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/raid1/www/Hosts/bankrupt/TCR_Public/050405.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 5, 2005, Vol. 9, No. 79 Headlines AAIPHARMA INC: Chapter 11 Threat Looms in Background AAIPHARMA INC: Payment Default Prompts S&P to Tumble Rating to D AAMES MORTGAGE: Moody's Downgrades Class B Cert. Rating to B3 ACCERIS COMMS: Appoints Allan Silber as Board Chairman AFFINITY TECH: Warns of Bankruptcy & Receives Going Concern Doubt AFFINITY TECH: U.S. Patent Office Completes Patent Reexamination ALLIED WASTE: Financial Restructuring Cues Fitch to Affirm Ratings AMERICAN BUSINESS: Court OKs $20M Operations Sale to Ocwen Federal AMERICAN BUSINESS: Liquidating Assets & Winding Down Operations AMERICAN RESTAURANT: Noteholders Want Exclusive Periods Terminated ARCHANGEL DIAMOND: Appoints Jonathan N. Dickman as Director & VP ASPEN TECHNOLOGY: S&P Affirms Junk Subordinated Debt Ratings ATA AIRLINES: Court Approves John Denison Employment Agreement ATHLETE'S FOOT: Moody's Downgrades Asset-Backed Bond Rating to Ba2 BOMBARDIER INC: Discloses Fourth Quarter & Annual Financials BSI HOLDING: Liquidating Trustee Issues 3rd Partial Distribution CATHOLIC CHURCH: St. George Asks Court to Extend CCAA Stay CHC HELICOPTER: Post-Split Shares Will Trade at NYSE on April 19 CHC INDUSTRIES: Has Until April 28 to File Objections to Claims CHIQUITA BRANDS: Moody's Assigns B3 Rating to Proposed $150M Debt COVANTA ENERGY: Wachovia Bank Wants Cash Collateral Order Modified CREDIT SUISSE: Fitch Puts BB Rating on $1.4 Mil. Mortgage Certs. DADE BEHRING: S&P Affirms BB+ Subordinated Debt Rating DANA CORP: Revises First Quarter 2005 Earnings Outlook DECISIONONE CORP: Section 341(a) Meeting Slated for April 19 DECISIONONE: Disclosure & Plan Confirmation Hearing on April 19 DELLS MOTOR: Case Summary & 20 Largest Unsecured Creditors DELPHI CORP: Secures $1.2B in Global Steering Column Biz in 2004 DELTAGEN INC: Has Until June 20 to File Chapter 11 Plan DLJ MORTGAGE: Moody's Downgrades Four Certificate Ratings to B3 DORIAN GROUP: Seeks Additional Bids for Assets DOWLING COLLEGE: Moody's Affirms Ba2 Long-Term Rating EXIDE TECH: Board Okays Restricted Stock Grants & Options to CEO FAIRMONT GENERAL: Moody's Affirms Ba2 Bond Rating FEDERAL-MOGUL: Estimation Hearing Scheduled for June 14 GE-RAY FABRICS: Case Summary & 41 Largest Unsecured Creditors GEORGIA-PACIFIC: Buying Back $250 Million Debentures on April 30 GLOBAL CROSSING: Sells Trader Voice Business to WestCom for $25M HIGH VOLTAGE: Choate Hall Approved as Chapter 11 Trustee Counsel HARRAH'S ENT: Hosting First Quarter Conference Call on April 20 HAWAIIAN AIRLINES: Posts $71 Million Operating Profit in 2004 HAWAIIAN AIRLINES: Promotes Dave Kolakowski to Senior Director HIGGINSON OIL: List of 20 Largest Unsecured Creditors HOFFMAN ESTATES: Moody's Downgrades Bond Rating to Ba1 HUGHES NETWORK: Moody's Assigns B1 Rating to Proposed $325M Debt IMMUNE RESPONSE: Liquidity Concerns Trigger Going Concern Doubt INTERNATIONAL UTILITY: Exits from CCAA Protection INTERPUBLIC GROUP: Has Until June 30 to File Annual Report INTERSTATE BAKERIES: Taps Judge Federman as Claims Mediator IPSCO INC: Steelworkers Say Wheat City Metal Lock-Out is Illegal JOHNSONDIVERSEY: Moody's Reviewing Ratings & May Downgrade KAISER ALUMINUM: Taps Dickstein Shapiro as Special Claims Counsel LEIGH ENTERPRISES: Selling Business to IBI Ent. for $955,000 LIFEPOINT HOSPITALS: Ups Purchase Price for Tendered Province Bond LIFEPOINT HOSPITALS: Health Management Acquires Bartow Memorial LITTLE MT. ZION: Files Plan of Reorganization in New York LOUISIANA HOUSING: S&P Downgrades $11.1 Mil. Bond Rating to BB- MACROCHEM CORP: Recurring Losses Prompt Going Concern Doubt MERRILL LYNCH: Moody's Puts Low-B Ratings on Two Mortgage Certs. MORTGAGE CAPITAL: Fitch Downgrades Ratings on Classes G & H Certs. NDCHEALTH CORP: Board Votes to Consider Sale of the Company NDCHEALTH CORP: S&P Junks Subordinated Debt Rating NEWAVE INC: Welcomes David Hanlon as Advisor NORTEL NETWORKS: Names Brian McFadden Chief Research Officer NORTHWESTERN CORP: Montana PSC Okays Wind Energy Proposal NRG ENERGY: Posts $18.1 Million Net Income in Fourth Quarter OAKWOOD HOMES: Trust Inks Pact to Settle $250 Mil. Arkansas Claims OMNI FACILITY: Judge Lifland Confirms First Amended Chap. 11 Plan PARMALAT USA: Farmland Wants Court OK on $61M LaSalle Exit Funding PENN ENGINEERING: Moody's Junks Senior Unsecured Issuer Rating PHYSIOMETRIX INC: Insufficient Cash Triggers Going Concern Doubt PRESIDENTIAL LIFE: S&P Puts Ratings on CreditWatch Negative PROVINCE HEALTHCARE: Noteholders Consent to Merger Amendments SALEM COMMS: Appoints Joe Davis as Chief Operating Officer SALOMON BROTHERS: S&P Downgrades Ratings on Four Class Certs. SEARS HOLDINGS: Inks Employment Agreement with Aylwin Lewis SHC INC: Administrator Has Until May 23 to File Notices of Removal SPIEGEL INC: Court Sets Plan Voting Deadline for May 13 SPIEGEL INC: Expects to Finalize Debt Facility Early This Month STACCATO GOLD: Band-Ore Resources Terminates Shebandowan Agreement STEELCASE INC: Moody's Affirms Ba1 Sr. Implied & Unsec. Ratings SYNTRON BIORESEARCH: Case Summary & 20 Largest Unsecured Creditors TERPHANE HOLDING: Moody's Assigns Ba3 Rating to $30M Debt Add-On TRUMP HOTELS: Files Third Amended Plan of Reorganization UAL CORP: U.S. Bank Holds $35.6 Mil. Liquidated Aircraft Claims USGEN NEW ENGLAND: TransCanada Completes Hydro Asset Purchase VIVENTIA BIOTECH: To Register with SEC to List Stock in AMEX WELLS FARGO: Fitch Puts Low-B Ratings on Four Mortgage Certs. WESTPOINT STEVENS: Motion to Sell All Assets Draws Mixed Reactions WHITE BIRCH: S&P Puts B- Rating on $125 Million Second-Lien Loan WORLDGATE COMMS: Auditors Express Going Concern Doubt * Large Companies with Insolvent Balance Sheets ********* AAIPHARMA INC: Chapter 11 Threat Looms in Background ---------------------------------------------------- aaiPharma Inc. (NASDAQ: AAII) received its anticipated income tax refund of $11.3 million and reached an agreement with the lenders under its senior credit facilities to permit the proceeds of the refund to be used for working capital expenses and other general corporate purposes subject to certain restrictions as detailed in the agreement. Subject to conditions in the agreement, aaiPharma's senior lenders also agreed not to take any action with respect to existing defaults under aaiPharma's senior credit facilities until April 30, 2005. Noteholders & Lenders Continue Talks aaiPharma also confirmed that it did not make the April 1, 2005, interest payment on its 11.5% Senior Subordinated Notes due 2010. The Company had previously announced that it expected that it would not make that payment on the due date. The failure of the Company to make the interest payment within 30 days after April 1, 2005, will entitle the holders of 25% of the outstanding amount of the notes or the trustee under the indenture governing the notes to declare the outstanding amount of the notes immediately due and payable. The Company has continued its discussions with advisors to an ad hoc committee of holders of the notes regarding a potential restructuring. Further, aaiPharma has entered into an agreement that provides a three-week exclusivity period to a third party that is considering a purchase of certain assets of aaiPharma's pharmaceutical products division. The agreement is not a binding agreement with respect to a sale of any assets of aaiPharma's pharmaceutical products division, and the Company cannot provide any assurance that any material asset sale will be agreed upon or completed. Under the agreement, the Company is allowed to engage in discussions with third parties regarding any restructuring or acquisition of its debt or equity securities or the sale of all or substantially all of its assets. Chapter 11 Highly Likely As previously announced, aaiPharma believes that it is highly likely that it will seek protection under chapter 11 of the U.S. bankruptcy code. About the Company aaiPharma Inc. -- http://www.aaipharma.com/-- is a science-based company with corporate headquarters in Wilmington, North Carolina with over 25 years experience in drug development. The company also sells branded pharmaceutical products, including the Darvon(R) and Darvocet(R) product lines, primarily in the area of pain management. AAIPHARMA INC: Payment Default Prompts S&P to Tumble Rating to D ---------------------------------------------------------------- NEW YORK (Standard & Poor's) April 4, 2005 Standard & Poor's Ratings Services lowered its ratings on aaiPharma Inc. to 'D' following the company's failure to pay the $10.5 million interest payment due on April 1, 2005, on its $175 million senior subordinated notes due April 1, 2010. In addition, the ratings were removed from CreditWatch, where they were placed on March 17, 2005, following the company's 8-K filing stating that it may not be able to make the scheduled interest payment. The Wilmington, North Carolina-based specialty pharmaceutical company has subsequently said that it is highly likely that it will seek Chapter 11 bankruptcy protection. aaiPharma continues to negotiate to sell certain pharmaceutical assets, though the timing and proceeds raised from a sale are uncertain. AAMES MORTGAGE: Moody's Downgrades Class B Cert. Rating to B3 ------------------------------------------------------------- Moody's Investors Service downgraded a certificate issued in one transaction by Aames Mortgage Trust in 2001. The transaction is backed mostly by first-lien, fixed rate, sub-prime mortgage loans originated by Aames Financial Corporation and is serviced by Countywide Home Loans, Inc. The Class B certificate issued in Aames Mortgage Trust 2001-1 has been downgraded because the securitization has experienced significant losses causing gradual erosion of credit enhancement provided in the form of overcollateralization. As of February 25, 2005, the realized cumulative loss was 5.74% for the 2001-1 transaction. The existing credit enhancement levels in the transaction do not provide adequate protection to support the rating on the most subordinate certificate class. Moody's complete rating actions are as: Issuer: Aames Mortgage Trust Downgraded: * Series 2001-1; Class B, downgraded to B3 from Ba2 ACCERIS COMMS: Appoints Allan Silber as Board Chairman ------------------------------------------------------ Acceris Communications Inc. (OTCBB:ACRS), said that, in conjunction with the expected sale of its telecommunications business, it has reconfigured its Board of Directors to reflect the new operating strategy and the contracted nature of the continuing operations of the Company. James Meenan and Frank Tanki have resigned as directors of the Company, recognizing that their experience may not materially contribute to the Company's future operating plans. In addition, Kelly Murumets and William Lomicka have resigned in order to downsize the Board to reflect the reduction in the size of the Company and to maintain the ratio of independent to non- independent directors. These changes reduced the current Board size to four members, comprised of Henry Toh and Hal Heaton (both independent) and Allan Silber and Samuel Shimer (both affiliated with Acceris' parent, Counsel Corporation). None of the resignations were for cause. As a result of these changes, the Board has appointed Allan Silber as Chairman of the Board, Henry Toh as Chairman of the Audit Committee and Hal Heaton as Chairman of the Special Committee of Independent Directors. Acceris Communications Inc. -- http://www.acceris.com/-- is a broad based communications company serving residential, small and medium-sized business and large enterprise customers in the United States. A facilities-based carrier, it provides a range of products including local dial tone and 1+ domestic and international long distance voice services, as well as fully managed and fully integrated data and enhanced services. Acceris offers its communications products and services both directly and through a network of independent agents, primarily via multi-level marketing and commercial agent programs. Acceris also offers a proven network convergence solution for voice and data in Voice over Internet Protocol communications technology and holds two foundational patents in the VoIP space. As of December 31, 2004, the Company's equity deficit widened to $61,965,000 compared to a $42,953,000 equity deficit at December 31, 2003. AFFINITY TECH: Warns of Bankruptcy & Receives Going Concern Doubt ----------------------------------------------------------------- Affinity Technology Group, Inc. (OTCBB:AFFI) reported financial results for the fourth quarter and for the full year ended December 31, 2004. Revenues for the quarter were $5,000, resulting in a net loss of $151,000. For the comparable period in 2003, revenues were $504,000 and the Company reported a net income of $29,000. Revenues for the comparable period in 2003 included $500,000 of nonrecurring income related to the settlement of a lawsuit. The weighted average number of shares outstanding during the three months ended December 31, 2004 was 42.1 million, compared to 41.8 million for the same period in 2003. For the year, revenues were $287,000, with a net loss of $217,000, compared to revenues of $518,000 in 2003, with a net loss of $561,000. The weighted average number of shares outstanding during the twelve months ended December 31, 2004, was 41.9 million, compared to 41.5 million for the same period in 2003. At Dec. 31, 2004, Affinity Technology's balance sheet showed a $1,513,523 stockholders' deficit, compared to a $1,329,579 deficit at Dec. 31, 2003. Going Concern Doubt The Company's independent registered public accounting firm, Scott Mcelveen L.L.P., raised substantial doubt about Affinity's ability to continue as a going concern due to the Company's recurring operating losses, accumulated deficit and certain convertible notes in default. Bankruptcy Warning In its Form 10-K for the fiscal year ended Dec. 31, 2004, filed with the Securities and Exchange Commission, Affinity said it has generated substantial operating losses and has been required to use a substantial amount of cash resources to fund its operations. At Dec. 31, 2004, the Company had cash and cash equivalents of $62,756. The Company needs to secure additional capital immediately since it has almost completely exhausted its remaining cash resources. Affinity also disclosed that it doesn't have the resources to repay the principal and accrued interest outstanding under its convertible secured notes, which have become due and payable in full. If any of the holders of these notes takes action to collect the amounts owed by the Company under these notes, it may be forced to consider alternatives for winding down its business, including offering its patents for sale and filing for bankruptcy protection. About the Company Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc., owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant-directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. AFFINITY TECH: U.S. Patent Office Completes Patent Reexamination ---------------------------------------------------------------- Affinity Technology Group, Inc. (OTCBB:AFFI) received a "Notice of Intent to Issue Ex Parte Reexamination Certificate" from the U. S. Patent and Trademark Office on March 30, 2005, relating to its U.S. Patent No. 5,940,811 entitled "Closed Loop Financial Transaction Method and Apparatus". Joe Boyle, Chairman, President and Chief Executive Officer said, "During 2004, our primary focus was the continued prosecution of the reexamination of two of our patents. We are pleased that the reexamination of our second loan processing patent has finally been completed. Consistent with the reexamination of our first loan processing patent, U.S. Patent No. 5,870,721, our second loan processing patent has withstood an extremely lengthy and rigorous reexamination. We believe that the satisfactory conclusion of the reexamination should strengthen our entire patent portfolio. "As we announced last year our patent covering the automated establishment of financial and credit accounts (U.S. Patent No. 6,105,007) is also under reexamination. The reexaminations of our patents have proven to be time consuming and has impeded our ability to execute a successful licensing program and raise additional capital. Our goals for the first part of 2005 are to attempt to raise additional capital, which is an immediate priority for us, and to continue to prosecute the reexamination of U.S. Patent No. 6,105,007." Bankruptcy Warning In its Form 10-K for the fiscal year ended Dec. 31, 2004, filed with the Securities and Exchange Commission, Affinity said it has generated substantial operating losses and has been required to use a substantial amount of cash resources to fund its operations. At Dec. 31, 2004, the Company had cash and cash equivalents of $62,756. The Company needs to secure additional capital immediately since it has almost completely exhausted its remaining cash resources. Affinity also disclosed that it doesn't have the resources to repay the principal and accrued interest outstanding under its convertible secured notes, which have become due and payable in full. If any of the holders of these notes takes action to collect the amounts owed by the Company under these notes, it may be forced to consider alternatives for winding down its business, including offering its patents for sale and filing for bankruptcy protection. About the Company Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc., owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant-directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. At Dec. 31, 2004, Affinity Technology's balance sheet showed a $1,513,523 stockholders' deficit, compared to a $1,329,579 deficit at Dec. 31, 2003. Going Concern Doubt The Company's independent registered public accounting firm, Scott Mcelveen L.L.P., raised substantial doubt about Affinity's ability to continue as a going concern due to the Company's recurring operating losses, accumulated deficit and certain convertible notes in default. ALLIED WASTE: Financial Restructuring Cues Fitch to Affirm Ratings ------------------------------------------------------------------ Allied Waste (NYSE: AW) recently completed its financing plan, including the offering of approximately $100 million of common stock, $600 million of mandatory convertible preferred stock, $600 million senior secured notes due 2015, and refinancing and funding of a new senior secured credit facility. Fitch affirms AW's ratings: -- $3.425 billion senior secured credit facility at 'BB-'; -- 7.25% $600 million senior secured notes due 2015 at 'B+'; -- 6.25% $600 million of three-year mandatory convertible preferred stock at 'CCC+'. In addition, Fitch withdraws the ratings of AW's 10% senior subordinated notes due 2009 and 7.625% senior secured notes due 2006 upon redemption of the securities. The existing ratings on outstanding senior secured notes, senior unsecured notes, senior subordinated notes and convertible preferred stock are 'B+', 'B', 'B-', and 'CCC+', respectively. The Rating Outlook is Negative, reflecting uncertainty regarding AW's ability to reverse margin deterioration through pricing improvements and cost reductions. The company is also searching for a new CEO. The completion of the financing plan has eliminated Fitch's concerns about AW's execution of the plan. The financing plan allowed the company to extend its debt maturity schedule, lower interest costs, and improve financial flexibility. Additional concerns include AW's continued margin deterioration, weak free cash flow outlook, higher capital expenditure requirements, and limited credit profile improvement in the intermediate term. Interest costs are expected to be lower due to the refinancing actions, but additional dividend payments on the new mandatory convertible preferred stock are expected to partially offset the interest savings, continuing to pressure fixed-charge coverage metrics. Stabilization of margins and improved free cash flow could lead to a review of the Rating Outlook. The ratings are supported by AW's solid market positions, the relatively low volatility of the waste industry, and the value of AW's landfill assets. The common stock and preferred stock were issued by Allied Waste Industries, Inc., and senior secured notes were issued by Allied Waste North America, Inc., a wholly owned subsidiary. The proceeds from the financing transactions were used to repay the remaining balance of 10% senior subordinated notes due 2009 ($195 million), to redeem $600 million of 7.625% senior secured notes due January 2006, and to pay off the existing term-loan balance of approximately $1.6 billion. In addition, the proceeds will be used to redeem a portion of 9.25% senior secured notes due 2012 and to retire the remaining balance of 7.875% senior secured notes due 2005 at maturity (approximately $70 million). AW does not have any near-term maturities. The overall capacity of the new senior secured credit facility is $3.425 billion. AW's new revolver due 2010 and institutional letter of credit facility due 2012 have capacity of $1.575 billion and $500 million, respectively (the old revolver and letter of credit capacities were $1.5 billion and $200 million, respectively). The new $1.35 billion term loan matures in 2012. Maturities and covenants have been improved with the refinancing and will give AW more financial flexibility. For example, the maximum debt/EBITDA and minimum EBITDA/interest under the new covenants through the end of 2005 are set at 6.50 times and 1.85x, respectively, compared to old covenants of 5.75x (leverage ratio) through June 30, 2005 and 2.0x (interest coverage ratio) for the quarters starting April 1 through Sept. 30, 2005. EBITDA margins have been declining steadily over the past several years due to rising costs and competitive pricing, which has pressured EBITDA cushion under the old covenants in recent years. With stronger volumes, improved pricing, and better controlled costs, AW could stabilize its margins, which could further improve flexibility under the new covenants. AMERICAN BUSINESS: Court OKs $20M Operations Sale to Ocwen Federal ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the sale of American Business Financial Services, Inc.'s servicing operations to Ocwen Federal Bank FSB for approximately $20 million. The sale is expected to close by May 2, 2005. On Friday, April 1, 2005, the Bankruptcy Court also granted the request by the Office of the U.S. Trustee for authority to appoint an examiner in ABFS' Chapter 11 case, a request that was supported by the Company. It is expected that an examiner will be selected in the next several days who will investigate certain specific issues and prepare and deliver a report summarizing his or her findings to the Court. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. AMERICAN BUSINESS: Liquidating Assets & Winding Down Operations --------------------------------------------------------------- American Business Financial Services, Inc., intends to wind down its operations and dispose of its assets through a Chapter 11 plan of liquidation. The Company closed its office in Texas on Friday, April 1, 2005, and closed its other offices in California and Maryland yesterday. Layoffs of Philadelphia based employees will begin on April 11, 2005. ABFS currently expects the wind down to be completed and the corporate headquarters in Philadelphia to be closed by the end of July. ABFS said that the decision to discontinue operations was made after an extensive analysis of the Company's prospects and careful consideration of other options for continuing the business, including a sale of the Company. "My team and I have worked diligently with the Company's senior management team and advisors to explore various options for maximizing recoveries to ABFS' creditor constituents," said David Coles of Alvarez & Marsal, who was appointed as Chief Restructuring Officer of ABFS on March 7, 2005. "As a result of this analysis, it became clear to us that the cash requirements to create a sustainable operation were significantly greater than the Company's available funding. Therefore, the Board of Directors and I reached the conclusion that the best course of action for the Chapter 11 estate and creditors is to wind down the Company in an orderly manner. "This was an extremely difficult decision," Mr. Coles said. "We regret the impact it will have on the Company's constituents, particularly its employees, who have been very patient, loyal and understanding during the Company's recent financial difficulties. We wish there were a viable alternative that would avoid a wind down of the Company, but we believe this option offers creditors the best prospects for recovery." ABFS intends to ask the Bankruptcy Court for authorization to make retention and severance payments to certain employees whose services have been determined to be critical to the wind down and liquidation process via a Key Employee Retention Program. The Company said that this announcement will not affect pending mortgage loan commitments and conditional approvals. These categories of applications will be funded in the normal course. Additionally, ABFS said that the announcement will not affect its existing loan customers. The Company's portfolio of loans currently held for sale is expected to be sold to one or more buyers as part of the liquidation process and when this occurs borrowers will receive information from their new lender. The Company does not expect its Chapter 11 case to be converted to a Chapter 7, saying that it intends to work closely with its creditor constituencies, including the DIP Lender, Secured Noteholders and the Unsecured Creditors Committee, to develop a Chapter 11 plan of liquidation that provides recoveries for creditors at least equal to amounts projected under a Chapter 7 liquidation. Mr. Coles said that he intends to meet with representatives of both the Secured Noteholders and Unsecured Creditors Committee to outline the Company's wind down plans and seek their continued support. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. AMERICAN RESTAURANT: Noteholders Want Exclusive Periods Terminated ------------------------------------------------------------------ The Ad Hoc Committee of Senior Secured Noteholders appointed in American Restaurant Group, Inc., and its debtor-affiliates' chapter 11 cases asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, not to extend the Debtors' exclusive plan filing and solicitation periods. The plan filing period ended on March 28. The Senior Secured Noteholders hold 11-1/2% Series D Senior Secured Notes due 2006 amounting to $161,774,000. The Noteholders say it doesn't want the exclusive period extended since it is imminent that a consensual plan drafted by the Debtors, the Official Committee of Unsecured Creditors and the Noteholders will soon be completed. Headquartered in Los Altos, California, American Restaurant Group, Inc., through its subsidiaries operating as Stuart Anderson's, specializes in U.S.D.A. Choice fresh-cut steak; seasoned, seared, and slow-roasted prime rib; and a variety of seafood entrees complete with 'all the fixin's'. The company and its debtor- affiliates filed a chapter 11 petition on Sept. 28, 2004 (Bankr. C.D. Cal. Case No. 04-30732). Thomas R. Kreller, Esq., at Milbank, Tweed, Hadley & McCloy, represents the Debtors in their restructuring efforts. When the Debtor filed for bankruptcy protection, it listed $77,873,000 in assets and $273,395,000 in total debts. ARCHANGEL DIAMOND: Appoints Jonathan N. Dickman as Director & VP ---------------------------------------------------------------- Michael J. M. Farmiloe resigned as a member of the Board of Directors of the Archangel Diamond Corporation effective March 24, 2005. Upon his retirement from the De Beers Group of companies, Mr. Farmiloe was originally nominated as director of the Corporation in connection with the acquisition by Cencan S.A. of approximately 62.7% of the issued and outstanding Common Shares of the Corporation in December 2002. On April 1, 2005, Jonathan N. Dickman was appointed as Director and Vice President of the Corporation. Mr. Dickman is a senior legal counsel with the De Beers Group of companies with extensive experience of Russia. Archangel Diamond Corporation is an international diamond exploration company that currently owns a 40% interest in Almazny Bereg, a Russian international open joint stock company, which conducts exploration on the Verkhotina license area in the Oblast of Arkhangel'sk in northwestern Russia. De Beers Consolidated Mines Ltd. recently stated in a technical assessment study based on all exploration work completed through November 3, 1999, that the Grib Pipe, located within the Verkhotina license area, has an estimated resource of approximately 98 million tonnes of kimberlite to a depth of 500 meters, containing some 67 million carats of recoverable +1 mm diamonds at an average mining grade of 69 carats per hundred tonnes and an average life-of-mine revenue value of US$79 per carat. For the past three years, Archangel has persistently sought political and legal assistance in an effort to cause its Russian joint venture partner to transfer the Verkhotina Diamond License, pursuant to underlying contracts, to Almazny Bereg. As of Sept. 30, 2004, Archangel Diamond's stockholders' deficit widened to $1,345,006, compared to a $704,570 deficit at Dec. 31, 2003. ASPEN TECHNOLOGY: S&P Affirms Junk Subordinated Debt Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services removed its ratings on Cambridge, Ma.-based Aspen Technology Inc. from CreditWatch, where they were placed with negative implications on Nov. 1, 2004, and affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings. The outlook is negative. "The rating action follows the filing of the company's 10-Q statements for the periods ending Sept. 30, 2004, and Dec. 31, 2004, which had been delayed because of ongoing investigations of accounting for certain software license and service-agreement transactions by its audit committee," said Standard & Poor's credit analyst Lucy Patricola. As a result of the investigation, the company has restated results from fiscal 2000 through fiscal 2004. The restatements, aggregated over the four-year period, are not material to operations and do not have a cash impact. The ratings on Aspen Technology reflect high leverage, limited near-term liquidity, and a narrow product offering. These are only partially offset by Aspen's good position as a specialized software provider. Aspen's software products focus on process manufacturing, specializing in chemicals, petrochemicals, and petroleum segments. Aspen competes against other specialized process industry software providers, as well as large, diversified supply-chain-applications providers. ATA AIRLINES: Court Approves John Denison Employment Agreement -------------------------------------------------------------- ATA Airlines, Inc., and John Denison executed an employment agreement on March 4, 2005. Pursuant to the Agreement, Mr. Denison will serve as ATA Airlines' Chief Executive Officer and continue to serve as the Co-Chief Restructuring Officer for ATA Airlines and ATA Holdings Corp. Mr. Denison has served as Co-Restructuring Officer since January 20, 2005. The Debtors believe Mr. Denison's leadership is crucial to their ongoing success and reorganization efforts. Mr. Denison's past successes and experience in the airline industry are excellent indicators of the value Mr. Denison will add to the Debtors. Melissa M. Hinds, Esq., at Baker & Daniels, in Indianapolis, Indiana, notes that in the ordinary course of business, the Debtors make strategic employment decisions, including hiring new officers and senior level management personnel. These employment decisions would be made regardless of the Debtors' Chapter 11 cases, and therefore should not require Court approval under Section 327 of the Bankruptcy Code. Moreover, courts have routinely held that officers and directors of a debtor should not be treated as "professional persons." At the Debtors' behest, Judge Lorch rules that the execution of the Employment Agreement is within the ordinary course of the Debtors' business. The United States Bankruptcy Court for the Southern District of Indiana approves the Employment Agreement nunc pro tunc to March 4, 2005. Ms. Hinds relates that, excluding Mr. Denison's most recent engagement as the Debtors' Co-Chief Restructuring Officer, Mr. Denison is a "disinterested person." Mr. Denison does not hold any interest adverse to the Debtors' estates. The salient terms of the Employment Agreement are: (a) As the Debtors' Co-Restructuring Officer, Mr. Denison will be paid $25,000 for the period January 20 to February 20, 2005; (b) As remuneration for all services to be rendered by Mr. Denison under the Agreement as of February 21, 2005, the effective date of the Agreement, the Debtors will pay Mr. Denison a bi-weekly salary of $12,115, less all applicable payroll tax withholding and other applicable deductions; (c) Mr. Denison will also be eligible to be considered for discretionary bonus, to be determined by the Board of Directors of the Company upon the earliest to occur of: (1) the termination of the employee's employment; (2) a consummation of any agreement or any transactions, involving any: * merger, consolidation or reorganization to which ATA Holdings or ATA Airlines are acquired by or combined with any entity; * acquisition, directly or indirectly, by a Purchaser of all or a substantial portion of the assets or operations of the ATA Companies or all or significant part of the outstanding or newly issued shares of any of the ATA Companies' capital stock; * closing of any other sale, transfer or assumption of all or a substantial portion of all of the assets, liabilities or stock of the ATA Companies; or * confirmation of a Chapter 11 reorganization plan for ATA Holdings or ATA Airlines; or (3) December 31, 2005. (d) ATA Airlines will provide Mr. Denison fringe benefits to which senior vice president level officers of the company are generally entitled. However, Mr. Denison is not entitled to any severance benefits or compensation or any vacation benefits; (e) ATA Airlines will pay or reimburse Mr. Denison for all ordinary and necessary expenses, in a reasonable amount, which Mr. Denison incurs in performing his duties; and (f) ATA Airlines will indemnify Mr. Denison against all liability and expense that he may be incur in connection with or resulting from any Claim to the fullest extent authorized or permitted by law, as the same exists or may be amended, or otherwise consistent with the public policy of the State of Indiana. 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. