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/raid1/www/Hosts/bankrupt/TCR_Public/050408.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, April 8, 2005, Vol. 9, No. 82 Headlines 2340 W. WABANSIA: Case Summary & 20 Largest Unsecured Creditors ACANDS INC: U.S. Trustee Amends Unsecured Creditors Committee ACANDS INC: Gets Court Okay to File Chapter 11 Plan Until June 20 ADVANSTAR COMMUNICATIONS: Weak Cash Flow Cues S&P to Watch Ratings AMERICAN REAL: Subsidiary Closes $180 Million TransTexas Merger ARMSTRONG WORLD: Wants Exclusive Right to File Plan Until Sept. 5 ATA AIRLINES: Discloses Status of 82-Aircraft Fleet BIO-RAD LAB: Inks Pact to Buy BioSource Stock for $8.50 per Share CAESARS ENT: Releasing First Quarter Financial Results on Apr. 21 CANDESCENT TECHNOLOGIES: Files First Amended Chapter 11 Plan CART INC: Inks $2 Million Settlement with International Speedway CATHOLIC CHURCH: 30 Claimants Wants Tucson's Disclosure Rejected CATHOLIC CHURCH: A. Bates Balks at Tucson's Disclosure Statement CHAPCO CARTON: Court Converts Case to Chapter 7 Liquidation CHASE COMMERCIAL: Fitch Puts Low-B Ratings on Four Cert. Classes CINCINNATI BELL: Annual Shareholders Meeting Slated for Apr. 29 CINCINNATI BELL: Appoints G. Cornett Sits & K. Freyberger as VPs CINDY L. SIMPUKAS: Case Summary & 12 Largest Unsecured Creditors CITATION CORP: Court Approves Amended Disclosure Statement CP PROPERTIES: Voluntary Chapter 11 Case Summary DAIRY BLOWMOLDING: Case Summary & 20 Largest Unsecured Creditors DARLENE MATHIS: Voluntary Chapter 11 Case Summary DB COS: Committee Can Object to Insider Claims & Pursue Actions DEVON MOBILE: Trustee Has Until September 26 to Object to Claims ENRON CORP: Ends PGE Sale to Texas Pacific & Will Distribute Stock FEDERAL-MOGUL: Relocating St. Johns' Operation to Mexico FORMAL FASHIONS: Case Summary & 20 Largest Unsecured Creditors GENERAL GROWTH: Fitch Assigns Low-B Ratings on Five Debts GENEVA STEEL: Mabey & Murray Replaces LeBoeuf as Local Counsel INTERPLAY ENT: Rose Snyder Replaces Squar Milner as Auditors INTERPUBLIC GROUP: Fitch Puts Bank Loan's B+ Rating on Watch Neg. INTERSTATE BAKERIES: Gets Court Nod to Reject 19 Leases IRVING TANNING: Bernstein Shur Approved as Bankruptcy Counsel IRVING TANNING: Look for Bankruptcy Schedules on May 2 ISTAR FINANCIAL: Moody's Upgrades Sr. Unsec. Notes' Rating to Baa3 HARRAH'S ENT: Anticipates $0.95 to $0.99 1st Quarter Adjusted EPS HOLLYWOOD ENT: Amends Sr. Debt Tender Offer & Consent Solicitation L.A. Graphics: Case Summary & 20 Largest Unsecured Creditors LAIDLAW INT'L: Cash Tender Offer for $202 Million Notes Expires LAIDLAW INT'L: Earns $236.2 Million of Net Income in 2nd Quarter LEHMAN BROTHERS: Fitch Rates $25.1 Million Mortgage Trust at BB- LIFEPOINT HOSPITALS: Moody's Affirms $1.55MM Facility's Ba3 Rating MAPCO EXPRESS: S&P Puts B+ Rating on $205M Senior Secured Loan MAULDIN INVESTMENTS: Case Summary & 2 Largest Unsecured Creditors MERRILL LYNCH: Fitch Upgrades Class B-2 upgraded to BBB from BB+ METRIS MASTER: Fitch Rates $44.35 Million Secured Notes at BB+ MICHAEL & DEBORAH CASH: Voluntary Chapter 11 Case Summary MIRANT CORP: Court Limits Document Discovery on MAGi Committee MIRANT CORP: Southern Co. Objects to Valuation Findings' Effect MOLECULAR DIAGNOSTICS: Can't File Annual Report on Time MONROE CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors MONTGOMERY BUILDING: Case Summary & 9 Largest Unsecured Creditors MOSLER INC: Court Extends Plan Trustee's Claim Objection Period MOUNT SINAI: Fitch Ups Revenue Bonds' Rating Two Notches to BB+ MOUNT SINAI: Good Financial Performance Cues S&P to Lift Ratings MUELLER GROUP: Cures Default By Filing Delayed Financial Reports MUELLER WATER: Moody's Confirms B2 Senior Implied Rating NATIONAL WATERWORKS: Parent's $400M IPO Cues S&P to Watch Ratings NATURADE INC: Independent Accountants Raise Going Concern Doubts NETEXIT INC: Pa. Wants Ch. 11 Plan Denied Until Returns Are Filed NOMURA ASSET: Fitch Assigns Low-B Ratings on B-2 & B-3 Classes NRG ENERGY: Appoints Anne Schaumburg to Board of Directors OAKWOOD HOMES: Trust & Wachovia Agree to Reduce Cash Mgt. Reserve OWENS CORNING: Inks Severance Agreement with Senior VP for HR PACIFIC GAS: City of Palo Alto Agrees to Dismiss Appeal PARAGON TRADE: Court Awards $457.9M Damages Against Weyerhaeuser PARAGON TRADE: Weyerhaeuser Will Appeal Bankruptcy Court Decision PARMALAT USA: Court OKs Pact Resolving Wells Fargo Lease Disputes PEGASUS COMMS: Reporting Delay Triggers Nasdaq Delisting Process QWEST COMMS: Names Thomas Richards as Executive Vice President ROGERS & SON: Court Converts Chapter 11 Case to Ch. 7 Liquidation ROGERS & SONS: Trustee Wants David R. Fischbein as Accountant SALEM COMMS: Completes Radio Station Exchange with Univision SALEM COMMS: Inks Pact to Acquire Radio Station for $900,000 SENETEK PLC: Terminates Merger Talks with IGI, Inc. SHAW GROUP: Likely Stock Sale Prompts S&P to Watch Low-B Ratings SL COMMERCIAL: Fitch Puts BB+ Rating on $20.3 Mil. Mortgage Certs. SOLUTIA INC: Appoints J.P. Wright & J. R. Voss as Senior VPs SOLUTIA INC: Discovery in FMC Corp. Litigation to End May 31 SPANCRETE OF FLORIDA: Case Summary & 20 Largest Unsecured Cred. SPIEGEL INC: Can Conduct Eddie Bauer Store Closing Sale TELTRONICS INC: Dec. 31 Balance Sheet Upside-Down by $6 Million TIAA CMBS: Fitch Upgrades Low-B Ratings of Three Cert. Classes TOMS FOODS: Voluntary Chapter 11 Case Summary TORCH OFFSHORE: Selling Vessels to Cal Dive for $92 Million TOWER AUTOMOTIVE: Moody's Assigns Low-B Ratings on $725M Debts UNION ACCEPTANCE: Inks Share Exchange Pact with White River UNITED AIRLINES: Inks Transition Plan Agreement with Air Wisconsin US AIRWAYS: U.S. Bank Slams NOL Trading Protocol Due to Ambiguity US AIRWAYS: Wants to Assume Insurance Agreements WARWICK VALLEY: Encounters Further Delay in Form 10-K Filing W.R. GRACE: Asbestos Comm. Taps Anderson Kill as Insurance Counsel WESTLAKE CHEMICAL: Names Joseph Nassif as VP-Corporate Purchasing * Clear Thinking Forms Bankruptcy Claims Administration Unit * Sheppard Mullin Adds David Sunkin to Los Angeles Office * BOOK REVIEW: Japanese Takeovers: The Global Contest ********* 2340 W. WABANSIA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: 2340 W. Wabansia, L.L.C. 545 West Aldine Chicago, Illinois 60657 Bankruptcy Case No.: 05-13188 Type of Business: Real Estate Chapter 11 Petition Date: April 7, 2005 Court: Northern District of Illinois (Chicago) Judge: John H. Squires Debtor's Counsel: Linda M Kujaca, Esq. Cohen & Krol 105 West Madison Chicago, Illinois 60602 Tel: (312) -368-0300 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 ------ --------------- ------------ First Bank & Trust Company $9,600,000 300 East Northwest Highway Palatine, IL 60067 Royal Builders II, Inc. $60,084 300 6th Street Wheeling, IL 600902808 Granite Innovations, Inc. $43,000 1420 West Hubbard Chicago, IL 60622 Tralmer Construction $39,273 P.O. Box 764 Morton Grove, IL 60053 Windy City Iron Works $28,270 1334 North Kostner Chicago, IL 60651 Arkay HVAC $11,990 14401 South Halsted Harvey, IL 60426 Architectural Sealants, Inc. $2,035 6525 West Steger Road Monee, IL 60449 Alan Freeman Unknown 900 North Michigan Avenue Chicago, IL 60610 Anthony & Lisa Madonia Notice only Unknown 2340 West Wabansia #G Chicago, IL 606475302 Architectural Sealants, Inc. Notice Only Unknown c/o Corporation Agents, Inc. 611 South Milwaukee P.O. Box 400 Libertyville, IL 60048 Bruce Freeman Unknown 225 West Goethe Street Chicago, IL 60610 Charles Russell Notice only Unknown 2340 West Wabansia #E Chicago, IL 606475302 Chicago Title & Trust Company Unknown 191 North Clark Street Chicago, IL 60601 City of Chicago Unknown 121 North LaSalle Street Chicago, IL 60602 Duane Palmer & Rob Rohland Notice only Unknown 2340 West Wabansia #D Chicago, IL 606475302 Glen Missnner Notice only Unknown 2340 West Wabansia #D2 Chicago, IL 606475302 Greater Illinois Title Unknown 2146 South Mannheim Road Westchester, IL 60154 James & Monica Sofranko Notice only Unknown 2340 West Wabansia #E West Chicago, IL 606475302 John Flannery Notice only Unknown 2340 West Wabansia #C Chicago, IL 606475302 Laura & Jeffery Swetow Notice only Unknown 2340 West Wabansia #F Chicago, IL 606475302 ACANDS INC: U.S. Trustee Amends Unsecured Creditors Committee ------------------------------------------------------------- The United States Trustee for Region 3 amended the membership of the Official Committee of Unsecured Creditors in ACandS, Inc., and its debtor-affiliates' chapter 11 cases. The nine current committee members are: 1. Terry Crawford Attn: Pamela Wise, Esq. Wise and Julian, P.C. 3555 College Avenue Alton, Illinois 62002 Tel: 877-456-3549, Fax: 608-462-2622 2. Augustus L. Lester Attn: Paul M. Matheny, Esq. Peter G. Angelos, P.C. 5905 Harford Road Baltimore, Maryland 21214 Tel: 410-426-3200, Fax: 410-426-6166 3. Steven Policastro Attn: Deirdre Woulfe Pacheco, Esq. Wilentz, Goldmann and Spitzer 90 Woodbridge Road, Suite 900 Box 10 Woodbridge, New Jersey 07095 Tel: 732-855-6189, Fax: 732-2756 4. Vivian Indiviglio Attn: Sanders McNew, Esq. Weitz and Luxenberg 180 Maiden Lane, 17th Floor New York, New York 10078 Tel: 212-558-5500, Fax: 212-344-5461 5. Charisse Dahlke Attn: Matthew Bergman, Esq. Senn Pageler and Frockt P.O. Box 2010 Vashon, Washington 98070 Tel: 206-463-4408, Fax: 206-463-4470 6. Gerald Krussell Attn: Rhonda K. Cleaves, Esq. Waters and Kraus, LLP 3129 McKinney Avenue, Suite 3000 Dallas, Texas 75204 Tel: 214-357-6244, Fax: 214-357-7252 7. Marjorie Havens Attn: Bryan O. Blevins, Jr., Esq. Provost and Umphrey 490 Park Street Beaumont, Texas 77704 Tel: 409-835-6000, Fax: 409-838-8888 8. Bernita Jensen Attn: Steven Kazan, Esq. Kazan, McClain, Edises, Abrams, Fernandez, Lyons and Farrise 171 Twelfth Street, Third Floor Oakland, California Tel: 510-465-7728, Fax: 510-835-4913 9. Ulysses Allen Attn: John D. Cooney, Esq. Cooney and Conway 120 North LaSalle Street, 30th Floor Chicago, Illinois 60602 Tel: 312-236-6166, Fax: 312-236-3029 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on September 16, 2002, (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million. ACANDS INC: Gets Court Okay to File Chapter 11 Plan Until June 20 ----------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankrutpcy Court for the District of Delaware gave ACandS, Inc., and its debtor- affiliates more time to file a plan of reorganization and solicit acceptances of that plan from creditors. ACandS told Judge Fitzgerald that it needs more time to negotiate an acceptable plan and to prepare adequate financial and non- financial information for disclosure to creditors. ACandS has until June 20, 2005, to formulate a viable plan and has until August 24, 2005, to solicit acceptances of that plan. Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on September 16, 2002, (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million. ADVANSTAR COMMUNICATIONS: Weak Cash Flow Cues S&P to Watch Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Advanstar Communications Inc. to negative from stable. At the same time, Standard & Poor's affirmed its existing ratings on the company, including its 'B' corporate credit rating. The Duluth, Minnesota-based business-to-business media firm, which is analyzed on a consolidated basis with its parent company, Advanstar Inc., had $753 million in consolidated debt on Dec. 31, 2004. The outlook change follows Advanstar's announcement that it is selling its trade show, publishing, and other businesses serving five sectors. Gross proceeds for these assets, which produced about 27% of the company's revenue, will total $185 million. Advanstar has not specified for what the proceeds will be used, which creates some concern. "Barring a substantial debt reduction, the lost profit from the sold assets will weaken the company's already marginal total interest coverage, modest discretionary cash flow, and high debt leverage," said Standard & Poor's credit analyst Steve Wilkinson. In addition, using the excess liquidity from the sale for acquisitions may not improve the company's business or financial profile from that which existed prior to the asset sales. The company will retain most of its best-positioned and strongest performing units, including its fashion and automotive power sports divisions, while jettisoning underperforming and smaller units such as technology and travel. Even so, the asset sale will reduce the company's sector diversity somewhat, which, along with significant cost reductions and some acquisitions, helped Advanstar perform better than many peers during the difficult industry operating conditions over the past few years. The company's significant reliance on its MAGIC men's fashion events, which represented about one-third of its EBITDA before corporate expenses in 2004, will increase following the sale. The negative outlook reflects concern about Advanstar's high leverage and weak discretionary cash flow in light of the pending asset sales and rising cash interest costs. Ratings could be lowered if leverage remains elevated over the near to intermediate term, especially if expensive acquisitions and discretionary cash flow deficits begin to erode the company's excess cash cushion. Conversely, ratings stability could be restored if Advanstar can reduce leverage to 8x or lower, and if it can demonstrate the ability to generate and sustain positive discretionary cash flow. AMERICAN REAL: Subsidiary Closes $180 Million TransTexas Merger --------------------------------------------------------------- American Real Estate Partners, L.P. (NYSE: ACP) disclosed the closing of the previously announced merger of TransTexas Gas Corporation with and into National Onshore LP, an indirect wholly owned subsidiary of AREP, on April 6, 2005, at a price of $180 million in cash. TransTexas is engaged in the exploration, production and transmission of oil and gas, primarily in South Texas, including the Eagle Bay field in Galveston Bay and the Southwest Bonus field in Wharton County. About American Real Estate American Real Estate Partners, L.P. -- http://www.areplp.com/-- a Delaware master limited partnership, is a diversified holding company engaged in a variety of businesses including real estate, gaming and entertainment, and oil and gas. AREP's real estate businesses include our rental real estate operations which consist primarily of retail, office and industrial properties leased to single-corporate tenants and its residential home development operations which focus primarily on the construction and sale of single-family homes, custom-built homes, multi-family homes and residential lots in subdivisions and in planned communities. AREP's primary gaming and entertainment assets consist of its ownership of Stratosphere Hotel Casino & Tower, Arizona Charlie's Decatur and Arizona Charlie's Boulder in Las Vegas. AREP's oil and gas operations currently consist of National Onshore LP and a 50.01% interest in National Energy Group, Inc. AREP's primary business strategy is to continue to grow its core businesses. In addition, AREP seeks to acquire undervalued assets and companies that are distressed or in out of favor industries. * * * As reported in the Troubled Company Reporter on Jan. 26, 2005, Moody's Investors Service affirmed its Ba2 senior unsecured ratings on American Real Estate Partners, L.P. -- AREP -- with a stable outlook. AREP is a master limited partnership that has publicly traded depositary units (NYSE: ACP). AREP's general partner is American Property Investors, Inc., which is a wholly owned subsidiary of Becton Corp., which is owned by Carl Icahn. Affiliates of Carl Icahn own approximately 86.5% of the outstanding depositary units of AREP, and 86.5% of the firm's cumulative pay-in-kind preferred units. ARMSTRONG WORLD: Wants Exclusive Right to File Plan Until Sept. 5 ----------------------------------------------------------------- On February 23, 2005, Judge Robreno of the U.S. District Court for the District of Delaware issued a decision and final order denying the confirmation of Armstrong World Industries, Inc.'s Fourth Amended Plan, on the sole basis that the determination by the U.S. District Court for the District of Delaware that the issuance of the "Warrants" to AWI's equity holder violated Section 1129(b) of the Bankruptcy Code. AWI has filed notices of appeal from the decision and order with the United States Court of Appeals for the Third Circuit. AWI has asked the Third Circuit to expedite the consideration of its Appeal. Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells Judge Fitzgerald that even if AWI is successful, the District Court may decide to rule on the other confirmation objections raised by the Official Committee of Unsecured Creditors, which the District Court did not decide originally. Accordingly, whether the Plan ultimately will be determined to be confirmable or whether AWI will be required to seek confirmation of an alternative plan remains uncertain. "The Committee's last minute abandonment of its prior commitment and the District Court's denial of confirmation were unexpected and unanticipated," Ms. Booth says. "While AWI pursues its right to seek appellate review of the Order, it is only fair and logical to maintain the status quo. This is particularly appropriate where AWI achieved a consensus with respect to a plan as contemplated by Chapter 11 but where, through no fault of its own, was unable to bring it to consummation." According to Ms. Booth, no one can dispute that AWI has acted in good faith throughout its Chapter 11 case and that, until the issuance the Order, had made unprecedented progress in furtherance of the reorganization process and the agreement that had been reached among all of its constituencies -- despite a number of unexpected circumstances that occurred along the way. Moreover, AWI has reached a global settlement of its ability for asbestos property damage and has recently entered into a settlement agreement with the United States Environmental Protection Agency, which resolves AWI's environmental liabilities at over 19 sites in various states at which the EPA has alleged AWI might be a potentially responsible party. At this stage, Ms. Booth says an extension of the deadline within which the Debtors have the exclusive right to file a plan of reorganization and solicit acceptances of that plan is warranted. Ms. Booth explains that the filing of competing plans of reorganization by other parties-in-interest necessarily will result in full-blown litigation among the parties, with the potential to disrupt AWI's business, as well as deplete estate resources, but with no assurance that AWI would emerge from Chapter 11 any more expeditiously. Therefore, pursuant to Section 1121(d) of the Bankruptcy Code, the Debtors ask the Court to further extend their Exclusive Plan Proposal Period through and including September 5, 2005, and their Exclusive Solicitation Period through and including November 7, 2005, without prejudice to the Debtors' right to seek additional extensions. The Debtors believe that an extension of the Exclusive Periods will provide the Debtors with the opportunity to pursue an appeal of the District Court's order while continuing to work with all parties to attempt to achieve a consensual resolution of the disputes among them. An extension will neither prejudice nor put pressure on any party-in-interest. Ms. Booth maintains that the termination of the Exclusive Periods at this stage of the Chapter 11 cases, or alternatively, the grant of only a short extension of the Exclusive Periods, would directly contravene the spirit and purpose of the development, formulation, confirmation and consummation of a consensual plan of reorganization. With the status of the Plan still uncertain, the termination of the Exclusive Periods would almost certainly lead to full blown litigation and limit the opportunity to attempt to re-forge a consensus among AWI's constituents. The Court will convene a hearing on April 25, 2005, to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' Exclusive Periods is automatically extended until the Court rules on the request. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Discloses Status of 82-Aircraft Fleet --------------------------------------------------- As of December 31, 2004, ATA Airlines, Inc., and Chicago Express Airlines, Inc., were certified to operate a fleet of 82 aircraft: Lockheed L-1011-100 1 Lockheed L-1011-500 4 Boeing 737-800 33 Boeing 757-200 15 Boeing 757-300 12 SAAB 340B 17 ------- TOTAL 82 ======= The Debtors' right to retain and operate certain aircraft, aircraft engines and other equipment defined in Section 1110 of the Bankruptcy Code that are leased or subject to a security interest or conditional sale contract are specifically governed by Section 1110 of the Bankruptcy Code. Section 1110 provides, in relevant part, that unless the Debtors, prior to 60 days after the Petition Date, agree to perform all obligations under the lease, security agreement, or conditional sale contract and cure all defaults thereunder -- other than defaults constituting a breach of provisions relating to the filing of the Chapter 11 cases, the Debtors' insolvency or other financial condition of the Debtors -- within the time specified in Section 1110, the right of the lessor, secured party or conditional vendor to take possession of the equipment in compliance with the provisions of the lease, security agreement, or conditional sale contract and to enforce any of its other rights or remedies under the lease, security agreement, or conditional sale contract is not limited or otherwise affected by the automatic stay, by any other provision of the Bankruptcy Code, or by any power of the Bankruptcy Court. The Section 1110 deadline for the Debtors was December 26, 2004. J. George Mikelsons, Chairman and Chief Executive Officer of ATA Holdings Corp., reports in a filing with the Securities and Exchange Commission that ATA, at December 31, 2004, operated the 82 aircraft, including 76 aircraft that were financed with operating leases. As of March 25, 2005, with regards to the 76 leased aircraft, ATA has returned 22 of these aircraft and related engines to the lessor. ATA expects to return 28 additional aircraft and related engines to the lessor between March 31, 2005, and January 25, 2006. The Company has renegotiated long-term rates on 10 aircraft and related engines. ATA has elected to cure existing defaults and is paying the contract rates required under the Bankruptcy Code with respect to 16 aircraft and related engines. ATA is also in the process of "regauging" its fleet to meet with its evolving revised business plan. Prior to the Petition Date, ATA's fleet consisted of 65 jet aircraft of five types. ATA expects to reduce the overall size of the fleet by at least one- third by rejecting non-economic leases and obtaining new leases of more appropriately sized aircraft on more favorable economic terms. 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) BIO-RAD LAB: Inks Pact to Buy BioSource Stock for $8.50 per Share ----------------------------------------------------------------- Bio-Rad Laboratories, Inc. (Amex: BIO and BIOB) made a proposal to BioSource International, Inc. (Nasdaq: BIOI) to acquire all of its outstanding shares for $8.50 per share in cash. Bio-Rad already owns close to 5% of the outstanding shares of BioSource. Norman Schwartz, Bio-Rad's President and Chief Executive Officer, noted that "Our offer represents a 21% premium to BioSource's closing price on April 5, 2005, and a 30% premium to its three- year average closing price. We believe this provides an attractive premium and enhanced liquidity for BioSource shareholders." Based on April 5th's closing price, BioSource was valued at approximately $68 million, while the proposal on April 6 values BioSource at over $82 million. Bio-Rad made its proposal in the form of a letter to the BioSource board. In the letter, Bio-Rad stated that it has made repeated attempts over the last two years, including most recently this Monday, to persuade the BioSource board to enter into negotiations regarding a merger and that each of these attempts was rebuffed by the BioSource board of directors. Brad Crutchfield, Bio-Rad's Vice President of Life Sciences, said, "The synergies offered by the combination of the product lines and research capabilities of Bio-Rad and BioSource make this an attractive match and will enable us to add value to the BioSource business." "We anticipate retaining the vast majority of BioSource's current employees," Mr. Crutchfield added. "BioSource would operate as a 'center of excellence' within our company, an approach we've successfully applied to allow acquired companies to continue focusing on their core mission while drawing on Bio-Rad's resources." "In short," Mr. Schwartz said, "This combination will be good for the customers, employees and shareholders of both companies." In recent years Bio-Rad has integrated several acquisitions in the areas of blood virus, food safety, process chromatography and gene expression. About the Company Bio-Rad Laboratories, Inc. -- http://www.Bio-Rad.com/-- is a multinational manufacturer and distributor of life science research products and clinical diagnostics. It is based in Hercules, California, and serves more than 70,000 research and industry customers worldwide through a network of more than 30 wholly owned subsidiary offices. * * * As reported in the Troubled Company Reporter on Dec. 15, 2004, Moody's Investors Service assigned a rating of Ba3 to Bio-Rad Laboratories' $200 million senior unsecured subordinated notes, due 2014. The ratings outlook has been changed to stable from positive. New ratings assigned: * Bio Rad Laboratories $200 million Senior Unsecured Subordinated Notes, due 2014, rated Ba3 Ratings affirmed: * Bio Rad Laboratories Senior Implied Rating, Ba2 * Bio Rad Laboratories Senior Unsecured Rating, Ba2 * Bio Rad Laboratories $225 million Senior Unsecured Subordinated Notes, due 2013, Ba3 CAESARS ENT: Releasing First Quarter Financial Results on Apr. 21 ----------------------------------------------------------------- Caesars Entertainment, Inc. (NYSE:CZR) will release financial results for the first quarter of 2005 at 5 a.m. PDT (8 a.m. EDT) on Thursday, April 21, 2005. Investors with questions regarding first quarter financial results should direct them to Josh Hirsberg, Vice President, Treasurer and Investor Relations, at 702.699.5269. The company will not host a conference call to discuss its first quarter results. About the Company Caesars Entertainment, Inc. (NYSE: CZR) is one of the world's leading gaming companies. With $4.2 billion in annual net revenue, 26 properties on three continents, nearly 26,000 hotel rooms, two million square feet of casino space and 50,000 employees, the Caesars portfolio is among the strongest in the industry. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The company has its corporate headquarters in Las Vegas. The company's Board of Directors in July 2004 accepted an offer from Harrah's Entertainment, Inc., to acquire the company for approximately $1.9 billion in cash and 67.7 million shares of Harrah's common stock. Shareholders of both companies approved the merger in separate meetings on March 11. The transaction is contingent on approval by federal and state regulatory agencies and is expected to close in the second quarter of 2005. * * * 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-'. CANDESCENT TECHNOLOGIES: Files First Amended Chapter 11 Plan ------------------------------------------------------------ Candescent Technologies Corp. and Candescent Technologies International, Ltd., a Bermuda company and Corp's wholly owned subsidiary, delivered their Joint First Amended Liquidating Plan of Reorganization to the U.S. Bankruptcy Court for the Northern District of California on March 21, 2005. Terms of the Amended Plan The Plan proposes to monetize the Debtors' assets. A liquidating Trustee will be appointed on the Plan's Effective Date to oversee the liquidation of the assets and distribution of proceeds to creditors. To complete the Liquidation, the Debtors will seek confirmation of the Plan from the U.S. Court and will then ask the Bermudan Court to sanction a parallel scheme of arrangement. Assets for Distribution On the Plan's effective date, the Debtors' $15 million of cash, less $2 million of reserves for implementation of the Plan and other expenses to be incurred after confirmation, will be used to pay holders of administrative expense claims, secured claims, tax claims, non-tax priority claims, and general unsecured claims. After completion of the claims process and resolution of any claims owned by either Debtor, if any funds remain, the Debtors will make a further, final payment (projected at approximately $1.5 million) of any remaining amounts of the Candescent reserves to general unsecured creditors. Creditor Recoveries Administrative expenses, tax and other priority claims, and secured claims will be paid in full. Holders of allowed general unsecured claims against Candescent-U.S are expected to receive approximately 0.8% of their claims. Holders of allowed general unsecured claims against Candescent- International are expected to receive approximately 3.24% of their claims. Equity security holders will receive nothing. Inter-Company Claims Candescent-U.S. will pay Candescent-International $7,694,000 from the proceeds of the sale to Canon Inc. of substantially all assets. Unpaid administrative expenses of both Debtors and both Debtors' expenses incurred after the Plan's effective date are to be paid 25% by Candescent-U.S. and 75% by Candescent- International. Bermuda's Plan of Arrangement Process Under the provisions of the Companies Act 1981 under Bermudan law, the Bermudan court can sanction a compromise or arrangement between a Bermudan company and its creditors pursuant to a "scheme of arrangement." Prior to sanctioning a scheme of arrangement, the Bermudan court must convene a meeting of Candescent- International's creditors and a majority in number, representing 75% in value, of the creditors attending and voting at the meeting must vote in favor of the scheme of arrangement. If creditor approval is obtained, the Bermudan court can then sanction the scheme of arrangement, and once a copy of the Bermuda court's order has been filed with the registrar of Companies in Bermuda, the scheme of arrangement is binding on all creditors of the Candescent-International. Full-text copies of the Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=050407223011 Full-text copies of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050407223417 Headquartered in Los Gatos, California, Candescent Technologies Corp. -- http://www.candescent.com/-- is a supplier of flat panel displays for notebook computers, communications and consumer products. The Company filed for chapter 11 protection on June 16, 2004 (Bankr. N.D. Calif. Case No. 04-53803). Ramon Naguiat, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represents the Debtors in their restructuring efforts. When the Company filed for protection from creditors, it reported debts and assets of over $100 million each. CART INC: Inks $2 Million Settlement with International Speedway ---------------------------------------------------------------- International Speedway Corporation (Nasdaq: ISCA)(OTC Bulletin Board: ISCB) reached settlement with the CART Liquidation Trust that allows a claim in ISC's favor of $2 million in CART Inc.'s bankruptcy. The claim is based on the failure to return ISC's sanction fee paid to CART, less allowable expenses, for the 2003 event scheduled in California that was canceled because of the state of emergency due to wildfires in Southern California at the time. Once the U.S. Bankruptcy Court, Southern District of Indiana, has approved the good faith settlement at a hearing scheduled for mid- April, the Company will be positioned to recover the first $1.5 million of the claim. If there are not sufficient funds remaining in the Trust to fully satisfy the allowed claim of $2 million, the Company will pursue the remaining funds, or up to $500,000, from Champ Car World Series (formerly Open Wheel Racing Series), as represented and agreed to at the CART bankruptcy hearing held in January 2004. About International Speedway International Speedway Corporation is a leading promoter of motorsports activities in the United States, currently promoting more than 100 events annually. The Company owns and/or operates 11 of the nation's major motorsports facilities, including Daytona International Speedway in Florida (home of the Daytona 500); Talladega Superspeedway in Alabama; Michigan International Speedway located outside Detroit; Richmond International Raceway in Virginia; California Speedway near Los Angeles; Kansas Speedway in Kansas City, Kansas; Phoenix International Raceway in Arizona; Homestead-Miami Speedway in Florida; Martinsville Speedway in Virginia; Darlington Raceway in South Carolina; and Watkins Glen International in New York. Other track ownership includes an indirect 37.5% interest in Raceway Associates, LLC, which owns and operates Chicagoland