/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050324.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, March 24, 2005, Vol. 9, No. 70 Headlines ABITIBI CONSOLIDATED: Moody's Rates New $500M Sr. Unsec. Debt Ba3 ABITIBI-CONSOLIDATED: S&P Rates $450M Sr. Unsec. Notes at BB- ACCESS FINANCIAL: Moody's Junks 8.040% Class B-1 Certificates ADELPHIA COMMS: Has Until Sept. 16 to Remove State Court Actions AIR CANADA: Adds Flights in Response to Jetsgo Shutdown ALOHA AIRLINES: Ableco & Goldman Extend $65 Million DIP Facility AMERICREDIT CORP: Good Finances Prompt S&P to Upgrade Ratings ARCHITECTURAL METALS: Case Summary & 20 Largest Unsec. Creditors ATA AIRLINES: Examiner Recommends Subsidiary Sale as Going Concern ATA AIRLINES: Court Approves Chicago Express Sale Protocol BEAR STEARNS: Fitch Affirms Five Series 1999-WF2 Low-B Ratings BEVERLY ENT: Sale Talks Cue Fitch to Put Rating on Watch Evolving BONUS STORES: Liquidating Agent Wants Removal Period Extended BOUNDLESS CORP: Asks Court to Approve Sale of Surplus Assets BOUNDLESS CORP: Asks Court to Okay Daley-Hodkin Letter Agreement CARSON FURNITURE: Case Summary & 20 Largest Unsecured Creditors CATHOLIC CHURCH: Court Sets Spokane's Investment Guidelines CHRISTOPHER'S MEN'S: Case Summary & 20 Largest Unsecured Creditors COGENTRIX ENERGY: S&P Puts BB+ Rating on New $700M Sr. Sec. Loan COUR D' ALENE: Posts $13 Million Fourth Quarter Net Income COUR D' ALENE: Explains Delay in SEC Annual Report Filing DB COS: Judge Walsh Approves Disclosure Statement DELPHI CORP: Sale to Johnson Won't Affect Ratings, Says Fitch DOLLAR GENERAL: Moody's Reviewing Ba2 Ratings & May Upgrade EAGLEPICHER INC: Names Bert Iedema as President & CEO EXIDE TECH: Elects Mark Demetree to Board of Directors FAIRPOINT COMMS: IPO Completion Cues S&P to Lift Rating to BB- FELCOR LODGING: Moody's Assigns B3 Rating to Preferred Stock GLOBAL CROSSING: Sells Unit to Matrix Telecom for $40.5 Million GOODYEAR TIRE: Moody's Places B3 Rating on New $300M Jr. Term Loan HANOVER DIRECT: John Swatek Succeeds Charles Blue as CFO HEXACON ELECTRIC: Case Summary & 20 Largest Unsecured Creditors HOLLINGER INT'L: Ill. Dist. Court Won't Dismiss $425 Mil. Lawsuit HOLLINGER INT'L: Names Gregory A. Stoklosa as VP for Finance HOME EQUITY: Moody's Rates $7M Class M-10 Variable Certs. at Ba1 HOSPITALITY ASSOCIATES: Plans to Sell Assets to Repay Debts INTERSTATE BAKERIES: Wants to Walk Away from Kansas Property Lease J. SILVER CLOTHING: 40-Store Chain Goes to the Auction Block JETSGO: Air Canada Adds Flights in Response to Company Shutdown KITCHEN ETC: Clear Thinking to Administer Reorganization Plan LIFEPOINT HOSPITALS: S&P Rates Proposed $1.4 Bil. Facility at BB LIFEPOINT HOSPITALS: Moody's Rates Planned $1.4 Bil. Debt at Ba3 LIONEL LLC: Has Until January 2006 to File Reorganization Plan MARTIN WRIGHT: Files for Chapter 11 Protection in San Antonio MIRANT CORP: Removes Calif. Atty. General's "Unjust Profit" Suit MONSOUR MEDICAL: Exits Chapter 11 with $2.5 Million of New Money MORGAN STANLEY: S&P Upgrades Ratings on Four Certificate Classes NORTHWEST TOOL: Case Summary & 20 Largest Unsecured Creditors NRG ENERGY: Look for Annual Report on March 31 ONE TO ONE: Case Summary & 20 Largest Unsecured Creditors ORIGEN'S MANUFACTURED: Moody's Junks 8.30% Class M-2 Certificates OWENS CORNING: Lehman Brothers Reports 6.27% Equity Stake PEABODY ENERGY: Buys Coal Reserves & Surface Assets in Ill. & Ind. PEGASUS SATELLITE: Plan Confirmation Hearing Continued to Mar. 30 POGO PRODUCING: Moody's Assigns Ba3 Rating to $300M Sr. Sub. Notes POGO PRODUCING: S&P Puts BB Rating on Proposed $300M Sub. Notes QUEEN'S SEAPORT: Taps Jeffer Mangels as Reorganization Counsel RIBILICIOUS LLC: Case Summary & 22 Largest Unsecured Creditors SOLUTIA INC: Gets Court Nod to Walk Away from Gateway Contracts SPHERION CORP: Names Anne Szostak to Board of Directors SPIEGEL INC: Taps Michael Hannafan as Illinois Local Counsel SPIEGEL INC: Wants to Conduct Eddie Bauer Store Closing Sales SPX CORP: Fitch Affirms Senior Debt Ratings at BB & BB+ SUNSTATE EQUIPMENT: Moody's Puts B3 Rating on Planned $175M Notes THORNBURG MORTGAGE: Fitch Puts BB- Rating on $50MM Preferred Stock UAL CORP: Committee Wants Air Wisconsin Agreement Modified USG CORP: Wants to Amend $100 Million LaSalle L/C Facility VICORP RESTAURANTS: Delays Form 10-Q Filing Due to Ongoing Probe WINN-DIXIE: Court Orders Timely Payment to Utility Companies WORLDCOM INC: District Court Gives Prelim Nod on Settlements YUKOS OIL: District Court Says Gazpromneft Appeal is Moot YUKOS OIL: Denies Monetary Liability to Rosneft * William W. Kannel Inducted Into American College of Bankruptcy ********* ABITIBI CONSOLIDATED: Moody's Rates New $500M Sr. Unsec. Debt Ba3 ----------------------------------------------------------------- Moody's Investors Service rated Abitibi-Consolidated Inc.'s new (up to) US$500 million senior unsecured debt issue Ba3. Concurrently, the company's Ba3 senior implied, senior unsecured and issuer ratings were affirmed, as was the SGL-4 speculative grade liquidity rating (indicating weak liquidity). Since the debt issue and tender offer eliminate near term maturities, Moody's anticipates the SGL rating will be upgraded upon completion. The outlook remains negative. While the new US$500 million debt issue and refinance are neutral to Abitibi's debt leverage, Moody's has noted in recent communications that the company's credit protection metrics lagged its rating, and that proactive steps were required so as to more appropriately balance cash flow to debt. While Moody's is encouraged that the Company's ongoing "in-depth operations review" involving four paper-making facilities -- part of longer term effort to restructure the North American newsprint sector - will have a positive impact on newsprint market fundamentals, given the measured pace with which pricing increases are being implemented, and given the potential of slowing economic growth in 2006, Moody's remains concerned that the company's cash flow will not reach adequate levels relative to its debt load in advance of a potential cyclical demand decrease and pricing retreat. Accordingly, the time frame for significant improvement in credit statistics is advancing. Should this not occur over the very near term, whether by way of significantly improved cash flow from operations or as a result of proactive debt reduction, Moody's will re-evaluate Abitibi's rating. This could occur before the end of the calendar year. Until conclusive evidence of the benefits of the market structure revisions the company is leading is observed on a sustained basis, a ratings upgrade is unlikely. The most positive near-to-mid term rating action would involve the outlook being revised to stable from negative. In absence of near term progress in permanently improving credit metrics, a ratings downgrade would be considered. Rating issued: Abitibi-Consolidated Company of Canada: * Senior unsecured 7-and-10 year notes of up to US$500 million (term-to-maturity split to be determined): Ba3 Ratings affirmed: Abitibi-Consolidated Inc.: Outlook: negative * Senior Implied: Ba3 * Issuer: Ba3 * Senior Unsecured: Ba3 * Senior Unsecured Shelf Registration: (P)Ba3 * Speculative Grade Liquidity Rating: SGL-4 Abitibi-Consolidated Company of Canada: Outlook: negative * Bkd Senior Unsecured: Ba3 * Senior Unsecured Shelf Registration: (P)Ba3 Abitibi-Consolidated Finance L.P.: Outlook: negative * Bkd Senior Unsecured: Ba3 * Senior Unsecured Shelf Registration: (P) Ba3 Donohue Forest Products Inc.: Outlook: negative * Bkd Senior Unsecured: Ba3 The Ba3 ratings reflect Abitibi's very high financial leverage and the resulting very poor credit protection measures observed over the past three years. In addition, risks stemming from the ongoing evolution of communication and advertising patterns, and their consequent impact on the printing and writing papers market, including the persistent decline of the North American newsprint business, are an important influence. So too are risks related to the company's exposure to further Canadian dollar appreciation, and as well, pressure from other input costs such as wood, electricity, chemicals and labor. The company's results have been quite cyclical and are expected to remain so, with demand, price and cash flow varying widely over short periods of time. Lastly, Moody's anticipates that alternative uses of cash flow (pension funding, selected investments) are likely to adversely affect debt reduction. Despite the margin erosion caused by the above-noted exchange rate dynamic, Abitibi continues to have relatively low cash costs of production compared to its peer group. This is supported by good backwards integration into fiber supply and good energy self- sufficiency. The uncoated mechanical papers market appears to have modest positive momentum, with five price increases in past two years, and with capacity utilization in the commercial printing sector improving from a very low base. Despite its debt burden, the company has taken a leadership role in managing supply in order to balance the market, and recently announced an additional initiative that Moody's expects will assist in improving both market fundamentals and the company's position. Successive term debt maturities through 2011 provide an opportunity to de-lever if cash flow is available. While the company is not actively selling assets, it has significant flexibility to reduce debt from asset sale proceeds. Moody's expects the company's quarterly LTM results to improve sequentially through 2005. With the US$401 million August 2005 debt maturity being refinanced, Abitibi's liquidity position will improve. In the interim, notwithstanding Abitibi's capital markets' access and ability to execute the refinance, the existing SGL-4 score indicating weak liquidity will remain. The company maintains a C$816 million revolver that is largely un-drawn and a US$500 million accounts receivable securitization vehicle that is generally more fully utilized. The bank facility matures in June 2006. Moody's views it as adequate back-up for the approximately C$400-to-C$500 million in outstanding receivables' financing. However, with such a large proportion of the bank facility backing up the receivables facility, Abitibi has little capacity to use the bank facility to assist with repaying long term debt maturities in advance of cash flow from operations being available. Abitibi is in compliance with its key financial covenants (Maximum Debt-to-Capitalization (65.8% actual at December 31, 2004 versus 70% threshold), and Minimum Interest Coverage (2.1x actual versus 1.25x threshold; threshold increases to 1.50x for each quarter-end in 2005, and 1.75x thereafter)). Moody's estimates that Abitibi could access the entire unused amount of the credit facility without violating its Debt-to- Capitalization covenant. While the company is expected to be modestly Free Cash Flow positive in 2005, it may not turn a profit. Consequently, the cushion relative to this test may not be as great going forward. However, so long as Abitibi is not required to make material adjustments to the carrying value of certain assets (idled assets whose carrying value has not been written-off), and so long as additional price increases are realized during the course of the year, Abitibi should be able to manage this figure so that compliance is maintained. With Cash Flow from Operations expected to display sequential improvement over the next several quarters, Moody's also expects the Interest Coverage test cushion to increase through 2005. The outlook is negative, and reflects Moody's assessment of the challenges facing the company in normalizing the relationship between its debt load and its cash flow at the Ba3 rating level. The North American newsprint market is characterized by declining demand, and is in the midst of a protracted restructuring with participants removing capacity in order to better balance supply with demand. However, the sustainability of the pricing impact of supply management initiatives is not yet proven. For a given level of demand, Moody's is skeptical that consumers will accept pricing increases as a result of input price or exchange rate induced cost-push pressures. In the context of gradually declining demand, and with the potential of slowing economic growth, it is not certain that margins can be expanded on a sustainable basis, and consequently, margins may remain under significant pressure. Accordingly, Moody's is concerned that difficult North American market fundamentals may cause current commodity pricing to be representative of near peak levels. Therefore, while Moody's expects Abitibi's 2005 results to show improvement over the dismal results posted for the past three years, the magnitude and sustainability of the improvement are uncertain. There are also risks that decreases in North American demand may yet again accelerate, or that the company's relative cost position will be further eroded by appreciation of the Canadian dollar, both of which would augment the required debt-to- cash flow adjustments. Moody's expectations for a Ba3 rating include average through-the- cycle RCF in excess of 10%, with the related FCF measure in excess of 5%. Note that Moody's debt figures include adjustments for off-Balance Sheet Accounts Receivable securitization vehicles. Moody's also accounts for operating leases and unfunded pensions, and while these are not included in the above figures, they do contribute incremental leverage that must be assessed. As noted above, Abitibi has a significant pension funding deficit that adds to leverage. Also as noted above, until conclusive evidence of the benefits of the market structure revisions the company is leading is observed on a sustained basis, a ratings upgrade is unlikely. The most positive near-to-mid term rating action would involve the outlook being revised to stable from negative. In absence of near term progress in permanently improving credit metrics, or in the event either or both of 2005 results and expectations for 2006 do not show dramatic improvement over the recent past, a ratings downgrade becomes more likely. A downgrade would also result from significant debt-financed acquisition activity or were liquidity arrangements to deteriorated significantly. Abitibi-Consolidated, Inc., headquartered in Montreal, Quebec, is North America's leader in newsprint and uncoated mechanical paper and also has a significant lumber business. ABITIBI-CONSOLIDATED: S&P Rates $450M Sr. Unsec. Notes at BB- ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to newsprint producer Abitibi-Consolidated Co. of Canada's US$450 million senior unsecured notes due 2015, issued pursuant to the company's US$800 million shelf registration. The notes are unconditionally guaranteed by its parent, Abitibi-Consolidated Inc. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit and senior unsecured debt ratings. The outlook is negative. "Proceeds from the new issue will be used to refinance existing debt due in August 2005 and December 2006," said Standard & Poor's credit analyst Daniel Parker. "The refinancing will improve Abitibi's maturity schedule and liquidity," Mr. Parker added. The ratings on Abitibi reflect its high debt levels, heavy exposure to cyclical commodity-oriented groundwood papers, and weak, but improving financial performance following several years of poor industry conditions. In the past five years the demand for newsprint has declined by about 15% because of waning newspaper readership, the infiltration of electronic media in the dissemination of information and advertising, and the migration of commercial printing to more value-added grades. These risks are partially offset by the company's leading market share position in newsprint and groundwood papers, and by its competitive cost position in North America. Standard & Poor's remains concerned that Abitibi will not be able to materially reduce debt through internally generated cash flow in the next 12-24 months. Even at recent stronger newsprint prices, Abitibi's existing debt load in relation to its ability to generate cash is high for the ratings. The appreciation of the Canadian dollar has further hampered efforts to generate cash to reduce debt. For every one U.S. cent appreciation of the Canadian dollar, EBITDA is negatively affected by about C$35 million (net of hedging). As all of Abitibi's debt is denominated in U.S. dollars, the negative cash flow effect is partially offset by a decline in the translated Canadian dollar debt level. Abitibi's profitability and cash flow generation have been weak because of a stronger Canadian dollar and structural changes to North American newsprint demand. In response to declining demand, newsprint producers (led by Abitibi), have closed substantial capacity in order to improve industry operating rates, which are currently at about 95%. Prices have slowly improved to US$580 per ton, which is a relatively strong market price, and the producers are determined to further increase prices in 2005. Further prices increases will be difficult to implement, however, as demand continues to decline. The negative outlook reflects Standard & Poor's concerns that the ratings could be lowered further if the company does not start reducing its current debt levels. Standard & Poor's believes that the company is poorly positioned financially to weather a cyclical downturn. The company does have some strategic options, however, which provide a level of nonoperational flexibility. In order for the ratings to improve, the company must materially reduce debt (through improved cash generation, or other strategic decisions). ACCESS FINANCIAL: Moody's Junks 8.040% Class B-1 Certificates ------------------------------------------------------------- Moody's Investors Service has downgraded three subordinate certificates of Access Financial's manufactured housing securitizations. The rating action concludes Moody's ratings review, which began on March 7, 2005. Moody's previously downgraded several subordinate certificates of Access Financial's 1995-1 and 1996-1 manufactured housing securitizations in September 2004. The rating actions were primarily based on the continued deterioration in the performance of the manufactured housing loans and the resulting erosion in credit support. The current rating action is prompted by the continued weaker- than-anticipated performance of Access Financial's manufactured housing pools. As of the February 15, 2005 remittance report, cumulative losses and cumulative repossessions for the 1995-1 securitization were 23.45% and 35.00%, respectively, with approximately 27% of the pool balance outstanding. Cumulative losses and cumulative repossessions for the 1996-1 securitization equaled 25.22% and 36.83%, respectively, with approximately 29% of the pool balance outstanding. Loss severities for the past six months on liquidated collateral for both transactions averaged approximately 94%. Overcollateralization in both transactions has been completely eroded and the pool balances are currently below the certificate balances. The complete ratings action are: Issuer: Access Financial Manufactured Housing Contract Trust, Series 1995-1: * 7.650% Class B-1 Certificates, downgraded from Ba2 to B2 Series 1996-1: * 7.975% Class A-6 Certificates, downgraded from Aa3 to A1 * 8.040% Class B-1 Certificates, downgraded from Caa2 to Ca Access Financial Lending Corp. is a wholly owned subsidiary of Cargill Financial Services Corporation. Access is headquartered in Minneapolis, Minnesota. The loans are currently serviced by Vanderbilt Mortgage & Finance. ADELPHIA COMMS: Has Until Sept. 16 to Remove State Court Actions ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended the period within which Adelphia Communications Corporation and its debtor-affiliates can file notices of removal with respect to prepetition civil actions, until the later to occur of: (a) September 16, 2005; or (b) 30 days after entry of an order terminating the automatic stay with respect to the particular action sought to be removed. Since they filed for bankruptcy, the ACOM Debtors have been called to respond to myriad and complex issues related to filing of their Chapter 11 cases. Despite many competing demands, the Debtors undertook the process of reviewing civil state court actions or proceedings to determine whether removal is appropriate. According to Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, the ACOM Debtors are currently party to several hundred State Court Actions. The extension would afford the Debtors the opportunity to make fully informed decisions concerning removal of State Court Actions without prematurely waiving the automatic stay and assure that the Debtors do not forfeit valuable rights under Section 1452 of the Judiciary Procedures Code, Ms. Chapman adds. 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. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Adds Flights in Response to Jetsgo Shutdown ------------------------------------------------------- Air Canada is adjusting its domestic Canada schedule to add flights between major cities across Canada in light of Jetsgo's sudden shut down on March 11, 2005. The carrier will add new daily round trip services between Toronto and Vancouver, Calgary, Winnipeg and Halifax in time for the peak summer travel season. Air Canada's increase in services will be implemented in stages across the country as plans are finalized. In addition, in the coming days Air Canada will implement increases to its market-leading Rapidair shuttle service in the Toronto-Montreal-Ottawa corridor. Beginning this month, the carrier will boost service between Toronto and Ottawa with an additional 10 one-way flights per week, for a total of up to 38 one-way flights per day. Air Canada is also boosting its schedule between Toronto and Montreal with an additional 22 one way flights per week for a total of up to 50 one way flights per day, representing by far the market leading position for frequent air service between Canada's two largest cities. "We are making these schedule improvements where we see demand increase for Air Canada services as a direct result of the withdrawal of Jetsgo," said Ben Smith, Vice President, Network Planning. "We will continue to evaluate market demand on an on-going basis and make adjustments to our schedule and deployment of capacity to ensure Air Canada maintains its market leading position as the airline of choice with the lowest fares to the greatest number of destinations on an everyday basis, bar none." As reported in the Troubled Company Reporter on Mar. 14, 2005, Jetsgo Corporation ceased all operations. The Company asked the Quebec Superior Court to immediately grant it protection under the Companies' Creditors Arrangement Act. Court protection will allow Jetsgo to consider all options available to reorganize its affairs. Jetsgo provided passenger flights to around 20 destinations in Canada and the US and had nine planes, making it Canada's third largest carrier. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. As of December 31, 2004, Air Canada's shareholders' deficit narrowed to CDN$203 million compared to a $4.155 billion deficit at December 31, 2004. (Air Canada Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALOHA AIRLINES: Ableco & Goldman Extend $65 Million DIP Facility ---------------------------------------------------------------- Prabha Natarajan, writing for the Pacific Business Journal, reports that Aloha Airlines has secured $65 million of debtor-in- possession financing from Ableco Finance LLC and Goldman Sachs Credit Partners LP. This deal replaces a $90 million package MatlinPatterson Global Opportunities Partners II LP had previously offered to the carrier. "Without the protection afforded by Chapter 11 of the Bankruptcy Code, [Aloha] will run out of cash and will not be able to operate after March 30, 2005," the company said in a court filing Mr. Natarajan reviewed. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERICREDIT CORP: Good Finances Prompt S&P to Upgrade Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit rating on AmeriCredit Corp. to 'BB-' from 'B' and raised its unsecured debt rating to 'B+' from 'B'. The outlook was revised to stable from positive. "The upgrade recognizes the continued improvement in AmeriCredit's financial performance as shown by its good asset quality measures, improving liquidity position, strong balance sheet, and significant capital base," said Standard & Poor's credit analyst Lisa J. Archinow, CFA. The ratings incorporate the solid progress that the company has made in restructuring in accordance with its turnaround plan announced in February 2003. Since that time, AmeriCredit has effectively boosted loan originations to a more normalized level and has improved the credit performance of its portfolio. Following the gradual improvement in the economy, and the aggressive tactics management took to revamp its underwriting and collections processes, asset quality has improved. Charge-offs in the December quarter are explained by the seasonality of the business and the general seasoning of the portfolio. Additionally, better performing loans originated during 2003 and 2004 represented a meaningful 51% of the portfolio at calendar year-end 2004, and this should translate into better performing asset quality trends. Profitability trends continue to be favorable for the six months ended Dec. 31, 2004, as the company earned a net interest margin of 13.4%, and an after-tax return on managed assets of 2.6%, which is in the company's targeted range. We will continue to monitor the company's growth initiatives to achieve its loan volume target, including the level of branch expansion, the quality of its dealer base, and new business volume. While AmeriCredit's use of deferrals has been an economic benefit to the company, as cash flows from deferred accounts have exceeded the additional depreciation on the collateral, we continue to be concerned that the company may be deferring problem accounts, while recognizing that most subprime lenders employ this strategy. Forth Worth, Texas-based AmeriCredit, with $9.4 billion in assets at Dec. 31, 2004, is a leading independent subprime automobile lender, targeting 'B' and 'C' customers that generally have limited access to traditional credit sources. The stable outlook reflects AmeriCredit's strong financial performance and improving liquidity position, significant capital base to cushion higher-risk adjusted losses, and maintenance of acceptable delinquencies and net charge-offs. ARCHITECTURAL METALS: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Architectural Metals, Inc. 6243 Jefferson Pike Frederick, Maryland Bankruptcy Case No.: 05-16198 Type of Business: The Debtor manufactures fabricated structural metals. Chapter 11 Petition Date: March 18, 2005 Court: District of Maryland Judge: Nancy V. Alquist Debtor's Counsel: James A. Vidmar, Jr., Esq. Jennifer D. Larkin, Esq. Linowes and Blocher 7200 Wisconsin Avenue, Suite 800 Bethesda, Maryland 20814-4842 Tel: (301) 961-5126 Estimated Total Assets: $1 Million to $10 Million Estimated Total Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Durrett Sheppard $65,413 Steel Co., Inc. PO Box 758656 Baltimore, MD 21275-8656 Metals USA Plates $48,543 and Shapes Northeast PO Box 827110 Philadelphia, PA 19182-7110 American Express $32,927 PO Box 360002 Fort Lauderdale, FL 33336 Posner Industries $28,517 US Bank $26,567 Insurance Brokers of MD Policy # $25,222 CPP0684811/ WC181776401 BMG Metals, Inc. $24,424 Hildebrand, Limparis $23,795 & Associates Sunbelt Rentals, PC $23,391 Canam Steel Corp. $22,279 Lee's Gas Supplies, Inc. $22,153 Fastenal Company $16,953 Citibank $16,329 Tri-State Shearing $15,724 L & L Welding, LLC $15,344 American Express $14,928 Fleet $12,478 Bank of America Payments Wooster Products, Inc. $12,237 Nicholas J. Bouras, Inc. $11,000 Exxon Mobil Fleet Card Services $10,798 ATA AIRLINES: Examiner Recommends Subsidiary Sale as Going Concern ------------------------------------------------------------------ Kenneth J. Malek, the Court-appointed Examiner, performed an examination on issues involving Chicago Express Airlines, Inc.: (a) The facts and circumstances that may be relevant to a judicial determination of the enforceability or avoidability of any guarantees provided by Chicago Express with respect to pre- and post-petition obligations of Debtors ATA Holdings Corp. or ATA Airlines, Inc., including the nature and value of consideration provided to Chicago Express in connection with the guarantees; (b) The basis and validity or invalidity of the approximately $16.8 million intercompany claim listed in the Non-CEA Debtors' schedules as a payable to Chicago Express from ATA Airlines as well as any postpetition intercompany claims between Chicago Express and the non-CEA Debtors; and (c) Whether it is in the best interest of Chicago Express to be sold as a going concern, as opposed to being liquidated, considering, among other factors, the resources available to Chicago Express. Mr. Malek submitted a written report on his factual findings to the United States Bankruptcy Court for the Southern District of Indiana on March 18, 2005. Guarantees Had ATA Airlines, Inc.'s management permitted, Mr. Malek believes that Chicago Express could have established a code-share arrangement in addition to or in replacement of that which it had with ATA Airlines. Whether the existence of that possibility would be sufficient to cause the upstream guarantees by Chicago Express to fail the reasonably equivalent value test, the Examiner says, is a complex legal and factual issue, which costs and time necessary for its resolution are inconsistent with the value and time sensitivities of Chicago Express' bankruptcy estate. Mr. Malek tells the Court that, if a purchaser wishes to purchase stock and have the case against Chicago Express dismissed, so that the purchaser would be buying the stock in a manner that the purchaser would assume the risk of either negotiating with the holders of the guaranteed debt or of prevailing in any legal contest of the issue, that should not be of concern to the Debtors and their counsel, so long as the purchaser would be paying at least the liquidation value of Chicago Express in cash equivalent value. The Examiner believes that, so long as a highest bidder will be providing cash equivalent value at least equal to the liquidation value, the best interest of creditors test can be met with respect to that bidder. The Examiner notes that his budget has not allowed him to study the traffic and revenue levels of ATA Airlines' and Chicago Express' routes, so as to determine when bankruptcy became imminent. Intercompany Claims Pursuant to the Debtors' financial statements, Chicago Express has intercompany account receivables from ATA Airlines from January 1, 2002, through January 31, 2005: Jan. 1, 2002 to Nov. 1, 2004 to Oct. 31, 2004 Jan. 31, 2005 ----------------- ---------------- Opening balance ($19,928,000) $0 Intercompany revenues booked, based on fixed departure fees 210,898,000 16,567,000 Cash funding for payroll and other payables (129,136,000) (10,627,000) Lease and sublease costs for Chicago Express' aircraft (17,379,000) (1,638,000) Other (26,628,000) (7,018,000) --------------- --------------- Ending balances $17,827,000 ($2,716,000) =============== =============== Chicago Express owed ATA Holdings an offsetting amount of $1,950,000. ATA Holdings funded Chicago Express' purchase of aircraft engines prior to December 31, 2001. The monthly intercompany revenue allocation from ATA Airlines to Chicago Express for the entire month does not occur until the close of the month, as part of month-end accounting. To estimate the intercompany balance as of the October 26, 2004 Petition Date, Mr. Malek subtracted 5/30th of the net November 2004 activity from the balance as of October 31, 2004. This has the effect of slightly decreasing the postpetition payable by Chicago Express to ATA Airlines and slightly decreasing the prepetition receivable by Chicago Express from ATA Airlines. The resulting balances are: Prepetition Postpetition ----------- ------------ Chicago Express' amount receivable as of 10/31/04 from ATA Airlines $17,827,000 ($2,716,000) Reclassification of five Days' activity (235,000) 235,000 Chicago Express' amount payable as of 10/26/04 to ATA Holdings (1,950,000) 0 ----------- ------------ Chicago Express' net receivables $15,642,000 ($2,481,000) Mr. Malek reports that Chicago Express has a valid prepetition receivable of $15,642,000. On the other hand, Chicago Express owes ATA Airlines a postpetition amount of $2,481,000. Chicago Express' Net Liquidation Value Mr. Malek reviewed Chicago Express' January 31, 2005 Balance Sheet in computing the liquidation value of Chicago Express. For purposes of establishing a cash value floor in a going-concern sale, the Examiner included a $297,422 unrestricted cash balance that Chicago Express has as of January 31, which, the Examiner finds, appears to be a reasonable operating cash balance. Mr. Malek, however, excluded a $17,592,000 prepetition intercompany receivable from ATA Airlines, on the assumption that the purchaser would not acquire the asset. Mr. Malek explains that it is easier to leave the intercompany receivable with the bankruptcy estates so as to fund potential creditor recoveries independent of the risk of business operations of Chicago Express' fleet and other business assets. Mr. Malek advises the Court that the expected proceeds of liquidation of Chicago Express is $992,486, net of all costs and expenses. Estimated Book Estimated Liquidation Value Recovery Proceeds ----- -------- ----------- Cash and cash equivalents $297,422 100.00% $297,422 Accounts receivable, net 78,614 100.00% 78,614 Prepetition intercompany receivable 17,592,000 0.00% - Inventories, net 2,097,382 10.00% 209,738 Prepaid items 604,436 0.00% - Deposits and other assets 589,190 0.00% - Property and equipment 6,951,397 10.00% 695,140 Leasehold improvements 875,288 0.00% - Goodwill and going concern value 1,501,466 0.00% - ----------- Book Value Subtotal $30,587,195 Postpetition payable owed to ATA Airlines (2,480,832) ----------- Total Assets Reported as of 1/31/05 $28,106,363 ----------- Estimated Value of Net Liquidation Proceeds $1,280,914 Trustee fee (38,427) Professional fees (250,000) ----------- Estimated Net Liquidation Value $992,486 =========== Chicago Express Should Be Sold As Going Concern Mr. Malek recommends that the parties attempt to sell the Chicago Express operations, if at all practicable, on a going-concern basis under Section 363 of the Bankruptcy Code. Based on all the facts and circumstances of Chicago Express, its Federal Aviation Administration Certificate and its Department of Transportation Fitness Authority, and the possible continuing existence of significant upstream guarantee obligations, the Examiner believes that it is possible to structure the sale of Chicago Express' operations as a going concern, which could provide maximum benefit to creditors. Mr. Malek suggests that the overall architecture of the sale should have these terms: (1) Minimum cash equivalent bid for Chicago Express' assets of $1 million. If no bidder provides this level of consideration in immediate cash equivalent value, then Chicago Express should be liquidated. (2) Bidders negotiate with AMR Leasing and ATA Airlines for interim lease terms to retain the Saab 340B aircraft in regular service while the winning bidder secures commitment from the FAA and DOT that it will be able to retain Chicago Express' FAA Certificate and DOT Authority. (3) Bidders negotiate with the Debtors' bankruptcy counsel a cash collateral arrangement that would allow the winning bidder to fund and receive the benefit of operating Chicago Express' aircraft for the period between March 28 and the time of final closing of the sale. The time of final closing presumably would be on or after the date that the winning bidder would receive approval from the FAA and DOT. (4) The purchase of assets of Chicago Express can take the form of a sale under Section 363(b), so that purchasers take assets essentially free and clear. It may be helpful to also acquire Chicago Express' stock, since the Certificate and Fitness Authority are not per se transferable. However, in view of the potential upstream guarantee liabilities, the assets probably should be cleansed through the Section 363(b) sale mechanism. Once the FAA and DOT approvals are received, it may be possible, subject to advice from legal counsel, to have Chicago Express' Chapter 11 case dismissed. (5) Should a purchaser desire to purchase only stock and leave the assets in corporate solution, then that purchaser would need to address any issues relating to the upstream guarantees. However, so long as that purchaser would be willing to pay at least $1 million cash equivalent value, the fact that the purchaser wants to purchase stock and not assets should not prevent it from becoming the winning bidder. (6) Similarly, so long as a purchaser is willing to pay at least $1 million cash equivalent value that can be used to fund payments to current creditors of Chicago Express, the purchaser should not be disqualified from becoming the winning bidder merely because it has not submitted a business plan to the Debtors' counsel for the Debtors. The FAA and the DOT will do what is necessary to ensure the safety of the flying public, and it is not necessary for the Debtors or their advisors to attempt to replicate any activities of the FAA and DOT in terms of ensuring that potential bidders have capability to operate an airline. (7) The transfer of consideration could be: (a) $1 million or greater cash equivalent value paid by the winning bidder to Chicago Express' bankruptcy estate in a Section 363(b) sale; (b) Chicago Express distributes $1 million or greater and intercompany account receivable to ATA Holdings, to hold on behalf of Chicago Express' creditors; and (c) Chicago Express' stock is sold to the winning bidder, with corporate shell remaining subject to prepetition liabilities. These liabilities would eventually be dealt with under the global ATA Holdings plan of reorganization. The source of payment for these liabilities, absent a substantive consolidation plan, would be principally the $1 million or greater cash equivalent value plus the proceeds from the prepetition intercompany account receivable. 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 Nos. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Court Approves Chicago Express Sale Protocol ---------------------------------------------------------- ATA Airlines, Inc., and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Indiana to approve procedures related to the possible sale of the assets of Chicago Express Airlines, Inc., including the common stock of Chicago Express held by ATA Holdings, Inc. The Debtors also ask Judge Lorch to set a hearing to consider the sale of Chicago Express to the buyer with the highest and best offer on April 1, 2005. The Debtors will accept bids for the Chicago Express assets until March 25, 2005. If the Debtors identify more than one Qualifying Bid that they determine would likely yield greater net present value to the estates following an auction and the lowest of the Qualifying Bids -- or combination of Qualifying Bids -- is within $250,000 in net present cash value of the highest and best of the Qualifying Bids, the Debtors will invite each the Qualifying Bidder by March 28, 2005, to participate in an auction. The Debtors will hold the auction on April 1, 2005, in New Albany, Indiana. Only Qualified Bidders invited to the Auction by the Debtors may participate in the Auction. Each Qualified Bidder invited to the Auction will receive concurrent with its invitation to the Auction and will keep confidential pursuant to the Confidentiality Agreement, the Qualifying Bids of the other Qualified Bidders invited to the Auction. The Debtors require Qualifying Bids that contemplate the purchase of the common stock of Chicago Express to provide information sufficient to allow the Debtors to evaluate the potential recovery by the prepetition and postpetition creditors of Chicago Express if the sale is consummated. All Qualifying Bids must include a good faith deposit equal to not less than 10% of the bid value in terms of cash and assumed debt. All Qualifying Bids must be irrevocable until the earlier of (1) closing of a Sale to another party of assets included in the offer, or (2) May 30, 2005. In evaluating the Bids, the Debtors will consult the United States Trustee, the professionals of the Official Committee of Unsecured Creditors, the Air Transportation Stabilization Board, the Tranche A and Tranche B lenders under the loan guaranteed by the ATSB, and Southwest Airlines Co. as the DIP lender. The Debtors may afford bid protections, like break-up fee and overbid limitation, to a Qualified Bid that merits protections typically afforded to a "Stalking Horse" bid. The Debtors will seek permission from the Court to provide those protections by March 28, 2005. All other Qualified Bidders, whose Qualifying Bids would return net present cash value to the Debtors' estates of not more than $250,000 less than the Stalking Horse Bid, would be invited to participate in the Auction. In the event of an Auction, the Debtors will adopt these rules: a. No bid may be submitted that is less than the Qualified Bid submitted by that Qualifying Bidder; b. All bids will be made and received in one room on an open basis; c. All bids at the Auction will be fully disclosed to all other bidders at the Auction; d. Overbid requirements, if any, will be determined and announced at the beginning of the Auction by the Debtors and set to ensure an efficient process while maximizing value to the estates; e. The Debtors, the ATSB Lenders, and the Committee will immediately review each bid and determine which among the current bids is the highest and best bid, and announce the result to the Qualifying Bidders; f. When in the Debtors' judgment, all Qualifying Bids have been submitted and further bidding at the Auction will not yield greater value, the Auction will be closed and the Debtors will prepare to present the highest and best bid to the Court for approval at the Sale Hearing. The Debtors will sell Chicago Express free and clear of all liens, claims, interests, and encumbrances with all liens and claims attaching to the Sale proceeds. The Debtors will also assume and assign executory contracts or unexpired leases related to Chicago Express' operation. NatTel Wants Chicago Express Sold as Going Concern NatTel, LLC, tells the Court that the Debtors' request, if granted, would create the untenable situation in which ATA would attempt to sell the shares or assets of Chicago Express after Chicago Express has already shut down and ceased operations on March 28, 2005. This renders the Air Carrier Certificate issued by the Federal Aviation Administration and fitness authority issued by the U.S. Department of Transportation null and void. As a result, Chicago Express would cease to be a going concern, would have no revenues, no operations, virtually no employees, and will essentially be in liquidation. ATA will have succeeded in needlessly destroying Chicago Express and its 600 jobs, as well any hope of Chicago Express' creditors to receive any recovery on their claims. NatTel explains that there is a "recency of operation" requirement for commuter airlines pursuant to 14 C.F.R. Section 119.63(a)(1). No commuter airline may conduct operations for which it has a valid FAA Certificate and Operations Specifications unless it has "conducted that kind of operation within the preceding 30 consecutive calendar days." This regulation means that, if there is a cessation of service at any time within the preceding 30 consecutive calendar days, a commuter airline may not resume service unless and until it satisfies the requirements of 14 C.F.R. Section 119.63(b). To resume service, however, the airline must, pursuant to 14 C.F.R. Section 119.63(b), not only give the FAA five days' advance notice of its intention to resume service, but make itself available for a "full inspection reexamination" to determine whether the airline "remains properly and adequately equipped and able to conduct a safe operation." The local FAA office that conducts the inspection -- in the case of Chicago Express, the FAA's Flight Standards District Office in Chicago -- has complete, total and unfettered discretion in determining whether an airline seeking to resume service is qualified to do so. NatTel notes that there can be no assurance that once Chicago Express ceases operations on March 28, the FAA will re-qualify it to resume operations at any time in the future. A shutdown of Chicago Express on March 28 will also endanger Chicago Express' DOT authority -- without which it also cannot operate. Pursuant to 14 C.F.R. Section 298.24(a), the DOT may cancel Chicago Express' fitness authority if it ceases operations or is otherwise found by the DOT not to be "fit, willing and able to conduct scheduled service." Chicago Express will not be able to resume service unless and until it passes a complete DOT fitness examination. NatTel notes that there can be no assurance that once Chicago Express ceases operations, the DOT will find it fit to resume operations at any time in the future. NatTel maintains that liquidation of Chicago Express has been ATA's avowed plan all along. NatTel asserts that the only way to maximize value for the estate and creditors of Chicago Express is to sell the airline as a going concern before the March 28th shutdown. NatTel Proposes Alternative Procedures NatTel contends that, having a sale hearing on April 1, after Chicago Express has shut down and ceased operations on March 28, will be "too little, too late," as the DOT Fitness Authority and FAA Certificate will be rendered useless and worthless by that time. Accordingly, NatTel wants to fast track the sale process. NatTel wants the Auction conducted on March 26, 2005, and the sale hearing held on March 25. NatTel asserts that the sole criterion for determining who is a "Qualified Bidder" should be simply whether that bidder submitted a written expression of interest to Compass Advisors, LLP, by March 7. Given the totality of the circumstances over the past 90 days regarding ATA's stonewalling of NatTel, NatTel wants to be automatically deemed a "Qualified Bidder" without any further action on its part. Any bid for the purchase of the Chicago Express shares need not provide any information to ATA as to the "potential recovery by the prepetition and postpetition creditors of Chicago Express if such sale is consummated." This provision, NatTel argues, was inserted specifically to frustrate its bid for the shares of Chicago Express, because NatTel is the only bidder for the shares and has refused to disclose its confidential business plan to ATA and Compass. ATA and Compass, NatTel maintains, should be able to conduct their own analyses and reach their own conclusions as to potential recoveries for pre- and post-petition creditors of Chicago Express without requiring any further information from bidders in general and NatTel in particular. NatTel also notes that any good faith deposit cannot include the value of "assumed debt" because, at present, Chicago Express has debt in excess of $500 million. This provision, NatTel suspects, was inserted solely to frustrate its bid for the shares of Chicago Express. Under NatTel's offer, the rights of Chicago Express creditors would be reinstated and creditors could exercise those rights, if they so choose, without being subject to the control and domination of ATA. Given the timing exigencies, NatTel says there is neither the time nor the need to identify a "stalking horse" bidder, set break-up fees or overbid protection. Moreover, the establishment of a bid level of $250,000 in net present cash value is arbitrary and does not reflect the reality of values regarding Chicago Express. NatTel Wants Examiner to Supervise Sale NatTel contends that ATA, Compass nor the ATSB Lenders and Southwest Airlines should be entrusted to evaluate the bids. That duty should rest solely with the Examiner. The Examiner, as the only independent party, is the only party who can be trusted to exercise his fiduciary obligations for the benefit of all parties-in-interest. NatTel suggests that the Examiner should simply solicit and receive all "Qualified Bids" and conduct an auction on March 23, 2005, at his office in Chicago, Illinois, and submit the winning bid to the Court for approval. Debtors Amend Bid Procedures The Debtors will invite each Qualifying Bidder, whose participation in an auction is reasonably likely to result in a higher and better Qualifying Bid than the highest and best Qualifying Bid available absent an auction, to participate in the Auction by March 28, 2005. The Debtors will hold the Auction on March 31, 2005, instead of April 1, at the offices of Baker & Daniels, in Indianapolis, Indiana. If the Debtors, in consultation with the Committee, the ATSB Lenders and Southwest Airlines, denominate and the Court affirms a "Stalking Horse" bidder, the Debtors may recommend that the Court approve dispensing with an Auction. If the Court, in response to a Stalking Horse Motion, does not approve dispensing with an Auction, then an Auction will be held minus a Stalking Horse bidder. The Debtors clarify that the buyer with respect to any approved Sale will be obligated to obtain all government consents and approvals required for the consummation of the proposed Sale. To the extent that any Sale requires regulatory review and approval from one or more governmental units or agencies, nothing contained in the Sale Procedures will constitute a waiver of the requirements. * * * Judge Lorch approves the Sale Procedures proposed by the Debtors. The Court based its decision on the evidences presented at the March 21, 2005 hearing, the Examiner's report and "majority of opinion." Bids for the Chicago Express Assets are due March 25, 2005. The Debtors may conduct an auction on March 31. The Court will conduct a Sale Hearing on April 1, 2005, in New Albany, Indiana, to consider the Sale. 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 Nos. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) BEAR STEARNS: Fitch Affirms Five Series 1999-WF2 Low-B Ratings -------------------------------------------------------------- Fitch Ratings affirms Bear Stearns Commercial Mortgage Securities, commercial mortgage pass-through certificates, series 1999-WF2: -- $125.5 million class A-1 'AAA'; -- $525.8 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $43.2 million class B 'AA+'; -- $43.2 million class C 'A'; -- $10.8 million class D 'A-'; -- $27.0 million class E 'BBB'; -- $10.8 million class F 'BBB-'; -- $21.6 million class G 'BB+'; -- $16.2 million class H 'BB'; -- $8.1 million class I 'BB-'; -- $9.5 million class J 'B+'; -- $10.8 million class K 'B-'; -- $4.1 million class L remains 'CCC'. Fitch does not rate the $4.2 million class M. The affirmations reflect stable overall loan performance since issuance. As of the March 2005 distribution date, the pool's aggregate balance has been reduced by 20.1% to $863.0 million from $1.08 billion at issuance. Currently, there are three loans (2.35%) in special servicing. The largest asset (1.09%) is collateralized by a retail center in Waterford Township, Michigan, and is now real estate owned. The current occupancy at the property is 42% as a result of K-Mart rejecting their Builder's Square lease in 2002. Based on recent valuations of the property, a loss is projected at the time of disposition. The second largest specially serviced loan (0.82%) is a 440-unit multifamily property in Jackson, Mississippi. The loan was transferred to the special servicer in January 2005 due to monetary default. The special servicer is evaluating the property and potential scenarios that would improve performance. BEVERLY ENT: Sale Talks Cue Fitch to Put Rating on Watch Evolving ----------------------------------------------------------------- Fitch Ratings has placed Beverly Enterprises, Inc. on Rating Watch Evolving. Beverly's Board of Directors announced they were putting the company up for sale. Beverly is currently in the midst of a Proxy contest with a group led by Formation Capital, LLC, which includes a host of investors that have collectively acquired 8.1% of BEV common shares. Formation has provided an indication of interest of $11.50 per share of BEV common stock, or approximately $1.8 billion. The evolving status reflects the uncertainty regarding the ultimate acquirer of Beverly, the nature of the transaction, and the resultant capital structure. Clearly, a highly levered transaction would likely warrant a negative ratings response, while conversely, a transaction more evenly balanced between cash, equity, and debt could have a positive or have no rating impact. The rating action covers approximately $460 million in public debt. Fitch's ratings on Beverly affected by this action include: -- Secured bank facility 'BB'; -- Senior unsecured debt (indicative) 'BB-'; -- Senior secured subordinated notes 'B+'; -- Senior subordinated convertible notes 'B+'. Fitch notes that Beverly's credit profile has demonstrated positive momentum over the past 18 months as the company has pursued an ambitious divestiture program (designed to reduce liability exposure and shed underperforming facilities), reduced debt, restructured its capital structure, and pursued a strategy designed to diversify the company's earnings streams in faster growing, higher margined ancillary services. Beverly's fiscal 2004 EBITDA margin expanded to 9.7% from 7.6% in fiscal 2003. Fitch does anticipate that there will be a modest negative impact on BEV's first-quarter 2005 performance, regardless of the outcome of the proxy contest, as BEV will incur unanticipated costs related to the proxy fight. During its fourth-quarter earnings call, BEV management affirmed its 2005 EBITDA goals of $210 million-$215 million (excluding costs related to the Formation bid and possible Medicare reimbursement decreases for rehabilitation services). For fiscal 2004, BEV's coverage (EBITDA/interest) was 4.2 times and leverage (total debt/EBITDA) was 2.9x. Net cash flow from operating activities -- NCFFO -- in 2004 was $75 million, and free cash flow (NCFFO less capital expenditures) was $13 million. Total debt at Dec. 31, 2004, was approximately $560 million, and cash was $215 million. BONUS STORES: Liquidating Agent Wants Removal Period Extended ------------------------------------------------------------- William Kaye, as the Liquidating Agent for the estate of Bonus Stores, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to extend the deadline to remove actions through and including June 16, 2005. The Liquidating Agent needs more time to make fully informed decisions concerning the removal of civil actions. An extension will assure that the Liquidating Agent's valuable rights pursuant to Section 1452 of the Judiciary Code can be exercised in the appropriate manner. Headquartered in Columbia, Mississippi, Bonus Stores, Inc., operated a chain of over 360 stores in 13 Southeastern states offering everyday deep discount prices on basic everyday items. The Company filed for chapter 11 protection on July 25, 2003 (Bankr. Del. Case No. 03-12284). Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and debts of more than $100 million. Bonus Stores, Inc. (fka Bill's Dollar Stores) declared its First Amended Liquidating Chapter 11 Plan effective on September 20, 2004. BOUNDLESS CORP: Asks Court to Approve Sale of Surplus Assets ------------------------------------------------------------ Boundless Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of New York to: 1) authorize the sale of certain of the Debtors' assets, free and clear of liens, claims and encumbrances, at an auction; or in the alternative permit the Debtors to abandon the assets if an Auction is not warranted; 2) approve the form, manner and extent of the Notice of Sale; and 3) exempt the sale of the assets from stamp or similar taxes under Section 1146(c) of the Bankruptcy Code and from the provisions of Bankruptcy Rules 6004(g) and 6006(d). The Assets for sale consist mostly of surplus assets, including cubicles, office furniture and equipment in the Debtors' facility. The Debtors explain that selling the Assets is appropriate because they have significantly downsized their businesses, they do not require and cannot use the Assets, and the disposition of the Assets will enable them to reduce their expenses. The Court will convene a status hearing at 2:00 p.m., on April 5, 2005, to consider the Debtors' request. Headquartered in Hauppauge, New York, Boundless Corp., is a global technology company and has two subsidiaries: Boundless Technologies, Inc., a desktop display products company, and Boundless Manufacturing Services, Inc., an emerging EMS company providing build-to-order systems manufacturing, printed circuit board assembly. The Company and its debtor-affiliates filed for chapter 11 protection on March 12, 2003 (Bankr. E.D.N.Y. Case No. 03-81558). Jeffrey A Wurst, Esq., at Ruskin Moscou Faltischek PC, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $19,442,850 and total debts of $19,417,517. BOUNDLESS CORP: Asks Court to Okay Daley-Hodkin Letter Agreement ---------------------------------------------------------------- Boundless Corporation and its debtor-affiliates entered into a Letter Agreement with The Daley-Hodkin Group on January 18, 2005, pursuant to which the Firm will inspect certain assets that the Debtors seek to sell. The Assets for sale consist mostly of surplus assets, including cubicles, office furniture and equipment in the Debtors' facility. Daley-Hodkin will analyze the feasibility of an auction, prepare an estimate of the gross proceeds of the Auction, and recommend to the Debtors the most effective method of disposing of the Assets. Daley-Hodkin will receive a $3,000 fee for inspecting and estimating the Assets and a $5,000 fee or 10% of the gross proceeds of the Asset sale for conducting the Auction. The Debtors ask the U.S. Bankruptcy Court for the Eastern District of New York to approve their Letter Agreement with Daley-Hodkin. U.S. Trustee Objects Deirdre A. Martini, the U.S. Trustee for Region 2, asks the Bankruptcy Court not to approve the Letter Agreement between the Debtors and Daley-Hodkin. Ms. Martini presents five reasons militating in favor of her request: a) Daley-Hodkin is not seeking employment for either as an appraiser or auctioneer of the Debtor as required under Section 327 of the Bankruptcy Code, which is surprising since Daley-Hodkin has on a number of occasions conducted bankruptcy auction sales and should be aware of the requirements under Section 327; b) it appears that Daley Hodkin is seeking to circumvent the retention process so that the compensation sought for services rendered will not be reviewed by the Bankruptcy Court; c) the $3,000 fee sought for services to be performed under the category Asset Inspection and Budget Commentary of the Agreement is in addition to the compensation sought for conducting the auction sale of the Assets, which must be approved by the Court before it is performed; d) the appraisal of the Assets is an unnecessary and unjustified expense that under normal circumstances would be included in the commission base after conducting the auction sale of the Assets; and e) a review of the Agreement shows that the commissions sought for the auction sale are in excess of the compensation scheme for auctioneers prescribed in Rule 6005-1 of the Local Rules for the U.S. Bankruptcy Court for the Eastern District of New York. The Court will convene a status hearing at 2:00 p.m., on April 5, 2005, to consider the Debtors' request and Ms. Martini's objection. Headquartered in Hauppauge, New York, Boundless Corp., is a global technology company and has two subsidiaries: Boundless Technologies, Inc., a desktop display products company, and Boundless Manufacturing Services, Inc., an emerging EMS company providing build-to-order systems manufacturing, printed circuit board assembly. The Company and its debtor-affiliates filed for chapter 11 protection on March 12, 2003 (Bankr. E.D.N.Y. Case No. 03-81558). Jeffrey A Wurst, Esq., at Ruskin Moscou Faltischek PC, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $19,442,850 and total debts of $19,417,517. CARSON FURNITURE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Carson Furniture, Inc. 1280 Southern Way Sparks, Nevada 89431 Bankruptcy Case No.: 05-50727 Chapter 11 Petition Date: March 22, 2005 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, NV 89509 Tel: 775-786-7600 Fax: 775-786-7764 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Winans, LLC Money Loaned $1,700,000 Attn: John Mulligan, Esq. Avansino, Melarkey et al. 165 W. Liberty St., Ste. 210 Reno, NV 89501 James W. Winans Money Loaned $1,234,957 P.O. Box 2529 Minden, NV 89423 Mike Cims Incorporated Goods/Services $157,623 2300 East Durry Street Long Beach, CA 90805 RH Brown Money Loaned $139,390 Andrew J. Winans Money Loaned $139,046 Miller, Jade & Tenley Money Loaned $100,000 New Plan Excel Realty Trust Rent Arrears - $75,901 Reno Alpine Furniture Goods/Services $68,090 Royola Pacific Goods/Services $66,875 El Ran Goods/Services $61,236 Kolo-TV Goods/Services $53,605 Sealy Mattress Co. Goods/Services $47,109 Dynasty Furniture Goods/Services $43,131 James W. Winans Rent Arrears - $32,380 Minden KTVN Goods/Services $27,391 Passco Diversified RP, LLC Lease Arrears $24,000 et al. Sunrise Luxury Living Room Goods/Services $21,588 Restonic/San Francisco Goods/Services $21,208 Manpower Temporary Svcs. Goods/Services $21,173 Universal Furniture Goods/Services $17,933 CATHOLIC CHURCH: Court Sets Spokane's Investment Guidelines ----------------------------------------------------------- The Honorable Patricia C. Williams of the U.S. Bankruptcy Court for the Eastern District of Washington directs the Diocese of Spokane and its Parishes to invest funds postpetition to entities approved by the U.S. Trustee or the Bankruptcy Court. Spokane's prepetition investment in the Spokane Catholic Investment Trust may, in the Diocese's discretion, remain in the SCIT. However, once withdrawn from the SCIT, the funds may not be reinvested into the SCIT without approval of the U.S. Trustee or the Court. Prepetition investments of the Parishes may remain in the SCIT. 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 Diocese 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHRISTOPHER'S MEN'S: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Christopher's Men's Stores, Inc. 90 State Street, Suite 511 Albany, New York 12207 Bankruptcy Case No.: 05-11827-1 Type of Business: The Debtor operates men's apparel stores. Chapter 11 Petition Date: March 22, 2005 Court: Northern District of New York (Albany) Debtor's Counsel: Richard L. Weisz, Esq. Hodgson Russ LLP Three City Square, Third Floor Albany, New York 12207 Tel: (518) 465-2333 Total Assets: $6,647,500 Total Debts: $3,200,000 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Peerless Clothing Inter. $249,586 200 Industrial Park Road Saint Albans, VT 05478-1873 SFI Apparel $239,211 Attn: Arnold Brant 6170 Metropolitan E. Montreal, CA HIS 1A9 Neema Clothing Ltd. $216,926 P.O. Box 37978 Charlotte, NC 28237-7978 Whiteman, Osterman & Hanna $114,548 James Edmond, Inc. $105,115 Schwartz Heslin Group $80,000 Hugo Boss Fashions $79,963 Jack Victor Ltd. $77,480 Vincent Rua $45,000 Capital Factors Inc. $40,599 Tuxedo Junction $36,998 Carol Rua $28,988 Azizo Import, Inc. $26,931 Viewpoint International $25,391 Ballin Intl. $23,283 Bugatchi Uomo Apparel, Inc. $23,049 Contract International $22,014 O'Neil Langan $21,994 Hart Schaffer & Marx $21,619 Florsheim Shoe Co. $16,345 COGENTRIX ENERGY: S&P Puts BB+ Rating on New $700M Sr. Sec. Loan ---------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'BB-' corporate credit rating on Cogentrix Energy Inc., following the company's announcement that it acquired about 978 MW of generating assets on Jan. 31, 2005 from National Energy Company LLC (formerly PG&E Generating Company LLC). The acquisition was funded with an interim loan from Cogentrix's parent, Goldman Sachs Group Inc., (A+/Stable/A-1). At the same time, Standard & Poor's assigned a 'BB+' rating and a recovery rating of '1' to the company's new senior secured bank loan facility, which is being expanded to $700 million (from $246 million) to fund about 80% of the acquisition cost. The outlook is stable. "The effect of the acquisition on Cogentrix's business risk profile is neutral, as the quality of the assets being acquired is very similar to Cogentrix's existing assets," noted Standard & Poor's credit analyst Tobias Hsieh. Cogentrix already owns interests in nine of the 11 projects being acquired, and as a result of the acquisition, Cogentrix will become the majority owner and manager in many of the existing projects. "This will allow Cogentrix to have more control over its ability to extract value from the projects through contract restructuring and monetization," he continued. However, because of the large overlap with the existing projects, the acquisition does not offer significant improvement on portfolio diversity. Cogentrix's solid operational performance and secured stream of contractual cash flow allow Standard & Poor's to conclude that the rating is stable. The rating depends on Cogentrix's commitment to maintain the amount of debt outstanding at an appropriate level compared with the value of assets as the portfolio evolves over time. COUR D' ALENE: Posts $13 Million Fourth Quarter Net Income ---------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE; TSX: CDM), the world's largest primary silver producer and a growing gold producer, reported results for the fourth quarter and full year 2004. Highlights Fourth Quarter - Net income of $13.0 million, or $0.05 per diluted share, compared with a loss of $12.9 million, or $0.06 per share, in the fourth quarter of 2003. Results for the quarter include operating income of $1.8 million, $2.1 million related to cumulative reduction in depletion and income taxes for the year and $9.1 million of tax benefits associated with the expected utilization of past net operating losses. - Revenue of $46.1 million, an increase of 48% over reported revenue of $31.2 million in the fourth quarter of 2003. - Silver production of 4.3 million ounces, up 23% from a year ago and 43% from last quarter. - Fourth quarter gold production of 47,055 ounces, up 80% from 2003's fourth quarter and 46% from last quarter. - Average cash cost declined 36% to $2.22 per ounce of silver, compared to $3.47 in 2003's comparable period and 49% lower than last quarter. - Cash, cash equivalents and short-term investments of $322.1 million at December 31, 2004. - Coeur shares commenced trading on the Toronto Stock Exchange (TSX:CDM) further enhancing the Company's leading liquidity position among silver producers. Full Year 2004 - Revenue of $133.5 million, up 21% from the previous year - Full year silver production of 14.1 million ounces compared to 14.2 million ounces in 2003 - Full year gold production of 129,332 ounces, up 8% from 2003's level of 119,518 ounces. - Average cash cost per ounce of $3.66, compared to $3.27 the previous year. - Total silver reserves increased 12% above last year's reserve levels, to 196 million ounces - reserve levels more than doubled at Cerro Bayo and Martha as a result of the expanded exploration program, further extending mine life. 2005 Outlook - San Bartolome construction has commenced, commercial production expected in 2006. - Revised Record of Decision for Kensington for the Final Environmental Impact Statement issued by the U.S. Forest Service. Final permits expected in the first half of 2005. - Exploration program expanded in 2005 "With continued strong silver and gold production, Coeur reported substantial profit in the fourth quarter of 2004, finishing the year in strong fashion," said Dennis E. Wheeler, Chairman, President and Chief Executive Officer of Coeur. "We are seeing the successful completion of Coeur's strategy to shift to new low-cost mines, significantly expand exploration spending to develop new low-cost ore reserves and improve our operations capability. We believe this focus on exploiting our vast exploration potential and low discovery costs at or near our existing low-cost operations will further strengthen our position as the premier silver investment. "Our young mines in South America, Cerro Bayo and Martha, had excellent fourth quarter and full year results, with strong metals production and low operating costs -- $0.60 per ounce of silver (net of gold production credits) in the fourth quarter and $2.07 per ounce for the full year -- as well as exploration results which exceeded our expectations and continued to extend mine life. We will continue our expanded exploration program there in 2005," Mr. Wheeler added. "Construction has commenced at our San Bartolome silver project, with an excellent construction and operating team in place. San Bartolome is expected to produce approximately eight million ounces of production annually which will increase the Company's total silver production by 56%. Production is expected to begin in 2006, with anticipated strong cash flow at existing silver prices. We are pursuing optimization of the project to further reduce capital expenditures and operating costs. Our cash liquidity position is strong, with $322 million in cash, cash equivalents and short-term investments at year-end, which will help fund our growth projects, including San Bartolome and Kensington, and gives us great flexibility to look for new opportunities to expand Company production, reserves and cash flow," Mr. Wheeler said. Financial Summary Coeur d'Alene Mines Corporation reported fourth quarter 2004 revenue of $46.1 million, an increase of 48% over reported revenue of $31.2 million in the fourth quarter of 2003. During the fourth quarter of 2004, the Company reported net income of $13.0 million, or $0.05 per diluted share, compared to a net loss of $12.9 million, or $0.06 per share, in the fourth quarter of 2003. The fourth quarter of 2004 included $2.8 million of exploration expense related to the Company's successful program which has increased our silver reserves, and $2.7 million in pre-development costs for the development of the San Bartolome and Kensington mines. Results for the quarter included operating income of $1.8 million, the effect of a cumulative reduction in depletion expense and income taxes for the year of $2.1 million and a $9.1 million benefit for income taxes associated with the expected utilization of past net operating losses. For the fourth quarter of 2004, Coeur realized an average silver price of $7.08 per ounce compared to an average realized silver price during the previous year's fourth quarter of $5.12 per ounce. For its gold sales, Coeur realized an average price of $427 per ounce during the fourth quarter of 2004 compared to an average gold price of $365 per ounce during the same period last year. For the full year 2004, the Company reported revenue of $133.5 million, up 21% from the $110.5 million reported in the previous year. The increase was due primarily to increased gold production and higher metals prices. For the full year 2004, the Company reported a net loss of $12.2 million, or $0.06 per share, compared to a net loss of $66.2 million, or $0.39 per share in 2003. Results for the year also included the effect of a cumulative reduction in depletion expense and income taxes of $2.1 million and a $9.1 million benefit for income taxes associated with the expected utilization of past net operating losses. The 2004 year included $11.4 million in pre-development costs related to the San Bartolome and Kensington projects and $15.7 million in one-time business development expenses. Absent these items, the Company would have reported a profit of $14.9 million. 2004's expenses also included $11.1 million of exploration expense. The previous year's loss included a $41.6 million loss on the early retirement of debt, a $2.3 million loss for the cumulative effect of change in accounting principle, and an additional interest payment of $7.0 million triggered by the early retirement of debt. For the full year 2004, Coeur realized an average silver price of $6.82 per ounce compared to an average realized price during the previous year of $4.89 per ounce. For its gold sales, Coeur realized an average price of $410 per ounce during 2004 compared to an average gold price of $345 per ounce during the same period last year. In 2004, Coeur completed a public underwriting of $180 million of 11/4% Convertible Senior Notes due January 2024 and the underwriting of 26.6 million common shares, which increased the Company's cash, cash equivalents and short-term investments to $322 million at December 31, 2004. The market prices of silver (Handy & Harman) and gold (London Final) on March 11, 2005 was $7.58 and $443.70 per ounce, respectively. Coeur does not hedge any of its silver or gold production. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. Coeur 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. S&P said the outlook is stable. Coeur D'Alene, an Idaho-based silver and gold mining company, currently has about $180 million in debt. (Troubled Company Reporter Latin America, Mar. 16, 2005) COUR D' ALENE: Explains Delay in SEC Annual Report Filing --------------------------------------------------------- Coeur d'Alene Mines Corporation informs the Securities and Exchange Commission that it cannot file its Form 10-K on time due to delays experienced in completing the preparation of its financial statements and corresponding assessments of the internal control over financial reporting. In addition, the reports of the Company and its independent auditor may cite the existence of one or more material weaknesses in the Company's internal control over financial reporting. The Company expects to report $133.5 million in total revenues for the year ended December 31, 2004, as compared to $110.5 million for the year ended December 31, 2003. Furthermore, it expects to report total costs and expenses for fiscal 2004 of approximately $156.1 million compared to $174.5 million for fiscal 2003. The Company expects to report a $12.2 million net loss for the year ended December 31, 2004, compared to a $66.2 million net loss for the year ended December 31, 2003. Fiscal year 2004 total costs and expenses include $15.7 million incurred in connection with the Company's tender offer for outstanding shares of Wheaton River Minerals, Ltd. That offer expired without the Company purchasing any Wheaton shares tendered due to unsatisfied conditions of the offer. No similar expenses were incurred in 2003. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. Coeur 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. S&P said the outlook is stable. Coeur D'Alene, an Idaho-based silver and gold mining company, currently has about $180 million in debt. (Troubled Company Reporter Latin America, Mar. 16, 2005) DB COS: Judge Walsh Approves Disclosure Statement ------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the Disclosure Statement explaining DB Companies, Inc., and its debtor-affiliates' Amended Liquidating Chapter 11 Plan. Judge Walsh found that the Disclosure Statement contains adequate information for creditors to make an informed decision whether to accept or reject the Plan. The Debtors are now authorized to solicit plan acceptances. Objections to confirmation of the Plan, if any, must be received by the Clerk of the Bankruptcy Court by April 15, 2005, at 4:00 p.m. The Court will convene a hearing to discuss the merits of the Plan on April 21, 2005, at 11:00 a.m. About the Plan The Plan doesn't intend to rehabilitate the Debtors' finances. Rather, the Plan facilitate an orderly liquidation of the Debtors' assets. DB Co. & its affiliates ceased to operate after filing for chapter 11 protection. All remaining assets of the Debtors will be sold to payoff secured and priority claims. The remaining funds will be used to pay general unsecured creditors. Cash for distribution to creditors is projected to range from $16 million to $20 million. General unsecured creditors, with claims amounting to $24 million to $30 million, are expected to recover 50% to 80% of what they're owed. The Debtors caution that their largest creditor -- Valero Marketing and Supply Company -- filed proofs of claim totaling more than $26 million. If those claims are allowed, that would reduce the available cash for distribution to unsecured creditors. The Debtors' Plan provides for interim distributions to creditors with undisputed claims. The first projected distribution will take place in May 2005. That distribution will pay all secured and priority claims in full and will also pay general unsecured creditors 20% of what they're owed. 