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/raid1/www/Hosts/bankrupt/TCR_Public/050425.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, April 25, 2005, Vol. 9, No. 96 Headlines 1501 F.M.: Voluntary Chapter 11 Case Summary AAT COMMUNICATIONS: Industry Review Cues S&P to Watch Low-B Rating ADELPHIA COMMS: Settles Tele-Media Dispute for $21.65 Million ADVOCAT INC: Lenders Extend Maturity Dates to Jan. 29, 2006 ALASKA AIRLINES: Industry Review Prompts S&P to Cut Ratings ALLEGHENY ENERGY: Trust Preferred Holders Accept Tender Offer ALLIANCE ATLANTIS: Moody's Withdraws Rating After Notes Redeemed AMERICA WEST: Likely US Airways Merger Cues S&P to Watch Ratings AMERICA WEST: Chairman Doug Parker Says Merger Is Possible AMERICAN PRODUCTION: AmeriChip Withdraws Proposed Chapter 11 Plan AMPEX CORP: Dec. 31 Balance Sheet Upside-Down by $99.4 Million AMR CORP.: Industry Review Prompts S&P to Pare Ratings APPLICA INC.: Likely First Quarter Loss Cues S&P to Watch Ratings ATA AIRLINES: Court Approves Settlement Pact with ATSB Lenders ATHEROGENICS INC: Equity Deficit Widens to $53,911,689 at Mar. 31 AUSTIN BOULEVARD: Case Summary & Largest Unsecured Creditor BEARINGPOINT INC.: Disclosures Prompt S&P to Cut Rating to B- BEARINGPOINT INC: Moody's Slices Senior Implied Rating to B1 BETHLEHEM STEEL: Liquidating Trust Wants BSI Contract Terminated CALL-NET: Likely Modest Cash Flow Prompts Moody's to Up Ratings CALPINE CORP: Company Says Bankruptcy Rumors are False CANFIBRE OF RIVERSIDE: Files Plan & Disclosure Statement CATHOLIC CHURCH: St. George's Has Until May 6 to File BIA Proposal CCC INFORMATION: March 31 Balance Sheet Upside-Down by $113 Mil. CELESTICA INC: Incurs $11.6 Million Net Loss in 2005 First Quarter CHANNEL MASTER: Trustee Settles Preferences for 3% to 26% CHRISTIANA CARE: AM Best Withdraws Ratings at Company's Request CINEMA EATERY: Case Summary & 20 Largest Unsecured Creditors COLAD GROUP: Harter Secrest Approved as Bankruptcy Counsel COLAD GROUP: Has Until Aug. 5 to Make Lease-Related Decisions COMCAST: Fitch Affirms Ratings After Adelphia Purchase Announced CONGOLEUM CORP: Modifies Chapter 11 Plan & Disclosure Statement CONTINENTAL AIRLINES: Industry Review Cues S&P to Cut Ratings CROWN CASTLE: Industry Review Prompts S&P to Watch Low-B Rating CURATIVE HEALTH: S&P Junks Senior Unsecured Debt Rating to CCC+ DELPHI CORP: Fitch Downgrades Low-B Ratings & Maintains Watch DELPHI CORP.: S&P Lowers Ratings a Notch to BB DEVON MOBILE: Trustee Wants Chapter 11 Proceedings Suspended DIGITAL LEGAL: Case Summary & 20 Largest Unsecured Creditors DMX MUSIC: Maxide Acquisition Files Schedules of Assets & Debts EDSAL CHESHIRE: Case Summary & 20 Largest Unsecured Creditors FEDERAL METAL: Case Summary & 20 Largest Unsecured Creditors FIBERMARK INC: Wants Court to Reinstate Exclusive Periods FLYI INC.: Industry Review Prompts S&P to Downgrade Ratings FRANK'S NURSERY: Bankruptcy Court Approves Disclosure Statement FREMONT HOME: Moody's Rates Cert. Classes B-1 & B-2 at Low-B FV STEEL: Gets Court Authority to Expand Services of Watson Wyatt GSAA 2005-4: Moody's Puts Ba1 Rating on $2.98MM Class B-4 Certs. GSAMP TRUST: Moody's Puts Ba1 Rating on $9.8MM Class B-4 Certs. HAIRSTON MOTOR: Case Summary & 20 Largest Unsecured Creditors HEILEG-MEYERS: Wants Wachovia's Disclosure Objections Overruled HIGHLAND HOLDING: Case Summary & 13 Largest Unsecured Creditors HOLLINGER INC: Ravelston Receivership Triggers Event of Default ICON HEALTH: Moody's Revises Outlook to Negative After Downgrade INDUSTRIAL ENT: Buying 100% Interest in Auto Aftermarket Supplier IVOW INC: Lack of Financing Prompts Going Concern Doubt KING PHARMACEUTICALS: Moody's Confirms Low-B Ratings After Review KMART HOLDING: Footstar Files Service Mark Brief Under Seal LCM III: Moody's Assigns Ba2 Rating to $11.5 Million Class D Notes LIFEPOINT HOSPITALS: Inks 30-Year Lease with Wythe County Hospital LNR PROPERTY: Repayment Prompts Fitch to Withdraw Low-B Ratings MARC LISNER: Case Summary & 20 Largest Unsecured Creditors MCI INC: Board Concludes Qwest Offer is Superior MOSAIC GROUP: Chapter 11 Trustee Terminates Claims Agent NORTEL NETWROKS: Board Declares Preferred Stock Dividends NORTHSHORE ASSET: Case Summary & 20 Largest Unsecured Creditors NORTHWEST AIRLINES: Industry Review Prompts S&P to Pare Ratings NOVA CHEMICALS: Earns $94 Million of Net Income in First Quarter OMEGA HEALTHCARE: Declares $0.21 Per Common Share Dividend PASADENA GATEWAY: Wants to Hire Marilee A. Madan as Bankr. Counsel PEABODY ENERGY: Moody's Revises Rating Outlook to Positive RAMP SERIES 2005-RZ1: Moody's Rates $2MM Class M-9 Certs. at Ba1 RAVELSTON CORP: Ontario Court Appoints RSM Richter as Receiver REAL MEX: Extends Sr. Secured Debt Exchange Offer Until Apr. 29 RFB CELLULAR: Two Subsidiaries Selling Spectrum Licenses RESIDENTIAL ASSET: S&P Pares Ratings on Two Certificate Classes RICHARDSON ELECTRONICS: Receives Nasdaq Delisting Notice ROBERT HERRINGTON: Case Summary & 16 Largest Unsecured Creditors RURAL CELLULAR: Won't Declare Quarterly Pref. Stock Dividends SAN ANTONIO: Case Summary & 20 Largest Unsecured Creditors SAXON ASSET: Moody's Junks Class BF-1 of Series 2000-4 & 2001-1 SBA COMMUNICATIONS: Debt Outstanding Cues S&P to Watch Junk Rating SCOTIA PACIFIC: Moody's Slices Rating on $463.35MM Notes to B1 SECURITY CAPITAL: Ernst & Young Won't Seek Re-Appointment SECURITIZED ASSET: Moody's Rates $13.19MM Class B-4 Certs. at Ba1 SEMINIS VEGETABLE: Moody's Cancels Ratings After Monsanto Buy-Out SILICON GRAPHICS: Poor Performance Prompts S&P to Junk Rating SOLECTRON CORP: Calls for Redemption of 9.625% Senior Notes SPECTRASITE INC.: Industry Review Cues S&P to Watch Low-B Rating STRUTHERS INDUSTRIES: Sells Assets for Approximately $6 Million SYNBIOTICS CORP: Proposing 1-for-2,000 Reverse Split to Go Private SYRATECH CORP: Creditors Committee Taps Bowditch as Counsel TEXAS STATE: Moody's Slices Rating on Subordinate Bonds to B3 TFM S.A.: Fitch Puts B+ Rating on $460 Mil. 9.375% Senior Notes TFM S.A.: Raises $386 Million in 11.75% Sr. Discount Debt Offer TNS INC: Moody's Rates Planned $240M Senior Sec. Facility at Ba3 UAL CORP: PBGC Agrees to Termination of Four Pension Plans UNITED AMERICAN: Case Summary & 20 Largest Unsecured Creditors VCA ANTECH: New $500MM Loans Will Refinance Senior Term F Notes VENTURE HOLDINGS: Auctioning 46-Acre Property in Seabrook, N.H. VISTEON: Fitch Lowers Senior Unsecured & Bank Debt to B from BB WEIGHT INTERVENTION: Voluntary Chapter 11 Case Summary WESTPOINT STEVENS: Court Approves Modified Bidding Procedures YOUNG BROADCASTING: Prices Tender Offer for 8-1/2% Senior Notes ZIFF DAVIS: Debt Refinancing Prompts S&P to Lift Ratings * BOND PRICING: For the week of April 4 - April 8, 2005 ********* 1501 F.M.: Voluntary Chapter 11 Case Summary -------------------------------------------- Lead Debtor: 1501 F.M. 1960 East Bypass, LP 1 Diamond M Drive Humble, Texas 77338 Bankruptcy Case No.: 05-35886 Type of Business: The Debtor operates a radio station. 1501 F.M. is affiliated with Humble Gattitown, LLP (Bankr. S.D. Tex. Case No. 04-43698). Humble Gattitown filed for chapter 11 protection on Sept. 28, 2004, and it's case is pending before the Honorable Jeff Bohm. Chapter 11 Petition Date: April 15, 2005 Court: Southern District of Texas (Houston) Judge: Wesley W. Steen Debtors' Counsel: Peter Johnson, Esq. Law Offices of Peter Johnson Eleven Greenway Plaza 2820 Summit Tower Houston, Texas 77046 Tel: (713) 552-0025 Fax: (713) 552-1433 Total Assets: $4,200,000 Total Debts: $3,667,623 The Debtor discloses that GE Capital holds a secured claim for more than $3.5 million against it's estate, secured by liens on real estate valued at $4.2 million. GE is represented by: Gregory Lowry, Esq. Locke Liddell & Sapp LLC 2200 Ross Avenue Dallas, TX 75201 The Debtor says in its bankruptcy petition that it has no unsecured creditors. AAT COMMUNICATIONS: Industry Review Cues S&P to Watch Low-B Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings for four wireless tower companies: (1) SpectraSite Inc. ('B+' corporate credit rating), (2) Crown Castle International Corp. ('B'), (3) AAT Communications Corp. ('B-'), and (4) SBA Communications Corp. ('CCC+'), as well as related entities -- on CreditWatch with positive implications. These ratings join those for American Tower Corp. (B-/Watch Pos/--), which were placed on CreditWatch with positive implications Jan. 14, 2005. These companies collectively have approximately $7 billion of debt outstanding. These CreditWatch listings relate to an industry review being conducted by Standard & Poor's of the tower leasing business and the position of the companies within this industry. "Strengthening business prospects could support higher ratings for the companies in this sector," said Standard & Poor's credit analyst Catherine Cosentino. "The wireless carriers, particularly the large national players, are expected to continue to increase their geographic footprint, coverage, and capacity to support increased minutes of use both for voice and expanding broadband services. Tower companies will benefit from these trends, which should continue to bolster increased tower co-location." Reflecting the high operating leverage in this industry, gross profit margins are very high for companies in this sector and EBITDA margins tend to rapidly improve as additional tenants are added to existing towers. For 2004, gross profit margins for the tower leasing business were in excess of 60% for the group, and EBITDA margins ranged from about 30%-60%, with the lower end attributable to the effects of operations in the less-profitable site development business of SBA Communications Corp. While SBA has significantly higher leverage than its peers, at about 14x for 2004 on an operating lease-adjusted basis, its business profile may support a higher corporate credit rating than the current 'CCC+' (depending on Standard & Poor's assessment of its liquidity over the next few years) given its ongoing growth in lease rental revenues. As part of this review, Standard & Poor's will be evaluating its ratings guidelines for the sector to determine if the industry supports less stringent financial guidelines based on overall business characteristics. If we conclude that the business risk of the sector is stronger than that which we previously incorporated in our guidelines, we will provide new thresholds when the CreditWatch listings are resolved. The qualitative measures may also be revised to introduce metrics more representative of the current state of the industry, including such possible measures as revenue per tower and debt to revenue. The recent change in operating lease accounting adopted by the tower operators does not affect the business prospects or cash flow prospects for the industry. It has had the impact of increasing the size of reported minimum cash lease commitments for most of the tower companies. However, the increase in such minimum recognized commitments is also indicative of the high rate of contract renewal in this business, which is not expected to abate. Standard & Poor's will meet with management at the tower companies to discuss their financial policies, including stock repurchase and dividend plans, as well as the possibility for additional acquisitions in resolving the CreditWatch listings. ADELPHIA COMMS: Settles Tele-Media Dispute for $21.65 Million ------------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates ask Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York to approve a global settlement agreement and release with these Tele-Media parties: -- Tele-Media Constructors Company, -- Tele-Media Corporation of Delaware, -- Robert E. Tudek, Trustee for The Robert E. Tudek Revocable Trust dated January 12, 1998, as amended, -- Robert E. Tudek, Jr., -- Constance A. Vicente, -- Thomas E. Mundy, -- James J. Mundy, -- Peggy L. Tudek, -- Robert D. Stemler, -- Allen C. Jacobson, -- Charles J. Hilderbrand, -- Robert H. Stewart, -- Steven E. Koval, -- Tony S. Swain, -- Gerald P. Corman, -- Richard W. Shore, -- Russell G. Bambarger, -- Frank R. Vicente, -- Thomas F. Kenly, -- Robert R. Shepherd, -- Ralph E. Steffan, and -- John R. Previs. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that the Tele-Media Parties own interests in a number of Tele-Media partnerships, corporations and limited liability companies, both Debtors and non-Debtors, that are engaged in owning or operating cable television systems, radio stations, and other related businesses. Beginning in 1992, the Tele-Media Parties and certain ACOM Debtors entered into a variety of transactions through which ACOM financed, purchased or became an equity participant in several groups of cable operations owned and managed by Tele-Media. By December 31, 1999, ACOM indirectly held controlling interests in each of these Joint Ventures, each of which is a Debtor: * Tele-Media Company of Tri-States, L.P.: -- ACOM 82% -- Tele-Media 18% * TMC Holdings Corporation: -- ACOM 75% -- Tele-Media 25% * Tele-Media Investment Partnership, L.P.: -- ACOM 75% -- Tele-Media 25%. The Joint Ventures' subsidiaries include these Debtors: -- CMA Cablevision Associates VII, L.P., -- CMA Cablevision Associates XI, Limited Partnership, -- Adelphia Company of Western Connecticut, -- TMC Holdings, LLC, -- Eastern Virginia Cablevision, L.P., -- Tele-Media Company of Hopewell-Prince George, and -- Eastern Virginia Cablevision Holdings, LLC. Each of the JV Entities was operated previously by Tele-Media Delaware pursuant to certain management agreements. In September 2003, certain ACOM Debtors entered into transition services agreements with Tele-Media Delaware that provided the transition of the management of the JV Entities to the Debtors. By March 31, 2004, the Debtors replaced Tele-Media Delaware as managers of the JV Entities and assumed full day-to-day operations of the cable systems. Disputes Between the Parties Since the Petition Date, the Tele-Media Parties have raised numerous objections to the Debtors' handling of the JV Entities' bankruptcy cases. As previously reported, on August 5, 2004, the Tele-Media Parties requested the appointment of an examiner for each of the JV Entities' Chapter 11 cases. The Tele-Media Parties alleged that the ACOM Debtors' management and board of directors breached their fiduciary obligations to the creditors and equity holders of the JV Entities. The Examiner Motion raised numerous complex factual issues. In June 2004, the Debtors initiated a preference action against each of Tele-Media Delaware and Tele-Media Constructors. Through the Preference Actions, the Debtors sought to recover around $93.6 million in allegedly preferential payments. The Court later stayed the actions. On May 14, 2004, the Court allowed the Tele-Media Parties to intervene in the adversary proceeding entitled, Adelphia Communications Corp., et al., v. Bank of America, et al. The Tele-Media Parties asserted that there are additional claims that they could assert in connection with the Co-Borrowing Facilities against the agents and lenders. After the Debtors took over the day-to-day management of the JV Entities in September 2003, the parties have had extensive business, operational and other related disputes. The Debtors have been engaged in extensive settlement negotiations with the Tele-Media Parties since the filing of the Examiner Motion. Tele-Media Claims The Tele-Media Parties filed 691 separate proofs of claim against the ACOM Debtors, of which 210 claims allege breaches of fiduciary obligation and fraudulent inducement by the Debtors to pledge specific JV Entities' interests in support of the Co- Borrowing Facilities. The Fiduciary Duty Claims total $638.7 million. Tele-Media Delaware and Tele-Media Constructors also filed an additional 481 claims related to construction work and management fees. The claims, many of which the ACOM Debtors believe are duplicative, total over $1.25 billion. Settlement Agreement Subject to the Judge Gerber's approval, the Settlement Agreement resolves the Tele-Media Claims, the Examiner Motion and other existing issues between the Debtors and the Tele-Media Parties. The principal provisions of the Settlement are: a. ACOM will pay the Tele-Media Parties $21.65 million as settlement; b. The Tele-Media Parties will sell, assign and transfer all of their Tele-Media Tri-States Interests, Tele-Media TMC Holdings Shares and Tele-Media Investment Partnership Interests to ACOM; c. Tele-Media Delaware will pay ACOM $912,500 at closing and assume responsibility for administering and paying any outstanding and unpaid invoices with respect to claims made under workers' compensation policies and attributable to the JV Entities; d. Of the 691 Tele-Media Claims, the Debtors will allow 22 reduced and allowed claims aggregating around $5.5 million. The remaining Tele-Media Claims will be disallowed and expunged; e. The parties will exchange mutual general releases of all claims; f. ACOM will dismiss the Preference Actions with prejudice; g. The Tele-Media Parties will transfer any rights they have asserted or could assert in connection with the Bank of America Adversary Proceeding to the Debtors; and h. The Tele-Media Parties will withdraw the Examiner Motion. Ms. Chapman enumerates the benefits the ACOM Debtors will achieve through the Settlement: -- the resolution of claims which collectively allege $1.9 billion for goods, services, damages and fees owed; -- a more streamlined sale or standalone plan with the ACOM Debtors' buying the Tele-Media interests in the JV Entities; and -- the ACOM Debtors will not be forced to litigate the Examiner Motion, the Preference Actions or the Fiduciary Duty Claims, which litigation would have resulted in substantial expense. The ACOM Debtors believe the Settlement is fair and reasonable. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVOCAT INC: Lenders Extend Maturity Dates to Jan. 29, 2006 ----------------------------------------------------------- Advocat Inc. (NASDAQ OTC: AVCA) executed an agreement to extend the maturities of its working capital line of credit and other borrowings with its primary bank lender. Under terms of the agreement, the bank has agreed to extend the maturity dates of the indebtedness to January 29, 2006, and to temporarily forbear from exercising its remedies upon default subject to the terms and conditions set forth in the amendments. The interest rate on indebtedness other than the working capital line was revised to prime rate plus 1/2% up to a maximum of 7.5%, and the interest rate on the working capital line of credit remained unchanged at prime plus 1/2% up to a maximum of 9.5%. L. Glynn Riddle, Jr., Advocate's Chief Financial Officer, relates that on April 14, 2005 Advocat Inc., entered into four definitive agreements: -- a Sixth Amendment to Master Amendment to Loan Documents and Agreement with AmSouth; -- an Eighth Amendment to Renewal Promissory Note by and among AmSouth Bank and Diversicare Assisted Living Services, NC, LLC; -- an Eighth Amendment to Renewal Promissory Note (Overline Facility) by and among AmSouth Bank and Diversicare Management Services, Co.; and -- a First Amendment to Replacement Reduced and Modified Renewal Revolving Promissory Note by and among AmSouth Bank and Diversicare Management Services, Co. Going Concern Doubt BDO Seidman LLP raised substantial doubt about Advocat Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The Company incurred operating losses in two of the three years in the period ended December 31, 2004, and although the Company reported a profit for the year ended December 31, 2004, that profit primarily resulted from non-cash expense reductions caused by downward adjustments in the Company's accrual for self-insured risks associated with professional liability claims. At Dec. 31, 2004, the Company reported a net working capital deficit of $45.5 million. The Company has $37.4 million of scheduled debt maturities (including short term debt, settlement promissory notes and current portions of long term debt) during 2005, and is in default of certain debt covenants contained in debt agreements. "Of the Company's $37.4 million of scheduled debt maturities, $10.3 million has matured since December 31, 2004, including the Company's working capital line of credit," Advocat said in its Annual Report. "The Company has received proposed terms from the bank for a renewal and believes it will be able to reach an agreement, but no assurances can be made that such negotiations will be successful." Reimbursement Reductions Advocat has previously disclosed that President Bush's proposed federal budget for the fiscal year beginning October 1, 2005, includes several reductions that will adversely affect Advocat's revenues if implemented. The budget eliminates the reimbursement of add-ons for high acuity patients under the Resource Utilization Group that if implemented, will reduce revenue and cash flow before taxes by approximately $3.6 million per year. In addition, the proposed reduction of reimbursement for cross-over bad debt expense may reduce the Company's revenue and cash flow before taxes by approximately $150,000 per year when fully phased in. About the Company Advocat Inc. provides long-term care services to nursing home patients and residents of assisted living facilities in nine states, primarily in the Southeast. ALASKA AIRLINES: Industry Review Prompts S&P to Cut Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Alaska Airlines Inc.'s 9.5% equipment trust certificates (ETCs) due April 12, 2012, to 'B+' from 'BB', as part of an industry wide review of aircraft-backed debt. All other ratings on Alaska Airlines and parent Alaska Air Group Inc., including the 'BB-' corporate credit ratings on both, are affirmed. The outlook remains negative. "The lower rating on the ETCs reflects Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of multiple, further bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Betsy Snyder. "Downgrades of aircraft-backed debt securities were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the analyst continued. In the case of Alaska Airlines, the rating was lowered on an ETC backed by MD83 aircraft, a large percentage of which are operated by U.S. "legacy carriers" that are rated 'B' or lower. Although values of most aircraft models are currently strengthening, that progress could be reversed for certain models if several more large U.S. airlines were to enter bankruptcy. Standard & Poor's also considered in its review potential adverse effects of an ongoing legal dispute over the rights of certain creditors to repossess aircraft from bankrupt United Air Lines Inc. If a current temporary restraining order blocking repossession is not overturned, the precedent could be used to pressure creditors into less favorable negotiated restructurings in future airline bankruptcies. The ratings on Alaska Air Group Inc. reflect a medium-sized route network serving competitive markets, and the inherent risk of the airline industry, offset somewhat by its strong position in its major markets and relatively good liquidity for its size. Alaska Air Group is the holding company for Alaska Airlines Inc., its major operating subsidiary, and Horizon Air Industries Inc. Alaska Airlines, the ninth-largest U.S. airline, operates hubs at: (1) Seattle, Washington; (2) Portland, Oregon; (3) Anchorage, Alaska; (4) and Los Angeles, primarily serving destinations in Alaska from the lower 48 states, as well as destinations along the West Coast of the U.S., Canada (Vancouver and Calgary), and Mexico (seven destinations). More recently, the company has begun to serve several East Coast destinations from Seattle. The ongoing weak revenue environment and high fuel prices are expected to continue to constrain any significant improvement in Alaska Air's earnings and cash flow. If these conditions were to worsen further, ratings would likely be lowered. Revision to a stable outlook is considered less likely, due to these industry pressures. ALLEGHENY ENERGY: Trust Preferred Holders Accept Tender Offer ------------------------------------------------------------- Allegheny Energy, Inc. (NYSE:AYE) disclosed that holders of $295 million (98.3 percent) of Allegheny Capital Trust I's 11-7/8% Mandatorily Convertible Trust Preferred Securities have accepted the company's previously announced tender offer and consent solicitation. The securities originally were due in 2008 and had $300 million outstanding. "This successful transaction is another significant step in strengthening Allegheny Energy's financial condition," said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "It brings us one step closer to achieving a 30 percent equity ratio and improves our credit profile." The tender offer expired at midnight on Apr. 21, 2005. Under the terms of the offer, Allegheny offered holders of the securities 83.33 shares of Allegheny Energy common stock and $160.00 in cash per $1,000.00 liquidation amount. The company accepted all validly tendered securities and will promptly issue an aggregate of 24.6 million shares of common stock and $47.2 million in cash to the holders of the tendered securities. After the transaction, Allegheny will have approximately 162.1 million shares of common stock outstanding. In addition, the proposed amendments to the indenture governing Allegheny Energy's 11-7/8% notes due 2008 will become effective. About the Company Headquartered in Greensburg, Pa., Allegheny Energy -- http://www.alleghenyenergy.com/-- is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. * * * As reported in the Troubled Company Reporter on March 1, 2005, the rating outlooks for Allegheny Energy, Inc. and Allegheny Energy Supply, LLC -- AE Supply -- have been revised to Positive from Stable. The revision of the Rating Outlooks reflects improvement in credit quality stemming from debt repayments of approximately $1.2 billion made since Dec. 1, 2003, a reduction of business risk because of the sale or wind-down of most of the higher risk nonregulated operations, improved financial reporting and controls, and Fitch's expectation of continued debt reduction and cash flow growth. The ratings of Allegheny and AE Supply have been affirmed. Approximately $4.7 billion of debt is affected. Fitch affirms ratings and revises the Rating Outlooks to Positive on: Allegheny Energy, Inc. -- Senior unsecured debt 'BB-'; -- 11 7/8% notes due 2008 'B+'. Allegheny Capital Trust I -- Trust preferred stock 'B+'. Allegheny Energy Supply Company LLC -- Senior secured 'BB-'; -- Senior unsecured notes 'B-'; -- Statutory trust (A notes) 'BB-' Allegheny Generating Company -- Senior unsecured debentures 'B-'. ALLIANCE ATLANTIS: Moody's Withdraws Rating After Notes Redeemed ---------------------------------------------------------------- Moody's Investors Service withdrew the senior subordinated debt rating for Alliance Atlantis Communications Inc. as the company redeemed this class of debt pursuant to a call option on December 21, 2004. The senior subordinated notes were refinanced with proceeds from a new senior secured credit facility, rated by Moody's. Ratings affected by this action: * Senior Subordinated rating: withdrawn Dec 21, 2004 (formerly B1) 13% Notes due December 15, 2009 US$300 million Ratings not affected by this action: * Senior Implied rating, Ba2 * Senior Secured rating, Ba2 * Revolver Authorization, due December 20, 2009 C$175 million * Term Loan A, amortizing to December 20, 2009 US$109 million * Term Loan B, due December 20, 2011 US$250 million * Issuer rating, Ba3 Alliance Atlantis Communications Inc. is a diversified communications company, headquartered in Toronto, Ontario, Canada. AMERICA WEST: Likely US Airways Merger Cues S&P to Watch Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services placed selected ratings on America West Holdings Corp. and subsidiary America West Airlines Inc., including the 'B-' corporate credit rating on both, on CreditWatch with negative implications. Ratings on selected enhanced equipment trust certificates (EETCs) of America West Airlines Inc., which were placed on CreditWatch on Feb. 24, 2005, as part of an industry wide review of aircraft-backed debt, remain on CreditWatch. "The CreditWatch placement is based on the potential combination of America West with US Airways Inc. (rated 'D'), the major operating subsidiary of US Airways Group Inc. (rated 'D'), both currently operating under Chapter 11 bankruptcy protection," said Standard & Poor's credit analyst Betsy Snyder. "The combination could present significant labor integration and financial challenges, depending on how any such combination is structured." Labor issues, which have plagued other airline combinations, include potential problems associated with combining seniority lists (which determine employees' wages, promotions, and benefits) of the airlines, a process that has tended to actually increase labor costs in previous combinations. In addition, while America West has indicated that financing for a potential combination with any other airline would be external, it will be difficult to assess the effect on its financial profile until more details are provided. Both airlines already have weak financial profiles, with both reliant on Air Transportation Stabilization Board (ATSB) guaranteed loans for their funding needs. However, the combination of America West, with hubs located at Las Vegas and Phoenix, and US Airways, which operates primarily along the East Coast, could result in a more extensive route network and enhanced revenue opportunities. The ratings on America West Holdings Corp. reflect its: (1) relatively small size within the high-risk airline industry, (2) a weak balance sheet, and (3) limited financial flexibility. America West Holdings' major subsidiary is America West Airlines Inc., the eighth-largest airline in the U.S, with hubs located at Phoenix and Las Vegas. America West benefits from a low cost structure, among the lowest in the industry. However, it competes at Phoenix and Las Vegas against Southwest Airlines Co., the largest low-cost, low-fare, operator in the industry and financially the strongest. More recently, America West has begun service on transcontinental routes, where it competes not only against other low-cost airlines but also with larger network airlines. As a result of the extensive competition on its route structure and its substantial reliance on lower-fare leisure travelers, its revenue per available seat mile tends to be among the lowest in the industry. AMERICA WEST: Chairman Doug Parker Says Merger Is Possible ---------------------------------------------------------- As previously reported, US Airways Group Inc. disclosed its been having talks with America West Airlines for a possible merger of the two companies to create a national low-cost airline that can compete with discount rivals. America West Airlines chairman Doug Parker said that mergers among airline companies are inevitable. However, Mr. Parker didn't comment on speculations regarding a merger with US Airways, John Yantis of the East Valley Tribune reports. "We find it's best not to talk about them until there is something concrete to talk about," John Yantis quotes Mr. Parker during a conference call. "We . . . do believe consolidation in the airline industry is inevitable. And we believe America West may eventually play a role in that consolidation that is positive for our shareholders and our employees." Airline analysts aren't very positive about a merger between the two companies, Mr. Yantis relates. These mergers, the analysts say, only looked good on paper but fail in the actual implementation. "Up to a point, we believe the idea has merit," UBS airline analyst Robert N. Ashcroft told Brad Foss of the Associated Press. He and other analysts said that gaining the necessary support of shareholders, employees and some deep-pocketed investors could prove difficult, however. Analyst estimate the merger would need a capital infusion of $500 milion due to rising jet fuel prices and low fares. Another hurdle, analysts say, would be integrating the companies' fleets, management and the rank and file employees. About America West America West Holdings Corporation -- http://www.americawest.com/ -- is an aviation and travel services company. Wholly owned subsidiary America West Airlines is the nation's second largest low-fare carrier, serving 95 destinations in the U.S., Canada, Mexico and Costa Rica. The Company posts a $33.6 million net income for the first quarter of 2005. As of Mar. 31, 2005, America West listed $1,580,400,000 in assets and $1,510,270,000 in liabilities. * * * Standard & Poor's Ratings Services assigned its preliminary 'B-' secured debt rating, and preliminary 'CCC' senior unsecured and subordinated debt ratings to securities filed under America West Holdings Corp. and subsidiary America West Airlines Inc.'s $500 million SEC Rule 415 shelf registration. Existing ratings, including the 'B-' corporate credit rating on both, are affirmed. AMERICAN PRODUCTION: AmeriChip Withdraws Proposed Chapter 11 Plan ----------------------------------------------------------------- The Board of Directors of AmeriChip International Inc.'s (OTCBB:ACHI) subsidiary, AmeriChip International Holdings, LLC, withdrew its proposed plan of reorganization in the Chapter 11 case of American Production Machining. The plan had provided for the acquisition of the assets of APM. The plan was withdrawn due to changes in the Debtor's financial condition. Headquartered in Plymouth, Michigan, U.S.A., AmeriChip International Inc., holds a patented technology known as Laser Assisted Chip Control, the implementation of which results in efficient chip control management in industrial metal machining applications. This technology provides substantial savings in machining costs of certain automobile parts providing much more competitive pricing and more aggressive sales approaches within the industry. Chapter 11 Status Report American Production Machining, LLC -- http://www.apm-machining.com -- manufacturers machined parts for General Motors, the Ford Motor Company, Meritor, Visteon, and American Axle. Three of APM's creditors -- Quality Steel Products, Inc., RMT Woodworth, Inc., and Geometric Precision, Inc. -- filed an involuntary chapter 7 petition against the company on May 15, 2003 (Bankr. E.D. Mich. Case No. 03-53930). Around that time, APM said its annual sales topped $18 million. APM consented to entry of an order for relief on May 30, 2003, and moved to convert the case to a chapter 11 proceeding. Jay L. Welford, Esq., at Jaffe, Raitt, Heuer & Weiss, represents the Debtor in its chapter 11 restructuring. The Fraser, Mich.