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/raid1/www/Hosts/bankrupt/TCR_Public/050304.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 4, 2005, Vol. 9, No. 53 Headlines ACCESS WORLDWIDE: Board Elects Alfonso Yuchengco as Director ADELPHIA COMMS: Reviewing the Bids for Adelphia's Cable-TV Assets AIR POWER INC: Case Summary & 20 Largest Unsecured Creditors AMERISTAR CASINOS: S&P Lifts Corporate Credit Rating to BB ARKLATEX PROPERTIES: Voluntary Chapter 11 Case Summary ARMSTRONG WORLD: Court Extends Cash Retention Program to Dec. 31 ATA AIRLINES: U.S. Bancorp's Motion to Get Back Planes Draws Fire AURORA MODULAR: Sells Certain Assets to Global Diversified B/E AEROSPACE: Moody's Up Ratings as Equity-to-Debt Ratio Improves BEAR ISLAND: Brant Allen's Plans Prompt S&P to Review Ratings BELDEN & BLAKE: Impending Default Prompts S&P to Review Ratings BFG INVESTMENTS LLC: Voluntary Chapter 11 Case Summary BOMARITO'S LLC: Case Summary & Largest Unsecured Creditor CANTERBURY CONSULTING: Breaches Financial Covenant with Bank CATHOLIC CHURCH: Spokane Board Taps Riddell Williams as Counsel CATHOLIC CHURCH: Spokane Wants Litigants Committee Disbanded CHASE COMMERCIAL: Fitch Puts Low-B Ratings on 3 Classes; Junks One CHESAPEAKE ENERGY: Moody's Reviews B3 Senior Ratings for Upgrade COEUR D'ALENE: Names Top Executives for Bolivian Subsidiary COLDWAVE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors COMDISCO INC: Declares $13 Per Share Common Stock Dividend COMDISCO INC: Distributes Cash to Contingent Rights Holders COMMERCE ONE: Wants Until Apr. 4 to File a Chapter 11 Plan DAW TECHNOLOGIES: Court Approves Amended Disclosure Statement DB COMPANIES: Court Okays Asset Sale Procedures DURA AUTOMOTIVE: Senior Secured Lenders Relax Financial Covenants EAGLEPICHER INC: Lenders Say EBITDA Must Top $5 Million in May EL PASO CORP: S&P Rates Proposed $200M Senior Unsec. Notes at B- EXIDE TECHNOLOGIES: Has Until Aug. 29 to Object to Claims FAYE FOODS INC: Case Summary & 20 Largest Unsecured Creditors FINLAY FINE: Moody's Pares Rating on $200MM Sr. Unsec. Notes to B2 FINLAY FINE: S&P May Slice Ratings After Federated-May Merger FRASER PAPERS: Moody's Rates Planned $150M Sr. Unsec. Notes at B3 FRASER PAPERS: S&P Places B Rating on $150M Senior Unsec. Notes GETTY IMAGES: Moody's Puts Ba3 Rating on $263MM Sub. Debentures GLASS GROUP: Wants to Hire Morris Nichols as Bankruptcy Counsel GLASS GROUP: Taps Focus Management as Financial Consultants GP CAPITAL: Increase Subordination Levels Spur S&P to Up Ratings GREEN TREE: Delayed Interest Payments Cause S&P's Default Rating HEALTHESSENTIALS SOLUTIONS: Taps Frost Brown as Bankruptcy Counsel HOLYOKE HOSPITAL: Fitch Downgrades $13.2 Million Bonds to BB+ INTERSTATE BAKERIES: Credit Suisse Discloses 8.3% Equity Stake INTERSTATE BAKERIES: Wants to Walk Away from 19 Real Estate Leases JEAN COUTU: Completes Exchange Offer for 7-5/8% Senior Notes LAS AMERICAS: Files for Chapter 11 Protection in E.D. California LAS AMERICAS: Case Summary & 20 Largest Unsecured Creditors LONG DISTANCE BILLING: Voluntary Chapter 11 Case Summary MANHATTAN IMAGING: Amends Two-Year-Old Plan & Disclosure Statement MAULDIN-DORFMEIER: Case Summary & 20 Largest Unsecured Creditors MCI INC: Employees Sending Mixed Signals, Says New Vault Surveys MCI INC: Verizon Opens Talks Between Qwest & MCI for Two Weeks MERRILL LYNCH: Fitch Puts Low-B Ratings on Certificate Classes F&G MERRILL LYNCH: Fitch Puts Low-B Ratings on Six 2003-KEY1 Certs. METALDYNE CORP: S&P Pares Corp. Credit Rating to B After Review METROPCS INC: Likely Default Cues S&P to Pare Credit Rating to CCC MIRANT CORP: Dynegy Agrees to Cut $2.7M Cure Claim to $125,000 NATIONAL BENEVOLENT: Court Confirms Full-Payment Chapter 11 Plan NEW HEIGHTS: Wants to Sell All Assets to Geneva7 for $1.1 Million NEW WORLD: Dec. 28 Balance Sheet Upside-Down by $112.9 Million NORTEL NETWORKS: Declares Preferred Shares Series 5 Dividends NORTEL NETWORKS: Will File Financial Statements by End of March OGLEBAY NORTON: Court Approves Settlement with London Insurers OWENS CORNING: Board Approves 2005 Executive Salary Increases OXSHOTT REALTY: Case Summary & Largest Unsecured Creditor PARMALAT USA: ReGen & Riverside Say Plan Fails "Good-Faith" Test PEABODY ENERGY: Board of Directors Elects Gregory Boyce as CEO QWEST COMMS: Verizon Opens Talks Between Qwest & MCI for Two Weeks RAVENEAUX LTD: Case Summary & 20 Largest Unsecured Creditors REFOCUS GROUP: Closes $7 Million Financing from Medcare Investment RELIANCE GROUP: Wants Court Nod on D&O Litigation Settlement Pact SALEM COMMS: Acquiring WGUL-AM & WLSS-AM for $9.5 Million SEALY MATTRESS: Nov. 28 Equity Deficit Widens to $383.7 Million SLADE & NG LLC: Case Summary & 20 Largest Unsecured Creditors SOLUTIA INC: Building Skydrol Production Unit at Anniston Plant SOLUTIA INC: Wants Exclusive Filing Period Stretched to July 11 SPX CORP: Extends Cash Tender Offers for 7-1/2% & 6-1/4% Sr. Notes STADACONA INC: S&P Reviews Ratings as Brant Allen May Take Control SUNRISE CDO: Credit Support Factors Spur S&P to Review Ratings SYRATECH CORPORATION: Wants Access to $25.35 Mil. of DIP Financing TITAN CORP: S&C & DOJ Settlements Cue S&P to Affirm Low-B Ratings TNP ENTERPRISES: S&P May Upgrade BB+ Credit Rating After Review TRI-COUNTY CONTRACTORS: Case Summary & Largest Unsecured Creditors TRICO MARINE: Court Approves Modifications to $75MM Exit Facility UAL CORP: Judge Wedoff Rules on Honoring the Revised ALPA Accord UNIFORET INC: Ability to Continue as a Going Concern is Uncertain US AIRWAYS: Court Allows Philadelphia to Set Off Multi-Mil. Claims WESTPOINT STEVENS: Bank of America Discloses 5.29% Equity Stake WINN-DIXIE: U.S. Trustee Appoints 7-Member Creditors' Committee WINN-DIXIE: Committee Has 3 Bondholders, 2 Landlords & 2 Vendors WINN-DIXIE: Creditors' Committee Taps Milbank Tweed as Counsel WITHERSPOON CDO: Moody's Puts Ba2 Rating on $18M Preference Shares W.R. GRACE: Phillip Hempleman Discloses 5.2% Equity Stake YUKOS OIL: To Appeal as Court Upholds Dismissal & Denies Stay * BOOK REVIEW: Business & Capitalism: An Intro to Business History ********* ACCESS WORLDWIDE: Board Elects Alfonso Yuchengco as Director ------------------------------------------------------------ Access Worldwide Communications, Inc. (OTC Bulletin Board: AWWC), disclosed that Alfonso S. Yuchengco III has been unanimously elected to the Company's Board of Directors, effective March 1, 2005. Mr. Yuchengco has extensive experience in the financial services and the Business Process Outsourcing industry. He is currently a Partner of Argosy Advisers, a boutique Financial Advisory firm and Vice-Chairman of NeoIT Philippines, a joint venture with NeoIT, the leading advisory firm on Offshore Outsourcing in the US. He was previously Executive Vice Chairman and CEO of Rizal Commercial Banking Corporation, the 4th largest Bank in the Philippines. Prior to that, he served as President and CEO of the Yuchengco family holding company, which has investments in consumer finance, construction, power generation, and banana plantations. He has also served as Chairman, Vice- Chairman or Director on the Board of several companies in various industries from credit cards, automotive manufacturing and distribution, education, real estate, pharmaceutical and memorial parks. Mr. Yuchengco was also responsible for setting up joint ventures in the Philippines with Honda, Isuzu, Enron and the Government Investment Corporation of Singapore. Mr. Yuchengco is the Honorary Consul General for the Republic of Hungary to the Philippines. He is a member of the Philippines- Singapore Business Council and the Philippines-Japan Economic Cooperation Committee. He also sits on the Board of Trustees of the Makati Business Club and is a Fellow of the Australian Institute of Company Directors. Mr. Yuchengco was born on March 12, 1959 in Manila, has a degree in Asian Studies from De La Salle University and lives in Manila, Philippines. "As we continue to build our off-shore Voice and 'BPO' capabilities, Mr. Yuchengco will be an invaluable asset for us with his background in the 'BPO' industry, his business acumen as well as his presence on the ground in the Philippines" commented Shawkat Raslan, Chairman, President and Chief Executive Officer of Access Worldwide. "I am very pleased that Mr. Yuchengco has accepted to join the Access Board and I am excited to welcome him to Access Worldwide." Mr. Yuchengco commented, "I am pleased to be elected to the Board of Directors and have already made a financial investment in the Company. I look forward to helping Access Worldwide develop and become a major player in the offshore 'BPO' space, sustain its revenue growth and build shareholder value." Founded in 1983, Access Worldwide provides a variety of sales, marketing and medical education services. Among other things, we reach physicians, pharmacists and patients on behalf of pharmaceutical clients, educating them on new drugs, prescribing indications, medical procedures and disease management programs. Services include product stocking, medical education, database management, clinical trial recruitment and teleservices. For clients in the telecommunications, financial services, insurance and consumer products industries, we reach the established mainstream and growing multicultural markets with multilingual teleservices. Access Worldwide is headquartered in Boca Raton, Florida and has over 1,000 employees in offices throughout the United States. More information is available at http://www.accessww.com/ At Sept. 30, 2004, Access Worldwide's balance sheet showed a $4,428,243 stockholders' deficit, compared to a $3,749,674 deficit at Dec. 31, 2003. ADELPHIA COMMS: Reviewing the Bids for Adelphia's Cable-TV Assets ----------------------------------------------------------------- Adelphia Communications Corporation received bids for its cable-television assets from: * Time Warner, Inc., and Comcast Corp., and * Kohlberg Kravis Roberts & Co. and Providence Equity Partners, Inc. Time Warner and Comcast's joint bid is reportedly valued at $17 to $17.5 billion, according to The Wall Street Journal. The value of KKR and Providence's bid is unknown at this time. KKR is a private equity firm specializing in management buyouts. Providence is a private investment firm specializing in equity investments in communications and media companies around the world. The New York Post reports that William Huff of W.R. Huff Asset Management Co., one of Adelphia's largest creditors, has submitted or is planning to submit a bid. Mr. Huff is reportedly opposed to a sale of less than $17.5 billion. According to The Post, by joining the auction, Mr. Huff is trying to ensure that ACOM won't be sold "at a bargain basement price." Last week, the Journal reported that its unidentified sources familiar with the negotiations say they want an all-cash deal. Those people say they're skeptical about the $35 billion valuation Time Warner and Comcast put on the company they'll create using Adelphia's assets and they don't have confidence the 15% slice of the pie is worth $5.6 billion. Court Grants Committee Lawyers and Financial Advisers Access to Bid Information The Wall Street Journal, citing people familiar with the matter, reports that Adelphia Communications Corp. reached a compromise with its equity and debt holders regarding access to bid information. According to Peter Grant, a staff reporter at the Journal, the compromise was reached at a closed hearing before Judge Gerber. The parties agreed to allow the Committees' lawyers and financial advisers to review bids. However, the Committee members cannot access the bid information. As previously reported, the Official Committee of Unsecured Creditors retained Kasowitz Benson Torres & Friedman LLP, as counsel, and Greenhill & Co., LLC, as its financial advisors. The Official Committee of Equity Security Holders hired Bragar Wexler Eagel & Morgenstern, LLP, as its special conflicts counsel, and Chanin Capital Partners, LLC, as financial advisor. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR POWER INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Air Power, Inc. PO Box 1449 West Caldwell, New Jersey 07007-1449 Bankruptcy Case No.: 05-16092 Type of Business: The Debtor is a fully licensed and bonded mechanical, HVAC, sheet metal and service contractor located in Fairfield, New Jersey. The Debtor installs, maintains and repairs air- conditioning systems for commercial, industrial and residential clients. See http://www.airpowerhvac.bigstep.com/ Chapter 11 Petition Date: March 2, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Daniel J. Yablonsky, Esq. Yablonsky & Associates, LLC 1430 Route 23 North Wayne, New Jersey 07470 Tel: (973) 686-3800 Fax: (973) 686-3801 Total Assets: $1,130,026 Total Debts: $1,495,197 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Business Loan $179,000 1825 E Buckeye Road Phoenix, AZ 85034 Wachovia Bank, NA $179,000 190 River Road Summit, NJ 07901 SMW L #25 Benefit Funds $165,927 440 Barrell Avenue Carlstadt, NJ 07072 Attn: Joseph R. Pagano, Esq. 11 Cleveland Place Springfield, NJ 07081 SMW National Benefit Funds $103,000 PO Box 79321 Baltimore, MD 21279 Attn: Jessica L. Tortella, Esq. Jennings Sigmond, P.C. 510 Walnut Street, Suite 1600 Philadelphia, PA 19106 Blasco Supply, Inc. $89,241 440 East 162nd Street Bronx, NY 10451 Refrigeration & A/C Division $71,873 c/o I.E. Shaffer PO Box 1058 Trenton, NJ 08628-0230 Technical Airflow, Inc. $34,783 Carrier Northeast $32,517 PO Box 33133 Newark, NJ 07188 Quantum Corporate Funding Business Loan $32,254 Limited Luce, Schwab & Kase, Inc. $29,621 ANTY Trucking, Inc. $22,089 Commerce Insurance $21,408 Distribution Fund Local #14 $21,111 Trane Parts Center Of NJ $21,101 IBEW LU #102 District Fund $19,586 Distribution Fund Local 274 $19,070 c/o Basil Castrovinci Assoc. AIM Fund Services, Inc. $17,991 Attn: Retirement Plans Operation State of New Jersey Sales & Tax Liability $16,968 Use Tax Asbestos Workers Local 32 $16,246 Verner, Cadby Ford $15,945 AMERISTAR CASINOS: S&P Lifts Corporate Credit Rating to BB ---------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Ameristar Casinos, Inc., including its corporate credit rating to 'BB' from 'BB-'. The outlook is stable. The Las Vegas, Nevada-based casino owner and operator has $766 million in debt. "The upgrade reflects Ameristar's continued solid operating performance, modest debt leverage, and the expectation that the company will continue to improve its credit measures in 2005, providing a cushion within the rating to accomplish its growth objectives," said Standard & Poor's credit analyst Peggy Hwan. The ratings on Ameristar reflect the company's active growth strategy, tempered by the company's leading competitive positions in its markets, a somewhat geographically diverse portfolio of casino assets, and good credit measures for the rating. ARKLATEX PROPERTIES: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: ArkLaTex Properties of Atlanta, Inc. 1405 College Drive Texarkana, Texas 75503 Bankruptcy Case No.: 05-50070 Chapter 11 Petition Date: February 28, 2005 Court: Eastern District of Texas (Texarkana) Judge: Brenda T. Rhoades Debtor's Counsel: Bart C. Craytor, Esq. 5331 Summerhill Road Texarkana, Texas 75503 Tel: (903) 832-4508 Fax: (903) 832-6247 Total Assets: $352,187 Total Debts: $1,683,499 The Debtor did not file a list of its 20 Largest Unsecured Creditors. ARMSTRONG WORLD: Court Extends Cash Retention Program to Dec. 31 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorizes Armstrong World Industries, Inc., and its debtor-affiliates, to implement their Cash Retention Program through Dec. 31, 2005. The Cash Retention Program is part of the Debtors' Current Employee Retention Program, a program designed to reduce if not eliminate employee turnover. Under the Cash Retention Program, approximately 150 key employees were eligible to receive annual cash retention payments over the three-year period ending December 31, 2003. Each year's payment ranged from 30% to 110% of base salary depending on the position level and the nature of the work performed by the key employees. AWI discloses in a regulatory filing with the Securities and Exchange Commission the participating executive officers who are eligible for a cash retention payment equal to the stated percentage of their current annualized base salary: Matthew J. Angello 100% F. Nicholas Grasberger 100% John N. Rigas 100% Stephen J. Senkowski 100% William C. Rodruan 60% Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: U.S. Bancorp's Motion to Get Back Planes Draws Fire ----------------------------------------------------------------- Timothy L. Black, Esq., at Feiwell & Hannoy, PC, in Indianapolis, Indiana, informs the United States Bankruptcy Court for the Southern District of Indiana that ATA Airlines and its debtor- affiliates have not surrendered aircraft bearing Tail Nos. N302CE, N306CE, N307CE and N308CE, which they leased from U.S. Bancorp Equipment Finance, Inc. On February 10, 2005, the Court approved the rejection of the lease agreements pertaining to the Aircraft. However, the Debtors continue to use certain engines covered by the Lease Agreements on aircraft in their flight operations. The Debtors informed U.S. Bancorp that they are not able to surrender the Aircraft because non-U.S. Bancorp engines are currently attached to U.S. Bancorp's airframes, while the U.S. Bancorp engines are attached to non-U.S. Bancorp airframes. The Debtors have further notified U.S. Bancorp that it will be some time before they can swap all the necessary engines and surrender all the Aircraft to U.S. Bancorp. On February 18, 2005, U.S. Bancorp provided the Debtors written notice that the Basic Rent under each Lease Agreement is overdue. The Debtors have represented that they will not cure the payment defaults within the applicable two-business day period as provided under the Lease Agreements. Mr. Black tells the Court that U.S. Bancorp has a purchaser for the Aircraft and will suffer significant damages if it cannot recover its Aircraft in time to consummate the sale. Section 1110(a)(2) of the Bankruptcy Code provides that if a debtor makes a Section 1110(a) election, it continues to receive the benefit of the automatic stay to the extent it keeps current on its obligations. Mr. Black argues that the Debtors cannot have it both ways -- failing to make payments under the Lease Agreements while not taking the final step to consummate the rejection of the Lease Agreements. Accordingly, U.S. Bancorp asks the Court to compel the Debtors to immediately return the Aircraft. Debtors Object Jeffrey J. Graham, Esq., at Sommer Barnard Attorneys, PC, in Indianapolis, Indiana, informs Judge Lorch that the attachment of the original engines to the appropriate Aircraft has been difficult due to the Debtors' lack of spare engines with which to effectively swap out engines between remaining Saab aircraft so as to attach the original engines to each Aircraft. Nevertheless, the Debtors have been working with U.S. Bancorp to comply with the Lease Rejection Procedures to the best of their ability. To that end, the Debtors withdrew all the Aircraft airframes from service on or before February 9, 2005, and the Aircraft have been available for surrender on these dates: Aircraft Date -------- ---- N303CE February 9, 2005 N305CE February 9, 2005 N306CE February 23, 2005 N302CE February 28, 2005 N307CE February 28, 2005 N308CE February 22, 2005 The airframe for N304CE and its unattached engines have been available to U.S. Bancorp for some time. Considering the immediate and imminent turnover of the Aircraft, the Debtors ask the Court to deny U.S. Bancorp's request. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) AURORA MODULAR: Sells Certain Assets to Global Diversified ---------------------------------------------------------- Global Diversified Industries, Inc. (OTC Bulletin Board: GDVI) focused on the modular building industry with emphasis on the education market, has completed its Asset Purchase Agreements in conjunction with assets from Aurora Modular Industries, Inc. One of the Agreements consists of a $500,000 purchase by Global Modular, Inc. -- a wholly owned subsidiary of Global Diversified Industries, Inc. -- for assets including intellectual and other tangible property with an estimated value of $3.3 million. The second Agreement, between Global Modular, Inc., and Impact Modular Leasing, Inc., involves fourteen partially completed buildings acquired in the Aurora Modular bankruptcy auction. Global will be paid for all expenses in completing the manufacturing of these buildings, plus, it will receive fifty percent (50%) of the net profits derived from the sale of these buildings. It is estimated that Global's share of the profits will be approximately $300,000. Global Diversified Industries, Inc., Chairman and CEO Phil Hamilton states, "We are pleased to have these Agreements finalized, as they will provide our subsidiaries with the resources needed to keep pace with the changing times regarding construction processes and architectural design in the modular building industry." About Global Diversified Industries, Inc. Global Diversified Industries, Inc., is a holding company with two wholly owned subsidiaries, Global Modular, Inc. and MBS Construction, Inc. Both are engaged in the modular construction marketplace with an emphasis on educational projects. They incorporate the latest in construction software, allowing them to better manage projects incorporating cost vs. profit ratios, construction and manufacturing schedules, purchasing, receiving and other facets of industrial management. The Company's work is found in Northern and Southern California, with numerous projects on budget for school systems throughout the state. About Aurora Modular Industries, Inc. Aurora Modular Industries, Inc., filed for chapter 7 protection on Aug. 11, 2004 (Bankr. C.D. Calif. Case No. 04-19357). Norman L. Hanover, Esq., at Reid & Hellyer, represents the Debtor in its liquidation efforts. B/E AEROSPACE: Moody's Up Ratings as Equity-to-Debt Ratio Improves ------------------------------------------------------------------ Moody's Investors Service has upgraded the ratings of B/E Aerospace, Inc.'s senior subordinated notes, to Caa2 from Caa3. Also, the rating agency has confirmed B/E's Senior Implied and Speculative Grade Liquidity ratings of B3 and SGL-2, respectively, and has changed the rating outlook to positive. In upgrading the subordinated notes, Moody's considered that the actions the company has taken to issue additional equity and reduce debt have improved the recovery value of subordinated investors in the company's capital structure. The confirmation of the senior debt ratings and the outlook change reflect Moody's belief that while the company continues to have a significant debt burden, its overall business outlook is improving, and future earnings and cash flow generation from its expanded backlog of business combined with careful control of working capital and capital expenditures should provide a basis for improved financial metrics. The SGL-2 Speculative Grade Liquidity Rating continues to reflect Moody's expectation that B/E Aerospace will maintain a good liquidity profile through internal cash sources and committed credit availability. As a leading provider of commercial aircraft interiors and aerospace fasteners, B/E Aerospace experienced a significant downturn in its business over the last several years, and weak operating performance has resulted in modest levels of cash flow generation relative to indebtedness. Free cash flow has been negative in each of the last few years, despite relatively modest levels of reinvestment in the business for working capital and capital expenditures. Nevertheless, the company has continued to win important business awards, including for interior elements of the Airbus A380 aircraft, and its backlog has grown to about $700 million as of December 2004. With new aircraft deliveries expected to increase over the next several years, this backlog should enable the company to demonstrate revenue growth and margin improvement, and cash flow generation that better supports the company's level of indebtedness. The ratings continue to reflect the high degree of debt carried by the company, and the effects that the substantial interest expense have on the company's free cash flow generation. The company reported approximately $680 million of debt as of December 2004, the majority of which comprised relatively high-coupon bonds. On a lease-adjusted basis, this represented about 7.3 times FY 2004 EBITDAR. At $76 million, interest expense was substantial, and was a major factor in the company's negative free cash flow generation in FY 2004. However, with the November 2004 repayment of the company's most expensive subordinated notes - $200 million of 9.5% notes - through about $154 million in proceeds from a 18 million share offering as well as through use of cash balances, B/E Aerospace has taken significant steps to reduce overall leverage, increase its equity cushion, and, most importantly, improve free cash flow and interest coverage. This transaction alone improved the company's EBIT/interest coverage from about 0.9 times (estimated LTM December 2004) to about 1.2 times, pro forma the reduced interest expense. Going forward, Moody's notes that B/E Aerospace's backlog has grown to about $700 million as of December 2004, which represents a 40% increase over the prior year levels. The rating agency believes that this is illustrative of increased business opportunities available to the company in the recovering commercial aviation sector, which has materialized in the form of increased contract levels, and should lead to revenue growth and improvement in operating margins for B/E over the next few years. However, Moody's remain cautious that the increase in business activity could require near-term investments in working capital and fixed assets, as the company strives to meet higher contractual delivery levels in the near future. The upgrade of B/E Aerospace's senior subordinated notes to Caa2 and senior unsecured issuer rating to B3, in line with Moody's standard notching practice, reflects Moody's assessment that expected recovery on subordinated debt under a default scenario has improved. This considers the expected recovery in the company's profitability and cash flows over the near term as well as the effects that B/E's Q4 2004 equity issuance and repayment of subordinated debt has on the company's capital structure. The Caa2 rating on B/E's senior subordinated notes, two notches below the senior implied rating, continues to reflect the junior claim of this class of debt to all existing and future senior debt, including B/E's $175 million of senior unsecured notes and the company's $50 million senior secured revolving credit facility (not rated by Moody's). The positive ratings outlook reflects Moody's expectations that B/E Aerospace will grow its revenue base and improve margins over the near term, returning the company to positive free cash flow generation and lower leverage relative to its earnings. Ratings may be upgraded if the company were to continue to grow its revenue base while improving operating margins, such that lease- adjusted debt were to fall below 6 times EBITDAR, EBIT coverage of interest were to exceed 1.5 times, and the company were to satisfy production on its backlog of business without a significant use of cash for capital spending and working capital requirements, allowing for sustainable positive free cash flow generation over the next two years. Conversely, the ratings or the outlook would likely face downward revision if lease-adjusted leverage were to remain at the current 7 times LTM EBITDAR levels, or if unanticipated working capital or CAPEX requirements were to result in continue negative free cash flow generation. B/E Aerospace's SGL-2 speculative grade liquidity rating reflects the company's good liquidity (cash and committed credit availability), with a comfortable cushion to covenant levels in its revolving credit facility, which was amended in 2004 to provide less restrictive financial covenant requirements. The SGL rating also reflects stronger cash flow generation due to expected improvements in operating results in FY 2005, as well as the effects of the repayment of the $200 million of 9.5% subordinated notes in the fourths quarter of 2004, which will reduce interest expense by about $19 million annually. Furthermore, B/E Aerospace does not have any near-term debt maturities that will place a significant call on liquidity. The ratings upgraded are: * $250 million senior subordinated notes due 2008, to Caa2 from Caa3 * $250 million senior subordinated notes due 2011, to Caa2 from Caa3 * Senior unsecured issuer rating to B3 from Caa2. The ratings confirmed are: * $175 million senior unsecured notes due 2010, rated B3 * Senior implied rating of B3 * Speculative Grade Liquidity Rating at SGL-2 Headquartered in Wellington, Florida, B/E Aerospace, Inc., is the world's largest manufacturer of commercial and general aviation cabin interior products and a major independent distributor of aerospace fasteners. The company had FY 2004 revenues of $733 million. BEAR ISLAND: Brant Allen's Plans Prompt S&P to Review Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on newsprint producers, Bear Island Paper Co., LLC, and Stadacona, Inc., on CreditWatch with positive implications. For Bear Island Paper, Standard & Poor's placed on CreditWatch its 'B-' corporate credit and senior revolver ratings and 'CCC+' senior unsecured rating. For Stadacona, the 'B' corporate credit and senior secured loan ratings and 'B+' senior secured rating were put on CreditWatch. "This rating action follows the announcement by Brant Allen Industries, Inc., parent company of Bear Island, that it is contemplating a restructuring that would bring Bear Island, Stadacona, and F.F. Soucy, Inc., under the common control of Brant-Allen," said Standard & Poor's credit analyst Dominick D'Ascoli. While details of the contemplated restructuring have not been released, Standard & Poor's expects the resultant combined entity would have a stronger credit profile than Stadacona or Bear Island alone because of greater operating diversity and larger scale. Standard & Poor's will resolve the CreditWatch action when details regarding the restructuring are released. BELDEN & BLAKE: Impending Default Prompts S&P to Review Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit, 'BB-' first-lien senior secured debt, and 'CCC+' second-lien senior secured debt ratings on Belden & Blake Corp on CreditWatch with negative implications. "The rating action follows the announcement that Belden & Blake will not be able to provide the lenders in its credit agreement with its reserve report as of Dec. 31, 2004, within the 60-day period from year-end (March 1, 2005) stipulated in the covenants of the facility," said Standard & Poor's credit analyst Paul B. Harvey. "If the reserve report is not provided by March 31, 2005, Belden would be in default of the credit agreement and its ISDA Agreement with J. Aron & Co., unless it receives waivers," he continued. If such an event occurred, an acceleration of the amounts under the credit agreement or the termination of the ISDA Agreement would create a default under the indenture for Belden & Blake's $192 million senior secured notes. Belden's reserve engineer, Wright & Company, Inc., informed Belden that it could not meet the March 1 deadline, and would likely need until March 15 to complete their work. Per the credit agreement, Belden & Blake will not be in default if the noncompliance is corrected or waived within 30 days -- March 31, 2005. Belden & Blake's ISDA Agreement with J. Aron also contained a 60-day reserve-reporting requirement, which has been waived until March 31, 2005. If the reserve report is not provided in that timeframe, Belden & Blake would need to seek waivers from both the credit agreement and its ISDA Agreement with J. Aron. Standard & Poor's will monitor the situation at Belden & Blake and take rating actions as warranted. BFG INVESTMENTS LLC: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: BFG Investments, LLC 1616 East Griffin Parkway, PMB 110 Mission, Texas 78572 Bankruptcy Case No.: 05-70173 Chapter 11 Petition Date: March 1, 2005 Court: Southern District of Texas (McAllen) Judge: Richard S. Schmidt Debtor's Counsel: Kelly K McKinnis, Esq. 612 Nolana Loop, Suite 240 McAllen, Texas 78504 Tel: (956) 686-7039 Fax: (956) 686-8261 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditor. BOMARITO'S LLC: Case Summary & Largest Unsecured Creditor --------------------------------------------------------- Debtor: Bomarito's, LLC 4601 Perkins Cove Memphis, Tennessee 38117 Bankruptcy Case No.: 05-22870 Chapter 11 Petition Date: February 24, 2005 Court: Western District of Tennessee (Memphis) Judge: David S. Kennedy Debtor's Counsel: John E. Dunlap, Esq. The Waggoner Law Firm 1433 Poplar Avenue Memphis, Tennessee 38104 Tel: (901) 276-3334 Total Assets: $1,601,000 Total Debts: $938,318 Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shelby Company Trustee Property Taxes $18,107 P.O. Box 2751 Memphis, Tennessee 38101 CANTERBURY CONSULTING: Breaches Financial Covenant with Bank ------------------------------------------------------------ Canterbury Consulting Group, Inc. (NASDAQ:CITI) reported that on Feb. 25, 2005, it notified its lender, Commerce Bank, N.A., that it was in breach of a financial covenant associated with its borrowing facility. The Company violated the "cumulative operating loss" codicil when it exceeded its loss threshold by losing an additional $194,000 in December 2004. The Company and the Bank had agreed to a maximum cumulative loss limit of $1,050,000 for all periods after Nov. 30, 2003. After the December 2004 loss was recently calculated and reported to the Bank the cumulative loss stands at $1,197,000 as of Dec. 31, 2004. As a result of this breach, the Bank has reduced the maximum borrowings allowed under the existing loan agreement to $750,000 from $1,500,000. Also, the Company has also agreed to seek another lender in order to pay off the existing line with the Bank. As of Feb. 28, 2005, the Company had $550,000 outstanding against this facility. Headquartered in Medford, New Jersey, Canterbury Consulting Group, Inc., offers technology training for software brands such as Adobe, Lotus, and Microsoft. CATHOLIC CHURCH: Spokane Board Taps Riddell Williams as Counsel --------------------------------------------------------------- Judge Williams authorizes the Official Committee of Tort Claimants in the Diocese of Spokane's Chapter 11 case to retain Riddell Williams P.S. as its legal counsel, nunc pro tunc to January 1, 2005. Additionally, Judge Williams authorizes Spokane and the U.S. Trustee to disclose to Riddell Williams the items filed under seal in the Diocese's Schedule F, Master Mailing List and other sealed pleadings and documents. Riddell Williams will use the information to perform a conflicts check but will not publish or otherwise disclose the information without further Court order. 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. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Wants Litigants Committee Disbanded ------------------------------------------------------------ The Diocese of Spokane asks the U.S. Bankruptcy Court for the Eastern District of Washington to direct the U.S. Trustee to disband the Committee of Tort Litigants appointed on February 2, 2005. Tucson also wants the Court to reconstitute the Committee of Tort Claimants appointed on December 23, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller LLP, in Spokane, Washington, explains that no matter how carefully tasks are allocated between the Committees, the existence of two committees, whose expenses and attorney's fees are paid from assets of Spokane's estate, will result in duplication of work, an undue increase in administrative expenses, and ultimately, will threaten the ability of the Diocese to reorganize. Mr. Paukert clarifies that Spokane does not seek to remove members of Litigants Committee from involvement in the Chapter 11 case by serving as members of the Tort Claimants Committee Claimants. Spokane's request concerns the appointment of an additional committee of unsecured creditors, not the selection of specific members to a committee. Mr. Paukert argues that appointment of a second committee was not necessary to assure adequate representation of creditors. Although the ability of a single committee to function, and standing and desires of creditors in the case may vary widely, the "formation of a creditors' committee is purposefully intended to represent the necessarily different interests and concerns of the creditors it represents." Likewise, the nature of the Diocese's case alone does not necessitate the continuation of two committees whose only distinction is the filing of prepetition lawsuits. The Diocese does not anticipate that the creditors represented by the two committees will be classified separately or treated differently under a plan of reorganization. The factual underpinning of the creditors' claims is exactly the same - alleged abuse by priests or employees of the Diocese. In fact, the Diocese believes that separately classifying claimants according to whether a particular claimant has or has not initiated a prepetition lawsuit would violate Section 1122 of the Bankruptcy Code. Mr. Paukert points out that the two committees have retained separate law firms, one from Seattle and one from Los Angeles. These firms charge as much as $400 per hour for their services. As the debtor, Spokane legally is responsible for the payment of not only its own legal fees, but the fees incurred by any official creditors' committees. "The Spokane Diocese simply cannot afford to pay $400,000 each month in administrative expenses," Spokane's Vicar General, Father Steve Dublinski, tells Judge Williams. "We believe that the appointment of a second committee was well intentioned. But this development, with its profound financial ramifications, threatens the very ability of the Diocese to reach a fair resolution of the claims and to make it through the Reorganization process." Appointing a second committee is an extraordinary remedy, Mr. Paukert continues. Fairness, justice, and equity will be better served for everyone by simply changing the composition of the first committee. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHASE COMMERCIAL: Fitch Puts Low-B Ratings on 3 Classes; Junks One ------------------------------------------------------------------ Fitch Ratings affirms Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 1997-2: -- $311.8 million class A-2 'AAA'; -- Interest only class X 'AAA'; -- $32.6 million class B 'AAA'; -- $48.8 million class C 'AAA'; -- $44.8 million class D 'AA-'; -- $12.2 million class E 'A'; -- $48.8 million class F 'BB'; -- $6.1 million class G 'BB-'; -- $12.2 million class H 'B'; -- $8.1 million class I remains 'CCC'. The $10.4 million class J certificates are not rated by Fitch. The affirmations reflect the stable performance and increased credit enhancements due to paydown and amortization. As of the February 2005 distribution date, the pool's aggregate collateral balance has been reduced by approximately 34%, to $535.9 million from $814 million at issuance. The certificates are collateralized by 131 commercial and multifamily mortgages, with concentrations in retail (33%) and multifamily (28%). The largest state concentrations are located in California (15%) and New York (12%). There are currently five loans (7.19%) being specially serviced. The largest loan (2.48%) in special servicing is a real estate owned -- REO -- limited-service hotel property located in Sturbridge, Massachusetts. The loan was transferred to special servicing as a result of a monetary default. The special servicer is evaluating different options in order to maximize the value of the property. The second largest specially serviced loan (1.74%) is a multifamily property located in Dayton, Ohio. The loan transferred to the special servicer in December 2004 due to monetary default and is currently 90+ days delinquent. An appraisal of the property has been ordered and the borrower is negotiating with the special servicer. As the workout scenarios of the large percentage of specially serviced loans becomes clearer, downgrades to some below investment grade classes are possible. Fitch will continue to monitor this deal closely for any changes in the status of the specially serviced loans. CHESAPEAKE ENERGY: Moody's Reviews B3 Senior Ratings for Upgrade ---------------------------------------------------------------- Moody's Investors Service placed Chesapeake Energy's Ba3 senior implied and Ba3 senior unsecured note ratings on review for upgrade. The review would likely result in either an upgrade to Ba2 with a stable outlook or in a confirmation of the existing ratings while retaining a positive outlook. In conducting its review for upgrade, Moody's will consider Chesapeake Energy's organic capacity for and willingness to deliver reduced leverage, yet still generate adequate growth; its potential to grow funded proven developed (PD) reserves faster than debt and faster than debt plus adjusted preferred stock; and ongoing re-leveraging risk embodied in Chesapeake Energy's acquisition and related funding activity. Chesapeake Energy's latitude to continue funding material acquisitions with adequate levels of common equity will be discussed with Chesapeake Energy management. The review for upgrade is warranted principally due to the cumulative reserve and production scale and diversification that Chesapeake Energy management has amassed, funded, and integrated in a rapid series of acquisitions over the last two years. Chesapeake Energy 's business risk has been substantially reduced relative to its financial risk, especially in the current price environment, and its hedging program provides strong price visibility on the large minority of its 2005 production. Chesapeake Energy's expansion effort has both intensified its holdings and its basin knowledge in the Mid-Continent, it has added other regions of potential growth, and it has retained a durable PD reserve life. The PD reserve life did fall from 8.1 years for 2003 to a still durable 7.8 years on annualized fourth quarter 2004 production and year-end 2004 PD reserves. Pro-forma for year-to-date 2005 acquisitions, Chesapeake Energy now holds approximately 850 mmboe of proven reserves, of which approximately 550 mmboe is PD reserves. Moody's does observe that Chesapeake Energy's leverage remains full, acquisition releveraging risk remains significant, 2004 reserve replacement costs were partially subsidized by the volume additions associated with an expansion of proven undeveloped reserves from 26% of total reserves to 34% of reserves, and further volume risk may reside in the 25% of reserves that Chesapeake Energy continues to internally engineer. Leverage could be reduced very modestly if CHK were to monetize certain non-reserve assets. Relative also to strong prevailing and anticipated natural gas prices, the review for upgrade is also warranted by Chesapeake Energy's combined unit operating, funding, and reserve replacement costs (leveraged unit full cycle costs). Though Chesapeake Energy's associated reserve replacement costs have not been competitive by historic asset market standards, those costs have been sufficiently competitive relative to prevailing historically expensive asset acquisition market conditions over the last two years and to how other peers' costs have fared in that market. Acquisition market prices have been driven by both the relative scarcity of properties of traditional quality, by prevailing strong prices, and by a very strong oil and gas price outlook. Should oil and gas prices moderate, Moody's would expect acquisition costs to also moderate. Lastly, the review for upgrade is warranted by Chesapeake Energy's comparatively low reinvestment risk profile. Its large diversified drilling inventory, fairly durable PD reserve life, and ample internal cash flow with which to fund its drilling program satisfactorily mitigate reserve replacement risk. At year-end 2004, leverage on PD reserves remains full at $6.08/PD BOE and $6.54/PD BOE including 50% of the convertible preferred stock as debt. These measures are up significantly from $5.35/PD BOE and $6.06/PD BOE, respectively, at year-end 2003. Leverage on daily production is up materially as well, rising from $15,800 of debt per unit of daily production for fourth quarter 2003 to $17,490 of debt per unit of daily production in fourth quarter 2004. However, including 50% of convertible preferred stock as debt, this figures moved up less aggressively, rising from $19,950 per unit of daily production to $20,120 per unit of daily production due to the conversion of two convertible preferred issues to common stock. At fourth quarter 2004 operating rates, Chesapeake Energy's total unit full cycle costs are approximately $20.51/boe, consisting of $5.34/boe of production costs, $1.54/boe of G&A expense (including $16.4 million of capitalized G&A), $3.79/boe of interest expense and preferred dividends, and, given the price environment, a competitive $9.84/boe of three year average all-sources reserve replacement costs. Though the 2004 drillbit and acquisition cost components of three year average reserve replacement costs benefited from the booking a much higher proportion of higher risk proven undeveloped reserves than in the past, reserve replacement costs would still appear to be competitive in the absence of such additional volume bookings. On reported data, 2004 drillbit finding and development costs were a competitive $7.03/boe and one-year all-sources reserve replacement costs were a higher (though still competitive) $10.43/boe (excluding capitalized interest and G&A) due to acquisition activity in an up-cycle market. Chesapeake Energy Corporation is headquartered in Oklahoma City, Oklahoma. COEUR D'ALENE: Names Top Executives for Bolivian Subsidiary ----------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE; TSX: CDM) disclosed the appointments of Jaime Villalobos as Executive Director, and Americo Villafuerte, as General Manager, of Coeur Manquiri, the wholly-owned Coeur subsidiary in Bolivia formed to operate the San Bartolome silver mine. Also, Coeur has assembled its team for the construction of San Bartolome, which is expected to commence production in 2006. Mr. Villalobos is a former member of government and renown consulting geologist who has been instrumental in the recognition of San Bartolome as a world-class silver deposit. Mr. Villafuerte, who will manage the operations at San Bartolome, is a mining engineer and MBA with over 20 years experience in mining, and has managed mines throughout South America for both large U.S. and other international mining firms. "Coeur is honored to have two such highly qualified and respected members of the mining community to head our Coeur Manquiri subsidiary and manage the future operations at this important project, which will be the first modern silver project built and operated in Bolivia, and a significant asset to the local and national economies of that country," said Dennis E. Wheeler, Chairman, President and Chief Executive Officer of Coeur d'Alene Mines Corporation. "We are proud to have them guiding this project which is so important to Coeur and to Bolivia." Coeur Manquiri is part of the Company's overall South American operations, headed by Ray Threlkeld, President. Leading the construction of San Bartolome is Alan Wilder, Coeur's Senior Vice President Project Development. The mining team assembled by Mr. Wilder for the construction phase of San Bartolome is headed by Thomas Turk, who has served as project manager for major mines throughout the world. Mr. Turk will be Coeur's project manager for San Bartolome, monitoring and managing the detailed engineering and procurement activities for the project. His work has previously included project management for mining operations in Nevada, New Guinea, Peru and Bolivia for U.S. mining firms, in a career that has spanned more than 40 years and two-dozen different large-scale projects. He will be assisted by David Carmichael as construction manager, who will monitor and manage construction activities at the site in Potosi, Bolivia. Mr. Carmichael, with 25 years experience, has also provided construction management and engineering work to large-scale projects in both North and South America. Rounding out the initial construction team are Larry Kyle as assistant construction manager, and Guy Morelli as project cost control manager for both San Bartolome and Coeur's Kensington gold project in Alaska. Mr. Kyle and Mr. Morelli both bring more than 35 years of experience in their disciplines. All will be employed by Coeur's 100-percent owned subsidiary formed to construct and operate San Bartolome. Following construction, average annual production of approximately 8.3 million ounces of silver is expected during the first five years of production at an expected cash operating cost of $3.50 per ounce. The mine has an initial estimated mine life of 15 years. Construction of the open pit milling operation and processing facility is currently expected to cost approximately $135 million. Total reserves measure 123 million ounces of silver contained in surface gravel deposits, or pallacos, which lend themselves to simple, low-tech surface-mining techniques. Additional mineral resources also hold potential for future expansion. San Bartolome is located near established industrial infrastructure in the historically silver-rich area of Potosi, Bolivia, where more than two billion ounces of silver have been mined. The building of the new mine represents the first modern, large-scale silver project built in Bolivia, generating an expected 500 local jobs during construction, and approximately 370 full-time jobs during operations. The project will also establish a foundation, called Fundespo, to assist in the development of new local industries, such as silversmithing and tourism. About the Company Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. * * * As reported in the Troubled Company Reporter on Oct. 4, 2004, Standard & Poor's Ratings Services affirmed its 'B-' corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corporation and removed the ratings from CreditWatch, where they were placed on June 1, 2004, with positive implications. The outlook is stable. Coeur D'Alene, an Idaho-based silver and gold mining company, currently has about $180 million in debt. COLDWAVE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Coldwave Systems, LLC Para Research Building 85 Eastern Avenue Gloucester, Massachusetts 01930 Bankruptcy Case No.: 05-11369 Type of Business: The Debtor provides portable equipment for ultra-low temperature (ULT) blast-freezing and ULT shipping for sashimi-grade tuna and other cargo. See http://www.coldwavesystems.com/ Chapter 11 Petition Date: March 1, 2005 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: D. Ethan Jeffery, Esq. Hanify & King PC One Beacon Street Boston, MA 02108 Tel: 617-423-0400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Partner Express $173,850 Nihonbaschi Sunrise Building 13-10 2-Chome, Nihonbaschi, Chuo-Ku Tokyo 103-0027, Japan BOC Gases Wuhan $87,085 11F Liangyou Plaza No. 316 Xinhua Ave. Hankou District Wuhan City, Hubei Province China BOZ AZ Gases $52,090 BOC Perth MC WA Australia, 6817 BOC Gases USA $48,900 Linde France $29,919 Linde Plin d.o.o $26,952 Agencia Maritima Blazquez, S.A. $24,776 Sampson & Associates $14,270 Citibank Advantage $13,923 Piper Alderman $13,193 TRT Ships Agency $11,046 Bank of America $10,835 DHL/Danzas Turkey $10,040 CRC $9,250 Carburos Metalicos $9,239 ColdWave Australia PTY Ltd. Bank $5,900 Blue Cross Blue Shield of MA $5,559 Tianjin Taiheng Gases $5,062 Carolina Shipping Co. $3,507 Carboxyque $2,100 COMDISCO INC: Declares $13 Per Share Common Stock Dividend ---------------------------------------------------------- Comdisco Holding Company, Inc.'s (OTC:CDCO) Board of Directors has declared a cash dividend of $13.00 per share on the outstanding shares of its common stock, payable on March 24, 2005, to common stockholders of record on March 14, 2005. Comdisco Holding Company has approximately 4 million shares of common stock outstanding. Comdisco Holding Company intends to treat the dividend distribution for federal income tax purposes as one in a series of liquidating distributions in complete liquidation of the company. Comdisco Holding Company cannot accurately predict the timing and amount of any future dividend distributions, due to, among other factors, its limited business purpose and declining asset base. About Comdisco Comdisco filed for chapter 11 protection on July 16, 2001 (Bankr. N.D. Ill. Case No. 01-24795), and emerged from chapter 11 bankruptcy proceedings on August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations and no further distributions will be made. John Wm. "Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq., George N. Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand, Esq., Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M. Tchen, Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq., and Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented Comdisco before the Bankruptcy Court. Evan D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham Dana LLP, served as Comdisco's International Counsel. COMDISCO INC: Distributes Cash to Contingent Rights Holders ----------------------------------------------------------- Comdisco Holding Company, Inc. (OTC:CDCO) will make a cash payment of $.1456 per right on the contingent distribution rights (OTC:CDCOR), payable on March 24, 2005, to contingent distribution rights holders of record on March 14, 2005. Comdisco Holding Company has approximately 152.3 million contingent distribution rights outstanding. The company also confirmed, as previously disclosed in its Form 10-Q for the fiscal quarter ended December 31, 2004, that on Feb. 14, 2005, a distribution of approximately $23.9 million of cash and associated stock was made to creditors in the bankruptcy estate of Comdisco, Inc., from the disputed claims reserve. The entire amount was redistributed to general unsecured creditors in a supplemental distribution. After giving effect to the most recent quarterly distribution and the dividend announced on March 2, 2005, the present value of distributions to the initially allowed general unsecured creditors in the bankruptcy estate of Comdisco, Inc., is approximately $3.592 billion and the present value recovery to general unsecured creditors is approximately 99 percent. The remaining estimated disputed claim amount in the bankruptcy estate of Comdisco, Inc. totals approximately $59 million. Contingent Distribution Rights Effect on Common Stock The plan of reorganization of the company's predecessor, Comdisco, Inc., entitles holders of Comdisco Holding Company's contingent distribution rights to share at increasing percentages in proceeds realized from Comdisco Holding Company's assets after the minimum percentage recovery threshold was achieved in May, 2003. The amount due contingent distribution rights holders is based on the amount and timing of distributions made to former creditors of the company's predecessor, Comdisco, Inc., and is impacted by both the value received from the orderly sale or run-off of Comdisco Holding Company's assets and on the resolution of disputed claims still pending in the bankruptcy estate of Comdisco, Inc. As the disputed claims are allowed or otherwise resolved, payments are made from funds held in a disputed claims reserve established in the bankruptcy estate for the benefit of former creditors of Comdisco, Inc. Since the minimum percentage recovery threshold has been exceeded, any further payments from the disputed claims reserve to former creditors of Comdisco, Inc., entitle holders of contingent distribution rights to receive payments from Comdisco Holding Company, Inc. The amounts due to contingent distribution rights holders will be greater to the extent that disputed claims are disallowed. The disallowance of a disputed claim results in a distribution from the disputed claims reserve to previously allowed creditors that is entirely in excess of the minimum percentage recovery threshold. In contrast, the allowance of a disputed claim results in a distribution to a newly allowed creditor that is only partially in excess of the minimum percentage recovery threshold. Therefore, any disallowance of the remaining disputed claims would require Comdisco Holding Company, Inc., to pay larger cash amounts to the contingent distribution rights holders that would otherwise be distributed to common shareholders. About Comdisco Comdisco filed for chapter 11 protection on July 16, 2001 (Bankr. N.D. Ill. Case No. 01-24795), and emerged from chapter 11 bankruptcy proceedings on August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations and no further distributions will be made. John Wm. "Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq., George N. Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand, Esq., Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M. Tchen, Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq., and Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented Comdisco before the Bankruptcy Court. Evan D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham Dana LLP, served as Comdisco's International Counsel. COMMERCE ONE: Wants Until Apr. 4 to File a Chapter 11 Plan ---------------------------------------------------------- Commerce One, Inc. (n/k/a CO Liquidation, Inc.), and its debtor- affiliate, Commerce One Operations, Inc. (n/k/a COO Liquidation, Inc.), ask the U. S. Bankruptcy Court for the Northern District of California for an extension, through and including April 4, 2005, within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, until June 3, 2005. This is the Debtors' first request for an extension of their exclusive periods. The Debtors give the Court five reasons militating in favor of their request to propose and file a chapter 11 plan without interference from other parties-in-interest: a) since the Petition Date, the Debtors have been preoccupied in activities connected with their reorganization efforts, specifically the sale of substantially all of their assets for an aggregate sum of $19.6 million, which was approved by the Court and closed in Dec. 2004; b) the Debtors are still in the process of reviewing their remaining nonresidential real property leases and executory contracts to determine their importance to the Debtors' estates; c) the Debtors are still in the process of resolving their claims objection to a $26 million claim filed by Charles Mitelhaus, which is scheduled for hearing at the Court on April 1, 2005, and they are also still evaluating other claims filed in their chapter 11 case; d) the Debtors anticipate they will have sufficient funds in funding a proposed liquidating plan of reorganization and they are working with the Creditors Committee in formulating the proposed plan; and e) the Debtors are paying all their bills and other post-petition obligations as they become due. Headquartered in San Francisco, California, Commerce One, Inc. (n/k/a CO Liquidation, Inc.)-- http://www.commerceone.com/-- provides software services that enable businesses to conduct commerce over the Internet. Commerce One, Inc., and its wholly owned subsidiary, Commerce One Operations, Inc., filed for chapter 11 protection on Oct. 6, 2004 (Bankr. N.D. Calif. Case Nos. 04- 32820 and 04-32821). Doris A. Kaelin, Esq., and Lovee Sarenas, Esq., at the Murray and Murray, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed $14,531,000 in total assets and $12,442,000 in total debts. As of December 2, 2004, Commerce One estimates that its liabilities owed to creditors total approximately $9.7 million, including approximately $5.1 million owed to ComVest. The Company expects that total liabilities will continue to increase over time. DAW TECHNOLOGIES: Court Approves Amended Disclosure Statement ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Utah approved the Amended Disclosure Statement prepared by DAW Technologies, Inc. to explain the Amended Plan of Reorganization the Company and its Official Committee of Unsecured Creditors have proposed. The Court determined that the Amended Disclosure Statement contains the right amount of the right kind of information necessary for creditors to make informed decisions when they vote on the Plan. The Debtor sold substantially all of its assets to Dawtech Acquisition, LLC, on Dec. 19, 2003. The Debtor's estate now consists of: * $24,049 cash, * shares of stock in DAW Technologies (France) * the right to receive 40% of any prepetition VAT tax refunds from: -- the Israeli government for the years 1997, 1998 and 1999, and -- Italy for the year 1998; which the Debtor estimates will total $240,00 to $280,000; and * the Company's corporate records. After all administrative and secured claims are paid, the remaining Debtor's assets will be transferred to Creditors' Trust for distribution to holders of unsecured claims. F. Ray Hawkins, formerly the Debtors' Human Resources Director, has agreed to serve as trustee for the Creditors' Trust. The Honorable Judith A. Boulden will consider confirmation of the Plan on March 17, 2005. DAW Technologies, Inc., designs and installs clean rooms for the semiconductor, pharmaceutical and medical industries. The Company filed for chapter 11 protection on March 10, 2003 (Bankr. Utah Case No. 03-24088). Peter W. Billings, Jr., Esq., at Fabian & Clendenin represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $6,626,240 in total assets and $9,947,612 in total debts. DB COMPANIES: Court Okays Asset Sale Procedures ----------------------------------------------- DB Companies, Inc., and its debtor-affiliates sought and obtained approval of uniform bidding procedures from the U.S. Bankruptcy Court for the District of Delaware governing the proposed sale of Store No. 762 located in Quinnipiac Avenue in North Haven, Connecticut. Matrix Capital Markets Group, Inc., the Debtors' investment banker, negotiated the sale of the store. The highest offer, for $900,000, came from Patel. The court-approved bidding procedures allow the Debtors to solicit competing bids. Any competing bid must be submitted no later than 4:00 p.m. on March 17, 2005, to: Partridge Snow & Hahn LLP Attn: James H. Hahn 180 South Main Street Providence, Rhode Island 02903 Fax: 401-861-8210 E-mail: jhh@psh.com and copies must be delivered to: Cohn & Whitesell LLP Attn: Daniel C. Cohn 101 Arch Street Boston, Massachusetts 02110 Fax: 617-951-0679 E-mail: cohn@ckmw.com Matrix Capital Markets Group, Inc. Attn: Thomas E. Kelso 100 South Charles Street, Suite 1350 Baltimore, Maryland 21201 Fax: 410-727-1405 E-mail: tkelso@matrixcapitalmarkets.com Whiteford, Taylor & Preston, LLP Attn: Brent Strickland Seven St. Paul Street Baltimore, Maryland 21202 Fax: 410-625-7510 E-mail: bstrickland@wtplaw.com Mesirow Financial Consulting, LLC Attn: Stephen Darr 99 High Street Boston, Massachusetts 02110 Fax: 617-988-0808 E-mail: sdarr@mesirowfinancial.com If competing bids are received, an auction will take place on March 22, 2005, at 10:00 a.m., at the Debtors' corporate headquarters located at 25 Concord Street in Pawtucket, Rhode Island. Objections to the proposed sale, if any, must be filed by March 17 at 4:00 p.m. The Debtors ask the Court to schedule a sale hearing to approve the sale of the store to the highest and best bidder at 11:00 a.m. on March 24, 2005. Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. -- http://www.dbmarts.com/-- operates and franchises a regional Chain of DB Mart convenience stores in Connecticut, Massachusetts, Rhode Island, and the Hudson Valley region of New York. The Company filed for chapter 11 protection on June 2, 2004 (Bankr. Del. Case No. 04-11618). William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets of over $50 million and debts of approximately $65 million. DURA AUTOMOTIVE: Senior Secured Lenders Relax Financial Covenants ----------------------------------------------------------------- DURA Automotive Systems, Inc. (Nasdaq:DRRA), has completed an amendment to its senior secured revolving credit facility. "The amendment ensures DURA covenant relief over the next six quarters and will provide the company with significantly improved liquidity," the Company said in a press release. The Lenders agree to allow the Company's: (a) Total Debt to EBITDA Ratio to be something higher than 5.0:1.0; (b) Senior Leverage Ratio to be exceed 2.5:1.0 by some amount; and (c) Interest Coverage Ratio to fall below 2.0:1.0. DURA AUTOMOTIVE SYSTEMS, INC., as Parent Guarantor, and DURA OPERATING CORP., TRIDENT AUTOMOTIVE LIMITED, DURA HOLDING GERMANY GMBH, DURA AUTOMOTIVE SYSTEMES EUROPE S.A., DURA AUTOMOTIVE SYSTEMS (CANADA), LTD., as Borrowers, are parties to a U.S.$323,125,000 AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 19, 1999, as amended and restated as of October 31, 2003, under which BANK OF AMERICA, N.A., serves as Collateral Agent and Syndication Agent, THE BANK OF NOVA SCOTIA, BARCLAYS BANK PLC, COMERICA BANK, STANDARD FEDERAL BANK, N.A., U.S. BANK NATIONAL ASSOCIATION, and WACHOVIA BANK, N.A., serve as Co-Documentation Agents, and JPMORGAN CHASE BANK, serves as Administrative Agent. As of Oct. 31, 2003, the members of the Lending Consortium were: * JPMORGAN CHASE BANK * BANK OF AMERICA, N.A. * THE BANK OF NOVA SCOTIA * COMERICA BANK * STANDARD FEDERAL BANK N.A. * U.S. BANK, NATIONAL ASSOCIATION * WACHOVIA BANK, N.A. * BARCLAYS BANK PLC and * FIFTH THIRD BANK, EASTERN MICHIGAN. About the Company DURA Automotive Systems, Inc. -- http://www.duraauto.com/-- is the world's largest independent designer and manufacturer of driver control systems and a leading global supplier of seating control systems, engineered assemblies, structural door modules and integrated glass systems for the global automotive industry. The company is also a leading supplier of similar products to the North American recreation and specialty vehicle markets. DURA sells its automotive products to every North American, Japanese and European original equipment manufacturer (OEM) and many leading Tier 1 automotive suppliers. DURA is headquartered in Rochester Hills, Mich. * * * As reported in the Troubled Company Reporter on Jan. 3, 2005, Moody's Investors Service downgraded certain ratings for Dura Operating Corp., its direct parent Dura Automotive Systems, Inc., and subsidiary Dura Automotive Systems Capital Trust. The outlook following these rating actions was changed to stable from negative. The rating actions were driven by Dura Automotive's persistently high leverage, which Moody's determined to be inconsistent with peers at the Ba3 senior implied level, together with the company's inability to realize material debt reduction over the past year and its weakening effective liquidity, margin compression, and long lead times necessary to realize organic net new business growth. The specific rating actions implemented for Dura Holdings and Dura Operating are: -- Affirmation of the Ba3 rating assigned for Dura Operating's approximately $322 million of guaranteed senior secured credit facilities, consisting of: -- $175 million revolving credit facility due October 2008; -- $146.6 million remaining term loan C due December 2008; -- Downgrade to B2, from B1, of the ratings for Dura's existing $400 million of 8.625% guaranteed senior unsecured notes due April 2012 (consisting of $350 million and $50 million tranches, respectively); -- Downgrade to B3, from B2, of the ratings of Dura's $456 million of 9% guaranteed senior subordinated notes due May 2009; -- Downgrade to B3, from B2, of the rating for Dura's Euro 100 million of 9% guaranteed senior subordinated notes due May 2009; -- Downgrade to Caa1, from B3, of the rating for Dura Automotive Systems Capital Trust's $55.25 million of 7.5% convertible trust preferred securities due 2028; -- Downgrade to B1, from Ba3, of the senior implied rating for Dura Holdings; -- Affirmation of the B2 senior unsecured issuer rating for Dura Holdings; -- Downgrade to SGL-3, from SGL-2 of Dura Holdings' speculative grade liquidity rating. The rating downgrades reflect that Dura Automotive was unsuccessful at achieving meaningful debt or leverage reduction over the past year, despite successful implementation of several actions directed at improving the company's near-term cost structure and future revenue and margin base. EAGLEPICHER INC: Lenders Say EBITDA Must Top $5 Million in May -------------------------------------------------------------- EaglePicher Holdings, Inc., and EaglePicher Incorporated disclosed that EPI has entered into a forbearance agreement with its credit agreement lenders. Pursuant to this agreement, the lenders agreed to forbear from exercising any remedies as a result of EPI's previously announced covenant noncompliance under its credit agreement through June 10, 2005, and to continue funding EPI's revolving credit facility through that date in its full amount of $125 million, provided that no new defaults occur. In connection with this forbearance agreement, Granaria Holdings B.V. and ABN AMRO Participaties B.V., which collectively control 100% and beneficially own approximately 84% of EP Holdings' common stock, purchased a $12,187,500 junior participation in EPI's revolving credit facility, the amount of EPI's March 1, 2005 interest payment on its 9.75% Senior Notes due 2013. Granaria also agreed to defer payment on its $1.75 million annual management fee through June 10, 2005. EPI continues to have use of its receivables securitization program and expects to enter into a forbearance agreement in the near future pursuant to which the receivables purchaser will agree to continue funding this program through June 10, 2005, provided no new defaults occur. The credit agreement forbearance agreement contains a covenant of minimum monthly earnings before interest, taxes, depreciation and amortization as defined in the forbearance agreement. Specifically, EaglePicher must report Monthly Adjusted EBITDA that's no less than: For the Month Ended Minimum Adjusted EBITDA ------------------- ----------------------- March 31, 2005 $4,300,000 April 30, 2005 $4,400,000 may 31, 2005 $5,100,000 This covenant is in lieu of the three financial covenants in the credit agreement of which EPI is currently not in compliance. EPI also agreed to an increase of 1-1/4 percentage points in the interest rate for the term loan and 3/4 of a percentage point in the interest rate for the revolving facility under the credit agreement. Additionally, EPI agrees to limit capital expenditures to $10 million from February 28 through June 10, 2005. Harris Trust And Savings Bank serves as the Administrative Agent for an unidentified consortium of lenders that includes Harris. EaglePicher paid the Lenders a $500,000 forbearance fee. EPI intends to make the scheduled semi-annual interest payment on its 9.75% Senior Secured Notes due 2013 on March 1, 2005. EaglePicher has filed an extension for the filing of its Annual Report on Form 10-K with the U.S. Securities and Exchange Commission. EaglePicher expects to file its 10-K no later than March 15, 2005. EPI may need to negotiate an extension of the credit agreement forbearance agreement (and the accounts receivable securitization forbearance agreement if obtained as expected) or an amendment of the underlying agreements on or before June 10, 2005. EaglePicher continues to evaluate possible divestitures of business units or other assets in order to reduce its debt, as well as various other financing alternatives. EaglePicher's net loss for the fiscal year ended Nov. 30, 2004, will be approximately $25 million if no goodwill impairment charge is required to be recorded for its Hillsdale segment, and could be up to approximately $60 million if all $35 million of goodwill related to its Hillsdale segment is impaired, compared to a net loss applicable to common shareholders of $9.4 million in 2003. The increase in its net loss is primarily the result of reduced operating performance at its Hillsdale segment, start-up operating losses to support a joint venture in its Commercial Power segment, insurance gains recorded in 2003, and a possible impairment of its Hillsdale segment's goodwill which might be recorded in 2004. About the Company EaglePicher Incorporated -- http://www.eaglepicher.com/-- founded in 1843 and headquartered in Phoenix, Arizona, is a diversified manufacturer and marketer of innovative, advanced technology and industrial products and services for space, defense, environmental, automotive, medical, filtration, pharmaceutical, nuclear power, semiconductor and commercial applications worldwide. The company has 3,900 employees and operates more than 30 plants in the United States, Canada, Mexico and Germany. * * * As reported in the Troubled Company Reporter on Jan. 14, 2005, Moody's Investors Service downgraded the ratings for both EaglePicher Incorporated and parent EaglePicher Holdings, Inc., in connection with the company's Dec. 27, 2004, announcement that it is once again revising downward earnings guidance for fiscal year 2004. EaglePicher additionally stated that in the event that actual performance falls at the low end of the company's revised EBITDA range, potential now exists for non-compliance with certain financial covenants under its credit agreement and accounts receivable securitization facilities by as early as the quarter ended Nov. 30, 2004. Moody's also revised the outlooks for both rated entities to negative, from stable. EaglePicher's latest revised guidance was announced only days after the Dec. 13, 2004, execution of amendments to its credit agreement and accounts receivable securitization facility which materially modified the financial covenants in those agreements for the quarter ended Nov. 30, 2004, and subsequent quarters through the maturity of those agreements. These amendments were expected to ensure EaglePicher's ongoing liquidity and increase the company's operating flexibility. The rating actions taken: -- Downgrade to Caa1, from B3, of the rating for EaglePicher Inc.'s $250 million of 9.75% guaranteed senior unsecured notes due September 2013; -- Downgrade to B3, from B2, of the ratings for EaglePicher Inc.'s $275 million of guaranteed senior secured bank credit Facilities consisting of: -- $125 million revolving credit facility due August 2008; -- $150 million ($142.8 million remaining) term loan B due August 2009; -- Downgrade to C, from Ca, of the rating of EaglePicher Holdings' $166.9 million current balance (including dividend accretion) of 11-3/4% cumulative redeemable exchangeable preferred stock mandatorily redeemable during March 2008; -- Downgrade to B3, from B2, of EaglePicher Holdings' senior implied rating; and -- Downgrade to Caa3, from Caa2, of EaglePicher Holdings' senior unsecured issuer rating. EL PASO CORP: S&P Rates Proposed $200M Senior Unsec. Notes at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to El Paso Corp.'s subsidiary Colorado Interstate Gas Co.'s planned $200 million senior unsecured notes. At the same time, Standard & Poor's affirmed its 'B-' corporate credit ratings on El Paso and its subsidiaries and revised the outlook on the companies to stable from negative. The outlook revision reflects El Paso's progress on restructuring its business and the company's improved liquidity ahead of large debt maturities in the next three years. "The stable outlook reflects the expectation that El Paso will continue to address adequately the company's operational and financial issues," said Standard & Poor's credit analyst Ben Tsocanos. "Although liquidity is not an immediate concern, El Paso will struggle to produce enough cash flow to barely cover its debt service as it tackles the challenges in its plan," said Mr. Tsocanos. El Paso has closed or announced assets sales over the last 18 months including oil refining business, much of its domestic power operations, its ownership of GulfTerra Energy Partners L.P., and certain noncore exploration and production and pipeline assets. The sales have yielded about $4 billion of proceeds, well within management's projected range. The sales are an important step toward streamlining El Paso's business and building adequate liquidity to meet looming debt maturities. Although the majority of the sales are complete, incremental sales, including power generation plants in Asia, are being considered. Once the divestitures are accomplished, El Paso will concentrate on two primary businesses, natural gas pipelines and E&P. EXIDE TECHNOLOGIES: Has Until Aug. 29 to Object to Claims --------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware extended Exide Technologies and its debtor-affiliates' Claims Objection Bar Date through and including Aug. 29, 2005. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, explained that the extension will provide the Debtors with necessary time to continue to evaluate the Claims filed against the estate, prepare and file additional objections and, where possible, consensually resolve the Claims. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, 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. FAYE FOODS INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Faye Foods, Inc. dba Krystal 645 Laconia Road Somerville, Tennessee 38068 Bankruptcy Case No.: 05-23072 Type of Business: The Debtor is a Krystal restaurant franchisee. Chapter 11 Petition Date: February 28, 2005 Court: Western District of Tennessee (Memphis) Judge: Jennie D. Latta Debtor's Counsel: Randall J. Fishman, Esq. George W. Emerson, Esq. Ballin, Ballin & Fishman, P.C. 200 Jefferson Avenue, Suite 1250 Memphis, Tennessee 38103 Tel: (901) 525-6278 Fax: (901) 525-6294 Total Assets: $0 to $50,000 Total Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ KABB Partnership Rent on 1730 North $231,000 212 East Court Street Germantown Parkway Dyersburg, TN 38024 Faye Stiles $130,000 645 Laconia Road Somerville, TN 38068 US Foodservice Food purchases $104,967 2850 Highway 80 West Montgomery, AL 361040117 The Krystal Company Past Due Royalties $66,614 One Union Square as of 2/20/2005 & Chattanooga, TN 37402 1% of advertising The Kystal Coops of Memphis Advertising $52,609 c/o Jones, McKnight & Edmonson, P.C. 1429 Business Center Drive Conyers, GA 30094 Central Leasing Corporation Remodeling of 6780 $43,859 Attn: Brient Mills Stage Road, 205 Powell Place Bartlett, TN Brentwood, TN 37027 Tennessee Department of Revenue Sales Tax $32,274 Andrew Jackson State Office Building 500 Deaderick Street Nashville, TN 37242 ATM Lenders LLC ATM machines $32,000 2483 East Orangethorpe Avenue Fullerton, CA 92831 Bob Patterson, Trustee 2003 and 2004 Real $26,618 Shelby County Trustee Estate Taxes, 1730 Post Office Box 2751 Germantown, Memphis, TN 381012751 Cordova, TN Treasurer, City of Memphis 2003 and 2004 City $20,192 Post Office Box 185 Taxes Memphis, TN 381010185 CocaCola Financial Corporation Equipment $13,901 c/o GlobalTech Financial LLC 2839 Paces Ferry Road, Suite 810 Atlanta, GA 30339 Tennessee Department of Revenue Franchise and $12,967 Andrew Jackson State Excise Tax Office Building 500 Deaderick Street Nashville, TN 37242 Bob Patterson, Trustee 2004 Real Estate $11,884 Shelby County Trustee Taxes, 1688 Post Office Box 2751 Sycamore View, Memphis, TN 381012751 Memphis, TN Bob Patterson, Trustee 2004 Real Estate $11,315 Shelby County Trustee Taxes, 6780 Stage Post Office Box 2751 Road, Bartlett, TN Memphis, TN 381012751 City of Germantown 2004 City Taxes $10,649 1930 South Germantown Road 2016 Germantown Post Office Box 38809 Road South, Germantown, TN 381830809 Germantown, TN Flowers Foods Food supplies and $10,239 FBC of Batesville LLC bread 1223 South Saint Louis Street Batesville, AR 72501 Super Market Specialties, Inc. Repairs to equipment $5,301 c/o Gary E. Veazey, Attorney 780 Ridge Lake Boulevard, #202 Memphis, TN 38120 Venture Construction Company Krystal Remodel $5,025 Attn: Blake Mull 6780 Stage Road, Assistant Vice President Bartlett, TN Post Office Box 4175 Norcross, GA 300914175 BellSouth Telephones for all $4,821 Post Office Box 105262 5 locations 7559820 Atlanta, GA 303485262 and 4760086 Treasurer, City of Memphis 1688 Sycamore $4,814 Post Office Box 185 View Memphis, TN 381010185 FINLAY FINE: Moody's Pares Rating on $200MM Sr. Unsec. Notes to B2 ------------------------------------------------------------------ Moody's Investors Service affirmed the senior implied rating of Finlay Fine Jewelry Corporation, but downgraded the company's $200 million senior unsecured notes rating to B2, and changed the rating outlook to negative from stable. The downgrade of the senior notes reflects Moody's expectation that usage under the senior secured revolver will increase given Finlay Fine's possible acquisition of Carlyle, as well as Moody's expectation that Finlay will continue to explore other possibilities to maintain top line sales which could also result in higher bank usage. The change in outlook reflects the possible negative impact on Finlay Fine's business of the proposed acquisition of The May Department Stores Company, a significant Finlay customer, by Federated Department Stores, Inc. The combination of May and Federated could well result in the closure of some of the stores served by Finlay. Approximately 481 or 50% of the leased jewelry departments that Finlay Fine Jewelry currently operates are with May. In addition, Finlay operates leased departments in about 113 of Federated's stores. The negative outlook reflects the expectation that any eventual store closures could reduce Finlay's operating earnings over the next eighteen months and lead to weakening credit metrics. In addition, the negative outlook reflects the possibility that Federated could at some point choose to self- operate May's jewelry departments, given that Federated currently manages its own jewelry business in its Macy's legacy stores. While Federated has not announced its intentions for the leased jewelry departments to be acquired upon combination with May, Federated has said that it is likely to ultimately convert most of May's regional department store chains to the Macy's banner. However, given the lease expiration dates, the size of the May leased jewelry department business, and other initiatives that may be a higher post-acquisition priority for Federated, Moody's believes that such a decision is unlikely to be made in the immediate future. Finlay Fine's ratings consider its dominant position as the largest operator of leased jewelry departments in department stores, its variable cost structure, and the low capital investment needed to open new departments. The ratings also reflect strong free cash flow for the rating category and management's historic ability to react to changes in host department store policies, including store closings or a change to self-operated departments. The rating also encompasses the favorable industry and demographic trends and the company's experienced and stable management team. The ratings take into account the risks and the benefits to the partnership relationship with the department stores. Finlay Fine has the benefit of not assuming any of the credit risk of the ultimate consumer as this is borne by the department store hosts. However, it is vulnerable to changes in the department store hosts' strategies toward leasing versus self-operating jewelry departments, as well as ongoing rationalization of the department store chains. The ratings are constrained by Finlay's low fixed charge coverage, high leverage, significant sales concentration to two department store hosts (May accounts for 55% of sales and Federated 18%), the discretionary and self-promotional nature of self-buy and gift jewelry, as well as the competition from other retail channels. The senior unsecured notes and issuer rating are notched down by one from the senior implied to reflect their subordination to the $225 million senior secured revolving credit facility, as well as Moody's expectation that usage under this facility will increase. The increase in usage under the revolving credit facility will likely result in lower asset coverage available to the noteholders. Given the negative outlook, an upgrade is highly unlikely. The outlook could stabilize should the company diversify from its reliance on its department store hosts or should Federated choose to allow Finlay Fineto continue to manage the leased jewelry departments in May post-acquisition. Ratings could be downgraded if Federated decides to convert the May stores to self-operated jewelry departments. In addition, ratings could be downgraded should operating performance deteriorate such that free cash flow to total debt falls below 6%. The rating affirmed is: * Senior implied at B1. The ratings downgraded are: * Senior unsecured issuer rating to B2 from B1; * $200 million senior unsecured notes to B2 from B1. Finlay Enterprises, Inc., headquartered in New York City, is a holding company whose primary asset is the stock of Finlay Fine Jewelry Corporation. Finlay Fine Jewelry operates 962 leased jewelry departments in major retailers. For the year ended January 2005, revenues were $923.8 million. FINLAY FINE: S&P May Slice Ratings After Federated-May Merger ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Finlay Fine Jewelry Corp., including its 'BB-' corporate credit rating on CreditWatch with negative implications. The rating action reflects Standard & Poor's concern over Finlay's business prospects following the recently announced merger between May Department Stores Co. (BBB/Watch Neg/--) and Federated Department Stores, Inc. (BBB+/Watch Neg/--). Finlay currently derives more than 50% of its sales from May Department Stores and about 18% of sales from Federated Department Stores. "Upon the completion of the merger, Finlay's corporate credit rating is likely to be lowered by one notch, to 'B+'. The outlook will depend on our review of Finaly's financial policy, its efforts to diversify its business and any decisions made by Federated Department Stores during the period regarding its plans for the combined company's jewelry business," said Standard & Poor's credit analyst Ana Lai. Standard & Poor's believes that the merger between Finlay's two largest customers increases Finlay's business risk. Finlay's customer concentration further increases -- the merged entity will account for more than 70% of total sales. Given the high revenue concentration, Finlay could have reduced bargaining power, pressuring profitability as leases renew. More critically, Finlay is vulnerable to potential store closings arising from the rationalization of the merged company's store base, as well as the assumption of jewelry department operations by host department stores as the merged entity seeks to achieve synergies. In January 2004, Federated Department Stores terminated Finlay's lease in the Burdines Department Store division due to the consolidation of the Burdines and Macy's fine jewelry departments. The termination of the lease resulted in the closure of 46 Finlay Departments in the Burdines Department Store division, which represented about $55 million in sales in 2003. Although Finlay has had long-standing relationship with most of its host store groups, its leases average less than five years. Therefore, depending on Federated Department Stores' jewelry strategy, Finlay's business could be under increasing pressure as its leases with the combined company mature. FRASER PAPERS: Moody's Rates Planned $150M Sr. Unsec. Notes at B3 ----------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Fraser Papers Inc.'s proposed $150 million senior unsecured note issue. At the same time, Moody's assigned a senior implied rating of B2, an issuer rating of Caa1 and a speculative grade liquidity rating of SGL-3. The rating outlook is stable. This is the first time that Moody's has rated the debt of Fraser Papers. The B2 senior implied rating reflects Fraser Papers' weak earnings performance over the past few years, its historically weak cash flow, and its disparate collection of assets in a number of pulp and paper and lumber segments. The rating also considers the susceptibility of the company to cyclicality in the forest products industry, the impact of changes in the U.S./Canadian dollar exchange rate and exposure to higher raw material costs. The rating favorably reflects the company's position in its niche markets and its recent and anticipated cost cutting initiatives and asset rationalizations, which should enable the company to generate positive EBIT in 2005. The proceeds of the note issue will be used to repay existing debt ($40 million at Dec. 31, 2004), buy out operating leases ($65 million) and cover transaction expenses ($4.5 million). Fraser Papers was spun out of Norbord in July 2004, and competes principally in the pulp and paper segment, operating 14 paper machines at 5 paper and pulp mills in the U.S. and Canada. The company's 735,000 tonnes of annual paper making capacity is focused in Uncoated Freesheet (66%) and Uncoated Mechanical Papers (22%). Its market pulp capacity is 355,000 tonnes. It also produces softwood dimension lumber at 4 sawmills, 2 each in the U.S. and Canada, owns 1 million acres of timberland in New Brunswick and Maine, and controls 1.3 million acres of Crown timberland licenses in New Brunswick. The company also operates, through a management agreement, two paper mills and one pulp mill at Katahdin Paper Company -- KPC. Fraser Papers has an option to buy KPC, which has paper making capacity of 465,000 tonnes. If acquired, KPC would substantially increase Fraser Papers paper making capacity. KPC, however, is also in a turnaround situation, with negative EBITDA of $18 million in 2004. Moody's anticipates that if KPC is acquired, it will be financed largely with cash and other available liquidity, in which case the rating will not be impacted. Fraser Papers' EBIT margin has averaged negative two percent over the last four years as a combination of weak markets, high cost mills, a strong Canadian dollar and high input costs (principally energy and fiber) have negatively impacted the company. The company's debt protection measurements are weak. The ratio of debt to EBITDA at December 31, 2004, proforma for the $150 million note issue and repayment of existing debt and leases, is 7.5 times. Adding the company's $108 million unfunded pension liability and L/C's of $32 million to debt increases the ratio to more than 15 times. Pro forma EBITDA to interest is 1.7 times (assuming an 8% interest rate on the $150 million note issue). These ratios should improve in 2005 as the company benefits from the recent sale of its Park Falls operation ($8 million negative EBITDA in 2004) and significant headcount reductions in the 4th quarter of 2004 and, later in 2005, reduces the annual cost of servicing its operating leases. Fraser Papers, on average, has not been able to generate positive free cash flow through the commodity price cycle. The company will therefore depend on an as yet unproven ability to generate cash flow to service its proposed note issue. While the cost reduction initiatives that have been made or are planned are expected to improve cash flow generation, there are execution risks that may negate their effectiveness. However, given the availability of latent value for certain non-paper-making assets, Moody's believes there are sufficient alternative sources of cash flow to service debt. The company's paper and pulp businesses are small players operating in competitive sectors that continue to have excess market capacity. Meaningful improvements in operating income beyond those derived from identified cost reduction initiatives will depend on a sustained period of higher market prices, which Moody's does not view as likely, and from additional cost reductions. The stable outlook assumes an improvement in operating performance resulting from, at a minimum, the cost cutting and asset rationalization activities. The rating could be lowered or the outlook changed to negative if the company suffers further erosion in its operating earnings and cash flow or if it undertakes debt financed acquisitions. The outlook could be changed to positive if the company is able to demonstrate that its cost base has improved to the point that it can consistently generate positive free cash flow. The SGL-3 speculative grade liquidity rating reflects the company's adequate liquidity. As of the closing of the note issue the company will have $18 million of undrawn capacity under its $50 million revolver and cash on hand of $40 million. However, its liquidity cushion could be significantly eroded if it exercises its option to purchase KPC. Fraser Papers, Inc., is engaged in the pulp and paper and lumber segments of the forest products industry and had sales of $996 million for the fiscal year ended December 31, 2004. Fraser Papers is headquartered in Toronto, Canada. FRASER PAPERS: S&P Places B Rating on $150M Senior Unsec. Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' foreign currency and local currency long-term corporate credit ratings to specialty paper producer Fraser Papers, Inc. At the same time, Standard & Poor's assigned its 'B' rating to the company's US$150 million senior unsecured notes due 2015. The proceeds from the notes will be used to repay existing debt, including operating leases. The outlook is stable. "The ratings on Fraser Papers reflect the company's below-average cost position; limited product diversity; exposure to volatile paper and lumber prices; and, to a lesser extent, foreign exchange risk," said Standard & Poor's credit analyst Daniel Parker. These risks are partially offset by the company's niche position as a specialty paper producer and a moderate capital structure. Fraser Papers' operations benefit from a higher proportion of specialty paper sales, the prices for which are less volatile that the straight commodity grades. About 70% of Fraser Papers' current production consists of specialty, niche market products. The company believes it has leading positions in bible papers, pharmaceutical inserts, and various technical specialties. The company's strategy to shift its product mix to more specialized, higher value-added paper grades is necessary as Fraser Paper's paper machines are smaller and not competitive in commodity grades because they do not benefit from the economies of scale provided by newer, faster, and larger paper machines. Fraser Papers' operations are focused in the northeast U.S. and Canada. Similar to other Canadian producers of paper and wood products, the company is vulnerable to both the ongoing softwood lumber dispute and the currency volatility between the U.S. and Canadian dollars. A one-cent appreciation of the Canadian dollar versus the U.S. dollar would negatively affect EBITDA by about US$4 million. The outlook is stable. Standard & Poor's expects that 2005 will be a year of transition, and as such, there is some execution risk as the company continues with its asset repositioning strategy and cost reduction initiatives. S&P expects the company will maintain moderate financial policies. Any significant increase in leverage, or a failure to improve the company's cost position and margins could have negative rating implications. If the company is successful with its cost-reduction initiatives and consistently demonstrates improved margins and improved cash flow generation, the ratings could be raised. GETTY IMAGES: Moody's Puts Ba3 Rating on $263MM Sub. Debentures --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Getty Images, Inc.'s $263 million series B convertible subordinated debentures due 2023 (new debentures) and upgraded the senior implied to Ba2 from Ba3. The rating outlook remains positive. In December 2004, the company completed an exchange offer in which it exchanged the new debentures and $0.3 million in cash for substantially its entire existing convertible subordinated debentures due 2023 (old debentures). The ratings upgrade reflects improved financial performance, strong free cash flow generation, significant short-term liquidity and the company's position as a leading provider of digital imagery to businesses worldwide. The ratings assigned by Moody's is: * $263 million, 0.5% series B convertible subordinated notes, due 2023, rated Ba3. The ratings upgraded by Moody's are: * Senior Implied, upgraded to Ba2 from Ba3; * Senior Unsecured Issuer, upgraded to Ba3 from B1. The ratings withdrawn by Moody's is: * $265 million convertible subordinated notes, due 2023, rated B2. Getty Images completed the exchange offer in December 2004 in order to change certain terms of the old debentures, including the type of consideration to be used to pay holders upon conversion. By committing to pay a portion of the consideration upon conversion of the new debentures in cash, Getty Images is required to account for the new debentures under the treasury stock method as if the new debentures were outstanding since June 2003. Since there are only $2 million of outstanding old debentures remaining after completion of the exchange offer, Moody's has withdrawn the ratings on these debentures. The ratings upgrade reflects the company's strong performance over the last two years. Revenues grew 13% in 2003 and 19% in 2004 while operating margins improved to about 27% in 2004 from 11% in 2002. Free cash flows from operations grew to $166 million in 2004 from $66 million in 2002. The major drivers of the company's revenue growth have been an increase in the average price per image licensed, an increased focus on editorial imagery and the positive impact of changes in foreign currency exchange rates on the translation of revenue generated in foreign countries. International revenues comprised about 50% of total revenues in 2004. The increase in the average price per image reflects selective price increases especially within the royalty-free portfolio, reduced levels of discounting and a shift in the mix of licensed uses towards higher priced uses. Revenues also benefited from the introduction of additional image collections from other imagery partners. The improvement in operating margins and free cash flows reflect the company's success at growing revenues while keeping its expense structure relatively flat. The company's gross margin has been fairly stable at about 72% for the last few years. Cost of sales is variable and primarily consists of commission payments to contributors, consisting of photographers, cinematographers and other imagery partners. In response to the weakening economy in 2000 and 2001, the company reduced its fixed cost base by, among other things, closing duplicate facilities and reducing its workforce. Selling, general and administrative expenses declined from $250 million in 2000 to $208 million in 2002. Although revenues grew about 34% from 2002 to 2004, selling, general and administrative expenses grew only 8% over the same period. The company has benefited from substantial operating leverage and any increase or decrease in revenues will have a significant impact on operating margins and cash flows. The company has utilized free cash flow from operations over the last two years primarily for selective small acquisitions and to build up its cash and short-term investments position. The company's balance of cash and short-term investments was $520 million at December 31, 2004. The company recently terminated its $85 million revolving credit facility. The ratings are limited by the highly competitive nature of the industry and the risk that new technologies could pose a threat to the company's business. The visual content industry is highly fragmented and the competition includes numerous general visual content providers, specialized visual content companies, stock film footage businesses and commissioned photographers. Although Getty Images is more than three times larger than its next closest competitor, its 2004 revenues were only $622 million. In addition to these smaller competitors, new advances in technology and changes in business strategy could lead to competition from larger technology companies with more financial and technical resources than the company. The ratings also reflect the company's exposure to the cyclical nature of the advertising sector and to foreign currency risk. The positive ratings outlook reflects Moody's expectation that the company will continue to grow its revenue base by adding new imaging partners, expanding international sales and focusing on the expansion of its editorial business. Due to its substantial operating leverage, revenue growth should lead to improving operating margins and free cash flows. If Getty Images can accomplish these financial goals while maintaining its competitive position and technological leadership, a ratings upgrade over the next twelve to eighteen months is likely. The outlook or ratings could come under pressure if a change in the competitive environment results in deterioration in operating margins and free cash flows. The Ba3 rating on the new debentures, one notch below the senior implied, reflects Moody's practice of compressing the notching of subordinated debt at senior implied rating levels of Ba2 and above. The new debentures are unsecured and subordinated in right of payment to all of Getty Images' future senior indebtedness and will rank equally in right of payment with all existing and future subordinated indebtedness. The new debentures are convertible into shares of Getty Images common stock based on an initial conversion price of $61.08 per share, subject to adjustment, and mature in 2023. The closing price of Getty Images common stock on the New York Stock Exchange on February 28, 2005 was $71.34 and the closing price has ranged between $48.50 and $72.60 over the last year. Upon conversion of the new debentures (assuming the conversion value is greater than the principal amount of the new debentures), the company will be required to pay cash equal to the principal amount of each new debenture converted, with the balance of the consideration payable in shares of company common stock. Holders of the new debentures may require the company to purchase all or a portion of the new debentures on June 9, 2008, 2013 or 2018 at 100% of the principal amount. The company is required to pay contingent interest beyond the 0.5% coupon rate at the rate of 0.5% per year on the average trading price of the new debentures commencing with the six-month period ending December 9, 2008, if such average trading price is greater than or equal to 120% of the principal amount of the new debentures. The company's credit metrics are strong within its rating category. Free cash flow (after capital expenditures) to debt was about 46% and 63% for the years ended December 31, 2003 and 2004. Total debt to EBITDA was about 1.6 times in 2003 and 1.2 times in 2004. Headquartered in Seattle, Washington, Getty Images Inc., is a leading provider of imagery and related products and services to customers worldwide. Revenues for the year ended December 31, 2004 were about $622 million. GLASS GROUP: Wants to Hire Morris Nichols as Bankruptcy Counsel --------------------------------------------------------------- The Glass Group, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Morris, Nichols, Arsht & Tunnell as its general bankruptcy counsel. Morris Nichols is expected to: a) provide the Debtor with all necessary services, including preparing all necessary documents in behalf of the Debtor in the areas of debtor-in-possession financing, corporate law, real estate, employee benefits, business and commercial litigation, tax and debt restructuring, and bankruptcy and asset dispositions; b) take all necessary actions to protect and preserve the Debtor's estate, including: (i) the prosecution of actions by the Debtor and the defense of any actions commenced against the Debtor's estate, and (ii) negotiations concerning all litigation in which the Debtor in involved and objecting to all claims filed against the Debtor; c) prepare and coordinate preparation on behalf of the Debtor, all necessary motions, applications, answers, orders, reports and papers in connection with the administration of its chapter 11 case; d) advise the Debtor with regards to its rights and obligations as a debtor-in-possession; and e) perform all other legal services to the Debtor that are necessary in its chapter 11 case; Derek C. Abbott, Esq., a Morris Nichols Partner, is the lead attorney for the Debtor. Mr. Abbot discloses that the Firm received a $164,634.92 post-petition retainer. Mr. Abbot reports Morris Nichols' professionals bill: Designation Hourly Rate ----------- ----------- Partners $400 - $585 Associates $220 - $380 Paraprofessionals $165 Case Clerks $100 Morris Nichols assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Millville, New Jersey, The Glass Group, Inc., -- http://www.theglassgroup.com/-- manufactures molded glass container and specialty products with plants in New Jersey and Missouri. Its products include cosmetic bottles, pharmaceutical vials, specialty jars, and coated containers. The Company filed for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Del. Case No. 05-10532). When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. GLASS GROUP: Taps Focus Management as Financial Consultants ----------------------------------------------------------- The Glass Group, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Focus Management Group, USA, Inc., as its financial consultants. Focus Management is expected to: a) review and analyze the current financial condition of the Debtor and its business plans, cash flow projections, restructuring programs and other reports or analyses prepared by the Debtor or its professionals; b) assist the Debtor in preparing an operational restructuring plan to be presented to the Debtor's provider of post- petition financing; c) review, evaluate and analyze the financial ramifications of proposed transactions for which the Debtor seek Court approval, including DIP financing and cash management, assumption/rejection of real property leases and other contracts, management compensation and retention and severance plans; d) review, evaluate and analyze the Debtor's internally prepared financial statements and related documentation and attend and advise at meetings with the Debtor, its counsel, other financial advisors and representatives of the Creditors Committee; e) assist and advise the Debtor and its counsel in the development, evaluation and documentation for any plan of reorganization or strategic transactions, including developing, structuring and negotiating the terms and conditions of a proposed plan or strategic transactions; f) make recommendations to improve the Debtor's profitability and production efficiency and render testimony in behalf of the Debtor; and g) provide other services as requested by the Debtor and required in its chapter 11 case. J. Tim Pruban, President of Focus Management, discloses that the Firm received a $75,000 retainer. Mr. Pruban reports Focus Management's professionals bill: Designation Hourly Rate ----------- ----------- Managing Directors $350 Senior Consultants $300 Focus Management assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Millville, New Jersey, The Glass Group, Inc., -- http://www.theglassgroup.com/-- manufactures molded glass container and specialty products with plants in New Jersey and Missouri. Its products include cosmetic bottles, pharmaceutical vials, specialty jars, and coated containers. The Company filed for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Del. Case No. 05-10532). Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. GP CAPITAL: Increase Subordination Levels Spur S&P to Up Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes from GP Capital Funding Corp.'s commercial mortgage pass-through certificates from series 2003-A. Concurrently, the rating on the remaining class is affirmed. The raised and affirmed ratings primarily reflect increased subordination levels since issuance. As of Feb. 22, 2005, the trust collateral consisted of 19 loans with an aggregate outstanding principal balance of $100.4 million, down from 139 loans amounting to $142.6 million at issuance. All of these loans are floating-rate (and all but one are based on the prime rate), recourse to the borrower, and provide no lockout provisions. The master servicer, BNY Asset Solutions LLC, provided financial data for the trailing 12-month period (TTM) ending Sept. 30, 2004, for 88.3% of the pool. For the balance of the pool, financial data for the nine-month period ending June 30, 2004, was used. Based on this information, Standard & Poor's calculated a weighted-average net operating income (NOI) debt service coverage (DSC) of 1.74x, up from 1.48x at issuance. The top 10 loans have an aggregate outstanding balance of $82.1 million (81.8%) and a weighted average DSC of 1.65x, up from 1.46x at issuance. The DSC was calculated using September 2004 TTM data for all but the third-largest loan, which only reported data for the nine-month period ending June 30, 2004. As part of its surveillance review, Standard & Poor's reviewed recent property inspections provided by BNY for the top 10 loans. All of the properties were characterized as "excellent" or "good." None of the top 10 loans are delinquent or in special servicing, but three have DSCs less than 1.10x and another three are due to mature by June 2006. The most recent remittance report indicates that two loans, with an aggregate outstanding balance of $4.6 million, are delinquent in their debt service payments. The larger of these two loans was reported to be on BNY's watchlist but has subsequently been transferred to the special servicer, also BNY. This loan has an outstanding balance of $3.3 million and is secured by a 44,000-sq.