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/raid1/www/Hosts/bankrupt/TCR_Public/050222.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 22, 2005, Vol. 9, No. 44 Headlines A.B. DICK: Files Liquidating Plan & Disclosure Statement AAA LIFE: S&P Pares Credit & Financial Strength Ratings to Bpi ACCIDENT & INJURY: Taps Bennett Weston as Bankruptcy Counsel ACCIDENT & INJURY: Look for Bankruptcy Schedules on Mar. 10 ADVANCED MEDICAL: Moody's Puts B1 Rating on $100MM Term Loan B AIR CANADA: Battles with AeroPlan Partners Over Trademark Use ALOHA AIRLINES: Dispatchers Agree to Ratify New Agreement AMERICAN RESTAURANT: Disclosure Statement Hearing Set for Mar. 10 ASSOCIATES MANUFACTURED: S&P Junks Class B-2 Certificates ATA AIRLINES: Wants to Reject KSM Billboard Agreements ATLANTIS PLASTICS: S&P Junks $75 Million Junior Secured Term Loan B&A CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors BEAR STEARNS: Fitch Assigns BB Rating on $8.8 Mil. Private Class BEVERLY ENT: Formation Capital Soliciting Votes for Board Election BIO-RAD LAB: Earns $17.1 Million of Net Income in Fourth Quarter BOMBARDIER CAPITAL: S&P Junks Six Certificate Classes C-BASS: Moody's Reviewing Class 2B-5 & B-2 Certs. for Downgrade CATHOLIC CHURCH: Spokane Litigants Want to Retain Esposito George CLEARLY CANADIAN: Obtains Additional Financing from BG Capital ELIZABETH ARDEN: S&P Revises Outlook on Low-B Ratings to Positive EMBARCADERO AIRCRAFT: S&P's Rating on Class C Notes Tumbles to D EXIDE TECHNOLOGIES: S&P Slices Corporate Credit Rating to B+ FEDERAL-MOGUL: Leases Smyrna Facility to House Distribution Center FURNAS COUNTY: Wants Plan Filing Period Extended Until May 20 GRUPO IUSACELL: Dec. 31 Balance Sheet Upside-Down by Ps$1.1 Mil. HEADWATERS INC: Equity Issue Plan Cues S&P to Review Ratings HUMAN GENOME: S&P Cancels Ratings Due to Lack of Investor Interest INDEPENDENCE III: Moody's Pares Rating on Two Class C Notes INDYMAC MANUFACTURED: S&P Junks Class M-1 Certificates INTERSTATE BAKERIES: Taps Colliers Seely as Real Estate Broker JP MORGAN: Fitch Puts Low-B Ratings on Six Mortgage Certificates MCI INC: Qwest Reviews Verizon Merger & May Submit Modified Offer MCI INC: Delivers Copy of Verizon Plan of Merger to SEC MCI INC: Moody's Reviewing Low-B Ratings for Possible Upgrade MCI INC: S&P Places Single-B Ratings on CreditWatch Positive METROMEDIA INT'L: Inks Pact to Sell ZAO PeterStar for $215 Million METROMEDIA FIBER: Wants Entry of Final Decree Delayed to Apr. 18 MIRANT CORP: Resolves Cash Management System Operation NATIONAL CENTURY: JPMorgan & Bank One Consent to Claims Objection PACIFIC BIOMETRICS: Losses & Deficit Trigger Going Concern Doubt PARMALAT: Farmland Gets $55 Mil. of Exit Financing from Wachovia PRIMEDIA INC: Moody's Junks Ratings on Preferred Stock PROTEIN DESIGN: S&P Withdraws Low-B & Junk Ratings QWEST COMMS: Reviews MCI Merger & May Submit Modified Offer RICHTREE INC: Court Terminates Restructuring Under CCAA Protection RICHTREE MARKETS: Court Approves PwC Hiring as Interim Receiver SATCON TECH: First Quarter Net Loss Widens to $1.4 Million SEARCHGOLD RESOURCES: Defaults on Tardy Financial Statements SENSE TECHNOLOGIES: Nov. 30 Balance Sheet Upside-Down by $861,991 SOUTHERN POWER: Case Summary & 20 Largest Unsecured Creditors SPX CORPORATION: Amends Cash Tender Offers for Senior Notes STELCO INC: Names Roland Keiper & Michael Woollcombe to Board STEWART ENTERPRISES: 99.4% of Noteholders Agree to Amend Indenture SOLUTIA INC: Wants to Walk Away from Gateway Lease SYRATECH CORP: Files for Chapter 11 Protection in D. Massachusetts SYRATECH CORP: Case Summary & 60 Largest Unsecured Creditors TECO AFFILIATES: Disclosure Statement Hearing Continued to Mar. 2 TECO AFFILIATES: Wants to Amend Agreement with Morgan Stanley TESTA HURWITZ: Ex-Partners File Involuntary Chapter 11 Petition TESTA HURWITZ & THIBEAULT: Involuntary Chapter 11 Case Summary TODD MCFARLANE: U.S. Trustee Picks 7-Member Creditors Committee TRANSWESTERN PUBLISHING: Retains Goldman Sachs to Explore Options TRANSWESTERN PUBLISHING: Moody's Puts B1 Rating on $65MM Sr. Loan TRANSWESTERN PUBLISHING: S&P Reviewing Low-B Ratings TRAVIS COUNTY: Moody's Junks Three Series of Housing Revenue Bonds TRICO MARINE: Executes New $75 Million Exit Financing Facility UAL CORP: District Court Transfers PBGC Complaint to Judge Wedoff UCFC FUNDING: S&P Junks Class M-1 & M-2 Certificates USGEN NEW ENGLAND: Files First Amended Plan & Disclosure Statement VALLEY MEDIA: Files Chapter 11 Liquidating Plan in Delaware VISTEON CORP: Moody's Lowers Senior Implied Rating to Ba2 from Ba1 W.R. GRACE: Asks Court to Approve Consulting Pact with Paul Norris WADDINGTON NORTH: S&P Slices Corporate Credit Rating to B- from B YUKOS OIL: Asks Judge Clark to Extend Lease Decision Period * Four Testa Lawyers Join DLA Piper Rudnick's Boston Office * Gibson Dunn Welcomes Thomas Budd as London Finance Partner * Large Companies with Insolvent Balance Sheets ********* A.B. DICK: Files Liquidating Plan & Disclosure Statement -------------------------------------------------------- A.B. Dick Company n/k/a Blake of Chicago, Corp., and its debtor- affiliates delivered their Liquidating Plan of Reorganization and an accompanying Disclosure Statement explaining that Plan to the U.S. Bankruptcy Court for the District of Delaware on Feb. 10, 2005. Terms of the Plan The Plan provides for the transfer of the Debtors' cash and other remaining assets, including all causes of action and avoidance claims, to liquidating trusts that will be formed for the benefit of holders of unsecured claims and subordinated claims. The Blake Liquidating Trust will be set-up to handle claims against Blake of Chicago. The Paragon Liquidating Trust will be set-up to handle claims against Paragon Corporate Holdings, Inc. As previously reported in the Troubled Company Reporter on Nov. 8, 2004, Presstek, Inc., bought substantially all of the Debtors' assets for $40 million. The Debtors are still in the process of selling their remaining assets including a facility in Rexdale, Ontario. Proceeds from the sale of Blake's assets will be used to satisfy claims against Blake's estate. Proceeds from the sale of Paragon's assets will be used to satisfy Paragon's claims. Holders of Blake's unsecured claims, owed $23,250,000, are projected to recover 25.8% of their claims. Subordinated claim holders will get any remaining cash if there's money left over after unsecured claims are fully satisfied. Holders of Blake equity interests take nothing under the Plan. Holders of Paragon's unsecured claims, owed $6,974,000, are projected to recover 1.35% of their claims. Subordinated claim holders will get any remaining cash if there's money left over after unsecured claims are fully satisfied. Holders of Paragon equity interests take nothing under the Plan. The Liquidating Trust will delegate to an oversight committee the obligation to recover preference and fraudulent transfers and other recoverable assets. The Oversight Committee will be comprised of members of the Official Committee of Unsecured Creditors, plus any members the Court may appoint. Headquartered in Niles, Illinois, A.B. Dick Company -- http://www.abdick.com/-- is a global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002) on July 13, 2004. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, LLP, and H. Jeffrey Schwartz, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, represent the Debtors in their restructuring efforts. Richard J. Mason, Esq., at McGuireWoods, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. A.B. Dick Company changed its name to Blake of Chicago, Corp., in Dec. 8, 2004, as required by the terms of the APA with Presstek. AAA LIFE: S&P Pares Credit & Financial Strength Ratings to Bpi -------------------------------------------------------------- Standard & Poor's Rating Services lowered its counterparty credit and financial strength ratings on AAA Life Insurance Co. to 'Bpi' from 'BBpi'. "The downgrade is based on the company's weak operating performance, marginal capitalization, high geographical concentration, slight product-line concentration, and marginal liquidity," explained Standard & Poor's credit analyst Puiki Lok. Headquartered in Livonia, Michigan, AAA Life writes mainly individual annuity, group accident and health, and group life insurance for members of the auto clubs. AAA Life, a wholly owned subsidiary of ACLI Acquisition Co., is licensed in all states except New York and Vermont. The company is rated on a stand-alone basis. Ratings with a 'pi' subscript are based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. ACCIDENT & INJURY: Taps Bennett Weston as Bankruptcy Counsel ------------------------------------------------------------ Accident & Injury Pain Centers, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Bennett, Weston & LaJone, P.C., as its bankruptcy counsel. Bennett Weston is expected to: a) assist the Debtors in performing their duties and responsibilities as debtors-in-possession under Section 521 of the Bankruptcy Code; b) assist the Debtors in the preparation of their Schedules and Statements and in preparing and proposing a disclosure statement and plan or joint plan of reorganization; c) review the nature and validity of liens asserted against the property of the Debtors and advise the Debtors on the enforceability of those lieas; d) advise the Debtors concerning actions that might be taken to collect and recover property for the benefit of the Debtors' estates; e) advise the Debtors in preparing responses to applications, motions, pleadings, draft orders, notices, schedules and other documents and review all financial and other reports to be filed in the Debtors' chapter 11 cases; f) perform all other legal services that are necessary and needed in the Debtors' chapter 11 case. Glenn A. Portman, Esq., a Member at Bennett Weston, is the lead attorney for the Debtors. Mr. Portman discloses that the Firm received a $50,000 retainer. Mr. Portman will bill the Debtors $325 per hour for his services. Bennett Weston has not yet submitted to the Debtors the hourly rates for its professionals when the Debtors filed a request with the Court to employ the Firm as their counsel. Bennett Weston assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Dallas, Texas, Accident & Injury Pain Centers, Inc., -- http://www.accinj.com/-- operate clinics that treat patients with highly advanced therapy equipment and techniques. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688). When the Debtors filed for protection from their creditors, they reported estimated assets and debts of $10 million to $50 million. ACCIDENT & INJURY: Look for Bankruptcy Schedules on Mar. 10 ----------------------------------------------------------- The Honorable Harlin DeWayne Hale of the U.S. Bankruptcy Court for the Northern District of Texas gave Accident & Injury Pain Centers, Inc., and its debtor-affiliates more time to file their Schedules of Assets and Liabilities, Statements of Financial Affairs, and Schedules of Executory Contracts and Unexpired Leases. The Debtors have until March 10, 2005, to file those documents. The Debtors explain that in order to prepare the Schedules and Statements, they must gather information from books, records, and documents relating to multiple locations of clinics and multiple contracts, leases, and other agreements. Consequently, collection of the information necessary to complete the Schedules and Statements will require an expenditure of substantial time and effort on the part of the Debtors' employees and counsel. The Debtors add that because of the size and complexity of the their chapter 11 cases and the competing demands upon their employees to assist in efforts to stabilize business operations during the initial post-petition period, it is likely that the Debtors will be able to complete the Schedules and Statements within 15 days after the Petition Date as required under the Bankruptcy Code. The Debtors assure Judge Hale that they are mobilizing their employees to work diligently with their counsel in completing and preparing the Schedules and Statements and submit those documents on or before March 10. Headquartered in Dallas, Texas, Accident & Injury Pain Centers, Inc., -- http://www.accinj.com/-- operate clinics that treat patients with highly advanced therapy equipment and techniques. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688). Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported estimated assets and debts of $10 million to $50 million. ADVANCED MEDICAL: Moody's Puts B1 Rating on $100MM Term Loan B -------------------------------------------------------------- Moody's Investors Service affirmed Advanced Medical Optics, Inc.'s existing ratings and assigned a rating of B1 to Advanced Medical $100 million Add-On Term Loan B and its $200 million senior secured revolving credit facility (upsized from $100 million). The outlook remains stable. Both the Add-On Term Loan B and the upsized revolver were provided for in the amendment to Advanced Medical's credit agreement dated January 7, 2005. The additional $100 million Term Loan B along with approximately $85 million drawn from the revolving credit facility will be used to finance the cash portion of the previously announced acquisition of VISX, Inc., for approximately $1.27 billion in cash and stock. The acquisition is expected to close in the second quarter of 2005. In the third quarter of 2004, the company completed its June 2004 tender offer to purchase its outstanding 9.25% senior subordinated notes due 2010. Accordingly, Moody's has withdrawn its B3 rating on these bonds. Moody's rating actions are: Ratings affirmed: $194 million Guaranteed Senior Secured Term Loan B due 2009, rated B1 (amortized from $250 million) $350 million Convertible Senior Subordinated Notes due 2024, rated B3 Senior Implied Rating -- B1 Senior Unsecured Issuer Rating -- B2 Outlook is stable Ratings assigned: $100 million Guaranteed Senior Secured Add-On Term Loan B due 2009, rated B1 $200 million Guaranteed Senior Secured Revolver due 2009, rated B1 (upsized from $100 million) Ratings withdrawn: $200 million 9.25% Guaranteed Senior Subordinated Notes due 2010 Moody's believes that the combination of Advanced Medical and VISX, Inc. will be a good complementary and strategic fit for Advanced Medical. It will enable the company to establish a strong position in the refractive surgery market, with a leading worldwide installed base of lasers, and solidify refractive offerings that include the company's existing microkeratome and phakic intraocular lens products. The combination will also diversify the company's business mix, enabling the company to expand into a leadership position in a third ophthalmic/eye care segment. In addition, the company will continue to gain scale and scope and will further strengthen its position as a leading competitor, along with larger rivals Alcon and Bausch & Lomb, in the ophthalmic surgical and eye care markets. Advanced Medical will finance the transaction conservatively, with only approximately $185 million of the $1.27 billion purchase price to be paid in cash. Pro forma for the transaction for the last twelve months ended September 24, 2004, adjusted free cash flow coverage of debt would have been in the range of 6-10%. EBIT coverage of interest would have been approximately 8 times. Partly offsetting the positive credit consideration is Moody's concern about the aggressive pace of the company's acquisition program and integration risks. VISX, Inc. will be the second material transaction AMO will be completing within a relatively short time frame. Moody's also notes the unsteady historical performance of VISX as a credit concern. VISX, Inc.'s recent performance trends have been strong, and fundamentals for the refractive laser industry have turned around. However, due to the significant operating leverage of the company's business, profitability can be significantly impacted by an adverse change in economic conditions or a decline in procedure volumes. The potential impact on the combined entity, however, should be more limited given its more diversified business mix as compared to VISX, Inc. as a stand-alone company. The outlook for the company is stable. If the company makes significant progress in successfully integrating VISX, Inc., continues to improve VISX's profitability and continues to reduce debt, Moody's will consider upgrading the ratings. If Advanced Medical sustains a ratio of adjusted free cash flow to adjusted debt of 10% or more, Moody's would consider upgrading the rating. Moody's will assess the potential for near term acquisition activity and the likely effect such activity may have on the company's credit profile. The rating could be downgraded if Advanced Medical continues to make significant investments in new or existing businesses that heighten the financial risk of the enterprise. Advanced Medical Optics, headquartered in Santa Ana, California, is a global leader in the development, manufacturing and marketing of ophthalmic surgical and contact lens care products. AIR CANADA: Battles with AeroPlan Partners Over Trademark Use ------------------------------------------------------------- AeroPlan Partners Co. LLC uses the AEROPLAN(R) service mark to provide brokerage services for the purchase and sale of aircraft, aircraft leasing services and services relating to the arranging of aircraft financing. AeroPlan Partners is a limited liability company organized and existing under the laws of the State of Delaware. AeroPlan Partners' principal place of business is in Broward County, Florida. Thomas Borzilleri, owner of AeroPlan Partners, filed a federal service mark application on May 6, 2002, for the mark AEROPLAN(R) with the U.S. Patent and Trademark Office in International Class 036 for aircraft brokerage services and in International Class 039 for aircraft leasing services. Mr. Borzilleri was issued a certification of registration by the PTO on October 7, 2003. On November 13, 2003, Air Canada filed two "intent to use" applications for AEROPLAN -- one for words and one for a logo -- for these goods and services: 1. Computer programs relating to its frequent flyer program; 2. Printed matter relating to its frequent flyer program; 3. Credit card financing services; and 4. Air transportation services relating to its frequent flyer program. The PTO refused registration of Air Canada's marks. The PTO cited AeroPlan Partners' registration against the Applications based on the alleged likelihood of confusion pursuant to 29(d) under the Trademark Act. On December 2, 2004, Air Canada sent AeroPlan Partners a cease and desist letter demanding that AeroPlan Partners stop using the AEROPLAN(R) mark, assign the registration to Air Canada, and assign any domain names incorporating AEROPLAN(R) to Air Canada. On December 7, Air Canada filed a petition with the PTO to cancel AeroPlan Partners' registration. Air Canada asserts that AeroPlan Partners' ownership, use and registration of the AEROPLAN(R) constitutes infringement of its services mark and dilution under the Lanham Act. AeroPlan Partners Seeks Declaratory Judgment On February 1, 2005, AeroPlan Partners initiated an action before the U.S. District Court for the Southern District of Florida for declaratory relief. AeroPlan Partners sought judgment that no likelihood of confusion exists between its use and Air Canada's use of the AEROPLAN(R) mark. AeroPlan Partners also asked the Florida Court to find that it is not infringing on or diluting Air Canada's use of its mark. AeroPlan Partners wants Air Canada's Petition to Cancel dismissed, with prejudice. AeroPlan Partners offers a list of reasons to the Florida Court: (a) AeroPlan Partners and Air Canada are into different businesses. AeroPlan Partners does not offer or sell a frequent flyer program. Air Canada does not provide brokerage services for the purchase and sale of aircraft, aircraft leasing services, and services relating to the arranging of aircraft financing; (b) AeroPlan Partners' and Air Canada's services provided under the AEROPLAN(R) mark do not overlap and do not compete with each other; (c) AeroPlan Partners' customers are very sophisticated and occupy a specific market niche. The average sales price of an airplane that AeroPlan Partners broke is $6,000,000, with the high end at about $16,000,000. The average financial deal arranged by AeroPlan Partners is $6,000,000; (d) Unlike AeroPlan Partners' expensive services, there is no fee associated with Air Canada's frequent flyer program; (e) Customers of both companies' goods and services are not likely to overlap. AeroPlan Partners' goods and services are sold to a very narrow group of sophisticated, wealthy business people within a narrow market and occupy a specific customer niche. Air Canada's frequent flyer program is offered to its general customers; (f) AeroPlan Partners' services are not offered and distributed, and not marketed or advertised in the same channel of trade as Air Canada's frequent flyer program; (g) AeroPlan Partners advertises its services in select publications like the DuPont registry, Robb Report, AC Flyer, Plan Fax and Broker Net Executive Controller. Air Canada does not advertise its frequent flyer program in any of these publications; (h) AeroPlan Partners adopted the AEROPLAN(R) mark in good faith; (i) There have been no known instances of actual confusion between AeroPlan Partners' use and Air Canada's use of the trademark in their business operations; and (j) Until Air Canada attempted to register its mark in the United States, it was unaware of AeroPlan Partners' use of the mark. James A. Gale, Esq., Lawrence S. Gordon, Esq., and Erica W. Stump, Esq., at Feldman Gale, P.A., in Miami, Florida, represent AeroPlan Partners. Jury Trial In December District Court Judge James I. Cohn has set a December 12, 2005, jury trial date on the matter. Pre-trial discovery matters are referred to Magistrate Judge Lurana S. Snow. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. (Air Canada Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) As of September 30, 2004, Air Canada's shareholders' deficit narrowed to $611 million, compared to a $4.155 billion deficit at December 31, 2004. ALOHA AIRLINES: Dispatchers Agree to Ratify New Agreement --------------------------------------------------------- Aloha Airlines' dispatchers and schedulers have voted to ratify a new agreement, becoming the fourth of five employee groups to accept new contracts. With the Transport Workers Union ratification, 94 percent of Aloha's workforce has agreed to cost- cutting measures in support of the Company's plan to emerge from bankruptcy protection. Aloha's TWU voted overwhelmingly in favor of a new 52-month contract, effective Jan. 1, 2005, through April 30, 2009. The unit represents 30 dispatchers and schedulers. "We commend the TWU for coming through with this overwhelming vote of confidence in support of our plan," said David A. Banmiller, Aloha's president and chief executive officer. At the same time, Aloha said members of the International Association of Machinists and Aerospace Workers (IAM) District Lodge 142 have voted down a proposed 52-month contract. IAM District Lodge 142 represents about 250 Aloha mechanics and inspectors. To continue the quick pace of progress toward early emergence from bankruptcy protection, Aloha Airgroup, Inc., the parent company of Aloha Airlines, Inc., will file a motion in the U.S. Bankruptcy Court for the District of Hawaii, seeking interim financial relief from the mechanics' current collective-bargaining agreement. Aloha CEO Banmiller said the filing under Section 1113 of the U.S. Bankruptcy Code does not preclude Aloha from obtaining consensual agreements with the mechanics. "This filing is an unfortunate step in light of the fact that 94 percent of our workforce has already ratified their agreements and are prepared to do what's necessary to move the Company forward," said Mr. Banmiller. The Court has already accepted Aloha's new agreements with the International Association of Machinists and Aerospace Workers (IAM) District Lodge 141 representing clerical, passenger service and ramp service employees; as well as the Association of Flight Attendants (AFA) and the Air Line Pilots Association (ALPA). Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERICAN RESTAURANT: Disclosure Statement Hearing Set for Mar. 10 ------------------------------------------------------------------ The Honorable Thomas B. Donovan of the U.S. Bankruptcy Court for the Central District of California will convene a hearing at 10:00 a.m., on March 10, 2005, to consider the adequacy of the Fourth Amended Disclosure Statement explaining the Joint Plan of Reorganization filed by American Restaurant Group, Inc., and its debtor-affiliates. The Debtor filed their Fourth Amended Disclosure Statement on Jan. 31, 2005, after Judge Thomas B. Donovan ruled that the previous iteration of that document did not provide creditors with enough information. The current Plan calls for a substantive consolidation of the three Debtor entities. The Debtors argue that provides the most prompt recovery to Holders of Claims and Equity Interests. The Plan's primary objectives are to: a) alter the Debtors' structure and business operations to permit them to emerge from their chapter 11 cases with a viable business and capital structure; b) improve the value of the ultimate recoveries to Holders of Allowed Claims and Allowed Equity Interests on a fair and equitable basis; and c) settle, compromise and otherwise dispose of certain Claims and Equity Interests on terms the Debtors believe to be fair and reasonable and in the best interests of the Debtors' estates and their creditors. The Plan groups claims and interests into 11 classes. Unimpaired claims from Class 1 to 4 consist of Other Priority Claims, Prepetition Credit Facility Claims and Other Secured Claims. These four classes will be paid in full on or after the Effective Date. Class 9, consisting of Unimpaired Intercompany Claims, will not receive any distributions under the Plan. Class 10 and 11, consisting of Equity Interests in Enterprises and Equity Interests in Property Management, remain intact. Creditors Will Own the Company The Amended Disclosure Statement states that Impaired Claims that consist of: a) Old Note Secured Claims, totaling $80.1 million, will be satisfied by delivering 84.6% of the New Common Stock in the Reorganized Company on the Effective Date; b) General Unsecured Claims will receive the remaining 15.4% slice of the New Equity in compromise of their claims on the Effective Date; c) Convenience Claims will receive a full cash distribution equal to the amount of allowed claims after the Effective Date; and d) Equity Interests in Old Common Stock will not receive any recovery or distributions under the Plan on account of those claims. Objections to the Amended Disclosure Statement, if any, must be filed and served by March 4, 2005. Headquartered in Los Altos, California, American Restaurant Group, Inc., through its subsidiaries operating as Stuart Anderson's, specializes in U.S.D.A. Choice fresh-cut steak; seasoned, seared, and slow-roasted prime rib; and a variety of seafood entrees complete with 'all the fixin's'. The company and its debtor- affiliates filed a chapter 11 petition on Sept. 28, 2004 (Bankr. C.D. Cal. Case No. 04-30732). Thomas R. Kreller, Esq., at Milbank, Tweed, Hadley & Mccloy represents the Debtors in their restructuring efforts. When the Debtor filed for bankruptcy protection, it listed $77,873,000 in assets and $273,395,000 in total debts. ASSOCIATES MANUFACTURED: S&P Junks Class B-2 Certificates --------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on classes B-1 & B-2 manufactured housing (MH) transactions from Associates Manufactured Housing Contract Pass-Thru Certs Series 1996-2. The lowered ratings reflect the continued adverse performance trends exhibited by the underlying pools of MH installment sales contracts and mortgage loans and the resulting deterioration of credit enhancement. The unfavorable market conditions that continue to plague the MH industry have contributed to the poor performance of these transactions. The projected lifetime cumulative net losses for the five transactions have significantly exceeded original expectations and the current rating actions reflect revised assumptions about cumulative lifetime net losses based on actual performance data and expectations on future trends. The higher losses exhibited by these transactions continue to be driven by higher-than-expected defaults and loss severities, as most of the underlying collateral pools have deteriorated during the past few years. All four of the issuers are no longer originating MH loans. Historically, when a MH seller/servicer discontinues loan originations or declares bankruptcy, dealer relations are negatively impacted and, consequently, the ability to liquidate repossession inventory at acceptable recovery rates becomes impaired. Consequently, Standard & Poor's does not believe the credit enhancement for these transactions is sufficient to cover remaining losses at the previous ratings. Ratings Lowered Associates Manufactured Housing Contract Pass-Thru Certs Series 1996-2 Rating Class To From ----- -- ---- B-1 BB+ BBB B-2 CCC B+ ATA AIRLINES: Wants to Reject KSM Billboard Agreements ------------------------------------------------------ ATA Airlines and its debtor-affiliates, through their agent Kelly Scott & Madison and Viacom Outdoor Inc., are parties to five billboard advertising display agreements. On November 1, 2004, KSM, at the request of the Debtors, informed Viacom that the Debtors want to cancel the contract and that Viacom was free to sell the billboard space provided by the KSM Agreements to another advertiser. In conversations that occurred thereafter, KSM reiterated to Viacom officials that the KSM Agreements had been cancelled and that the Debtors would not be liable for continued service under them. The messages displayed on the outdoor billboards covered by the KSM Agreements relate to business class travel with the Debtors. Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that the Debtors' efforts to convert aircraft to implement a business class section have slowed since the Petition Date. As a result, the KSM Agreements are no longer critical to the Debtors' marketing efforts. Pursuant to Section 365 of the Bankruptcy Code, the Debtors seek the United States Bankruptcy Court for the Southern District of Indiana's authority to reject the KSM Agreements effective as of November 1, 2004. 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) ATLANTIS PLASTICS: S&P Junks $75 Million Junior Secured Term Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Atlanta, Georgia-based Atlantis Plastics, Inc. At the same time, Standard & Poor's assigned its 'B' rating and its recovery rating of '3' to the company's proposed $25 million senior secured revolving credit facility due 2011 and $120 million senior secured term loan B due 2011, based on preliminary terms and conditions. The rating on the senior secured credit facility is the same as the corporate credit rating; this and the '3' recovery rating indicate the expectation of a meaningful (50% to 80%) recovery of principal in the event of a default. Standard & Poor's also assigned its 'CCC+' rating and its recovery rating of '5' to the company's proposed $75 million junior secured term loan C due 2012. The rating on the junior secured term loan is two notches below the corporate credit rating; this and the '5' recovery rating indicate the expectation of negligible (0% to 25%) recovery of principal in the event of a default. Proceeds from the transaction will be used to refinance the company's existing credit facilities, to fund a $97 million dividend to shareholders, and for fees and expenses. The outlook is stable. Standard & Poor's also withdrew its 'B' rating on the company's proposed $105 million senior secured credit facilities, and its 'CCC+' rating on the proposed $125 million senior subordinated notes, following the company's decision to pursue a $220 million secured financing in lieu of the previously announced financing plan. Pro forma for the transaction, total debt will be about $199 million. "The company's defensible market positions in certain niche segments, and growth prospects in injection-molded products should help to offset the potential impact on operating margins of any additional increases in already high raw-material costs or lower-than-expected sales growth over the business cycle," said Standard & Poor's credit analyst Liley Mehta. The ratings on Atlantis Plastics reflect a very aggressive financial profile, which overshadows its well-below-average business risk profile in highly competitive, cyclical polyethylene film and injection-molded plastic products, serving mainly industrial customers. With annual revenues of about $334 million, Atlantis Plastics enjoys a competitive position in plastic films (including stretch films and custom films and representing about 65% of revenues), stemming from a decent cost structure and effective distribution capabilities. Injection-molded products (about 28% of sales) include components sold to original equipment manufacturers (OEMs) mainly in the home appliance industry, and siding panels for the home building industry and residential replacement market. Profile extruded products account for 7% of sales and are used in recreational vehicles, mobile homes, and other consumer and commercial products. B&A CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: B&A Construction Co., Inc. 1716 Candler Road Gainesville, Georgia 30507 Bankruptcy Case No.: 05-20421 Type of Business: The Debtor is a commercial, highway and residential grading contractor. Chapter 11 Petition Date: February 18, 2005 Court: Northern District of Georgia (Gainesville) Debtor's Counsel: J. Robert Williamson, Esq. Scroggins and Williamson 1500 Candler Building 127 Peachtree Street, North East Atlanta, GA 30303 Tel: 404-893-3880 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ J B Jones Drilling LLC Trade $190,121 P.O. Box 817 Jasper, GA 30143 Er Snell Trade $175,163 P.O. Box 306 Snellville, GA 30078 Ferguson Enterprises Trade $171,491 FEI #554 P.O. Box 100268 Atlanta, GA 30384 Martin Contracting Trade $127,619 Southeast Culvert Trade $119,787 Keating Brothers Inc. Trade $116,983 John Hewell Trucking Trade $106,180 Roger West Trade $103,866 APAC-Southeast Trade $99,527 Dills Trucking Trade $98,272 Action Concrete Trade $78,463 J D Shuler Contracting Trade $67,505 Stewart Melvin & Frost Trade $58,543 Floyd & Associates Trade $46,988 Atlanta Corrugating Trade $41,623 Turpin $41,400 Tim Pitman Trade $41,410 Jasper Curb Inc. Trade $36,751 Gilstrap Plumbing Trade $31,735 Atlanta Erosion Consultants Trade $25,773 BEAR STEARNS: Fitch Assigns BB Rating on $8.8 Mil. Private Class ---------------------------------------------------------------- Bear Stearns Asset-Backed Securities (BSABS) Trust, series 2005-1, is rated by Fitch Ratings: -- $313,746,000 class A 'AAA'; -- $37,689,000 class M-1 'AA'; -- $18,549,000 class M-2 'A'; -- $4,341,000 class M-3 'A-'; -- $3,946,000 class M-4 'BBB+'; -- $2,960,000 class M-5 'BBB'; -- $4,538,000 class M-6 'BBB-'; and -- $8,880,000 privately offered class M-7 'BB'. The 'AAA' rating on the senior certificates reflects the 22.35% initial credit enhancement provided by: * 9.55% class M-1, * 4.70% class M-2, * 1.10% class M-3, * 1.00% class M-4, * 0.75% class M-5, * 1.15% class M-6, * 2.25% class M-7 along with target overcollateralization -- OC -- of 1.85%. In addition, the ratings on the certificates reflect the quality of the underlying collateral, and Fitch's level of confidence in the integrity of the legal and financial structure of the transaction. The mortgage pool consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties, with an aggregate principal balance of $ 394,649,130. As of the cut-off date (Jan. 1, 2005), the mortgage loans had a weighted average loan-to-value ratio - LTV -- of 84.50%, weighted average coupon - WAC -- of 8.032%, weighted average remaining term (WAM) of 329 months and an average principal balance of $111,894. Single-family properties account for 70.87% of the mortgage pool, 2-4 family properties 10.53%, and condos 5.22%. Approximately 81.69% of the properties are owner occupied. The three largest state concentrations are: * California (27.62%), * Florida (7.44%), * Texas (5.80%). Approximately 13.68% of the loans may be subject to special rules, disclosure requirements and other provisions that were added to the federal Truth-in-Lending Act by the Home Ownership and Equity Protection Act of 1994, or HOEPA. As to approximately 86.32% of the mortgage loans, none of such loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003, entitled, 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/ Bear Stearns Asset Backed Securities I LLC deposited the loans into the trust, which issued the certificates, representing beneficial ownership in the trust. Wells Fargo Bank, N.A. will act as Trustee. EMC Mortgage Corporation. (rated 'RPS1' by Fitch) will act as master servicer for this transaction. BEVERLY ENT: Formation Capital Soliciting Votes for Board Election ------------------------------------------------------------------ Formation Capital, LLC, and its associates Appaloosa Management L.P. and Franklin Mutual Advisers, LLC, said Arnold Whitman, CEO of Formation, have filed a preliminary proxy statement with the Securities and Exchange Commission to solicit proxies to elect six candidates to the Board of Directors of Beverly Enterprises, Inc. (NYSE: BEV) at the Company's upcoming 2005 annual meeting of stockholders. As previously announced, the nominees who will be standing for election to the Beverly Board include: -- Jeffrey A. Brodsky, a Managing Director of Quest Turnaround Advisors, LLC; -- John J. Durso, a partner of the Chicago office of the law firm Michael Best & Friedrich LLP, where he has chaired the national Long-Term Care Practice Group; -- Philip L. Maslowe, former Executive Vice President and Chief Financial Officer of The Wackenhut Corporation and of KinderCare Learning Centers, Inc.; -- Charles M. Masson, a managing partner of Masson & Company, LLC, a firm providing interim and crisis management, turnaround consulting and assessment, and financial restructuring services; -- Mohsin Y. Meghji, a Principal of Loughlin Meghji + Company, a financial advisory boutique specializing in advising management, investors and lenders in relation to transactions involving financially challenged companies; and -- Guy Sansone, a Managing Director at Alvarez & Marsal, LLC, a global professional services firm specializing in turnaround management and corporate restructuring. Additional biographical information on the nominees is available in the proxy statement. On Feb. 18, 2005, Arnold Whitman filed a preliminary proxy statement with the SEC for the solicitation of the stockholders of Beverly Enterprises in connection with the Company's 2005 annual meeting of stockholders. Security holders of Beverly Enterprises are urged to read the preliminary proxy statement (and, when it becomes available, the definitive proxy statement) and any other proxy solicitation materials filed by Mr. Whitman because they contain (or will contain) important information. Mr. Whitman and certain other persons may be deemed to be "participants in the solicitation" of the stockholders of Beverly Enterprises in connection with the Company's 2005 annual meeting of stockholders. A list of these persons and a description of their interests in the solicitation is included in the preliminary proxy statement. Investors may obtain a free copy of the preliminary proxy statement (and, when it becomes available, the definitive proxy statement) and other documents filed by Mr. Whitman with the SEC at the SEC's website at http://www.sec.gov/Investors will also be able to obtain a free copy of the preliminary proxy statement (and, when it becomes available, the definitive proxy statement) and these other documents by contacting MacKenzie Partners, Inc., the proxy solicitor retained in connection with the solicitation, at (212) 929-5500 (call collect) or (800) 322-2885 (toll-free) or by email at proxy@mackenziepartners.com About the Company Beverly Enterprises, Inc. and its operating subsidiaries are leading providers of healthcare services to the elderly in the United States. BEI, through its subsidiaries, currently operates 351 skilled nursing facilities, as well as 18 assisted living centers, and 53 hospice and home health centers. Through Aegis Therapies, BEI also offers rehabilitative services on a contract basis to facilities operated by other care providers. * * * Beverly Enterprises' 9-5/8% Senior Notes Due 2009 currently carry Moody's B1 Rating, Standard & Poor's B+ Rating, and Fitch's BB- Rating. BIO-RAD LAB: Earns $17.1 Million of Net Income in Fourth Quarter ---------------------------------------------------------------- Bio-Rad Laboratories, Inc. (Amex: BIO; BIOb), a multinational manufacturer and distributor of life science research products and clinical diagnostics, reported financial results for the fourth quarter ended December 31, 2004. Fourth-quarter net sales from continuing operations were $307.9 million, up 19.3 percent compared to the $258.1 million reported for the same quarter of 2003. On a currency-neutral basis, revenues were up 14.1 percent versus fourth-quarter 2003 results. This growth was largely due to a combination of events including organic growth in Bio-Rad's two main business segments and the addition of MJ GeneWorks products to the Company's portfolio. For the quarter, income from continuing operations was $17.1 million compared to $18.6 million in the fourth quarter of last year. For the full year, overall Company sales from continuing operations grew by 11.3 percent to $1,090.0 million compared to $979.6 million in 2003. Normalizing for the impact of currency effects, growth was 5.5 percent. Year-over-year income from continuing operations fell by 14.2 percent to $66.3 million, from $77.3 million due to the Company's acquisition and integration of MJ GeneWorks which included more than $14 million of one-time costs, continued investment in R&D and infrastructure development projects, and additional expenses associated with Sarbanes-Oxley Act compliance. Full-year gross margin from continuing operations was 56.0 percent, down slightly compared to 56.8 percent over the same period of 2003. Fourth-Quarter Highlights Overall net sales from continuing operations for the fourth quarter grew by 19.3 percent versus fourth-quarter 2003 results. Fourth-quarter basic earnings from continuing operations were $0.66 per share, or $0.65 per share on a diluted basis, compared to $0.73 and $0.71, respectively, in the same period of last year. Segment net sales for the quarter were 21.6 percent higher for the Life Science segment and 17.1 percent higher for the Clinical Diagnostics segment compared to their respective figures in 2003. During the quarter, Bio-Rad sold $200 million aggregate principal amount of 6.125% Senior Subordinated Notes due 2014 in a private offering. Life Science segment net sales for the quarter were $148.5 million, 21.6 percent higher than last year's comparable period. On a currency-neutral basis, segment sales grew by 16.4 percent. Full-year reported sales from continuing operations were $504.7 million for the segment, up 10.6 percent over the previous year, or 4.8 percent on a currency-neutral basis. Performance in this segment was boosted by the addition of acquired MJ GeneWorks products and by increased sales in several product areas including multiplex array technology and amplification reagents. During the quarter, the Life Science Group launched a number of products including the new Experion(TM) Automated Electrophoresis System, a novel approach to RNA and protein analysis and separation that will revolutionize the way electrophoresis is performed. The Life Science segment was negatively impacted by price erosion in the BSE (bovine spongiform encephalopathy or mad cow disease) product line, which was partially offset by a continued expansion in unit volume. The Clinical Diagnostics segment reported net sales of $156.7 million for the quarter, up 17.1 percent compared to the fourth quarter of 2003, or 11.9 percent excluding currency effects. Full-year segment sales from continuing operations were $576.4 million, a 12.0 percent increase compared to 2003 results, or 6.3 percent excluding currency effects. These results are due in part to continued growth in the blood virus, diabetes monitoring and quality controls product lines. During the quarter, the Company received marketing clearance from the U.S. Food and Drug Administration (FDA) for its new BioPlex(TM)2200 system, a revolutionary new immunoassay platform that employs multiplexing technology to analyze for multiple disease states from single patient samples. Bio-Rad also received approval from the FDA for its new Multispot HIV-1/HIV-2 Rapid Test, the only single-use assay to be approved by the FDA for the detection and differentiation of HIV-1 and HIV-2 antibodies. Also during the quarter, the Clinical Diagnostics Group won a major blood-bank tender in Russia, making Bio-Rad the largest supplier of HIV and hepatitis blood screening products in that country. 2004 Highlights -- Full-year Company sales from continuing operations grew by 11.3 percent to $1,090.0 million. -- Year-over-year income from continuing operations fell by 14.2 percent to $66.3 million from $77.3 million in 2003. -- In March, the Company purchased the assets of Hematronix Inc. for approximately $17 million in cash. This acquisition further enhances Bio-Rad's leadership position in the quality-control management industry. -- In August, the Company purchased MJ GeneWorks, Inc. and its subsidiaries, including MJ Research, Inc., for approximately $31 million in cash and the assumption of certain liabilities of those companies. The acquisition significantly enhances Bio-Rad's portfolio of gene expression products. "2004 was as much a year of investment as it was of continued progress. The year brought increased organic growth in our core businesses, expansion of our product lines through new product introductions and strategic acquisitions, infrastructure improvements and increased R&D," said Norman Schwartz, President and Chief Executive Officer. "These efforts give Bio-Rad a larger proprietary-technology base, improved operational systems and an increased presence in certain key markets, all of which help strengthen the foundation for future success." About the Company Bio-Rad Laboratories, Inc., is a multinational manufacturer and distributor of life science research products and clinical diagnostics. It is based in Hercules, California, and serves more than 70,000 research and industry customers worldwide through a network of more than 30 wholly owned subsidiary offices. * * * As reported in the Troubled Company Reporter on Dec. 15, 2004, Moody's Investors Service assigned a rating of Ba3 to Bio-Rad Laboratories' $200 million senior unsecured subordinated notes, due 2014. The ratings outlook has been changed to stable from positive. New ratings assigned: * Bio Rad Laboratories $200 million Senior Unsecured Subordinated Notes, due 2014, rated Ba3 Ratings affirmed: * Bio Rad Laboratories Senior Implied Rating, Ba2 * Bio Rad Laboratories Senior Unsecured Rating, Ba2 * Bio Rad Laboratories $225 million Senior Unsecured Subordinated Notes, due 2013, Ba3 BOMBARDIER CAPITAL: S&P Junks Six Certificate Classes ----------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 11 classes from manufactured housing (MH) transactions from Bombardier Capital Mortgage Securitization Corp., Series 1998-C and 1999-A. The lowered ratings reflect the continued adverse performance trends exhibited by the underlying pools of MH installment sales contracts and mortgage loans and the resulting deterioration of credit enhancement. The unfavorable market conditions that continue to plague the MH industry have contributed to the poor performance of these transactions. The projected lifetime cumulative net losses for the five transactions have significantly exceeded original expectations and the current rating actions reflect revised assumptions about cumulative lifetime net losses based on actual performance data and expectations on future trends. The higher losses exhibited by these transactions continue to be driven by higher-than-expected defaults and loss severities, as most of the underlying collateral pools have deteriorated during the past few years. All four of the issuers are no longer originating MH loans. Historically, when a MH seller/servicer discontinues loan originations or declares bankruptcy, dealer relations are negatively impacted and, consequently, the ability to liquidate repossession inventory at acceptable recovery rates becomes impaired. Consequently, Standard & Poor's does not believe the credit enhancement for these transactions is sufficient to cover remaining losses at the previous ratings. Ratings Lowered Bombardier Capital Mortgage Securitization Corp. Series 1998-C Rating Class To From ----- -- ---- A-1 BB- BB+ M-1 CCC+ B M-2 CCC CCC+ B-1 CCC- CCC Bombardier Capital Mortgage Securitization Corp. Series 1999-A Rating Class To From ----- -- ---- A-2 B+ BB A-3 B+ BB A-4 B+ BB A-5 B+ BB M-1 CCC+ B- M-2 CCC- CCC+ B-1 CC CCC C-BASS: Moody's Reviewing Class 2B-5 & B-2 Certs. for Downgrade --------------------------------------------------------------- Moody's Investors Service has placed under review for possible upgrade and downgrade four certificates from two transactions, issued by C-Bass ABS, LLC. The transactions are backed by other residential mortgage backed securities. The Class 1B-1 and 1B-2 certificates from Series 1997-3 are being placed on review for upgrade based on the performance of the underlying securities as well as the level of credit enhancement provided by the subordinated classes. The class 2B-5 is placed on review for downgrade based on the weak performance of the underlying security and reduced credit enhancement level relative to the current projected losses of the underlying security. The Class B-2 certificate from Series 1998-2 is placed on review for downgrade based on the weak performance of the underlying securities with historical and expected cumulative losses exceeding original expectations. The complete rating actions are: -- Issuer: C-Bass ABS, LLC Review for upgrade: * Series 1997-3; Class 1B-1, current rating Aa2, under review for possible upgrade * Series 1997-3; Class 1B-2, current rating A2, under review for possible upgrade Review for downgrade: * Series 1997-3; Class 2B-5, current rating B2, under review for possible downgrade * Series 1998-2; Class B-2, current rating Ba2, under review for possible downgrade CATHOLIC CHURCH: Spokane Litigants Want to Retain Esposito George ----------------------------------------------------------------- According to Richard Frizzell, Chairman of the Official Tort Litigants Committee, the Diocese of Spokane's Chapter 11 case presents unique issues of law and fact. Property issues, which are first-day issues in any bankruptcy filing, are undoubtedly the principal issue in Spokane's case, including: * the questions raised by Spokane's proposed cash management order, which has already been objected to by the Litigants Committee; and * the avoidance powers of the Trustee or the Debtors for which the Litigants Committee has already sought authority to pursue. In addition, it is anticipated that there will be: -- issues to vacate the bankruptcy stay; resistance to removal actions and motions for remand, withdrawal of reference issues; and issues regarding the Court's jurisdiction, core versus non-core proceedings, timing and propriety of claim filings, identity of claimants, whether claims will be fully adjudicated by trial in state or federal court or under what circumstances and for what purpose may be estimated by the Bankruptcy Court; -- issues regarding plan confirmation standards, liquidation analysis, employment issues, accounting issues, and avoidance actions; -- evaluation of claims, proposed asset sales and disposition, financing arrangements, Spokane's rights and obligations as well as the desirability of either assuming or rejecting executory contracts; -- issues whether a Chapter 11 trustee should be appointed, or in the alternative, whether the case should be converted to a Chapter 7; -- evaluation of claims and litigation matters; and -- claims bar date issues and the effect or desirability of filing proofs of claim and when. To assist in addressing these issues, the Litigants Committee seeks authority from the U.S. Bankruptcy Court for the Eastern District of Washington to retain Esposito, George & Campbell, PLLC, as its counsel. Mr. Frizzell informs the Court that Esposito has 21 years of experience practicing bankruptcy law, is certified by the American Bankruptcy Board of Certification, and has practiced almost exclusively bankruptcy or bankruptcy-related issues for the 21-year period. Esposito has done extensive work for local panel Chapter 7 trustees, including the firm's partner, Joseph A. Esposito, who has represented hundreds of debtors, as well as creditors, in Chapters 12, 11, 13 and 7. Esposito is also admitted to the states of Washington, Idaho, and Arizona, as well as related federal courts and specifically the Eastern District of Washington Bankruptcy and Federal District courts. In exchange for its services, Esposito will be paid based on its hourly rates: John W. Campbell $200 Richard M. George $225 Joseph A. Esposito $225 Mr. Frizzell assures Judge Williams that Esposito 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. Mr. Frizzell notes that on December 4, 2004, John W. Campbell, a member of Esposito, attended a meeting with a representative and certain members of a group of sexual abuse survivors, which was an unofficial creditors committee but, as a result of negotiation with the U.S. Trustee, is identified in further pleadings as "the unofficial clergy sex abuse survivors group." Mr. Frizzell does not believe that that unofficial group could be classified as a creditor as defined by Section 101(10) of the Bankruptcy Code. Therefore, Esposito has not and does not represent an entity classified as a creditor. 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) CLEARLY CANADIAN: Obtains Additional Financing from BG Capital -------------------------------------------------------------- Clearly Canadian Beverage Corporation (CNQ:CCBC)(OTCBB:CCBC) has completed short term financing arrangements with BG Capital Group Ltd. BG Capital has advanced US$1,000,000 to Clearly Canadian under a secured loan agreement and demand note. The BG Capital Loan bears interest at a rate of 10% per annum and is payable within 90 days, if demand for repayment is made by BG Capital. As well, from the Company's perspective, if it chooses to seek additional financing from any third parties, then it will be required to pay a penalty or break fee to BG Capital. Such penalty would require Clearly Canadian to pay all accrued and unpaid interest at the time of such prepayment of the BG Capital Loan at a rate of 50% per annum. Going forward, it will be necessary for Clearly Canadian to secure additional financing in order to support the Company's operations and relations with existing suppliers and vendors and to allow for more aggressive marketing and sales activities for its beverage products. About BG Capital BG Capital Group is a merchant bank specializing in small to mid- cap growth opportunities. Its holdings include 100%, 50% and largest shareholder positions in numerous public and private companies throughout the United States and Canada, all of which are profitable, with cumulative revenues in excess of US$100 million. BG Capital has over 20 years of investor relations experience as well as in-depth marketing and financial management expertise. It has an incredible track record of success in identifying promising enterprises and profitably growing them with an effective hands-on management style. About Clearly Canadian Based in Vancouver, B.C., Clearly Canadian Beverage Corporation -- http://www.clearly.ca/-- markets premium alternative beverages and products, including Clearly Canadian(R) sparkling flavoured water, Clearly Canadian O+2(R) oxygen enhanced water beverage and Tre Limone(R) which are distributed in the United States, Canada and various other countries. At September 30, 2004, Clearly Canadian's balance sheet showed a $681,000 stockholders' deficit, compared to $1,125,000 in positive equity at December 31, 2003. ELIZABETH ARDEN: S&P Revises Outlook on Low-B Ratings to Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on prestige beauty products company Elizabeth Arden, Inc., to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'B+' corporate credit rating. Approximately $225 million of rated debt is affected by this action. "The revised outlook is based on Elizabeth Arden's improved operating performance resulting from successful new product launches and improved efficiencies. Sales increases in the key second quarter holiday season, resulting from successful launches of Elizabeth Arden Provocative Woman and Curious Britney Spears and cost savings, have helped improve cash flow and reduce leverage. The ratings could be raised over the near to intermediate term if Elizabeth Arden continues to effectively manage new product introductions and reduce leverage," said Standard & Poor's credit analyst Patrick Jeffrey. The company's sales rose 8% in the first six months of fiscal 2005, primarily because of recent product launches of Curious Britney Spears and Elizabeth Arden Provocative Woman products. However, operating margins of 12.8% for the 12 months ended Dec. 31, 2004, are flat compared to operating margins achieved in the fiscal year ended Jan. 31, 2004. Higher advertising expenses to promote new product launches and higher product development costs have offset increased sales and cost savings. New product launches, particularly the launch of Curious Britney Spears in additional international markets, are expected to continue to help drive sales and improve operating margins in the near term. The company maintains a diverse distribution channel selling through both department stores and the mass retail channel with about 67% of its sales in the North America. EMBARCADERO AIRCRAFT: S&P's Rating on Class C Notes Tumbles to D ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Embarcadero Aircraft Securitization Trust's class C notes to 'D' from 'CC' after the class C noteholders did not receive their full interest payment on the February payment date. The 'BB' rating and the negative outlook on the class A-1 and A-2 notes remains unchanged since they were downgraded March 24, 2004. Embarcadero Aircraft Securitization Trust or EAST is a securitization backed by a pool of 34 aircraft operating leases originated by Lehman Brothers, Inc., and GATX Capital Corp. in August 2000. Since 2002, collections available to service the notes have been under tremendous stress as a result of lessee defaults, reductions in aircraft lease rates, and increases in aircraft-related expenses. Funds in class-specific reserve accounts have been drawn on to cover note interest on payment dates on which available collections are insufficient to pay note interest based on the transaction's payment priority. The class C cash reserve has been consistently drawn since January 2002 and was depleted on the February payment date. Currently, the class A cash reserve account has been fully replenished to its required amount. EXIDE TECHNOLOGIES: S&P Slices Corporate Credit Rating to B+ ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'B+' from 'BB-'. "The action was taken because of the company's weak operating performance amid high commodity costs, and increased debt levels that will result from a proposed new debt offering. It also reflects the difficult operating environment facing the company," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide has pro forma total debt, including the present value of operating leases, of about $750 million. The rating outlook is negative. At the same time, Standard & Poor's assigned a 'B' rating to Exide's proposed $350 million of senior notes due 2013, to be issued under rule 144A with registration rights. The notching on the senior notes reflects their junior position relative to Exide's secured bank debt, operating leases, and liabilities of Exide's non-domestic subsidiaries, which are not guaranteeing the notes. These factors are partially offset by the moderate geographic diversity of Exide's operations and an intercompany note payable to Exide Technologies from its foreign subsidiaries. The rating on Exide's senior secured bank credit facility, which is being reduced with a portion of the proceeds from the senior notes, was affirmed at 'BB-'; however the recovery rating was raised to '1' from '3' because of the improved expected recovery resulting from the proposed facility reduction. The bank loan rating and the recovery rating reflect our expectation that lenders will receive full recovery of principal in the event of a default. Exide is a global manufacturer of transportation and industrial batteries. It has suffered from the dramatic rise in the cost of lead, a key component in battery production that now makes up about one-third of Exide's cost of sales. Average lead prices rose 70% during the first nine months of fiscal 2005 from the year-earlier period, and cost recovery was moderate. A portion of the proceeds from the new debt offering will be used to increase liquidity, which is necessary to support Exide's funding requirements during the next few years, including restructuring spending, pension contributions, capital investments, and debt service. We do not expect Exide to generate positive free cash flow during the next few years, but improvement in EBITDA should come from expanded restructuring activities and increased raw material cost recovery, provided lead costs remain stable or decline, which should result in modest improvements in debt leverage. FEDERAL-MOGUL: Leases Smyrna Facility to House Distribution Center ------------------------------------------------------------------ In March 2004, Federal-Mogul Corporation lost its distribution center in Smithville, Tennessee to fire. The Smithville Facility was used to distribute aftermarket chassis parts for the TRW and Moog brands. As a result, FM Corporation relocated its operations in a facility in Smyrna, Tennessee, 60 miles away from Smithville. SouthPark Warehouse II Acquisition Corporation, a REIT, owns the facility. FM Corporation subleased the facility from Graybar Electric for $2.40 per square foot, for the duration of Graybar's lease. Graybar Electric's lease tenure will end on Dec. 31, 2005. Because FM Corporation needs a facility to serve as its distribution center, FM Corporation examined potential locations that might serve for that purpose after December 31, 2005. The main alternatives were: (1) rebuilding in Smithville; (2) staying at the Smyrna Facility; or (3) finding another location in the area. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, in Wilmington, Delaware, tells the Court that FM Corporation enlisted the help of a leading real estate broker, Jones Lang Lasalle, to evaluate the possibilities in the area. FM Corporation discovered that there are no other suitable Tier 1 facilities currently existing in the area. There are some other facilities being constructed in central Tennessee, but they are insufficiently far away from Smyrna and Smithville that FM Corporation would lose much of the trained personnel that currently work at Smyrna. Furthermore, the relocation would require FM Corporation to incur approximately $500,000 in relocation expenses. The Debtors decided that remaining in the Smyrna Facility was the better alternative than building a new facility. The Smyrna facility had significant advantages over the Smithville location that could not be replicated through building a new facility and because an additional relocation could disrupt FM Corporation's operations. The Smyrna Facility's location is better situated for shipping products to FM Corporation's customers than Smithville because Smyrna has a stronger local infrastructure, is in an industrial park near other manufacturers, and is more easily accessible than Smithville. Furthermore, FM Corporation already had lost many of the personnel from the Smithville operations and was unlikely to be able to rehire them after the period necessary to rebuild at Smithville. Finally, having already endured the disruption to service of FM Corporation customers caused by relocation from Smithville to Smyrna, a second interruption would be extremely detrimental to FM Corporation's relationship with its customers. FM Corporation decided to attempt to enter into a long-term lease at the Smyrna Facility rather than construct at Smithville. The negotiations over the Smyrna Lease were complex and difficult. SouthPark expressed particular discomfort with entering into a long-tem lease with a tenant in Chapter 11. SouthPark sought a letter of credit or at least a substantial security deposit to guarantee FM Corporation's obligations under the Smyrna Lease. Ultimately, FM Corporation was able to negotiate a five-year lease commencing on January 1, 2006, that requires no cash security deposit or letter of credit unless FM Corporation is unable to establish after emerging from its Chapter 11 case that FM Corporation is sufficiently solvent to fulfill its obligations. The base rental rate is $83,750 per month plus real property taxes, insurance premiums, and common area expenses. FM Corporation's total obligations under the Smyrna Lease are approximately $3.35 per square foot, and are consistent with the market rates for similar facilities in the area. * * * Judge Lyons approves FM Corporation's entry into the Smyrna Lease. The Smyrna Lease will permit FM Corporation to house a distribution center in Tennessee at market rental rates until at least 2011. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue Nos. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) FURNAS COUNTY: Wants Plan Filing Period Extended Until May 20 ------------------------------------------------------------- Furnas County Farms and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nebraska for an extension until May 20, 2005, of their exclusive period to file a chapter 11 plan. The Debtors and their secured creditors tell the Court they need more time to agree whether to dismiss the chapter 11 cases or to formulate a chapter 11 plan. Headquartered in Columbus, Nebraska, Furnas County Farms operated the largest swine operations in Nebraska, South Dakota and Iowa. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Neb. Case No. 04-81489) on May 3, 2004. James Overcash, Esq., and Joseph H. Badami, Esq., at Woods & Aitken, LLP, represent the Debtors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. GRUPO IUSACELL: Dec. 31 Balance Sheet Upside-Down by Ps$1.1 Mil. ---------------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) reported unaudited financial results for the fourth quarter 2004 (in Mexican pesos). Grupo Iusacell recorded a 6% growth in revenue to Ps$1,422 million for the fourth quarter of 2004, compared to Ps$1,343 million for the same period in 2003. For the year 2004, the Company recorded a 9% revenue growth to Ps$5,431 million, compared to Ps$4,984 million for the previous year. Operating income before depreciation and amortization decreased to Ps$43 million for the fourth quarter 2004 from Ps$91 million for the corresponding 2003 period. However, Iusacell increased operating income before depreciation and amortization to Ps$654 million in the year 2004, representing an increase of Ps$95 million over 2003. This reduced the fourth quarter's net loss to Ps$363 million compared to a Ps$1,386 million net loss in the fourth quarter of 2003, and also reduced the year's net loss to Ps$1,989 million, compared to a Ps$4,953 million net loss reported for 2003. Grupo Iusacell ended the year with a subscriber base of 1.46 million, up 15% from 2003. Revenues for the fourth quarter 2004 increased 6% to Ps$1,422 million, from Ps$1,343 million for the same period in 2003. For the year 2004, revenues increased 9% to Ps$5,431 million, from Ps$4,984 million in 2003, mainly reflecting an increase in service revenues as a result of: (1) an increase in postpaid revenues, (2) an increase in airtime sales, (3) a higher subscriber base and (4) an increase in telephone sales. During the fourth quarter 2004, total costs increased 21% to Ps$883 million as compared to Ps$732 million during the same period the previous year. For the year, total costs increased 27% over 2003. The increase resulted mainly from: (1) a higher subsidy for terminals, (2) cost increase associated with larger gross additions and (3) the obsolescence of certain telephone models which, according to company policies, were charged to results of operations. For the fourth quarter of 2004, operating expenses reached Ps$496 million, which was 5% lower than the Ps$520 million recorded for the fourth quarter 2003. For the full year 2004, the Company reported an 18% decrease to Ps$1,561 million, as compared to Ps$1,904 million in 2003. Iusacell reported operating income before depreciation and amortization of Ps$43 million for the fourth quarter of 2004, a 53% reduction over Ps$91 million for the corresponding quarter in 2003, mainly as a result of a quarterly increase in sales costs and a reduction in handset revenues and tower sales. In spite of this, however, the Company ended 2004 with operating income before depreciation and amortization of Ps$654 million, up 17% from the Ps$558 million recorded for 2003. Quarterly net loss fell to Ps$363 million as compared to a Ps$1,386 million loss in the corresponding quarter in 2003. For the year, the Company reported a 60% reduction in net loss, going from Ps$4,953 million in 2003 to Ps$1,989 million in 2004. In the last quarter of 2004, the Company invested approximately US$9 million. Combined with US$31 million invested in previous quarters, Iusacell invested a total of approximately US$40 million in 2004, which mainly went toward expanding the capacity and coverage area of Iusacell's 3G network. Recent Events Nationwide Launch of Push to Talk (PTT) As announced in the third quarter of 2004, Iusacell launched the RADIO PLUS service, better known as Push to Talk or PTT, in Mexico's region 8. However, during the last quarter of 2004, the Company launched this service nationwide, giving customers immediate and unlimited connection to Iusacell coverage areas in radio mode and allowing them to experience direct one-button communication with up to five people at a time, with no long- distance or roaming charges. Tower Sales During the fourth quarter of 2004, the Company sold and leased back 29 towers to MATC, for approximately Ps$67 million in net revenue, which was completely reinvested in Company operations. Debt Restructuring The Company continues negotiations with various creditors in an effort to reach a comprehensive debt restructuring agreement in the shortest time possible. About the Company Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE and BMV: CEL) is a wireless cellular and PCS service provider in Mexico encompassing a total of approximately 92 million POPs, representing approximately 90% of the country's total population. Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operates. At Dec. 31, 2004, Grupo Iusacell's balance sheet showed a Ps$1,079,166 stockholders' deficit, compared to a Ps$903,927 of positive equity at Dec. 31, 2003. HEADWATERS INC: Equity Issue Plan Cues S&P to Review Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services placed its '3' recovery ratings on Headwaters Inc.'s revolving credit facility and first-lien term loan on CreditWatch with positive implications. Standard & Poor's assigned its 'B-' rating to Headwaters' $172.5 million 2.875% subordinated convertible notes due 2016 on Sept. 8, 2004. Standard & Poor's also assigned its 'B+' corporate credit rating in September and said the outlook is stable. "The action follows Headwaters' announcement that it plans to issue common equity and use expected net proceeds of about $180 million to reduce debt," said Standard & Poor's credit analyst Cynthia Werneth. Debt totaled $960 million, including capitalized operating leases, at Dec. 31, 2004. However, if the planned amount of equity is raised and used to reduce debt, Standard & Poor's will revise its outlook on Headwaters to positive from stable. With a lighter debt burden, free cash generation should be stronger, positioning the company to further improve its financial profile and potentially merit slightly higher ratings within the next few years. Headwaters plans to use $50 million of the equity proceeds to reduce its second-lien bank debt and the remainder to reduce its first-lien bank debt, of which $50 million has already been repaid since the loan's inception last fall. If the contemplated amount of equity is raised and used for debt reduction, the recovery ratings on these facilities will be raised to '2' (indicating the likelihood of substantial recovery -- 80% to 100% -- in a default scenario) from '3' (meaningful recovery or 50% to 80%). About Headwaters Incorporated Headwaters Incorporated is a diversified growth company providing products, technologies and services to the energy, construction and home improvement industries. Through its alternative energy, coal combustion products, and building products businesses, the Company earns a growing revenue stream that provides the capital needed to expand and acquire synergistic new business opportunities. HUMAN GENOME: S&P Cancels Ratings Due to Lack of Investor Interest ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew the ratings on Rockville, Maryland-based emerging pharmaceutical company Human Genome Sciences, Inc., have been withdrawn due to lack of investor interest. As reported in the Troubled Company Reporter on Oct. 4, 2004, Standard & Poor's assigned a 'CCC' subordinated debt rating to the proposed $250 million, 2.25% convertible subordinated debt issue of Human Genome Sciences, Inc., a development-stage biopharmaceutical company. The amount of the notes can be increased by $50 million and the debt will mature in 2011. At the same time, Standard & Poor's affirmed its 'B-' corporate credit rating on Human Genome. All of the net proceeds from the offering will be used to repurchase a portion of the company's outstanding convertible subordinated debt, $500 million of which is due in early 2007. INDEPENDENCE III: Moody's Pares Rating on Two Class C Notes ----------------------------------------------------------- Moody's Investors Service announced that it had lowered the ratings of two classes of notes issued by Independence III CDO, Ltd.: 1) to A1 (from Aa2), the U.S. $18,000,000 Class B Second Priority Floating Rate Term Notes, Due 2037; and 2) to Ba3 (from Baa2), the U.S. $7,000,000 Class C-1 Third Priority Floating Rate Term Notes, Due 2037 and U.S. $15,000,000 Class C-2 Third Priority Fixed Rate Term Notes, Due 2037. Moody's indicated that both classes of notes had been under review for downgrade at the time of its rating action and announced that they would both remain under review for further possible downgrade. Independence Fixed Income LLC is the collateral manager of the transaction. Moody's noted that this transaction, backed primarily by structured finance securities, closed on May 9, 2002. According to Moody's, its rating action reflects concern over deterioration in the credit quality, in particular in the weighted average rating factor of the collateral pool. Moody's noted that in the most recent monthly report on the transaction, nearly 25% of the collateral pool had a Moody's rating below Baa3 (10% limit) and that the weighted average rating factor was 1389 (475 limit). Rating Action: Downgrade And Review For Downgrade Issuer: Independence III CDO, Ltd. Class Description: U.S. $18,000,000 Class B Second Priority Floating Rate Term Notes, Due 2037 Prior Rating: Aa2 (under review for downgrade) Current Rating: A1 (under review for downgrade) Class Description: U.S. $7,000,000 Class C-1 Third Priority Floating Rate Term Notes, Due 2037; U.S. $15,000,000 Class C-2 Third Priority Fixed Rate Term Notes, Due 2037 Prior Rating: Baa2 (under review for downgrade) Current Rating: Ba3 (under review for downgrade) INDYMAC MANUFACTURED: S&P Junks Class M-1 Certificates ------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on four classes from manufactured housing (MH) transactions from Indymac Manufactured Housing Contract Pass-Thru Trust 1998-2. In addition, the ratings are removed from CreditWatch negative, where they were placed May 7, 2004. The lowered ratings reflect the continued adverse performance trends exhibited by the underlying pools of MH installment sales contracts and mortgage loans and the resulting deterioration of credit enhancement. The unfavorable market conditions that continue to plague the MH industry have contributed to the poor performance of these transactions. The projected lifetime cumulative net losses for the five transactions have significantly exceeded original expectations and the current rating actions reflect revised assumptions about cumulative lifetime net losses based on actual performance data and expectations on future trends. The higher losses exhibited by these transactions continue to be driven by higher-than-expected defaults and loss severities, as most of the underlying collateral pools have deteriorated during the past few years. All four of the issuers are no longer originating MH loans. Historically, when a MH seller/servicer discontinues loan originations or declares bankruptcy, dealer relations are negatively impacted and, consequently, the ability to liquidate repossession inventory at acceptable recovery rates becomes impaired. Consequently, Standard & Poor's does not believe the credit enhancement for these transactions is sufficient to cover remaining losses at the previous ratings. Ratings Lowered Removed from CreditWatch Negative Indymac Manufactured Housing Contract Pass-Thru Trust 1998-2 Rating Class To From ----- -- ---- A-2 BB BBB/Watch Neg A-3 BB BBB/Watch Neg A-4 BB BBB/Watch Neg M-1 CCC B+/Watch Neg INTERSTATE BAKERIES: Taps Colliers Seely as Real Estate Broker -------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Western District of Missouri's authority to employ Colliers Seeley International, Inc., to provide certain brokerage services with respect to a parcel of land in San Pedro, California, pursuant to a Broker Retention Agreement. Prior to the Petition Date, Colliers Seely worked with the Debtors on the possible disposition of two parcels of real estate in San Pedro, California. Hence, the Debtors believe that Colliers Seely has extensive knowledge of the market and specific issues affecting the disposition of the California Property. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, relates that continuing to work with Colliers Seeley will enable the Debtors to maximize and derive value from the Real Property to better enable the Debtors to successfully reorganize. As broker, Colliers Seeley will: (a) meet with the Debtors and their representatives to ascertain the Debtors' goals, objectives and financial parameters for the sale of the California Property in an orderly fashion to maximize their value; (b) develop, design and implement a marketing program for the sale of the California Property which may include, as appropriate, newspaper, magazine or journal advertising, letter or flyer solicitation, placement of signs, direct telemarketing and other marketing methods as may be necessary, all of which will be subject to the Debtors' prior approval; (c) coordinate and organize the bidding procedures and sale processes for the sale of the California Property, utilizing, where appropriate, the Standing Bidding Procedures approved by the Court at the December 14, 2004 hearing; (d) respond to, and provide information to negotiate with and solicit offers from, prospective purchasers and make recommendations to the Debtors as to the advisability of accepting particular offers; (e) negotiate the terms of agreements with any prospective purchaser of the California Property and work with the attorneys responsible for the negotiation and implementation of the sale transaction contemplated by the Agreement; (f) at the Debtors' behest, conduct or participate in any auctions necessary for the disposition of the California Property; (g) report to the Debtors and their representatives regarding the status of the marketing and sale of the California Property on a periodic, as requested basis; (h) provide other services as agreed to with the Debtors to implement the orderly disposition of the California Property; and (i) participate and attend and testify at, where appropriate, all Court hearings where approval is sought for any transaction involving the approval of Colliers Seeley as broker pursuant to the terms of the Agreement and the sale of the Real Property. In return for its services, Colliers Seeley will receive 3% of the cumulative gross proceeds, including cash and cash equivalents, rents, notes and other like kind consideration, of the sale and disposition of the California Property. Colliers Seeley will be solely responsible for all its marketing and out- of-pocket costs, including the costs of Court appearances. Stephen C. Calhoun, SIOR, a partner and Senior Vice President of Colliers Seeley, assures the Court that Colliers Seeley: (i) does not have any connection with the Debtors, their creditors, or any other party-in-interest, or their attorneys or accountants; (ii) is a "disinterested person" under Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b); and (iii) does not hold or represent an interest adverse to the estate or any class of creditors or equity security holders, by reason of direct or indirect relationship to, in connection with, or interest in the Debtors, or for any other reason. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) JP MORGAN: Fitch Puts Low-B Ratings on Six Mortgage Certificates ---------------------------------------------------------------- Fitch Ratings affirms JP Morgan Commercial Mortgage 2004-C1: -- $84.1 million class A-1 at 'AAA'; -- $210 million class A-2 at 'AAA'; -- $303.2 million class A-3 at 'AAA'; -- $229.8 million class A-1A at 'AAA'; -- Interest-only classes X-1 and X-2 at 'AAA'; -- $27.4 million class B at 'AA'; -- $11.7 million class C at 'AA-'; -- $22.1 million class D at 'A'; -- $13 million class E at 'A-'; -- $11.7 million class F at 'BBB+'; -- $9.1 million class G at 'BBB'; -- $10.4 million class H at 'BBB-'; -- $6.5 million class J at 'BB+'; -- $5.2 million class K at 'BB'; -- $3.9 million class L at 'BB-'; -- $5.2 million class M at 'B+'; -- $2.6 million class N at 'B'; -- $2.6 million class P at 'B-'; Fitch does not rate the $15.6 million class NR. The rating affirmations reflect the minimal reduction of the pool collateral balance since issuance. As of the January 2004 distribution date, the pool has paid down 6.5%, to $974.3 million from $1.04 billion at issuance. Currently, one loan (0.18%) in the pool is delinquent and there are no specially serviced loans. At issuance, the transaction contained two credit assessments, The Forum Shops (15.9%) and Fiesta Mall (5.6%). In November of 2004, the Fiesta Mall loan paid in full including the prepayment penalty. The credit assessment of the Forum Shops remains investment grade. The Forum Shops $465 million is a pari passu note with $155 million serving as collateral for this transaction. There is an additional $85 million B-note held outside the trust. The most recent operating data available from GMAC, the master servicer for this loan, is year-to-date June 2004. Occupancy remains flat at 95%. MCI INC: Qwest Reviews Verizon Merger & May Submit Modified Offer ----------------------------------------------------------------- In a letter dated Feb. 17, 2005, to MCI, Inc.'s Board of Directors, Richard C. Notebaert, Chairman and Chief Executive Officer of Qwest Communications International, Inc., relates that Qwest is in the process of evaluating MCI's agreement with Verizon Communications Inc. Once Qwest completes its review Verizon merger agreement, Mr. Notebaert says, Qwest intends to submit a modified offer to acquire MCI. "We would expect MCI and its advisors to engage us in a meaningful dialog regarding the merits of our offer and we would further expect access to due diligence information consistent with that offered other parties," Mr. Notebaert says. According to Mr. Notebaert, Qwest hasn't received any response regarding it proposal submitted on February 11, 2005. Qwest also complains that it was provided with limited access to due diligence information regarding MCI. Other parties were reportedly given more access. "Published reports, including public disclosures by MCI's President and CEO, indicate that the consideration to MCI shareholders in the Verizon proposal is substantially less than the consideration Qwest offered to MCI shareholders. In addition to the superior merger consideration offered by Qwest to your shareholders compared to the Verizon offer, we would like to remind you that Qwest's proposal is superior to the Verizon proposal because our regulatory approval process is likely to be completed at least six months more quickly and the value to the MCI shareholders from participation in approximately 40% of the synergies in a Qwest transaction will substantially exceed the value of synergies that would be received by MCI Shareholders in a Verizon deal," Mr. Notebaert asserts. Qwest's February 11 Proposal On February 11, 2005, Qwest transmitted a letter to the Board of Directors of MCI, Inc., in which it proposed to acquire MCI. Qwest reconfirmed the terms of its proposal in writing to the MCI Board of Directors on the evening of February 13, 2005. To eliminate any public confusion regarding the terms of the proposal included in its letter, Qwest filed a Form 8-K with the Securities and Exchange Commission, on February 16, 2005, outlining the terms of its proposal. Stephen E. Brilz, Assistant Secretary of Qwest Communications, presents a summary of Qwest Communications' proposed cash and stock transaction terms: Consideration: Qwest common stock with a cash component to MCI Value: $23.00 per share consideration to MCI shareholders comprised of $7.50 in cash and $15.50 of Qwest common stock based on a fixed exchange ratio of 3.735 Qwest shares per MCI share. In addition, MCI shareholders to receive $0.40 in quarterly dividends per MCI share for the 4 quarters anticipated between signing and closing. Pro forma ownership split of 40.0% MCI/60.0% Qwest. Form of Fixed exchange ratio, no collar, cap, floors or Exchange Ratio: other 'banding' mechanisms. Exchange ratio based on Qwest closing price of $4.15 on February 11, 2005, and MCI offer price adjusted for $7.50 cash consideration per MCI share to be paid to MCI shareholders. MCI shareholders participate in upside of Qwest stock and substantial synergies from day of announcement. Definitive The Merger Agreement will contain Agreement: representations, warranties, covenants, closing conditions and other terms as are customary for transactions of this type, including closing conditions regarding shareholder approval, no material adverse change in MCI, receipt of regulatory approvals, accuracy of representations and warranties, compliance with covenants, and no governmental injunction. The Merger Agreement will not have a financing condition. Example of For clarity, given the above and assuming a Overall Value February 28, 2006 closing, MCI shareholders Received by MCI would receive between signing and closing: Shareholders: * Approximately $1.60 in cash (over 4 quarters) per MCI share; * Approximately $7.50 in cash per MCI share; and * 3.735 Qwest shares per MCI share. In addition, MCI shareholders receive substantial participation in value of synergies post-closing. No Solicitation/ The Merger Agreement will contain an Superior appropriate non-solicitation provision, which Proposal: would allow MCI's board the ability to change its recommendation in favor of the Qwest transaction prior to the MCI shareholder vote in the event of a Superior Proposal that Qwest does not match. In the event of a Superior Proposal, Qwest will be entitled to a customary break up fee and reasonable and documented out-of-pocket expenses. Regulatory: Qwest and its regulatory advisors are highly confident that all necessary regulatory approvals can be obtained within a ten to twelve month time frame and would not require actions (e.g., divestitures) material to the underlying business case for the transaction. Qwest and MCI will agree in the Merger Agreement to use reasonable best efforts to obtain all necessary regulatory approvals, which will include taking any remedial actions other than those having a material adverse change on the combined entity. Expected Timing: Closing will occur after all regulatory approvals are obtained, which is anticipated to be 10 to 12 months after signing. Drop Dead Date: The Merger Agreement will have an outside termination date of 10 months unless regulatory approvals are not yet satisfied, in which case the outside termination date can be extended by either party for 60-day increments up to a maximum of 14 months from the signing date. Consideration: (In millions except for per share data) Per Share Aggregate --------------------------------------- --------- --------- Effective Value to MCI Shareholders $24.60 $7,997 Less: Quarterly Dividends (1.60) (520) Cash Merger Consideration (7.50) (2,438) --------- --------- Qwest Stock to Be Issued $15.50 $5,039 Qwest Stock Price at 02/11/05 $4.15 Exchange Ratio 3.735 Qwest Shares to be Issued 1,214 % of Pro Forma Outstanding Qwest Shares 40% 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. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. Including MCI's estimated net debt of approximately $4 billion at the time of the close of the transaction, the total value of the transaction is approximately $9.3 billion. MCI, prior to the close of the transaction, will pay out quarterly and special dividends of $4.50 per share, or $1.463 billion, to its existing shareholders. The Rating Watch Negative also applies to the existing long-term debt of other Verizon subsidiaries, as listed below. The 'F1' ratings assigned to Verizon Global Funding and Verizon Network Funding are not on Rating Watch Negative and have been affirmed. Verizon Global Funding primarily funds the nonregulated operations of Verizon. Verizon Global Funding is a subsidiary of Verizon, and benefits from a support agreement with Verizon. Verizon Communications' implied senior unsecured rating is also 'A+'. The rating action reflects the need to evaluate: -- The moderately higher business risk profile of Verizon following its acquisition of MCI; -- The potential synergies to be achieved; -- The outcome of the regulatory approval process. -- The potential for other bids to arise for MCI. MCI INC: Delivers Copy of Verizon Plan of Merger to SEC ------------------------------------------------------- In a filing with the Securities and Exchange Commission dated February 17, 2005, Eric Slusser, MCI's Senior Vice President & Controller, reports that on February 14, 2005, Verizon Communications Inc., a Delaware corporation, MCI, Inc., a Delaware corporation and Eli Acquisition, LLC, a wholly owned subsidiary of Verizon and a Delaware limited liability company -- Merger Sub -- entered into an Agreement and Plan of Merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, MCI will merge with and into Merger Sub, with Merger Sub continuing as the surviving person or, in certain situations, as provided in the Merger Agreement, a wholly owned corporate subsidiary of Verizon will merge with and into MCI, with MCI as the surviving corporation. At the effective time and as a result of the Merger: (i) MCI will become a wholly owned subsidiary of Verizon; and (ii) each share of MCI common stock will be converted into the right to receive: (x) 0.4062 shares of Verizon common stock; and (y) cash in the amount of $1.50 per share, which amount of cash and number of shares may be reduced pursuant to a purchase price adjustment based on MCI's bankruptcy claims and for certain tax liabilities, on the terms specified in the Merger Agreement. The Merger Agreement also provides for the distribution by MCI of a special cash dividend in the amount of $4.10 per share of MCI common stock, less the amount of any dividends declared by MCI during the period from February 14, 2005, to the consummation of the Merger, but excluding, for the avoidance of doubt, the $0.40 per share cash dividend approved by its Board of Directors on February 11, 2005. All outstanding MCI stock-based awards at the effective time will be replaced by a grant of Verizon stock-based awards. Verizon and MCI have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants: (i) to conduct, in the case of MCI, its businesses in a commercially reasonable manner consistent with industry practice and, in the case of Verizon, its business in the ordinary course, consistent with past practice, in each case between the execution of the Merger Agreement and the consummation of the Merger; and (ii) not to engage in certain kinds of transactions during such period. In addition, MCI made certain additional customary covenants, including, among others, covenants: (i) subject to certain exceptions, to cause a stockholder meeting to be held to consider approval of the Merger and the other transactions contemplated by the Merger Agreement; (ii) subject to certain exceptions, for its Board of Directors to recommend adoption and approval by its stockholders of the Merger Agreement and the transactions contemplated by the Merger Agreement; (iii) not to solicit proposals relating to alternative business combination transactions; and (iv) subject to certain exceptions, not to enter into discussions concerning or provide confidential information in connection with alternative business combination transactions. Consummation of the Merger is subject to customary conditions, including: (i) approval of the holders of MCI common stock; (ii) expiration or termination of the applicable Hart-Scott- Rodino waiting period and receipt of certain other regulatory approvals; (iii) absence of any law or order prohibiting the closing; and (iv) subject to certain exceptions, the accuracy of representations and warranties and the absence of any Material Adverse Effect with respect to MCI's or Verizon's business, as applicable. In addition, Verizon's obligation to close is subject to other conditions, including: (i) the absence of any pending U.S. governmental litigation with a reasonable likelihood of success seeking to prohibit the closing or to impose certain limitations; (ii) receipt of a bankruptcy order issued by the United States Bankruptcy Court for the Southern District of New York allowing for the substitution of shares of Verizon common stock for shares of MCI common stock to satisfy certain bankruptcy-related claims; and (iii) receipt of an order issued by the United States District Court for the Southern District of New York relating to MCI's Corporate Monitor. The Merger Agreement contains certain termination rights for both MCI and Verizon, and further provides that, upon termination of the Merger Agreement under specified circumstances, MCI may be required to pay Verizon a termination fee of $200 million. Consummation of the Merger will constitute a "Change of Control" under MCI's outstanding Senior Notes, which will obligate the surviving person to make an offer to purchase the Notes within 30 days after the effective time at a purchase price equal to 101% of the principal amount plus accrued interest. A full-text copy of the MCI-Verizon Agreement and Plan of Merger is available for free at the Securities and Exchange Commission: http://www.sec.gov/Archives/edgar/data/723527/000095010305000307/feb1705_ex0201.txt Verizon Files Draft "Talking Points" Pursuant to Rule 425 under the Securities Act of 1933, Verizon Communications filed with the Securities and Exchange Commission on February 17, 2005, a draft on talking points for use with ESG customers regarding the MCI Acquisition. The draft outlines customer benefits of the MCI Acquisition. MCI believes that, in addition to GAAP financial measures, the inclusion and discussion of certain numerical statistics like the EBITDA allows management, investors and analysts to fully evaluate its consolidated results of operations. A free copy of the Form 425 draft is available at the Securities and Exchange Commission: http://www.sec.gov/Archives/edgar/data/723527/000119312505031449/d425.htm Webcast Slides & Transcript MCI, Inc., and Verizon Communications, Inc., hosted a webcast on February 14, 2005. The webcast includes a discussion of operating income before depreciation and amortization. MCI believes that, in addition to GAAP financial measures, the inclusion and discussion of certain numerical statistics like the EBITDA allows management, investors, and analysts to fully evaluate its consolidated results of operations. The slides used by MCI and Verizon in connection with the webcast is available at the Securities and Exchange Commission: http://www.sec.gov/Archives/edgar/data/723527/000095010305000287/feb1405_425-1.htm The final transcript of the February 14 webcast is also available at the Securities and Exchange Commission: http://www.sec.gov/Archives/edgar/data/723527/000119312505029733/0001193125-05-029733-index.htm 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. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. Including MCI's estimated net debt of approximately $4 billion at the time of the close of the transaction, the total value of the transaction is approximately $9.3 billion. MCI, prior to the close of the transaction, will pay out quarterly and special dividends of $4.50 per share, or $1.463 billion, to its existing shareholders. The Rating Watch Negative also applies to the existing long-term debt of other Verizon subsidiaries, as listed below. The 'F1' ratings assigned to Verizon Global Funding and Verizon Network Funding are not on Rating Watch Negative and have been affirmed. Verizon Global Funding primarily funds the nonregulated operations of Verizon. Verizon Global Funding is a subsidiary of Verizon, and benefits from a support agreement with Verizon. Verizon Communications' implied senior unsecured rating is also 'A+'. The rating action reflects the need to evaluate: -- The moderately higher business risk profile of Verizon following its acquisition of MCI; -- The potential synergies to be achieved; -- The outcome of the regulatory approval process. -- The potential for other bids to arise for MCI. MCI INC: Moody's Reviewing Low-B Ratings for Possible Upgrade ------------------------------------------------------------- Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. Moody's review for possible upgrade of MCI's will focus on VZ's plans for MCI's debt upon completion of the merger. While a VZ guarantee of MCI's debt would equalize MCI's and VZ's long-term ratings, Moody's believes unguaranteed MCI debt would still benefit from indirect VZ support. As a result, MCI's rating could potentially rise a couple of notches, even absent a guarantee, while Moody's view of VZ's pro forma business risk will primarily drive VZ's rating. Moody's believes the proposed merger is positive for MCI from an operational standpoint. Recent regulatory rulings pertaining to UNE-P pricing have been harmful for MCI's business prospects, especially in the consumer space. While MCI is a well-positioned long haul provider with good customer relationships, Moody's believes the long haul sector remains intensely competitive with companies like AT&T, Qwest, Level 3, and others aggressively pricing capacity and other long distance services. VZ's bid for MCI signals its desire to be a leading telecommunications company in the United States. Moody's believes that VZ's purchase of MCI will complement its current business activities and establish it as the number two provider in enterprise data services, a potential growth area. While owning MCI's extensive long distance network should reduce VZ's cost structure in relation to its own long distance, broadband and even wireless long haul transport needs, MCI's revenue stream remains in decline. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. Verizon Communications is a regional Bell operating carrier, headquartered in New York City. MCI Inc. is a global telecommunications provider headquartered in Ashburn, Virginia. MCI INC: S&P Places Single-B Ratings on CreditWatch Positive ------------------------------------------------------------ Standard & Poor's Ratings Services placed its long-term ratings of New York City-based Verizon Communications, Inc., and affiliates on CreditWatch with negative implications following the company's announcement of its plan to acquire MCI, Inc. In the event of a downgrade, Verizon's long-term corporate credit rating (currently at 'A+') would not fall lower than 'A'. Accordingly, the 'A-1' short-term rating on financing arms Verizon Global Funding Corp. and Verizon Network Funding Co. were affirmed. An aggregate of approximately $39 billion of Verizon debt is affected. At the same time, Standard & Poor's placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. The acquisition proposal values MCI at about $9 billion. Under the terms of the transaction, MCI shareholders will receive about $5 billion of Verizon stock and just under $2 billion in cash. At closing, Verizon will assume about $4 billion of net MCI debt, which is elevated by the cash payment that will be made to MCI shareholders. The consideration is subject to adjustment if MCI's contingent bankruptcy and tax-related liabilities exceed $1.725 billion at closing. The acquisition requires approval by MCI shareholders and a number of regulatory bodies, and the transaction will take about a year to close. "The negative CreditWatch listing for the Verizon ratings reflects the potential for weaker financial parameters at the company, as well as a possible weakening of Verizon's overall business risk position," explained Standard & Poor's Managing Director Richard Siderman. "The initial financial impact on Verizon will not be significant, given MCI's large cash position and the relative size of the companies. Accordingly, the CreditWatch placement incorporates concerns regarding prospects for material cash generation at MCI over the next few years." Standard & Poor's recently affirmed its ratings on SBC Communications, Inc., after it announced its planned merger with AT&T Corp. To some extent, this was because SBC has some more capacity than Verizon to absorb such an acquisition given that it is rated a notch lower than Verizon. More importantly, the SBC affirmation recognized that AT&T, despite its significant business challenges, is still expected to generate good cash flow from its enterprise segment for a number of years. In contrast, MCI has a materially smaller presence in the enterprise segment and fewer local points of presence -- POPs, which means that it faces higher access costs than AT&T. However, Standard & Poor's expects the regional Bells, including Verizon, to increase their marketing efforts in the large business enterprise segment. By purchasing MCI's network and its expertise, Verizon could mitigate some of the risk it might otherwise have incurred had it decided to more aggressively pursue the enterprise segment on its own. Also, Verizon's extensive network in its local service territory should enable it to somewhat reduce MCI's access costs. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by a much more creditworthy entity. If Verizon does not guarantee the MCI obligations, then the extent of a potential MCI upgrade will depend on a number of factors, including where the MCI debt will reside within the Verizon corporate structure. If the MCI debt resides at a Verizon subsidiary and is nonrecourse to Verizon, Standard & Poor's would have to determine the strategic value of MCI to Verizon and what degree of support Verizon would give to the MCI debt. In resolving the CreditWatch listings, Standard & Poor's will examine how the MCI purchase alters Verizon's strategy to expand its the enterprise and international segments, as well as the likelihood for and magnitude of operating synergies. METROMEDIA INT'L: Inks Pact to Sell ZAO PeterStar for $215 Million ------------------------------------------------------------------ Metromedia International Group, Inc. (OTCBB: MTRM) (PINK SHEETS: MTRMP), the owner of interests in various communications and media businesses in the countries of Russia and Georgia, has entered into a definitive agreement with First National Holding S.A., Emergent Telecom Ventures S.A. and Pisces Investment Limited, a company organized under the Companies Law of Cyprus and a wholly- owned subsidiary of FNH and Emergent, to sell its entire interest in ZAO PeterStar, the leading competitive local exchange carrier in St. Petersburg, Russia, for a cash purchase price of $215 million. Consummation of the transaction set forth in the agreement is principally subject only to a vote of a majority of the holders of the Company's common stock and the continued accuracy of certain customary Company representations concerning its ownership of, and authority with respect to the sale of, the interests being sold. Assuming approval by a majority of the holders of the Company's common stock, the Company presently expects to consummate the sale of PeterStar during the third quarter of this year. The Company will utilize a portion of the proceeds of the sale to retire all of the Company's outstanding $ 152.0 million 10.5% Senior Discount Notes, due 2007. The Company also presently expects that it will be able to utilize its 2004 tax attributes (capital loss carry-forwards and net operating loss carry- forwards) and anticipated 2005 losses to offset any federal or state tax gain that would be recognized on the sale of PeterStar. Upon completion of this sale, the Company's principal business operations will include Magticom Ltd., the leading Georgian mobile telephony operator, and Telecom Georgia, a well-positioned Georgian long distance telephony operator. The Company intends to continue active development of these and other Georgian business interests. Mark Hauf, the Chairman and Chief Executive Officer of the Company, said "I believe that this sale of our interests in PeterStar provides an extraordinary value for our stakeholders. Our development strategy for PeterStar over the past two years and the excellent performance of the PeterStar management team resulted in PeterStar becoming a highly strategically sought after Russian telephony business. The value we are offered today for PeterStar, represents one of the higher earnings multiples paid for a business of this kind in the region over recent years and is the ultimate fruit of those efforts." Mr. Hauf commented further: "Assuming approval by our shareholders, we will emerge from this sale of PeterStar essentially debt free and having sufficient cash on hand to pursue further development of our business interests in Georgia. I believe we are presented with exciting opportunities for further development in Georgia, reinforced by the recent strengthening of ownership position in our core Georgian businesses and the continued strong performance of Magticom. I have assured the government of Georgia and our business partners in Georgia that the Company's strategic commitment to enthusiastic development of telecommunications business in that country remains firm. In summary, I believe the events of recent weeks and the intense corporate restructuring efforts that preceded them have gone far towards producing a revival of the Company and genuine value for its stakeholders." Evercore Partners acted as financial advisor to MIG in this transaction and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to MIG. About the Company Through its wholly owned subsidiaries, the Company owns interests in communications businesses in the countries of Russia and Georgia. Since the first quarter of 2003, the Company has focused its principal attentions on the continued development of its core telephony businesses, and has substantially completed a program of gradual divestiture of its non-core cable television and radio broadcast businesses. The Company's core telephony businesses include PeterStar and Magticom, Ltd., the leading mobile telephony operator in Georgia. At Sept. 30, 2004, Metromedia International's balance sheet showed a $6,497,000 stockholders' deficit, compared to a $13,155,000 deficit at Dec. 31, 2003. METROMEDIA FIBER: Wants Entry of Final Decree Delayed to Apr. 18 ---------------------------------------------------------------- AboveNet, Inc., fka Metromedia Fiber Network, Inc., and its reorganized subsidiaries ask the U.S. Bankruptcy Court for the Southern District of New York to delay the entry of a final decree formally closing their cases under Local Rule 3022-1 of the Local Rules for the Southern District of New York. The Reorganized Debtors want entry of a final decree delayed until April 18, 2005. The extension is necessary in order for the Reorganized Debtors to prosecute claim objections and estate litigations including various preference actions. Without the extension, the Reorganized Debtors won't have a full opportunity to marshall and distribute assets of the estates for the benefit of their creditors. Metromedia Fiber Network, Inc., which changed its name to AboveNet Inc. upon emergence from bankruptcy on Sept. 8, 2003, combines the most extensive metropolitan area fiber network with a global optical IP network, state-of-the-art data centers and award winning managed services to deliver fully integrated, outsourced communications solutions for high-end enterprise companies. The all-fiber infrastructure enables AboveNet customers to share vast amounts of information internally and externally over private networks and a global IP backbone, creating collaborative businesses that communicate at the speed of light. On May 20, 2002, Metromedia Fiber Network, Inc., and most of its domestic subsidiaries commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York. When Metrodmedia filed for protection form its creditors, it listed $7,024,208,000 in total assets and $4,262,000,000 in total debts. MIRANT CORP: Resolves Cash Management System Operation ------------------------------------------------------ Mirant Americas Energy Marketing, LP, is a party to certain third-party bilateral and exchange traded contracts, forward sales, financial products -- including but not limited to hedges, swaps, contracts for differences, options, and weather derivates -- and other transactions, including transactions that require posting of collateral, in connection with: (1) electric energy, capacity and ancillary services or other related products produced by certain electric generating facilities owned or leased by other Debtors; and (2) fuel oil, natural gas, and coal required to operate the generating facilities on behalf of the "Beneficiary Debtors." The Official Committee of Unsecured Creditors for Mirant Corporation believed that the Debtors were not accounting for the MAEM Asset Hedging Transactions in a manner consistent with the DIP Order. On September 1, 2004, the Creditors Committee asked the U.S. Bankruptcy Court for the Northern District of Texas to enforce compliance with the DIP Financing Order requirement for recording intercompany loans, which will require the Debtors, inter alia, to provide an accurate accounting of the Intercompany Loan balances, including collateral posted and prepayment, on a biweekly basis to the Creditors Committee. After subsequent discussions with the Debtors, the Creditors Committee were satisfied that the manner in which the Debtors have accounted for Asset Hedging is consistent with the DIP Order. However, in the course of dealing and prior practices between MAEM and the Beneficiary Debtors, the Creditors Committee has expressed concerns that certain ambiguities continue to exist regarding the treatment of postpetition claims between MAEM and the Beneficiary Debtors because various power sale, fuel supply and services agreements between MAEM and the Beneficiary Debtors remain unsigned. To clarify the postpetition treatment of the Asset Hedging transactions and interpretation of the DIP order as well as resolve the Creditors Committee's Compliance Motion, the Debtors and the Creditors Committee entered into a stipulation, which was approved by the Court. The Stipulation provides that: (1) To the extent that MAEM engages in Asset Hedging or has open positions with respect to Asset Hedging, on behalf of one or more of the Beneficiary Debtors, any of the Beneficiary Debtors will bear the risk and be entitled to the benefits of that Asset Hedging transactions. MAEM will be liable on a postpetition basis to a Beneficiary Debtor on account of any existing or future Asset Hedging solely to the extent of actual postpetition performance by the relevant third-party market participant. To the extent that MAEM suffers a postpetition loss to a third- party market participant as a result of Asset Hedging -- including but not limited to, by way of a loss of collateral posted -- the relevant Beneficiary Debtors will be responsible for reimbursing MAEM for any Loss incurred by MAEM. All obligations owing by and owing by and among MAEM and the Beneficiary Debtors will constitute Intercompany Loans. (2) Each month, the Debtors will provide to each of the Official Committees of Unsecured Creditors the "Summary Collateral Allocation by Entity Report," on or before the second business day after the same has been provided to the Debtors' management. (3) The Stipulation will not be deemed to relieve MAEM of its obligations to act with the appropriate standard of care with respect to Asset Hedging. (4) The Stipulation will not be deemed to effect the treatment, validity or enforceability of any prepetition claim between MAEM and the Beneficiary Debtors. (5) The Creditors Committee's Compliance Motion will be deemed withdrawn. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL CENTURY: JPMorgan & Bank One Consent to Claims Objection ----------------------------------------------------------------- JPMorgan Chase Bank, N.A. and Bank One, N.A., responded to the objections of Unencumbered Assets Trust against JPMorgan's and Bank One's claims. The Unencumbered Assets Trust is the successor-in-interest to National Century Financial Enterprises, Inc., and its debtor-affiliates. Bank One, N.A., served as Indenture Trustee with respect to NPF XII, which had $2 billion in outstanding notes. JP Morgan Chase Bank served as Indenture Trustee with respect to NPF VI, which had $900 million in outstanding notes. As reported in the Troubled Company Reporter on Jan. 5, 2005, Bank One and JPMorgan Chase, as Indenture Trustees, filed proofs of claim on behalf of noteholder beneficiaries, asserting claims for indemnification. JPMorgan filed 31 claims: Claim No. Background of Claim -------- ------------------- 628 through 642 Claims for adequate protection resulting (Cash Collateral from the diminution in value of collateral Claims) for the NPF VI Notes caused by the Debtors' use of the cash collateral 643 through 655 Filed against the Debtors other than (Diversion National Premier Financial Services, Inc., Claims) and NPF VI Claims relating to the NPF VI Indentures or the sales and subservicing agreements with providers, including (a) amounts that should have been paid to NPF VI Noteholders but were allegedly diverted to the Debtors for their own corporate purposes, and (b) claims that JP Morgan may have against the Debtors as sellers or subservicers under the sales and subservicing agreements 656, 657 Claims based on the "actions and inactions" (NPFS Claims) of NPFS as servicer under the NPF VI Indenture and sales and subservicing agreements 658 Claim for principal and interest amounting to $884.5 million arising out of the NPF VI Indenture; and other claims relating to the NPF VI Indenture, including claims for compensation and reimbursement and indemnification. Bank One asserted 14 claims: Claim No. Background of Claim -------- ------------------- 284 Claim against NPF XII for: (a) principal and interest amounting to $2,047,500,000 arising out of the NPF XII Indenture; and (b) other claims arising out of the NPF XII Indenture, including claims for Indemnification. 285 through 297 Filed against the Debtors other than NPF (Diversion XII and Allied Medical, Inc., for unjust Claims) enrichment, breach of contract, conversion, fraud, fraudulent transfer, constructive trust and other causes of action for the Debtors' alleged misconduct in advancing funds to providers that were not supported by purchased receivables and wrongfully transferring funds from reserve accounts maintained for the benefit of the NPF XII Noteholders JPMorgan's Response According to William C. Wilkinson, Esq., Thompson Hine LLP, in Columbus, Ohio, whether the Unencumbered Assets Trust represents the NPF VI Noteholders' interest in respect of the JPMorgan Noteholder Claims or not, it is certain that upon the confirmation of the Debtors' Plan, JPMorgan Chase Bank, N.A, is no longer authorized to represent those interests as the indenture trustee. If there are to be any further proceedings on the Representative Claims or the Trust's Objection to the JPMorgan Noteholder Claims, the Court will need to arrange for the participation of the NPF VI Noteholders or some other authorized party to represent the NPF VI Noteholders' remaining interest in the JPMorgan Noteholder Claims, if any. Nonetheless, JPMorgan has no reason to disagree with the Trust's suggestion that the claims filed by JPMorgan on the NPF VI Noteholders' behalf were or may have been resolved by virtue of the confirmation of the Debtors' Plan, the implementation of the Noteholder Deficiency Claim Settlement, and the allowance of the Noteholder Deficiency Claim. Bank One's Response Bank One, N.A., filed Claim Nos. 284 through 297 against certain Debtors in its behalf and on the NPF XII Noteholders' behalf. By virtue of its resignation as the indenture trustee for NPF XII and the confirmation of the Debtors' Plan, since at least February 20, 2004, Bank One no longer had authority to represent the interests of the NPF XII Noteholders. However, P. Brian See, Esq., Squire, Sanders & Dempsey L.L.P., in Columbus, Ohio, says that Bank One has no reason to disagree with the Trust's suggestion that the Bank One Noteholder Claims were or may have been resolved by virtue of confirmation of the Debtors' Plan, the implementation of the Noteholder Deficiency Claim Settlement, and the allowance of the Noteholder Deficiency Claim. The Trust can be expected to speak accurately on this point since it is currently responsible for representing the interests of the NPF XII Noteholders. If there are to be any further proceedings on the Bank One Noteholder Claims or the Trust's Objection to the claims, the NPF XII Noteholders' position should be propounded by the Noteholders themselves or by some other party with present authority to represent their interests. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC BIOMETRICS: Losses & Deficit Trigger Going Concern Doubt ---------------------------------------------------------------- Pacific Biometrics, Inc., had net losses for the three- and six-month periods ended December 31, 2004, and for the fiscal year ended June 30, 2004. Although the Company had net earnings in fiscal 2003, it experienced a net loss from operations. The Company has historically experienced recurring losses from operations and has had cash flow shortages. While the Company currently had a positive working capital position of $224,065, at December 31, 2004, it had significant amounts of debt, including a secured convertible note and notes payable of $1,877,136 and other liabilities of $1,900,601, and stockholders' deficit of $499,812. If the beneficial conversion feature of the secured convertible note of $1,096,475 were included, total liabilities at December 31, 2004 would equal $4,874,212 and stockholders' deficit would be $1,596,287. Historically, the Company has had deficiencies in working capital and stockholders' equity and has had significant amounts of current and past due debt and payables. These matters raise substantial doubt about the Company's ability to continue as a going concern. The Company's auditors added an explanatory paragraph to their opinion on Pacific Biometrics fiscal 2004 financial statements stating that there was substantial doubt about the ability of the Company to continue as a going concern. Management has taken steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue in existence for the near term. However, the Company had significant net operating losses for the six-month period ended December 31, 2004 and the fiscal year ended June 30, 2004. Revenues for the six-month period ended December 31, 2004, and the fiscal year ended June 30, 2004, were significantly lower than those in the comparable prior fiscal year periods, although there was improvements in revenues during the second quarter of the current 2005 fiscal year. Unless revenues increase, Pacific Biometrics will likely continue to experience significant losses and its cash and working capital positions will be adversely impacted. The Company's operations historically have been funded through revenues generated from operations and from the sale and issuance of common stock, preferred stock and debt. Management continues to contemplate alternatives to enable the Company to fund continuing operations, including loans from management or employees, salary deferrals and reductions and other cost cutting mechanisms, and raising additional capital by private placements of equity or debt securities or through the establishment of other funding facilities. In addition, the Company is exploring strategic alternatives, which may include a merger, asset sale, joint venture or another comparable transaction. None of these potential alternatives may be available to it, or may only be available on unfavorable terms. If unable to obtain sufficient cash to continue to fund operations or if unable to locate a strategic partner, Pacific Biometrics has indicated it may be forced to seek protection from creditors under the bankruptcy laws or cease operations. Any inability to obtain additional cash as needed could have a material adverse effect on its financial position, results of operations and its ability to continue in existence. Established in 1989, Pacific Biometrics, Inc., provides specialized central laboratory services to support pharmaceutical and diagnostic manufacturers conducting human clinical trial research. The company provides expert services in the areas of cardiovascular disease, cholesterol and lipid abnormalities, diabetes, obesity, metabolic syndrome, osteoporosis, and arthritis. The PBI laboratory is accredited by the College of American Pathologists and is one of only three U.S.-based laboratories approved and accredited by the Centers for Disease Control (CDC) as a member of the Cholesterol Reference Method Laboratory Network. PBI's clients include many of the world's largest pharmaceutical, biotech, and diagnostic companies. Pacific Biometrics also owns several patented and patent-pending technologies, including molecular diagnostic and noninvasive device technologies, relevant to its areas of specialty expertise. PARMALAT: Farmland Gets $55 Mil. of Exit Financing from Wachovia ---------------------------------------------------------------- Farmland Dairies, LLC, needs a working capital credit facility that will provide the necessary financing to repay its debtor-in- possession facility, fund certain payments under its Plan of Reorganization, and operate its business after its chapter 11 plan takes effect. Gary T. Holtzer, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that under its Plan, Farmland's exit financing will consist of two facilities. One component will be the funding pledged by Wachovia Investment Holdings, LLC, under a Senior Secured Exit Facility. Farmland is also negotiating the other component, a Junior Secured Exit Facility, with General Electric Capital Corporation. In connection with efforts to secure the Senior Secured Exit Financing, Farmland's investment banker, Lazard Freres and Co., LLC, prepared and delivered an informational memorandum and related diligence materials regarding the Senior Secured Exit Facility to a number of potential lenders. Based on those materials, several potential lenders submitted initial proposals to Lazard. After reviewing the proposals, Farmland decided to pursue further discussions with three potential lenders interested in providing the Senior Secured Exit Facility that provided the most reasonable proposals. Lazard then conducted management presentations with each of the Potential Lenders, and each of them subsequently submitted revised proposals containing more favorable terms than those contained in the initial proposals. As a condition to signing the proposal letters and commitment letters related to providing the Senior Secured Exit Facility to Farmland, the Potential Lenders sought from Farmland deposits designed to cover the costs of their field examinations and certain preliminary legal due diligence, including reasonable fees and out-of-pocket expenses. Accordingly, the U.S. Bankruptcy Court for the Southern District of New York previously authorized Farmland to pay the deposit for fees and expenses in connection with the Exit Financing. Farmland continued its negotiations with the Potential Lenders, and the Potential Lenders performed due diligence regarding the provision of the Senior Secured Exit Facility to Farmland. During the negotiations, Farmland and Lazard compared and analyzed the proposals and ultimately concluded that Wachovia offered the most favorable terms for the Senior Secured Exit Facility. On December 4, 2004, Farmland executed Wachovia's revised proposal letter with an accompanying term sheet, and, pursuant to the proposal letter, Farmland paid Wachovia a deposit for fees and expenses related to Wachovia's performance of due diligence. After continued negotiations, Wachovia and Farmland have reached an agreement on a commitment letter, pursuant to which Wachovia will provide up to a maximum of $55,000,000 under: -- a secured revolving loan facility, -- a term loan facility, and -- a letter of credit facility. With the Court's blessing, Farmland will enter into the Commitment Letter and pay Wachovia a $100,000 commitment fee and a $75,000 additional deposit for expenses. The Commitment Letter contains these salient terms and conditions: Borrower Farmland Dairies, LLC Sole Lead Arranger Wachovia Capital Markets, LLC and Sole Bookrunner Agent Wachovia Investment Holdings, LLC, or any designated affiliates Lenders Wachovia and any other financial institutions that may become lenders to the financing arrangements as determined by Wachovia Capital Maximum Credit $55,000,000 Revolving Loan Up to $35,000,000 of revolving loans Facility at any time outstanding subject to amount available under a lending formula Letter of Credit Up to $25,000,000 in the aggregate Facility at any time outstanding, included within the Revolving Loan Facility Term Loan Facility Up to the lesser of $20,000,000 in principal amount or 90% of the orderly liquidation value of eligible equipment and 72.5% of the fair market value of eligible real property. Collateral First priority perfected security interests liens to secure all obligations of Borrower and Guarantors to Agent and Lenders upon substantially all of Borrower's and Guarantor's present and future assets, including accounts, contract rights, general intangibles, deposit accounts, letters of credit, letter- of-credit rights, supporting obligations, chattel paper, documents, instruments, investment property, inventory, equipment, fixtures and other goods, real property and all other products and proceeds with the exceptions as provided in the Commitment Letter. Use of Proceeds The proceeds of the Loans under the Credit Facility will be used by the Borrower to pay allowed administrative expenses and allowed claims in accordance with the Plan, costs, expenses and fees in connection with the Credit Facility and for working capital and general corporate purposes of the Borrower. Interest Rates (a) Prime Rate Margin -- will be 0% per annum above the announced "prime rate" of Wachovia Bank, National Association, subject to Each increase or decrease in prime rate. (b) Eurodollar Rate Margin -- will be 2-1/2% per annum above the Adjusted Eurodollar Rate, if the applicability of that rate is elected by or on behalf of the Borrower, subject to the Agent's customary terms applicable to Eurodollar rate-based loans. (c) Adjusted Eurodollar Rate -- will be calculated based on the average of rates of interest per annum at which Wachovia Bank is offered deposits of U.S. dollars in the London interbank market for the applicable period of one, two, or three months as elected by the Borrower, adjusted by the reserve percentage prescribed by governmental authorities as determined by the Agent. All interest will be computed on the basis of actual days elapsed over a 360-day year, payable monthly and may be charged by Agent to Borrower's loan amount. The rates will also be subject to an adjustment each quarter after the first full fiscal quarter after closing based on quarterly average excess amounts available in the immediately preceding quarter at levels set forth in the Commitment Letter. Default Rates After an event of default under the Financing Agreements, the applicable rates of interest and rate for LC fees will be increased by 2% per annum above the highest pre-default rates. The increased rate will also apply to Revolving Loans and L/Cs outstanding in excess of the loan availability or any applicable limits, whether or not those excesses are permitted by the Agent or any Lender at any time. The increased rates also apply to any unpaid obligations, at the termination of the Financing Agreements. Term Four years from the closing date of the Credit Facility Fees All fees will be in addition to interest, LC fees and other charges provided in the Commitment Letter and may, at the Agent's option, be charged directly to the loan account of any Borrower maintained by the Agent. The Exit Financing will effectively replace Farmland's current DIP financing and provide Reorganized Farmland with the on-going working capital financing it needs. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. (Parmalat Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRIMEDIA INC: Moody's Junks Ratings on Preferred Stock ------------------------------------------------------ Moody's Investors Service has placed all ratings of PRIMEDIA Inc. on review for possible upgrade. The ratings placed on review include: * $175 million in senior secured floating rate notes, due 2010 -- B3 * $300 million of 8.0% senior notes, due 2013 -- B3 * $475 million of 8.875% senior notes, due 2011 -- B3 * $225 million of 7.625% senior notes, due 2008 -- B3 * $167 million of Series D 10.0% exchangeable preferred stock, due 2008 -- Ca * $95 million of Series F 9.2% exchangeable preferred stock, due 2009 -- Ca * $212 million of Series H 8.625% exchangeable preferred stock, due 2010 -- Ca * Senior Implied Rating -- B3 * Senior Unsecured Issuer Rating -- Caa2 PRIMEDIA Inc.'s SGL - 3 Speculative Grade Liquidity Rating is affirmed. This action follows the company's announcement that it has agreed to sell its About.com subsidiary to The New York Times Company in a cash transaction valued at approximately $410 million. The rating review will assess the likelihood that the sale will be successfully concluded, the probability that proceeds will be used to reduce PRIMEDIA Inc.'s outstanding debt and preferred stock obligations, and the impact that this will have on PRIMEDIA's future interest expense and free cash flows. The SGL - 3 liquidity rating is affirmed, however, Moody's considers that if the company uses proceeds to reduce its debt, this will lead to a reduction in interest expense and an improvement in liquidity, which may affect its SGL rating.. The proposed sales price is significantly higher than the value expected by Moody's and provides PRIMEDIA Inc., with an ability to prematurely reduce its debt and preferred stock burden to less onerous proportions. Assuming that an estimated $390 million in after-tax proceeds is used to reduce debt, Moody's estimates that PRIMEDIA's pro-forma leverage (based upon September 30, 2004 LTM EBITDA) will reduce to 7.2 times debt and preferred stock to EBITDA. Moody's had previously estimated that the company would reduce leverage to this level by the end of 2009. New York City-based PRIMEDIA Inc., is a specialty magazine publisher providing targeted content for both the consumer and business-to-business sectors. The company recorded $1.4 billion in revenues for the last twelve months ended September 30, 2004. PROTEIN DESIGN: S&P Withdraws Low-B & Junk Ratings -------------------------------------------------- Standard & Poor's Ratings Services withdraw the ratings on Fremont, California-based emerging pharmaceutical company Protein Design Labs, Inc., due to lack of investor interest. As reported in the Troubled Company Reporter on July 14, 2003, Standard & Poor's assigned its 'CCC' rating to Protein Design Labs Inc.'s proposed $250 million 2.75% convertible subordinated notes due 2023 (the notes could include an additional amount of up to $50 million). At the same time Standard & Poor's affirmed its 'B-' corporate credit rating on the emerging biotechnology company. QWEST COMMS: Reviews MCI Merger & May Submit Modified Offer ----------------------------------------------------------- In a letter dated Feb. 17, 2005, to MCI, Inc.'s Board of Directors, Richard C. Notebaert, Chairman and Chief Executive Officer of Qwest Communications International, Inc., relates that Qwest is in the process of evaluating MCI's agreement with Verizon Communications Inc. Once Qwest completes its review Verizon merger agreement, Mr. Notebaert says, Qwest intends to submit a modified offer to acquire MCI. "We would expect MCI and its advisors to engage us in a meaningful dialog regarding the merits of our offer and we would further expect access to due diligence information consistent with that offered other parties," Mr. Notebaert says. According to Mr. Notebaert, Qwest hasn't received any response regarding it proposal submitted on February 11, 2005. Qwest also complains that it was provided with limited access to due diligence information regarding MCI. Other parties were reportedly given more access. "Published reports, including public disclosures by MCI's President and CEO, indicate that the consideration to MCI shareholders in the Verizon proposal is substantially less than the consideration Qwest offered to MCI shareholders. In addition to the superior merger consideration offered by Qwest to your shareholders compared to the Verizon offer, we would like to remind you that Qwest's proposal is superior to the Verizon proposal because our regulatory approval process is likely to be completed at least six months more quickly and the value to the MCI shareholders from participation in approximately 40% of the synergies in a Qwest transaction will substantially exceed the value of synergies that would be received by MCI Shareholders in a Verizon deal," Mr. Notebaert asserts. Qwest's February 11 Proposal On February 11, 2005, Qwest transmitted a letter to the Board of Directors of MCI, Inc., in which it proposed to acquire MCI. Qwest reconfirmed the terms of its proposal in writing to the MCI Board of Directors on the evening of February 13, 2005. To eliminate any public confusion regarding the terms of the proposal included in its letter, Qwest filed a Form 8-K with the Securities and Exchange Commission, on February 16, 2005, outlining the terms of its proposal. Stephen E. Brilz, Assistant Secretary of Qwest Communications, presents a summary of Qwest Communications' proposed cash and stock transaction terms: Consideration: Qwest common stock with a cash component to MCI Value: $23.00 per share consideration to MCI shareholders comprised of $7.50 in cash and $15.50 of Qwest common stock based on a fixed exchange ratio of 3.735 Qwest shares per MCI share. In addition, MCI shareholders to receive $0.40 in quarterly dividends per MCI share for the 4 quarters anticipated between signing and closing. Pro forma ownership split of 40.0% MCI/60.0% Qwest. Form of Fixed exchange ratio, no collar, cap, floors or Exchange Ratio: other 'banding' mechanisms. Exchange ratio based on Qwest closing price of $4.15 on February 11, 2005, and MCI offer price adjusted for $7.50 cash consideration per MCI share to be paid to MCI shareholders. MCI shareholders participate in upside of Qwest stock and substantial synergies from day of announcement. Definitive The Merger Agreement will contain Agreement: representations, warranties, covenants, closing conditions and other terms as are customary for transactions of this type, including closing conditions regarding shareholder approval, no material adverse change in MCI, receipt of regulatory approvals, accuracy of representations and warranties, compliance with covenants, and no governmental injunction. The Merger Agreement will not have a financing condition. Example of For clarity, given the above and assuming a Overall Value February 28, 2006 closing, MCI shareholders Received by MCI would receive between signing and closing: Shareholders: * Approximately $1.60 in cash (over 4 quarters) per MCI share; * Approximately $7.50 in cash per MCI share; and * 3.735 Qwest shares per MCI share. In addition, MCI shareholders receive substantial participation in value of synergies post-closing. No Solicitation/ The Merger Agreement will contain an Superior appropriate non-solicitation provision, which Proposal: would allow MCI's board the ability to change its recommendation in favor of the Qwest transaction prior to the MCI shareholder vote in the event of a Superior Proposal that Qwest does not match. In the event of a Superior Proposal, Qwest will be entitled to a customary break up fee and reasonable and documented out-of-pocket expenses. Regulatory: Qwest and its regulatory advisors are highly confident that all necessary regulatory approvals can be obtained within a ten to twelve month time frame and would not require actions (e.g., divestitures) material to the underlying business case for the transaction. Qwest and MCI will agree in the Merger Agreement to use reasonable best efforts to obtain all necessary regulatory approvals, which will include taking any remedial actions other than those having a material adverse change on the combined entity. Expected Timing: Closing will occur after all regulatory approvals are obtained, which is anticipated to be 10 to 12 months after signing. Drop Dead Date: The Merger Agreement will have an outside termination date of 10 months unless regulatory approvals are not yet satisfied, in which case the outside termination date can be extended by either party for 60-day increments up to a maximum of 14 months from the signing date. Consideration: (In millions except for per share data) Per Share Aggregate --------------------------------------- --------- --------- Effective Value to MCI Shareholders $24.60 $7,997 Less: Quarterly Dividends (1.60) (520) Cash Merger Consideration (7.50) (2,438) --------- --------- Qwest Stock to Be Issued $15.50 $5,039 Qwest Stock Price at 02/11/05 $4.15 Exchange Ratio 3.735 Qwest Shares to be Issued 1,214 % of Pro Forma Outstanding Qwest Shares 40% About MCI Inc 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. About Qwest Communications Qwest Communications International Inc. -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Sept. 30, 2004, Qwest's balance sheet showed a $2,477,000,000 stockholders' deficit, compared to a $1,016,000,000 stockholders' deficit at Dec. 31, 2003. RICHTREE INC: Court Terminates Restructuring Under CCAA Protection ------------------------------------------------------------------ The Ontario Superior Court of Justice terminated Richtree Inc.'s proceedings under the Companies' Creditors Arrangement Act, subject to certain exceptions, including the continuation of the directors' and officers' indemnity and certain super-priority charges previous granted by the Court under the Oct. 18 initial order. The order came following subsidiary Richtree Markets' filing of a Notice of Intention to make a proposal in bankruptcy on Feb. 14, 2005. The Court also approved and authorized the implementation of a claims procedure in respect of any claims against the directors and officers of Richtree, pursuant to which PricewaterhouseCoopers Inc. will act as the claims administrator. The Court also approved the activities of PwC, in its capacity as monitor of Richtree, as set out in the sixth report of the monitor to the Court dated Feb. 8, 2005, a copy of which will soon be available, along with the order, on Richtree's Web site at http://www.richtree.ca/ A copy of the first report of PWC, as interim receiver, dated Feb. 8, 2005, has also been approved by the Court and will be available, along with any related orders, on Richtree's Web site. Richtree confirmed its view that the shareholders of Richtree Inc. are unlikely to recover any value for their Class B Subordinate Voting shares (MOO.SV.B) from the Richtree restructuring process and therefore do not likely have any continuing economic interest in Richtree. About the Company Richtree, Inc., is the holder of exclusive master franchise rights from Movenpick Group of Switzerland to operate and sub-franchise Movenpick March, and Marchelino restaurants in Canada and the United States and to operate Movenpick restaurants in Canada. The Company owns and operates 4 March, restaurants, 6 Marchelino restaurants, 2 Take-me! March, outlets and 4 Movenpick restaurants in Toronto, Ottawa, Montreal and Boston. In addition, the Company operates 12 Take-me! March, outlets in a joint venture with Loblaws. RICHTREE MARKETS: Court Approves PwC Hiring as Interim Receiver --------------------------------------------------------------- The Ontario Superior Court of Justice approved on Feb. 14, Catalyst Fund General Partner I Inc.'s request to appoint PricewaterhouseCoopers Inc. as Richtree Markets Inc.'s interim receiver for the limited and sole purpose of completing a sale transaction. The approval came after Markets gave a Notice of Intention to make a proposal in bankruptcy filed on the same date. Catalyst, a senior secured lender of Markets' parent, Richtree Inc., sought and obtained the Court's approval of the sale by PwC, as interim receiver, of the property, assets and undertaking of Markets to Richtree Market Restaurants Inc., a newly incorporated corporation controlled by Catalyst, pursuant to a purchase and sale agreement entered into as of Feb. 14, 2005. The purchase price for the Assets of Markets will consist of the assumption by the Purchaser of approximately $8.5 million of the debt owing to Catalyst by Markets. The Court declared that the terms of the Purchase Agreement, including the purchase price, are fair and commercially reasonable and were arrived at in a commercially reasonable manner. The purchase of the assets of Markets is subject to the satisfaction of certain conditions and is expected to close within thirty days. Notwithstanding the appointment of PwC as the interim receiver, Markets shall, until the completion of the sale, remain in possession of its property and shall carry on its business, subject to and in a manner consistent with the Purchase Agreement. Colin T. West, President and CEO of Richtree, said: "the purchase of the assets of Markets by a Catalyst-led company places the operations in a strong financial position with capital available to further develop its restaurants, and is in the best interest of our customers, suppliers and employees, all of whom are being offered positions with the new company." The restaurants owned and operated by Markets in Ontario, located in Toronto (4), Ottawa, Mississauga and Windsor continue in full operation and will be acquired by the Purchaser as part of the closing. Markets will open a new restaurant in Milton, Ontario on February 22, 2005, the second such unit in a Q-store in collaboration with Canadian Tire Corporation's Leapfrog project. Despite the termination of Richtree's CCAA proceedings, the Court authorized Markets, to enter into an extension and amendment of the debtor-in-possession term sheet with Catalyst originally dated Oct. 18, 2004, extending the DIP term sheet to March 15, 2005, and increasing the maximum amount available under the DIP financing from $3.0 million to $4 million. About the Company Richtree, Inc., is the holder of exclusive master franchise rights from Movenpick Group of Switzerland to operate and sub-franchise Movenpick March, and Marchelino restaurants in Canada and the United States and to operate Movenpick restaurants in Canada. The Company owns and operates 4 March, restaurants, 6 Marchelino restaurants, 2 Take-me! March, outlets and 4 Movenpick restaurants in Toronto, Ottawa, Montreal and Boston. In addition, the Company operates 12 Take-me! March, outlets in a joint venture with Loblaws. SATCON TECH: First Quarter Net Loss Widens to $1.4 Million ---------------------------------------------------------- SatCon Technology Corporation (Nasdaq NM: SATC), a developer and manufacturer of electronic power control systems, reported financial results for its fiscal 2005 first quarter, which ended Jan. 1, 2005. "Revenues for the three months ended January 1, 2005 were $9.2 million as compared to $8.2 million in the same period last year," said David Eisenhaure, SatCon's chairman and chief executive officer. "Our revenues for the fiscal first quarter increased by 12% compared to a year ago and our backlog at quarter-end was $22 million. Our operating loss totaled $1.2 million for the first quarter." From an operational standpoint, $6.0 million of the $9.2 million in revenue was from Power Systems. Our Electronics group contributed with $2.2 million in revenue and our Applied Technology group contributed $0.9 million. As we look forward to the remainder of 2005, we expect continued improvement in sales from all of our divisions for products in the defense systems, electronics, alternative energy, test and measurement and industrial automation markets. We are also confident that we can continue to manage our costs, increase our backlog and grow profitably in the future. "During the quarter we completed the $8.0 million financing transaction that we had previously reported. As we stated then, we intend to use the net proceeds from the financing for general corporate purposes, in particular to support our growth opportunities in 2005 and beyond. About the Company SatCon Technology Corporation -- http://www.satcon.com/-- manufactures and sells power Control products for critical military systems, alternative energy applications and in high- reliability industrial automation. Products include inverter electronics from 5 kilowatts to 5 megawatts; power switches; and hybrid microcircuits for industrial, medical, military and aerospace applications. SatCon also develops and builds digital power electronics and high-efficiency machines and control systems for a variety of defense applications. * * * Going Concern Doubt SatCon Technology received a going concern opinion from its auditors contained in its Form 10-K for the fiscal 2004 fourth quarter and year-end, which ended Sept. 30, 2004, filed with the Securities and Exchange Commission. Revenues for the 12 month period ending September 30, 2004, increased by 27% from $26.9 million in fiscal 2003 to $34.2 million for fiscal 2004. Backlog was up 20% to $24 million, the highest quarterly backlog reported since the Company began reporting quarterly backlog data about two years ago. The Company decreased its operating losses from $26 million in fiscal 2003 to $4 million in fiscal 2004. The Company also raised $8 million in cash through an equity financing. For the three months ended Jan. 1, 2005, SatCon's net losses widened to $1,432,440, compared to a $921,659 net loss for the three months ended Dec. 27, 2003. SEARCHGOLD RESOURCES: Defaults on Tardy Financial Statements ------------------------------------------------------------ SearchGold Resources Inc. (TSX VENTURE:RSG) discloses that following the Notice of Default issued by the Company on Jan. 19, 2005, the only change required to be disclosed relates to the fact that the Company has filed its Annual financial statements and expects to file their quarterly financial statements on or about Feb. 25, 2005. As previously disclosed, there are no events to report and the stock will continue to trade, as usual. The management cease trade order is maintained until filings are completed. SearchGold must issue a Default Status Report on a bi-weekly basis (during the period of default) disclosing: (i) any material change in the information contained in the Notice of Default; (ii) details of any failure by the Company to fulfill its stated intentions in its Notice of Default; (iii) any actual or anticipated default of a financial statement filing requirement subsequent to that disclosed in the Notice of Default; and (iv) any other material information concerning the affairs of the Company that has not been generally disclosed. About the Company SearchGold Resources Inc. -- http://www.searchgold.ca/-- is a Canadian based mining exploration company whose primary mission is to target, explore