- based company is also receiving financial advisory services from Woodward Capital Advisors and accounting services Timothy G. Weed at Plante and Moran. Comerica Bank has provided APM with post- petition financing and a cash collateral stipulation is in place through June 1, 2005. The Debtor filed its Schedules of Assets and Liabilities and Statement of Financial Affairs on July 1, 2003. The U.S. Trustee convened and concluded a meeting of creditors pursuant to Sec. 341 of the Bankruptcy Code on July 7, 2003. The Honorable Thomas J. Tucker entered an order on July 17, 2003, extending the deadline imposed by 11 U.S.C. Sec. 365(d)(4) by which APM must make decisions about whether to assume, assume and assign, or reject its non-residential real property leases. Judge Tucker denied APM a further extension of its exclusive period to file a chapter 11 plan on March 30, 2004, opening the door to AmeriChip's competing plan. American Production Machining, LLC, filed its own Second Amended Combined Plan, and a Disclosure Statement explaining that Plan, on February 22, 2005. The Court docket is unclear about what progress has been made in obtaining approval of that disclosure document, getting the plan into creditors' hands for a vote, and confirmation of the Debtor's Plan. The United States Trustee appointed an Official Committee of Unsecured Creditors on June 20, 2003. There's no indication on the Court docket that the Committee ever hired a professional or has had any active role in the company's chapter 11 proceeding. AMPEX CORP: Dec. 31 Balance Sheet Upside-Down by $99.4 Million -------------------------------------------------------------- Ampex Corporation (OTCBB:AEXCA) filed its 2004 report on Form 10-K with the Securities and Exchange Commission. The Company has also filed its restated Form 10-K/A for 2003 and the Form 10-Q/A for each of the quarters ending March 31, June 30, and September 30, 2004, to correct the accounting for the pension obligations of a former subsidiary that was disposed of in 1995. For the year ended Dec. 31, 2004, the Company reported $46,362,000 of net income on $101,451,000 of total revenue. At Dec. 31, 2004, Ampex Corporation's balance sheet showed a $99,429,000 stockholders' deficit, compared to a $147,784,000 deficit at Dec. 31, 2003. Ampex Corporation -- http://www.ampex.com/-- headquartered in Redwood City, California, is a leading innovator and licensor of visual information technology. During its 60-year history, the Company has developed substantial proprietary technology relating to the electronic storage, processing and retrieval of data, particularly images. Ampex currently holds approximately 600 patents and patent applications covering digital image processing, digital image compression and recording technologies. Through its wholly-owned subsidiary, Ampex Data Systems Corporation, the Company incorporates this technology in the design and manufacture of very high performance data storage products, principally used in intelligence gathering and defense applications to gather digital images and other data from aircraft, satellites and submarines. AMR CORP.: Industry Review Prompts S&P to Pare Ratings ------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on selected equipment trust certificates (ETCs) and enhanced equipment trust certificates (EETCs) of AMR Corp. (B-/Stable/B-3) unit American Airlines Inc. (B-/Stable/--) as part of an industry-wide review of aircraft-backed debt. The ratings were removed from CreditWatch with negative implications, where they were placed on Feb. 24, 2005. "The rating actions reflect Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of multiple, further bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Philip Baggaley. "Downgrades of ETCs and EETCs were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines and junior classes that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the credit analyst continued. In the case of American Airlines, ratings were lowered on EETCs backed at least partly by B757 or MD83 aircraft, and/or junior EETCs. About half of all B757s and MD80 series aircraft are operated by the six U.S. "legacy carriers," each of which is rated 'B' or lower. Although values of most aircraft models are currently strengthening, that progress could be reversed for certain models if several more large U.S. airlines were to enter bankruptcy. Standard & Poor's also considered in its review potential adverse effects of an ongoing legal dispute over the rights of certain creditors to repossess aircraft from bankrupt United Air Lines Inc. If a current temporary restraining order blocking repossession is not overturned, the precedent could be used to pressure creditors into less favorable negotiated restructurings in future airline bankruptcies. The downgrades of American debt were not related directly to the first-quarter results announced by AMR April 20, though some trends affecting those results, such as high fuel prices and price competition, are concerns that were factored into Standard & Poor's review of aircraft-backed debt. The 'B-' corporate credit ratings on AMR Corp. and American Airlines Inc. reflect: (1) a weak financial profile following several years of huge losses, (2) a heavy debt and pension burden, and (3) participation in the competitive, cyclical, and capital- intensive airline industry. Adequate liquidity, with $3.0 billion of unrestricted cash at March 31, 2005, is a modest positive. AMR's American Airlines Inc. subsidiary is the world's largest airline, measured by traffic, with solid market shares in the U.S. domestic, trans- Atlantic, and Latin American markets, but a minimal presence in the Pacific. AMR is expected to post another substantial loss in 2005, but positive operating cash flow, refinancing of the bank credit facility, and a healthy cash balance limit near-term liquidity concerns. Ratings on AMR and American are one notch lower than those of the most comparable large U.S. hub-and-spoke airlines, Continental Airlines Inc. and Northwest Airlines Corp. (both B/Negative/B-3), and have more room to accommodate disappointing results. A further deterioration in airline industry conditions, most likely due to high fuel prices, intensified price competition, or terrorist attacks affecting aviation, could prompt a revision of the outlook to negative. A positive outlook revision is considered less likely in the near term, given the difficult industry environment. APPLICA INC.: Likely First Quarter Loss Cues S&P to Watch Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' corporate credit and 'CCC' subordinated debt ratings on small appliance manufacturer Applica Inc. on CreditWatch with negative implications. At Dec. 31, 2004, Applica had about $150 million in total debt outstanding. "The CreditWatch listing reflects adverse operating trends, including Applica's recent announcement that it anticipates a first quarter loss of $22-$23 million. The loss results from a write-down of inventory, higher product warranty returns, and losses in the company's Mexican operations," said Standard & Poor's credit analyst Martin Kounitz. Participants in the small appliance industry face increased raw material costs, which have lowered margins, with intensified pressure from retailers to develop new products, or face the loss of shelf space. Miramar, Florida-based Applica manufacturers and markets small appliances under the Black & Decker and other trademarks, including irons, coffee makers, jar openers and other products. Before resolving the CreditWatch listing, Standard & Poor's will meet with management to discuss its business and financial plans for improving Applica's operating performance in this challenging environment. ATA AIRLINES: Court Approves Settlement Pact with ATSB Lenders -------------------------------------------------------------- James M. Carr, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that ATA Airlines, Inc. and its debtor- affiliates, obtained a $168,000,000 term loan under a loan agreement, dated as of November 20, 2002, consisting of: Loan Designation Amount Lenders ---------------- ------ ------- Tranche A Loan $148,500,000 Govco Incorporated Citibank, N.A. Tranche B Loan 19,500,000 Citibank, N.A. Investments XII, Inc. Int'l Lease Finance Corp. Citibank serves as the agent for the Lenders and as the collateral agent under the ATSB Loan. Citicorp North America, Inc., serves as administrative agent to Govco. BearingPoint, Inc., serves as the loan administrator to the ATSB Loan. The Air Transportation and Stabilization Board guaranteed the Tranche A Loan, as authorized by the Air Transportation Safety and System Stabilization Act, pursuant to a November 20, 2002 Guarantee Agreement. ATA Holdings Corp. and its subsidiaries guaranteed the repayment of the ATSB Loan to the ATSB Lender Parties. The ATSB Loan is also collateralized in certain prepetition collateral of ATA Airlines pursuant to a Mortgage and Security Agreement dated November 20, 2002. As of the Petition Date, the Debtors owed $140,564,060 under the ATSB Loan, including accrued but unpaid interest: Outstanding Accrued Loan Principal Amount Unpaid Interest ---- ---------------- --------------- Tranche A $123,661,607 $450,029 Tranche B 16,238,393 214,031 In 2004, the ATSB Lenders and the Debtors negotiated an agreement, which provides for: (i) the Debtors' continued use of the ATSB Lender Parties' cash collateral and use; (ii) sale and lease of the other Prepetition Collateral on an interim basis in the Chapter 11 cases; (iii) adequate protection of the ATSB Lender Parties; and (iv) memorialization of certain agreements and stipulations regarding: -- the outstanding amount of the ATSB Loan; -- the amount and type of the Prepetition Collateral; and -- the validity, priority and enforceability of the Prepetition Liens in the Prepetition Collateral held by the Collateral Agent for the ratable benefit of the ATSB Lenders. The United States Bankruptcy Court for the Southern District of Indiana approved the parties' agreement on December 10, 2004, as amended and supplemented. On December 6, 2004, the Tranche A Lenders made a demand on the ATSB for payment under the ATSB Guarantee Agreement. On February 4, 2005, the ATSB paid the Tranche A Lenders and was subrogated to the position of the Tranche A Lenders. The Official Committee of Unsecured Creditors appointed in ATA's Chapter 11 cases disputes the valuation of the Prepetition Collateral as of the Petition Date. The Committee investigated the validity, enforceability and perfection of the Prepetition Liens in the Prepetition Collateral and the value of the Prepetition Collateral as of the Petition Date. The Debtors, the Committee and the ATSB Lenders engaged in good faith settlement negotiations to resolve the issues between them with regard to the validity, enforceability and perfection of the Prepetition Liens and the value of the Prepetition Collateral as of the Petition Date without prolonged, protracted and expensive litigation. Consequently, the parties stipulate and agree that, as of the Petition Date, the Prepetition Collateral had a value of $110,000,000. The salient terms of the parties' Settlement Agreement, dated as of March 15, 2005, are: (A) Validity and Priority of Prepetition Liens As of the Petition Date, Citibank, as the Collateral Agent, held perfected, valid, binding, enforceable and unavoidable first priority liens and security interests in the Prepetition Collateral for the ratable benefit of the ATSB Lenders, which are not subject to challenge on any legal or equitable ground. (B) Secured Claim The ATSB Lenders will have an allowed, secured claim for $110,000,000 against the Debtors with respect to the ATSB Loan Obligations. The Secured Claim is not subject to counterclaim, offset, avoidance, subordination or disallowance by any Party for any reason whatsoever. The Plan for the Debtors will provide for the then- outstanding amount of the Secured Claim, to be satisfied by a secured note issued by the Debtors. (C) Superpriority Claims Subject and subordinate only to the Carve-Out defined in the Cash Collateral Order and any DIP financing, acceptable in form and substance to the ATSB Lenders, the ATSB Lenders will have an allowed, superpriority administrative expense claim, pursuant to Section 507(b) of the Bankruptcy Code, with priority over all other administrative expense claims against ATA Airlines. The Superpriority Claim will be equal to the aggregate diminution as of the Petition Date of the Secured Claim in the amount of the diminution of the ATSB Lender Parties' interests in the Prepetition Collateral from the use, sale or lease of the collateral and the imposition of the automatic stay pursuant to Section 362. (D) General Unsecured Claims The ATSB Lenders will have an allowed, general unsecured claim against ATA Airlines in respect of the remaining outstanding portion of the ATSB Loan Obligations for $30,564,060, plus the aggregate amount due to the ATSB Lenders under the applicable Loan Documents in respect of the ATSB Lenders' legal fees and expenses. The ATSB Lenders will also have an allowed, general unsecured claim against: * ATA Holdings with respect to the ATA Holdings' Guarantee of the ATSB Loan Obligations equal to the sum of the Secured Claim and the ATA Airlines Unsecured Claim; and * ATA Holdings' Subsidiaries with respect to the Subsidiary's Guarantee of the ATSB Loan Obligations equal to the sum of the Secured Claim and the ATA Airlines Unsecured Claim. The Guarantor Unsecured Claims are subject to challenge by the Debtors or the Creditors Committee pursuant to Sections 544 and 548, within 90 days upon approval of the Settlement Agreement. The Unsecured Claims will be afforded the same treatment under the Plan as is afforded to all other allowed, general unsecured claims, other than "convenience class claims" under the Plan. (E) Adequate Protection Payments On the first business day of each quarter, beginning with the 2nd quarter of 2005, ATA Airlines will pay $2,300,000 to Citibank, for the ATSB Lenders' benefit, as partial adequate protection of the ATSB Lenders' interests in the Prepetition Collateral. Pursuant to Section 9(m) of the Cash Collateral Order, ATA Airlines will pay $4,500,000 to Citibank, for the ATSB Lenders' benefit, on or before the earlier of: (i) December 31, 2005; and (ii) the effective date of a Plan in ATA Airlines' Chapter 11 Case. The ATA Holdings Unsecured Claim and each of the Guarantor Unsecured Claims will be reduced with the amounts accrued in the Quarterly and the Section 9(m) Payments. (F) Use of Cash Collateral The ATSB Lenders consent to the extension of the period during which the Debtors may use, sell and lease the Cash Collateral, provided, that the ATSB Lenders and the Debtors agree to acceptable financial covenant levels for a "minimum cash balance" of Available Cash and certain other mutually agreeable metrics. (G) Use of Other Prepetition Collateral Pursuant to Section 1110(a), the Debtors may use, sell and lease the Appraised Collateral so long as they timely make each and every required payment to Citibank, as Agent. The Debtors may also use, sell and lease the Pledged Equipment for so long as they timely make each and every required payment to Citibank, as Agent. (H) Asset Sales In connection with any sale, transfer or other disposition of property outside the ordinary course of the Debtors' various businesses, the Debtors will remit to Citibank, for the ATSB Lenders' benefit, within three business days of the Debtors' receipt thereof: (i) 100% of the Net Cash Proceeds of the Prepetition Collateral transferred in connection with the Asset Sale; and (ii) 100% of the Net Cash Proceeds of the "Replacement Collateral" transferred in connection with the Asset Sale, if the ATSB Lenders have a demonstrable diminution claim, up to the value of the ATSB Lenders' Replacement Lien in the Replacement Collateral. The ATSB Lenders' Secured Claim, the ATA Holdings Unsecured Claim and each of the Guarantor Unsecured Claims will each be reduced by the amount of the remitted funds. The Debtors and the Committee release the ATSB Lender Parties from any claims or causes of action related to the Loan Documents. The Debtors and the Committee, however, do not waive, release or discharge the ATSB Lender Parties from (x) any of their obligations under the Settlement Agreement or (y) the Debtors' ability to challenge the Guarantor Unsecured Claims under Sections 544 and 548. At the Debtors' behest, Judge Lorch approves the Settlement Agreement. 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATHEROGENICS INC: Equity Deficit Widens to $53,911,689 at Mar. 31 ----------------------------------------------------------------- AtheroGenics, Inc., (Nasdaq: AGIX) reported financial results for the first quarter ended March 31, 2005. Research and development expenses for the first quarter of 2005 were $16.2 million, compared to $14.0 million for the prior year period. The increase in research and development spending was due to expenditures associated with the Company's lead compound AGI- 1067, principally for the ongoing ARISE Phase III clinical trial, partially offset by reduced spending in other programs, including the discontinued AGIX-4207 program in rheumatoid arthritis. General and administrative expenses totaled $1.8 million in the first quarter of 2005, compared to $1.7 million for the prior year period reflecting higher compensation and other inflationary increases. AtheroGenics recorded interest expense of $2.1 million during the quarter, compared to interest expense of $1.3 million for the prior year period. The higher interest in 2005 relates to the $200 million principal amount of 1.5% convertible notes due 2012 issued by the Company in January 2005. AtheroGenics' net loss for the first quarter of 2005 was $18.6 million compared to $16.6 million for the same period in 2004. At March 31, 2005, cash, cash equivalents and short-term investments totaled $241.7 million. "During this quarter we raised additional capital to ensure that we can continue to execute on all aspects of our AGI-1067 program, including the ARISE Phase III trial and pre-commercialization activities," stated Russell M. Medford, M.D., Ph.D., President and Chief Executive Officer of AtheroGenics. "In addition, we also received approval from the FDA to amend our ARISE protocol that enabled us to accelerate the pace of this pivotal Phase III trial." AtheroGenics, Inc. -- http://www.atherogenics.com/--is focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, including heart disease (atherosclerosis), rheumatoid arthritis and asthma. The Company has two drug development programs currently in the clinic. AtheroGenics' lead compound, AGI-1067, is being evaluated in the pivotal Phase III clinical trial called ARISE, as an oral therapy for the treatment of atherosclerosis. AGI-1096 is a novel, oral agent in Phase I that is being developed for the prevention of organ transplant rejection in collaboration with Fujisawa. AtheroGenics also has preclinical programs in rheumatoid arthritis and asthma using its novel vascular protectant(R) technology. As of March 31, 2005, AtheroGenics' stockholders' deficit widened to $53,911,689 compared to a $35,942,382 deficit at December 31, 2004. AUSTIN BOULEVARD: Case Summary & Largest Unsecured Creditor ----------------------------------------------------------- Debtor: Austin Boulevard Property Corporation 4160 Austin Boulevard Island Park, New York 11558 Bankruptcy Case No.: 05-82719 Type of Business: Real Estate Chapter 11 Petition Date: April 22, 2005 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Marc A. Pergament, Esq. Weinberg Gross & Pergament LLP 400 Garden City Plaza Garden City, New York 11530 Tel: (516) 877-2424 Total Assets: $1,350,000 Total Debts: $1,741,804 Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ LIPA $10,670 P.O. Box 9038 Melville, NY 11747-9083 BEARINGPOINT INC.: Disclosures Prompt S&P to Cut Rating to B- -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on McLean, Virginia-based BearingPoint Inc., including its corporate credit rating to 'B-' from 'BB'. In addition, all ratings remain on CreditWatch with negative implications reflecting concerns regarding near-term liquidity, financial reporting problems, and the financial impact of announced restructuring actions. The rating actions follow BearingPoint's Form 8-K filing in which it stated that: (1) Cash balances of about $200 million as of March 31 were not adequate to meet "expected near-term cash needs". The company said it is planning a $250 million debt offering that will be used to replace its existing line of credit and for general corporate purposes but cautioned that it could still run out of money to run the business. Its fiscal 2004 financial report may include a going-concern paragraph from its auditor; (2) BearingPoint expects losses for the three months ended March 31 and for the full year 2005, and does not expect to generate cash from operations during 2005; (3) Material weaknesses exist in its internal controls; (4) Uncertainty as to when it will submit its audited financial results for 2004. The company also anticipates missing filing deadlines for its quarterly reports for each of the first three quarters of 2005; and (5) An informal SEC investigation related to the company's accounting practices and internal control procedures. Standard & Poor's expects that the $250 million private debt placement (or some other financial alternative) will be completed over the next week or the rating may be lowered further because the company's liquidity position may be insufficient to fund operations over time. We will meet with management to review near-term liquidity requirements and any plans to further bolster liquidity, cash flow and profitability expectations, the impact of restructuring actions, and will continue to monitor the progress being made with internal controls, the filing of audited financial results, and the SEC investigation. BEARINGPOINT INC: Moody's Slices Senior Implied Rating to B1 ------------------------------------------------------------ Moody's Investors Service lowered the ratings for BearingPoint, Inc. (senior implied to B1). The ratings remain under review for further possible downgrade. The rating action follows the company's announcement that it will be unable to meet the April 29, 2005 extended filing requirements for its 2004 Form 10-K. As a result, the company will be unable to access its interim credit facility, which it plans to terminate following completion of the recently announced $250 million new convertible debentures offering. The rating action reflects very weak financial performance, significant funding requirements and limited financial flexibility. The ratings remain under review for further possible downgrade, pending completion of the offering, resolution of the company's interim credit facility and the ultimate filing of its 2004 10-K and interim quarterly reports for 2005. The review will also consider the potential negative implications for its franchise in light of these uncertainities. The delay in filing the company's 2004 Form 10-K is related to material weaknesses in its internal control and financial reporting, restatements of prior period reported results and impairment of goodwill for its European, Middle East and Africa business segment. In addition, the company indicated that its auditor may issue a report that cites a "going concern" opinion, if the auditor concludes that the company would require additional financing to support its operations at current levels through the end of 2005. Completion of the proposed financing could help address that specific concern. The company is seeking funding that would enable it to terminate its interim credit facility prior to an event of default on April 29, 2005. Should the company not achieve adequate funding, it could seek waivers and maturity extensions from the lenders under the facility. Based on its current projections, the company does not expect to generate positive cash flow from operations in 2005, and expects to require $250 to $400 million of additional funding for the remainder of 2005. Ratings downgraded include: * Senior Implied Rating to B1 from Ba2 * Interim senior secured credit facility maturing May 2005 to Ba3 from Ba1 * Senior unsecured Issuer Rating to B2 from Ba3 * Series A and Series B convertible subordinated debentures to B3 from B1 BearingPoint, Inc., headquartered in McLean, Virginia, is a global business consulting, systems integration and managed services firms serving government and commercial clients with estimated revenue of $3.2 billion in 2003. BETHLEHEM STEEL: Liquidating Trust Wants BSI Contract Terminated ---------------------------------------------------------------- On December 10, 2001, the Court approved a contract between Bankruptcy Services LLC and Bethlehem Steel Corporation and its debtor-affiliates, under which BSI agreed to act as the Debtors' Official Claims Agent to provide computerized bankruptcy support services and bankruptcy administrative services. BSI maintained and recorded the proofs of claim filed in the Debtors' Chapter 11 cases. John W. Kibler, Esq., at King & Spalding LLP, in New York, relates that BSI was retained to expedite the processing of claims and relieve the Office of the Bankruptcy Court Clerk of the administrative burden that would otherwise be imposed by the size and complexity of the Debtors' case. However, the Court no longer requires the services of the Claims Agent. Nearly all claims filed in the case have been resolved. Hence, there is no further need to expend additional sums on BSI's services. Accordingly, The Bethlehem Steel Corporation Liquidating Trust seeks the Court's authority to terminate the BSI Contract. The Liquidating Trust also asks the Court to direct BSI to prepare final claims registers for the Clerk's Office pursuant to the Guidelines for Implementation of 28 U.S.C. Section 156(c), and box and transport the claims to the Federal Archives, at the direction of the Clerk's Office pursuant to the Guidelines. These services will charge to the Debtors' estate. Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel Corporation -- http://www.bethlehemsteel.com/-- was the second- largest integrated steelmaker in the United States, manufacturing and selling a wide variety of steel mill products including hot- rolled, cold-rolled and coated sheets, tin mill products, carbon and alloy plates, rail, specialty blooms, carbon and alloy bars and large diameter pipe. The Company filed for chapter 11 protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01- 15288). Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., at WEIL, GOTSHAL & MANGES LLP, represent the Debtors in their restructuring, the centerpiece of which was a sale of substantially all of the steelmaker's assets to International Steel Group. When the Debtors filed for protection from their creditors, they listed $4,266,200,000 in total assets and $4,420,000,000 in liabilities. Bethlehem obtained confirmation of a chapter 11 plan on October 22, 2003, which took effect on Dec. 31, 2003. (Bethlehem Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) CALL-NET: Likely Modest Cash Flow Prompts Moody's to Up Ratings --------------------------------------------------------------- Moody's has upgraded Call-Net Enterprises Inc.'s Senior Implied rating to B3 from Caa2, upgraded its Senior Secured rating to B3 from Caa3 and upgraded its Issuer rating to Caa1 from Ca. The outlook is stable. Debt affected by this action: * 10.625% Senior Secured Notes, (upgraded to B3 from Caa3) US$223 million The ratings upgrade largely reflects Moody's expectation that the Canadian Radio-television and Telecommunications Commission's February 2005 regulatory decision, which lowered competitive digital network access fees paid by Call-Net to the incumbents, will enable Call-Net to generate modest free cash flow through 2005. This has reduced the probability of default and given Moody's greater confidence that the company will not need to seek additional debt capital to sustain its business plan. To a lesser extent, the upgrade reflects the meaningful reduction in debt levels since the company exited from a debt restructuring in April 2002, which has occurred entirely from non-operating means. In addition to the above factors, the ratings are supported by Call-Net's success at transitioning its business model towards a local access strategy over the past few years while curtailing cash use and maintaining sufficient liquidity. The stable outlook reflects Moody's expectation that Call-Net will remain self-sufficient financially over the next 12 to 18 months. The Senior Secured rating has been notched up to the same level as the benchmark Senior Implied rating, as Moody's no longer expects Call-Net will incur additional prior-ranking debt beyond the C$55 million in funding already obtained under its accounts receivable securitization facility. While the terms of the Notes Indenture permit up to a total of US$300 million of prior-ranking debt via securitized assets, vendor financing or capital leases, Moody's does not expect Call-Net to require further funding, it has no further significant receivables to pledge, and vendor financing activity in general has been greatly curtailed. The ratings may be further upgraded if Moody's believed Call-Net was able to generate sustainable Free Cash Flow (cash flow from operations less capital expenditures and dividends) to Total Debt of 10%, likely due to better than expected results from its local phone service or success in up-selling services to the business customers in eastern Canada acquired last fall ("360 Networks Acquisition"). Alternatively, the ratings may be moved back down if Call-Net's available liquidity were to deteriorate below C$25 million or its operations were again to consume cash, likely due to greater than expected erosion in long distance revenues or a failure to grow local access revenues in the face of increased competition from cable companies. Since April 2002, the company has benefited from favorable FX movements on its unhedged US dollar debt and re-purchased a portion of its Notes at a discount, the result of which has been a reduction of gross debt by over 40%. This reduction, combined with an increase in enterprise value due to an expected improvement in results, has provided Moody's with greater confidence that senior debt obligations would likely be fully covered by asset values, including available Net Operating Losses. Moody's expects Call-Net will generate modest free cash flow over the next year as the company benefits from the favorable CDNA regulatory ruling, which will save Call-Net approximately C$25 million per annum and, to a lesser extent, the 360 Networks Acquisition. Moody's, however, expects these positive forces will be partially offset by higher operating costs associated with the company's DSL product launch and continuing shift of revenue mix away from higher margin long distance revenues. Moody's expects long distance revenues, which account for approximately 50% of the company's total revenues, will continue to decline at an accelerated pace in 2005 following aggressive pricing action by the largest incumbent in mid 2004, industry consolidation, and continuing oversupply in the wholesale segment. Pro-Forma for the 360 Networks Acquisition, Call-Net's Business segment provides roughly 45% of total revenues and a similar level of the company's contribution margin. Moody's believes this segment has performed relatively well over the past year despite challenging industry conditions as the incumbents aggressively seek to transition their larger customers to IP based solutions and market value-added services to the small and medium sized enterprises -- SME. Call-Net's focus on Multi-National Corporations -- MNC's, which it co-markets with Sprint Corporation, and up-selling opportunities associated with the 360 Networks Acquisition, are expected to contribute to the stability of results in 2005. Despite the ratings upgrade, Moody's remains concerned that Call-Net's price-based resale phone service is a weak customer value proposition (particularly in the residential segment) compared to the incumbent carriers, which have greater marketing power and broader product bundles. While local access contributes just 25% to total revenues currently, it is the strategic focus of the company. Although the company has exceeded Moody's expectations with this service to date, attracting over 300 thousand residential and 100 thousand business (ex- acquisition) access lines, Moody's nonetheless remains concerned that the company's competitive position will erode once cable operators begin to fully market their digital phone service later this year. Call-Net has added a wireless resale product to its bundle and plans to launch a DSL product in the third quarter of 2005 to strengthen the attractiveness of its offering. Call-Net's liquidity consists entirely of its C$74 million cash position, as it has no bank facility and as it has fully utilized its C$55 million five-year committed AR securitization facility, which matures in 2008. The company has debt retirement obligations totaling C$27 million through 2006. Call-Net Enterprises is a local, data and long distance alternative telecommunications company based in Toronto, Ontario. CALPINE CORP: Company Says Bankruptcy Rumors are False ------------------------------------------------------ Calpine Corporation (NYSE: CPN) issued a statement Friday to respond, the company said, to "trading pressure on the company's equity and bonds as a result of Friday's false market rumors." The statement says: "While it is not Calpine's policy to respond to market rumors, we feel compelled to comment today to assure the marketplace that these rumors are false. Calpine remains in compliance with its corporate and project indentures. Further, the company assures the market that it has no plans to file for bankruptcy." "The company continues to move forward on its 2005 financial program focused on reducing corporate debt, enhancing liquidity, and strengthening its long-term contract portfolio." A major power company, Calpine Corporation supplies customers and communities with electricity from clean, efficient, natural gas- fired and geothermal power plants. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information, visit http://www.calpine.com. * * * As reported in the Troubled Company Reporter on Oct. 13, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to Calpine Corp.'s (B/Negative/--) $736 million unsecured convertible notes due 2014. The rating on the notes is the same as Calpine's existing unsecured debt and two notches lower than the corporate credit rating. S&P said the outlook is negative. Calpine's balance sheet dated Dec. 31, 2004, showed $27 billion in assets and $22 billion in liabilities. Calpine reported a $287 million net loss in 2004. Calpine's liquidity tightened at the end of 2004, with its balance sheet showing $3.5 billion in current assets available to pay $3.3 billion of current liabilities coming due this year. Trading in Calpine shares closed at $2.19 Friday afternoon, placing a $1.17 billion market cap on the California-based power producer. Nearly 40 million shares in Calpine traded hands Friday; Calpine stock dipped below $2 per share some days in Oct. 2002. Calpine Calpine has a $250 million issue of 8-1/4% Senior Notes coming due on August 15, 2005. Another $503 million comes due in 2006, and $928 million comes due in 2007. Calpine's 8-3/4% Senior Notes due July 15, 2007, traded around 67 late Friday. CANFIBRE OF RIVERSIDE: Files Plan & Disclosure Statement -------------------------------------------------------- Canfibre of Riverside, Inc., delivered its Disclosure Statement explaining its Chapter 11 Plan of Liquidation to the U.S. Bankruptcy Court for the District of Delaware on April 18, 2005. The Plan provides for the liquidation of the Debtor's remaining assets for distribution to creditors. A Liquidation Trust will be established to: a) prosecute causes of action; b) prosecute and settle objections to claims and interests; and c) make distributions to holders of allowed claims in accordance with the terms of the Plan. The Plan appoints Chad Shandler at Traxi, LLC, as the Liquidation Trustee. He can be reached at: Chad Shandler Traxi, LLC 212 West 35th Street, 4th Floor New York, NY 10001 Telephone (212) 465-0770 Fax (212) 465-1919 On the Effective Date, the plan proposes to pay, in full, in cash: * administrative claims; * fee claims; * priority tax claims; * priority claims; and * secured claims. General unsecured creditors will receive pro rata shares of any cash distributions from the Liquidation Trust. The Disclosure Statement does not attempt to quantify the value of those shares, nor do the Debtors indicate what creditors could expect to receive if the estate were liquidated under chapter 7 of the Bankruptcy Code. Subject to a $300 cap, holders of Convenience Claims will 30% of their claims in cash. Equity interests will be cancelled on the Effective Date. About Canfibre Canfibre of Riverside, Inc., a Delaware corporation, developed, constructed, owned and operated a waste wood recycling facility in Riverside County, California. The Facility produced medium density fiberboard -- MDF -- using a proprietary steam injection process. Riverside's facility was unique due to its ability to use recyclable dry fiber waste materials normally destined for landfills, such as clean mill residue, construction and demolition wood, packaging woods and waste panel board, without the use of environmentally damaging urea formaldehyde resin. Canfibre tumbled into chapter 11 on October 24, 2000, after it failed to obtain working capital to operate its commercial scale MDF plant using steam injection presses. Howard Seife, Esq., Joseph H. Smolinsky, Esq., N. Theodore Zink, Jr., Esq., at Chadbourne & Parke LLP, and James L. Patton, Jr., Esq., Brendan Linehan Shannon, Esq., Michael R. Nestor, Esq., and Matthew B Lunn, Esq., at Young, Conaway, Stargatt & Taylor represent Canfibre. John H. Knight, Esq., at Richards, Layton & Finger, P.A., represents the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it listed estimated assets and debts of more than $100 million each. CATHOLIC CHURCH: St. George's Has Until May 6 to File BIA Proposal ------------------------------------------------------------------ The Roman Catholic Episcopal Corporation of St. George's Diocese today requested and received a further extension of time to file a proposal under the Notice of Intention filed on March 8, 2005 pursuant to the Bankruptcy and Insolvency Act. The BIA Notice stayed civil actions against the Corporation including those launched since 1991 on behalf of victims of sexual abuse. The Corporation now has until May 6, 2005 to file its proposal to creditors. Since March 8 the Corporation has been assessing the value of its assets to determine its financial capacity to make a just and fair proposal to its creditors and has been actively negotiating with representatives of the victims of sexual abuse. "Our discussions so far have been positive," said the Most Rev. Douglas Crosby, Bishop of St. George's Diocese. "I am hopeful that with this additional time we will be able to prepare a viable and acceptable proposal. We have a legal, moral and pastoral obligation to see this through to the end." The Diocese of St. George's -- http://www.rcchurch.com/-- is located in Western Newfoundland. Established in 1904, it serves a Catholic population of 32,060 found in 20 parishes under the pastoral care of 18 priests. St. George's is one of four Catholic dioceses in the province. The Diocesan Center is located in Corner Brook. CCC INFORMATION: March 31 Balance Sheet Upside-Down by $113 Mil. ---------------------------------------------------------------- CCC Information Services Group Inc. (Nasdaq: CCCG) reported net income of $5.4 million for the first quarter ending March 31, 2005, compared to net income $6.2 million for the same quarter in 2004. Revenue for the first quarter was $49.7 million, compared to $49.6 million for the same quarter in 2004. Operating income was $11.2 million for the quarter, including $0.7 million for non-cash stock compensation expense, compared to operating income of $10.0 million for the first quarter in 2004. The company did not incur non-cash stock compensation expense during the first quarter of 2004. Operating margin was 22.4 percent, compared to 20.2 percent for the same quarter in 2004. Net income of $5.4 million compares to $6.2 million for the same quarter in 2004. Net income and earnings per share for 2005 reflect the impact of the company's September 2004 self-tender transaction. "We're on track for 2005," said Githesh Ramamurthy, Chairman and Chief Executive Officer. "Our new customer implementations are going as planned, the base business is solid and we continue to realize the cost savings we promised last year. We expect to see revenue start to ramp late in the second quarter continuing through the balance of the year." First Quarter Revenue and Expense Highlights Key drivers for revenue performance for the first quarter, compared to the same quarter in 2004, were: -- The CCC Pathways(R) portfolio was up slightly year over year due to CCC Pathways unit growth and sales of Recycled Parts Service to insurance companies. Toward the end of the second quarter the company expects to begin seeing the favorable impact of several new customers that have been in the process of converting to CCC since the beginning of the year. -- CCC Valuescope(R) portfolio revenue increased primarily due to the growth from new customers that were added during 2004. -- Workflow benefited from sales of CCC Autoverse(TM) to new customers and further rollouts at existing customers. -- Other revenue was down due to the completion of the planned phase out of the CARS(R) service, as well as a decrease in certain project-related revenue. Key operating expense highlights for the first quarter, compared to the same quarter in 2004, are: -- Commissions, royalties and licenses expenses increased due to new data license fees to support the Valuescope product. -- Selling, general, and administrative expenses were favorable versus prior year as a result of the organization realignment that took place in mid-2004 as well as the absence of certain non-recurring expenses incurred last year, including improvements made to the main office in Chicago. Offsetting a portion of these favorable variances were costs related to Sarbanes-Oxley requirements, non-cash stock compensation expense, and our annual customer conference, which in 2004 was held during the second quarter. -- Product development and programming expenses reflect the favorable impact from the 2004 organization realignment. Guidance Update The company issued the following guidance for the second quarter and full year 2005: -- Diluted earnings per share for the second quarter is expected to be in the $0.31 to $0.33 per share range. For the full year, the company has tightened the range and now expects diluted earnings per share to be in the $1.30 to $1.35 per share range from prior guidance of $1.25 to $1.35. The company is using a diluted share base of 17.5 million shares for both the second quarter and full year. As mentioned during the year-end earnings call, the company is evaluating the impact of FAS 123R. However, based on the announcement by the SEC last week delaying the implementation of FAS 123R, the company is considering delaying its implementation until 2006. -- Revenue growth for the second quarter is expected to be in the low single digits and for the full year revenue is expected to grow in the low-to-mid single digit range. This is unchanged from previous guidance. The company expects revenue growth to accelerate in the second half as new customer implementations are completed by the end of the second quarter. -- Operating income for the second quarter is expected to be in the $11 to $12 million range. The guidance for full year operating income is $47 to $49 million. Both the second quarter and full year guidance includes the impact of the non-cash stock compensation expense. At Mar. 31, 2005, CCC Information's balance sheet showed a $113,374,000 stockholders' deficit, compared to a $121,875,000 deficit at Dec. 31, 2004. About the Company CCC Information Services Group Inc. (NASDAQ: CCCG), headquartered in Chicago, is a leading supplier of advanced software, communications systems, and Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. Its technology-based products and services optimize efficiency throughout the entire claims management supply chain and facilitate communication among approximately 21,000 collision repair facilities, 350 insurance companies and a range of industry participants. For more