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 $100 million in assets and debts of approximately $65 million. DELPHI CORP: Sale to Johnson Won't Affect Ratings, Says Fitch ------------------------------------------------------------- The sale of Delphi Corporation's global automotive battery operations to Johnson Controls Inc. for $212.5 million does not affect the current ratings of Delphi, according to Fitch Ratings. Fitch's 'BB+' rating on Delphi's senior unsecured debt remains on Rating Watch Negative. Additionally, in a separate announcement, Delphi announced that it has substantially completed its financial accounting investigation with only modest further adjustments, which Fitch sees as a positive step for the company. To resolve the Rating Watch Negative status, Fitch will be focused on the filing of Delphi's financial statements (currently estimated by the company to be by June 30), the status of the investigation by the Securities & Exchange Commission, any further changes to the company's financial management team and the status of its bank agreement. Fitch will also focus on Delphi's ability to manage the current severe operating environment, where Delphi's margin pressures will be exacerbated by GM's production cutbacks for the first half of 2005. Delphi's leverage to GM volumes, high required pension contributions and cash outlflows related to restructuring activities are expected by Fitch to lead to negative cash flow through 2005 and a weakened balance sheet. Fitch believes that the bank agreements may be renegotiated to provide the banks with security which would impair the position of the unsecured. The sale of the battery assets provides Delphi with additional liquidity and the opportunity to exit a non-core business. These funds are expected to fund a portion of negative cash flow projected for 2005. Delphi has stated that batteries will not remain a part of its portfolio, and the ultimate resolution of the company's North American battery assets will likely require further cash outlays. Over the long-term, Delphi has shown solid top-line growth in non- GM business, and certain technology strengths provide several platforms for growth (including non-automotive business. Although the company's severely underfunded pension position represents a heavy claim on cash flows over the near term, heavy required contributions well in excess of benefits paid indicate that the company should show progress in closing this gap. Any rise in interest rates will further assist the closing of this gap in the near term. However, current pension legislation being considered could result in tighter funding requirements which would further impair the company's cash flow position over the intermediate term. DOLLAR GENERAL: Moody's Reviewing Ba2 Ratings & May Upgrade ----------------------------------------------------------- Moody's Investors Service placed the long-term debt ratings of Dollar General Corporation on review for possible upgrade. The review reflects the track record that Dollar General has established of maintaining solid margins, leverage, and coverage metrics despite a difficult selling environment and an increase in capital expenditures and working capital. These ratings are placed on review: * Senior implied of Ba2; * Senior unsecured of Ba2; * Issuer rating of Ba2. During the fiscal year ended January 28, 2005, sales increased by 11.5% to $7.7 billion due to a 3.2% increase in same store sales and 722 new store openings. Dollar General's sales were constrained by the negative impact on its core lower income customer of higher fuel prices, heating costs, and unemployment rates. Despite the softer selling environment, Dollar General was able to maintain healthy financial metrics. EBITDA margin for the period was 9.4% versus 9.8% in the prior period. For the period ended January 28, 2005 Adjusted Debt/EBITDAR was 2.6x, EBITDAR/Interest+Rent was 3.2x, and Free Cash Flow/Total Debt was 17.8%. In addition, during the last fiscal year, Dollar General was able to maintain solid free cash flow while increasing its investment in capital expenditures for new store openings, the roll out of coolers, and a new distribution center, as well as higher working capital usage. During the year the company also repurchased $209 million of common stock and ended the year with a cash balance of $233 million. Moody's review will focus on the new management team's business strategies and financial policies, including its share repurchase program. Since the accounting irregularities announced in 2001 the entire senior management team of Dollar General has been replaced. The CEO, David Perdue, joined in 2003 and the CFO, David Tehle, joined in 2004. Given its history involving the accounting irregularities, the review will also focus on Dollar General's financial, accounting, and operational controls. In addition, the operational infrastructure to support the company's continued growth and the company's plans to address the recent inventory build will be assessed. Dollar General, headquartered in Goodlettsville, Tennessee, operates 7,320 extreme value general merchandise stores in 30 states. Revenues for the fiscal year ended January 28, 2005, were approximately $7.7 billion. EAGLEPICHER INC: Names Bert Iedema as President & CEO ----------------------------------------------------- EaglePicher Inc. said Bert Iedema has assumed the roles of president and chief executive officer for the Company and EaglePicher Holdings, Inc. A director of EaglePicher Holdings since September 2001, Mr. Iedema, 44, served as the Company's senior vice president and chief financial officer in an interim capacity from October 2001 until February 2002. Since May 2003, Mr. Iedema has served as chief executive officer of Granaria Holdings B.V., EaglePicher's controlling shareholder. He also held executive vice president and chief financial officer positions of Granaria Holdings B.V. from September 2000 until May 2003. Mr. Iedema was previously employed as the chief financial officer of SSM Coal B.V. in The Netherlands from 1996 until August 2000. "We are pleased that Bert has accepted the position of CEO. His knowledge of EaglePicher's people and businesses as well as its challenges will enable him to move quickly in developing and implementing new strategies that will generate positive results," said Dr. Joel P. Wyler, chairman of EaglePicher Holdings, Inc., and Granaria Holdings, B.V. "He brings 20 years of financial expertise that will be of great value as we forge a renewed EaglePicher over the coming months." Mr. Iedema also expressed his enthusiasm: "I am excited with the challenge of leading EaglePicher through some difficult times. I believe EaglePicher has some great businesses that will enable us to move ahead. I look forward to expanding my working relationship with the talented team at EaglePicher." Mr. Iedema, who holds a master's degree in business economics from the Free University of Amsterdam, also serves on the boards of Landinvest N.V. and Revival, Recovery Investment Advisors B.V. and is a Certified Public Accountant in The Netherlands. EaglePicher Incorporated, 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. Additional information on the company is available on the Internet at http://www.eaglepicher.com/ EaglePicher Holdings, Inc., is the parent of EaglePicher Incorporated. At Nov. 30, 2004, EaglePicher Inc.'s balance sheet showed a $142,046,000 stockholders' deficit, compared to a $90,207,000 deficit at Nov. 30, 2003. EXIDE TECH: Elects Mark Demetree to Board of Directors ------------------------------------------------------ The Board of Directors of Exide Technologies (NASDAQ: XIDE), a global leader in stored electrical-energy solutions, elected Mark C. Demetree, 48, as Director. His appointment follows an earlier announcement by the Company, in its Form 8-K filed with the U.S. Securities and Exchange Commission on March 3, 2005, that the Board had voted to expand its membership by two Directors to a total of nine. Mr. Demetree, who will serve on Exide's Nominating and Governance Committee, is Chairman and CEO of US Salt Holdings, LLC, a producer of inorganic chemicals. He also is non-executive Chairman of the Board of Texas Petrochemical, Inc. (TXPI) and serves as a Director of American Italian Pasta Company (NYSE: PLB), where he is Chairman of the Compensation Committee. Mr. Demetree is the former President of North American Salt Company and a past President of Trona Railway Company. 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. * * * As reported in the Troubled Company Reporter on March 22, 2005, Standard & Poor's Ratings Services assigned its 'B' rating to Exide Technologies' $290 million senior secured notes due 2013 and its 'B-' rating to the company's $60 million floating rate convertible senior subordinated notes due 2013, both to be issued under Rule 144A with registration rights. At the same time, the 'B+' corporate credit rating on the company was affirmed, and the 'B' rating on its proposed $350 million senior notes was withdrawn. Lawrenceville, N.J.-based Exide, a global manufacturer of transportation and industrial batteries, has debt, including the present value of operating leases, of about $750 million. The rating outlook is negative. Exide replaced its proposed senior notes offering with the senior secured notes and convertible notes. Proceeds from the new debt issues will be used to reduce bank debt and for general corporate purposes. Security for the senior secured notes is provided by a junior lien on the assets that secured Exide's senior credit facility, including the bulk of its domestic assets and 65% of the stock of its foreign subsidiaries. "We expect earnings and cash flow improvements, provided the costs of lead remain fairly stable or decline and restructuring actions are effective," said Standard & Poor's credit analyst Martin King, "which should allow debt leverage to decline and cash flow coverage to improve over the next few years. FAIRPOINT COMMS: IPO Completion Cues S&P to Lift Rating to BB- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on FairPoint Communications Inc. to 'BB-' from 'B+' due to the completion of the company's IPO. The outlook is negative. The rating is removed from CreditWatch, where it was placed Jan. 10, 2005 with positive implications in anticipation of the IPO. The 'BB-' bank loan rating and '4' recovery rating on the company's $690 million secured bank facility were affirmed. When assigned, these ratings were based on the prospective revision in the corporate credit rating. FairPoint is a rural local exchange carrier (RLEC) providing local, long-distance, Internet, and data services to about 242,271 access lines in 17 states. Pro forma total debt outstanding was about $590 million as of Sept. 30, 2004. "The rating upgrade reflects the material deleveraging impact of the IPO on this rural telephone operator," explained Standard & Poor's credit analyst Rosemarie Kalinowski. "The negative outlook is based on the continuing potential longer-term impact of cable telephony on FairPoint's competitive position. The rating reflects the company's aggressive, shareholder-oriented financial policy, which provides a substantial dividend, and the low-growth revenue trends of the mature RLEC industry. These factors are tempered by FairPoint's relatively stable telephone revenue, its healthy EBITDA margins, a supportive regulatory environment, and the depth of company management's experience." The debt repayment from the IPO significantly reduces FairPoint's leverage to roughly 4.3x debt to EBITDA, from about 6.6x, based on annualized results for the nine months ended Sept. 30, 2004. Reduced debt and a lower cost of bank debt improve interest coverage to the 4.2x area from 1.2x. The refinancing also modestly improves the maturity profile. However, Standard & Poor's views the company's high dividend paying common stock as having some debt-like characteristics akin to preferred stock. The ratings also remain constrained by the reduction in discretionary cash flow resulting from the dividend payout, which is about 75% of free cash flow. FELCOR LODGING: Moody's Assigns B3 Rating to Preferred Stock ------------------------------------------------------------ Moody's Investors Service has assigned a B3 rating to FelCor Lodging Trust's Series C Cumulative Redeemable Preferred Stock. The REIT's rating outlook is stable. This ratings assignment follows FelCor's announcement that it had entered into an agreement to sell 5.4 million depositary shares, each representing 1/100 of a share of its 8% Series C Cumulative Redeemable Preferred Stock, at a price of $25.00 per share. The gross proceeds of $135 million will be used to redeem 54,000 shares of FelCor's currently outstanding 9% Series B Cumulative Redeemable Preferred Stock, and the corresponding 5.4 million depositary shares representing the Series B preferred stock being redeemed. FelCor's senior unsecured debt is rated B. According to Moody's, the ratings assignment reflects the steady and continued improvement in FelCor's operating performance, and the REIT's efforts to strengthen its balance sheet. Recovery in corporate and leisure lodging demand has helped to boost operating cash flows, while low interest rates have enabled FelCor to reduce its interest costs and to lengthen its debt maturity profile. These positive credit factors are offset by the REIT's high levels of secured debt, low fixed charge coverage and challenges associated with its hotel repositioning effort, which is expected to take time. After three years of earnings declines, FelCor showed continued improvement in operating results throughout 2004.Rrevenue per available room increased 4.9% for the full year, with occupancy increasing 3.1%. Furthermore, the REIT has begun to regain pricing power, with average daily rate the principal component of RevPAR growth beginning in the second half of 2004. Continued increases in ADR should help improve hotel operating profit margins in future periods. The improved operating performance has helped boost credit metrics such as Net Debt/EBITDA. Net Debt/EBITDA (including pro rata consolidation of JVs) was 7.1x for 2004, down from 8.0x at year-end 2003. Moody's noted that it is encouraged by the progress FelCor has made towards repositioning its hotel portfolio to include higher quality assets in higher growth markets. The REIT disposed of 17 non-strategic hotels in 2004 for gross proceeds of $157 million, in addition to termination of the lease on one hotel. Regarding the REIT's leverage, FelCor has tapped the bond and preferred stock markets to lower its capital costs, while at the same time extending the maturity of its debt, although secured debt levels remain high at roughly 27% of gross assets, up from 22% at year-end 2003. The REIT completed $680 million of financings -- a mix of secured debt, unsecured debt and preferred stock -- in 2004, which leaves it with modest amounts of debt maturing until 2007. The stable rating outlooks reflects Moody's expectation that FelCor's operating performance and liquidity will continue to improve as lodging demand recovers. Near-term ratings improvement depends upon FelCor's ability to reduce secured debt to below 20% of gross assets, and Net Debt/EBITDA to the mid-6x range. A reversal in trends in operating performance that would cause Net Debt/EBITDA to increase beyond current levels, or secured debt to rise to levels materially above 30%, could lead to negative ratings pressure. These ratings were assigned: * FelCor Lodging Trust, Incorporated -- Series C preferred stock at B3 FelCor Lodging Trust, Incorporated, headquartered in Irving, Texas, USA, is the second-largest lodging REIT in the USA, with a portfolio comprised of 143 hotels, located in 31 states and Canada. FelCor's assets are operated under the Embassy Suites, Crowne Plaza, Holiday Inn, Doubletree, Westin, Hilton and Sheraton flags. Based on 2004 operating profit, 40% of FelCor's portfolio is located in suburban locations, with the balance located in urban (28%), airport (21%), and resort (11%) locations. GLOBAL CROSSING: Sells Unit to Matrix Telecom for $40.5 Million --------------------------------------------------------------- Global Crossing (Nasdaq: GLBC) entered into a purchase agreement to sell its small business group to Matrix Telecom(R), a Platinum Equity company. Under the agreement, Global Crossing will receive $40.5 million in gross cash proceeds for SBG. Also, Global Crossing and Matrix have entered into a long-term carrier services agreement under which Global Crossing will offer its full suite of voice, data and IP services to Matrix. The sale is subject to regulatory approval and is expected to close during the third quarter of 2005. Global Crossing expects approximately $35 million in net cash proceeds from the transaction after giving effect to estimated purchase price adjustments, the payment of certain fees and the deduction of certain retained liabilities. In addition to the purchase agreement, Global Crossing and Matrix Telecom, a telecommunications provider to the small- and medium- sized enterprise market, have entered into a long-term carrier services agreement, under which Global Crossing will provide to Matrix wholesale voice, data and IP services. Revenues under this carrier services agreement are in addition to the cash proceeds mentioned above. "Since our primary focus is providing converged communications services to global enterprises and carriers, the sale of SBG allows us to concentrate on our core business," said John Legere, Global Crossing's chief executive officer. "I am immensely proud of the team of dedicated employees who are part of serving this set of customers and know that they will play a key role in Matrix's continued success. We're thankful to Platinum Equity for their diligence and hard work throughout this transaction, and we look forward to providing communications services and support to Matrix throughout the transition of SBG." SBG is a provider of voice and data products to an estimated 30,000 small- to medium-sized business enterprises in the U.S., which have remained customers of SBG for an average of more than seven years. SBG's current product offering includes switched and dedicated voice services and data applications. Matrix Telecom is one of 21 operating companies in the portfolio of Platinum Equity, a global acquisition firm based in Los Angeles and headed by CEO Tom Gores. "We are very excited to bring SBG and Matrix together," said Mr. Gores. "The two businesses complement one another extremely well, and their integration will create value and enhance the capabilities of both. The combination should be welcome news to customers, employees and business partners of both SBG and Matrix." The Blackstone Group served as a financial advisor to Global Crossing on the transaction. In October 2004, Global Crossing announced that it was focusing its operations to better capitalize on its IP network and capabilities. The company's plan includes concentrating on global enterprise offerings, new carrier data offerings and additional means of distributing its suite of IP capabilities to end-users. Also as part of this initiative, Global Crossing announced that it is de-emphasizing certain non-strategic areas of its business, including the small- to medium-sized enterprise space. About Matrix Telecom Matrix Telecom(R) Inc. -- http://www.matrixvalue.com/-- a Platinum Equity company, is a fully integrated, facilities-based telecommunications carrier providing premium quality voice and data services to a nationwide customer base. Headquartered in Dallas, Texas, Matrix Telecom offers a complete line of voice, data, and Voice over IP products servicing the residential and business markets. Matrix Telecom offers wholesale products direct to other carriers, as well as retail products distributed through resellers and agents. Matrix Telecom is committed to providing customized communication services that exceed customers' expectations for quality, value, and reliability. About Platinum Equity Platinum Equity, LLC -- http://www.platinumequity.com/-- is a global M&A&O(R) firm specialized in the merger, acquisition, and operation of mission-critical services and solutions companies. Since its founding in 1995, the firm has completed more than 65 transactions, building a diverse portfolio of companies with nearly 40,000 employees, more than 600,000 customer sites, and a multi- billion dollar revenue base. Platinum Equity in 2004 was named the 32nd largest private company in the United States by Forbes magazine. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. GOODYEAR TIRE: Moody's Places B3 Rating on New $300M Jr. Term Loan ------------------------------------------------------------------ Moody's Investors Service has assigned a rating of B3 to a new $300 million junior lien term loan of Goodyear Tire & Rubber Company. The new six-year loan will be pari passu with junior lien notes issued under a March 2004 indenture for a 144A placement of $650 million and takes the total amount of junior lien obligations to approximately $950 million, all of which will mature in March 2011. Proceeds from the loan will add to general corporate liquidity and help address a maturing obligation for EUR400 million (approximately $530 million) in June 2005. The B3 rating on the new debt matches the existing rating on the current $650 million of junior lien notes. The rating outlook remains negative. The junior lien term loan will have a third priority interest in certain collateral which Goodyear has pledged under its $1.5 billion first lien revolving credit and its $1.2 billion second lien term loan, both of which will mature in April 2010. The new junior lien term loan will have the identical set of domestic and Canadian subsidiary guarantors as the first and second lien facilities. Upon closing of the first lien revolver, the second lien term loan, and credit facilities of Goodyear Dunlop Tire Europe B.V., the security interest of the junior lien obligations will no longer be shared with lenders under GDTE's revolving credit who have a guarantee from Goodyear. This guarantee will continue upon closing of the new GDTE transactions, but will become an unsecured obligation of the parent company. In a March 7, 2005 rating action, Moody's affirmed the ratings of Goodyear (senior implied at B1, first lien at B1, second lien at B2 and senior unsecured at B3) and maintained a negative outlook. The negative outlook reflected uncertainties and prospective delays associated with the company's need to restate previous financial statements, an examination by its auditors of internal control matters, and a lingering SEC investigation. Moody's acknowledges that the company has completed its filings with the SEC, including an audited financial statement for the year ending December 31, 2004 and earlier restatements. The auditor's opinion and management's assessment cite certain internal control matters. The rating agency will be reviewing these issues in greater detail in the near future, whereupon the outlook will be revisited. Goodyear will benefit from the new term loan from the additional liquidity and the further lengthening of its debt maturity profile. In the short-term the funds raised will bolster the company's gross liquidity (cash and available lines), which was approximately $3.1 billion at year end 2004. In June 2005 Goodyear has a ?400 million note issue which matures. The company's liquidity rating was raised to SGL-2 in the March 7, 2005 rating actions. In the short term Goodyear's total adjusted leverage will increase by approximately 0.2 times estimated 2004 EBITDAR to a level slightly in excess of 4 times. Initially the net debt position will be unchanged. Upon retirement of the ? notes in June, leverage statistics are anticipated to retreat marginally from the expected use of cash to reduce debt. While the percentage amount which secured obligations represent in Goodyear's debt structure will increase as a result of the new financing, and increase further upon the retirement of the unsecured ? notes in June, no incremental assets (beyond fluctuations in working capital assets related to changes in business activity) are being added to the collateral package. Further, the maximum amount of priority claims from the first and second lien facilities will increase by roughly $120 million in the refinancing activity. Thus, expectations on the amount of collateral value which may cascade down to the benefit of the junior lien creditors remains essentially unchanged, if not slightly reduced. By increasing the amount of the junior lien debt from $650 million to $950 million, the percentage recovery against those residual collateral values by third lien creditors may be diluted. Given the uncertainties associated with determining those values in a downside scenario and differentiating it to a material extent from the recovery rate of unsecured creditors, the junior lien notes have been assigned a B3 rating. This is also the rating for unsecured obligations of Goodyear and is two notches below the senior implied rating of B1. Indentures for Goodyear's existing unsecured notes place restrictions on the amount of domestic manufacturing assets that can be pledged without providing equal and ratable security to the unsecured notes. In addition, not all of the parent's investments in subsidiaries are subject to the liens of the recent financing. The effect is to establish a meaningful pool of assets, which are not subject to liens. Goodyear, headquartered in Akron, Ohio, is one of the world's leading manufacturers of tire and rubber products with 2004 revenues of $18.4 billion. The company manufactures tires, engineered rubber products and chemicals in more than 80 facilities in 28 countries and employs about 80,000 people. HANOVER DIRECT: John Swatek Succeeds Charles Blue as CFO -------------------------------------------------------- Hanover Direct, Inc. (PINK SHEETS: HNVD) appointed John Swatek to serve as its Senior Vice President, Chief Financial Officer and Treasurer commencing April 2005. Mr. Swatek will report directly to Wayne P. Garten, the Company's Chief Executive Officer. Prior to joining the Company, Mr. Swatek most recently served as Vice President and Controller of Linens 'n Things, Inc., where he held various positions beginning in 2001. Prior to joining Linens 'n Things, Inc., Mr. Swatek was employed by Micro Warehouse from 1997 through 2001, serving as its Senior Vice President, Finance from 2000 to 2001. Mr. Swatek succeeds Charles E. Blue, who resigned effective as of March 8, 2005. Wayne P. Garten has served as acting Chief Financial Officer during the interim period. Under the Company's March 15, 2005 Employment Agreement with Mr. Swatek, which will expire on May 6, 2005, Mr. Swatek will be paid an annual salary of $270,000 and will be granted options to acquire 50,000 shares of the Company's common stock pursuant to its 2000 Management Stock Option Plan. One third of the options vested upon execution of the Employment Agreement and the balance will vest in two equal annual installments on the anniversary of the original grant date, subject to earlier vesting in the event of a change in control of the Company. Mr. Swatek will be entitled to participate in the Company's discretionary bonus plan for executives. The Employment Agreement provides for: -- reimbursement of up to $25,000 of foregone benefits as a result of Mr. Swatek's decision to join the Company; -- a lump sum change in control payment equal to Mr. Swatek's annual compensation if his employment is terminated during the term and a change in control occurs during that time; and -- one year of severance payments if Mr. Swatek is terminated without cause or terminates his employment for good reason during the term and he is not otherwise entitled to change in control benefits. Mr. Swatek will also be entitled to one year of severance payments equal to his annual base salary if his agreement is not renewed at the end of the term. Company Completes Stock Sale The Company also completed its previously announced sale of the stock of Gump's Corp. and Gump's By Mail, Inc., to Gump's Holdings, LLC, an investor group comprised of two venture capital firms and a private investment firm, for $8.5 million. About the Company Hanover Direct, Inc. (PINK SHEETS: HNVD) and its business units provide quality, branded merchandise through a portfolio of catalogs and e-commerce platforms to consumers, as well as a comprehensive range of Internet, e-commerce, and fulfillment services to businesses. The Company's catalog and Internet portfolio of home fashions, apparel and gift brands include Domestications, The Company Store, Company Kids, Silhouettes, International Male, Undergear and Scandia Down. Each brand can be accessed on the Internet individually by name. Keystone Internet Services, LLC -- http://www.keystoneinternet.com/-- the Company's third party fulfillment operation, also provides the logistical, IT and fulfillment needs of the Company's catalogs and web sites. Information on Hanover Direct, including each of its subsidiaries, can be accessed on the Internet at http://www.hanoverdirect.com/ At June 26, 2004, Hanover Direct's balance sheet showed a $46,503,000 stockholders' deficit, compared to a $47,629,000 deficit at December 27, 2003. HEXACON ELECTRIC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Hexacon Electric Company 161 West Clay Avenue Roselle Park, New Jersey 07204 Bankruptcy Case No.: 05-18846 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Clay Corporation 05-18849 Type of Business: The Debtor manufactures soldering equipment. See http://www.hexaconelectric.com/ Chapter 11 Petition Date: March 22, 2005 Court: District of New Jersey (Newark) Judge: Morris Stern Debtors' Counsel: Stephen M. Packman, Esq. Archer & Greiner, P.C. One Centennial Square Haddonfield, NJ 08033 Tel: 856-795-2121 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtors' Consolidated List of 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pension Benefit Guaranty Corporation $2,200,000 Office of the General Counsel 1200 K St., NW Washington, DC 20005 Elizabethtown Gas $6,264 One Elizabethtown Plaza Elizabeth, NJ 07083 New York Life Insurance $4,824 51 Madison Ave., Ste. 3200 New York, NY 10010 Greene Technologies $3,320 Kyocera Ind. Ceramic $2,126 Forest Industries, Inc. $2,078 Heatron $1,927 K B Electronics, Inc. $1,882 TW Metals, Inc. $1,790 Ventronics, Inc. $1,530 Parason Machine, Inc. $1,373 NJ Porcelain $1,136 U Line $929 PurTech $869 EIS $798 Precise Alloys $631 National Electric Wire $585 State Electronics $570 Hospira, Inc. $560 Aero Metal Prod. Co. $519 HOLLINGER INT'L: Ill. Dist. Court Won't Dismiss $425 Mil. Lawsuit ----------------------------------------------------------------- Hollinger International, Inc., reports that that a federal judge in Chicago has denied all of the motions to dismiss the Company's Second Amended Complaint against Conrad Black, Hollinger Inc., the Ravelston Corporation, David Radler and other former officers and directors of the Company. The Honorable Blanche M. Manning, United States District Judge in the Northern District of Illinois, held that the Company had stated legally sufficient claims against all of the Defendants in its action to recover more than $425 million plus interest from the Defendants arising out of their alleged looting of the Company. Gordon A. Paris, Chairman and Chief Executive Officer of the Company, and Chairman of the Special Committee of the Board of Directors said: "This ruling represents an important step in our efforts to hold Black, Radler and the other Defendants accountable for their conduct as officers, directors and controlling shareholders of Hollinger International." About the Company Hollinger International Inc. is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area as well as in Canada. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. Approximately $78 million principal amount of Notes is outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately $5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from the staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. HOLLINGER INT'L: Names Gregory A. Stoklosa as VP for Finance ------------------------------------------------------------ Hollinger International, Inc., appoints Gregory A. Stoklosa as Vice President - Finance, effective immediately. Mr. Stoklosa will be based at the Company's Chicago headquarters and will report directly to Gordon Paris, Chairman and Chief Executive Officer. Mr. Stoklosa will succeed Peter Lane as Chief Financial Officer upon Mr. Lane's retirement later this year. As the Company has previously disclosed, certain corporate functions are transitioning from Toronto to its Chicago headquarters, including its corporate financial and accounting function. Current Chief Financial Officer, Peter Lane, will remain in Toronto. Following completion of the move to Chicago, Mr. Lane will retire from the Company and Mr. Stoklosa will succeed him. Until that time, Messrs. Stoklosa and Lane will work closely together. About the Company Hollinger International Inc. is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area as well as in Canada. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. Approximately $78 million principal amount of Notes is outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately $5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from the staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. HOME EQUITY: Moody's Rates $7M Class M-10 Variable Certs. at Ba1 ---------------------------------------------------------------- Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by Home Equity Mortgage Loan Asset-Backed Trust, Series INABS 2005-A and ratings ranging from Aa1 to Ba1 on the subordinated certificates. The securitized pool is comprised of fixed and adjustable rate, conventional, sub-prime mortgage loans that are secured by first liens on one-to-four family residential properties originated by IndyMac Bank F.S.B. The ratings are primarily based on the quality of the collateral and the levels of protection afforded by structural subordination. The credit quality of the loan pool is considered by Moody's to be comparable to the collateral pool backing the most recent IndyMac SPMD 2004-C subprime securitization. IndyMac Bank F.S.B. will be the servicer of the mortgage loans. The complete rating actions are: * Class A-I-1, $463,377,000, Variable Rate Certificate, rated Aaa * Class A-I-2, $115,844,000, Variable Rate Certificate, rated Aaa * Class A-II-1, $100,916,000, Variable Rate Certificate, rated Aaa * Class A-II-2, $117,178,000, Variable Rate Certificate, rated Aaa * Class A-II-3, $14,185,000, Variable Rate Certificate, rated Aaa * Class M-1, $31,000,000, Variable Rate Certificate, rated Aa1 * Class M-2, $29,500,000, Variable Rate Certificate, rated Aa2 * Class M-3, $19,000,000, Variable Rate Certificate, rated Aa3 * Class M-4, $15,000,000, Variable Rate Certificate, rated A1 * Class M-5, $15,500,000, Variable Rate Certificate, rated A2 * Class M-6, $14,000,000, Variable Rate Certificate, rated A3 * Class M-7, $12,000,000, Variable Rate Certificate, rated Baa1 * Class M-8, $8,000,000, Variable Rate Certificate, rated Baa2 * Class M-9, $7,500,000, Variable Rate Certificate, rated Baa3 * Class M-10, $7,000,000, Variable Rate Certificate, rated Ba1 HOSPITALITY ASSOCIATES: Plans to Sell Assets to Repay Debts ----------------------------------------------------------- Hospitality Associates LLC, the operator of Duck Cedar Inn, a restaurant and catering hall located in Tuxedo, N.Y., filed for chapter 11 protection earlier this month to stall an eviction proceeding, according to Michael Levensohn at the Times Herald- Record. Mr. Levensohn reports that Dominick Caiazzo, Hospitality's owner, told the Bankruptcy Court that Duck Cedar Inn's landlord served eviction papers on the business shortly before the filing. A decline in cash flow and more than $250,000 in renovation costs put the Inn, which remains open, behind in rent payments. Mr. Levensohn reports that Hospitality Associates bought the business in 2003 and is now in the process of selling all or part of it, with the intention of using those sale proceeds to settle the business's debts. Hospitality Associates LLC filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 05-35577) on March 15, 2005. Paul D. Feinstein, Esq., in Manhattan, represents the Debtor. The restaurant and catering operation listed $1,417,425 of assets and $1,093,670 of debts in its chapter 11 petition. INTERSTATE BAKERIES: Wants to Walk Away from Kansas Property Lease ------------------------------------------------------------------ Interstate Bakeries Corporation and its debtor-affiliates identified an unexpired non-residential real property lease for premises at One West Armour in Kansas City, Missouri, that is financially burdensome and unnecessary to their ongoing operations and business. The Debtors believe that the Lease is not a source of potential value for their future operations, creditors and interest holders. Therefore, the Debtors seek the Court's authority to reject the Lease, including any related subleases, if any, effective as of March 23, 2005, to reduce postpetition administrative costs. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) J. SILVER CLOTHING: 40-Store Chain Goes to the Auction Block ------------------------------------------------------------ The Providence Journal reports that the 40-store J. Silver Clothing, Inc., retail business is preparing to sell its assets in a bankruptcy court auction setting to the highest bidder. The South Norwalk, Conn.,-based clothing retailer's board of directors fired Chief Executive Officer Robert S. Bland and Chief Financial Officer Joseph Bastone without cause shortly before the company sought chapter 11 protection late last month. The 40 stores are scattered throughout Connecticut, Massachusetts, Rhode Island, New York and Illinois. J. Silver Clothing, Inc. -- http://www.jsilverclothing.com/-- filed for chapter 11 protection (Bankr. D. Del. Case No. 05-10522) on February 25, 2005. Gilbert R. Saydah, Jr., Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the retailer. The Debtor estimated its assets and liabilities total less than $10 million in its bankruptcy petition. JETSGO: Air Canada Adds Flights in Response to Company Shutdown --------------------------------------------------------------- Air Canada is adjusting its domestic Canada schedule to add flights between major cities across Canada in light of Jetsgo's sudden shut down on March 11, 2005. The carrier will add new daily round trip services between Toronto and Vancouver, Calgary, Winnipeg and Halifax in time for the peak summer travel season. Air Canada's increase in services will be implemented in stages across the country as plans are finalized. In addition, in the coming days Air Canada will implement increases to its market-leading Rapidair shuttle service in the Toronto-Montreal-Ottawa corridor. Beginning this month, the carrier will boost service between Toronto and Ottawa with an additional 10 one-way flights per week, for a total of up to 38 one-way flights per day. Air Canada is also boosting its schedule between Toronto and Montreal with an additional 22 one way flights per week for a total of up to 50 one way flights per day, representing by far the market leading position for frequent air service between Canada's two largest cities. "We are making these schedule improvements where we see demand increase for Air Canada services as a direct result of the withdrawal of Jetsgo," said Ben Smith, Vice President, Network Planning. "We will continue to evaluate market demand on an on-going basis and make adjustments to our schedule and deployment of capacity to ensure Air Canada maintains its market leading position as the airline of choice with the lowest fares to the greatest number of destinations on an everyday basis, bar none." As reported in the Troubled Company Reporter on Mar. 14, 2005, Jetsgo Corporation ceased all operations. The Company asked the Quebec Superior Court to immediately grant it protection under the Companies' Creditors Arrangement Act. Court protection will allow Jetsgo to consider all options available to reorganize its affairs. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. As of December 31, 2004, Air Canada's shareholders' deficit narrowed to CDN$203 million compared to a $4.155 billion deficit at December 31, 2004. Jetsgo provided passenger flights to around 20 destinations in Canada and the US and had nine planes, making it Canada's third largest carrier. (Air Canada Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) KITCHEN ETC: Clear Thinking to Administer Reorganization Plan ------------------------------------------------------------- Clear Thinking Group, LLC, a retail/consumer products manufacturing consultancy, and Joseph Myers, a partner and managing director, have been named plan administrator in a Plan of Reorganization and Disclosure Statement filed by Exeter, N.H.- based kitchenware and tabletop retailer Kitchen Etc., Inc. The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware confirmed the Second Amended Liquidating Plan of Reorganization filed by Kitchen Etc., Inc., on January 31, 2005. As reported in the Troubled Company Reporter on Dec. 27, 2004, the Plan provides for the appointment of a Plan Administrator who will act as the sole representative of the Debtor upon the Effective Date of the Plan and who will have the authority and power to make the required distributions under the Plan. In accordance with the Plan, Mr. Myers and select staff from Clear Thinking Group's Creditors Rights Practice have created a liquidated assets trust to enable the Debtor to pay its administrative and general unsecured claims. As plan administrator, the firm will also assist the Debtor in meeting obligations established under terms of the Plan of Reorganization and Disclosure. About Clear Thinking Group Clear Thinking Group, LLC -- http://www.clearthinkinggrp.com/-- provides a wide range of strategic consulting services to retail companies, consumer product manufacturers/distributors and industrial companies. The national advisory organization specializes in assisting small- to mid-sized companies during times of growth, opportunity, strategic change, acquisition, and crisis. Headquartered in Exeter, New Hampshire, Kitchen Etc., Inc. -- http://www.kitchenetc.com/-- was a multi-channel retailer of household cooking and dining products. Kitchen Etc. filed for chapter 11 protection on June 8, 2004 (Bankr. Del. Case No. 04- 11701) and quickly retained DJM Asset Management to dispose of all 17 Kitchen Etc. stores throughout New England, New York, Delaware, Pennsylvania, Maryland and Virginia. Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $32,276,000 in total assets and $33,268,000 in total debts. LIFEPOINT HOSPITALS: S&P Rates Proposed $1.4 Bil. Facility at BB ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BB' rating and a recovery rating of '3' to the proposed $1.4 billion senior secured bank credit facility of LifePoint Hospitals Inc. The facility is due in 2012. LifePoint Hospitals Inc. will be the newly formed holding company after the acquisition of Province Healthcare Company is completed. The new bank facility is rated the same as LifePoint Hospitals Inc.'s corporate credit rating; this and the '3' recovery rating mean that lenders are unlikely to realize full recovery of principal in the event of a bankruptcy, though meaningful recovery is likely (50%-80%). LifePoint is also expected to issue $200 million of senior subordinated debt as part of the financing of the Province acquisition. Standard & Poor's expects to provide a rating for this proposed debt when the terms become available. Standard & Poor's also affirmed its 'BB' corporate credit rating on hospital operator LifePoint Hospitals Inc. and removed the rating from CreditWatch, where it was placed Aug. 16, 2004. The CreditWatch listing followed the announcement that LifePoint would acquire Province in a transaction estimated to be about $1.7 billion. As of Dec. 31, 2004, LifePoint's total debt outstanding was $221 million. However, pro forma for the transaction, the debt will increase to approximately $1.5 billion. The outlook is negative. Upon completion of the acquisition, Province Healthcare's ratings will be withdrawn. "The ratings on Brentwood, Tenn.-based LifePoint Hospitals Inc. are based on the strength of the company's diversified hospital portfolio, which will number 51 facilities following the Province Healthcare acquisition," said Standard & Poor's credit analyst David Peknay. "This is an increase from 30 facilities before the transaction. The portfolio is still vulnerable, however, to industry operating risks." The acquisition improves LifePoint's business profile. Not only has the company's hospital portfolio grown, but LifePoint's largest state of operation, Kentucky, should now generate less than 20% of the company's revenues, where it previously contributed 30%. LifePoint will also generate less of its earnings from its top 10 hospitals than it did before the acquisition. The company retains a strong competitive position within its markets, where nearly all its hospitals are the sole community providers. The Province acquisition, which is likely to close before the end of the second quarter, will be funded with both debt and equity. Although a large transaction, it reflects the disciplined approach that we expected, and has created a financial profile that is consistent with the rating. LIFEPOINT HOSPITALS: Moody's Rates Planned $1.4 Bil. Debt at Ba3 ---------------------------------------------------------------- Moody's Investors Service assigned ratings to LifePoint Hospitals, Inc.'s proposed offering of a $1.4 billion senior secured credit facility in connection with its proposed acquisition of Province Healthcare Company. Concurrently, Moody's concluded its review of both LifePoint (formerly LifePoint Hospitals) and Province and confirmed the ratings of both companies. On August 20, 2004, Moody's placed the ratings of LifePoint, LifePoint Hospital Holdings, Inc and Province Healthcare Company on review for possible downgrade. The rating action followed the announcement by LifePoint that it had entered into an agreement to purchase Province in a transaction valued at approximately $1.7 billion including the assumption of Province's debt by LifePoint. At the completion of the transaction, Moody's expects to withdraw the existing ratings of Province based on the understanding that LifePoint will refinance Province's existing debt. Below is a summary of Moody's actions: LifePoint Hospitals, Inc. (parent): * Assigned Ba3 rating to $1.100 billion senior secured Term Loan B * Assigned Ba3 rating to $300 million senior secured revolving credit facility * Assigned Ba3 senior implied rating * Assigned B2 senior unsecured issuer rating LifePoint (former parent): * Confirmed B3 rating on $221 million ($250 million prior to the repurchase of $29 million of notes during 2004) 4.50% convertible subordinated notes due 2009, rated B3 * Withdrew Ba3 senior implied rating and reassigned to LifePoint Hospitals, Inc. (the highest corporate entity with rated debt) * Withdrew B2 senior unsecured issuer rating and reassigned to LifePoint Hospitals, Inc. LifePoint Hospital Holdings, Inc. (operating subsidiary): * Confirmed Ba2 rating on $200 million senior secured revolving credit facility due 2006 (to be withdrawn at close of the proposed transaction) Province Healthcare Co. (to be withdrawn at the close of the proposed transaction): * Confirmed B3 rating on $200 million senior subordinated notes due 2013 * Confirmed B3 rating on $172.5 million convertible subordinated notes due 2008 * Confirmed Ba3 senior implied rating * Confirmed B2 senior unsecured issuer rating The outlook for the ratings is stable. The ratings reflect: 1. the combined company's high pro forma leverage; 2. the likelihood that the combined company will continue with its acquisitive strategy; 3. Moody's concern over LifePoint's ability to capture out- migration of services to larger urban facilities or non- affiliated outpatient centers; 4. Moody's concern that budgetary pressures may lead to declining rates of Medicaid reimbursement or disproportionate share payments to Lifepoint in the near to intermediate term; 5. higher-than-historical bad debt expense (a concern throughout the industry); and 6. slowing same-store admissions growth for the rural hospital industry over the past several quarters. The ratings also reflect: 1. management's conservative strategy combined with an excellent track record of deleveraging; 2. the company's use of a significant portion of equity for the purchase of Province; 3. good cash flow and free cash flow that will allow for rapid debt repayment; 4. increased geographic and revenue diversification following the acquisition; 5. increased scale that will allow the company to compete more effectively with other non-urban hospital players; 6. solid market share (94% sole community providers); 7. an operating model that Moody's believes will allow the company to leverage synergies from the transaction in the areas of physician recruitment and retention as well as managed care pricing; and 8. better revenue per adjusted admission trends than its competitors, despite the general slowing of same-store admissions growth. The stable outlook reflects Moody's view that positive demographic trends will continue, and rates for Medicare, which it expect to represent 35-40% of the company's revenues going forward, will remain stable in the near term. Moody's feel that LifePoint has successfully navigated the general softening of hospital trends over the past few quarters. However, if same-store admissions and revenue per admissions trends were to turn negative and materially affect the company's cash flow, there may be downward pressure on the ratings. Moody's expects the company to use its free cash flow to pay down debt over the next several quarters and to continue with its strategy of acquiring small, non-urban, not-for-profit hospitals. The high pro forma leverage and the continued acquisition strategy are expected to constrain the ratio of adjusted cash flows from operations to adjusted debt and the ratio of adjusted free cash flow to adjusted debt, significant factors in the analysis of companies in this sector. Therefore, an upgrade of the ratings would not be expected in the near term. If the company is not able to attain a sustainable ratios of adjusted operating cash flow to adjusted debt and adjusted free cash flow to adjusted debt of 20% and 10%, respectively, there could be downward pressure on the ratings. Additionally, we would expect to see adjusted debt to adjusted capital reach a sustainable level of 50% or less by 2006 in order to maintain the current ratings. Moody's would also see downward pressure on the ratings if the company were to make another large acquisition or fail to rapidly reduce leverage below the levels associated with the proposed transaction. While the bulk of the acquisition can be financed with the new credit facilities, Moody's expects LifePoint to complete the Province acquisition through a second phase of financing. Pro forma for the Province acquisition and giving effect to the new capital structure following the completion of the acquisition financing, LifePoint will have cash flow coverage of debt that is weak to moderate for the Ba3 category. Pro forma adjusted cash flow from operations to adjusted debt would have been approximately 16% for the year ended December 31, 2004. With maintenance capital expenditures approximately 7% of net revenue, pro forma adjusted free cash flow to adjusted debt would have been approximately 8% for the same period. Coverage metrics for LifePoint will be moderate. For the twelve months ended December 31, 2004, pro forma EBIT coverage of interest would have been approximately 4.0 times while pro forma EBITDA less capital expenditures to interest would have been approximately 3.5 times. Pro forma adjusted debt to adjusted book capitalization would have been approximately 62% at December 31, 2004. Moody's estimates that pro forma adjusted debt to EBITDAR would have been approximately 3.9 times. Moody's notes that the use of EBITDA and related EBITDA ratios as a single measure of cash flow without consideration of other factors can be misleading (see Moody's Special Comment, "Putting EBITDA in Perspective," dated June 2000). Moody's expects LifePoint to have good liquidity pro forma for the acquisition and incurrence of debt. At December 31, 2004, on a pro forma basis, LifePoint would have had approximately $65 million of cash and access to a $300 million revolving credit facility. The senior secured credit facility is held at the level of the senior implied rating due to its preponderance in the capital structure and the belief that total collateral value would not cover the level of debt at pro forma December 31, 2004. The existing convertible notes are rated at three notches below the senior implied level due to contractual subordination, the lack of a guarantee and the lack of security. The senior unsecured issuer rating is notched two levels below the senior implied rating. Ratings remain subject to final review of documentation by Moody's. LifePoint Hospitals, Inc. operates 29 hospitals in non-urban communities (excluding one facility currently classified as discontinued operations) with a total of 2,688 licensed beds. For the twelve months ended December 31, 2004, LifePoint reported revenues of approximately $997 million. Province Healthcare is a provider of health care services in non- urban markets. The Company owns or leases 21 general acute care hospitals with a total of 2,533 licensed beds. For the twelve months ended December 31, 2004, Province reported total revenues of approximately $883 million. LIONEL LLC: Has Until January 2006 to File Reorganization Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York overseeing Lionel L.L.C.'s reorganization granted the Company's request to extend its exclusive period for filing a plan of reorganization through January 2006. During this period, no other creditor may file a competing plan. The Court also denied a separate motion by Mike's Train House that would have granted MTH greater access to Lionel's historical operating documents and information. "We're extremely pleased and gratified to have received the Court's support in these two critical matters," said Jerry Calabrese, Lionel's CEO. "The judge's ruling guarantees that Lionel will continue doing business exactly as it has done in the past, by making the products our fans want, and selling them at prices people can afford. We now have all the time we need to complete our product development and sales initiatives that made 2004 our best year in recent memory, and we expect even better results this year. "As we approach the one year anniversary of the MTH verdict, Lionel is truly resurgent on all fronts, and getting stronger every day. In addition to the very real gains we've recently enjoyed in our business, the court's vote of confidence ensures that we will also continue and complete our efforts to appeal and overturn what we truly believe was an unjust verdict in favor of MTH," Mr. Calabrese concluded. In January 2005, Lionel received approval of its DIP financing and also filed its appeal of the MTH verdict. Headquartered in Chesterfield, Michigan, Lionel LLC -- http://www.lionel.com/-- is a marketer of model train products, including steam and die engines, rolling stock, operating and non- operating accessories, track, transformers and electronic control devices. The Company filed for chapter 11 protection on Nov. 15, 2004 (Bankr. S.D.N.Y. Case No. 04-17324). Abbey Walsh Ehrlich, Esq., at O'Melveny & Myers, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts more than $50 million. MARTIN WRIGHT: Files for Chapter 11 Protection in San Antonio ------------------------------------------------------------- Martin Wright Electric Co., filed for chapter 11 protection this week in the U.S. Bankruptcy Court for the Western District of Texas. Vicki Vaughan, writing for Express-News, reports that Martin Wright is a 101-year-old commercial electric contractor that did extensive work on the Alamodome. Charles "Chip" Goode, business manager at Local 60 of the International Brotherhood of Electrical Workers, tells Ms. Vaughan that more than 260 IBEW members were working for Martin Wright, about half of them at a Toyota plant. Ms. Vaughn indicates that the University of Texas at San Antonio is another major customer. Jefferson State Bank, owed $1.7 million, is the company's bank lender. Repayment of that loan is secured by Martin Wright's San Antonio property, valued at $1.4 million, and $1.36 million in accounts receivable. Because, Martin Wright says, Jefferson's security interests are adequately protected, the Debtor is asking the Court for permission to continue using the lenders' cash collateral to pay for day-to-day post-petition operating expenses. MIRANT CORP: Removes Calif. Atty. General's "Unjust Profit" Suit ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Aug. 30, 2004, Attorney General Bill Lockyer filed a lawsuit against Mirant alleging the firm unjustly profited from rampant lying and fraud during the Energy Crisis of 2000-01 that drained billions of dollars from California's economy and ratepayers. Filed in San Francisco Superior Court on behalf of the people, Lockyer's complaint alleges Mirant's market manipulation violated the state's commodities fraud statute and Unfair Competition Law -- UCL. The lawsuit seeks restitution, damages and disgorgement of unjust profits. Additionally, the complaint asks the court to award civil penalties of $25,000 for each commodities fraud violation and $2,500 for each violation of the UCL. The complaint does not specify the total relief sought. The court will determine that figure based on the evidence. But Lockyer said the damages, restitution, disgorgement and civil penalties could well total in the hundreds of millions of dollars. The named defendants include: * Mirant Corporation; * Mirant Americas, Inc.; * Mirant California Investments, Inc.; * Mirant California, LLC; * Mirant Americas Development, Inc.; * Mirant Americas Energy Marketing, LP; * Mirant Delta, LLC; and * Mirant Potrero, LLC. The lawsuit is the latest enforcement action resulting from Lockyer's ongoing investigation of market misconduct by Mirant and other power companies during the Energy Crisis. The complaint alleges that Mirant engaged in the unlawful conduct for at least three years. Suit Removed to California District Court Mirant Corporation discloses in a Form 10-K filing with the Securities and Exchange Commission that the Company removed the suit to the United States District Court for the Northern District of California. Mirant also filed a request seeking dismissal of the claims asserted on the grounds that they are barred by the doctrine of preemption and the filed rate doctrine. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) MONSOUR MEDICAL: Exits Chapter 11 with $2.5 Million of New Money ---------------------------------------------------------------- With a $2.5 million investment from an unnamed entity, Monsour Medical Center exited the chapter 11 restructuring process. How? With no opposition, Joe Napsha at the Tribune-Review reports, U.S. Bankruptcy Judge Bernard Markovitz approved the Center's request to dismiss its Chapter 11 bankruptcy case at the conclusion of a 15-minute hearing in Pittsburgh earlier this week. Robert O. Lampl, Esq., Monsour's bankruptcy lawyer, told Judge Markovitz that dismissing the Chapter 11 bankruptcy case is in the best interests of the 140-bed medical center because having a lengthy and protracted case would not be beneficial to any party, Mr. Napsha relates. "We think we can survive out of bankruptcy court," Mr. Lampl told the judge, "and pay the $41 million owed to creditors." Mr. Napsha tried to get John Bukovac, the hospital's new chief executive officer, and Dr. Alexander Kavic, Monsour's medical director, to identify the source of the $2.5 million infusion. They wouldn't. Monsour Medical Center filed for chapter 11 protection on Oct. 15, 2004 (Bankr. W.D. Pa. Case No. 04-33736). MORGAN STANLEY: S&P Upgrades Ratings on Four Certificate Classes ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes C, D, E, F, G, H, J, and K of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates series 1999-CAM1. At the same time, all other outstanding ratings are affirmed. The raised and affirmed ratings reflect steady pool performance along with credit enhancement levels that provide adequate support through various stress scenarios. As of March 2005, the trust collateral consisted of 117 commercial mortgages with an outstanding balance of $508.3 million, down 37% since issuance. To date, there have been three realized losses totaling $6.6 million (0.82% of the initial pool balance). There are no delinquent loans or specially serviced loans in the pool. The master servicer, KeyBank Real Estate Capital, reported either full-year 2003 or partial year 2004 net cash flow (NCF) debt service coverage ratios (DSCRs) for 99.56% of the pool. Based on this information, Standard & Poor's calculated the weighted average DSCR for the pool at 1.59x, improved from 1.41x at issuance. The current weighted average DSCR for the top 10 loans, which make up 26.7% of the pool, improved to 1.63x, from 1.47x at issuance. The third-, seventh-, and ninth-largest loans appear on the servicer's watchlist due to declines in DSCRs. However, two of the three loans fully amortize. The servicer's watchlist includes 15 loans totaling $75.0 million, or 14.7% of the pool. The loans are on the watchlist due to low occupancies, low DSCRs, or upcoming lease expirations, and were stressed accordingly by Standard & Poor's. The pool has geographic concentrations in excess of 5% in California (21.9%), Washington (7.7%), and Florida (6.2%). Property type concentrations include retail (40.9%), office (35.75%), industrial (16.1%), multifamily (4.4%), and lodging (2.8%). Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to those on the watchlist and those with low DSCRs. The expected losses and resultant credit enhancement levels adequately support the rating actions. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1999-CAM1 Rating Class To From Credit Enhancement (%) ----- -- ---- ---------------------- C AAA A+ 19.32 D AAA A 16.94 E AA- BBB+ 12.98 F A+ BBB 11.39 G BBB+ BB+ 8.62 H BBB- BB 5.84 J BB+ BB- 4.65 K BB- B+ 3.06 Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1999-CAM1 Class Rating Credit Enhancement (%) ----- ------ --------------------- A-2 AAA 29.64 A-3 AAA 29.64 A-4 AAA 29.64 B AAA 24.48 X AAA N/A NORTHWEST TOOL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Northwest Tool & Die Company, Inc. 2980 Three Mile Road NW Grand Rapids, Michigan 49544 Bankruptcy Case No.: 05-03343 Type of Business: Makers of High Quality Dies Chapter 11 Petition Date: March 15, 2005 Court: Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Debtor's Counsel: Perry G. Pastula, Esq. Dunn Schouten & Snoap PC 2745 DeHoop Avenue SW Wyoming, Michigan 49509 Tel:(616) 538-6380 Total Assets: $6,644,225 Total Debts: $4,341,241 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Betz Industries $71,069 2029 Bristol Grand Rapids MI 49504 Maco Steel $66,231 8057 Graphic Indust Park NE Belmont MI 49306 Kasten Machinery $61,880 8009 Coxs Drive Portage MI 49002 Forward Industries Inc. $53,643 Good Metals Inc $45,793 Priority Health $40,368 Creston Industrial Sales $36,833 Arbor Gage & Tooling Inc. $34,125 Ericksons Inc. $28,346 Mich Wire Edm Service Inc. $26,887 Ajacs Die Sales Corp. $23,133 Michigan Dept Of Treasury $22,931 Waddell Electric Co. $22,408 Vans Pattern Corp. $22,180 Intern'l Coatings Inc. $21,337 C B Dekorne Inc. $17,854 Hansen Balk Co. $15,055 Bergers Supply Co. $14,232 Laser Access $14,190 Metrologic Group Service Inc. $12,230 NRG ENERGY: Look for Annual Report on March 31 ---------------------------------------------- NRG Energy, Inc., informs the Securities and Exchange Commission that it will not be able to timely file its Annual Report for the fiscal year ended Dec. 31, 2004, due on March 16, 2005, without incurring an unreasonable amount of effort and expense. The Company expects to be able to file the Report within fifteen calendar days, on or before March 31, 2005. Management of NRG Energy, Inc., is in the process of completing its assessment of the effectiveness of its internal control over financial reporting as required by Section 404 of the Sarbanes- Oxley Act of 2002. NRG Energy's 2004 results will not be comparable to the corresponding prior year period for a number of reasons related to significant corporate events that have taken place during 2003, including emergence from bankruptcy, significant financing transactions, asset dispositions and the impact of fresh start reporting on NRG Energy's financial reporting. NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million convertible perpetual preferred stock. S&P says the outlook is stable. ONE TO ONE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: One to One Interactive, LLC 500 Harrison Avenue, 3rd Floor Boston, Massachusetts 02118 Bankruptcy Case No.: 05-12083 Type of Business: The Debtor provides Internet marketing services and offers marketing, creative and technology services to companies in industries like financial services, life sciences, media, telecommunications and technology. See http://www.onetooneinteractive.com/ Chapter 11 Petition Date: March 18, 2005 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: A. Davis Whitesell, Esq. Cohn & Whitesell, LLP. 101 Arch Street, 16th Floor Boston, Massachusetts 02110 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mr. David Landrith Partial Summary $3,518,017 62 Blue Hill Avenue Judgement, Canton, MA 02286 Member Redemption Litigation Fastweb (Monster) Trade Debt $173,144 PO Box 34649 Newark, NJ 07189-4649 ClassesUSA Trade Debt $154,020 1200 South Avenue Suite 207 Staten Island, NY 10314 Ivillage Trade Debt $92,364 Military Advantage Trade Debt $89,060 ESPN Trade Debt $81,745 Sportsline Trade Debt $81,531 Overture Services Inc. Trade Debt $80,336 Yahoo, Inc Trade Debt $75,328 American Express Gold Trade Debt $71,670 DoubleClick TechSolutions Trade Debt $71,370 McDermott, Will & Emery Professional $69,878 Services Emode.com Inc. Trade Debt $69,684 E! Online Trade Debt $59,146 Baby Center Trade Debt $52,268 RichMay Trade Professional $48,494 Services CentrPort Trade Debt $27,910 Bolt's Trade Debt $25,100 All Star Directories Trade Debt $22,032 Advance Magazine Group Trade Debt $21,863 ORIGEN'S MANUFACTURED: Moody's Junks 8.30% Class M-2 Certificates ----------------------------------------------------------------- Moody's Investors Service has downgraded two mezzanine certificates of Origen's manufactured housing 2001-A securitization. The rating action concludes Moody's ratings review, which began on March 4, 2005. Moody's previously downgraded several senior, mezzanine and subordinate certificates of Origen's manufacturing housing securitizations in September 2004. The rating actions were primarily based on the weaker-than-anticipated performance of the manufactured housing loans. The current action is prompted by the continued weaker-than anticipated performance of the pool and the resulting erosion in credit support. Delinquencies and repossessions have exceeded original expectations, leading to high cumulative losses. As of the Feb 14, 2005 remittance report, cumulative losses and cumulative repossessions for the 2001-A transaction were 17.30% and 23.23%, respectively, with 50.13% of the pool outstanding. Loss severities for the last six months on liquidated collateral averaged approximately 84%. Since losses have exceeded the available amount of excess spread, the overcollateralization has been completely eroded. As a result, the Class B Certificates are currently experiencing losses and close to being completely written down. The complete rating action is: Issuer: Origen Manufactured Housing Contract Senior/Subordinate Asset-Backed Certificates, Series 2001-A * 7.82% Class M-1 Certificates, downgraded from Ba2 to B1 * 8.30% Class M-2 Certificates, downgraded from Caa2 to Ca Origen is a Delaware limited liability company with its headquarters in Southfield, Michigan. The company is primarily engaged in the business of underwriting, originating and servicing manufactured housing contracts. OWENS CORNING: Lehman Brothers Reports 6.27% Equity Stake --------------------------------------------------------- Lehman Brothers Holdings, Inc., and Lehman Brothers, Inc., inform the Securities and Exchange Commission that they may be deemed to beneficially own 3,476,903 shares of Owens Corning Common Stock, which represents 6.27% of all outstanding shares. Lehman Brothers, Inc., a broker/dealer registered under Section 15 of the Securities Exchange Act of 1934, is the actual owner of the Shares. Under the SEC rules and regulations, Lehman Brothers Holdings may be deemed to be the beneficial owner of the shares of Common Stock owned by Lehman Brothers, Inc. At September 30, 2004, 55,343,098 shares of Owens Corning common stock are outstanding. 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. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEABODY ENERGY: Buys Coal Reserves & Surface Assets in Ill. & Ind. ------------------------------------------------------------------ Peabody Energy's subsidiaries have acquired selected assets from Lexington Coal Company for $61 million in cash. Strong growth and long-term demand for Illinois Basin coal and increased investments in technologies allows Peabody to further expand its leadership position in the region. The transaction is expected to be accretive to earnings in 2006. The acquired properties have significant synergies with other Peabody subsidiaries, enabling lower-cost mining and longer mine lives. Purchased assets include: -- Approximately 10 million tons of reserves, a preparation plant, mining equipment and facilities near Coulterville, Ill. The newly formed Coulterville Coal Company may also access adjacent coal reserves owned by Peabody subsidiaries. The mine is expected to begin production in 2005 and will produce approximately 2 million tons per year when it reaches full capacity in 2006. The mine will supply coal under a new agreement with Northern Indiana Public Service Company with terms that can be extended through 2015. -- Approximately 40 million tons of coal reserves, a preparation plant, facilities, a shovel and other mobile mining equipment in Knox County, Ind. The assets will be operated by Peabody subsidiary Black Beauty Coal Company's Miller Creek Mine, which is expected to access these surface reserves in 2006. -- Approximately 20 million tons of reserves, a preparation plant, significant surface land reserves, a large dragline and other mobile mining equipment in Sullivan County, Ind. The assets will be operated by Black Beauty's Farmersburg Mine. Development of the operation is targeted for 2007. About the Company Peabody Energy (NYSE: BTU) is well positioned to fuel the future energy needs of America and the world. Peabody is the world's largest private-sector coal company, with 2004 sales of 227 million tons 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. The company is serving global coal demand from electricity generators and steelmakers, and is growing to serve new global customers and emerging "Btu Conversion" markets. * * * 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. PEGASUS SATELLITE: Plan Confirmation Hearing Continued to Mar. 30 ----------------------------------------------------------------- A status conference regarding confirmation of Pegasus Satellite Communications Inc. and its debtor-affiliates' proposed Plan of Reorganization will be held today, March 24, 2005, at 10:30 a.m. The hearing to consider confirmation of the Plan will be continued to March 30, 2005, at 2:00 p.m. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) POGO PRODUCING: Moody's Assigns Ba3 Rating to $300M Sr. Sub. Notes ------------------------------------------------------------------ Moody's assigned a Ba3 rating to Pogo Producing Company's pending $300 million of 10-year senior subordinated notes. Moody's also confirmed Pogo's Ba1 senior implied rating and its current Ba3 rating for its $200 million of 8.25% senior subordinated notes due 2011. Note proceeds will repay secured bank debt. Pro-forma for the note offering, Moody's estimates March 31, 2005 secured revolver debt to be in the range of $200 million. Pro-forma bank debt would be roughly $200 million under a $750 million unsecured bank revolver. The rating outlook is moved to negative from developing, partly reflecting the risk of leverage, cost, and overall credit erosion over the next 12 to 18 months if Pogo does not make very substantial gains this year reversing its historically high 2004 drillbit and all-sources reserve replacement costs. While Pogo's three year average reserve replacement costs remain acceptable and are not yet in outlier territory, another high reserve replacement cost year would substantially boost the three year trend. A return to a stable rating outlook will depend on Pogo's ability to greatly improve upon its weak 2004 reserve replacement costs, a key element of an exploration and production firm's ability to regenerate itself at supportable costs. The rating had been moved to developing from stable on January 25, 2005 upon Pogo's strategic announcements. While Pogo initiated several plans that it hopes will begin to reposition its portfolio and improve its reinvestment productivity, our cautionary change to a negative outlook follows further consideration of the challenges in that regard and review of its 2004 10-K. While gross and net leverage on proven developed reserves remain satisfactory for the ratings after rising significantly in 2004, and though cash flow before capital spending and stock buybacks should remain strong this year, Pogo's underlying ability to organically regenerate itself has eroded over the last four years as its property base yielded surging organic reserve replacement costs and its organic reserve replacement from extensions and discoveries fell progressively from 168% in 2000, 111% in 2001, 65% in 2002, 53% in 2003, and a very low 27% in 2004. In addition to the direct credit implications of such deterioration in internal capital reinvestment productivity, Moody's traditionally considers such a major deterioration in portfolio productivity as a strategic imbalance that may entail increased event risk. This respects the latitude a firm may need as it moves to rebalance its property portfolio, reload its drilling inventory, and support its share price. Pogo's decision to curtail all discretionary 2005 development drilling and other spending due to increasingly low internal reserve replacement, surging drillbit finding and development costs (over $40/boe in 2004), and rising sector drilling and oilfield services costs appears to be a superior corporate finance decision to avoid further capital destruction. However, that is not a position taken from strength, plus estimated $280 million in conserved cash flow will effectively be used to buyback up to $375 million of common stock. Furthermore, the 2004 hiatus in material drillbit productivity underscores that only time will tell how productive Pogo's existing portfolio will be. Likewise, Pogo's decision to market its core Gulf of Thailand (GOT) properties is also potentially attractive though part of the reason for the sale would be, through subsequent acquisitions, to rebalance Pogo's reserve and production base and reload its drilling inventory. The fact that a sale during 2005 would occur under a favorable one-time 2005 tax window in which to repatriate foreign capital and liquidity made a GOT sale worth considering. Aside from that, Pogo's core Gulf of Mexico (GOM) and GOT properties both have particularly short PD reserves lives in the range of 3 years. A recycling of capital into longer lived onshore U.S. properties could relieve Pogo's long battle against two steep production decline curves. While Moody's believes that proceeds from a sale of Pogo's GOT properties could be reinvested in longer lived U.S. onshore properties, this would transpire during a time of extreme competition for onshore conventional and unconventional reserves. In that competition, acquirers are paying historically very dear prices for properties that have contained low proportions of PD reserves, effectively paying very high prices for current production and higher risk proven undeveloped and probable reserves. Positive developments include the substantial return to production of Pogo's GOM Main Pass production, the fact that the reduced 2005 capital budget will actually contain Pogo's second highest exploration and development outlays on record (aiding the production outlook), and that first quarter 2005 production is at least starting out on a sounder trend. Also, while it will entail more drilling risk, a higher proportion of capital spending will be allocated to exploration drilling. To the degree that spending is successful, the drillbit could add more materially to reserve replacement in 2005. The ratings are also supported by still acceptable leverage on PD reserves and expected strong 2005 cash flow before capital spending and stock buybacks. Leverage on PD reserves increased significantly in 2004 on acquisitions needed to fill the breach left by low reserve additions and high reserve replacement costs. However, leverage rose to still conservative levels relative to peers. Furthermore, Pogo's stock buyback activity may proceed at a pace that can be internally funded with cash flow. Pro-forma for the bond offering, Moody's estimates March 31, 2005 leverage in the range of approximately $3.00/PD Boe of reserves. Net leverage is materially lower to the degree that foreign liquidity is free to be repatriated during the 2005 tax holiday. Pogo's historic fiscal conservatism enables it to pursue substantial remedial actions without being simultaneously under leverage pressure. Moody's estimates that Pogo's total leveraged full-cycle costs (production, G&A, gross interest, and reserve replacement costs) are at the high end of its peers in the range of $24/boe, including three-year average reserve replacement costs and after the fourth quarter 2004 acquisition of higher production cost properties. That figure would be very high, at over $30/boe, using 2004's $20.64/boe all-sources reserve replacement cost figure. Pogo's 2004 drillbit finding and development costs exceeded an extraordinary $40/boe, which is included in the $20.64/Boe all-sources 2004 figure. The collapse in drillbit productivity was partially due to the fact that the 2004 spending budget, weighted heavily to development drilling on proven development reserves, did not yield material step-out reserve additions as an adjunct to development drilling. The collapse was also due to relatively unproductive exploration drilling in Hungary and, as yet, lack of a break through in Pogo's drilling over the GOM Outer Continental Shelf. Pogo Producing Company is headquartered in Houston, Texas. POGO PRODUCING: S&P Puts BB Rating on Proposed $300M Sub. Notes --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating on Pogo Producing Co. At the same time, Standard & Poor's assigned its 'BB' rating to the company's proposed $300 million subordinated notes due 2015. Proceeds from the note offering will be used to repay existing bank borrowings under the company's $750 million credit facility. Houston, Texas-based Pogo had $755 million of debt as of Dec. 31, 2004. "The stable outlook on Pogo reflects our expectations that Pogo will prudently manage its more aggressive financial policies and 2005 budget initiatives while maintaining its sound financial profile and adequate liquidity for the current ratings," said Standard & Poor's credit analyst Brian Janiak. The rating on Pogo's existing subordinated notes are one notch below the company's corporate credit rating in accordance with Standard & Poor's notching criteria. QUEEN'S SEAPORT: Taps Jeffer Mangels as Reorganization Counsel -------------------------------------------------------------- Queen's Seaport Development, Inc., asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Jeffer Mangels Butler & Marmaro LlP as its general reorganization counsel. Jeffer Mangels is expected to: a) advise the Debtor of its duties and responsibilities as a debtor-in-possession in the continued management and operation b) analyze the Debtor's financial situation and prepare its petitions, schedules, statements of affairs and s proposed plan of reorganization; c) represent the Debtor at the meeting of creditors, confirmation hearing for the proposed plan and other hearings related to the Debtor's bankruptcy case; c) represent the Debtor in adversary proceedings and other contested bankruptcy matters; and d) perform other legal services that are incident and necessary to the Debtor's chapter 11 case. Joseph A. Eisenberg, Esq., a Partner at Jeffer Mangels, is the lead attorney for the Debtor. Mr. Eisenberg discloses that the Firm received a $100,000 retainer. Queen's Seaport had not yet received Jeffer Mangels' hourly rates for its professionals when the Debtor filed the employment application with the Court. Jeffer Mangels assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Long Beach, California, Queen's Seaport Development, Inc., -- http://www.queenmary.com/-- operates the Queen Mary ocean liner, various attractions and a hotel. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. C.D. Calif. Case No. 05-15175). When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. RIBILICIOUS LLC: Case Summary & 22 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Ribilicious, LLC 310 Old Vine Street, Suite 101 Lexington, Kentucky 40507 Bankruptcy Case No.: 05-50900 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Best Que, LLC 05-50899 Hot Concept, Inc. 05-50901 Chapter 11 Petition Date: March 18, 2005 Court: Eastern District of Kentucky Debtor's Counsel: Martin B. Tucker Swayer & Glancy 3120 Wall St., Suite 310 Lexington, KY 40513 Tel: (859) 223-1500 Estimated Assets Estimated Debts ---------------- ---------------- Ribilicious, LLC $100,000 to $500,000 $100,000 to $500,000 Best Que, LLC $1M to $10M $1M to $10M Hot Concept, Inc. $100,000 to $500,000 $500,000 to $1M A. Best Que, LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Famous Dave's of America $357,937 PO Box 86 Minneapolis, MN 55486-2369 The IJ Company $173,732 4721 Singleton Station Road Louisville, TN 37777 MJMT, Inc. $84,634 667 Reilly Road Cincinnati, OH 45215 Advanced Electrical Service $69,144 The Roberts Group P.S.C. $40,582 CBL & Associates Management, Inc. $29,062 c/o Eastgate Mall Supreme Lobster & Seafood $21,745 Insight Media Advertising $20,184 BWC State Insurance Fund $13,197 Corporate Processing Department Young Contracting Services $6,000 Buchanan Ingersoll $4,743 Piazza Produce Company $4,528 General Sports Corporation $4,169 Vasey Commercial Heating & Air $2,513 Lifeskills Center for Leadership $1,536 Ignite $1,442 Roto-Rooter $1,287 Edward Don & Company $1,224 LaGrange & Associates Inc. $1,000 Diversey Lever, Inc. $756 B. Hot Concept, Inc.'s 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bob Evans $135,000 BEF REIT, Inc. 3776 South High Street Columbus, OH 43207-4000 Griffith, Delaney & Hillman $3,296 429 13th Street PO Box 1360 Ashland, KY 41105-1360 SOLUTIA INC: Gets Court Nod to Walk Away from Gateway Contracts --------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates had contracted with Gateway Energy WGK, LLC, in 1998 for the construction and operation of a separate plant at the William G. Krummrich Plant in Sauget, Illinois. Solutia and Gateway entered into: (a) a Land Lease dated June 8, 1998, pursuant to which Gateway leases land at the Krummrich Facility for the Gateway Plant; and (b) a related Service Agreement dated June 8, 1998, that governs Gateway's provision of the Steam Services to Solutia and the Guests. In connection with the execution of the Gateway Services Agreement, Gateway Energy Systems, LC, Environmental Management Corporation, Energy Equities L.C., G&P Energy Equities, L.C., and Ameren Corporation executed a performance-related Guaranty in favor of Solutia for Gateway's obligations under the Gateway Services Agreement and the Land Lease. The Land Lease and the Gateway Services Agreement both run for terms of 20 years and expire in October 2019. Solutia pays Gateway $3.7 million per year for the Steam Services, $1.1 million of which Solutia allocates to the Guests under the Operating Agreements. Pursuant to a separate operating and maintenance agreement between Gateway and EMC, EMC operates the Gateway Plant and provides Steam Services to Solutia and the Guests on Gateway's behalf, and has been doing so since 2000. Financing of the Gateway Plant To finance the construction of the Gateway Plant, Gateway initially borrowed $16 million from Mercantile Bank National Association under a construction bridge loan pending the consummation of additional financing. Gateway later refinanced the construction loan and completed the Gateway Plant through its issuance of an $18.6 million senior note due 2019, to Teachers Insurance and Annuity Association of America, and through equity contributions from Gateway's members in the initial amount of $2.22 million. The outstanding principal and interest on the Note owed to Teachers is currently in excess of $16 million. Pursuant to the terms of the Gateway Services Agreement, if Solutia breaches that agreement before its expiration in 2019, Gateway has the contractual right to damages in accordance with a pre-negotiated schedule. Gateway granted UMB Bank of St. Louis, as collateral agent for Teachers, a first priority security interest in the Gateway Services Agreement and any claims to which Gateway would be entitled to secure Gateway's payment obligation under the Note. Solutia also entered into a Consent and Agreement with UMB Bank, pursuant to which Solutia agreed to assume Gateway's obligation for the payment to Teachers of the Note if Solutia terminates the Gateway Services Agreement, terminates the Land Lease or fails to perform material obligations or covenants under the Gateway Services Agreement. Thus, although Gateway is the party to the Gateway Services Agreement with Solutia, Teachers has asserted, pursuant to the Consent and Agreement, that it is entitled to enforce all obligations under the Gateway Services Agreement directly against Solutia. Solutia Decides to Reject Gateway Lease Solutia is paying about $2.6 million per year under the Gateway Contracts, which cannot be re-allocated to the Guests, for Steam Services that are no longer being used. The Gateway Contracts have become administrative burdens exposing Solutia to $2.6 million in annual costs that would total $39 million through the remaining 15-year terms of the Gateway Contracts. Solutia explored alternatives to rejecting the Gateway Contracts including the possibility of assigning them to a third party for value. But because of the complex nature of Solutia's relationships with the Guests under the Operating Agreements and that the Gateway Plant is physically located on and connected to the Krummrich Facility, it was unlikely for any third party to step into Solutia's shoes with respect to the Gateway Contracts. Instead, Solutia has worked with Gateway, Teachers and EMC to negotiate a consensual transaction pursuant to which Solutia will reject the Gateway Contracts, agree with Gateway and Teachers on a rejection damage claim and agree to terminate the Performance Guaranty. Over the past several months, Solutia has been in discussions with various alternate providers to deliver Steam Services to the Guests at the Krummrich Facility after rejecting the Gateway Contracts. Solutia has explored the possibility of leasing new boilers and related equipment from third parties, as well as obtaining replacement Steam Services in connection with a third-party operator's purchase and operation of the existing Gateway Plant. Solutia decided that the most cost-effective alternative for its replacement of Steam Services would be through a third-party's purchase and operation of the Gateway Plant. Thus, Solutia and Gateway have negotiated with EMC, the current operator of the Gateway Plant, and Industrial Steam Products, Inc. with respect to the sale of the Gateway Plant and the use of those assets to provide Steam Services to the Guests at the Krummrich Facility. After carefully evaluating proposals from both EMC and Industrial, Solutia favored EMC's proposal. Although both had substantially the same fixed annual fixed costs, Industrial did not propose a mechanism for the reduction in these costs over time. Therefore, Solutia, Gateway, Teachers and EMC agreed to an asset purchase agreement, pursuant to which EMC is required to purchase the Gateway Plant and close the sale by February 24, 2005. Solutia and EMC further agreed to a services agreement, which would run for an initial five-year term and continue thereafter unless and until terminated with 24 months notice. Because the EMC Services Agreement would contemplate a reduced level of Steam Services and because Solutia can re-allocate 100% of the costs for that reduced service level to the Guests under the Operating Agreements, Solutia's costs for procurement of the Steam Services going forward will be reduced to zero. This will enable Solutia to save $2.6 million per year as compared to payments to Gateway under the Gateway Contracts, which could total $39 million over the remaining terms of the Gateway Contracts. Although Solutia's rejection of the Gateway Contracts will expose Solutia to a significant rejection damage claim, the claim will be outweighed by the projected long-term savings under the EMC Services Agreement. As part of the overall sale transaction, Gateway has agreed to assign the Land Lease to EMC to enable EMC to operate and maintain the Gateway Plant at the Krummrich Facility. There are no impediments to Solutia's assumption of the Land Lease because Solutia and Gateway have agreed that there are no defaults that need to be cured and that there is adequate assurance of Solutia's future performance under the Land Lease. Resolution of Teachers' Rejection Damage Claim Gateway and UMB Bank both filed proofs of claim against Solutia for $20.2 million in damages in the event Solutia rejects the Gateway Contracts and for $200,000 for other prepetition amounts due under the Gateway Contracts. Solutia decided to allow Teachers' asserted rejection damage claim. Solutia is willing to grant Teachers an allowed prepetition unsecured claim against its estate for $20,391,317, effective on the closing of the sale of the Gateway Plant to EMC. Effective Date Solutia wants its rejection of the Gateway Contracts, termination of the Performance Guaranty, and assumption and amendment of the Land Lease be effective as of the Closing Date of the sale transaction between Gateway and EMC. Accordingly, the Debtors sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authority to: (a) reject the Gateway Contracts; (b) terminate the Performance Guaranty; (c) assume and amend the Land Lease; (d) resolve Teachers' rejection damage claim; and (e) enter into the EMC Services Agreement. The Operating Agreements generally govern the relationships between Solutia and the Guests and allocate certain costs between the parties for utility and other ancillary support services used by them at the Krummrich Facility. In particular, Solutia is obligated to provide certain steam, boiler feed water and compressed air service to the Guests for use in their daily operations. 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. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPHERION CORP: Names Anne Szostak to Board of Directors ------------------------------------------------------- Spherion Corporation (NYSE:SFN) appointed Anne Szostak to its board of directors, effective immediately. This appointment expands the number of directors from seven to eight. Ms. Szostak, age 54, has more than 30 years of experience, primarily in banking and human resources. She has spent the majority of her career at FleetBoston Financial in a variety of executive management roles, most recently serving as executive vice president and corporate director of human resources until her retirement in 2004. Ms. Szostak also previously served as chairman and CEO of Fleet Bank-Rhode Island and chairman, president and CEO of Fleet-Maine. She is currently a member of the board of directors of Tupperware Corporation and Belo Corporation and is Chairman of the Board of Governors of the Boys & Girls Clubs of America. Steven S. Elbaum, Spherion's Chairman, stated that, "The Board is delighted to add Anne Szostak as an independent director. Her many years of senior management experience in banking, financial services and human resources will serve Spherion well." Ms. Szostak will also serve on the Board's Corporate Governance committee. About the Company Spherion Corporation is a leader in the staffing industry in North America, providing value-added staffing, recruiting and workforce solutions. Spherion has helped companies improve their bottom line by efficiently planning, acquiring and optimizing talent since 1946. To learn more, visit http://www.spherion.com/ * * * As reported in the Troubled Company Reporter on Sept. 6, 2004, Moody's Investors Service has withdrawn the ratings of Spherion Corporation to reflect the redemption of the company's rated debt securities. These ratings have been withdrawn: * $89.6 million convertible subordinated notes due 2005, previously rated B2 (withdrawn as of August 27, 2004); * Senior Implied, rated Ba3; * Issuer Rating, rated B1. Moody's withdrawal of Spherion Corporation's ratings reflects the company's redemption of its rated debt with proceeds from the sale of its discontinued operations and an expansion of its current credit facility. SPIEGEL INC: Taps Michael Hannafan as Illinois Local Counsel ------------------------------------------------------------ On Nov. 18, 2003, the U.S. Bankruptcy Court for the Southern District of New York authorized the Official Committee of Unsecured Creditors to retain Zuckerman Spaeder LLP as its special conflicts counsel, nunc pro tunc to October 2, 2003. Zuckerman rendered legal services that included, among other things, reviewing, investigating, and prosecuting claims or causes of actions against third parties, like KPMG LLP and others with which the Committee's counsel, Chadbourne & Parke LLP, has a conflict of interest or is otherwise unable to represent the Committee. On Feb. 18, 2005, Zuckerman sought and obtained the Court's authority to bring a legal action on behalf of the Debtors' estates against KPMG in an Illinois court. Norman L. Eisen, Esq., at Zuckerman, in Washington, D.C., tells the Court that the retention of a local counsel is typical where an out-of-state firm wishes to file an action in Illinois. Accordingly, the Committee asks Judge Blackshear for authority to retain Michael T. Hannafan & Associates Ltd. as its Illinois local counsel, nunc pro tunc to March 10, 2005. Mr. Eisen relates that Hannafan has significant experience in Illinois courts and all of the firm's lawyers are admitted to the Illinois bar. Hannafan will be able to provide Zuckerman with substantive and practical guidance regarding the policies and practices of Illinois courts. As the Committee's local counsel, Mr. Hannafan will assist Zuckerman by: (a) reviewing, investigating, and, if appropriate, prosecuting claims or causes of actions against third parties; (b) appearing before the Court and any other court to protect the interests of the estate; (c) performing all other necessary legal services requested by the Committee in connection with the matters for which it is being retained; and (d) otherwise representing the Committee in matters where it so directs. The Committee assures the Court that in performing the required tasks, Hannafan will coordinate with Zuckerman to avoid duplication of expense to the estate. Michael T. Hannafan, Esq., a principal of the firm, attests that the firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtors' estates or creditors. Mr. Hannafan will be paid on an hourly basis. The attorneys and professionals presently designated to represent the Committee, and their hourly rates are: Michael T. Hannafan $500 Blake T. Hannafan $340 Nicholas A. Pavich $300 Paralegal Assistance $50 Mr. Hannafan may use one or more additional lawyers in connection with its engagement. The hourly rates are subject to periodic adjustments from time to time. Mr. Hannafan will also be reimbursed for actual, necessary expenses incurred. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Wants to Conduct Eddie Bauer Store Closing Sales ------------------------------------------------------------- Prior to the closing of each Eddie Bauer home retail store, whether in accordance with the amendment or termination of a Home Store lease, the rejection of the lease, pursuant to a Lease Swap Agreement or any other transaction authorized by the U.S. Bankruptcy Court for the Southern District of New York, Spiegel, Inc., and its debtor-affiliates may find it in their best interest to sell inventory and fixture and conduct store closing sales with respect to certain Home Stores. In this regard, the Debtors seek the Court's permission to conduct Store Closing Sale at Eddie Bauer Home Stores and, if necessary, in some Eddie Bauer retail apparel stores governed by a Home Store Lease, in accordance with the guidelines previously negotiated with the landlords of those Eddie Bauer stores and as approved by the Court in connection with previous store closings. The Debtors note that absent the proposed liquidation of Eddie Bauer's Home Division and the necessary store closures and immediate liquidation of the inventory at the Home Stores, the Debtors will continue to suffer losses to the detriment of their creditors and their estates, and will fail to maximize recovery for their estates. To conduct of the Store Closing Sales and related transactions, the Debtors ask the Court that they be presumed to be in compliance with any licensing and other requirements governing the conduct of store closing or other inventory clearance sales, including state and local statutes and regulations establishing licensing, registration, or permitting requirements, waiting periods, time limits, bulk sale restrictions or augmentation limitations that would otherwise apply to the Store Closing Sales. The Debtors want each and every federal, state or local agency, department or governmental authority with authority over the Store Closing Sales, and all newspapers and other advertising media in which the sale is advertised, to allow them to consummate the transactions without requiring any further approvals, licenses or permits of any governmental authority, in each case. Upon the fixing of the date of closure of a particular Home Store, if a Store Closing Sale is to be conducted, the Debtors will provide notice to the landlord and the Attorney General of the state in which the Home Store is located by no later than 14 days before the date on which the Debtors intend to commence the Store Closing Sale. The Store Closing Sales will commence or continue at some home stores or related Eddie Bauer apparel stores after the Debtors' Chapter 11 Plan is confirmed. The Debtors do not intend to hire a liquidator to conduct the Store Closing Sales at this time. If the Debtors subsequently decide so, they will seek the Court's approval by a separate request and hearing. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPX CORP: Fitch Affirms Senior Debt Ratings at BB & BB+ ------------------------------------------------------- Fitch affirmed the ratings for SPX Corporation's senior unsecured debt and senior secured bank debt at 'BB' and 'BB+', respectively. The Rating Outlook has been revised to Stable from Evolving. At Dec. 31, 2004, SPX had approximately $2.5 billion of debt outstanding. The Rating Outlook revision to Stable recognizes the anticipated reduction in debt and leverage after SPX completes its divestitures of Edwards Systems Technology and Kendro. Estimated proceeds of nearly $2 billion from the divestitures, including BOMAG, which was sold in January 2005, will be used to pay down most of SPX's bank term debt and senior notes. Total debt on the balance sheet is expected to decline to around $800 million. In addition to reducing debt by approximately $1.7 billion, the company plans to repurchase 10 million shares of its stock for roughly $450 million. Fitch estimates pro forma debt/EBITDA will fall below 2.0 times compared to historical levels above 3.0x. The ratings also consider SPX's diverse portfolio of businesses, low capital intensity, a renewed focus on operations, and the implementation of more conservative financial policies than in the past. SPX has reduced its target range for debt/EBITDA to 1.5x- 2.0x (using gross debt) versus its previous net debt/EBITDA target of 2.0x-2.5x. Despite SPX's planned debt reduction, however, the ratings are constrained by concerns about operating challenges and the eventual costs and effectiveness of SPX's efforts to resolve them. Operating margins and cash flow declined significantly in 2004 even as general economic conditions improved. While higher raw material costs were partly to blame, SPX believes its decentralized organizational structure has contributed to weak results and is implementing a number of actions to better integrate its businesses and improve management oversight. As part of the overall restructuring of its operations, SPX is taking steps to improve productivity, supply chain management, management information systems, and new product development. Given the broad scope of the operating, governance, and management changes to be accomplished, Fitch believes the timing of a turnaround in SPX's performance is uncertain, although the company expects to see improving margins after the first quarter of 2005. Upon completing the pending divestitures, SPX's estimated debt of $800 million will consist chiefly of $657 million of liquid yield option notes -- LYONs. The notes can be put back to SPX as early as May 2005 ($17 million) and February 2006 ($641 million); SPX may also be liable for $102 million of tax recapture on the notes. SPX's liquidity is supported by cash balances estimated by SPX at $280 million on a pro forma basis following the divestitures and related debt reduction. In addition, SPX has borrowing capacity under a $500 million bank revolver maturing in 2008. Availability under the revolver was reduced by $180 million in letters of credit outstanding as of Dec. 31, 2004. Aside from the potential redemption of LYONs, SPX's uses of cash include annual dividends of around $65 million and a planned doubling of capital expenditures at continuing operations to $80 million in 2005 to fund operating initiatives. SPX is targeting improved working capital investment over the next one to two years and pension contributions are expected to remain minimal through 2005. The ratings incorporate Fitch's expectation that spending on share repurchases and acquisitions will remain modest until SPX has demonstrated progress in addressing its operating and management issues. Further review of the ratings will revolve around SPX's ability to rebuild the company's operating performance and cash flow, and to resolve concerns about potential liabilities resulting from shareholder lawsuits and other legal actions against the company. SUNSTATE EQUIPMENT: Moody's Puts B3 Rating on Planned $175M Notes ----------------------------------------------------------------- Moody's Investor Service has assigned a B3 long-term rating to Sunstate Equipment Co., LLC's proposed $175 million, second priority, senior secured notes, due 2012. The rating agency also assigned a B2 senior implied and a Caa1 senior unsecured issuer rating to the company. The rating outlook is stable. The B2 senior implied rating reflects Moody's expectation that Sunstate's credit metrics and operational performance will be challenged by: 1) the high leverage the company will carry as a result of a large distribution to the controlling shareholder and the redemption of an equity interest held by Prudential; 2) the ongoing cyclicality of the equipment rental sector; 3) the need to fund the expansion of its rental fleet as the market recovers; and, 4) potential competition from larger and better capitalized enterprises. However, Moody's believes that Sunstate has some important strengths that help to mitigate these challenges including: 1) participation by Sunstate in the recovery of the non- residential construction market; 2) Sunstate's operating in a niche market with the focus on short-term rentals; and 3) the company's maintaining relationships with a diverse customer base across all end markets within the construction industry. The B3 rating of the second lien notes, which will have Sunstate Equipment Co. (a holding company that is a wholly-owned subsidiary of Sunstate) as a co-issuer, reflects the junior position relative to the security interest of the $150 million first-lien facility on substantially all of Sunstate's property and equipment. Moody's has not assigned a rating to the senior securities. The ratings incorporate a number of key expectations including the following: 1) Sunstate will strengthen its debt protection measures as the US construction rental market continues to recover; 2) the company will not likely, during the intermediate term, make any further member distributions beyond what is currently proposed; 3) excess cash could be used for debt repayment; and, 4) the completion of the new $175 million second-lien notes, in combination with the new $150 million first-lien credit facility, which is already fully underwritten, will afford Sunstate with a simplified capital structure by redeeming the equity sponsor's investment. Moody's believes at this time that Sunstate's first-lien credit facility provides adequate liquidity to absorb growth and seasonal working capital needs with approximately $45 million available at peak utilization. Proceeds from the proposed credit facilities will be used to: 1) refinance approximately $131.6 million in existing debt; 2) redeem $23.6 million of Prudential's equity interests; 3) make a $76.9 million member distribution; and 4) pay $9 million in associated fees and expenses. Sunstate will continue to face important operational and financial challenges. Operationally, the construction equipment rental market remains both highly competitive and cyclical. Sunstate significantly scaled back its capital expenditures during the recent economic downturn as it sold off its excess fleet, mitigating the impact of the downturn. With the economic recovery underway, Sunstate will require major investment in its fleet, which will strain the company's cash flow. Additionally, the company generates modest levels of cash relative to the potentially high leverage employed in Sunstate's capital structure. The company's small size coupled with the higher leverage makes it vulnerable to potential adverse operating and financial risks. Also, Moody's believes that the contemplated distribution will result in a significant increase in leverage, with proforma debt/Adjusted EBITDA at December 31, 2004 rising from 2.38x to 4.50x. This represents a much more aggressive financial strategy than in the past, and it increases financial risk materially. Finally, the priority of claim of the second- lien notes will remain junior to that of the large, first-lien facility. The non-residential construction market, which is the main driver for equipment rental industry, is experiencing a solid recovery with spending growth projected to be in the mid to high-single digits over the next two years versus the negative growth experienced in mid-2001 through 2003. This more favorable industry outlook should support continued improvement in Sunstate's utilization rates, operating margins, and cash generation. As a result, Moody's anticipates that Sunstate will be able to fund a majority of its rental fleet expansion from internally generated cash. Moody's believes that Sunstate will also benefit from the continuation of the US economic recovery. This recovery should support stronger construction spending levels and consequently more robust fundamentals for the equipment rental sector. As a result, Sunstate's credit metrics are expected to show steady improvement during the next two years. Upon closing of the second-lien notes Sunstate will have extended its debt maturity profile until mid-2009 when the first-lien facility matures and redeemed all outstanding preferred shares. Notwithstanding favorable industry outlook and the potential benefits to Sunstate, the company faces considerable challenges. The equipment industry is highly competitive with over 15,000 participants. Additionally, large OEMs with significant financial resources are entering the equipment rental business to create another outlet for their products and to benefit from projected growth in the rental market. However, Moody's believes that Sunstate's business model of providing predominately very short- term of daily and weekly rentals to local contractors in select markets mitigates the threat from OEM's, which desire long-term contracts with regional and national contractors. The industry will also remain highly cyclical. To remain competitive Sunstate must continue with significant capital purchases with projected outlays of approximately $60 million in 2005. Over the past three years Sunstate averaged $25 million in CAPEX. Most CAPEX occurred in 2004, which totaled $49 million. Partially offsetting the capital disbursement requirement is an active secondary market for used construction equipment. The sale of equipment into this market represents a materially smaller portion of cash flow for Sunstate than for many of its competitors. Importantly, Sunstate has maintained prudent depreciation rates for its rental fleet. Consequently, residual values of equipment sold in the secondary market have historically been very close to the realization value. Despite the severe downturn in the equipment rental sector from 2001 through 2003, Sunstate managed to maintain solid debt protection measures. For 2004 the ratio of EBIT to interest expense was a strong 2.80x and the ratio of debt to EBITDA was 2.23x. Free cash flow to total debt was a weak 2% in 2004, but reflects the beginning of Sunstate's intense CAPEX program relative to the expenditures in previous years. Moody's remains concerned with Sunstate's significantly increased net debt of approximately $116 million coupled with a sizeable distribution of $76.9 million to members, and an aggressive CAPEX program. As a result, all debt protection measures will be strained. However, improving industry fundamentals should support steady improvement through 2006. As Sunstate capitalizes on this recovery, debt protection measures should become more solidly