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATHLETE'S FOOT: Moody's Downgrades Asset-Backed Bond Rating to Ba2 ------------------------------------------------------------------ Moody's Investors Service is downgrading its rating on asset- backed notes issued by Athlete's Foot's I.P. Holdings, Inc., a securitization entity wholly owned by Athlete's Foot Brands, Inc., in August 2003. The Notes are backed by franchise fee revenues generated by The Athlete's Foot footwear stores and their related trademarks. The complete rating action is: Issuer: Athlete's Foot's I.P. Holdings, Inc * Asset-Backed Notes, rated Baa3, downgraded to Ba2 Athlete's Foot LLC filed for bankruptcy protection on December 10, 2004. Under its reorganization plan and as of March 31, 2005, all of the 114 company owned stores have been liquidated, though 32 of these have been purchased by existing franchisees. Athlete's Foot, the entity that owned and operated the company owned stores, is a separate operating entity from the securitization vehicle. As a result, the 593 franchisees continued to operate on an "as-is" basis and were not directly affected by the bankruptcy. The downgrade is due to the recent loss of royalty revenue to the securitization as a result of the closing of the company-owned stores. Though a portion of this lost revenue is expected to replaced by collections from franchisees as well as the opening of new locations, the level of recovery remains uncertain. The potential damage to the Athlete's Foot brand due to the bankruptcy was also factored into the rating action. BOMBARDIER INC: Discloses Fourth Quarter & Annual Financials ------------------------------------------------------------ Bombardier Inc. (TSX:BBD.MV.A)(TSX:BBD.SV.B) disclosed its financial results for the fourth quarter and the year ended Jan. 31, 2005. Consolidated revenues totaled $4.8 billion for the three-month period ended Jan. 31, 2005, compared to $4.9 billion for the same period last year. For the year ended Jan. 31, 2005, consolidated revenues totaled $15.8 billion, compared to $15.5 billion the previous year. These results mainly reflect higher revenues in the transportation segment and lower revenues in the aerospace segment. Consolidated earnings (loss) before income taxes (EBT), before special items, were $93 million for the fourth quarter of fiscal year 2005, compared to negative $38 million for the same period last fiscal year. The improvement of $131 million is mainly due to better results in the transportation segment. EBT before special items for fiscal year 2005 was $71 million, compared to $311 million last year. The manufacturing segments' free cash flow for the fourth quarter of fiscal year 2005 was $704 million, an improvement of $60 million over the corresponding period last year. For fiscal year 2005, free cash flow was $388 million for a $1.1 billion improvement, compared to last fiscal year. The Corporation's cash position as at Jan. 31, 2005, was solid at $2.4 billion. In the aerospace segment, business jet net orders were up 69% year over year, demonstrating the continued strengthening of the market. For the transportation segment, its restructuring initiative is proceeding as planned with a net workforce reduction of approximately 4,000 as at Jan. 31, 2005. In accordance with the Corporation's policy and based on last fiscal year results, the Board of Directors decided there will be no dividend payment on common shares (Class A and Class B shares) for fiscal year 2006. "Despite a very challenging environment, our cash position is solid and we had a good free cash flow performance this year," said Laurent Beaudoin, Chairman of the Board and Chief Executive Officer of Bombardier Inc. "The Corporation's foundations are robust: highly skilled employees and great product portfolios. All our efforts will be concentrated on our two main businesses to ensure that they can achieve their full profit potential." Bombardier Aerospace Bombardier Aerospace was profitable for the fourth quarter and the year ended Jan. 31, 2005, in spite of a challenging environment. Total aircraft deliveries increased to 329 from 324 the previous year. Business jet deliveries were up 44%. Lower Bombardier CRJ200 deliveries were partially offset by a 26% increase in Bombardier CRJ700 and CRJ900 aircraft deliveries. With regards to aircraft orders, business jet net orders were up 69% and Q-Series turboprop aircraft orders were up 88% for fiscal year 2005. Bombardier Aerospace continues to be a leader in the business jet and regional aircraft segments in which it competes. The business jet market share, based on deliveries, reached 27% from 20% last year. The regional aircraft market share, based on gross order intake, increased from 56% to 67%. Deliveries of Bombardier products represented 57% of the overall 20- to 90-seat regional aircraft deliveries during the last year. Bombardier Aerospace also maintains its competitiveness with product innovations that meet customers' needs. An enhanced version of the CRJ900 aircraft, which combines substantially, improved take-off and landing performance, increased range and lower fuel consumption was recently introduced. An engine upgrade was also introduced for the CRJ700 aircraft, that will offer operators savings of up to 15% in engine maintenance costs over 15 years. In March 2005, the Board of Directors of the Corporation granted Bombardier Aerospace authority to offer the new CSeries family of aircraft to customers. The authority to offer is an important step in the process that could lead to the aircraft program launch. Prior to launch, Bombardier will seek firm commitments from potential customers, suppliers and government partners. Bombardier Transportation Bombardier Transportation's results continue to improve as the ongoing restructuring initiative progresses on schedule. Site closures are proceeding as planned with three plant closures in fiscal year 2005. Site improvement measures were deployed with clear, measurable cost saving targets. The project management function has been strengthened with regular audits of the most critical 40 projects, supported by a strict governance system and resulting in enhanced accountability. A detailed procurement action plan was put in place to reduce costs and the number of suppliers. Two important product milestones were achieved in the last fiscal year. The first Bombardier TRAXX MS multi-system freight locomotive was delivered to the Swiss Federal Railways, bringing significant commonality and interoperability advantages to customers. Also, the first AGC high-capacity regional trainset was delivered to the French National Railways ahead of schedule, reflecting the improvements in project management and the focus on customer satisfaction. Bombardier Transportation remains the global leader in rail equipment manufacturing. Sales efforts will be intensified in the new member countries of the European Union, the Middle East, and Asia. Emphasis will also be placed on the fast-growing signaling and services segments. Consolidated Results Consolidated revenues totaled $4.8 billion for the three-month period ended Jan. 31, 2005, compared to $4.9 billion for the same period last year. This decrease is due to lower sales in the aerospace segment, partially offset by higher sales in the transportation segment. For the year ended Jan. 31, 2005, consolidated revenues totaled $15.8 billion, compared to $15.5 billion the previous year. This increase is due to higher revenues in the transportation segment, partially offset by lower revenues in the aerospace segment. EBT before special items for the three-month period ended Jan. 31, 2005, amounted to $93 million, compared to negative $38 million for the same period last year. This improvement results from better performance in the transportation segment, partially offset by lower results in the aerospace and BC segments. EBT before special items reached $71 million for fiscal year 2005, compared to $311 million for fiscal year 2004. This decrease is mainly explained by lower performance in the Aerospace and BC segments. Special items for the three-month period ended Jan. 31, 2005 amounted to $38 million, compared to $362 million for the same period last year. For the year ended Jan. 31, 2005, special items reached $172 million, compared to $330 million for fiscal year 2004. As a result, EBT amounted to $55 million for the fourth quarter of fiscal year 2005, compared to a negative EBT of $400 million for the same period the previous year. For the year ended Jan. 31, 2005, EBT was negative $101 million, compared to negative EBT of $19 million for fiscal year 2004. Income from continuing operations was $56 million, or $0.03 per share, for the fourth quarter of fiscal year 2005, compared to a loss of $415 million, or $0.24 per share, for the same period the previous year. For the year ended Jan. 31, 2005, loss from continuing operations was $85 million, an improvement of $81 million over the $166 million loss, for fiscal year 2004. As at Jan. 31, 2005, Bombardier's order backlog was $31.5 billion, compared to $34.6 billion as at Jan. 31, 2004. The main reason for the reduction is an excess of revenues recorded over order intake in the transportation segment. Bombardier Aerospace's segmented revenues amounted to $2.6 billion for the three-month period ended Jan. 31, 2005, compared to $2.9 billion for the same period the previous year. Bombardier Aerospace's segmented revenues amounted to $7.9 billion for the year ended Jan. 31, 2005, compared to $8.2 billion for the same period the previous year. These decreases mainly result from lower deliveries of CRJ200 aircraft, partially offset by increased deliveries and a favorable mix of business aircraft and increased deliveries of CRJ700 and Q400 aircraft. Effective the first quarter of fiscal year 2005, Bombardier prospectively changed its revenue recognition policy for sales of aircraft fractional shares. Under the previous accounting policy, total revenues would have been higher by $163 million for fiscal year 2005. Earnings before net interest expense, income taxes and depreciation and amortization (EBITDA) amounted to $164 million for the three-month period ended Jan. 31, 2005, compared to $232 million for the same period last year. EBITDA amounted to $555 million for fiscal year 2005, compared to $717 million for fiscal year 2004. These decreases mainly result from the negative impact of higher effective exchange rates of the Canadian dollar compared to the U.S. dollar, lower deliveries of CRJ200 aircraft, severance and other involuntary termination costs and higher research and development costs related to the CSeries aircraft for the periods of fiscal year 2005. These decreases were partially offset by increased deliveries and a favorable mix of business aircraft, increased deliveries of CRJ700 and Q400 aircraft and improved margin on pre-owned aircraft. EBIT amounted to $78 million, or 3% of segmented revenues, for the fourth quarter ended Jan. 31, 2005, compared to $139 million, or 4.9%, for the same period the previous year. For fiscal year 2005, EBIT was $190 million, or 2.4% of segmented revenues, compared to $409 million, or 5%, for fiscal year 2004. For the quarter ended Jan. 31, 2005, aircraft deliveries totaled 108, compared to 107 for the same period the previous year. The 108 deliveries were made up of 47 business aircraft, 60 regional aircraft and one amphibious aircraft. During fiscal year 2005, Bombardier Aerospace delivered 329 aircraft, compared to 324 for fiscal year 2004. Aircraft delivered during fiscal year 2005 consisted of 200 regional aircraft, 128 business aircraft and one amphibious aircraft. Bombardier expects aircraft deliveries in fiscal year 2006 to remain at a similar level as in fiscal year 2005. For the fourth quarter and fiscal year ended Jan. 31, 2005, Bombardier received 54 and 154 net orders for business aircraft, compared to 48 and 91 net orders for the same periods last fiscal year. This increase reflects the introduction of new models and the sustained recovery in the worldwide business aircraft market. For the fourth quarter and fiscal year ended Jan. 31, 2005, Bombardier received 12 and 133 net orders for regional aircraft, compared to 38 and 140 for the same periods last year. The fiscal year 2005 orders included an order for 32 CRJ200 aircraft from Atlantic Southeast Airlines, valued at approximately $780 million; an order from Air Canada for 15 CRJ Series 705 and 15 CRJ200, valued at approximately $821 million; an order from Air Nostrum for 20 Bombardier CRJ200 aircraft, valued at approximately $512.6 million; and an order from FlyBE. for 20 Q400 aircraft valued at approximately $485 million. As at Jan. 31, 2005, the aerospace firm order backlog totalled $10.2 billion, compared to $10.9 billion as at Jan. 31, 2004. The year-over-year reduction in the backlog is mainly due to the voluntary removal of 34 CRJ200 aircraft orders from Independance Air, Inc. (formerly Atlantic Coast Airlines, Inc.), and the deliveries exceeding new orders for regional aircraft (mainly CRJ200 aircraft), partially offset by the increase in the backlog for business aircraft. Bombardier Transportation -- Successful ongoing execution of the restructuring initiative -- Revenues of $2.1 billion for the fourth quarter; $7.6 billion for fiscal year 2005 -- EBITDA before special items of $94 million ($56 million after special items) for the fourth quarter; $171 million (negative $1 million after special items) for fiscal year 2005 -- EBIT before special items of $61 million ($23 million after special items) for the fourth quarter; $33 million (negative $139 million after special items) for fiscal year 2005 -- Special items of $38 million for the fourth quarter; $172 million for fiscal year 2005 -- New order intake totaling $4.4 billion for the year -- Order backlog of $21.3 billion Bombardier Transportation's segmented revenues amounted to $2.1 billion for the three-month period ended Jan. 31, 2005, compared to $1.9 billion for the same period last year. For the year ended Jan. 31, 2005, segmented revenues amounted to $7.6 billion, compared to $7 billion for the previous year. These increases were mainly due to higher revenues on mainline contracts and the positive effect of foreign currency fluctuations resulting from the weakening of the U.S. dollar compared to the euro and other western European currencies. EBITDA before special items amounted to $94 million for the three- month period ended Jan. 31, 2005, compared to negative $98 million for the same period last year. The increase is primarily due to contract adjustments in fiscal year 2004 related to revisions in estimates for the completion of certain contracts and the charge related to the settlement of all outstanding claims in connection with the Amtrak Acela high-speed train contracts. For fiscal year 2005, EBITDA before special items totaled $171 million, compared to $197 million for fiscal year 2004. The decrease is primarily due to the deterioration in the profitability of certain significant contracts during the fourth quarter of fiscal year 2004 and the first quarter of fiscal year 2005, which are now accounted for at a lower margin, partially offset by lower operating expenses resulting from the positive effects of various restructuring and cost reduction initiatives. EBIT before special items totaled $61 million, or 2.9% of segmented revenues for the fourth quarter ended Jan. 31, 2005, compared to negative $145 million for the same quarter the previous fiscal year. For fiscal year 2005, EBIT before special items was $33 million, or 0.4% of segmented revenues, compared to $39 million, or 0.6%, for fiscal year 2004. Special items amounted to $38 million for the three-month period ended Jan. 31, 2005, compared to $349 million for the same period last year. For fiscal year 2005, special items totaled $172 million, compared to $349 million for fiscal year 2004. These special items relate to severance and other involuntary termination costs, as well as site closure costs. The total cost of the restructuring initiative, initially estimated at $583 million, is now expected to amount to $617 million. As a result, EBIT amounted to $23 million, or 1.1% of segmented revenues, for the fourth quarter ended Jan. 31, 2005, compared to negative $494 million for the same quarter the previous fiscal year. For fiscal year 2005, EBIT amounted to negative $139 million, compared to negative $310 million for fiscal year 2004. Major orders during fiscal year 2005 were for 324 high-capacity trains, AGC type, from the French National Railways (SNCF), valued at $474 million; a fully-automated rapid transit system from Yong- In of Korea, valued at $320 million; and 20 eight-car high-speed trainsets from the Ministry of Railways of China, valued at $263 million. Bombardier Transportation's backlog totaled $21.3 billion as at Jan. 31, 2005, compared to $23.7 billion as at Jan. 31, 2004. This decrease in the value of the order backlog reflects an excess of revenues recorded over order intake, partially offset by the positive impact of a foreign exchange adjustment of approximately $800 million, mainly due to the weakening of the U.S. dollar compared to the euro and other western European currencies. Bombardier Capital -- Revenues of $105 million for the fourth quarter; $426 million for fiscal year 2005 -- EBT of negative $1 million for the fourth quarter; positive $29 million for fiscal year 2005 -- 13% reduction of wind-down portfolios for the fourth quarter; 45% reduction for fiscal year 2005 For the fourth quarter of fiscal year 2005, Bombardier Capital's segmented revenues amounted to $105 million, compared to $114 million for the same quarter the previous year. For the year ended Jan. 31, 2005, Bombardier Capital's segmented revenues amounted to $426 million, compared to $493 million for fiscal year 2004. These decreases are consistent with the reduction in average assets under management. Bombardier Capital's EBT amounted to negative $1 million and positive $29 million for the quarter and fiscal year ended Jan. 31, 2005, compared to EBT of $13 million and $53 million for the same periods the previous year. These decreases are mainly due to the payment of $19 million in connection with the repurchase of call options related to putable/callable notes as a result of the downgrades in the Corporation's credit ratings in November 2004 and the reduction in net margin resulting from the decrease in the wind-down portfolios, partially offset by lower non-interest expenses and improved credit quality trends resulting in lower provision requirements. Significant progress was made in reducing the wind-down portfolios during fiscal year 2005. Finance receivables and assets under operating leases related to the wind-down portfolios declined 45%, or $420 million, during fiscal year 2005, mainly arising from reductions in the business aircraft, manufactured housing and consumer finance portfolios as a result of loan repayments. Continued portfolios are regularly assessed for strategic fit, profitability, funding availability and risk profiles. The orderly and timely reduction of the wind-down portfolios carries on as planned. A world-leading manufacturer of innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment, Bombardier, Inc. -- http://www.bombardier.com/-- is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2004 were $15.5 billion US and its shares are traded on the Toronto and Frankfurt stock exchanges (BBD and BBDd.F). * * * As reported in the Troubled Company Reporter on Mar. 18, 2005, Standard & Poor's Ratings Services would keep its ratings on Bombardier, Inc., and its subsidiaries, on CreditWatch with negative implications, where they were placed Dec. 13, 2004. The ratings remain on CreditWatch pending the company's release of its annual results, and meetings between Standard & Poor's and the company's senior management. "Bombardier recently announced that it would be offering a new C- series aircraft line for sale aimed at the 110-130 seat segment," said Standard & Poor's credit analyst Kenton Freitag. The announcement falls short of a full launch, with decisions still to be made on government and supplier support and the company will be seeking firm customer commitments prior to launch. "The company has estimated development costs of about US$2 billion," added Mr. Freitag. The C-series aircraft signals a continuing interest by Bombardier to compete in the commercial aerospace segment. Bombardier aims to exploit a market niche by offering an aircraft that is comparable in size to Boeing Co. (A/Stable/A-1) and Airbus's smallest offerings (the 737-600 and A318) and Embraer's largest aircraft (the 190/195). The company expects that its aircraft will be lighter and offer better operating market economics than current competing offerings and will target airlines that will be retiring DC-9s and older B-737s. There are significant risks to new aircraft development. Development costs frequently balloon beyond original estimates, market reception is uncertain, and the costs beyond development (working capital, financing subsidies, and residual value support) can be onerous. The market segment that Bombardier is focusing on has experienced a particularly high failure rate in the past; the economics would likely need to be very compelling to overcome concerns about fleet commonality and an unproven operating history. Finally, a targeted competitive response to the C-series from Boeing or Airbus could seriously handicap the jet's potential for success. Bombardier estimates that its share of development costs would be about US$700 million spread out over the next five years, and that it will substantially finance its portion out of operating cash flows. At this time, however, Bombardier's future cash flows are very uncertain and even modest incremental development costs could strain the company's financial profile. Although Standard & Poor's expects to discuss these issues with management in forthcoming meetings, resolution of the CreditWatch will be primarily focused on near-term financial issues. Standard & Poor's subsequently expects to resolve the CreditWatch in April 2005. Any downgrade would likely be limited to one or two notches, provided liquidity remains adequate. Conversely, ratings could be affirmed if there are indications that the company's financial position has stabilized. BSI HOLDING: Liquidating Trustee Issues 3rd Partial Distribution ---------------------------------------------------------------- Joseph Myers, a partner and managing director of Clear Thinking Group, LLC, and Liquidating Trustee for BSI Holding Co., Inc., f/k/a Bob's Stores, said that BSI's unsecured creditors have been issued the third partial distribution of their undisputed claims, bringing total distributions to date to 75 cents on the dollar. The distribution exceeds the 70-cent return that had initially been anticipated, Mr. Myers said. An additional disbursement of funds for payment of general unsecured claims is expected to occur at the end of the second quarter of 2005. Mr. Myers credited the higher-than-anticipated return rate and expedient distribution of claims to the efforts of Jay Indyke, of New York City-based Kronish Leib Weiner & Hellman LLP, counsel to the trustee. He also acknowledged the cooperation of several other individuals and firms involved in the matter, including Michael Pappone and Nancy Johnsen of Goodwin Procter LLP, Boston, Mass., counsel to the debtor; David Fournier and Adam Hiller, of the Wilmington, Del. office of Pepper Hamilton LLP, local counsel to the trustee; Shelia Smith and Tim Hurley, at Deloitte & Touche LLP, financial advisor to the trustee; and Bob Duffy of FTI Consulting, financial advisor to the debtor. 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. BSI Holding Co., Inc., formerly known as Bob's Stores, Inc., and its affiliates operated a retail clothing chain headquartered in Meriden, Connecticut. The companies filed for chapter 11 protection on October 22, 2003 (Bankr. Del. Case No. 03-13254). At that time, the casual clothing and footwear chain operated 34 stores in six states throughout the Northeast. The majority of the merchant's assets were subsequently acquired by The TJX Companies, Framingham, Mass., for about $100 million less various adjustments. A liquidation trust was then established to reconcile all remaining claims and liquidate the retailer's estate. Adam Hiller, Esq., at Pepper Hamilton represents the Debtors. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP, and Charlene Davis, Esq., and Deirdre Richards, Esq., at The Bayard Firm represent the Creditors' Committee. When the Company filed for protection from its creditors, it listed debts and assets of more than $100 million. CATHOLIC CHURCH: St. George Asks Court to Extend CCAA Stay ---------------------------------------------------------- The Most Rev. Douglas Crosby, Bishop of St. George's Diocese, confirmed that the Roman Catholic Episcopal Corporation of St. George's, the civil arm of the Diocese, is seeking a 45-day extension of the time to file a proposal under the Notice of Intention filed on March 8, 2005, pursuant to the Bankruptcy and Insolvency Act. This notice effected a "stay of proceedings" in civil actions against the Corporation including those launched since 1991 on behalf of 36 victims of sexual abuse. Since March 8, the Corporation has notified its creditors of the filing, established a listing of the Corporation's land holdings, completed a full review of the Corporation's insurance policies, initiated a review of a number of legal issues affecting various stakeholders including creditors and parishioners and has begun assembling a list of other assets within the Corporation. The Corporation is currently in the process of obtaining independent valuations for each of its land holdings and, with the assistance of legal counsel, is preparing to meet with the insurers to assess liability coverage. The requested extension will give the Corporation additional time necessary to complete the processes currently underway, to meet with its major creditors to review and assess proposal options and to prepare a viable proposal to present to its creditors. "We will see this through till the end," said Bishop Crosby. "Too many innocent people have been hurt and continue to suffer. Not just the victims of abuse, for whom no amount of money can compensate for their suffering, but the people in our parishes and their priests - everyone." The Corporation is taking active steps to assemble a clear and complete listing of its assets and their value in order to properly determine its financial capacity to make a just and fair proposal to its creditors. "I am confident that the Roman Catholic Episcopal Corporation of St. George's is firm in its resolve to meet its obligations to its creditors, in particular, the victims of sexual abuse," said Bishop Leonard Whitten, retired Anglican Bishop of Western Newfoundland. "The process underway is open and transparent." In February 2005 Bishop Whitten accepted Bishop Crosby's invitation to serve as an independent and external reviewer of the Corporation's financial resources. The Diocese of St. George's -- http://www.rcchurch.com/-- established in 1904, is located in Western Newfoundland. It serves a Catholic population of 32,060 found in 20 parishes under the pastoral care of 18 priests. St. George's is one of four Catholic dioceses in the province. The Diocesan Centre is located in Corner Brook. CHC HELICOPTER: Post-Split Shares Will Trade at NYSE on April 19 ---------------------------------------------------------------- CHC Helicopter Corporation (TSX: FLY.SV.A and FLY.MV.B; NYSE: FLI) has amended the mailing date for share certificates associated with the two-for-one subdivision of shares. As reported in the Troubled Company Reporter on Mar. 31, 2005, CHC Helicopter Corporation's shareholders approved the subdivision of CHC's issued and unissued Class A Subordinate Voting Shares, Class B Multiple Voting Shares and Ordinary Shares, all on a two for one basis. Articles of amendment reflecting the subdivision were filed with Industry Canada. Shareholders of Record on April 14, 2005, will receive certificates for the additional shares to which they are entitled as a result of the subdivision. It is expected that Class A Subordinate Voting Shares and Class B Multiple Voting Shares listed on the Toronto Stock Exchange will commence trading on a post-split basis on April 12, 2005. As a result of the subdivision, CHC's annual dividend will change from 60 cents per share to 30 cents per share, payable at 7.5 cents per quarter on a post-split basis. The subdivision will increase the number of Class A Subordinate Voting Shares outstanding from approximately 18,414,000 to 36,828,000; the number of Class B Multiple Voting Shares outstanding from approximately 2,933,000 to 5,866,000; and the number of Ordinary Shares from 11,000,000 to 22,000,000. In order to accommodate requirements of the New York Stock Exchange, certificates for additional Class A Subordinate Voting Shares and Class B Multiple Voting Shares will be mailed April 18, 2005, not April 20 as stated earlier. As a result of this change, the Class A Subordinate Voting Shares listed on the New York Stock Exchange will commence trading on a post-split basis on April 19, 2005. The subdivision record date remains unchanged. Shareholders of Record on April 14, 2005, will receive certificates for the additional shares to which they are entitled as a result of the subdivision. CHC Helicopter Corporation is the world's largest provider of helicopter services to the global offshore oil and gas industry, with aircraft operating in more than 30 countries and a team of approximately 3,400 professionals worldwide. * * * As reported in the Troubled Company Reporter on Mar. 17, 2005, Moody's Investors Service assigned a B2 rating to CHC Helicopter Corporation's proposed US$100 million senior subordinated note add-on to the existing 7.375% senior subordinated notes issue while affirming the Ba3 senior implied rating. However, the outlook is changed to stable from positive to accommodate the company's growth leverage back to historical levels and that is considered full for the Ba3 senior implied rating and no longer supportive of a positive outlook. Moody's notes that the increased debt beyond what was utilized for the strategic Schreiner acquisition has funded the company's aircraft fleet expansion and growth of its repair and overhaul business. Moody's rating actions for CHC Helicopter are: * assigned B2 -- CHC's proposed US$100 million add-on senior sub notes * affirmed B2 -- CHC's existing US $250 million senior sub. notes due 2014 * affirmed Ba3 -- CHC's senior implied rating * affirmed B1 -- CHC's issuer rating CHC INDUSTRIES: Has Until April 28 to File Objections to Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave CHC Industries, Inc., an extension, through and including April 28, 2005, to file objections to claims. The Debtor relates that its creditors have filed 330 claims against it, and in addition, there are approximately 240 creditors listed on its schedules that did not appear to file claims. The Debtor has filed objections to numerous filed and scheduled claims with the Bankruptcy Court since February 2005. The Debtor tells the Court that it is still continuing to review other claims and may still file additional objections with respect to those claims, if necessary. The Debtor explains that the extension will allow it and the Creditors Committee to verify that objections have been filed to all disputed and contested claims. The Debtor further assures the Court that the extension will not prejudice its creditors and will not delay the payment to holders of allowed claims. Headquartered in Palm Harbor, Florida, and formerly known as Cleaners Hanger Company, CHC Industries, Inc., manufactures and distributes steel wire coat hangers. The Company filed for chapter 11 protection on October 6, 2003 (Bankr. M.D. Fla. Case No. 03-20775). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, PA, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $25,000,000 in total assets and $20,000,000 in total debts. CHIQUITA BRANDS: Moody's Assigns B3 Rating to Proposed $150M Debt ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Chiquita Brands LLC's proposed new senior secured credit facilities. Moody's also assigned a B3 rating to the planned $150 million senior unsecured notes of Chiquita Brands International, Inc. (CBII, the holding company), downgraded CBII's existing senior unsecured notes to B3 from B2, and downgraded Chiquita's senior implied rating to B2 from B1. The ratings outlook is stable. These ratings actions conclude Moody's review of Chiquita's ratings, which was initiated on February 24, 2005, after the company's announcement that it intended to acquire the Fresh Express unit of Performance Food Group Company for $855 million in cash (approximately 9.4x Fresh Express' adjusted 2004 EBITDA). Proceeds from the proposed credit facilities, along with $50 million of debt secured by ships, $75 million of planned perpetual convertible preferred stock, and cash on hand will fund the acquisition of Fresh Express. The ratings recognize that the addition of Fresh Express provides important diversification to Chiquita's business, but also takes into account the significant cost of the acquisition, its largely debt funding, the consequent increase in financial leverage, the challenges in integrating the new business, which will increase Chiquita's sales by a third, and the continuing sensitivity of Chiquita's earnings and cash flow to the regulatory regime for banana imports in Europe, which will be modified by 2006. The specific regulatory changes in Europe are not yet agreed, and the extent of potential negative impact on Chiquita's profitability is uncertain but could be significant. Moody's ratings actions were: Chiquita Brands LLC: i) $150 million senior secured revolving credit, maturing 2010 -- B1 assigned; ii) $125 million senior secured term loan A, maturing 2010 -- B1 assigned; and iii) $375 million senior secured term loan B, maturing 2012 -- B1 assigned. Chiquita Brands International Inc.: i) $150 million senior unsecured notes, due 2015 -- B3 assigned; ii) $250 million 7.5% senior unsecured notes, due 2014 -- to B3 from B2; iii) Unsecured issuer rating -- to B3 from B2; iv) Senior implied rating -- to B2 from B1; and v) Ratings outlook -- stable. Moody's does not rate Chiquita Brands LLC's existing $150 million secured credit facility, secured shipping loans ($133 million pro forma after the Fresh Express acquisition), or the proposed $75 million of CBII perpetual convertible preferred stock. Fresh Express, which is an industry leader in value-added and other fresh-cut produce in US retail and foodservice channels, will add significant business diversification to Chiquita in higher margin products in a growing food category. The acquisition will add about $1 billion of revenues and $91 million of adjusted EBITDA to Chiquita's $3 billion 2004 revenue base and $172 million of adjusted 2004 EBITDA. Bananas will drop to 42% of Chiquita's sales from 56%, though earnings exposure to European banana markets will remain material. While an important strategic business move for Chiquita, integration of the acquisition could pose challenges because it is a large addition to Chiquita in a new type of produce. Also, while Fresh Express' sales growth has been good, category growth is slowing, and margins have been declining. In addition, the acquisition cost is significant and financing is largely debt, increasing Chiquita's overall debt and leverage at a time when it still faces uncertainty about the outcome of new European banana import regulations. Chiquita's ratings are restrained by the sensitivity of its earnings to factors such as commodity input cost volatility (on fuel, shipping and packaging costs, as well as fruit and vegetable supplies, which can be impacted by weather, disease and pests). The company's earnings also are exposed to foreign exchange rates, particularly the Euro. In addition, the business can be affected by changing international trade regulations, and the company's overseas farm operations can be subject to political risks, labor issues, and litigation. Pro forma debt and lease adjusted enterprise leverage is high considering the company's low operating margins, modest returns on assets, the large intangible component to its pro forma balance sheet, the uncertainty about the changes in European banana import regulations, and the Fresh Express integration risks. The ratings gain support from the business/geographic diversification and scale gained with the Fresh Express acquisition, a business with higher margins than Chiquita, growing sales, and relatively steady earnings generation. Chiquita's earnings concentration on European bananas will reduce materially, though still be significant. The ratings also consider the well- established market positions of both Chiquita and Fresh Express. Demand trends for both businesses' products are steady, with some underlying growth, and Chiquita has strong brand name awareness by consumers. The ratings also recognize Chiquita's risk management initiatives, which have included hedging a large part of its Euro exposure through 2006 to protect the profitability of its European operations from negative euro exchange rate movements. In addition, the ratings consider the liquidity provided by the revolving credit, which provides adequate seasonal availability and covenant levels that provide ample cushion. The stable ratings outlook accommodates potential for negative impact from the scheduled changes in European regulations in 2006. Ratings could be upgraded once the changes are agreed if the impact on Chiquita is moderate and free cash flow after capital spending and dividends is expected to be above about 8% of enterprise debt. The ratings also could gain support if earnings growth enables Chiquita to reduce debt levels materially while the market transitions in Europe. Ratings could be pressured by a combination of significant profit impairment resulting from the new regulations in Europe and pressures on earnings from uncontrollable cost increases and/or unfavorable banana supply/demand dynamics, and/or major integration difficulties with Fresh Express. Pro forma for the acquisition, Chiquita will have a $4 billion revenue base, $1.1 billion of debt, and $263 million of adjusted PF EBITDA. The company also will have significant operating leases. PF lease adjusted debt/EBITDA will be about 5x. Pro forma free cash flow after capital spending and dividends represents about 6% of debt. The balance sheet will have a significant goodwill and intangible component. PF EBITDA margins are about 6%, and EBITDA less capital spending provides 2.5x coverage of interest expense and 2.0x coverage of interest and dividends. The company's EBITDA, however, could drop materially in 2006, when European banana import tariffs become effective, if tariff levels are set in the upper half of the range currently under discussion (Euro 75/MT to Euro 230/MT), materially weakening credit measurements. The senior secured credit facilities are notched up from the senior implied rating to reflect their effective and structural priority to $400 million of unsecured notes and $75 million of convertible preferred shares at the holding company (CBII). Tangible asset coverage is not robust and coverage of principal would rely on realizing value in trademarks, but enterprise value at a low multiple of EBITDA would provide adequate coverage of principal. The Revolver and Term Loan A are guaranteed by the holding company and material US and Latin American subsidiaries; they are secured by the Chiquita trademark and a pledge of 65% of the stock of material European subsidiaries. The Term Loan B is guaranteed by the holding company, material domestic Chiquita subsidiaries, and Fresh Express and its subsidiaries; Term Loan B will have security in the assets and stock of Fresh Express and its subsidiaries, including the Fresh Express trademark, but not new working capital or other new assets of Fresh Express going forward. The rating on the unsecured notes is notched down to reflect their unsecured and structurally subordinated position in the company's capital structure. The notes are at the holding company (CBII), with no upstream guarantees. The planned new note issue will have some increased indenture flexibility compared with the existing notes. Asset coverage of the notes at par would require realization of a significant amount of intangible value on Chiquita's pro forma balance sheet. Chiquita Brands International has headquarters in Cincinnati, Ohio. The company is a global producer and marketer of fresh fruit, with a revenue base of $3 billion. Fresh Express is a marketer of fresh-cut produce, with a revenue base of $1 billion. COVANTA ENERGY: Wachovia Bank Wants Cash Collateral Order Modified ------------------------------------------------------------------ The United States Bankruptcy Court for the Southern District of New York's Final Cash Collateral Order provides that, to the extent approved by the Court as reasonable fees, costs, or charges provided for under the agreement under which the claim arose, and as specifically relating to the interests of the indenture trustees under certain indentures relating to Covanta Energy Corporation and its debtor-affiliates' waste-to-energy projects, acting on behalf of bondholders, or bond insurers or owner participants, the postpetition legal fees and expenses of the WTE Trustees provided for in the WTE Agreements and related to the Chapter 11 Cases will constitute secured claims to the extent permitted by Section 506(b) of the Bankruptcy Code in respect of those estates against which the WTE Trustees hold prepetition claims, and will accrue, but will not be paid, prior to 30 days after confirmation of a plan of reorganization in these Chapter 11 cases. Wachovia Bank, National Association, formerly known as First Union National Bank, is an indenture trustee for the holders of bonds issued in connection with a WTE facility owned by Covanta Warren Energy Resources Co. L.P. Covanta Warren entered into several contracts related to the WTE facility located in Warren County, New Jersey. Wachovia Bank is a party to those contracts as well as several other related instruments relevant to the WTE Project, which provide for the reimbursement of certain of Wachovia Bank's legal fees and costs incurred in the Covanta Energy Corporation and its debtor-affiliates' bankruptcy case. By this motion, Wachovia Bank asks the Court to modify the Cash Collateral Order provision so it may: (a) file interim fee applications; and (b) be reimbursed for legal fees and costs in this case on an interim basis. Jan I. Berlage, Esq., at Ballard Spahr, Andrews & Ingersoll, LLP, in Baltimore, Maryland, explains that the provision in the Final Cash Collateral Order that the WTE Trustee's legal fees cannot be reimbursed until 30 days after confirmation of a plan was premised, in part, on the Debtors' prompt emergence from bankruptcy. The Debtors have achieved that goal in regards to all of their WTE Facility Debtors with the exception of the Covanta Warren. Mr. Berlage notes that Covanta Warren, Covanta Warren Holdings I, Inc., formerly known as Covanta Equity of Alexandria/Arlington, Inc., and Covanta Warren holdings II, Inc., formerly known as Covanta Equity of Stanislaus, Inc., are still continuing their restructuring efforts. Covanta Warren is continuing to review its options with respect to filing a plan of reorganization. However, it has not yet completed negotiations with interested parties. Mr. Berlage says it is only fair and just for the Court to modify its Final Cash Collateral Order to allow Wachovia Bank to be reimbursed on an interim basis while Covanta Warren continues in bankruptcy. Mr. Berlage adds that the Debtors have no objection to Wachovia Bank's request. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy Corporation and its core subsidiaries emerged from chapter 11 as a wholly owned subsidiary of Danielson Holding Corporation. Some of Covanta's non-core subsidiaries have liquidated under separate chapter 11 plans. (Covanta Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) CREDIT SUISSE: Fitch Puts BB Rating on $1.4 Mil. Mortgage Certs. ---------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp. mortgage pass-through certificates, series 2005-3, are rated: -- $981.8 million classes I-A-1, II-A-1, III-A-1 through III- A-34, IV-A-1, V-A-1, V-A-2, VI-A-1 through VI-A-4, VII-A-1 through VII-A-5, AR, AR-L, VI-X, A-X, C-X, PP, and A-P (senior certificates) 'AAA'; -- $10.7 million class C-B-1 certificates 'AA'; -- $4.8 million class C-B-2 certificates 'A'; -- $2.6 million class C-B-3 certificates 'BBB'; -- $1.4 million privately offered class C-B-4 certificates 'BB'. The mortgage loans are separated into seven loan groups. Loan groups I, II, and VI are cross-collateralized with the class D-B certificates that support the class I-A-1, II-A-1, VI-A-I through VI-A-4, VI-X, A-P, A-R, and AR-L certificates. Loan groups III, IV, V, and VII are cross-collateralized with the class C-B certificates that support the class III-A-1 through III-A-34, IV- A-1, V-A-1, V-A-2, VII-A-1 through VII-A-5, C-X, A-X, PP, and A-P certificates. The certificates generally receive distributions based on collections on the mortgage loans in the corresponding loan group or loan groups. The 'AAA' rating on the group I, II, and VI senior certificates reflects the 7.25% subordination provided by the following classes which Fitch does not rate, including: * 4.00% class D-B-1, * 1.10% class D-B-2, * 0.65% class D-B-3, * 0.80% privately offered class D-B-4, * 0.50% privately offered class D-B-5, and * 0.20% privately offered class D-B-6 certificates. The 'AAA' rating on the group II, IV, V, and VII senior certificates reflects the 3.00% subordination provided by the: * 1.45% class C-B-1, * the 0.65% class C-B-2, * the 0.35% class C-B-3, * the 0.20% privately offered class C-B-4, * the 0.20% privately offered class C-B-5 (not rated by Fitch), and * the 0.15% privately offered class C-B-6 (not rated by Fitch) certificates. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank, N.A., which is rated 'RMS1' by Fitch. The trust will contain seven groups of fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an approximate aggregate principal balance of $1,011,676,449. At closing, the depositor may deposit up to approximately $12,844,898 into a prefunding account to be used to acquire subsequent mortgage loans from the seller during the prefunding period. The mortgage loans in groups I, II, and VI initially consist of 889 fixed-rate mortgage loans with an aggregate principal balance of $275,033,955 as of the cut-off date, March 1, 2005. The mortgage pool has a weighted average loan-to-value ratio of 72% with a weighted average mortgage rate of 6.48%. Cash-out refinance loans account for 37.6% and second homes 3.3%. The average loan balance is $309,374, and the loans are primarily concentrated in: * California (39.6%), * New York (10.2%), and * Florida (8.3%). The mortgage loans in groups III, IV, V, and VII consist of 1,443 fixed-rate mortgage loans with an aggregate principal balance of $736,642,494 as of the cut-off date. The mortgage pool has a weighted average LTV of 67.1% with a weighted average mortgage rate of 5.88%. Cash-out refinance loans account for 29.3% and second homes 5.7%. The average loan balance is $510,494, and the loans are primarily concentrated in: * California (43.3%), * Massachusetts (7.0%), and * New York (6.9%). None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release dated May 1, 2003 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/ U.S. Bank National Association will serve as trustee. Credit Suisse First Boston Mortgage Securities Corp., a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits. DADE BEHRING: S&P Affirms BB+ Subordinated Debt Rating ------------------------------------------------------ Standard & Poor's Ratings Services assigned a 'BBB' senior secured credit rating and a recovery rating of '1' to Dade Behring Inc.'s new $600 million senior revolving credit facility due in 2010. Dade Behring Inc. is a subsidiary of Dade Behring Holdings Inc. The 'BBB-' corporate credit and 'BB+' subordinated debt ratings of Dade Behring Holdings are affirmed. The outlook is stable. This new facility will enable Dade to refinance high-cost debt later this year. Deerfield, Ill.-based Dade Behring Holdings Inc. is a leading manufacturer of systems and related products and services for in vitro diagnostic (IVD) testing. The company underwent a prepackaged bankruptcy filing in August 2002. Before that, it had incurred an onerous debt burden to fund a sponsor dividend while at the same time expanding its product offerings and geographic presence through acquisitions. This constrained financial position limited its ability to withstand a temporary operating shortfall that led to the default. The company was able to exit bankruptcy promptly and has since capitalized on its strong market position to quickly repay debt. Currently, the lease-adjusted debt to capital of 44% and total debt to EBITDA of about 1.9x indicate a moderately leveraged financial profile. These measures are expected to improve as Dade Behring continues to increase profits and free cash flow. Over the course of 2005, Dade Behring is expected to refinance its $275 million of senior subordinated notes, which can be called in October at a premium. As these bear a very high 11.9% coupon, the refinancing is expected to markedly reduce interest expense and further improve earnings and cash flow. Dade Behring's Dimension family of clinical chemistry analyzers is the second-largest brand in the industry. The rapid acceptance of these units is yielding sales growth, on a constant currency basis, of more than 7% for Dade Behring's core chemistry business. However, although Dimension is the single largest brand for Dade Behring, it contributes less than half of sales, a fact that illustrates the diversity of the company's product offering. The base of installed equipment, which generates repeat sales of consumables and reagents used in testing, is relatively young. "These recurring revenues, which account for some 86% of the corporate total, impart an important measure of stability and predictability to Dade Behring's business profile," said Standard & Poor's credit analyst David Lugg. DANA CORP: Revises First Quarter 2005 Earnings Outlook ------------------------------------------------------ Dana Corporation (NYSE: DCN) revised its first-quarter 2005 earnings outlook to a range of 11 to 13 cents per share, from its previously announced range of 17 to 23 cents per share. Dana Chairman and CEO Michael J. Burns said the reduction is primarily attributable to three factors: -- Higher-than-expected material costs, including the effect of the increased cost of steel to Dana's suppliers and other factors; -- A current component shortage from a principal supplier that has resulted in reduced shipments of heavy-duty axles; and -- Lower-than-expected North American light-vehicle production rates on key platforms. Mr. Burns added, "We are hopeful that we will see less pressure on material price increases during the balance of the year, but we can't count on this. We are accelerating our cost-reduction efforts to pull forward savings to offset the potential impact of continued pressure on material costs. Regarding the component shortage that has reduced heavy-duty axle shipments, we are working closely with the supplier to resolve the situation and are confident that we will see a substantial improvement in the second quarter. However, given the uncertain outlook for the light- vehicle industry in general, as well as on commodity prices, we feel it is prudent to lower our 2005 full-year guidance to $1.30 to $1.45 per share, from our previous guidance of $1.40 to $1.62 per share." About the Company Dana Corporation -- http://www.dana.com/-- people design and manufacture products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles every year. A leading supplier of axle, driveshaft, engine, frame, chassis, and transmission technologies, Dana employs 46,000 people in 28 countries. The company is based in Toledo, Ohio, and reported sales of $9.1 billion in 2004. * * * Dana Corporation's 5.85% notes due January 15, 2015, carry Moody's Investors Services' Ba2 rating. DECISIONONE CORP: Section 341(a) Meeting Slated for April 19 ------------------------------------------------------------ The United States Trustee for Region 3 will convene a meeting of DecisionOne Corporation's creditors at 10:00 a.m., on April 19, 2005, at the J. Caleb Boggs Federal Building, located in 844 North King Street, 5th Floor in Wilmington, Delaware. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Frazer, Pennsylvania, DecisionOne Corporation -- http://www.decisionone.com/-- serves leading companies and government agencies with tailored information technology support services that maximize the return on technology investments, minimize capital and infrastructure costs and optimize operational effectiveness. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. D. Del. Case No. 05-10723). When the Debtor filed for protection from its creditors, it listed total assets of $107 million and total debts of $273 million. DECISIONONE: Disclosure & Plan Confirmation Hearing on April 19 --------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware will convene a combined hearing at 2:30 p.m., on April 19, 2005, to consider the adequacy of DecisionOne Corporation's disclosure statement and confirmation of its pre- packaged plan of reorganization. As reported in the Troubled Company Reporter on March 16, 2005, the Company filed a "pre-packaged" Chapter 11 plan to restructure and substantially reduce the Company's debt, strengthen its balance sheet and improve its liquidity. Approximately 98% of the Company's investors agreed to exchange their debt for equity. The Company anticipates emerging from Chapter 11 by early May 2005. Full-text copies of DecisionOne Corporation's Plan and Disclosure Statement are available for a fee at: Disclosure Statement: http://www.researcharchives.com/bin/download?id=050404215056 Plan of Reorganization: http://www.researcharchives.com/bin/download?id=050404214615 Objections, if any, to the adequacy of the Disclosure Statement or to plan confirmation must be in writing and served by April 12, 2005, at 4:00 p.m., to: (a) Counsel to the Debtors: Mark D. Collins, Esq. Richards, Layton & Finger, P.A. One Rodney Square 920 N. King Street P.O. Box 551 Wilmington, Delaware 19899 -- and -- Michael A. Bloom, Esq. Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, Pennsylvania 19103 (b) Counsel to the Secured Noteholders: David B. Stratton, Esq. Pepper Hamilton LLP Hercules Plaza 1313 Market Street, Suite 5100 Wilmington, Delaware 19899 (c) Office of the U.S. Trustee: Richard L. Schepacarter, Esq. J. Caleb Boggs Federal Building 844 North King Street, Suite 2313 Lockbox 35 Wilmington, Delaware 19801 Headquartered in Frazer, Pennsylvania, DecisionOne Corporation -- http://www.decisionone.com/-- serves leading companies and government agencies with tailored information technology support services that maximize the return on technology investments, minimize capital and infrastructure costs and optimize operational effectiveness. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. D. Del. Case No. 05-10723). When the Debtor filed for protection from its creditors, it listed total assets of $107 million and total debts of $273 million. DELLS MOTOR: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Dells Motor Speedway, Inc. N1070 Smith Road Wisconsin Dells, WI 53965 Bankruptcy Case No.: 05-12251 Type of Business: The Debtor operates a 1/3-mile asphalt racetrack located just five minutes from the famous downtown Wisconsin Dells tourist area, three miles West of I-90/94, Exit 85, on Highway 12/16 toward Lyndon Station. See http://www.dellsmotorspeedway.com/ Chapter 11 Petition Date: March 30, 2005 Court: Western District of Wisconsin (Eau Claire) Judge: Judge Thomas S. Utschig Debtor's Counsel: Claire Ann Resop, Esq. Brennan, Steil & Basting, S.C. 22 East Mifflin Street, Suite 400 P.O. Box 990 Madison, WI 53701-0990 Tel: (608)251-7770 Fax: (608)251-6626 Total Assets: $1,269,823 Total Debts: $1,367,541 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gray Electric Trade debt $33,169 N4717 Highway 12-16 Mauston, WI 53948 DRS, Ltd. Trade debt $22,640 2534 South Fish Hatchery Road Madison, WI 53711 Midwest Bleachers $20,600 Scott's Construction, Inc. $17,605 Henderson/Yates $14,733 WKOW Television, Inc. $14,394 Wisconsin Dept. of Revenue Witholding and $13,275 sales tax - amount estimated RaceQuip Safety Systems $11,682 Thundercat Fireworks $10,000 Bound Tree Medical $9,282 IRS Witholding - $9,000 amount estimated Bob Johnson Lubricants $7,835 Milestone Materials $7,834 Clear Channel $7,500 Green Earth Organic Lawn $7,201 Charter Media $7,100 Ray Zobel & Sons $5,179 The LAMAR Co. $5,117 Viking Village, Inc. Trade debt $5,082 Wisconsin Dist. $5,000 DELPHI CORP: Secures $1.2B in Global Steering Column Biz in 2004 ---------------------------------------------------------------- Delphi Corporation (NYSE: DPH) booked more than $1.2 billion in new steering column business globally last year, company officials said Thursday. The new business bookings include eight OEM customers spanning several regions including North America, Europe, Asia and South America, and 26 new customer programs total. Details of individual contracts remain confidential at the customers' request. "Our column team was very successful at broadening its customer base and global presence last year, which is important to Delphi," said Robert J. Remenar, Delphi Steering president. "We continue to demonstrate that we can support our customers in every region with high quality products and seamless execution." "Delphi Steering has led the column industry for more than 40 years and provides vehicle expertise that allows us to assist our customers with a deeper level of service, often addressing broader vehicle level challenges," said Gregory D. Kochendorfer, Delphi Steering global director of sales, marketing and planning. "Our customers value this extended knowledge as steering columns have become a main point of interface for key vehicle systems." Steering columns used to be simple, mechanical devices. Now, they're one of the more complicated subsystems on a vehicle. A steering column is a critical safety device that affects the vehicle's crash worthiness, handling, control, comfort, convenience, and even styling. Fueled by governmental agency research and mandates, safety continues to be a major focal point for consumers and vehicle manufacturers. A recent NHTSA report shows traditional energy- absorbing steering columns helped saved 53,000 lives from 1960 to 2002, second only to seat belts. In correlation, Delphi's new steering column contracts won in 2004 are nearly 100 percent energy-absorbing steering columns with the exception of some tractor business and small base car platforms. "Our customers continue to turn to Delphi for leading edge energy absorbing steering column technology to help improve their safety ratings," said Daniel B. Crishon, Delphi Steering business line executive, steering columns. "Our focus is on developing ways to further increase the level of safety gained from energy absorption through innovative integration with other safety systems." About the Company Delphi -- http://www.delphi.com/-- is the world's largest automotive component supplier with annual revenues topping $25 billion. Delphi is a world leader in mobile electronics and transportation components and systems technology. Multi-national Delphi conducts its business operations through various subsidiaries and has headquarters in Troy, Michigan, USA, Paris, Tokyo and Sao Paulo, Brazil. Delphi's two business sectors -- Dynamics, Propulsion, Thermal & Interior Sector and Electrical, Electronics & Safety Sector -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 186,500 employees and operates 171 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices and 34 technical centers in 41 countries. * * * As reported in the Troubled Company Reporter on March 24, 2005, 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. DELTAGEN INC: Has Until June 20 to File Chapter 11 Plan ------------------------------------------------------- Deltagen Inc. and its debtor-affiliates sought and obtained an extension until June 20, 2005, from the U.S. Bankruptcy Court for the Northern District of California to exclusively file a plan of reorganization. The Court also extended the Debtors' exclusive right to solicit acceptances of that plan until Aug. 15, 2005. The Debtors want to continue to maximize the value of their assets and the ultimate distribution to creditors under a plan. The Debtors has largely completed their efforts to market the sale or licensing of their selected assets and liquidated various assets of their non-debtor subsidiaries. The Debtors are continuing their discussions with a federal government agency regarding academic licensing of their pre-existing lines of knockout mice and associated data, which may provide the framework for a confirmable plan, and would take several months to complete. Although they fully expect to develop a consensual plan with the Official Committee of Unsecured Creditors at an appropriate time, the Debtors are willing to continue to share the extended Exclusive Periods with the Committee in the event that the Committee is dissatisfied with the contours of a plan formulated by the Debtors. The Debtors understand that during the extended exclusive periods: (a) they may file and solicit acceptances of a plan, provided that: -- the Committee supports the plan; -- the Committee has filed a motion, on no less than 15 days' notice, to reduce the extended exclusive periods pursuant to Sec. 1121(d) of the U.S. Bankruptcy Code; or (b) the Committee may file and solicit acceptances of a plan, provided that the Debtors support the plan. Deltagen Inc. provides essential data on the in vivo mammalian functional role of newly discovered genes. The Company and its debtor-affiliates filed for chapter 11 protection on June 27, 2003 (Bankr. N.D. Calif. Case No. 03-31906). Alan Talkington, Esq., and Frederick D. Holden, Esq., at Orrick, Herrington and Sutcliffe, and Henry C. Kevane, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. DLJ MORTGAGE: Moody's Downgrades Four Certificate Ratings to B3 --------------------------------------------------------------- Moody's Investors Service downgrades four certificates from DLJ Mortgage Acceptance Corp. asset-backed securitization deals from 1993, 1994, and 1996. The transactions consist of adjustable-rate first-lien mortgage loans. The seller and originator on the transactions is Quality Mortgage USA. The Class I B-1 certificate from Series 1993-Q18, the Class II B-1 certificate from series 1994-Q01, the class B-1 certificate from series 1996-QB, and the class B-3 from Series 1996-QJ are downgraded based on the weak performance of the underlying loans with historical and expected cumulative losses exceeding original expectations. The four certificates have already assumed some writedowns. Complete rating actions are: Issuer: DLJ Mortgage Acceptance Corporation Downgrade: * Series 1993-Q18; Class I B-1, current rating Baa3, downgrade to B3; * Series 1994-Q01; Class II B-1, current rating Ba1, downgrade to B3; * Series 1996-QB; Class B-1, current rating Baa3, downgrade to B3; and * Series 1996-QJ; Class B-3, current rating Ba3, downgrade to B3. DORIAN GROUP: Seeks Additional Bids for Assets ---------------------------------------------- Dorian Group Ltd. announced in January that it will liquidate its recording and mastering equipment, various inventories and trademarks, and the Dorian Recordings and Discovery catalog. The sale should have been concluded on Feb. 25 but there was only one proposal submitted. The Company asks the U.S. Bankruptcy Court for the Southern District of New York for more time to solicit additional bids. Artists are now given the chance to bid for their own master recordings and contracts. Headquartered in Troy, New York, The Group Ltd. -- http://www.dorian.com/-- produces and releases audiophile-quality recordings of fine classical and accoustic traditional music. The Company filed for chapter 11 protection on Jan. 5, 2005 (Bankr. S.D.N.Y. Case No. 05-10056). Robert J. Rock, Esq., in Albany, New York, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $10 million to $50 million in assets and $1 million to $10 million in debts. DOWLING COLLEGE: Moody's Affirms Ba2 Long-Term Rating ----------------------------------------------------- Moody's Investors Service has affirmed Dowling College's Ba2 long- term rating, but revised the rating outlook to negative from stable. The outlook revision primarily reflects ongoing enrollment challenges, which impact the College's operating performance and reliance on external bank lines for cash flow. The rating affirmation and outlook revision applies to $33 million of outstanding Series 1993, 1994, 1996, and 2002 bonds, issued through the Suffolk County Industrial Development Authority. Credit strengths are: * Annual operations cover peak debt service with some cushion at 1.1 times in FY2004; * Projected operating surplus of $300K for FY2005 if summer enrollment meets projections; * Significant increase in private philanthropy in FY2004 with gift revenue of $2 million; and * Reported increase in student demand for education programs, although demand softness continues in business programs. Credit challenges are: * Operating deficit in FY2004 due to enrollments that came in lower than projections; * Still reliant on external sources to meet seasonal cash flow needs; and * Thin balance sheet cushion for debt (0.08 expendable resources to debt) and operations (0.06 expendable resources to operations) with significant portion of cash and investments pledged as collateral for bank lines of credit and term loans. Recent Developments/Results In fall 2004, the College posted an operating deficit of -1.7% by Moody's measures, whereas Moody's had expected to see at least balanced operations. Management attributes the deficit to a shortfall in summer enrollment compared to budget. This operating shortfall also resulted in a $1 million increase in the amount outstanding under the College's line of credit as of the end of FY2004, which management reports has since been paid down so that $3 million will remain outstanding under the bank line as of the end of FY2005. Nonetheless, this reliance on external credit lines for cash flow purposes points to the College's still fragile operating position. For FY2005, management reports continued softness in enrollment in business programs and in education programs in fall 2004. Education program enrollment rebounded, however, in spring 2005. Overall, tuition revenue for FY2005 was lower than initial projections, which management has accommodated through expense reductions, such that the College is now projecting a $300K operating surplus. Summer enrollment, however, is still uncertain, and the negative outlook reflects our concerns that further enrollment shortfalls relative to budget, either this summer or next fiscal year, could place further stress on the College's credit quality. On the positive side, the College did report a significant increase in private philanthropy in FY2004, with $2 million in gift revenue booked as a result of a challenge gift from a Board member. In order for Dowling's credit profile to achieve long- term stabilization, the College will need to build balance sheet strength through reinvested operating surpluses and fundraising. In Moody's opinion, this will require a substantial increase in philanthropic support, particularly from the Board. Outlook The negative outlook reflects our concerns that the College could again miss budgeted enrollment targets, which could lead to additional operating pressure and further reliance on external lines of credit. What Could Change the Rating - UP * Significant growth in financial resources, coupled with an improved philanthropic profile and reduced reliance on external bank lines of credit. What Could Change the Rating - DOWN * Inability to meet targeted enrollment, leading to operating deficits and increased use of external lines of credit. Key Data And Ratios (Fall 2004 Enrollment, FY 2004 Financial Information): * Total Enrollment: 4,763 full-time equivalent students * Freshman Applicants Accepted: 84.3% * Freshman Accepted Students Enrolled: 24.9% * Expendable Resources to Pro Forma Debt: 0.08 times * Expendable Resources to Operations: 0.06 times * FY2004 Operating Margin: -1.7% * MADS Coverage: 1.1 times EXIDE TECH: Board Okays Restricted Stock Grants & Options to CEO ---------------------------------------------------------------- Exide Technologies (NASDAQ: XIDE) confirmed that, pursuant to the terms of the previously announced March 3, 2005, employment agreement with Gordon A. Ulsh, the Board of Directors approved the grant of restricted stock and stock options to Mr. Ulsh in connection with his commencement of employment as Exide's President and Chief Executive Officer effective April 2, 2005. As an inducement to commence employment with Exide, Mr. Ulsh is granted an option to purchase 80,000 shares of Exide's common stock at a per share exercise price equal to the fair market value of one share as of April 2. The option will vest at the rate of 33-1/3% of the shares on the first, second and third anniversaries of the grant date. Mr. Ulsh also is granted 100,000 shares of Exide's common stock, subject to certain restrictions that will lapse at the rate of 33- 1/3% of the shares on the first, second, and third anniversaries of the grant date. This stock may not be transferred, disposed of or sold during the restricted period and will be forfeited if Mr. Ulsh terminates employment voluntarily or is terminated by Exide for cause, prior to the date the restrictions lapse. The grants of the option and restricted stock are not subject to the approval of Exide's shareholders. Pursuant to Mr. Ulsh's employment agreement, he also will be granted other stock options and restricted stock under Exide's stock option plan. These grants under the stock option plan, however, are subject to the approval of the plan by Exide's shareholders at the Company's next annual meeting. 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. FAIRMONT GENERAL: Moody's Affirms Ba2 Bond Rating ------------------------------------------------- Moody's Investors Service has affirmed Fairmont General Hospital's Ba2 bond rating, affecting $6.3 million of debt outstanding. The rating outlook remains negative. The affirmation of the Ba2 rating is attributable to low levels of liquidity and a third consecutive year of volume declines, balanced by a notable level of operational improvement demonstrated in the current fiscal year. Nonetheless, the negative outlook reflects our belief that FGH will continue to face challenges with volumes given the area's fundamentals and the potential encroachment of a nearby competitor. Legal Analysis: The bonds are secured by a pledge of gross revenues of FGH. No swaps outstanding. FGH Slowly Recovering From Operating Losses; Challenges Remain Though consolidated audited financials have not been completed, it appears that FGH will demonstrate modest levels of recovery in FY 2004 after incurring a peak operating loss of $3.4 million in FY 2003, which left the System less than $700,000 in operating cash flow. At FYE 2004, FGH's management reported a break-even bottom line with a slight operating gain of $161,000 (for the hospital only) compared to an audited operating loss of $3.2 million at FYE 2003. Based on unaudited financials, it appears that operating cash flow (for FGH alone) rose significantly in FY 2004 to $3.9 million, compared to just $296,000 in FY 2003. Management attributes the improvement in operating performance to successful cost-saving measures and significant changes in emergency room services. FGH has been aggressively trying to recover from heavy operating losses suffered in FY 2002 and FY 2003, due to the disbandment of eight physicians practicing in FGH's emergency department, inpatient volume declines, and agency nursing costs. Significant challenges related to the costs of professional liability coverage at the time hindered FGH's physician recruitment efforts, thereby slowing the recovery process. These challenges appear to have subsided with the passing of tort reform legislation in July 2003, and FGH has focused on recruiting physicians and nurses while working with consultants to identify key savings opportunities. The results of these initiatives now appear visible in FY 2004, with management reporting 7.1% revenue growth while expenses remained flat with 1.8% growth. In addition, FGH successfully renegotiated a collective bargaining agreement with nurses in October 2004, which stipulates a modest 4% increase over 3 years (not per year). Despite improvement in operating performance, Moody's notes a third consecutive year of admission declines at FGH. Total in- patient admissions have declined 11.3% from FY 2001 to FY 2004, largely due to the operating setbacks in FY 2002. Management attributes the decline in acute admissions in FY 2004 to the retirement of three physicians - one general surgeon and two OB/GYNs - representing 5.6% of total patient volume in FY 2003. FGH has developed several strategic initiatives to address these challenges and improve operating performance in FY 2005 including physician recruitment and developing a hospitalist program. Moody's notes that outpatient visits have increased from FY 2002, which we view favorably. The decline in acute admissions in FY 2004 was slightly offset by increases in admissions in FGH's Behavioral Medicine Unit, which grew by 17.8% in FY 2004. Behavioral medicine represents a profitable line of business for the hospital, and management plans to expand this program in FY 2005. In addition, FGH expects the new prospective payment system for psychiatric services to bring in an additional $800,000 per year when fully phased in (2008). ED volumes continued to decline by 2.7% in FY 2004, which poses some concern as 13.5% of the hospitals admissions are derived from the ED, although declines were not as severe as in prior years (4.2% and 7.7% in FY 2002 and FY 2003, respectively). FGH's budget for FY2005 includes a 10.7% increase in net patient revenues. Moody's view this level as highly optimistic given the trend of volume declines in the past three years. Based on consolidated audited financial statements, FGH has only seen double-digit revenue growth once in the past five years. Cash Levels Remain Thin But Relatively Stable; Debt Levels Appear To Be Coming Down At FYE 2004, FGH reported cash levels at $5.8 million (for the hospital only), or 33.0 days cash on hand, relatively flat from $5.4 million (30.9 days cash on hand) in FY 2003. Management expects FYE 2005 unrestricted liquidity to be $5.2 million (26.8 cash days on hand). Despite a modest improvement in cash-to-debt ratios (from 38.3% in at FYE 2003 to 48.1% at FYE 2004), Moody's believe FGH retains little financial cushion to withstand unforeseen operating challenges. FGH has kept capital spending low (average capital spending level 0.85 from FY 1999-2003) in spite of deferred capital needs. Moody's are concerned that low levels of investment in the plant over the last five years will challenge the organization to remain competitive as nearby competitors refurbish and rebuild. FGH's capital budget for FY 2005 is $3.2 million. FGH's current debt service is high relative to total debt outstanding due to a rapidly amortizing debt schedule. Three of FGH's four bond series are due to expire in 2007 (Series 1997, 2000 and 2002, representing $5.8 million in debt outstanding), while the Series 1994 bonds mature in 2019. At FYE 2004, FGH's total debt outstanding was $12.2 million (includes capital leases). Maximum annual debt service coverage improved to 1.3 times from 0.31 times at FYE 2003. FGH does not have plans to issue additional debt in the near term. FGH Maintains Strong Market Share But Faces Stiff Competition From A Strong Potential Competitor As the only acute care hospital in Marion County, FGH enjoys a solid market position. The hospital derives approximately 80% of its admissions from Marion County (population 56,000 in 2000), its primary service area. Management reports a 72.8% market share in Marion County. However, the area's fundamentals continue to present challenges for the hospital's long-term growth. From 1990 to 2000, Marion County experienced a 1.1% decline in population. Moody's also notes an increasing percentage of self-pay patients, as evidenced by a material increase in bad debt expense in FY 2004. FGH reported that bad debt expense rose 25.0% in FY 2004, representing 10.7% of FGH's net patient revenue. Hospital management is now looking to establish an outpatient presence in South Fairmont, where the payor mix is more favorable. FGH also faces competitive pressures from three hospitals located only 15-20 miles away. 182-bed Monongalia General Hospital and 363-bed West Virginia University Hospital are located in Morgantown, only 15 miles to the northeast, while 309-bed United Hospital (part of the West Virginia University Hospital System) lies 19 miles southwest in Clarksburg, WV. Given the volume declines in the past three years, Moody's expects FGH may have experienced some market share erosion. It should be noted that FGH has been involved in a protracted legal battle with United Hospital, which is looking to build a replacement facility in Bridgeport. While United Hospital only draws 3-4% of Marion County's business, the new facility would place United even closer to FGH (10 minutes driving time). Both FGH and United Hospital filed certificate of need applications for replacement facilities in 2002. At that time, FGH's capital partner, Triad Hospitals, Inc., was in discussions to buy FGH pending approval of the CON application. However, in October 2003, the West Virginia Health Care Authority approved United Hospital's request for a replacement facility. As a result, Triad pulled out of discussions and FGH was forced to withdraw its CON application. FGH appealed the decision twice, and in November 2004 a circuit judge overturned HCA's decision. Both United Hospital and the West Virginia HCA have now appealed the case to the West Virginia Supreme Court of Appeals. Key Facts: (Based on consolidated audited financial results of December 31, 2003; unaudited FY 2004 for FGH only) * Admissions: 6,265 * Total operating revenue: $64.8 million; $67.3 million * Net revenue available for debt service: $953,000; $4.0 million (Moody's normalizes investment income at 6%) * Total unrestricted cash: $5.4 million; $5.8 million * Total debt outstanding: $13.2 million; $12.1 million * Operating cash flow margin: 1.0%; 5.4% * Cash-to-debt: 40.8%; 48.1% * Debt-to-cash flow: 118.7 times; 3.8 times * Days cash on hand: 30.27 days; 32.96 days * Maximum annual debt service: $3.1 million * Maximum annual debt service coverage: 0.31 times; 1.3 times Outlook The negative outlook reflects Moody's belief that FGH will continue to face challenges with volumes given the area's fundamentals and the potential encroachment of a nearby competitor. FEDERAL-MOGUL: Estimation Hearing Scheduled for June 14 ------------------------------------------------------- Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, relates that as a result of proceedings before the U.S. Bankruptcy Court for the District of Delaware, Federal-Mogul Corporation's estimation proceedings are now scheduled to begin in the District Court on June 14, 2005, with the confirmation hearing on the Plan to follow thereafter. The Estimation Proceedings The amount of Asbestos Claims against the U.K. Debtors is at the core of the dispute among the various constituencies in Federal- Mogul's chapter 11 cases. The Asbestos PI Committee's expert, Dr. Mark Peterson, has estimated the total amount of all Asbestos Claims against the U.K. Debtors at $10.97 billion. EMB, the U.K. Administrators' expert, estimates the tort system liability of Asbestos Claims against the U.K. Debtors at $5.3 billion, and has suggested that there is some other, even lower, value that will be produced if the English Court disregards the U.S. jury system in assessing the Asbestos Claims that arise under U.S. law. Tillinghast, the expert for the T&N Retirement Benefits Scheme (1989) Trustee, estimates the liability in the range of $2.1 to $5.5 billion. The Property Damage Committee says it's $2.4 billion. This disagreement, the Debtors observe, has resulted in a stalemate among the creditor constituencies that is costing millions of dollars per year in professional fees while creditors wait for distributions. The Estimation Proceeding is expect to broadly resolve the parties' dispute regarding the aggregate amount of the Asbestos Claims against the U.K. Debtors for both the Chapter 11 Cases and the English Proceedings. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., Represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. (Federal-Mogul Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) GE-RAY FABRICS: Case Summary & 41 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Ge-Ray Fabrics, Inc. 1071 Avenue of the Americas New York, New York 10018 Tel: (212) 869-3400 Bankruptcy Case No.: 05-12201 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Lustar Dyeing & Finishing, Inc. 05-12207 Type of Business: Ge-Ray Fabrics, Inc., is a supplier of circular knitted fabrics to the apparel industry. The fabrics include cottons and synthetics, with and without spandex, and range from basic jersey to high fashion knits. Lustar Dyeing & Finishing, Inc., is a dyeing & finishing processing plant for textile fabrics. See http://www.geray.com/ Chapter 11 Petition Date: April 4, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Avrom R. Vann, Esq. Avrom R. Vann, P.C. 420 Lexington Avenue, Suite 2450 New York, New York 10170 Tel: (212) 382-1700 Fax: (646) 227-1579 Total Assets Total Debts ------------ ----------- Ge-Ray Fabrics, Inc. $10 Mil. to $50 Mil. $10 Mil. to $50 Mil. Lustar Dyeing & Finishing, Inc. $1 Mil. to $10 Mil. $500,000 to $1 Mil. A. Ge-Ray Fabrics, Inc.'s 22 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Titan-Dillon Yarn Corporation $1,673,515 PO Box AE Paterson, NJ 075509 Attn: Harold Nebbia Tel: (973) 684-1600 Unifi, Inc. $965,235 PO Box 19109 Greensboro, NC 27419 Attn: Ramona Johnson Tel: (336) 316-5617 Wellstone $434,664 856 South Pleasantburg Drive Greenville, SC 29607 Attn: Johnny McPherson Tel: (864) 255-3533 Spectrum Textured Yarns Inc. $330,238 136 Patterson Road Kings Mountain, NC 28086 Attn: Jim Roark Tel: (704) 739-7401 Russ Knits, Inc./CIT Group $273,298 PO Drawer 130 Candor, NC 27229 Attn: Joyce Beam Tel: (910) 974-4114 Fruit of the Loom $271,500 One Fruit of the Loom Drive Bowling Green, KY 42103 Attn: William Howell Tel: (502) 782-4222 Radicispandex Corporation $266,758 125 Hartwell Street Fall River, MA Attn: Theo Papajadas Tel: (508) 674-3588 Buhler Yarns, Inc. $246,956 PO Box 729 Jefferson, GA 30549 Alandale Knitting Company, Inc. $212,004 PO Box 708 Troy, NC 27371 Nylstar, Inc. $207,601 4100 Medenenhall Oaks, Suite 130 High Point, NC 27265 Spectrum Dyed Yarn, Inc. $104,231 136 Patterson Road Kings Mountain, NC 28086 Eastman Chemical Financial $97,328 One James C. White Drive PO Box 2002 Kingsport, TN 37662 Invista SARL $96,162 4123 East 37th Street North Wichita, KS 67220 Distribution De Ropa Viva $87,840 Avena No. 513 Col Granjas Mexico Dei Iziacolco, Mexico D.F. CP 08400 Globus Mercantile Company, Inc. $80,657 10 East 40th Street, Suite 3612 New York, NY 10016 Somelos Mix Fios Textiles, S.A. $68,220 PO Box 1503 New York, NY 10268 Transportation $52,588 10 Spring Street Freehold, NJ 07728 Frontier Spinning $49,859 c/o Suntrust Bank 55 Park Place Atlanta, GA 30303 Textil Tearfil S.A. (W) $49,275 Avenida Comendador Joaquim De Almeda Freitos, 3 Molreira De Congregos Guimaraes Apartado 203 Caldas De Vizela Portugal 4815-903 Hyosung America New York $48,227 One Penn Plaza 25 West 24th Street, Suite 10119 New York, NY 10119 Tuscarora Yarns Inc. BB&T $47,672 PO Box 218 Mount Pleasant, NC 28124 Globus Mercantile Company-CIT Group $44,213 10 East 40th Street, Suite 3612 New York, NY 10016 B. Lustar Dyeing & Finishing, Inc.'s 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Clariant Corporation $108,555 4000 Monro Road Charlotte, NC 28205 Attn: Gary Mulerian Dystar L.P. $92,435 Pine Brook III 9844-A Southern Pine Boulevard Charlotte, NC 28273 Attn: Tom Barcellona MSD Buncombe County $35,237 2028 Riverside Drive Ashville, NC 28804 Public Service of North Carolina Inc. PO Box 100256 Columbia, SC 29202-3256 M Dohmen USA Inc. $20,163 25 Ellwood Court Greenville, SC 29681 Carauster $18,404 PO Box 11088 Charlotte, NC 28220 CIBA Specialty Chemicals Corporation $14,390 540 White Plains Road Tarrytown, NY 10591 Boehme Fitatex Incorporated $13,561 209 Watlington Industrial Drive Reidsville, NC 27320-8147 Securitas Security Services $13,049 United Stated Supply Company Inc. $11,966 Vesco Industrial Trucks $11,844 Primary Physician Care Inc. $11,665 Chemway Corporation $10,958 Noveon, Inc. $10,021 Ashville Staffing Resources $8,699 Engineering Sales Association $7,276 GDS of Ashville Inc. $5,663 IBM Corporation $5,657 Colonial Packaging Inc. $5,356 Tubular Textile Machinery $5,270 GEORGIA-PACIFIC: Buying Back $250 Million Debentures on April 30 ---------------------------------------------------------------- Georgia-Pacific Corp. (NYSE: GP) elected to call for redemption all of its 8.625% debentures due April 30, 2025. These debentures were issued in April 1995 and have an aggregate outstanding principal amount of $250 million. The company anticipates that the debentures will be redeemed on April 30, 2005. Georgia-Pacific said it will use funds available under its revolving credit facility to redeem these debentures. The company expects to record a second quarter 2005 pretax charge of approximately $12.5 million for call premiums and to write off deferred debt issuance costs. Headquartered at Atlanta, Georgia-Pacific -- http://www.gp.com/-- is one of the world's leading manufacturers and marketers of tissue, packaging, paper, building products and related chemicals. With 2004 annual sales of $20 billion, the company employs approximately 55,000 people at more than 300 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So-Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia-Pacific's building products manufacturing business has long been among the nation's leading suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. * * * As reported in the Troubled Company Reporter on Dec. 20, 2004, Moody's Investors Service changed the outlook on Georgia-Pacific Corporation's ratings to positive from stable, with similar outlook changes initiated for the other entities through which Georgia-Pacific and its subsidiaries and predecessor companies have issued debt. At the same time, Moody's affirmed Georgia- Pacific's senior implied rating at Ba2, and the senior unsecured and issuer ratings at Ba3. Moody's continued its practice of rating debt that is either issued or guaranteed by Fort James Corporation at a level equivalent with the Ba2 senior implied rating, with all other debt rated one notch below at Ba3. Georgia- Pacific's Speculative Grade Liquidity -- SGL -- rating was also affirmed at SGL-2, which indicates good liquidity. * Georgia-Pacific Corporation: -- Outlook changed to positive from stable Ratings affirmed: -- Senior Implied: Ba2 -- Senior unsecured: Ba3 -- Issuer rating: Ba3 -- Speculative Grade Liquidity Rating: SGL-2 * Fort James Corporation: -- Outlook changed: to positive from stable Rating affirmed: -- Senior Unsecured: Ba2 * G-P Canada Finance Company: -- Outlook changed: to positive from stable Rating affirmed: -- Backed Senior Unsecured: Ba3 * Fort James Operating Company: -- Outlook changed: to positive from stable Rating affirmed: -- Backed Senior Unsecured: Ba2 As reported in the Troubled Company Reporter on May 6, 2004, Standard & Poor's Ratings Services revised its outlook on Atlanta, Ga.