information about CCC Information Services, visit CCC's Web site at http://www.cccis.com/ CELESTICA INC: Incurs $11.6 Million Net Loss in 2005 First Quarter ------------------------------------------------------------------ Celestica Inc. (NYSE: CLS, TSX: CLS/SV) disclosed its financial results for the first quarter ended March 31, 2005. Revenue was $2,151 million, up 7% from $2,017 million in the first quarter of 2004. Net loss on a GAAP basis for the first quarter was ($11.6) million or ($0.05) per share, compared to a GAAP net loss for the first quarter of 2004 of ($12.1) million or ($0.06) per share. Included in these results is $31.9 million in charges associated with the company's previously announced restructuring activities. Adjusted net earnings for the quarter were $33.4 million or $0.15 per share compared to $4.5 million or $0.02 per share for the same period last year. Adjusted net earnings is defined as net earnings before amortization of intangible assets, gains or losses on the repurchase of shares and debt, integration costs related to acquisitions, option expense and other charges, net of tax. These results compare with the company's guidance for the first quarter, announced on January 27, 2005, of revenue of $2.0 - $2.225 billion and adjusted net earnings per share of $0.10 to $0.18. "Results for the quarter were as expected and continue to demonstrate the steady progress being made at Celestica," said Steve Delaney, CEO, Celestica. "Our employees continue to execute well and are driving efficiency in all areas of the operations. For the remainder of the year, our focus will be to further improve our financial returns, complete our restructuring initiatives, and grow our revenue base through additional penetration of diversified end markets, expansion of our services offering and superior execution for our customers." Outlook For the second quarter ending June 30, 2005, the company anticipates revenue to be in the range of $2.1 billion to $2.35 billion, and adjusted earnings per share ranging from $0.13 to $0.21. Celestica, Inc. -- http://www.celestica.com/-- is a world leader in the delivery of innovative electronics manufacturing services -- EMS. Celestica operates a highly sophisticated global manufacturing network with operations in Asia, Europe and the Americas, providing a broad range of integrated services and solutions to leading OEMs (original equipment manufacturers). Celestica's expertise in quality, technology and supply chain management, enables the company to provide competitive advantage to its customers by improving time-to-market, scalability and manufacturing efficiency. As reported in the Troubled Company Reporter on Feb. 8, 2005, Moody's Investors Service has lowered the credit ratings of Celestica Inc., concluding the review that was initiated on December 10, 2004. Specifically, the senior implied rating was lowered to Ba3 from Ba2, the senior unsecured issuer rating was lowered to B1 from Ba3 and the subordinated notes' senior subordinated and LYONS, rating was lowered to B2 from Ba3. The SGL-1 liquidity rating was affirmed. Moody's says the rating outlook is stable. As reported in the Troubled Company Reporter on Sept. 20, 2004, Standard and Poor's Ratings Services said it placed its long-term corporate credit rating on Toronto, Ontario-based Celestica, Inc., on CreditWatch with negative implications based on revised guidance and poor operating performance that has not met Standard & Poor's expectations. As reported in the Troubled Company Reporter on March 31, 2004, Standard & Poor's Ratings Services lowered it long-term corporate credit rating and unsecured debt on Celestica, Inc., to 'BB' from 'BB+'. At the same time, Standard & Poor's lowered its subordinated debt rating on the company to 'B+' from 'BB-'. S&P says the outlook is negative. CHANNEL MASTER: Trustee Settles Preferences for 3% to 26% --------------------------------------------------------- Montague S. Claybrook, the Chapter 7 Trustee appointed in Channel Master Holdings, Inc., and its debtor-affiliates' chapter 7 cases, sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to compromise and settle five preference claims: Face Amount of Settlement Defendant Preference Claim Amount --------- ---------------- ----------- Baird Satellite Supporting Systems $76,703.67 $20,000.00 Classic Upholstery $46,652.00 $12,745.80 Carolina Power & Light Company $217,524.05 $8,000.00 Continental Metals, Inc. $343,284.30 $10,000.00 Wolverine Steel, Inc. d/b/a Wolverine Metals $35,377.30 $2,644.73 The Trustee said it is obligated to maximize the value of the estate and make his decisions in the best interests of all the Debtors' creditors. The Court considered four factors in determining whether a settlement should be approved under Bankruptcy Rule 9019: i) the probability of success in the litigation; ii) the likely difficulties in collection; iii) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; and iv) the paramount interest of the creditors. The settlement of the Avoidance Actions, the Trustee says, will eliminate the potentially high costs of litigation and the uncertainty of success in light of the defendant's asserted defenses. Headquartered in Smithfield, North Carolina, Channel Master Holdings, Inc., with the Debtor-affiliates, are leading designer and manufacturer of high-volume, superior quality antenna products for the satellite communications industry both in the U.S. and internationally. The Company filed for chapter 11 protection on October 2, 2003 (Bankr. Del. Case No. 03-13004). David B. Stratton, Esq., at Pepper Hamilton LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million each. CHRISTIANA CARE: AM Best Withdraws Ratings at Company's Request --------------------------------------------------------------- A.M. Best Co. has withdrawn the financial strength rating of C+ (Marginal) and assigned a rating of NR-4 (Company Request) to Christiana Care Health Plans, Inc. (New Castle, DE). This is in response to management's request that the company be removed from A.M. Best's interactive rating process. Christiana Care Health Plans, Inc. is selling its commercial line of business, which will terminate its health plan business. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. CINEMA EATERY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Cinema Eatery #2, L.L.C. 15719 North Freeway Houston, Texas 77050 Bankruptcy Case No.: 05-35840 Chapter 11 Petition Date: April 14, 2005 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Calvin C. Braun, Esq. Law Offices of Calvin Braun 8100 Washington Avenue, Suite 120 Houston, Texas 77007 Tel: (713) 880-3366 Fax: 713-880-3225 Total Assets: $34,000 Total Debts: $1,164,563 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Brasser Note & Security Misc. business debt $600,000 8810 Business Park Drive, Suite 300 Austin, TX 78759 Camden Construction Misc. business debt $450,000 1514 Antoine Drive Houston, TX 77055 Mobiliario, SA DE CV Misc. business debt $40,520 Calle del Sol 33 San Rafael Chamapa Naucalpan, Edo. Mex 53660 Mexico VSI Misc. business debt $27,500 5518 Mitchelldale Houston, TX 77092 Houston Commons JAWSIII, Misc. business debt $26,037 Ltd. C/O Wes Walters Realty 8810 Business Park Drive, Suite 300 Austin, TX 78759 Southwest Cinema Services Misc. business debt $12,600 2112 Lear Lane Austin, TX 78745 Constellation New Energy Misc. business debt $5,000 1301 McKinney St., Suite 200 Houston, TX 77010 SR McSwain Misc. business debt $1,000 16042 Sunbeam River Houston, TX 77084 SBC Misc. business debt $700 P.O. Box 650661 Dallas, TX 75265-0661 Phillips & Akers PC Misc. business debt $500 3200 Phoenix Tower 3200 Southwest Freeway Houston, TX 77027 Pacific Life and Annuity Co. Misc. business debt $406 Navarro Insurance Agency 9575 Katy Freeway, Suite 150 Houston, TX 77024 Harris County M.U.D. #189 Misc. business debt $300 2200 Sciaaca Road Spring, TX 77373 Alamo Drafthouse Cinema Ltd. Misc. business debt $0 13809 Research Blvd., 735 Austin, TX 78750 COLAD GROUP: Harter Secrest Approved as Bankruptcy Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York gave Colad Group, Inc., permission to employ Harter, Secrest & Emery LLP as its general bankruptcy counsel. Harter Secrest will: a) advise the Debtor's management of its fiduciary obligations to the bankruptcy estate, its creditors and the Court; b) assist the Debtor in the administration and prosecution of its chapter 11 case, including negotiating and obtaining the appropriate cash collateral and post-petition financing, prosecution of appropriate adversary proceedings, defense of actions commenced against the Debtor, and assisting in claims reconciliation process; c) advise the Debtor regarding the preparation of schedules, statements, and operating reports in connection with the administration of the estate; d) prepare motions, applications, orders, and other pleadings, and represent the Debtor at all hearings before the Court; e) assist the Debtor in the sale of substantially all of its assets, and in the formulation and negotiation of a disclosure statement and plan of reorganization; and f) render all other legal services that may be requested by the Debtor's management in its chapter 11 case. Raymond L Fink, Esq., a Partner at Harter Secrest, is the lead attorney for the Debtor. Mr. Fink discloses that the Firm received a $100,000 retainer. Mr. Fink charges $300 per hour for his services. Mr. Fink reports Harter Secrest's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- John R. Weider Partner $310 Ingrid S. Palermo Counsel $200 Joseph E. Simpson Counsel $165 Steven Wells Associate $140 Cathleen E. Clancy Paralegal $125 Harter Secrest assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Buffalo, New York, Colad Group, Inc. -- http://www.colad.com/-- designs, develops and manufactures packaging products. The Company filed for chapter 11 protection on Feb. 3, 2005 (Bankr. W.D.N.Y. Case No. 05-10765). When the Debtor filed for protection from its creditors, it estimated assets of $1 million to $10 million and debts of $10 million to $50 million. COLAD GROUP: Has Until Aug. 5 to Make Lease-Related Decisions ------------------------------------------------------------- The Honorable Carl L. Bucki of the U.S. Bankruptcy Court for the Western District of New York extended, until august 5, 2005, the period within which Colad Group, Inc., can elect to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor explains that it is a party to an unexpired nonresidential lease property located in 801 Exchange Street, Buffalo, New York, where its main manufacturing facility is located. The unexpired lease is under a Lease Agreement between the Debtor and County Industrial Development Agency dated Nov. 1, 1996. The Lease Agreement is part of the issuance of Industrial Development Revenue Bonds for the Debtor's property. The Debtor believes that its unexpired nonresidential lease is not a true lease, but a financing vehicle so that tax-exempt Industrial Development Revenue Bonds could be issued for the Debtor. The Debtor filed a request to extend its lease decision period out of an abundance of caution in case the lease is ever determined to be a true lease. The Debtor submits three reasons to the Court in favor of its request: a) the unexpired lease is significant to the Debtor's business and the possible sale of its assets, and it depends on the property to accommodate its present manufacturing operations; b) the Debtor continues to pay for its post-petition use and occupancy of the property, and the extension will not harm County Industrial; and c) the Debtor is still actively negotiating the sale of its business to possible purchasers, and it is anticipating that the sale will include the property where the lease is located. Headquartered in Buffalo, New York, Colad Group, Inc., -- http://www.colad.com/-- designs, develops and manufactures packaging products. The Company filed for chapter 11 protection on Feb. 3, 2005 (Bankr. W.D.N.Y. Case No. 05-10765). Raymond L. Fink, Esq., at Harter, Secrest & Emery LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of $1 million to $10 million and debts of $10 million to $50 million. COMCAST: Fitch Affirms Ratings After Adelphia Purchase Announced ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BBB' rating on the senior unsecured debt of Comcast Corporation and its subsidiaries that hold substantially all of its cable businesses including: * Comcast Cable Communications Holdings, Inc., * Comcast Cable Communications, LLC, * Comcast Cable Holdings, LLC, * Comcast MO Group, Inc., and * Comcast MO of Delaware, LLC. Additionally, Fitch has affirmed the 'BBB-' rating on the senior subordinated debentures of Comcast Holdings Corporation and the 'BB+' rating of the 9.65% TCI TOPRS. Fitch has affirmed the 'F2' short-term rating on Comcast Corporation's commercial paper program. The Rating Outlook for all of Comcast's ratings remains Positive. Fitch's rating action affects approximately $21.9 billion of debt (excluding exchangeable debt) outstanding as of the end of 2004. Fitch's rating action follows Comcast's announcement that the company, along with subsidiaries of Time Warner Cable, Inc. -- TWC -- and Adelphia Communications Corporation, have reached an agreement in principal for the joint purchase of Adelphia's assets. Total consideration for the transaction is expected to be approximately $17.6 billion in cash and TWC stock. Additionally, Comcast and TWC have reached an agreement that facilitates Comcast's exit from its 21% ownership stake in TWC. On a net basis, following the closure of the transactions and following the system exchanges between Comcast and TWC, Comcast is expected to receive approximately 1.8 million basic subscribers. Comcast's cash requirement, in addition to its TWC stake, related to the transactions, on a net basis, will be approximately $1.5 billion. Fitch believes that the transactions, as currently structured, are positive for Comcast's credit profile. The transaction provides Comcast an opportunity to exchange its ownership stake in TWC in a tax efficient manner for cash flow generating assets. Comcast will increase its basic subscriber base to approximately 23.4 million subscribers from the 21.6 million subscribers as of year- end 2004. Importantly, the transaction positions Comcast to further strengthen key cable system clusters in New England, Florida, and the mid-Atlantic region. Fitch also expects that Comcast will exit three primary markets, including: * Los Angeles, Calif.; * Dallas, Texas|; and * Cleveland, Ohio. Fitch believes that Comcast's strong track record of integrating acquired businesses and maximizing operational synergies, as demonstrated by the AT&T Broadband acquisition, will largely mitigate the operating risks associated with the acquired cable systems. The acquired cable systems are expected to be substantially upgraded; however, Fitch believes that Comcast will need to invest a modest amount of capital to deploy new services. From Fitch's perspective, the acquired systems will have potential revenue and operating margin growth opportunities as Comcast expands penetration of existing services and introduces other advanced digital cable and telephony services. From a free cash flow perspective, the transaction is expected to have a modest positive impact. However, Fitch points out the risks associated with this expectation, including an assumed level of capital expenditures, growth in subscriber ARPU, and margin improvement. Fitch anticipates the transaction, as currently envisioned, will not have a meaningful impact on Comcast's credit protection metrics, and the company will continue to improve these metrics during 2005 and 2006. Comcast's leverage metric as of the end of 2004 was 2.9 times, excluding approximately $1.7 billion of exchangeable notes. Comcast's debt (excluding exchangeable debt)- to-EBITDA leverage metric should continue to improve throughout 2005, and Fitch believes that by year-end 2005, Comcast's leverage should be under 2.5x. Pro forma for the transaction closing on Dec. 31, 2005, Fitch would continue to expect leverage to be under 2.5x. The transactions with Adelphia are subject to receipt of HSR, FCC, Adelphia Creditor Committee, bankruptcy court, and local franchise authority approvals. The closing of the transaction is expected to take from 9-12 months. Fitch's Positive Rating Outlook reflects Comcast's strengthened financial performance and capital structure, which have driven steady improvement in the company's credit metrics over the past two years, as well as Fitch's expectation of continued positive operating trends, sustainable free cash flow generation, and improving credit protection metrics. Fitch will continue to monitor the company's credit profile improvement, and, as currently envisioned, this could lead to a ratings upgrade in 2005. Factors that would lead Fitch to upgrade Comcast to 'BBB+' include demonstrating through continued strong operating results that the company will meet its 2005 operating and financial objectives. Fitch would target leverage in the range between 2.5x-2.75x for a 'BBB+' rated large MSO. CONGOLEUM CORP: Modifies Chapter 11 Plan & Disclosure Statement --------------------------------------------------------------- Congoleum Corporation (AMEX:CGM) reached an agreement in principle with representatives of the Asbestos Claimants' Committee and the Future Claimants' Representative to make certain modifications to its proposed plan of reorganization and related documents governing the settlement and payment of asbestos related claims against Congoleum. Under the agreed-upon modifications, asbestos claimants with claims settled under Congoleum's pre-petition settlement agreement would agree to forego the security interest they were granted and share on a pari passu basis with all other present and future asbestos claimants in insurance proceeds and other assets of the trust to be formed to pay asbestos claims against Congoleum. As a result of these changes, Congoleum will be preparing an amended plan and disclosure statement and soliciting acceptances from certain claimant creditors affected by these modifications. There can be no assurance that the amended plan will receive the affirmative vote of the requisite majorities. Congoleum has requested an adjournment of the hearing presently underway to consider confirmation of its existing plan of reorganization. The amended plan and disclosure statement modifications and solicitation procedures will be subject to court approval. Roger S. Marcus, Chairman of the Board, commented, "We consider this another positive step forward. We have renegotiated certain important aspects of our plan of reorganization and related documents in light of developments in other asbestos bankruptcy proceedings as well as objections raised concerning our current proposed plan. Our hope is that by addressing these concerns and following judicial guidance from other asbestos reorganization cases, the process of obtaining and sustaining the confirmation of our amended plan will ultimately take less time and cost less money, and the risk of an unfavorable outcome will be reduced. While these changes will delay the start of our confirmation process, we believe they will ultimately shorten the time it will take to get the asbestos problem completely behind us. We are hopeful that we can accomplish that by the end of 2005." Interested parties should refer to the documents that will be filed for a complete description of the modified plan. Copies of the modified plan and disclosure statement will be filed by Congoleum with the Securities and Exchange Commission as exhibits to a Form 8-K when they are available. They will also be available on the investor relations section of Congoleum's website at http://www.congoleum.com/ Exclusivity Hearing Today As previously reported in the Troubled Company Reporter, Congoleum Corporation and its debtor-affiliates asked the U.S. Bankruptcy Court for the District of New Jersey for an extension, through and including Aug. 1, 2005, of the time within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors through Sept. 1, 2005. The Court will convene a hearing at 2:30 p.m., today, Apr. 25, 2005, to consider the merits of that request. Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524). Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. CONTINENTAL AIRLINES: Industry Review Cues S&P to Cut Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on selected enhanced equipment trust certificates (EETCs) of Continental Airlines Inc. (B/Negative/B-3) as part of an industrywide review of aircraft-backed debt. Those and EETC ratings that were affirmed were removed from CreditWatch, where they were placed with negative implications Feb. 24, 2005. "The rating actions reflect Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of further multiple bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Philip Baggaley. "Downgrades of EETCs were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines and junior classes that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the credit analyst continued. In the case of Continental, ratings were lowered on EETCs backed at least partly by aircraft (B737-500, B757, B767-200ER, B767- 400ER, MD82, and Embraer regional jets) that are concentrated with the six U.S. "legacy airlines" (each of which is rated 'B' or lower), and planes that, while incorporating new technology, have narrow airline operator bases (B737-900). Although values of most aircraft models are currently strengthening, that progress could be reversed for certain models if several more large U.S. airlines were to enter bankruptcy. Standard & Poor's also considered in its review potential adverse effects of an ongoing legal dispute over the rights of certain creditors to repossess aircraft from bankrupt United Air Lines Inc. If a current temporary restraining order blocking repossession is not overturned, the precedent could be used to pressure creditors into less favorable negotiated restructurings in future airline bankruptcies. The downgrades are not related specifically to Continental's recently reported first-quarter 2005 results, though some of the industry pressures affecting those results, such as high fuel prices and price competition, are concerns. The corporate credit ratings on Continental Airlines reflects its participation in the high-risk airline industry, a heavy debt and lease burden, and limited financial flexibility, with no general bank lines and few unencumbered assets available for sale or borrowing. These factors outweigh better-than-average operating performance among its peer large U.S. hub-and-spoke airlines. Continental, the fifth-largest U.S. airline, serves markets mainly in the southern and eastern U.S. from hubs at: (1) Houston, Texas; (2) Newark, N.J.; and (3) Cleveland, Ohio. International routes serve the central Pacific, selected Asian destinations, Latin America, and Europe. Continental's success in securing a large portion of its targeted labor concessions improves its prospects, but pressure from very high fuel costs and a competitive domestic fare environment could nevertheless erode liquidity and prompt a downgrade. A revision of the outlook to stable is possible if the improved cost structure and more favorable external airline industry conditions allow Continental to substantially reduce losses and rebuild liquidity. CROWN CASTLE: Industry Review Prompts S&P to Watch Low-B Rating --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings for four wireless tower companies: (1) SpectraSite Inc. ('B+' corporate credit rating), (2) Crown Castle International Corp. ('B'), (3) AAT Communications Corp. ('B-'), and (4) SBA Communications Corp. ('CCC+'), as well as related entities -- on CreditWatch with positive implications. These ratings join those for American Tower Corp. (B-/Watch Pos/--), which were placed on CreditWatch with positive implications Jan. 14, 2005. These companies collectively have approximately $7 billion of debt outstanding. These CreditWatch listings relate to an industry review being conducted by Standard & Poor's of the tower leasing business and the position of the companies within this industry. "Strengthening business prospects could support higher ratings for the companies in this sector," said Standard & Poor's credit analyst Catherine Cosentino. "The wireless carriers, particularly the large national players, are expected to continue to increase their geographic footprint, coverage, and capacity to support increased minutes of use both for voice and expanding broadband services. Tower companies will benefit from these trends, which should continue to bolster increased tower co-location." Reflecting the high operating leverage in this industry, gross profit margins are very high for companies in this sector and EBITDA margins tend to rapidly improve as additional tenants are added to existing towers. For 2004, gross profit margins for the tower leasing business were in excess of 60% for the group, and EBITDA margins ranged from about 30%-60%, with the lower end attributable to the effects of operations in the less-profitable site development business of SBA Communications Corp. While SBA has significantly higher leverage than its peers, at about 14x for 2004 on an operating lease-adjusted basis, its business profile may support a higher corporate credit rating than the current 'CCC+' (depending on Standard & Poor's assessment of its liquidity over the next few years) given its ongoing growth in lease rental revenues. As part of this review, Standard & Poor's will be evaluating its ratings guidelines for the sector to determine if the industry supports less stringent financial guidelines based on overall business characteristics. If we conclude that the business risk of the sector is stronger than that which we previously incorporated in our guidelines, we will provide new thresholds when the CreditWatch listings are resolved. The qualitative measures may also be revised to introduce metrics more representative of the current state of the industry, including such possible measures as revenue per tower and debt to revenue. The recent change in operating lease accounting adopted by the tower operators does not affect the business prospects or cash flow prospects for the industry. It has had the impact of increasing the size of reported minimum cash lease commitments for most of the tower companies. However, the increase in such minimum recognized commitments is also indicative of the high rate of contract renewal in this business, which is not expected to abate. Standard & Poor's will meet with management at the tower companies to discuss their financial policies, including stock repurchase and dividend plans, as well as the possibility for additional acquisitions in resolving the CreditWatch listings. CURATIVE HEALTH: S&P Junks Senior Unsecured Debt Rating to CCC+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on specialty infusion and wound-care management services provider Curative Health Services Inc. The corporate credit rating was lowered to 'B-' from 'B', and the senior unsecured debt rating was lowered to 'CCC+' from 'B-'. In addition, the ratings were removed from CreditWatch with negative implications, where they were placed on Feb. 28, 2005, because of our concerns about the company's liquidity. Curative faces large semiannual interest payments in May and November, and by comparison, has limited cash flow and credit facility availability. The ratings outlook is now negative. "The downgrade reflects Standard & Poor's belief that Curative's liquidity prospects are characteristic of a weaker credit," said Standard & Poor's credit analyst Jesse Juliano. The company's financial profile and liquidity were severely weakened by a large reduction in reimbursement rates for its blood-clotting factor products by the state of California's Medi-Cal program in June 2004. (Reimbursement reductions by Medicare were also a factor in this liquidity crunch, though to a lesser degree.) The new Medi-Cal rates for these products are based on an average selling price and are approximately 30%-40% lower than the previous reimbursement. The company's 2005 EBITDA could be less than 50% of its expectations in April 2004, when Curative issued $185 million of senior unsecured notes to finance the purchase of Critical Care Systems Inc. The ratings on Curative reflect: (1) the aforementioned weakness in the company's financial profile, (2) its narrow business focus in specialty infusion services, (3) potential margin pressure from drug and products manufacturers, and (4) continued payor concentration. These concerns are only partially offset by the company's greater product diversity after the acquisition of Critical Care Systems. Given the operating challenges faced by Curative, Standard & Poor's believes it unlikely the company's financial profile will significantly improve in the near future. The company is exposed to potential price increases by manufacturers. Even though the drug Synagis, provided by MedImmune Inc., is the only Curative product stemming from a single source, the company has limited supply sources for its other products as well. Curative also is exposed to pricing pressure from managed-care companies and reimbursement changes by Medicaid and Medicare. Because it is relatively small, it has less negotiating leverage with managed-care organizations and drug suppliers than a company with greater scale. Critical Care Systems has traditionally grown via the creation of de novo branches, and such internal growth will now be the focus of Curative's own plans. However, it remains to be seen if the company can fully offset the effects of the California reimbursement change in the near- to medium-term with this growth strategy. DELPHI CORP: Fitch Downgrades Low-B Ratings & Maintains Watch ------------------------------------------------------------- Fitch Ratings has downgraded the ratings of Delphi Corporation: -- Senior unsecured debt and bank facilities to 'BB-' from 'BB+'; -- Trust preferred to 'B' from 'BB-'. The ratings also remain on Rating Watch Negative by Fitch. The downgrade reflects Delphi's exposure to GM production rates and the continuing stresses placed on the automotive supplier universe: * pricing pressures, * lower production rates, * higher commodity prices and * high fixed costs structures. Delphi remains particularly exposed due to its operating leverage and heavy reliance on GM revenues (which still represent roughly 50% of total revenues). Recent operating results at GM have raised the level of event risk, and continuing deterioration at GM could require a fundamental restructuring that could result in more significant production cutbacks. Negative cash flow at Delphi is expected to persist through 2005 and 2006, resulting in further balance sheet deterioration. This deterioration is also occurring in an environment of steady economic growth and healthy industry build rates. Although cash and bank liquidity remain adequate for the near term, Delphi has a $1.5 billion revolving credit maturing in June 2005 that may require security in order to be replaced. In that event, Fitch would review the relative ratings between the secured and unsecured debtholders. The Rating Watch Negative primarily reflects concern regarding the lack of audited financial statements. Operating cash flows have been fully claimed by significant required pension contributions and to a lesser degree, cash outflows related to restructuring actions. The pace of restructuring at AHG indicates that this will remain a meaningful burden over the next several years. At the same time, required pension contributions will accelerate sharply from $600 million in 2005 to more than $1 billion in 2006. Current pension legislation, if enacted as proposed, would increase the near-term claim on cash flows and further impair Delphi's credit profile. Despite strong growth in non-GM business, the decline in GM production rates, high operating leverage and high commodity prices may defer meaningful improvement in operating measures and cash flow until 2007. Over the long-term, Delphi has a number of strengths that could support the company's operating profile. Competitive technologies in a number of areas (that also extend outside of the auto industry) and strong growth in non-GM business provide potential margin and top-line growth opportunities. In addition, the company's very heavy required pension contributions heavily exceed outflows related to benefits payments and would be expected to eventually decline, particularly in the event of steady asset returns and any upturn in discount rates. Attrition rates and an eventual migration to lower-cost labor under Delphi's two-tier wage structure will lower costs. Also, the continuing wind-down of AHG should eventually result in lower cash outflows relating to restructuring actions. The commercial paper rating is being withdrawn. DELPHI CORP.: S&P Lowers Ratings a Notch to BB ---------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on Delphi Corp. to 'BB' from 'BB+'. The ratings remain on CreditWatch with negative implications where they were placed March 4, 2005. "The rating actions reflect the pressure on Delphi's operating performance as a result of tough industry conditions, including reduced vehicle production and high raw material costs," said Standard & Poor's credit analyst Martin King, "as well as the uncertainty surrounding various accounting misstatements, which have led to SEC and FBI investigations, shareholder lawsuits, and the departure of two senior executives." Troy, Michigan-based Delphi has total debt of about $4 billion and under-funded benefit liabilities of about $13 billion. The challenges Delphi faces are not expected to reverse in the near term. Delphi is likely to report a large loss for 2005, and free cash flow, after $600 million of required pension contributions, is expected to be negative. The departure of the company's vice chairman and chief financial officer and the pending retirement of the company's chairman and chief executive officer create management uncertainty at a time of intense industry challenges. Delphi's problems necessitate active and careful restructuring, which could be delayed or less effective because of management turnover. Standard & Poor's expects to resolve the CreditWatch within the next few weeks. The ratings could be lowered again if it appears that Delphi's losses and negative cash flow will continue for a sustained period. DEVON MOBILE: Trustee Wants Chapter 11 Proceedings Suspended ------------------------------------------------------------ On June 21, 2004, Buccino & Associates, Inc., as the Liquidation Trustee in Devon Mobile Communications, LP, and its debtor- affiliates' Chapter 11 cases, commenced an adversary proceeding against Adelphia Communications Corporation and its debtor- affiliates in the U.S. Bankruptcy Court for the Southern District of New York. Filed on behalf of the Devon Debtors, the Liquidating Trust and the Devon Estate, the Devon Trustee Action asserts claims for, inter alia, fraud, fraudulent misrepresentation, preference, alter ego, deepening insolvency, breach of contract, breach of duty to fund and breach of fiduciary duties. According to Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, the Devon Trustee Action represents a significant asset of the Devon estate. Mr. Nestor tells Judge Walsh the U.S. Bankruptcy Court for the District of Delaware that the Devon Trustee does not expect to file pleadings before, or request relief from the Delaware Bankruptcy Court during the pendency of the Action. Section 305(a) of the Bankruptcy Code, Mr. Nestor notes, allows the Court to suspend all Chapter 11 proceedings if, among others, the interests of creditors and the debtor would be better served by the suspension. Pursuant to Section 305(a), the Devon Trustee asks Judge Walsh to suspend the Devon Debtors' Chapter 11 proceedings until the sooner to occur of: a. the Delaware Bankruptcy Court's entry of an order vacating an order of suspension; or b. 30 days after entry of a final non-appealable judgment in the Action. The Devon Trustee believes that the suspension of Devon's Chapter 11 cases will enable it and its professionals to devote full attention towards the Action and to achieve substantial benefit for Devon's estate and creditors. 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. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIGITAL LEGAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Digital Legal Services, LLC 1411 K Street, Northwest, Suite 300 Washington, DC 20005 Bankruptcy Case No.: 05-00653 Type of Business: The Debtor provides document management service for lawyers and any other interested parties. Digital Legal saves documents in digital format so copies are made readily available. See http://www.digitallegalservices.com/ Chapter 11 Petition Date: April 22, 2005 Court: District of Columbia (Washington, D.C.) Debtor's Counsel: Ann N. Kathan, Esq. Ann N. Kathan, PLLC 524 King Street Alexandria, Virginia 22314 Tel: (703) 518-5189 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company Working capital loan, $342,446 Attn: Mr. Paul McCommons which is secured by Rodney Square North a residence owned by 1100 North Market Street by the debtor's sole Wilmington, DE 19890 member. Virtual Information Partners Outsourced Work $202,186 181 Laurel Circle Princeton, NJ 08540 DLS Coding, LLC Outsourced Work $79,879 1001 North Jefferson St. Suite 100 Wilmington, DE 19801 Digital Legal Servs. Outsourced work $64,638 Delaware Digiscribe Outsourced work $63,649 McCarter English Legal Fees $47,384 I-Base Data Services Outsourced work $44,454 Litigation Management Group Outsourced work $38,586 District of Columbia Gov't. Unpaid sales taxes $32,482 Office of Tax and Revenue 1411 K Holdings LLC Back rent and $25,970 prior operating costs Danka Office Imaging Copier maintenance $12,472 program Kroll Ontrack Legal Tech. Outsourced work $12,104 Renewdata Outsourced work $12,061 Xerox Equipment leasing $10,644 & Maintenance ILS Technologies, LLC Outsourced work $9,609 Clicks Professional Outsourced work $9,090 Copy Service San Francisco Legal Copy Outsourced work $8,668 NMATRIX, Inc. Outsourced work $7,168 IPRO Tech. Dongle Clicks $6,416 TriState Courier & Carriage Courier Service $6,308 DMX MUSIC: Maxide Acquisition Files Schedules of Assets & Debts --------------------------------------------------------------- Maxide Acquisition, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the District of Delaware, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property None B. Personal Property $45,384,615 C. Property Claimed as Exempt Not Applicable D. Creditors Holding Secured Claims None E. Creditors Holding Unsecured Priority Claims None F. Creditors Holding Unsecured Nonpriority Claims $159,269,126 ----------- ------------ Total $45,384,615 $159,269,126 Headquartered in Los Angeles, California, DMX MUSIC, Inc., -- http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in more than 100 countries. DMX MUSIC distributes its music and visual services worldwide to more than 11 million homes, 180,000 businesses, and 30 airlines with a worldwide daily listening audience of more than 100 million people. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 14, 2005 (Bankr. D. Del. Case No. 05-10431). The case is jointly administered under Maxide Acquisition, Inc. (Bankr. D. Del. Case No. 05-10429). Curtis A. Hehn, Esq., 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 estimated more than $100 million in assets and debts. EDSAL CHESHIRE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Edsal Fredrick Cheshire dba Cheshire & Sons, Inc. dba Cheshire & Sons 41 East 600 North Tooele, Utah 84074 Bankruptcy Case No.: 05-26245 Type of Business: The Debtor operates a 24-hour car repair and towing service. Chapter 11 Petition Date: April 21, 2005 Court: District of Utah (Salt Lake City) Judge: William T. Thurman Debtor's Counsel: Grant W.P. Morrison, Esq. Morrison & Morrison 352 East 900 South Salt Lake City, Utah 84111 Tel: (801) 359-7999 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 ------ --------------- ------------ Firmco Financial Trade debt $78,000 4700 South State Street Unsecured value: Salt Lake City, Utah 84107 $78,000 Firmco Financial Trade debt $28,000 4700 South State Street Unsecured value: Salt Lake City, Utah 84107 $28,000 CIT Bank Trade debt $7,000 [Address not provided] Sears Premier Card Trade debt $5,622 P.O. Box 6563 The Lakes, NV 88901 Utah Industrial Depot Trade debt $5,422 Firmco Financial Trade debt $5,400 Unsecured value: $5,400 Edwin B. Parry, Atty. Trade debt $4,115 Superior Accounting Trade debt $3,400 Bank of America Trade debt $1,348 Utah Industrial Depot Trade debt $1,015 Receivable Management Trade debt $852 Avaya Trade debt $761 Danka Collections Center Trade debt $450 Precision Testing Trade debt $360 Ace Disposal Trade debt $335 Imaging Management, LC Trade debt $275 Lee Sheet Metal Trade debt $190 IHC Physicians Group Trade debt $156 CSK Auto Inc. Trade debt $135 Internal Revenue Service Trade debt $0 FEDERAL METAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Federal Metal & Glass Corporation 2074 Flatbush Avenue Brooklyn, New York 11234 Bankruptcy Case No.: 05-16228 Chapter 11 Petition Date: April 21, 2005 Court: Eastern District of New York (Brooklyn) Judge: Elizabeth S. Stong Debtor's Counsel: Barton Nachamie, Esq. Todtman Nachamie Spizz & Johns P.C. 425 Park Avenue New York, New York 10022 Tel: (212) 754-9400 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 ------ --------------- ------------ Internal Revenue Service $1,095,926 1 Lefrak City Plaza Corona, NY 11368 Lumbermens Mutual Casualty Co. Bonding Company $390,345 518 Stuyvesant Avenue Lyndhurst, NJ 07071 New York State Employment Taxes Taxes $102,976 P.O. Box 26823 New York, NY 10087 Callahan & Company PC Accounting Services $40,311 16 Spring Street Red Bank, NJ 07701 New York State Insurance Fund Insurance Fund $40,233 199 Church Street New York, NY 10007 New York State Department of Labor $38,752 Church Street Station New York, NY 10008 Local 282 Fringe Benefits Fund $36,250 c/o Avrum Schreiber, Esq. 40 Exchange Place, Suite 1300 New York, NY 10005 Pride Equipment Corporation $32,066 150 Nassau Avenue Islip, NY 11751 US Liability Insurance Company Insurance $28,649 c/o Cohn & Cohn 116 John Street, 17th Floor New York, NY 10038 First Insurance Funding Insurance Premium $26,396 Corporation 8075 Innovation Way Chicago, IL 60682 American Equity Insurance Co. Insurance Premium $24,253 c/o Maidenbaum & Assocs. 875 Ave of Americas, Suite 1905 New York, NY 10001 Local 282 Fringe Benefits Fund $22,500 2500 Marcus Avenue Lake Success, NY 11042 Dewhurst MacFarlane & Partners $20,967 45 East 20th Street New York, NY 10003 Meyer Dorfman P.E. Engineering Fees $20,540 159-15 Northern Boulevard Flushing, NY 11358 GHI Insurance Insurance $18,888 c/o Leopold Gross & Sommers PC 105 Court Street Brooklyn, NY 11201 Anthony J. Lopresti, Esq. Legal Services $15,028 310 Old Country Road, Suite 103 Garden City, NY 11530 First Insurance Funding Corp. Insurance Premium $14,399 8075 Innovation Way Chicago, IL 60682 Group Health Incorporated $14,183 P.O. Box 6245 Church Street Station New York, NY 10249 Dorf Mananagement Organization Rent in Arrears $13,794 62 South 2nd Street, Suite 2 D Deer Park, NY 11729 Local 282 Fringe Benefits Fund $13,274 c/o Friedman & Wolf 1500 Broadway, Suite 2300 New York, NY 10036 FIBERMARK INC: Wants Court to Reinstate Exclusive Periods --------------------------------------------------------- FiberMark, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Vermont to either reinstate or extend through July 20, 2005, their exclusive periods for proposing and obtaining acceptances of one or more plans of reorganization or, alternatively, to establish procedures for the filing and prosecution of plans of reorganization by non-Debtors. As reported in the Troubled Company Reporter on March 23, 2005, FiberMark, Inc., withdrew its current Plan of Reorganization because, the Company says, its three largest bondholders, also members of the Creditors Committee, remain unable to resolve disputes among themselves relating to corporate governance and control issues involving the reorganized company. Despite the company's ongoing efforts to facilitate agreement on these normally routine Plan implementation matters, the bondholders again missed a Court deadline to take the actions necessary to permit confirmation of the Plan. Although the Plan submitted to creditors for approval in December was unanimously supported by the Creditors Committee, the three bondholder members of the Creditors Committee subsequently voted against the Plan due to intercreditor disagreements. Without the bondholders' resolution of these issues, their votes in favor of the Plan and the Creditors Committee approval of corporate governance and other implementation documents, the company cannot proceed with confirmation of its current Plan. Plan Filing Procedure In the event that the Court is unwilling to reinstate the exclusive periods, the Debtors submit that the Court has other options available to it that will serve to protect their estates. The Debtors propose that the Plan Filing Procedures shall apply to the filing and prosecution of any plan of reorganization filed by any non-Debtor party in these cases to permit the Court to manage the plan process "expeditiously and economically". The Debtors explain that absent the request, the filing and prosecution of multiple competing plans could potentially confuse creditors, increase estate expenses, and delay the resolution of their chapter 11 cases. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wallcoverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J. Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray, 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 $329,600,000 in total assets and $405,700,000 in total debts. FLYI INC.: Industry Review Prompts S&P to Downgrade Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on selected enhanced equipment trust certificates (EETCs) of FLYi Inc. as part of an industrywide review of aircraft-backed debt. All ratings on FLYi, including the 'CC' corporate credit rating, remain on CreditWatch with developing implications, where they were placed on Feb. 23, 2005. "The lower ratings reflect Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer if financially weak FLYi were to file for Chapter 11 bankruptcy protection and reject the aircraft backing these EETCs," said Standard & Poor's credit analyst Betsy Snyder. "These aircraft have become less important to FLYi as it has begun to take delivery of Airbus A319's that allow it to fly longer-haul routes out of Washington's Dulles Airport." FLYi's CreditWatch status reflects its very weak financial profile, due to the substantial losses it has incurred resulting from its conversion to a low-cost carrier. Dulles, Virginia-based FLYi is the parent of Independence Air, a small airline based at Washington Dulles International Airport. FLYi's Feb. 23, 2005, financial restructuring provides near-term relief through deferral of aircraft lease and debt obligations, although the company's financial condition remains precarious, with substantial doubt about its ability to continue as a going concern expressed by its auditor. The restructuring includes return of 24 regional jets and 21 regional turboprop planes to lessors and lenders, and deferral (but not rejection) of some payments on financings backed by another 52 regional jets. Contingent obligation on another 30 Dornier 328 regional jets, which would have required payments by the company if Delta Air Lines Inc. were to default, were terminated in negotiations with lessors. Aircraft obligations securitized into the rated enhanced equipment trust certificates, series 1997-1, were not affected. FLYi had missed a Feb. 15, 2005, interest payment on its 6% convertible notes due 2034, but paid the amount on Feb. 18, within the notes' 30-day grace period. Independence Air is in the process of converting itself from a regional airline that fed United Air Lines Inc. at Dulles to a low-cost carrier that uses 132-seat A319's, as well as its 50-seat regional jets. FLYi has incurred heavy losses in recent quarters, culminating in a $192 million loss in 2004 after several profitable years. Prospects for achieving the transformation to a low-cost carrier, while helped by the financial restructuring, remain uncertain. Ratings will be reviewed in light of the recent developments and could be raised modestly to reflect the company's improved liquidity. Alternatively, the corporate credit rating could be lowered to 'SD' (selective default) if Standard & Poor's concludes that terms of the various financial restructurings represent the equivalent of a default or to 'D' if the company were to file for Chapter 11 bankruptcy protection. FRANK'S NURSERY: Bankruptcy Court Approves Disclosure Statement --------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York entered an order approving Frank's Nursery & Crafts, Inc.'s (OTCBB:FNCNQ) Second Amended Disclosure Statement on Apr. 22, 2005, paving the way for the Company to commence solicitation of votes for approval of its Second Amended Chapter 11 Plan of Reorganization and complete its Chapter 11 restructuring. The Plan is supported by the Company's major equity holders and the official committee of unsecured creditors that was appointed in the Company's reorganization case. The Company has concluded an orderly wind-down of its store operations by completing going out of business sales at its locations and has also sold or rejected substantially all of its leasehold interests. The Plan is based on the Debtor retaining approximately 42 parcels of real estate which will be developed by the reorganized Company. As previously announced, funding for the Plan will be provided by certain existing shareholders of the Company in the form of convertible notes in the aggregate amount of up to $120 million and a $20 million equity investment. Based on current anticipated needs, it is estimated that the Company will issue approximately $83 million of notes. If confirmed, the Plan generally will provide that all unsecured claims will be paid in full plus post-petition interest. Shareholders that own 5,000 shares or less will receive $.75 per existing share in cash. Shareholders of record as of April 22 who own greater than 5,000 shares will be provided the option either to receive $.75 per existing share in cash, or to exchange their existing shares for shares in the reorganized Company (subject to dilution). Shareholders that hold 100,000 shares or more and are accredited investors will have the right to invest in the convertible notes and equity proposed to be issued by the reorganized Company. Plan Confirmation Hearing The Court has scheduled a hearing on June 14, 2005, to consider confirmation of the Plan. If confirmed at that time, the Company would expect to emerge from Chapter 11 at the end of the summer. However, there can be no assurance that the Plan will be confirmed. Headquartered in Troy, Michigan, Frank's Nursery & Crafts, Inc., operated the largest chain (as measured by sales) in the United States of specialty retail stores devoted to the sale of lawn and garden products. Frank's Nursery and its parent company, FNC Holdings, Inc., each filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the District of Maryland on Feb. 19, 2001. The companies emerged under a confirmed chapter 11 plan in May 2002. Frank's Nursery filed another chapter 11 petition on September 8, 2004 (Bankr. S.D.N.Y. Case No. 04-15826). Allan B. Hyman, Esq., at Proskauer Rose LLP, represents the Debtor. In the Company's second bankruptcy filing, it listed $123,829,000 in total assets and $140,460,000 in total debts. FREMONT HOME: Moody's Rates Cert. Classes B-1 & B-2 at Low-B ------------------------------------------------------------ Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by Fremont Home Loan Trust 2005-1, and ratings ranging from Aa1 to Ba2 to the mezzanine and subordinate certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate subprime mortgage loans originated by Fremont Investment & Loan. The ratings are based primarily on the credit quality of the loans, and on the credit enhancement in the transaction. Credit enhancement includes overcollateralization, subordination, and excess spread. The loans are being serviced by Litton Loan Servicing LP. The complete rating actions are: * Class I-A1 $753,440,000 Variable rated, Aaa * Class I-A2 $188,360,000 Variable rated, Aaa * Class II-A1 $195,000,000 Variable rated, Aaa * Class II-A2 $304,200,000 Variable rated, Aaa * Class II-A3 $31,734,000 Variable rated, Aaa * Class M-1 $108,162,000 Variable rated, Aa1 * Class M-2 $80,155,000 Variable rated, Aa2 * Class M-3 $37,663,000 Variable rated, Aa3 * Class M-4 $34,766,000 Variable rated, A1 * Class M-5 $40,561,000 Variable rated, A2 * Class M-6 $31,869,000 Variable rated, A3 * Class M-7 $26,075,000 Variable rated, Baa1 * Class M-8 $24,143,000 Variable rated, Baa2 * Class M-9 $19,315,000 Variable rated, Baa3 * Class B-1 $12,554,000 Variable rated, Ba1 * Class B-2 $19,315,000 Variable rated, Ba2 FV STEEL: Gets Court Authority to Expand Services of Watson Wyatt ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Wisconsin gave FV Steel and Wire Company, and its debtor-affiliates permission to increase the scope of services Watson Wyatt & Company will provide. FV Steel previously hired Watson Wyatt as their special actuarial consultants. FV Steel is one of the debtor-affiliates of Keystone Consolidated Industries, Inc. On Sept. 20, 2004, Keystone Consolidated filed its Objection to the Pension Inter-Company Claim of FV Steel, which relates to the transfer by FV Steel of the sponsorship of the Keystone Employees' Retirement Plan in 2002. On Oct. 12, 2004, FV Steel filed its Response to the Pension Inter-Company Claim Objection of Keystone Consolidated. On Dec. 20, 2004, FV Steel filed a request with the Court to retain Watson Wyatt as its special actuarial consultants, and the Court granted the FV Steel's request on Jan. 11, 2005. The Court's original order limits Watson Wyatt's fees for FV Steel to a maximum of $19,800. Watson Wyatt's expanded services include: a) assisting FV Steel in defending its Pension Inter-Company Claim, including assisting FV Steel's special counsel in drafting a Brief in support of its Response to the Objection of Keystone Consolidated; b) providing testimony in the analysis and conclusions relating to the Keystone Employees' Retirement Plan, and review Keystone's reply to FV Steel's Brief in preparation for the Claim Objection Hearing; and b) providing all other special actuarial services for FV Steel that are related to the Pension Inter-Company Claim. FV Steel wants to pay Watson Wyatt an additional fee of $19,800 for these additional services. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company and its debtor-affiliates filed for chapter 11 protection on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22422). The case is jointly administered under E.D. Wisc. Case No. 04-22421. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $196,953,000 in total assets and $365,312,000 in total debts. GSAA 2005-4: Moody's Puts Ba1 Rating on $2.98MM Class B-4 Certs. ---------------------------------------------------------------- Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by GSAA 2005-4 and ratings ranging from Aa2 to Ba1 to the mezzanine and subordinate certificates in the securitization. The securitization is backed by adjustable-rate alternative "A" mortgage loans originated by GreenPoint Mortgage Funding, Inc., IndyMac Bank, F.S.B. and Countrywide Home Loans, Inc., and acquired by Goldman Sachs Mortgage Company. The ratings are based primarily on the credit quality of the loans and the credit enhancement in the transaction, which consists of subordination, overcollateralization, and excess spread. The credit quality of the loan pool is in line with that of other average ARM loan pools backing recent alternative "A" securitizations. GreenPoint, IndyMac and Countrywide Home Loan Servicing, LP will continue to service the mortgage loans in the securitized pool. The complete rating actions are: * Class A-1 $185,000,000 Variable-Rate Asset-Backed Certificates, rated Aaa * Class A-2 $56,332,000 Variable-Rate Asset-Backed Certificates, rated Aaa * Class A-3 $59,769,000 Variable-Rate Asset-Backed Certificates, rated Aaa * Class A-4 $6,640,000 Variable-Rate Asset-Backed Certificates, rated Aaa * Class A-5 $214,912,000 Variable-Rate Asset-Backed Certificates, rated Aaa * Class A-6 $23,879,000 Variable-Rate Asset-Backed Certificates, rated Aaa * Class M-1 $16,958,000 Variable-Rate Asset-Backed Certificates, rated Aa2 * Class M-2 $11,306,000 Variable-Rate Asset-Backed Certificates, rated A2 * Class B-1 $6,248,000 Variable-Rate Asset-Backed Certificates, rated Baa1 * Class B-2 $2,975,000 Variable-Rate Asset-Backed Certificates, rated Baa2 * Class B-3 $2,975,000 Variable-Rate Asset-Backed Certificates, rated Baa3 * Class B-4 $2,975,000 5.00% Asset-Backed Certificates, rated Ba1 * Class R-1 $100 Not Applicable Asset-Backed Certificates, rated Aaa * Class R-2 $100 Not Applicable Asset-Backed Certificates, rated Aaa GSAMP TRUST: Moody's Puts Ba1 Rating on $9.8MM Class B-4 Certs. --------------------------------------------------------------- Moody's Investors Service has assigned ratings of Aaa to certain mortgage pass-through certificates issued by GSAMP Trust 2005-HE2. The Aaa ratings are based on the expected performance of the mortgages, the 19.80% subordination of the subordinate certificates, excess spread, 2.20% initial over collateralization, and the structural and legal protections in the transaction. The ratings of the subordinate certificates are also based on the respective subordination of the other classes. The certificates are secured by average subprime mortgages originated by First NLC Financial Services, LLC of approximately 40.73%, United Pacific Mortgages d/b/a Mandalay Mortgage of approximately 23.74%, 23.45% from various sources under Goldman Sachs Mortgage Company conduit program, and the remaining 12.09% from Acoustic Home Loans, LLC. The weighted average FICO score of 626 is average for other recent securitized subprime pools. The weighted average LTV of 77.65% is slightly weaker than recent subprime originations. Investor property account for 3.32% of the pool and the performance of this segment could be more volatile. The pool is geographically concentrated with loans in California accounting for 46.43% of the pool. The complete rating actions are: * Class A 1, $297,636,000, rated Aaa * Class A 2, $169,463,000, rated Aaa * Class A 3, $79,117,000, rated Aaa * Class M 1, $49,720,000, rated Aa2 * Class M 2, $40,265,000, rated A2 * Class M 3, $11,555,000, rated A3 * Class B 1, $10,154,000, rated Baa1 * Class B 2, $8,403,000, rated Baa2 * Class B 3, $8,754,000, rated Baa3 * Class B 4, $9,804,000, rated Ba1 * Class R-1, $100, rated Aaa * Class R-2, $100, rated Aaa The loans will be serviced by primarily by: -- Countrywide Home Loans Servicing LP (33.21%), and -- JPMorgan Chase Bank, National Association (66.79%). GS Mortgage Securities Corp. is a Delaware corporation, wholly owned by Goldman Sachs Mortgage Company established to act as depositor. GSAMP Trust 2005-HE2 is a REMIC established for acquiring mortgage loans and issuing the certificates. HAIRSTON MOTOR: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Hairston Motor Company, Corp. 2505 Riverside Drive Danville, Virginia 24540 Bankruptcy Case No.: 05-61574 Type of Business: The Debtor sells and services automobiles. Chapter 11 Petition Date: April 22, 2005 Court: Western District of Virginia (Lynchburg) Debtor's Counsel: Reginald R. Yancey, Esq. P.O. Box 2779 Lynchburg, Virginia 24501 Tel: (434) 528-1632 Fax: (434) 846-7112 Total Assets: $727,229 Total Debts: $1,788,714 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Volvo Car Finance North Open Account $999,449 America 1700 Jay Ell Drive Richardson, TX 75081 First State Bank 25 Tires:$2,500.00 $255,522 P.O. Box 6400 Body shop parts Danville, VA 24541 and accessories: $10,000.00 Volvo maintance car parts and accessories: $65,371.00 Other parts and accessories: $23 Value of security: $90,919 ADP Dealer Services Open Account $9,404 5800 Windward Parkway Tower B Alpharetta, GA 30005 American Tire Open Account $2,633 3020 Tucker Street Burlington, NC 27215 Lowes Open Account $2,255 P.O. Box 105980 Dept 79 Atlanta, GA 30353 City of Danville 07-009474-03 $1,955 Division of Central 07-069072-02 Collection P.O. Box 3308 Danville, VA 24543 Tel Cove Open Account $1,595 324 West Main Street Charlottesville, VA 22903 Erie Vo Vo Open Account $1,592 P.O. Box 67 Whitesboro, NY 13492 Internal Revenue Service Federal $1,500 Insolvence Units withholding taxes, P.O. Box 10025 second quarter of Richmond, VA 23240 year of 2005 Commonwealth of Virginia State withholding $1,300 Dept of Taxation taxes, second P.O. Box 2156 quarter of year of Richmond, VA 23218 2005 Verizon Open Account $1,136 P.O. Box 17577 Baltimore, MD 21297 Saftey Kleen Open Account $1,097 P.O. Box 382066 Pittsburgh, PA 15250 Fisher Auto Parts Open Account $1,083 P.O. Box 2246 Staunton, VA 24402 Unifirst Open Account $1,064 526 Piney Grove Road Kernersville, NC 27284 P and D Auto Parts Open Account $895 P.O. Box 210 Pelham, NC 27311 ADP Commercial Leasing Open Account $847 P.O. Box 34656 Newark, NJ 07189 Smith Davis Tire Open Account $813 788 Piney Forest Road Danville, VA 24541 Paul Automotive Open Account $752 P.O. Box 899 Danville, VA 24543 Scarce Muffler Open Account $740 406 Piney Forest Road Danville, VA 24541 The Parts Place Body Open Account $712 2854 Riverside Drive Danville, VA 24541 HEILEG-MEYERS: Wants Wachovia's Disclosure Objections Overruled --------------------------------------------------------------- Heilig-Meyers Company, its debtor-affiliates and the Official Committee of Unsecured Creditors, the proponents of the Second Amended and Restated Joint Liquidating Plan of Reorganization responded to Wachovia Bank, N.A.'s objections to the Disclosure Statement explaining the Plan. The Plan Proponents ask the Court to overrule Wachovia's objections. As previously reported, the U.S. Bankruptcy Court for the Eastern District of Virginia approved the Disclosure Statement explaining the Amended and Restated Joint Plan of Reorganization proposed by HMY RoomStore, Inc., a wholly owned subsidiary of Heilig-Meyers Company, and the Official Committee of Unsecured Creditors, on March 10, 2005. The Plan Proponents filed a Second Amended and Restated Disclosure Statement for Heilig-Meyers after the Court approved the HMY RoomStore Disclosure Statement. Wachovia Bank, N.A., complains about the negotiated distribution framework under the Heilig-Meyers Plan and argues that the Heilig- Meyers Disclosure Statement is inadequate. The Debtors point out that Wachovia is the sole objector. The Debtors argue that Wachovia's objection must be viewed in the context of its continuing efforts to convert the Debtors' chapter 11 to chapter 7 cases and displace the Debtors from control of pending litigation against the pre-petition secured lenders, as reported in the Troubled Company Reporter on March 15, 2005. The Plan Proponents supplemented and made certain modifications of the Disclosure Statement to address a number of Wachovia's objections, including, but not limited to: (a) supplemental disclosure concerning the affiliated Debtor Unsecured Claim, the value of the New RoomStore Common stock, Reorganized RoomStore's financial projections, company background, and initial directors and officers; (b) supplemental disclosure identifying the assets to be transferred to the Liquidation Trust; (c) supplemental disclosure concerning the factors that may influence unsecured creditor recoveries; (d) supplemental disclosure concerning risk associated with non-confirmation of the RoomStore Plan and risks associated with New RoomStore Common Stock; (e) supplemental disclosure concerning discussion of securities law considerations under the Plan; (f) supplemental disclosure concerning the sources of funding for payments to be made pursuant to the Plan; (g) modifications to the "best interests test" discussion contained in the Disclosure Statement; and (h) modifications to estimated unsecured creditor recoveries based upon adjustments to the estimated approximate value of Trust Assets. In addition, the Plan Proponents invited Wachovia to propose whatever language they wanted to see in the Disclosure Statement with respect to their remaining objections. Wachovia hasn't made any suggestions. Accordingly, the Plan Proponents submit that the Disclosure Statement contains adequate information -- information sufficient to enable the Debtors' creditors to make informed decisions when they're asked to vote on the Plan. The Plan Proponents ask the Bankruptcy Court to approve the Disclosure Statement. Heilig-Meyers Company filed for chapter 11 protection on Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion in assets and $839 million in liabilities. When the Company filed for bankruptcy protection it operated hundreds of retail stores in more than half of the 50 states. In April 2001, the company shut down its Heilig-Meyers business format. In June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc. GOB sales have been concluded and the Debtors are liquidating their remaining Heilig-Meyers assets. The Debtors are working to effect a restructuring of their RoomStore business operations with the expectation of bringing that business out of bankruptcy as a reorganized company. Bruce H. Matson, Esq., Troy Savenko, Esq., and Katherine Macaulay Mueller, Esq., at LeClair Ryan, P.C., in Richmond, Va., represent the Debtors. Michael S. Stamer, Esq., Shuba Satyaprasad, Esq., Stanley J. Samorajczyk, Esq., and Scott L. Alberino, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Official Committee of Unsecured Creditors. HIGHLAND HOLDING: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Highland Holding Company LLC 13251 Road F Northwest Ephrata, Washington 98823 Bankruptcy Case No.: 05-02591 Chapter 11 Petition Date: March 31, 2005 Court: Eastern District of Washington (Spokane/Yakima) Judge: John A. Rossmeissl Debtor's Counsel: Joseph A. Esposito, Esq. Richard M. George, Esq. Esposito George & Campbell 421 West Riverside Avenue, Suite #960 Spokane, Washington 99201-0402 Tel: (509) 624-9219 Fax: (509) 624-9231 Estimated Assets: [Not provided] Estimated Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Dune Lake Properties $144,000 1790 E. Kittleson Road, Suite A Moses Lake, WA 98837 Dorothy Thomas $33,600 10919 Handicap Drive Southeast Warden, WA 98857 Winstation Systems $30,802 1475 Nelson Road Northeast Moses Lake, WA 98837 Dan Thomas $8,000 PUD Grant County $6,292 Divco Incorporated $4,920 Sutter Kunkle & Thompson PS $4,198 East Columbia Irrigation District $3,540 Tom Taylor Insurance $2,843 Capital One $1,814 Ladd Irrigation $1,087 Horizon Electric $420 Seattle Times $283 HOLLINGER INC: Ravelston Receivership Triggers Event of Default --------------------------------------------------------------- The Ontario Superior Court of Justice appointed RSM Richter Inc. as receiver of all of The Ravelston Corporation Limited's and Ravelston Management Inc.'s assets (except for certain shares held directly or indirectly by them, including shares of Hollinger Inc. and RMI). The order also provides a stay of proceedings commenced or continued against or in respect of either or both of Ravelston and RMI and any such proceedings currently under way (including Hollinger's lawsuit announced on March 29, 2005 as it pertains to Ravelston and RMI) until May 20, 2005, or such later date as the Court may order. Event of Default As a result of the commencement of these proceedings by RMI, an Event of Default has occurred under terms of the indentures governing Hollinger's US$78 million principal amount of 11.875% Senior Secured Notes due 2011 and US$15 million 11.875% Second Priority Secured Notes due 2011. RMI is a guarantor of Hollinger's Notes. With respect to both the Senior Secured Notes and the Second Priority Notes, the relevant trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the relevant Notes have the right to accelerate the maturity of the Notes. Until the Event of Default is remedied or a waiver is provided by holders of the Notes, the terms of the Indentures will prevent Hollinger from honouring retractions of its Series II Preference Shares. Accordingly, Hollinger has concluded that it is not able to complete retractions of any Series II Preference Shares submitted after April 19, 2005 without unduly impairing its liquidity. Therefore, retractions of Hollinger's outstanding Series II Preference Shares submitted after such date are suspended until further notice. Retraction of any shares which are not withdrawn will be completed if and when Hollinger's liquidity position permits. Pending completion of retractions, holders do not become creditors of Hollinger but remain as shareholders. Holders may exercise their right to withdraw their retraction notices at any time. In order to exercise the withdrawal right, holders should contact the Computershare Call Centre - Shareholder Services at 1 (800) 564-6253. Seizes Collateral for Ravelston Debt As reported in the Troubled Company Reporter on Apr. 15, 2005, Hollinger Inc. served formal notice on The Ravelston Corporation Limited to vacate the premises occupied by Ravelston and related companies, including Argus Corporation Limited, in Hollinger's head office building located at 10 Toronto Street, Toronto, not later than May 31, 2005. Hollinger has also taken steps to immediately seize shares held by Ravelston in Hollinger, Argus and other Ravelston-related companies. These shares are part of the collateral for debt in the amount of approximately $15 million owing by Ravelston to Hollinger, which debt is in default. The collateral represents part of the direct and indirect control position held by Ravelston in Hollinger. This action by Hollinger is separate from its recently announced lawsuit against Conrad Black, Ravelston and related parties for $550 million in monetary damages and $86 million reimbursement of amounts owing by Ravelston to Hollinger plus accrued interest and costs. About the Company Hollinger's principal asset is its interest in Hollinger International Inc. which is a newspaper publisher, the assets of which include the Chicago Sun-Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments. Hollinger also owns a portfolio of revenue-producing and other commercial real estate in Canada, including its head office building located at 10 Toronto Street, Toronto, Ontario. ICON HEALTH: Moody's Revises Outlook to Negative After Downgrade ---------------------------------------------------------------- Moody's Investors Service downgraded all the credit ratings of ICON Health & Fitness, Inc., and changed the outlook to negative. The ratings downgrade reflects operating performance in the latest quarter that was well below Moody's expectations, limited borrowing capacity under the revolving credit facility, exposure to significant potential damages related to the Nautilus litigation and Moody's estimate of recovery values in the event of default. Moody's downgraded these ratings: * $155 million 11.25% senior subordinated notes due 2012, downgraded from Caa2 to Caa3; * Senior Implied, downgraded from B3 to Caa1; * Senior Unsecured Issuer, downgraded from Caa1 to Caa2. In January 2005 Moody's downgraded the ratings of ICON by two notches reflecting the company's significant decline in operating performance and assigned a stable outlook reflecting Moody's view that the business was stabilizing and management had taken initiatives, which were expected to allow for anticipated improvements in operations. However given the weak operating performance in the company's third fiscal quarter of 2005, with particular emphasis on the 46% decline in revenues for CrossBar and other higher margin strength products, Moody's now expects a more difficult operating environment for the company. As such today's downgrade reflects not only the adverse variance in financial performance, but also Moody's concerns over whether management will be able to execute on its plans to improve profitability levels. ICON's weak performance in the latest quarter continues a trend of declining sales and profitability in its 2005 fiscal year. For the nine months ending February 26, 2005, sales and gross profit were down 9% and 32%, respectively, from the comparable 2004 period. The poor performance was primarily caused by increased commodity prices and transportation costs, manufacturing efficiencies caused by delays in the product development cycle and lack of successful replacement of the CrossBar product in the direct to consumer segment. Moody's had expected gross margins in the company's third fiscal quarter of 2005 to improve significantly from the 24% level recorded in the second fiscal quarter of 2005 due to design and efficiency improvements implemented by the company. ICON indicated that it re-designed portions of its product line to minimize the utilization of certain commodities and moved up product development cycles to increase manufacturing efficiency. ICON believes that continued weakness in sales over shadowed the expected benefit of these initiatives. The wide disparity between actual and projected performance in the third quarter casts doubt on whether ICON will be able to achieve projected operating improvements over the next year. The ratings downgrade also reflects the company's limited liquidity. Availability under the company's $275 million revolver has declined from about $31 million as of November 27, 2004, to about $18 million as of March 26, 2005, excluding the $25 million minimum availability required under the revolver. The decline in availability reflects normal seasonal declines in working capital of the company. The revolver, which is not rated by Moody's, matures in 2007 and contains a material adverse change clause that provides that lenders having more than 66.67% of the commitment or borrowing have the right to block the company's requests for future borrowings. Moody's liquidity concerns also reflect ICON's exposure to monetary damages from the patent and trademark infringement litigation with the Nautilus Group, Inc. In February 2005, the district court construed the meaning of various terms in the allegedly infringed patent. The patent litigation is scheduled to go to trial in June 2005 and the company has stated that it is unable to quantify with any certainty the extent of any potential liability. Moody's is concerned about the sufficiency of available borrowings and the possibility that a significant judgment against the company will trigger the material adverse change clause in the company's revolver. The negative ratings outlook anticipates that ICON will have a difficult time increasing margins and stabilizing its financial performance. Although the company has taken steps to improve its performance, such as reducing its cost structure, discontinuing under performing businesses, re-designing its product line and moving up product development cycles, results of operations to date have shown no real improvement. The negative outlook also anticipates continued limited revolver availability and reflects the exposure to significant potential liability from the Nautilus litigation. The outlook or ratings could be upgraded if the company were to stabilize sales and improve operating margins, which leads to sustainable positive free cash flows from operations. Another event that could lead to an upgrade would be the elimination of the Nautilus litigation without a material adverse effect to the company. The outlook or ratings could be downgraded if sales and margin pressures intensify and threaten the expected recovery values of the company's debt instruments. A material judgment against the company in connection with the Nautilus litigation could also pressure the rating. The Caa3 rating on the senior subordinated notes reflects the contractual subordination to senior debt and the expected moderate recovery rates in the event of default. Free cash flow from operations after capital expenditures was negative $118 million in the nine months ended February 26, 2005 compared to negative $63 million in the comparable 2004 period. EBITDA was $16 million in the 2005 period compared to $88 million in 2004. ICON Health & Fitness Inc., based in Logan, Utah, is one of the largest manufacturers and marketers of home fitness equipment in the United States. Revenue for the nine months ended February 26, 2005 was about $707 million. INDUSTRIAL ENT: Buying 100% Interest in Auto Aftermarket Supplier ----------------------------------------------------------------- Industrial Enterprises of America, Inc.'s (Pink Sheets: ILNP.PK) management agreed in principal to acquire 100% ownership of a leading manufacturer and seller of automotive chemicals and additives. The acquisition of this private company will result in the acquired company becoming a wholly owned subsidiary of Industrial Enterprises of America, and management anticipates that the acquisition will increase existing ILNP sales on a pro forma basis by 300%. Historically, the operations of the target have been profitable and are expected to add to Industrial Enterprises of America's earnings per share in the first year of combined operations. Industrial Enterprises of America believes that a definitive agreement will be reached, and the transaction will likely be consummated, within 45 days, subject to definitive due diligence and certain other conditions. Crawford Shaw, Chief Executive Officer of Industrial Enterprises of America, stated, "Upon the completion of the acquisition, Industrial Enterprises of America plans to begin manufacturing products that are currently being outsourced by the target, resulting in improved product margins. Additionally, this acquisition brings an experienced marketing and sales force to our core packaging business, as well as providing cross-selling opportunities between proprietary brands." About Industrial Enterprises Headquartered in Houston, Texas, Industrial Enterprises of America, Inc., f/k/a Advanced Bio/Chem, Inc., is the parent company of EMC Packaging, Inc., a Delaware corporation that packages, markets and sells refrigerants. EMC Packaging has been in this business since 1974. Its products serve a variety of industries and its current clients include a number of fortune 500 companies. * * * Going Concern Doubt In its Form 10-Q for the quarterly period ended Dec. 31, 2004, filed with the Securities and Exchange Commission, the Company said it has suffered recurring losses from operations and its total liabilities exceed its total assets by $2,641,977. These factors, the Company said, raises substantial doubt about its ability to continue as a going concern. IVOW INC: Lack of Financing Prompts Going Concern Doubt ------------------------------------------------------- J. H. Cohn LLP says there's substantial doubt about iVOW, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended Dec. 31, 2004. As of Dec. 31, 2004, the Company had an accumulated deficit, and management believes that the Company will require additional financing to fund its operations beyond June 2005. Management isn't sure that such financing will be available. At Dec. 31, 2004, the Company had cash and cash equivalents of $1.97 million. "We are pursuing several alternatives to address this situation, including raising additional funding, but cannot assure that we will be successful," the Company said in its Annual Report. "Should we be unable to raise sufficient funds, we may be required to curtail our operating plans and possibly relinquish rights to portions of our intellectual property or products. In addition, increases in expenses and delays in signing new management and consulting contract may adversely impact our cash position and require further cost reductions. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future." About the Company iVOW, Inc., f/k/a Vista Medical Technologies, Inc., is focused exclusively on the disease state management of chronic and morbid obesity. They provide program management, operational consulting and clinical training services to physicians and hospitals involved in the medical and surgical treatment of morbidly obese patients. They also provide specialized vitamins to patients who have undergone obesity surgery. KING PHARMACEUTICALS: Moody's Confirms Low-B Ratings After Review ----------------------------------------------------------------- Moody's Investors Service confirmed the ratings of King Pharmaceuticals, Inc. (Ba3 senior implied), concluding a rating review for possible downgrade initiated on December 1, 2004. Following this rating action, the rating outlook is negative. Confirmation of King's Ba3 senior implied rating reflects: (1) good prospects for free cash flow generation because of favorable demand for its core pharmaceutical products; (2) King's low debt levels and high cash balances, which provide flexibility to withstand litigation payments and to perform acquisitions; and (3) management's strategic plans to maximize the potential of its inline products and leverage its 1,000-person sales force by pursuing pharmaceutical acquisitions and collaborations. Despite certain operating challenges, strong underlying demand for products such as Altace, Levoxyl and Thrombin should continue to sustain good free cash flow. Moody's notes that King generated $261 million of cash flow from operations and $208 million of free cash flow in a very challenging year in which drug wholesalers were reducing the excess inventory of King's products and Levoxyl faced generic entrants. Although it is difficult to fully rule out future swings in wholesaler inventory levels, Moody's is more comfortable that King's revenue is beginning to align with underlying demand. King's cash flow is strong relative to reported debt of only $345 million. Moody's views the company's liquidity position as very sound currently, with $342 million of unrestricted cash, an undrawn $400 million credit facility with ample room currently under financial covenants, and no debt maturities in the next 12 months. However, King's convertible notes become putable on November 15, 2006 and will likely represent a cash obligation. Moody's believes the largest risk to King's near-term cash flow is the potential loss of marketing exclusivity on Skelaxin, which represented approximately 18% of 2004 sales. King has filed various Citizen's Petitions with the FDA related to the Skelaxin patents, but these efforts may not be successful in preventing generic competition. Even under an adverse scenario, however, Moody's estimates free cash flow in excess of $200 million annually, supporting the rating confirmation. King faces a number of other challenges including: (1) restoring investor confidence as a stand-alone entity now that the acquisition of King by Mylan was aborted; (2) recruiting a new CFO and other financial managers and improving internal financial controls to rectify material weaknesses; (3) the eventual patent expiration of Altace in 2008, (representing 27% of 2004 sales) but potentially earlier because of a patent challenge; (4) resolving complex government investigations involving a number of entities including the SEC and the OIG; and (5) executing product in-licensing deals and acquisitions. King's material weaknesses related to an insufficient staffing in its finance function, resulting in certain errors but not in any audit adjustments or material misstatements as of year-end 2004. Earlier, King delayed the filing of its 10-Q for the third quarter of 2004 related to errors in estimating its returns reserve, and it restated its financial statements for 2003 and 2002. This situation was previously recognized by Moody's in the downgrade to Ba3 from Ba1 on December 1, 2004. The company's remediation plan includes the hiring of additional financial professionals. Until a new CFO is hired and the company's financial policies, acquisition strategy and correction of internal controls become more clear, Moody's does not believe that King's credit profile has fully stabilized. As a result, Moody's is assigning a negative rating outlook. Moody's will evaluate the appropriateness of the negative outlook over the next 12 months as King's acquisition plans unfold, as well as management's refinancing plans for the $345 million convertible note putable in November 2006. Under many scenarios, King may be able to withstand these challenges and maintain sufficient financial flexibility to maintain its current rating. Factors that are very likely to result in a downgrade include the following: (1) failure to correct material weaknesses in internal controls during 2005; (2) acquisitions larger than $1 billion over the next 12 months; (3) failure to address refinancing of the convertible notes; or (4) an earlier than-expected loss of the Altace patent through an adverse court outcome. Based on King's current balance sheet and expected free cash flow, Moody's believes that the current rating may accommodate cash- financed acquisitions over the next 12 months in the range of $500 million to $1 billion. At the high end of this range, acquisitions may pressure the rating but not necessarily lead to a downgrade, depending on the type of product acquired and the benefits that could be realized by King. Moody's notes that the market for product acquisitions is extremely competitive, as major pharmaceutical players as well as specialty players such as King are seeking new growth opportunities. King's largest acquisition to date was the $814 million acquisition of Elan's primary care products in 2003. Moody's believes upward pressure is limited until the operating challenges and financial control issues outlined above are more fully resolved. Longer term, King's ratings will depend to a large extent on its ability to prepare for the eventual loss of Altace revenue by developing or acquiring pharmaceutical products to fill out its product portfolio. The rating on King's $400 million bank credit facility is one-notch above the senior implied rating, continuing to reflect its secured position in King's capital structure, and Moody's estimate that King's enterprise value more than amply covers this amount. Ratings confirmed: * Ba3 senior implied * Ba2 senior secured revolving credit facility of $400 million due 2007 * Ba3 senior unsecured guaranteed convertible debentures of $345 million due 2021 * B1 senior unsecured issuer rating King Pharmaceuticals, Inc., headquartered in Bristol, Tennessee, manufactures, markets, and sells primarily acquired branded prescription pharmaceutical products. The company reported revenues of $1.3 billion for in 2004. KMART HOLDING: Footstar Files Service Mark Brief Under Seal ----------------------------------------------------------- As previously reported, Kmart Corporation asked the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to require Footstar, Inc., to vacate certain Kmart stores. On February 3, 2005, Kmart notified Footstar that it plans to begin the reconfiguration of Stores scheduled for conversion to an alternative format in April. Kmart instructed Footstar that, by as early as February 21, 2005, Footstar could either vacate those Stores or have the footwear departments in those Stores relocated around the conversion-related construction until the conversion date -- when Footstar would be evicted. Julie A. Younglove-Webb, Vice President/Space Planning for Kmart Corporation, explains that as a result of Sears, Roebuck and Co.'s acquisition of 50 Kmart and six Wal-Mart stores finalized in the third quarter 2004, 25 Sears Essentials stores are scheduled to open this Spring. Following the opening of Sears Essentials, Sears' point-of-sale systems will track store sales and transmit this information to Sears' headquarters in Hoffman Estates, Illinois, for recording, analysis and decision-making by Sears' employees. Among other effects of this switch from Kmart to Sears POS systems is that Kmart's merchandise, including that sold by Footstar, will not be capable of being scanned in the store. Kmart also asserts that, because in the course of Footstar's Chapter 11 cases Footstar has not taken the position that Store Closings have violated the automatic stay, Footstar has waived its right to do so. Kmart Wants 30 Stores Vacated Amy R. Wolf, Esq., at Wachtell, Lipton, Rosen & Katz, in New York, relates that since March 4, 2005, plans have been finalized to convert seven additional stores that Kmart Corporation previously sold to Sears, Roebuck and Co. into Sears Essentials stores. The seven stores that are slated to close as Kmart stores and reopen as Sears Essentials stores on or after July 5, 2005, are: * 3638 Tewksbury, Massachusetts, * 3760 No. Ft. Myers, Florida, * 3825 Parsippany, N Jersey, * 3985 Lakeland, Florida, * 4496 Keene, New Hampshire, * 7427 Londondery, New Hampshire, and * 3124 Corona, California Ms. Wolf notes that the plan to convert Store 9378 in Crestwood, Illinois, has been changed. Kmart withdraws its request to lift the automatic stay with respect to that store. Accordingly, Kmart asks the U.S. Bankruptcy Court for the Southern District of New York to compel Footstar to vacate 30 stores, including the seven stores, but excluding the Crestwood, Illinois store. Footstar Files Reply Brief Under Seal On March 25, 2005, the U.S. Bankruptcy Court considered the interpretation of the service mark element of the Master Agreement's definition of "Store". Footstar, Inc.'s brief concerning the interpretation of the service mark element definition of "Store" contains and discusses in-depth significant confidential and sensitive competitive information. Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that general disclosure of the Service Mark Brief could be detrimental and prejudicial to Kmart Corporation and Sears and Roebuck Co. and their operations. Accordingly, Footstar, with the support of the Official Committee of Unsecured Creditors and the Official Committee of Equity Holders in its Chapter 11 case, sought and obtained the Court's permission to file its Service Mark Brief under seal. Kmart Responds Kmart contends that Footstar's response, which was filed under seal, is founded entirely on misunderstandings and inaccurate misrepresentations of the facts. Once these are corrected, Footstar's arguments for remaining in the Sears Essentials stores fall of their own weight. Contrary to Footstar's assertions, Amy R. Wolf, Esq., at Wachtell, Lipton, Rosen & Katz, in New York, contends that the Sears Essentials stores will not be operated under the Kmart service mark once they are launched in a new format. Thus, the sole question presented is whether Footstar has a right to sell shoes in stores that are operated under the Sears Essentials mark. Ms. Wolf says Footstar's construction of the Master Agreement, under which a store operated under any service mark whatsoever meets the definition of "Store," can be rejected without resort to parol evidence. Ms. Wolf clarifies that Kmart has never taken the position that Footstar may not continue to operate their footwear departments during the conversion process. "The issue is not whether Footstar is permitted to operate in the converting stores, but whether it will be entitled to operate in the converted stores once they have reopened under the Sears Essentials service mark," Ms. Wolf says. The Sears Essentials stores, once officially launched in their new format, will not be operated under the Kmart service mark, the Super Kmart Center service mark, or any other service mark incorporating the Kmart mark in whole or in part. The Sears Essentials stores that will be open a day later will not be "Stores" because, they will not be operated under any form of the service mark Kmart. Kmart "will close the Stores" forever, and Sears will open its stores the next day. Accordingly, the termination provisions of the Master Agreement are plainly applicable. Even if the termination provisions were not applicable, Footstar still would have no right to operate in the Sears Essentials stores. Ms. Wolf explains that, regardless of the workings of the termination provisions, the Sears Essentials stores will in no event be Stores, as the definition of the term will not be met, and Footstar has not been granted a license to operate in a Sears Essentials store. While the Master Agreement will remain extant, Footstar will have no present right to operate within stores that have been closed by Kmart and reopened by Sears. To support its argument, Kmart provides the Court with: * drafts of the Master Agreement that are in its possession; and * a letter dated March 27, 1995 from Maureen Richards, Corporate Counsel and Assistant Secretary of Melville Corporation, to Gerald T. Tschura, Vice President, Treasurer and Legal Counsel of Kmart Properties, Inc., in which Ms. Richards describes Melville's suggested changes to the Master Agreement, including changes to the definitions of the words "Store(s)" and "Marks." The documents include sensitive and confidential commercial information and are filed under seal. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) LCM III: Moody's Assigns Ba2 Rating to $11.5 Million Class D Notes ------------------------------------------------------------------ Moodys assigned these ratings to 4 Classes of Notes issued by LCM III Ltd.: * Aaa to U.S. $269,500,000 Class A Senior Secured Floating Notes Notes Due 2017; * A2 to U.S. $25,000,000 Class B Second Priority Deferrable Floating Rate Notes Due 2017; * Baa2 to U.S. $16,000,000 Class C Third Priority Deferrable Floating Rate Notes due 2017; and * Ba2 to U.S. $11,500,000 Class D Fourth Priority Deferrable Floating Rate Notes Due 2017. Moody's ratings reflect the quality of the collateral pool, the enhancement afforded the senior classes by the capital structure, the legal documentation of the transaction, and its review of the collateral manager's prior experience and capacity to manage the portfolio. LCM III is managed by Lyon Capital Management LLC and is backed primarily by senior secured loans. LIFEPOINT HOSPITALS: Inks 30-Year Lease with Wythe County Hospital ------------------------------------------------------------------ LifePoint Hospitals, Inc. (NASDAQ: LPNT) signed a definitive agreement with the Wythe County Community Hospital Board of Directors to enter into a 30-year lease agreement for the 104-bed facility located in Wytheville, Virginia. Established in 1972, Wythe County Community, with approximately 400 employees and annual revenues of approximately $40 million, is the only hospital located in Wythe County and provides care to the approximately 36,000 individuals residing in Wythe and Bland counties. In commenting on the announcement, Kenneth C. Donahey, president and chief executive officer of LifePoint Hospitals, said, "We are very excited about adding Wythe County Community Hospital to the LifePoint family. It is obvious to us that the management and staff of Wythe County Community Hospital share LifePoint's mission of providing the highest quality care to the people of Wythe and Bland counties." About the Company LifePoint Hospitals, Inc., is a leading hospital company focused on providing healthcare services in non-urban communities, with 50 hospitals, approximately 5,285 licensed beds and combined revenues of approximately $1.9 billion in 2004. Of the combined 50 hospitals, 46 are in markets where LifePoint Hospitals is the sole community hospital provider. LifePoint Hospitals' non-urban operating strategy offers continued operational improvement by focusing on its five core values: delivering high quality patient care, supporting physicians, creating excellent workplaces for its employees, providing community value and ensuring fiscal responsibility. Headquartered in Brentwood, Tennessee, LifePoint Hospitals is affiliated with approximately 18,000 employees. * * * As reported in the Troubled Company Reporter on Apr. 8, 2005, 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 Moody's said the ratings outlook is stable. LNR PROPERTY: Repayment Prompts Fitch to Withdraw Low-B Ratings --------------------------------------------------------------- Fitch Ratings withdraws its 'B' senior unsecured and 'B-' senior subordinated debt ratings for LNR Property Corp -- LNR. The withdrawal follows LNR's final repayment last week of all of its senior subordinated convertible bonds. LNR repaid its revolving credit facility and senior subordinated notes concurrent with its acquisition by Cerberus Capital Management, LP, in February 2005. LNR was taken private by Cerberus and as part of the transaction, the company's existing public indebtedness was privately refinanced. Fitch continues to rate LNR's subsidiary Lennar Partners, Inc., as a CMBS special servicer. Lennar's 'CSS1' special servicer rating is unaffected by the withdrawal of LNR's unsecured debt ratings. LNR was acquired in February 2005 by an entity that is majority- owned by Cerberus, a $15 billion private investment firm based in New York City, its real estate affiliate, Blackacre Capital Management, LLC, and co-investors. LNR Property Corp. is headquartered in Miami Beach, Florida, and is one of the nation's leading real estate finance companies with substantial investments in CMBS, commercial real estate properties, commercial mortgage loans, and undeveloped land. MARC LISNER: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: L. Marc Lisner Katina K. Lisner 1308 Masters Court Chesapeake, Virginia 23320 Bankruptcy Case No.: 05-71759 Chapter 11 Petition Date: March 31, 2005 Court: Eastern District of Virginia (Norfolk) Judge: David H. Adams Debtor's Counsel: Shreen N. Mahmoud, Esq. Harry Jernigan CPA Attorney, P.C. 258 North Witchduck Road, Suite C Virginia Beach, Virginia 23462 Tel: (757) 490-2200 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 ------ --------------- ------------ Washington Mutual Bank, FA Unsecured loan on $709,750 P.O. Box 3139 home Milwaukee, WI 53201-3139 Internal Revenue Service Civil penalty from $110,709 Special Procedures Lisnor Escrow & P.O. Box 10025 Title Richmond, VA 23240 Internal Revenue Service 1998, 1999, 2001 $104,234 Special Procedures 1040 income taxes P.O. Box 10025 Richmond, VA 23240 Reeds Jewelers $32,142 P.O. Box 2229 ATTN: Benny Smith Wilmington, NC 28402 MBNA $26,187 P.O. Box 15102 Wilmington, DE 19886-5102 VA Department of Taxation Withholding taxes $21,994 P.O. Box 2156 Richmond, VA 23218 Internal Revenue Service 2004 income tax $21,312 Special Procedures P.O. Box 10025 Richmond, VA 23240 MBNA $20,947 P.O. Box 15102 Wilmington, DE 19886-5102 VA Department of Taxation 1996, 1998, 2003 $20,263 P.O. Box 2156 income taxes Richmond, VA 23218 MBNA $17,093 P.O. Box 15102 Wilmington, DE 19886-5102 Citi $15,862 P.O. Box 8106 South Hackensack, NJ 07606 American Express $13,714 P.O. Box 530001 Atlanta, GA 30353-0001 Bank One $10,634 P.O. Box 182549 Columbus, OH 43218-2549 Compass Bk Conv Line $10,320 P.O. Box 2210 Decatur, AL 35699 Household $9,228 P.O. Box 7013 Anaheim, CA 92850-7013 Dominion Virginia Power $9,120 P.O. Box 26543 Richmond, VA 23290-0001 First USA Bank $8,740 P.O. Box 15153 Wilmington, DE 19886 BMW Financial Services NA 1998 BMW 7501 $8,417 LLC 5515 Parkcenter Circle Dublin, OH 43017 Wells Fargo $6,576 Card Services P.O. Box 522 De Moines, IA 50302-9907 American Express $6,348 P.O. Box 530001 Atlanta, GA 30353-0001 MCI INC: Board Concludes Qwest Offer is Superior ------------------------------------------------ MCI, Inc.'s (Nasdaq: MCIP) Board of Directors has determined that Qwest Communications International Inc.'s latest $9.74 billion offer to acquire the Company is superior to the terms of the current $7.5 billion MCI/Verizon merger agreement. "Qwest is gratified that MCI has recognized its superior offer for MCI," Qwest said in a press statement. "Through this combination, both the fundamental economics and the future competitive landscape of the telecommunications industry can be aligned to deliver long-term value for investors, robust competition and better services for customers. "We expect MCI to build upon its declaration of superiority with specific acts of support, including expeditiously seeking regulatory approvals of a transaction that it considers superior and in the best interests of its shareowners." Under the terms of the MCI/Verizon merger agreement, Verizon has five business days -- through Friday, April 29, 2005 -- to respond with a revised proposal. Under Qwest's irrevocable offer, MCI's Board of Directors has until May 3, 2005, to change its current recommendation in favor of the MCI/Verizon merger agreement. Latest Qwest Proposal On April 21, 2005, Qwest presented MCI with a revised offer comprised of $16.00 in cash (excluding MCI's March 15 dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14.00 provided Qwest's share price is between $3.32 and $4.15) per MCI share. MCI/Verizon Merger Agreement On March 29, 2005, MCI and Verizon amended their merger agreement. Under that agreement, each MCI share would receive cash and stock worth at least $23.10, comprising $8.35 (excluding MCI's March 15 dividend payment of $0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75. Verizon Considering Options Following the board's determination, Verizon indicated that it may elect to terminate the agreement with MCI: "Today, MCI reiterated what it expressed over two weeks ago -- namely that it would deem a Qwest offer of $30 to be superior to the $23.10 provided under the current Verizon-MCI merger agreement -- apparently concluding that the difference was sufficient compensation for the increased risks associated with completing the transaction and executing the business plan thereafter. "Verizon believes its pending transaction with MCI creates long- term, as well as short-term, value for the shareholders of both companies by protecting the integrity of MCI's business, ensuring that MCI's customers have continuing access to the best communications services, retaining key employees, and stabilizing MCI's financial position and prospects. "Under the terms of the Verizon-MCI definitive merger agreement, Verizon may elect to require MCI to continue to finalize its proxy statement and to organize a meeting of MCI's shareholders to consider the agreed transaction with Verizon. Alternatively, Verizon may elect to terminate the agreement with MCI. Upon such a termination, Verizon would be entitled to be paid by MCI a $240 million break-up fee plus an expense reimbursement of up to $10 million, and the same amounts would be payable following an MCI shareholders meeting if the Verizon-MCI transaction were not approved and an agreement was signed with Qwest. "In light of the change in this process, we will consider all of our options and determine how best to serve Verizon shareholders." 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. About MCI Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. * * * 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. MOSAIC GROUP: Chapter 11 Trustee Terminates Claims Agent -------------------------------------------------------- Jeffrey H. Mims, the chapter 11 Trustee for the estates of Mosaic Group (US) Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Texas to terminate the services of Bankruptcy Management Corporation as the official claims and noticing agent. The Court's order is effective April 1, 2005. On Dec. 19, 2002, the Debtors filed their request for authority to employ Bankruptcy Management as their official claims and noticing agent. The Court approved the Debtors' application on Dec. 26, 2002. The Debtors explained to the Court that Bankruptcy Management's services were needed to assist them in noticing matters and to receive, docket and maintain proofs of claim that would otherwise be unduly time consuming and burdensome for the Clerk of the Bankruptcy Court to perform. Mr. Mims has determined that Bankruptcy Management's services are no longer needed in the Debtors' bankruptcy cases because of the wind-down status and the unlikelihood of any distribution to unsecured creditors being made. The Court also orders that Bankruptcy Management's duties and responsibilities will be transferred to the Clerk of the Bankruptcy Court, and all records about the Debtors that Bankruptcy Management possesses will be transferred to Kane, Russell, Coleman & Logan, Mr. Mims' counsel. Headquartered in Irving, Texas, Mosaic Group (US) Inc., -- http://www.mosaic.com/-- a world-leading provider of results- driven, measurable marketing solutions for global brands, filed for chapter 11 relief on Dec. 17, 2002 (Bankr. N.D. Tex. Case No. 02-81440). Charles R. Gibbs, Esq., David H. Botter, Esq., and Kevin D. Rice, Esq., at Akin, Gump, Strauss, Hauer & Feld, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it estimated debts and assets of over $100 million each. Mosaic Group, Inc., also sought and obtained protection under the Companies' Creditors Arrangement Act in Canada. On June 15, 2004, Jeffrey H. Mims was appointed as Chapter 11 Trustee for the Debtors' estate. NORTEL NETWROKS: Board Declares Preferred Stock Dividends --------------------------------------------------------- The board of directors of Nortel Networks Limited declared a dividend on each of the outstanding Cumulative Redeemable Class A Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding Non- cumulative Redeemable Class A Preferred Shares Series 7 (TSX:NTL.PR.G). The dividend amount for each series is calculated in accordance with the terms and conditions applicable to each respective series, as set out in the Company's articles. The annual dividend rate for each series floats in relation to changes in the average of the prime rate of Royal Bank of Canada and The Toronto-Dominion Bank during the preceding month and is adjusted upwards or downwards on a monthly basis by an adjustment factor which is based on the weighted average daily trading price of each of the series for the preceding month, respectively. The maximum monthly adjustment for changes in the weighted average daily trading price of each of the series will be plus or minus 4.0% of Prime. The annual floating dividend rate applicable for a month will in no event be less than 50% of Prime or greater than Prime. The dividend on each series is payable on June 13, 2005, to shareholders of record of such series at the close of business on May 31, 2005. About the Company Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/ * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NORTHSHORE ASSET: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Northshore Asset Management LLC 208 South LaSalle Street, Suite 1201 Chicago, Illinois 60606 Debtor: Bankruptcy Case No.: 05-12797 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- NSCT LLC 05-12798 Saldutti Capital Management, LP 05-12799 Type of Business: The Debtors provide investment management services to private equity and hedge funds and sophisticated investors. On March 29, 2005, the Honorable Judge Pamela S. Hollis of the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago Division ordered transferring Case Nos. 05-04950, 05-04958 & 05-04959 from the Illinois Court to the U.S. Bankruptcy Court for the Southern District of New York, Manhattan Division. Chapter 11 Petition Date: April 18, 2005 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: Jon C. Vigano, Esq. Patricia J. Fokuo, Esq. Schiff Hardin LLP 6600 Sears Towers Chicago, Illinois 60606 Tel: (312) 258-5792 Debtors' Restructuring Advisor: Morris Anderson & Associates, Ltd. Total Assets Total Debts ------------ ----------- Northshore Asset $10 Million to $10 Million to Management LLC $50 Million $50 Million NSCT LLC $10 Million to $10 Million to $50 Million $50 Million Saldutti Capital Less than $50,000 Less than $50,000 Management, LP A. Northshore Asset Management LLC's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bloomberg L.P. $43,641 499 Park Avenue New York, NY 10022-1240 Franklin Kites Holdings, LLC $32,500 One Thousand Circle, Third Floor Darien, CT 06820 One Thorndal Circle, Inc. $29,313 c/o The Nielsen Company 3 Thorndal Circle Darien, CT 06103-3597 Robinson & Cole $26,600 280 Trumbull Street Hartford, CT 06103-3597 Anobi Technology Corporation $26,200 McDermott, Will, & Emery $11,866 LaSalle Adams, LLC $11,731 American Express $8,966 Accucom Consulting Inc. $7,950 Appia Communications $4,265 Andrew Russin $3,850 CIT Technology Financial Services $3,026 CQG $2,403 SBC $2,157 AT & T $1,560 Jefferson Pilot Financial $1,100 Avaya Financial Services $1,089 Spectrum Global Fund Administration $3,982 B. Saldutti Capital Management, LP's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ American Express $8,966 P.O. Box 0001 Los Angeles, CA 90096-0001 NYSE $345 Grand Central Station P.O. Box 4695 New York, NY 10163 NORTHWEST AIRLINES: Industry Review Prompts S&P to Pare Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on selected enhanced equipment trust certificates (EETCs) of Northwest Airlines Corp. (B/Negative/B-3) unit Northwest Airlines Inc. (B/Negative/--) as part of an industry wide review of aircraft- backed debt. "The rating actions reflect Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of multiple, further bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Philip Baggaley. "Downgrades of EETCs were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines and junior classes that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the credit analyst continued. In the case of Northwest Airlines, ratings were lowered on EETCs backed at least partly by B757, B747, or Avro regional jet aircraft, with most of the rating changes affecting junior certificates. These planes are either 1980s generation models and/or lack wide airline operator bases. Although values of most aircraft models are currently strengthening, that progress could be reversed for certain models if several more large U.S. airlines were to enter bankruptcy. EETCs that were affirmed were backed mostly by modern technology Airbus aircraft. Standard & Poor's also considered in its review potential adverse effects of an ongoing legal dispute over the rights of certain creditors to repossess aircraft from bankrupt United Air Lines Inc. If a current temporary restraining order blocking repossession is not overturned, the precedent could be used to pressure creditors into less favorable negotiated restructurings in future airline bankruptcies. The downgrade of Northwest debt is not related to its first- quarter results being announced today, though some of the trends affecting those results, such as high fuel prices and price competition, are concerns that were factored into Standard & Poor's review of aircraft-backed debt. The corporate credit ratings on Northwest Airlines Corp. and Northwest Airlines Inc. reflect: (1) a participation in the high-risk passenger airline industry, (2) the airline's need to lower its relatively high labor costs, and (3) substantial debt and pension obligations. The credit profile benefits from satisfactory near-term liquidity, with $2.46 billion of unrestricted cash. Northwest has a domestic route system (two-thirds of total revenue) focused on major domestic hubs in Minneapolis, Minnesota, and Detroit, Michigan. The company also has extensive Pacific routes (one-fifth of revenues, mostly to Japan) and trans-Atlantic service through a successful joint venture with KLM Royal Dutch Airlines. Ratings could be lowered if the airline is unable to make further progress in lowering its relatively high labor costs, or if a worsening of the overall airline industry environment causes a material deterioration in Northwest's financial profile. An outlook revision to stable is considered less likely, as difficult industry conditions will remain a challenge even if labor costs are reduced. NOVA CHEMICALS: Earns $94 Million of Net Income in First Quarter ---------------------------------------------------------------- NOVA Chemicals Corporation reported net income of $94 million for the first quarter of 2005. This compares to net income of $162 million in the fourth quarter of 2004, which included $131 million of after-tax gains related to a tax settlement and an asset sale. In the first quarter of 2004, NOVA Chemicals reported net income of $7 million. "Net income from our two businesses totaled $91 million, or $1.03 of our total $1.06 earnings per share. This is the most we've earned in a quarter since the second quarter of 2000," said Jeff Lipton, NOVA Chemicals' President and Chief Executive Officer. "Earnings from both businesses improved each month from the seasonally weak December through January period. We believe both industry fundamentals and our company specific improvements continue to point to a long period of strong earnings." First Quarter Snapshot Olefins/Polyolefins: -- Net income of $112 million in Q1 of 2005 compares to $82 million in Q4 2004 -- The Company's Corunna, Ontario flexi-cracker co-product volumes and margin contributed significantly to the net income improvement Styrenics: -- Net loss of $21 million in the first quarter versus a net loss of $17 million in Q4 2004 -- Each month in the quarter showed marked improvement from the previous month Corporate: -- Cash flow from operations was $96 million -- Ended the quarter with $227 million in cash -- Repurchased 2.6 million shares during the quarter and completed the 7.5 million share buyback program NOVA Chemicals Highlights (unaudited, millions of U.S. dollars except per share amounts and as noted) -------------------------- Three Months Ended -------------------------- Mar. 31 Dec. 31 Mar. 31 2005 2004 2004 -------- -------- -------- Net income (loss)(1) Olefins/Polyolefins $ 112 $ 82 $ 32 Styrenics (21) (17) (22) Corporate and other(2) 3 97 (3) ------- ------- ------- $ 94 $ 162 $ 7 ======= ======= ======= Earnings per common share Basic $ 1.12 $ 1.91 $ 0.08 Diluted $ 1.06 $ 1.78 $ 0.08 Weighted-average common shares outstanding (millions)(3) Basic 83 85 87 Diluted 90 92 89 Revenue $ 1,488 $ 1,527 $ 1,126 EBITDA(4) $ 242 $ 123 $ 121 Depreciation and amortization $ 72 $ 72 $ 80 Funds from operations $ 155 $ 76 $ 87 Capital expenditures (net) $ 73 $ 100 $ 43 Average capital employed(5) $ 3,393 $ 3,455 $ 3,205 After-tax return on capital employed(6) 13.3% 21.3% 3.6% Return on average common equity(7) 26.4% 45.3% 2.2% (1) On Jan. 1, 2005, NOVA Chemicals adopted new Canadian accounting standards, which require our preferred shares to be classified as debt. Accordingly, any dividends associated with these preferred shares were reclassified to interest expense. All prior periods have been restated. (2) See "Corporate and other" table below for a description of all corporate items. (3) Weighted-average number of common shares outstanding during the period used to calculate the earnings per share. See Note 6 under Notes to Consolidated Financial Statements for more information. (4) Net income before income taxes, other gains and losses, interest expense and depreciation and amortization. See Consolidated Statement of Income and Reinvested Earnings and Supplemental Measures. (5) Average capital employed equals cash expended on plant, property and equipment (less accumulated depreciation and amortization) and working capital, and excludes assets under construction and investments. Amounts are converted to U.S. dollars using quarter-end exchange rates. See Supplemental Measures. (6) After-tax return on capital employed equals NOVA Chemicals' net income plus after-tax interest expense (annualized) divided by average capital employed. See Supplemental Measures. (7) Return on average common equity equals annualized net income divided by average common equity. NOVA Chemicals -- http://www.novachemicals.com/-- produces ethylene, polyethylene, styrene monomer and styrenic polymers, which are used in a wide range of consumer and industrial goods. NOVA Chemicals manufactures its products at 18 operating facilities located in the United States, Canada, France, the Netherlands and the United Kingdom. The company also has five technology centers that support research and development initiatives. NOVA Chemicals Corporation shares trade on the Toronto and New York stock exchanges under the trading symbol NCX. * * * As reported in the Troubled Company Reporter on Jan. 27, 2005, Moody's Investors Service affirmed the Ba2 senior unsecured ratings of NOVA Chemicals Corporation, and revised its ratings outlook to stable from negative. Moody's also changed the company's speculative grade liquidity rating to SGL-1 from SGL-2. The outlook revision was prompted by NOVA's announcement that it expects to receive a cash payment of approximately $110 million stemming from its resolution of a tax dispute with U.S. Internal Revenue Service. This is in addition to the $80 million received in the fourth quarter of 2004 from the sale of its ethane gathering system. The ratings affirmations reflects Moody's view that the combination of the cyclical upturn in petrochemicals, and these one-time cash inflows, will enable the company to maintain a robust cash balance despite anticipated share repurchases and the pending maturity of $100 million of debentures in September 2005. As reported in the Troubled Company Reporter on Dec. 23, 2004, Standard & Poor's Ratings Services revised its outlook on petrochemicals producer Nova Chemicals Corp. to stable from negative. At the same time, Standard & Poor's affirmed the 'BB+' long-term corporate credit and senior unsecured debt ratings on Nova. OMEGA HEALTHCARE: Declares $0.21 Per Common Share Dividend ---------------------------------------------------------- Omega Healthcare Investors, Inc.'s (NYSE:OHI) Board of Directors declared a common stock dividend of $0.21 per share, a $0.01 increase over the prior quarter, and announced the release date of the Company's first quarter results and earnings call. Common Dividends The Company's Board of Directors announced a common stock dividend of $0.21 per share, to be paid May 16, 2005, to common stockholders of record on May 2, 2005. At the date of this release the Company had approximately 51 million common shares outstanding. First Quarter Earnings Call The Company scheduled to release its earnings results for the quarter ended March 31, 2005, on Thursday, April 28, 2005. In conjunction with its release, the Company will be conducting a conference call on April 28, 2005, at 10 a.m. EDT to review its first quarter 2005 results and current developments. To listen to the conference call via webcast, log on to http://www.omegahealthcare.com/and click the "earnings call" icon on the Company's homepage. Webcast replays of the call will be available on the Company's website for at least two weeks following the call. Additionally, a copy of the earnings release will be available on the "news releases" section of the Company's website. Omega