Speedway and Route 66 Raceway near Chicago, Illinois. About CART Inc. CART, Inc., a subsidiary of Championship Auto Racing Teams, Inc., filed a petition under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Indiana on Dec. 16, 2003 (Bankr. S.D. Ind. Case No. 03-23385). CART, Inc., continues to operate as debtor-in-possession under the Bankruptcy Code in order to wind up its affairs. On August 3, 2004, CART filed CART's Amended Chapter 11 Plan and the Second Amended Disclosure Statement For Amended Chapter 11 Plan of CART, Inc., with the Bankruptcy Court. The Plan provides for the distribution of the asset sale proceeds and other currently available cash and the liquidation and distribution of the remaining estate assets to CART, Inc.'s creditors. The Disclosure Statement was approved as containing adequate information by the Bankruptcy Court on August 3, 2004. The Plan was confirmed on Sept. 23, 2004. CATHOLIC CHURCH: 30 Claimants Wants Tucson's Disclosure Rejected ---------------------------------------------------------------- Thirty sexual abuse tort claimants ask the U.S. Bankruptcy Court for the District of Arizona to deny approval of the Diocese of Tucson's Disclosure Statement. Clifford B. Altfeld, Esq., at Leonard Felker Altfeld Greenberg & Battaile PC, in Tucson, Arizona, argues that, among other things, the Disclosure Statement fails to disclose that the Tort Creditors disagree with the Diocese's proposal that any jury trial or trial to the Court will only occur in the Arizona Bankruptcy Court. The Tort Creditors believe that under certain circumstances, it may be appropriate for trial on the claims to occur in state court instead of federal court and Tort Creditors may seek that venue if trial is required. The Tort Creditors assert that the Disclosure Statement should also disclose that there is a disagreement between the Diocese and the Tort Creditors as to (i) whether the parishes are separate entities, and (ii) whether the parishes are creditors of the Diocese, or are part of the Diocese and cannot be creditors. The 2002 Settlement Before 2002, the Diocese was a defendant in 11 suits involving 16 plaintiffs. Tucson also provided counseling and other services to people who alleged that they were abused but who had not sought damages through civil actions. In early 2002, Tucson settled the 11 suits. The Diocese indicated in the Disclosure Statement that counsel for the plaintiffs in the 2002 Cases breached the confidentiality of the 2002 Settlement by disclosing the settlement amount paid in a newspaper article. The Tort Creditors disagree. Mr. Altfeld points out that the Diocese previously had disclosed to the press the amount of the deferred or remaining 2002 Settlement payment and had asked counsel for the plaintiffs for their agreement to disclose the total settlement amount. Plaintiffs' counsel agreed with the Diocese's request and accordingly released the total amount to the public. Hence, there was no breach and the Diocese's statement is false. Mr. Altfeld argues that the Diocese's statement is gratuitous as it is unnecessary to meet the purposes of the Disclosure Statement. If the Diocese persists in keeping that gratuitous statement in the Disclosure Statement, then it needs to add explanatory language explaining that its version of the 2002 Settlement is disputed and that it is the position of Tort Creditors and 2002 Plaintiffs that the Debtor's gratuitous inclusion of the false statement in the Disclosure Statement is yet another example of the attitude it has manifested towards victims and their representatives that has resulted in the Diocese having to file for bankruptcy protection. As part of the 2002 Settlement, Tucson represented in a court filing that it agreed to pay the Plaintiffs in the 11 suits $3,000,000 due in January 2007. A parcel of real estate previously owned by Tucson secures the $3,000,000 Payment. Tucson acknowledged in the court filing that the Claimants in the 11 suits are secured creditors. Inclusion of All Assets for Distribution The Tort Creditors disagree that the Diocese has included all assets in its Plan for distribution in light of the dispute as to the parish-related assets. Tort Creditors do not agree that $3,200,000 proposed by the Diocese to constitute the total funding from the Diocese is sufficient or appropriate. This disagreement needs to be noted in the Amended Disclosure Statement, Mr. Mr. Altfeld says. Best Interests and Liquidation Analysis The Tort Creditors do not agree that the liquidation value of the Diocese's property is less than $4,000,000. The Tort Creditors believe that the Diocese failed to perform a liquidation analysis under which (i) parish property would be included in the liquidation, or (ii) in which parish property would not be included in the liquidation. The Diocese has claimed that there would be a "race to the courthouse" as the alternative of dismissal, but fails to describe the amount of money judgments those cases would likely achieve. Mr. Altfeld maintains that the Diocese's liquidation analysis fails to include parish properties or a sufficient amount for insurance claims. The Tort Creditors assert that the liquidation value of the Diocese's property will far exceed $4,000,000. The Tort Creditors join in the objections to the injunction filed by the U.S. Trustee. Additionally, the Tort Creditors object to: (a) the parishes being given voting rights in the Plan of Reorganization or, pursuant to the Plan, receiving any distribution whatsoever; (b) the Diocese's characterization of Class 5 Parish guaranty claims and to the Class 6 Parish unsecured claims; (c) the description of insurance actions since the description does not explain that creditors will have an opportunity to object to any settlement with an insurance company before it is approved by the Court. All details of the Diocese's insurance coverages applicable to sexual abuse claims including coverage, limitations of liability, demands, responses and reservation of rights are also not disclosed; and (d) the description of restricted assets, as well as and preferences in the Avoidance Action section. "Jane Doe," a sexual abuse claimant who is party to an action pending before the Pima County Superior Court, cause number C20042940, and G. David DeLozier, attorney for 3 Sexual Abuse Tort Creditors, concur with the objections presented by the 30 Sexual Abuse Tort Creditors. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: A. Bates Balks at Tucson's Disclosure Statement ---------------------------------------------------------------- The Unknown Claims Representative in Tucson's Chapter 11 case, A. Bates Butler III, complains that certain portions of the Disclosure Statement prepared by the Diocese of Tucson to explain its chapter 11 plan have to be clarified. Among other things, Mr. Butler asserts that: (a) The Disclosure Statement does not identify the persons involved with the Diocese who provided the information contained in the Disclosure Statement; (b) The proposed fund for victims who have presently identified themselves and for those who recognize their Claims or identify themselves in the future must be clarified; (c) There needs to be more disclosure and clarification as to the Settlement Trust and the Litigation Trust, and how the Diocese intends to reserve funds for the unknown victims; (d) More information should be provided concerning the formula to be used in determining proposed reserve for the Claims of Minors and Unknown Tort Claims; (b) The Disclosure Statement fails to address how the Special Master will be selected and the process if the parties do not agree; and (c) No time frame has been set for the unknown victims. The Diocese should propose a time frame in which assets will be available for distribution to the unknown claimants. The amount of the fund and the duration the fund will be available should be disclosed. Sally M. Darcy, Esq., at McEvoy, Daniels & Darcy PC, in Tucson, Arizona, tells the U.S. Bankruptcy Court for the District of Arizona that Mr. Butler and the Guardian ad Litem, Charles Arnold, should be part of the decision making process for the classification of tort claimants into Tiers. The criteria for each Tier, which will be set forth in the Settlement Trust, should be agreed upon by the Diocese, the Committee and Messrs. Butler and Arnold. Additionally, Messrs. Butler and Arnold should be included in the process of determining whether payments made to creditors prior to the bankruptcy may be recoverable. Mr. Butler reserves his rights to: -- object to the Diocese's failure to include "Parish Property" as property of the estate. Mr. Butler believes that when a Catholic diocese is formed as a corporation, sole, parishes within the diocese are part of the diocese itself and do not have any separate legal existence. While parishes may be separate entities for religious purposes under Canon Law, they are not separately incorporated under civil law. In fact, the Diocese proposes to have the Parishes incorporate after confirmation of a plan; and -- dispute that the Parishes are separate entities with claims. To the extent the Parishes have separate claims, they are insider claims, and that class is subject to Section 1129(a)(10) of the Bankruptcy Code. In addition, the Plan discriminates unfairly if the Class 6 Parish Unsecured Claims and the Class 7 General Unsecured Claims are paid in full, but the Class 9 Tort Claimants are being paid less than the full amount of their claim. Mr. Butler contends that no Third Party, including the parishes, should obtain an injunction without contributing a substantial sum of money to the payment of the Tort Claims. The Diocese cannot obtain an injunction for the benefit of third parties, nor would that injunction benefit the Estate. Mr. Arnold supports Mr. Butlers' arguments. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHAPCO CARTON: Court Converts Case to Chapter 7 Liquidation ----------------------------------------------------------- The Honorable Bruce W. Black of the U.S. Bankruptcy Court for the Northern District of Illinois converted the Chapter 11 bankruptcy case of Chapco Carton Company to a Chapter 7 liquidation proceeding on March 24, 2005. Judge Black based his decision on the separate motions of IFC Credit Corporation, a secured creditor of the Debtor, and Kugman Associates, Inc., the Debtor's financial advisors. Kugman Associates filed its request to convert the Debtor's case to a chapter 7 proceeding on Dec. 20, 2004. IFC Credit filed its request on March 21, 2005. Judge Black says three things make a reorganization impossible: a) the Debtor has incurred unpaid administrative expenses, including professional fees and adequate protection payments, which contribute to the continuing diminution of the Debtor's estate; b) the Debtor does not have unencumbered funds or assets necessary to confirm a plan of reorganization and pay, among other things, all administrative expenses as required under 11 U.S.C. Section 1129(a)(9), and IFC Credit's super priority claims; and c) the Debtor's failure to file a plan of reorganization has prejudiced IFC Credit and other creditors and parties in interest. Judge Black concludes these facts demonstrate cause to convert the Debtor's chapter 11 case to a chapter 7 proceeding pursuant to Section 1112(b) of the Bankruptcy Code. Headquartered in Bolingbrook, Illinois, Chapco Carton Company -- http://www.chapcocarton.com/-- manufactures, sells and distributes folding cartons used for retail packaging in food, candy, office supplies and automotive parts industries. The Company filed for chapter 11 protection on July 13, 2004 (Bankr. N.D. Ill. Case No. 04-26000). Chad H. Gettleman, Esq., at Adelman Gettleman & Merens, represents the Company. When the Debtor filed for protection from its creditors, it listed $15,232,256 in assets and $19,220,379 in liabilities. CHASE COMMERCIAL: Fitch Puts Low-B Ratings on Four Cert. Classes ---------------------------------------------------------------- Fitch Ratings upgrades Chase Commercial Mortgage Securities Corp.'s, commercial mortgage pass-through certificates, series 1998-2: -- $69.7 million class C to 'AA-' from 'A+'. In addition, Fitch affirms these classes: -- $39.9 million class A-1 at 'AAA'; -- $720.6 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $63.4 million class B at 'AAA'; -- $72.9 million class D at 'BBB+'; -- $19.0 million class E at 'BBB-'; -- $57.1 million class F at 'BB'; -- $12.7 million class G at 'BB-'; -- $22.2 million class H at 'B'; -- $9.5 million class I at 'B-'. The $15.7 million class J is not rated by Fitch. The rating upgrade is a result of increased subordination levels due to amortization and prepayments. Since the last rating action an additional 5% of the transaction has been defeased. As of the March 2005 distribution date, the transaction's aggregate principal balance has decreased 12.9% to $1.10 billion from $1.27 billion at issuance. The five largest loans represent 39.4% of the deal's outstanding loan balance. The performance of these loans has improved since issuance. One loan (0.3%) is 60 days delinquent and specially serviced. The loan is secured by a limited service hotel located in Rock Falls, Ill. The loan transferred to special servicing in January 2005 due to declining performance as a result of increased competition from a hotel located directly across the street from the property. Losses on this loan are expected to be absorbed by the $15.7 million nonrated class. CINCINNATI BELL: Annual Shareholders Meeting Slated for Apr. 29 --------------------------------------------------------------- The 2005 Annual Meeting of Shareholders of Cincinnati Bell Inc. will be held on Friday, April 29, 2005, at 11:00 a.m., Eastern Daylight Savings Time, at the Cincinnati Museum Center at Union Terminal, 1301 Western Avenue, Cincinnati, Ohio for these purposes: (1) to elect four Class III directors to serve three-year terms ending in 2008; (2) to ratify the appointment of Deloitte & Touche LLP as independent accountants to audit the financial statements of the Company for the year 2005; (3) to re-approve the material terms of the performance goals of the Cincinnati Bell Inc. 1997 Long Term Incentive Plan; (4) to re-approve the material terms of the performance goals of the Cincinnati Bell Inc. Short Term Incentive Plan; and (5) to consider any other matters that may properly come before the meeting. The Board of Directors has established the close of business on March 4, 2005, as the record date for determining the shareholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement of the meeting. Only shareholders of record at the close of business on the Record Date are entitled to vote on matters to be presented at the Annual Meeting. Cincinnati Bell, Inc. (NYSE: CBB) -- http://cincinnatibell.com/-- is parent to one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio. At Dec. 31,2004, Cincinnati Bell's balance sheet showed a $621.5 million stockholders' deficit, compared to a $679.4 million deficit at Dec. 31, 2003. As reported in the Troubled Company Reporter on Apr. 7, 2005, Standard & Poor's Ratings Services raised its rating on Cincinnati Bell Inc.'s -- CBI -- $50 million of senior secured debt to 'BB-' from 'B+'. The recovery rating was revised to '1' (indicating a high expectation for full recovery in the event of a payment default) from '2'. These ratings were removed from CreditWatch, where they were placed with positive implications in anticipation of a refinancing by CBI. The upgrade of this debt reflects the completion of the refinancing of Cincinnati Bell's previous $450 million secured bank facility with new debt financings, including borrowings from a new $250 million secured revolving credit. The $50 million secured notes are pari passu with the revolver. With this recapitalization, there is less secured debt at CBI and, given the over-collateralization, the rating on the $50 million notes has been raised to the same level as the rating on the revolver. At the same time, Standard & Poor's affirmed its other existing ratings on CBI (B+/Negative/--) and subsidiary Cincinnati Bell Telephone Co. S&P says the outlook is negative. As reported in the Troubled Company Reporter on Feb. 7, 2005, Fitch Ratings has assigned ratings to two Cincinnati Bell, Inc.'s (CBB) issues: -- $250 million of 7% senior unsecured notes due 2015 rated 'B+'; -- $100 million of 8 3/8% senior subordinated notes due 2014 rated 'B'. Fitch says the Rating Outlook is Stable for all ratings. As reported in the Troubled Company Reporter on Feb. 4, 2005, Moody's Investors Service affirmed the senior implied and other ratings for Cincinnati Bell, Inc. When Moody's upgraded the ratings on January 25, 2005, we assumed that Cincinnati Bell would issue $350 million of new senior notes that would rank pari passu with the existing $500 million of 7.25% senior notes due 2013. Cincinnati Bell will now be issuing $250 million of new senior notes and $100 million of additional 8.375% senior subordinated notes. Moody's believes this to be a modest change to the company's capitalization, and thus we are affirming these ratings: * Senior implied -- Ba3 * Issuer rating -- B1 * $250 million senior secured revolving credit facility -- Ba3 * $50 million 7.25% Senior Secured Notes due 2023 -- Ba3 * $250 million (down from $350 million) new Senior Notes due 2015 -- B1 * $500 million 7.25% Senior (unsecured) Notes due 2013 -- B1 * 16% Senior Subordinated Discount Notes due 2009 -- B2 * $540 million 8.375% Senior Subordinated Notes due 2014 -- B3 * $100 million (new) 8.375% Senior Subordinated Notes due 2014 assigned B3 CINCINNATI BELL: Appoints G. Cornett Sits & K. Freyberger as VPs ---------------------------------------------------------------- Cincinnati Bell Inc. (NYSE:CBB) reported that Gary Cornett will assume a new role within the organization as Vice President of Purchasing and Supply Chain Management. The Company also announced that it has appointed Kurt Freyberger as Vice President and Controller of Cincinnati Bell Inc. Mr. Cornett served as Vice President and Controller of the Company since February of 2004. Previously, he served as Controller of the Cincinnati-based operating subsidiaries of the Company. With his appointment to this newly created position, he has been challenged with increasing efficiency and reducing costs in the company's logistics operations. Mr. Freyberger had been an executive with Chiquita Brands International Inc. since 1996, most recently serving as Assistant Corporate Controller and Director of Financial Reporting. Prior to working at Chiquita, Mr. Freyberger was an audit manager with PricewaterhouseCoopers LLP. He holds a Bachelor of Science degree in Accounting from Western Kentucky University. "I'm very pleased to announce these new assignments," said Brian Ross, chief financial officer of Cincinnati Bell Inc. "This change provides Gary an opportunity to expand his already considerable financial management skills. Kurt's appointment brings additional strength and experience to our financial team. The Company will benefit tremendously from their leadership." Cincinnati Bell, Inc. (NYSE: CBB) -- http://cincinnatibell.com/-- is parent to one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio. At Dec. 31,2004, Cincinnati Bell's balance sheet showed a $621.5 million stockholders' deficit, compared to a $679.4 million deficit at Dec. 31, 2003. As reported in the Troubled Company Reporter on Apr. 7, 2005, Standard & Poor's Ratings Services raised its rating on Cincinnati Bell Inc.'s -- CBI -- $50 million of senior secured debt to 'BB-' from 'B+'. The recovery rating was revised to '1' (indicating a high expectation for full recovery in the event of a payment default) from '2'. These ratings were removed from CreditWatch, where they were placed with positive implications in anticipation of a refinancing by CBI. The upgrade of this debt reflects the completion of the refinancing of Cincinnati Bell's previous $450 million secured bank facility with new debt financings, including borrowings from a new $250 million secured revolving credit. The $50 million secured notes are pari passu with the revolver. With this recapitalization, there is less secured debt at CBI and, given the over-collateralization, the rating on the $50 million notes has been raised to the same level as the rating on the revolver. At the same time, Standard & Poor's affirmed its other existing ratings on CBI (B+/Negative/--) and subsidiary Cincinnati Bell Telephone Co. S&P says the outlook is negative. As reported in the Troubled Company Reporter on Feb. 7, 2005, Fitch Ratings has assigned ratings to two Cincinnati Bell, Inc.'s (CBB) issues: -- $250 million of 7% senior unsecured notes due 2015 rated 'B+'; -- $100 million of 8 3/8% senior subordinated notes due 2014 rated 'B'. Fitch says the Rating Outlook is Stable for all ratings. As reported in the Troubled Company Reporter on Feb. 4, 2005, Moody's Investors Service affirmed the senior implied and other ratings for Cincinnati Bell, Inc. When Moody's upgraded the ratings on January 25, 2005, we assumed that Cincinnati Bell would issue $350 million of new senior notes that would rank pari passu with the existing $500 million of 7.25% senior notes due 2013. Cincinnati Bell will now be issuing $250 million of new senior notes and $100 million of additional 8.375% senior subordinated notes. Moody's believes this to be a modest change to the company's capitalization, and thus we are affirming these ratings: * Senior implied -- Ba3 * Issuer rating -- B1 * $250 million senior secured revolving credit facility -- Ba3 * $50 million 7.25% Senior Secured Notes due 2023 -- Ba3 * $250 million (down from $350 million) new Senior Notes due 2015 -- B1 * $500 million 7.25% Senior (unsecured) Notes due 2013 -- B1 * 16% Senior Subordinated Discount Notes due 2009 -- B2 * $540 million 8.375% Senior Subordinated Notes due 2014 -- B3 * $100 million (new) 8.375% Senior Subordinated Notes due 2014 assigned B3 CINDY L. SIMPUKAS: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Cindy L. Simpukas 5315 Chelsen Wood Drive Duluth, Georgia 30097 Bankruptcy Case No.: 05-66438 Chapter 11 Petition Date: April 4, 2005 Court: Northern District of Georgia (Atlanta) Judge: Margaret Murphy Debtor's Counsel: J. Robert Williamson, Esq. Scroggins and Williamson 1500 Candler Building 127 Peachtree Street, North East Atlanta, Georgia 30303 Tel: (404) 893-3880 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Business Loan Express Guaranty $960,000 645 Madison Avenue New York, NY 10022 M&T Mortgage Corp. Guaranty $930,000 PO Box 1288 Buffalo, NY 14240-1288 Alchem Chemical Company Guaranty $220,631 Dept. GA00406 PO Box 530110 MBNA American Bank, NA $35,583 GE Corporate Payment Guaranty $23,281 Services Chase Bank One Credit Card $16,782 Sherman Acquisition II, LP $5,258 South Trust Bank Personal line $4,858 American Express Credit line $4,010 Thornhill Homeowners Association dues $1,250 Association Saint Joseph's Hospital Medical $765 Bank of America Credit line $735 CITATION CORP: Court Approves Amended Disclosure Statement ---------------------------------------------------------- The Honorable Tamara O. Mitchell of the U.S. Bankruptcy Court for the Northern District of Alabama approved the adequacy of the Second Amended Disclosure Statement explaining the Second Amended Joint Plan of Reorganization filed by Citation Corporation and its debtor-affiliates. Judge Mitchell approved the Amended Disclosure Statement on March 31, 2005, the same day the Debtors filed their Amended Disclosure Statement and Amended Plan. The Debtors are now authorized to send copies of the Amended Disclosure Statement and Amended Plan to creditors and solicit their votes in favor of the Plan. Under the Amended Plan, Reorganized Citation will be authorized to issue 1.5 million shares of New Common Stock and 75,000 shares of New Preferred Stock with an aggregate liquidation preference of $75 million. Reorganized Citation will also issue Stock Purchase Warrants exercisable for 20% of the New Common Stock measured on fully diluted basis after giving effect to the Warrants. On or after the Effective Date, Citation's existing common stock will be cancelled, the New Preferred Stock and New Common Stock will be issued to the Pre-Petition Credit Agreement Secured Parties, and the New Common Stock and Stock Purchase Warrants will be issued to the holders of Allowed Holdings Notes Claims. The Reorganized Subsidiaries will retain their Pre-Petition corporate structures, though the Reorganized Debtors may dissolve certain non-operating Subsidiaries. The Reorganized Debtors may contemplate the merger or dissolution of some Subsidiaries after the Effective Date upon further discussion and analysis of the best interests of the Debtors' estates. The Plan groups claims and interests into eight classes. Unimpaired claims consist of: a) Other Priority Claims to be paid in full without interest and no more than 90 days after the Effective Date b) Other Secured Claims Holders will receive, at the option of the Reorganized Debtors, the net proceeds of the sale or disposition of the Collateral, or the Collateral securing those holders' allowed claims, or a note with periodic cash payments equal to the value of those holders' Secured Claims, or other property necessary to satisfy their claims as required by the Bankruptcy Code; Impaired claims consist of: a) Pre-Petition Credit Agreement Secured Party Claims will receive their Pro Rata share of the New Tranche A Bank Debt, a number of shares of New Common Stock equal to those holders' Pro Rata share of 95% of the New Common Stock, and a number of shares of New Preferred Stock equal to those holders' Pro Rata share of the New Preferred Stock; b) Allowed Convenience Claims will receive Cash distributions equal to the lesser of 50% of the amount of those holders' allowed claims or $250 after the Effective Date; c) General Unsecured Claims will receive their Pro Rata share of the New Subordinated Notes after the Initial Distribution Date; d) Allowed Holdings Notes Claims will receive their Pro Rata share of 5% of the New Common Stock and the Stock Purchase Warrants after the Effective Date; e) Intercompany Claims receive no distribution under the Plan; and f) Equity Interests will be cancelled on the Effective Date and will not receive any distribution under the Plan. Full text copies of the Amended Disclosure Statement and Amended Plan are available at no charge at: http://bankrupt.com/misc/CitationCorporationSecondAmendedDisclosureStatement .pdf -- and -- http://bankrupt.com/misc/CitationCorporationSecondAmendedChap11Plan.pdf All ballots must be returned by May 2, 2005, to the Debtors' voting agent: Citation Corporation Claims Processing c/o Bankruptcy Services, LLC 757 Third Avenue, 3rd Floor New York, New York 10017 Objections to the Plan, if any, must be filed and served by May 2, 2005. The Court will convene a confirmation hearing to consider the merits of the Plan at 2:00 p.m., on May 16, 2005. Headquartered in Birmingham, Alabama, Citation Corporation -- http://www.citation.net/-- designs, develops and manufactures cast, forged and machined components for the capital and durable goods industries, including the automotive and industrial markets. Citation uses aluminum, steel, gray iron, and ductile iron as the raw materials in its various manufacturing processes. The Debtors filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represent the Debtors. When the Company and its debtor-affiliates filed for protection from their creditors, they estimated more than $100 million in assets and debts. CP PROPERTIES: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: CP Properties II, Ltd. PO Box 1123 15851 Dallas Parkway, Suite 500 Addison, Texas 75001 Bankruptcy Case No.: 05-33946 Type of Business: Real Estate Chapter 11 Petition Date: April 5, 2005 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Paul C. Allred, Esq. Paul C. Allred, P.C. 6440 North Central Expressway, Suite 501 Dallas, Texas 75206 Tel: (214) 448-9496 Fax: (214) 853-5395 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. DAIRY BLOWMOLDING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Dairy Blowmolding Specialists, Inc. 1206 US Highway 301 Building E Tampa, Florida 33619 Bankruptcy Case No.: 05-06564 Type of Business: The Debtor specializes in upgrading Uniloy- Milacron Blowmolding. See http://www.dairyblowmolding.com/ Chapter 11 Petition Date: April 7, 2005 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtor's Counsel: Lynn V. H. Ramey, Esq. Ramey, Ramey & Kampf, P.A. 701 West Kennedy Boulevard Tampa, Florida 33606 Tel: (813) 241-0123 Fax: (813) 241-0205 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Suncoast Schools Federal Bank loan $163,000 Credit Union P.O. Box 11904 Tampa, FL 33680 Rexel Consolidated Trade Debt $114,727 8224 E. Broadway Ave Tampa, FL 33619 Bank of America Bank loan $83,854 P.O. Box 1070 Neward, NJ 07101 American Express Gold Trade Debt $71,000 Uniloy Trade Debt $63,126 Dunnte Metal Fabricators, Trade Debt $52,000 Inc. Wachovia Bank loan $47,792 PG&H Engineering, Inc. Trade Debt $30,663 Ross Controls Trade Debt $29,862 Ted Mahr Supply, Inc. Trade Debt $29,492 Wells Fargo Trade Debt $23,454 Advanta Bank loan $21,245 Aero Hardware & Supply Trade Debt $18,780 Inc. Portola Trade Debt $17,749 FFW Trade Debt $17,736 Hampton-Tilley Associates Trade Debt $12,311 of Florida Xaloy, Inc. Trade Debt $9,750 Parker Hanifen Corp. Trade Debt $9,132 Federal Express Freight Trade Debt $9,084 Marco Fluid Power, Inc. Trade Debt $7,906 DARLENE MATHIS: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Darlene Mathis Gardner aka D. Mathis aka Darlene Gardner aka Darlene Mathis 1300 N Street, Northwest Washington, DC 20005 Bankruptcy Case No.: 05-00477 Chapter 11 Petition Date: March 29, 2005 Court: District of Columbia (Washington, D.C.) Debtor's Counsel: Steven H. Greenfeld, Esq. Cohen, Baldinger & Greenfeld LLC 7101 Wisconsin Avenue, Suite 1200 Bethesda, Maryland 20814 Tel: (301) 881-8300 Fax: (301) 881-8350 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. DB COS: Committee Can Object to Insider Claims & Pursue Actions --------------------------------------------------------------- DB Companies, Inc., and its debtor-affiliates, along with the Official Committee of Unsecured Creditors appointed in their chapter 11 cases, ask the U.S. Bankruptcy Court for the District of Delaware to approve a stipulation granting the Committee derivative standing to pursue certain claim objections and affirmative claims against the Debtors' insiders. Some of the Debtors' insiders have filed proofs of claims against the Debtors' estates that appear "improper" or "objectionable." The Debtors also made transfers to some Insiders during the one-year period before they filed for bankruptcy that may be subject to avoidance and recovery. Other affirmative claims may exist against the Insiders. The Debtors and the Committee agree that the Committee is better situated to pursue, on behalf of the bankruptcy estates, objections to the Insider Claims and recoveries of avoidable transfers made to the Insiders. Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. -- http://www.dbmarts.com/-- operates and franchises a regional Chain of DB Mart convenience stores in Connecticut, Massachusetts, Rhode Island, and the Hudson Valley region of New York. The Company filed for chapter 11 protection on June 2, 2004 (Bankr. Del. Case No. 04-11618). William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated $100 million in assets and debts of approximately $65 million. DEVON MOBILE: Trustee Has Until September 26 to Object to Claims ---------------------------------------------------------------- Buccino & Associates, Inc., as the Liquidation Trustee in Devon Mobile Communications, LP, and its debtor-affiliates' chapter 11 cases, has worked diligently to timely resolve each of the proofs of claim and interest filed against the estates. The Liquidation Trustee has filed and prosecuted claim objections. Despite the Devon Trustee's efforts, there are still a number of claims outstanding. At the Trustee's request, the Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware extended the deadline to object to administrative and other claims filed in Devon's Chapter 11 cases to September 26, 2005. Kara S. Hammond, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, says that the extension will provide the Liquidation Trustee with adequate time to effectively evaluate all outstanding claims, prepare and file additional objections to claims and, where possible, attempt to consensually resolve disputed claims. Devon Mobile Communications filed for Chapter 11 protection on August 19, 2002 (Bankr. D. Del. Case No. 02-12431). Lawyers at Saul Ewing, LLP, represent the Debtor. Devon is 49% owned by Adelphia Communications Corporation. (Adelphia Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Ends PGE Sale to Texas Pacific & Will Distribute Stock ------------------------------------------------------------------ Enron Corp. reached an agreement with Oregon Electric Utility Company, LLC, a company backed by Texas Pacific Group, to terminate the sale agreement for Portland General Electric Company following the Oregon Public Utility Commission's denial of Oregon Electric's application to buy the utility. Enron intends to move forward with plans to issue PGE common stock to creditors in accordance with Enron's approved bankruptcy plan. As part of this process, current PGE common stock would be cancelled and new common stock would be issued. Initially, at least 30 percent of the new PGE common stock would be issued to creditors, with the remainder held in a reserve and released to creditors determined to hold allowed claims in accordance with Enron's bankruptcy plan. The initial issuance of PGE common stock is not expected to commence until April 2006, but could begin as soon as October 2005. Enron and PGE intend to apply for a listing of the new PGE stock on a national securities exchange such as the NYSE or Nasdaq. Once the PGE common stock is issued, owners who are not affiliates of PGE will then be able to sell it in the open market. "We are moving forward with this plan because we believe it maximizes value to Enron's creditors and will help put an end to the uncertainty surrounding the utility's ownership," said Stephen Cooper, Enron's interim CEO and chief restructuring officer. "The PGE management team and I are confident that PGE will continue to operate successfully as a publicly-traded entity." Mr. Cooper added, "It is clear that recent expansions by PGE, including the highly-efficient power plant being built at Port Westward, add to the utility's value. In addition, a number of the issues negatively affecting PGE have been resolved, providing a clearer path forward for PGE." Pursuant to the Enron bankruptcy plan that was approved by the Bankruptcy Court and which became effective on November 17, 2004, Enron's Board of Directors will oversee the process of issuing common stock to Enron creditors. Any issuance of new PGE common stock is subject to certain conditions and regulatory approvals such as approval by the Oregon Public Utility Commission and the U.S. Securities and Exchange Commission. Peggy Fowler, CEO and President of PGE, said, "This is a good plan for PGE's customers, employees and community. As we move forward with plans to make PGE a publicly-traded utility headquartered in Oregon, our focus remains on delivering safe, reliable power and providing top-notch customer service at a reasonable cost." In accordance with its ongoing efforts to maximize the value of the estate, Enron will continue to consider credible offers to purchase Enron's common stock in PGE. About Portland General Electric Headquartered in Portland, Oregon, Portland General Electric Company -- http://www.PortlandGeneral.com/-- is a fully integrated electric utility that serves more than 765,000 residential, commercial and industrial customers in Oregon. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. FEDERAL-MOGUL: Relocating St. Johns' Operation to Mexico -------------------------------------------------------- High production cost prompts Federal-Mogul Corporation to relocate several low-profit product lines in St. Johns, Michigan, to a cheaper facility in Puebla, Mexico, in order to preserve the business, Barbara Wieland of Lansing State Journal reports. In a written statement to the Lansing State Journal, Federal- Mogul's spokesperson Paula Silver said, "it has become apparent that St. Johns will not be able to meet the planned targets for 2005." The company has been trying to keep its operations afloat in St. Johns, Greenville and Sparta by securing wage concessions and tax breaks. But, Ms. Silver tells the Lansing State Journal, high steel prices and demand for lower auto parts prices dragged the profits down. Federal-Mogul employs 470 workers at its plant in St. Johns. About 320 Federal-Mogul employees work in Greenville and Sparta. According to Ms. Weiland, the company won't say if the relocation to Mexico will result in layoffs. 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) FORMAL FASHIONS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Formal Fashions, LLC dba Mr. Formal dba Michael's Formalwear 2214 W. Washington Boulevard Sarasota, Florida 34234 Bankruptcy Case No.: 05-06224 Type of Business: The Debtor operates tuxedo rental stores. Chapter 11 Petition Date: April 5, 2005 Court: Middle District of Florida (Tampa) Judge: K. Rodney May Debtor's Counsel: Bernard J. Morse, Esq. Morse & Gomez PA 119 South Dakota Avenue Tampa, Florida 33606 Tel: (813) 301-1000 Fax: (813) 301-1001 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Tuxacco Inc. $31,904 Lord West Accessories PO Box 456 Bristol, PA 19007 Verizon Directories $30,878 PO Box 619009 DFW Airport, TX 75261 Lord West $25,000 247 Rittenhouse Ctr PO Box 2145 Bristol, PA 19007 GMAC Commercial Credit $24,622 Kerkering Barberios Co $21,005 Vijay Luthra $19,260 Fabian Couture Group $16,710 Hartsford Fire Insurance $16,440 Michael's Formal Wear $16,000 Verizon $15,871 Sprint Yellow Pages $14,204 KB Information Svcs $13,714 Schifino Lee $12,739 Plaza Walk Partners $12,406 Regency Squares $11,808 Bellsouth $11,509 IR Mall Assoc Ltd. $11,197 Shoppingtown LLC $10,894 CSS Trading Co. Inc. $10,591 Desoto Square $9,971 GENERAL GROWTH: Fitch Assigns Low-B Ratings on Five Debts --------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative ratings for General Growth Properties, Inc. (GGP) and its subsidiaries: General Growth Properties, Inc.: -- Senior unsecured issuer to 'BB' from 'BB+'; -- Preferred stock shelf to 'B+' from 'BB'. Price Development Co., LP (Price): -- Senior unsecured debt to 'BB+' from 'BBB-'. Fitch has also assigned these ratings: General Growth Properties, Inc.: -- Bank facility 'BB'. Rouse LP -- Senior unsecured debt 'BB'. The Rating Outlook for GGP and its subsidiaries is now Stable. Approximately $8.4 billion of debt is affected by Fitch's action. The lowering of GGP's senior unsecured and preferred stock rating principally reflects the company's aggressive capitalization and unencumbered asset strategy following its acquisition of The Rouse Company, Inc. GGP's leverage, defined as total debt divided by total undepreciated book capital, increased to 81.69% at Dec. 31, 2004 from its historical range of 55% to 65%. This concern is partially offset by management's commitment to reduce leverage towards its historical range through the sale of non-core properties as well as issuance of equity. Nevertheless, Fitch expects that the company's leverage will remain above 70% for the foreseeable future. The Rouse acquisition also added approximately $2 billion of development in progress and land assets to the company, which Fitch generally believes are less leverageable than traditional fully leased operating properties. The ratings assume a decline in leverage over the next 12 to 18 months based on GAAP measures. Fitch would revisit its Rating Outlook for GGP absent favorable movement in GAAP leverage metrics in this time period. Another concern centers on the company's financing strategy. GGP has announced that it may refinance its unsecured bank facilities in part by placing mortgages on existing unencumbered properties, and increasing leverage on existing encumbered properties. In Fitch's view, this strategy limits the company's financial and, to a lesser degree, operational flexibility. On a consolidated basis, Fitch estimates that GGP has less than $1 billion of unencumbered operating properties at gross book value supporting over $8 billion of unsecured debt. In addition, the high volume of recently acquired assets in combination with its aggressive capitalization exposes the company to substantial market risk. Over 50% of the company's assets have been constructed or acquired within the last two years - a period of exceptional appreciation for commercial real estate assets. These assets are now reflected on GGP's balance sheet with book value reflecting asset prices at or near peak valuations. Although Fitch does not expect a sharp correction in the retail real estate market or a significant downturn in consumer retail spending in the near term, this may leave the company more vulnerable to changing economic conditions over time than other real estate investment trusts. Partially offsetting these concerns is the company's size, tenant diversity, property quality, and long history of demonstrating solid financial results. GGP is now the largest equity REIT by undepreciated book asset value. In addition, the company's largest tenant contributes less than 2.8% of total net operating income and the largest tenants represent well known, and in some cases investment-grade rated retailers. The Rouse acquisition increased the company's total portfolio to 221 managed retail properties spread across 42 states. In Fitch's view, this creates a highly diverse, robust cash flow stream that helps to insulate the company from regional economic volatility. Fitch views GGP's property management expertise and broad relationship network as core strengths. The company is believed to have broad and deep relationships with many of America's major retailers contributing to strong property level performance. The company also leverages its expertise to actively manage and continually update its retail properties, which has ultimately been reflected in strong lease renewals and re-leasing spreads. Same store net operating income improvements were 4.3% in 2004 and 3.8% in 2003, both of which were at or near the top of the company's peer group. The notching applied to the Price unsecured debt, which at 'BB+' one notch higher than the 'BB' GGP issuer rating, reflects the strength of the bond covenants requiring unencumbered asset coverage of 150% of unsecured debt as well as the short maturity and annual repayment schedule of the bonds resulting in high repayment visibility. Rouse bondholders, by contrast, do not have an unencumbered asset requirement and as a result do not receive a notching benefit. However, Fitch does believe that the Rouse Bonds receive some additional protection from a 65% debt to total assets covenant, which is lower than GGP's overall leverage. The two notch lowering of the preferred stock shelf rating is also reflective of higher leverage levels and Fitch's view that a significant portion of the book value of the company's portfolio currently reflects peak market valuations. Fitch believes this would impact subordinated instruments, particularly from a recovery standpoint, to a greater degree than senior obligations. Based in Chicago, Ill., GGP is one of the nation's largest REITs with $27.2 billion of gross balance sheet assets at Dec. 31, 2004. The company owns or has financial interests in 173 million square feet of gross leasable area throughout 44 states in its retail portfolio and nearly 6 million square feet of office and industrial space. The company also owns approximately 75,000 acres of land in its community development segment. GENEVA STEEL: Mabey & Murray Replaces LeBoeuf as Local Counsel -------------------------------------------------------------- With U.S. Bankruptcy Court for the District of Utah's approval, Geneva Steel LLC replaced LeBoeuf Lamb Greene & MacRae with Mabey & Murray LC as its bankruptcy counsel, nunc pro tunc Mar. 14, 2005. LeBoeuf has acted as the Debtor's counsel since Jan. 25, 2002, and also acted as counsel to the Debtor's predecessor-in-interest, Geneva Steel Company, in its 1999 chapter 11 proceeding. LeBoeuf closed its Salt Lake City office, effective March 11, 2005. Attorneys previously associated with LeBoeuf, including all of those who assisted in the Debtor's representation prior to the closure, joined Mabey & Murray, a newly established law firm located in Salt Lake City. Mabey & Murray's responsibilities include: (1) advising the Debtor in its rights, powers, and duties as debtor and debtor-in-possession; (2) taking all necessary action to protect and preserve the Debtor's estate including: (a) the prosecution of actions on the Debtor's behalf, (b) the defense of actions commenced against the Debtor, (c) the negotiation of disputes in which the Debtor is involved, and (d) the preparation of objections to claims filed against the estates; (3) assisting in preparing on the Debtor's behalf all necessary motions, applications, answers, orders, reports, and papers in connection with the administration of the Debtor's estate; (4) assisting in presenting the Debtor's proposed plan of reorganization and all related transactions and any related revisions, amendments, etc.; and (5) performing all other necessary legal services in connection with the Debtor's chapter 11 case. Mabey & Murray will coordinate efforts with Kaye Scholer LLC, the Debtor's lead counsel. Steven J. McCardell, Esq., a member of Mabey & Murray, discloses that his firm's professionals bill: Hourly Rate ----------- Members $325 to $500 Associates $160 to $280 Paraprofessionals $100 to $115 Mr. McCardell assures the Court that his firm's members and associates do not have any connection with or any interest adverse to the Debtor, its creditors or any other party-in-interest. Headquartered in Provo, Utah, Geneva Steel LLC, owns and operates an integrated steel mill. The Company filed for chapter 11 protection on January 25, 2002 (Bankr. Utah Case No. 02-21455). Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E. Garcia, Esq., at Kaye Scholer LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $262 million in total assets and $192 million in total debts. INTERPLAY ENT: Rose Snyder Replaces Squar Milner as Auditors ------------------------------------------------------------ The Audit Committee of Interplay Entertainment Corporations's Board of Directors appointed Rose, Snyder & Jacobs, a Corporation of Public Accountants, as its new independent public accounting firm to audit its financial statements on March 30. On March 11, 2005, the Company was informed by Squar, Milner, Reehl & Williamson, LLP that Squar Milner was resigning as the Company's independent registered public accounting firm. Pursuant During the years ended December 31, 2002, and 2003, the Company's consolidated financial statements did not contain any adverse opinion or disclaimers of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, other than an explanatory paragraph regarding an uncertainty as to the Company's ability to continue as a going concern. In a letter to the Company dated February 8, 2005, Squar Milner noted a material weakness in the Company's internal control over financial reporting during their interim review of the Company's unaudited consolidated financial statements as of September 30, 2004 and for the quarter then ended included in the Company's September 30, 2004 Form 10-Q, filed with the Securities and Exchange Commission on December 22, 2004. In the letter, Squar Milner says: "We noted that the Company began losing most of its personnel beginning in June 2004 through layoffs and resignations. Well before September 30, 2004, substantially all accounting department personnel, except for the controller, had departed the Company. Additionally, most other Company personnel that the Company's accounting department interacts with to provide information necessary to produce timely and accurate financial statements had also departed the Company well before September 30, 2004. While we were able to overcome this internal control deficiency in order to complete our interim review, we believe that this internal control deficiency rises to the level of a material weakness in the financial reporting process for the Company." Interplay Entertainment Corp. develops and publishes interactive entertainment software for core gamers and the mass market. INTERPUBLIC GROUP: Fitch Puts Bank Loan's B+ Rating on Watch Neg. ----------------------------------------------------------------- Fitch Rating's 'B+' senior unsecured and multicurrency bank credit facility ratings for The Interpublic Group of Companies -- IPG -- remain on Rating Watch Negative following the company's April 5, 2005, announcement of preliminary and unaudited revenue and operating earnings for 2004. The status of the IPG's full-year 2004 audit and filing of its Form 10-K remains uncertain and Fitch continues to be concerned about the reliability of the company's financial reporting. Fitch expects to conclude its review and resolve its Rating Watch status on IPG following the filing of the company's Form 10-K for 2004 and the auditors' opinion on those statements. Fitch lowered IPG's ratings to 'B+' from BB+' and placed the ratings on Rating Watch Negative on March 11, 2005. These actions reflected the increased levels of negative event risk at IPG, concerns about the reliability of the company's financial reporting and the ability of IPG's auditors to provide an 'unqualified' opinion about the company's financial reports, and IPG's earnings and cash flow outlook, given the company's weak organic growth trends and significant pressures on operating margins. Certain event risks have been resolved since this rating action. On March 30, 2005, IPG announced that it had received covenant waivers on all of its bonds that extend the 'event of default' filing requirement date for the company's Form 10-K from March 31, 2005, to Sept. 30, 2005, and extend the filing requirement of the Form 10-Q for the first and second quarters of 2005 to Sept. 30, 2005. Furthermore, on March 31, 2005, IPG received waivers and amendments on its $700 million of credit facilities from the bank syndicate related to the late-filing covenant, extending the required filing date for the Form 10-K from March 31, 2005, to June 30, 2005 and the Form 10-Q for the first quarter of 2005 to July 31, 2005. IPG also received amended financial covenants for minimum interest coverage, maximum debt/EBITDA leverage, and minimum EBITDA. INTERSTATE BAKERIES: Gets Court Nod to Reject 19 Leases ------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri authorized Interstate Bakeries Corporation and its debtor- affiliates to reject real property leases for 19 locations to reduce substantial postpetition administrative costs that constitute an unnecessary drain on the Debtors' cash resources. As reported in the Troubled Company Reporter on March 4, 2005, according to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, the Debtors need to reject the Real Property Leases because they are: -- financially burdensome; -- unnecessary to the Debtors' ongoing operations and business; and -- not a source of potential value for the Debtors' future operations, creditors and interest holders. The Debtors intend to reject 15 Real Property Leases effective as of March 23, 2005: Lessor Address of Leased Premises Lease Date ------ -------------------------- ---------- Pacesetter 22482 Muirland B, Lake 12/22/1983 Muirlands, LLC Forest, California 56935 Elk Court 56935 Elk Court, Elkhart, 01/19/1998 Land Trust Indiana Polly M. Cerasa 820 Richey Hwy, Pasadena, 09/23/1965 Texas GC Acquisition Corp. 1706 Woodman Dr., 03/19/1996 Kettering, Ohio Complete Medical 796 E Laurel Rd., London, - Supply Kentucky Goldsmith 10370 Julian Dr., Woodlawn, 10/22/1997 Properties Ohio Dan Ward (Nominee Southway Village, Taunton, 06/27/1994 of Investors Massachusetts Services Company Trust) Ale Importers, LLC 625 East Montgomery St., - Villa Rica, Georgia Middletown Better 601 North Verity Parkway 05/21/1971 Homes Company Middletown, Ohio Roxanne and James 1818 N Mitchell, Cadillac 08/24/1975 Nixon Michigan Jaxwil Enterprises 138 Shurfine Drive, Ankeny 11/13/2002 Iowa Philip and Doris 1357 Tamiami Trail Fort 11/11/1994 Folger Myers, Florida Seed Investments, 203 N Cedar St., Mason 05/01/1992 LLC Michigan Management/ 5250 Grand Avenue, Gurnee, 09/10/1998 Marketing Services, Illinois Inc. J. Harrison, Trustee 824 North Illinois, Route 10/19/2000 83 Mundelein, Illinois The Debtors also want to reject four Real Property Leases effective as of February 28, 2005: Lessor Address of Leased Premises Lease Date ------ -------------------------- ---------- Sunpro, LLC 1618 Buckhannon Pike, 08/04/1997 Nutter Fort, West Virginia IRET Properties, LP 5306 Business Highway 51, 07/12/1993 Schofield, Wisconsin Blackstone 2201 East 62nd Street, 07/10/1987 Development Indianapolis, Indiana Katella Cottages, 9384-86 Katella Ave., 01/31/1996 LLC Garden Grove, California Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) IRVING TANNING: Bernstein Shur Approved as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maine gave Irving Tanning Company permission to employ Bernstein, Shur, Sawyer & Nelson, P.A., as its general bankruptcy counsel. Bernstein Shur will: a) advise the Debtor with respect to its powers and duties as a debtor in possession and the continued management and operation of its businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties in interest, respond to creditor inquiries, and advise and consult the Debtor on the conduct of the case, including all of the legal and administrative requirements of operating under chapter 11; c) negotiate and prepare on behalf of the Debtor a plan or plans of reorganization, and all related documents, and prosecute the plan or plans through the confirmation process; d) represent the Debtor in connection with any adversary proceedings or automatic stay litigation that may be commenced in the proceedings and any other action necessary to protect and preserve the Debtor's estate; e) advise the Debtor in connection with any sale of assets, and represent and advise the Debtor regarding post-confirmation operations and consummation of a plan or plans of reorganization; f) prepare necessary motions, applications, answers, orders, reports, and papers necessary to the administration of the Debtor's estate; and g) perform all other legal services to the Debtor necessary in its chapter 11, including services or legal advice relating to applicable state and federal laws and securities, labor, commercial, and real estate laws. Michael A. Fagone, Esq., a Shareholder at Bernstein Shur, is the lead attorney for the Debtor. Mr. Fagone discloses that the Firm received a $20,000 retainer. Mr. Fagone charges $215 per hour for his services. Mr. Fagone reports Bernstein Shur's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Robert J. Keach Shareholder $385 Leonard M. Gulino Shareholder $230 Todd D. Ross Associate $115 Daniel J. Murphy Associate $110 Sheila R. Dilios Paralegal $100 Bernstein Shur assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Hartland, Maine, Irving Tanning Company, -- http://www.irvingtanning.com/-- is a leading supplier of leather to global footwear, handbag and personal leather goods industries. The Company filed for chapter 11 protection on March 17, 2005 (Bankr. D. Maine Case No. 05-10423). When the Debtor filed for protection from its creditors, it listed total assets of $22 million and total debts of $15 million. IRVING TANNING: Look for Bankruptcy Schedules on May 2 ------------------------------------------------------ Irving Tanning Company asks the U.S. Bankruptcy Court for the District of Maine for more time to file its Schedules of Assets and Liabilities, Statements of Financial Affairs, Statements of Executory Contracts and Unexpired Leases. The Debtor wants until May 2, 2005, to file those documents. The Debtor explains that due to the complexity of its financial condition, and because its professionals were busy obtaining authority to use cash collateral and finding a replacement source of working capital in the early stages of its bankruptcy proceedings, it need more time to accurately prepare the Schedules and Statements. The Debtor relates that the U.S. Trustee does not oppose this request. Headquartered in Hartland, Maine, Irving Tanning Company, -- http://www.irvingtanning.com/-- is a leading supplier of leather to global footwear, handbag and personal leather goods industries. The Company filed for chapter 11 protection on March 17, 2005 (Bankr. D. Maine Case No. 05-10423). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $22 million and total debts of $15 million. ISTAR FINANCIAL: Moody's Upgrades Sr. Unsec. Notes' Rating to Baa3 ------------------------------------------------------------------ Moody's Investors Service announced today that it has upgraded its rating on the 7.95% senior unsecured notes of TriNet Corporate Realty Trust, Inc. to Baa3, from Ba1, due to TriNet's merger with and into its parent, iStar Financial Inc. and the resulting direct obligation of these senior notes by iStar. TriNet was formerly a wholly-owned subsidiary of iStar. Moody's also has withdrawn the ratings of the 7.7% senior unsecured notes due 2017 of TriNet as a result of the completed exchanged offer for these notes by iStar. iStar exchanged its 5.7% Series B Senior Notes due 2014 for virtually all of TriNet's outstanding 7.7% Senior Notes, and redeemed the remaining principal balance for cash. iStar Financial Inc. [NYSE: SFI], a property finance company that is taxed as a real estate investment trust, provides structured mortgage, mezzanine and corporate net lease financing. iStar financial is headquartered in New York City, and has assets of $7.2 billion at December 31, 2004. HARRAH'S ENT: Anticipates $0.95 to $0.99 1st Quarter Adjusted EPS ----------------------------------------------------------------- Harrah's Entertainment, Inc. (NYSE:HET) said it expects to report Adjusted Earnings Per Share of 95 to 99 cents for the first quarter of 2005. The estimate compares with Adjusted EPS of 76 cents reported for the first quarter of 2004 and analysts' consensus estimate of 83 cents for the first quarter of 2005. Adjusted EPS is not a Generally Accepted Accounting Principles (GAAP) measurement but is commonly used in the gaming industry as a measure of performance and as a basis for valuation of gaming companies. In addition, analysts' per-share earnings estimates for gaming companies are comparable to Adjusted EPS. After consideration of costs related to the pending acquisition of Caesars Entertainment, Inc., a charge resulting from the early extinguishment of debt, write-downs and reserves and project opening costs, diluted earnings per share for the first quarter are expected to be 89 to 93 cents. In the first quarter of 2004, the company reported diluted earnings per share of 73 cents. "We expect to report strong operating results," said Gary Loveman, chairman, chief executive officer and president of Harrah's Entertainment. "Our geographic distribution, marketing expertise, nationwide customer-loyalty program and prudent capital investments produced solid performances across the country. "The Horseshoe Gaming portfolio, acquired on July 1, 2004, continued to make a significant contribution to our earnings in the first quarter," Mr. Loveman said. "We estimate that the three Horseshoe properties added 7 to 8 cents to earnings per share in the first quarter. The early success of the Horseshoe acquisition bodes well for our pending acquisition of Caesars. "Acquisitions were not the only growth driver during the quarter, as our organic growth continued unabated," Mr. Loveman said. "We expect to report same-store sales growth of approximately 6 percent in the first quarter. This is further evidence of the effectiveness of our cross-marketing strategy and customer-loyalty initiatives, such as Total Rewards 2 and Fast Cash." Harrah's Chief Operating Officer Tim Wilmott commented on operating performances by region. "Strong results at our three Southern Nevada properties propelled the West Region to what we expect will be yet another record quarter," Mr. Wilmott said. "These results more than offset weather-related declines in business at our Northern Nevada properties. "East Region results are expected to be similar to last year's levels, as more efficient marketing spending offset business volume declines caused by inclement weather and an aggressive promotional environment," Mr. Wilmott said. "Our significant investments in the North Central Region paid off with an expected record quarter," Mr. Wilmott said. "The addition of Horseshoe Hammond, a lower gaming tax rate in Iowa and gains driven by the recent expansion of Harrah's St. Louis all contributed to growth in this region. "The Horseshoe acquisition also played a key role in what is expected to be a record quarter for the South Central Region," Mr. Wilmott said. "The region's performance was driven by the additions of Horseshoe Bossier City and Horseshoe Tunica, as well as yet another expected strong quarter from Harrah's New Orleans." Management fee revenues are expected to be higher in the first quarter of 2005 due to expansion-driven increases in business at managed properties. First-quarter corporate expenses are expected to rise compared to the year-ago quarter. Amortization of intangible assets is expected to increase as a result of the Horseshoe acquisition. Interest expense is also expected to increase due to higher debt levels associated with the Horseshoe acquisition. The company expects to report first-quarter 2005 results on April 20, 2005. About the Company 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. Caesars Entertainment's Board of Directors in July 2004 accepted an offer from Harrah's Entertainment, Inc., to acquire Caesars for approximately $1.9 billion in cash and 67.7 million shares of Harrah's common stock. Shareholders of both companies approved the merger in separate meetings on March 11. The transaction is contingent on approval by federal and state regulatory agencies and is expected to close in the second quarter of 2005. * * * 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-'. HOLLYWOOD ENT: Amends Sr. Debt Tender Offer & Consent Solicitation ------------------------------------------------------------------ Hollywood Entertainment Corporation (Nadsaq: HLYW) said that, in connection with the previously announced tender offer and consent solicitation for any and all of its $225,000,000 outstanding principal amount of 9.625% Senior Subordinated Notes due 2011, it has amended the Total Consideration to be paid for the Notes and has extended the Consent Payment Deadline. As described in the Offer to Purchase for Cash and Consent Solicitation Statement dated March 24, 2005, the Total Consideration is determined by reference to a fixed spread over the bid-side yield to maturity of the 3.375% U.S. Treasury Note due February 28, 2007. The currently scheduled Price Determination Date is April 7, 2005. Hollywood has amended the fixed spread from 62.5 basis points to 50 basis points. In addition, Hollywood has extended the Consent Payment Deadline. The Consent Payment Deadline, which was scheduled to expire at 5:00 p.m., New York City time, on April 7, 2005, has been extended to 5:00 p.m., New York City time, on April 12, 2005, unless further extended or earlier terminated. Holders who validly tender their Notes by the Consent Payment Deadline will be entitled to a consent payment of $30 per $1,000 principal amount of Notes as part of the Total Consideration. All other terms relating to the determination of the Total Consideration and the Tender Offer Consideration will remain as described in the Statement. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on April 21, 2005, unless extended or earlier terminated. Tendered Notes may not be withdrawn and consents may not be revoked after the Withdrawal Deadline, which will be the earlier of: (i) the Consent Payment Deadline and (ii) 5:00 p.m., New York City time, on the business day following the business day on which Hollywood issues a press release announcing that it has obtained the consents from holders of at least a majority in aggregate principal amount of the Notes, unless that date is extended. The obligation of Hollywood 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 completion of the acquisition of Hollywood by Movie Gallery, Inc., and the receipt of consents to the Proposed Amendments from the holders of at least a majority of the aggregate principal amount of outstanding Notes, each as described in more detail in the Statement. Wachovia Securities has advised Hollywood that Wachovia Securities has received verbal commitments from the holders of a majority of the aggregate principal amount of outstanding Notes that such holders intend to tender their Notes pursuant to the tender offer and consent solicitation, as amended. This announcement is neither 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 the consent solicitation are being made solely pursuant to the Statement and related Letter of Transmittal and Consent. Hollywood has retained Wachovia Securities to serve as the dealer manager and solicitation agent for the tender offer and the consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to Wachovia Securities at (704) 715-8341 or (866) 309-6316. Requests for documents in connection with the tender offer and the consent solicitation may be directed to MacKenzie Partners, Inc., the information agent, at (212) 929-5500 or (800) 322-2885. Hollywood, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from its shareholders with respect to the transactions contemplated by the Agreement and Plan of Merger by and among Movie Gallery, TG Holdings, Inc., a wholly owned subsidiary of Movie Gallery, and Hollywood dated as of January 9, 2005. Information about the directors and executive officers of Hollywood and their interests in the transactions contemplated by the Merger Agreement, including their ownership of Hollywood common stock, is set forth in the proxy statement for Hollywood's special meeting to consider the Merger Agreement, which was filed with the SEC on March 21, 2005. Investors and security holders may obtain additional information regarding the interests of these potential participants by reading the proxy statement and the other relevant documents filed with the SEC as they become available. * * * As reported in the Troubled Company Reporter on Feb. 11, 2005, Hollywood Entertainment's 9-5/8% senior notes due March 15, 2011, currently holds Moody's Investors Services & Standard & Poor's single-B ratings. L.A. Graphics: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: L.A. Graphics, Inc. 15 Ellwood Court Greenville, South Carolina 29607 Bankruptcy Case No.: 05-04009 Type of Business: The Debtor is a commercial graphic designer See: http://www.la-graphics.com/ Chapter 11 Petition Date: April 5, 2005 Court: District of South Carolina (Spartanburg) Judge: Chief Judge Wm. Thurmond Bishop Debtor's Counsel: G. William McCarthy, Jr., Esq. Robinson, Barton, McCarthy, Calloway & Johnson, P.A., 1715 Pickens Street, Columbia, South Carolina 29211 Tel: (803) 256-6400 Total Assets: $2,987,066 Total Debts: $3,265,639 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carolina First Bank $170,000 102 South Main Street Greenville SC 29601 Carolina First Bank $140,000 102 South Main Street Greenville SC 2960 3M $161,674 PO Box 200715 Dallas TX 75320-0715 Arlon Sign Tech Ltd $66,021 co B of A 2926 Collection Center Drive Chicago IL 60693 Verseidag Seemee US Inc $53,923 4 Aspen Drive Randolph NJ 07869 Arlon Adhesives and Films Division $52,807 PO Box 98116 Chicago IL 60693 Carolina First Bank Visa $49,584 PO Box 7968 Columbia SC 29202-7968 UPS $43,639 PO Box 7247-0244 Philadelphia PA 19170-0001 Cooley Group $31,524 co Citizens Bank PO Box 345210 Boston MA 02284-5210 Trim USA Inc $28,992 3105 Big Oaks Drive Tobaccoville NC 27050 Watkins Motor Lines Inc $18,542 PO Box 95001 Lakeland FL 33804-5001 NAI Earle Furman LLC $17,813 Property Management Division 101 E Washington St Ste 400 Greenville SC 29601 Vutek $16,915 aka Inkwear PO Box 845230 Boston MA 02284 Blue Cross and Blue Shield $13,914 PO Box 6000 Columbia SC 29260 Stafford Textiles Limited $13,661 2200 Lakeshore Blvd West Suite 308 Toronto Ontario Canada M8V1A4 Southeastern Freight $12,437 PO Box 1691 Columbia SC 29202 Ultraflex Systems Inc $10,741 1578 Sussex Turnpike Building 4 Randolph NJ 07869 Selective Insurance $9,508 PO Box 371468 Pittsburgh PA 15250-7468 Beckman Lawson LLP $9,293 co Jack E Roebel 912 South Calhoun Street Fort WAyne IN 46802 International Sign Association $4,500 707 North Saint Asaph Street Alexandria VA 22314-1911 LAIDLAW INT'L: Cash Tender Offer for $202 Million Notes Expires --------------------------------------------------------------- Laidlaw International, Inc. (NYSE: LI), disclosed the expiration at 5:00 pm (EDT) on April 4, 2005, of its offer at par for up to $202,000,000 of the 10-3/4% Senior Notes due 2011 as described in its Offer to Purchase dated March 4, 2005. An aggregate principal amount of $2,450,000 of Notes was validly tendered to Deutsche Bank Trust Company Americas, the paying agent for the Offer to Purchase. Laidlaw made payment to the paying agent in the amount of 100% of the principal amount of the Notes tendered plus accrued and unpaid interest. Questions regarding the Offer and requests for documents may be directed to D.F. King & Company ((800) 431-9645), the information agent for the Offer. This announcement is not an offer to purchase or a solicitation of an offer to sell the Notes or any other security. The tender offer is being made solely by means of the Offer to Purchase which has been prepared by Laidlaw in connection with the Offer. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc. -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service has placed the long-term debt ratings of Laidlaw International, Inc., under review for possible upgrade. The review is prompted by the recent announcement by the company that it had entered into a definitive agreement to sell both of its healthcare businesses to Onex Partners LP, an affiliate of Onex Corporation, for $820 million. Net proceeds after fees and assumption of a small amount of debt by the buyer is estimated at $775 million, with a majority of the proceeds intended to be used to repay substantial levels of Laidlaw's existing debt. Moody's has also assigned a Speculative Grade Liquidity Rating of SGL-2 to Laidlaw International, Inc. As part of the rating action, Moody's has reassigned to Laidlaw International, Inc., certain ratings, including the senior implied and senior unsecured issuer ratings, originally assigned at Laidlaw, Inc., in order to reflect more appropriately the company's current organizational structure. As reported in the Troubled Company Reporter on Dec. 9, 2004, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Laidlaw International, Inc., on CreditWatch with positive implications. The rating action follows Laidlaw's announcement that it has entered into definitive agreements to sell both of its health care companies, American Medical Response and Emcare, to Onex Partners L.P. for $820 million. Laidlaw expects to receive net cash proceeds of $775 million upon closing of the transaction, which is expected by the end of March 2005. Naperville, Illinois-based Laidlaw currently has about $1.5 billion of lease-adjusted debt. LAIDLAW INT'L: Earns $236.2 Million of Net Income in 2nd Quarter ---------------------------------------------------------------- Laidlaw International, Inc. (NYSE:LI) reported the results for its second quarter ended February 28, 2005. The company had income from continuing operations of $20.7 million as compared to income from continuing operations of $3.8 million for the second quarter of the last fiscal year. Diluted earnings per share from continuing operations were $0.20 for the second quarter of 2005 as compared to $0.04 in the prior year's quarter. During the quarter the company sold its healthcare businesses and their results are presented as discontinued operations. The sale resulted in a gain of $210.4 million which, when combined with the operating results of the healthcare businesses through the February 10, 2005 sale date, produced $215.5 million of income from discontinued operations. Net income for the quarter totaled $236.2 million or $2.36 per basic share. "The results this quarter benefited from the focus each of our operations had on improving margins as well as from better weather with fewer snow days than last year," said Kevin Benson, President and Chief Executive Officer of Laidlaw International, Inc. "In addition, we had very favorable insurance and claims costs in the quarter as compared to prior year. "The sale of the healthcare companies enabled us to significantly reduce indebtedness and we are now examining alternatives to reduce the cost of our remaining debt," Mr. Benson added. "I believe our resulting balance sheet will show considerable strength and move us closer towards our goal of an investment grade rating." Revenue of $763.7 million was relatively flat as compared to prior year. Favorable foreign exchange translation offset the impact of the company's efforts to focus on improving profitability by shedding under-performing contracts and bus routes. Operating income for the second quarter of 2005 was $50.9 million, an increase of $31.4 million, compared to $19.5 million for the prior year quarter. Second quarter EBITDA (a non-GAAP financial measure, representing operating income plus depreciation and amortization) was $115.9 million as compared to an EBITDA of $80.4 million in the second quarter of fiscal 2004, and reflects improvements in all three business segments. While lower insurance and claims costs contributed most of the improvement, further benefits were also realized from improved operations. The continued focus across each of the businesses to improve labor productivity and reduce operating costs more than offset rising fuel prices. Insurance and claims costs as a percentage of revenue were significantly lower than prior year reflecting favorable trends and disproportionately high claims costs in the first half of fiscal 2004. In the second half of fiscal 2004, these costs as a percentage of revenue declined to 5.5% from 8.0% for the first half of fiscal 2004. The company expects a more even distribution of costs in the current year and does not anticipate the year over year improvement in insurance and claims costs to continue in the second half of fiscal 2005. Schedules reconciling EBITDA to income from continuing operations and EBITDA to net cash provided by operating activities are provided as a supplement to this release. As the company has outlined in the past, the strategic plans prioritize improvements in profitability rather than revenue growth. As a result, consolidated revenue from continuing operations for fiscal 2005 is expected to be flat to down 2% over fiscal 2004. EBITDA from continuing operations for fiscal 2005 is projected to range from $405 to $420 million. On a continuing operations basis Laidlaw reported an EBITDA for fiscal 2004 of $373 million. Net capital expenditures for fiscal 2005 are projected to be approximately $170 to $180 million. As of February 28, 2005, the company had unrestricted cash and cash equivalents of $296.4 million and debt outstanding of $544.3 million. At the end of the quarter, the pension liability was $99.6 million reflecting the contribution of the proceeds of the sale of stock in the pension trust. Laidlaw acquired and retired the shares from the pension trust during the quarter. Net capital expenditures for the six month period were $52.6 million as compared to $89.4 million for the prior year. Included with the financials in this press release is a supplemental schedule of results on a continuing operations basis of fiscal 2004 third and fourth quarter. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc. -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service has placed the long-term debt ratings of Laidlaw International, Inc., under review for possible upgrade. The review is prompted by the recent announcement by the company that it had entered into a definitive agreement to sell both of its healthcare businesses to Onex Partners LP, an affiliate of Onex Corporation, for $820 million. Net proceeds after fees and assumption of a small amount of debt by the buyer is estimated at $775 million, with a majority of the proceeds intended to be used to repay substantial levels of Laidlaw's existing debt. Moody's has also assigned a Speculative Grade Liquidity Rating of SGL-2 to Laidlaw International, Inc. As part of the rating action, Moody's has reassigned to Laidlaw International, Inc., certain ratings, including the senior implied and senior unsecured issuer ratings, originally assigned at Laidlaw, Inc., in order to reflect more appropriately the company's current organizational structure. As reported in the Troubled Company Reporter on Dec. 9, 2004, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Laidlaw International, Inc., on CreditWatch with positive implications. The rating action follows Laidlaw's announcement that it has entered into definitive agreements to sell both of its health care companies, American Medical Response and Emcare, to Onex Partners L.P. for $820 million. Laidlaw expects to receive net cash proceeds of $775 million upon closing of the transaction, which is expected by the end of March 2005. Naperville, Illinois-based Laidlaw currently has about $1.5 billion of lease-adjusted debt. LEHMAN BROTHERS: Fitch Rates $25.1 Million Mortgage Trust at BB- ---------------------------------------------------------------- Fitch Ratings upgrades Lehman Brothers Floating Rate commercial mortgage trust 2002-LLF-C3: -- $4.7 million class F to 'AAA' from 'AA'; -- $36.9 million class G to 'AAA' from 'A+'. In addition, Fitch affirms these classes: -- Interest Only (IO) classes X-2 and X-FLP at 'AAA'; -- $25.1 million class H at 'A'; -- $25.1 million class J at 'BBB+'; -- $20 million class K at 'BBB'; -- $25.3 million class L at 'BBB-'; -- $25.1 million class M at 'BB-'. Classes A, X-1, X-FLWPB, X-FLWT, X-FLH, X-XSWPB, B, C, D, and E have paid in full. The recent repayment of the Decorative Center loan and scheduled amortization have resulted in increased credit enhancements to the classes. As a result, Fitch upgraded the two senior most classes outstanding. Future downgrades to classes J through M are possible, however, if leasing activity and net cash flow performance continue to deteriorate at Michigan Industrial Portfolio and the Boulder Portfolio. As of the March 2005 distribution date, the pool's outstanding principal balance has been reduced 85.2% to $162.3 million from $340.8 million at issuance. Sixteen loans have paid off since issuance. The Michigan Industrial Portfolio (53.3%) is secured by 25 industrial properties containing nearly 5.2 million square feet -- sf -- in the Grand Rapids Michigan submarket. Overall portfolio occupancy as of December 2004 was 62.6% as of Dec. 31, 2004, compared to 68% at last review and 81% at issuance. As of year- end 2004 the Fitch adjusted net cash flow -- NCF -- decreased 45.8% since issuance reflecting the declines in occupancy. The Fitch stressed debt service coverage ratio -- DSCR -- for the trust mortgage balance as of YE 2004 was 0.74 times compared to 1.37x at issuance. Affiliates of Kojaian Management Co, one of the largest industrial owners in the submarket, own and manage the properties and are actively marketing the vacant space. Although Fitch remains concerned with the loan performance, the trust exposure is less than $17 per sf. The Boulder Portfolio (24.5%) consists of three office properties located in Boulder, Colorado. Occupancy for the portfolio as of December 2004 was 66.7% compared to 66% at YE 2003 and 95.4% at issuance. As of YE 2004, the Fitch adjusted NCF declined 51% since issuance, reflecting the decline in occupancy. The DSCR as of YE 2004 for the trust mortgage balance was 0.69x compared to 1.40x at issuance. The servicer is currently holding a $2 million lease roll-over reserve. Although Fitch remains concerned with the loan performance, the loan remains current with a maturity of March 2006. The borrower, an affiliate of Investcorp, is actively marketing the vacant space. Printers Square (22.2%) is a mixed-use facility comprised of multifamily, office and research and development space. The Fitch adjusted NCF as of YE 2004 increased 21% since issuance, due to increased rents for both the multifamily and office portions. Occupancy as of December 2004 was 85% compared to 95% at issuance. As of YE 2004 the DSCR was 1.59x compared to 1.32x at issuance. As part of its review, Fitch analyzed the performance of the three remaining loans and the underlying collateral. Fitch compared each loan's debt service coverage ratio -- DSCR -- at issuance to the YE 2004 DSCR. DSCR's were calculated based on a Fitch adjusted NCF and a stressed debt service constant. For Michigan Industrial and Boulder Portfolio loans, an all-in DSCR was also calculated in order to fully reflect the entire stress on the loan. LIFEPOINT HOSPITALS: Moody's Affirms $1.55MM Facility's Ba3 Rating ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings of LifePoint Hospitals, Inc.'s proposed offering of a $1.550 million senior secured credit facility in connection with its proposed acquisition of Province Healthcare Company. The ratings follow an announcement by the company that the originally proposed senior secured Term Loan B of $1,100 million would be increased to $1,250 million. The originally proposed $300 million revolving credit facility will remain in place and undrawn. Moody's also affirmed the company's other ratings; the outlook remains stable. Moody's had anticipated that LifePoint Hospitals, Inc., would complete a second phase of financing in order to fund the acquisition of Province. Moody's now expects the financing of the acquisition to be completed the through the increased credit facility and cash on hand. Below is a summary of Moody's actions: LifePoint Hospitals, Inc. (parent): Affirmed Ba3 rating to proposed $1,250 million senior secured Term Loan B (originally proposed at $1,100 million) Affirmed Ba3 rating on proposed $300 million senior secured revolving credit facility Affirmed Ba3 senior implied rating Affirmed B2 senior unsecured issuer rating LifePoint (former parent): Affirmed B3 rating on $221 million ($250 million prior to the repurchase of $29 million of notes during 2004) 4.50% convertible subordinated notes due 2009, rated B3 The outlook for the ratings is stable. The ratings reflect: 1. the combined company's high pro forma leverage; 2. the likelihood that the combined company will continue with its acquisitive strategy; 3. Moody's concern over LifePoint's ability to capture out- migration of services to larger urban facilities or non- affiliated outpatient centers; 4. Moody's concern that budgetary pressures may lead to declining rates of Medicaid reimbursement or disproportionate share (DSH) payments to LifePoint in the near to intermediate term; 5. higher-than-historical bad debt expense (a concern throughout the industry); and 6. slowing same-store admissions growth for the rural hospital industry over the past several quarters. The ratings also reflect: 1. management's conservative strategy combined with an excellent track record of deleveraging; 2. the company's use of a significant portion of equity for the purchase of Province; 3. good operating cash flow and free cash flow that will allow for rapid debt repayment; 4. increased geographic and revenue diversification following the acquisition; 5. increased scale that will allow the company to compete more effectively with other non-urban hospital players; 6. solid market share (94% sole community providers); 7. an operating model that Moody's believes will allow the company to leverage synergies from the transaction in the areas of physician recruitment and retention as well as managed care pricing; and 8. better revenue per adjusted admission trends than its competitors, despite the general slowing of same-store admissions growth. The stable outlook reflects Moody's view that positive demographic trends will continue, and rates for Medicare, which the rating agency expect to represent 35%-40% of the company's revenues going forward will remain stable in the near term. Moody's feel that LifePoint has successfully navigated the general softening of hospital trends over the past few quarters. However, if same- store admissions and revenue per admissions trends were to turn negative and materially affect the company's operating cash flow, there may be downward pressure on the ratings. Moody's expects the company to use its free cash flow to pay down debt over the next several quarters and to continue with its strategy of acquiring small, non-urban, not-for-profit hospitals. The high pro forma leverage and the continued acquisition strategy are expected to constrain the ratio of adjusted cash flows from operations to adjusted debt and the ratio of adjusted free cash flow to adjusted debt, significant factors in the analysis of companies in this sector. Therefore, an upgrade of the ratings would not be expected in the near term. If the company is not able to attain sustainable ratios of adjusted operating cash flow to adjusted debt and adjusted free cash flow to adjusted debt of 20% and 10%, respectively, there could be downward pressure on the ratings. Additionally, we would expect to see adjusted debt to adjusted capital reach a sustainable level of 50% or less by 2006 in order to maintain the current ratings. Moody's would also see downward pressure on the ratings if the company were to make another large acquisition or fail to rapidly reduce leverage below the levels associated with the proposed transaction. Pro forma for the Province acquisition and giving effect to the revised capital structure, LifePoint will have cash flow coverage of debt that is weak to moderate for the Ba3 category. Pro forma adjusted cash flow from operations to adjusted debt would have been approximately 17% for the year ended December 31, 2004. With maintenance capital expenditures of approximately 7% of net revenue, pro forma adjusted free cash flow to adjusted debt would have been approximately 8% for the same period. Coverage metrics for LifePoint will also continue to be moderate. For the twelve months ended December 31, 2004, pro forma EBIT coverage of interest would have been approximately 4.5 times while pro forma EBITDA less capital expenditures to interest would have been approximately 3.9 times. Pro forma adjusted debt to adjusted book capitalization would have been approximately 62% at December 31, 2004. Moody's estimates that pro forma adjusted debt to EBITDAR would have been approximately 3.8 times. Moody's notes that the use of EBITDA and related EBITDA ratios as a single measure of cash flow without consideration of other factors can be misleading. Moody's expects LifePoint to have good liquidity pro forma for the acquisition and incurrence of debt. At December 31, 2004, on a pro forma basis, LifePoint would have had approximately $65 million of cash and access to a $300 million revolving credit facility. The senior secured credit facility is held at the level of the senior implied rating due to its preponderance in the capital structure and the belief that total collateral value would not cover the level of debt at pro forma December 31, 2004. The existing convertible notes are rated at three notches below the senior implied level due to contractual subordination, the lack of a guarantee and the lack of security. The senior unsecured issuer rating is notched two levels below the senior implied rating. Ratings remain subject to final review of documentation by Moody's. LifePoint Hospitals, Inc. operates 29 hospitals in non-urban communities (excluding one facility currently classified as discontinued operations) with a total of 2,688 licensed beds. For the twelve months ended December 31, 2004, LifePoint reported revenues of approximately $997 million. Province Healthcare is a provider of health care services in non- urban markets. The Company owns or leases 21 general acute care hospitals with a total of 2,533 licensed beds. For the twelve months ended December 31, 2004, Province reported total revenues of approximately $883 million. MAPCO EXPRESS: S&P Puts B+ Rating on $205M Senior Secured Loan -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Franklin, Tennessee-based MAPCO Express Inc. The rating outlook is negative. At the same time, Standard & Poor's assigned its 'B+' bank loan rating to the company's proposed $165 million term loan due 2011 and $40 million revolving credit facility due 2010. The recovery rating on the loan is '2', indicating the expectation for substantial recovery of principal (80%-100%) in the event of a payment default. The senior secured credit facilities are obligations of MAPCO Express Inc. and MAPCO Family Centers Inc. (the operating companies). Proceeds from the credit facilities will be used to partly fund a dividend to Delek US Holdings Inc., the parent company, and to refinance existing indebtedness. Pro forma for the transaction, the company will have about $187 million of funded debt outstanding. The ratings are based on preliminary terms and conditions, and are subject to review once final documentation is received. "The ratings reflect MAPCO's participation as a relatively small regional player in the competitive and highly fragmented convenience store industry, significant exposure to the volatility of gasoline prices, and market concentrations in a few key markets in the Southeastern U.S., in which economic slowdowns can impact operations," said Standard & Poor's credit analyst Kristi Broderick. "The company also is highly leveraged and has a relatively small EBITDA base." MAPCO controls a network of 418 convenience store and gasoline retailers in eight states in the Southeastern U.S. The company's primary markets are Nashville, Memphis, and Richmond, and it operates stores under the MAPCO Express, East Coast, and Discount Food Mart names. MAPCO is a wholly owned subsidiary of Delek US Holdings Inc., which is part of The Delek Group, an Israel-based conglomerate. MAULDIN INVESTMENTS: Case Summary & 2 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Mauldin Investments, LLC fdba JJT&T Post Office Box 115 Greenville, South Carolina 29615 Bankruptcy Case No.: 05-03875 Chapter 11 Petition Date: April 2, 2005 Court: District of South Carolina (Spartanburg) Judge: Judge John E. Waites Debtor's Counsel: Randy A. Skinner, Esq. Skinner and Associates Law Firm, LLC P.O. Box 1843 Greenville, South Carolina 29602 Tel: (864) 232-2007 Fax: (864) 232-8496 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Greenville County 2004 Property taxes $5,761 Tax Collector on real property P.O. Box 368 located at 304 East Greenville, Stone Avenue, South Carolina 29602 Greenville, SC Collins Hammett Construction Repair sinkhole $500 P.O. Box 299 Moore, South Carolina 29369 MERRILL LYNCH: Fitch Upgrades Class B-2 upgraded to BBB from BB+ ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Merrill Lynch Mortgage Investors, Inc. mortgage pass-through certificates: Series 2001-S1: -- Classes 1-A and 2-A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AAA'; -- Class M-3 affirmed at 'AAA' ; -- Class B-1 upgraded to 'AA+' from 'AA'; -- Class B-2 upgraded to 'A+' from 'A.' Series 2002-A3: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 upgraded to 'AAA' from 'AA'; -- Class M-3 upgraded to 'AA' from 'A'; -- Class B-1 upgraded to 'A' from 'BBB'; -- Class B-2 upgraded to 'BBB' from 'BB+'. Series 2003-A1: -- Classes 1-A, 2-A and 3-A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 upgraded to 'AA+' from 'AA'; -- Class M-3 upgraded to 'A+' from 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'B'. The upgrades reflect an increase in credit enhancement relative to future loss expectations, and represent approximately $11.5 million of outstanding principal while the affirmations affect around $168 million. The pool factors (current principal balance as a percentage of original) range from approximately 6% to 30% outstanding. The underlying collateral for series 2001-S1 consists of fully amortizing 15- to 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. Credit enhancement for the upgraded classes has grown to more than 13 times original levels. There have been no realized losses to date. The underlying collateral for series 2002-A3 consists of fully amortizing 15- to 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Credit enhancement for the upgraded classes has increased by more than 9x original levels. The pool has not incurred any losses to date. Series 2003-A1 is secured from conventional, first lien, one- to four-family, 15- to 30-year adjustable-rate residential mortgage loans. The upgraded classes have experienced a rise in credit enhancement to more than 3x original levels. As of the March 25 distribution date, no realized losses have occurred in the mortgage pool. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ METRIS MASTER: Fitch Rates $44.35 Million Secured Notes at BB+ -------------------------------------------------------------- Fitch rates Metris Master Trust's series 2005-1: -- $278.5 million class A floating-rate asset-backed securities 'AAA'; -- $63.3 million class M floating-rate asset-backed securities 'AA'; -- $34.0 million class B floating-rate asset-backed securities 'A'. In addition, Metris Secured Note Trust 2005-1 is rated: -- $82.3 million class C floating-rate secured notes 'BBB'; -- $44.35 million class D floating-rate secured notes 'BB+'. In addition, Fitch affirms its outstanding trust ratings, indicating that the issuance of this new series will not result in a reduction or withdrawal of ratings assigned to any series or class of master trust securities. The ratings are based on the quality of the Visa and MasterCard receivables pool, available credit enhancement, Direct Merchants Credit Card Bank, N.A.'s servicing capabilities, and the sound legal and cash flow structures. Credit enhancement for the class A securities consists of 10.0% subordination of class M, 12.0% subordination of class B, 13.0% subordination of class C notes, 7.0% subordination of class D notes, and 14.0% of overcollateralization -- OC. Credit enhancement for the class M securities consists of 12.0% subordination of class B, 13.0% subordination of class C notes, 7.0% subordination of class D notes, and 14.0% OC. Credit enhancement supporting the class B securities consists of 13.0% subordination of class C notes, 7.0% subordination of class D notes, and 14.0% OC. Credit enhancement supporting the class C secured notes consists of 7.0% subordination of class D notes and 14.0% OC, as well as a note reserve account. Credit enhancement supporting the class D notes is derived from 14.0% OC, as well as a note reserve account. Class A, M, and B securityholders will receive monthly interest payments of one-month LIBOR (1mL) plus 0.10%, 1mL plus 0.17%, and 1mL plus 0.42% per annum, respectively. Securityholders will receive monthly interest payments on the 20th business day of each month, commencing on May 20, 2005. The ratings address the likelihood of investors receiving full and timely interest payments in accordance with the terms of the underlying documents and full repayment of principal by the March 21, 2011, legal final termination date. They do not address the likelihood of principal repayment by the expected maturity date of May 20, 2007 for class A, M, and B securities and class C and D secured notes. MICHAEL & DEBORAH CASH: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Michael J. & Deborah P. Cash Sr. dba Mike Cash Insurance and Office Products P.O. Box 732 Monroe, Georgia 30655 Bankruptcy Case No.: 05-30442 Chapter 11 Petition Date: March 23, 2005 Type of Business: The Debtor sells Office supplies, office equipment, office furniture, insurance, computers, and computer products. See http://www.megamikecash.com/ Court: Middle District of Georgia (Athens) Judge: Robert F. Hershner, Jr. Debtor's Counsel: Ernest V. Harris, Esq. Harris & Liken, L.L.P. 1045 South Milledge Avenue, Suite 200 P.O. Box 1586 Athens, Georgia 30603 Tel: (706) 613-1953 Fax: (706) 613-0053 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtors' did not file a list of its 20 Largest Unsecured Creditors. MIRANT CORP: Court Limits Document Discovery on MAGi Committee -------------------------------------------------------------- Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas grants the request of the Official Committee of Unsecured Creditors appointed in Mirant Americas Generation LLC's chapter 11 case to the extent that discovery of the MAGi Committee in connection with the valuation hearing to be held will be limited to the production of: (i) documents or information in the possession, custody or control of the MAGi Committee and its retained professionals, and will not include any documents or information in the possession of former members of the MAGi Committee; and (ii) documents or information consulted, utilized or relied upon by Houlihan Lokey Howard & Zukin in the preparation of the expert valuation report submitted by Houlihan Lokey on the MAGi Committee's behalf. The MAGi Committee's request is denied with respect to the First Set of Interrogatories to the MAGi Committee served by the Official Committee of Equity Security Holders. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Southern Co. Objects to Valuation Findings' Effect --------------------------------------------------------------- The Southern Company advises parties-in-interest in the chapter 11 cases of Mirant Corporation and its debtor-affiliates that: (a) it considers the purpose of any findings of fact and conclusions of law that the Court may make in connection with the Valuation Hearing to be limited strictly to a determination of the value of the Debtors for the purpose of confirmation of the Debtors' Plan of Reorganization, and (b) the findings will have neither collateral estoppel nor res judicata effect regarding the existence, validity, or amount of any claims by or against it. Southern Company recognizes that a determination is needed for evaluation of the Disclosure Statement and the Plan of the Debtors. If the Debtors intend for any findings of fact or conclusions of law resulting from the Valuation Hearing to be binding on Southern Company, however, Southern Company objects because the findings of fact and conclusions of law would violate its procedural and due process rights. Evelyn H. Biery, Esq., at Fulbright & Jaworski L.L.P., in Houston, Texas, informs the Court that Southern Company does not intend to participate in the Valuation Hearing. Given that no claim has been formally asserted against Southern Company, there is no reason for Southern Company to attempt to defend itself at this time. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOLECULAR DIAGNOSTICS: Can't File Annual Report on Time ------------------------------------------------------- Molecular Diagnostics, Inc., is unable to timely file its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, because the audit of the Company's annual financial statements will not be complete in time for management to fully prepare and finalize the Form 10-KSB by the prescribed filing date. However, the Company will use its best efforts to complete the required Annual Report on Form 10-KSB as quickly as possible. The Company expects to report a net loss of approximately $13.6 million for the fiscal year ended December 31, 2004 as compared to a net loss of $9.6 million for fiscal year 2003, primarily resulting from a one-time write-off of approximately $6.85 million in connection with legal settlements entered into by the Company in the fourth quarter of 2004. This charge consisted primarily of a non-cash write-off of intangible assets. Molecular Diagnostics develops cost-effective cancer screening systems, which can be utilized in a laboratory or at the point-of- care, to assist in the early detection of cervical, gastrointestinal, and other cancers. The InPath System is being developed to provide medical practitioners with a highly accurate, low-cost, cervical cancer screening system that can be integrated into existing medical models or at the point-of-care. At Sept. 30, 2004, Molecular Diagnostics' balance sheet showed a $4,934,000 stockholders' deficit, compared to a $8,549,000 deficit at Dec. 31, 2003. MONROE CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Monroe Construction Company, LLC 3993 Howard Hughes Parkway, Suite 830 Las Vegas, Nevada 89109 Bankruptcy Case No.: 05-12757 Type of Business: The Debtor is a contractor. Chapter 11 Petition Date: April 6, 2005 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: David A. Colvin, Esq. Marquis & Aurbach 10001 Park Run Drive Las Vegas, Nevada 89145 Tel: (702) 382-0711 - and - Dykema Gossett Rooks Pitts PLLC Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Monroe Capital Partners, LLC $4,901,244 3993 Howard Hughes Parkway, Suite 830 Las Vegas, NV 89109 Dick Anderson Construction, Inc. $850,344 4610 Tri-Hill Frontage Road Great Falls, MT 59404 Design Showcase Interiors $400,000 3585 East Patrick Lane, Suite 700 Las Vegas, NV 89120 XLV Services $110,505 P.O. Box 200 3900 Paradise Road, Suite R Las Vegas, NV 89109 Missoula Valley Excavating, Inc. $102,910 9905 Inspiration Drive Missoula, MT 59808 Rattlesnake Electrical $88,633 P.O. Box 4292 Missoula, MT 59806 Temp Right Services, Inc. $46,631 101 North Catlin Missoula, MT 59801 Myni Ferguson $45,425 395 Blanchard Lake Drive Whitefish, MT 59937 Clawson Manufacturing, Inc. $37,714 P.O. Box 17557 Missoula, MT 59808 All Phase Construction $34,067 20805 Mullan Road Frenchtown, MT 58834 Ken's Refrigeration & Heating $27,505 Stanton Stone Supply, Inc. $20,050 Antonioli and Wade PC $18,779 Home Depot $15,771 Oliver Painting $14,325 BMC Lumber $12,006 Boyce Lumber $10,847 Fabricon $9,800 Eyer Electrical Construction $7,389 Lincoln Machine & Welding $5,554 MONTGOMERY BUILDING: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Montgomery Building, LLC PO Box 3126 Spartanburg, South Carolina 29304 Bankruptcy Case No.: 05-03937 Chapter 11 Petition Date: April 4, 2005 Type of Business: Undetermined. Cleveland-White Realtors shares the Debtors' Post Office Box. See http://www.clevelandwhite.com/ Court: District of South Carolina (Spartanburg) Judge: Chief Judge Wm. Thurmond Bishop Debtor's Counsel: G. William McCarthy, Jr., Esq. Robinson, Barton, McCarthy, Calloway & Johnson, P.A., 1715 Pickens Street, Columbia, South Carolina 29211 Tel: (803) 256-6400 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Correll Insurance $37,235 Attn Ben Correll P.O. Box 2707 Spartanburg SC 29304 Duke Power $16,414 P.O. Box 1090 Charlotte NC 28201 Campbell Meek and Associates $11,781 Attn Martin Meek 807 E. Main Street Spartanburg SC 29302 The Budd Group Inc. $7,858 Schindler Elevator Corp. $6,527 Action Building Company Inc. $5,000 W.N. Kirkland Inc. $1,463 Total Comfort Service Inc. $943 Spartanburg Water System $201 MOSLER INC: Court Extends Plan Trustee's Claim Objection Period --------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave Alfred R. Rabasca -- the Plan Agent appointed in the chapter 11 case of Mosler, Inc., nka MDIP, Inc., pursuant to the company's confirmed Chapter 11 Plan -- until July 27, 2005, to object to proofs of claim filed against the Debtor's estates. The Court confirmed the Debtor's Second Amended Plan of Reorganization on June 30, 2003, and the Plan took effect on Aug. 1, 2003. Pursuant to the Confirmed Plan, Mr. Rabasca has authority to object to proofs of claim. The Court formally closed MDIP of Alabama, Inc.'s and MDIP Indiana LLC's chapter 11 cases on March 31, 2004. MDIP, Inc., f/k/a Mosler, Incorporated, was a leading integrator of physical and electronic security systems, filed, along with its debtor-affiliates for chapter 11 protection on August 6, 2001 (Bankr. D. Del. Case No. 01-10055). Russell C. Silberglied, Esq., at Richards Layton & Finger, and Robert Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, represented the Debtors. When the Company filed for protection from its creditors, it estimated assets of $10 million to $50 million and estimated debts of more than $100 million. The Debtors' Second Amended Joint Plan of Liquidation was confirmed by the Honorable Gregory M. Sleet on June 30, 2003. MOUNT SINAI: Fitch Ups Revenue Bonds' Rating Two Notches to BB+ --------------------------------------------------------------- Fitch Ratings upgrades the approximately $295 million City of Miami Beach Health Facilities Authority revenue bonds issued on behalf of Mount Sinai Medical Center, Florida -- MSMC -- to 'BB+' from 'BB', as listed below. The Rating Outlook has been revised to Positive from Stable. The rating is primarily supported by MSMC's continued financial improvement, good management practices, and market position as the only full-service provider on Miami Beach. MSMC's operating margin (excluding a $10 million contribution from the Mount Sinai Medical Center Foundation, and a $2.8 million loss on extinguishment of debt) improved to negative 1% (negative $4.4 million) in 2004 from negative 3.4% ($14.9 million) in 2003. MSMC's bottom line (excluding the Foundation contribution) also improved to negative 0.6% (negative $2.6 million) in 2004 from negative 2.3% ($10.1 million). MSMC fell short of its breakeven bottom line goal in 2004 primarily due to volume loss largely associated with the 2004 hurricanes. Days cash on hand (including unrestricted cash and investments of the Foundation) improved to 105.4 days at 2004 from 91.4 days at 2003. Days in accounts receivable at 2004 were a very low 43.6 days, reflecting continued improvement in revenue cycle management. Fitch also notes strong labor management (personnel costs as a percent of total revenue of 37.7% in 2004), excellent disclosure practices, and the formation of a captive insurance company to stabilize insurance expense as initiatives that have contributed to MSMC's overall improvement. Lastly, MSMC's position as the only full-service provider on Miami Beach has led to ongoing philanthropic support from the community. Credit concerns include future capital needs, declining utilization trends, and a high debt burden. MSMC's average age of plant (11.6 years) continues to rise, indicating the need to increase capital spending. Fitch notes, however, that capital spending as a percent of depreciation expense was 121.9% at 2004. MSMC's admissions, outpatient surgeries, and emergency room visits declined 3.1%, 2.6%, and 5.4% in 2004 compared to the prior year. While a large part of this decline can be attributed to the disruption from the 2004 hurricanes, Fitch believes limited physician office space and deferred spending have also contributed to declining utilization trends. Management indicated that finalization of plans to build a 100,000 square foot developer- financed medical office building are nearing completion. MSMC's debt burden remains high as indicated by maximum annual debt service as a percent of revenues, and debt to earnings before interest, taxes, depreciation and amortization of 5.3% and 5.6 times, respectively, in 2004. The upgrade and Positive Outlook reflect Fitch's expectation that MSMC will meet its budgeted goals over the next two years. Management is budgeting a $1.1 million bottom line in 2005. Management indicated that its ongoing legal issues have been reserved for at estimates that are expected to fully cover the outcomes. Fundraising by the Foundation is expected to improve in 2005 to $16.9 million, from actual pledges and bequests of $12 million in 2004; however, Fitch does not expect significant improvement in liquidity indicators due to MSMC's future capital needs. MSMC is a two-campus health care provider offering a wide range of tertiary services with 979 licensed beds (780 staffed) located in Miami Beach, Florida. MSMC had total operating revenue of $430 million in 2004. MSMC covenants to provide quarterly and annual disclosure to bondholders. MSMC's strong disclosure includes management discussion and analysis, an income statement, balance sheet, cash flow statement, and utilization statistics and can be accessed at http://www.dac-ey.com/ MSMC also conducts quarterly conference calls for investors. MOUNT SINAI: Good Financial Performance Cues S&P to Lift Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its rating to 'BB+' from 'BB' on Miami Beach Health Facilities Authority, Fla.'s $282.6 million outstanding series 2004, 2001A, and 1998 bonds, issued on behalf of Mount Sinai Medical Center (Mount Sinai) and its subsidiaries. The outlook is stable. The rating incorporates the financial strength of Mount Sinai Medical Center Foundation, as it is a guarantor of Mount Sinai's debt and the heart of Mount Sinai's strong fund-raising efforts, which remain essential to the medical center's overall financial profile. "The upgrade reflects the management team's steady track record of improved financial performance during a number of years, highlighted by a return to positive excess margins and the solid growth in liquidity," said Standard & Poor's credit analyst Martin Arrick. However, the rating remains non-investment grade due to a combination of concerns, including: (1) persistent, though smaller, losses from operations (excluding unrestricted foundation support); (2) marginal declines in business volume and net patient service revenue; (3) a series of ongoing legal suits, including an SEC investigation; and (4) the potential for a significant organizational expansion three to five years out, although the size, scope, and funding of the projects are still in the conceptual phase. The upgrade is supported by a clear improvement in operating performance since 2001, reflecting, in part, strong overall revenue-cycle management, including: (1) a sharp reduction in bad debt expense with no increase in charity care; (2) negotiated rate increases; and (3) strong cost-control efforts, highlighted by lower insurance costs. All generating improved debt service coverage of more than 2.0x for the first time. Additional factors supporting the 'BB+' rating include: (1) the achievement of solid improvements in unrestricted liquidity, including the unrestricted net assets of the foundation, simultaneously with the improvement of receivables and the reduction of payables; (2) the maintenance of solid fundraising, with $12 million raised by the foundation in 2004; and (3) the maintenance of a sound business position as the major acute-care provider in Miami Beach, Florida and one of the two major academic medical centers in Miami- Dade County, Florida Also, Mount Sinai has a solid management team that is focused on: (1) overall improved financial performance, highlighted by growing new business lines (including a dedicated vascular center), (2) the elimination of underperforming programs and assets, and (3) the implementation of a comprehensive campus realignment plan that is still in process. The bonds are secured by a revenue pledge and a mortgage of the medical center and are also backed by a guaranty from the foundation. MUELLER GROUP: Cures Default By Filing Delayed Financial Reports ---------------------------------------------------------------- Mueller Water Products, Inc., and its wholly owned subsidiary, Mueller Group, Inc., delivered their Annual Reports on Form 10-K for the year ended September 30, 2004, and their Quarterly Reports on Form 10-Q for the quarter ended January 1, 2005, to the Securities and Exchange Commission. Mueller Group also delivered to its lenders under the Mueller Group senior credit facility copies of its filed annual and quarterly reports and the compliance certificates required for the fiscal year ended September 30, 2004, and the quarter ended January 1, 2005. By delivering these reports and certificates, Mueller Group satisfied the terms of the February 4, 2005, waiver under its senior credit facility that permitted Mueller Group to deliver these reports and certificates by March 31, 2005. These filings cure any default relating to late filings of annual or quarterly reports under the indentures for the Company's outstanding senior discount notes and for Mueller Group's outstanding senior secured and senior subordinated notes. About the Mueller Group, Inc. The Mueller Group is a leading North American manufacturer of a broad range of flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution systems and piping systems. It has manufactured industry-leading products for almost 150 years and currently operates thirty manufacturing facilities located in the United States, Canada, and China. * * * As reported in the Troubled Company Reporter on Jan. 7, 2005, Moody's Investors Service placed the ratings of Mueller Group, Inc., under review for possible downgrade. The action was prompted by Moody's concerns over Mueller's December 29, 2004, announcement that it was unable to file its 10-K for the fiscal year ended September 30, 2004. In November 2004, Mueller's Audit Committee was notified of alleged potential accounting improprieties. The Audit Committee appointed an independent law firm to investigate the allegations and until this investigation is concluded, Mueller cannot complete the preparation of its financial statements. If the company fails to file the 10-K within a 15-day period after the due date of the 10-K (or January 13th), it would constitute a default under its credit facility, senior subordinated and senior secured notes, as well as Mueller Water Products, Inc., senior discount notes (unrated). These ratings were placed under review for downgrade: * Second lien senior secured notes, due 2011 -- B3 * Senior subordinated notes, due 2012 -- Caa1 * First lien senior secured term loan and revolving credit facility -- B2 * Senior implied rating -- B2 * Senior unsecured issuer rating -- Caa1 MUELLER WATER: Moody's Confirms B2 Senior Implied Rating -------------------------------------------------------- Moody's confirmed the ratings of Mueller Group, Inc. (B2 senior implied rating), a wholly-owned subsidiary of Mueller Water Products, Inc. The ratings confirmation was prompted by Mueller's successful filing of its 10-K for the fiscal year ended September 30, 2004 and 10-Q for the quarter ended January 1, 2005. The company's filing of these statements has cured technical violations under Mueller Group, Inc.'s credit facility, senior subordinated and senior secured notes, as well as Mueller Water Products, Inc.'s senior discount notes (unrated). The company received an unqualified opinion from its independent auditors. This concludes a review that was initiated on January 5, 2005. When Mueller's ratings were placed under review for downgrade in January, Moody's had expressed concerns over the potential magnitude of any accounting improprieties as well as any potential weaknesses in the company's financial reporting and internal controls. Moody's has concluded that the accounting restatements, which primarily applied to inventory valuation, research and development costs, and revenue recognition, were not sufficiently material to warrant any adjustment to the ratings. The confirmation also acknowledges that Mueller has initiated actions to address financial reporting and internal control weaknesses identified in the investigation performed by an independent law firm. Such actions include expanding the internal audit function and appointing an interim Chief Financial Officer. Moody's will continue to monitor Mueller's progress on these initiatives. The ratings are supported by Mueller's prominent position in its markets that have significant barriers to entry, its extensive distribution network and limited competition, particularly within water infrastructure products. Mueller's two business segments manufacture and distribute flow control products for water and gas distribution and piping system products. Mueller's 2004 operating results have improved significantly, reflecting continued strength in residential construction and increased spending from municipalities and non-residential construction markets. In addition, Mueller has been successful with improving its operating results by lowering its cost structure through innovative manufacturing techniques and facility consolidation. The ratings confirmation also recognizes Mueller's adequate liquidity, which is supported by a $52 million cash balance and $58 million of revolving credit facility availability as of January 1, 2005. The company has a favorable debt maturity profile with only $11 million of debt maturing over the next three fiscal years. Additionally, the company has good flexibility under the financial covenants governing the credit facility. The outlook reflects Moody's expectation that Mueller will generate approximately $50 million of free cash flow in FY2005, implying FCF to total debt of about 5%. Should free cash flow deteriorate to breakeven levels, or should Mueller be tapped for additional cash distributions or undertake meaningful debt financed acquisition activity, a ratings downgrade would be likely. Conversely, if the company reduces consolidated leverage to less than 5.0 times on a sustainable basis while consistently generating a FCF to debt of at least 5%, Moody's may consider raising the outlook or ratings. These ratings were confirmed: * Second lien senior secured notes, due 2011 - B3 * Senior subordinated notes, due 2012 - Caa1 * First lien senior secured term loan and revolving credit facility - B2 * Senior implied rating - B2 * Senior unsecured issuer rating - Caa1 Headquartered in Decatur, Illinois, Mueller Water Products, Inc., produces a wide range of flow control products including hydrants, valves, pipe fittings, pipe hangers, pipe nipples, and other related products. The company reported revenues of $1.1 billion for the LTM ended January 1, 2005. NATIONAL WATERWORKS: Parent's $400M IPO Cues S&P to Watch Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B+' corporate credit rating, on National Waterworks Inc. (NWI) on CreditWatch with positive implications. At Dec. 31, 2004, the Waco, Texas-based distributor of water products had approximately $678 million in total debt outstanding, including parent company obligations. The CreditWatch placement follows the S-1 filing with the SEC by parent company National Waterworks Holdings Inc. for an initial public offering of up to $400 million, with proceeds to be used in part for repurchase of all of the $250 million, 12.5% holding company notes, all of NWI's $200 million 10.5% subordinated notes, borrowings under its revolving bank credit facility, and fees associated with the transaction. "The transaction, if completed as noted in the filing, would be a meaningful shift in the company's financial strategies," said Standard & Poor's credit analyst Joel Levington, "which historically have been driven in part by its equity sponsor's very aggressive financial motives." Before taking a further rating action, we will meet with management to discuss the timing for the transaction, near- and long-term financial strategies, and business strategies with potentially a much-reduced financial burden. NATURADE INC: Independent Accountants Raise Going Concern Doubts ---------------------------------------------------------------- At December 31, 2004, Naturade Inc. had a $22,023,470 accumulated deficit, a $1,859,320 net working capital deficit and a $3,031,547 stockholders' capital deficiency. The Company anticipates that it will incur net losses for the foreseeable future and will need access to additional financing for working capital and to expand its business. If unsuccessful in those efforts, Naturade could be forced to cease operations and investors in Naturade's common stockcould lose their entire investment. Based on this situation, the Company's independent registered public accounting firm qualified their opinion on the Company's December 31, 2004, financial statements by including an explanatory paragraph in which they expressed substantial doubt about the Company's ability to continue as a going concern. Defaults As of December 31, 2004, the Company was in compliance with all loan covenants of its Credit Agreement. The Company was, however, in default of the payment provisions of certain Investor Notes and a Loan Agreement. On January 26, 2005, the due date on the Loan Agreement was extended to December 31, 2005. On March 25, 2005, the payment provisions of the Investor Notes was amended to require a principal payment of $20,000 plus accrued interest on July 15, 2005 with the remaining principal of $92,345 plus accrued interest due December 31, 2005. Revenue Sources The Company's three largest customers together account for 54% of sales revenue for the fiscal year ended December 31, 2004. One mass market customer represented approximately 23% of Naturade's total sales, and two health food distributors accounted for 31% of total sales during the year ended December 31, 2004. The loss of any of these customers could have a material adverse effect on the Company's results of operations. From time to time, major customers of Naturade have experienced financial difficulties. Naturade does not have long-term contracts with any of its customers and, accordingly, there can be no assurance that any customer will continue to place orders with Naturade to the same extent it has in the past, or at all. Nutrition Business Journal, a San Diego-based research publication that specializes in this industry, reports that sales for the overall $58 billion "Nutrition" industry were up 7% in 2004 versus 2003. Naturade primarily competes in the $19 billion segment defined by NBJ as Supplements, which grew 3.8% in 2004. In addition, the report points out that sales of supplements were growing at similar rates in both the mass market channel and health food and natural product stores at approximately 3.5%. Cash Sources The Company's sources of cash in 2004 came principally from operations supported by drawings on its line of credit from Wells Fargo and a Loan Agreement with a principal shareholder and other shareholders coupled with the sale of the aloe vera brand. Based on the current operating plan, the Company believes that its existing cash balances and financing arrangements will provide it with sufficient funds to finance its operations for at least the next twelve months. In the past, the Company has utilized both operating and capital lease financing for certain equipment used in its operations and expects to continue to selectively do so in the future. The Company may in the future require additional funds to support its working capital requirements, or for other purposes, and may seek to raise such additional funds through the sale of public, or private, equity and debt financings, or from other sources. No assurance can be given that additional financing will be available in the future, or that if available, the financing will be obtainable on terms favorable to the Company's stockholders, or to the Company when it is required. Naturade Inc. is a branded natural products marketing company focused on growth through innovative, scientifically supported products designed to nourish the health and well being of consumers. The Company primarily competes in the overall market for natural, nutritional supplements. NETEXIT INC: Pa. Wants Ch. 11 Plan Denied Until Returns Are Filed ----------------------------------------------------------------- The Pennsylvania Department of Revenue asks the U.S. Bankruptcy Court for the District of Delaware to delay or to deny confirmation of Netexit Inc. and its debtor-affiliates' plan of reorganization until the Debtors file their prepetition corporate tax reports and withholding tax returns. The Pennsylvania Revenue Department also wants the Debtors to file "out-of-existence" affidavits for corporate entities that no longer exist. As reported in the Troubled Company Reporter on Mar. 18, 2005, the Debtors delivered their Disclosure Statement explaining their Liquidating Plan of Reorganization to the U.S. Bankruptcy Court for the District of Delaware. Assets Sold in 2003 The Debtors remind the Court that, on November 25, 2003, they sold substantially all of their assets to Avaya, Inc. As a result of the sale to Avaya, Netexit and its subsidiaries are left with the proceeds of the asset sale, no ability generate ongoing revenues, and a mountain of liabilities. The Debtors' Liquidating Plan is is designed to efficiently and economically resolve claims against their estates and equitably distribute the estates' remaining assets to creditors. About the Plan The Plan groups claims and interests into four classes: -- priority claims; -- general unsecured litigation claims; -- general unsecured contract claims; and -- equity interests holders. Holders of approximately $11,768,800 of general unsecured litigation claims and $189,915,025 of general unsecured contract claims are projected to recover approximately 24% of what they're owed. Equity interests holders will get nothing under the Plan. Prepetition History Netexit, Inc., formerly known as Expanets, Inc., was a nationwide provider of networked communications and data services and solutions to small to mid-sized businesses. Expanets, itself and through its subsidiaries, offered sendees including voice and data networking, internet connectivity messaging systems, advanced call processing applications, computer telephone networking management and carrier services. Expanets was 99% owned by Northwestern Corporation. Northwestern is a publicly traded Delaware corporation that was incorporated in 1923. Northwestern and its direct and indirect subsidiaries comprise one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest regions of the United States, serving approximately 608,000 customers throughout Montana, South Dakota and Nebraska. The acquisition of Expanets and several non-utility subsidiary entities was an attempt by Northwestern to diversity. Northwestern incurred a significant amount of debt to finance a number of acquisitions by Expanets, as well as provide it with working capital, Expanets was formed in 1997 and through December 31, 1999, had established operations in many major United States markets through the acquisition of 26 telecom and data services companies. In March 2000, in its largest acquisition, Expanets purchased the Growing and Emerging Markets division of Lucent Technologies Enterprise Network Group. NCR's investment in Expanets took the form of common stock, preferred stock and debt. The significant investments in Expanets and in other non-utility businesses, resulted in a severe financial drain on NOR, particularly when Expanets, as well as other investments, including Blue Dot, failed to perform as expected. Eventually, Northwestern determined to restructure itself and on September 14, 2003 filed its own Chapter 11 case. Netexit, Inc., aka Expanets, Inc., based in Sioux Falls, South Dakota, and its debtor-affiliates filed for chapter 11 protection on May 4, 2004 (Bankr. D. Del. Case No. 04-11321). Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker LLP, and Scott D. Cousins, Esq. Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, represent the Debtors. When the company filed for chapter 11 protection, it estimated $50 million in assets and more than $100 million in liabilities. NOMURA ASSET: Fitch Assigns Low-B Ratings on B-2 & B-3 Classes -------------------------------------------------------------- Nomura Asset Securitization Corporation's, commercial mortgage pass-through certificates, series 1997-D4, are upgraded by Fitch Ratings: -- $21 million class A-4 to 'AAA' from 'AA+'; -- $42.1 million class A-5 to 'AA+' from 'AA'. These classes are affirmed by Fitch: -- $629.6 million class A1-D 'AAA'; -- $84.2 million class A1-E 'AAA'; -- Interest-only class PS-1 'AAA'; -- $28.1 million class A-2 'AAA'; -- $49.1 million class A-3 'AAA'; -- $28.1 million class A-6 'A+'; -- $21 million class A-7 'A'; -- $21 million class A-8 'BBB+'; -- $35.1 million class B-1 'BBB-'; -- $35.1 million class B-2 'BB'; -- $14 million class B-3 'BB-'. Fitch does not rate the $21 million class B-4, the $14 million class B-5, the $14 million class B-6, the $11.8 million class B-7, or the $562 class B-7H certificates. The upgrades are due to increased credit enhancement since issuance. As of the March 2005 distribution date, the pool's certificate balance has been reduced by 24% to $1.07 billion from $1.40 billion at issuance. Fifteen loans (22%) have been fully or partially defeased, including the largest loan in the pool (6%). Currently, eight loans (13%) are in special servicing, including five delinquent loans (5.5%). The largest specially serviced loan is the second largest loan in the pool (6%), secured by six office properties in Massachusetts. A new borrower assumed the loan in 2004, curing all defaults and the loan is current. The loan is expected to be returned to the master servicer shortly. The second largest specially serviced loan (1.8%) is secured by a retail property in West Mifflin, Pa. After Builder's Square and Pharmor had vacated, a new tenant moved in, increasing occupancy to 91%. However, the borrower still could not make the debt service payments. The special servicer is evaluating options. Losses are expected. The third largest specially serviced loan (1.7%) is currently secured by two retail outlet centers in Oregon and Idaho. The loan became real estate owned -- REO -- in February 2004. The properties are expected to be sold shortly and losses are expected. NRG ENERGY: Appoints Anne Schaumburg to Board of Directors ---------------------------------------------------------- NRG Energy, Inc. (NYSE:NRG) appointed Anne C. Schaumburg to the Company's Board of Directors, effective April 1. Ms. Schaumburg served as Managing Director of Credit Suisse First Boston's Global Energy Group from 1984 to 2002. During the five years prior, she was Managing Director in the Utilities Group at Dean Witter Financial Services Group. Ms. Schaumburg holds an Associate of Arts degree from the College of Staten Island. "Anne brings an exceptional knowledge of the power industry and deep experience with the capital markets, the combination of which will make her invaluable in her role as a Director," said Howard E. Cosgrove, Chairman of the NRG Board. The appointment of Schaumburg brings NRG's Board to nine members and she is filling one of the three seats vacated by MatlinPatterson Global Advisers LLC. Eight of the nine members, including Schaumburg, qualify as independent directors under the listing standards of the New York Stock Exchange. * * * Timothy W. J. O'Brien, NRG Energy, Inc.'s Vice President, Secretary and General Counsel, discloses in a regulatory filing with the Securities and Exchange Commission that the Company has not yet determined Ms. Schaumburg's committee assignments. There are no arrangements or understandings between Ms. Schaumburg and any other persons pursuant to which she was elected. There are no transactions involving the Company and Ms. Schaumburg that would be required to be reported by Item 404(a) of Regulation S-K. Mr. O'Brien also reports that, on the effective date of her appointment, Ms. Schaumburg will receive a grant of deferred stock units equal to $88,000 divided by the closing price of the Company's common stock on April 1, 2005. The grant is payable, at her option, immediately, upon termination of her service on the Board of Directors or pursuant to a schedule to be determined. Each deferred stock unit is equivalent in value to one share of the Company's common stock, par value $0.01. Ms. Schaumburg will also receive compensation consistent with that received by the Company's other directors. 