-based Georgia-Pacific Corp. (GP) and its subsidiaries to stable from negative, and affirmed its 'BB+' corporate credit and senior unsecured debt ratings. GLOBAL CROSSING: Sells Trader Voice Business to WestCom for $25M ---------------------------------------------------------------- Global Crossing entered into an agreement to sell its Trader Voice business to WestCom Corporation. In addition to the sale, Global Crossing announced a wholesale services agreement to provide bandwidth and co-location services to WestCom. Under the sale agreement, Global Crossing will receive $25 million in gross cash proceeds for the Trader Voice business, including a three-year, $0.7 million prepayment for certain services under the wholesale services agreement. Global Crossing expects approximately $22 million in net cash proceeds from the transaction, after giving effect to the payment of certain fees and the deduction of certain retained liabilities. The transaction is expected to close in the second quarter, subject to remaining regulatory approvals. The application for regulatory approval filed with New York State Public Service Commission was granted, and such approval will become effective by operation of law on April 30, 2005. The Federal Communications Commission approved the sale on March 22, 2005. "Global Crossing's strategy is to provide multinational enterprise and carrier customers, including those in the financial markets industry, with global IP products and services. The sale of our Trader Voice business, a specialty service used by trading floors, enables us to intensify our focus on our core business and to transition these important customers and their services to WestCom, the industry leader in trader voice services to the financial industry," said John Legere, chief executive officer of Global Crossing. "We're happy to proceed with this sale with WestCom, and through our wholesale agreement, to support them in providing their customers with the quality service and reliability of our global data network." The Trader Voice business being acquired by WestCom, which includes all the assets and hardware, provides high-quality, high-speed voice solutions to thousands of traders in the world's largest financial services firms. The Trader Voice product offering includes services such as Manual Ringdown, Automatic Ringdown and Hoot 'n Holler circuits. "The acquisition of Global Crossing's Trader Voice business further secures our position as the largest provider of trader voice services in the world," said Michael Hirtenstein, chief executive officer and founder of WestCom. "With this acquisition, we are adding over 500 on-net customer sites to our network. This is great news for our new and existing customers, all of whom will benefit from our rapid provisioning services, which allow us to turn up new trading connections in a matter of hours over our privately managed network." Mr. Hirtenstein continued: "This transaction further demonstrates our commitment to supporting this specialty product for our customers as we continue to explore exciting opportunities to provide additional services and take advantage of a wider range of technologies." WestCom is owned by One Equity Partners, a private equity unit of J.P. Morgan Chase & Co. Global Crossing is intensifying its focus to capitalize on the growing trend of major corporations to adopt IP-based, top- performing networking solutions as part of their corporate infrastructures. Global Crossing's sales of its Trader Voice business Small Business Group units complete two major milestones in this effort. About Westcom WestCom Corporation -- http://www.westcom.com/-- is an international telecommunications company that provides specialty trader voice and data products to the financial industry. Our global private network enables members to turn up new trader voice lines within 24 hours to participating financial institutions. WestCom's Global Trader Voice Exchange is the largest of its kind in the world, reaching 20 countries and every major financial center. WestCom offers a variety of solutions including trader voice ring down service, multiple-point Hoot 'n Holler networks and point-to-point data services. WestCom is focused exclusively on the financial community, with expertise in supporting the critical trading activities for many of the largest firms in the world. Headquartered in New York City, WestCom with network operations centers in New York and London, and business offices in Paris, Frankfurt, Chicago, San Francisco, Houston and South Carolina. About Global Crossing 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. HIGH VOLTAGE: Choate Hall Approved as Chapter 11 Trustee Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts gave Stephen S. Gray, the Chapter 11 Trustee for High Voltage Engineering Corporation and its debtor-affiliates, permission to retain Choate, Hall & Stewart as his counsel effective as of Feb. 18, 2005. Choate Hall will: a) provide Mr. Gray with legal advice and counsel on his rights, duties and responsibilities as a Chapter 11 Trustee in the Debtors' chapter 11 cases; and b) provide all other legal services to Mr. Gray that are necessary for the proper administration of the Debtors' estates and their bankruptcy proceedings. Charles L. Glerum, Esq., a Shareholder at Choate Hall, is one of the attorneys performing services for Mr. Gray. Mr. Glerum charges $530 per hour for his services. Mr. Glerum discloses that the Firm has not received any retainer for its representation of Mr. Gray. Mr. Glerum reports Choate Hall's professionals bill: Designation Hourly Rates ----------- ------------ Partners $435 - $495 Associates $245 - $390 Choate Hall assures the Court that it does not represent any interest adverse to the Chapter 11 Trustee, the Debtors or their estates. Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates a group of three industrial and technology based manufacturing and services businesses. HVE's businesses focus on designing and manufacturing high quality applications and engineered products which are designed to address specific customer needs. The Debtor filed its first chapter 11 petition on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended Joint Chapter 11 Plan of Reorganization was confirmed on July 21, 2004, allowing the Company to emerge on Aug. 10, 2004. High Voltage filed its second chapter 11 petition on Feb. 8, 2004 (Bankr. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin, Gump, Strauss, Hauer & Feld LLP, and Douglas B. Rosner, Esq., at Goulston & Storrs, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. HARRAH'S ENT: Hosting First Quarter Conference Call on April 20 --------------------------------------------------------------- Harrah's Entertainment, Inc. (NYSE: HET) will host a conference call Wednesday, April 20, 2005, at 9:00 a.m. Eastern Daylight Time to discuss its 2005 first-quarter results. Those interested in participating in the call should dial 1-888-399-2695, or 1-706-679-7646 for international callers, approximately 10 minutes before the call start time. A taped replay of the conference call can be accessed at 1-800-642-1687, or 1-706-645-9291 for international callers, beginning at 11:00 a.m. EDT on Wednesday, April 20. The replay will be available through 11:59 p.m. EDT on Tuesday, April 26. The passcode number for the replay is 5244318. Interested parties wanting to listen to the conference call may do so on the company's Web site -- http://www.harrahs.com/-- in the Investor Relations section. About Harrah's Entertainment Founded 67 years ago, Harrah's Entertainment, Inc., owns or manages through various subsidiaries 27 casinos in the United States, primarily under the Harrah's and Horseshoe brand names. Harrah's Entertainment is focused on building loyalty and value with its valued customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. * * * As reported in the Troubled Company Reporter on July 19, 2004, Fitch Ratings has affirmed the following long-term debt ratings of Harrah's Entertainment and placed the long-term ratings of Caesars Entertainment on Rating Watch Positive. HET -- Senior secured debt 'BBB-'; -- Senior subordinated debt 'BB+'. CZR -- Senior unsecured debt 'BB+'; -- Senior subordinated debt 'BB-'. HAWAIIAN AIRLINES: Posts $71 Million Operating Profit in 2004 ------------------------------------------------------------- Hawaiian Airlines, Inc., reported its audited financial results for the fiscal year ending December 31, 2004, reporting an operating profit of $71.1 million on revenue of $764.0 million. By comparison, Hawaiian reported an operating profit of $77.5 million on revenue of $697.7 million for 2003. Hawaiian Airlines Trustee Joshua Gotbaum said, "With rising fuel costs and increasing competition, 2004 was a very tough year for airlines. Nonetheless, the people of Hawaiian Airlines performed magnificently, setting new standards for service, reliability, and financial performance. That same performance will be necessary in the tough times ahead." Mr. Gotbaum added that the brunt of rising fuel costs and increased competition were felt more heavily as the year wore on, and are continuing into 2005. He noted that more than 95 percent of Hawaiian's operating profit for 2004 was realized in the first eight months of the year. Hawaiian's overall operating expenses for 2004 increased by 11.7 percent to $692.9 million, with fuel costs skyrocketing by 40.1 percent to $135.9 million compared to 2003. Labor costs increased by 5.5 percent to $227.3 million for the year. Along with operating expenses, Hawaiian also recognized $129.5 million in reorganization expenses for 2004. These primarily consisted of $110.6 million in one-time non-cash claims to settle leases with Boeing Capital Corporation for three Boeing 767-300 and 11 Boeing 717-200 aircraft, and with Ansett for a B767-300 rejected by Hawaiian in 2003. Under generally accepted accounting principles, reorganization- related expenses are reported as a non-operating expense. The aircraft lease settlements converted ongoing cash obligations into unsecured claims. Taking into account reorganization-related expenses and an income tax provision of $16.8 million, Hawaiian recorded a net loss of $75.4 million in 2004. This compares with a net loss of $49.5 million for 2003. The complete financial report for 2004 will be available online at http://www.HawaiianAirlines.com/ Becoming A National Leader For Hawaiian Airlines, 2004 was a year in which Hawaii's largest and longest-serving carrier became recognized as one of the nation's best. Hawaiian maintained profitability, improved service, and led the nation in performance and reliability. Based on reports issued by the U.S. Department of Transportation, Hawaiian led America's airlines in service for 2004, finishing #1 for punctuality, #2 for both baggage handling and boarding reliability, and in the top five for fewest consumer complaints. Moreover, according to Aviation Daily, Hawaiian was the nation's best airline at attracting customers, leading all carriers with a systemwide load factor of 85.7 percent. Hawaiian continued to innovate to make travel more enjoyable and hassle-free for customers in 2004. It became the world's first carrier to introduce a mobile skycap service, BaggageDirect, so that travelers are no longer forced to lug their bags to the airport and through security. Hawaiian was the first transpacific carrier to introduce digEplayer, a laptop personal entertainment system. Hawaiian also reorganized its airport operations, improved its Web Check-In, and added significantly more Self- Check-In Hele On machines to ticket lobbies throughout its route system, thereby speeding up lines and, in some cases, eliminating them entirely. Mark Dunkerley, Hawaiian's president and chief operating officer, said, "Our good operational performance in 2004 leaves us well- placed to distinguish our service from that of our competitors in a market of increasing competitive intensity. As always, there remains further room for improvement and we shall not lose sight of the need to innovate." About the Company Hawaiian Airlines, the nation's number one on-time carrier, is recognized as one of the best airlines in America. Readers of two prominent national travel magazines, Conde Nast Traveler and Travel + Leisure, have both rated Hawaiian as the top domestic airline serving Hawaii in their most recent rankings, and the fifth best domestic airline overall. Celebrating its 76th year of continuous service, Hawaiian is Hawaii's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the U.S. mainland. Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities than any other airline. Hawaiian also provides approximately 100 daily jet flights among the Hawaiian Islands, as well as service to Australia, American Samoa and Tahiti. On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. HAWAIIAN AIRLINES: Promotes Dave Kolakowski to Senior Director -------------------------------------------------------------- Hawaiian Airlines promotes Dave Kolakowski, a 27-year airline training professional, to senior director of corporate training. In his new role, Mr. Kolakowski oversees The Learning Center at Hawaiian and is responsible for airline operations training, specifically involving pilots, flight attendants, customer service agents, and ramp personnel. He also provides guidance on regulatory and leadership issues. Mr. Kolakowski's promotion is part of a larger effort by Hawaiian to centralize its training resources and take greater advantage of the airline's assets in providing a consistency of 'need-to-know' information to employees. One of his projects is reviewing all corporate training requirements to ensure that Hawaiian meets the professional development needs of its employees and operational divisions, while complying with government regulations. Hawaiian hired Mr. Kolakowski in March 2003 as senior director of flight standards and crew training. The position carried a wide berth of responsibilities to standardize and improve training of pilots and flight attendants. One of his first accomplishments was implementing an Advanced Qualification Program for pilots, which emphasizes real-work conditions by training cockpit crews as flight teams instead of individuals. Before joining Hawaiian, Mr. Kolakowski spent 25 years at the United Airlines Flight Center in Denver, where he rose through the ranks with promotions and ever-increasing responsibilities focusing on the training of pilots and flight attendants. A native of Erie, Pennsylvania, Mr. Kolakowski earned a Bachelor of Science in English Education, as well as a Masters in Education from Edinboro University in Pennsylvania. About the Company Hawaiian Airlines, the nation's number one on-time carrier, is recognized as one of the best airlines in America. Readers of two prominent national travel magazines, Conde Nast Traveler and Travel + Leisure, have both rated Hawaiian as the top domestic airline serving Hawaii in their most recent rankings, and the fifth best domestic airline overall. Celebrating its 76th year of continuous service, Hawaiian is Hawaii's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the U.S. mainland. Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities than any other airline. Hawaiian also provides approximately 100 daily jet flights among the Hawaiian Islands, as well as service to Australia, American Samoa and Tahiti. On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. HIGGINSON OIL: List of 20 Largest Unsecured Creditors ----------------------------------------------------- Higginson Oil Company released a list of its 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Countrymark Cooperative Open Account $343,766 2250 S. East Street Suite 605 Indianapolis, IN 46202 CoreMark Open Account $182,184 P.O. Box 4609 Leitchfield, KY 42755 Wabash Foodservice Open Account $47,320 P.O. Box 576 Vincennes, IN 47591 Heritage Petroleum Open Account $38,446 P.O. Box 6850 Pepsi Americas Open Account $23,955 Hinderliter Environmental Open Account $14,000 Services E. M. Cobb Lease of business $13,216 premises Central State Coca-Cola Open Account $8,492 P.O. Box 88987 Ideal American Dairy Open Account $8,028 P.O. Box 4038 Evansville Courier Corp. Open Account $7,110 P.O. Box 268 Daviess County Open Account $6,386 Royal Crown Beverages Open Account $5,733 P.O. Box 2870 Aramark Uniforms Open Account $2,413 P.O. Box 1290 FritoLay Open Account $1,938 P.O. Box 643105 Miles & Finch, Inc. Open Account $1,800 Sara Lee Bakery Group Open Account $1,683 Ice Products Open Account $1,517 K & I Toy House Open Account $1,384 IBC Wonder/Hostess Open Account $954 P.O. Box 60223 Coca-Cola Bottling Works Open Account $938 Higginson Oil Company filed an identical chapter 11 petition on March 24, 2005, and the Clerk assigned Case No. 05-70569 to that proceeding. Judge Lorch entered an order on March 28, 2005, granting the Debtor's motion to dismiss that proceeding because the documents were electronically filed in error. HOFFMAN ESTATES: Moody's Downgrades Bond Rating to Ba1 ------------------------------------------------------ Moody's Investors Service has downgraded the rating on the Village of Hoffman Estates' (Illinois) Tax Increment Junior Lien Revenue Bonds, Series 1991 to Ba1/stable outlook from Baa2/negative outlook, affecting $22 million of outstanding debt. The bonds carry a junior lien on tax increment revenues generated in the Economic Development Area in which Sears located its world headquarters; Series 1997 Tax Increment Revenue Refunding Bonds (unrated) carry a senior lien on these revenues. The primary security for the Series 1991 bonds is provided by an Ancillary Agreement between the Village and Sears, Roebuck and Co. (rated Ba1/stable outlook), in which Sears is obligated to make debt service payments should incremental revenues be insufficient. The agreement constitutes an unsecured contractual obligation of Sears, on parity with the company's senior unsecured debt. This agreement has taken on increasing importance in recent years due to a lag in development activity below projections has resulted in TIF cash-flow shortfalls and, accordingly, Sears has made partial payments on the Series 1991 bonds annually since 1999. The Series 1991 Bonds represent the second series of tax increment bonds sold by the village, following a Series 1990 issue, used to finance land acquisition and infrastructure improvements in an Economic Development Area in which Sears located its world headquarters. The 1990 Bonds were later refunded by a 1997 refunding issue that carries a senior lien on the project's incremental revenues. The EDA was enabled by special state legislation designed to provide incentives to insure Sears remained in Illinois when it sought to leave the City of Chicago in the late 1980s, and essentially functions like a TIF district. Incremental taxes respect the following flow of funds: (1) a Governmental Share Account which distributes a minimum level of taxes to the various units of government serving the area; (2) a Program Expense Account; (3) Senior Lien Bond debt service; (4) Senior Lien Debt Service Reserve Account; (5) Junior Lien Bond debt service; and (6) a General Account for surplus monies. Though cash flow has been sufficient to cover debt service on the Senior Lien bonds, there have been shortfalls in each of the last five years regarding junior lien debt service, totaling $36.3 million. Though Sears own headquarters complex is fully valued at nearly $821 million, anticipated ancillary development in the remaining acres of the corporate office park that was formed has been slower than anticipated, resulting in the shortfalls of incremental revenues. These shortfalls reiterate the importance of the primary security for the Series 1991 bonds; Sears unconditional and irrevocable obligation to make payments (on the business day preceding debt service due dates) to the trustee sufficient to cover debt service debt service payments coming due. The rating revision reflects the importance of this agreement, and the credit substitution it represents. This rating action, which concludes the review for downgrade initiated on November 17, 2004, follow the recent consummation of the acquisition of Sears, Roebuck and Co. by Kmart Holdings, and the closing of a $4 billion senior secured credit facility with Kmart Corporation and Sears Roebuck Acceptance Corp. as co- borrowers. The rating downgrade reflects the increased risk profile of Sears, Roebuck and Co. following its acquisition by Kmart as management seeks to improve the performance of two challenged retailers by integrating certain of their operations, repositioning their franchises and cross-merchandising the two main retail concepts. The primary risk is integration-based as the new entity will be rationalizing substantial real estate assets at the same time it is combining significant proprietary brands. The Ba1 senior implied rating for Sears Holdings considers the challenges that management faces as it integrates and re-positions two challenged retailers in a fiercely competitive environment, as well as the solid credit metrics that will result from this debt- free combination and the additional financial flexibility provided by its real estate holdings. The Sears franchise, while possessing a market-leading position in hard lines, remains challenged by its ongoing inability to craft a cogent soft lines strategy. Kmart, which has made healthy strides since its emergence from Chapter 11, has yet to prove it can compete effectively as a pure retailer in the discount space now unquestionably led by Wal-Mart. Moody's notes that the combination should accelerate the new company's ability to increase the number of Sears stores in off- mall locations, as well as allowing the two concepts to cross- merchandise their proprietary brands. However, significant square footage for both concepts will still be devoted to soft lines, categories where both have faced challenges and which will continue to face fierce competition from discounters such as Wal-Mart and Target and specialty retailers such as Gap. In addition, the integration process, which is never easy, will be further complicated by the level of real estate rationalization that is likely necessary. With combined locations of over 3,500, it is clear that combinations and closings will occur, which will magnify the integration risk. The stable rating outlook reflects Sears Holdings solid position in its rating category, industry leading hardlines business, and relatively low levels of funded debt. Upward rating pressure would result from Sears Holdings demonstrating: (a) that it is successfully integrating the two businesses in relation to systems, operations, culture and store rationalization; and (b) that the resulting concepts are gaining traction with the consumer, including maintenance of Sears' market share in hard lines and both Sears and Kmart becoming more credible competitors in apparel. An upgrade would also require Sears Holdings to demonstrate that it can maintain free cash flow to adjusted debt of at least 7%, with free cash flow reflecting reasonable capital reinvestment to maintain a fresh store base, and EBIT margins of at least 3.5%. A demonstrated ability to access the market on an unsecured basis would also add to upward rating pressure. While Sears Holdings is solidly positioned in its rating category, downward rating pressure would emanate from deterioration in operating performance that would result in significantly weaker credit metrics, with free cash flow to adjusted debt of less than 5% and EBIT margins of less than 2.5%. Qualitatively, should the company's competitive position erode, or should the integration not proceed fairly smoothly, a negative outlook is likely, with continued erosion resulting in a downgrade. The Baa3 rating of the $4 billion senior secured 5 year revolving credit facility is notched up one from the senior implied and considers the facility's favorable position in the proposed capital structure of Sears Holdings, as well as its receipt of a pledge of inventory and minimal credit card receivables. Co-borrowers under this facility will be SRAC and Kmart, with guarantees from Sears Holdings, Sears, Roebuck and Co. and principally all domestic subsidiaries. The advance rates are conservative, with significant excess availability that provides cushion to the unsecured creditors. The unsecured debt at SRAC is guaranteed by Sears, Roebuck and Co., as well as being a beneficiary of a support agreement from Sears, Roebuck and Co. Although this debt is effectively subordinated to the secured bank facility, there should be significant tangible assets available to support the position of senior unsecured creditors given likely drawings under the bank facility and the rating is therefore at the same level as the senior implied rating. Commercial paper issued by SRAC is also guaranteed by Sears, Roebuck and Co., and its rating was lowered to Not Prime reflecting the company's non-investment grade senior unsecured debt rating. The Not Prime rating will be withdrawn once the outstanding commercial paper has been repaid. The medium term notes at Sears DC Corp. benefit from a support agreement from Sears, Roebuck and Co., which requires Sears, Roebuck to pay interest on its unsecured notes issued to Sears DC Corp. sufficient to cover principal and interest obligations at least 1.005x, as well as a Net Worth Maintenance Agreement, which requires Sears, Roebuck and Co. to maintain ownership of and positive shareholders equity in Sears DC Corp. The notes are therefore rated at the Ba1 level. Sears, Roebuck and Co. which operates more than 870 full-line department stores and approximately 1,300 specialty stores, is the parent of Sears Roebuck Acceptance Corp., and is a wholly-owned subsidiary of Sears Holdings, which is headquartered in Hoffman Estates, Illinois, and is also the parent of K-Mart Corporation, which operates approximately 1,500 retail stores. HUGHES NETWORK: Moody's Assigns B1 Rating to Proposed $325M Debt ---------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Hughes Network Systems' proposed $325 million senior unsecured notes due 2013 and a Ba3 rating to the company's proposed $50 million revolving credit facility. This is the first time that Moody's has rated HNS. This transaction coincides with the acquisition of 50% of HNS by SkyTerra Communications, which is 63% owned by Apollo Management. Proceeds from the note issue will be used largely to finance the acquisition and complete the company's SPACEWAY 3 satellite. The ratings broadly reflect HNS's increasing challenges from terrestrial based competition, relatively low margins, and the significant risk and capital spending associated with the company's SPACEWAY 3 satellite launching in late 2006 offset by modest leverage (3.8x total debt to adjusted EBITDA, pro forma 2004) and good interest coverage (3.2x). Moody's assigned these ratings to HNS: * Senior implied rating -- B1 * $50 million senior secured revolving credit facility maturing 2011 -- Ba3 * Speculative grade liquidity rating -- SGL-2 Moody's assigned these ratings to HNS and HNS Finance Corp. as co- issuers: * $325 million senior unsecured notes due 2013 -- B1 * The outlook on all ratings is stable. The B1 senior implied rating reflects neutral to negative projected free cash flow owing to the company's investment in the SPACEWAY 3 satellite, low EBITDA margins (roughly 14%), and the business risk associated with the launching and implementation of the SPACEWAY 3 satellite. Moody's recognizes that the vertical integration enabled by SPACEWAY 3 may reduce the company's cost structure, and that the new satellite will facilitate higher data rates and open up new marketing opportunities. However, any failure with respect to SPACEWAY (e.g. launch, orbital placement, operational failure) could impair the company's business plan. The ratings also consider the company's leading position in the VSAT market (58% market share -- next largest competitor has a 26% share), and some degree of revenue stream diversification (67% domestic, 33% international; top 10 customers accounted for only 23% of 2004 revenues). The ratings also recognize its customers' longer term contracts (3-5 years) and good enterprise customer retention (85%), good liquidity as evidenced by the company's $115 million pro forma cash balance (though much of this cash is allocated to the completion of SPACEWAY 3), and the company's servicing of a market niche that is underserved by terrestrial competitors. Additionally, the B1 senior implied rating reflects the company's reasonable pro forma leverage (3.8x -- pro forma 2004), good interest coverage (3.2x), and nearly 2.0x asset coverage of debt obligations (including lease debt). The stable rating outlook considers the company's moderate growth plans and reasonable likelihood of at least maintaining its present operating cash flow generating customer base. Moody's would likely raise HNS's ratings if the company could sustain EBITDA margins above 20%, and generate enough free cash flow, despite necessary capital expenditures associated with SPACEWAY 3, to begin meaningfully delevering. Moody's would likely lower HNS's ratings if the company's EBITDA margins fall below 14% for a prolonged period of time, leaving only minimal free cash flow generation to grow the business, compete effectively, and reduce leverage. The use of cash flow to pay a material distribution to the equity owners prior to reducing leverage and the successful launching and implementation of SPACEWAY 3, could negatively affect the ratings. Moody's has notched up the revolver's rating relative to the senior implied rating. The proposed revolver benefits from a collateral interest in effectively all the company's assets. The company's receivables, inventories, and net PP&E of $424 million provides 1.0x coverage of total debt, and 8.5x coverage of senior secured debt (if the revolver were to be fully drawn), not giving effect for $115 million in cash. Moody's does not notch the ratings of the senior unsecured notes relative to the company's senior implied rating since it currently represents a significant majority of the company's total debt. As a class, senior unsecured debt could be notched lower than the senior implied rating if the company were to issue a material amount of secured debt in the future. HNS's SGL-2 rating reflects Moody's belief that the company has good liquidity to meet its near-term cash operating and investment needs through a combination of operating cash flow and availability under its $50 million revolving credit facility. Though the company has a significant cash balance as of the end of 2004 (pro forma for the note offering), Moody's notes that much of this cash is essentially allocated to the completion and launch of the SPACEWAY 3 satellite. Additionally, while Moody's does not expect HNS to accumulate cash over the 2005-2006 timeframe because of its investment in SPACEWAY 3, we believe the revolver would be sufficient for working capital needs and unforeseen spikes in capital expenditures should operating performance falter. Two financial covenants (total senior secured leverage, 1.5x, and interest coverage, 2.0x) will govern the revolving credit facility. Moody's anticipates that the company will have significant cushion under these covenants to weather an unexpected operational shortfall. In the event of a liquidity crisis, Moody's believes that the company is unlikely to sell fixed assets given their strategic importance and highly specialized nature. Moody's notes that the company does have nearly $200 million in receivables that it could potentially monetize. Moody's understands that the notes will be guaranteed by all domestic subsidiaries (other than license subsidiaries and future receivables subsidiaries). The revolver is guaranteed by each of HNS's direct and indirect domestic subsidiaries (other than license subsidiaries and any future receivables subsidiaries). HNSI and SkyTerra do not provide downstream guarantees. Additionally, a perfected first priority security interest in all of HNS's assets, 65% of the capital stock of foreign subsidiaries and all the capital stock of HNS secure the revolver. The company is issuing the notes and revolving credit facility in connection with the formation and capitalization of Hughes Network Systems LLC, pursuant to an agreement between HNS, HNSI, SkyTerra and DIRECTV. HNSI, 100% owned by DIRECTV, will contribute substantially all of its assets, including the SPACEWAY 3 satellite assets, to HNS. As consideration, HNS will pay HNSI $201 million in cash, after which HNSI will own 100% of HNS's equity interests. Subsequently, HNSI will sell 50% of its equity interests in HNS to SkyTerra for $50 million in cash, plus 300,000 shares of SkyTerra common stock. Net proceeds from the note issue will be used largely to fund the $201 million cash payment to HNSI, and as an addition to HNS's cash balance (subject to transaction adjustments). Hughes Network Systems, headquartered in Germantown, Md., is a global provider of broadband satellite networks and services to the VSAT enterprise market and the largest Internet access provider to the North American consumer market. The company generated approximately $789 million in revenue in 2004. IMMUNE RESPONSE: Liquidity Concerns Trigger Going Concern Doubt --------------------------------------------------------------- The Immune Response Corporation's (Nasdaq:IMNR) auditors, Levitz, Zacks & Ciceric, included a going concern opinion in the Company's Form 10-K filed with the Securities and Exchange Commission, due to operating and liquidity concerns which resulted from its significant net losses and negative cash flows from operations. As of Dec. 31, 2004, the Company had a consolidated accumulated deficit of $329,815,000. "We have not generated revenues from the commercialization of any product," the Company said in its Annual Report. "We expect to continue to incur substantial net operating losses over the next several years, which would imperil our ability to continue operations. We may not be able to generate sufficient product revenue to become profitable on a sustained basis, or at all, and do not expect to generate significant product revenue before the end of 2008, if at all." Nasdaq's rules require Nasdaq-listed companies to publicly disclose whenever a Form 10-K includes an audit opinion containing a going-concern qualification. About the Company The Immune Response Corporation (Nasdaq:IMNR) -- http://www.imnr.com/-- is a biopharmaceutical company dedicated to becoming a leading immune-based therapy company in HIV and multiple sclerosis (MS). The Company's HIV products are based on its patented whole-killed virus technology, co-invented by Company founder Dr. Jonas Salk, to stimulate HIV immune responses. REMUNE(R), currently in Phase II clinical trials, is being developed as a first-line treatment for people with early-stage HIV. We have initiated development of a new immune-based therapy, IR103, which incorporates a second-generation immunostimulatory oligonucleotide adjuvant and is currently in Phase I/II clinical trials in Canada and the United Kingdom. The Immune Response Corporation is also developing an immune-based therapy for MS, NeuroVax(TM), which is currently in Phase II clinical trials and has shown potential therapeutic value for this difficult-to-treat disease. INTERNATIONAL UTILITY: Exits from CCAA Protection ------------------------------------------------- International Utility Structures Inc. has obtained an order from the Court of Queen's Bench of Alberta providing for its exit from its proceedings under the Company's Creditors Arrangement Act (Canada). This order contemplates, among other things: * an interim distribution to those remaining creditors, * the placement with the Monitor of an amount of funds in order to deal with certain remaining outstanding matters, * the resignation of the remaining Canadian directors, and * the discharge of the Chief Restructuring Officer. Given that all of IUSI's assets have been substantially realized and that all funds received or to be received will be disbursed to the remaining creditors at a substantial loss, IUSI again confirms that there will be no funds available for distribution to its shareholders. International Utility Structures makes the metal poles and structures that power companies, cities, and phone companies use to support lighting, power lines, traffic signs and lights, and telecommunications cables. After failing to make scheduled interest payments on its subordinated notes, IUSI filed for creditor protection under the Companies' Creditor Arrangement Act of Canada in 2003. Soon after filing for creditor protection president and CEO Robert Jack was released from his duties. INTERPUBLIC GROUP: Has Until June 30 to File Annual Report ---------------------------------------------------------- The Interpublic Group of Companies, Inc. (NYSE: IPG) disclosed that its solicitation of consents to amendments relating to the following series of debt securities expired on March 31, 2005: Outstanding Supplemental Principal Indenture