and develop diamond and gold deposits in Africa and Canada. SearchGold's project strategy maximizes its experience and resources and supports the Company's commitment to strengthen shareholder value. SENSE TECHNOLOGIES: Nov. 30 Balance Sheet Upside-Down by $861,991 ----------------------------------------------------------------- Sense Technologies, Inc., filed with the Securities and Exchange Commission its financial statements for the quarterly period ended Nov. 30,2004. Sales for the period ended November 30, 2004 were $6,608, a 96 percent decrease over the period ended November 30, 2003. The difference is due to timing of customer's purchases and the Company's attention currently being focused on the ScopeOut product line acquisition and development. Direct costs were $5,184, a 96 percent decrease over the period ended November 30, 2003, which is primarily in-line with the change in sales. The Company realized a positive gross margin contribution of $1,424. At Nov. 30, 2004, the Company had cash and cash equivalents on hand of $17,611 compared to $3,876 at November 30, 2003. During the period ended November 30, 2004, the Company funded operations using existing cash balances, cash flow from operations, and by raising money through the issuance of common stock. At Nov. 30, 2004, Sense Technologies had a working capital deficit of $1,015,283 as compared to positive working capital of $177,750 at November 30, 2003. The decrease in working capital is largely due to certain convertible promissory notes payable becoming due within one year. About the Company Sense Technologies, Inc., holds an exclusive license to manufacture, distribute, market and sublicense world-wide, a patented technology which is used to produce the Guardian Alert backing awareness system for motor vehicles utilizing microwave radar technology, as well as a patented technology which is used to produce the ScopeOut adjustable mirrors system for improved backing awareness. The Company manufactures the Guardian Alert product in Charlotte, NC through an outsourced vendor with extensive experience producing products for auto dealerships, and OEMs. The manufacturer of the ScopeOut products will be approved soon. The Company has established relationships with multiple large dealership groups and after market product distributors. The Company plans to complete development of its next-generation microwave product and continue to increase sales through continued development of new marketing relationships, as well as develop marketing opportunities for the recently-added ScopeOut product line. At Nov. 30, 2004, Sense Technologies' balance sheet showed a $861,991 stockholders' deficit, compared to a $937,355 deficit at Feb. 29, 2004. SOUTHERN POWER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Southern Power Systems, Inc. 1668 Capital Circle South East Tallahassee, Florida 32301 Bankruptcy Case No.: 05-40164 Type of Business: The Debtor is an electrical contracting firm. Chapter 11 Petition Date: February 17, 2005 Court: Northern District of Florida (Tallahassee) Judge: Lewis M. Killian Jr. Debtor's Counsel: Albert C. Penson, Esq. Penson, Padgett & Conrad, P.A. 2810 Remington Green Circle Tallahassee, FL 32308 Tel: 850-561-8000 Fax: 850-561-8030 Total Assets: $615,732 Total Debts: $1,350,034 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Capital City Bank Accounts Receivable, $354,950 PO Box 900 Equipment, Fixtures, Tallahassee, FL 32302 Furniture & Inventory Secured value: $288,889 Hughes Supply, Inc. $181,853 550 Appleyard Drive Tallahassee, FL 32304 Graybar Electric Secured by notice $167,217 PO Box 511 to owner Tallahassee, FL 32302 Capital City Bank 1994 Chevy 1500; New $146,872 Holland model 25 mini ex; 1997 Chevrolet Box Truck Tilt Cab; 1997 GMC Savana Van 2500; 1999 GMC Savana V Secured value: $56,760 Internal Revenue Service Form 941 $92,635 Sid Gray Insurance $40,000 FHM Insurance Company $35,550 Data Set Ready, Inc. $22,830 BC Power Design, Inc. Secured by Notice $15,543 to Owner AIIC $13,347 City Electric Supply $12,826 Capital Trenching $12,555 Department of Revenue Form 940 Unemployment $11,606 compensation Bank Card Center Credit card debt $11,371 Koorsen Protection $11,325 Trojan Labor $10,866 Simplex Grinnell $9,808 Internal Revenue Service Form 941 $7,309 Barnett, Inc. $7,116 Great Southern Demolition $5,642 SPX CORPORATION: Amends Cash Tender Offers for Senior Notes ----------------------------------------------------------- SPX Corporation (NYSE: SPW), amended certain of the terms of its pending tender offers for its 7-1/2% Senior Notes due 2013 and for its 6-1/4% Senior Notes due 2011. As part of the amendment, SPX amended the pricing with respect to each of the tender offers for the 7-1/2% Senior Notes and the 6-1/4% Senior Notes. Accordingly, holders who tender their 7-1/2% Senior Notes at or prior to 5:00 p.m., New York City time, on March 7, 2005, will receive the total consideration, including the consent payment, based on a fixed spread of 62.5 basis points over the yield to maturity of the 3% U.S. Treasury due Nov. 15, 2007, subject to the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated Feb. 4, 2005. Holders who tender their 6-1/4% Senior Notes on or prior to March 7, 2005, will receive the total consideration, including the consent payment, based on a fixed spread of 62.5 basis points over the yield to maturity of the 5% U.S. Treasury Note due Feb. 15, 2011, subject to the terms and conditions set forth in the Offer to Purchase. In addition, the date by which holders of Notes needed to tender their Notes in order to obtain the consent payment has been extended to March 7, 2005. The remaining terms of the tender for the 6-1/4% Senior Notes and the 7-1/2% Senior Notes remain unchanged. As described above, the consent solicitations and tender offers will expire at 5:00 p.m., New York City time, on March 7, 2005, unless extended. Holders who tender their Notes pursuant to the offers will be required to consent to the proposed amendments. The offer is subject to the satisfaction of certain conditions, including closing of the sale of SPX Corporation's Edwards Systems Technology business, and receipt of consents in respect of the requisite principal amount of Notes. The purpose of the consent solicitations is to, among other things, eliminate substantially all of the restrictive covenants and certain of the default provisions contained in the indenture governing the Notes. As of Feb. 17, 2005, SPX Corporation had received the requisite consents for the 6-1/4% Senior Notes. A Supplement to the tender offer documents is being distributed to holders. J.P. Morgan Securities Inc. is the Lead Dealer Manager for the offers and Lead Solicitation Agent for the consent solicitations and can be contacted at (212) 834-3424 (collect) or (866) 834-4666 (toll free). Global Bondholder Services Corporation is the Information Agent and can be contacted at (212) 430-3774 (collect) or (866) 387-1500 (toll free). About the Company SPX Corporation is a global provider of technical products and systems, industrial products and services, flow technology, cooling technologies and services, and service solutions. The Internet address for SPX Corporation's home page is http://www.spx.com/ * * * As reported in the Troubled Company Reporter on Nov. 22, 2004, Fitch affirmed the ratings on SPX Corporation's senior unsecured debt and senior secured bank debt at 'BB' and 'BB+'. The Rating Outlook has been revised to Evolving from Stable. At Sept. 30, 2004, SPX had close to $2.5 billion of debt outstanding. The Rating Outlook revision follows SPX's recently announced, separate agreements to sell BOMAG and Edwards Systems Technology -- EST -- for a combined $1.8 billion in cash. SPX expects the transactions will be completed by the end of the first quarter of 2005 and has stated its intent to use proceeds from the sales to strengthen its balance sheet, pay down debt and buy back equity. The company continues to review its business portfolio for potential additional asset sales. STELCO INC: Names Roland Keiper & Michael Woollcombe to Board ------------------------------------------------------------- Stelco Inc. (TSX:STE) appointed Roland Keiper and Michael Woollcombe to its Board of Directors, effective immediately. Mr. Keiper is the President of Clearwater Capital Management Inc., a Toronto-based investment manager. Prior to co-founding Clearwater in 1999, Mr. Keiper headed the Canadian proprietary investing activities of RBC Dominion Securities. Mr. Woollcombe is a principal of VC & Co. Incorporated, which acts as a strategic advisor to institutional and other shareholders with respect to their investments in Canadian public and private companies. Prior to the establishment of VC & Co. Incorporated Mr. Woollcombe practised corporate and securities law with a major Toronto law firm. Stelco indicated by way of background that its Board had received specific requests from a number of shareholders to consider such appointments. Shareholders holding in excess of 35% of the Company's shares were supportive of the appointments. After careful consideration, and given potential recoveries at the end of the Company's restructuring process, the Board responded favourably to the requests by making the appointments announced on Feb. 18. Richard Drouin, Chairman of Stelco's Board of Directors, said, "I'm pleased to welcome Roland Keiper and Michael Woollcombe to the Board. Their experience and their perspective will assist the Board as it strives to serve the best interests of all our stakeholders. We look forward to their positive contribution." With Friday's appointments Stelco's Board consists of nine members. Mr. Drouin said that other appointments to the Board may be forthcoming. About the Company Stelco, Inc. -- http://www.stelco.ca/--which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. STEWART ENTERPRISES: 99.4% of Noteholders Agree to Amend Indenture ------------------------------------------------------------------ Stewart Enterprises, Inc. (Nasdaq NMS: STEI) completed its previously announced tender offer and consent solicitation for any and all $300 million outstanding principal amount of its 10-3/4% Senior Subordinated Notes due 2008. A total of $298.3 million in aggregate principal amount of the Notes (99.4% of the outstanding Notes) were tendered prior to the expiration date of 5:00 p.m., New York City time, on Feb. 18, 2005. The Company previously accepted for purchase and paid for approximately $298.2 million in aggregate principal amount of the Notes tendered pursuant to the Offer. The Company expects to accept for purchase and pay for the remaining tendered Notes on or about Feb. 22, 2005. The amendments to the indenture governing the Notes that were proposed by the Company in connection with the Offer, which eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture governing the Notes, were approved by written consent of the tendering holders of the Notes and became operative on Feb. 11, 2005, upon the Company's acceptance of the tendered Notes for purchase. Banc of America Securities LLC acted as the Company's exclusive dealer manager and solicitation agent in connection with the Offer. About the Company Founded in 1910, Stewart Enterprises is the third largest provider of products and services in the death care industry in the United States, currently owning and operating 236 funeral homes and 147 cemeteries. Through its subsidiaries, the Company provides a complete range of funeral merchandise and services, along with cemetery property, merchandise and services, both at the time of need and on a preneed basis. * * * As reported in the Troubled Company Reporter on Feb. 3, 2005, Moody's Investors Service assigned a Ba3 rating to Stewart Enterprises, Inc.'s $230 million term loan B and a B1 rating to the company's proposed $200 million of senior notes. Concurrently, Moody's affirmed existing ratings and maintained a stable outlook. Moody's rating actions are: * Assigned $230 million (upsized from $100 million) term loan B due 2011, rated Ba3; * Assigned $200 million senior notes (guaranteed) due 2013, rated B1; * Affirmed $125 million revolving credit facility due 2009, rated Ba3; * Affirmed $300 million senior subordinated notes (rating to be withdrawn upon completion of the proposed tender offer), rated B2. * Affirmed Senior Implied, rated Ba3; * Senior Unsecured Issuer Rating (non-guaranteed exposure), lowered to B2 from B1; The ratings outlook is stable. SOLUTIA INC: Wants to Walk Away from Gateway Lease -------------------------------------------------- Historically, Solutia, Inc., operated the world's largest integrated chlorobenzene business, which made a range of intermediate "building block" chemicals used in a large number of commercial applications. Solutia operated the Chlorobenzene Business primarily from its William G. Krummrich Plant in Sauget, Illinois. Due to the Chlorobenzene Business' deteriorating and disappointing financial performance in the several years leading up to the Petition Date, Solutia decided to shut it down. After the shutdown of the Chlorobenzene Business, three non-debtor entities continue to run separate chemical operations as guests at the Krummrich Facility: (a) Astaris, LLC, (b) Flexsys America, LP, and (c) Occidental Chemical Corporation. The Operating Agreements generally govern the relationships between Solutia and the Guests and allocate certain costs between the parties for utility and other ancillary support services used by them at the Krummrich Facility. In particular, Solutia is obligated to provide certain steam, boiler feed water and compressed air service to the Guests for use in their daily operations. Gateway Contracts To procure the Steam Services for the Guests and for its Chlorobenzene Business, Solutia had contracted with Gateway Energy WGK, LLC, in 1998 for the construction and operation of a separate plant at the Krummrich Facility. Solutia and Gateway entered into: (a) a Land Lease dated June 8, 1998, pursuant to which Gateway leases land at the Krummrich Facility for the Gateway Plant; and (b) a related Service Agreement dated June 8, 1998, that governs Gateway's provision of the Steam Services to Solutia and the Guests. In connection with the execution of the Gateway Services Agreement, Gateway Energy Systems, LC, Environmental Management Corporation, Energy Equities L.C., G&P Energy Equities, L.C., and Ameren Corporation executed a performance-related Guaranty in favor of Solutia for Gateway's obligations under the Gateway Services Agreement and the Land Lease. The Land Lease and the Gateway Services Agreement both run for terms of 20 years and expire in October 2019. Solutia pays Gateway $3.7 million per year for the Steam Services, $1.1 million of which Solutia allocates to the Guests under the Operating Agreements. Pursuant to a separate operating and maintenance agreement between Gateway and EMC, EMC operates the Gateway Plant and provides Steam Services to Solutia and the Guests on Gateway's behalf, and has been doing so since 2000. Financing of the Gateway Plant To finance the construction of the Gateway Plant, Gateway initially borrowed $16 million from Mercantile Bank National Association under a construction bridge loan pending the consummation of additional financing. Gateway later refinanced the construction loan and completed the Gateway Plant through its issuance of an $18.6 million senior note due 2019, to Teachers Insurance and Annuity Association of America, and through equity contributions from Gateway's members in the initial amount of $2.22 million. The outstanding principal and interest on the Note owed to Teachers is currently in excess of $16 million. Pursuant to the terms of the Gateway Services Agreement, if Solutia breaches that agreement before its expiration in 2019, Gateway has the contractual right to damages in accordance with a pre-negotiated schedule. Gateway granted UMB Bank of St. Louis, as collateral agent for Teachers, a first priority security interest in the Gateway Services Agreement and any claims to which Gateway would be entitled to secure Gateway's payment obligation under the Note. Solutia also entered into a Consent and Agreement with UMB Bank, pursuant to which Solutia agreed to assume Gateway's obligation for the payment to Teachers of the Note if Solutia terminates the Gateway Services Agreement, terminates the Land Lease or fails to perform material obligations or covenants under the Gateway Services Agreement. Thus, although Gateway is the party to the Gateway Services Agreement with Solutia, Teachers has asserted, pursuant to the Consent and Agreement, that it is entitled to enforce all obligations under the Gateway Services Agreement directly against Solutia. Solutia Decides to Reject Gateway Lease Solutia is paying about $2.6 million per year under the Gateway Contracts, which cannot be re-allocated to the Guests, for Steam Services that are no longer being used. The Gateway Contracts have become administrative burdens exposing Solutia to $2.6 million in annual costs that would total $39 million through the remaining 15-year terms of the Gateway Contracts. Solutia explored alternatives to rejecting the Gateway Contracts including the possibility of assigning them to a third party for value. But because of the complex nature of Solutia's relationships with the Guests under the Operating Agreements and that the Gateway Plant is physically located on and connected to the Krummrich Facility, it was unlikely for any third party to step into Solutia's shoes with respect to the Gateway Contracts. Instead, Solutia has worked with Gateway, Teachers and EMC to negotiate a consensual transaction pursuant to which Solutia will reject the Gateway Contracts, agree with Gateway and Teachers on a rejection damage claim and agree to terminate the Performance Guaranty. Over the past several months, Solutia has been in discussions with various alternate providers to deliver Steam Services to the Guests at the Krummrich Facility after rejecting the Gateway Contracts. Solutia has explored the possibility of leasing new boilers and related equipment from third parties, as well as obtaining replacement Steam Services in connection with a third-party operator's purchase and operation of the existing Gateway Plant. Solutia decided that the most cost-effective alternative for its replacement of Steam Services would be through a third-party's purchase and operation of the Gateway Plant. Thus, Solutia and Gateway have negotiated with EMC, the current operator of the Gateway Plant, and Industrial Steam Products, Inc. with respect to the sale of the Gateway Plant and the use of those assets to provide Steam Services to the Guests at the Krummrich Facility. After carefully evaluating proposals from both EMC and Industrial, Solutia favored EMC's proposal. Although both had substantially the same fixed annual fixed costs, Industrial did not propose a mechanism for the reduction in these costs over time. Therefore, Solutia, Gateway, Teachers and EMC agreed to an asset purchase agreement, pursuant to which EMC is required to purchase the Gateway Plant and close the sale by February 24, 2005. Solutia and EMC further agreed to a services agreement, which would run for an initial five-year term and continue thereafter unless and until terminated with 24 months notice. Because the EMC Services Agreement would contemplate a reduced level of Steam Services and because Solutia can re-allocate 100% of the costs for that reduced service level to the Guests under the Operating Agreements, Solutia's costs for procurement of the Steam Services going forward will be reduced to zero. This will enable Solutia to save $2.6 million per year as compared to payments to Gateway under the Gateway Contracts, which could total $39 million over the remaining terms of the Gateway Contracts. Although Solutia's rejection of the Gateway Contracts will expose Solutia to a significant rejection damage claim, the claim will be outweighed by the projected long-term savings under the EMC Services Agreement. As part of the overall sale transaction, Gateway has agreed to assign the Land Lease to EMC to enable EMC to operate and maintain the Gateway Plant at the Krummrich Facility. There are no impediments to Solutia's assumption of the Land Lease because Solutia and Gateway have agreed that there are no defaults that need to be cured and that there is adequate assurance of Solutia's future performance under the Land Lease. Resolution of Teachers' Rejection Damage Claim Gateway and UMB Bank both filed proofs of claim against Solutia for $20.2 million in damages in the event Solutia rejects the Gateway Contracts and for $200,000 for other prepetition amounts due under the Gateway Contracts. Solutia decided to allow Teachers' asserted rejection damage claim. Solutia is willing to grant Teachers an allowed prepetition unsecured claim against its estate for $20,391,317, effective on the closing of the sale of the Gateway Plant to EMC. Effective Date Solutia wants its rejection of the Gateway Contracts, termination of the Performance Guaranty, and assumption and amendment of the Land Lease be effective as of the Closing Date of the sale transaction between Gateway and EMC. Accordingly, the Debtors ask authority from the U.S. Bankruptcy Court for the Southern District of New York to: (a) reject the Gateway Contracts; (b) terminate the Performance Guaranty; (c) assume and amend the Land Lease; (d) resolve Teachers' rejection damage claim; and (e) enter into the EMC Services Agreement. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) SYRATECH CORP: Files for Chapter 11 Protection in D. Massachusetts ------------------------------------------------------------------ Syratech Corporation and its subsidiaries, Wallace International de P.R., Inc., and CHI International, Inc., filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the District of Massachusetts, Eastern Division, on Feb. 16, 2005. The Debtors suffered significant net losses and generated negative cash flows from operating activities during years 2002, 2003 and 2004. As a result, the Debtors did not make certain payments due on Oct. 15, 2004, under a senior notes indenture, which constituted events of default under the indenture and its prepetition credit agreement. On Nov. 16, 2004, the Debtors reached an agreement in principle with its noteholders' committee to restructure and substantially reduce the Debtors' outstanding indebtedness, while at the same time preserving the Debtors' critical relationships with suppliers and customers, through a "pre-packaged" chapter 11 filing. To reflect this agreement, the Debtors entered into a Lock-up Agreement, dated Nov. 15, 2004, with their senior noteholders. Pursuant to the terms and conditions of the Lock-up Agreement, the holders of more than 70% of the amount of the senior note claims have agreed not to oppose the prepackaged Chapter 11 Plan. The Lock-up Agreement provides that a disclosure statement describing the Plan must be approved within 60 days of the bankruptcy filing, and the Plan must be confirmed within 45 days of the date the disclosure statement is approved. Also, the Debtors have engaged in significant cost reduction efforts over the past year, and expect to realize the benefits of those efforts over the coming year. Terms of the Plan The Plan provides for the Debtors' continued operations after the Plan confirmation with a new capital structure. To achieve the new capital structure, the Plan effectively provides for: (a) a new senior secured financing that will be used to pay off in full the debtor-in-possession financing facility; (b) holders of trade debt and employee-related unsecured debt to be paid in full their allowed claims as they would become due in the ordinary course of business, and holders of other general unsecured claims to be paid in full their allowed claims on the effective date of the Plan; (c) holders of senior notes and certain other non-trade unsecured debt to share pro rata, in a pool consisting of $55 million in new senior notes to be issued by reorganized Syratech and approximately 90% of the common equity of Reorganized Syratech, subject to dilution as described in the Plan; (d) holders of Syratech's outstanding preferred equity interests to receive a pro-rata share of warrants for 2.5% of Reorganized Syratech's common stock, exercisable when reorganized Syratech's equity value, assuming conversion of the new senior notes, exceeds $140 million; (e) holders of Syratech's outstanding equity interests to receive a pro rata share of warrants for 2.5% of reorganized Syratech's common stock, exercisable when reorganized Syratech's equity value, assuming conversion of the new senior notes, exceeds $155 million; and (f) approximately 10% of the common stock of the reorganized Syratech to be reserved for a management incentive plan. Under the Debtors' proposed plan of reorganization, general unsecured creditors, will be unimpaired. DIP Loan The Debtors intend to finance their chapter 11 cases through a revolving credit facility of up to $45 million provided by CapitalSource Finance LLC. The proceeds of the DIP Loan will be used to pay the Debtors' operating expenses, satisfy in full the Debtors' prepetition secured lenders, and pay other amounts authorized pursuant to its first-day motions. CapitalSource has also committed to provide the Debtors with an exit facility upon Plan confirmation on substantially the same economic terms as the DIP Loan. Headquartered in Boston, Massachusetts, Syratech Corporation -- http://www.syratech.com/-- manufactures, markets, imports and sells tabletop giftware and home decor products. The Company and its subsidiaries filed for chapter 11 protection on Feb. 16, 2005 (Bankr. D. Mass. Case No. 05-11062, 05-11064 through 05-11065). Andrew M. Troop, Esq., Arthur R. Cormier, Jr., Esq., and Christopher R. Mirick, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $86,845,512 in total assets and $251,387,015 in total debts. SYRATECH CORP: Case Summary & 60 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Syratech Corporation 175 McClellan Highway Boston, Massachusetts 02128 Bankruptcy Case No.: 05-11062 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CHI International, Inc. 05-11064 Wallace International de Puerto Rico, Inc. 05-11065 Type of Business: The Debtor manufactures, markets, imports and sells tabletop giftware and home decor products. See http://www.syratech.com/ Chapter 11 Petition Date: February 16, 2005 Court: District of Massachusetts (Boston) Judge: Robert Somma Debtors' Counsel: Andrew M. Troop, Esq. Arthur R. Cormier, Jr., Esq. Christopher R. Mirick, Esq. Weil, Gotshal & Manges LLP 100 Federal Street, 34th Floor Boston, MA 02110 Tel: 617-772-8300 Fax: 617-772-8333 Total Assets: $86,845,512 Total Debts: $251,387,015 A. Syratech Corporation's 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Trust National Bond Debt $129,112,508 Association Corporate Trust Services Attn: James E. Murphy, V.P. 100 Wall St., Suite 1600 New York, NY 10005 Banco Popular De Puerto Rico Unsecured Bank $472,981 Post Office Box 3362708 Loan - Wallace San Juan, PR 00936 International De Puerto Rico, Inc. Tae Yang Sa Company Trade Debt $306,458 C.P.O. Box 3279 Seoul, Korea Minex Trade Debt $198,698 Hayim Abulafia Separation Agreement $173,333 Taurus N.E. Inv. Corp 620 Real Estate Lease $142,228 Intelligroup Trade Debt $125,250 Richard Sonking Consulting Agreement $103,336 Joey Heiberg Royalties $95,258 Structuretone Trade Debt $79,344 Bohemia Crystalex Trading Trade Debt $70,392 Pride Printers Trade Debt $59,059 Seshin Co. Trade Debt $54,582 Mixed Media Group Inc. Royalties $46,884 Sap America, Inc. Trade Debt $46,537 Mike Mullins Wages/Benefits $41,250 Paul Kanter Wages/Benefits $39,332 Lee Brother Picture Frame Trade Debt $34,507 Co., Ltd. Toth Brand Imaging Trade Debt $31,250 Merchandise Mart Properties Real Estate Lease $31,162 Techstar Trade Debt $30,528 Volt Trade Debt $29,489 Royal China And Porcelain Royalties $28,507 Companies Robert Kellner Wages/Benefits $27,750 Richard Roy Wages/Benefits/ $27,604 Severance Badger KRY & Partners Trade Debt $27,500 Privilege Staffing Trade Debt $25,207 Richard Freiman Wages/Benefits $23,399 Eurl Guy Vieille Trade Debt $21,551 Americasmart Real Estate Lease $20,846 B. Wallace Int'l de Puerto Rico's 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Banco Popular De Puerto Rico Unsecured Bank Loan $472,981 P.O. Box 3362708 San Juan, PR 00936 O'neill & Borges Trade Debt $22,997 250 Munoz Rivera Avenue 8th Floor San Juan, PR 00918 Jose Arroyo Wages/Vacation/ $7,400 Box 1251 Benefits San German, PR 00683 Allstate Polyethylene Corp. Trade Debt $6,308 Edwin Colon Wages/Vacation/ $6,120 Benefits Peter Sorrentini Trade Debt $6,000 Rene Lugo Wages/Vacation/ $5,480 Benefits Edwin Ramos Wages/Vacation/ $4,920 Benefits Luis Rodriguez Wages/Vacation/ $4,520 Benefits Iris Bonilla Wages/Vacation/ $4,440 Benefits Rita Rodriguez Wages/Vacation/ $4,200 Benefits Felix Rosado Wages/Vacation/ $3,880 Benefits Manuel Cruz Wages/Vacation/ $3,560 Benefits Julmarie Acosta Wages/Vacation/ $3,520 Benefits Jose L. Rodriguez Wages/Vacation/ $3,320 Benefits Roberto Oliveras Wages/Vacation/ $3,160 Benefits Aracelis Vazquez Wages/Vacation/ $3,080 Benefits Adiel Ramos Wages/Vacation/ $3,000 Benefits Maria D. Olmeda Wages/Vacation/ $2,840 Benefits Edwin Santos Wages/Vacation/ $2,840 Benefits Divine Brothers Company Trade Debt $2,785 Sergio Ocasio Residencial Wages/Vacation/ $2,760 Sabana Benefits Tae Yang Sa Co. Trade Debt $2,734 Luis Santiago Wages/Vacation/ $2,680 Benefits Anthony De Leon Wages/Vacation/ $2,600 Benefits 3m De Puerto Rico, Inc. Trade Debt $1,699 Fernando J. Rentas Wages/Vacation/ $1,320 Benefits Ochoa Industrial Sales Corp. Trade Debt $1,189 Liquilux Gas Corp. Trade Debt $1,000 Alarmas De Ponce, Inc. Trade Debt $900 TECO AFFILIATES: Disclosure Statement Hearing Continued to Mar. 2 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona approved a stipulation among Panda Gila River, L.P., Union Power Partners, L.P., Trans-Union