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 & Wachovia Agree to Reduce Cash Mgt. Reserve ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved a stipulation modifying the order confirming Oakwood Homes Corporation and its debtor-affiliates' Second Amended Joint Consolidated Plan of Reorganization reducing the cash management reserve. The stipulation is between Wachovia Bank, National Association and Alvarez & Marsal, LLC, in its capacity as the appointed trustee of the OHC Liquidation Trust, the Debtors' successor-in-interest pursuant to the confirmed Plan. Cash Management Reserve Conflict Wachovia Bank was the Debtors' cash management bank. Prior to the confirmation hearing, Wachovia Bank objected to plan confirmation, alleging that due to the length of processing time, its potential exposure on future "charge backs" could not be known by Nov. 26, 2003, the administrative expense bar date. To resolve Wachovia's objection, the Debtors and Wachovia Bank agreed to, among other things, extended the Administrative Expense Bar Date for Wachovia and to maintain a $5 million initial reserve to satisfy any "charge backs" or any other charges Wachovia incurred. The terms of this settlement are incorporated to the March 31, 2004, confirmation order. On Dec. 6, 2004, the Liquidation Trust sought reconsideration of that portion of the Confirmation Order. Since its request, the Liquidation Trust engaged in settlement talks with Wachovia. The parties agree that: 1. In the event that Wachovia does not assert a cash management administrative claim on or before April 15, 2005, the Cash Management Reserve the Liquidation Trust maintains, will be reduced from $5 million to $1 million; 2. In the event that Wachovia does not assert a cash management administrative claim on or before May 1, 2005, the Cash Management Reserve the Liquidation Trust maintains, will be further reduced from $1 million to $0; and 3. Any unused portion of the $100,000 retainer the Debtor paid to Wachovia's counsel will be returned to the Liquidation Trust no later than July 1, 2005, along with a final invoice to support the fees and costs paid to the lawyers. 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. When the Debtors filed for protection from their creditors, they listed $842,085,000 in total assets and $705,441,000 in total debts. The Court confirmed the Debtors' Joint Consolidated Plan of Reorganization on March 31, 2004, and the Plan took effect on April 15, 2004. OWENS CORNING: Inks Severance Agreement with Senior VP for HR ------------------------------------------------------------- Owens Corning's Compensation Committee of the Board of Directors has approved a Key Management Severance Agreement between the Company and Joseph C. High, Owens Corning's Senior Vice-President of Human Resources, effective as of January 1, 2004. The Severance Agreement provides Mr. High with certain protections and conforms to the Company's current policy regarding an officer's entitlement to pay, benefits and privileges on the termination of his employment. Absent a Change of Control, if Owens Corning terminates Mr. High's employment for any reason other than Permanent Total Disability or Cause, or Mr. High voluntarily terminates his employment under circumstances involving a Constructive Termination, Mr. High will be entitled to compensation, provided he executes a Release and Non-Competition Agreement satisfactory to the Company. Under the Agreement, Mr. High will receive: 1) Base salary earned and as yet unpaid through the effective date of termination; 2) Two years' Base Pay; 3) Two times Mr. High's Separation Incentive Payment; 4) Incentive Pay as yet unpaid from the prior fiscal year and Incentive Pay for the fiscal year of termination, prorated for the period of Mr. High's actual employment prior to termination; and 5) Mr. High's vested Cash Balance Pension Benefit. Mr. High will be entitled to base salary earned and as yet unpaid through the effective date of termination and his vested Cash Balance Pension Benefit if, prior to a Change of Control, Owens Corning terminates his employment for Cause. However, should Owens Corning exercise its discretion to award Mr. High compensation, based on effort expended and results obtained to date, Mr. High could receive: 1) Up to but no more than 12 months' Base Pay; 2) Up to but no more than One times Mr. High's Separation Incentive Payment; and 3) Up to but no more than the amount of Incentive Pay as yet unpaid from the prior fiscal year. If, within a two-year period after a Change of Control, Owens Corning or any successor terminates Mr. High's employment for any reason other than Permanent Total Disability or Cause, or Mr. High voluntarily terminates his employment under circumstances involving a Constructive Termination, Mr. High will receive: 1) Base salary earned and as yet unpaid through the effective date of termination; 2) Two years' Base Pay; 3) Two times Mr. High's Separation Incentive Payment; 4) Incentive Pay as yet unpaid from the prior fiscal year and Target Level Incentive Pay for the fiscal year of termination, prorated for the period of Mr. High's actual employment prior to termination; and 5) Mr. High's vested Cash Balance Pension Benefit. If Mr. High is terminated for Cause within a two-year period after a Change of Control, he will only be entitled to base salary earned and as yet unpaid through the effective date of termination and his vested Cash Balance Pension Benefit. However, should Owens Corning exercise its discretion to award Mr. High compensation, based on effort expended and results obtained to date, Mr. High could receive: 1) Up to but no more than 12 months' Base Pay; 2) Up to but no more than One times Mr. High's Separation Incentive Payment; and 3) Up to but no more than the amount of Incentive Pay as yet unpaid from the prior fiscal year. Mr. High received $325,000 annual salary in 2004, Owens Corning disclosed in a recent Form 10-K filing with the Securities and Exchange Commission. Mr. High also received $803,316 in bonuses for the year, including a $100,000 one-time sign-on bonus, and $54,258 in other annual compensation. Pursuant to the Agreement, Owens Corning will continue Mr. High's participation and coverage for a period of two years from his last day of employment under all the Company's life, medical and dental plans, subject to the Company's right to modify the terms of the plans or arrangements providing the benefits. Mr. High agrees not to compete. A full-text copy of the Severance Agreement is available at the Securities and Exchange Commission at no charge: http://www.sec.gov/Archives/edgar/data/75234/000119312505044604/dex10.htm Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC GAS: City of Palo Alto Agrees to Dismiss Appeal ------------------------------------------------------- On March 21, 2005, the City of Palo Alto filed a stipulation in the U.S. District Court for the Northern District of California, asking the District Court to enter an order of voluntary dismissal of the City's appeal to stay PG&E's Plan Confirmation Order issued by the Bankruptcy Court on December 22, 2003. The District Court is expected to dismiss the appeal pursuant to the stipulation. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. Pacific Gas and Electric emerged from chapter 11 protection on April 12, 2004, paying all creditors 100 cents-on- the-dollar plus post-petition interest. PARAGON TRADE: Court Awards $457.9M Damages Against Weyerhaeuser ---------------------------------------------------------------- U.S. Bankruptcy Judge Margaret Murphy has entered an Order and Judgment holding Weyerhaeuser Company liable to the bankruptcy estate of Paragon Trade Brands for $457,858,150 million in damages, plus attorneys' fees and interest. This dispute stemmed from a 1993 asset sale by Weyerhaeuser to Paragon which closed concurrent with the sale of 100 percent of Paragon's newly issued stock to public investors. Weyerhaeuser received more than $200 million in proceeds from the IPO. At the time of the offering, Weyerhaeuser had incorporated what it knew was patented features into diapers it sold in the business it transferred to Paragon, but did not have the licenses from its competitors for use of the technology. As a result, Paragon's use of this patented technology resulted in a patent infringement lawsuit against Paragon by Procter & Gamble a year after the IPO, and another case filed after the IPO against Paragon by Kimberly- Clark Corporation. Paragon's loss of the P&G patent case in late 1997 and the huge damages verdict and injunction that were issued set in motion Paragon's bankruptcy filing. In this action by Paragon against Weyerhaeuser, the Court previously held that four warranties included as part of the agreement between Weyerhaeuser and Paragon were breached as a matter of law, because, among other matters, the intellectual property assets transferred to Paragon by Weyerhaeuser were not adequate to conduct the business that Weyerhaeuser was conducting at the time of the IPO. The $457,858,150 million damages judgment follows a 15-day damages trial held to determine the damages the Paragon estate is entitled to recover based on Weyerhaeuser's breach of the warranties. Judge Murphy had the following to say in her Order: ". . . The gravamen of Weyerhaeuser's liability is that, in addition to the funds Weyerhaeuser received in connection with the IPO the primary benefit of the bargain to Weyerhaeuser was divorcing itself from what it knew to be an enormous potential patent infringement liability that was substantially certain to occur. Additionally, Weyerhaeuser was able to reap the benefit of an unpredictably successful IPO. To reward Weyerhaeuser's strategic divestment by limiting damages ... would encourage other large corporations to evade liabilities by transferring assets to a subsidiary and divesting themselves of their liability-laden subsidiaries ... Weyerhaeuser's apparent strategy was to defer the inevitable as long as possible. From this perspective, it has succeeded: Instead of paying the royalties in 1992 when they were demanded, it has postponed the reckoning until now." Lawyers representing Randall Lambert, the litigation claims representative for Paragon, were John Lee and Scott Locher of Andrews Kurth (Houston), and co-counsel Parker C. Folse, III of Susman Godfrey L.L.P. (Seattle) and Charles E. Campbell of McKenna Long and Aldridge L.L.P. (Atlanta). Mr. Lambert says, "I commend Andrews Kurth for their efforts in bringing this to trial and seeking justice on behalf of the shareholders." Mr. Lee, who represented Paragon shareholders in the original investigation and now represents Lambert in bringing the claims on Paragon's behalf, said: "Judge Murphy's findings establish that Weyerhaeuser's 1993 IPO of Paragon was tainted by fraud and failure to disclose the gravity of the patent infringement risk confronting Weyerhaeuser, and, after the IPO, Paragon. While Weyerhaeuser managed to skirt liability for securities fraud in the offering, Judge Murphy properly held it accountable for breaching the warranties it was required to make to sell Paragon in the IPO. This Judgment will enable the Paragon shareholders and creditors who were wiped out from the patent claims and resulting bankruptcy to recover substantially all of their losses." With respect to Weyerhaeuser's statement that it intends to appeal the liability holding and damage judgment, Lee had the following to add: "Judge Murphy's well-reasoned and well-supported damage award follows mainstream legal principles. We are fully confident we will prevail on appeal, just as we have prevailed on every one of Weyerhaeuser's previous challenges to the liability holding. If Weyerhaeuser continues to postpone the day of reckoning through appeal interest will continue to accrue and the judgment will continue to grow. Lambert has both the temerity and the duty to see the case through conclusion, and will." Andrews Kurth LLP, founded in 1902, has more than 400 lawyers and eight offices in Austin, Dallas, Houston, London, Los Angeles, New York, The Woodlands and Washington, DC. The firm has an international client base and has experience in all major industries and areas of business law. About Weyerhaeuser Weyerhaeuser Company -- http://www.weyerhaeuser.com/-- one of the world's largest integrated forest products companies, was incorporated in 1900. In 2002, sales were $18.5 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. About Paragon Headquartered in Norcross, Georgia, Paragon Trade Brands Incorporated manufactures store brand infant disposable diapers, training pants, feminine care and adult incontinence products and other absorbent personal care products in North America. The Company distributes primarily through mass merchandisers, grocery and food stores, warehouse clubs, toy stores and drug stores that market the products under their own store brand names. The Company established international joint ventures in Mexico, Argentina, Brazil, Colombia and China for the manufacture and sale of infant disposable diapers and other absorbent personal care products. The Company filed for chapter 11 protection on Jan. 6,1998 (Bankr. N.D. Ga. Case No. 98-60390). The Company emerged from Chapter 11 protection as contemplated by a Second Amended Plan of Reorganization and a related Disclosure Statement on January 2000. PARAGON TRADE: Weyerhaeuser Will Appeal Bankruptcy Court Decision ----------------------------------------------------------------- Weyerhaeuser Company (NYSE: WY) will appeal to the U.S. District Court for the Northern District of Georgia, Atlanta Division, a decision by the Hon. Judge Margaret Murphy of the U.S. Bankruptcy Court for the Northern District of Georgia awarding $460 million to the Litigation Claims Representative of Paragon Trade Brands Inc. Weyerhaeuser has not recorded a charge against earnings because it believes the bankruptcy decision will ultimately be reversed. Generally accepted accounting principles do not permit a reserve to be established if there is a high likelihood that the company will not be required to pay damages. However, the company also said that it cannot predict with certainty the ultimate outcome of the lawsuit and, therefore, there could be a charge that could materially and adversely affect the company's results of operations or financial condition for the quarter and the year in which the charge is recorded. Factors that could lead to a charge include: -- whether the appeal to the U.S. District Court and/or Court of Appeals for the Eleventh Circuit is resolved in the company's favor; -- the outcome of any retrial ordered by an appellate court; and -- whether a summary judgment in favor of the company on liability is ordered by an appellate court. The bankruptcy court's decision arises out of Weyerhaeuser's sale to Paragon of its infant diaper business in February 1993. In May 1999, the bankruptcy estate of Paragon commenced a lawsuit against Weyerhaeuser alleging that it had breached warranties in the sale agreements by failing to have licenses at the time of the sale to certain patents. In June 2002, the bankruptcy court issued an oral opinion granting partial summary judgment on liability in favor of the Paragon estate. The court issued its damage award on April 5, 2005. Weyerhaeuser has consistently maintained that the sales agreement transferred all liabilities of the infant diaper business, including any potential liabilities relating to the patents involved in the litigation, to Paragon as part of the sale and that, accordingly, the suit is without merit. The company has said that it plans to take every step available to seek to have the bankruptcy court's decision reversed. About Weyerhaeuser Weyerhaeuser Company -- http://www.weyerhaeuser.com/-- one of the world's largest integrated forest products companies, was incorporated in 1900. In 2002, sales were $18.5 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. About Paragon Headquartered in Norcross, Georgia, Paragon Trade Brands Incorporated manufactures store brand infant disposable diapers, training pants, feminine care and adult incontinence products and other absorbent personal care products in North America. The Company distributes primarily through mass merchandisers, grocery and food stores, warehouse clubs, toy stores and drug stores that market the products under their own store brand names. The Company established international joint ventures in Mexico, Argentina, Brazil, Colombia and China for the manufacture and sale of infant disposable diapers and other absorbent personal care products. The Company filed for chapter 11 protection on Jan. 6,1998 (Bankr. N.D. Ga. Case No. 98-60390). The Company emerged from Chapter 11 protection as contemplated by a Second Amended Plan of Reorganization and a related Disclosure Statement on January 2000. PARMALAT USA: Court OKs Pact Resolving Wells Fargo Lease Disputes ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approves a stipulation between Parmalat USA Corporation and Farmland Dairies LLC resolving their disputes with regards to certain Wells Fargo leases. On October 20, 1998, Sunnydale Farms, Inc., entered into an equipment lease with Norwest Equipment Finance, Inc., for certain equipment. The Norwest Lease provides for a $15,444 monthly lease payment, plus applicable sales and use tax. Also in October 1998, Sunnydale Farms entered into an equipment lease with Wells Fargo Equipment Finance, Inc., for certain equipment. The Lease provides for a monthly payment equal to $9,636, plus applicable sales and use tax. On August 19, 1999, Parmalat USA Corp. entered into an equipment lease with Wells Fargo for certain equipment, providing a $7,828 monthly lease payment. Parmalat USA also executed a guaranty absolutely and unconditionally guaranteeing payment with respect to any of Farmland's present or future obligations owed to Wells Fargo. Farmland Dairies LLC and Wells Fargo entered into a Master Lease on April 21, 2000, wherein Farmland agreed to lease certain equipment from time to time pursuant to separate supplement leases. The Supplement Leases and the corresponding monthly lease payments are: Lease Monthly Lease Payment ----- --------------------- Supplement Lease No. 102 $9,518 Supplement Lease No. 103 2,087 Supplement Lease No. 104 9,073 Supplement Lease No. 105 22,957 On May 18, 2004, Wells Fargo filed a request in the U.S. Debtors' Chapter 11 cases compelling the assumption or rejection of the Leases and modifying the automatic stay provisions of Section 362 of the Bankruptcy Code. The Request has been adjourned from time to time. In June 2004, Wells Fargo filed: (a) a secured claim against Farmland, asserting $2,895,804, plus taxes, attorney's fees and other amounts due relating to the Sunnydale/Wells Fargo Claim and Supplemental Lease Nos. 102, 103, 104, and 105; (b) an unsecured claim against Parmalat USA, asserting $2,895,804, based on Parmalat USA's guarantee of Farmland's obligations; and (c) a secured claim against Parmalat USA for $368,612, plus taxes, attorney's fees and other amounts due relating to the Parmalat/Wells Fargo Lease. Farmland and Parmalat USA desire to settle and compromise their disputes respecting the Wells Fargo Leases. Thus, the parties stipulate that: Payment Farmland will pay Wells Fargo, on account of cure costs and administrative expenses, the sum of $37,000, payable within 30 days of the Court's approval of the Stipulation. Brooklyn Farmland will assume the Northwest Lease and purchase the equipment subject to that lease on these terms: (i) Farmland will make $15,444 monthly lease payments to Wells Fargo, commencing with the regularly scheduled February payment; (ii) Wells Fargo consents to Farmland selling the equipment subject to the Norwest Lease; and (iii) At the completion of the equipment sale, Farmland will pay Wells Fargo a buyout payment equal to $330,000 minus the amount of any monthly payments made, but in no event will the payment of the Buyout Amount be made later than June 30, 2005. Atlanta Parmalat USA will assume its lease with Wells Fargo at the contractual term and payment level, effective on the closing of the sale of substantially all of Farmland's operations in Atlanta, Georgia. Farmland will also assume Supplement Lease Nos. 102, 103 and 104 at the contractual terms and payment levels, effective on the closing of the sale of substantially all of Farmland's Atlanta operations. In the event that substantially all of Farmland's Atlanta operations are not sold by July 1, 2005, Parmalat USA reserves the right to reject the Parmalat/Wells Fargo Lease and Farmland reserves the right to reject Supplemental Lease Nos. 102, 103 and 104 upon providing 30 days' prior notice, on or after July 1, 2005. If the Parmalat/Wells Fargo Lease and Supplemental Lease Nos. 102, 103 and 104 are rejected, Wells Fargo will be allowed a claim against Parmalat USA or Farmland, as applicable, for rejection damages, which would consist of the net of the remaining payments on each lease, minus any recovered rents in the disposition or release of the equipment and the reasonable costs associated with the transfer, storage, and sale of the subject equipment. Wallington Farmland will assume Supplemental Lease No. 105 with amended payment and term provisions. The monthly aggregate payment will be $11,000 beginning February 15, 2005, for a total of 46 payments. Following the 46 payments, the U.S. Debtors have the option to buy out the subject equipment for $200,000. In addition, Lease No. 105 is amended to give the Debtors the right to exercise an early buy-out on 60 days' prior notice, in which case Farmland would be entitled to buy out the equipment in exchange for a payment equal to the sum of: (i) all past due payments under the lease, including late charges; (ii) unpaid rent for the balance of the lease term discounted at a 5% rate; (iii) the present value of $200,000, discounted at a 5% rate. Northwest Lease Wells Fargo grants title over the equipment subject to the Northwest Lease to Farmland. Wells Fargo cedes all rights, interests or claims it has or may have pursuant to the Lease. Allowed Claim Farmland grants Wells Fargo an allowed general unsecured claim in a reduced amount equal to $499,000. Parmalat USA grants Wells Fargo an allowed general unsecured claim for a reduced amount of $220,000. Wells Fargo's claim relating to the Parmalat/Wells Fargo Lease will be deemed withdrawn with prejudice on the date that the Court approves the Stipulation. Taxes Farmland agrees to pay Wells Fargo $35,250 -- which amount represents the outstanding property taxes for 2004 aggregating $21,538 and the pro-rated property taxes due for 2005 totaling $13,712 -- payable within 30 days of the Court's approval of the Stipulation. Releases Wells Fargo will be released from all preference, fraudulent conveyance or other avoidance actions pursuant to the Bankruptcy Code and other federal and state law, including any cause of action by the U.S. Debtors arising out of Section 547. Stipulation, Wells Fargo will release Farmland and Parmalat USA from any liability under the Wells Fargo Claims and all other claims or causes of action not specifically set in the Stipulation. Covenant Parmalat USA and Farmland covenant and agree to use commercially reasonable efforts to assist Wells Fargo to resolve tax disputes and obtain tax refunds related to the equipment subject to the Leases. Headquartered in Wallington, New Jersey, Parmalat U.S.A. Corporation -- http://www.parmalatusa.com/--generatesmore 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) PEGASUS COMMS: Reporting Delay Triggers Nasdaq Delisting Process ---------------------------------------------------------------- Pegasus Communications Corporation (NASDAQ: PGTV) received a Nasdaq staff determination on April 5, 2005, that the company has failed to comply with the Nasdaq filing requirement, as set forth in Marketplace Rule 4310(c)(14), due to the fact that it did not file its Annual Report on Form 10-K for the year ended Dec. 31, 2004, with the SEC by March 31, 2005. As a result, beginning at the opening of trading on April 7, 2005, Nasdaq will append the fifth character "E" to the company's trading symbol. Pegasus intends to request a hearing before a Nasdaq Listing Qualifications Panel to review the staff determination. The hearing request will stay the delisting and the company's Class A common stock will continue to be listed on The Nasdaq National Market until the Panel issues its decision. There can be no assurance that the Panel will grant the company's request for continued listing. The hearing is expected to be held within the next four to six weeks and the Panel will issue its decision following the hearing. The company said that it is diligently working to file its Form 10-K with the SEC and hopes to do so in the near future. Pegasus' failure to file its Form 10-K by March 31, 2005, has been occasioned by: -- the resignation of the company's former independent public accountants on December 29, 2004; -- the delay in the engagement of the company's new public accountants until February 14, 2005; -- as well as the time and resources required to be devoted by management to the Chapter 11 bankruptcy proceedings of its subsidiary, Pegasus Satellite Communications, Inc. About Pegasus Communications Pegasus Communications Corporation is the parent company of: * Pegasus Satellite Communications, Inc.; * Pegasus Development Corporation, which holds Ka band satellite licenses granted by the FCC and intellectual property rights licensed from Personalized Media Communications L.L.C.; * Pegasus Guard Band LLC, which holds FCC licenses to provide terrestrial communications services in the 700 MHZ spectrum covering areas of the United States including approximately 180 million people -- POPS; and * Pegasus Rural Broadband LLC, which provides wireless broadband Internet access in rural areas. Pegasus Communications Corporation provides digital satellite television to rural households throughout the United States. It is are the 10th largest pay television company in the United States and the only publicly traded cable or satellite company exclusively focused on service to rural and underserved areas. Pegasus owns and operates television stations affiliated with CBS, FOX, UPN and The WB networks. At Sept. 30, 2004, Pegasus Communications' balance sheet showed a $423,200,000 stockholders' deficit, compared to a $105,330,000 deficit at Dec. 31, 2003. QWEST COMMS: Names Thomas Richards as Executive Vice President -------------------------------------------------------------- Qwest Communications International, Inc. (NYSE:Q) appointed Thomas E. Richards as Executive Vice President, Business Markets Group, effective April 4, 2005. Mr. Richards will be based in Denver, reporting directly to Richard C. Notebaert, Qwest's Chairman and CEO. "Tom Richards is an outstanding leader who will be a tremendous asset to the Qwest team as we capitalize on the momentum in our business," said Mr. Notebaert. "I am confident that Tom's extensive experience in the telecommunications industry will make him an ideal leader for Qwest's Business Markets Group. During three decades of experience, Tom has acquired deep knowledge of key customer segments, from wireless to network services to the Internet, and he has managed integrated operations comprising tens of thousands of employees." In his new role, Mr. Richards will oversee the sales, marketing and delivery of telecommunications services to all of Qwest's regional, national and global business customers. He will be replacing Clifford S. Holtz who is leaving the company to pursue other opportunities. Of his new appointment, Mr. Richards said, "I am looking forward to joining the Qwest team at this exciting time as we continue to build on a tradition of excellence in the Business Markets Group, and tackle new growth opportunities that will benefit customers." Mr. Richards joins Qwest with nearly 30 years of professional experience in the telecommunications industry, most recently with Clear Communications, an international supplier of optical and digital network management software where he served as President, CEO and Chairman of the board. Prior to joining Clear Communications, Mr. Richards spent 24 years at leading regional communications companies where he held management positions in operations, sales and marketing. Mr. Richards received a BA in Economics from the University of Pittsburgh and a MS in Management from the Massachusetts Institute of Technology's Sloan School of Management as an Alfred P. Sloan Fellow. "I would like to thank Cliff Holtz for his years of service at Qwest," said Mr. Notebaert. "Thanks to his leadership, I am confident that the team he has built is ready for the future." About Qwest Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Dec. 31, 2004, Qwest Communications' balance sheet showed a $2,612,000,000 stockholders' deficit, compared to a $1,016,000,000 deficit at Dec. 31, 2003. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services placed its ratings on Denver, Co.-based diversified telecommunications carrier Qwest Communications International, Inc., and subsidiaries, including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's counter bid to Verizon Communications, Inc., for long-distance carrier MCI, Inc., for $3 billion in cash and $5 billion in stock. MCI also has about $6 billion of debt outstanding. The ratings on MCI, including the 'B+' corporate credit rating, remain on CreditWatch with positive implications, where they were placed Feb. 14, 2005 following Verizon's announced agreement to acquire the company. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by either Verizon or Qwest, both of which are more creditworthy entities. However, the positive CreditWatch listing of the 'B+' rating on MCI's senior unsecured debt assumes no change to the current MCI corporate and capital structure under an assumed acquisition by Qwest, such that this debt would become structurally junior to other material obligations. "The negative CreditWatch listing of the Qwest ratings reflects the higher business risk at MCI if its bid is ultimately successful," explained Standard & Poor's credit analyst Catherine Cosentino. As a long-distance carrier, MCI is facing ongoing stiff competition from other carriers, especially AT&T Corp. Moreover, MCI is considered to be competitively disadvantaged relative to AT&T in terms of its materially smaller presence in the enterprise segment and fewer local points of presence -- POPs. The latter, in particular, results in higher access costs relative to AT&T. Qwest also faces the challenge of integrating and strengthening MCI's operations while improving its own underperforming, net free cash flow negative long-distance business. These issues overshadow the positive aspects of Qwest's incumbent local exchange carrier business that were encompassed in the former developing outlook. As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. ROGERS & SON: Court Converts Chapter 11 Case to Ch. 7 Liquidation ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Carolina converted Rogers & Son Construction, Inc.'s chapter 11 case to a chapter 7 liquidation proceeding on March 24, 2005, at the Debtor's behest. Rogers & Son is unable to stem its continuing losses and diminution of the value of its estate. The company concluded there's no likelihood for rehabilitation. The Debtor is no longer able to continue insurance coverage and can't fund its payroll. The Debtor tells the Court that it can't craft a chapter 11 plan that would meet the requirements of Section 1123 of the Bankruptcy Code. The Court directs the Debtor to file with the Court Clerk by today, April 8, 2005: * final statements of profit and loss and cash position by as of March 24, 2005; * these additional schedules: (i) Schedule D -- list of creditors holding secured claims or interests; (ii) Schedule E -- list of creditors holding unsecured priority claims or interests; and (iii) Schedule F -- list of creditors holding unsecured non- priority claims or interests; showing claims or interests against the Debtor arising after the chapter 11 petition date; * a mailing matrix * revised schedules: (i) Schedule A -- list of real properties; (ii) Schedule B -- list of personal properties; (iii) Schedule C -- list of properties claimed as exempt; (iv) Schedule I -- current income (v) Schedule J -- current expenditures * a description of any postpetition transactions that should be reflected in the Statement of Affairs filed as of March 24, 2005. Headquartered in Summerville, South Carolina, Rogers & Son Construction, Inc., provides general contracting, concrete, structural-steel, excavation, and demolition work for commercial, industrial, institutional, and utility projects. The Debtor filed for chapter 11 protection on Jan. 26, 2005 (Bankr. D. S.C. Case No: 05-00901). Charles S. Bernstein, Esq., at Bernstein & Bernstein, P.A., in North Charleston, South Carolina presents the Debtor in its restructuring efforts. When the company filed for bankruptcy, it reported assets & debts from $1 to $10 million. ROGERS & SONS: Trustee Wants David R. Fischbein as Accountant ------------------------------------------------------------- Kevin Campbell, the Chapter 7 Trustee overseeing the liquidation of Rogers & Son Construction, Inc., asks the U.S. Bankruptcy Court for the District of South Carolina for permission to employ David R. Fischbein as his accountant. Mr. Campbell wants Mr. Fischbein to perform these services: a) examine the books and records of the Debtor; b) investigate other records relating to the financial condition and business transactions; c) prepare and file tax returns as required by the taxing authorities which must be filed by Mr. Campbell; and d) render other assistance as the Trustee may deem appropriate. The papers filed with the Bankruptcy Court do not indicate how much Mr. Fischbein will be paid for his work. Headquartered in Summerville, South Carolina, Rogers & Son Construction, Inc., provides construction services. The Company filed for chapter 11 protection on January 26, 2005 (Bankr. South Caolina, Charleston Division Case No. 04-13943). The case was converted to chapter 7 on March 24, 2005. Charles S. Bernstein, Esq., at Bernstein & Bernstein, P.A. represents the Debtor. When the Company filed for protection from its creditors, it listed an estimated $1 Million to $10 Million in total assets and an estimated $1 Million to $10 Million in total debts. SALEM COMMS: Completes Radio Station Exchange with Univision ------------------------------------------------------------ Salem Communications Corporation (Nasdaq:SALM), the leading radio broadcaster focused on Christian and family-themed programming, completed the exchange of radio stations in Chicago, Houston and Dallas effective March 31, 2005, which are part of the previously announced exchange with Univision Communications Inc. The completed transaction involves the exchange by Salem of radio station WPPN (106.7 FM), serving Chicago, for the following three radio stations from Univision: -- WIND (560 AM) Chicago, -- KKHT (100.7 FM), serving Houston, and -- KNIT (1480 AM), Dallas. KSFS (94.3 FM), serving Sacramento, Calif., and KVVZ (100.7 FM), serving San Francisco, Calif., continue to operate under local marketing agreements. It is anticipated that the exchange of these radio stations will be completed during the second quarter of 2005. About the Company 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. SALEM COMMS: Inks Pact to Acquire Radio Station for $900,000 ------------------------------------------------------------ Salem Communications Corporation (Nasdaq:SALM), the leading radio broadcaster focused on Christian and family themed programming, will acquire KHLP (1420 AM) in Omaha, Nebr., from Journal Broadcasting Group for $900,000. Salem expects to operate the station, once acquired, in its growing News Talk format. Joe D. Davis, executive vice president and chief operating officer, commented, "The addition of KHLP (1420 AM) supports our strategy of building radio station clusters in each of our markets allowing us to better serve our listeners and our advertisers and, at the same time, gain technical and operating efficiencies. KHLP (1420 AM) will join KCRO (660 AM), our Christian Teaching and Talk-formatted station, and KGBI (100.7 FM), our Contemporary Christian Music station, providing Salem with a third format to serve Omaha and surrounding areas." Doug Kiel, chief executive officer of Journal Broadcast Group and president of Journal Communications, Inc., said, "While Journal rarely seeks station divestitures, the sale of KHLP (1420 AM) to Salem actually strengthens our very successful Omaha operations by allowing our people and resources to be even better focused on our core stations in the market." Johnny Andrews, general manager KGB I (100.7 FM) and KCRO (660 AM), will add KHLP (1420 AM) to his responsibilities as market manager for Salem in Omaha. About the Company Salem Communications Corporation (Nasdaq:SALM) -- http://www.salem.cc/-- headquartered in Camarillo, Calif., is the leading U.S. radio broadcaster focused on Christian and family- themed programming. Upon the close of all announced transactions, the company will own 106 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 radio advertising sales force; Salem Web Network(TM), a leading Internet provider of Christian content and online streaming; and Salem Publishing(TM), a leading publisher of Christian themed magazines. Journal Broadcast Group owns a total of 38 radio stations and seven television stations in 11 states and operates an additional television station under a local marketing agreement. The broadcast business of Journal Communications Inc., Journal Broadcast Group is headquartered in Milwaukee. Journal Communications (NYSE:JRN) is a diversified media and communications company with operations in publishing, broadcasting, telecommunications and printing services. * * * 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. SENETEK PLC: Terminates Merger Talks with IGI, Inc. ---------------------------------------------------- Senetek PLC (OTC Bulletin Board: SNTKY) has terminated merger discussions with IGI, Inc. Senetek's Chairman and CEO, Frank J. Massino, commented, "The two companies have agreed to work together in mutually capitalizing on their respective technologies and established channels of distribution. We will be working very closely with IGI, Inc., to identify and evaluate ways in which we can maximize revenues for both companies." About the Company Senetek PLC -- http://www.senetekplc.com/-- is a life sciences- driven product development and licensing company focused on the high growth market for products primarily addressing age-related conditions. Senetek's patented compound Kinetin is a naturally occurring cytokinin that has proven effective in improving the appearance of aging skin with virtually none of the side effects associated with acid-based active ingredients. Senetek has licensed Kinetin to leading global and regional dermatological and skin care marketers including Valeant Pharmaceuticals, The Body Shop and Revlon, and has licensed its Invicorp erectile dysfunction technology to Ardana Bioscience Ltd. for Europe, with rights to additional markets. Senetek's researchers at the University of Aarhus, Denmark, also are collaborating with the Institute of Experimental Botany, Prague, and with Beiersdorf AG, Hamburg, to identify and evaluate additional new biologically active compounds for the high growth skin care field. At Dec. 31, 2004, Senetek's balance sheet showed a $1,361,000 stockholders' deficit, compared to a $2,929,000 deficit at Dec. 31, 2003. SHAW GROUP: Likely Stock Sale Prompts S&P to Watch Low-B Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' corporate credit and senior secured ratings on The Shaw Group Inc. on CreditWatch with positive implications. At the same time, we also placed our 'B+' senior unsecured and 'B' preliminary subordinated shelf ratings on CreditWatch with positive implications. "The CreditWatch placement followed the company's announcement that it intends to sell up to 12.5 million shares of common stock for estimated proceeds of up to $262.5 million, with the intention of using proceeds and other available resources to fund a tender offer for outstanding $253 million 10 3/4% senior notes due 2010," said Standard & Poor's credit analyst Paul Kurias. At Dec. 31, 2004, the Baton Rouge, La.-based company had $483 million of lease-adjusted debt outstanding. Based on our estimate of EBITDA for the 12 months ended Feb. 28, 2005, pro forma for the tender, total lease-adjusted debt to EBITDA would potentially strengthen to about 2x from levels of approximately 4x. The Shaw Group is a leading global provider of engineering and construction (E&C) services, mainly to the power, process, and environmental and infrastructure sectors. The CreditWatch will consider the potential benefits of this deleveraging event. In addition, we will meet with management to discuss its business objectives and longer-term capital structure goals. The rating review will also factor in Shaw's near- to intermediate-term prospects and free cash flow generating capabilities. SL COMMERCIAL: Fitch Puts BB+ Rating on $20.3 Mil. Mortgage Certs. ------------------------------------------------------------------ SL Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1997-C1, are affirmed: -- Interest-only class X at 'AAA'; -- $3.7 million class D at 'AAA'; -- $2.5 million class E at 'AAA'; -- $20.3 million class F at 'BB+'. The rating affirmations reflect scheduled amortization and stable performance of the transaction. As of the March 2005 distribution date, the pool's certificate balance has decreased 89.5% to $26.5 million from $253.7 million at issuance. Classes A, B, and C have been paid in full. The pool has become more concentrated with only 12 of the original 56 loans remaining. The top five loans account for (54%) of the pool balance. Retail properties make up 57% of the transaction, however are diversified by location. GMAC Commercial Mortgage Corp., the master servicer, collected year-end 2003 financials for seven of the remaining 12 loans (45.4%) in the pool. Since issuance, there have been no delinquencies or specially serviced loans in the transaction. SOLUTIA INC: Appoints J.P. Wright & J. R. Voss as Senior VPs ------------------------------------------------------------ Solutia Inc. (OTC Bulletin Board: SOLUQ)reported two changes to its executive leadership team, effective immediately. "These changes are another important step in our strategy to position Solutia to thrive after emergence from Chapter 11," said Jeffry N. Quinn, president and CEO, Solutia Inc. Jonathon P. Wright has been named senior vice president of Solutia Inc. and president of integrated nylon. In this role he will lead Solutia's integrated nylon division, a $1.6 billion business that is a leading producer of high-performance polymers, carpet fiber, and chemical intermediates. He will have responsibility for all commercial, operational and strategic aspects of the business. Wright replaces John F. Saucier, who will be leaving Solutia. James R. Voss has been named senior vice president - business operations for Solutia Inc. In this role he will have enterprise- wide responsibility for human resources, procurement, information technology, governmental affairs, communications and public affairs. "Jonathon and Jim are seasoned professionals who bring fresh perspectives to their roles at Solutia. The decision of these two proven executives to join our team is a clear endorsement of the progress we are making to position Solutia for future success," added Quinn. "Jonathon will provide the strategic and commercial leadership that will revitalize our integrated nylon business. Jim will be a strong partner with Jonathon and Luc De Temmerman, senior vice president of Solutia Inc. and president of performance products, in their efforts to optimize our business and operational performance." Mr. Wright, 45, joins Solutia from Charles River Associates, a global management consulting firm, where he served as vice president. Prior to that, he led Arthur D. Little's strategy practice and management consulting business in North America. During his eight-year consulting career, Wright worked extensively in the petrochemical, specialty chemical, and related process industries. Previously, Wright held various operating, commercial and strategic roles with British Gas. Wright holds a M.Sc. in economics from Reading University and was an honors graduate in economics from City of London Polytechnic. Mr. Voss, 38, joins Solutia from Premcor Inc., a major independent oil refiner, where he most recently served as senior vice president and chief administrative officer. In addition to his four years at Premcor, Voss' previous business experience includes ten years in operational and human resources capacities with United Parcel Services, Foodmaker Industries and Swank Inc. Voss holds bachelor's degrees in psychology and sociology from Maryville University, a master's degree in human resources development from Webster University, and a MBA from Washington University in St. Louis. In addition to Mr. Quinn, Mr. De Temmerman, Mr. Wright and Mr. Voss, Solutia's executive leadership team consists of: * James M. Sullivan Senior Vice President Chief Financial Officer * Rosemary L. Klein Senior Vice President General Counsel Corporate Secretary * Max W. McCombs Vice President Environmental, Safety and Health * Robert T. DeBolt Vice President Strategy. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Conor D. Reilly, Esq., and Richard M. Cieri, Esq., at Gibson, Dunn & Crutcher, LLP. (Solutia Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Discovery in FMC Corp. Litigation to End May 31 ------------------------------------------------------------ As previously reported, on October 14, 2003, Solutia filed an action in Circuit Court in St. Louis County, Missouri, against FMC Corporation over the failure of purified phosphoric acid technology provided by FMC to Astaris, the 50/50 joint venture between Solutia and FMC. On February 20, 2004, Solutia voluntarily dismissed the state court action and filed an adversary proceeding against FMC in the U.S. Bankruptcy Court for the Southern District of New York. FMC filed with the bankruptcy court a motion to withdraw the reference. The motion was granted, and, as a result, the matter is now pending in the U.S. District Court for the Southern District of New York. FMC has filed a motion to dismiss Solutia's action based on an alleged lack of standing. On October 15, 2004, the court heard oral arguments on FMC's motion to dismiss. Discovery is ongoing with the discovery deadline set for May 31, 2005. Solutia is vigorously pursuing its action. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Conor D. Reilly, Esq., and Richard M. Cieri, Esq., at Gibson, Dunn & Crutcher, LLP. (Solutia Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPANCRETE OF FLORIDA: Case Summary & 20 Largest Unsecured Cred. --------------------------------------------------------------- Debtor: Spancrete of Florida, LLC 6201 Lee Ann Lane Naples, Florida 34109 Bankruptcy Case No.: 05-06482 Type of Business: The Debtor manufactures precast concrete products and equipment. See http://www.spancreteofflorida.com/ Chapter 11 Petition Date: April 7, 2005 Court: Middle District of Florida (Tampa) Debtor's Counsel: Andrew T. Jenkins, Esq. Jeffrey W. Warren, Esq. Bush Ross, P.A. PO Box 3913 Tampa, Florida 33602 Tel: (813) 224-9255 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 ------ --------------- ------------ Strand-Tech Martin Inc. Trade Debt $193,499 Box 2220 Summerville SC 29484 Eastern Portland Cement Trade Debt $157,411 Corp P.O. Box 701093 Cincinnati OH 45270-1093 Heartland Harvesting Inc Trade Debt $109,224 11401 Payne Road Sebring FL 33875 Spancrete Machinery Corp Deficiency $99,152 Fifth Third Bank Deficiency $90,414 Campbell Crane Company Trade Debt $85,022 Best Aggregate Carrier Trade Debt $78,731 Allied Crane Service Inc Trade Debt $77,084 Florida Rock Industries Inc Trade Debt $49,744 Jahna Concrete Inc Trade Debt $38,230 Madsen Kneppers & Assoc Inc Trade Debt $34,200 PG Bulk Inc Trade Debt $32,345 RMC South Florida Inc Trade Debt $26,374 FCCI Commercial Ins Company Trade Debt $25,384 George Hartz & Lundeen Trade Debt $24,072 Spancrete Manufactures Assoc Trade Debt $22,500 Youngquist Brothers Rock Inc Trade Debt $21,635 Randy J Mellor Construction Trade Debt $17,203 PenHall/SaintGobain Abrasi Trade Debt $15,419 Hamilton Form Company Inc Trade Debt $15,300 SPIEGEL INC: Can Conduct Eddie Bauer Store Closing Sale ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Spiegel, Inc., and its debtor-affiliates permission to conduct Store Closing Sale at Eddie Bauer Home Stores and, if necessary, in some Eddie Bauer retail apparel stores governed by a Home Store Lease, in accordance with the guidelines previously negotiated with the landlords of those Eddie Bauer stores and as approved by the Court in connection with previous store closings. The Court directs Spiegel, Inc., and its debtor-affiliates to notify, on or prior to May 2, 2005, all Landlords whose Home Store Leases they intend to assume or reject and provide notice of the effective date of rejection, provided that the effective date of rejection will be no earlier than May 31, 2005, and provided that the effective date of rejection may be later than the Plan Effective Date but in no case later than September 30, 2005. The Court authorizes and empowers the Debtors pursuant to Section 363(b) of the Bankruptcy Code to conduct the Store Closing Sale at the Home Stores, which sale will be no more than 12 weeks in duration, with the final day of that sale to be no later than September 30, 2005. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) TELTRONICS INC: Dec. 31 Balance Sheet Upside-Down by $6 Million --------------------------------------------------------------- Teltronics, Inc. (OTC Bulletin Board: TELT) reported its financial results for the year ended December 31, 2004. Revenues for 2004 were $46.0 million as compared to $46.9 million reported in 2003. The Company reported a net income of $539,000, a $3.8 million improvement, which resulted partially from the $1.2 million gain on the sale of certain patents, over the $3.3 million loss reported in 2003. The net loss available to common shareholders for 2004 decreased to $86,000 from a $3.9 million loss for 2003. Gross profit margin increased from 39.0% for 2003 to 39.7% for 2004. The Company's operating expenses for 2004 decreased $2.6 million from 2003 due primarily to a full year realization of the Company's cost reduction program implemented. "We are pleased that revenues have stabilized and that the industry appears to have turned the corner on the difficult times of the past four years," said Ewen Cameron, Teltronics' President and Chief Executive Officer. "The start of the industry's recovery, along with the continuing benefits of our cost-cutting initiatives, enabled the Company to generate net income for the first time since 1999. What is most exciting is that we believe the Company is well positioned, both in product offerings and in its cost structure, to carry this performance into 2005 and beyond," Cameron concluded. About the Company Teltronics, Inc. -- http://www.teltronics.com/-- is a leading global provider of communications solutions and services that help businesses excel. The Company manufactures telephone switching systems and software for small-to-large size businesses, government, and 911 public safety communications centers. Teltronics offers a full suite of Contact Center solutions -- software, services and support -- to help their clients satisfy customer interactions. Teltronics also provides remote maintenance hardware and software solutions to help large organizations and regional telephone companies effectively monitor and maintain their voice and data networks. The Company serves as an electronic contract-manufacturing partner to customers in the U.S. and overseas. At Dec. 31, 2004, Teltronics' balance sheet showed a $6,043,551 stockholders' deficit, compared to a $6,124,389 deficit at Dec. 31, 2003. TIAA CMBS: Fitch Upgrades Low-B Ratings of Three Cert. Classes -------------------------------------------------------------- Fitch Ratings upgrades TIAA CMBS I Trust's commercial mortgage pass-through certificates, series 2001-C1: -- $58.6 million class B to 'AAA' from 'AA'; -- $51.3 million class C to 'AA+' from 'A'; -- $22 million class D to 'AA-' from 'A-'; -- $14.7 million class E to 'A+' from 'BBB+'; -- $18.3 million class F to 'A-' from 'BBB'; -- $14.7 million class G to 'BBB+' from 'BBB-'; -- $33 million class H to 'BBB' from 'BB+'; -- $14.7 million class J to 'BBB-' from 'BB'; -- $11 million class K to 'BB+' from 'BB-'. In addition, Fitch affirms these classes: -- $24.2 million class A-1 'AAA'; -- $119.4 million class A-2 'AAA'; -- $214.6 million class A-3 'AAA'; -- $400 million class A-4 'AAA'; -- $172 million class A-5 'AAA'; -- Interest only class X 'AAA'; -- $14.7 million class L 'B+'; -- $7.3 million class M 'B'; -- $7.3 million class N 'B-'. Fitch does not rate the class O certificates. The upgrades reflect improved credit enhancement levels since issuance due to loan payoffs and amortization. As of the March 2005 distribution date, the pool's aggregate certificate balance has decreased 23.5%, to $1.11 billion from $1.46 billion at issuance. Of the original 252 loans, 199 remain outstanding in the pool. There are currently no delinquent or specially serviced loans. The pool's property type concentrations include: * retail (33%), * multifamily (22%), * cooperative housing (11%), and * industrial (11%). Higher risk property types which include hotels and healthcare properties, account for 12.5% of the pool. Geographic concentrations include: * California (11%), * New York (10%), * Florida (9%), * New Jersey (8%), and * Texas (7%). TOMS FOODS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Tom's Foods Inc. aka Tom's aka Tom's Foods 900 8th Street Columbus, Georgia 31901 Bankruptcy Case No.: 05-40683 Type of Business: The Debtor manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candy. Chapter 11 Petition Date: April 6, 2005 Court: Middle District of Georgia (Columbus) Judge: John T. Laney, III Debtor's Counsel: David B. Kurzweil, Esq. Greenberg Traurig, LLP 3290 Northside Parkway, Suite 400 Atlanta, Georgia 30327 Total Assets: $93,100,000 Total Debts: $79,091,000 The Debtor did not file a list of its 20 Largest Unsecured Creditors. TORCH OFFSHORE: Selling Vessels to Cal Dive for $92 Million ----------------------------------------------------------- Torch Offshore, Inc. (OTC Pink Sheets: TORCQ) entered into an asset purchase agreement with Cal Dive International, Inc. (Nasdaq: CDIS). Under the purchase agreement, Cal Dive has agreed to serve as the "stalking horse" bidder for the purchase of Torch's fleet of vessels, including all equipment, inventory, intellectual property and other assets related to the operation of the vessels. In exchange for these assets, Torch will receive consideration of approximately $92.0 million, including a deposit of $4.6 million, which will be credited towards the purchase price. The purchase agreement does not include Torch's accounts receivable, overhead assets unrelated to the operation of the vessels, and claims owned by Torch's bankruptcy estate. On April 6, 2005, Torch filed the purchase agreement with the United States Bankruptcy Court for the Eastern District of Louisiana along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers for all or part of Torch's assets, as required under Section 363 of the Bankruptcy Code. If Cal Dive is the highest bidder for all of Torch's assets, it is anticipated that the transaction will be completed in the second quarter of 2005, pending approval of the Bankruptcy Court and certain government regulatory agencies. Owen Kratz, Chairman and Chief Executive Officer stated, "This transaction represents our continued commitment to the Marine Contracting business as it remains an integral part of our Production Contracting business model." About Cal Dive Cal Dive International, Inc., headquartered in Houston, Texas, is an energy service company, which provides alternate solutions to the oil and gas industry worldwide for marginal field development, alternative development plans, field life extension and abandonment, with service lines including marine diving services, robotics, well operations, facilities ownership and oil and gas production. About Torch Offshore Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $201,692,648 in total assets and $145,355,898 in total debts. TOWER AUTOMOTIVE: Moody's Assigns Low-B Ratings on $725M Debts -------------------------------------------------------------- On February 25, 2005 Moody's Investors Service assigned point-in- time unmonitored ratings for $725 million of debtor-in-possession credit facilities provided to R.J. Tower Corporation as a Debtor- in-Possession. RJ Tower is the primary domestic subsidiary of Tower Automotive, Inc. as a Debtor-in-Possession. No outlook was assigned, given that the ratings will remain unmonitored and therefore will not be updated for future events. The DIP facility ratings were: - A Ba2 rating for RJ Tower's $300 million tranche A DIP Revolver due February 2, 2007; - A Ba3 rating for RJ Tower's $425 million tranche B DIP Term Loan due February 2, 2007 The notching differential between the DIP facilities was based upon the fact that while both DIP facilities are supported by superpriority claim status, perfected first-priority senior priming liens, and guarantees by Tower Automotive and substantially all domestic subsidiaries, the credit agreement specifies that the DIP Revolver obligations are to be repaid in full prior to any repayments of the DIP Term Loan obligations. The collateral package for the DIP facilities consists of first liens on most of the company's domestic assets, 100% of the stock of domestic subsidiaries, and up to 65% of the stock of first-tier foreign subsidiaries. Drawdowns under the DIP Revolver are also supported at all times by a domestic borrowing base limitation. While this borrowing base provides some added protection to the lenders under this facility, Moody's notes that up to 75% of the borrowing base calculation is permitted to consist of advances against appraised orderly liquidation values for machinery and equipment. Moody's notes that this revolving credit structure is heavily driven by the value of property and equipment and places limited reliance upon the support of liquid asset coverage. The rating assignments for the DIP facilities favorably reflected that approximately $818 million of senior unsecured pre-petition debt obligations were classified as liabilities subject to compromise and will not receive any cash interest payments while Tower Automotive and its domestic subsidiaries remain in bankruptcy. The DIP ratings additionally reflected that the DIP Revolver provides the company with access to incremental liquidity, that Tower has approximately $1.4 billion of value- added new business launching through 2005 with many of these launches already completed, and that the company continues to benefit from significant support from its key customers particularly in light of its high volume of new launches and limited number of full-service competitors. Steel exposure will be further mitigated through the transition to additional low-risk resale agreements with customers. Tower's international operations remain strong and profitable, and the company maintains that there will be sufficient flexibility to repatriate funds as needed. Management represents that none of Tower's foreign liquidity facilities contain provisions restricting the transfer of foreign cash to the US. Despite the fact that the DIP lenders will not hold direct liens on foreign assets, they will have the legal right to receive any cash proceeds from foreign subsidiary sales. The DIP rating assignments were constrained by: 1. the transaction's non-traditional borrowing base and reliance primarily upon recovery from fixed asset coverage and/or future cash flows; 2. concern that management's assumptions regarding improving business economics and performance enhancements may be difficult to achieve in the current environment; and 3. potential for the rollouts of new launches to be delayed and/or for production volumes of existing platforms to fall below expectations. A high proportion of Tower's assets and operating margins are notably generated outside of the US and consideration of the US operations alone would not support the ratings assigned. Moody's additionally notes that Tower's ongoing projected liquidity remains reliant upon accommodations by certain customers and a small degree of future trade support. The company will additionally be obligated to continue to pay cash interest for its $155 million second-lien letter of credit facility, its approximately $185 million of foreign debt, and about $67 million of existing IRB's and capital leases that will not be compromised as a result of the bankruptcy filing. DIP Revolver usage is notably expected to increase over the life of the facility, as the company finances new launches and funds restructuring efforts. Tower Automotive, Inc., headquartered in Novi, Michigan, is a Tier 1 supplier of structural components and assemblies for automotive manufacturers. Annual revenues approximate $3.0 billion. Tower Automotive and its direct and indirect wholly-owned domestic subsidiaries filed for protection under Chapter 11 of the US Bankruptcy Code on February 2, 2005. UNION ACCEPTANCE: Inks Share Exchange Pact with White River ----------------------------------------------------------- Union Acceptance Corporation (Pink Sheets:UACA) and White River Capital, Inc., reported that White River has filed with the Securities and Exchange Commission a registration statement on Form S-4 and Form S-1 in connection with two related offerings: -- White River is offering up to 310,191 shares of its common stock to UAC shareholders in a share exchange for shares for UAC common stock. The exchange ratio is one share of White River common stock for 100 shares of UAC common stock. As a result of the share exchange, UAC will become a wholly owned subsidiary of White River. The share exchange is subject to shareholder approval. -- White River is offering 3,500,000 shares of its common stock in a subscription offering to UAC shareholders and certain standby purchasers. The subscription price is expected to be $10.00 per share. The record date for determining the UAC shareholders entitled to vote on the share exchange and participate in the subscription offering is April 5, 2005. The subscription offering represents new financing for White River. Proceeds will be used by White River in part to acquire Coastal Credit, LLC, headquartered in Virginia Beach, Virginia and to purchase notes of UAC issued pursuant to UAC's Plan of Reorganization, which was confirmed by the bankruptcy court on August 8, 2003. White River will mail a final proxy statement/prospectus to UAC shareholders of record, as soon as practical after the Securities and Exchange Commission declares the registration statement effective. About White River Capital White River Capital, Inc. is an Indiana corporation incorporated by UAC for the purpose of completing the transactions described in the registration statement. About Coastal Credit Coastal Credit, LLC is a specialized finance company engaged in the business of acquiring and servicing vehicle retail installment sales contracts. About Union Acceptance Union Acceptance Corporation is a specialized finance company engaged in the business of holding and administering automobile retail installment sales contracts and installment loan agreements headquartered in Indianapolis, Indiana. Union Acceptance filed a petition for reorganization under Chapter 11 of the Bankruptcy Code in the Southern District of Indiana, Indianapolis Division of the U.S. Bankruptcy Court on October 31, 2002 to facilitate a financial restructuring. On August 8, 2003, the Court confirmed UAC's Second Amended Plan of Reorganization. UAC emerged from bankruptcy on the effective date of the Plan, September 8, 2003. The confirmed Plan prescribes that available cash resources and cash flows released over time from the retained interest be used to repay creditors in their order of priority. Holders of senior and senior subordinated notes received new limited-recourse restructured notes reflecting these rights. For convenience, holders of smaller unsecured claims were entitled to elect a discounted repayment in exchange for early payout. As reported in the Troubled Company Reporter on March 12, 2005, as a result of the revaluation of retained interest and the associated impact on future cash flows, UAC has estimated that approximately $65 million of liabilities confirmed in the Plan will not likely be paid. UNITED AIRLINES: Inks Transition Plan Agreement with Air Wisconsin ------------------------------------------------------------------ United Airlines has reached a tentative agreement with Air Wisconsin Airlines on flying and ground-handling transition plans. The agreement is subject to approval by the U.S. Bankruptcy Court and is expected to be heard during the regularly scheduled Omnibus hearing on April 22. As reported in the Troubled Company Reporter on Mar. 16, 2005, United and Air Wisconsin are parties to 20 Agreements, including the United Express Agreement, which governs regional jet services. After evaluating bids received as part of the request for proposal issued in November 2004, United will have a new group of regional air carriers take over all United Express flying currently operated by Air Wisconsin out of Washington Dulles, Chicago O'Hare International and Denver International Airports. Air Wisconsin will continue to perform ground handling for United Express at a number of stations. "This tentative agreement represents an important step toward reducing costs for a significant portion of our United Express flying and ground handling, while ensuring a safe, customer- friendly transition," said Sean Donohue, vice president of United Express and Ted. "We're very pleased to have reached market- competitive rates with Air Wisconsin for ground handling at a number of locations they currently serve, keeping a valued, long-standing partner on board with us." As the company previously announced, the carriers that will take over United Express flying include SkyWest and GoJet (a Trans States subsidiary). United currently is in discussions with other carriers and may continue to award additional flying and ground- handling through the RFP process. "The United Express product and reliability continue to improve, and our new agreements ensure we will continue to provide superior service and competitive fares to our customers," Mr. Donohue said. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. US AIRWAYS: U.S. Bank Slams NOL Trading Protocol Due to Ambiguity ----------------------------------------------------------------- U.S. Bank objects to US Airways, Inc., and its debtor-affiliates' request for notice and hearing procedures that must be satisfied before transfers of claims against, and equity securities in, the Debtors are deemed effective. As reported in the Troubled Company Reporter on Oct. 15, 2004, Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explained that the Debtors must protect and preserve Net Operating Losses totaling more than $600,000,000. The Debtors can maintain the NOLs by establishing notice and hearing procedures for trading of claims and equity securities. If left unrestricted, improper trading could severely limit the use of the NOLs and could have negative consequences for the Debtors, their estates and the reorganization process. To preserve the flexibility to craft a plan of reorganization that maximizes the NOLs' value, the Debtors must closely monitor transfers of claims and equity securities. If noncompliant transfers are contemplated, the Debtors must be able to act accordingly to preserve the NOLs. Specifically, trading of claims and equity securities could adversely affect the Debtors' NOLs if: (a) too many 5% blocks of equity securities are created, or too many shares change hands from these blocks, so that, an ownership change within the meaning of Section 382 of the Internal Revenue Code is triggered; or (b) ownership of the Debtors' claims currently held by "qualified creditors" is transferred, prior to consummation of the plan, and those claims would be converted under a plan of reorganization into a 5% or greater block of the Reorganized Debtors' stock. The Debtors proposed these procedures for trading in equity securities: -- Any entity designated a Substantial Equityholder will file with the Court, and serve a notice of this status upon the Debtors and their counsel, within 10 days of earning this designation; and -- Prior transferring equity securities that would increase the amount of US Airways Group, Inc., common stock owned by a Substantial Equityholder, the recipient will file with the Court, and serve on the Debtors and their counsel, advance written notice of the intended equity securities transfer. U.S. Bank Objects Ira H. Goldman, Esq., at Shipman & Goodwin, in Hartford, Connecticut, reminds the U.S. Bankruptcy Court for the Eastern District of Virginia that the Debtors offered and sold pass through certificates to finance aircraft they owned or leased. The Debtors formed Pass Through Trusts. U.S. Bank, Mr. Goodman's client, acts as the Pass Through Trustee for each series of Certificates issued. The purchasers of the Certificates are beneficiaries of the issuing Pass Through Trust. Each Certificate evidences a pro rata interest in the property of that particular trust equal to the ratio of the value of all of the Certificates owned by a holder to the value of all the Certificates issued by that trust. U.S. Bank serves as Liquidating Trustee for the Debtors' 29 Liquidating Trusts that were formed to restructure Pass Through Transactions in US Airways' prior bankruptcy cases. The Liquidating Trusts were established to take and hold title to, and ultimately to dispose of, those Aircraft involved in the Pass Through Transactions that were either (i) originally owned by the Debtors and returned during the USAir I Bankruptcy, or (ii) were subject to leases rejected by the Debtors during the USAir I Bankruptcy. Certificates of Beneficial Interests represent the economic interest in the Liquidating Trusts, the Aircraft and the Liquidating Trust Leases. For Aircraft leased to the Debtors in the USAir I Bankruptcy, the Loan Trustee under the original Indenture and Security Agreements is the CBI holder, pending foreclosure. Once title to the Aircraft is held by the Liquidating Trusts, whether as a result of foreclosure or return of Aircraft, the CBIs are distributed to the holders of the Debtors' Pass Through Certificates. U.S. Bank objects to entry of the Proposed Trading Order because its coverage of Certificate and CBI holders is ambiguous and may not provide for adequate notice. Mr. Goldman says that the Order appears to exclude a person from being a Substantial Claimholder if he is a holder of Certificates or CBIs. However, the language is not free from ambiguity when read in conjunction with other parts of the Order. The Order is intended to offer relief to holders of Certificates and CBIs, but the extent of that relief is unclear. Mr. Goldman tells Judge Mitchell that, because there are a substantial number of Certificate and CBI holders with large amounts of money involved in freely tradable securities, any restrictions imposed on holding and trading of the securities by the Order must be clear. Also, the Order is not clear about whether holders have been provided notice either of the hearing on the Order or its entry. Mr. Goldman finds it unclear whether a notice of the revised Order has been served on holders of Certificates and CBIs. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Wants to Assume Insurance Agreements ------------------------------------------------ Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explains that for many years, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, and certain affiliates, all member companies of American International Group, Inc., have provided primary coverage for workers' compensation, employer's liability insurance and automobile liability insurance for US Airways, Inc., and its debtor-affiliates. AIG currently provides primary coverage under several Insurance Policies, along with Risk Management Services relating to the Policies. The Insurance Program, comprised of the Insurance Policies and the Services, are governed by a Payment Agreement for Insurance and Risk Management Services. Under the Insurance Program, AIG pays insured losses and expenses that exceed any deductible/retention amounts owed by the Debtors under the applicable policies. Since the Insurance Program is a large deductible/retention program, the Debtors are obligated to reimburse AIG for losses within the deductible/retained layer. To support the reimbursement obligations, the Debtors provide Collateral for AIG's benefit. The Collateral currently totals approximately $118,000,000, consisting of $50,000,000 in cash held by AIG, plus an Escrow with in excess of $60,000,000. The Debtors are required by state law to maintain the coverages under the Insurance Program. Mr. Leitch says that there are a limited number of insurance companies, other than AIG, with sufficient levels of coverage and resources to service claims on a nationwide basis. The AIG Insurance Program expired on February 14, 2005. Prior to that date, the Debtors tried unsuccessfully to reach agreement with AIG on the terms and conditions of a long term extension of the Insurance Program. However, so the Debtors were not left exposed, AIG provided a 60-day extension, through April 20, 2005, of the Insurance Program. The Extension is contingent upon Court approval of the Debtors' assumption of the Insurance Program by March 31, 2005. The premiums and surcharges related to the Extension are $325,000. Upon Court approval, AIG will return $10,000,000 in Collateral to the Debtors. Thereafter, AIG will periodically review and reduce the Collateral to retain only enough to maintain a 25% buffer over ultimate incurred losses less paid losses. AIG will promptly return any excess Collateral to the Debtors. The first quarterly evaluation will utilize losses valued as of June 30, 2005. Quarterly evaluations will continue for one year ending June 30, 2006. Thereafter, the parties will conduct semi-annual collateral reviews. In exchange for AIG's agreement to release Collateral, the Debtors will not seek any other return of Collateral for the next four years. The Debtors ask the U.S. Bankruptcy Court for the Eastern District of Virginia to issue an Order that: a) provides for the Debtors to assume the Insurance Program and execute all necessary documents; b) provides that the Debtors will cure all defaults and pay their obligations under the Insurance Program, and that, if the Debtors default, AIG may exercise its contractual rights; c) provides that the Debtors' obligations under the Insurance Program will be administrative obligations entitled to priority under Section 503(b) of the Bankruptcy Code; d) provides that AIG does not need to file a proof of claim for administrative expenses or a request for payment of administrative expenses and that AIG will be exempt from any bar date for filing proofs of claim relating to administrative expenses; e) provides that all Collateral or security held by AIG and prior payments to AIG under the Insurance Program are approved, and AIG is authorized to retain and use the Collateral or security, subject to AIG's obligation to Return Collateral to the Debtors; f) allows AIG to adjust, settle and pay insured claims, utilize funds and carry out the terms and conditions of the Insurance Program, without further Court order; g) provides that the Insurance Program may not be altered by any plan of reorganization and that nothing in any plan will impair AIG's interests in its Collateral; h) provides that the Debtors' rights against all Collateral held by AIG will be governed by the terms of the Insurance Program, related security documentation and the Order; i) provides that during these cases, AIG will not be required to return any of the security it holds for the Insurance Program without adequate protection; and j) authorizes the Debtors to take necessary actions to implement the terms of the Order. Mr. Leitch tells Judge Mitchell that operating without insurance is not an option. AIG has insisted on the assumption of the Insurance Program as a condition of providing the Extension and the return of Collateral. The return of Collateral is crucial to Debtors' ability to enter into a new Insurance Program with another insurer and AIG will not release Collateral absent the Debtors' assumption of the Insurance Program. Mr. Leitch assures Judge Mitchell that assumption of the Insurance Program will not increase the incremental cost to the Debtors over the amount already posted as Collateral. After the return of the initial $10,000,000 in Collateral, AIG will retain Collateral aggregating 125% of the Debtors estimated potential reimbursement obligations. AIG will cancel the Insurance Program if the Court does not grant the Debtors' request. In that case, Mr. Leitch says the Debtors would be in violation of state laws and, in the worse case, be forced to shut down operations. It is clearly in the best interests of the Debtors' estates to assume the Insurance Program. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) WARWICK VALLEY: Encounters Further Delay in Form 10-K Filing ------------------------------------------------------------ Warwick Valley Telephone Company (NASDAQ: WWVY) was unable to file its Annual Report on Form 10-K for the year ended December 31, 2004 by the extended due date of March 31, 2005. As previously disclosed in the Company's Form 12b-25 filing on March 17, 2005, due to the complex nature of the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the fact that the Company has encountered unanticipated delays in connection with its evaluation and testing, the Company has not yet completed its assessment of its internal control over financial reporting. Additionally, due to the redirection of personnel resources in connection with the ongoing efforts to complete management's assessment of the effectiveness of the Company's internal control over financial reporting, the Company has not yet completed its financial statements. Management has devoted, and continues to devote, significant time, effort and expense in preparing its financial statements and performing its evaluation of internal control over financial reporting. Management intends to file the Company's Annual Report on Form 10-K as soon as possible. Nasdaq Delisting As a result of its inability to file its Annual Report on Form 10-K on time, on April 5, 2005, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market, Inc., stating that the Company fails to comply with Nasdaq's Marketplace Rule 4310(c)(14) because it has not yet filed its Annual Report on Form 10-K for the year 2004. Because of this failure to comply, the Company's Common Shares will begin trading at the opening of business on April 7, 2005, under the symbol "WWVYE," rather than under its usual symbol, "WWVY." Furthermore, the notice stated that the Company's Common Shares will be delisted from The Nasdaq National Market at the opening of business on April 14, 2005, unless by 4:00 pm EDT on April 12, 2005, the Company requests a hearing before a Nasdaq Listing Qualifications Panel. The Company intends to promptly request an oral hearing. That request will stay the delisting of the Company's Common Shares. The Company currently believes the hearing will take place in approximately one month. There can be no assurance that the Panel will grant the Company's request for continued listing. Defaults Waived The Company entered into a 10-year, multiple-draw credit facility with a maximum availability of $18,475,000 with CoBank on Oct. 16, 2002. Under the credit facility, the availability of undrawn amounts expired on September 30, 2004, at which time a principal amount of $12,149,058 was outstanding. Several covenants and events of default potentially relate to the inability of the Company to file its Annual Report on Form 10-K on time. One of the covenants in the facility requires the Company to provide audited financial statements to the lender 90 days after fiscal year end. Another requires the Company to comply with all regulations, which would include the reporting regulations of the Securities and Exchange Commission. CoBank has waived until June 1, 2005, all defaults that relate or might relate to the Company's failure on March 31, 2005, to file its Annual Report on Form 10-K, the failure on March 31, 2005, to deliver audited financials to CoBank and the receipt on April 5, 2005, of the notice described above from Nasdaq; as a result, the Company is not in default under the facility. In the event the Company is unable to file audited statements on June 1, 2005, and the filing deadline is not further extended, CoBank could declare an Event of Default that could accelerate the maturity of all amounts then outstanding and then seek to collect those amounts. As previously disclosed in the Form 12b-25, the Company has identified certain material weaknesses in the design and operating effectiveness of internal control over financial reporting. The existence of one or more material weaknesses as of December 31, 2004 would preclude a conclusion by management that the Company's internal control over financial reporting was effective as of that date. As previously reported, when comparing results from year 2004 to year 2003: -- Total Operating Revenues of the Company are expected to decline $1.1 million or approximately 4% due principally to a decrease in revenue from network access charges; -- Operating Expense is expected to increase by approximately $1.5 million or approximately 6% largely due to a significant increase in professional fees related to management's ongoing Section 404 assessment; and -- net income is expected to increase by $0.8 million, or approximately 10% due largely to a gain on the sale of the Company's interest in DataNet and to an increase in its income from its limited partnership interest in Orange County-Poughkeepsie LP, partially offset by the decrease in Total Operating Revenues and the increase in the Operating Expenses discussed above. The foregoing results are preliminary and are subject to adjustment. Warwick Valley Telephone Company is based in Warwick, N.Y. The Company's Sept. 30, 2004, balance sheet shows $67 million in assets and $26 million in liabilities. W.R. GRACE: Asbestos Comm. Taps Anderson Kill as Insurance Counsel ------------------------------------------------------------------ The Official Committee of Asbestos Personal Injury Claimants appointed in the chapter 11 cases of W.R. Grace & Co. and its debtor-affiliates seeks the U.S. Bankruptcy Court for the District of Delaware's authority to retain Anderson Kill & Olick, P.C., nunc pro tunc to March 17, 2005, as its special insurance counsel to evaluate and advise on the Debtors' insurance coverage and any pending or future motions seeking the resolution of insurance- related disputes. The PI Committee believes that Anderson Kill has extensive experience in insurance matters, and the firm possesses substantial and well-known expertise in analyzing complex insurance coverage and recovery issues. Among other things, Anderson Kill has successfully pursued insurance coverage on behalf of 10 major asbestos defendants, as well as many other insurance policyholder clients. Anderson Kill has tried 17 major insurance coverage litigations on behalf of policyholders, prevailing in 15 of them, and has obtained billions of dollars in recoveries in well-publicized settlements in numerous other cases. The PI Committee states that Anderson Kill's services are both necessary and appropriate to assist the PI Committee in reviewing any future motions which the Debtors might file seeking to resolve insurance coverage disputes. Insurance coverage disputes and the related settlements are often extremely complicated and require specialized experience to appropriately evaluate and determine their reasonableness. As indicated by the Debtors' Amended Disclosure Statement, the Debtors have $987 million of excess insurance coverage available from more than 30 presently solvent insurers. In addition, the Debtors have $355 million of excess insurance coverage with insolvent or non-paying insurance carriers. Thus, the PI Committee deems it entirely appropriate to retain Anderson Kill to advise them on these matters. As special insurance counsel, Anderson Kill will be: (a) advising the PI Committee regarding matters of the Debtors' insurance coverage available for payment of asbestos-related, silica-related, or other toxic exposure claims, including gaps in coverage, overlapping coverage provided by multiple carriers and availability of excess insurance coverage; (b) reviewing, analyzing and advising the PI Committee on potential settlements between the Debtors and the insurance carriers; and (c) advising the PI Committee regarding issues related to the Debtors' insurance coverage in connection with their Chapter 11 cases. Robert M. Horkovich, Esq., an equity shareholder of the law firm, assures the Court that Anderson Kill is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Moreover, the firm holds no interest adverse to the Debtors or their estates for the matters on which it is to be retained. Mr. Horkovich also attests that Anderson Kill has no connection to the Debtors, their creditors or their related parties. Anderson Kill will be paid on an hourly basis and reimbursed for the actual and necessary expenses it incurs. The Anderson Kill attorneys and paralegals expected to provide services to the PI Committee and their 2005 hourly rates are: Robert M. Horkovich, Esq. $675 Ann V. Kramer, Esq. $550 Mark Garbowski, Esq. $425 Robert Y. Chung, Esq. $375 Karen Frankel (paralegal) $185 Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 82 ; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTLAKE CHEMICAL: Names Joseph Nassif as VP-Corporate Purchasing ----------------------------------------------------------------- Westlake Chemical (NYSE: WLK) appointed Joseph B. Nassif as Vice President, Corporate Purchasing. In his new position, Mr. Nassif will direct the corporate-wide procurement activities in support of the business to include maintenance, repairs, operations, capital expenditures and administrative purchasing. His responsibilities also include the development and analysis of strategic procurement processes and opportunities for our business. "We are delighted that Joe has joined our management team and believe his 20 plus years of chemical industry experience in supply chain, operating and financial management give him the ideal background to make an immediate and positive impact on our business," said Albert Chao, President and CEO of Westlake Chemical Corporation. Mr. Nassif most recently was a Principal Consultant with Genesis Business Performance Inc., where he provided supply chain, strategic planning and business analysis consulting services to the chemical industry. He previously served as COO of Lipo Chemicals, Inc., Vice President and Business Director and Vice President Operations and Supply Chain for the chemicals and filters division of International Specialty Products, Inc. For over 10 years Mr. Nassif worked for BASF in a variety of increasingly responsible positions in logistics, procurement and finance. He holds a BS in chemistry from City University of New York, an MS in Chemical Engineering from Columbia and an MBA from NYU. About the Company Westlake Chemical Corporation -- http://www.westlakechemical.com/ -- is a manufacturer and supplier of petrochemicals, polymers and fabricated products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, vinyl intermediates, PVC and PVC pipe, windows and fence. * * * As reported in the Troubled Company Reporter on Sept. 24, 2004, Moody's Investors Service upgraded Westlake Chemical Corporation's $247 million Guaranteed senior unsecured notes due 2011, from Ba3 to Ba2. * Clear Thinking Forms Bankruptcy Claims Administration Unit ------------------------------------------------------------ Clear Thinking Group LLC, a retailing, consumer products and industrial manufacturing consultancy headquartered here, formed a Claims Administration Unit that will execute all facets of bankruptcy claims processing and administration on behalf of debtors. The unit is an extension of Clear Thinking Group's Creditors' Rights Practice, headed up by Joseph Myers, a partner and managing director of the firm. Functions of the unit will include assisting debtors through each step of the claims administration process and handling disbursements to be made in line with a Plan of Reorganization. The unit will also place notice advertisements pertaining to cases being administered, handle all notice mail and serve as balloting and tabulation agents. Working along with Mr. Myers in serving Claims Administration Unit clients will be Clear Thinking Group manager Dorene Robotti, Esq., and Denise Engelhardt, who joined the firm on April 1 with a particular focus on the claims administration practice. Ms. Engelhardt has more than 25 years of retail accounting and bankruptcy claims management experience. She most recently served as retail controller of Kennesaw, Ga.-based Carpetland/Flooring America, becoming the merchant's de facto claims agent after it filed for Chapter 11 bankruptcy protection in June 2000, handling nearly 6,700 creditor claims. Before joining Carpetland/Flooring America in 1987, Ms. Engelhardt spent seven years in the accounting department of Stokes Brothers Electronics, Salt Lake City, Utah, where she rose to the position of retail controller. Prior to that, she was a member of the accounting department at Sears, Roebuck & Co. "Debtors are looking for alternative services to guide them through the process of administering claims, which can be a complicated, time-consuming undertaking," Mr. Myers stated. "The Claims Administration Unit provides comprehensive assistance in this important area. It is a complement to the Creditors Rights Practice and to Clear Thinking Group as a whole, enabling us to fulfill yet another dimension of client needs." 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. * Sheppard Mullin Adds David Sunkin to Los Angeles Office --------------------------------------------------------- Sheppard, Mullin, Richter & Hampton LLP welcomes David Sunkin as a partner in its Los Angeles office's Corporate Practice Group. Mr. Sunkin was most recently vice president and general counsel with Earl Scheib, Inc. (AMEX: ESH). "We're very pleased to welcome David to the firm and to the Los Angeles office," said Larry Braun, co-head of the firm's Corporate Practice Group. "As the in-house counsel of client Earl Scheib, I have worked very closely with David for years. He is an excellent business lawyer who will be a valuable addition to our practical approach to assisting clients. We are thrilled to have him join the Corporate group." Mr. Sunkin comments, "I am excited about resuming my private practice with a premier firm and am looking forward to building strong relationships with all of the practices and the clients throughout the firm. Having previously practiced with a law firm, as well as in-house, I've gained valuable perspective from both sides and am familiar with the challenges each faces." "David played an important role on the executive team at Earl Scheib, making possible the most recent improvements in Scheib's financial performance," said Christian Bement, CEO and president of Earl Scheib. As general counsel and the only in-house attorney at Earl Scheib, Mr. Sunkin was responsible for all of the company's legal and business affairs and involved in strategic planning with the other members of the executive team. Accordingly, Mr. Sunkin has managed all of the Company's public reporting and corporate work as well as a wide range of litigation and employment matters, risk management-insurance programs, and real estate matters. In his capacity as general counsel, Mr. Sunkin represented Earl Scheib in obtaining an $11.5 million asset-backed credit facility with Wells Fargo Foothill, was instrumental in advising the Scheib board during its recent review of strategic alternatives, prepared all of the Company's 1933/1934 Act filings, negotiated and documented the company's acquisition of over 60 new nationwide retail/industrial locations (through acquisitions and internal growth) and the sale of approximately 60 nationwide parcels of real property, and negotiated the purchase of all of the Company's insurance programs. In addition to ten years with Earl Scheib, Mr. Sunkin previously practiced at Buchalter, Nemer, Fields & Younger in Los Angeles, specializing in general corporate and securities law, with an emphasis on mergers and acquisitions, venture capital financing and public offerings, banking and finance, and advising various- sized public and private companies. Mr. Sunkin earned his law degree from Loyola Law School in 1992 and graduated from the University of California, Los Angeles, with a BA in Economics in 1989. About Sheppard, Mullin, Richter & Hampton LLP Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm with 430 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment and Media; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax, Employee Benefits, Trusts and Estate Planning; and White Collar Defense. * BOOK REVIEW: Japanese Takeovers: The Global Contest ----------------------------------------------------- Author: W. Carl Kester Publisher: Beard Books Softcover: 324 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587982102/internetbankrupt Kester's "Japanese Takeovers" revisits the wave of Japanese takeovers of large foreign corporations in the 1980s, including many American businesses. At the time, there was concern among economists, businesspersons, and government officials about not only the economic consequences, but also the political consequences. In taking over major American corporations, some of them identified as flagships of the American economic system, many felt that a part of America was being lost. Japanese control of large American businesses also raised concerns about Japanese influence over politicians and considerations about the communities where the businesses were located. These concerns were for the most part dispelled with the new life Japanese cash and management brought to many corporations and Japanese sensitivities to the situations of employees and their families and communities. Yet these same economic, political, and social concerns continue to be raised with regard to the business activity in the globalization gaining strength in the years following the Japanese takeovers that attracted worldwide attention and scrutiny. In historical hindsight, Kester sees the Japanese takeovers as the initial stage of the globalization before long to involve large corporations from countries around the world; not only the United States, but the European countries of Britain, France, and Germany, and Middle Eastern countries wealthy from oil. Kester delves into the sources of the Japanese corporations' desires and abilities to take over large businesses in foreign countries. He sees also how this takeover activity signaled shifts in the outlooks and operations of corporations. The interrelated, central matters of stakeholder expectations and the ambitions and plans of corporate heads and top executives were transformed in these early years when Japanese firms were demonstrating in a national, yet widely influential way what globalization was, how it worked, and what it meant for the world. Finally, the author brings the ambivalent effects of the Japanese takeover activity to light. Kester focuses on "tying together the struggles among major groups of corporate stakeholders (shareholders, lenders, employees, suppliers, customers, and so forth) with merger and acquisition activity." It was in these struggles that the orientation of large corporations was changed. No longer did they try to be simply leaders in their industry, or develop images linking them to specific products or services. Instead, Japanese corporations and others following in their steps looked at the entire world as the field for their development, growth, and extension of their corporate name and influence. Many Japanese corporations became known for their takeover activities more than their products or services. Such changes in the orientation of the Japanese corporations forging the trail in foreign takeovers entailed numerous interrelated changes in all areas of a corporation and also changes in economic principles and concepts. Cash is but one of these economic factors Kester assesses. After the "period of adjustment" following the oil shocks on the 1970s, there was "the emergence in Japan of a manufacturing sector that has substantial cash flow relative to its needs." Along with this, there was "the much reduced monitoring of [such companies'] entrenched managers." In these circumstances, cash began to be "deployed in ways that have little bearing on the achievement of product market competitiveness or parity growth in the value of stakeholder claims." Japanese manufacturing firms were pursuing "diversification plans" unrelated to their traditional business activities and outside of the fields they were established in. Kester interviewed more than 40 top executives in 15 different Japanese firms. Included in these were the well-known companies Hitachi, Mitsubishi, and Toshiba. Banking and financial services are also found in the list (contained in the appendix). Kester included material from the financial institutions primarily for a perspective from institutions which were helping the large Japanese manufacturing companies with the capital for their takeovers plans. Even though Japanese foreign real-estate takeovers are not included, the "field sample is comparatively large" and relevant in that it deals with the main area of Japanese takeover activity. This activity, now summed up in the term globalization, marked the beginnings of a new era in economic history. This author's systematic study of Japanese corporations ushering in this new era offers a comprehensive understanding of the globalization which has come to be the dominant economic activity of today. With the Harvard Business School since 1981, W. Carl Kester teaches finance in its MBA and Executive Education Programs. He has written extensively on Japanese corporate finance and strategic resource allocation. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***