Amount Title of Securities CUSIP Indenture dated as of ----------- ----------------------- ------- ---------- ---------- 7.875% Senior Unsecured 460690AK6 2000 $250,000,000 Notes due 2005 Indenture N/A 7.25% Senior Unsecured 460690AR1 2000 August 22, Notes due 2011 U46064AB4 Indenture 2001 $500,000,000 460690AM2 4.50% Convertible Senior460690AT7 2000 March 13, Notes due 2023 460690AS9 Indenture 2003 $800,000,000 U46064AC2 5.40% Senior Unsecured 460690AU4 2004 November 18, $250,000,000 Notes due 2009 Indenture 2004 6.25% Senior Unsecured 460690AV2 2004 November 18, $350,000,000 Notes due 2014 Indenture 2004 The amendments provide, pursuant to the terms of the Company's consent solicitation dated March 18, 2005, as supplemented, that failure to comply with certain reporting covenants will not constitute a default under the indentures. With respect to the 4.50% Convertible Senior Notes due 2023, the amendments further provide: (1) an extension from March 15, 2008, to September 15, 2009, of the date before which the Company may not redeem the notes and (2) an additional "make-whole" adjustment to the conversion rate in the event of a change of control meeting specified conditions. The Company said that all conditions to the consent solicitation have been met and that it has accepted the consents it had received. The Company said it will pay the initial consent fee on April 1, 2005, to each record holder from which the Company has received and accepted consents. If the Company has not filed its 2004 Annual Report by 5:30 p.m., New York City time, on June 30, 2005, the Company will pay the additional consent fee on July 1, 2005 to each such record holder. For every $1,000 of principal amount of Securities as to which the Company has received and accepted consents, the initial consent fee is $2.50 and the additional consent fee is $1.25. Copies of the solicitation statement, as supplemented, and related consent form may be obtained at no charge by contacting the information agent by telephone at (866) 470-3900 (toll-free) or (212) 430-3774, or in writing at 65 Broadway - Suite 704, New York, NY 10006. Questions regarding the solicitation may be directed to: Citigroup Global Markets Inc. at (800) 558-3745 (toll-free) or (212) 723- 6106 (collect), J.P. Morgan Securities Inc. at (800) 834-4666 (toll-free) or (212) 834-3424 (collect), and UBS Securities LLC at (888) 722-9555 ext. 4210 (toll-free) or (203) 719-4210 (collect). This announcement is not a solicitation of consents with respect to any Securities. About the Company The Interpublic Group of Companies, Inc. (NYSE: IPG) is one of the world's leading organizations of advertising agencies and marketing-services companies. Major global brands include Draft, Foote Cone & Belding Worldwide, GolinHarris International, Initiative, Jack Morton Worldwide, Lowe & Partners Worldwide, MAGNA Global, McCann Erickson, Octagon, Universal McCann and Weber Shandwick. Leading domestic brands include Campbell-Ewald, Deutsch and Hill Holliday. * * * As reported in the Troubled Company Reporter on March 15, 2005, Fitch Ratings has lowered the following debt ratings of The Interpublic Group of Companies, Inc. -- IPG: -- Senior unsecured debt to 'B+' from 'BB+'; -- Multicurrency bank credit facility to 'B+' from 'BB+'. Fitch said the debt ratings have also been placed on Rating Watch Negative. At the same time, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Manhattan-based The Interpublic Group of Cos. Inc. to 'BB-' from 'BB+', based on the long-term challenges the company faces related to its reporting systems and restoring operating performance to peer levels. The rating remains on CreditWatch with negative implications given the company's need to seek waivers from lenders and bondholders in order to address the possibility of a technical default. The advertising agency holding company had approximately $2.2 billion of debt outstanding on Sept. 30, 2004. INTERSTATE BAKERIES: Taps Judge Federman as Claims Mediator ----------------------------------------------------------- On December 3, 2004, the U.S. Bankruptcy Court for the Western District of Missouri approved procedures for liquidating and settling tort claims. Under the Claims Resolution Procedures, Interstate Bakeries Corporation and its debtor-affiliates are required to identify and employ a firm to administer the mediation and arbitration process for all eligible claims, and serve as mediator or arbitrator for many of the eligible claims. Pursuant to the Claims Resolution Procedures, "a person may serve as a mediator only if: (i) the person has judicial experience or has been trained in mediation in a recognized program such as that of the American Arbitration Association or is otherwise mutually agreeable to the Debtors and the Eligible Claimant; (ii) the person is an impartial and neutral person; (iii) the person has no financial or personal interest in the proceedings, or except where otherwise agreed by the parties, in any related matter; and (iv) the person, upon appointment, discloses any circumstances likely to create a reasonable inference of bias or prevent a prompt hearing or conference with the parties." J. Eric Ivester, Esq., Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that the Debtors, after interviewing and assessing the qualifications of several applicants, determined that Judge Arthur B. Federman, a United States Bankruptcy Judge for the Western District of Missouri since 1989, is eminently qualified to assist the Court and the Debtors' estates in implementing the Claims Resolution Procedures as to claims subject to mediation or arbitration. The Debtors, therefore, seek the Court's authority to employ Judge Federman to serve as Mediator. Mr. Ivester explains that Judge Federman will not be seeking any fees for his services but will be entitled to reimbursement of expenses incurred, with costs to be shared equally by the parties engaged in the mediations or arbitrations. For administrative purposes, the Debtors will pay all of Judge Federman's fees and expenses incurred within 10 days after submission of the bill to the Debtors. The Tort Claimant will pay its share of fees and expenses directly to the Debtors. "Reimbursement of Judge Federman's fees and expenses would be on the same basis that judges are reimbursed for government travel, which includes actual expenses for hotel, travel and postage, plus a per diem allowance for food. Judge Federman will not be required to submit any application for allowance of such expenses," Mr. Ivester clarifies. The Debtors anticipate that Judge Federman will examine any conflicts that he may have with parties-in-interest on a case by case basis, and when necessary, Judge Federman will disclose any conflicts that he may have and voluntarily recuse himself from the matter, where applicable. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) IPSCO INC: Steelworkers Say Wheat City Metal Lock-Out is Illegal ---------------------------------------------------------------- The United Steelworkers says that a lock-out notice served Friday by Wheat City Metal, a subsidiary of IPSCO against 38 workers at its scrap metal processing facility in Regina is illegal, and the union intends to forward the matter to the Saskatchewan Labour Relations Board. Although both parties had resolved various issues at the bargaining table, on March 28 the employer sent a letter to the union with an ultimatum that there be an agreement by 12 p.m. Friday or the company would serve notice to lock out the workers. Steelworker Staff Representative Mike Park said that, under Saskatchewan labour law, collective agreements must be between one to three years in duration unless there is an exemption granted by the provincial legislature. "Last year IPSCO made nearly a half billion dollars in profits. The Wheat City operation is a money maker and there is no rational reason that this company can not reach a fair agreement with its workers," said Mr. Park. "Our members refuse to accept the company's offer of measly lump sum payments over five years. There are also pension issues that must be properly addressed." The members of Steelworkers Local 5917 have been without a contract since December 31, 2004. Across Canada, the union represents more than 255,000 men and women working in every sector of Canada's economy. IPSCO Inc. operates steel mills at three locations and pipe mills at six locations in Canada and the United States. As a low cost North American steel producer, IPSCO has a combined annual steel making capacity of 3,500,000 tons and provides further processing at its five cut-to-length lines located in both the U.S. and Canada. The Company's tubular facilities produce a wide range of tubular products including line pipe, oil and gas well casing and tubing, standard pipe and hollow structurals. * * * As reported in the Troubled Company Reporter on Nov. 9, 2004, Moody's Investors Service upgraded its senior implied rating for IPSCO, Inc., to Ba2. The upgrade reflects IPSCO's much-stronger financial performance in response to improved market conditions for discrete plate, coil and tubular products, and its much improved capitalization. In consideration of IPSCO's strong credit metrics, low cost position, ability to further reduce leverage as debt matures over the next two years, and the very favorable near-term outlooks for its primary products, plate and energy tubulars, Moody's changed IPSCO's rating outlook to positive. These ratings were upgraded: * $200 million of 8.75% guaranteed senior unsecured notes due 2013 -- to Ba2 from Ba3, * senior implied rating -- to Ba2 from Ba3, and * senior unsecured issuer rating -- to Ba3 from B1. As reported in the Troubled Company Reporter on February 26, 2004, Standard & Poor's Ratings Services lowered its ratings on steel producer IPSCO Inc., including the long-term corporate credit rating, which was lowered to 'BB' from 'BB+'. At the same time, Standard & Poor's lowered its rating on the company's 5.5% cumulative redeemable first preferred shares to 'B' from 'B+'. The downgrade affects about US$425 million in unsecured debt. S&P says the outlook is stable. JOHNSONDIVERSEY: Moody's Reviewing Ratings & May Downgrade ---------------------------------------------------------- Moody's Investors Service placed the ratings of JohnsonDiversey, Inc., and its parent JohnsonDiversey Holdings, Inc. on review for possible downgrade primarily because Moody's believes free cash flow for 2005 and 2006 will be weaker than originally forecast when the ratings were assigned in April 2002 and because of the limited reduction of debt over the past three years. Ratings placed under review for possible downgrade are: JohnsonDiversey Holdings, Inc. -- $406.3 million aggregate principal amount at maturity 10.67% senior discount notes due 2013, at B3 JohnsonDiversey, Inc. -- Senior implied, at Ba3 -- $1.2 billion senior secured credit facilities due 2008-2009, at Ba3 -- $300 million senior subordinated notes due 2012, at B2 -- EUR225 million senior subordinated notes due 2012, at B2 In the fiscal year ended December 31, 2004, EBITDA margins fell to 12.4% (from 12.7% for the fiscal year ended January 2, 2004) before $46 million of integration and restructuring related costs. The 12.4% margin is less than the margin anticipated when Moody's changed the outlook on its ratings to negative in August 2003. The margin pressure was primarily driven by continued price increases for crude oil and natural gas, which are key raw materials for the company's polymer division and the floor care unit of the professional services business. Successful ahead-of- plan cost reduction efforts in the post merger integration and restructuring process could only partly mitigate this decrease. Moody's notes that lower-than-anticipated cash generation, and the adverse impact of the weakening of the dollar on the dollar value of euro denominated debt have led to stagnant debt levels since the merger. As of December 31, 2004, the company's funded debt of approximately $1.76 billion (adjusted for accounts receivable securitization and including the discount notes at the holding level) remained close to levels at closing of the merger of S.C. Johnson Commercial Markets Inc. and DiverseyLever Inc. in May 2002. The currency impact on term debt from the time of the merger until December 31, 2004 was an increase of approximately $189 million. While the absolute level of operating earnings increased since the merger, cash generation remains flat and debt protection measures continue to be weak for the current rating category. In fiscal 2004, Moody's estimates that cash flow from operations before receivables securitization was $162 million, which was approximately flat compared to fiscal 2003 when adjusted for the timing of certain post-merger payments between Unilever and JohnsonDiversey and pension plan contributions. Free cash flow to non-adjusted debt and EBITDA less capital expenditures to cash interest were 1.2% and 2.4 times, respectively, for the fiscal year ended December 31, 2004. We note that JohnsonDiversey has material off-balance sheet debt, including operating leases, asset securitizations and unfunded pension obligations. In addition, Moody's views the company's Class B common stock as debt because of the put rights held by Unilever under a stockholders' agreement. Moody's review will focus on JohnsonDiversey's prospects to improve operating margins and cash generation. Moody's anticipates this will depend on the company's ability to offset higher input costs of the affected businesses through pricing actions in a highly competitive environment. Moody's will also examine the company's ability to balance growth plans with the flexibility to reduce debt and its ability to obtain ample liquidity to execute its financial strategy. Our decision to review JohnsonDiversey's ratings anticipates that credit facility covenants will be amended as proposed by the company in March 2005. Headquartered in Sturtevant, Wisconsin, JohnsonDiversey, Inc., is a leading manufacturer and marketer of cleaning products and services for the global institutional and industrial cleaning and sanitation market. The company is also a leading worldwide supplier of water-based acrylic polymer resins, primarily for the industrial printing and packaging markets. The company was formed in May 2002 through the acquisition of Unilever's DiverseyLever by S.C. Johnson Commercial Markets (a previously spun-off subsidiary of S.C. Johnson & Son, Inc.). JohnsonDiversey, Inc., is a wholly owned subsidiary of JohnsonDiversey Holdings, Inc., which in turn is owned by Johnson family affiliates (67%) and Unilever (33%). Unilever has put rights with respect to its equity stake at 8x LTM EBITDA beginning in 2007. Sales for the fiscal year ended December 31, 2004 were approximately $3.2 billion. KAISER ALUMINUM: Taps Dickstein Shapiro as Special Claims Counsel ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave Kaiser Aluminum Corporation and its debtor-affiliates permission to employ Dickstein Shapiro as special claims counsel, nunc pro tunc to January 1, 2005. Dickstein Shapiro's retention nunc pro tunc to January 1, 2005, will provide for Dickstein Shapiro to be properly compensated for the work the firm has performed for the Debtors prior to the Court's approval. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEIGH ENTERPRISES: Selling Business to IBI Ent. for $955,000 ------------------------------------------------------------ Leigh Enterprises, Inc., dba A.D. Price Funeral Establishment, asks the U.S. Bankruptcy Court for the Eastern District of Virginia for authority to enter into a sales agreement with IBI Enterprises LLC. IBI proposes to acquire A.D. Price for $955,000. Leigh first entered into a sales contract with Marcorp Ltd. to sell its business for $820,000 but the sale wasn't consummated. Headquartered in Richmond, Virginia, Leigh Enterprises Inc., dba, A.D. Price Funeral Establishment is Richmond's oldest black-owned funeral home. The Debtor filed for chapter 11 protection on Dec. 29, 2003 (Bankr. E.D. Va. Case No. 03-41964). The case was converted into a chapter 7 proceeding on August 6, 2004. Robert A. Canfield, Esq., in Richmond, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts of $1 million to $10 million. LIFEPOINT HOSPITALS: Ups Purchase Price for Tendered Province Bond ------------------------------------------------------------------ LifePoint Hospitals, Inc. (NASDAQ: LPNT) disclosed that, in connection with the previously announced tender offer by Lakers Holding Corp., a subsidiary of LifePoint Hospitals, for any and all of the $172.5 million aggregate principal amount of Province Healthcare Company's 4-1/4% Convertible Subordinated Notes due 2008, the purchase price to be paid for each $1,000 principal amount of Notes validly tendered (and not validly withdrawn) in the offer has been increased from $1,060 to $1,070, plus accrued and unpaid interest up to, but not including, the date of payment for the Notes. The offer is being made pursuant to an Offer to Purchase dated March 18, 2005, as supplemented by the Supplemental Offer to Purchase dated March 21, 2005, and the Second Supplemental Offer to Purchase dated April 1, 2005, and a related Letter of Transmittal, which more fully set forth the terms and conditions of the offer. LifePoint Hospitals expects the payment date to be promptly after the expiration date. The offer is scheduled to expire at 12:00 midnight, New York City time, on April 14, 2005, unless extended or earlier terminated. Tenders of the Notes may be withdrawn pursuant to the Offer to Purchase at any time prior to the Expiration Date. The offer is conditioned upon, among other things, the satisfaction or waiver of all conditions precedent to the consummation of LifePoint Hospitals' proposed acquisition of Province Healthcare set forth in the agreement and plan of merger relating to the proposed acquisition. Copies of the Offer to Purchase and the Letter of Transmittal may be obtained from Global Bondholder Services Corporation, the information agent for the offer, at (866) 804-2200 (US toll free) and (212) 430-3774 (collect). Lakers Holding has engaged Citigroup Global Markets Inc. to act as the dealer manager in connection with the offer. Questions regarding the offer may be directed to Citigroup Global Markets Inc., Liability Management Group, at (877) 531-8365 (US toll- free). This announcement is not an offer to purchase or a solicitation of an offer to purchase with respect to any securities. The offer is being made solely by the Offer to Purchase and the related Letter of Transmittal dated March 18, 2005. LifePoint Hospitals currently operates 30 hospitals in non-urban communities. In most cases, the LifePoint Hospitals facility is the only hospital in its community. LifePoint Hospitals' non- urban operating strategy offers continued operational improvement by focusing on its five core values: delivering high quality patient care, supporting physicians, creating excellent workplaces for its employees, providing community value and ensuring fiscal responsibility. Headquartered in Brentwood, Tennessee, LifePoint Hospitals is affiliated with over 9,900 employees. * * * As reported in the Troubled Company Reporter on March 24, 2005, 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." LIFEPOINT HOSPITALS: Health Management Acquires Bartow Memorial --------------------------------------------------------------- LifePoint Hospitals, Inc. (NASDAQ: LPNT) disclosed the sale of its 56-bed Bartow Memorial Hospital, located in Bartow, Florida, to Health Management Associates, Inc. (NYSE: HMA) effective April 1, 2005. The terms of the transaction were not disclosed. Kenneth C. Donahey, president and chief executive officer of LifePoint Hospitals, said, "We are pleased to complete the sale of Bartow Memorial Hospital, and we are confident that the hospital, its staff, and the residents of Bartow and the surrounding communities will be well served by HMA." With the addition of Bartow Memorial Hospital, HMA now operates 17 hospitals in the State of Florida, and has now completed five acquisitions in fiscal year 2005, achieving its fiscal year 2005 objective to acquire between four and six hospitals. Bartow Memorial Hospital's annual net revenue is approximately $33 million. About HMA Health Management Associates, Inc., is the premier operator of non-urban general acute care hospitals in communities situated throughout the United States. HMA has generated 16 years of uninterrupted operating earnings growth and operates 57 hospitals in 16 states with approximately 8,259 licensed beds. About the Company LifePoint Hospitals, Inc., currently operates 30 hospitals in non- urban communities. In most cases, the LifePoint Hospitals facility is the only hospital in its community. LifePoint Hospitals' non-urban operating strategy offers continued operational improvement by focusing on its five core values: delivering high quality patient care, supporting physicians, creating excellent workplaces for its employees, providing community value and ensuring fiscal responsibility. Headquartered in Brentwood, Tennessee, LifePoint Hospitals is affiliated with approximately 9,900 employees. * * * As reported in the Troubled Company Reporter on March 24, 2005, 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." LITTLE MT. ZION: Files Plan of Reorganization in New York --------------------------------------------------------- Little Mt. Zion Pentecostal Faith Church, Inc., delivered its Plan of Reorganization to the U.S. Bankruptcy Court for the Southern District of New York, Manhattan Division. The Plan provides that administrative, secured, priority and unsecured claim holders will be fully paid in cash on the Effective Date. Equity interest holders will retain their interest in the Debtor. Headquartered in New York, Little Mt. Zion Pentecostal Faith Church Inc., is a church. The Church filed for chapter 11 protection on Jan. 5, 2005 (Bankr. S.D.N.Y. Case No. 05-40051). James E. Hurley, Jr., Esq., in 75 Maiden Lane, New York, represents the Debtor. When the Debtor filed for protection from its creditors, it listed $1 million in assets and $100 million in debts. LOUISIANA HOUSING: S&P Downgrades $11.1 Mil. Bond Rating to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Louisiana Housing Finance Agency's (New Orleans Towers project) $11.1 million Section 8 assisted multifamily housing bonds series 1992A to 'BB-' from 'BB+'. The outlook is negative. The downgrade reflects the continued decline in debt service coverage to under 1.0x maximum annual debt service (MADS) for the fiscal year-ended 2003 and the expectation that the coverage will continue to decline. The audited financial results for the year ended Dec. 31, 2003, indicate that the performance of the property has declined over the past several years. In fiscal 2003 debt service coverage declined to 0.88x MADS from 1.05x MADS in 2002. The year-to-date financial statements for the six months ended June 30, 2004, indicate a further decline in debt service coverage to 0.81x MADS. The average rent of $764 per unit per month has remained stable over the past several years. There have been no rental increases since 1996. The owner has not applied for a rental increase because the rents are currently 165% above fair market rents. The average rent has remained stable but the vacancy loss has increased leading to a decline in the economic rent per unit per month to $674 in 2002 from $706 in 2002. Expenses per unit per year increased by 16% to $4,318 per unit in 2003 from $3,606 in fiscal 2002. Utility expenses increased by 43% and maintenance and repair expenses increased by 26%. Debt per unit was $27,752 as per the trustee report dated May 4, 2004. Occupancy at the property has significantly declined to 88% in 2003 from 92% in 2002. MACROCHEM CORP: Recurring Losses Prompt Going Concern Doubt ----------------------------------------------------------- In accordance with applicable Nasdaq rules, MacroChem Corporation (NasdaqSC: MCHM) disclosed that the report of the Company's independent registered public accounting firm regarding the Company's 2004 financial statements included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission, contained an explanatory paragraph regarding the Company's ability to continue as a going concern. The going concern opinion was based upon recurring losses from operations and the Company's cash balance as of December 31, 2004, which is not sufficient to fund projected operations over the next year. The explanatory paragraph does not take into consideration any potential future cash inflows. About the Company MacroChem Corporation -- http://www.macrochem.com/--is a specialty pharmaceutical company that innovates, develops and commercializes pharmaceuticals administered in novel ways, to treat important medical conditions. MacroChem is developing two products containing its patented enhancer, SEPA(R): Opterone(R), a SEPA-enhanced topical testosterone treatment for male hypogonadism; and EcoNail(TM), a SEPA-enhanced antifungal nail lacquer to treat a common and potentially debilitating nail infection known as onychomycosis. MERRILL LYNCH: Moody's Puts Low-B Ratings on Two Mortgage Certs. ---------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-NC1 and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by New Century originated adjustable- rate (84.18%) and fixed-rate (15.82%) sub-prime mortgage loans. The ratings are based primarily on the credit quality of the loans, performance of past deals backed by collateral from this originator, and on the protection from subordination, overcollateralization, and excess spread. The loans backing this deal are of average quality relative to other recent securitizations of this lender's collateral. Wilshire Credit Corporation will service the loans. Moody's has assigned its above average servicer quality rating (SQ2) to Wilshire for primary servicing of subprime loans. The Complete Rating Actions Are: Issuer: Merrill Lynch Mortgage Investors Trust Securities: Mortgage Loan Asset-Backed Certificates, Series 2005-NC1 * Class A-1A, rated Aaa * Class A-1B, rated Aaa * Class A-2A, rated Aaa * Class A-2B, rated Aaa * Class A-2C, rated Aaa * Class R, rated Aaa * Class M-1, rated Aa2 * Class M-2, rated A2 * Class M-3, rated A3 * Class B-1, rated Baa1 * Class B-2, rated Baa2 * Class B-3, rated Baa3 * Class B-4, rated Ba1 * Class B-5, rated Ba2 MORTGAGE CAPITAL: Fitch Downgrades Ratings on Classes G & H Certs. ------------------------------------------------------------------ Fitch Ratings downgrades Mortgage Capital Funding, Inc.'s multifamily/commercial mortgage pass-through certificates, series 1997-MC1: -- $6.6 million class G to 'B+' from 'BB-'; -- $13.2 million class H to 'CC' from 'CCC'. In addition, Fitch affirms these classes: -- $119.5 million class A-3 at 'AAA'; -- Interest-only class X at 'AAA'; -- $39.5 million class B at 'AAA'; -- $36.2 million class C at 'AAA'; -- $32.9 million class D at 'A+'; -- $39.5 million class F at 'BB'; -- $3.8 million class J remains 'D'. The $13.2 million class E is not rated by Fitch. The downgrades reflect the expected losses on the specially serviced loans. Fitch expected losses will cause credit enhancement levels to decline on the G and H classes. As of the March 2005 distribution date, the pool's aggregate certificate balance decreased 53.8% since issuance, to $304.4 million from $658.5 million. To date, the transaction has realized losses in the amount of $12.7 million. Cumulative interest shortfalls due to appraisal reductions and servicer fees total $4.2 million and currently affect classes F, G, H, J and K. Currently, there are six loans (9.35%) that are specially serviced. The largest specially serviced loan (2.32%) is secured by a 179-room full-service hotel located in Augusta, Ga. The loan transferred to the special servicer as a result of a monetary default. Property performance has declined since issuance due to increased competition and a general decline in Augusta's economy. The property is currently real estate owned. A recent appraisal value indicates a significant loss upon liquidation of the property. The second largest specially serviced loan (2%) is secured by a single-tenant retail property, located in Plymouth, Mass. The loan transferred to the special servicer after K-Mart filed bankruptcy and subsequently rejected its lease. The property is now REO. The property was marketed for sale and an offer has been accepted. A minimal loss is expected at the time of disposition. NDCHEALTH CORP: Board Votes to Consider Sale of the Company ----------------------------------------------------------- NDCHealth Corporation's (NYSE: NDC) Board of Directors voted to pursue the potential sale of the company. The decision follows the completion by the Board, acting with the assistance of The Blackstone Group L.P., of an evaluation of strategic alternatives with the objective of maximizing stockholder value over a reasonable period of time. The Blackstone Group and Goldman, Sachs & Co. will act as the company's financial advisors. NDCHealth notes that there can be no assurance regarding the outcome of this process. The company said it does not intend to comment further publicly with respect to its process until its conclusion, unless the company determines it would be appropriate to do so at an earlier stage. About the Company Headquartered at Atlanta, Ga., NDCHealth Corporation -- http://www.ndchealth.com/-- is a leading information solutions company serving all sectors of healthcare. Its network solutions have long been among the nation's leading, automating the exchange of information among pharmacies, payers, hospitals and physicians. Its systems and information management solutions help improve operational efficiencies and business decision making for providers, retail pharmacy and pharmaceutical manufacturers. * * * Standard & Poor's Ratings Services affirmed NDCHealth's corporate credit and senior secured ratings at 'B' and the subordinated debt rating is affirmed at 'CCC+'. NDCHEALTH CORP: S&P Junks Subordinated Debt Rating -------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Atlanta, Ga.-based NDCHealth Corp. to developing from stable, following its announcement that the company's board of directors has voted to consider the sale of the company. The corporate credit and senior secured ratings are affirmed at 'B' and the subordinated debt rating is affirmed at 'CCC+'. "The outlook revision is based on the uncertain outcome of the company's sale," said Standard & Poor's credit analyst Lucy Patricola. Ratings could be lowered or raised depending on the financial and business profile of the new parent company and the financial structure of the transaction. The ratings reflect pricing and cost pressures in its core product offerings and thin cash flow, offset somewhat by the company's good pharmacy market position and recurring revenue streams. NDCHealth provides transaction-processing products to the health care industry via its proprietary network, its point-of-service systems, and its information management services. Its primary market segment is prescription claims processing, adjudication, and payment systems, as well as database information on prescription drug sales and pharmacy operations. Total lease- adjusted debt was about $345 million as of November 2004. NDCHealth's weak business profile reflects its challenging position as a small service provider to large, national drugstore chains and its narrow product focus within the pharmaceutical industry. Providing some offset, NDCHealth has a leading position in the pharmacy market, where it is connected to more than 90% of U.S. pharmacies and processes about 70% of claims. The company continues to face a challenging profitability environment. EBITDA margins remain around 18%, well below the company's historical average of around 30%. Profitability has been adversely affected by challenging conditions in the pharmaceutical industry and consolidation among pharmacy customers, both of which have led to pricing pressures; and higher expense levels related to new product releases. The company has announced restructuring efforts to align costs with this new pricing environment. NEWAVE INC: Welcomes David Hanlon as Advisor -------------------------------------------- NeWave, Inc. (OTC Bulletin Board: NWWV), said David P. Hanlon, former CEO of International Game Technology (NYSE) and Merv Griffin Resorts International has joined the Company as an advisor. Mr. Hanlon will consult directly with NeWave's senior management on issues of business strategies and corporate development. NeWave CEO Michael Hill stated, "We are extremely delighted about having an individual of Dave's stature on our team. His tremendous accomplishments within the business world speak for themselves and NeWave can only benefit from his experience and insight. He will be a valuable asset to the Company as we progress forward." David Hanlon commented, "Newave is providing excellent application of modern technology and helping the business process move more quickly and effectively. It's an exciting situation and I'm very pleased to be asked to work with this capable and aggressive management team." About David Hanlon From 1996-1999 David Hanlon served as President and Chief Operating Officer of the Rio Suites Hotel & Casino in Las Vegas where he guided the Company through a major expansion resulting in the doubling of profits within two years. The Rio was voted "Best Hotel in Vegas" by Zagat Guide and "World's Best Hotel Value" by Travel & Leisure magazine. From 1994 to 1995 Mr. Hanlon served as CEO of International Game Technology (NYSE) where he led the development of new products and greatly broadened IGT's domestic and international markets. From 1988-1993 Mr. Hanlon was President & CEO of Merv Griffin's Resorts International, Atlantic City and Bahamas, where he successfully completed two, billion dollar corporate restructurings while simultaneously effecting an extremely successful operational turnaround. During this period he was voted "Executive of the Year" by Casino Player magazine and also served as the Chairman of the New Jersey Casino Association. From 1984-1988 Mr. Hanlon was President of Harrah's Atlantic City (Marina & Trump Plaza), which was the most profitable casino in Atlantic City at that time. He also served as CFO and Executive Vice President for Caesar's World, Inc., from 1978-1983. Mr. Hanlon received a B.S in Hotel Administration from Cornell University, M.S. in Accounting and M.B.A in Finance from the Wharton School, University of Pennsylvania. He currently serves as a consultant to several companies within the gaming, hospitality and technology industries. About the Company NeWave Inc. -- http://www.newave-inc.com/-- is a direct marketing company, which utilizes the internet to maximize the income potential of its customers, by offering a fully integrated turnkey ecommerce solution. NeWave subsidiary Onlinesupplier.com, offers a comprehensive line of products and services at wholesale prices through its online club membership. Auction Liquidator, a NeWave subsidiary is an online portal that provides customers with a quick and efficient method for selling unwanted items on eBay and other online auction sites. * * * As reported in the Troubled Company Reporter on June 8, 2004, Kabani & Company's report on the Company's consolidated financial statements for the fiscal years ended December 31, 2003, and December 31, 2002, included an explanatory paragraph expressing substantial doubt about NeWave's ability to continue as a going concern. Losses have continued in 2004. For the nine-month period ending Sept. 30, 2004, NeWave posted a $3,344,334 net loss. NORTEL NETWORKS: Names Brian McFadden Chief Research Officer ------------------------------------------------------------ Nortel Networks Corporation (NYSE:NT) (TSX:NT) reported that Brian McFadden, a 26-year Nortel veteran and the current CTO, has been appointed to the role of Chief Research Officer, effective April 4, 2005. In his new role, Mr. McFadden will oversee the Advanced Technology, Research and Standards organization and will continue to report to the president and COO. He will be responsible for setting Nortel's research priorities to ensure they support the company's business strategies, which include maintaining an industry leadership position in end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband solutions. McFadden will also ensure that Nortel continues to play a lead role in industry standards and regulatory organizations. "We are absolutely committed to growing our business and a key component of that is our continued technology leadership," said Bill Owens, vice chairman and chief executive officer, Nortel. "Today's announcement reaffirms the profound importance of research and development to Nortel's future and our commitment to ensuring our technology decisions are highly integrated with our overall business strategy and the dynamics of an extremely competitive global market. Creating two distinct technology and research and development organizations with specific mandates and led by two very accomplished senior executives certainly reflects our 'playing to win' commitment to enhancing shareholder value." Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/.For the latest Nortel news, visit http://www.nortel.com/news * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NORTHWESTERN CORP: Montana PSC Okays Wind Energy Proposal --------------------------------------------------------- The Montana Public Service Commission approved NorthWestern Corporation's -- d/b/a NorthWestern Energy (NASDAQ: NWEC) -- power sales agreement with an affiliate of Invenergy Wind LLC to purchase 135 to 150 megawatts of electricity from a $150 million, large-scale wind farm near Judith Gap in Wheatland County, Montana. The 20-year contract will provide NorthWestern Energy's default supply customers with approximately 7 percent of their electricity from the wind at a price that is competitive with electricity generated from other resources. The contract price is approximately $32/MWh, but the cost paid by the consumer will be slightly higher due to the intermittent nature of wind. "We are very pleased that the PSC has given expedited approval to our contract with the first large-scale wind farm in Montana," said Mike Hanson, President. "This project allows NorthWestern Energy to serve a portion of its customer needs using low-cost renewable electricity. This project also will help provide rate stability for our default supply customers through greater diversity in types of electricity generation and suppliers." The 8,000-acre wind farm will utilize 100 turbines each with a capacity of about 1.5 MW. Wind Park Solutions Arcadia developed the project and sold its interest to Invenergy Wind LLC who will construct, own and operate the facility. To realize the benefits afforded by federal Production Tax Credits, which are included in the contract price, the facility must be in production by Dec. 31, 2005. About Invenergy Wind LLC Invenergy Wind LLC -- http://www.invenergyllc.com/-- and its affiliates develop, own and operate wind energy and natural gas fueled projects throughout North America. Invenergy is based in Chicago, Ill. About Wind Park Solutions Arcadia Wind Park Solutions Arcadia is a Montana company based in Big Sandy. It was formed in 2002 by the partnership of Wind Park Solutions America, specializing in all aspects of wind park development and analysis, and Arcadia Windpower, a New York firm with significant financial expertise and a strong history in wind development. For more information about Wind Park Solutions America, visit http://www.windpark-solutions.com/and for information about Arcadia Windpower, visit http://www.ArcadiaWind.com/ Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/ -- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. The Court entered a written order confirming the Debtors' Second Amended and Restated Plan of Reorganization, which took effect on Nov. 1, 2004. At Sept. 30, 2004, NorthWestern Corp.'s balance sheet showed a $602,981,000 stockholder's deficit, compared to a $585,951,000 deficit at Dec. 31, 2003. NRG ENERGY: Posts $18.1 Million Net Income in Fourth Quarter ------------------------------------------------------------ NRG Energy, Inc. (NYSE:NRG) reported net income for the quarter ended December 31, 2004 of $18.1 million. Reported net income for the year ended December 31, 2004 was $185.6 million or $1.85 per diluted share. Income from discontinued operations was $0.2 million during the fourth quarter and $23.5 million or $0.24 per diluted share for the full year. The fourth quarter results included a $60 million before tax mark-to-market gain associated with financial electricity sales executed during the fourth quarter 2004 to hedge the Northeast coal-fired generation primarily related to the first quarter 2005. Cash provided by operations was $48.6 million and $644 million for the fourth quarter and full year 2004, respectively. Fourth quarter and full year net increase in cash was $5.3 million and $558.8 million, respectively. The $558.8 million result includes $147 million from asset sales and a $100 million net payment from the Xcel Energy settlement. The Company completed several significant capital transactions during the fourth quarter 2004. These included the issuance of $420 million of preferred securities, the repurchase of 13 million common shares from MatlinPatterson, and the $950 million refinancing of its Senior Debt Facility. "Our strong execution across all areas of our business in 2004 allowed us to exceed our own financial objectives for the year," said David Crane, NRG President and Chief Executive Officer. "We are also pleased that during the course of achieving such a strong first year result, we succeeded in positioning the Company's balance sheet and asset portfolio as a platform for value- enhancing growth." Adjusted net income, excluding discontinued operations and other nonrecurring items, was $15.9 million or $0.16 per diluted share for the three months ended December 31, 2004 and $180.2 million or $1.80 per diluted shares for the twelve months ended December 31, 2004. Adjustments were primarily associated with asset impairments, restructuring and relocation charges and litigation settlements. Additional Full Year and Fourth Quarter Highlights: -- $976 million of adjusted EBITDA for 2004; -- Reduced net debt to total capital to 49% as of December 31, 2004; -- Successful implementation of NRG's multi-faceted approach to long-term environmental remediation at our New York coal-fired plants; -- Record operating reliability across fleet led by Big Cajun II, which set a net generation output record of 10,468,596 megawatt hours (MWh) in 2004; and -- Strong operating performance internationally, buoyed by completion of the Playford refurbishment and strong summer weather in Australia. Financial Summary NRG's fourth quarter net income of $18.1 million and operating revenues of $580.9 million were primarily driven by the solid performance of our Northeast assets and the strong generating output and pool prices in Australia. These favorable results were partially offset by unplanned outages in South Central and the pre-tax impact of $41.2 million of prepayment penalties and a write off for previously deferred financing costs associated with the refinancing of the Senior Debt Facility. Operating expenses were lower primarily due to reduced auxiliary power charges and tax credits. The fourth quarter included $60 million in pretax mark-to-market gains associated with financial electricity sales in the Northeast. This was partially offset by a $6.4 million mark-to-market loss in our Australian operations. "NRG's full-year net income of $185.6 million and operating revenues of $2.4 billion reflect the strong reliability of our assets throughout the year, particularly during the first quarter 2004 when we saw an extreme cold weather condition in the Northeast and strong pool prices during a hot summer in Australia," Mr. Crane cites. Full-year results were also impacted by higher revenues from West Coast Power (WCP), our partnership with Dynegy Inc., the favorable settlement of the Connecticut RMR agreement, the $38.5 million FERC-approved settlement with Connecticut Light & Power and tax credits. Expenses incurred in connection with relocation, reorganization, restructuring and impairments aggregated $47.4 million pretax. Included in the full year results were $71.6 million of pretax write-offs for previously deferred financing costs and prepayment premiums associated with first and fourth quarter 2004 refinancings. Northeast The Northeast region posted a strong fourth quarter with adjusted EBITDA of $111 million. These results included the favorable impact of $60 million in unrealized before tax gains from financial energy sales transactions. Additionally, our Huntley and Dunkirk plants continued to realize the benefits from their conversion to low-sulfur, lower cost Powder River Basin (PRB) coal. Our Indian River facility had higher generation and revenues for the quarter due to the unavailability of other generating facilities in the PJM market. The Northeast also benefited from a settlement that reduced its auxiliary power utility charges. The Northeast's full-year adjusted EBITDA was due to strong asset performance during extreme weather in January 2004 and the favorable reliability-must-run (RMR) settlement for some our NEPOOL assets. The RMR settlement received final approval from the FERC on January 27, 2005. Northeast operating expenses were lower due to tax credits. South Central The South Central region generated $24 million in adjusted EBITDA during the quarter. These results proved to be the weakest quarterly results for the region during the year. Coop and long term customer load demand was strong during the fourth quarter with 2.1 million MWh delivered to such customers. December load volume hit a record high due to unusually cold weather. Consequently, high customer demand limited our ability to sell into the merchant market where prices are generally more favorable than our contracted energy prices. The region's quarterly performance was also adversely affected by a forced outage at one of our three units at our Big Cajun II facility during October 2004, which required the Company to meet its contracted load-following obligations in the merchant market at higher cost than our coal-based generating assets. For the full year, our South Central region generated $116 million in adjusted EBITDA. During the year, the Company delivered over 8.9 million MWh to our coop and long term customers. These contracted energy revenues were further supplemented by merchant energy sales of 1.7 million MWh. Despite the October forced outage discussed above, our Big Cajun II facility produced a record 10.5 million MWh with a net capacity factor of 80.9% versus 73.4% for 2002. Big Cajun II's equivalent forced outage rate of 4.9% was half of what it was in 2002, marking two consecutive years of operating improvements. West Coast The West Coast region's fourth quarter adjusted EBITDA of $50 million was driven primarily by the earnings realized by WCP. Full-year results of our West Coast region were favorable due to WCP's pricing under the California Department of Water Resources (CDWR) contract with adjusted EBITDA totaling $185 million. Additionally, revenues from ancillary services and minimum load cost compensation power positively contributed to WCP's operating results. As of January 1, 2005 we retired our Long Beach facility following approval from the California ISO as the facility was no longer required for reliability. The power purchase agreement with the CDWR expired on December 31, 2004. Australia Fourth quarter adjusted EBITDA totaled $10 million. The increased generation from the newly refurbished Playford station and strong pool prices during the quarter offset a generally mild start to the summer season. Full-year adjusted EBITDA of $70 million was primarily due to the strong first quarter, when Australia experienced a particularly hot summer, driving higher generation and pool prices. Other North America Fourth quarter adjusted EBITDA totaled $8 million. During the quarter, we successfully closed the sale of our Kendall operation, resulting in $1 million in net sales proceeds and the removal of approximately $450 million in consolidated project-financed debt from our balance sheet. Kendall contributed $5.7 million in EBITDA for the fourth quarter as we continued to see increasing run-time from the asset since it became part of the PJM market. Other North American assets' full-year adjusted EBITDA totaled $81 million. The results were driven by our Kendall asset and equity investments. Kendall contributed $41.9 million of adjusted EBITDA to the Other North American results, with the balance driven by the performance of the Rockford asset and the Rocky Road and James River equity investments. Other International Adjusted EBITDA for the fourth quarter was $20 million. These results were driven primarily by the Company's German operations, Schkopau and MIBRAG. MIBRAG, a coal mining and power plant operation in which NRG holds a 50% ownership, benefited this quarter as its coal customers were back to full operations after outages in the two prior quarters. Full-year adjusted EBITDA of $92 million was driven by the German operations, which are largely contracted, and the Enfield investment, which recorded a total of $23 million in unrealized gains associated with its long-term gas contract. Thermal and Other Non-Generation Adjusted EBITDA for Thermal and other Non-Generation through 2004 was primarily from the thermal operations. Thermal's output is largely contracted, providing steam heating to approximately 565 customers and chilled water to 90 customers, resulting in a steady earnings stream. Liquidity and Capital Resources On December 24, 2004, the Company amended and restated its Senior Debt Facility, which now consists of a $450 million Term B loan, a $350 million funded letter of credit facility and a $150 million revolver. The interest rate on the amended Term B loan and Letter of Credit is LIBOR plus 187.5 basis points, a reduction of 212.5 basis points from the original facility. On December 27, 2004, NRG completed the issuance of $420 million of convertible preferred stock which provided $406 million in net proceeds. The proceeds were used to redeem and cancel $375 million of its high yield notes at 108. This redemption was completed on February 4, 2005. The issuance of the preferred securities also enabled NRG to use available cash balances to repurchase 13 million shares of common stock for $31.16 per share from investment partnerships managed by MatlinPatterson Global Advisers, LLC. This left MatlinPatterson with less than 10% of the common stock, and caused them to relinquish their three board seats and registration rights with respect to their remaining shares. During the first quarter of 2005, the Company purchased in the market an additional $41 million of high yield notes at an average cost of approximately 108. The face amount of our remaining outstanding high yield notes was $1.35 billion as of March 1, 2005. Recent Development On February 25, 2005, the Company collected $70.8 million of an arbitration award arising out of the Company's participation in the TermoRio project in Brazil. Previous to its receipt, that potential award had been carried on the Company's balance sheet at $57.3 million. As a result, the difference of approximately $13 million will be included in the first quarter 2005 earnings. The entire $70.8 million will be included in the Company's first quarter 2005 net cash flow. 2005 Outlook While the notable weather events (in Australia and the Northeast U.S.) that positively influenced the Company's financial results in the first quarter 2004 have not occurred in 2005, NRG continues to take advantage of the persistently high gas price environment to hedge its baseload coal position for the balance of 2005 and into 2006. As previously disclosed, the Company substantially hedged its baseload coal generation in the Northeast for 2005 early in the fourth quarter of 2004 resulting in a $60 million pretax mark-to-market gain as of year end 2004. While this $60 million is associated with 2005 revenues, FAS 133 requires it to be recorded in fiscal year 2004 results. The Company's adjusted EBITDA guidance for 2005, excluding unusual or nonrecurring events and assuming normal weather patterns in our core markets, is estimated at $560 million. This adjusted EBITDA guidance excludes the $60 million mark-to-market gain . . . and takes into account the sale during 2004 of Kendall and the projected sale of additional EBITDA-generating assets during 2005. The gross margin associated with this EBITDA estimate is substantially hedged in terms of downside protection while the Company retains the potential to benefit from extreme weather events, locational supply-demand imbalances or gas price spikes through its dual fuel-fired peaking units. 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. OAKWOOD HOMES: Trust Inks Pact to Settle $250 Mil. Arkansas Claims ------------------------------------------------------------------ The OHC Liquidation Trust, as successor-in-interest to Oakwood Homes Corporation and its debtor-affiliates pursuant to their Second Amended Joint Consolidated Plan of Reorganization, seek authority from the U.S. Bankruptcy Court for the District of Delaware to enter into a settlement agreement with certain claimants. In February 2001, several individuals filed a suit against the Debtors alleging unfair trade practices and consumer fraud laws. They demanded damages for a group of people who were sold mobile homes by Oakwood. The claimants filed an unsecured claim against the Debtors' estates for $250 million. After the Debtors' Plan became effective on April 15, 2004, the Arkansas claims were still disputed. To avoid a costly and lengthy litigation, retired Judge Nicholas J. Politan was engaged as a mediator. The parties reached a settlement agreement, wherein the Trust agrees to pay the claimants $10 million and $2 million for the plaintiffs' counsel. Oakwood Homes Corporation and its subsidiaries are engaged in the production, sale, financing and insuring of manufactured housing throughout the U.S. The Debtors filed for chapter 11 protection on November 15, 2002 (Bankr. Del. Case No. 02-13396). Robert J. Dehney, Esq., Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell, and C. Richard Rayburn, Esq., and Alfred F. Durham, Esq., at Rayburn Cooper & Durham, P.A., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $842,085,000 in total assets and $705,441,000 in total debts. The Debtors' Plan became effective on April 15, 2004. OMNI FACILITY: Judge Lifland Confirms First Amended Chap. 11 Plan ----------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York confirmed Omni Facility Services, Inc., and its debtor-affiliates' First Amended Consolidated Chapter 11 Plan of Liquidation. Terms of the Plan The Plan provides for a substantive consolidation of the Debtors' estates, the creation of a Creditors' Trust, the appointment of a Plan Administrator to oversee the winding down of the Debtors' estates, the rejection of executory contracts and unexpired leases not previously assigned, and the compromise and settlement of Claims and prosecution of causes of actions. Holders of priority non-tax claims will be paid in full 30 days after the effective date of the Plan. Holders of miscellaneous secured claims will be paid in full from the net proceeds from the sale of the relevant collateral or the return of the relevant collateral. Prepetition lenders holding secured claims will receive payments as set forth in the settlement agreement. Holders of general unsecured claims will receive their pro rata share of any distribution from the Creditors' Trust or upon the mutual agreement of the Creditor Trustee and the general unsecured creditor. Holders of subordinated claims under a Last-Out Participation Agreement will receive payments from the Creditors' Trust but only after all General Unsecured Claims are paid in full. Subordinated Lenders under a Subordination and Intercreditor Agreement will receive payments from the Creditors' Trust but only after all General Unsecured Claims and Last-Out Participation Claims have been paid in full. Intercompany Claims will be cancelled. Holders of equity interests will not receive any distributions under the Plan. Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. PARMALAT USA: Farmland Wants Court OK on $61M LaSalle Exit Funding ------------------------------------------------------------------ As previously reported, Farmland Dairies LLC, a Parmalat USA Corporation debtor-affiliate, needs to obtain a working capital credit facility which will provide the necessary financing to repay its DIP facility, to fund certain payments under the confirmed Plan of Reorganization, and to operate its business after the effective date of the Plan. Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that under the Plan, Farmland's exit financing will consist of two facilities: -- a "Junior Secured Exit Facility," and -- a "Senior Secured Exit Facility." Farmland and General Electric Capital Corporation have executed a commitment letter with respect to the Junior Secured Exit Facility, and they are in the process of formalizing the negotiated terms into a final loan document. In connection with Farmland's efforts to secure Exit Financing, its investment banker, Lazard Freres and Co. LLC, prepared and delivered to a number of potential lenders an informational memorandum, related diligence materials, and requests for proposals regarding the Senior Secured Exit Facility portion of the Exit Financing. After reviewing the initial proposals submitted by several potential lenders, Farmland pursued further discussions with three potential lenders interested in providing the Senior Secured Exit Facility whose proposals were among the more favorable for Farmland's needs. The Potential Lenders each performed due diligence in connection with making a proposal for a potential Senior Secured Exit Facility. Subsequent to the negotiations, Farmland and Lazard ultimately concluded, at the time, that Wachovia Investment Holdings, LLC had offered the most favorable terms for the Senior Secured Exit Facility. On December 4, 2004, Farmland executed Wachovia's revised proposal letter and paid Wachovia $75,000 for Wachovia's performance of due diligence. Wachovia and Farmland reached a substantial agreement on a commitment letter pursuant to which Wachovia was to provide Farmland with the Senior Secured Exit Facility. Under the proposed Wachovia Commitment Letter, Wachovia was to provide a secured revolving loan facility, including a letter of credit sub-facility, and a term loan facility of up to an aggregate of $55,000,000. In connection with the Wachovia Commitment Letter, Farmland agreed to pay Wachovia a $100,000 commitment fee and a $75,000 additional deposit for fees and expenses. The Court had also previously authorized Farmland to enter into the Wachovia Commitment Letter and pay the Wachovia Commitment Fee. Farmland executed the Wachovia Commitment Letter and paid Wachovia the agreed commitment amount. Subsequent to Farmland's selection of Wachovia, LaSalle Business Credit, LLC, one of the initial Potential Lenders, approached Farmland with a proposal to provide the Senior Secured Exit Facility on more favorable terms than LaSalle's initial proposal. According to Mr. Holtzer, Farmland continued to negotiate with LaSalle and the negotiations ultimately resulted in a proposal for the Senior Secured Exit Facility with significantly better terms than those negotiated with Wachovia, taking into account the additional costs and fees attendant to entering into the proposed credit facility with LaSalle. On March 2, 2005, Farmland executed a proposal letter with LaSalle and, to date, has paid LaSalle an aggregate of $150,000 as Diligence Deposit as previously authorized by the Court. Farmland and LaSalle subsequently negotiated and entered into a commitment letter pursuant to which LaSalle will provide Farmland with a Senior Secured Exit Facility up to an aggregate of $61,000,000 through these credit facilities: * a $35,000,000 revolving line of credit facility, including a letter of credit sub-facility; and * $26,000,000 consisting of various term loans. LaSalle Has Superior Offer Although Farmland initially received the best proposal from Wachovia, the terms proposed by LaSalle are superior and more beneficial than the terms otherwise offered by Wachovia, Mr. Holtzer says, because LaSalle: -- offers a facility that is $6,000,000 larger and provides for greater than $10,000,000 more in availability; -- has a $1,000,000 smaller availability block; -- requires $6,000,000 less in borrowing availability at closing; -- charges less for letters of credit; -- requires $120,000 less a year in servicing fees; and -- has lower prepayment fees. The LaSalle Commitment Letter contains these salient terms: Borrower: Farmland Dairies, LLC Agent: LaSalle Business Credit, LLC Lenders: LaSalle and a syndicate of financial institutions and other accredited investors assembled by LaSalle. Maximum Credit: $61,000,000 Revolving Loan Lenders commit to advance an amount up Facility: to the lesser of $35,000,000 or the sum of the listed sublimits described in the LaSalle Commitment Letter. Term Loans: The Lenders commit to advance these additional amount on the closing date or at other time as specified: * Term Loans A and B -- Up to the lesser of: a. the sum of: -- the lesser of: (A) 80% of the appraised orderly liquidation value of the Borrower's domestic machinery and equipment other than those located in Atlanta, Georgia, or any idle machinery and equipment; or (B) 100% of the forced liquidation value of domestic machinery and equipment at specified locations as identified in a schedule to the LaSalle Commitment Letter; and -- 75% of the appraised fair market value of the Farmland's real estate as identified in the Commitment Letter; or b. $16,000,000 allocated between Term Loans A and B as determined by LaSalle in its sole discretion; plus * Term Loan C -- $5,000,000 as a special accommodation loan. * Term Loan D -- In LaSalle's sole discretion, up to $5,000,000 to be used by the Borrower from time to time for purposes to be agreed upon between the parties in the final documentation. Collateral: A first priority lien on all of the Borrower's assets. However, the lien on the Borrower's Atlanta Facility will be released when Term Loan C is repaid in full and the Term Loan C commitment is terminated. Interest Rates: * Revolving Credit Facility -- An interest at the Borrower's option, at either (i) the publicly announced prime rate of LaSalle Bank Nation Association or (ii) at the LIBOR Rate plus the applicable amount set forth in the pricing grid contained in the LaSalle Commitment Letter. * Term Loans A and B -- An interest rate at the Borrower's option at either (i) the Prima Rate plus 1.25% of (ii) the LIBOR Rate plus 2.5%. * Term Loans C and D -- An interest rate at the Borrower's option at either: -- the Prime Rate plus 1.75%, or -- the greater of (i) the LIBOR Rate plus 3.00% or (ii) 5.00% per annum. Letters of Credit: The Lenders will cause the issuance of and co-sign for, upon the Borrower's request, commercial and standby letters of credit, provided that the aggregate undrawn face amount of these letters of credit will not exceed the lesser of Availability or $25,000,000, in the aggregate. The Borrower will pay the issuer's normal charges for letters of credit, and in addition, will pay the Lenders an administrative charge equal to 2% per annum payable on the outstanding amount of the letters of credit, which charges will be payable monthly in arrears on each day that interest is payable. The Borrower's contingent liability under the letters of credit will automatically reduce, dollar-for-dollar, the amount of Revolving Loans which the Borrower may borrow. Excess The Borrower will, at the time of the Availability: initial disbursement of the Loans, have Availability plus cash and cash equivalents in excess of $11,000,000. Good Faith Deposit: The Borrower has remitted to LaSalle $150,000 as an initial good faith deposit. At the Court's approval, the Borrower will remit an additional $125,000 deposit. The good faith deposits, less (i) LaSalle's charges and expenses for its initial examination of the Borrower's Collateral, as well as the Borrower's books and records and (ii) all other out-of-pocket expenses will be refunded to the Borrower at the time LaSalle makes the initial disbursement of the Loan or the termination of the LaSalle Commitment Letter. LaSalle Commitment The Borrower will pay LaSalle a Fee: $100,000 Commitment Fee, on the later of (i) the execution of the LaSalle Commitment Letter by both parties and (ii) receipt of the Court's approval. The Commitment Fee will be fully earned and non-refundable when paid and will be applied as a credit to the closing fee at the closing date. Indemnification: The Borrower will indemnify and hold LaSalle harmless from and against any loss, claim, liability or expense, including reasonable outside attorney's fees and legal expenses incurred in connection with, arising out of, or in any way related to the LaSalle Commitment Letter or any of the contemplated transactions, except to the extent directly arising from the gross negligence, willful or criminal misconduct or an Indemnified Party as determined pursuant to a final, non- appealable order of a court of competent jurisdiction. The Indemnified Parties will not, in any case be liable for any special, indirect or consequential damages in respect of a breach of alleged breach of any of LaSalle's or the Borrower's obligation that might be deemed to exist under the LaSalle Commitment Letter. Mr. Holtzer assures the Court that any additional fees and expenses incurred as a consequence of moving the Senior Secured Exit Facility to LaSalle and Farmland's proposed payment of the LaSalle Commitment Fee will not impact the recovery to Farmland's general unsecured creditors under the Plan. Under these circumstances, Farmland believes that incurring the LaSalle Commitment Fee at this time is warranted and is a necessary step in furtherance of procuring the Senior Secured Exit Facility. Farmland sought and obtained the Court's authority to: (a) enter into the LaSalle Commitment Letter; and (b) pay LaSalle a good faith deposit for $125,000 and a commitment fee for $100,000. Headquartered in Wallington, New Jersey, Parmalat U.S.A. Corporation -- http://www.parmalatusa.com/-- generates more than EUR7 billion in annual revenue. The Parmalat Group's 40- some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company employs over 36,000 workers in 139 plants located in 31 countries on six continents. It filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The Bankruptcy Court confirmed the U.S. Debtors' Plan of Reorganization on March 7, 2005. (Parmalat Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENN ENGINEERING: Moody's Junks Senior Unsecured Issuer Rating -------------------------------------------------------------- Moody's assigned a B2 rating to the proposed new first lien senior secured bank credit facilities for Penn Engineering & Manufacturing and a B3 rating to the company's second lien term loan. The ratings consider the company's significant leverage, small size relative to its debt levels, and execution risk related to new management initiatives. This is the first time rating of Penn by Moody's. The ratings reflect the company's strong market position, highly integrated contribution to its clients' manufacturing process and expectation for meaningful de-leveraging over the next eighteen months. The stable rating outlook reflects expectations for stable operating and financial performance. Moody's has assigned these ratings to Penn: * $20 million senior secured revolving credit facility, due 2010, rated B2; * $155 million senior secured first lien term loan, due 2011, rated B2; * $60 million senior secured second lien term loan, due 2012, rated B3; * Senior Implied, rated at B2; and * Senior Unsecured Issuer Rating, Caa1. The ratings outlook is stable. The ratings are subject to final documentation that is consistent with the Moody's understanding of the transaction. Proceeds from the facilities, along with $115 million of equity from Tinicum Capital Partners II L.P., will finance the acquisition of Penn for total purchase price of $330.5 million, which represents a purchase multiple of approximately 8 times EBITDA. The $20 million senior secured revolver is expected to be unused at closing and is expected to remain largely unused throughout the year. The ratings are constrained by the company's high leverage and execution risk related to its de-leveraging strategy. Moody's expects Penn to finance its de-leveraging through cash flow generation, expense reduction, efficiency gains, as well as through the sale of non-core and redundant assets. Additionally, senior management, while highly experienced, will be relatively new to the company's day-to-day operations. Consistent trends for US manufacturers to move operations overseas may place pressure on Penn to invest in new facilities overseas or lose additional customers. Penn is currently pursuing an Asian investment strategy. The ratings benefit from expectations for positive, although slow, revenue growth. Furthermore, the company's fasteners are used by manufacturers as an integral part of the manufacturing process. If its fasteners were not available, its customers would need to find an alternative supplier or an alternative products. The difficulty (time and effort) its customers would experience in replacing the company's products in their manufacturing process suggests an above average customer retention opportunity. Although the timeframe for cost cutting and asset sales is unclear, there is a clear commitment to de-leveraging as evidenced by the company's covenants that call for significant de-leveraging (step-downs) over the next couple of years. The B2 rating on the $175 million senior secured first lien credit facilities will be unconditionally guaranteed by the parent and by each of the existing and future domestic subsidiary of the company. The facilities will be secured by a first priority pledge of all the capital stock (65% in the case of a foreign subsidiary) and substantially all tangible and intangible assets of the parent, the company and each existing and subsidiary guarantor. The $20 million revolver will be used solely to fund the company's working capital needs. The $155 million term loan will amortize in equal quarterly installments at an annual rate of 1% per year. Proceeds from the asset sales are first applied to the repayment of the first lien term loan. The facilities will include an acquisition basket not to exceed $7.5 million over the life of the first lien. The facilities will include an excess cash flow sweep. The first lien facilities are not notched from the senior implied rating because of the facilities size when compared to the company's assets. For fiscal year 2004, plant property and equipment totaled $85 million, accounts receivable were $37 million while inventory was $47 million. The B3 rating on the $60 million senior secured second lien term loan primarily reflects expectations that the anticipated prepayment of the first lien facility will result in improved asset coverage for the second lien. The second lien will similarly be unconditionally guaranteed by the parent and by each of the existing and future domestic subsidiary of the company. The second lien facility is to be secured by all the assets of the parent, the company and each subsidiary guarantor that constitute the collateral under the first lien senior facilities. The second lien facility will not be subject to interim scheduled amortization. The second lien is also to include an acquisition basket not to exceed $7.5 million over the life of the assets. This restriction makes it clear that acquisitions are not expected to be an integral part of the company's strategy. Penn Engineering's covenants are expected to be comprised of a first lien leverage covenant, a total leverage covenant, an interest coverage covenant and a fixed charge covenant. Moody's expects the company to be in compliance for at least the next twelve months. Moody's notes that changes in documentation, structure, or operating performance from what has been relied upon, may have yielded a different ratings outcome. The stable outlook reflects Penn's customer's reliance on high quality fasteners and the company's strong market position. The outlook also reflects the expectation for an increased focus on cost cutting. The ratings could improve if the company were to reduce its leverage to under 4 times debt to EBITDA and improve its competitive position through increased participation in areas of the world where its customers have chosen to invest in, such as China and India. The ratings could deteriorate if the company's international strategy was executed poorly or if it did not report significant progress in its de-leveraging strategy over the next eighteen months. Moody's expects EBITDA to cash interest for 2005 to be over 2.8 times, while its total debt to EBITDA is expected to be close to 3.5 times. For the fiscal 2005, Moody's expects Penn's free cash flow to be above $15 million. Penn Engineering and Manufacturing, headquartered in Danboro, Pennsylvania, is a leading manufacturer and distributor of fasteners and fractional horsepower motors. The company generated revenues of $243 million in 2004. PHYSIOMETRIX INC: Insufficient Cash Triggers Going Concern Doubt ---------------------------------------------------------------- Physiometrix, Inc.'s (Nasdaq: PHYX) auditors, Ernst & Young LLP, raised substantial doubts about the Company's ability to continue as a going concern. The uncertainty described in Physiometrix's Form 10-K filed with the Securities and Exchange Commission was based on the company's cash balance as of December 31, 2004, which was not sufficient to fund projected operations over the next year and does not take into account any potential future cash inflows. "Our principal source of liquidity at December 31, 2004 consisted of cash, cash equivalents and short-term investments, which aggregated $2.6 million," the Company said in its regulatory filing. "We anticipate that our existing cash, cash equivalents, and short-term investments will be sufficient to conduct operations only until the beginning of the third quarter of 2005, at which time we will be unable to meet our working capital requirements." Bankruptcy Warning The Company said it is currently engaged in negotiations and discussions with potential sources of new capital. "If additional amounts cannot be raised and we are unable to substantially reduce our expenses," the Company continued, "we would suffer material adverse consequences to our business, financial condition and results of operations and would likely be required to seek other alternatives up to and including the sale of our technology, filing for protection under the United States bankruptcy laws or cessation of operations." About the Company Physiometrix Inc. -- http://www.physiometrix.com/-- designs, manufactures and markets noninvasive medical products -- based on novel gel materials, sophisticated signal-processing electronics technologies, and proprietary software -- for use in anesthesia- monitoring during surgical procedures. PRESIDENTIAL LIFE: S&P Puts Ratings on CreditWatch Negative ----------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' counterparty credit rating on Presidential Life Corp. (NASDAQ:PLFE; Presidential) on CreditWatch with negative implications. Standard & Poor's also said that it placed its 'BB+' counterparty credit and financial strength ratings on Presidential Life Insurance Co. on CreditWatch negative. These rating actions follow the release of the company's 10-K yesterday, which had been delayed for two weeks as a result of recently announced accounting errors. "The ratings are on CreditWatch negative to reflect our growing concern about the company's aggressive investment strategy, poor risk management, and weak capital adequacy," said Standard & Poor's credit analyst Jeff Watson. "In addition, management has identified a material weakness related to recent accounting restatements associated with certain investments." On Feb. 17, 2005, Presidential disclosed improper accounting treatment for some of its principal-protected notes, which led to a negative $69 million statutory loss (net of pretax income offsets) and wiped out about 25% of total capital. This follows three years of significant investment write-downs, capped by losses totaling 3.7% of invested assets and 45% of capital in 2002. The recent accounting restatement and material weakness highlight Standard & Poor's concern that Presidential's capital adequacy and risk management might not be sufficient to support its investment profile at the current rating level. "The CreditWatch status of the ratings will be resolved over the next four to five weeks following a full review of the insurance operations and discussions with senior management," Mr. Watson added. "The ratings are not expected to fall by more than two notches." PROVINCE HEALTHCARE: Noteholders Consent to Merger Amendments ------------------------------------------------------------- Province Healthcare Company (NYSE: PRV) received the requisite consents and tenders from holders of its 7-1/2% Senior Subordinated Notes due 2013 to eliminate substantially all of the restrictive covenants and to significantly amend the merger covenant and certain events of default and related provisions contained in the indenture governing the Notes. On March 18, 2005, Province Healthcare, in connection with its previously announced business combination with LifePoint Hospitals, Inc. (Nasdaq: LPNT) into a newly formed company, commenced a cash tender offer and consent solicitation for any and all of its $200,000,000 outstanding principal amount of the Notes. The consent solicitation expired at 12:00 midnight, New York City time, on Thursday, March 31, 2005. Prior to expiration of the consent solicitation, holders of approximately 96.9% of the outstanding principal amount of the Notes had tendered their Notes and consented to the Proposed Amendments. These consents and tenders may not be validly withdrawn unless Province Healthcare makes a material change in the terms of the tender offer. The tender offer is scheduled to expire at 12:00 midnight, New York City time, on April 15, 2005, unless extended or earlier terminated. Province Healthcare intends to enter into a supplemental indenture to effect the Proposed Amendments described in the Offer to Purchase and Consent Solicitation Statement, dated March 18, 2005. The Proposed Amendments will not become operative, however, unless and until the Notes tendered by the consenting holders are accepted for purchase pursuant to the terms of the tender offer. Once the Proposed Amendments become operative, they will be binding upon the holders of the Notes not purchased in the offer. The obligations of Province Healthcare to accept for purchase and pay for the Notes in the tender offer is conditioned on, among other things, the satisfaction or waiver of all conditions precedent to the consummation of the Proposed Transaction, as described in more detail in the Offer to Purchase and Consent Solicitation Statement. This announcement is not an offer to purchase, nor a solicitation of an offer to purchase, nor a solicitation of tenders or consents with respect to, any Notes. The tender offer and consent solicitation are being made solely pursuant to the Offer to Purchase and Consent Solicitation Statement and related Consent and Letter of Transmittal. Province Healthcare has retained Citigroup Global Markets Inc. to serve as the dealer manager and solicitation agent for the tender offer and the consent solicitation. Questions regarding the tender offer and consent