Pipeline, L.P., and UPP Finance Co., LLC, Aretex, LLC, Franklin Mutual Advisers, LLC, and Citibank, N.A., which provides for these modified timelines in the Debtors' Chapter 11 cases: (a) The Initial Hearing will be continued to March 2, 2005 at 1:30 p.m. This Continued Hearing will be a final hearing to determine if the Disclosure Statement contains adequate information. The Continued Hearing will not be evidentiary in nature, and no witnesses will be called and no discovery will be taken with respect to the issue of whether the Disclosure Statement contains adequate information under Section 1125 of the Bankruptcy Code; (b) The Disclosure Statement Objection Deadline is 12:00 p.m. Mountain Standard Time on February 24, 2005; (c) On or before February 18, 2005, the Debtors, the Non- Consenting Banks and Citibank must submit to the Court a discovery plan concerning the confirmation of the Plan. The Discovery Plan must also contain a preliminary statement of the nature of the Non-Consenting Banks' objections, if any, to confirmation of the Plan. The Discovery Plan will be subject to Court approval; (e) Assuming approval of the Disclosure Statement, the Voting Solicitation will begin on March 7, 2005; (f) The Voting Deadline will be moved to April 1, 2005; (g) The Confirmation Objection Deadline will be moved to April 1, 2005; (h) The deadline to file any responses to any objections to confirmation of the Plan will be April 8, 2005; (i) The Combined Hearing will be moved to April 5, 2005, at 10:00 a.m., and will be used to address any administrative issues relating to confirmation of the Plan, like the submission of ballot reports, and as a pre-trial conference with respect to any objections that may be filed to confirmation of the Plan; and (j) A final evidentiary hearing to consider confirmation of the Plan will commence on April 19 and 20, 2005, at 9:00 a.m. Any party that intends to introduce testimony at the Final Hearing must file with the Court on or before April 14, 2005, a declaration from each witness that will testify at the Final Hearing setting forth the direct testimony of the witness, or as otherwise directed by the Court. Additionally, any witness that submits a declaration must be present in the courtroom at the Final Hearing and be available for cross-examination. The Debtors and the Non-Consenting Banks will both use good faith and commercially reasonable efforts, to respond to legitimate requests to amend, modify, or clarify the Disclosure Statement between February 14, 2005, and March 2, 2005. The Debtors will promptly provide relevant and non-privileged documents exchanged with Citibank or its representatives relating to the Continued Hearing and to confirmation. Additionally, Aretex and Franklin Mutual's Motion for Reconsideration is withdrawn, and the Critical Path Order is deemed amended. Panda Gila River, L.P., Union Power Partners, L.P., Trans-Union Pipeline, L.P., and UPP Finance Co., LLC -- http://www.tecoenergy.com/-- own and operate the two largest combined-cycle natural gas generation facilities in the United States. The Debtors filed for bankruptcy protection on Jan. 26, 2005 (Bank. D. Ariz. Case No. 05-01143, and 05-01149 through 05-01151). Craig D. Hansen, Esq., Thomas J. Salerno, Esq., and Sean T. Cork, Esq., at Squire, Sanders & Dempsey L.L.P., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,196,000,000 in total assets and $2,268,800,000 in total debts. (TECO Affiliates Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) TECO AFFILIATES: Wants to Amend Agreement with Morgan Stanley ------------------------------------------------------------- As previously reported, Union Power Partners, L.P., Panda Gila River, L.P., Trans-Union Interstate Pipeline, L.P., and UPP Finance Co., LLC, sought the Court's authority to (i) assume certain safe harbor agreements and (ii) execute a postpetition assurance and amendment agreement between Panda Gila and Constellation Energy Commodities Group, Inc. Included in the schedule of executory contracts to be assumed in the Debtors' request, is a master power purchase and sale agreement between the Debtors and Morgan Stanley Capital Group, Inc., dated as of June 12, 2003, which was amended on May 12, 2004. The Debtors wish to enter into a Second Amendment to the Master Agreement. The Debtors believe that the execution of the Second Amendment is in the ordinary course of their business, as well as authorized by the terms of the Court's interim order entered on January 27, 2005, with regards the Debtors' safe harbor contracts. Specifically, the Interim Order, among other things: (a) authorized the Debtors to enter into and perform safe harbor contracts and to pledge collateral under safe harbor contracts; (b) authorized the Debtors to continue to perform under Safe Harbor Contracts and to enter into assurance agreements related to the Contracts; and (c) established procedures for settling terminated Safe Harbor Contracts. Out of an abundance of caution, however, the Debtors seek the Court's authority to enter into the Second Amendment to the Master Agreement with Morgan Stanley. A full-text copy of the Second Amendment is available for free at: http://bankrupt.com/misc/TECO_2ndamendmentagreement.pdf Craig D. Hansen, Esq., at Squire, Sanders & Dempsey, L.L.P., in Phoenix, Arizona, informs the Court that the execution of the Second Amendment is essential to preserve the value of the Debtors' estates and achieve a successful reorganization. The Debtors' business is dependent on their ability to hedge their exposure to commodity price fluctuations, which, in turn, enables them to improve revenue with respect to the sale of energy and minimize the impact of rising prices of natural gas. If the Debtors are unable to continue their hedging activities, they may have to resort to the spot market for the purchase of natural gas and sale of energy, which will force them to incur unnecessary and costly expenses. Morgan Stanley, Mr. Hansen says, is one of the Debtors' most critical trading counterparties, and is a significant trading partner with respect to the Safe Harbor Contracts. If the Safe Harbor Contracts to which Morgan Stanley is a party are terminated, the results to the Debtors' operations and restructuring prospects will be disastrous. Because termination of the Safe Harbor Contracts are excepted from the automatic stay by virtue of Sections 556 and 560 of the Bankruptcy Code, the Debtors want to assure Morgan Stanley that they will have the ability to continue to perform under the Safe Harbor Contracts. Mr. Hansen relates that the execution of the Second Amendment, which was negotiated in good faith between the Debtors and Morgan Stanley, is the only way to provide assurance to Morgan Stanley. Besides, Mr. Hansen continues, the execution of the Second Amendment will not prejudice other creditors or parties-in- interest. The execution of the Second Amendment will instead benefit the estates and creditors by enabling the Debtors to continue their hedging activities with Morgan Stanley, which, in turn, will permit the Debtors to maintain their business operations and continue to generate revenue. * * * The Court will convene a hearing on the Debtors' request at 1:30 p.m., on March 2, 2005. Panda Gila River, L.P., Union Power Partners, L.P., Trans-Union Pipeline, L.P., and UPP Finance Co., LLC -- http://www.tecoenergy.com/-- own and operate the two largest combined-cycle natural gas generation facilities in the United States. The Debtors filed for bankruptcy protection on Jan. 26, 2005 (Bank. D. Ariz. Case No. 05-01143, and 05-01149 through 05-01151). Craig D. Hansen, Esq., Thomas J. Salerno, Esq., and Sean T. Cork, Esq., at Squire, Sanders & Dempsey L.L.P., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,196,000,000 in total assets and $2,268,800,000 in total debts. (TECO Affiliates Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) TESTA HURWITZ: Ex-Partners File Involuntary Chapter 11 Petition --------------------------------------------------------------- Eight former lawyers of Testa, Hurwitz & Thibeault, LLP, have filed an involuntary chapter 11 petition against the firm asserting $1,976,241 in individual claims. The petition came after Testa disclosed on Jan. 14, 2005, that it has reached a decision to wind up its business and, ultimately, to dissolve it. The Involuntary Chapter 11 petition was filed on Feb. 17 in the U.S. Bankruptcy Court for the Eastern District of Massachusetts. In a statement issued Friday, Feb. 18, Testa Hurwitz said: "We are disappointed that certain of the firm's former partners saw fit to file an involuntary Chapter 11 petition against the firm. Since the firm's announced dissolution on Jan. 14, 2005, the firm has proceeded to wind down its affairs in an orderly manner to maximize the value of its assets for the benefit of its creditors, employees and partners. The firm is current in its obligations to all of its creditors and employees. The firm's paramount concern remains to ensure an orderly transition of its clients and the satisfaction of its obligation to its employees and creditors. This action by certain of the former partners could only disrupt this process and will be vigorously contested by the firm, as the firm has more than sufficient resources to satisfy all of its obligations to employees and creditors. We look forward to a prompt resolution to this matter." In early December, ten partners decided to leave the Firm, having found opportunities elsewhere that they considered more attractive than continuing at Testa. Although the Firm conducted merger discussions with a number of suitors during the past several weeks, many partners ultimately decided that they preferred other opportunities. As previously disclosed, George Thibeault, one of the Firm's founding partners, and a committee comprised of Bill Asher, former Managing Partner, Mark Smith, Chair of the Business Practice Group, and John Welsh, COO of the Firm, will manage the orderly winding up of the Firm. Testa employees have received notice of 60 days of continued employment with the Firm. Also, the Firm will offer outplacement assistance to the extent possible. The Firm's accounts receivable will be collected and vendors will be paid in an orderly fashion. The Firm has no outstanding bank debt. About the Firm Headquartered in Boston, Massachusetts, Testa, Hurwitz & Thibeault, LLP -- http://www.tht.com/-- assists clients ranging from multinational publicly traded businesses to start-ups to individual entrepreneurs. The firm's track record of innovation and leadership in shaping the venture capital and private equity industry is well known, and is matched today by robust practices in all areas affecting information technology, life science and other technology-oriented companies: intellectual property counseling and litigation; securities law compliance and corporate governance; corporate finance and acquisitions; securities and other complex business litigation; governmental investigations; taxation; executive compensation and employee benefits; and immigration, labor and employment. TESTA HURWITZ & THIBEAULT: Involuntary Chapter 11 Case Summary -------------------------------------------------------------- Alleged Debtor: Testa, Hurwitz & Thibeault LLP 125 High Street Boston, MA 02110 Involuntary Petition Date: February 17, 2005 Case Number: 05-11102 Chapter: 11 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Petitioners' Counsel: John J. Monaghan, Esq. Holland & Knight 10 St. James Avenue Boston, MA 02116 Tel: 617-523-2700 Petitioner Claim Amount ---------- ------------ Eric A. Deutsch $504,220 1005 Wisteria Way Wayland, MA 01778 Gordon H. Hayes, Jr. $375,000 c/o LeBoeuf, Lamb, Greene & McRae, LLP (plus interest) 260 Franklin St., 23rd Fl. Boston, MA 02110 John M. Hession $375,000 51 Ellicott St. (plus interest) Needham, MA 02492 Edwin L. Miller, Jr. $222,000 (plus interest) Thomas A. Beaudoin $220,414 (plus interest) David S. Davenport $166,421 (plus interest) Leslie E. Davis $94,000 Richard S. Sanders $19,186 (plus interest) TODD MCFARLANE: U.S. Trustee Picks 7-Member Creditors Committee --------------------------------------------------------------- The United States Trustee for Region 14 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Todd McFarlane Productions, Inc.'s chapter 11 case: 1. Greg Capullo 5017 Colonial Drive Schenectady, New York 12303 Tel: 518-357-9265, Fax: 518-357-9270 2. Neil Gaiman Attn: Kenneth F. Levin 20 North Wacker Drive, #4200 Chicago, Illinois 60606 Tel: 312-827-9000, Fax: 312-827-9001 3. Haberlin Studios Inc. Attn: Brian Haberlin 28411 Rancho De Linda Laguna Niguel, California 92677 Tel: 949-425-9622, Fax: 949-425-9623 4. Comicraft Attn: Richard Starkings 8910 Rayford Drive Los Angeles, California 90045 Tel: 310-215-0362, Fax: 775-890-5787 5. Tony Twist Attn: Donald W. Powell, Esq. 7301 North 16th Street, #103 Tel: 602-861-0777, Fax: 602-870-0296 6. Brian Holguin 3416 Buena Vista Avenue Glendale, California 91208 Tel: 818-248-5778, Fax: 818-248-5778 7. Thomas Orzechowski 2037 North Farragut Portland, Oregon 97217 Tel: 503-286-0421, Fax: 503-286-0421 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Tempe, Arizona, Todd McFarlane Productions, Inc. -- http://www.spawn.com-- publishes comic books including Spawn, Hellspawn, & Sam and Twitch. The Company filed for chapter 11 protection on Dec. 17, 2004 (Bankr. D. Ariz. Case No. 04-21755). Kelly Singer, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed more than $10 million in assets and more than $50 million in debts. TRANSWESTERN PUBLISHING: Retains Goldman Sachs to Explore Options ----------------------------------------------------------------- TransWestern Publishing Company LLC, a wholly-owned subsidiary of TransWestern Holdings L.P., has retained Goldman, Sachs & Co. to explore strategic alternatives. On Jan. 17, 2005, TransWestern Publishing announced preliminary, unaudited year-end results for 2004, reporting record revenue of $371 million, an increase of 15 percent over 2003, and record EBITDA of $110 million, a 21 percent increase over 2003. About the Company TransWestern Publishing is a California-based independent yellow page directory publisher with more than 330 community-oriented telephone directories in 25 states. * * * As reported in the Troubled Company Reporter on Aug. 18, 2004, Moody's Investors Service has assigned a B1 rating to TransWestern Publishing Company, LLC's proposed add-on first lien term loan and a B3 rating to its proposed add-on second lien term loan. Details of the rating action are: Ratings assigned: * proposed $100 million add-on senior secured first lien term loan, due 2012 -- B1; and * proposed $50 million add-on senior secured second lien term loan, due 2012 -- B3. Ratings affirmed: * existing $65 million senior secured first lien revolving credit facility, due 2012 -- B1; * existing $400 million senior secured first lien term loan, due 2012 -- B1; and * senior implied rating -- B1. Ratings downgraded: * existing $200 million senior secured second lien term loan, due 2012 -- to B3 from B2; and * issuer rating -- to Caa1 from B3. TRANSWESTERN PUBLISHING: Moody's Puts B1 Rating on $65MM Sr. Loan ----------------------------------------------------------------- Moody's Investors Service has affirmed ratings of TransWestern Publishing Inc. and changed the outlook to developing. The ratings affirmed are: * $65 million senior secured first lien revolving credit facility, due 2012 -- B1 * $525 million senior secured first lien term loan, due 2012 -- B1 * $225 million senior secured second lien term loan, due 2012 -- B3 * Senior implied rating -- B1 * Issuer rating -- Caa1 The outlook is changed to developing from stable. This action follows the company's announcement that it has retained an investment bank to explore strategic alternatives. The change in outlook reflects the likelihood that TransWestern will successfully conclude a sale of the company, which, in turn, will affect its credit profile. Moody's expects to refresh the current ratings upon review of the details of a potential sale agreement, and the terms and conditions of any related financing. Moody's expects that a sale of the company will result in the retirement of existing debt and its replacement with new debt in a leveraged buyout. The developing outlook underscores the uncertainty, which currently surrounds the company's prospective capital structure under new ownership and the possibility for changes in its management philosophy, growth strategies and financial policies. Headquartered in San Diego, California, TransWestern Publishing publishes 330 directories in 25 states. In 2003, the company reported revenues of $324 million. TRANSWESTERN PUBLISHING: S&P Reviewing Low-B Ratings ---------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on TransWestern Publishing Co. LLC, including its 'B+' corporate credit rating, on CreditWatch with developing implications. The CreditWatch listing follows the company's announcement that it has retained Goldman, Sachs & Co. to explore strategic alternatives, which could include a sale of the company. TransWestern had about $700 million in debt outstanding as of Dec. 31, 2004. Developing implications suggest that ratings could be affected either positively or negatively, depending on whether a transaction ultimately occurs. An example of a transaction that might have a positive effect would be an acquisition by a higher-rated entity. An example of a transaction that could have a negative impact might include a decision to increase debt levels to pursue an acquisition or a recapitalization. "In resolving our CreditWatch listing, we will continue to monitor developments associated with the company's pursuit of strategic alternatives. We could decide to resolve the CreditWatch listing at a later date if it appears a transaction is not likely to occur," said Standard & Poor's credit analyst Emile Courtney. TRAVIS COUNTY: Moody's Junks Three Series of Housing Revenue Bonds ------------------------------------------------------------------ Moody's Investors Service has affirmed the Caa2 rating on the Travis County Housing Finance Corporation Multifamily Housing Revenue Bonds (Lakeview Apartments Project), Series 2001A and the Ca rating on the Series 2001C junior bonds and Series 2001D subordinated bonds. The rating outlook on the senior and junior debt remains negative. Series 2001B have been retired. The rating has been affirmed based upon Moody's review of unaudited financial statements and occupancy updates from management. The rating affirmation of the Caa2 reflects the expectation of at least partial recovery by bondholders while the Ca reflects the subordinate position in the recovery process. Recent Developments/Results: On January 1, 2005 there were insufficient funds to pay debt service on any series of bonds, including the senior series. In addition, the debt service reserve funds remain insufficient to cover full payment due to bondholders. The junior and subordinate bonds remain in default; the July 1, 2003, January 1, 2004, July 1, 2004 and January 1, 2005 payments for junior and subordinate bonds were not made. The reserve and replacement fund has a balance of zero, creating the long-term problem of making the capital improvements necessary to attract renters. Lakeview's occupancy has been severely impacted by a downturn in the Austin economy and the related soft demand for affordable multifamily rental housing. Management reports that physical occupancy in February 2005 is approximately 81% up from 71% in April 2004. This is a reversal as occupancy levels had previously been dropping. Unaudited financial results for 2004 demonstrate senior bond debt service coverage of approximately 0.46x, well below the 1.46x projected in the underwriting pro forma. Junior and subordinate debt service coverage were also well below projections at approximately 0.40x and 0.36x. These results are lower than those experienced in 2003 when senior coverage was 0.60x, and junior and subordinate coverage were 0.52x and 0.48x, respectively. Lakeview's owner, Agape Austin Area Housing Inc., a subsidiary of the American Agape Foundation, has contributed funds to settle certain expenses of the property but has indicated to Moody's that it does not have the resources necessary to bring the debt service on any series of debt current. Outlook: The rating outlook for all series' of bonds remains negative given the challenges facing the property and the ongoing accrual of principal in default. Moody's believes that recent increase in occupancy could indicate increasing demand, but expects that in the near term Lakeview will operate under significant financial stress, thus jeopardizing future debt service payments of all series' of debt. In addition, the possibility of physical deterioration of the project lessons the rate of recovery. TRICO MARINE: Executes New $75 Million Exit Financing Facility -------------------------------------------------------------- Trico Marine Services, Inc. (OTC Pink Sheets: TMARQ) has entered into a new $75 million exit financing facility agreement with its existing U.S. Senior Secured Lenders, comprising a $55 million term loan and a $20 million revolving credit facility. The Exit Credit Agreement will become effective and replace the Company's existing $75 million debtor-in-possession financing facility following final approval by the United States Bankruptcy Court for the Southern District of New York. At the request of the Lenders, the Company will file a motion with the Bankruptcy Court on Tuesday, Feb. 22, 2005, requesting approval of certain modifications to the Exit Credit Agreement. Trico will request that a hearing on the motion be held on accelerated notice. The Company anticipates that such approval will be the final step prior to emerging from Chapter 11, which is now expected to occur not later than March 15, 2005. Headquartered in New York, Trico Marine Services, Inc. -- http://www.tricomarine.com/-- provides marine support services to the oil and gas industry around the world. The Trico Companies operate a large, diversified fleet of vessels used in the transportation of drilling materials, crews and supplies necessary for the construction, installation, maintenance and removal of offshore drilling facilities and equipment. Trico Marine and its debtor-affiliates filed for chapter 11 protection on Dec. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-17985). Leonard A. Budyonny, Esq., and Robert G. Burns, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $535,200,000 in assets and $472,700,000 in debts. UAL CORP: District Court Transfers PBGC Complaint to Judge Wedoff ----------------------------------------------------------------- On Dec. 30, 2004, the Pension Benefit Guaranty Corporation brought a complaint in the U.S. District Court for the Northern District of Illinois seeking the involuntary termination of the United Air Lines Pilot Defined Benefit Pension Plan under 29 U.S.C. Section 1342(a). The PBGC alleged that it issued to United, as the administrator of the A Plan, a Notice of Determination that stated that the PBGC had determined that "the possible long run loss of the PBGC with respect to the Plan may reasonably be expected to increase unreasonably." The PBGC finds the termination of the Pilot Plan necessary to avoid an unreasonable increase in the liability of the PBGC insurance fund. The PBGC asked the District Court that it be appointed to serve as the trustee of the Pilot Plan. Case Transferred to Bankruptcy Court At a hearing held on January 25, 2005, United argued that the termination of all of the Defined Benefit Pension Plans was necessary for them to emerge from bankruptcy and that any termination was a factor in its ability to emerge. United asserted that the PBGC action should be before Judge Wedoff. The Air Line Pilots Association attorney supported United's position. The PBGC's attorneys argued that Congress expressly gave authority over involuntary terminations to District Courts and that an involuntary termination had nothing to do with the bankruptcy proceedings. After hearing the oral arguments, District Judge Joan Lefkow ruled in favor of United and transferred the PBGC's action to the Bankruptcy Court. The URPBPA and the ALPA have filed requests with the District Court to intervene in the PBGC's action. Judge Lefkow also referred both requests to the Bankruptcy Court. 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) UCFC FUNDING: S&P Junks Class M-1 & M-2 Certificates ---------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on classes M-1 and M-2 manufactured housing (MH) transactions from UCFC Funding Corp. Manufactured Housing Pass-Thru Certs Series 1998-3. The lowered ratings reflect the continued adverse performance trends exhibited by the underlying pools of MH installment sales contracts and mortgage loans and the resulting deterioration of credit enhancement. The unfavorable market conditions that continue to plague the MH industry have contributed to the poor performance of these transactions. The projected lifetime cumulative net losses for the five transactions have significantly exceeded original expectations and the current rating actions reflect revised assumptions about cumulative lifetime net losses based on actual performance data and expectations on future trends. The higher losses exhibited by these transactions continue to be driven by higher-than-expected defaults and loss severities, as most of the underlying collateral pools have deteriorated during the past few years. All four of the issuers are no longer originating MH loans. Historically, when a MH seller/servicer discontinues loan originations or declares bankruptcy, dealer relations are negatively impacted and, consequently, the ability to liquidate repossession inventory at acceptable recovery rates becomes impaired. Consequently, Standard & Poor's does not believe the credit enhancement for these transactions is sufficient to cover remaining losses at the previous ratings. Ratings Lowered UCFC Funding Corp. Manufactured Housing Pass-Thru Certs Series 1998-3 Rating Class To From ----- -- ---- M-1 CCC+ B M-2 CCC CCC+ USGEN NEW ENGLAND: Files First Amended Plan & Disclosure Statement ------------------------------------------------------------------ On Feb. 17, 2005, USGen New England, Inc., delivered to the U.S. Bankruptcy Court for the its First Amended Plan and Disclosure Statement. USGen also delivered a liquidation analysis in support of the Plan. USGen presented a comparison of the recoveries of impaired Creditors under the Plan and in a hypothetical Chapter 7 liquidation. Bear Swamp Compromise The First Amended Plan clarifies that the sole parties to the Bear Swamp Compromise are: (1) HSBC Bank USA, N.A., (2) Bear Swamp I, LLC, (3) Bear Swamp II, LLC, (4) Bear Swamp Generating Trust No. 1 LLC, (5) Bear Swamp Generating Trust No. 2 LLC, and (6) the holders of: -- 7.459% Pass Through Certificates, series 1998-A; and -- 8.270% Pass Through Certificates, series 1998-B. Administrative Claims The First Amended Plan provides that the deadline for payment requests of Administrative Claims that arise from the confirmation date of the First Amended Plan through and including the Plan's effective date will be 30 days after the Confirmation Date. The Post-Confirmation Administrative Bar Date, therefore, is set 15 days closer to the Confirmation Date than what the original Plan provided, which was 45 days after the Confirmation Date. Class 1 Secured Claims Distribution Moreover, Allowed Class 1 Claims will be paid in full in Cash, together with "interest" -- unless otherwise agreed by any holder. The distribution provisions for Secured Claims under the First Amended Plan will no longer include "Postpetition Interest" as previously specified. Liquidation Analysis According to Ernest K. Hauser, President of USGen New England, USGen's Plan meets the "best interests" requirement in that the Plan provides each holder of an impaired claim with a recovery having a value at least equal to the value of the distribution each holder would receive if USGen were liquidated under Chapter 7 of the Bankruptcy Code. Mr. Hauser points out that a liquidation under Chapter 7 would require the Bankruptcy Court to appoint a trustee to conduct the liquidation of the Debtor. The Chapter 7 trustee would have limited historical experience or knowledge of USGen's Chapter 11 Case or of the Debtor's records, assets or business. The fees charged by a Chapter 7 trustee and any professionals retained by the Chapter 7 trustee could impose substantial administrative costs on the Debtor's estate that would not be incurred under the Plan. Liquidation under Chapter 7 would increase substantially the magnitude of Claims against the Debtor for items like severance and lease rejections. Furthermore, there is no assurance as to when distributions would occur in a Chapter 7 liquidation. USGen New England, Inc. Liquidation Analysis As of June 2005 (In Millions) Chapter 11 Plan of Chapter 7 Liquidation Liquidation ----------- ----------- Proceeds Fossil Plants Sale Price $643 $643 Hydro Plants Sale Price 505 455 Cash on Hand 350 348 ----------- ------------- Total Proceeds 1,498 1,446 Administrative Claims 15 50 Priority Claims 5 5 ----------- ------------- Net Proceeds after Admin Claims and Priority Claims 1,478 1,391 General Unsecured Claims Novated PPAs 336 336 NEP 195 195 Firm Transport Contracts 107 107 Bear Swamp 485 485 - 900 Intercompany ET 97 97 JPMorgan Chase Revolver 81 81 Prepetition AP 7 7 Misc. Litigation Claims 5 5 ----------- ------------- Subtotal 1,313 1,313 - 1,728 ----------- ------------- Interest 72 72 ----------- ------------- Subtotal 1,385 1,385 - 1,800 ----------- ------------- Net Est. Liquidation Proceeds/ (Shortfall) after General Unsecured Claims 93 6 - (409) =========== ============= A full-text copy of USGen's First Amended Plan, including exhibits, is available at no charge at: http://bankrupt.com/misc/USGen_First_Amended_Plan.pdf A full-text copy of USGen's First Amended Disclosure Statement is available at no