-ft. office property located Fort Worth, Texas. The loan, which is due to mature March 14, 2005, is 60-plus days delinquent in its debt service payments. The borrower indicated that it plans to pay off the loan in full by maturity, but has not yet produced a refinancing commitment letter. The smaller loan that is delinquent is not in special servicing and is secured by a 16,000-sq.-ft. retail property in Oakland, California, and has an outstanding balance of $1.3 million. BNY's watchlist consists of two loans, inclusive of the aforementioned delinquent loan that has been transferred to the special servicer. The remaining loan is secured by a 508,000-sq.-ft. mall in Massena, New York, and has an outstanding balance of $3.5 million. This loan reported a TTM Sept. 2004 DSC of 0.99x and four anchor tenants have upcoming lease expirations. The master servicer has informed Standard & Poor's that three of these tenants have renewed their leases. The loan is due to mature March 23, 2005, but the borrower has requested a maturity extension that the master servicer is reviewing. The trust collateral is concentrated in seven states and New York (40.6%), California (23.7%), and New Jersey (21.4%) amount to more than 85.7% of the trust's exposure. Retail (36.6%) and lodging (24.3%) assets account for more than 60.9% of the property concentration. Standard & Poor's stressed the delinquent loans, loans on the watchlist, and other loans with credit issues in its analysis. The resulting credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised GP Capital Funding Corp. Commercial Mortgage Pass-Through Certs Series 2003-A Rating Class To From Credit Enhancement ----- -- ---- ------------------ B AAA AA 66.0% C AA+ A 50.5% D AA- BBB 40.7% E A- BBB- 37.9% F BBB+ BB 32.5% G BB B 26.8% Rating Affirmed GP Capital Funding Corp. Commercial Mortgage Pass-Through Certs Series 2003-A Class Rating Credit Enhancement ----- ------ ------------------ A AAA 78.6% GREEN TREE: Delayed Interest Payments Cause S&P's Default Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on two classes from two Green Tree-related manufactured housing transactions to 'D' from 'CC'. The lowered ratings reflect the reduced likelihood that investors will receive timely interest and the ultimate repayment of their original principal investment. Manufactured Housing Contract Sr/Sub Pass-Thru Trust 1999-5 and Manufactured Housing Contract Sr/Sub Pass-Thru Cert Series 2000-4 each reported an outstanding liquidation loss interest shortfall for their M-2 classes on the March 2005 payment date. Standard & Poor's believes that interest shortfalls for these transactions will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pools of collateral, as well as the location of mezzanine and subordinate class write-down interest at the bottom of the transactions' payment priorities (after distributions of senior principal). Standard & Poor's will continue to monitor the outstanding ratings associated with these transactions in anticipation of future defaults. Ratings Lowered Manufactured Housing Contract Sr/Sub Pass-Thru Trust 1999-5 Rating Class To From ----- -- ---- M-2 D CC Manufactured Housing Contract Sr/Sub Pass-Thru Cert Series 2000-4 Rating Class To From ----- -- ---- M-2 D CC HEALTHESSENTIALS SOLUTIONS: Taps Frost Brown as Bankruptcy Counsel ------------------------------------------------------------------ HealthEssentials Solutions, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of Kentucky, Louisville Division, for authority to retain Frost Brown Todd LLC as their counsel in these chapter 11 cases. Frost Brown is expected to: a) advise the Debtors of their powers and duties as debtors- in-possession in the continued operation of their businesses and properties; b) provide assistance, advice and representation concerning a plan of reorganization, a disclosure statement and the solicitation of consents to and confirmation of such plan; c) advise the Debtors in connection with any sale of assets; d) provide assistance, advice and representation concerning any further investigation of the assets, liabilities and financial condition of the Debtors that may be required; e) represent the Debtors at hearings or matters pertaining to their affairs as debtors-in-possession; f) prosecute and defend litigation matters and such other matters that might arise during and related to the cases; g) provide counseling and representation with respect to the assumption or rejection of executory contracts and leases and other bankruptcy-related matters arising from these cases; h) render advice with respect to the myriad general corporate and litigation issues as they relate to these cases, including, real estate, ERISA, securities, corporate finance, tax and commercial matters, health services; and i) perform such other legal services as may be necessary and appropriate for the efficient and economical administration of these cases. C. Edward Glasscock, Esq., a member at Frost Brown, discloses that his Firm received a $75,000 retainer. Mr. Glasscock didn't report the current hourly billing rates of professionals at Frost Brown. To the best of the Debtors' knowledge, Frost Brown is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Louisville, Kentucky, HealthEssentials Solutions, Inc. -- http://www.healthessentialsinc.com/-- provides primary care services to elderly patients. The Debtor along with its affiliates filed for chapter 11 protection on March 1, 2005 (Bankr. W.D. Ky. Case No. 05-31218). When the Debtor filed for protection from its creditors, it listed $35,384,953 in total assets and $40,785,376 in total debts. HOLYOKE HOSPITAL: Fitch Downgrades $13.2 Million Bonds to BB+ ------------------------------------------------------------- Fitch Ratings downgrades the $13,180,000 Massachusetts Health and Educational Facilities Authority, Holyoke Hospital Issue, series B of 1994 to 'BB+' from 'BBB-'. The Rating Outlook is revised to Negative from Stable. Valley Health System, Inc. -- VHS -- is the parent and sole corporate member of Holyoke Hospital. Therefore, Fitch has analyzed the financial statements of the entire system. Holyoke Hospital is the only entity obligated for the series B bonds. The downgrade to 'BB+' is based on VHS's decline in operating performance, weak debt service coverage, poor payor mix, and light liquidity. The decline in operating performance has led to a financial profile that is no longer consistent with an investment grade category credit. VHS's last two fiscal years have resulted in negative operating losses in excess of $2 million. The negative operating performance has been driven by an increase in the charity care load as the state tightened the eligibility requirements for the Medicaid program. The poor operating performance has led to very weak debt service coverage of 0.9 times for fiscal year 2004 (this calculation was based on VHS, the obligated group met its debt service coverage covenant). Holyoke's payor mix has a heavy concentration of governmental payors (45.7% Medicare payors and 19.1% Medicaid payors), leaving the hospital vulnerable to changes in governmental reimbursement. VHS's liquidity has also declined due to negative bottom lines and spending on its property, plant, and equipment. Days cash on hand at fiscal year-end 2004 was 43.9 days. Although VHS's recent capital investment of over $16 million is viewed favorably by Fitch, the financing of a hospital renovation project and equipment have pressured VHS's already weak financial profile. Of the $16 million investment in its plant, $7.5 million was funded through bank borrowings, $3.2 million from a capital campaign, and $5.3 million from the hospital's cash flow. Despite the recent losses, several initiatives have been implemented that should lead to improved operating performance. The most significant item is additional funding from the state due to Holyoke's high uncompensated care load. In FY 2005, Holyoke will receive $2 million to 2.5 million ($1.1 million was received in January 2005) from one time state appropriated funds and $1.5 million from the state's uncompensated care pool. In addition, Holyoke has renegotiated several managed care contracts that have resulted in double digit rate increases. Physician recruitment has been successful mainly due to the newly renovated surgical suites that have led to solid increases in inpatient and outpatient volume. Discharges increased 5.3% and outpatient surgeries increased 5.7% in fiscal 2004. Through the four months ended Jan. 31, 2005, the hospital had a bottom line loss of negative $180,000 (excluding $1.1 million state funds received), which is ahead of the year to date budget loss of negative $348,000. The full year hospital budgeted operating income for fiscal 2005 is $510,000. Fitch believes Holyoke's fiscal 2005 performance should be well ahead of budget however; this is due to one time funding sources. The Rating Outlook Negative is based on Fitch's belief that Holyoke's financial performance will continue to be pressured due to the reimbursement environment and service area characteristics. The ability to secure another one time grant from the state for its growing charity care load and Holyoke's future allocation from the state's uncompensated care pool is uncertain. Valley Health System, Inc. is located in Holyoke, Massachusetts (approximately 90 miles west of Boston, Massachusetts) and is comprised of Holyoke Hospital (151 staffed beds) and other healthcare entities. In fiscal 2004, VHS reported total operating revenues of $105 million. Holyoke Hospital covenants to provide quarterly and annual financial information to bondholders. Fitch has received timely quarterly interim financial statements that include the hospital's balance sheet, income statement, and utilization statistics. INTERSTATE BAKERIES: Credit Suisse Discloses 8.3% Equity Stake -------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated February 14, 2005, Credit Suisse First Boston, on behalf of the Credit Suisse First Boston business unit, discloses that it is the beneficial owner of 3,759,052 shares of Interstate Bakeries Corporation Common Stock, representing 8.3% of the total outstanding shares issued. As of April 6, 2004, there are 45,383,839 shares of Common Stock issued and outstanding. The CSFB business unit is comprised of an asset management business principally conducted under the brand name Credit Suisse Asset Management. The CSFB business unit provides financial advisory and capital raising services, sales and trading for users and suppliers of capital around the world, and invests in and manages private equity and venture capital funds. The ultimate parent company of CSFB is Credit Suisse Group, a corporation formed under the laws of Switzerland. CSG is a global financial services company with three distinct business units. In addition to the CSFB business unit, CSG and its consolidated subsidiaries are comprised of the Credit Suisse business unit and the Winterthur business unit. The Credit Suisse business unit offers global private banking and corporate and retail banking services in Switzerland. The Winterthur business unit provides life and non-life insurance and pension products to private and corporate clients worldwide. 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) INTERSTATE BAKERIES: Wants to Walk Away from 19 Real Estate Leases ------------------------------------------------------------------ Interstate Bakeries Corporation seek the U.S. Bankruptcy Court for the Western District of Missouri's authority to reject real property leases for 19 locations to reduce substantial postpetition administrative costs that constitute an unnecessary drain on the Debtors' cash resources. According to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, the Debtors need to reject the Real Property Leases because they are: -- financially burdensome; -- unnecessary to the Debtors' ongoing operations and business; and -- not a source of potential value for the Debtors' future operations, creditors and interest holders. The Debtors intend to reject 15 Real Property Leases effective as of March 23, 2005: Lessor Address of Leased Premises Lease Date ------ -------------------------- ---------- Pacesetter 22482 Muirland B, Lake 12/22/1983 Muirlands, LLC Forest, California 56935 Elk Court 56935 Elk Court, Elkhart, 01/19/1998 Land Trust Indiana Polly M. Cerasa 820 Richey Hwy, Pasadena, 09/23/1965 Texas GC Acquisition Corp. 1706 Woodman Dr., 03/19/1996 Kettering, Ohio Complete Medical 796 E Laurel Rd., London, - Supply Kentucky Goldsmith 10370 Julian Dr., Woodlawn, 10/22/1997 Properties Ohio Dan Ward (Nominee Southway Village, Taunton, 06/27/1994 of Investors Massachusetts Services Company Trust) Ale Importers, LLC 625 East Montgomery St., - Villa Rica, Georgia Middletown Better 601 North Verity Parkway 05/21/1971 Homes Company Middletown, Ohio Roxanne and James 1818 N Mitchell, Cadillac 08/24/1975 Nixon Michigan Jaxwil Enterprises 138 Shurfine Drive, Ankeny 11/13/2002 Iowa Philip and Doris 1357 Tamiami Trail Fort 11/11/1994 Folger Myers, Florida Seed Investments, 203 N Cedar St., Mason 05/01/1992 LLC Michigan Management/ 5250 Grand Avenue, Gurnee, 09/10/1998 Marketing Services, Illinois Inc. J. Harrison, Trustee 824 North Illinois, Route 10/19/2000 83 Mundelein, Illinois The Debtors also want to reject four Real Property Leases effective as of February 28, 2005: Lessor Address of Leased Premises Lease Date ------ -------------------------- ---------- Sunpro, LLC 1618 Buckhannon Pike, 08/04/1997 Nutter Fort, West Virginia IRET Properties, LP 5306 Business Highway 51, 07/12/1993 Schofield, Wisconsin Blackstone 2201 East 62nd Street, 07/10/1987 Development Indianapolis, Indiana Katella Cottages, 9384-86 Katella Ave., 01/31/1996 LLC Garden Grove, California 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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) JEAN COUTU: Completes Exchange Offer for 7-5/8% Senior Notes ------------------------------------------------------------ The Jean Coutu Group (PJC) Inc. has closed its exchange offer, pursuant to which the Company's unregistered 7-5/8% Senior Notes due 2012, which were issued on July 30, 2004, were exchanged for new 7-5/8% Senior Notes due 2012, which have been registered under the Securities Act of 1933, as amended, and the Company's unregistered 8-1/2% Senior Subordinated Notes due 2014, which were issued on July 30, 2004, were exchanged for new 8-1/2% Senior Subordinated Notes due 2014, which have been registered under the Securities Act of 1933, as amended. All of the $350 million aggregate principal amount of the Company's unregistered Senior Notes and all of the $850 million aggregate principal amount of the Company's unregistered Senior Subordinated Notes were exchanged in the exchange offer. About the Company The Jean Coutu Group (PJC) Inc. is the fourth largest drugstore chain in North America and the second largest in both the eastern United States and Canada. The Company and its combined network of 2,225 corporate and affiliated drugstores (under the banners of Eckerd, Brooks, PJC Jean Coutu, PJC Clinique and PJC Sante Beaute) employ more than 60,000 people. The Jean Coutu Group's United States operations employ over 46,000 persons and comprise 1,904 corporate owned stores located in 18 states of the Northeastern, mid-Atlantic and Southeastern United States. The Jean Coutu Group's Canadian operations and drugstores affiliated to its network employ over 14,000 people and comprise 321 PJC Jean Coutu franchised stores in Quebec, New Brunswick and Ontario. * * * As reported in the Troubled Company Reporter on July 21, 2004, Standard & Poor's Ratings Services rated Jean Coutu Group, Inc.'s US$250 million senior unsecured notes 'B'. The 'BB' bank loan ratings and the '1' recovery rating indicate that lenders can expect full recovery of principal in the event of a default. The outlook is negative. LAS AMERICAS: Files for Chapter 11 Protection in E.D. California ---------------------------------------------------------------- Las Americas Broadband, Inc. (Pink Sheets: LABN) filed a voluntary chapter 11 petition in the United States Bankruptcy Court for the Eastern District of California on Feb. 28, 2005. The company contemplates a reorganization plan to be submitted to the court in the next few months. The reorganization will outline the new plan allowing for the company's bankruptcy proceedings to be completed in a reasonable amount of time. In its latest Form 10-K filed with the Securities and Exchange Commission -- for the fiscal year ended Dec. 31, 2003 -- Las Americas said it has no established source of revenue, has experienced net operating losses of $14,039,199 since inception, had a net loss of $4,222,512 and a negative cash flow from operations of $847,434 for the year ended December 31, 2003. The Company also has working capital and stockholders' deficiencies of $3,765,127 and $3,014,453, respectively, as of Dec. 31, 2003. The Company's auditors -- Weinberg & Company, in Boca Raton, Florida -- raised substantial doubt about the Company's ability to continue as a going concern when they reviewed the company's 2003 financials. Headquartered in Tehachapi, California, Las Americas Broadband, Inc. -- http://www.lasamericasbroadband.com/-- operates a cable and satellite television network in Kern County, California. The Debtor filed for chapter 11 protection on Feb. 28, 2005 (Bankr. E.D. Calif. Case No. 05-11397). Leonard K. Welsh, Esq., at Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $4,964,500 in total assets and $4,641,110 in total debts. LAS AMERICAS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Las Americas Broadband, Inc. dba Country Cable aka DDD Cablevision, Ltd. fka Info America, Inc. 785 Tucker Road #G, PMB 436 Tehachapi, California 93561 Bankruptcy Case No.: 05-11397 Type of Business: The Debtor operates a cable and satellite television network in Kern County, California. See http://www.lasamericasbroadband.com/ Chapter 11 Petition Date: February 28, 2005 Court: Eastern District Of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: Leonard K. Welsh, Esq. Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP 4550 California Avenue, 2nd Floor Bakersfield, CA 93309 Tel: 661-395-1000 Total Assets: $4,964,500 Total Debts: $4,641,110 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ USBU LoneOne, LLC Judgment entered $585,372 575 Logan Avenue Denver, CO 80203 Jenkens & Gilchrist, LLP Attorney fees $583,621 The Chrysler Building 405 Lexington Avenue New York, NY 10174 Certified Leasing Deficiency on returned $118,721 P.O. Box 2088 vehicles Bakersfield, CA 93303 Weinberg & Company, PA Accountant fees $109,586 Kern Co. Administrative Franchise fees $87,879 Office John T. Heaney Attorney fees $80,000 Rios Zertuche Attorney fees $77,375 MTV Networks Program provider $69,612 Bank of the Sierra-VISA Stipulated judgment $57,102 National Cable Television Judgment entered $56,102 TVC, Inc. Purchase of equipment $46,704 & supplies Harmonic Inc. Purchase of equipment $44,389 & supplies turner Network Television Program provider $31,597 AT&T - Middle Markets Lease of $26,821 communication line Fox Sports Net West Program provider $25,682 ESPN, Inc. Program provider $24,958 CNN Program provider $24,193 Time Warner Telecom Wireless internet $24,107 site provider Digicomm International, Inc. Purchase of equipment $23,634 & supplies RGR Abogados Attorney fees $22,384 LONG DISTANCE BILLING: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Long Distance Billing Service, Inc. 436 Lynchburg Avenue Brookneal, Virginia 24528 Bankruptcy Case No.: 05-11168 Type of Business: The Debtor provides telecommunications and internet services to consumers in North America and Latin America. See http://www.ldbsinc.com/ Chapter 11 Petition Date: February 22, 2005 Court: Northern District of Mississippi (Aberdeen) Judge: David W. Houston III Debtor's Counsel: Craig M. Geno, Esq. Harris & Geno, PLLC P.O. Box 3380 Ridgeland, MS 39158 Tel: 601-427-0048 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. MANHATTAN IMAGING: Amends Two-Year-Old Plan & Disclosure Statement ------------------------------------------------------------------ Manhattan Imaging Associates, P.C., dba Diagnostics Radiology Associates, delivered its Amended Plan and a Second Amended Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of New York its on Feb. 7, 2005. These filings supercede previous versions filed two years ago. Manhattan Imaging filed its initial Plan of Reorganization and Disclosure Statement on October 9, 2002. Those documents were amended on November 14, 2002, as the Debtor prepared for a Disclosure Statement Hearing on November 20, 2002. At that Nov. 20 hearing, the Bankruptcy Court declined to approve the adequacy of the information contained in the disclosure statement and adjourned the hearing sine die. Terms of the Plan The Plan proposes to pay holders of allowed unsecured claims 100% of their claims over five years. The Debtor will pay Unsecured Claim Holders, owed $3,482,913, in five equal 20% installments. Five large claims: * Jeffrey Brown & Associates' $700,000 claim; * A.D. Winston Corp.'s $117,848 ancillary construction claim; * Dr. Maureen Matturri's $337,400 and $250,000 claims; and * Dr. Joel Bloom's $757,362 claim, are to be expunged, reclassified or subordinate to all other allowed general unsecured claims: The claims of Drs. Matturri and Bloom are separately classified in the Plan from general unsecured claims. Objections to the Brown Claim and the ancillary construction claim have been resolved, reducing the Brown Claim to an allowed unsecured claim of $50,000.00. Therefore the Debtor believes the amount of Allowed Unsecured Claims totals $254,122. The Debtor has separately classified Class 5 Claims of Drs. Matturri and Bloom since these claims arise from the obligation of the Debtor to redeem stock held by Class 5 creditors. The Debtor believes that these claims should be subordinated to other Unsecured Claims pursuant to Section 510 of the Bankruptcy Code and the principles of equitable subordination. Manhattan Imaging's equity holders take nothing, unless they agree to sign an Employment Agreement with the Reorganized Debtor. Shares of stock of the Reorganized Debtor will be distributed to Equity Interest Holders who opt to be employed by the Reorganized Debtor. The Honorable Robert E. Gerber will consider approval of the Second Amended Disclosure Statement on April 6, 2005. Objections to Disclosure Statement must be filed by April 1, 2005. Manhattan Imaging Associates, P.C. dba Diagnostics Radiology Associates, operator of a medical imaging/radiology imaging center, filed for chapter 11 protection on February 13, 2002 (Bankr. S.D.N.Y. Case No. 02-10646). Robert R. Leinwand, Esq., at Robinson Brog Leinwand Greene Genovese & Gluck P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $5,194,769 in total assets and $5,328,079 in total debts. MAULDIN-DORFMEIER: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Mauldin-Dorfmeier Construction, Inc. P.O. Box 15100 Fresno, California 93702 Bankruptcy Case No.: 05-11402 Type of Business: The Debtor provides construction services. See http://www.mdc-inc.com/ Chapter 11 Petition Date: February 28, 2005 Court: Eastern District Of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: Riley C. Walter, Esq. Walter Law Group 7110 North Fresno Street, #400 Fresno, CA 93720 Tel: 559-435-9800 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ St. Paul Fire and Marine Insurance Co. $10,000,000 1455 S. 344th Way, Ste. 200 Auburn, WA 98001 Kinetics Mechanical Service, I $1,360,045 33225 Western Avenue Union City, CA 94587 Fireman's Fund $1,000,000 777 San Marin Drive Novato, CA 94998 Helix Electric $507,746 8760 Camino Santa Fe, Suite A San Diego, CA 92121 Collins Electrical Co., Inc. $463,597 P.O. Box 1609 Stockton, CA 95201 Kasco Fab, Inc. $455,347 4529 S. Chestnut Fresno, CA 93725 W.M. Lyles Co. $420,665 P.O. Box 4377 Fresno, CA 93744 Tarlton & Sons, Inc. $401,145 4173 S. Fig Ave. Fresno, CA 93706 Bostrom-Bergen Metal Products Inc. $365,036 3488 W. Ashlan Fresno, CA 93722 All West Construction Inc. $318,027 2560 South East Avenue Fresno, CA 93706 First Insurance Funding Corp. of America $317,336 450 Skokie Blvd., Ste. 1000 Northbrook, IL 60065 Mountain Connection, Inc. $260,922 2347 Middle Road Columbia Falls, MT 59912 Howe Electric $208,188 Engineered Glass Walls Inc. $191,461 Four C's Service $181,907 King's Roofing $180,287 ARC Comfort Systems USA, Inc. $171,563 Cosco Fire Protection, Inc. $165,044 Risse Mechanical $157,640 E.L. Wills $157,353 MCI INC: Employees Sending Mixed Signals, Says New Vault Surveys ---------------------------------------------------------------- MCI Inc. (NasdaqNM: MCIP) employees are sending mixed signals about the company's future, New York research firm Vault has found in new employee surveys on the communications giant, which disclosed that it would "engage with Qwest to review its latest proposal from Feb. 24, 2005 to acquire MCI.," with the agreement of Verizon. The survey results, published on March 2, can be accessed at: http://www.vault.com/go/to.jsp?place=32977 Vault's employee surveys give investors and jobseekers insight into the company's business operations. Says a senior government markets account manager, "MCI has been an adventure the past seven years. The corporate culture has changed as the result of a hostile takeover, redirection in corporate focus, mismanagement, bankruptcy, new management and refocus and finally emergence from bankruptcy. Long time, devoted employees found themselves desperate and destitute. Those still employed felt insecure and restless. Recently new management has breathed integrity and customer focus back into MCI's corporate culture. What a difference corporate leadership can make!" A small business representative thinks that "Employees I work with are excited about the merger with Verizon. What that means for the long term is hard to say. But the stability of Verizon and their expanding markets as well as maintaining our current base keep the bulk of the employees very energetic." (Written before March 2's press release about the MCI acquisition by Qwest) Neither Vault nor its employee surveys are endorsed by or affiliated with MCI. About Vault Inc Vault, Inc. is the leading media company focused on careers. Vault's primary offering is its web site -- http://www.vault.com/ -- which features "insider" workplace information on over 5,000 companies, expert career articles on more than 70 industries, and an industry-focused job board. Offline, Vault offers the Vault Career Library, a series of more than 100 nationally distributed career-focused print books. 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. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, 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. 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. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services 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. 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. MCI INC: Verizon Opens Talks Between Qwest & MCI for Two Weeks -------------------------------------------------------------- Verizon Communications Inc. (NYSE: VZ) and MCI, Inc. (Nasdaq: MCIP) have agreed that MCI may engage in further discussions with Qwest Communications International Inc. (NYSE: Q) through March 17, subject to the applicable provisions of the Feb. 14 agreement for Verizon to acquire MCI. The following statement has been issued by Verizon: "Verizon recognizes that it is in the best interests of the stakeholders of both Verizon and MCI to address recent market speculation regarding Qwest's claims that it can deliver greater value to MCI's shareholders. Notwithstanding this speculation, we believe that this process will result in MCI reaching the same conclusion that it reached after seven months of discussions with Qwest. "Verizon is the best partner for MCI, with the most compelling value proposition for its shareholders. Verizon is a financially strong, diversified communications company positioned for growth across all customer segments with both wired and wireless products. The company has a proven track record of completing transactions and delivering value for customers, employees, bondholders and shareholders." Following is Verizon's letter to MCI: March 2, 2005 MCI, Inc. 22001 Loudoun County Parkway Ashburn, Virginia 20147 Ladies and Gentlemen: You and we are party to the Agreement and Plan of Merger dated as of February 14, 2005 among Verizon Communications Inc., Eli Acquisition, LLC and MCI, Inc. (the "Agreement"). Capitalized terms used without definition in this letter have the meanings ascribed to them in the Agreement. Section 6.5(a) of the Agreement provides that you may not furnish information to or engage in discussions with Persons who make a Takeover Proposal without making certain specified findings. The purpose of this letter is to reflect our agreement that, from and after the date hereof and prior to March 18, 2005 you and your Representatives may engage in the activities described in subparagraphs (x) and (y) of Section 6.5(a) of the Agreement with Qwest Communications International, Inc. or its Representatives without having made the determinations contemplated by the proviso immediately following clause (y) thereof. For the avoidance of doubt, nothing in this letter shall relieve you of the obligation to comply with the other provisions of the Agreement, including the other provisions of Section 6.5, or prejudice your ability to make any future determination under the above-referenced proviso. Please signify your concurrence with the foregoing by signing below. Sincerely, VERIZON COMMUNICATIONS INC. By: ______________________________ John W. Diercksen Accepted and agreed: MCI, INC. By: _______________________________ Anastasia D. Kelly Verizon intends to file a registration statement, including a proxy statement of MCI, and other materials with the Securities and Exchange Commission in connection with the proposed transaction. Verizon and MCI urge investors to read these documents when they become available because they will contain important information. Investors will be able to obtain free copies of the registration statement and proxy statement, as well as other filed documents containing information about Verizon and MCI, at http://www.sec.gov/the SEC's website. Investors may also obtain free copies of these documents at http://www.verizon.com/investoror by request to: Verizon Communications Inc. Investor Relations 1095 Avenue of the Americas, 36th Floor New York, NY 10036 Free copies of MCI's filings are available at http://www.mci.com/about/investor_relationsor by request to: MCI, Inc. Investor Relations 22001 Loudoun County Parkway Ashburn, VA 20147 Verizon, MCI, and their respective directors, executive officers, and other employees may be deemed to be participants in the solicitation of proxies from MCI shareowners with respect to the proposed transaction. Information about Verizon's directors and executive officers is available in Verizon's proxy statement for its 2004 annual meeting of shareholders, dated March 15, 2004. Information about MCI's directors and executive officers is available in MCI's annual report on Form 10-K for the year ended December 31, 2003. Additional information about the interests of potential participants will be included in the registration statement and proxy statement and other materials filed with the SEC. About MCI 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 Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/--is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Dec. 31, 2004, Qwest Communications' balance sheet showed a $2,612,000,000 stockholders' deficit, compared to a $1,016,000,000 deficit at Dec. 31, 2003. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services placed its ratings on Denver, Co.-based diversified telecommunications carrier Qwest Communications International, Inc., and subsidiaries, including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's counter bid to Verizon Communications, Inc., for long-distance carrier MCI, Inc., for $3 billion in cash and $5 billion in stock. MCI also has about $6 billion of debt outstanding. The ratings on MCI, including the 'B+' corporate credit rating, remain on CreditWatch with positive implications, where they were placed Feb. 14, 2005 following Verizon's announced agreement to acquire the company. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by either Verizon or Qwest, both of which are more creditworthy entities. However, the positive CreditWatch listing of the 'B+' rating on MCI's senior unsecured debt assumes no change to the current MCI corporate and capital structure under an assumed acquisition by Qwest, such that this debt would become structurally junior to other material obligations. "The negative CreditWatch listing of the Qwest ratings reflects the higher business risk at MCI if its bid is ultimately successful," explained Standard & Poor's credit analyst Catherine Cosentino. As a long-distance carrier, MCI is facing ongoing stiff competition from other carriers, especially AT&T Corp. Moreover, MCI is considered to be competitively disadvantaged relative to AT&T in terms of its materially smaller presence in the enterprise segment and fewer local points of presence -- POPs. The latter, in particular, results in higher access costs relative to AT&T. Qwest also faces the challenge of integrating and strengthening MCI's operations while improving its own underperforming, net free cash flow negative long-distance business. These issues overshadow the positive aspects of Qwest's incumbent local exchange carrier business that were encompassed in the former developing outlook. If Qwest's offer is accepted by MCI's shareholders, Standard & Poor's will evaluate the company's plans for integrating MCI, its financial plans, and longer-term strategy given the competitive and consolidating telecommunications industry. Moreover, the status of the shareholder lawsuits is still uncertain and could be a factor in the rating or outlook even after the CreditWatch listing is resolved under an assumed successful bid by Qwest for MCI at current terms. As such, if Qwest's bid is rejected and it terminates efforts to acquire MCI, ratings on Qwest will be affirmed and removed from CreditWatch, and a developing outlook will be reassigned. MERRILL LYNCH: Fitch Puts Low-B Ratings on Certificate Classes F&G ------------------------------------------------------------------ Fitch Ratings upgrades Merrill Lynch Mortgage Investors, Inc.'s mortgage pass-through certificates, series 1999-C1: -- $32.6 million class B to 'AAA' from 'AA'; -- $26.7 million class C to 'A+' from 'A'; -- $8.9 million class D to 'A' from 'A-'. These classes are affirmed by Fitch: -- $13 million class A-1 at 'AAA'; -- $337.8 million class A-2 at 'AAA'; -- Interest only class IO at 'AAA'; -- $20.7 million class E at 'BBB'; -- $7.4 million class F at 'BB+'; -- $23.7 million class G at 'B'. The $20.7 million class H and $3 million class J remain at 'CC' and 'C' respectively. Fitch does not rate the $13.3 million class K. The upgrades are the result of increased credit enhancement. The transaction has paid down 14.4% since issuance, to $507.1 million as of the February 2005 distribution date from the original $592.5 million. Currently, there are five loans (9.4%) in special servicing and consist of two real estate owned - REO -- properties (3.9%), two loans in foreclosure (1.7%) and one loan that is 90 days delinquent (3.1%). The largest specially serviced asset is an office property in Salt Lake City, Utah (3.4%), currently REO. The special servicer is pursuing prospective purchasers and given the appraisal value of the property, losses are expected. The second largest specially serviced asset is an office property in Irving, Texas (3.1%), currently 90 days delinquent. The borrower was paying according to a forbearance agreement that expired at the end of February 2005 while attempting to release vacant space. The special servicer is evaluating additional work out options. Losses associated with this loan are possible. Fitch loans of concern are high at 16.9%, and include the specially serviced loans, loans with low debt service coverage ratios -- DSCR -- and declining occupancies. However, the investment grade classes benefit from the paydown of the pool and subsequent increases in credit enhancement. The below investment grade ratings currently reflect the expected losses on the Fitch loans of concern. MERRILL LYNCH: Fitch Puts Low-B Ratings on Six 2003-KEY1 Certs. --------------------------------------------------------------- Fitch Ratings-Chicago-March 2, 2005: Fitch Ratings affirms Merrill Lynch Mortgage Trust's commercial mortgage pass-through certificates, series 2003-KEY1: -- $27.2 million class A-1 at 'AAA'; -- $177.7 million class A-1A at 'AAA'; -- $75 million class A-2 at 'AAA'; -- $130 million class A-3 at 'AAA'; -- $482.9 million class A-4 at 'AAA'; -- Interest-only class XC at 'AAA'; -- Interest-only class XP at 'AAA'; -- $34.3 million class B at 'AA'; -- $15.8 million class C at 'AA-'; -- $25.1 million class D at 'A'; -- $10.6 million class E at 'A-'; -- $11.9 million class F at 'BBB+'; -- $7.9 million class G at 'BBB'; -- $10.6 million class H at 'BBB-'; -- $5.3 million class J at 'BB+'; -- $5.3 million class K at 'BB'; -- $4 million class L at 'BB-'; -- $6.6 million class M at 'B+'; -- $2.6 million class N at 'B'; -- $1.3 million class P at 'B-'. Fitch does not rate the $11.9 million class Q, classes WW-1 through WW-3, or the interest-only class WW-X. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the February 2005 distribution date, the pool has paid down 0.9% to $1.05 billion from $1.06 billion at issuance. Currently, one loan (0.4%) is in special servicing. The loan has been brought current and is expected to be returned to the master servicer. Fitch reviewed the credit assessments of these four loans: * 77 West Wacker Drive (13.9%); * Solomon Pond Mall (10.9%); * Miami International Mall (9.3%); and * Mall at Fairfield Commons (2.7%). All four loans maintain investment grade credit assessments. The Miami International Mall is secured by a regional mall located in Miami, Florida. As of December 2004, occupancy declined to 81.4% from 92.2% at issuance. The decline is due to tenant lease expirations and bankruptcies. Occupancy, however, is expected to increase in 2005 as there are many prospects for the vacant space. METALDYNE CORP: S&P Pares Corp. Credit Rating to B After Review --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and other ratings on Plymouth, Michigan, based Metaldyne Corp. and removed them from CreditWatch, where they were placed Nov. 29, 2004. The 'BB-' corporate credit rating was lowered to 'B'. The rating actions are based on the company's high leverage, constrained liquidity, and the increasingly challenging industry conditions. The outlook is negative. The company is controlled by unrated Heartland Industrial Partners L.P., which acquired Metaldyne in November 2000. "While we still expect that the company will be able to significantly offset higher raw material costs and maintain viable liquidity in the face of challenging industry conditions during 2005, partly due to a fairly well-positioned customer mix, leverage is likely to remain high, as most cash flow will be used for debt service, capital spending and to support working capital needs," said Standard & Poor's credit analyst Robert Schulz. "For the rating, we expect lease-adjusted debt (including domestic and foreign accounts receivable financing programs) to EBITDA to be 5x-6x. For the 12 months ended Sept. 30. 2004, the company's leverage, as calculated under its bank agreement, was 4.47x, and the company has received covenant modifications. However, there could be limited headroom under the covenants later during the year since covenant levels become more restrictive." The ratings on Metaldyne reflect the company's highly leveraged capital structure and the cyclical and competitive pricing pressures of the capital-intensive automotive metal component supply industry. Metaldyne is one of the largest independent manufacturers of engineered metal components to the global automotive market, with content on about 90% of the top-40 NAFTA light vehicles and revenues of almost $2 billion. The company is the largest independent forming company, the second-largest machining and assembly supplier, and one of the largest powdered manufacturers for light vehicles. Despite Metaldyne's niche market leadership position in certain segments of its markets, good engineering capabilities, and fair customer and platform diversity, margins have been pressured in 2004, partly from higher raw material costs, but are still in the low double-digit area. In late 2004, Metaldyne filed its 10-K for 2003 and 10-Qs for the first three quarters of 2004 after resolving pending accounting issues, which is considered a positive. The issues surrounded an independent inquiry into certain accounting matters at its Sintered division (about 10% of total sales) where income at the division had first been deliberately overstated, then understated. Downside rating risk would be driven by deterioration in the company's near-term access to liquidity, which could occur if EBITDA and cash flow levels are insufficient relative to tighter covenants later in 2005. Underlying concerns continue to be production cuts by certain customers, ultimate recovery on higher raw material costs, and the need for successful launches during the year. In any case, cash generation is unlikely to result in much debt reduction during 2005. Revision of the outlook to stable or longer term upside potential would require cash generation sufficient to reduce debt levels, along with an improved level of liquidity. METROPCS INC: Likely Default Cues S&P to Pare Credit Rating to CCC ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Dallas, Texas-based wireless carrier MetroPCS, Inc., to 'CCC' from 'CCC+'. The outlook is negative. "The downgrade reflects Standard & Poor's view that the company is subject to heightened default risk in light of its failure to file its financial statements with the SEC since the second quarter of 2004 due to an ongoing SEC investigation," said Standard & Poor's credit analyst Catherine Cosentino. The company has obtained waivers from its creditors through March 8 to avoid a technical default under the bond indenture. In the meantime, it has leveraged up with recent transactions, including the purchase of wireless spectrum licenses from Cingular Wireless LLC in Detroit and Dallas for $230 million and receipt of up to $240 million in related financing for this acquisition, as well as receipt by MetroPCS of up to $300 million in exchangeable senior secured loans for FCC licenses obtained in the recent spectrum auction by MetroPCS' 85%-owned designated entity Royal Street Communications LLC, in which MetroPCS has a non-controlling interest. These transactions pose incremental financial and business risk, including additional capital expenditures for license build-outs and other start-up expenses. Standard & Poor's has no visibility on prospects for 2005 because of the company's protracted lack of financial reporting. Even if MetroPCS obtains an extended waiver from its creditors, the company still remains at a very high risk for default. MIRANT CORP: Dynegy Agrees to Cut $2.7M Cure Claim to $125,000 -------------------------------------------------------------- Mirant Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas to approve their Joint Stipulation with Dynegy Marketing and Trade, which resolves their dispute relating to a Master Netting, Setoff and Margining Agreement, dated June 25, 2002. Dynegy, Mirant Americas Energy Marketing, LP, and Mirant Canada Energy Marketing, Ltd., are parties to that contract. On December 16, 2003, Dynegy filed Claim Nos. 7145 and 7146 for at least $2,742,370.50 each against Mirant Americas Development, Inc., and MAEM, each Claim asserting a "Power Sale Claim" and a "Litigation Claim." The Claims each refer to the Contract. On July 14, 2004, MAEM assumed the Contract. The parties initially disputed the cure amount owing by MAEM to Dynegy with respect to MAEM's assumption of the Contract and the proper application of offsets and deductions in connection therewith. The Debtors also objected to Dynegy's proofs of claim. In their Joint Stipulation, the parties agree that: (a) the Cure Amount owing by MAEM to Dynegy with respect to the Contract is $125,000; (b) upon payment of the Cure Amount, the Claims will be deemed withdrawn in their entirety, with prejudice without further Court order or action by the parties; and (c) Dynegy and MAEM have agreed to release any claims they may have against each other in regard to the Contract and amounts owed under the Contract. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirectsubsidiaries, generate, sell and deliver electricity in NorthAmerica, the Philippines and the Caribbean. Mirant Corporationfiled 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 theDebtors filed for protection from their creditors, they listed$20,574,000,000 in assets and $11,401,000,000 in debts. (MirantBankruptcy News, Issue No. 54; Bankruptcy Creditors' Service,Inc., 215/945-7000) NATIONAL BENEVOLENT: Court Confirms Full-Payment Chapter 11 Plan ---------------------------------------------------------------- The Honorable Robald B. King of the U.S. Bankruptcy Court for the Western District of Texas put his stamp of approval on an order confirming the chapter 11 plan of reorganization for National Benevolent Association of the Christian Church. In December 2004, the Bankruptcy Court approved a sale of some health care centers to Fortress NBA Acquisitions LLC for approximately $210 million. Under the Plan, unsecured creditors are paid in full and the solvent debtor will pay a couple of additional percentage points for post-petition interest. Full-text copies of the Plan and Disclosure Statement are available at no charge at: http://bankrupt.com/misc/04-50948-Plan.pdf - and - http://bankrupt.com/misc/04-50948-Disclosure.pdf "This case presented some novel and interesting challenges given the debtors' not-for-profit status," Matthew R. Niemann, a managing director at Houlihan Lokey Howard & Zukin, who served as the financial advisor for the creditors' committee, told W. Scott Bailey at the San Antonio Business Journal. "But fortunately the parties pulled together to unlock $210 million in value from the senior-care facilities and not only afford the creditors a par plus accrued recovery, but also provide the residents with a world-class owner and new management," Mr. Niemann continued. The Debtors lawyers are: R. Glen Ayers, Jr., Esq. Emerson Banack, Jr., Esq. David S. Gragg, Esq. LANGLEY & BANACK, INC. Trinity Plaza II 745 East Mulberry, Suite 900 San Antonio, TX 78212-3166 Telephone: (210) 736-6600 Telecopier: (210) 735-6889 The Official Committee of Unsecured Creditors is represented by: Robert D. Albergotti, Esq. John D. Penn, Esq. Eric Terry, Esq. HAYNES AND BOONE, LLP 112 E. Pecan St., Suite 1600 San Antonio, TX 78205 Telephone: (210) 978-7000 Telecopier: (210) 978-7450 Headquartered in Saint Louis, Missouri, The National Benevolent Association of the Christian Church (Disciples of Christ) -- http://www.nbacares.org/--manages more than 70 facilities financed by the Department of Housing and Urban Development and owns and operates 18 other facilities, including 11 multi-level older adult communities, four children's facilities and three special-care facilities for people with disabilities. The non-profit organization filed for chapter 11 protection on February 16, 2004 (Bankr. W.D. Tex. Case No. 04-50948), listing more than $200 million in debts and assets at that time. NEW HEIGHTS: Wants to Sell All Assets to Geneva7 for $1.1 Million ----------------------------------------------------------------- New Heights Recovery & Power, LLC, seeks authority from the U.S. Bankruptcy Court for the District of Delaware to sell substantially all of its assets to Geneva7 LLC for $1.1 million. As reported in the Troubled Company Reporter on March 2, 2005, the Debtor didn't receive any acceptable bids when it tried sell its assets for more than $537,511 owed on account of secured claims held by Cook County, Illinois. The Debtor's best plan, at that juncture, was to abandon the assets to Cook County in full satisfaction of the County's claims. Under that scenario, holders of general unsecured claims would get nothing. Geneva7 has come to the rescue. Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling, in Wilmington, Delaware, tells the Court that the sale of the Debtor's assets to Geneva7 will allow the Debtor to pay: * 19% of its lenders $2 million postpetition claim; * 10% of unsecured claims; and * 2% of its lenders' $30 million prepetition claim. Headquartered in Ford Heights, Illinois, New Heights Recovery & Power, LLC -- http://www.tires2power.com/-- is the owner and operator of the Tire Combustion Facility and other tire rubber processing facilities. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11277). Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling represents the Debtor in its restructuring efforts. When the Company filed for chapter 11 protection, it listed both its estimated debts and assets of $50 million. The Debtor first filed for bankruptcy in March 26, 1996, as a result to the amendment of the Retail Rate Law. It emerged towards the end of 1998. NEW WORLD: Dec. 28 Balance Sheet Upside-Down by $112.9 Million -------------------------------------------------------------- New World Restaurant Group, Inc. (Pink Sheets: NWRG.PK) reported an increase in fourth quarter comparable store sales, as well as significant improvements in operating income and reduced net losses for both the quarter and year ended Dec. 28, 2004. The company's operations generated $11.0 million in cash flow during fiscal 2004, a five-fold increase from 2003. Comparable store sales increased by 2.6 % over the corresponding 2003 period during the fourth quarter, contributing to a 0.2% increase in total revenues for the 13-week period to $97.3 million from $97.1 million in the fourth quarter of 2003. Income from operations improved to $3.6 million, or 3.7 % of revenues, representing an $11.9 million improvement over the restated $8.3 million operating loss reported in the fourth quarter of 2003. "We are very pleased to report a return to increased comparable store sales and total revenues during the fourth quarter and continuing improvements in operating income that began in the first quarter of 2004. Both revenues and income from operations reached their highest levels for the year during the fourth quarter," said Paul Murphy, New World CEO. "The year-over-year increase in comparable store sales followed sequential improvements in this key measurement during the first three quarters of 2004. The improvements arose from continued enhancement in the operation of restaurants throughout the year, the introduction of new menu items, and supporting marketing and advertising campaigns initiated in the fourth quarter. These factors helped drive a 5.2% increase in the average check which was partially offset by a 2.5% decline in transactions during the quarter." Commenting on New World's fiscal 2004 operating results, Mr. Murphy said that revenues were consistent with the company's expectations. "Throughout 2004, we saw continued improvement in our company operated store performance. I am quite proud of the efforts our personnel put forward over the past year. Our back to basics approach to the business is now bearing fruit," he explained. "We will continue to implement solutions to improve our margins, but expect this trend to level out during 2005, as many of the cost- level reduction initiatives will have been in place for approximately one year." In the fourth quarter, EBITDA increased 43.2% to $10.6 million, or 10.9% of revenues, from $7.4 million, or 7.6% of revenues, during the comparable fiscal 2003 period. Adjusted EBITDA for the 13 weeks improved 12.1% to $11.2 million, or 11.5% of revenues, from $9.9 million, or 10.2% of revenues, in the 2003 quarter. (See tables at end of this press release for explanation of EBITDA, adjusted EBITDA and corresponding reconciliations.) New World's net loss for the fourth quarter declined to $2.1 million, or 21 cents per basic and diluted share, from a restated $14.0 million, or $1.43 per share, a year earlier. In addition to the improvements in revenues and income from operations, cash flow from operations was $11.4 million compared with $7.6 million in the fourth quarter of 2003. General and administrative expenses were $7.5 million in the fourth quarter of 2004, a 33.2% decrease from $11.2 million in the comparable 2003 quarter. New World chief financial officer Richard P. Dutkiewicz also noted that while posting increases in EBITDA during 2004, New World continued to narrow the difference between EBITDA and adjusted EBITDA. EBITDA is not intended to represent cash flow from operations in accordance with GAAP and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. Rather, EBITDA is a basis upon which to assess financial performance. While EBITDA is frequently used as a measure of operations and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled measures of other companies due to the potential inconsistencies in the method of calculation. The company presents adjusted EBITDA information because it is relevant to the covenants in both the $160 million notes and the AmSouth Revolver. For the year ended December 28, 2004, total revenues decreased by 2.5 % to $373.9 million from $383.3 million in 2003. The results primarily reflected a 2.3% decline in retail sales from the company-operated Einstein Bros. and Noah's New York Bagels restaurants to $347.8 million from $356.2 million in fiscal 2003. Comparable store sales decreased by 1.9 %, reflecting a 5.4% drop in transactions partially offset by a 3.8% increase in average check size. The company reported income from operations of $7.0 million for fiscal 2004, compared to a restated loss from operations of $17.6 million in fiscal 2003. Operating results for fiscal 2003 included $5.3 million in impairment charges and $2.1 million in integration and reorganization charges. EBITDA for fiscal 2004 rose 48.3% to $35.3 million, or 9.4% of revenues, from $23.8 million, or 6.2% of revenues, during fiscal 2003, which included net unusual charges of $10.9 million. Adjusted EBITDA for 2004 was $36.7 million, or 9.8% of revenues, a 5.6% increase from $34.7 million, or 9.1% of revenues, in fiscal 2003. New World's net loss for 2004 was $17.4 million, or $1.77 per basic and diluted share, compared with a restated net loss of $73.5 million in fiscal 2003. After including dividends and accretion on Preferred Stock of $14.4 million, the restated net loss to common stockholders for fiscal 2003 was $87.9 million, or $22.71 per share. An equity restructuring completed in September 2003 eliminated the Series F Preferred Stock and its related dividends and accretion on a going forward basis. The company's net loss for fiscal 2004 includes a $1.6 million loss on the abandonment of certain assets, partially offset by $0.3 million in other income. New World's net loss for the prior year included a one-time, non-cash loss of $23.0 million on the exchange of Series F Preferred Stock in connection with the September 2003 equity restructuring, partially offset by a $1.0 million benefit for the cumulative change in the fair value of derivatives, a $0.6 million gain on the disposal of assets, a $0.4 million gain on investment in debt securities, and $0.2 million in other income. In addition to the improvement in income from operations and the impact of the aforementioned items, the year-to-year reduction in New World's net loss reflected a 32.2% decline in net interest expense to $23.2 million from $34.2 million in fiscal 2003, due to a debt refinancing completed during the third quarter of 2003. While revenues decreased during fiscal 2004, gross profit increased by 2.4% to $67.2 million, or 18.0% of total revenues, from $65.6 million, or 17.1% of revenues, in 2003. This increase was primarily due to improvements in retail cost of sales, with retail margins rising by 1.3% over 2003. The company, which factors all store level expenses into its retail margins, realized approximately $8.2 million of the margin improvement from the decision to temporarily reduce marketing expenditures. Retail margins also benefited from improvements in labor utilization and an approximate $1.1 million reduction in group insurance and workman's compensation claims, offset by commodity cost increases of approximately $2.4 million. The year-over-year improvement in income from operations also reflected a 21.6% decrease in general and administrative (G&A) expenses to $32.8 million in fiscal 2004 from $41.8 million in 2003, when the company incurred $3.9 million in non-capitalizable legal and consulting expenses related to the debt refinancing and equity recapitalization and a re-audit of its fiscal 2000 and 2001 financial results. The year-over-year reduction in G&A expenses was also aided by a $1.8 million decrease in bad debt expense due to improved collection efforts and management of franchisee receivables. During fiscal 2004, New World's operations generated cash flow of $11.0 million compared with cash flow of $2.0 million in fiscal 2003. "With the significant improvement in cash flow, we were able to reinvest $9.3 million of cash in the business," said Mr. Dutkiewicz. "We expect to continue to experience improvements in cash flow in 2005." Reinvestments during 2004 included $1.2 million for new stores and $5.8 million for replacement and new equipment at existing company-operated stores, as well as $0.8 million for manufacturing operations and $1.5 million for general corporate purposes. In the fourth quarter of 2004, New World unveiled five test concept Einstein Bros. Cafe (EB Cafe) restaurants in Colorado. The first new unit of this quick casual concept opened in Denver's Stapleton area in October. Shortly thereafter, New World retrofitted four additional Einstein Bros. Bagel restaurants located in the Denver and Colorado Springs markets. In addition to Einstein Bros.' traditional bagels and an expanded breakfast menu, the new concept offers an extensive lunch menu with a culinary focus on innovative items using fresh and high quality ingredients. The restaurants also feature a more sophisticated, upgraded look inside and out, as well as improvements to customer service systems. "To date, we are pleased with the results we have seen during the first few weeks of the operations, with gains shown in average check size and a higher proportion of sales being generated during the afternoon day-part compared to our traditional Einstein locations," said Mr. Murphy. "We are closely analyzing the data from these restaurants to determine the need for modifications to the menu offerings, physical layout, operational and design elements before going forward with future retrofits or new locations. "Our current plan is to convert the existing Einstein Bros. Bagel locations to the EB Cafe concept over an approximate three-year time frame on a market-by-market basis," he continued. "By converting the restaurants on a market basis, as we did in Colorado Springs, we can develop a consistent marketing and advertising message to our customers, and minimize the impact that supporting multiple brands within the same market would have on our distribution partners." New World is currently in discussion with Bear Stearns regarding the refinancing of its $160 million notes and the AmSouth Revolver, which may reduce interest expense. As disclosed in a separate press release, New World determined that it was appropriate to adjust certain prior financial statements for leasehold amortization. These adjustments are all non-cash and have no impact on cash flows, cash position, revenues, same-store sales, and EBITDA. About the Company New World Restaurant Group, Inc. (Pink Sheets: NWRG.PK) is a leading company in the quick casual restaurant industry. The company operates locations primarily under the Einstein Bros. and Noah's New York Bagels brands and primarily franchises locations under the Manhattan Bagel and Chesapeake Bagel Bakery brands. As of December 28, 2004, the company's retail system consisted of 453 company-operated locations, as well as 180 franchised, and 57 licensed locations in 34 states, plus D.C. The company also operates a dough production facility. At Dec. 28, 2004, New World Restaurant's balance sheet showed a $112,483,000 stockholders' deficit, compared to a $95,153,000 deficit at Dec. 30, 2003. NORTEL NETWORKS: Declares Preferred Shares Series 5 Dividends ------------------------------------------------------------- The board of directors of Nortel Networks Limited declared a dividend on each of the outstanding Cumulative Redeemable Class A Preferred Shares Series 5 [TSX: NTL.PR.F] and the outstanding Non- cumulative Redeemable Class A Preferred Shares Series 7 [TSX: NTL.PR.G]. The dividend amount for each series is calculated in accordance with the terms and conditions applicable to each respective series, as set out in the Company's articles. The annual dividend rate for each series floats in relation to changes in the average of the prime rate of Royal Bank of Canada and The Toronto-Dominion Bank during the preceding month and is adjusted upwards or downwards on a monthly basis by an adjustment factor which is based on the weighted average daily trading price of each of the series for the preceding month, respectively. The maximum monthly adjustment for changes in the weighted average daily trading price of each of the series will be plus or minus 4.0% of Prime. The annual floating dividend rate applicable for a month will in no event be less than 50% of Prime or greater than Prime. The dividend on each series is payable on April 12, 2005 to shareholders of record of such series at the close of business on March 31, 2005. About Nortel Nortel Networks Ltd. is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NORTEL NETWORKS: Will File Financial Statements by End of March --------------------------------------------------------------- Nortel Networks Corporation [NYSE/TSX:NT] and its principal operating subsidiary, Nortel Networks Limited, provided a status update pursuant to the alternative information guidelines of the Ontario Securities Commission. These guidelines contemplate that the Company and NNL will normally provide bi-weekly updates on their affairs until such time as they are current with their filing obligations under Canadian securities laws. Filing of Financial Statements for Third Quarter 2004 and Year 2004 The Company expects that it and NNL will file their unaudited financial statements for the third quarter of 2004, and related Quarterly Reports on Form 10-Q and corresponding Canadian filings, by the end of March 2005, and their audited financial statements for the year 2004, and related Annual Reports on Form 10-K and corresponding Canadian filings, by the end of April 2005. The Company and NNL will therefore each be filing with the United States Securities and Exchange Commission a Form 12b-25 Notification of Late Filing relating to the delay in filing their 2004 Annual Reports. The Company's expectation as to timing of filing their financial statements is subject to change due to limitations including: previously announced material weaknesses in the Company's internal control over financial reporting and the review or audit of the Nortel financial statements by the Company's external auditors. Also, the Company continues to work with its external auditors on the internal control reports required for the first time in connection with the 2004 Annual Reports under s.404 of the Sarbanes-Oxley Act of 2002. Also, the Company disclosed that it ended 2004 with approximately US$3.7 billion in cash. Annual Shareholders' Meeting As previously announced, the Company was granted an order by the Ontario Superior Court of Justice extending the time for calling the Company's 2004 Annual Shareholders' Meeting to a date no later than May 31, 2005, or such later date as the Court may further permit. This extension was obtained, after discussions with the Staff of the SEC, to permit compliance with a specific SEC rule which would require, in these circumstances, that the Company provide to shareholders its 2004 audited financial statements either prior to or concurrently with the mailing of the proxy materials for the Meeting. As this would not be possible if the Meeting were to be held by May 31, 2005, in light of the Company's current expectation as to the timing for filing its 2004 audited financial statements, the Company intends to seek a Court order extending the time for holding the Meeting to a date no later than June 30, 2005. If the order is granted, the Company intends to hold a combined Annual Shareholders' Meeting for fiscal years 2003 and 2004 by such date. Debt Securities As a result of the delay in filing the Company's and NNL's 2004 Third Quarter Reports and the anticipated delay in filing their 2004 Annual Reports, the Company and NNL are not in compliance with their obligations to deliver their SEC filings to the trustees under their public debt indentures. While a notice of default could have been given at any time after March 30, 2004, by holders of at least 25 percent of the outstanding principal amount of any relevant series of debt securities, neither the Company nor NNL has received any such notice as of Feb. 25, 2005. EDC Support Facility As previously announced, the current waiver from Export Development Canada of certain defaults related to the delayed filings and related breaches under the EDC performance-related support facility will expire on March 15, 2005. As the Company and NNL currently expect to file the 2004 Third Quarter Reports by the end of March 2005, EDC will have the right, on March 15, 2005 (absent a further waiver in relation to the delayed filings and related breaches), to terminate the EDC Support Facility, exercise certain rights against collateral or require NNL to cash collateralize all existing support. In addition, EDC will also have this right on March 30, 2005 (absent a further waiver) as the Company and NNL do not expect to deliver their 2004 Annual Reports by such date. While NNL intends to seek a new waiver from EDC in connection with the delay in filing the 2004 Third Quarter Reports and 2004 Annual Reports, there can be no assurance that NNL will receive a new waiver or as to the terms of any such waiver. For other information on the EDC Support Facility and related breaches, see the Company's press release "Nortel Announces New Waiver from Export Development Canada" dated Feb. 15, 2005. The Company and NNL reported that there have been no material developments in the matters reported in their status updates of June 2, 2004 through February 1, 2005; and the Company's press release "Nortel Announces New Waiver from Export Development Canada" dated February 15, 2005, with the exception of the matters described above. The Company's and NNL's next bi-weekly status update is expected to be released during the week of March 14, 2005. About Nortel Nortel Networks Ltd. is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. OGLEBAY NORTON: Court Approves Settlement with London Insurers -------------------------------------------------------------- Oglebay Norton and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy for the District of Delaware to enter into settlement agreements with certain asbestos plaintiffs and the London Trust Insurers. The tort claimants are represented by Kelley & Ferraro, LLP, Bevan & Associates LPA, Climaco, Lefkowitz, Peca, Wilcox & Garofoli Co., LPA, et. al. The settlement with the tort plaintiffs resolve approximately 20,000 asbestos claims asserted against the Debtors. These settlement agreements include: i) the Kelley Settlement resolving claims for $31 million; ii) the Baron Settlement resolving claims for $1,535,600,000; iii) the Silber Settlement resolving claims for $3,168,000; iv) the Jaques Settlement resolving claims for $1.5 million; v) the Cooney Settlement differs from the other settlements because it provides a specific recovery for each particular documented illness (primarily mesothelioma and lung cancer); the Debtors estimate the settlement at approximately $16 million; and vi) the Angelos Settlement resolving claims for $53,203,600 which will be paid entirely from the Debtors' London insurance trust and various insurance policies. To facilitate the different settlements, the London Trust Insurers agrees to make payments within 30 business days to a tort plaintiff upon submission of medical evidence on a claim that meets the criteria under the applicable settlement agreement. Headquartered in Cleveland, Ohio, Oglebay Norton Company - http://www.oglebaynorton.com/-- mines, processes, transports and markets industrial minerals for a broad range of applications in the building materials, environmental, energy and industrial market. The Company and its debtor-affiliates filed for chapter 11 protection on February 23, 2004 (Bankr. D. Del. Case Nos. 04- 10559 through 04-10560). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $650,307,959 in total assets and $561,274,523 in total debts. The Debtors' plan of reorganization became effective on Jan. 31, 2005. OWENS CORNING: Board Approves 2005 Executive Salary Increases ------------------------------------------------------------- On February 2, 2005, the Compensation Committee of Owens Corning's Board of Directors approved new annual base salaries for two Executives -- Charles E. Dana and George E. Kiemle -- as well as for other executive officers, effective February 16, 2005. Owens Corning's Senior Vice-President Stephen K. Krull reports that Mr. Dana, Vice-President and President of Composite Solutions Business, will get $350,000 annual base salary. Mr. Kiemle as Vice-President and President of the Insulating Systems Business will get $325,000 annual salary. The Compensation Committee also approved the funding measures applicable to the Company's Corporate Incentive Plan for the 2005 performance period and for the Company's Long Term Incentive Plan for the 2005-2007 performance period: (1) The funding measures applicable to the Corporate Incentive Plan for the 2005 performance period are "income from operations" (weighted at 75%) and "cash flow from operations" (weighted at 25%). These funding measures are the same funding measures that were applicable to the Corporate Incentive Plan for the 2004 performance period; And (2) The funding measure applicable to the Long Term Incentive Plan for the 2005-2007 performance period is "average annual return on net assets". This funding measure is the same funding measure that was applicable to the one-year transition performance period cycle for 2004 under the Long Term Incentive Plan. Owens Corning has adopted the form of Key Employee Retention Incentive Plan that will be utilized for calendar year 2005 under its Bankruptcy Court-approved retention program. A copy of the form of Owens Corning Key Employee Retention Incentive Plan is available at no cost at: http://www.sec.gov/Archives/edgar/data/75234/000118143105011984/rrd69861_4030.htm Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) OXSHOTT REALTY: Case Summary & Largest Unsecured Creditor --------------------------------------------------------- Debtor: Oxshott Realty Trust 23852 Pacific Coast Highway #180 Malibu, California 90265 Bankruptcy Case No.: 05-11088 Chapter 11 Petition Date: February 28, 2005 Court: Central District of California (San Fernando Valley) Judge: Maureen A. Tighe Debtor's Counsel: Carolyn J. Wallace, Esq. 28711 Pacific Coast Highway #28 Malibu, CA 90265 Tel: 310-457-9133 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Mr. & Mrs. L.J. Galardi $320,000 8975 Route 66 Ashland, OR 97520 PARMALAT USA: ReGen & Riverside Say Plan Fails "Good-Faith" Test ---------------------------------------------------------------- ReGen Capital I, Inc., and Riverside Claims, LLC, observe that Parmalat USA Corporation and its U.S. debtor-affiliates attempt to paint the settlement contained in the Plan as one that is beneficial to all parties involved, including Farmland Dairies, LLC's general unsecured creditors. However, the practical reality of the settlement indicates otherwise. Although the settlement proposed by the Plan seems to subordinate the interests of GE Capital Public Finance, Inc., in Reorganized Farmland to that of general unsecured creditors, the reality is that the settlement actually favors GE in numerous ways, with little or no protection for general unsecured creditors against GE putting its interests ahead of theirs. ReGen and Riverside relate that the recovery of general unsecured creditors is effectively subordinated to GE's preferred interests under the Plan. The Plan expressly provides that under certain circumstances, the Note to be given to Farmland's general unsecured creditors will be subordinated to the preferred interests being given to GE, and there are few, if any, safeguards in the Plan to prevent this from happening. ReGen and Riverside explain that in the likely event of a Note subordination, instead of general unsecured creditors receiving a more certain, albeit smaller recovery, as implied by the Plan, they will actually have to wait for GE to receive a recovery of 35% on their claims before any recovery will be received on the Note. If Reorganized Farmland is successful and decides to sell its assets, achieving the result GE initially sought, the Note becomes subordinated to GE's interests. In return for subordinating their Note, however, general unsecured creditors get no participation in Reorganized Farmland's upside. Even if the Note were paid at some point, the maximum return to general unsecured creditors from the estate would be 33%, excluding any interest paid on the Note. Thus, ReGen and Riverside contend that the Plan should not be confirmed if the subordination provision remains in place. Subordination of the general unsecured creditors' Note is not the only way in which the Plan favors GE. ReGen and Riverside add that the potential for fluctuation in the amount of general unsecured claims also favors GE, as the Plan does not provide a mechanism which protects general unsecured creditors from allowed claims being higher than anticipated. In addition, the Plan proposes a structure that is rife with conflicts of interest on GE's part. The Plan's structure facilitates self-interested decision-making for GE. The Plan provides that GE gets all of the preferred and 80% of the common stock of Reorganized Farmland, and will essentially own the company and control its directors and officers. However, while GE will have fiduciary duties stemming from its directorship and ownership roles, it is in its own interest to sell the company, therefore having its preferred interests propelled ahead of the Note. For these reasons, ReGen and Riverside contend that the Plan is not proposed in good faith and cannot pass the "essential smell test." Furthermore, concerns about GE controlling Reorganized Farmland and, under the terms of the Plan, the return to general unsecured creditors, are elevated by GE's prior conduct in the Montgomery Ward case. In a similar situation, GE became the equity owner under Montgomery Ward's Chapter 11 Plan. However, it has been alleged that GE took a less than even-handed approach to its varied and, at times, conflicting, fiduciary duties as owners and directors. GE was also intent on misleading and deceiving its creditors. These allegations, ReGen and Riverside tell Judge Drain, demonstrate that concerns about the control given to GE under the Plan are not merely speculative or hypothetical, especially since the very terms of the Plan render GE's interests conflicting. Moreover, because it has been shown that the Plan favors GE and because the Plan proponents have failed to provide a valuation, ReGen and Riverside assert that it is imperative that the Court require, at a minimum, that a valuation of the equity in Reorganized Farmland be provided. A market test should also be conducted to establish the fair value of the equity and ensure that the highest and best value is attained for the benefit of the U.S. Debtors' constituents. ReGen and Riverside further note that the Plan is flawed in that it provides that preference actions against potential defendants, whose aggregate payments during the preference period are estimated to be at least $126,000,000, have been inexplicably waived. Recovery of even a small fraction of the preferential payments would have brought a substantial increase in the pool of funds to be distributed to unsecured creditors. For all these reasons, ReGen and Riverside ask the Court to deny confirmation of the U.S. Debtors' Plan. As reported in the Troubled Company Reporter on March 1, the hearing to consider confirmation of the Debtors' Revised Plan has been adjourned to March 7, 2005, at 10:00 a.m. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEABODY ENERGY: Board of Directors Elects Gregory Boyce as CEO -------------------------------------------------------------- Peabody Energy's (NYSE: BTU) Board of Directors has elected Gregory H. Boyce to the position of President and Chief Executive Officer, effective Jan. 1, 2006. Chairman and Chief Executive Officer Irl F. Engelhardt will continue his CEO duties through 2005, and will remain employed as Chairman of the Board on Jan. 1, 2006. Mr. Boyce was also elected to the Board of Directors, effective March 1, 2005, and has been named Chairman of the Executive Committee of the Board. "Several years ago, I suggested to the Board that we begin an orderly succession planning process, a hallmark of a highly successful company. We have moved carefully through the process and have an excellent successor and transition plan in place," said Mr. Engelhardt. "Under Greg's leadership as President and Chief Operating Officer, Peabody has achieved record safety, productivity and production results, and I am confident that his experience and skills will lead Peabody to new heights. Greg and I will work together to ensure a seamless transfer, and I look forward to contributing to Peabody's success as Chairman." "Peabody has an excellent team, assets and financial position, and an industry-leading record in creating value," said Mr. Boyce. "We have entered an extended period of industry growth, as coal is the only fuel source capable of meeting expanding global demand for energy. I will ensure that we continue our strong growth, focusing on safety, executing the basics, expanding our international presence, and participating in new generation projects and Btu Conversion technologies." Mr. Boyce joined Peabody in October 2003 as President and Chief Operating Officer following a comprehensive search. He has extensive U.S. and international management, operating and engineering experience. Prior to joining Peabody, Mr. Boyce served as Chief Executive Officer - Energy for international mining company Rio Tinto in London, with responsibility for a worldwide coal and uranium portfolio. Prior to that, he was President and Chief Executive Officer of Kennecott Energy Company. During his tenure, Kennecott more than tripled sales volume and grew to become the second-largest U.S. coal company. Other prior positions include President of Kennecott Minerals Company and Executive Assistant to the Vice Chairman of Standard Oil of Ohio. Mr. Boyce holds a Bachelor of Science Degree in Mining Engineering from the University of Arizona, and completed the advanced management program from the Graduate School of Business at Harvard University. About the Company Peabody Energy (NYSE: BTU) is the world's largest private-sector coal company, with 2004 sales of 227 million tons of coal and $3.6 billion in revenues. Its coal products fuel more than 10 percent of all U.S. electricity and 3 percent of worldwide electricity. * * * Moody's Rating Services and Standard & Poor's assigned their low-B ratings to Peabody Energy's $650 million of outstanding 6-7/8% Senior Notes in March 2003. Peabody posted losses for two quarters in the middle of 2003 and has reported profits every quarter thereafter. QWEST COMMS: Verizon Opens Talks Between Qwest & MCI for Two Weeks ------------------------------------------------------------------ Verizon Communications Inc. (NYSE: VZ) and MCI, Inc. (Nasdaq: MCIP) have agreed that MCI may engage in further discussions with Qwest Communications International Inc. (NYSE: Q) through March 17, subject to the applicable provisions of the Feb. 14 agreement for Verizon to acquire MCI. The following statement has been issued by Verizon: "Verizon recognizes that it is in the best interests of the stakeholders of both Verizon and MCI to address recent market speculation regarding Qwest's claims that it can deliver greater value to MCI's shareholders. Notwithstanding this speculation, we believe that this process will result in MCI reaching the same conclusion that it reached after seven months of discussions with Qwest. "Verizon is the best partner for MCI, with the most compelling value proposition for its shareholders. Verizon is a financially strong, diversified communications company positioned for growth across all customer segments with both wired and wireless products. The company has a proven track record of completing transactions and delivering value for customers, employees, bondholders and shareholders." Following is Verizon's letter to MCI: March 2, 2005 MCI, Inc. 22001 Loudoun County Parkway Ashburn, Virginia 20147 Ladies and Gentlemen: You and we are party to the Agreement and Plan of Merger dated as of February 14, 2005 among Verizon Communications Inc., Eli Acquisition, LLC and MCI, Inc. (the "Agreement"). Capitalized terms used without definition in this letter have the meanings ascribed to them in the Agreement. Section 6.5(a) of the Agreement provides that you may not furnish information to or engage in discussions with Persons who make a Takeover Proposal without making certain specified findings. The purpose of this letter is to reflect our agreement that, from and after the date hereof and prior to March 18, 2005 you and your Representatives may engage in the activities described in subparagraphs (x) and (y) of Section 6.5(a) of the Agreement with Qwest Communications International, Inc. or its Representatives without having made the determinations contemplated by the proviso immediately following clause (y) thereof. For the avoidance of doubt, nothing in this letter shall relieve you of the obligation to comply with the other provisions of the Agreement, including the other provisions of Section 6.5, or prejudice your ability to make any future determination under the above-referenced proviso. Please signify your concurrence with the foregoing by signing below. Sincerely, VERIZON COMMUNICATIONS INC. By: ______________________________ John W. Diercksen Accepted and agreed: MCI, INC. By: _______________________________ Anastasia D. Kelly Verizon intends to file a registration statement, including a proxy statement of MCI, and other materials with the Securities and Exchange Commission in connection with the proposed transaction. We urge investors to read these documents when they become available because they will contain important information. Investors will be able to obtain free copies of the registration statement and proxy statement, as well as other filed documents containing information about Verizon and MCI, at http://www.sec.gov/the SEC's website. Investors may also obtain free copies of these documents at http://www.verizon.com/investor or by request to Verizon Communications Inc., Investor Relations, 1095 Avenue of the Americas, 36th Floor, New York, NY 10036. Free copies of MCI's filings are available at http://www.mci.com/about/investor_relationsor by request to MCI, Inc., Investor Relations, 22001 Loudoun County Parkway, Ashburn, VA 20147. Verizon, MCI, and their respective directors, executive officers, and other employees may be deemed to be participants in the solicitation of proxies from MCI shareowners with respect to the proposed transaction. Information about Verizon's directors and executive officers is available in Verizon's proxy statement for its 2004 annual meeting of shareholders, dated March 15, 2004. Information about MCI's directors and executive officers is available in MCI's annual report on Form 10-K for the year ended December 31, 2003. Additional information about the interests of potential participants will be included in the registration statement and proxy statement and other materials filed with the SEC. About MCI 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. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, 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. 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. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services 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. 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. RAVENEAUX LTD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Raveneaux, Ltd. dba Raveneaux Country Club 9415 Cypresswood Drive Spring, Texas 77379 Bankruptcy Case No.: 05-32734 Type of Business: The Debtor operates a country club, a golf course and tennis courts. See http://www.raveneaux.com/ Chapter 11 Petition Date: February 24, 2005 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Edward L. Rothberg, Esq. Hugh Massey Ray, III, Esq. Melissa Anne Haselden, Esq. Weycer Kaplan Pulaski & Zuber, P.C. 11 Greenway Plaza, Suite 1400 Houston, Texas 77046 Tel: (713) 961-9045 Fax: (713) 961-5341 Total Assets: $15,000,000 Total Debts: $11,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Janet Brittain $415,000 200 Winrow Jamestown, North Carolina 27282 Tel: (336) 454-5451 Kate Mower $351,458 31 East Elm Unit 1-A Chicago, Illinois 60611 Tel: (312) 944-6348 Von Hagge, Smelek, Baril $349,000 Attn: Bob Von Hagge 17823 Theiss Mail Route Spring, Texas 77379 Tel: (281) 376-8282 Mike Watford $100,000 6519 Wimbledon Trail Spring, Texas 77379 C.W. Stubbs $87,979 Sysco Food Services $36,015 BWI-Schulenburg $29,719 Champions Hydro-Lawn $25,000 United Healthcare $22,589 Metzger Construction $20,000 Mizuno USA, Inc. $17,525 Nu West Golf Course Construction $17,500 Footjoy/Acushnet $17,444 Alexander Engineering $15,000 Champions Printing Publishing $14,577 Titleist/Acushnet $10,775 Tail, Inc. $10,511 Raveneaux, Inc. $6,640 Polo Ralph Lauren $6,619 TAI Consulting $4,693 REFOCUS GROUP: Closes $7 Million Financing from Medcare Investment ------------------------------------------------------------------ Refocus Group, Inc. (OTC: RFCG.OB), a medical device company engaged in the research and development of treatments for eye disorders, reported the closing of the first half of a financing commitment totaling $14 million from Medcare Investment Fund III, Ltd. of San Antonio, Texas. At the first closing on March 1, 2005, the company issued to Medcare 280,000 shares of its newly authorized Series A-1 Convertible Preferred Stock for an aggregate offering price of $7 million. The Series A-1 Convertible Preferred Stock is convertible into Common Stock at $0.25 per share. As part of this transaction, Medcare has committed to purchasing an additional 280,000 shares of the company's newly authorized Series A-2 Convertible Preferred Stock for an aggregate offering price of an additional $7 million at a second closing to occur no sooner than 12 months after the initial closing and upon the company's achievement of an FDA clinical trial milestone, and subject to other customary closing conditions. The Series A-2 Convertible Preferred Stock is convertible into Common Stock at $0.25 per share. Finally, Medcare was additionally granted a two-year warrant to purchase up to 133,334 shares of the company's newly- authorized Series A-3 Convertible Preferred Stock for an aggregate exercise price of up to $4 million. The Series A-3 Convertible Preferred Stock is convertible into Common Stock at $0.30 per share. This closing in total has the potential of providing Refocus Group with up to $18 million in aggregate financing between now and March 2007 (assuming the close of the second offering as well as the exercise of all warrants granted as part of this closing). As of the March 1 closing, Medcare is the beneficial owner of greater than 50 percent of the outstanding voting stock of the company. Medcare has the option to nominate up to one-half of the board of directors. Effective as of the closing, David Williams and Chuck Edwards have resigned from the company's board of directors, and Thomas W. Lyles, Jr. and Doug Williamson have joined the company's board. The company will use the net proceeds of the first closing for the repayment of debt, for expansion of its scleral spacing procedure (SSP) clinical trials program and for capital expenditures and general corporate purposes. Following this closing, Refocus Group plans to explore the possible termination of the company's financial reporting obligations under the Securities and Exchange Act of 1934 (i.e., explore "going private") in order to reduce costs directly relating to such reporting obligations, such as annual audit, legal, insurance and other expenses. For more information on "going private" in general, refer to http://www.sec.gov/answers/gopriv.htmFurther information regarding the financing, including the terms of the Series A Convertible Preferred Stock, will be included in the company's Form 8-K to be filed shortly. As reported in the Troubled Company Reporter on Feb. 1, 2005, Refocus Group disclosed the closing of an additional interim financing in the amount of $500,000. The proceeds of this financing will be utilized by the company to fund the continued evaluation of the U.S. Food and Drug Administration Phase II clinical trial of its Scleral Spacing Procedure for the surgical treatment of presbyopia, and for general corporate purposes. The new interim financing involved the issuance of secured debt. About Medcare Investment Fund III, Ltd. Medcare Investment Fund III, Ltd. is a San Antonio, Texas based venture capital group that directly or through its founders have been successfully involved in developing early stage medical devices and founding of other early stage medical enterprises. About Refocus Group's Scleral Spacing Procedure Refocus Group's Scleral Spacing Procedure for surgically treating presbyopia, primary open-angle glaucoma and ocular hypertension utilizes four scleral implants, each about the size of a small grain of rice, which are surgically implanted just under the surface of the sclera (white of eye) in four quadrants. Presbyopia is a vision disorder that affects virtually 100 percent of the population over age 40, while glaucoma affects millions worldwide and is a leading cause of blindness. The surgical procedure is the same for presbyopia, glaucoma and/or ocular hypertension. For the latter of these two conditions, the company believes that the procedure helps restore the natural base-line tension in the ciliary body, allowing for improvement in the natural drainage of the eye and the lowering of intraocular pressure. In the case of presbyopia, the company believes that the procedure helps reduce the crowding of the underlying tissues surrounding the crystalline lens, allowing the muscles to once again naturally reshape the lens and accommodate (focus) the eye. The uniqueness of the company's technology is that it does not remove tissue from the eye, does not affect the cornea and is believed to be fully reversible -- unlike laser vision surgery or more invasive treatments involving the permanent removal and replacement of the crystalline lens with an intraocular lens. The procedure can be performed on an outpatient basis under topical or local anesthesia. The company's implant device is limited, in the United States, by federal law to investigational use, pending approval by the Food and Drug Administration. About Refocus Group Refocus Group (OTC: RFCG.OB) -- http://www.refocus-group.com/-- is a Dallas- based medical device company engaged in the research and development of treatments for eye disorders. Refocus holds over 100 domestic and international pending applications and issued patents, the vast majority directed to methods, devices and systems for the treatment of presbyopia, ocular hypertension, primary open-angle glaucoma and macular degeneration. The company's most mature device is its patented scleral implant and related automated scleral incision handpiece and system, used in the Scleral Spacing Procedure for the surgical treatment of presbyopia, primary open-angle glaucoma and ocular hypertension in the human eye. At Sept. 30, 2004, Refocus Group's balance sheet showed a $1,610,344 stockholders' deficit, compared to $1,150,451 in positive equity at Dec. 31, 2003. RELIANCE GROUP: Wants Court Nod on D&O Litigation Settlement Pact ----------------------------------------------------------------- The Official Unsecured Bank Committee and the Official Unsecured Creditors' Committee for the estates of Reliance Group Holdings, Inc., and Reliance Financial Services Corporation, and the Debtors ask Judge Gonzalez of the United States Bankruptcy Court for the Southern District of New York to approve a Settlement Agreement that resolves all outstanding disputes between Reliance Insurance Company and its former Officers and Directors. D&O Litigation On June 24, 2002, M. Diane Koken, as Pennsylvania Insurance Commissioner and Liquidator for RIC, filed a complaint in the Commonwealth Court against 17 RIC former Officers and Directors, namely: -- Saul P. Steinberg, -- Robert M. Steinberg, -- George R. Baker, -- George E. Bello, -- Dennis A. Busti, -- Lowell C. Freiberg, -- Kenneth R. Frohlich, -- Thomas P. Gerrity, -- Stewart J. Gerson, -- Linda S. Kaiser, -- Jewell J. McCabe, -- Bernard Schwartz, -- Richard E. Snyder, -- Bruce E. Spivery, -- Howard E. Steinberg, -- James E. Yacobucci, and -- Paul W. Zeller. Preference Actions On October 2, 2003, the Liquidator filed an additional complaint in the Commonwealth Court against Robert M. Steinberg. The Liquidator has also asserted claims and actions relating to questionable payments and transfers made by RIC to other former Officers and Directors, namely: -- John P. Cavoores, -- Robert C. Olsman, -- George T. Van Gilder, -- Albert Marino, -- David H. McElroy, -- Roger Walker, -- A. Raymond Williams, and -- Carl D. Sullo. Collateral Litigation In addition, four collateral lawsuits involve or implicate the interests of RIC and the Debtors' estates and their rights to the proceeds of certain insurance policies: (a) LaManna v. Steinberg et al., E.D. Pa. Civil Action No. 01-CV-3571; (b) In re Reliance Group Holdings, Inc. Securities Litigation, S.D.N.Y. Civil Action No. 00-CV-4653; (c) Dalicandro v. Legalgard, Inc., et al., E.D. Pa. Civil Action No. 2:99-CV-03778; and (d) Sandenhill, Inc. v. Reliance Insurance Company, et al., Adversary Proceeding No. 03-1162, In re Sandenhill, Inc., E.D. Pa. Bankr. Case No. 02-11232. Deloitte Litigation On October 15, 2002, the Liquidator filed a complaint in the Commonwealth Court against RIC's outside auditor, Deloitte & Touche LLP, and its appointed actuary, Jan A. Lommele. The Settlement Agreement does not resolve the claims asserted in the Deloitte Litigation. Insurance Policies & Prior Agreements RGH, RFSC and RIC provided their directors and officers with certain director and officer liability insurance coverage under policies issued by Lloyd's Underwriters, Greenwich Insurance Company, and Clarendon Insurance Company. The Insurers have either disputed the existence of coverage or reserved the right to deny coverage to certain Defendants. Lloyd's Underwriters, however, has been paying certain defense costs. Andrew P. DeNatale, Esq., at White & Case, counsel for the Bank Committee, and Arnold Gulkowitz, Esq., at Orrick, Herrington & Sutcliffe, counsel for the Creditors' Committee, tell the Bankruptcy Court that due to protracted and expensive litigation related to the D&O Actions, the Insurers have paid out over $20,000,000 in defense costs. In addition, the Collateral Litigation has consumed over $7,000,000 under the Policies. In total, the Policies have been tapped for $27,196,186 in defense costs. The maximum insurance limits on the Policies are estimated at $125,000,000. Every hour of legal activity reduces the potential recovery for recipient parties. As a result, it is important to act quickly to realize the greatest amount possible for policyholders and other stakeholders. Absent a settlement, the amount available for the estates will be eroded by continued defense cost payments. The Committees and the Debtors agreed in 2003 not to bring any actions they may have against the former Directors and Officers in exchange for a 40% share in any recovery the Liquidator obtains. In a 2004 Settlement, RGH is to recover 72.5% and RFSC is to recover 27.5% of the 40% share of the Liquidator's recovery on account of the D&O Lawsuit. Thus, RGH is entitled to 29% of the Liquidator's recovery and RFSC is entitled to 11% of the Liquidator's recovery. Assuming an $85,000,000 recovery, this amounts to $24,650,000 for RGH and $9,350,000 for RFSC. The Settlement Agreement After years of litigation and months of intensive mediation, the former Officers and Directors, the Insurers and the Liquidator, with the consent of the Committees, have reached a Settlement Agreement that resolves all disputes between RIC and its former Officers and Directors. Pursuant to the Settlement Agreement, the Insurers will pay $122,640,289 out of the Policies to fund a settlement account to resolve the Lawsuits. Out of the Settlement Amount, $21,384,000 is reserved for final resolution of the Collateral Litigation. Also, $13,500,000 will be paid into an escrow fund for future defense and claim costs of the former Officers and Directors. Upon termination of the Escrow Agreement, any funds remaining in the escrow account will be paid to the Liquidator, with the Debtors' estates receiving 40% of that amount, to be split between the Debtors' estates in accordance with the 2004 RGH/RFSC Settlement. The Liquidator will receive at least $85,000,000, with accrued interest. If the Settlement Amount falls below $85,000,000, exclusive of accrued interest, the Liquidator has the exclusive right to terminate the Settlement Agreement. The Insurers and their contributions to the Settlement are: Insurer Policy No. Contribution ------- ---------- ------------ Underwriters at Lloyd's, London and Companies FD9900896 $97,803,814 FD9701593 FD9804211 FD9701594 FD9798178 Greenwich Insurance Company ELU 82236-01 $24,000,000 ELU 82237-01 Clarendon National Insurance Company MAG 1440057950000 $1,000,000 The Collateral Litigation will be resolved under these conditions: a) LaManna Settlement Cap: $4,940,000 Defense Costs Cap: $55,000 b) Securities Action: Settlement Cap: $15,000,000 Defense Costs Cap: $300,000 c) Dalicandro and Sandenhill: Settlement Cap: $990,000 Defense Costs Cap: $99,000 The Liquidator, RGH, RFSC, the former Officers and Directors and the Insurers will execute a joint tortfeasor release and mutual release. This will release all claims by the Debtors, the Debtors' creditors who are not "opt-out creditors" under the Debtors' plans of reorganization and by RIC against the former Officers and Directors and the Insurers. The releases will also release all claims by the former Officers and Directors and the Insurers against the Debtors and RIC. Messrs. Bello and Freiberg will dismiss with prejudice the adversary proceeding captioned Bello et al. v. Syndicate 1212 at Lloyd's, London, Adversary Proceeding No. 03-1162, filed in connection with the Debtors' Chapter 11 cases. The Liquidator will dismiss the D&O Litigation with prejudice. Execution of the Settlement Agreement does not constitute evidence of wrongdoing or culpability. According to Messrs. Gulkowitz and DeNatale, the Committees and their professionals have examined the Settlement Agreement and they believe it will produce a favorable outcome for the Debtors' estates and creditors. The Settlement Agreement was the subject of extensive arm's-length, mediated negotiations. Absent approval of the Settlement, the amount available under the Policies will be substantially reduced by the payment of further defense costs and claims incurred in the D&O Litigation and the Collateral Litigation. The various disputes involve numerous complex issues of fact or law and there is no certainty that a resolution would be as favorable if litigated through trial and appeal. The Liquidator has concluded, based on financial information provided to the Court by certain former Officers and Directors, that pursuit of personal assets from the former Officers and Directors would not be an economical or efficient use of the RIC estate's resources. Therefore, the Settlement represents the best alternative to maximize recovery for stakeholders and end the protracted and expensive litigation. * * * HARRISBURG, Pennsylvania -- February 25, 2005 - Pennsylvania Insurance Commissioner Diane Koken, in her role as statutory liquidator for Reliance Insurance Company, announced that the Department has finalized the negotiation of an $85 million settlement with the former directors and officers of the Reliance Insurance Group. "The goal of this settlement was to maximize the recovery for Reliance policyholders," Commissioner Koken said. "From the day we took over the Reliance Insurance Company, we committed ourselves to taking any and all steps necessary to protect and recover the assets of the company for the benefit of all policyholders and to hold responsible parties accountable for their actions. "That was the reason we took action against Reliance's former officers and directors. We have fought long and hard in this case, and we are pleased with this settlement, as we believe it is the largest one ever for the Department." Of the $85 million settlement, $34 million will benefit the creditors of Reliance parent companies, Reliance Group Holdings Inc. and Reliance Financial Services Corporation. The remaining settlement proceeds of more than $51 million are being reserved for the benefit of Reliance's policyholders. This $51 million, when combined with the $45 million previously recovered from Reliance's parent companies, results in a recovery of nearly $100 million for Reliance's policyholders from litigation brought by the Department. In addition to a substantial monetary recovery, the settlement provides non-economic benefits, which were negotiated by the Department for the benefit of Pennsylvania policyholders and to deter future misconduct by insurance company executives. These include agreements from defendants Saul P. Steinberg and Robert M. Steinberg not to serve as officers or directors, or to hold a controlling interest in any insurance company domiciled, licensed or conducting insurance business in the Commonwealth of Pennsylvania for the next 15 years. Other defendants have also confirmed that they do not have a controlling interest in any insurance company domiciled, licensed or carrying on insurance business in the Commonwealth of Pennsylvania. "Today, the Pennsylvania Insurance Department has closed a large chapter in the story of the liquidation of the Reliance Insurance Company," Koken continued. "We could not have done it without the direction and expertise of the President Judge of the Commonwealth Court, Judge James Gardner Colins, who had a critical role in establishing and overseeing the mediation which resulted in the settlement. "We also stand ready to assist law enforcement agencies in their continuing efforts and investigations into the collapse of the Reliance companies." A copy of the settlement agreement can be found at the Reliance Documents Web site at http://www.reliancedocuments.com/ Policyholders with questions in the Reliance liquidation estate should call 215-864-4500. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) SALEM COMMS: Acquiring WGUL-AM & WLSS-AM for $9.5 Million --------------------------------------------------------- Salem Communications Corporation (Nasdaq:SALM), will acquire WGUL- AM (860 AM), in Dunedin, FL and WLSS-AM (930 AM), in Sarasota, FL (Tampa market) from WGUL-FM, Inc., for a purchase price of $9.5 million. Salem Communications expects to operate the stations in its News Talk format. Edward G. Atsinger III, President and CEO, commented, "The vibrant Tampa market continues to present opportunities to enhance our presence and build our cluster of stations serving this growing market. The addition of these two stations will enable us to deliver quality programming to area listeners as well as improve operating efficiencies." Salem Communications currently owns two stations serving the Tampa Bay area; WTBN-AM 570 and 910. Christopher M. Gould, Sr., serves as General Manager for both stations and will manage the new stations once the acquisition is completed. About the Company Salem Communications Corporation (Nasdaq:SALM) -- http://www.salem.cc/-- headquartered in Camarillo, Calif., is the leading U.S. radio broadcaster focused on Christian and family themes programming. Upon the close of all announced transactions, the company will own 106 radio stations, including 67 stations in 24 of the top 25 markets. In addition to its radio properties, Salem owns Salem Radio Network, which syndicates talk, news and music programming to over 1,900 affiliated radio stations; Salem Radio Representatives, a national sales force; Salem Web Network, the leading Internet provider of Christian content and online streaming; and Salem Publishing, a leading publisher of Christian themed magazines. * * * As reported in the Troubled Company Reporter on Dec. 16, 2004, Moody's Investors Service upgraded the long-term debt ratings for Salem Communications Holding Corporation. The upgrades are driven mostly by improvements at development-stage stations, better than expected financial performance in 2004, the company's willingness to issue equity to reduce total debt and the subsequent balance sheet de-leveraging. The outlook is stable. Moody's upgraded these ratings: * $94 million 9% senior subordinated notes due 2011 upgraded to B2 from B3, and * $100 million 7.75% senior subordinated notes due 2010 upgraded to B2 from B3. Moody's assigned these ratings: * assigned a Ba3 senior implied rating, and * assigned a B1 senior unsecured issuer rating. Moody's withdrew the former senior implied rating and issuer rating for Salem Communications Corporation (the Parent) and upgraded and reassigned them to Salem Communications Holding Corporation. The rating outlook is stable. SEALY MATTRESS: Nov. 28 Equity Deficit Widens to $383.7 Million --------------------------------------------------------------- Sealy Mattress Corporation, the world's largest manufacturer of bedding products, reported results for the fiscal fourth quarter and full year ending Nov. 28, 2004. For the quarter, Sealy reported sales of $322.0 million, an increase of 4.9% from $306.8 million for the same period a year ago. Net income was $12.2 million, compared with $1.5 million a year earlier. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter was $45.5 million, compared with $32.3 million a year earlier. For the full year, net sales reached a record $1.3 billion in 2004, up 10.4% from 2003. The company reported a net loss of $38.3 million, cash flow from operations of $43.5 million and EBITDA of $48.5 million for the year. Included in the full year reported net loss, cash flow from operations and EBITDA is a pretax charge of $133.1 million for recapitalization expenses. For the year, adjusted EBITDA, as defined in the credit agreement governing our senior secured credit facilities, was $200.0 million. "We are extremely pleased with our 2004 performance," said David J. McIlquham, Sealy's Chairman and Chief Executive Officer. "We have achieved strong mix improvements from our new products as well as improved manufacturing efficiencies. In the fourth quarter, the delivery of strong sales, gross margin, EBITDA and an on-going focus on working capital management allowed us to continue to improve our capital structure. We have reduced our net debt by $63.8 million during the quarter and by $113.0 million since the April transaction," said Mr. McIlquham. About the Company Sealy Mattress Corporation -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.3 billion in 2004. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy (R), Sealy Posturepedic (R), Stearns & Foster (R), and Bassett (R) brands. Sealy has the largest market share and highest consumer awareness of any bedding brand in North America. Sealy employs more than 6,000 individuals, has 29 plants, and sells its products to 3,200 customers with more than 7,400 retail outlets worldwide. Sealy is also a leading supplier to the hospitality industry. At Nov. 28, 2004, Sealy Mattress' balance sheet showed a $383,743,000 stockholders' deficit, compared to a $76,162,000 deficit at Nov. 30, 2003. SLADE & NG LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Slade & Ng LLC dba Minuteman Press Irvine 17524 Von Karman Irvine, Ca 92614 Bankruptcy Case No.: 05-11133 Type of Business: The Debtor provides commercial printing and graphics. See http://www.mpirvine.com/ Chapter 11 Petition Date: February 28, 2005 Court: Central District of California (Santa Ana) Judge: James N. Barr Debtor's Counsel: Stanley Minier, Esq. Law Offices of Stanley Minier Inc. 2677 North Main #320 Santa Ana, CA 92705 Tel: 714-558-0181 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Citicorp Vendor Finance Inc. Equipment lease(s) $450,000 c/o Solomon, Grindle, et al. 12555 High Bluff Dr., #260 San Diego, CA 92130 Minuteman Press, Int'l Franchisor claim $203,000 61 Executive Blvd. Farmingdale, NY 11735 American Express Credit card debt $110,832 c/o T. Ray, Esq. 301 Howard St., #830 San Francisco, CA 94106 Kelly Paper Supplies $78,851 Financial Pacific Leasing Equipment lease(s) $53,284 LLC Washington Mutual Loans $27,723 Wilks Land Judgment by former $14,084 landlord Glasgow, Don Judgment by seller $12,516 of CDM franchise Star Paper Supplies $9,838 Kiken Group Legal fees $9,824 Ellys Letterpress Services $9,500 Blurke, Kelly Current landlord $8,793 Focus Financial Equipment lease $8,122 SBC Smart Yellow Pages Advertising $8,061 WF Construction Construction $7,500 OCB Services $6,410 BCT Costa Mesa Services $6,185 Print Techniques Services $5,665 Eagle Protection Services $5,434 Inland Envelope Supplies $2,494 SOLUTIA INC: Building Skydrol Production Unit at Anniston Plant --------------------------------------------------------------- Solutia Inc. (OTC Bulletin Board: SOLUQ) will construct a new, state-of-the-art facility for the production of its Skydrol aviation hydraulic fluids and SkyKleen aviation cleaning solvents at the company's Anniston, Alabama, plant. The new manufacturing unit is scheduled to be operational in late 2005 or early 2006. "Solutia's investment in this new facility reflects our commitment to providing customers with the latest production and packaging technology available," said Dale Kline, global business director, Specialty Fluids, Solutia Inc. "And, because the Anniston plant specializes in the manufacture, distribution and technical support of specialty fluids, it is very well suited to meet the needs of our Skydrol customers." Solutia's Anniston plant manufactures Therminol, the world's leading brand of high-temperature synthetic heat transfer fluids, as well as HB-40 polymer modifier and other specialty fluids. The plant also is home to a world-class fluid testing lab, as well as Solutia's Southeastern Regional Distribution Center, which regularly handles fluids that have storage and transportation needs similar to those of Skydrol. Overall, the plant employs about 60 people. The Solutia Anniston plant's quality system is certified to ISO 9001:2000, and it has an exemplary track record in terms of customer satisfaction and on- time-delivery. In addition, the Anniston plant has been recognized by the U.S. Occupational Safety and Health Administration (OSHA) as a Voluntary Protection Program (VPP) Star Site, which is the agency's highest designation for outstanding voluntary employee safety and health programs. Solutia's manufacturing presence for Skydrol and SkyKleen is currently located at the company's J.F. Queeny plant in St. Louis. Solutia announced in December 2004 it will exit the Queeny plant in late 2005 or early 2006 because the plant is no longer economically viable. No other Solutia products are manufactured at the Queeny plant. Skydrol is the world's most advanced line of aviation hydraulic fluids, which are approved by all airframe manufacturers specifying fire-resistant hydraulic fluids. It has been part of the commercial aviation industry's commitment to safety and reliability for fire resistance and excellence in performance for over 50 years. For more information about Skydrol, call 1-800-260-4150, visit http://www.skydrol.com/or send a request on company letterhead to: Solutia Inc. Skydrol-2S P.O. Box 66760 St. Louis, Missouri 63166 -- or -- Solutia Europe S.A./N.V. Customer Service Centre Rue Laid Burniat 3 B-1348 Louvain-la- Neuve (Sud) Belgium 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 INC: Wants Exclusive Filing Period Stretched to July 11 --------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend their exclusive periods to file a plan of reorganization through and including July 11, 2005, and to solicit and obtain acceptance of that plan through and including September 7, 2005. Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, notes that considering the significant and complex issues involved in the Debtors' reorganization cases, the size of the Debtors' business operations and that the Debtors are in the initial stages of analyzing the more than 14,000 claims filed in their reorganization cases -- which include claims based on alleged, but unproven, exposure to toxins, environmental remediation and other complex issues -- the Debtors have not had sufficient time to formulate, promulgate and build consensus for a chapter 11 plan of reorganization. According to Mr. Cieri, an extension of the Debtors' exclusive periods will permit the current plan process to move forward in an orderly fashion. "The extension will provide the Debtors' management with sufficient time to finish developing and begin implementing a viable long-term business plan, to estimate the various claims that have been asserted against them (including claims based on alleged toxic torts and environmental remediation) and permit the Debtors' and their diverse creditor constituencies sufficient time to negotiate the terms of a consensual chapter 11 plan of reorganization that will enable the Debtors to emerge from chapter 11 and thrive as a reorganized entity." The Debtors have taken significant strides to establish a framework to effectuate the Debtors' development of a plan of reorganization: -- The Debtors have stabilized their operations. The Debtors orchestrated a substantial and successful operational restructuring, which has positioned the Debtors to achieve and sustain profitability on a long-term basis. -- The Debtors continue to analyze their complex contractual relationships with significant vendors, customers and facility guests. The Debtors have commenced negotiations with certain of these parties. Moreover, the Debtors also are continuing to evaluate contracts for possible rejection or termination and have rejected contracts to date, thereby minimizing administrative costs. -- The Debtors obtained Court approval to implement an employee incentive program for 2004. The Debtors currently are preparing to implement a similar program for 2005. The Debtors anticipate seeking the Court's approval of the 2005 Program in the near term. An extension will afford the Debtors an opportunity to propose a realistic and viable chapter 11 plan of reorganization, after soliciting the views of major creditor constituencies and analyzing and resolving the multitude of complex issues present in their reorganization cases. Mr. Cieri emphasizes that the Debtors are not seeking an extension to delay administration of their cases or to pressure creditors to accept an unsatisfactory plan. On the contrary, the Debtors want to facilitate an orderly, efficient and cost-effective plan process for the benefit of all creditors -- "a process that is necessary to prepare a plan that will cause the Debtors to emerge from chapter 11 as a viable entity." 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. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPX CORP: Extends Cash Tender Offers for 7-1/2% & 6-1/4% Sr. Notes ------------------------------------------------------------------ SPX Corporation (NYSE: SPW), is extending its pending tender offers for its 7-1/2% Senior Notes due 2013 and for its 6-1/4% Senior Notes due 2011. The offer is subject to the satisfaction of certain conditions, including the 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 offer is being extended because the Edwards closing has not yet occurred. As of 5:00 p.m., New York City time on March 2, 2005, a majority of each of the 6-1/4% Senior Notes and the 7-1/2% Senior Notes had tendered into the offer, which would represent receipt of the requisite consents for each of the 6-1/4% Senior Notes and the 7-1/2% Senior Notes, upon the closing of the offer. SPX is extending each of the tender offers for the 7-1/2% Senior Notes and the 6-1/4% Senior Notes to 5:00 p.m., New York City time on March 17, 2005. Also, the date by which holders of Notes needed to tender their Notes in order to obtain the consent payment has also been extended to March 17, 2005. Accordingly, holders who tender their Notes at or prior to 5:00 p.m., New York City time, on March 17, 2005 will receive the total consideration, including the consent payment, based on the applicable fixed spread set forth in the Supplement dated Feb. 18, 2005 to the Offer to Purchase and Consent Solicitation Statement dated Feb. 4, 2005, subject to the terms and conditions set forth in the Offer to Purchase. Also, the price determination date has now been extended to 2:00 p.m., New York City time on March 15, 2005. The 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 17, 2005, unless extended. In the future, the company may extend the expiration time of the tender offers, however, the company shall not extend the consent time and the withdrawal rights of holders of Notes will end on March 17, 2005. The consent solicitations and tender offers were earlier scheduled to expire at 5:00 p.m., New York City time, on March 7, 2005. Holders who tender their Notes pursuant to the offers will be required to consent to the proposed amendments. 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. 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. STADACONA INC: S&P Reviews Ratings as Brant Allen May Take Control ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on newsprint producers, Bear Island Paper Co., LLC, and Stadacona, Inc., on CreditWatch with positive implications. For Bear Island Paper, Standard & Poor's placed on CreditWatch its 'B-' corporate credit and senior revolver ratings and 'CCC+' senior unsecured rating. For Stadacona, the 'B' corporate credit and senior secured loan ratings and 'B+' senior secured rating were put on CreditWatch. "This rating action follows the announcement by Brant Allen Industries, Inc., parent company of Bear Island, that it is contemplating a restructuring that would bring Bear Island, Stadacona, and F.F. Soucy, Inc., under the common control of Brant-Allen," said Standard & Poor's credit analyst Dominick D'Ascoli. While details of the contemplated restructuring have not been released, Standard & Poor's expects the resultant combined entity would have a stronger credit profile than Stadacona or Bear Island alone because of greater operating diversity and larger scale. Standard & Poor's will resolve the CreditWatch action when details regarding the restructuring are released. SUNRISE CDO: Credit Support Factors Spur S&P to Review Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A, B, and C notes issued by Sunrise CDO I Ltd., a CDO backed by a static pool of primarily ABS and other structured finance securities, on CreditWatch with negative implications. The CreditWatch placements reflect factors that have negatively impacted the credit enhancement available to support the notes since the December 2004 rating actions. These factors primarily include significant amount of credit deterioration of several CDOs contained in the underlying collateral of Sunrise CDO. Standard & Poor's noted that for purposes of calculating its overcollateralization test ratios, Sunrise "haircuts" (or reduces the principal value of) assets rated below 'BB-' that exceed 5% of the net outstanding portfolio collateral balance. Without haircutting the principal value of these assets, the class A overcollateralization ratio, as of the Jan. 25, 2005, monthly report, would have been approximately 129.99% instead of 113.76%; the class B overcollateralization ratio would have been approximately 103.35% instead of 90.456%; and the class C overcollateralization ratio would have been approximately 96.85% instead of 84.763%. Standard & Poor's will be reviewing the results of current cash flow runs generated for Sunrise to determine the level of future defaults the rated notes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed On CreditWatch Negative Sunrise CDO I Ltd. Rating Class To From ----- -- ---- A AA+/Watch Neg AA+ B BB/Watch Neg BB C CCC-/Watch Neg CCC- Transaction Information Issuer: Sunrise CDO I Ltd. Co-issuer: Sunrise CDO I Inc. Administrative advisors: EPIC Asset Management Ltd. BroadStreet Group LLC Underwriter: Credit Suisse First Boston Trustee: Wells Fargo Bank Transaction type: CDO of ABS Tranche Initial Prior Current Information Report Action Action ----------- ------- ------ ------- Date (MM/YYYY) 01/2002 12/2004 3/2005 Class A notes rtg. AAA AA+ AA+/WtchNeg Class A notes bal. $220.60mm $175.054mm $159.722mm Class A OC ratio 134.63% 118.592% 113.761% Class A OC ratio min. 120.00% 120.0% 120.0% Class B notes rtg. AA BB BB/WtchNeg Class B notes bal. $45.10mm $45.10mm $45.10mm Class B OC ratio 111.94% 94.297% 90.456% Class B OC ratio min. 106.50% 106.50% 106.50% Class C notes rtg. BBB CCC- CCC-/WtchNeg Class C notes bal. $17.05mm $14.786mm $15.241mm Class C OC ratio 105.24% 88.36% 84.763% Class C OC ratio min. 101.75% 101.75% 101.75% SYRATECH CORPORATION: Wants Access to $25.35 Mil. of DIP Financing ------------------------------------------------------------------ Syratech Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for permission to obtain $25,350,000 postpetition interim financing from CapitalSource Finance LLC. The Debtors intend to borrow up to $45 million upon final approval from the Court. Syratech and its affiliates need the financing to preserve and maximize the value of the estates and enhance their reorganization prospects. The money coming in will be used to payoff the prepetition debts, meet the Debtors' working capital and operating needs including payments to employees, suppliers, landlords, utilities and professionals. The foreign suppliers in particular are unwilling to continue trading when payments are interrrupted. The Debtors will grant mortgages, security interests, liens and superpriority claims to CapitalSource to protect its interests. Additionally, the Debtors shall pay: i) a collateral management fee of $75,000; and ii) a commitment fee of $806,375. The Debtors urge the Court to approve the interim financing and to schedule a hearing for a final approval in order for their restructuring to be successful. Headquartered in Boston, Massachusetts, Syratech Corporation -- http://www.syratech.com/-- manufactures, markets, imports and sells tabletop giftware and home decor products. The Debtor along with its affiliates filed for chapter 11 protection on Feb. 16, 2005 (Bankr. D. Mass. Case No. 05-11062). When the Company filed for protection from its creditors, it listed $86,845,512 in total assets and $251,387,015 in total debts. TITAN CORP: S&C & DOJ Settlements Cue S&P to Affirm Low-B Ratings ----------------------------------------------------------------- Standard & Poor's Rating Services affirmed its ratings on San Diego, California-based Titan Corp. and removed them from CreditWatch, where they were placed on Sept. 16, 2003. The corporate credit and senior secured debt ratings are 'BB-' and the subordinated debt rating is 'B'. The outlook is stable. "The negative CreditWatch listing was based on uncertainty surrounding investigations by the Department of Justice and the Securities and Exchange Commission into whether Titan consultants violated the Foreign Corrupt Practices Act," said Standard & Poor's credit analyst Ben Bubeck. The rating affirmation reflects agreements reached with both the SEC and DOJ, and Titan's eligibility to continue to perform work for the Federal government. The CreditWatch listing initially had positive implications based on the planned acquisition of Titan by Lockheed Martin, later terminated. On March 1, 2005, it was announced that Titan reached a plea agreement with the DOJ and entered into a consent to the entry of a final judgment with the SEC. Titan will pay approximately $28.5 million in fines, composed of a $13 million criminal penalty to the DOJ and $15.5 million in disgorgement of profits and prejudgment interest to the SEC, and will be required to implement a best-practices compliance program designed to detect and deter future violations of the Foreign Corrupt Practices Act -- FCPA. Although Titan is pleading guilty to three felony counts associated with the DOJ's investigation, the announced settlement agreement between Titan and the U.S. Navy affirms Titan's eligibility to perform work for the Federal government, alleviating concerns regarding nonfinancial implications associated with these investigations. An agreement with the IRS will require Titan to amend its tax return for 2002, reducing Titan's operating loss carry forward benefit by about $1.3 million. The outlook is stable. Ratings upside remains limited by Titan's highly leveraged financial profile and below average operating margins. However, a solid backlog, offering strong revenue visibility, along with expectations for moderate free operating cash flow generation, supports the current ratings. TNP ENTERPRISES: S&P May Upgrade BB+ Credit Rating After Review --------------------------------------------------------------- Standard & Poor's Ratings Services revised the CreditWatch implications on its 'BB+' corporate credit rating on TNP Enterprises, Inc., to positive from developing. "The rating action is based on the strong likelihood that the proposed acquisition of TNP Enterprises by PNM Resources, Inc., (BBB/Stable/A-2) will receive all required approvals," said Standard & Poor's credit analyst Judith Waite. Upon completion of the acquisition, which is expected before the end of June 2005, the corporate credit and senior debt ratings on Texas-New Mexico Power Co., the wholly owned utility subsidiary of TNP Enterprises, will be 'BBB', mirroring those of Public Service Co. of New Mexico. At closing, PNM Resources will pay down all debt of TNP Enterprises, including $275 million of long-term debt, a $110 million term loan, and $217 million of payment-in-kind preferred stock. PNM Resources received anti-trust clearance for the acquisition under the Hart-Scott-Rodino Act from the Federal Trade Commission on Feb. 2, 2005. Although the settlements are unopposed, the acquisition still requires the formal approval of the Public Utility Commission of Texas and the New Mexico Public Regulatory Commission, and also requires the approval of the FERC and the SEC, all of which are expected within the next several weeks. TRI-COUNTY CONTRACTORS: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Tri-County Contractors Supply, Inc. 154 Wayside Avenue West Springfield, Massachusetts 01089 Bankruptcy Case No.: 05-40996 Chapter 11 Petition Date: March 1, 2005 Court: District of Massachusetts (Worcester) Judge: Henry J. Boroff Debtor's Counsel: Henry E. Geberth, Jr., Esq. Hendel & Collins, P.C. 101 State Street Springfield, MA 01103 Tel: 413-734-6411 Total Assets: $3,000,950 Total Debts: $3,617,299 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Tenco Machinery (CDN) Trade debt $204,029 P.O. Box 60 1318 Principale St. Valerien De Milton Canada J0H 2B0 Export Development Canada Trade debt $200,000 151 O'Connor Ottawa, Canada K1A1K3 Sentry Select Insurance Trade debt $113,503 P.O. Box 8022 Davenport, IA 52806 Bornag, Inc. Trade debt $54,360 Swenson Spreader Co. Trade debt $53,057 Holder of North America Trade debt $41,796 Weber Machine, Inc. Trade debt $40,595 Diamond Products, Inc. Trade debt $29,406 Highway Equipment Co. Trade debt $28,986 Galion-Godwin Truck Body Co. Trade debt $27,438 LLC Force America Trade debt $25,924 FleetPride-MA Trade debt $22,216 C N Wood Trade debt $22,000 Alamo Group/Tiger Mowers Trade debt $21,484 GC Castings Trade debt $20,776 Automation, Inc. Trade debt $20,046 Miller Spreader Trade debt $18,656 Atlas Copco Construction Trade debt $16,988 Commercial Vehicle System Trade debt $13,509 Union Tools Trade debt $12,533 TRICO MARINE: Court Approves Modifications to $75MM Exit Facility ----------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York entered a supplemental order approving certain modifications to the credit agreement for the $75 million exit facility that Trico Marine Services, Inc. (OTC Pink Sheets: TMARQ.PK) negotiated with its existing U.S. senior secured lenders. Provided that there are no appeals from the Bankruptcy Court's supplemental order during the mandatory ten-day waiting period, the Company anticipates closing the Exit Facility and emerging from Chapter 11 on or about March 15, 2005. The Company and two of its wholly owned subsidiaries filed voluntary petitions for relief under Chapter 11 on Dec. 21, 2004. On Jan. 21, 2005, the Bankruptcy Court confirmed the Company's prepackaged plan of reorganization. Under the terms of the Plan, the holders of the Company's $250 million 8-7/8% senior notes due 2012 on the date of the Company's emergence from Chapter 11 will be entitled to receive, in exchange for their total claims (including principal and accrued and unpaid interest), 10,000,000 shares of common stock of the reorganized Company, representing 100% of the fully-diluted common stock of the reorganized Company before giving effect to: (i) the exercise of warrants to be distributed to the Company's existing holders of common stock pursuant to the Plan and (ii) a long-term incentive plan. Also, pursuant to the Plan, holders of the Company's common stock will be entitled to receive, on a pro rata basis, for each 74 shares of Old Common Stock, warrants that are exercisable for, in the aggregate, 10% of the New Common Stock of the reorganized Company (before giving effect to the long-term incentive plan). All of the shares of Old Common Stock will be cancelled and converted into the right to receive warrants described above. Distributions of New Common Stock in exchange for the Senior Notes, and warrants in exchange for Old Common Stock shall commence as soon as reasonably practicable following the Effective Date. All securities to be issued pursuant to the Plan shall be deemed issued as of the Effective Date, regardless of the date on which the securities are actually distributed. 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: Judge Wedoff Rules on Honoring the Revised ALPA Accord ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Feb. 23, 2005, the Air Line Pilots Association, International asked the U.S. Bankruptcy Court for the Northern District of Illinois to compel UAL Corporation and its debtor-affiliates to continue paying the collectively bargained, non-qualified pension benefit payments. Debtors Object James H.M. Sprayregen, Esq., at Kirkland & Ellis, explains that the Debtors' obligation to make the pension payments will cease once the Pilot's Pension Plan is terminated. The Debtors have suspended payments while the Pension Benefit Guaranty Corporation attempts to terminate the Plan effective December 30, 2004. To avoid unnecessarily parting with cash, a realistic scenario if the PBGC forces a retroactive termination date, the Debtors have suspended payments until a termination date is set. Once a termination date is established, the Debtors will make up any payments owed until that point. Mr. Sprayregen argues that the Air Line Pilots' Association is trying to "obtain unjustified treatment" for a select group of retiring and retired pilots by enforcing its claims under the collective bargaining agreement. Any unnecessary payments will produce a windfall to a number of retired pilots, allowing them to jump ahead of other unsecured creditors. The pilots would improve their position based on the fact that it may take several months to litigate the PBGC's involuntary termination proceeding. The parties do not need the Court to decide this matter. The issue clearly falls within the purview of the grievance and arbitration dispute resolution mechanisms under the collective bargaining agreement. Mr. Sprayregen notes that the ALPA has maintained for some time that is does not represent retired pilots. The ALPA's refusal to represent its pilots led to the formation of the retired pilot committee in the Section 1114 process. Mr. Sprayregen also insists that the Debtors are not breaching the collective bargaining agreement. It is beyond question that once the Plan terminates, the Debtors' obligations to pay non-qualified benefits will cease. The Debtors are not obligated to make the payments because they amount to prepetition, general unsecured obligations. Section 1113(f) of the Bankruptcy Code does not transform prepetition claims into superpriority administrative claims because they arise under a collective bargaining agreement. Since the Petition Date, the Debtors have paid over $130,000,000 to almost 3,000 retired pilots and surviving spouses who are entitled to receive non-qualified benefits. On average, the Debtors pay $6,000,000 per month in non-qualified benefits. The Debtors will suffer harm if compelled to make unnecessary pension payments. * * * Judge Wedoff rules that the Debtors must continue the non- qualified payments absent a Court order terminating the Pension Plan. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/--throughUnited 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) UNIFORET INC: Ability to Continue as a Going Concern is Uncertain ----------------------------------------------------------------- Uniforet Inc. reports a net loss of $1.7 million for the fourth quarter ended December 31, 2004, which compares to a net loss of $9.0 million for the corresponding period in 2003. Net earnings for the third quarter of 2004 had totaled $4.9 million. The improvement in the results for the fourth quarter of 2004 over those for the corresponding quarter of 2003 stems from the increase in net selling prices for lumber, from greater productivity at the sawmills and from the takeover of pulp mill operations by Katahdin. At the same time, improvement in results was curbed by the appreciation of the Canadian dollar and by the rise in transportation and energy costs. The startup of a third work shift at the Port-Cartier sawmill in late September 2004 led to an increase in production volumes during the quarter. For the fiscal year ended December 31, 2004, net loss was $3.4 million, compared to net earnings of $110.7 million for the previous fiscal year, which contained among other things an after- tax gain on debt settlement of $116.3 million resulting from the Company's plan of arrangement with its creditors. Excluding non- recurring items and the foreign-exchange gain on long term debt and related taxes, net loss for fiscal 2003 had amounted to $27.6 million. Average selling prices for lumber for reference items (fob the Great Lakes), expressed in US dollars, show an improvement of 25.9% for 2X4-stud and of 11.2% for 2X4-random lengths in comparison with those in the corresponding period of the previous fiscal year. The Canadian dollar continued to advance in relation to US currency, rising by an average of 7.0% during the quarter compared to its level for the same period of 2003, in the process eliminating about $0.7 million in net earnings compared to those for the corresponding period of 2003. During the fourth quarter of 2004 the Company paid out $1.6 million ($1.2 million US) in countervailing and anti-dumping duties imposed on shipments of lumber to the US, bringing the total to $31.1 million ($22.3 million US) since implementation of those duties in May 2002. The complications involved in exporting Canadian lumber to the US market continued during the fourth quarter, adding confusion to the already extremely complex issue. On Dec. 14, 2004, the US Department of Commerce announced the final results of the first administrative reviews of anti-dumping and countervailing duties. Overall rates were revised from 27.2% to 21.2%, although these had been revised to 13.2% at a previous administrative review carried out in June 2004 and, again, to 7.82% in August 2004. Deposits of these duties were to take place at the new rates of 21.2% as of December 20, 2004. Then, the combined rates were further revised, to 21.0%, on January 24, 2005. Still, it is worth bearing in mind that on August 31, 2004, the North American Free Trade Agreement (NAFTA) review panel handed down a final decision favorable to the Canadian industry, ruling that the US had not succeeded in making its case that the US softwood lumber industry is threatened with material injury by Canadian imports. As a result it demanded that the US Department of Commerce reverse its decision, which was done at the beginning of September. This victory for Canada meant that the US could not legally impose countervailing duties and anti-dumping penalties on imports of Canadian softwood lumber. Nevertheless, on October 13, 2004, the US government announced its intention to contest the decision of the NAFTA panel before a NAFTA extraordinary challenge committee. Management Discussion and Analysis Fourth Quarter 2004 vs. Fourth Quarter 2003 Sales for the fourth quarter of 2004 amounted to $ 44.3 million, up 23.6% over those of the same period in 2003 owing to an increase of 22.2% in selling prices for lumber, whereas the volume of lumber shipments decreased slightly, by 2.8%, to 74.1 million board feet. On the other hand, woodchip sales reflect an upswing of 36.6% in comparison with those of the corresponding period in 2003, the reason being an increase in shipments. Operating earnings for the fourth quarter of 2004 total $1.4 million, compared to an operating loss of $4.9 million for the corresponding period in 2003, stemming from the strong improvement in sales and the takeover of maintenance costs at the pulp mill by Katahdin following the transaction of April 2004. Sales and administration costs for the fourth quarter of 2004 show an increase of $0.3 million, totaling $1.6 million, the reason being the stock incentive plan charge entered on the books in conformity with the new accounting policy adopted in 2004. Depreciation of fixed assets show an increase of $0.5 million, totaling $2.5 million, because of increased sawmill production volume during the fourth quarter of 2004. Net rental revenues from the Port-Cartier pulp mill amounted to $0.5 million during the fourth quarter of 2004, while depreciation charges for this mill totaled $0.1 million. The maintenance costs for the mill, now presented as non-recurring items, had amounted to $0.6 million for the corresponding period in 2003. Financial expenses for the fourth quarter of 2004 total $3.3 million given that the new secured notes were issued on August 8, 2003, further to the Company's plan of arrangement with its creditors. Net loss for the fourth quarter amounts to $1.7 million ($0.02 per share), compared to a net loss of $9.0 million ($0.14 per share) for the corresponding period in 2003. Net earnings for the third quarter of 2004 had amounted to $4.9 million ($0.07 per share). F.Y. 2004 vs. F.Y. 2003 Sales for fiscal 2004 amounted to $176,0 million, up 16.9% over those of the previous fiscal year thanks to the important improvement of $84 per fbm in selling prices for lumber (23.3%), while shipments increased by 4.6% to total 291.4 million fbm. Woodchip sales show a drop of 7.4% compared with those of the previous fiscal year as a consequence of reduced shipments in 2004. The application of countervailing duties of 27.2% on all shipments to the US in 2004 eliminated more than $13.9 million in revenues in 2004. Moreover, the rapid strengthening of the Canadian dollar in relation to US currency in 2004 brought about a decrease in revenues of $5.8 million compared to those for 2003. Operating earnings for 2004 show a remarkable turnaround to total $9.9 million, which compares to a loss of $16.9 million in 2003. The important increase in operating earnings for 2004 results essentially from the improvement in selling prices for lumber, the reduction in unit costs of goods sold, and from the takeover of maintenance costs at the pulp mill by Katahdin as of May 8, 2004, further to the transaction of April 2004. Sales and administration costs for fiscal 2004 amount to $5.7 million, up $0.8 million over those of 2003 primarily as a result of the stock incentive plan charge, increases in insurance costs and contributions to industrial associations. Fixed-asset depreciation costs total $9.2 million in 2004, compared to $8.2 million in 2003, a result of increased sawmill production volume during the fiscal year. Net rental revenues after deduction of attributable expenses from the Port-Cartier pulp mill amounted to $0.9 million in fiscal 2004 and are comprised by revenues based on actual mill's production following its restart by Katahdin. Depreciation charges for this mill totaled $0.4 million in 2004. Mill maintenance costs had totaled $5.7 million in 2003 including $2.4 million, now presented as non-recurring items. The rest was assumed by the lumber sector to reflect operating cost for the biomass boiler and electricity plant. Non-recurring loss for fiscal 2004 stands at $0.9 million and represents the pulp mill maintenance costs incurred until Katahdin took them over on May 8, 2004. Non-recurring gains for fiscal 2003 had amounted to $156.4 million and consisted primarily of the pre- tax gain on debt settlement of $133.9 million resulting from the sanctioning of the Company's plan of arrangement with its creditors in 2003 and from the foreign exchange gain on long-term debt, which amounted to $25.6 million. Pulp mill maintenance costs had totaled $2.4 million in 2003. Financial costs for 2004 amount to $12.7 million, compared to $8.0 million in 2003, when the Company realized a foreign exchange gain in the amount of $6.1 million on accrued interest payable on long- term debt expressed in foreign currency during that fiscal year. Interest on long-term debt totals $6.4 million and shows a major reduction of $4.0 million compared to that of 2003, the primary reason being the diminished debt load resulting from the sanctioning in 2003 of the Company's plan of arrangement with its creditors. Accretion in the value of the Senior convertible note "B" and the note payable to a shareholder amounts to $4.4 million in 2004, compared to $2.8 million for 2003, further to the realization of the Company's plan of arrangement with its creditors in May 2003. Financial costs for 2004 also include an accretion charge for asset retirement obligations of $0.4 million. Net loss for 2004 stands at $3.4 million, compared to net earnings of $110.7 million for the previous fiscal year, which included among other things a net after-tax gain on debt settlement of $116.3 million resulting from the Company's plan of arrangement with its creditors. Excluding non-recurring items and the foreign-exchange gain on long term debt and related taxes, net loss for fiscal 2003 would have amounted to $27.6 million. Cash Flow and Financial Resources Operations for the fourth quarter of fiscal 2004 generated $2.9 million, compared to the $5.3 million required for the corresponding period in 2003, the principal reasons being the improvement in operating earnings and the reduction in financial expenses. On the other hand, non-cash operating items required $1.4 million compared to a minimal amount for the corresponding period in 2003. Additions to fixed assets for the fourth quarter of 2004 amounted to $3.0 million, primarily for the installation of an additional production line at the Peribonka sawmill, as well as for the installation of forestry infrastructures at Port-Cartier. Additions to fixed assets for the corresponding period of 2003 had totaled $1.8 million. In other respects, the Company disposed of a $1.0 million investment during the