solicitation or requests for documents may be directed to Citigroup Global Markets Inc., Liability Management Group, at (800) 558-3745 (U.S. toll free) and (212) 723-6106 (collect) or Global Bondholder Services Corporation, the Information Agent, at (866) 804-2200 (U.S. toll-free) and (212) 430-3774 (collect). About LifePoint LifePoint Hospitals, Inc. operates 30 hospitals in non-urban communities. For the twelve months ended June 30, 2004, LifePoint reported revenues of approximately $968 million. About Province Healthcare Province Healthcare is a provider of health care services in attractive non-urban markets in the United States. The Company owns or leases 20 general acute care hospitals in 12 states with a total of 2,486 licensed beds. For the twelve months ended June 30, 2004, Province reported total revenues of approximately $780 million. * * * As reported in the Troubled Company Reporter on Aug. 25, 2004, Moody's Investors Service placed the ratings of LifePoint Hospitals, Inc., LifePoint Hospital Holdings, Inc., and Province Healthcare Company on review for possible downgrade. The rating action follows the announcement by LifePoint that it has 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. The ratings placed on review for possible downgrade are: LifePoint Hospitals, Inc. (parent) -- Ba3 senior implied rating -- B2 senior unsecured issuer rating -- $250 million 4.5% convertible subordinated notes due 2009, rated B3 LifePoint Hospital Holdings, Inc. (operating company) -- $200 million senior secured revolving credit facility due 2006, rated Ba2 Province Healthcare Company -- Ba3 senior implied rating -- $210 million senior secured revolving credit facility due 2006, rated Ba3 -- B2 senior unsecured issuer rating -- $200 million senior subordinated notes due 2013, rated B3 -- $172.5 million convertible subordinated notes due 2008, rated B3 SALEM COMMS: Appoints Joe Davis as Chief Operating Officer ---------------------------------------------------------- Salem Communications Corporation (Nasdaq:SALM), the leading radio broadcaster focused on Christian and family themed programming, disclosed the appointment of Joe D. Davis to executive vice president and chief operating officer of the company, effective immediately. Mr. Davis has been executive vice president of radio for the company since 2003. Mr. Davis' new duties will include day-to-day operational oversight of all of Salem Communication's lines of business including radio broadcasting, news, music and talk programming, network syndication, and non-broadcast activities that include Salem Publishing and Salem Web Network. Mr. Davis will continue to report directly to Edward G. Atsinger III, president and chief executive officer. Edward G. Atsinger III commented, "Joe has successfully championed our efforts to expand our national footprint in radio and develop our strategic formats, most recently in Contemporary Christian Music and in News Talk. Over the 15 years that I have known Joe, I have developed a tremendous regard for his ability to execute the strategies of the company, his performance in the face of tremendous challenges, and the strength of his character. His leadership will prove extremely valuable as we continue to grow Salem as a company that creates and distributes programming and content that is consistent with Christian and heartland values." "I am honored by this appointment, humbled by its scope and energized by the opportunities for growth and impact across all of our platforms," said Mr. Davis. "There is a large and growing audience interested in the kind of content that we develop and distribute. We will work diligently to continue to deliver on our mission with excellence and integrity." Joe Davis began his career with Salem Communications in 1989 as general manager of WMCA-AM, New York, and in 1994, also became general manager of WWDJ-AM, New York. He was appointed vice president operations in 1996, and was promoted to senior vice president in 2000. The next year he was named executive vice president, operations and was promoted to head of radio in 2003. Mr. Davis served as president of Davis Eaton Corporation in Phoenix, Arizona, president of Vintage Advertising Agency and as vice president and executive director of the Christian Fund for the Disabled. He has been involved professionally in various aspects of broadcasting since 1967. Mr. Davis is married to the former Carolyn Bradley, and they have four adult children and six grandchildren. He and his family will relocate to the corporate office in California from the current East Coast office in New Jersey. Salem Communications Corporation (Nasdaq:SALM) (B+/Stable/) -- http://www.salem.cc/-- headquartered in Camarillo, Calif., is the leading U.S. radio broadcaster focused on Christian and family themes programming. Upon the close of all announced transactions, the company will own 105 radio stations, including 68 stations in 24 of the top 25 markets. In addition to its radio properties, Salem owns Salem Radio Network(R), which syndicates talk, news and music programming to more than 1,900 affiliates; Salem Radio Representatives(TM), a national sales force; Salem Web Network(TM), the leading Internet provider of Christian content and online streaming; and Salem Publishing(TM), a leading publisher of Christian themed magazines. * * * As reported in the Troubled Company Reporter on Dec. 16, 2004, Moody's Investors Service upgraded the long-term debt ratings for Salem Communications Holding Corporation. The upgrades are driven mostly by improvements at development-stage stations, better than expected financial performance in 2004, the company's willingness to issue equity to reduce total debt and the subsequent balance sheet de-leveraging. The outlook is stable. Moody's upgraded these ratings: * $94 million 9% senior subordinated notes due 2011 upgraded to B2 from B3, and * $100 million 7.75% senior subordinated notes due 2010 upgraded to B2 from B3. Moody's assigned these ratings: * assigned a Ba3 senior implied rating, and * assigned a B1 senior unsecured issuer rating. Moody's withdrew the former senior implied rating and issuer rating for Salem Communications Corporation (the Parent) and upgraded and reassigned them to Salem Communications Holding Corporation. Moody's said the rating outlook is stable. SALOMON BROTHERS: S&P Downgrades Ratings on Four Class Certs. ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on classes C, D, E-NM, and F-NM of Salomon Brothers Mortgage Securities VII Inc.'s series 2001-CDC and removed them from Credit Watch negative. At the same time, the ratings on classes B, E-DS, F-DS and X-3B-DS are affirmed. The downgrades reflect the loss of the major tenant of the office building that secures the 74 New Montgomery loan, one of the two remaining loans in this mortgage pool, which has a current in- trust mortgage loan balance of $18.8 million. The major tenant at 74 New Montgomery Street, which occupies 64% of this 119,481- square-foot office building in downtown San Francisco, is vacating. The borrower has decided to convert the building to residential condominiums. Conversations with the special servicer, Midland Loan Services Inc., indicated that payoff of the subject loan will be dependent upon the obtainment of construction and permanent financing for the conversion later this year. Standard & Poor's placed its ratings on classes C, D, E-NM and F-NM on CreditWatch with negative implications in December 2004 pending resolution of the lease renewal of the major tenant at 74 New Montgomery Street. The other loan in this pool, with a current in-trust mortgage loan balance of $60.4 million, is known as the DIVCO-SVP loan, and is secured by seven office buildings totaling 456,556 square feet in Santa Clara, Calif. Net cash flow for the year ended Dec. 31, 2003 for this collateral was 43% lower than at issuance. A forbearance and loan modification agreement was executed which, in effect, extended the loan through Dec. 11, 2005 after a one-time principal reduction of $3.8 million in April 2004. The loan, while current, remains in special servicing for monitoring and processing of draw requests relating to the use of reserves to fund tenant improvements for the vacant space in two of the seven buildings. Ratings Lowered and Off Creditwatch Negative Salomon Brothers Mortgage Securities VII Inc. Commercial mortgage pass-thru certs series 2001-CDC Rating Class To From ----- -- ---- C BB- BBB-/Watch Neg D B+ BBB-/Watch Neg E-NM B BB/Watch Neg F-NM B- BB-/Watch Neg Ratings Affirmed Salomon Brothers Mortgage Securities VII Inc. Commercial mortgage pass-thru certs series 2001-CDC Class Rating ----- ------ B AAA E-DS B+ F-DS B X-3B-DS AAA SEARS HOLDINGS: Inks Employment Agreement with Aylwin Lewis ----------------------------------------------------------- Sears Holdings Corporation entered into a five-year Amended and Restated Employment Agreement with Aylwin Lewis on March 24, 2005. Under the Agreement, Mr. Lewis will serve as: -- President of Sears Holdings; -- Chief Executive Officer and President of Kmart Holding Corporation; and -- Chief Executive Officer of Sears Retail. Mr. Lewis was also appointed to the Board of Directors of Sears Holdings. The Lewis Agreement supersedes and replaces Mr. Lewis' prior employment agreement with Kmart Management Corporation. Mr. Lewis will receive an annual salary of not less than $1,000,000, an annual bonus opportunity with a target amount equal to his annual salary, relocation benefits, and other employee benefits and perquisites made available generally to Kmart's other senior executives or, in Sears Holdings' discretion, Sears Holdings' senior executives or its employees generally. Mr. Lewis will be deemed to be constructively terminated if: (a) neither Edward Lampert, Sears Holdings' Chairman or Mr. Lewis becomes the Chief Executive Officer of Sears Holdings; or (b) Alan Lacy is no longer Chief Executive Officer of Sears Holdings. In this event, Mr. Lewis will receive his salary and continued welfare benefits for the lesser of three years or the remaining term of the Lewis Agreement, but not less than 12 months, and a pro-rata portion of the annual bonus for the year of termination. A full-text copy of the Lewis Agreement is available free of charge at: http://www.sec.gov/Archives/edgar/data/1310067/000095012305003833/y07301aexv10w1.htm Pursuant to Mr. Lewis' Nonqualified Stock Option Agreement and Restricted Shares Agreement with Kmart, dated as of October 18, 2004, Mr. Lewis was granted options to acquire 150,000 shares of Kmart common stock with an exercise price equal to $88.6150, and 50,781 restricted shares of Kmart common stock. These options and restricted shares vest in four installments on the last day of fiscal years 2005 through 2008, subject to Mr. Lewis' continued employment and, in the case of the restricted stock, to a performance condition. If Mr. Lewis' employment is terminated without cause or as a result of constructive termination, these restricted shares will vest in full and options that would have vested within 12 months of the date of termination will vest, and all vested options will remain exercisable for two years. These restricted shares also vest in full upon his death or disability. Pursuant to Mr. Lewis' Restricted Share Agreement that he executed with Kmart on March 24, 2005, immediately after the close of the Kmart stockholder meeting held on that date, Mr. Lewis was also granted an additional 8,011 restricted shares of Kmart common stock. These additional restricted shares vest in three installments on the last day of fiscal years 2005 through 2007, subject to his continued employment and to a performance condition. These restricted shares vest in full upon his death or disability. A full-text copy of Mr. Lewis' Restricted Share Agreement with Kmart is available at no charge at: http://www.sec.gov/Archives/edgar/data/1310067/000095012305003590/y06960exv4w6.htm The grants of options, restricted shares, and the additional restricted shares, were subject to receiving the approval of the Kmart stockholders on March 24, 2005, which was obtained. As a result of the consummation of the Mergers, these options and restricted shares were exchanged for restricted shares and options of Sears Holdings on a one-for-one basis and are subject to the same vesting and restrictions. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000) SHC INC: Administrator Has Until May 23 to File Notices of Removal ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave Walker Truesdell & Associates, Inc., and Carrol Services, LLC, an extension to file notices of removal of related proceedings involving the estate of SHC, Inc., and its debtor-affiliates, until the later of: -- May 23, 2005, or -- 30 days after the entry of an order terminating the automatic stay with respect to the particular action sought to be removed. Walker Truesdell is the Plan Administrator appointed pursuant to the Debtors' Confirmed Plan. Carrol Services serves as the Liquidation Trustee pursuant to the terms of the Plan. The Court confirmed the Debtors' Amended Joint Liquidating Plan of Reorganization on July 7, 2004, and the Plan took effect on Aug. 2, 2004. Walker Truesdell and Carrol Services relate that the Post- Confirmation Debtors are parties to various State Court Actions. According to Walker Truesdell and Carrol Services, they have not had sufficient time to investigate and fully evaluate all the State Court Actions to determine whether removal is appropriate because they were busy with the process of reviewing and objecting to claims related to the State Court Actions. The extension will give them an opportunity to make fully informed decisions concerning removal of any State Court Action. The extension will also assure the Post-Confirmation Debtors that they do not forfeit valuable rights under Section 1452(a) of the Judiciary Procedures Code. Adversaries to the state court actions will not be prejudiced by the extension, Walker Truesdell and Carrol Services assure the Court. SHC, Inc., headquartered in Chicopee, Massachusetts, is a manufacturer of golf balls and clubs and other sporting goods. The Company and its debtor-affiliates filed for chapter 11 protection on June 30, 2003 (Bankr. Del. Case No. 03-12002). Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors. The Court confirmed the Debtors' Joint Plan on July 7, 2004, and the Plan became effective on Aug. 2, 2004. When the Debtors filed for chapter 11 protection, they listed estimated assets of more than $50,000 and estimated debts of more than $100 million. SPIEGEL INC: Court Sets Plan Voting Deadline for May 13 ------------------------------------------------------- The Hon. Cornelius Blackshear of the U.S. Bankruptcy Court for the Southern District of New York established March 29, 2005, as the record date for purposes of determining which creditors are entitled to vote on Spiegel, Inc., and its debtor-affiliates' Plan of Reorganization. Judge Blackshear directs all Ballots to be properly completed, executed and transmitted in accordance with the agreed requirements to Bankruptcy Services, LLC, so as to be actually received no later than 4:00 p.m. on May 13, 2005. As reported in the Troubled Company Reporter on March 21, 2005, the Debtors will solicit votes from General Unsecured Claim Holders in Class 4 and Convenience Claim Holders in Class 5. Claims in Class 1 (Groveport Secured Claims), Class 2 (Other Secured Claims) and Class 3 (Non-Tax Priority Claims) are designated as unimpaired classes and, therefore, are conclusively presumed to accept the Plan. Equity interests in Class 6 are not receiving distributions under the Plan and, thus, are conclusively presumed to reject the Plan. The Debtors have established standards and protocols for the voting and tabulation of the Ballots: (1) Ballots voting to accept or reject the Plan must be "actually received" by Bankruptcy Services on or before the Voting Deadline. The Ballots may be transmitted to Bankruptcy Services through: * mail by returning an original executed ballot to: Bankruptcy Services, LLC 757 Third Avenue, 3rd Floor New York, New York 10017 Attn: Spiegel, Inc., Balloting * a facsimile copy of an executed ballot which is faxed to (646) 282-2501 and received prior to the Voting Deadline will be effective as delivery of a manually executed ballot; or * a scanned copy of an executed ballot, saved in portable document format and attached to an e-mail that is sent to spiegelvote@bsillc.com Any Ballot actually received after the Voting Deadline will not be counted unless the Debtors will have granted in writing an extension of the Voting Deadline with respect to that Ballot. (2) If a holder of a claim submits more than one Ballot with respect to the same claim prior to the Voting Deadline, only the first Ballot actually received by BSI will count unless the Court orders that the holder has sufficient cause within the meaning of the Bankruptcy Rule 3018(a) to submit, or the Debtors consent to the submission of, a superseding Ballot. (3) If a claim holder casts simultaneous duplicative Ballots voted inconsistently, then those Ballots will be counted as one vote accepting the Plan. (4) The authority of the signatory of each Ballot to complete and execute that Ballot will be presumed. (5) Any Ballot that is not signed, is illegible or contains insufficient information to permit the identification of the claimant will not be counted. (6) Ballots transmitted electronically will be counted, provided that their requirements are fully complied with. (7) Ballots transmitted by facsimile will be counted. (8) A claimholder must vote the entire claim within one particular class under the Plan either to accept or reject the Plan, and may not split its vote with respect to the claim between more than one class, whether or not those claims are asserted against the same or multiple Debtors. Accordingly, a Ballot that partially rejects and partially accepts the Plan, or that indicates both a vote for and against the Plan, will be counted as one vote accepting the Plan. (9) Any Ballot that is timely received and duly executed but does not indicate whether the holder of the relevant claim is voting to accept or reject the Plan will be counted as a vote accepting the Plan. (10) Any Ballot cast by a person or entity that does not hold a claim in a class that is entitled to vote to accept or reject the Plan will not be counted. Any Ballot cast for a claim scheduled as unliquidated, contingent, or disputed for which no proof of claim was timely filed will not be counted. If any creditor seeks to challenge the allowance of its claim to vote on the Plan, that creditor must file a motion for an order pursuant to Bankruptcy Rule 3018(a) temporarily allowing its claim in a different amount for voting purposes. A Creditor's Voting Motion must be filed 10 days after the later of the date of service of the Confirmation Hearing Notice and the date of service of notice of an objection, if any, to that claim. 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 INC: Expects to Finalize Debt Facility Early This Month --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Spiegel, Inc., and its debtor-affiliates permission to enter into and perform under certain Work Fee Letters so that prospective lenders may commence the due diligence process necessary for the Debtors to obtain the Senior Debt Facility contemplated by the Plan. The Debtors disclose in recent filings with the Court that they anticipate that a commitment letter for the Senior Debt Facility will be finalized in early April 2005. Work Fee Letters The Prospective Lenders are willing to perform due diligence under the terms and conditions of certain work fee letters. Each of the Work Fee Letters provide: (i) that each Prospective Lender will be paid a $100,000 work fee; and (ii) for the indemnification of each Prospective Lender in connection with the engagement. The Work Fee will be used for reasonable out-of-pocket expenses. The Work Fee balance will be credited against closing fees in the event that the Debtors select the Prospective Lender as the underwriter or arranger under the Senior Debt Facility. Miller Buckfire advised the Debtors that the terms of the Work Fee Letters are typical for transactions similar to the Senior Debt Facility. 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. STACCATO GOLD: Band-Ore Resources Terminates Shebandowan Agreement ------------------------------------------------------------------ Band-Ore Resources Ltd. (TSX:BAN) terminated the agreement with Staccato Gold Resources Ltd. (TSX VENTURE:CAT) on 16 contiguous patented mining claims and one mineral lease located in Conacher Township within the Thunder Bay Mining Division of Northern Ontario. Staccato is in default regarding certain terms of the agreement. Assay results from the November, 2004 drilling program included significant gold and zinc values. Assay results of 4.65 g/t gold and 7.5% zinc over 1.1 metres and 5.13 g/t gold over 1.5 metres were intersected in drillhole SG 04-08. A comprehensive review of all data is required before determining the next exploration programs on the property. The Shebandowan property is located along the North Shore of Shebandowan Lake, approximately two kilometres west of the village of Shebandowan, and approximately 80 kilometres west of Thunder Bay, Ontario. The past producing Shebandowan Mine (Inco) is located approximately 10 kilometres southwest of the property. At least two known gold mineralized zones occur on the property. The Main (No. 1) Zone, discovered in 1937, consists of sheared and altered porphyry with disseminated and stringer pyrite mineralization. Based on the drilling conducted during the period 1944 to 1947, Watts, Griffis and McQuat, in 1980, estimated a reserve of approximately 706,000 tonnes grading 6.86 g/t gold above the 500 foot level. Mattagami Lake Explorations Limited (a subsidiary of Noranda Mines Ltd.) optioned the property from Band- Ore Resources in 1980 and over the next 10 years conducted exploration programs, which consisted of I.P., Magnetic and VLF surveys, detailed geological mapping and 9,346 metres (30,655 feet) of diamond drilling. Erratic distrubition of gold mineralization discouraged Noranda from completing further work on the Main (No. 1) Zone. The No. 4 Zone was discovered by Mattagami Lake Explorations in 1980 by routinely testing IP anomalies. The No. 4 Zone lies in the southern part of the property, 800 metres southwest of the Main (No.1) Zone and is comprised of three sub-zones termed the Telluride, Upper and Lower Zones, and consists of sheared and altered felsic to intermediate pyroclastics. Possible geological reserves for these three zones were calculated by Mattagami to be approximately 616,000 tonnes of 4.83 g/t gold and 7.71g/t silver. Subsequent drilling by Noranda from 1984 to 1990 in the No. 4 Zone has reduced the possibility of western, eastern and depth extensions of the No. 4 Zone. A review of the data by Staccato indicated there may be more potential for additional resources than indicated by the Noranda drilling. These resource estimates for the Main (No. 1) Zone and the No. 4 Zone do not follow the required disclosure for reserves and resources as outlined in National Instrument 43-101 as they were prepared in the 1980's prior to NI 43-101. The historic resource figures generated by Mattagami (Noranda) have not been redefined to conform to the CIM approved standards as required in NI 43-101. The resource estimates have been obtained by sources believed reliable and are relevant but cannot be verified. No effort has been made to refute or confirm these estimates and they can only be described as historical estimates. STEELCASE INC: Moody's Affirms Ba1 Sr. Implied & Unsec. Ratings --------------------------------------------------------------- Moody's Investors Service has affirmed Steelcase Inc.'s Ba1 senior implied and senior unsecured ratings and changed the ratings outlook to stable from negative. The change in the outlook is based on the company's improved operating performance and its positive effect on financial metrics, positive momentum in transforming the company's business model, and a more favorable outlook for capital spending among the company's largest customers over the near-to-intermediate term. Moody's Ba1 ratings for Steelcase reflect its widely recognized brand name and reputation for quality office furnishings. Steelcase remains the leading provider of office environments, an industry with considerable barriers to entry. The company has a diversified installed customer base of major national and multinational corporations that are likely to return to Steelcase for future furnishing requirements for uniformity among their corporate environments, especially given a significant reduction in furniture spending in the 2000-2004 period. Furthermore, Moody's ratings are supported by the company's success with realizing asset sale proceeds that were sufficient not only to meet its ongoing cash requirements during the cyclical downturn, but also to reduce debt and build cash and short-term investments on its balance sheet, which now stands at almost $350 million. The Ba1 ratings also incorporate Moody's concern over continued pressure on the company's cost structure and working capital needs due to high input costs for steel, fuel and petroleum derivatives, a $40 million increase in variable compensation costs associated with bonuses, and production disruptions associated with continued restructurings and plant closings since the company has reduced its manufacturing footprint 40% over the last 5 years. The stable outlook is predicated on Moody's expectation the company will continue to make progress in converting the company's business strategy from a vertically-integrated, fixed-cost manufacturing model to one that is more variable and competitive in nature. Moody's anticipates this will enable the company to generate increased levels of gross profit, operating income and cash flow, even during another cyclical downturn. Moody's outlook contemplates operating income margins above 5% and EBIT interest coverage (excluding restructuring costs) above 1.5x, while maintaining an average retained cash flow- and free cash flow-to- adjusted total debt (adjusted to include under-funded pension liabilities) of 20% and 7.5%, respectively. Given the company's operating performance volatility as a result of the economic cycle, as was evidenced by a considerable deterioration in credit metrics during the challenging economic environment from 2001-2003 and improvement during 2004 and so far in 2005, Moody's believes the stable outlook will tolerate, for any given year, some deviation from the average credit metrics stated above. Strategically, Moody's believes management's efforts, to date, and commitments to continue lean manufacturing principles, which includes outsourcing a greater percentage of component manufacturing to lower-cost jurisdictions and reducing the North American manufacturing footprint is critical for the company to improve operating efficiency and remain competitive. The company's recent announcement that it intends to consolidate manufacturing plants and reduce the workforce in the Grand Rapids area is further evidence of the company's progression towards a leaner cost base, resulting in a reduction of production space in North America from 7.6 million square feet to 5 million without limiting capacity given the greater reliance on component suppliers. Moody's recognizes that there continues to be additional short-term economic costs associated with restructurings and corresponding business disruptions, which Moody's anticipates will total more than $200 million on a pre-tax basis since fiscal 2002. However, Moody's believes these costs are necessary to improve long-term profitability. Downward ratings pressure could occur if the company is unable to maintain average credit metrics consistent with those listed above, giving effect to cyclical operating performance volatility and the company's prospects for recovering higher input costs through high prices and planned surcharges in 2005 and 2006 and smoothing variable compensation expenditures. Longer-term, downward pressure could occur should Steelcase not realize the full benefits of its lower overhead cost structure, any indications that the strengthening in the domestic contract furnishings market will not materialize or begin to slow, or the company's international markets, which account for 23% of total revenues, contract sharply given continued economic weakness. Conversely, upward pressure on the ratings could occur if Steelcase's sustained, average retained cash flow- and free cash flow-to-adjusted total debt were to improve to 25% and 10%, respectively, average EBIT margins near to 8%, and EBIT interest coverage above 5.0x. Moody's believes Steelcase has a strong liquidity profile and expects the company to generate approximately $30 million in free cash flow in fiscal 2006 (ending February 24, 2006). Steelcase has approximately $350 million in cash and short-term investments on the balance sheet and over $180 million in cash surrender value of company-owned life insurance. Moody's anticipates the company will use cash on hand to retire a $47 million capital lease that matures in May 2005, thereby reducing overall balance debt by approximately 15%. In addition, the company has a $250 million unsecured credit facility due July 2006. At February 25, 2005, the credit facility was undrawn. However, while the company remains covenant compliant, the onerous leverage ratio covenant limited actual availability to about $128 million as of November 26, 2004. Steelcase Inc., based in Grand Rapids, MI, is the world's largest supplier of office furniture with fiscal 2005 (ending February 25, 2005) revenue of $2.6 billion. SYNTRON BIORESEARCH: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Syntron Bioresearch, Inc. 2774 Loker Avenue West Carlsbad, California 92008 Bankruptcy Case No.: 05-02757 Type of Business: The Debtor is a research, development and manufacturing company specializing in advanced rapid in vitro immunodiagnostic test systems. The Debtor is also licensed as a Medical Device Establishment. See http://www.syntron.net/ Chapter 11 Petition Date: April 1, 2005 Court: Southern District of California (San Diego) Judge: James W. Meyers Debtor's Counsel: Colin W. Wied, Esq. C. W. Wied Professional Corporation 600 West Broadway, Suite 1510 San Diego, California 92101-8567 Tel: (619) 338-4030 Fax: (619) 338-4022 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 ------ --------------- ------------ Morrison & Foerster 18.5% of $3,391,631 3811 Valley Centre Dr., capital stock #500 San Diego, CA 921302332 Baker McKenzie Litigation fee $964,725 Ali Mojdehi, Esq. 101 West Broadway, Suite 1200 San Diego, CA 92101 Venture LLC $230,000 7348 Melodia Terrace Carlsbad, CA 92009 Foley & Lardner Patent fee $141,116 Tianjin New Bay $50,607 Bioresearch Co Advanced Microdevices $37,543 (PVT)Lt Weber Marking $30,366 Systems, Inc. Perfect Mold, Inc. $19,872 G & L Precision $18,301 Die Cutting * Campbell & Flores LLP $13,200 Abbott Laboratories $10,000 Pacific Plastics $9,735 Regulatory Specialists Inc. $8,799 Arista Biologicals, Inc. $7,800 Mcdermott, Will & Emery $7,712 Sudchemie Performance $7,521 The JG Plastics $7,012 Group, Inc. Spectrum $5,481 Richard M. Viscasillas,P.A $4,520 Sigma-Aldrich, Inc. $3,281 TERPHANE HOLDING: Moody's Assigns Ba3 Rating to $30M Debt Add-On ---------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Terphane Holding Corporation's $30 million add-on to its 12.5% fixed rated senior secured notes, due 2009, and affirmed existing ratings. Concurrently, Moody's changed the ratings outlook to negative from stable reflecting concern about increased financial leverage resulting from this proposed second decapitalization consisting of an additional $26 million distribution to its investor group, led by Rhone Capital I LLC (bringing the total dividend paid to approximately $56 million in less than one year). The negative ratings outlook incorporates the aggressive posture of the sponsors and the company's fiscal policies, notably given Terphane's already fragile financial condition leaving it vulnerable to potential economic downturn. Despite more favorable macro-economic trends in Brazil (B1 sovereign rating) since the initiation of Terphane's ratings in May 2004, the change in the ratings outlook to negative from stable reflects the pro-forma incremental increase in financial leverage with pro-forma debt to FYE December 31, 2004 EBIT approaching 5 times (approximately 4 times EBITDA), debt continuing to exceed net consolidated revenue of only $75 million, and increased senior secured borrowings on collateral not fully available to the bondholders (e.g. approximately $6 million in working capital loans plus approximately $24 million pari passu borrowings for equipment financing in both the US and Brazil). Additionally, the negative ratings outlook reflects the expectation of continued pressure on margins from rising input costs, some pricing pressure, and competition throughout North America. The company is at an inflection point as it finishes the ramp up of a major films line in Brazil. Should the company execute its stated strategy and exceed expectations consistently throughout the next several quarters, specifically regarding free cash flow generation and reduction in financial leverage, the ratings outlook could be revised back to stable. Moody's took the following actions: * Assigned B3 rating to the $30 million add-on 12.5% guaranteed fixed rate senior secured notes, due 2009; * Affirmed B3 rating for the existing $46.5 million existing 12.5% guaranteed fixed rate senior secured notes, due 2009; * Affirmed B3 rating for the existing approximately $7 million guaranteed floating rate senior secured notes, due 2009; * Affirmed B3 senior implied rating; and * Affirmed Caa2 senior unsecured issuer rating (non-guaranteed exposure). The Speculative Grade Liquidity Rating of SGL-4 is affirmed and the rationale is updated. The ratings outlook changed to negative from stable. Favorably incorporated into the affirmation of the ratings is Terphane's solid performance throughout fiscal 2004 as the company's results were in line with expectations despite challenges from high raw material and other operating costs and the ongoing ramp up of significant capital projects. Enterprise value appears to have remained consistent with Moody's original expectations, thereby continuing to support the B3 rating of the guaranteed senior secured notes, due 2009. Moody's updated the rationale for Terphane's Speculative Grade Liquidity rating of SGL-4 reflecting weak liquidity with minimal external committed sources of liquidity (roughly $1 million available under a $2 million secured financing intended for equipment purchases). Terphane has a secured $5 million export receivables facility plus roughly $4 million remaining under its additional indebtedness basket in the indenture. Headroom under the one financial covenant, minimum EBITDA of $20 million, is expected to be adequate throughout the near term. Unrestricted average cash on hand is expected to remain modest (less than $10 million) throughout the near term and net cash generated by operations is expected to be slightly positive after working capital. All assets and stock are encumbered. Through its operating subsidiaries, Terphane Corporation produces and sells polyester film used in numerous packaging and industrial applications. The company states that it is the sole polyester film producer in South America and has leading market share in the thin polyester film market in Brazil and throughout South America. The company also produces and sells film in North America. Products are manufactured at facilities located in Bloomfield, New York and in Cabo Pernambuco, Brazil. For the fiscal year ended December 31, 2004, net revenue was approximately $75 million. TRUMP HOTELS: Files Third Amended Plan of Reorganization -------------------------------------------------------- On March 30, 2005, Trump Hotels & Casino Resorts, Inc., and its debtor-affiliates filed with the U.S. Bankruptcy Court for the District of New Jersery their Third Amended Plan of Reorganization. Among others, the Third Amended Plan reflects the settlement reached between the Debtors and the Official Committee of Equity Security Holders. Accordingly, the Third Amended Plan lays claim not only the support of the Debtors, Donald J. Trump, the TAC and TCH Noteholder Committees, but also that of the Equity Committee. The salient revisions included in the Third Amended Plan are: A. World's Fair Site Sale The Debtors will sell the World's Fair Site in Atlantic City, pursuant to a motion under Section 363 of the Bankruptcy Code to be filed within 60 days after the Effective Date. The World's Fair Site will be sold: -- according to procedures as are mutually agreed between the Debtors and the Equity Committee; and -- subject to a restriction to be set forth in the deed of the Worlds Fair Site, which prevents its purchaser or any successor, assign, lessee or occupant from developing or conducting any activities relating to owning, operating, managing or developing a casino or a similar facility. To the extent the Debtors employ a broker or auctioneer to conduct the sale, the broker or auctioneer will be: -- jointly selected by the Equity Committee and the Debtors; -- retained pursuant to Section 327 of the Bankruptcy Code; and -- paid its fees and costs from the World's Fair sale proceeds as World's Fair sale expenses. B. Class 11 Treatment In the event Class 11 votes to accept the Plan, each holder of an Allowed Class 11 Interest, on the Effective Date (or, in the case of the Worlds Fair Sale Proceeds, as soon as practicable), will: (i) to the extent the holder holds Old THCR Common Stock, retain its existing shares of Old THCR Common Stock, be subject to the Reverse Stock Split and dilution upon issuance of the New Common Stock; (ii) to the extent the holder held Old THCR Shares as of the New Class A Warrants Record Date, receive, on a pro rata basis: * a subset of the New Class A Warrants to acquire up to an aggregate number of 2,207,260 shares of New Common Stock at an exercise price of $14.60 per share of New Common Stock -- New Class 11 Class A Warrants; * the Worlds Fair Sale Proceeds; and * $17,500,000 in cash; (iii) to the extent the holder holds Old THCR Holdings LP Interests, retain its existing Old THCR Holdings LP Interests, subject to the terms of the New THCR Partnership Agreement; and (iv) to the extent the holder holds Old THCR Class B Common Stock, retain its existing shares of Old THCR Class B Common Stock, which will be reclassified on a one-to- one basis into shares of New Class B Common Stock. C. New DJT Class A Warrants Mr. Trump would exchange his right to receive the World's Fair Site, for additional equity in the recapitalized company. Mr. Trump will be issued a subset of the New Class A Warrants to acquire up to 1,217,933 shares of New Common Stock at an exercise price of $14.60 per share. The issuance of the New DJT Class A Warrants could bring Mr. Trump's stake to around 30% of the Debtors' fully diluted common stock. D. Class 7 Claim and TCAP Claim Class 7 is a group of subclasses, each of which consists of the Allowed General Unsecured Claims against one of the Debtors. Claims of participants in the Trump Capital Accumulation Plan based on breach of fiduciary duty will be treated as a disputed claim in the Class 7 subclass for the Debtor against which the TCAP Claim is asserted. Each holder of a Class 7 Claim that is entitled to receive interest accruing on or after the Petition Date with respect to the claim under applicable law will receive interest in an amount sufficient to render it unimpaired. E. 12 Groups of Claims and Interests The Third Amended Plan now only groups claims and interests into 12 classes. The group of claims and interest now exclude the Class 13 Claims -- Securities Claims Against THCR. A full-text copy of the Third Amended Plan is available for free at: http://www.thcrrecap.com/pdfs/901-100/03-30-05-901.pdf Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. UAL CORP: U.S. Bank Holds $35.6 Mil. Liquidated Aircraft Claims --------------------------------------------------------------- On May 9, 2003, U.S. Bank, as Mortgagee, on behalf of V5U-737X2 LLC, as Lender, filed Claim Nos. 35497 and 35498 for two Boeing 737-322 Aircraft bearing Tail Nos. N366UA and N367UA. The Claims asserted unliquidated amounts of at least $24,175,902 each. On May 12, 2003, Chuo Mitsui Trust & Banking Co., Ltd., filed Claim Nos. 40300 and 40302, relating to the Aircraft, in unliquidated amounts of at least $19,916,973 each. On August 18, 2004, V5U purchased and succeeded to all rights, claims and interests of Chuo Mitsui relating to the Aircraft, including Claim Nos. 40300 and 40302. On May 9, 2003, Peak Finance Partners III, LP, as Owner Participant, filed Claim No. 36286 relating to the Aircraft, in a contingent, unliquidated amount. UAL Corporation and its debtor-affiliates, U.S. Bank, V5U and Peak have agreed to resolve the Aircraft Claims. The parties agree that Claim Nos. 35497 and 35498 will be liquidated for $17,783,360 each, and allowed as prepetition, general unsecured claims without priority. Claim Nos. 40300 and 40302 will each be liquidated for $0 and disallowed and expunged. To the extent that Claim No. 36286 asserts claims arising from a Tax Indemnity Agreement between Peak and the Debtors, Claim No. 36286 will be liquidated for $0. Judge Wedoff approves the Stipulation. 