charge at: http://bankrupt.com/misc/USGen_Disclosure_Statement.pdf Headquartered in Bethesda, Maryland, USGen New England, Inc., an affiliate of PG&E Generating Energy Group, LLC, owns and operates several electric generating facilities in New England and purchases and sells electricity and other energy-related products at wholesale. The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported assets amounting to $2,337,446,332 and debts amounting to $1,249,960,731. (PG&E National Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) VALLEY MEDIA: Files Chapter 11 Liquidating Plan in Delaware ----------------------------------------------------------- Valley Media, Inc., delivered on Feb. 9, 2005, to the U.S. Bankruptcy Court for the District of Delaware its Chapter 11 Liquidating Plan. The Plan provides for the liquidation and distribution of all of Valley Media's assets to all holders of allowed claims and interests. Valley Media projects that it will have approximately $1.4 million to $2.4 million cash on hand on the Effective Date. It also intends to pursue litigation claims and avoidance actions amounting to $66 million to increase the amount of money available for distribution to creditors. A Liquidating Trust will be established on the Effective Date. All assets of the estate including litigation claims and avoidance actions will be transferred to the Trust for distribution to creditors. Administrative claims, secured claims and priority claims will be paid in full on the Effective Date. General unsecured creditors are expected to recover $0.006 to $0.023 on the dollar. Subordinated claims and equity holders get nothing under the Plan. Headquartered in Woodland, California, Valley Media, Inc. -- http://www.valleymedia.com/-- is a full-line distributor of music and video entertainment products. The Company filed for chapter 11 protection on November 20, 2001 (Bankr. D. Del. Case No. 01-11353). Bernard George Conaway, Esq., at Fox Rothschild LLP, Christopher A. Ward, Esq., at The Bayard Firm, Christopher Martin Winter, Esq., at Duane Morris LLP, et. al. represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $241,547,000 in total assets and $259,206,000 in total debts. VISTEON CORP: Moody's Lowers Senior Implied Rating to Ba2 from Ba1 ------------------------------------------------------------------ Moody's Investors Service has lowered the debt ratings of Visteon Corporation's Senior Implied to Ba2 from Ba1. The ratings remain under review for possible further downgrade. The actions flow from a review initiated in September 2004 and consider the challenges to the company's profitability and cash flow which result from lower vehicle production schedules in North America, particularly from Visteon's largest customer-Ford, un-recovered raw material cost increases, and a continuing higher cost domestic employee expense base. During 2004, Visteon Corp. made progress in several objectives: growing its non-Ford business, achieving substantial new business awards, restoring profitability in its European operations, and lowering its domestic costs and headcount from previous levels. However, the combination of lower Ford production and commodity cost increases more than offset these gains. Until further restructuring initiatives are undertaken, the company's credit strength is expected to remain under pressure from reduced Ford production in the first quarter of 2005, continuing cost pressures, ongoing price-downs, and cash utilization for business needs and debt maturities. The ratings continue under review for possible downgrade and will consider developments expected in the near term regarding the strategic review of the company's business units, definition of a restructuring plan to restore profitability, which will be heavily influenced by the outcome of discussions currently being held with Ford Motor Company, and any actions taken to support the company's liquidity profile during the restructuring period. Specifically, the ratings changed are: -- Visteon Corporation * Senior Implied to Ba2 from Ba1 * Senior Unsecured to Ba2 from Ba1 * Issuer rating to Ba2 from Ba1 * Unsecured shelf to (P)Ba2 from (P)Ba1 * Subordinated shelf to (P)Ba3 from (P)Ba2 * Preferred shelf to (P)B1 from (P)Ba3 -- Visteon Capital * Preferred shelf to (P)Ba3 from (P)Ba2 Visteon's commercial paper rating of Not Prime is unchanged. In 2004, Visteon Corp. grew its non-Ford revenues by 36% resulting in non-Ford business accounting for 30% of full year revenues, up from 24% in 2003. None-the-less, a reduction in Ford's annual North American vehicle production of 5.2% from 2003 levels (6.2% lower in the second half) adversely impacted Visteon's original expectation of being profitable and cash flow positive for the year. Losses and negative cash flow in the second half of 2004 more than offset positive results achieved in the first half. Steel, resin and other raw material cost increases in the second half exacerbated the financial impact of lower volumes with the company reporting a pre-tax loss of $489 million (including special charges of $396 mm) and negative cash flow of $440 million (after dividends) for all of 2004. Given that Ford North American production in the first quarter of 2005 is expected to be some 8.7% lower than the first quarter 2004, and until further actions can be taken to adjust the company's high cost base, the rating agency would expect Visteon Corp. to continue with poor results, limited cash flows and debt protection metrics not representative of a Ba1 credit. Visteon Corp. has defined its core strategic business units as climate control, electronics (including lighting) and interiors. Segment revenue information on these units from 2003 would equate to approximately 55% of the total in that year. With net new business awards concentrated in these sectors, these key product areas likely represent 55%-60% of current revenues and a higher proportion of gross margins. Customer and geographic diversification also experienced positive developments in 2004. Visteon continues with global manufacturing scale, competitive technologies, and a diverse advanced product offering. Continued trends in OEM outsourcing of product development and more complete systems and modules should benefit larger tier 1 suppliers such as Visteon Corp. longer term. None-the-less, absent further restructuring actions to better position the core units, materially lower the costs of labor inputs in the non-core sectors, and restore operating profitability, Visteon's ability to generate free cash flow will be limited. The company's recent decision to suspend its dividend payment will help support cash flow, but with over $2.0 billion of balance sheet debt, the company's adjusted ratio of free cash flow to total debt is considered weak for the rating category. Visteon Corp.'s cash position at the end of 2004 was $752 million, yet with negative free cash flow, potential expenditures for any restructuring actions and certain near term debt maturities, Moody's believes that Visteon will need to take actions to further support its liquidity profile during the coming year. A $100 million accounts receivable securitization facility is scheduled to mature in March and a $565 million 364 day revolving credit facility matures in June. While utilization of the accounts receivable securitization has been modest, and the revolving credit facility was undrawn at year-end, the company's 7.95% notes ($250 million outstanding) mature in August. Until the terms of a Ford-Visteon agreement are announced and an effective restructuring plan is implemented, Visteon's free cash flow is expected to be marginal or even negative if seasonal working capital requirements or future restructuring disbursements add to cash uses. Consequently, internal sources of liquidity may be under pressure in the short term. While the company continues to hold a sizable cash balance as well as an undrawn $775 million term revolving credit facility with maturity in 2007 (However, approximately $100 million of letters of credit have been issued under this facility), external liquidity will be influenced by the pace and terms of renewal of its other liquidity arrangements. The principal financial covenant in the bank facilities, consolidated net debt/defined EBITDA (which excludes special or non-recurring charges), was comfortably met at year end (approximately at 1.9 times vs. the maximum of 3.5 times) and could accommodate an additional $1.2 billion plus of incremental net debt should EBITDA run rates remain unchanged from 2004. Visteon Corp.'s significant portfolio of business assets is currently unencumbered, and could provide some support to alternate liquidity planning (subject to lien limitations and undertakings in its indentures and credit agreements). The combination of marginal-to-negative cash flow, near term debt maturities and renewal dates to retain substantial committed back- up facilities results in a liquidity profile more appropriately reflected with a Speculative Grade Liquidity Rating of SGL-3. The review will focus on Visteon Corp.'s ability to adapt to lower automotive production rates in North America, its evolving liquidity position and terms, and will assess the impact on profitability and cash flow of an expected Ford/Visteon agreement. Restoring Visteon to profitability with positive cash flow generation through lower domestic manufacturing costs, legacy liability relief, asset dispositions, or raw material cost recovery actions will be critical. Quantitatively these could be reflected by being on a course to generate and sustain EBIT margins at least in the low single digits, free cash flow to adjusted debt in the mid-single digit level, and adjusted leverage retreating to 3 times or lower. Further, progress in diversifying the customer base through higher non-Ford revenues and continued growth in international markets would also be an important element of the company's future credit profile. Visteon Corporation is a leading full-service supplier that delivers consumer-driven technology solutions to automotive manufacturers worldwide and through multiple channels within the global automotive aftermarket. Visteon has approximately 70,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 25 countries. W.R. GRACE: Asks Court to Approve Consulting Pact with Paul Norris ------------------------------------------------------------------ W.R. Grace & Co., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to enter into a post-retirement agreement with their current CEO Paul J. Norris for consulting services related to their Chapter 11 cases and other matters. Mr. Morris would continue to provide advice and guidance to the Debtors as an independent contractor and would retain no authority to enter into agreements on behalf of the Debtors or any management or supervisory authority. The Debtors' Board of Directors values Mr. Norris' involvement in the Debtors' Chapter 11 cases as their CEO since the bankruptcy petition date. The Board believes that Mr. Norris' background and knowledge regarding the cases, along with his professional skills, will facilitate the Debtors' reorganization. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, tells Judge Fitzgerald that the Norris Consulting Agreement will provide for an uninterrupted continuation of the Debtors' efforts to emerge from bankruptcy. In addition, Mr. Norris would be available to provide the Debtors with other consulting services, including assistance related to the transition from his term as CEO to Alfred E. Festa's term. In exchange for those consulting services, Mr. Norris will initially receive a monthly retainer equal to $35,417 per month. The Board and Mr. Norris negotiated the amount of the retainer based on the assumption that his duties under the Norris Consulting Agreement will generally require him to dedicate an amount of time equal to approximately one-half of a regular 40-hour per week work schedule. Mr. Norris and the Board have also agreed that, if the amount of time he must dedicate to these duties is or becomes significantly less than contemplated, then his monthly fee will be similarly adjusted downward. There are no other compensation components under the Norris Consulting Agreement. The Norris Consulting Agreement may be terminated by the Debtors' Board or Mr. Norris at any time at 30 days' written notice, without the obligation to make any post-termination payments, provided that the Agreement will, in any event, terminate no later than 90 days after the Debtors emerge from Chapter 11. Headquartered in Columbia, Maryland, W.R. Grace & Co., -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) WADDINGTON NORTH: S&P Slices Corporate Credit Rating to B- from B ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Waddington North America Inc., to 'B-' from 'B'. At the same time, Standard & Poor's placed these ratings on CreditWatch with negative implications. Covington, Kentucky-based Waddington North or WNA had approximately $172 million of total debt outstanding at Dec. 31, 2004. The downgrade and CreditWatch listing reflect WNA's weaker-than-anticipated financial performance and liquidity position, as a result of lower-than-budgeted thermoformed product volumes, a sabotage-related manufacturing disruption, and elevated raw-material costs during the past six to nine months. "The shortfall in operating results is particularly significant to credit quality because WNA is currently in violation of the financial covenants in its bank credit agreement," said Standard & Poor's credit analyst Franco DiMartino. The company has initiated discussions with its bank lenders to obtain a waiver of the covenant violations that, if successful, would restore near-term liquidity. Subsequently, WNA will seek to negotiate a permanent amendment to the financial covenants to address lower-than-initially anticipated profitability over the near to intermediate term. The CreditWatch placement highlights the risk of another downgrade if WNA is unable to obtain a waiver or an amendment. The outcome of the CreditWatch listing will depend on WNA's success in alleviating bank covenant pressure to ensure sufficient liquidity for its near-term operating needs. In addition, Standard & Poor's will review operating prospects to reassess the company's ability to generate meaningful free cash flow in order to meet increasing term loan amortization requirements during the next several years. YUKOS OIL: Asks Judge Clark to Extend Lease Decision Period ----------------------------------------------------------- Yukos Oil Company and its debtor-affiliates' assets include a number of executory contracts and unexpired leases, including nonresidential real property leases and oil and gas production licenses. Zack A. Clement, Esq., at Fulbright & Jaworski L.L.P., in Houston, Texas, tells the Court that the majority of the Unexpired Leases are leases used by the Debtor to operate its oil and gas business. "The Unexpired Leases are integral to the Debtor's continued operations as it seeks to reorganize." Section 365(d)(4) of the Bankruptcy Code provides that any unexpired nonresidential leases are deemed rejected if they are not assumed within the first sixty days after the Petition Date. The Debtor has not yet completed its review of all of its Unexpired Leases. Thus, it cannot determine exactly which Unexpired Leases should be assumed, assigned, or rejected. The Debtor believes that, due to the necessity that the Debtor keep its immediate and primary focus on: -- conducting discovery in its on-going adversary proceeding, -- attempting to protect its remaining assets from further expropriation, -- preparing for trial on the Motion to Dismiss its Chapter 11 Bankruptcy Case, and -- focusing on working towards confirmation of its Plan of Reorganization, it will be impossible for it to adequately assess whether to assume or reject the Unexpired Leases within the statutory 60-day period provided for in Section 365(d)(4) of the Bankruptcy Code. Under Section 365(d)(4), the United States Bankruptcy Court for the Southern District of Texas can, for cause, extend the period during which the Debtor must assume or reject the Unexpired Leases. By this motion, the Debtor asks Judge Clark to extend its lease decision period until the effective date of any plan of reorganization. The Debtor intends to remain current on all of its postpetition rent obligations. The Court will convene a hearing on the Debtor's request at 10:00 a.m., on March 10, 2005. 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) * Four Testa Lawyers Join DLA Piper Rudnick's Boston Office ----------------------------------------------------------- DLA Piper Rudnick Gray Cary US LLP, one of the world's leading law firms, disclosed that four senior lawyers have joined its Boston office from Testa, Hurwitz & Thibeault. Michael Collins, Kimberley J. Kaplan-Gross and Howard S. Rosenblum have become partners in the Corporate and Securities group; Joseph A. Hugg has become Of Counsel in the Tax group. All were experienced members of the private equity practice group at Testa, Hurwitz & Thibeault, will lead the expansion of the firm's practice in the areas of private equity fund formation and operations, and are important additions to the firm's growing corporate and securities group in its Boston office. Elliot M. Surkin, the managing partner of the Boston office, said, "We are delighted to welcome this team of corporate and tax lawyers to the firm. Their skills and experience will complement the firm's corporate offerings both in Boston and on a national level, by bringing to our team their experience in private equity fund formation, operations and transactions, as well as the representation of venture-funded operating companies." Michael Collins concentrates his practice in the private equity fund formation and investment area, including marketing, formation, structuring, operations, management, tax planning and related transactions and investment support for a wide spectrum of funds, such as venture capital, private equity, debt, distressed securities, institutionally sponsored investment programs, corporate investment programs, hedge funds, and a variety of customized vehicles throughout the United States, Canada, the UK and Europe. In addition to counseling fund managers and investment advisers, Mr. Collins also represents a number of institutional investors in the development of their asset allocation programs and the evaluation of fund investment opportunities internationally. Mr. Collins has over 20 years of experience in these areas and served as the original chair of the private equity group at Testa, Hurwitz & Thibeault from its establishment in 1996. Mr. Collins has published several articles on private investment fund topics and is an active guest speaker and participant with numerous professional and business conferences. Mr. Collins received his A.B., magna cum laude, from Boston College and his J.D., magna cum laude, from Boston College. Kimberley J. Kaplan-Gross represents international and domestic venture capital and private equity funds in capital formation transactions, secondary transactions, management and governance issues, and investment adviser regulatory matters. In fundraising, she advises fund sponsors on legal structuring matters, guides them in market positioning and setting proposed terms and conditions and leads their negotiations with investors. In addition, Ms. Kaplan-Gross represents institutional investors in their investments in private investment funds. Ms. Kaplan- Gross also assists private equity funds with investment and exit transactions and with transactions undertaken by their portfolio companies. Ms. Kaplan-Gross is a frequent presenter at conferences focused on the private equity industry. Ms. Kaplan-Gross also has a robust general corporate practice representing public and private growth oriented companies in emerging and high technology industries. Her company representation experience includes private equity financing and public offerings, debt financing, securities compliance, mergers and acquisitions, technology licensing and commercial agreements, and general corporate representation. Ms. Kaplan-Gross received her B.S. from Boston University and her J.D., cum laude and Order of the Coif, from University of Miami's School of Law. Howard S. Rosenblum concentrates in the areas of formation of and investments by domestic and international private equity funds and the general representation of emerging growth enterprises. His work in the private equity industry includes advising fund mangers on a broad range of issues including fundraising, capital formations, internal governance and operational issues, and portfolio investment transactions. Mr. Rosenblum also counsels companies in all aspects of their operations, from start-up through public offerings and/or acquisitions. He has advised companies across a diverse range of businesses, including software, telecommunications, networking, internet and retail. He has also published numerous articles regarding topics in the venture capital and high technology fields. Mr. Rosenblum has significant involvement with the representation of Israeli and Israeli-related companies and venture capital funds. He has represented numerous Israeli technology companies in connection with their financing activities and operations in the U.S. Mr. Rosenblum also takes an active role in the Israeli venture capital community. In addition to his representation of many of the premier Israeli venture capital funds, Mr. Rosenblum is a frequent speaker at the Israel Venture Association conferences. Mr. Rosenblum received his B.A., cum laude, from the University of Pennsylvania and his J.D., cum laude, from Boston College Law School. Joseph A. Hugg concentrates his practice in the tax and ERISA issues affecting private equity funds, private equity investors and portfolio companies. He advises clients on the domestic and international tax aspects of fund formations, including choice of entity and partnership tax matters. Mr. Hugg also assists in structuring portfolio investments to minimize taxes and ensure compliance with U.S. and foreign tax laws. In addition, Mr. Hugg has substantial experience dealing with ERISA "plan assets" and other fiduciary issues arising from private equity investment transactions, including compliance with the Department of Labor's venture capital operating company exception and other plan assets exceptions. Mr. Hugg has advised numerous private equity funds- of-funds on the special ERISA requirements that affect their structures and operations. Mr. Hugg also works in the area of executive compensation. He is experienced with tax-qualified and non-qualified compensation arrangements, including equity compensation, representing both taxable and tax-exempt employers. He has also advised banks, insurance companies and investment management firms regarding ERISA compliance, with particular emphasis on investment-related matters and related Department of Labor class exemptions such as QPAM and INHAM. Mr. Hugg has lectured frequently and has published numerous articles on these topics. Mr. Hugg is a cum laude graduate of Harvard Law School and he received a master of laws degree in Taxation from New York University. Mr. Hugg earned his bachelor's degree, cum laude, from Georgetown University. * Gibson Dunn Welcomes Thomas Budd as London Finance Partner ------------------------------------------------------------ Thomas Budd will join Gibson, Dunn & Crutcher LLP's London office as partner and Co-Chair of the firm's Global Finance Practice Group. Formerly a partner and the head of Jones Day's UK finance practice, Mr. Budd will continue his corporate lending, acquisition finance and real estate finance practices. "Tom will be a terrific addition to our London office and the firm," said Ken Doran, Managing Partner of Gibson Dunn. "His broad-based finance practice complements our existing London practices and will enhance our ability to handle Europe's largest and most complex M&A and finance transactions." "Tom has a high-profile borrower side finance practice, and his experience will benefit our clients tremendously, particularly our private equity clients, such as Investcorp, Lehman Brothers and Gores Technology Group," said Judith Shepherd, a London partner and member of the firm's International Corporate Transactions Group. "Our private equity practice in London is very busy, and with Tom, we will have the additional capacity we need." "Tom has a particularly strong reputation in the property finance sector, and I am thrilled that we are joining forces," said Alan Samson, a partner leading the firm's property and property finance practice in London. "Tom will be instrumental in helping us to build our growing European real estate private equity group which regularly represents the dominant market players including Apollo International Real Estate Fund, AEW Capital Partners, Lehman Brothers and Westbrook Partners." Mr. Budd is the latest addition to the firm's European offices. In 2004, capital markets partner Alan Bannister joined the London office, antitrust partners James Ashe-Taylor and David Wood joined in the London and Brussels offices, tax partner Hans Martin Schmid joined in Munich, and corporate partner Nicolas Baverez joined in Paris. Mr. Budd has experience in a wide range of banking, capital markets and restructuring transactions, with particular expertise in corporate lending and syndications, structured finance, trade finance, real estate finance, securitisation, capital markets transactions and debt restructuring transactions. He has represented both borrowers and banks and financial institutions. He will serve as Co-Chair of the Firm's Global Finance Practice Group along with New York partner Joerg Esdorn and Los Angeles partner Jeff Hudson. Prior to joining Gibson Dunn, Mr. Budd served as head of Jones Day's UK finance practice. He joined Gouldens in 1992, which merged with Jones Day in 2003. He earned his LL.M. from the University of Cambridge in 1985 and his LL.B. from University of Queensland in 1982. "Gibson Dunn's strengths in finance, corporate finance, capital markets and mergers and acquisitions, and its market-leading corporate practice, will provide exciting opportunities for me," said Mr. Budd. "I am looking forward to working with my new partners to develop the firm's European finance practice." About the London Finance Practice The London office specializes in acquisition finance, property finance, senior and mezzanine debt, refinancings and restructurings, funds and Sharia compliant financings. In addition, the project finance group specializes in all forms of international power, oil and gas, telecommunication and transportation projects. In the past year, the amount and breadth of finance work handled by the London office has increased notably with attorneys advising on significant instructions including, most recently, the first European non-real estate Sharia compliant LBO. About the Firm Gibson, Dunn & Crutcher LLP is a leading international law firm. Consistently ranking among the world's top law firms in industry surveys and major publications, Gibson Dunn is distinctively positioned in today's global marketplace with more than 800 lawyers and 13 offices, including Los Angeles, New York, Washington, D.C., San Francisco, Palo Alto, London, Paris, Munich, Brussels, Orange County, Century City, Dallas and Denver. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. PCSA (94) 299 86 Akamai Tech. AKAM (126) 183 62 Alaska Comm. Syst. ALSK (29) 642 73 Alliance Imaging AIQ (41) 654 36 Amazon.com AMZN (227) 3,249 919 Ampex Corp. AEXCA (140) 33 12 AMR Corp. AMR (314) 29,261 (1,824) Amylin Pharm. Inc. AMLN (42) 402 325 Arbinet-Thexchan. ARBX (1) 70 11 Atherogenics Inc. AGIX (19) 93 77 Blount International BLT (283) 423 103 CableVision System CVC (1,669) 11,795 223 CCC Information CCCG (131) 80 (8) Cell Therapeutic CTIC (52) 174 87 Centennial Comm CYCL (516) 1,608 169 Choice Hotels CHH (203) 262 (32) Cincinnati Bell CBB (600) 1,987 (20) Clorox Co. CLX (457) 3,710 (422) Compass Minerals CMP (109) 642 99 Conjuchem Inc. CJC (25) 30 22 Cotherix Inc. CTRX (44) 25 20 Cubist Pharmacy CBST (75) 155 (6) Delta Air Lines DAL (3,297) 23,526 (2,614) Deluxe Corp DLX (179) 1,533 (337) Denny's Corporation DNYY (246) 730 (80) Dollar Financial DLLR (47) 335 82 Domino Pizza DPZ (575) 421 (16) Eagle Hospitality EHP (26) 177 N.A. Echostar Comm-A DISH (1,711) 6,170 (503) Emeritus Corp ESC (102) 693 (53) Empire Resorts NYNY (13) 61 7 Fairpoint Comm. FRP (53) 828 (33) Foster Wheeler FWHLF (441) 2,268 (212) Foxhollow Tech. FOXH (60) 28 16 Graftech International GTI (44) 1,036 284 Hawaiian Holding HA (160) 236 (60) Hercules Inc. HPC (40) 2,658 362 I2 Technologies ITWH (180) 385 85 IMAX Corp IMX (49) 222 9 Immersion Corp. IMMR (5) 26 9 Indevus Pharm. IDEV (84) 149 108 Int'l Wire Group ITWG (80) 410 97 Isis Pharm. ISIS (18) 255 116 Life Sciences LSRI (5) 173 1 Lodgenet Entertainment LNET (68) 301 20 Lucent Tech. Inc. LU (717) 16,687 3,921 Majesco Holdings MJES (41) 26 9 Maxxam Inc. MXM (649) 1,017 72 Maytag Corp. MYG (75) 3,020 535 McDermott Int'l MDR (338) 1,245 (33) McMoran Exploration MMR (85) 156 29 Northwest Airline NWAC (2,166) 14,450 (431) Northwestern Corp. NWEC (603) 2,445 (692) ON Semiconductor ONNN (381) 1,110 215 Pegasus Comm PGTV (203) 235 52 Per-se Tech. Inc. PSTI (25) 169 31 Phosphate Res. PLP (484) 280 6 Pinnacle Airline PNCL (18) 147 26 Primedia Inc. PRM (1,163) 1,577 (203) Quality Distribution QLTY (26) 377 9 Qwest Communication Q (2,477) 24,926 (509) Riviera Holdings RIV (31) 224 1 SBA Comm. Corp. SBAC (27) 915 11 Sepracor Inc. SEPR (331) 1,039 707 St. John Knits Inc. SJKI (57) 208 73 Syntroleum Corp. SYNM (8) 48 11 Triton PCS Holding A TPC (254) 1,443 62 US Unwired Inc. UNWR (263) 640 (335) U-Store-It Trust YSI (34) 536 N.A. Vector Group Ltd. VGR (48) 528 110 Vertrue Inc. VTRU (33) 486 31 WR Grace & Co. GRA (118) 3,087 774 Young Broadcasting YBTVA (12) 798 85 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***