fourth quarter of 2004. Financing activities generated $0.3 million because of the increase in lines of credit. Repayment of long-term debt amounted to $0.3 million during the fourth quarter of 2004, compared to $4.5 million for the corresponding period in 2003, which included a cash repayment of $4.3 million to certain long-term creditors as part of the Company's plan of arrangement. For fiscal 2004, operations generated $11.6 million, whereas those for fiscal 2003 had required $22.4 million. This significant improvement in funds derives from the important growth in operating earnings during 2004 compared to the operating loss of $16.9 million in 2003, and from the substantial reduction in interest on long-term debt. Non-cash operating items required $5.5 million, compared to funds of $8.7 million generated in 2003 and primarily owing to the increase in log inventories and the reduction of certain accounts payable. Financing activities for the fiscal year required $0.8 million, compared to the $5.3 million generated in 2003. Investment activities required funds totaling $5.3 million in 2004, compared to $4.9 million in 2003. Additions to fixed assets in 2004 were $5.9 million, compared to $4.9 million in 2003. At December 31, 2004, bank overdraft stood at $14.3 million, and the Company's working capital amounted to $9.4 million, for a ratio of 1.25:1 compared to a ratio of 1.13:1 at December 31, 2003. During the first quarter of 2005, the Company has renewed its credit facilities with its lending institution up to May 31, 2005. Review of Balance Sheet Total assets of the Company at December 31, 2004, amounted to $143.8 million, up $5.9 million over those of December 31, 2003. Current assets expanded by $9.5 million to $46.5 million during the fiscal year ended December 31, 2004, primarily because of the increase in inventories of raw material needed to support the sawmills' full-capacity operation. Fixed assets totaled $97.3 million at December 31, 2004, down $3.6 million from those at December 31, 2003. Additions to fixed assets for 2004 amounted to $5.9 million, while an amount of $9.6 million was recorded in amortization charges. Moreover, the Company disposed of assets in the amount of $0.2 million during 2004. At December 31, 2004, current liabilities expanded by $4.2 million compared to their level at December 31, 2003, to stand at $37.1 million, primarily because of the increase in sums owing forestry contractors stemming from the buildup of raw-material inventories and accrued interest on Senior convertible note "B". In addition, the tranche of the long-term debt falling due in the short term shows a drop of $0.9 million compared to its level at December 31, 2003. Assets retirement obligations stood at $2.1 million at Dec. 31, 2004 compared to $2.3 million in 2003. Long-term debt grew by $4.8 million to $89.9 million at December 31, 2004, compared to $85.1 million at December 31, 2003. That increase in long-term debt stems from the accretion, amounting to $4.4 million, in the value of the Senior convertible note "B" and the note payable to a shareholder since they were recorded at present value in the Company's balance sheet further to its plan of arrangement with its creditors in 2003. Repayment of long-term debt amounted to $1.0 million during fiscal 2004, whereas long- term debt itself rose by $0.6 million. Shareholders' equity stood at $14.7 million at December 31, 2004, down by $2.8 million from its level of $17.5 million at December 31, 2003, as a result of the net loss suffered during fiscal 2004. The Company's share capital consists of an unlimited number of class "A" and "B" subordinate voting shares and preferred shares. The class "A" and "B" subordinate voting shares carry the same privileges, except that the latter comprise 10 votes per share compared to only one for the class "A." The preferred shares may be issued in one or more series. The Senior convertible note "B" of an aggregate principal amount of $40 million may be converted, at the holder's discretion, into 80 million class "A" subordinate voting shares. Outlook Supported by positive housing-start statistics, the lumber market experienced a very interesting start to 2005 at the level of demand, which produced a rise in selling prices for lumber. After enjoying an exceptional strengthening during the last quarter of 2004, the Canadian dollar has remained relatively stable in the early part of fiscal 2005. Production and lumber shipment volume during the next quarter should be stable compared to those of the last quarter of 2004, as the two sawmills will be operating at full capacity throughout the first quarter of 2005. In another connection, on February 9, 2005, the Canadian government announced its intention to ask the World Trade Organization on February 25 to order the U.S. to reimburse the amount of $4.1 billion, which is the total of countervailing duties and anti-dumping penalties paid by Canadian lumber exporters since the litigation began on May 22, 2002. Going Concern Doubt These interim consolidated financial statements are presented on the assumption that the Company is on going concern in accordance with Canadian generally accepted accounting principles. The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. There is doubt about the appropriateness of the use of the going concern assumption because, although the financial reorganization was completed on Oct. 3, 2003, and resulted in a significant decrease in financial expenses, this financial reorganization cannot single-handedly ensure that the Company remains a going concern. The trading environment in which the company operated in 2004 was turbulent, and presented important challenges to which the Company had to respond. The commercial dispute with the US over imports of Canadian softwood lumber to the US market continued in 2004. Despite decisions favorable to the Canadian industry handed down by the North American Free Trade Agreement (NAFTA) review panel, the US government announced, in early October 2004, its intention to contest these before a NAFTA extraordinary challenge committee. No resolution in this matter is foreseeable in the short term. The vigorous appreciation of the Canadian dollar over the last two years in relation to US currency made for important losses in revenues for Canadian export industries, significantly reducing their profit margins and their competitive position. Furthermore, the important hike in energy costs in 2004 gave rise to significant increases in the Company's delivery and production expenses, primarily at the level of raw materials and conversion costs. The Company has to generate the cash flow required to provide for the semi-annual interest payments of $4.2 million due in March 2005 and in September 2005, and to meet its general operating cash flow requirements. In that context, the Company will have to renew its current credit facilities, which expire on May 31, 2005, or obtain additional capital, in case of insufficient or non-renewal of its credit facilities. In other matters, the Company concluded on April 29, 2004, final agreements with a third party concerning the rental of its pulp mill and co- generation facilities of Port-Cartier. That transaction has permitted since May 8, 2004, for the elimination of maintaining costs of that mill, which amounted to more that 5.0 million in 2003. Moreover, the agreement provides that the realization of net earnings based on annual pulp production at the mill and the improvement in results at the adjacent sawmill. In the opinion of management, the improvement in these operating results in the course of recent quarters as well as the transaction described above will contribute to a mitigation of the unfavorable conditions that are casting doubt on the validity of the going-concern hypothesis used as part of the preparation of the present financial statements. However, there is no guarantee that the Company could generate sufficient cash-flows and/or that additional capital ultimately be obtained in order to provide for its financial obligations up until December 30, 2005. About the Company Uniforet manufactures softwood lumber and owns a pulp mill now rented by virtue of a long-term agreement. The Company carries on business through mills located in Port-Cartier and in the Peribonka area. Uniforet's Class A Subordinate Voting Shares are listed on the Toronto Stock Exchange under the trading symbol UNF.SV.A. US AIRWAYS: Court Allows Philadelphia to Set Off Multi-Mil. Claims ------------------------------------------------------------------ At the request of the City of Philadelphia, Department of Commerce, Division of Aviation, Judge Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia lifts the automatic stay and allows the City to set off certain prepetition obligations owed by the City to US Airways, Inc., and its debtor-affiliates against prepetition obligations owed by the Debtors to the City. Pedro A. Ramos, Esq., Solicitor of the City of Philadelphia, explains that the Debtors and the City are parties to prepetition Leases and contracts for use of terminals, facilities and services at the Philadelphia International Airport. Since the Petition Date, the Debtors used the PIA in the ordinary course of business. When they filed for bankruptcy for the second time, the Debtors owed $3,951,927 to the City under the Leases, exclusive of contingent claims and unliquidated claims. However, pursuant to a review, the Debtors were entitled to credits of $7,675,000 from the City for lower than expected use of baggage conveyor systems, loading bridges and other equipment. The City will set off its $3,951,927 prepetition, non-contingent and liquidated claim against the $7,675,000 credit owed to the Debtors. The Debtors will apply the remainder of the credit, equal to $3,723,073, to its ongoing rent expense and other fees at PIA. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Bank of America Discloses 5.29% Equity Stake --------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Bank of America Corporation discloses that it is deemed to beneficially own 2,639,095 shares of WestPoint Stevens, Inc., common stock: No. of Shares Percentage Beneficially Outstanding Reporting Person Owned of Shares ---------------- ------------- ---------- Bank of America Corporation 2,639,095 5.29% NB Holdings Corporation 2,639,095 5.29% Bank of America, NA 2,424,095 4.86% Bank of America Strategic Solutions Inc. 2,424,095 4.86% Bank of America Securities, LLC 215,000 0.43% NationsBanc Montgomery Holdings Corp. 215,000 0.43% Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: U.S. Trustee Appoints 7-Member Creditors' Committee --------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2 and Richard C. Morrissey, Esq., the attorney for the U.S. Trustee in charge of Winn-Dixie Stores, Inc., and its debtor-affiliates' chapter 11 proceedings, convened an organizational meeting of the Debtors' creditors for the purpose of forming one or more official committees to participate in the Debtors' chapter 11 cases on Tuesday, March 1, 2005, in Manhattan. More than 100 creditor representatives and professionals ready to pitch their services to an official committee attended. The U.S. Trustee made it clear that this organizational meeting is not the official meeting of creditors pursuant to 11 U.S.C. Sec. 341(a). That meeting -- at which a representative of the Debtors will appear to be examined under oath -- will take place at a later date and all creditors will be notified of the time, place and date of that official proceeding. Additionally, the U.S. Trustee made it clear that an official committee of creditors represents, as a fiduciary, the interests of its constituency as a whole. Accordingly, a committee is not a substitute for individual legal counsel when the interests of one particular creditor diverge from the interests of all creditors. The U.S. Trustee received requests from a number of parties urging the appointment of multiple committees. After reviewing those requests, the U.S. Trustee concluded that one official committee can adequately represent the interests of all unsecured creditors in Winn-Dixie's cases. The U.S. Trustee understands that bondholders, vendors and landlords have different short-term and long-term interests. Those competing interests, the U.S. Trustee believes, can be adequately represented and that decisions by the official committee will ultimately be in the best interests of all creditors. The U.S. Trustee noted that Section 1102 of the Bankruptcy Code directs that committees should "ordinarily" be composed of the seven largest creditors willing to serve. The U.S. Trustee reminded creditors that this is a guideline that's generally followed in the Southern District of New York, but not a mandate. Bennett L. Nussbaum, Winn-Dixie's Chief Financial Officer, introduced himself to those in attendance. Mr. Nussbaum reviewed the events leading the company's board of directors to conclude that seeking chapter 11 protection is the best way to maximize value for all stakeholders. Mr. Nussbaum indicated that operations at the store level are stable and, from a customer's or employee's perspective, it's "business as usual." Mr. Nussbaum thanked creditors for continuing to support the company with ordinary trade credit and indicated that critical suppliers are extending post-petition trade credit. Mr. Nussbaum told creditors that Winn-Dixie is working on putting a business plan together as rapidly as possible and management looks forward to working with the official committee to refine that plan. Following a recess, the U.S. Trustee announced that a single seven-member committee of unsecured creditors will be appointed in Winn-Dixie's chapter 11 case, and the committee members are: * Capital Research & Management * Deutsche Bank Trust * Kraft Foods * New Plan Realty Trust * Oaktree Capital Management * PepsiCo * R2 Investments The U.S. Trustee thanked all creditors and their representatives for attending the organizational meeting and for their willingness to serve on an official committee. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/ -- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate Meagher & Flom, LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Committee Has 3 Bondholders, 2 Landlords & 2 Vendors ---------------------------------------------------------------- Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code, Deirdre A. Martini, the United States Trustee for Region 2 appointed seven creditors to the Official Committee of Unsecured Creditors in Winn-Dixie's Chapter 11 cases: 1. R2 Investments, LDC c/o Amalgamated Gadget, LP 301 Commerce Street, Suite 3200 Fort Worth, TX 76102 Attn: Dave Gillespie, Chief Financial Officer Tel. No. (817) 332-9500 2. Deutsche Bank Trust Company Americas 60 Wall Street New York, NY 10005-2858 Attn: S. Berg Tel. No. (212) 250-2921 3. New Plan Excel Realty Trust, Inc. 420 Lexington Avenue New York, NY 10170 Tel. No. (212) 869-3000 4. Kraft Foods Global, Inc. Three Lakes Drive Northfield, IL 60093 Attn: Sandra Schirmang, Senior Director of Credit Tel. No. (847) 646-6719 5. Pepisco & Subsidiaries 7701 Legacy Drive 38-109 Plano, TX 75024 Attn: Scott Johnson, Group Credit Manager Tel. No. (972) 334-7405 6. OCM Opportunities Fund V, L.P. c/o Oaktree Capital Management, LLC Los Angeles, CA 90071 Attn: Alan S. Adler, Vice President Tel. No. (213) 830-6300 7. Capital Research & Management Company 333 South Hope Street Los Angeles, CA 90071 Attn: Ellen Carr, Vice President Tel. No. (213) 486-9200 R2, OCM and Capital Research are bondholders. R2 reportedly holds one-third of the company's bond debt. New Plan is a Winn-Dixie landlord. Deutsche Bank serves as the indenture trustee under an issue of privately placed Winn-Dixie Pass-Through Certificates Series 1999-1 Certificates (secured, according to Standard & Poor's Ratings Services, by mortgages on 15 properties leased to Winn-Dixie). Kraft and Pepsi, of course, are trade vendors. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/ -- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate Meagher & Flom, LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Creditors' Committee Taps Milbank Tweed as Counsel ---------------------------------------------------------------- After appointing the Official Committee of Unsecured Creditors earlier this week, the U.S. Trustee directed the committee's members to immediately convene their first meeting, introduce themselves to one another, select a chairperson, decide how to conduct their business and, if they wished, select professionals to advise and assist them in carrying out their statutory duties. The Committee met and decided that it should retain legal counsel. The Committee asked lawyers from Jones Day; Weil, Gotshal & Manages; and Milbank Tweed Hadley & McCloy to participate in its beauty pageant. The Committee selected Milbank Tweed as its counsel. Dennis F. Dunne, Esq., will lead the engagement. Mr. Dunne has extensive experience in representing a long list of debtors and creditors in reorganization cases and out-of-court workouts. Mr. Dunne has been ranked, for several years, as one of the top restructuring professionals under 40 by Turnaround & Workouts and was also listed among the top 40 global restructuring professionals under 40 in the Global Insolvency and Restructuring Review. Mr. Dunne is also listed in the K&A Register of the Leading Bankruptcy and Financial Restructuring Lawyers and Financial Advisors in the United States, as well as a Leading Individual (Bankruptcy) in the 2004 edition of Chambers' The Client's Guide. Mr. Dunne received his law degree from New York University School of Law with honors, where he was also the Galgay Fellow in Bankruptcy, and his undergraduate degree from Williams College, with honors. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/ -- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate Meagher & Flom, LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) WITHERSPOON CDO: Moody's Puts Ba2 Rating on $18M Preference Shares ------------------------------------------------------------------ Moody's Investors Service has assigned the ratings to Witherspoon CDO Funding, Ltd.: 1) Prime-1 to the $602,001,000 Class A-1 CP Notes, 2) Aaa to the U.S.$258,000,000 Class A-1 LT-a Floating Rate Notes Due 2039, 3) Aaa to the U.S.$602,001,000 Class A-1 LT-b Floating Rate Notes Due 2039, 4) Aaa to the U.S.$50,000,000 Class A-2 Floating Rate Notes Due 2039, 5) Aa2 to the U.S.$40,000,000 Class B Floating Rate Notes Due 2039, 6) A2 to the U.S.$23,000,000 Class C Floating Rate Deferrable Interest Notes Due 2039, 7) Baa2 to the U.S.$9,000,000 Class D Floating Rate Deferrable Interest Notes Due 2039, 8) Ba2 to the U.S.$18,000,000 Aggregate Liquidation Preference of Preference Shares, and 9) Baa1 to the U.S.$5,000,000 Combination Securities Due 2039. Princeton Advisory Group and Structured Asset Investors, LLC, are jointly managing this transaction. The ratings assigned to the Term Securities address the ultimate cash receipt of all required interest, if any, and principal payments as provided by the Term Securities' governing documents, and are based on the expected loss posed to holders of the Term Securities relative to the promise of receiving the present value of such payments. The rating of the Preference Shares addresses only the likelihood that the holders thereof will receive payment of the preference share rated balance thereof by their scheduled maturity. The ratings of the Combo Notes address only the likelihood that the holders thereof will receive payment of the combination security notional balance thereof by their scheduled maturity. The ratings of the Combo Notes and the Preference Shares do not address any interest or other distributions or payments thereon. Moody's Prime-1 rating assigned to the CP Notes is based on the payment in full of the face amount of the CP Notes from the proceeds of newly issued CP Notes, cash payments received from the underlying assets, or cash paid by AIG Financial Products Corp., as swap counterparty, and Societe Generale, NY Branch, as put counterparty, under the terms of the interest rate swap transaction and put option, respectively, by the legal final maturity. The Prime-1 rating considers all grace periods (up to five business days) and payment delays permitted under the governing documents. The Prime-1 rating also depends in part on the short term ratings of the swap and put counterparties, and may be lowered if the rating of the either the swap or put counterparty is lowered or if the swap or put agreement is terminated. W.R. GRACE: Phillip Hempleman Discloses 5.2% Equity Stake --------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated February 11, 2005, Phillip J. Hempleman discloses holding 3,460,000 shares or 5.2% of the outstanding shares of W.R. Grace & Co. Common Stock through: No. of Shares Percentage Beneficially Outstanding Reporting Person Owned of Shares ---------------- ------------- ----------- Ardsley Partners Fund II, L.P. 1,000,000 1.5% Ardsley Partners Institutional Fund, L.P. 520,000 0.8% Ardsley Offshore Fund Ltd. 1,420,000 2.2% Ardsley Advisory Partners 2,995,000 4.5% Ardsley Partners I 1,520,000 2.3% AP II and Ardsley Institutional are Delaware limited Partnerships. Ardsley Offshore is a British Virgin Islands Corporation. Ardsley and Ardsley Partners are Connecticut general partnerships. Ardsley, the Investment Manager of Ardsley Offshore and the Investment Adviser of certain managed accounts, has the power to vote and direct the disposition of the proceeds from the sale of the shares of Common Stock owned by Ardsley Offshore and the managed accounts, and accordingly may be deemed the direct "beneficial owner" of those shares of Common Stock. Ardsley, the Investment Adviser of AP II and Ardsley Institutional shares the power to vote and direct the disposition of the proceeds from the sale of the shares of Common Stock owned by AP II and Ardsley Institutional, and accordingly may be deemed the direct "beneficial owner" of those shares of Common Stock. Ardsley Partners, the General Partner of AP II and Ardsley Institutional shares the power to vote and direct the disposition of the shares of Common Stock owned by AP II and Ardsley Institutional, and accordingly may be deemed the direct "beneficial owner" of those shares of Common Stock. Mr. Hempleman is the Managing Partner of Ardsley and Ardsley Partners and in that capacity directs their operations and therefore may be deemed to be the indirect "beneficial owner" of the shares of Common Stock owned by Ardsley Offshore, AP II, Ardsley Institutional and the managed accounts. Mr. Hempleman also has the power to vote and direct the disposition of the proceeds from the sale of the shares of Common Stock that he owns individually. 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) YUKOS OIL: To Appeal as Court Upholds Dismissal & Denies Stay ------------------------------------------------------------- Judge Letitia Z. Clark of the U.S. Bankruptcy Court for the Southern District of Texas denied Yukos Oil Company's request for a new trial and imposition of automatic stay at a hearing on Thursday, March 3, 2005, in Houston, Texas. According to the Associated Press, Judge Clark expressed sympathy over Yukos' and its shareholders' concerns over lack of asset protection and a forum to sue under U.S. bankruptcy law. Judge Clark, however, refused to reconsider her decision to dismiss the case. Yukos Seeks Stay Pending Appeal Yukos will take an appeal from the Bankruptcy Court's Dismissal Order to the U.S. District Court for the Southern District of Texas. Pending resolution of the appeal, Yukos asks Judge Clark to stay the Order. "In the seven days since [the Bankruptcy] Court issued its ruling dismissing the case, Yukos has already begun to suffer the effects of the lack of bankruptcy protection," Zack A. Clement, Esq., at Fulbright & Jaworski, L.L.P., tells Judge Clark. Mr. Clement explains that Yukos received notices from Ingosstrakh Insurance Company and AIG Russia Insurance Company that certain of its Directors' and Officers' liability insurance policies were being cancelled. According to Mr. Clement, those letters would not have been received if the bankruptcy case had not been dismissed. On February 28, 2005, a Moscow court issued an arrest warrant for Mikhail Yelfimov, currently Yukos' acting president for Yukos Refining and Marketing, the management company for Yukos' downstream operations. The next day Russian prosecutors opened a criminal investigation against the chief executive of Tomskneft, one of Yukos' two remaining production subsidiaries following the expropriation of Yuganskneftegas. The Tomskneft chief executive allegedly violated oil field license agreements in 2003 by producing too much crude oil in two regions, although the production was in line with revised field development plans, which had been submitted to the Russian Government long ago. On March 2, 2005, the Russian press reported that the Moscow Arbitrazh Court of Appeals, No. 9, denied Yukos' appeal of the re- assessment of 2002 taxes, thus approving the $6.59 billion of additional taxes that had been assessed, and confirmed the imposition of a $2.57 billion tax penalty. The long-planned merger of Gazprom with Rosneft, the subsequent transferee of Yukos' YNG stock, was also carried out because of the dismissal of the bankruptcy. Mr. Clement points out that the Gazprom-Rosneft merger had been delayed because of fears of legal action relating to the bankruptcy case. On February 25, Yukos received a demand letter from Rosneft threatening suit unless Yukos paid $3.8 billion in receivables that were payable by Yukos to YNG. Mr. Clement relates that a large portion of the receivables were amounts taken by the Russian Government from Yukos bank accounts for which Yukos was acting as collection agent for YNG. Rosneft, a 100% state-owned entity, is demanding payment of the same YNG funds that the Russian Government has taken from Yukos' accounts. Other amounts of the receivables were funds taken by Yukos' trade finance creditors after the creditors put Yukos in default as a result of the Russian Government actions. YNG is a guarantor of the trade finance. The demand letter gave Yukos until February 28 to make the payment or Rosneft would bring a collection suit in the Russian courts. Yukos also received a demand on a lawsuit which had been stayed. On December 28, 2004, Sergey Funygin improperly filed a complaint against Yukos alleging claims for unpaid wages, bonuses and compensation for relocation. The claim was actually against YNG. Yukos filed a Suggestion of Bankruptcy informing the court of the bankruptcy filing and of the automatic stay. Two business days after the Bankruptcy Court dismissed Yukos' case, the company received a telephone call from Mr. Funygin, claiming that he intended to file an emergency motion to garnish Yukos' money located in the United States. The press has also reported that Russian President Vladimir Putin stated that Tatneft, a Russian oil company, was interested in purchasing a Yukos subsidiary's 49% ownership in the Slovakian pipeline, Transpetrol. News reports conclude from this statement that "the Russian government now seems more than happy to view all of Yukos' assets as ripe for takeover, primarily by state-run firms," Mr. Clement says, citing a WMRC daily analysis by Stephanie Berger. Requirements for a Stay are Met The Fifth Circuit in Arnold v. Garlock, Inc., 278 F.3d 426, 438-39 (5th Cir. 2001), has held that a request for stay pending appeal is judged by a four-part test: (1) Whether the movant has made a showing of likelihood of success on the merits; (2) Whether the movant has made a showing of irreparable injury if the stay is not granted; (3) Whether the granting of the stay would substantially harm the other parties; and (4) Whether the granting of the stay would serve the public interest. Citing Arnold, 278 F.3d at 439, Mr. Clement argues that, to show the likelihood of success on the merits, the movant "need not always show a 'probability' of success on the merits; instead the movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of the equities weighs heavily in favor of granting the stay." Mr. Clement asserts that the legal issues alone justify a likelihood of success on appeal. Mr. Clement notes that the Bankruptcy Court agreed with Yukos' arguments on each of the individual issues that Deutsche Bank argued as the basis for dismissal. The Court ordered dismissal for "cause" under Section 1112(b) of the Bankruptcy Code on grounds that were, in some cases, unsupported by evidence, and, in other cases, at odds with the evidence. Significantly, the Court did not make the finding required under Section 1112(b) that dismissal would be in the best interests of the creditors and the estate. "Indeed, there is substantial evidence that dismissal would not be in the best interests of the creditors and the estate and no evidence that dismissal would be in the best interests of creditors or the estate," Mr. Clement says. Mr. Clement also reiterates that the automatic stay is crucial to Yukos' continued existence as a going concern. Absent the stay, Yukos has no remedy against those who will attempt to take its assets. A later money judgment against parties who obtain Yukos' assets through means which would otherwise have violated the stay, will not be available to Yukos to put it back in the same place it was when the appeal began. "Once Yukos is taken apart, like the proverbial egg that fell from the wall, it cannot be put back together again," Mr. Clement adds. Mr. Clement also repeats that granting a stay will not cause substantial harm to other parties. Mr. Clement reminds the Court that Deutsche Bank's counsel, early in the case, stated in open court before the Bankruptcy Court, and again before the District Court on the appeal of the Temporary Restraining Order taken by Gazpromneft, that Deutsche Bank would not finance any transaction in violation of the automatic stay. The Bank's representatives, Henrik Aslaksen and Nicholas Jordan, testified in depositions taken February 2 and 7, 2005, that Deutsche Bank had no current plans to become involved in any transactions involving Yukos. Accordingly, Mr. Clement says Deutsche Bank will not be harmed by the continued imposition of a stay with regard to the sale of other Yukos assets. If Deutsche Bank in the future wishes to make money by continuing to assist in the taking of Yukos' assets, Mr. Clement notes that those assets will remain in place if Yukos is eventually unsuccessful in its appeal. Mr. Clement further insists that there is no harm to the public interest caused by Yukos being given a stay. If Yukos is destroyed, there may be no entity to pursue Yukos' causes of action nor to collect on judgments, if any. Yukos' creditors will not be repaid. Thus, in the end, the only "creditor" who will be allowed to profit from the absence of a stay is the Russian Federation, the party that caused the harm to Yukos in the first place. If the stay is imposed, the public interests of U.S. investors in Yukos who relied on the Foreign Investment Law, far from being harmed, will be served by holding the Russian Federation to the promises it made in that law. Mr. Clement reminds Judge Clark that these U.S. investors have lost over $4 billion as a result of the Russian Government's expropriation of Yukos' assets in violation of Russia's Foreign Investment Law. Court Denies Stay After due deliberation, Judge Clark denies the Debtors' request to impose a stay pending appeal. 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. * BOOK REVIEW: Business & Capitalism: An Intro to Business History ------------------------------------------------------------------ Author: N. S. B. Gras Publisher: Beard Books Hardcover: 428 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587981939/internetbankrupt Gras's "Business and Capitalism" is as relevant to the fundamentals, practices, and trends of today's business world as it was when it was first published in 1939. This was a time when the value and resiliency of capitalism were being challenged from without by communism and other ideologies and also from within by the depression. But such is the breadth and soundness of Gras's history, that he is able to put these threats into perspective even in his own day. Obviously, capitalism survived; whereas the threats to it of Gras's day, as he saw them, did not much affect the basics of business and capitalism. From Gras's point of view, based on a study of history and analysis - or anatomy - of the business field, business and capitalism cannot be put aside by revolution or political change or superceded by utopian societies because they are inextricably rooted in history, human nature, and society, particularly social needs and aspirations. Rudiments of business can be found in primitive and ancient societies. Gras focuses on these much as anthropologists focus on the religious rituals and family structures of early societies. He sees in some of these a cultural nomadic economy, and in others, a pastoral nomadic economy. In each of these economies can be seen the combining of some form of capital--namely, goods in these cases--with the management of it. Herds of animals, for example, were the capital in the cultural nomadic economy; in the pastoral nomadic economy, the capital was fields of crops. Although Gras points to ancient and medieval economies as undeniable and necessary precursors for capitalist business, "In most of man's history there has been no business." The author's definition of business underlies the point when business as it is understood and practiced today became a part of history and society: "Business is the administration of labor and natural resources, in partnership with capital, in a process which leads to the sales of goods or services, with other activities in a subordinate position." The "business man" is differentiated from the primitive shepherd, for instance, in that the shepherd raises his sheep mainly to feed himself and a small number of others, only occasionally trading them outside this small circle. By contrast, the business man is not directly involved in production; he administers labor and resources to produce something which can be exchanged, i. e., sold. Gras stresses "business is administration that looks toward exchange." "Petty capitalism", the first stage of the intertwined business and capitalism that takes up most of Gras's lengthy history and analysis formed in early towns on all continents. The names of many of these towns are well known--Babylon, Athens, Rome, London, Paris, Amsterdam. That they were centers of the petty capitalism of their bourgeoisie is a principle reason they had significant roles in history. Pedlars, shopkeepers, and tradesmen represented this petty capitalism. This first stage of capitalist business became more highly organized in the course of history, and more multifacted. The petty capitalism was succeeded by mercantile capitalism, represented by merchants who entered into partnerships with other merchants, issued stock in their businesses, and developed sophisticated bookkeeping practices. Later came industrial capitalism with its large factories, complex production processes, and widespread, in some cases international, markets. Industrial capitalism spawned financial capitalism involving diversified practices and services of stock markets and banks to meet the big and sometimes unexpected financial requirements to sustain it and for it to grow. Today's diversified, vibrant, and global U. S. economy can be seen as the high point of Gras's industrial capitalism mixed with his financial capitalism. He ends his economic history with a chapter on the national capitalism practiced by Nazism and Fascism which at the time challenged the centuries of business progress based on private capitalism. But these challenges were turned back in World War II. The dated parts of "Business and Capitalism" are limited; although they hold interest for historians and philosophers of economics. A knowledgeable study of the different forms capitalist business has taken throughout history, it is a book for all time. The economic historian N. S. B. Gras (d. 1956) was a Professor of Business History at Harvard's Graduate School of Business and in 1926, the founder of the Business History Society with its "Journal of Business History". ********* 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 ***