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. Employing 61,200 workers, United, United Express and Ted operate more than 3,500 flights a day to more than 200 U.S. domestic and international destinations from hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. 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. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) USGEN NEW ENGLAND: TransCanada Completes Hydro Asset Purchase ------------------------------------------------------------- TransCanada Corporation (TSX:TRP) (NYSE:TRP) closed its acquisition of hydroelectric generation assets from USGen New England, Inc., for $505 million US in cash, subject to specified closing adjustments. The assets have a total generating capacity of 567 megawatts. The sale, previously announced in September 2004, received bankruptcy court approval and met other regulatory approvals and conditions. "We're pleased to be growing our power business through this acquisition," said Hal Kvisle, TransCanada's chief executive officer. "With the addition of these strong hydro facilities and expert employees, TransCanada now offers more power, reliability and flexibility to meet the needs of our customers in the U.S. Northeast." An existing agreement between the Town of Rockingham and USGen New England provided the Town with the option to purchase the 49 MW Bellows Falls facility for $72 million US. In December, 2004 the Town exercised the option and assigned its rights to the Vermont Hydroelectric Power Authority. TransCanada has assumed USGen's rights and obligations under the option agreement and will therefore sell the Bellows Falls hydroelectric facility to Vermont Hydroelectric Power Authority for $72 million US. Before it can close, the transaction requires regulatory approvals and the satisfaction of certain conditions under the option agreement. When the sale of the Bellows Falls facility is completed, TransCanada will have 12 dams with 36 hydroelectric generating units on two rivers in New England: the Connecticut River in New Hampshire and Vermont and the Deerfield River in Massachusetts and Vermont. Operations of these facilities, known as the Deerfield River and Connecticut River Systems, will be integrated into TransCanada's existing operations model. TransCanada is financing the acquisition in a manner consistent with maintaining its solid financial position and credit ratings. TransCanada expects the transaction to be immediately accretive to earnings and cash flow. TransCanada -- http://www.transcanada.com/-- is a leading North American energy company. TransCanada is focused on natural gas transmission and power services with employees who are expert in these businesses. TransCanada's network of approximately 41,000 kilometres (25,600 miles) of pipeline transports the majority of Western Canada's natural gas production to the fastest growing markets in Canada and the United States. With the acquisition of the USGen hydro assets, TransCanada now owns, controls or is constructing approximately 5,700 megawatts of power generation - an amount of power that can meet the needs of about 5.7 million average households. The Company's common shares trade under the symbol TRP on the Toronto and New York stock exchanges. Headquartered in Bethesda, Maryland, USGen New England, Inc., an affiliate of PG&E Generating Energy Group, LLC, owns and operates several electric generating facilities in New England and purchases and sells electricity and other energy-related products at wholesale. The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported assets amounting to $2,337,446,332 and debts amounting to $1,249,960,731. VIVENTIA BIOTECH: To Register with SEC to List Stock in AMEX ------------------------------------------------------------ Viventia Biotech Inc. (TSX:VBI) plans to register with the United States Securities and Exchange Commission with the intent of making an application for a listing of its common shares on the American Stock Exchange in the near term. "Listing on the AMEX will support Viventia's growth strategy by raising our profile with U.S. investors and by providing our Company with opportunities to attract new sources of capital to fund our research and development activities," said Dr. Nick Glover, President and CEO of Viventia Biotech. Viventia Biotech intends to continue to trade its common shares on the Toronto Stock Exchange under the symbol "VBI". Viventia Biotech, Inc. (TSX: VBI), is a publicly traded biopharmaceutical company developing Armed Antibodies(TM), powerful and precise anti-cancer drugs designed to overcome various forms of cancer. Viventia's lead product candidate is Proxinium(TM), which combines a cytotoxic protein payload significantly more powerful than traditional chemotherapies with the highly precise tumor-targeting characteristics of a monoclonal antibody. Proxinium(TM) is in clinical development for the treatment of head and neck cancer and bladder cancer, and is expected to enter advanced clinical trials in 2005. As of December 31, 2004, Viventia Biotech's equity deficit widens to CDN$21,255,000 compared to a CDN$4,484,000 equity deficit at December 31, 2003. WELLS FARGO: Fitch Puts Low-B Ratings on Four Mortgage Certs. ------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2005-2, are rated by Fitch Ratings: Group 1 certificates: -- $633,337,194 classes I-A-1 through I-A-12, I-A-R, and I- A-PO, (Group 1 senior certificates) 'AAA'; -- $8,457,000 classes I-B-1, 'AA'; -- $3,578,000 classes I-B-2, 'A'; -- $1,952,000 classes I-B-3, 'BBB'; -- $1,301,000 classes I-B-4, 'BB'; -- $976,000 classes I-B-5, 'B'. Group 2 certificates: -- $296,464,343 classes II-A-1 and II-A-PO, (Group 2 senior certificates) 'AAA'; -- $1,952,000 classes II-B-1, 'AA'; -- $601,000 classes II-B-2, 'A'; -- $450,000 classes II-B-3, 'BBB'; -- $301,000 classes II-B-4, 'BB'; -- $300,000 classes II-B-5, 'B'. The 'AAA' ratings on the group 1 senior certificates reflect the 2.65% subordination provided by the: * 1.30% class I-B-1, * 0.55% class I-B-2, * 0.30% class I-B-3, * 0.20% privately offered class I-B-4, * 0.15% privately offered class I-B-5, and * 0.15% privately offered class I-B-6. Classes I-B-1, I-B-2, I-B-3, I-B-4, and I-B-5 are rated 'AA,' 'A,' 'BBB,' 'BB,' and 'B,' respectively, based on their respective subordination. Class I-B-6 is not rated by Fitch. The 'AAA' ratings on the group 2 senior certificates reflect the 1.30% subordination provided by the: * 0.65% class II-B-1, * 0.20% class II-B-2, * 0.15% class II-B-3, * 0.10% privately offered class II-B-4, * 0.10% privately offered class II-B-5, and * 0.10% privately offered class II-B-6. Classes II-B-1, II-B-2, II-B-3, II-B-4, and II-B-5 are rated 'AA,' 'A,' 'BBB,' 'BB,' and 'B,' respectively, based on their respective subordination. Class II-B-6 is not rated by Fitch. The ratings also reflect the quality of the underlying collateral, the primary servicing capabilities of Wells Fargo Bank, N.A. rated 'RPS1' by Fitch, and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by two pools of mortgage loans, which respectively collateralize the group 1 and 2 certificates. Groups 1 and 2 are not cross-collateralized with each other. The group 1 collateral consists of 1,365 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with weighted average remaining terms to stated maturity ranging from 298 to 360 months. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 66.30%. The average balance of the mortgage loans is $476,614 and the weighted average coupon of the loans is 5.883%. The weighted average FICO credit score for the group is 736. Second homes comprise 6.05% and there are no investor-occupied properties. Rate/Term and cashout refinances represent 29.81% and 30.50%, respectively, of the group 1 mortgage loans. The states that represent the largest geographic concentration of mortgaged properties are: * California (49.87%), * New York (6.60%) and * Maryland (5.38%). All other states comprise fewer than 5% of properties in the group. The group 2 collateral consists of 571 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with WAM ranging from 168 to 180 months. The weighted average OLTV for the mortgage loans in the pool is approximately 57.54%. The average balance of the mortgage loans is $526,041 and the WAC of the loans is 5.169%. The weighted average FICO credit score for the group is 746. Second homes comprise 6.70% and there are no investor-occupied properties. Rate/Term and cashout refinances represent 39.52% and 30.14%, respectively, of the group 2 mortgage loans. The states that represent the largest geographic concentration of mortgaged properties are: * California (42.58%), * New York (6.90%), * Texas (5.45%) and * Florida (5.09%). All other states comprise fewer than 5% of properties in the group. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003, entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/ All of the mortgage loans were generally originated in conformity with underwriting standards of Wells Fargo Bank, N.A. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and Wachovia Bank, N.A. will act as trustee. An election will be made to treat the trust as a real estate mortgage investment conduit for federal income tax purposes. WESTPOINT STEVENS: Motion to Sell All Assets Draws Mixed Reactions ------------------------------------------------------------------ As previously reported, WestPoint Stevens, Inc., and its debtor- affiliates asked United States Bankruptcy Court for the Southern District of New York to hold a hearing on June 15, 2005, to consider approval of: (a) the terms of the asset purchase agreement(s) selected by the Debtors as the highest or best bid(s); (b) the sale(s) of any assets under the asset purchase agreement free and clear of all liens, claims, encumbrances, and other interests to the party or parties submitting the highest or otherwise best offer(s) at the Auction; (c) the assumption(s) and assignment(s) of certain executory contracts and unexpired leases related thereto; and (d) the distribution of proceeds from the sale to satisfy the liens of the First Lien Lenders and, if applicable, the Second Lien Lenders in the manner provided in the Asset Purchase Agreement. WestPoint Stevens Inc. entered into a definitive agreement for the sale of the Company to an investor group. The investor group consists of WL Ross & Co. LLC, and holders of a majority of the Company's Senior Credit Facility, including Contrarian Capital Management and CP Capital Investments. The agreement calls for the sale of substantially all of the assets of WestPoint Stevens. As part of the agreement, equity in the new company will be distributed to holders of outstanding senior secured debt, and the new company will conduct a rights offering, underwritten by the investor group, to raise $207.5 million of equity capital. All of WestPoint Stevens' Senior Credit Facility holders will have the equal right to participate, and in certain circumstances WestPoint Stevens' Second Lien Facility holders could participate in the rights offering. The new company will repay WestPoint Stevens' debtor in possession loan, satisfy certain administrative claims, and assume WestPoint Stevens' ordinary course payables and certain other postpetition liabilities, including bankruptcy emergence costs. The agreement provides that WestPoint Stevens' Second Lien Facility holders would receive $10.0 million released from escrowed adequate protection payments provided they do not object to the transaction and additional consideration in certain other events if the sale is completed. Following the sale, WestPoint Stevens will wind down its estate, and as a result, its unsecured creditors could receive a small distribution and all shares of its common stock would be cancelled with no payment. John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, tells the Court that for the past seven months, the Debtors have attempted to reach consensus with their three main creditor constituencies on the terms of a Chapter 11 reorganization plan: Creditor Group Approximate Claim -------------- ----------------- First Lien Lenders $480 million Second Lien Lenders 165 million Creditors Committee 1.1 billion The First Lien Lenders are the holders of claims against any of the Debtors based upon that certain Second Amended and Restated Credit Agreement dated as of June 9, 1998, among WestPoint Stevens Inc., as Borrower, WestPoint Stevens (U.K.) Limited and WestPoint Stevens (Europe) Limited, as Foreign Borrowers, Bank of America, N.A., as Issuing Lender, Swingline Lender as Administrative Agent and the several banks and other financial institutions from time to time parties thereto. The Second Lien Lenders are the holders of claims against any of the Debtors based on that certain Second Lien Credit Facility dated as of June 29, 2001, among WestPoint as Borrower, Wilmington Trust Company (as successor to Deutsche Bank Trust Company Americas) as Administrative Agent, and the banks and other financial institutions from time to time parties thereto. Responses (1) Second Lien Lenders Wilmington Trust Company, as successor Administrative Agent under a Second Lien Credit Facility dated as of June 29, 2001, asserts that the Asset Purchase Agreement concerning the sale of substantially all of the Debtors' assets is not a simple transfer of assets between the Debtors and the purchaser. Gary M. Becker, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, explains that the Asset Purchase Agreement provides for the Debtors' transfer of assets to the purchaser in return for the transfer of value to different classes of creditors -- creditors senior to the Second Lien Lenders and, fatally, creditors junior to the Second Lien Lenders, while leaving little or nothing to pay the secured/superpriority claims of the Second Lien Lenders. Mr. Becker argues that the APA is an impermissible "sub rosa plan" -- a scheme to circumvent both the priority provisions contained in the Bankruptcy Code and rights granted to the Second Lien Lenders to be paid before other administrative expense claimants. Worst of all, junior priority unsecured claimants are being paid out of value according to the Debtors' own filings -- at least $30 million and possibly much more -- in excess of the DIP Lender's and First Lien Lenders' claims, that as a matter of law belongs to the Second Lien Lenders. Mr. Becker asserts that the Court should not approve an APA or a sale process that is designed to flow this value to claimants junior to the Second Lien Lenders. "Not only does the sale expropriate the property of the Second Lien Lenders and award it to creditors who are junior to them, it vitiates the creditor protections built into plan provisions of the Bankruptcy Code, while dictating the outcome of any subsequently filed plan," Mr. Becker says. "The Court cannot and should allow the Debtors to accomplish through a Section 363 sale what they could not accomplish through a plan of liquidation." Accordingly, the Second Lien Lenders ask the Court to deny the Debtors' Sale Motion. In the alternative, the Second Lien Lenders ask the Court to: (a) set a date for an evidentiary hearing to establish the value of: (1) the Debtors; (2) the collateral of the First Lien Lenders; and (3) the collateral of the Second Lien Lenders; and (b) compel the Debtors, Rothschild, Inc., and WL Ross & Co. LLC to respond to the discovery requests of Wilmington Trust. (2) First Lien Lenders The Steering Committee of the First Lien Lenders disagrees with the bid treatment in the Debtors' Sale Motion. The Debtors are borrowers and guarantors under a Second Amended and Restated Credit Agreement dated April 9, 1999. Pursuant to the Credit Agreement, banks holding a majority of the aggregate outstanding obligations have the right to request and direct a Collateral Trustee and Administrative Agent to enforce any rights and remedies that exist under the Credit Agreement, a certain Collateral Trust Agreement, or applicable law. A. Brent Truitt, Esq., at Hennigan, Bennett & Dorman LLP, in New York, relates that the Collateral Trustee has the right to bid for the assets to be sold pursuant to the Sale Motion. The proposed Bidding Procedures permit the Collateral Trustee to credit bid at the auction on behalf of the banks under the Credit Agreement. However, the Sale Motion also states that "[n]otwithstanding any credit bid, the Debtors intend to evaluate all Bids based upon the proceeds actually received by the Debtors' estates and creditors." Mr. Truitt argues that, in valuing the amount of the bids, the Debtors should be required to consider the credit bid as equivalent to a cash bid equal to the total outstanding obligations under the Credit Agreement subject to the lien. The Debtors should not accept any competing bid that does not provide for a cash payment that exceeds the credit bid. Mr. Truitt explains that this requirement is necessary to protect the "absolute" and "unconditional" right of a lienholder to credit bid. The purpose of credit bidding is to ensure that a secured creditor, upon disposition of its collateral free and clear of liens, receives the actual market value of the property rather than a value that the Court determines. Mr. Truitt clarifies that the disagreements between the Debtors and the Banks do not need to be addressed or resolved at the Sale Motion hearing on April 7, 2005, since both sides have agreed to reserve all rights with respect to those matters. However, the Banks believes that it is appropriate to resolve those issues before the auction that, under the proposed bidding procedures, is scheduled for June 7, 2005. Determining these issues before the auction will provide the Debtors and bidders with certainty as to the criteria that the Debtors will use to select the successful bidder, Mr. Truitt says. The Steering Committee comprises Contrarian Capital Management, Inc., Satellite Senior Income Fund, L.L.C. and CP Capital Investments, L.L.C. (3) Creditors' Committee Lawrence M. Handelsman, Esq., at Stroock & Stroock & Lavan LLP, in New York, informs the Court that the Official Committee of Unsecured Creditors has worked with the Debtors, their secured creditors, and other parties to achieve two principal goals: -- to formulate a plan of reorganization; and -- to maximize recoveries for all creditors. Through the Sale Motion, which was filed without any warning to or consultation with the Creditors Committee, the Debtors abandon those goals in favor of a fundamentally flawed sale process that is not designed to foster maximum participation so as to enhance bidding and maximize value for the Debtors' assets, Mr. Handelsman says. "Apparently frustrated by disputes among the secured lenders and their intransigence in plan negotiations, the Debtors have thrown in the towel and have engineered a sale process and Bidding Procedures that will chill third party bidding and effectively result in a two-horse race between Carl Icahn and the Steering Committee," Mr. Handelsman tells Judge Drain. The "sale process" is nothing more than a poorly disguised transfer of the Debtors' assets to its secured creditors in satisfaction of their claims, Mr. Handelsman argues. This is an impermissible sub rosa plan that sidesteps the protections of the reorganization process and disenfranchises the holders of unsecured claims. Moreover, the Debtors have not adequately demonstrated and articulated a business purpose, other than the appeasement of major creditors. While the Debtors ask the Court to approve a sale process and a stalking horse bid, Mr. Handelsman notes that the Debtors have not provided the Creditors Committee, its advisors or the Court with any factual record of a marketing process they conducted. The Creditors Committee believes that the Steering Committee and Mr. Icahn are the only parties with whom the Debtors have engaged in discussions prior to the selection of the stalking horse. Thus, there can be no assurance that the stalking horse bid is an adequate starting point, particularly given the Steering Committee's heavy utilization of credit bidding and the likelihood that Mr. Icahn will employ similar strategies. The Court should adjourn the sale process so as to allow the Debtors sufficient time to market their assets to other parties, Mr. Handelsman states. Furthermore, the Creditors Committee believes that: (a) there should be no stalking horse bidders; (b) there is no justification for the Break-Up Fee; and (c) the deposit requirements prescribed by the Bidding Procedures confer a substantial and unfair advantage to the Steering Committee. Accordingly, the Creditors Committee asks the Court to deny the Sale Motion. (4) Taxing Authorities The City of San Marcos, San Marcos C.I.S.D. and the City of Denton, in Texas, have filed secured priority tax claims against the Debtors for $23,850. As of January 1, 2005, a first priority lien attached to the Debtors' property to secure payment of all tax, penalty and interest imposed by Texas statute for 2005 taxes. In addition, the County of Comal, County of Denton, and County of Hays, in Texas, assert that the Debtors are delinquent in paying property taxes for the tax years 2002-2003, aggregating $15,035, as well as estimated taxes for the tax year 2005, amounting to $19,292. The laws of the State of Texas, Property Tax Code, Section 32.05(b), give the tax lien securing property taxes priority over any other claim or lien against these properties. These tax claims are entitled to priority as a secured claim, and over other secured claims, pursuant to Section 506 of the Bankruptcy Code. Unless unpaid taxes are satisfied or sufficient proceeds are segregated to secure the tax claims, the Taxing Authorities find it impossible for them to collect the prepetition taxes. The Taxing Authorities ask the Court to compel the Debtors to pay in full delinquent property taxes, penalties and interest from the proceeds of the sale, at the time of the closing of the sales transaction, prior to application of proceeds to other lien creditors. In the alternative, the Taxing Authorities ask the Court to compel the Debtors to segregate appropriate proceeds to pay taxes at the time of the sale closing. (5) Silver Sands Silver Sands Joint Venture Partners II leases to the Debtors certain retail space in a shopping center in Walton County, Florida. The Lease expires on April 30, 2008. The Bidding Procedures provide that, in the event that any bidder conditions its offer to purchase assets on the assumption of any unexpired leases of real estate and their assignment to the bidder, those leases must be identified in the bid package and the bidder must provide evidence of its ability to provide adequate assurance of future performance under those leases. All bids must be submitted by no later than May 23, 2005, and, if an auction is necessary, it will be held on June 7, 2005, in New York City. The date requested for the hearing on confirmation of the sale is June 15, 2005. Patrick E. Mears, Esq., at Barnes & Thornburg LLP, in Grand Rapids, Michigan, contends that the Sale Motion and Bidding Procedures prescribe an extremely short notice period to lessors: (a) advising them that the Debtors propose to assume and assign their leases to the successful bidder; and (b) specifying the Debtors' estimate of the applicable cure amounts. The Debtors propose that, sometime after the June 7 auction, the Debtors will file the Cure Schedule with the Court, which will then transmit that document to all affected lessors by first class mail. Any lessors objecting to the proposed assignment and assumption or to the proposed cure amount must file a written objection with the Court so that it is actually received "on or before the date that is five (5) business days after" the date on which the Cure Schedule is filed. Mr. Mears argues that the objection deadline is unreasonable. The Court should expand the objection deadline to at least 14 days. In addition, the Debtors should be required to transmit copies of the Cure Schedule directly to the affected lessors by Federal Express and to their counsel by Federal Express or by electronic means. (6) LeasePlan LeasePlan USA, Inc., the lessor of an assumed lease with the Debtors, asks the Court to deny the Sale Motion because: (a) the proposed sale could not satisfy the requirements of Section 363(f) of the Bankruptcy Code; (b) the Debtors do not propose a date by which to notify Non- Debtor Parties as to the Debtors' intention with their lease or executory contract; (c) the Debtors do not disclose how obligations under those leases and executory contracts that have been assumed during the course of their Chapter 11 case will be met by an as yet unidentified purchaser. Thus, Debtors have not provided and cannot provide adequate assurance of future performance under such leases and executory contracts; (d) the Debtors' proposed sale constitutes a sub rosa plan; (e) the Debtors make no assurances that the unknown purchaser will not attempt to "cherry pick" the components of any assumed leases; and (f) the Debtors do not provide adequate time for Non-Debtor Parties to object to the cure schedule. (7) D.A. Moore D.A. Moore Corporation holds an $89,775 claim against the Debtors, which is secured by a mechanic's lien on the Debtors' real property in North Carolina. The Sale Motion indicates that the First Lien Lenders and the Second Lien Lenders hold valid, perfected security interests in substantially all of the Debtors' assets and that the total amount of the lenders' combined claims is expected to substantially exceed the total purchase price for the Debtors' assets. However, D.A. Moore points out that the Sale Motion does not indicate what portion of the total purchase price is to be allocated to the Property. D.A. Moore objects to the proposed sale in the absence of any allocation of the purchase price, which would allow it to determine whether the price is fair and reasonable as it relates to the Property and also whether its interest in the Property has value. In addition, the proceeds of the sale of the Property should be segregated with valid preexisting liens attaching to the proceeds in the same priority as existed on the property at the time of the sale. (8) Aretex Aretex LLC holds approximately 40% of the First Lien Debt and approximately 52% of the Second Lien Debt. Aretex finds the Asset Purchase Agreement between the Debtors and New Textile Co., an entity acting on behalf of WL Ross & Co. LLC, as well as the Bidding Procedures fatally flawed. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal LLP, in New York, argues that the Sale Motion and Bidding Procedures should not be approved because: (a) The Wilbur Ross/Steering Committee bid fails to meet the standards necessary to be authorized as a stalking horse bid. Aretex has a higher and better bid, which values the assets being acquired at $800 million and provides a significant recovery for the Second Lien Lenders. In contrast, the Wilbur Ross/Steering Committee bid is materially lower in value -- somewhere between $550 million and $650 million -- and provides little or no value to the Second Lien Lenders; (b) The Wilbur Ross/Steering Committee bid constitutes a sub rosa plan that is dead on arrival. It improperly diverts to WLR and many administrative and priority creditors value that belongs to the Second Lien Lenders, and at the same time fails to assume the superpriority adequate protection claim of the Second Lien Lenders. Absent the Second Lien Lenders' consent, neither the APA nor the follow-on liquidating plan can be approved; (c) Given that there are at least two capable and qualified bidders interested in bidding for substantially all of the Debtors' assets, there is no justification to pay the Wilbur Ross/Steering Committee a break-up fee. Aretex is prepared to go forward with its bid without a break-up fee and with an expense reimbursement capped in all instances at $1 million in contrast to the proposed $3.5 million expense reimbursement in favor of Wilbur Ross/Steering Committee if Aretex's bid prevails; (d) Certain elements of the Bidding Procedures are unfairly skewed to discourage rival bids and transactions and need to be altered to provide for a level playing field. Among other things, bidders should not be compelled or pushed to assume substantially all of the Debtors' administrative expenses and priority claims. Bids which offer more value to the senior Second Lien Debt should be permitted; and (e) The Steering Committee has no authority to direct the First Lien Agent to credit bid and that provision must be struck in its entirety. It is outrageous that they are purporting to impair Aretex's 40% of the First Lien Debt without its consent. This effort is without precedent, has no basis in the law or the loan documents, and is essentially an effort by the Steering Committee to take Aretex's property without its consent in a manner that Aretex views as little more than common theft. As the largest creditor in the Debtors' Chapter 11 cases with aggregate first and second lien debt of $270 million, Aretex has the most at stake in maximizing value, Mr. Wolfson points out. Pursuant to Aretex's bid, the DIP financing and the First Lien Debt will be fully satisfied, with substantial value to the Second Lien Debt. Postpetition trade, current payroll and certain other critical administrative expenses necessary to preserve the value of the assets being acquired will also be assumed by Aretex. Based on discussions with the other large holders of the Second Lien Debt and the Second Lien Agent, Aretex believes that they agree in principle to support its bid. (9) PBGC The Pension Benefit Guaranty Corporation is a wholly owned United States government corporation and an agency of the United States that administers the defined benefit pension plan termination insurance program under Title IV of the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sections 1301-1461 (2000 & Supp. II 2002). The PBGC guarantees the payment of certain pension benefits upon the termination of a single-employer pension plan covered by Title IV of ERISA. When an underfunded plan terminates, the PBGC generally becomes trustee of the plan and, subject to certain statutory limitations, pays the plan's unfunded benefits with its insurance funds. Margaret E. Drake, Esq., relates that WestPoint Stevens, Inc., is the contributing sponsor of the WestPoint Stevens, Inc. Salaried Retirement Plan and the WestPoint Stevens, Inc. Hourly Retirement Plan within the meaning of 29 U.S.C. Section 1301(a)(13). The Pension Plans are single-employer defined benefit pension plans covered by Title IV of ERISA. The PBGC estimates that the Salaried Plan is underfunded on a termination basis for $148.8 million while the Hourly Plan is underfunded on a termination basis for $134.1 million. The Debtors and the Non-Debtors, Ms. Drake says, are jointly and severally liable to the Pension Plans for the contributions required under ERISA's minimum funding standard and to the PBGC for the Pension Plans' unfunded benefit liabilities. Ms. Drake points out that the Asset Purchase Agreement appears to provide for the transfer of the assets of Non-Debtors, as well assets of the Debtors. Furthermore, the Bidding Procedures do not distinguish among the assets of the Debtors and the assets of the Non-Debtors, or for allocating the proceeds of sale among the Debtors and the Non-Debtors. Including assets of Non-Debtors in the proposed sale, Ms. Drake avers, is outside the scope of Bankruptcy Code Section 363 of the Bankruptcy Code, which provides only for the sale of property of the estate. Moreover, use of the proceeds of the sale of those assets to fund the Debtors' reorganization may violate Section 548 of the Bankruptcy Code and applicable state law relating to fraudulent transfer and the Non-Debtors' obligations to their creditors. Accordingly, to provide for appropriate treatment of the assets of the Non-Debtors and the protection of the Non-Debtors' creditors, the PBGC asks the Court to compel the Debtors to: -- modify the bidding procedures to clearly identify the Non-Debtors' assets that are intended to be included in the sale; -- establish procedures to determine the fair market value of these assets; and -- require that the proceeds resulting from the sale of assets of Non-Debtors be segregated and preserved for their creditors. Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) WHITE BIRCH: S&P Puts B- Rating on $125 Million Second-Lien Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' senior secured debt rating, and '1' recovery rating to White Birch Co.'s proposed $275 million first-lien term loan B due 2012. Standard & Poor's also assigned its 'B-' senior secured debt rating and '3' recovery rating to White Birch's $125 million second-lien term loan C due 2013. Term loan ratings were assigned based on preliminary terms and conditions. At the same time, Standard & Poor's withdrew its 'B' rating on the company's previously proposed $400 million senior unsecured notes. All other ratings, including the 'B' corporate credit rating on White Birch, were affirmed. The outlook is positive. White Birch, a Nova Scotia unlimited liability company, will be indirectly owned 75% by Mr. Peter Brant, 12.5% by Mr. Aby Rosen, and 12.5% by Mr. Michael Fuchs and will acquire a 100% interest in each of the following companies: * Stadacona Inc. (B/Stable/--), * Bear Island Paper Co. LLC (B-/WatchPos/--), and * F.F. Soucy Inc. (not rated). All three companies will become direct or indirect subsidiaries of White Birch. The $400 million of expected term loan proceeds will be used to refinance debt at the acquired companies and buy out existing partners. "Bear Island Paper Co. ratings will remain on CreditWatch until the transaction is completed, at which time the ratings will be raised to the same level as White Birch and removed from CreditWatch," said Standard & Poor's credit analyst Dominick D'Ascoli. The outlook on Stadacona will be revised to positive from stable upon completion of the transaction. The ratings on White Birch reflect limited product diversity with a primary focus on the highly cyclical commodity newsprint market, and aggressive debt levels. These weaknesses are partially offset by the company's low cost position and high capacity utilization rates. The company produces newsprint (82% of 2004 pro forma revenues), directory paper (9%), paperboard (5%), and lumber (3%) on seven paper machines, one paperboard machine, and a sawmill located at three mills (one in the U.S. and two in Canada). Newsprint is the company's primary focus and area of expertise. WORLDGATE COMMS: Auditors Express Going Concern Doubt ----------------------------------------------------- WorldGate Communications, Inc.'s (Nasdaq: WGAT) auditors raised substantial doubt about the Company's ability to continue as a going concern because the Company had suffered recurring losses from operations and had a net accumulated deficiency of $220 million for the year ended Dec. 31, 2004. As of December 31, 2004, the Company had cash and cash equivalents of $11,840. The operating cash usage from continuing operations for the twelve months ended December 31, 2004 was $7,084. About the Company WorldGate Communications, Inc. -- http://www.wgate.com/-- is in the business of developing, manufacturing and distributing video phones for personal and business use, to be marketed with the Ojo brand name. The Ojo video phone is designed to conform with industry standard protocols, and utilizes proprietary enhancements to the latest technology for voice and video compression to deliver quality, real-time video images that are synchronized with the accompanying sounds. Ojo video phones are designed to operate on the high-speed data infrastructures of cable and DSL providers. WorldGate has applied for patent protection for its unique technology and techno-futuristic design that contribute to the functionality and consumer appeal offered by the Ojo video phone. WorldGate believes that this unique combination of design, technology and availability of broadband networks allow for real- life video communication experiences that were not economically or technically viable a short time ago. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. PCSA (94) 299 86 Akamai Tech. AKAM (126) 183 62 Alaska Comm. Syst. ALSK (12) 650 84 Alliance Imaging AIQ (41) 654 36 Amazon.com AMZN (227) 3,248 919 AMR Corp. AMR (581) 28,773 (2,047) Amylin Pharm. Inc. AMLN (87) 358 282 Arbinet-Thexchan. ARBX (1) 70 11 Atherogenics Inc. AGIX (19) 93 77 Blount International BLT (282) 423 103 CableVision System CVC (1,944) 11,393 248 CCC Information CCCG (131) 80 (8) Cell Therapeutic CTIC (52) 174 87 Centennial Comm CYCL (516) 1,608 168 Choice Hotels CHH (203) 262 (32) Cincinnati Bell CBB (600) 1,987 (20) Clorox Co. CLX (457) 3,710 (422) Compass Minerals CMP (109) 642 99 Conjuchem Inc. CJC (35) 19 13 Cotherix Inc. CTRX (44) 25 20 Cubist Pharmacy CBST (75) 155 (6) Delta Air Lines DAL (5,519) 21,801 (2,335) Deluxe Corp DLX (179) 1,533 (337) Denny's Corporation DNYY (246) 730 (80) Dollar Financial DLLR (47) 335 82 Domino's Pizza DPZ (575) 421 (16) Eagle Hospitality EHP (26) 178 N.A. Echostar Comm-A DISH (2,078) 6,029 (41) Empire Resorts NYNY (13) 61 7 Fairpoint Comm. FRP (162) 831 (36) Foster Wheeler FWHLF (441) 2,268 (212) Foxhollow Tech. FOXH (60) 28 16 Graftech International GTI (44) 1,036 284 Hawaiian Holding HA (160) 236 (60) I2 Technologies ITWH (180) 385 85 IMAX Corp IMX (42) 230 17 Int'l Wire Group ITWG (80) 410 97 Isis Pharm. ISIS (18) 255 116 Life Sciences LSRI (5) 173 1 Lodgenet Entertainment LNET (68) 301 20 Majesco Holdings MJES (41) 26 9 Maxxam Inc. MXM (649) 1,017 72 Maytag Corp. MYG (75) 3,020 535 McDermott Int'l MDR (338) 1,245 (33) McMoran Exploration MMR (85) 156 29 New York & Co. NWY (14) 280 43 Northwest Airline NWAC (2,824) 14,042 (919) Northwestern Corp. NWEC (603) 2,445 (692) ON Semiconductor ONNN (381) 1,110 215 Pegasus Comm PGTV (203) 235 52 Per-se Tech. Inc. PSTI (25) 169 31 Phosphate Res. PLP (484) 280 6 Pinnacle Airline PNCL (18) 147 26 Primedia Inc. PRM (1,163) 1,577 (203) Protection One PONN (177) 461 (372) Quality Distribution QLTY (26) 377 9 Qwest Communication Q (2,612) 24,324 (68) SBA Comm. Corp. SBAC (27) 915 11 Sepracor Inc. SEPR (331) 1,039 636 St. John Knits Inc. SJKI (57) 208 73 Syntroleum Corp. SYNM (8) 48 11 US Unwired Inc. UNWR (263) 640 (335) U-Store-It Trust YSI (34) 536 N.A. Valence Tech VLNC (43) 16 1 Vector Group Ltd. VGR (48) 528 110 Vertrue Inc. VTRU (33) 486 31 WR Grace & Co. GRA (118) 3,087 774 Young Broadcasting YBTVA (12) 798 85 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. 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