supportive of the rating. Sunstate, founded in 1977 and headquartered in Phoenix, Arizona is a regional equipment rental company in the Southwest region. THORNBURG MORTGAGE: Fitch Puts BB- Rating on $50MM Preferred Stock ------------------------------------------------------------------ Fitch rates Thornburg Mortgage, Inc.'s -- TMA -- issuance of $50 million of 8.0% series C cumulative redeemable preferred securities 'BB-'. The Rating Outlook is Stable. This transaction is expected to be completed on March 22, 2005. Concurrent with this action, Fitch affirmed the rating at 'BB', with a Positive Rating Outlook on TMA's senior unsecured debt. TMA's ratings reflect the company's good asset quality, improving funding diversity, and solid risk-based capitalization. Rating concerns center on the company's significantly encumbered balance sheet, sizable debt roll-over risk, and rising competition for residential mortgage originations. The single notch between the senior unsecured and preferred stock ratings is based largely upon the relatively limited distance within TMA's balance sheet, pro forma for the preferred stock transaction, between the first dollar of senior unsecured debt and the last dollar of preferred stock. Due to the relatively small dollar amounts of these instruments relative to the company's entire capital structure, there is only about 125 basis points of capitalization separating the two points. In addition, the single notch also reflects that the recognition that TMA's overall risk profile is improving. This view is based in large part on the company's continued progress at reducing its reliance upon reverse repurchase agreements as a primary funding source and the increased use of other instruments such as collateralized debt obligations, asset-backed commercial paper, and unsecured capital such as senior unsecured notes and preferred stock. While good progress has been made over the past 12 months, Fitch will be closely monitoring the sustainability of the improvements. The rating is also based on Fitch's expectation that TMA will not issue any subordinated debt over the intermediate term. Subordinated debt would be notched off the senior debt rating with the preferred stock rating being notched off of the subordinated debt. The difference in Rating Outlook for the senior notes relative to the preferred stock factors in Fitch's expectation that TMA will continue to improve its funding profile by reducing reliance on reverse repurchase agreements and, over time, increase the component of senior and unsecured financings in its funding structure. These elements would improve the credit profile of the senior notes to a greater degree than the preferred stock. The preferred stock is being issued by Thornburg Mortgage Inc. and will pay dividends at a rate of 8.00% per annum. If dividends are in arrears for more than six quarters, which need not be consecutive, preferred holders may elect two additional members to Thornburg's board of directors. The securities are redeemable after a period of five years. Fitch expects proceeds to be used to finance TMA's continued asset growth. Based in Santa Fe, NM, TMA is among the nation's largest mortgage real estate investment trusts -- REIT. The company is focused on underwriting, purchasing, and holding investments in adjustable- rate residential mortgages. TMA originates and purchases adjustable-rate jumbo mortgages backed by single-family residential properties owned by predominantly high quality borrowers. The company is also an originator, as well as purchaser, of mortgage-backed securities from Freddie Mac, Fannie Mae, and a diverse range of private institutions. As of Dec. 31, 2004, TMA had $29.2 billion of assets and $1.8 billion of shareholders' equity. UAL CORP: Committee Wants Air Wisconsin Agreement Modified ---------------------------------------------------------- The Official Committee of Unsecured Creditors asks the U.S. Bankruptcy Court for the Northern District of Illinois to modify its Order dated September 19, 2003, authorizing UAL Corporation and its debtor-affiliates to enter into an Amended United Express Agreement with Air Wisconsin Airlines Corporation. Specifically, the Committee wants the Court to remove the provision whereby Air Wisconsin receives Additional Payments in case the Debtors reject, modify, amend or fail to assume the Amended Agreement. The Additional Payments have been running about $5,000,000 per month. Pursuant to the Amended Agreement, the Debtors pay Air Wisconsin for services rendered plus an additional 10%. Air Wisconsin holds the Additional Payments in case the Debtors do not assume the Amended Agreement. Since the Order, the Debtors have paid Air Wisconsin approximately $90,000,000 in Additional Payments, above and beyond payments for regular services, Carole Neville, Esq., at Sonnenschein, Nath & Rosenthal, in New York City, relates. The Committee did not oppose the Additional Payment provision at the time it was proposed because the Debtors' emergence from bankruptcy appeared imminent. The Committee was advised that the Additional Payments would not amount to much and the payments would be made for only a few months. However, the circumstances in these proceedings have changed. Exit dates have been extended repeatedly. The Debtors have been in bankruptcy for double the amount of time predicted when the Order was granted. As a result, the punitive financial impact of the Additional Payments has been magnified. The Additional Payments now exceed all bargained-for savings contemplated by the Debtors under the Amended agreement. Ms. Neville asserts that the Additional Payments constitute a significant burden to the estate. The Court should grant the Committee's request because if the Debtors continue to make the payments and reject the Amended Agreement, Air Wisconsin will attempt to: 1) retain over $100,000,000 as an administrative claim; 2) receive an allowed general unsecured claim for rejection damages; and 3) retain all regularly scheduled payments received pursuant to the Amended Agreement. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Wants to Amend $100 Million LaSalle L/C Facility ---------------------------------------------------------- USG Corporation and its debtor-affiliates believe that since their bankruptcy petition date, they have maintained a very strong cash position. Specifically, the Debtors had approximately $300 million in cash and marketable securities, which amount they increased to approximately $1.25 billion as of December 31, 2004. As a result of that strong cash position, the Debtors never borrowed under the $350 million postpetition credit facility that they had obtained at the beginning of their Chapter 11 cases. To avoid the continuing fees that were payable under the Previous DIP Facility, the Debtors terminated that facility and replaced it with a $100 million postpetition letter of credit facility with LaSalle Bank National Association in the middle of 2003. While the Debtors terminated the Previous DIP Facility because they did not project any borrowing needs for the remainder of their Chapter 11 cases, they do issue letters of credit from time to time and, therefore, require the L/C Facility. The Debtors seek the U.S. Bankruptcy Court for the District of Delaware's authority to amend the L/C Facility. The Debtors tell Judge Fitzgerald that the L/C Facility amendment is necessary for two main reasons: (1) The Debtors require an increase in the size of the L/C Facility because they anticipate greater letter of credit needs for general corporate purposes, including insurance, environmental and foreign trade credit purposes; and (2) USG Corporation will have access to the L/C Facility only until April 30, 2006, pursuant to the original agreement. Specifically, the Debtors wish to replace $36,040,189 of prepetition letters of credit with postpetition letters of credit issued under the L/C Facility. Bruce A. Czyl, the Director of Risk Management for USG, explains that the Existing Letters of Credit are "evergreen" letters of credit that backstop various insurance, workers' compensation, environmental, reclamation and other obligations of the Debtors. In most cases, the Debtors have been required to post the letters of credit to participate in various state workers' compensation programs, various private insurance programs or to secure environmental and other obligations. Mr. Czyl states that in all cases, since the Debtors are paying their obligations under those programs in the ordinary course, there is no expectation that the Existing Letters of Credit will be drawn, unless they are not renewed. Instead, the letters of credit merely need to be in place to provide security so that the Debtors can participate in the relevant programs or meet state and federal requirements. The cancellation dates for certain of the Existing Letters of Credit are fast approaching. In addition, the letter of credit issuer under the prepetition credit facility may need the consent of 100% of the debt outstanding under that facility to renew the Existing Letters of Credit, which, Mr. Czyl contends, is impractical, especially given the trading in the debt that has occurred prior to and after the Petition Date. If the Existing Letters of Credit are not replaced, they will be drawn by the L/C holders. Mr. Czyl also asserts that, for several reasons, it is not in the interests of the Debtors' estates that the letters of credit be drawn. If the Existing Letters of Credit are drawn, the Debtors may not be permitted to continue their participation in certain of the programs for which the Existing Letters of Credit were issued. This would result to material economic harm to the Debtors' estates. Moreover, the Debtors may have to pay a much higher price to obtain the necessary corporate coverage that is currently supported by the Existing Letters of Credit, Mr. Czyl avers. Even if the Debtors were permitted to continue to participate in the current programs, they might be required to post a much higher level of security or pay a much higher cost to do so. Various beneficiaries likely would question why the Debtors were not able to prevent the Existing Letters of Credit from being drawn, and, notwithstanding facts to the contrary, could view the Debtors as being in a risk category that requires them to pay a much higher cost to participate in the relevant state or corporate program. Mr. Czyl further relates that although the Debtors might try to replace cash received from drawing down the Existing Letters of Credit with new letters of credit under the L/C Facility, it is not clear that the Debtors would be able to do so, and those attempts in any case likely would create a difficult administrative burden on the estates. Regardless of the exact ramifications in each case of the drawing of an Existing Letter of Credit, it is clear that the draw will create significant administrative costs associated with the Debtors being required to explain to state agencies and other parties why the draw occurred and negotiating the Debtors' continued participation in the relevant programs. While the Existing Letters of Credit technically constitute prepetition debt that would be extinguished once they were replaced with postpetition letters of credit, the likelihood that these letters of credit would ever be drawn, absent allowing them to pass their stated cancellation notice dates, is extremely remote, Mr. Czyl says. Therefore, the Debtors are not in any practical sense satisfying prepetition debt by replacing the Existing Letters of Credit, as there is no expectation that those letters of credit ever would be drawn. Mr. Czyl adds that, if it were not for the upcoming expiration dates for the Existing Letters of Credit, it would be customary to replace the letters of credit with letters of credit issued under an exit facility at the time of confirmation of a plan of reorganization. As a result, the Debtors are simply implementing the exchange earlier in the case. It should be noted that USG has continually asserted that it is solvent, a position supported by its current stock price of in excess of $30 per share, which gives USG's equity a value in excess of $1.2 billion. Assuming USG is solvent, if the Existing Letters of Credit were drawn, $36 million of contingent debt for which the Debtors currently are accruing only letter of credit fees would be converted into funded debt for which they would be required to pay full interest at the applicable rate, including potentially the default rate of interest. As such, the draw could increase the Debtors' postpetition cost under the credit facility by approximately $2.3 million per year. In addition, the Amendment extends the maturity date of the L/C Facility until April 30, 2008. Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells Judge Fitzgerald that the terms of the L/C Facility will continue to be superior to the Previous DIP Facility in several respects, including allowing the Debtors to have letter of credit availability at a reduced cost and without restrictive covenants that limit the Debtors' flexibility in operating their businesses. Previous DIP Facility L/C Facility --------------------- ----------- Obligors All Debtors USG Commitment $350 million $100 million, increased to $175 million Availability Subject to a borrowing No borrowing base Base Commitment Fee 50 basis points 25 basis points L/C Fee 200 basis points 50 basis points Fronting Fee 25 basis points None For Letter of Credit Issuances Administrative Approximately $175,000 None Agent Fee annually Covenants Various affirmative None and negative financial and operating covenants Security All of the Debtors' Cash or property assets equal to 103% of the face amount of each letter of credit outstanding Under the L/C Facility, if USG requests that LaSalle issue a letter of credit, USG is required to post cash, cash equivalents or other property with LaSalle for 103% of the face amount of that letter of credit. If the letter of credit is drawn, LaSalle is further authorized to obtain that property notwithstanding the automatic stay as reimbursement for its obligation to pay the holder of the letter of credit and for certain fees under the L/C Facility. Mr. Heath relates that granting a lien to LaSalle in property to secure letter of credit obligations and permitting it to obtain property if a letter of credit is drawn are customary terms in letter of credit facilities of similar type. The Debtors also ask the Court to: * continue to authorize them to grant LaSalle a lien in the cash or other property used to secure their reimbursement obligations under the L/C Facility; and * modify the automatic stay to permit LaSalle to obtain that property if a letter of credit is drawn. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/--through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) VICORP RESTAURANTS: Delays Form 10-Q Filing Due to Ongoing Probe ---------------------------------------------------------------- VICORP Restaurants, Inc., will delay the filing of its Form 10-Q for the first quarter ended Jan. 27, 2005. This delay is due to VICORP's ongoing evaluation of the views expressed by the Office of the Chief Accountant of the SEC on Feb. 7, 2005, in a letter to the American Institute of Certified Public Accountants regarding certain operating lease accounting issues and their application under generally accepted accounting principles. VICORP's management has made a preliminary determination that its current method of accounting for certain of its leases is not consistent with the views expressed by the SEC staff. VICORP has not yet reached a final determination as to whether these matters will require a restatement of prior period financial statements, but believes that a restatement is likely. VICORP anticipates that the restatement of prior period financial statements will not have any impact on VICORP's previously reported cash flows or revenues. VICORP is working diligently to complete its review and to quantify the impact of any necessary adjustments on each of the affected prior periods and the current period. The lenders participating in VICORP's senior credit facility have agreed to extend the time period for VICORP to deliver financial information required under the senior credit facility until April 15, 2005, in order to avoid an event of default under the senior credit facility. VICORP anticipates that it will file its Form 10-Q on or before April 15, 2005. About VICORP Restaurants, Inc. VICORP Restaurants, Inc., operates family-dining restaurants under two proven and well-recognized brands, Village Inn and Bakers Square. VICORP, founded in 1958, has 376 restaurants in 25 states, consisting of 273 company-operated restaurants and 103 franchised restaurants. Village Inn is known for serving fresh breakfast items throughout the day, and we have also successfully leveraged its strong breakfast heritage to offer traditional American fare for lunch and dinner. Bakers Square offers delicious food for breakfast, lunch and dinner complemented by its signature pies, including dozens of varieties of multi-layer specialty pies made from premium ingredients. Our headquarters are located at 400 West 48th Avenue, Denver, Colorado 80216. * * * VICORP's 10-1/2 senior notes due 2011 carry Moody's and Standard & Poor's single-B ratings. WINN-DIXIE: Court Orders Timely Payment to Utility Companies ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York directs Winn-Dixie Stores, Inc., and its debtor-affiliates to pay on a timely basis, in accordance with their prepetition practices, all undisputed invoices in respect of postpetition utility services rendered by utility companies to the Debtors. Any undisputed charge for utility services provided after the Petition Date will constitute an administrative expense. The Court continues the hearing indefinitely with respect to JEA, formerly known as Jacksonville Electric Authority, pending the conclusion of further negotiations with the Debtors. The Court also continues the hearing indefinitely with respect to BellSouth Business Systems, Inc., BellSouth Long Distance, Inc., and BellSouth Telecommunications, Inc., pending the conclusion of further negotiations with the Debtors. BellSouth is restrained from discontinuing, altering, or refusing service to the Debtors on account of unpaid charges for prepetition services and from requiring the payment of a deposit or other security in connection with the continued provision of services to the Debtors. To permit further negotiations with the Debtors, the Court continues the hearing until April 12, 2005, at 10:00 a.m. with respect to these Utility Companies: * American Electric Power, * Alabama Power Company, * Carolina Power & Light d/b/a Progress Energy Carolinas, * Duke Energy Corporation d/b/a Duke Power Company, * Entergy Gulf States, Inc., * Entergy Louisiana, Inc., * Entergy Mississippi, Inc., * Entergy New Orleans, Inc., * Florida Power and Light Company, * Florida Power Corporation d/b/a Progress Energy Florida, * Orlando Utilities Commission, * Tampa Electric Company, and * Virginia Electric and Power Company d/b/a Dominion Virginia Power and Dominion North Carolina Power. The Utility Companies will be deemed to be adequately assured of payment under Section 366 of the Bankruptcy Code until and unless the Court rules otherwise. 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. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: District Court Gives Prelim Nod on Settlements ------------------------------------------------------------ Judge Denise Cote of the U.S. District Court for the Southern District of New York preliminarily approved the settlement between JPMorgan Chase & Co. and Lead Plaintiff Alan G. Hevesi, as Comptroller of the State of New York, Administrative Head of the New York State and Local Retirement Systems and Trustee of the New York State Common Retirement Fund. The District Court permitted the Plaintiffs' Co-Lead Counsel to utilize, and ordered JPMorgan to pay, up to $3,000,000 out of the Settlement Fund to fund the Notice and Administration Fund incurred by Plaintiffs' Co-Lead Counsel in connection with the Settlement. Judge Cote severed the class claims against JPMorgan from the claims against the non-settling parties, pending a final hearing on the Settlement. According to Bloomberg News, the District Court also granted preliminary approval to settlements involving defendants: -- WestLB AG, formerly Westdeutsche Landesbank Girozentrale, -- Mizuho International plc, -- BNP Paribas Securities Corp., -- Mitsubishi Securities International plc, formerly Tokyo- Mitsubishi International plc, -- Caboto Holding SIM S.p.A., -- Deutsche Bank Alex Brown Inc., formerly known as Deutsche Bank Securities Inc., -- Banc of America Securities LLC, -- Fleet Securities, Inc., -- Lehman Brothers Inc., -- Credit Suisse First Boston LLC, successor by merger to Credit Suisse First Boston Corp, -- Goldman, Sachs & Co., -- UBS Warburg LLC, and -- ABN AMRO Inc. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: District Court Says Gazpromneft Appeal is Moot --------------------------------------------------------- The United States District Court for the Southern District of Texas previously declined to vacate a temporary restraining order entered by the Bankruptcy Court, enjoining certain entities from participating in Russia' auction of Yuganskneftegas. On March 3, 2005, District Court Nancy F. Atlas directed the parties to advise whether Gazpromneft's Appeal could be dismissed. Yukos Oil Company asserted that the Appeal is moot. Gazpromneft responded that it does not consider the Appeal to be moot because there are other issues pending before the Bankruptcy Court, including Yukos' allegation in a related adversary proceeding that Gazprom violated the TRO. The District Court recognizes that issues remaining before the Bankruptcy Court may generate future appeals, but those appeals will be assigned to the District Court as new cases. Thus, Judge Atlas dismisses Gazpromneft's Appeal as moot. Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: Denies Monetary Liability to Rosneft ----------------------------------------------- YUKOS Oil Company totally rejects any suggestion that money is owed to Rosneft from historical operations of Yukos' subsidiary, Yuganskneftegas as is being alleged by a lawsuit that has been filed against YUKOS by Rosneft in the past few days. A YUKOS Oil Company spokesperson stated on March 15: "The claims made last week by Rosneft are ridiculous and totally unfounded. YUKOS has still not received any formal notification that 77% stock ownership of Yuganskneftegaz has been acquired by Rosneft. As a result, Yukos still considers that Yuganskneftegas continues to be a legitimate asset of YUKOS, and Rosneft has illegally confiscated it and is managing it illegally. To steal our asset and then file a false and unfounded multi-billion dollar lawsuit against YUKOS accusing our company of acting unlawfully in the operation of that asset is ludicrous. These latest allegations take the insanity of the attack against YUKOS by government authorities to a new level. There seems to be no end to the extraordinary lengths that the Russian authorities and its state- owned companies will resort to in order to continue this totally unjustified assault on YUKOS and its employees. "We will defend ourselves against these claims to our fullest ability and we will use every legal avenue open to us." Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) * William W. Kannel Inducted Into American College of Bankruptcy ---------------------------------------------------------------- William W. Kannel, a member in the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., has been inducted into the American College of Bankruptcy. Criteria for selection include: -- the highest standard of professionalism, ethics, character, integrity, professional expertise and leadership in contributing to the enhancement of bankruptcy and insolvency processes; -- sustained evidence of scholarship, teaching, lecturing or writing on bankruptcy or insolvency; and -- commitment to elevate knowledge and understanding of the profession and public respect for the practice. "This is the highest honor that can be bestowed upon a bankruptcy attorney," said Richard E. Mikels, a member in Mintz Levin's Boston office and Chairman of the Bankruptcy, Restructuring and Commercial Law Section, "and we are extremely pleased that the most prestigious of all bankruptcy organizations has recognized Bill for his professional excellence and contributions to the legal profession." The College was formed in 1989 and has approximately 600 Fellows that are selected by a Board of Regents from among recommendations received from the Circuit Admissions Council in each federal judicial circuit. The mission of the College is to honor and recognize distinguished bankruptcy professionals who are qualified for membership in an effort to set standards of achievement for others in the insolvency community, and to fund and assist projects that enhance the highest quality of bankruptcy practice, including undergraduate and graduate programs related to bankruptcy and insolvency. Mr. Kannel practices in the Bankruptcy, Restructuring and Commercial Law Section. His practice focuses primarily in the area of commercial law, workouts and corporate reorganization and has represented various institutional lenders, indenture trustees, bondholders, other creditors, debtors, and trustees in all manner of insolvency proceedings in courts throughout the United States. Mr. Kannel is a member of the American Bar Association, the American Bankruptcy Institute, the Massachusetts Bar Association and is a member of and former chair of the Bankruptcy Law Section of the Boston Bar Association. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC -- http://www.mintz.com/-- is a multidisciplinary law firm with over 450 attorneys and senior professionals in Boston, Washington D.C., Reston, VA, New York, Stamford, CT, Los Angeles and London. Mintz Levin is distinguished by its reputation for responsive client service and expertise in the areas of bankruptcy; business and finance; communications; employment; environmental; federal; health care; immigration; intellectual property; litigation; public finance; real estate; tax; and trust and estates. Mintz Levin's international clientele range from privately held start- ups to Fortune 100 companies in a wide array of industries including biotechnology, venture capital, telecommunications, health care and high technology. Mintz Levin was one of the first law firms to develop complementary consulting capabilities to provide complete solutions to clients' problems, including investment/wealth management, and government and public affairs. ********* 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, Christian Q. Salta, Jason A. Nieva, 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 ***