is a real estate investment trust investing in and providing financing to the long-term care industry. At December 31, 2004, the Company owned or held mortgages on 221 skilled nursing and assisted living facilities with approximately 23,105 beds located in 29 states and operated by 42 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on Nov. 2, 2004, Fitch Ratings published a credit analysis report on Omega Healthcare Investors, Inc., providing insight into Fitch's rationale for its ratings of: -- $300 million of outstanding senior unsecured notes 'BB'; -- $168 million of preferred stock 'B'. Fitch said the rating outlook is stable. PASADENA GATEWAY: Wants to Hire Marilee A. Madan as Bankr. Counsel ------------------------------------------------------------------ Pasadena Gateway Venture, Ltd., asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Marilee A. Madan, P.C., as its general bankruptcy counsel. Marilee A. Madan is expected to: a) file appropriate pleadings with the Court, represent the Debtor's interests in any and all hearings related to its bankruptcy case before the Court, and assist the Debtor in determining the property of the Estate and take control of that property; b) provide the Debtor with legal advice with respect to its powers, duties and rights as debtor-in-possession in the continued management and operation of its business; c) negotiate with creditors and parties in interest on matters affecting the Debtor and its estate, and assist in the development and filing of a disclosure statement and plan of reorganization; d) assist in the determination of the extent, validity, and priority of any and all claims asserted against the Debtor's estate; e) prepare on behalf of the Debtor, all applications, answers, orders, reports and any other legal papers which may need to be filed during the pendency of its chapter 11 case; f) review all claims asserted against the Debtors' estate and to object to those claims, as necessary and required; and g) provide all other legal services to the Debtor that are appropriate and necessary in its chapter 11 case. Marilee A. Madan, Esq., is the lead attorney for the Debtor. Ms. Madan discloses that her Firm received a $26,000 retainer. Ms. Madan reports her Firm's professionals bill: Designation Hourly Rate ----------- ----------- Partner $300 Associates $175 - $250 Law Clerks/Paralegals $40 - $90 Marilee A. Madan assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Houston, Texas, Pasadena Gateway Venture, Ltd., filed for chapter 11 protection on April 3, 2005 (Bankr. S.D. Tex. Case No. 05-34900). When the Debtor filed for protection from its creditors, it reported estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. PEABODY ENERGY: Moody's Revises Rating Outlook to Positive ---------------------------------------------------------- Moody's Investor Service affirmed Peabody Energy's Ba3 senior unsecured rating and its Ba2 senior implied rating and changed the outlook to positive from stable. All other ratings were affirmed. The positive outlook reflects Moody's view that Peabody will continue to improve its debt coverage metrics in 2005 as it benefits from continued strong coal markets and a stabilization of its debt. The Ba2 senior implied rating reflects Peabody's diversified low-cost operations, extensive and geographically diversified reserves of high quality coal, strong management, and portfolio of long-term coal supply agreements with a large number of electricity generation customers. However, the rating also reflects the volatile nature of the coal mining business and cost pressures that may constrain Peabody's free cash flow and limit its ability to materially reduce debt. Ratings affirmed are: * Senior unsecured bond rating, Ba3 * Senior implied rating, Ba2 * Senior unsecured issuer rating, Ba3 * Speculative grade liquidity rating, SGL-1 Peabody's strong position across a variety of coal markets, coupled with its overall cost position within the coal industry, should enable it to continue to improve on the debt coverage metrics experienced in 2004. An increase in rating is possible if Peabody demonstrates the ability to consistently generate retained cash flow (cash from operations before changes in working capital and after dividends) to debt in the range of 20 to 25%, and free cash flow to debt in the range of 5 to 10%. The rating could be lowered if the company weakens its leverage and debt protection measurements through debt financed acquisitions or suffers a sustained period of lower coal prices and/or higher operating or regulatory costs. Peabody's ratings have been constrained by Moody's concerns about industry-wide cost trends, which could restrain Peabody's operating cash flow, limit its ability to materially reduce debt, and exacerbate the consequences of its considerable retiree benefit, workers' compensation, and reclamation liabilities, which totaled approximately $1.7 billion at December 31, 2004. While Moody's recognizes that most of these liabilities are long term in nature, they a carry high cash service cost, which totaled approximately $200 million in 2004, exclusive of a $52 million voluntary pension fund contribution. Additionally, operating costs are likely to continue to be pressured by normal reserve degradation and higher input costs such as employee health care, energy and steel. The cost of acquiring Powder River Basin (PRB) reserves by lease has recently increased, further impacting the ability of companies operating in this region to generate sufficient free cash flow to meaningfully reduce debt. Peabody's free cash flow averaged negative $5.5 million per annum over the past 3 years. Moody's rates Peabody's senior unsecured debt one notch below the senior implied rating reflecting the heavy weighting of prior ranking obligations in the capital structure. At December 31, 2004 secured debt and L/C's issued under the secured revolver totaled $794 million, $200 million was utilized under the accounts receivable facility, and the company's annual rentals under equipment lease obligations were $108 million in 2004, equivalent to $864 million of debt by application of an 8x multiple to such rentals. These prior ranking obligations comprise 68% of the total of these obligations plus senior unsecured debt. Peabody Energy's SGL-1 speculative grade liquidity rating reflects the company's very good liquidity and Moody's expectation that the company's cash and operating cash flow will adequately cover interest, capital expenditures, debt amortization and dividends over the next 12 months. At December 31, 2004, Peabody had used $346 million of its $900 million revolving credit facility, solely for letters of credit. Usage is not expected to be constrained by the facility's financial covenants. Peabody Energy has several alternatives for arranging other sources of liquidity. Peabody Energy Corporation, headquartered in St. Louis, Missouri, is the world's largest private-sector coal company with revenues in 2004 of $3.6 billion. RAMP SERIES 2005-RZ1: Moody's Rates $2MM Class M-9 Certs. at Ba1 ---------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by RAMP Series 2005-RZ1 Trust, and ratings ranging from Aa1 to Ba1 to the mezzanine and subordinate certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate mortgage loans acquired by Residential Funding Corporation under its Home Solution Program. The program was established for first-lien mortgage loans with high loan-to-value ratios of up to 107%. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, and excess spread. The credit quality of the loan pool is similar to a typical pool backing RZ transactions. HomeComings Financial Network, Inc., will service the loans, and RFC will act as master servicer. Moody's has assigned Homecomings its servicer quality rating of SQ1 and SQ2 as a primary servicer of prime loans and subprime loans, respectively, and RFC its top servicer quality rating (SQ1) as master servicer. The complete rating actions are: * Class A-1, $81,700,000, rated Aaa * Class A-2, $61,800,000, rated Aaa * Class A-3, $26,136,000, rated Aaa * Class M-1, $6,150,000, rated Aaa * Class M-2, $4,100,000, rated Aa1 * Class M-3, $4,100,000, rated Aa2 * Class M-4, $4,100,000, rated Aa3 * Class M-5, $3,075,000, rated A1 * Class M-6, $2,050,000, rated A2 * Class M-7, $2,050,000, rated A3 * Class M-8, $2,563,000, rated Baa2 * Class M-9, $2,050,000, rated Ba1 RAVELSTON CORP: Ontario Court Appoints RSM Richter as Receiver -------------------------------------------------------------- The Ontario Superior Court of Justice appointed RSM Richter Inc. as receiver of all of The Ravelston Corporation Limited's and Ravelston Management Inc.'s assets (except for certain shares held directly or indirectly by them, including shares of Hollinger Inc. and RMI). The order also provides a stay of proceedings commenced or continued against or in respect of either or both of Ravelston and RMI and any such proceedings currently under way (including Hollinger's lawsuit announced on March 29, 2005 as it pertains to Ravelston and RMI) until May 20, 2005, or such later date as the Court may order. RSM Richter -- http://www.rsmrichter.com/-- is one of the largest independent accounting, business advisory and consulting firms in Canada. Event of Default As a result of the commencement of these proceedings by RMI, an Event of Default has occurred under terms of the indentures governing Hollinger's US$78 million principal amount of 11.875% Senior Secured Notes due 2011 and US$15 million 11.875% Second Priority Secured Notes due 2011. RMI is a guarantor of Hollinger's Notes. With respect to both the Senior Secured Notes and the Second Priority Notes, the relevant trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the relevant Notes have the right to accelerate the maturity of the Notes. Until the Event of Default is remedied or a waiver is provided by holders of the Notes, the terms of the Indentures will prevent Hollinger from honouring retractions of its Series II Preference Shares. Accordingly, Hollinger has concluded that it is not able to complete retractions of any Series II Preference Shares submitted after April 19, 2005 without unduly impairing its liquidity. Therefore, retractions of Hollinger's outstanding Series II Preference Shares submitted after such date are suspended until further notice. Retraction of any shares which are not withdrawn will be completed if and when Hollinger's liquidity position permits. Pending completion of retractions, holders do not become creditors of Hollinger but remain as shareholders. Holders may exercise their right to withdraw their retraction notices at any time. In order to exercise the withdrawal right, holders should contact the Computershare Call Centre - Shareholder Services at 1 (800) 564-6253. Seizes Collateral for Ravelston Debt As reported in the Troubled Company Reporter on Apr. 15, 2005, Hollinger Inc. served formal notice on The Ravelston Corporation Limited to vacate the premises occupied by Ravelston and related companies, including Argus Corporation Limited, in Hollinger's head office building located at 10 Toronto Street, Toronto, not later than May 31, 2005. Hollinger has also taken steps to immediately seize shares held by Ravelston in Hollinger, Argus and other Ravelston-related companies. These shares are part of the collateral for debt in the amount of approximately $15 million owing by Ravelston to Hollinger, which debt is in default. The collateral represents part of the direct and indirect control position held by Ravelston in Hollinger. This action by Hollinger is separate from its recently announced lawsuit against Conrad Black, Ravelston and related parties for $550 million in monetary damages and $86 million reimbursement of amounts owing by Ravelston to Hollinger plus accrued interest and costs. About the Company Hollinger's principal asset is its interest in Hollinger International Inc. which is a newspaper publisher, the assets of which include the Chicago Sun-Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments. Hollinger also owns a portfolio of revenue-producing and other commercial real estate in Canada, including its head office building located at 10 Toronto Street, Toronto, Ontario. REAL MEX: Extends Sr. Secured Debt Exchange Offer Until Apr. 29 --------------------------------------------------------------- Real Mex Restaurants, Inc., extended the expiration date for its previously announced exchange offer relating to its outstanding 10% Senior Secured Notes Due 2010 which commenced on Sept. 28, 2004. The exchange offer, which was initially scheduled to expire on October 27, 2004, has been extended until 5:00 p.m., E.S.T. on April 29, 2005. Holders of Notes previously tendered for exchange shall have the right to withdraw tenders of Notes at any time prior to the expiration of the exchange offer. As of this date, holders of $104,925,000, or approximately 100% of the outstanding principal amount of Notes have tendered their Notes for exchange. As previously announced, the Company has temporarily suspended the use of its exchange offer prospectus. Such suspension shall continue to be in effect until further notice from the Company. About the Company Headquartered in Long Beach, California, Real Mex Restaurants is the largest full-service, casual dining Mexican restaurant chain operator in the United States, with 164 restaurants in California and an additional 35 company-owned restaurants in twelve other states. These include 70 El Torito Restaurants, 69 company-owned Chevys Fresh Mex Restaurants, 38 Acapulco Mexican Restaurants, 6 El Torito Grill Restaurants, 5 company-owned Fuzios Universal Pasta Restaurants, the Las Brisas Restaurant in Laguna Beach, and several regional restaurant concepts such as Who-Song & Larry's, Casa Gallardo, El Paso Cantina, Keystone Grill and GuadalaHARRY's. Real Mex Restaurants is committed to the highest standards and is dedicated to serving the freshest Mexican food with excellent service in a clean, comfortable, and friendly environment. For more information, please visit the company's websites at http://www.eltorito.com/,http://www.chevys.com/or http://www.acapulcorestaurants.com/ * * * As reported in the Troubled Company Reporter on Jan. 14, 2005, Standard & Poor's Ratings Services affirmed its ratings, including the 'B' corporate credit rating, on casual-dining restaurant operator Real Mex Restaurants, Inc. All ratings were removed from CreditWatch. The outlook is stable. The ratings affirmation follows Real Mex's acquisition of Chevys Inc., for $77.9 million, to be funded through a $70 million senior unsecured term loan and cash balances. The acquisition of Chevys, the second-largest casual-dining Mexican restaurant in California, improves the company's market position in California, where its El Torito and Acapulco concepts are the largest and third-largest casual-dining Mexican restaurant chains, respectively. Standard & Poor's believes the acquisition risk is limited because Real Mex is already adept at operating casual-dining Mexican restaurants in California. Moreover, the company could realize cost savings from the consolidation of general and administrative expenses, as well as lower food distribution costs. Pro forma leverage will be high, but will remain about the same as previous levels, with total lease-adjusted debt to EBITDA at about 5.0x. "The ratings reflect Real Mex's participation in the highly competitive restaurant industry, its small size and regional concentration, weak cash flow protection measures, and a highly leveraged capital structure," said Standard & Poor's credit analyst Robert Lichtenstein. The company is a small player in the highly competitive casual-dining sector of the restaurant industry. Although Real Mex has a leading position in California as a casual-dining Mexican restaurant operator, the company maintains a relatively small market share among overall casual-dining chains. Many of its competitors have substantially greater financial and marketing resources, and continue to expand rapidly. Moreover, Real Mex is regionally concentrated, with about 90% of its restaurants in California. RFB CELLULAR: Two Subsidiaries Selling Spectrum Licenses -------------------------------------------------------- Two of RFB Cellular's subsidiaries in California and Massachusetts are selling their spectrum licenses. Alpine-California F L.L.C. and Alpine-Hyannis F L.L.C. ask the U.S. Bankruptcy Court for the Central District of California, for authority to sell their 10-mh spectrum licenses in the 1.9 GHz spectrum band. Alpine-California has a $3.9 million cash offer from Leap Wireless International Inc. for the spectrum license covering Bakersfield, California. Alpine-Hyannis has a $640,000 offer from Verizon Wireless for the spectrum license covering Hyannis, Massachusetts. The Court will convene a sale hearing on May 17, 2005, at 2:00 p.m. Headquartered in Gaylord, Michigan, RFB Celllular Inc., filed for chapter 11 protection on August 5, 2003 (Bankr. C.D. Calif. Case No. 03-12187). Jeffrey N. Pomerantz, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub represents the Debtor. When the Company filed for protection from its creditors, it listed $100 million in assets and debts. RESIDENTIAL ASSET: S&P Pares Ratings on Two Certificate Classes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on two classes from RAMP Series 2002-RS2 Trust: (1) the rating on class M-I-3 (fixed-rate loan group) is lowered to 'B' from 'BB-', and (2) the rating on class M-II-3 (adjustable-rate loan group) is lowered to 'B' from 'BB'. Concurrently, ratings are affirmed on the remaining classes from the same series. RAMP Series 2002-RS2 Trust (Residential Asset Mortgage Products Inc.) is an affiliate of Residential Funding Corp. The lowered ratings reflect: (1) Continued erosion of credit support due to adverse collateral pool performance; (2) Overcollateralization (o/c) that has been reduced to $318,838 (fixed-rate group) and $138,251 (adjustable-rate group); and (3) Serious delinquencies (90-plus days, foreclosure, and REO) for the fixed- and adjustable-rate loan groups of 10.29% and 31.09%, respectively. As of the March 2005 remittance period, cumulative realized losses, as a percentage of original pool balance, totaled 1.35% ($5,223,265) and 3.69% ($2,872,292) for the fixed- and adjustable- rate loan groups, respectively. With respect to the fixed-rate loan group, at least 40% of the cumulative losses have occurred in the last 12 months. Furthermore, due to adverse collateral pool performance of both loan groups, the transaction is unable to benefit from the cross-collateralization of excess interest to cover losses. Credit support for the M-I-3 and M-II-3 classes is provided by excess interest and o/c; all other classes receive additional support from subordination. Current credit enhancement (prior to giving credit to excess spread) for the classes with lowered ratings is as follows: (1) Class M-I-3: 0.42% (2) Class M-II-3: 0.83% In both cases, the current support percentages are below original support levels. Standard & Poor's will continue to closely monitor the performance of the transaction, adjusting the ratings, accordingly. The affirmations reflect sufficient levels of credit support to maintain the current ratings, despite the poor performance of the mortgage loans. The collateral for this transaction consists of fixed- or adjustable-rate, first- or second-lien loans, secured primarily by one- to four- family residential properties. Ratings Lowered RAMP Series 2002-RS2 Trust Mortgage asset-backed pass-thru certs series 2002-RS2 Rating ------ Class To From ----- -- ---- M-I-3 B BB- M-II-3 B BB Ratings Affirmed RAMP Series 2002-RS2 Trust Mortgage asset-backed pass-thru certs series 2002-RS2 Class Rating ----- ------ A-I-4*, A-I-5, A-II AAA M-I-1, M-II-1 AA M-I-2, M-II-2 A *Denotes bond-insured transaction ratings that reflect the financial strength of their respective bond insurer. RICHARDSON ELECTRONICS: Receives Nasdaq Delisting Notice -------------------------------------------------------- Richardson Electronics, Ltd. (Nasdaq: RELL) received a Nasdaq Staff Determination Letter on April 19, 2005, indicating that the Company is subject to potential delisting by April 28, 2005, from The Nasdaq National Market because it is not in compliance with Nasdaq Marketplace Rule 4310(c)(14) as a result of the Company's previously announced inability to timely file its Form 10-Q for the quarter ended February 26, 2005. The Company will request a hearing before a Nasdaq Listing Qualifications Panel to appeal the Nasdaq staff's notification and request continued listing, which will stay the delisting until the appeal has been heard and the panel has rendered its decision. Until a decision is made on the appeal the Company's trading symbol will be "RELLE". As previously announced, the filing of the Company's Form 10-Q for the quarter ended February 26, 2005, has been delayed in order to provide additional time for the Company's current independent auditors to complete a review of certain currency translation adjustments and to reach agreement with our prior auditors regarding their impact on prior periods. The Company is working to resolve these matters and expects to file its required filings as soon as practicable following the completion of this review. These adjustments will not impact the Company's previously reported net cash flows, revenues or operating income. Form 10-Q Filing Delay The Company filed an extension of the Apr. 7, 2005 filing deadline for its quarterly report on Form 10-Q for the period ended Feb. 26, 2005, with the Securities and Exchange Commission in order to correct the accounting treatment relating to certain currency translation adjustments and complete the preparation of its filing. On April 7, 2005, the Company's management, in consultation with the Company's independent accounting firm and the Audit Committee of the Board of Directors, concluded that the Company's previously issued consolidated financial statements for the quarter ended November 27, 2004 and its earnings release for the quarter ending February 26, 2005, should be restated to correct the Company's method of accounting for currency translation adjustments under Financial Accounting Standard No. 52. The Company is finalizing its analysis of the impact on these periods and is continuing to evaluate the accounting correction on prior periods and has not yet determined whether it will need to restate any other prior periods. These adjustments will not impact the Company's previously reported net cash flows, revenues, or operating income. The Company expects to file its quarterly report on Form 10-Q for the period ended February 26, 2005, on or before the 5th calendar day following the prescribed due date and to amend its quarterly report on Form 10-Q for the period ended November 27, 2004. The Company's late filing and restatement will result in a default of the Company's secured revolving credit agreement with respect to the timely delivery of financial statements. The Company is currently discussing with its senior lenders if a waiver is needed under its secured revolving credit facility, relating to the restatement. As a result of the Company's determination to restate its consolidated financial results as discussed above, the financial statements for the quarter ended November 27, 2004, and the earnings release for the quarter ended February 26, 2005, will be corrected accordingly. About Richardson Electronics Richardson Electronics, Ltd., is a global provider of "engineered solutions," serving the RF and wireless communications, industrial power conversion, security and display systems markets. The Company delivers engineered solutions for its customers' needs through product manufacturing, systems integration, prototype design and manufacture, testing and logistics. ROBERT HERRINGTON: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Robert Nolan Herrington P.O. Box 1301 Mont Belview, Texas 77580 Bankruptcy Case No.: 05-20575 Type of Business: The Debtor owns Herrington Equipment Company. Elite Rentals of Louisiana, Ltd., dba Herrington Equipment Company filed for chapter 11 protection on April 22, 2005 (Bankr. S.D. Tex. Case No. 02-20955), and is represented by Jim Evans, Esq., and Harlin C. Womble, Jr., Esq., at Jordan, Hyden, Womble & Culbreth, P.C. Bankruptcy Court records indicate that Elite Rentals confirmed a chapter 11 plan on Sept. 4, 2003, and the case remains open. Chapter 11 Petition Date: April 19, 2005 Court: Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtors' Counsel: Ronald Hornberger, Esq. Plunkett & Gibson Inc. 70 Northeast Loop 410, Suite 1100 San Antonio, Texas 78216 Tel: (210) 734-7092 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtors' 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America, NA Personal Guaranty $1,624,559 300 Louisiana Street Houston, TX 77002 Volvo Commercial Finance Personal Guaranty $606,692 A Division of VFS US LLC 7025 Albert Pick Road, Suite 105 P.O. Box 26131 Greensboro, NC 27402-6131 Volvo Commercial Finance Personal Guaranty $537,047 A Division of VFS US LLC 7025 Albert Pick Road, Suite 105 P.O. Box 26131 Greensboro, NC 27402-6131 Textron Financial Personal Guaranty $518,383 Corporation P.O. Box 2299 Little Rock, AR 72203-2299 Caterpillar Financial Personal Guaranty $393,644 Services Corp. P.O. Box 730681 Dallas, TX 75373-0681 Deutsche Financial Services Personal Guaranty $299,778 Deutsche Financial Group 625 Maryville Centre Drive, Suite 100 St. Louis, MO 63141 Komatsu Financial Limited Personal Guaranty $265,133 Partnership 1333 Butterfield Road, Suite 600 P.O. Box 7049 Downers Grove, IL 60515-7049 Deutsche Financial Services Personal Guaranty $133,762 Deutsche Financial Group 625 Maryville Centre Drive, Suite 100 St. Louis, MO 63141 Citicapital Commercial Personal Guaranty $121,105 Corporation fka Associates Commercial Corporation P.O. Box 868 Addison, TX 75001-0868 Caterpillar Financial Personal Guaranty $115,805 Services Corp. 4975 Preston Park Blvd., Suite 280 Plano, TX 75093 Deere Credit, Inc. Personal Guaranty $250,000 Leasing Department (Estimate) P.O. Box 6600 Johnstown, IA 50131-6600 Deere Credit, Inc. Personal Guaranty $100,000 Golf & Turf Department (Estimate) P.O. Box 6600 Johnstown, IA 50131-6600 Textron Financial Personal Guaranty $100,000 P.O. Box 6687 (Estimate) Providence, RI 02940-6687 South Trust Bank Personal Guaranty $41,143 fka Bayshore National Bank 6810 Garth Road Baytown, TX 77521 Citicapital Commercial Personal Guaranty $13,529 Corporation fka Associates Commercial Corporation P.O. Box 868 Addison, TX 7501-0868 Deutsche Financial Services Personal Guaranty $10,541 Deutsche Financial Group 625 Maryville Centre Drive, Suite 100 St. Louis, MO 63141 RURAL CELLULAR: Won't Declare Quarterly Pref. Stock Dividends ------------------------------------------------------------- Rural Cellular Corporation's (NASDAQ:RCCC) Board of Directors has determined not to declare the quarterly dividend payable on the 11-3/8% Senior Exchangeable Preferred Stock and the 12-1/4% Junior Exchangeable Preferred Stock. These dividends would have been payable in cash on May 15, 2005, to holders of record on May 1, 2005. About the Company Rural Cellular Corporation (NASDAQ:RCCC), based in Alexandria, Minnesota, provides wireless communication services to Midwest, Northeast, South and Northwest markets located in 14 states. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services revised its outlook on Rural Cellular Corp. to negative from stable due to continued high debt leverage and lower-than-anticipated EBITDA for 2005. Ratings on the company, including the 'B-' corporate credit rating, were affirmed. As of Dec. 31, 2004, total debt outstanding was about $1.3 billion; including preferred stock, debt comes to about $1.9 billion. SAN ANTONIO: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: San Antonio Gateway Plaza Apartments, L.C. 2431 Pinn San Antonio, Texas 78227 Bankruptcy Case No.: 05-52078 Type of Business: The Debtor owns and manages apartments in San Antonio. Chapter 11 Petition Date: April 13, 2005 Court: Western District of Texas (San Antonio) Judge: Bankruptcy Judge Leif M. Clark Debtor's Counsel: James Samuel Wilkins, Esq. Willis & Wilkins, LLP 100 West Houston Street, Suite 1275 San Antonio, Texas 78205 Tel: (210) 271-9212 Fax: (210) 271-9389 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The Home Depot Supply $6,279 P.O. Box 509058 San Diego, CA 92150-9058 Unique Staff Leasing Co. $4,655 4538 Centerview San Antonio, TX 78228 Bill J. Gregory $4,205 16500 San Pedro Avenue, Suite 215 San Antonio, TX 78232 Redi Carpet $3,567 P.O. Box 973897 Dallas, TX 79397-3897 Jimeneez, Jorge $2,059 4180 Diversey Converse, TX 78109 Unlimited Parts & Supply $1,502 4946 Center Park Blvd. San Antonio, TX 78218 Surface Specialist $1,424 9090 Green Road Converse, TX 78109 Grande Disposal, Inc. $1,032 P.O. Box 200064 San Antonio, TX 78220 BG Personnel Services $945 P.O. Box 803312 Dallas, TX 75380-3312 ICI Dulux Pain Centers $834 21033 Network Place Chicago, IL 60673-1210 For Rent Magazine $780 75 Remittance Drive, Suite 1711 Chicago, IL 60675-1711 River City Pool Service $755 P.O. Box 27293 San Antonio, TX 78227-0293 Dye Masters of San Antonio, LLC $633 P.O. Box 769272 San Antonio, TX 78245 A&C Cleaning $490 4100 Parkdale, #3611 San Antonio, TX 78229 Alfonso's Lawncare, Inc. $377 3700 Frederickburg Road, Suite 229 San Antonio, TX 78201 Duane K. Killian $300 10307 Crystal Field San Antonio, TX 78250 Texas Mobile Auto Glass, Inc. $208 1978 Austin Highway San Antonio, TX 78218 Rent.Com $199 c/o Viva Group, Inc. Department 1987 Los Angeles, CA 90087-1987 Hope Apartment Locators $199 13620 Northwest Military Highway, Suite C San Antonio, TX 78231 San Antonio Apartment Ass., Inc. $170 6363 De Zavala, Suite 300 San Antonio, TX 78249 SAXON ASSET: Moody's Junks Class BF-1 of Series 2000-4 & 2001-1 --------------------------------------------------------------- Moody's Investors Service has downgraded ten subordinate certificates from five transactions, upgraded three subordinate certificates from three transactions, and confirmed the rating of one subordinate certificate from one transaction, all issued by Saxon Asset Securities Trust in 2000 and 2001. These certificates are secured by fixed rate and adjustable rate home equity loans. The review focused on the bonds' current credit enhancement levels compared to the current projected loss numbers. The underlying collateral of the certificates have been downgraded because they are performing worse than Moody's original expectations. The credit profile of the certificates being upgraded have strengthened due to the build-up of credit enhancement relative to expected future losses in the underlying mortgage pools. The complete rating actions are: Downgrades: * Series 2000-1; Class MF-2, downgraded to Baa1 from A2 * Series 2000-1; Class BF-1, downgraded to B3 from Ba3 * Series 2000-4; Class MF-2, downgraded to Ba2 from Baa2 * Series 2000-4; Class BF-1, downgraded to Ca from B1 * Series 2001-1; Class MF-2, downgraded to Ba2 from Baa2 * Series 2001-1; Class BF-1, downgraded to Ca from B2 * Series 2001-2; Class M-2, downgraded to Baa1 from A2 * Series 2001-2; Class B-1, downgraded to Ba2 from Baa2 * Series 2001-3; Class M-2, downgraded to Baa1 from A2 * Series 2001-3; Class B, downgraded to Ba1 from Baa2 Upgrades: * Series 2000-1; Class MV-2, upgraded to Aaa from Aa2 * Series 2000-4; Class MV-2, upgraded to Aaa from Aa2 * Series 2001-1; Class MV-2, upgraded to Aaa from Aa3 Confirmed: * Series 2001-2; Class M-1, current rating Aa2 confirmed SBA COMMUNICATIONS: Debt Outstanding Cues S&P to Watch Junk Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings for four wireless tower companies: (1) SpectraSite Inc. ('B+' corporate credit rating), (2) Crown Castle International Corp. ('B'), (3) AAT Communications Corp. ('B-'), and (4) SBA Communications Corp. ('CCC+'), as well as related entities -- on CreditWatch with positive implications. These ratings join those for American Tower Corp. (B-/Watch Pos/--), which were placed on CreditWatch with positive implications Jan. 14, 2005. These companies collectively have approximately $7 billion of debt outstanding. These CreditWatch listings relate to an industry review being conducted by Standard & Poor's of the tower leasing business and the position of the companies within this industry. "Strengthening business prospects could support higher ratings for the companies in this sector," said Standard & Poor's credit analyst Catherine Cosentino. "The wireless carriers, particularly the large national players, are expected to continue to increase their geographic footprint, coverage, and capacity to support increased minutes of use both for voice and expanding broadband services. Tower companies will benefit from these trends, which should continue to bolster increased tower co-location." Reflecting the high operating leverage in this industry, gross profit margins are very high for companies in this sector and EBITDA margins tend to rapidly improve as additional tenants are added to existing towers. For 2004, gross profit margins for the tower leasing business were in excess of 60% for the group, and EBITDA margins ranged from about 30%-60%, with the lower end attributable to the effects of operations in the less-profitable site development business of SBA Communications Corp. While SBA has significantly higher leverage than its peers, at about 14x for 2004 on an operating lease-adjusted basis, its business profile may support a higher corporate credit rating than the current 'CCC+' (depending on Standard & Poor's assessment of its liquidity over the next few years) given its ongoing growth in lease rental revenues. As part of this review, Standard & Poor's will be evaluating its ratings guidelines for the sector to determine if the industry supports less stringent financial guidelines based on overall business characteristics. If we conclude that the business risk of the sector is stronger than that which we previously incorporated in our guidelines, we will provide new thresholds when the CreditWatch listings are resolved. The qualitative measures may also be revised to introduce metrics more representative of the current state of the industry, including such possible measures as revenue per tower and debt to revenue. The recent change in operating lease accounting adopted by the tower operators does not affect the business prospects or cash flow prospects for the industry. It has had the impact of increasing the size of reported minimum cash lease commitments for most of the tower companies. However, the increase in such minimum recognized commitments is also indicative of the high rate of contract renewal in this business, which is not expected to abate. Standard & Poor's will meet with management at the tower companies to discuss their financial policies, including stock repurchase and dividend plans, as well as the possibility for additional acquisitions in resolving the CreditWatch listings. SCOTIA PACIFIC: Moody's Slices Rating on $463.35MM Notes to B1 -------------------------------------------------------------- Moody's lowered the ratings on the three outstanding classes of Timber Collateralized Notes issued by Scotia Pacific Company LLC. The rating action reflects concern over continued weak cash flow from timber operations due to recent regulatory reversals at the state level and financial difficulties at The Pacific Lumber Company -- PALCO, the parent of Scotia Pacific and the servicer in the transaction. These problems have been ongoing for a number of years, due to changes in regulations that govern timber harvesting, changes in the regulatory bodies that oversee environmental and timber matters, and pending court actions. Moody's believes the increased uncertainty warrants a rating action at this time. The complete rating actions are: -- Scotia Pacific Company LLC Timber Collateralized Notes, Final Maturity July 2028 * $160.700 million Class A-1 Notes Scheduled Maturity January 2007, rating lowered to Ba3, on review for possible downgrade, from a rating of Baa2 * $243.200 million Class A-2 Notes, Scheduled Maturity January 2014, rating lowered to B1, on review for possible downgrade, from a rating of Baa3 * $463.348 million Class A3 Notes, Scheduled Maturity January 2014, rating lowered to B1, on review for possible downgrade, from a rating of Ba1 All three ratings will remain on review for possible downgrade. In particular, Moody's notes that there is increased risk that there will be insufficient cash to make full payment of interest on the July payment date. If this occurs and an event of default is declared, repayment will be made on a pari passu, pro rata basis to all investors based on their principal amount outstanding. Currently repayment is on a sequential basis, with Class A-1 principal repaid before Class A-2 principal, and Class A-2 principal repaid prior to Class A-3 principal. The primary asset underlying the transaction, over 200,000 acres of timber property in northern California, is unique and provides investors with considerable protection. Unlike other structured finance assets, timber that is not harvested today remains available to be harvested and provide cash flow at a later time. In addition, Scotia Pacific and its parent, The Pacific Lumber Company, are required to manage the property on a sustained yield basis. This means that if harvesting occurs at maximum permitted levels, on average, timber growth tends to replace the harvested amount at a rate that permits harvest levels to be maintained. Scotia Pacific Company LLC is a wholly owned subsidiary of The Pacific Lumber Company -- PALCO. It is structured to be a bankruptcy-remote entity and its assets are segregated from those of PALCO and PALCO's parent corporations. Scotia Pacific's principal asset consists of timber property and an associated database integral to managing the property. PALCO is a 140-year-old lumber and timber products company located in Scotia, California. In addition to owning Scotia Pacific, PALCO is the primary purchaser of the timber harvested by Scotia Pacific. PALCO is a wholly owned subsidiary of Houston-based Maxxam Inc. Neither PALCO nor Maxxam are currently rated by Moody's. SECURITY CAPITAL: Ernst & Young Won't Seek Re-Appointment --------------------------------------------------------- Ernst & Young LLP, Security Capital Corporation's (AMEX: SCC) principal accountant, notified the Chairman of the Audit Committee of the Company's Board of Directors on April 15, 2005, that it declines to stand for re-appointment as the Company's principal accountant after completion of the current annual audit of the Company's financial statements for the fiscal year ended Dec. 31, 2004. The Audit Committee has commenced the process of selecting an independent registered public accounting firm to replace Ernst & Young as the Company's principal accountant. The Company's two reportable segments are employer cost containment and health services, and educational services. The employer cost containment and health services segment consists of WC Holdings, Inc., which provides services to employers and their employees primarily relating to industrial health and safety, industrial medical care, workers' compensation insurance and the direct and indirect costs associated therewith. The educational segment consists of Primrose Holdings, Inc., which is engaged in the franchising of educational child care centers, with related activities in real estate consulting and site selection services in the Southeast and Southwest. Fourth Quarter Results & Form 10-K Filing Delay Security Capital reported its operating results for the quarter and year ended December 31, 2004, and that it was not yet in a position to file its Annual Report on Form 10-K for the year ended December 31, 2004. The filing of the Company's Form 10-Q for the quarter ended September 30, 2004, was delayed as a result of the Company's previously announced internal investigation. The investigation was completed, and the Third Quarter Form 10-Q was filed on March 11, 2005. As a result of the delayed filing of the Third Quarter Form 10-Q, the Company needs additional time to complete its 2004 Form 10-K. The Company said it is working diligently and hopes to be in a position to file the 2004 Form 10-K by April 29, 2005. The Company estimates that, for the quarter ended December 31, 2004, income from continuing operations will be approximately $1,600,000 compared to $1,652,000 for the quarter ended Dec. 31, 2003. The Company also estimates that basic and diluted earnings per common share from continuing operations will be $0.25 and $0.22, respectively, for the quarter ended December 31, 2004, compared to basic and diluted earnings per common share from continuing operations of $0.24 and $0.22, respectively, for the quarter ended December 31, 2003. The Company further estimates that income available to common stockholders for the quarter ended December 31, 2004, will be approximately $2,350,000 compared to $1,296,000 for the quarter ended December 31, 2003. The Company also estimates that basic and diluted earnings per common share will be $0.37 and $0.34, respectively, for the quarter ended December 31, 2004 compared to basic and diluted earnings per common share of $0.20 and $0.18, respectively, for the quarter ended December 31, 2003. The Company estimates that, for the year ended December 31, 2004, income from continuing operations will be approximately $5,300,000, compared to $5,352,000 for the year ended December 31, 2003. The Company also estimates that basic and diluted earnings per common share from continuing operations will be $0.62 and $0.54, respectively, for the year ended December 31, 2004, compared to basic and diluted earnings per common share from continuing operations of $0.76 and $0.69, respectively, for the year ended December 31, 2003. The Company further estimates that income available to common stockholders for the year ended December 31, 2004 will be approximately $2,000,000 compared to $2,926,000 for the year ended December 31, 2003. The Company also estimates that basic and diluted earnings per common share will be $0.31 and $0.24, respectively, compared to basic and diluted earnings per common share of $0.45 and $0.38, respectively, for the year ended December 31, 2003. For the year ended December 31, 2004, income from continuing operations has been reduced by $754,000 for additional accretion relating to the redemption of all the Company's zero coupon convertible preferred stock. Additionally, income from continuing operations included expenses of $200,000 and $600,000 for the quarter and year ended December 31, 2004, respectively, associated with the Company's Special Committee's exploration of strategic alternatives and $900,000 for the quarter and year ended December 31, 2004, associated with the Company's previously announced internal investigation. Delisting Notice As a result of the Company's failure to timely file the 2004 Form 10-K, as required by Sections 134 and 1101 of the American Stock Exchange Company Guide, the Company may no longer be in compliance with the continued listing requirements of the AMEX and, pursuant Section 1003(d) of the Company Guide, such failure to timely file the 2004 Form 10-K may be deemed a material violation of the Company's listing agreement with AMEX. On April 14, 2005, the Company notified the AMEX Listing Qualifications Staff of such possible noncompliance. The Company is in discussions with the Staff regarding this matter. About the Company Security Capital Corporation operates as a holding company and participates in the management of its subsidiaries, WC Holdings, Primrose Holdings Inc. and Pumpkin Masters Holdings Inc. WC is an 80%-owned subsidiary that provides cost-containment services relative to direct and indirect costs of corporations and their employees primarily relating to industrial health and safety, industrial medical care and workers' compensation insurance. WC's activities are primarily centered in California, Ohio, Virginia, Maryland and, to a lesser extent, in other Middle Atlantic states, Indiana and Washington. Primrose is a 98.5%- owned subsidiary involved in the franchising of educational childcare centers. Primrose schools are located throughout the United States, except in the Northeast and Northwest. Pumpkin is a wholly owned subsidiary engaged in the business of designing and distributing Halloween-oriented pumpkin carving kits and related accessories. SECURITIZED ASSET: Moody's Rates $13.19MM Class B-4 Certs. at Ba1 ----------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by Securitized Asset Backed Receivables LLC Trust 2005-OP1, and ratings ranging from Aa1 to Ba1 to the mezzanine and subordinate certificates in the deal. The securitization is backed by adjustable-rate (74%) and fixed-rate (26%) subprime mortgage loans purchased from Option One Mortgage Corporation. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, and excess spread. The credit quality of the loan pool is in line with the average loan pool backing recent subprime securitizations. Option One Mortgage Corporation will service the loans. Moody's has assigned Option One its top servicer quality rating as a primary servicer of subprime loans. The complete rating actions are: * Class A-1A, $639,979,000, Senior P&I, Variable, rated Aaa * Class A-1B, $159,995,000, Senior P&I, Variable, rated Aaa * Class A-2A, $127,428,000, Senior P&I, Variable, rated Aaa * Class A-2B, $64,404,000, Senior P&I, Variable, rated Aaa * Class A-2C, $50,357,000, Senior P&I, Variable, rated Aaa * Class M-1, $42,214,000, Mezzanine P&I, Variable, rated Aa1 * Class M-2, $67,938,000, Mezzanine P&I, Variable, rated Aa2 * Class M-3, $66,619,000, Mezzanine P&I, Variable, rated A2 * Class M-4, $18,469,000, Mezzanine P&I, Variable, rated A3 * Class B-1, $13,852,000, Subordinate P&I, Variable, rated Baa1 * Class B-2, $11,213,000, Subordinate P&I, Variable, rated Baa2 * Class B-3, $9,894,000, Subordinate P&I, Variable, rated Baa3 * Class B-4, $13,192,000, Subordinate P&I, Variable, rated Ba1 Class A-1A, class A-1B, and class B-4 have been sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under rule 144A. SEMINIS VEGETABLE: Moody's Cancels Ratings After Monsanto Buy-Out ----------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings for Seminis Vegetable Seeds, Inc. Seminis was acquired on March 23, 2005 by Monsanto Company (Baa1). Monsanto has effectively eliminated the majority of Seminis' rated debt and will not be providing guarantees on any small amounts of debt that remain. In addition, Monsanto will no longer be providing audited financials on Seminis such that there will be insufficient information to assess effectively the creditworthiness of the issuer. Ratings withdrawn are: * $75 million senior secured revolver, maturing 9/08 - Ba3, * $90 million senior secured term loan, maturing 9/09 - Ba3, * $340 million 10.25% senior subordinated notes, due 2013 - B3, * Senior implied - B1, * Unsecured issuer rating - B2. Seminis Vegetable Seeds, Inc., now a subsidiary of Monsanto Company, is developer, producer and marketer of vegetable and fruit seeds with sales in more than 150 countries. Seminis reported FY04 (ending 9/30/04) revenue of $526 million. SILICON GRAPHICS: Poor Performance Prompts S&P to Junk Rating ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Mountain View, California-based Silicon Graphics, Inc. (SGI), and revised its outlook to negative from developing. The outlook revision reflects weak revenues and operating performance in the March 2005 quarter, and limited liquidity. "The ratings on Silicon Graphics reflect a leveraged financial profile, declining annual revenues, and negative free operating cash flow. While SGI has a good technology position in high-end computing and graphics solutions, the company has been struggling to establish revenue stability and profitability in the highly competitive technical workstation, server and storage markets," said Standard & Poor's credit analyst Martha Toll-Reed. The company's efforts have been hampered by reduced growth rates in information technology spending, particularly for high-end equipment, and a highly competitive industry environment. SGI had revenues of $159 million in the quarter ended March 25, 2005, down 25% from the prior year period. Although the company has continued to implement cost-reduction actions, EBITDA levels have been volatile, with an EBITDA loss (before restructuring charges) of about $15 million in the March 2005 quarter, compared to positive EBITDA of $18 million in the seasonally stronger December 2004 quarter. Given weak profitability levels, leverage remains high and debt protection metrics are weak. SOLECTRON CORP: Calls for Redemption of 9.625% Senior Notes ----------------------------------------------------------- Solectron Corporation (NYSE:SLR) has called for redemption on May 20, 2005, all of its 9.625 percent senior notes due 2009. There is $500 million aggregate principal amount of the notes outstanding. The notes will be redeemed at a total redemption price equal to the greater of: (1) 104.813 percent of the principal amount of the notes, plus accrued and unpaid interest, and (2) a make-whole premium on the notes, plus, to the extent not included in the make-whole premium, accrued and unpaid interest to, but not including, the date of redemption. Under the terms of the indenture governing the notes, the make- whole premium with respect to the notes is the sum of the present values of the remaining scheduled payments of interest, principal and premium thereon as if the notes were redeemed on Feb. 15, 2006, discounted to the date of redemption on a semiannual basis at the treasury rate plus 50 basis points. All notes will be automatically redeemed on May 20, 2005, after which interest will cease to accrue. The company has reported cash flow from operations in the six months ended Feb. 25, 2005, of approximately $477 million and currently has a total cash balance of approximately $1.96 billion. The company is applying some of its liquidity to the redemption in order to eliminate the interest expense of the notes. A notice of redemption and a letter of transmittal (which may be used to surrender notes for redemption) are being mailed to all registered holders of the notes. Copies of the notice of redemption and the letter of transmittal may be obtained from the conversion and redemption agent, U.S. Bank, National Association, by calling Paula Oswald at 213-615-6043. Solectron Corporation -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, California, and had sales from continuing operations of $11.64 billion in fiscal 2004. * * * As reported in the Troubled Company Reporter on Jan. 13, 2005, Fitch Ratings affirmed Solectron Corporation's debt ratings: -- 'BB-' senior unsecured debt; -- 'BB+' senior secured bank credit facility; -- 'B' subordinated debt. Fitch says the rating outlook is stable. Approximately $1.2 billion of debt is affected by Fitch's action. SPECTRASITE INC.: Industry Review Cues S&P to Watch Low-B Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings for four wireless tower companies: (1) SpectraSite Inc. ('B+' corporate credit rating), (2) Crown Castle International Corp. ('B'), (3) AAT Communications Corp. ('B-'), and (4) SBA Communications Corp. ('CCC+'), as well as related entities -- on CreditWatch with positive implications. These ratings join those for American Tower Corp. (B-/Watch Pos/--), which were placed on CreditWatch with positive implications Jan. 14, 2005. These companies collectively have approximately $7 billion of debt outstanding. These CreditWatch listings relate to an industry review being conducted by Standard & Poor's of the tower leasing business and the position of the companies within this industry. "Strengthening business prospects could support higher ratings for the companies in this sector," said Standard & Poor's credit analyst Catherine Cosentino. "The wireless carriers, particularly the large national players, are expected to continue to increase their geographic footprint, coverage, and capacity to support increased minutes of use both for voice and expanding broadband services. Tower companies will benefit from these trends, which should continue to bolster increased tower co-location." Reflecting the high operating leverage in this industry, gross profit margins are very high for companies in this sector and EBITDA margins tend to rapidly improve as additional tenants are added to existing towers. For 2004, gross profit margins for the tower leasing business were in excess of 60% for the group, and EBITDA margins ranged from about 30%-60%, with the lower end attributable to the effects of operations in the less-profitable site development business of SBA Communications Corp. While SBA has significantly higher leverage than its peers, at about 14x for 2004 on an operating lease-adjusted basis, its business profile may support a higher corporate credit rating than the current 'CCC+' (depending on Standard & Poor's assessment of its liquidity over the next few years) given its ongoing growth in lease rental revenues. As part of this review, Standard & Poor's will be evaluating its ratings guidelines for the sector to determine if the industry supports less stringent financial guidelines based on overall business characteristics. If we conclude that the business risk of the sector is stronger than that which we previously incorporated in our guidelines, we will provide new thresholds when the CreditWatch listings are resolved. The qualitative measures may also be revised to introduce metrics more representative of the current state of the industry, including such possible measures as revenue per tower and debt to revenue. The recent change in operating lease accounting adopted by the tower operators does not affect the business prospects or cash flow prospects for the industry. It has had the impact of increasing the size of reported minimum cash lease commitments for most of the tower companies. However, the increase in such minimum recognized commitments is also indicative of the high rate of contract renewal in this business, which is not expected to abate. Standard & Poor's will meet with management at the tower companies to discuss their financial policies, including stock repurchase and dividend plans, as well as the possibility for additional acquisitions in resolving the CreditWatch listings. STRUTHERS INDUSTRIES: Sells Assets for Approximately $6 Million --------------------------------------------------------------- As previously reported, Struthers Industries Inc. asked the U.S. Bankruptcy Court for the Southern District of Mississippi for authority to sell its assets after it failed to recover under its confirmed plan of reorganization. The Company opted to sell its assets to maximize creditor recoveries. An auction to sell the company's assets was held on April 20, 2005. There were 35 qualified bids submitted. Bidding Results * Michael Fox International, Inc., submitted the highest bid for Struthers' machinery and equipment at $2,475,000. * Struthers' beachfront property located in Bay St. Louis, Mississippi fetched a $1.3 million bid from James MacPhaille. * Struthers' two items of intellectual property: -- one sold for $500,000 to Thermal Engineering International, Inc., and -- the other one sold for $175,000 to Thermax, Ltd. * The combined IP resulted in the winning bid of $1.1 million from TEI. * The Creosote Road property was sold at $675,000 to Lance Densing. * The 34th Street property was sold to certain prepetition lenders for $300,000. * Accounts receivable sold for $125,000 to Libra Holdings. * Struthers Industries as a going concern sold for $2.1 million to TEI. The Honorable Edward R. Gaines approved the sale transactions to the respective winning bidders. The Court also approved the Company's request to change its name to SII Liquidating, Inc., after the sale transactions close, because the company sold its name and has no right to use it post- closing. Equity Partners, Inc., the Company's broker, will receive a $301,000 commission for orchestrating these asset sales. Stuthers Industries, Inc. -- http://www.struthersind.com/-- designs and fabricates heat transfer equipment including shell and tube heat exchangers, Feedwater heaters and waste heat boilers. The company filed for chapter 11 protection on Mar. 9, 1998 (Bankr. N.D. Okla. Case No. 98-00882). Randall S. Pickard, Esq., in Tulsa, Oklahoma, represents the Debtor. When it filed for bankruptcy, it listed $155.5 million in assets and $196.9 million in debts. SYNBIOTICS CORP: Proposing 1-for-2,000 Reverse Split to Go Private ------------------------------------------------------------------ Synbiotics Corporation (Pink Sheets:SBIO) will seek shareholder approval for Synbiotics to "go private." Specifically, Synbiotics is proposing a 1-for-2,000 reverse split of its common stock, with a payment in lieu of issuing fractional shares, followed by a 2,000-for-1 forward split of its common stock. The cash payment in lieu of fractional shares will be at the rate of $0.13 per pre- reverse split share traceable to the fractional shares. The purpose of the proposal is to reduce the number of Synbiotics' shareholders of record to below 300. This, in turn, will enable Synbiotics under the applicable legal standards to elect to deregister its securities under the Securities Exchange Act of 1934, thereby "going private." Synbiotics would deregister as soon as possible, in order to: (i) eliminate the costs associated with preparing and filing documents under the 1934 Act with the U.S. Securities and Exchange Commission; (ii) eliminate or reduce the costs and other burdens associated with being a 1934 Act registrant, including the costs of complying with Section 404 of the Sarbanes- Oxley Act of 2002 as to internal control over financial reporting; (iii) avoid the requirement of regular mandatory disclosure of financial information and management analyses, to the public but also to our competitors and commercial counterparties, even when such disclosure would be adverse to a Synbiotics objective; (iv) reduce the costs of administering shareholder accounts and responding to shareholder requests; (v) provide liquidity to shareholders holding less than 2,000 pre-reverse split shares of common stock; and (vi) provide greater flexibility in the management and governance of Synbiotics. The cost savings associated with "going private" would be, Synbiotics believes, a minimum of $245,000 in the first full year alone. In order to finance the cash payment in lieu of fractional shares, Synbiotics has entered into an agreement to sell 180 newly issued and unregistered shares of Series C preferred stock to Redwood Holdings, LLC for $180,000 cash. Redwood Holdings, LLC, is an affiliate of Synbiotics' controlling shareholder, Redwood West Coast, LLC, and its directors Thomas A. Donelan and Christopher P. Hendy. Any such sale of Series C preferred stock is contingent upon the shareholder approval of the proposed transaction. This equity investment to maintain cash levels is required by Synbiotics' lender Comerica Bank as a condition to its waiver of Synbiotics' covenant not to repurchase common stock. About the Company Synbiotics Corporation -- http://www.synbiotics.com/-- develops, manufactures and markets veterinary diagnostics, instrumentation and related products for the companion animal, large animal and poultry markets worldwide. Headquartered in San Diego, California, Synbiotics manufactures and distributes its products through its operations in San Diego, Calif., and Lyon, France. * * * Going Concern Doubt After reviewing Synbiotics Corporation's 2004 financial statements, LEVITZ, ZACKS & CICERIC, says it has substantial doubt about the company's ability to continue as a going concern. The auditing firm points to the Company's $46,113,000 accumulated deficit, the fact that $1,000,000 of contractual obligations are coming due in July and another $1,500,000 contractual obligation, to the same party, comes due in July 2006. Synbiotics has told the auditing firm that it doesn't believe its cash position will be sufficient to fund its operations and service its debt for the next twelve months if it also pays the $1,000,000 due in July 2005. SYRATECH CORP: Creditors Committee Taps Bowditch as Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors in Syratech Corporation and its debtor-affiliates' chapter 11 cases asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for authority to hire Bowditch & Dewey, LLP, as its counsel, nunc pro tunc to February 25, 2005. Bowditch & Dewey will: a) advise the Committee on its rights, duties and responsibilities in these cases; b) assist the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, and any other matter relevant to these cases; c) evaluate the Debtor's plan of reorganization; d) prepare pleadings, applications and objections as may be necessary in the furtherance of the Committee's interests and objectives; e) assist the Committee in considering the appointment of a trustee or examiner, as and if appropriate; f) consult with the Debtors, their counsel and other professionals retained in this case and the United States Trustee concerning the administration of the estate; g) represent the Committee in hearings and other judicial proceedings; and h) perform other legal services as may be required and are deemed to be in the interest of the Committee and the unsecured creditors in accordance with those powers and duties set forth in the Bankruptcy Code. The Debtor will pay Bowditch & Dewey for the professional services it will provide the Committee based on these hourly rates: Designation Rates ----------- ----- Partners $235-500 Associates $150-220 Legal Assistants & 75-125 George W. Tetler III, Esq., and Mark W. Powers, Esq., are the attorneys expected to be principally involved in this case. Mr. Tetler bills $395 per hour and Mr. Powers bills $275 per hour. To the best of the Committee's knowledge, Bowditch & Dewey is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Boston, Massachusetts, Syratech Corporation -- http://www.syratech.com/-- manufactures, markets, imports and sells tabletop giftware and home decor products. The Debtor, along with its affiliates, filed for chapter 11 protection on Feb. 16, 2005 (Bankr. D. Mass. Case No. 05-11062). Andrew M. Troop, Esq. Arthur R. Cormier, Jr., Esq., Christopher R. Mirick, Esq., at Weil, Gotshal & Manges LLPWhen the Debtors filed for protection from their creditors, they listed $86,845,512 in total assets and $251,387,015 in total debts. TEXAS STATE: Moody's Slices Rating on Subordinate Bonds to B3 ------------------------------------------------------------- Moody Investors Service has downgraded the rating of Texas State Affordable Housing Corporation Multifamily Housing Revenue Bonds (Housing Initiatives Corporation - Arborstone/Baybrook/Crescent Oaks Development) Senior Series 2001A&B to Ba3 from Baa3 and Subordinate Series 2001C to B3 from Ba3. The outlook on the ratings remain negative. The bonds remain on the watchlist. The underlying rating downgrades reflects a lower then anticipated rental revenue stream, as evidenced by a current debt service coverage ratio of below 1x coverage on the senior and subordinate bonds as determined from a combination of monthly unaudited financial statements as well as annualized projections on the properties. This marks a rapid and significant decline from two quarters ago and an even greater decline from projected senior and subordinate coverage levels of 1.40x and 1.25x respectively. The ratings have been downgraded due to the continued weakened financial performance of the properties compared with projected debt service coverage levels. The bonds are secured by the revenues from three cross collateralized properties, Arborstone Apartments, Baybrook Apartments and Crescent Oaks Apartments, as well as by funds and investments pledged to the trustee under the indenture as security for the bonds. Vacancy and dwelling adjustments reflecting concessions, loss to lease, non-revenue units, delinquencies and past due collections have increased significantly with the Arborstone and Baybrook properties. While occupancy has slowly trickled up to a weighted average of 88% as of April 11, 2005 stabilization has not yet been achieved and continued volatility in occupancy rates are anticipated. In addition to the lower than projected occupancy, Arborstone had recently suffered damage attributable to a fire. The damage had left one building of eight units uninhabitable. Insurance proceeds and borrower infusions have since restored the building where tenants are now renting. These events as well as high vacancies contribute to the volatility in occupancy. Arborstone together with Baybrook account for 76% of the apartment pool (1,312 units). Occupancy levels for Arbostone has hovered around the low 80 percentiles for the past year (currently 88%), while Baybrook has declined to a current 84%. Crescent Oaks (429 units) continues to exhibit strong and stabilized occupancy (96% as of 4/11/05). As of 4/11/05 occupancy levels for Arborstone, Baybrook and Crescent Oaks were 88%, 84% and 96% respectively. In an effort to reach higher occupancy and underwriittn rent levels, HIC has proactively implemented changes in property managers. Asset Plus who is property manager for Crescent Oaks is now also managing Baybrook. Myan management has been contracted to manage Arborstone. The erosion of debt service coverage levels is a direct result of a decline in rental revenues as exhibited in increased vacancies. While the Arborstone/Baybrook/Crescent Oaks Apartment Pool has continued to generate rental revenues suffice to pay debt service, they have been experiencing some softness in the market. As previously reported, the Baybrook property in Webster, Texas and the Arborstone property in Dallas have been most affected. Webster has experienced some softness in the market as reflected in the performance of the Baybrook property. Baybrook accounts for 776 units of the 1741 unit apartment pool (approximately 44%). Webster has recently suffered job loss due to closures of large retail establishments such as Walmart and Best Buy. The affect of these closures has trickled down to the rental market of Webster, as evidenced by the fluctuating occupancy of the Baybrook Apartments project. The unemployment rate of Webster and Dallas continue to have a negative impact on stabilized occupancy and collected rents. Strong marketing and concessions are in place and occupancy has already incrementally increased. Utility expenses and insurance premiums in particular, continue to rise, exerting downward pressure on the net operating income on all three properties. While high insurance premiums continue to be the norm, Asset Plus, Myan and KPE Development management companies continue to shop for competitive rates in this market. Credit Strengths: * Senior and Subordinate Debt Service Reserve Funds are fully funded * Overall occupancy is slowly rising. As stabilization nears, rental revenues should increase net operating income * The project has assumed new property managers and a trustee, both specializing in distressed securities Credit Challenges: * Property needs to increase occupancy and reach stabilization * Low rates continue to convert renters to homeowners, reducing the supply of prospective tenants * Dallas and Webster continue to suffer job loss translating to higher vacancy rates of their respective submarkets Recent Developments/Results: Fire damage suffered by Arborstone Apartments in October of 2004 has been fully restored and is now being rented, slowly increasing occupancy. In connection with increased occupancy, new property managers have been in place. Asset Plus and Myan management have expertise in distressed projects and are focusing efforts on marketing the properties. US Bank has assumed the role of trustee. The borrower has contributed funds to the marketing and renovation of the properties to further attract tenants. Outlook The current outlook is negative for the Senior and Subordinate Bonds and the bonds remain on watch. This reflects the soft market environment of the properties, debt service coverage levels continuing to trend negatively and prolonged vacancies in the pooled apartment units. TFM S.A.: Fitch Puts B+ Rating on $460 Mil. 9.375% Senior Notes --------------------------------------------------------------- Fitch Ratings has assigned a 'B+' foreign currency rating to the US$460 million 9.375% senior notes due 2012 issued by TFM, S.A. de C.V. Fitch has also affirmed the 'B+' foreign and local currency senior unsecured ratings of TFM. The Rating Outlook is Stable. The foreign currency rating also applies to TFM's US$150 million senior notes due 2007 and the company's US$180 million senior notes due 2012. The proceeds from this new issuance will be used primarily to repurchase TFM's US$443 million 11.75% senior notes due 2009 that are also rated 'B+'. TFM's 'B+' ratings reflect the company's challenging operating environment, high leverage, flat earnings, and tight liquidity. Over the last two years, TFM has operated in a challenging environment characterized by higher fuel costs, a depreciating Mexican peso versus the U.S. dollar and a general shift in manufacturing to China from several countries, including Mexico. This latter factor has resulted in a decline in the shipment of cargo from some sectors served by the company, including automotive. In 2004, TFM's revenues of approximately US$700 million were flat vis-a-vis those of 2003. TFM remains highly levered. As of Dec. 31, 2004, TFM had about US$1.4 billion in total debt, consisting of US$773 million in unsecured bonds, a US$133 million term loan and an estimated US$504 million of off-balance debt associated with lease obligations. TFM's EBITDAR, which is defined as EBITDA plus the company's annual locomotive and railcar lease payments, was US$277 million in 2004 or about the same level as in 2003. The ratio of total debt-to-EBITDAR has remained at about 5.0 times throughout the last several years. EBITDAR covered fixed expenses, defined as interest expense plus lease payments, by about 1.7x in 2004. TFM's liquidity is poor with only US$14.2 million of cash as of Dec. 31, 2004. Fitch believes, that neither the completed transaction to sell Grupo TMM's indirect stake in TFM to Kansas City Southern -- KCS -- nor the resolution of TFM's value added tax claim is likely to provide any cash for debt reduction at TFM. Despite the continued favorable court rulings for TFM's claim to an estimated US$1 billion value added tax refund from the Mexican government, a considerable amount of doubt exists as to whether any portion of TFM's VAT refund will be in the form of cash. The Mexican government holds a PUT option for its 20% equity interest in TFM. Grupo TFM's shareholder is obligated to acquire the shares that the government holds in TFM if they are not purchased by the public. In one scenario, the government could put its 20% of TFM's shares to Grupo TFM, and Grupo TFM could acquire the Mexican government's 20% stake in TFM. Because the government has lost most of the steps in TFM's VAT negotiation process, it could effectively offset the VAT refund it owes to TFM with the proceeds of the sale of TFM in a cashless transaction as proposed by Grupo TFM's shareholders. Fitch views the transaction completed on April 1, 2005 in which Grupo TMM sold its 51% voting interest in Grupo TFM to KCS as being mildly positive for TFM. The transaction replaced TFM's financially distressed controlling shareholder, Grupo TMM, with KCS, a U.S. entity that has a stronger financial profile but one that is also highly leveraged. In addition, TFM will likely be able to continue refinancing and borrowing at a lower cost under the control of KCS which is a somewhat stronger financially vis-a- vis Grupo TMM. Despite becoming the controlling stockholder of TFM, KCS continues to be a small railway and about two-thirds of its future operating earnings will be generated by the Mexican operations. TFM holds the concession to operate Mexico's northeastern rail lines and is Mexico's largest railroad by volume. The company transports more than 40% of Mexican rail volume and owns more than 2,600 miles of rail track. TFM is the only Mexican carrier to Laredo, Texas, the largest freight exchange point between the United States and Mexico. TFM also serves three of Mexico's four primary seaports and approximately 80% of the company's revenue is related to international freight. In 2004, TFM's revenues were generated from the following main industries: * agro-industrial (21%), * cement, * metals and * minerals (20%), * chemical and petrochemical (18%), * automotive (17%), * manufacturing and industrial (11%) and * intermodal (7%). TFM is an operating company 80% owned by Grupo TFM and 20% owned by the Mexican government. KCS now owns all the common stock of Grupo TFM, a holding company, and controls all of the shares of TFM that carry full voting rights. TFM S.A.: Raises $386 Million in 11.75% Sr. Discount Debt Offer --------------------------------------------------------------- TFM, S.A. de C.V., a subsidiary of Kansas City Southern (NYSE:KSU), accepted for purchase tenders equal to approximately $386.0 million principal amount of its 11.75% Senior Discount Debentures due 2009 of its majority owned subsidiary, TFM, S.A. de C.V. on April 20, 2005. The Notes accepted for payment were tendered on or prior to the Consent Deadline of 5:00 p.m. New York time, April 14, 2005, pursuant to the previously announced consent solicitation and tender offer for the Notes, and TFM made payments to Holders of the Notes of the Total Consideration plus Accrued Interest. As part of its pending tender offer for the Notes, TFM was soliciting consents to eliminate substantially all of the restrictive covenants included in the indenture under which the Notes were issued and to reduce the minimum prior notice period with respect to a redemption date for outstanding Notes from 30 to three days. The supplemental indenture relating to the Notes containing the proposed changes was executed by TFM and the Trustee under the indenture, and it became operative on April 20, 2005. About the Company TFM, S.A. de C.V., based on Mexico City, Mexico, owns the concession to operate Mexico's northeast railway. TFM, S.A. de C.V. is owned by Grupo TFM and the Government of Mexico. Grupo TFM is owned by Kansas City Southern. Kansas City Southern, based in Kansas City, Missouri owns and operates several railroads including Kansas City Southern Railway, a Class I U.S. railroad. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Moody's Investors Service assigned a B2 rating to $460 million of new senior unsecured notes expected to be issued by TFM, S.A. de C.V. to fund the tender for its existing 11.75% Notes. Moody's also affirmed the ratings on TFM's other rated debt. Moody's said the rating outlook is negative. TNS INC: Moody's Rates Planned $240M Senior Sec. Facility at Ba3 ---------------------------------------------------------------- Moody's Investors Service confirmed the ratings of TNS, Inc., the parent holding company of Transaction Network Services, Inc., following a review of the company's business and financial profile pro forma for its anticipated large debt financed share repurchase program recently announced. Concurrently, Moody's assigned a Ba3 rating to TNS' proposed senior secured credit facility. Proceeds from the new facility will be used to fund the modified Dutch tender auction, in which up to nine million shares of stock is to be purchased at a price between $18.00 and $18.50 per share. The rating outlook is stable. This concludes the review for possible downgrade commenced on April 7, 2005. Moody's took these ratings actions: * Assigned a Ba3 rating to the proposed $240 million senior secured credit facility consisting of a $30 million revolver, maturing in 5 years, and a $210 million term B loan, maturing in 7 years - at Transaction Network Services, Inc. * Confirmed Ba3 senior implied rating * Confirmed B1 senior unsecured issuer rating (non-guaranteed exposure) The ratings outlook is stable. The ratings on the new bank credit facilities are subject to the review of final documentation. The ratings for the existing facility have been prospectively withdrawn pro forma for the replacement by the proposed facility. Despite TNS' weakened financial profile resulting from the incremental increase in financial leverage for the proposed transactions, ongoing erosion in its domestic point-of-service business (45% of consolidated total revenue), and the loss of some contracted business from a major customer, the ratings were confirmed given that the company's business mix continues to evolve with decreasing reliance on domestic POS business and solid growth in revenue and profitability from other business segments. The confirmation of the ratings reflects the company's proven ability to generate free cash flow in excess of 10% of total pro forma debt and the expectation that such levels will be sustained throughout the intermediate term. The ratings benefit from management's solid track record in navigating the businesses under adverse conditions, notably high financial leverage, since its inception. The ratings remain constrained by: (1) the company's small size; concentration of revenues among its top five Customers (28%); (2) limited tangible asset value which could result in limited recovery in a distressed scenario; and (3) leverage approaching 3.3x pro forma the transaction. Although credit metrics are weakened, they are still within the lower end of tolerance for the Ba3 rating. The stable ratings outlook reflects satisfactory cushion under credit statistics to support modest adverse fluctuations in operating performance. The outlook is sensitive to additional financial leverage, debt financed acquisitions, and meaningful reduction in profitability or free cash flow, specifically, negative variance under operating expectations could result in a negative ratings outlook. Given that the company is at an inflection point, Moody's anticipates it will take some time for the company to re-solidify its position within the Ba3 rating category. Although TNS still has a leading market share (60%-70%) in domestic dial-up POS, its domestic POS revenue has declined consistently for the past 3 years, noted in previous rating considerations. The decline is mainly due to overall macro trend of increasing consumer acceptance of internet shopping and payment over the internet, which is not covered by TNS' traditional on- site point of sale payment processing. Both the number of transactions processed and average price per transaction have declined for TNS. Gross margins have improved slightly, partly due to the more profitable nature of its international business. However, TNS' overall EBITDA has grown from approximately $50 million to $65 million for each of the past three fiscal years and free cash flow has also increased over the past three years. The company has been trying to stem POS revenue decline by exploring new usage both in terms of new end markets served (health care, state lottery, etc.) and technology used (i.e. wireless). However, non dial-up POS, which is mainly wireless currently, is still small (15% of POS revenue). TNS continues to benefit from longer-term contracts, which provide for roughly 24 months of revenue visability. TNS's EBITDA margins in excess of 25% reflect high operating leverage due to the fixed cost of running the data network. The company's free cash flow in excess of $25 million results from limited working capital investment need coupled with low maintenance capex needs. Moody's estimates that pro forma 2004 leverage (defined as debt / EBITDA) will remain less than 3.5x and that pro forma 2004 fixed charge coverage (defined as EBITDA less interest expense / capital expenditures) will be in excess of 2.0x following consummation of the transaction. The Ba3 rating assigned to the proposed credit facility reflects the priority position in the capital structure and the expectation of collateral coverage under a distress scenario. Outstandings will be secured by a first priority perfected security interest in all the domestic assets and stock of the borrower and its subsidiaries, to the extent of the law. The borrower is intended to be the operating company, Transaction Network Services. Unconditional guarantees by TNS and each of the borrower's subsidiaries, to the extent allowable, support the facility. The proceeds of the new bank credit facility will be used to pay down the existing term loan of $51 million at December 2004 as well as to fund the proposed share repurchase, which Moody's estimates will add between $111 million and $167 million to the balance sheet. The new facility will include a 50% excess cash flow sweep, which Moody's anticipates will be in effect so long as leverage is greater than 2.00x. Should leverage decline to 1.50x, the excess cash flow sweep would fall to 25%. At the time of Moody's review, financial covenants were not yet finalized. Covenants are intended to address maximum total leverage, minimum interest coverage, minimum fixed charges, and limitations on capital expenditures and select corporate activities. Through its subsidiaries, TNS, Inc., headquartered in Reston, Virginia, is a leading provider of business-critical data communications for transaction-oriented applications. Revenues were approximately $249 million in fiscal 2004. UAL CORP: PBGC Agrees to Termination of Four Pension Plans ---------------------------------------------------------- The Pension Benefit Guaranty Corporation reached a settlement with United Airlines over the termination of the company's defined benefit pension plans. "We believe that this agreement, under the circumstances, is in the best interests of the pension insurance program and its stakeholders," said PBGC Executive Director Bradley D. Belt. "The PBGC has an obligation to reduce its losses for the protection of workers and retirees, other companies that pay insurance premiums, and taxpayers. By reaching a settlement now, we further that goal." Under the terms of the agreement, pending approval from the U.S. Bankruptcy Court for the Northern District of Illinois, the PBGC would terminate and become trustee of the company's four pension plans and the agency's claims against the company would be settled. The PBGC and its financial advisers believe the settlement is superior to the recovery the agency would have received as an unsecured creditor in bankruptcy. "This agreement with the PBGC -- if approved by the U.S. Bankruptcy Court -- resolves one of the major issues standing between United and its successful exit from bankruptcy," UAL Corporation, the parent company of United Airlines, said in a press statement. "It will allow the company to move forward as a sustainable, competitive enterprise for the long term -- ultimately United's most important goal. "While the company's first choice was to resolve pension issues consensually with all of its unions, unfortunately no viable solutions were offered or found over the past many months," the Company continued. "In the event that United and its unions are able to find a viable alternative to termination and replacement of their defined benefit pension plans prior to this agreement taking effect, the agreement would allow United to pursue that alternative." Collectively, United's pension plans are underfunded by $9.8 billion on a termination basis, $6.6 billion of which is guaranteed, according to the PBGC. The four plans are: (a) the UA Pilot Defined Benefit Plan, which covers 14,100 participants and has $2.8 billion in assets to pay $5.7 billion in promised benefits; (b) the United Airlines Ground Employees Retirement Plan, which covers 36,100 participants and has $1.3 billion in assets to pay $4.0 billion in promised benefits; (c) the UA Flight Attendant Defined Benefit Pension Plan, which covers 28,600 participants and has $1.4 billion in assets to pay $3.3 billion in promised benefits; and (d) the Management, Administrative and Public Contact Defined Benefit Pension Plan, which covers 42,700 participants and has $1.5 billion in assets to pay $3.8 billion in promised benefits. "If approved, the agreement will streamline the trial that is scheduled to begin on May 11, allowing the trial to focus solely on issues related to 1113(c)," UAL said. "In addition, this agreement will keep United on track to exit bankruptcy." As of Sept. 30, 2004, the PBGC's own balance sheet showed a $23.3 billion deficit, with $39 billion in assets to pay $62.3 billion in guaranteed pension benefits to more than 1 million workers and retirees. By law, the PBGC is required to keep premiums as low as possible and has no call on the U.S. Treasury beyond a $100 million line of credit. "This again highlights the need for the comprehensive pension reform. Unless and until Congress fixes the rules that allow pension plans to become so underfunded, the insurance program and plan participants are at risk of suffering large financial losses," Mr. Belt said. The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits for about 44 million American workers and retirees participating in over 31,000 private-sector defined benefit pension plans. Lynne Marek at Bloomberg News relates that Greg Davidowitch, president of United's Association of Flight Attendants, called the proposal "outrageous," Friday afternoon. Mr. Davidowitch says the Flight Attendants will fight the termination plan. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. UNITED AMERICAN: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: United American Inc. dba United American Construction dba United American Tenant Services 8150 Leesburg Pike, Suite 830 Vienna, Virginia 22182 Bankruptcy Case No.: 05-11507 Type of Business: The Debtor is a commercial and residential general contractor. See http://www.unitedamericaninc.com/ Chapter 11 Petition Date: April 22, 2005 Court: Eastern District of Virginia (Alexandria) Debtor's Counsel: Thomas P. Gorman, Esq. Tyler, Bartl, Gorman & Ramsdell, PLC 700 South Washington Street, Suite 216 Alexandria, Virginia 22314 Tel: (703) 549-5010 Fax: (703) 549-5011 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 ------ --------------- ------------ Interstate Service Company, Trade debt $496,034 Inc. 4101 Utah Avenue Brentwood, MD 20722 Virginia Commerce Bank Line of credit $300,000 375 East Maple Avenue Vienna, VA 000221825 C&L Contractors, LTD. Trade debt $172,838 8996 Burke Lake Road #302 Burke, VA 22015 Pico Industries, Inc. Trade debt $103,531 611 W. Ostend Street Baltimore, MD 21230 Occupied Spaces, Inc. Trade debt $98,859 7620D Rickenbacker Drive Gaithersburg, MD 20879 Accent Architectural Trade debt $79,850 19877 Clark Graham Avenue Baie D'Urfe, QC H9X 3T1 Freestate Elec. Svc. Co., Trade debt $72,218 Inc. 6623 Mid Cities Avenue Beltsville, MD 20705 E & F Contracting, LLC Trade debt $63,569 1290 Baydale Drive Arnold, MD 21012 Truland Service Corporation Trade debt $63,051 5520 Cheerokee Avenue Alexandria, VA 22312 Smitty's Building Supply Trade debt $62,644 8457 Richmond Highway Alexandria, VA 22309 Marks Building Systems, Inc. Trade debt $54,626 18775E North Frederick Avenue Gaithersburg, MD 20879 Mazz Electric, Inc. Trade debt $54,424 5649 K General Washington Drive Alexandria, VA 22312 Precision Doors & Hardware, Trade debt $51,481 Inc. 629580 Edsall Road Alexandria, VA 223122670 Hallmark Iron Works, Inc. Trade debt $44,837 8399 Paris Street Newington, VA 22122 Beck's Door and Hardware Trade debt $40,687 Service, Inc. 7520 � P Fullerton Road Springfield, VA 22153 R&B Grove Cabinetry, Inc. Trade debt $39,131 1702 McHenry Street Baltimore, MD 21223 Specified Woodworking Corp. Trade debt $39,010 9327A Washington Blvd. Laurel, MD 20723 Lakota Contracting, Inc. Trade debt $35,854 1312 18th Street, Northwest Washington, DC 20036 Floor Concepts, Inc. Trade debt $34,387 P.O. Box 70443 Chicago, IL 060673044 Corley Roofing & Sheet Metal $32,636 Co., Inc. 4941 Beech Place Temple Hills, MD 207482003 VCA ANTECH: New $500MM Loans Will Refinance Senior Term F Notes --------------------------------------------------------------- VCA Antech (NASDAQ:WOOF) proposes to enter into a new senior credit facility providing for up to $425.0 million in term loans and a $75.0 million revolving facility. The new facility is intended to: -- refinance the $220.3 million of total outstanding senior term F notes; and -- provide the financing for a tender offer and consent solicitation for any and all of the outstanding $170 million principal amount of 9.875% Senior Subordinated Notes due 2009 of Vicar Operating, Inc., a wholly owned subsidiary of VCA. The proposed new senior credit facility will replace the existing term F notes with new senior term loans in an amount up to $425 million. If the existing term F notes are refinanced, and the tender offer is consummated, we expect to incur debt retirement costs in the second quarter of 2005 related to the write-off of deferred financing costs and other related expenses with respect to both the refinancing of the senior term F notes, and the purchase of the senior subordinated notes. Other than the interest rate, the terms and conditions of the new term loans are expected to be substantially similar to the existing senior term F notes. The tender offer is contingent on the satisfaction of several conditions, including the receipt of sufficient funds from the anticipated proceeds of the new senior credit facility. Vicar Operating, Inc., has commenced an offer to purchase for cash any and all of its $170.0 million in outstanding principal amount of 9.875% Senior Subordinated Notes due 2009. Vicar Operating, Inc., is also soliciting consents from the holders of the notes to approve amendments to the indenture under which the notes were issued. Holders who validly tender notes and deliver consents prior to 5:00 p.m., New York City time, on April 29, 2005 will be eligible to receive the total consideration, which includes a consent payment of $30.00 per $1,000 principal amount of notes. Holders who validly tender notes after April 29, 2005 but prior to 12:01 a.m., New York City time, on May 17, 2005, will be eligible to receive the tender consideration, which is the total consideration less the consent payment. In addition, holders who validly tender and do not withdraw their notes in the tender offer will receive accrued and unpaid interest from the last interest payment date up to, but not including, the date payment is made for the notes. The total consideration will be determined by reference to a fixed spread of 50 basis points, or 0.5%, over the yield to maturity based on the bid side price of the U.S. Treasury 1.875% Bond due November 30, 2005, which we refer to as the tender offer yield, as measured at 2:00 p.m., New York City time, two days prior to the expiration date of the tender offer. Assuming a settlement date of May 18, 2005 and using the tender offer yield of 3.665% on April 18, 2005, the total consideration, inclusive of the consent payment of $30.00, would be $1,081.07 per $1,000 principal amount of notes. Consent Solicitation Acceptance of the notes tendered will occur promptly following the expiration of the tender offer. The consummation of the tender offer is contingent on receipt of sufficient funds from the anticipated proceeds of the new senior credit facility, at least a majority of the notes being validly tendered and not withdrawn, and other general conditions described in the offer to purchase. The tender offer will expire at 12:01 a.m., New York City time, on May 17, 2005, unless extended or earlier terminated. The consents being solicited will eliminate substantially all of the restrictive covenants and certain events of default in the indenture governing the notes. Information regarding the pricing, tender and delivery procedures, and conditions of the tender offer and consent solicitation is contained in the Offer to Purchase and Consent Solicitation Statement dated April 19, 2005, and related documents. Goldman, Sachs & Co., has been appointed as the exclusive dealer manager and solicitation agent for the tender offer and consent solicitation. Please direct any questions relating to the offer to Goldman, Sachs & Co., toll-free at (800) 828-3182 or collect at (212) 357-3019. Global Bondholder Services Corp. has been appointed the information agent and depositary for the tender offer and consent solicitation. The Offer to Purchase and Consent Solicitation Statement, the Consent and Letter of Transmittal, and any additional information concerning the terms and conditions of the tender offer and consent solicitation may be obtained by contacting Global Bondholder Services, 65 Broadway - Suite 704, New York, New York 10006, Attn: Corporate Actions. About the Company VCA Antech owns, operates and manages the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country. VENTURE HOLDINGS: Auctioning 46-Acre Property in Seabrook, N.H. --------------------------------------------------------------- Venture Holdings Company, LLC, and its debtor-affiliates are selling 46 acres of land and some buildings located at 700 Lafayette Road in Seabrook, New Hampshire. A satellite photo of the property obtained from http://maps.google.com/is available at no charge at http://bankrupt.com/misc/700Lafayette.pdf An auction for the sale of the Seabrook property will be held on May 3, 2005, at 10:00 a.m. at the offices of the Debtors' counsel Foley & Lardner LLP. Prospective bidders may obtain information regarding the Seabrook Property, a copy of the purchase agreement and other relevant materials from: John A. Simon, Esq. Foley & Lardner LLP 500 Woodward Avenue, Suite 2700 Detroit Michigan Tel: 313-234-7117 E-mail: jsimon@foley.com The U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, set the minimum bid price for the property at $14,000,000. A $460,000 break-up fee will be paid to the stalking horse bidder in the event that it is not the successful bidder. Qualified bidders must deliver to Nicole Y. Lamb-Hale at Foley & Lardner by April 29, 2005, at 5:00 p.m.: (a) a bid for no less than $14 million plus a $100,000 incremental bid, plus the $460,000 break-up fee; (b) a $100,000 cash deposit; and (c) evidence of financial capacity to close the sale within a specified time frame. The Court will convene a sale hearing at 9:00 a.m. on May 4, 2005, to approve the sale of the property to the highest bidder. Headquartered in Fraser, Michigan, Venture Holdings Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. Mich. Case No. 03-48939) on March 28, 2003. Deluxe Pattern Corporation and its debtor-affiliates filed for chapter 11 protection on May 24, 2004 (Bankr. E.D. Mich. Case No. 04-54977). Together, Venture and Deluxe are part of a worldwide full-service automotive supplier, systems integrator and manufacturer of plastic components, modules and systems. As of March 31, 2002, the Debtors had total assets of $1,459,834,000 and total debts of $1,382,369,000. VISTEON: Fitch Lowers Senior Unsecured & Bank Debt to B from BB --------------------------------------------------------------- Fitch Ratings has lowered the ratings of Visteon Corporation: -- Senior unsecured and bank debt to 'B' from 'BB'. Fitch also maintains the Rating Watch Negative status on Visteon. In the absence of a final agreement with Ford, Visteon is increasingly exposed to refinancing risks and uncertainty regarding its ultimate capital structure and sources of liquidity. The negotiations toward a final agreement have taken place over an extended period, demonstrating the complexity of the task. Execution will depend on successful negotiations between Ford, Visteon and the UAW rather than solely between Ford and Visteon. The vast majority of the financial burden will fall on Ford, but during the negotiating period, Visteon is exposed to refinancing risk with the August maturity of $250 million in notes and the expiry of a $565 million bank facility in June 2005. In addition, Visteon's operating profile, post-restructuring, remains unknown. Fitch's downgrade also reflects increasingly difficult conditions for the automotive supplier universe, including production cutbacks, which will likely accelerate Visteon's negative cash flow in 2005. The Rating Watch Negative status is based on the uncertainties mentioned above, although Fitch recognizes that a final agreement with Ford could provide material financial support and an improved operating profile that could warrant a review of the rating. Visteon reported negative free cash flow exceeding $400 million in 2004, which is expected to deteriorate further in 2005 due to lower Ford production, higher commodity prices, Visteon's high fixed-cost structure (including significant legacy costs) and operating leverage. Visteon and Ford are currently operating under a temporary agreement that would effectively cover 2005 cash flow shortfalls. Nevertheless, incremental production cutbacks at Ford will exacerbate previous negative free cash estimates through 2005 and weaken Visteon's financial profile on a stand-alone basis. Bank lines and cash holdings would provide limited ability to financing operating losses upon the expiry of the support agreement with Ford (potentially at yearend 2005). The extent and terms of post-restructuring liquidity are unknown. In Fitch's view, liquidity is expected to come from secured bank financing, potentially subordinating existing unsecured holders. If that was to occur, Fitch will review the relative ratings of the secured and unsecured holders. WEIGHT INTERVENTION: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Lead Debtor: Weight Intervention and Surgical Healthcare Holding, LLC dba WISH Holding, LLC 2801 South Finley Road Downers Grove, Illinois 60515 Bankruptcy Case No.: 05-16002 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Weight Intervention and Surgical Healthcare Center No. 3, LLC 05-16003 Weight Intervention and Surgical Healthcare Center No. 4, LLC 05-16004 Weight Intervention and Surgical Healthcare Center No. 5, PLLC 05-16005 WISH Center No. 6, LLC 05-16006 WISH Center No. 7, PLLC 05-16007 WISH Center No. 8, PLLC 05-16008 WISH Center No. 9, LLC 05-16009 WISH Center No. 10, PLLC 05-16010 WISH Center No. 103, LLC 05-16011 WISH Products, LLC 05-16012 Midwest Trauma, LLC 05-16013 Midwest Surgical, LLC 05-16014 Midwest Surgical Real Estate Holdings, LLC 05-16015 Type of Business: The WISH Center is a nationally recognized and proven weight loss program which specializes in advanced surgical treatment and long-term management of patients with morbid obesity. See http://www.wishcenter.org/ Chapter 11 Petition Date: April 22, 2005 Court: Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtors' Counsel: Geoffrey S. Goodman, Esq. Edward J. Green, Esq. Foley & Lardner LLP 321 North Clark Street, Suite 2800 Chicago, Illinois 60610 Tel: (312) 832-4514 Fax: (312) 832-4700 Total Assets Total Debts ------------ ----------- Weight Intervention & Surgical $1 Million to $1 Million to Healthcare Holding, LLC $10 Million $10 Million Weight Intervention & Surgical $1 Million to $1 Million to Healthcare Center No. 3, LLC $10 Million $10 Million Weight Intervention & Surgical $1 Million to $1 Million to Healthcare Center No. 4, LLC $10 Million $10 Million Weight Intervention & Surgical $1 Million to $1 Million to Healthcare Center No. 5, PLLC $10 Million $10 Million WISH Center No. 6, LLC $1 Million to $1 Million to $10 Million $10 Million WISH Center No. 7, PLLC $1 Million to $1 Million to $10 Million $10 Million WISH Center No. 8, PLLC $1 Million to $1 Million to $10 Million $10 Million WISH Center No. 9, LLC $1 Million to $1 Million to $10 Million $10 Million WISH Center No. 10, PLLC $1 Million to $1 Million to $10 Million $10 Million WISH Center No. 103, LLC $1 Million to $1 Million to $10 Million $10 Million WISH Products, LLC $1 Million to $1 Million to $10 Million $10 Million Midwest Trauma, LLC $1 Million to $1 Million to $10 Million $10 Million Midwest Surgical, LLC $1 Million to $1 Million to $10 Million $10 Million Midwest Surgical Real $1 Million to $1 Million to Estate Holdings, LLC $10 Million $10 Million The Debtors did not file a list of their 20 Largest Unsecured Creditors. WESTPOINT STEVENS: Court Approves Modified Bidding Procedures ------------------------------------------------------------- The U.S. Bankruptcy Court approved the modified bidding and notice procedures for the sale of substantially all of WestPoint Stevens Inc.'s (OTC Bulletin Board: WSPQE) assets. As a result of the ruling of the U.S. Bankruptcy Court on April 7, 2005, with respect to proposed bidding procedures, the previously announced asset purchase agreement with a group of investors consisting of WL Ross & Co. LLC and holders of a majority of the Company's Senior Credit Facility was terminated. The sale process will now be conducted without a stalking horse bid. A deadline of 12:00 noon Eastern Time on June 10, 2005, has been established for the submission of bids. Interested parties should contact the Company's financial advisors Rothschild Inc. (Attn: Neil Augustine, 212-403- 3500) or legal advisors, Weil, Gotshal & Manges LLP (Attn: Michael Walsh, Esq. or John Rapisardi, Esq., 212-310-8000). DIP Financing Amendment WestPoint Stevens amended the maturity of its existing debtor-in- possession financing, extending it to the earlier of Dec. 2, 2005, or the consummation of a sale of the Company. The amendment will allow sufficient time for the Company to complete the sale process. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. YOUNG BROADCASTING: Prices Tender Offer for 8-1/2% Senior Notes --------------------------------------------------------------- Young Broadcasting Inc. (NASDAQ: YBTVA) disclosed the consideration to be paid in the previously announced cash tender offer and consent solicitation with respect to its $246,890,000 outstanding principal amount of 8-1/2% Senior Notes due 2008. The terms of the Offer and the Consent Solicitation are more fully described in the Offer to Purchase and Consent Solicitation Statement and related Letter of Transmittal and Consent, each dated Apr. 11, 2005. The total consideration for the Notes accepted for purchased in the Offer will be $1,069.56 per $1,000 principal amount of Notes, which includes a consent payment of $30 per $1,000 principal amount of Notes for those Notes validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time on April 22, 2005, unless extended. The Total Consideration was determined as of 2:00 P.M., New York City Time, on Friday, April 22, 2005, by reference to a fixed spread of 75 basis points above the yield to maturity of the 1.875% U.S. Treasury Note due Nov. 30, 2005. For those Notes validly tendered after the Consent Payment Deadline that are not validly withdrawn and are accepted for purchase, the tender offer consideration payable, per $1,000 principal amount of such Notes, will be equal to the Total Consideration less the consent payment of $30.00. In each case, holders will receive accrued and unpaid interest on such Notes, from the last interest payment date to, but not including, the applicable settlement date. The Offer is scheduled to expire at 5:00 p.m., New York City time, on May 9, 2005, unless extended or earlier terminated. 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 Offer and the Consent Solicitation are being made solely pursuant to the Statement and related Letter of Transmittal and Consent. YBI has retained Wachovia Securities, Lehman Brothers and Merrill Lynch to serve as the dealer managers and solicitation agents for the Offer and the Consent Solicitation. Questions regarding the Offer and the Consent Solicitation may be directed to Wachovia Securities at (704) 715-8341 or (866) 309-6316, to Lehman Brothers at (212) 528-7581 or (800) 438-3242 or to Merrill Lynch at (212) 449-4914 or (888) ML4-TNDR. Requests for documents in connection with the Offer and the Consent Solicitation may be directed to Global Bondholder Services Corporation, the information agent, at (212) 430-3774 or (866) 470-3900. About the Company YBI owns ten television stations and the national television sales representation firm, Adam Young Inc. Five stations are affiliated with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV - Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN and WBAY-TV - Green Bay, WI), three are affiliated with the CBS Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA and KELO-TV - Sioux Falls, SD) and one is affiliated with the NBC Television Network (KWQC-TV - Davenport, IA). KRON-TV - San Francisco, CA is the largest independent station in the U.S. and the only independent VHF station in its market. * * * As reported in the Troubled Company Reporter on Apr. 22, 2005, Moody's Investors Service assigned B1 ratings to Young Broadcasting Inc.'s $295 million in new senior secured credit facilities ($20 million revolving credit facility due 2010, $275 million senior secured term loan B due 2013). Additionally, Moody's affirmed Young's existing ratings, including a B2 senior implied rating, and changed the outlook to negative. The proceeds from the issuance will be used to redeem the company's 8.5% senior notes due 2008. Thus, the transaction is neutral to leverage. The negative outlook incorporates Young's still high debt burden, operating margins that lag peers in the television broadcast sector, and our expectation that the company will continue to burn cash in the near-term. Accordingly, absent asset sales, the company is not able to meaningfully reduce debt. ZIFF DAVIS: Debt Refinancing Prompts S&P to Lift Ratings -------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Ziff Davis Media Inc. to 'CCC+' from 'CCC'. All ratings were removed from CreditWatch, where they were placed on April 12, 2005, with positive implications. The outlook is stable. As of Dec. 31, 2004, the New York, New York-based integrated media company, which is analyzed on a consolidated basis with its parent company, Ziff Davis Holdings Inc., had $340 million in pro forma consolidated debt. "The upgrade is based on the improvement in Ziff Davis's capital structure following the refinancing of its debt," said Standard & Poor's credit analyst Steve Wilkinson. This transaction, consistent with Standard & Poor's expectations, eased pressure on Ziff Davis' capital and maturity structure, by substantially reducing the risk of near-term default by eliminating bank maturities that were scheduled to increase to $24 million in 2005 and $83 million in 2006, and by modestly increasing liquid assets. The rating on Ziff Davis reflects its high debt leverage, marginal coverage ratios, limited liquid resources, and earnings concentration in a few key technology magazine titles. In addition, the company's thin positive discretionary cash flow will turn negative when its compounding notes begin requiring cash interest payments in February 2007, unless the company can significantly improve its profitability and cash flow over the next two years. These risks are not meaningfully offset by Ziff Davis' established position in the computer and electronic game magazine publishing industries. Competition in this niche is fierce; Ziff Davis and two other publishers account for the bulk of technology magazine industry revenues. Ziff Davis is highly reliant on volatile high- tech advertising demand, with the bulk of its revenues derived from advertising sales to computer, technology, and video game companies. Rating stability relies on expectations for gradually improving EBITDA and key credit measures. The rating could be easily lowered if Ziff Davis does not gradually build its discretionary cash flow to meet the onset of cash interest payments on the subordinate notes in early 2007, or if its liquidity erodes, operating momentum reverses, or debt-financed acquisitions keep financial risk elevated. The potential for a positive outlook, which Standard & Poor's views as a longer-term development, depends on the company's ability to increase discretionary cash flow and improve key credit ratios. * BOND PRICING: For the week of April 4 - April 8, 2005 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 41 Adelphia Comm. 3.250% 05/01/21 6 Adelphia Comm. 6.000% 02/15/06 6 Advanced Access 10.750% 06/15/11 72 Aetna Industries 11.875% 10/01/06 7 Allegiance Tel. 11.750% 02/15/08 25 Allegiance Tel. 12.875% 05/15/08 31 Allied Holdings 8.625% 10/01/07 69 Amer. Color Graph. 10.000% 06/15/10 69 Amer. Comm. LLC 12.000% 07/01/08 5 Amer. & Forgn PWR 5.000% 03/01/30 75 Amer. Plumbing 11.625% 10/15/08 14 Amer. Restaurant 11.500% 11/01/06 63 Amer. Tissue Inc. 12.500% 07/15/06 62 American Airline 7.377% 05/23/19 67 American Airline 7.379% 05/23/16 66 American Airline 8.839% 01/02/17 73 American Airline 8.800% 09/16/15 74 American Airline 9.070% 03/11/16 72 American Airline 10.180% 01/02/13 72 American Airline 10.190% 05/26/16 73 American Airline 10.600% 03/04/09 70 American Airline 10.610% 03/04/11 67 American Airline 11.000% 05/06/15 75 AMR Corp. 4.500% 02/15/24 69 AMR Corp. 9.000% 08/01/12 74 AMR Corp. 9.200% 01/30/12 74 AMR Corp. 9.750% 08/15/21 65 AMR Corp. 9.800% 10/01/21 64 AMR Corp. 9.880% 06/15/20 62 AMR Corp. 10.000% 04/15/21 64 AMR Corp. 10.125% 06/01/21 60 AMR Corp. 10.150% 05/15/20 60 AMR Corp. 10.200% 03/15/20 64 AMR Corp. 10.290% 03/08/21 63 AMR Corp. 10.450% 11/15/11 56 AMR Corp. 10.550% 03/12/21 57 Anadigics 5.000% 10/15/09 69 Apple South Inc. 9.750% 06/01/06 16 AT Home Corp. 0.525% 12/28/18 7 AT Home Corp. 4.750% 12/15/06 5 ATA Holdings 12.125% 06/15/10 44 ATA Holdings 13.000% 02/01/09 45 Atlantic Coast 6.000% 02/15/34 20 Atlas Air Inc. 9.702% 01/02/08 51 Avado Brands Inc. 11.750% 06/15/09 20 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 9 Bank New England 9.500% 02/15/96 6 Bethlehem Steel 10.375% 09/01/03 0 Big V Supermarkets 11.000% 02/15/04 1 Borden Chemical 9.500% 05/01/05 1 Budget Group Inc. 9.125% 04/01/06 0 Burlington Inds. 7.250% 08/01/27 6 Burlington Inds. 7.250% 09/15/05 6 Burlington Northern 3.200% 01/01/45 61 Calpine Corp. 4.750% 11/15/23 62 Calpine Corp. 7.750% 04/15/09 61 Calpine Corp. 7.875% 04/01/08 63 Calpine Corp. 8.500% 07/15/10 75 Calpine Corp. 8.500% 02/15/11 61 Calpine Corp. 8.625% 08/15/10 62 Calpine Corp. 8.750% 07/15/07 71 Calpine Corp. 8.750% 07/15/13 73 Charter Comm Inc. 5.875% 11/16/09 74 Charter Comm Hld. 10.000% 05/15/11 75 Chic East ILL RR 5.000% 01/01/54 55 Coeur D'Alene 1.250% 01/15/24 72 Collins & Aikman 12.875% 08/15/12 40 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 43 Cone Mills Corp. 8.125% 03/15/05 10 CoreComm. Limited 6.000% 10/01/06 5 Covad Communication 3.000% 03/15/24 73 Cray Research 6.125% 02/01/11 63 Curagen Corp. 4.000% 02/15/11 73 Delta Air Lines 2.875% 02/18/24 49 Delta Air Lines 7.299% 09/18/06 58 Delta Air Lines 7.711% 09/18/11 55 Delta Air Lines 7.779% 11/18/05 75 Delta Air Lines 7.779% 01/02/12 48 Delta Air Lines 7.900% 12/15/09 34 Delta Air Lines 7.920% 11/18/10 51 Delta Air Lines 8.000% 06/03/23 38 Delta Air Lines 8.270% 09/23/07 70 Delta Air Lines 8.300% 12/15/29 29 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 8.540% 01/02/07 54 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 8.540% 01/02/07 68 Delta Air Lines 8.950% 01/12/12 61 Delta Air Lines 9.000% 05/15/16 28 Delta Air Lines 9.200% 09/23/14 43 Delta Air Lines 9.250% 03/15/22 28 Delta Air Lines 9.300% 01/02/10 63 Delta Air Lines 9.300% 01/02/10 68 Delta Air Lines 9.375% 09/11/07 66 Delta Air Lines 9.750% 05/15/21 30 Delta Air Lines 9.875% 04/30/08 73 Delta Air Lines 10.000% 06/01/08 59 Delta Air Lines 10.000% 08/15/08 39 Delta Air Lines 10.000% 06/01/09 65 Delta Air Lines 10.000% 05/17/10 73 Delta Air Lines 10.000% 06/01/10 64 Delta Air Lines 10.000% 06/01/10 36 Delta Air Lines 10.125% 05/15/10 37 Delta Air Lines 10.140% 08/14/11 68 Delta Air Lines 10.140% 08/26/12 50 Delta Air Lines 10.375% 02/01/11 35 Delta Air Lines 10.375% 12/15/22 31 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.500% 04/30/16 45 Delta Air Lines 10.790% 03/26/14 71 Delta Air Lines 10.790% 03/26/14 34 Delta Air Lines 10.790% 03/26/14 37 Delta Mills Inc. 9.625% 09/01/07 48 Delphi Trust II 6.197% 11/15/33 47 Diva Systems 12.625% 03/01/08 1 Dura Operating 9.000% 05/01/09 74 Duty Free Int'l 7.000% 01/15/04 25 DVI Inc. 9.875% 02/01/04 9 E. Spire Comm Inc. 10.625% 07/01/08 0 E. Spire Comm Inc. 12.750% 04/01/06 0 E. Spire Comm Inc. 13.000% 11/01/05 0 E&S Holdings 10.375% 10/01/06 51 Eagle-Picher Inc. 9.750% 09/01/13 66 Eagle Food Center 11.000% 04/15/05 4 Edison Brothers 11.000% 09/26/07 0 Encompass Service 10.500% 05/01/09 0 Enron Corp. 6.400% 07/15/06 32 Enron Corp. 6.500% 08/01/02 28 Enron Corp. 6.625% 10/15/03 32 Enron Corp. 6.625% 11/15/05 31 Enron Corp. 6.725% 11/17/08 32 Enron Corp. 6.750% 09/01/04 32 Enron Corp. 6.750% 09/15/04 33 Enron Corp. 6.750% 07/01/05 0 Enron Corp. 6.750% 08/01/09 30 Enron Corp. 6.875% 10/15/07 32 Enron Corp. 6.950% 07/15/28 33 Enron Corp. 6.950% 07/15/28 30 Enron Corp. 7.000% 08/15/23 33 Enron Corp. 7.125% 05/15/07 34 Enron Corp. 7.375% 05/15/19 31 Enron Corp. 7.625% 09/10/04 31 Enron Corp. 7.875% 06/15/03 34 Enron Corp. 8.375% 05/23/05 33 Enron Corp. 9.125% 04/01/03 33 Enron Corp. 9.875% 06/15/03 11 Epic Resorts LLC 13.000% 06/15/05 2 Exodus Comm. Inc. 10.750% 12/15/09 0 Exodus Comm. Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 42 Federal-Mogul Co. 7.375% 01/15/06 26 Federal-Mogul Co. 7.500% 01/15/09 28 Federal-Mogul Co. 8.120% 03/06/03 28 Federal-Mogul Co. 8.160% 03/06/03 28 Federal-Mogul Co. 8.250% 03/03/05 28 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.460% 10/27/02 28 Federal-Mogul Co. 8.800% 04/15/07 31 Fibermark Inc. 10.750% 04/15/11 70 Finova Group 7.500% 11/15/09 43 Fleming Cos. Inc. 10.125% 04/01/08 35 Flooring America 9.250% 10/15/07 0 Foamex L.P. 9.875% 06/15/07 50 Ford Motor Co 6.625% 02/15/28 74 Ford Motor Credit 5.250% 12/21/09 74 Ford Motor Credit 5.900% 02/20/14 75 Ford Motor Credit 6.000% 03/20/14 74 Ford Motor Credit 6.000% 11/20/14 72 Ford Motor Credit 6.000% 01/20/15 72 Ford Motor Credit 6.050% 12/22/14 74 Ford Motor Credit 7.250% 07/20/17 74 Ford Motor Credit 7.400% 11/01/46 73 Ford Motor Credit 7.700% 05/15/97 74 Fruit of the Loom 8.875% 04/15/06 0 General Motors 7.400% 09/01/25 73 GMAC 5.250% 01/15/14 72 GMAC 5.350% 01/15/14 68 GMAC 5.700% 06/15/13 73 GMAC 5.700% 10/15/13 72 GMAC 5.750% 01/15/14 74 GMAC 5.850% 05/15/13 72 GMAC 5.900% 12/15/13 72 GMAC 5.900% 12/15/13 73 GMAC 5.900% 01/15/19 70 GMAC 5.900% 01/15/19 68 GMAC 5.900% 02/15/19 67 GMAC 5.900% 10/15/19 62 GMAC 6.000% 07/15/13 67 GMAC 6.000% 11/15/13 73 GMAC 6.000% 12/15/13 74 GMAC 6.000% 02/15/19 64 GMAC 6.000% 02/15/19 69 GMAC 6.000% 02/15/19 62 GMAC 6.000% 03/15/19 70 GMAC 6.000% 03/15/19 66 GMAC 6.000% 03/15/19 69 GMAC 6.000% 03/15/19 65 GMAC 6.000% 03/15/19 67 GMAC 6.000% 04/15/19 66 GMAC 6.000% 09/15/19 68 GMAC 6.000% 09/15/19 67 GMAC 6.050% 08/15/19 62 GMAC 6.050% 08/15/19 65 GMAC 6.050% 10/15/19 66 GMAC 6.100% 09/15/19 67 GMAC 6.125% 10/15/19 68 GMAC 6.150% 08/15/19 68 GMAC 6.150% 09/15/19 63 GMAC 6.150% 10/15/19 66 GMAC 6.200% 05/15/19 71 GMAC 6.250% 12/15/18 69 GMAC 6.250% 01/15/19 68 GMAC 6.250% 04/15/19 71 GMAC 6.250% 05/15/19 67 GMAC 6.250% 07/15/19 66 GMAC 6.300% 08/15/19 65 GMAC 6.300% 08/15/19 69 GMAC 6.350% 04/15/19 66 GMAC 6.350% 07/15/19 68 GMAC 6.350% 07/15/19 73 GMAC 6.400% 12/15/18 71 GMAC 6.400% 11/15/19 75 GMAC 6.400% 11/15/19 71 GMAC 6.500% 06/15/18 70 GMAC 6.500% 11/15/18 67 GMAC 6.500% 12/15/18 72 GMAC 6.500% 12/15/18 73 GMAC 6.500% 05/15/19 66 GMAC 6.500% 01/15/20 69 GMAC 6.500% 02/15/20 72 GMAC 6.550% 12/15/19 71 GMAC 6.600% 08/15/16 75 GMAC 6.600% 05/15/18 70 GMAC 6.600% 06/15/19 65 GMAC 6.600% 06/15/19 72 GMAC 6.650% 06/15/18 69 GMAC 6.650% 10/15/18 68 GMAC 6.650% 10/15/18 71 GMAC 6.650% 02/15/20 72 GMAC 6.700% 05/15/14 75 GMAC 6.700% 08/15/16 70 GMAC 6.700% 06/15/18 74 GMAC 6.700% 06/15/18 68 GMAC 6.700% 11/15/18 70 GMAC 6.700% 06/15/19 70 GMAC 6.700% 12/15/19 70 GMAC 6.750% 07/15/16 72 GMAC 6.750% 06/15/17 71 GMAC 6.750% 07/15/18 73 GMAC 6.750% 09/15/18 74 GMAC 6.750% 10/15/18 72 GMAC 6.750% 11/15/18 72 GMAC 6.750% 05/15/19 71 GMAC 6.750% 05/15/19 72 GMAC 6.750% 06/15/19 72 GMAC 6.750% 06/15/19 72 GMAC 6.800% 09/15/18 70 GMAC 6.800% 10/15/18 69 GMAC 6.875% 08/15/16 74 GMAC 6.875% 07/15/18 72 GMAC 6.900% 06/15/17 73 GMAC 6.900% 07/15/18 73 GMAC 6.900% 08/15/18 74 GMAC 7.000% 05/15/17 74 GMAC 7.000% 06/15/17 72 GMAC 7.000% 02/15/18 74 GMAC 7.000% 02/15/18 75 GMAC 7.000% 03/15/18 72 GMAC 7.000% 05/15/18 71 GMAC 7.000% 09/15/21 66 GMAC 7.000% 09/15/21 68 GMAC 7.000% 06/15/22 71 GMAC 7.000% 11/15/23 66 GMAC 7.000% 11/15/24 66 GMAC 7.000% 11/15/24 70 GMAC 7.000% 11/15/24 70 GMAC 7.050% 05/15/17 74 GMAC 7.050% 03/15/18 74 GMAC 7.125% 07/15/17 75 GMAC 7.125% 10/15/17 73 GMAC 7.150% 07/15/17 75 GMAC 7.150% 01/15/25 68 GMAC 7.150% 03/15/25 70 GMAC 7.250% 05/15/17 70 GMAC 7.250% 09/15/17 72 GMAC 7.250% 04/15/18 74 GMAC 7.250% 04/15/18 73 GMAC 7.250% 01/15/25 71 GMAC 7.250% 02/15/25 65 GMAC 7.250% 03/15/25 75 GMAC 7.300% 12/15/17 73 GMAC 7.300% 01/15/18 73 GMAC 7.375% 04/15/18 74 GMAC 7.400% 12/15/17 74 GMAC 7.400% 02/15/21 74 GMAC 7.500% 11/15/17 74 GMAC 7.500% 03/15/25 72 Golden Books Pub. 10.750% 12/31/04 1 Golden Northwest 12.000% 12/15/06 10 Graftech Int'l 1.625% 01/15/24 72 Graftech Int'l 1.625% 01/15/24 68 GST Network Funding 10.500% 05/01/08 0 Guilford Pharma 5.000% 07/01/08 74 Gulf States STL 13.500% 04/15/03 1 HNG Internorth. 9.625% 03/15/06 31 Huntsman Packag 13.000% 06/01/10 74 Icon Health & Fit 11.250% 04/01/12 71 Imperial Credit 9.875% 01/15/07 0 Imperial Credit 12.000% 06/30/05 0 Impsat Fiber 6.000% 03/15/11 74 Inland Fiber 9.625% 11/15/07 49 Intermet Corp. 9.750% 06/15/09 58 Intermune Inc. 0.250% 03/01/11 69 Iridium LLC/CAP 10.875% 07/15/05 16 Iridium LLC/CAP 11.250% 07/15/05 17 Iridium LLC/CAP 13.000% 07/15/05 17 Iridium LLC/CAP 14.000% 07/15/05 15 IT Group Inc. 11.250% 04/01/09 1 Kaiser Aluminum & Chem. 12.750% 02/01/03 12 Key Plastics 10.250% 03/15/07 1 Kmart Corp. 6.000% 01/01/08 16 Kmart Corp. 8.990% 07/05/10 70 Kmart Corp. 9.350% 01/02/20 25 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 40 Kulicke & Soffa 0.500% 11/30/08 72 Land O Lakes Cap. 7.450% 03/15/28 70 Lehman Bros. Holding 6.000% 05/25/05 58 Lehman Bros. Holding 7.500% 09/03/05 47 Level 3 Comm. Inc. 2.875% 07/15/10 52 Level 3 Comm. Inc. 6.000% 09/15/09 53 Level 3 Comm. Inc. 6.000% 03/15/10 52 Liberty Media 3.750% 02/15/30 62 Liberty Media 4.000% 11/15/29 65 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 MacSaver Financial 7.600% 08/01/07 8 MacSaver Financial 7.875% 08/01/03 5 Metaldyne Corp. 11.000% 06/15/12 75 Metamor Worldwide 2.940% 08/15/04 1 Mississippi Chem. 7.250% 11/15/17 4 Muzak LLC 9.875% 03/15/09 52 Nat'l Steel Corp. 8.375% 08/01/06 3 Nat'l Steel Corp. 9.875% 03/01/09 3 New Orl Grt N RR 5.000% 07/01/32 74 North Atl Trading 9.250% 03/01/12 73 Northern Pacific Railway 3.000% 01/01/47 61 Northpoint Comm. 12.875% 02/15/10 1 Northwest Airlines 7.248% 01/02/12 72 Northwest Airlines 7.360% 02/01/20 66 Northwest Airlines 7.875% 03/15/08 58 Northwest Airlines 8.070% 01/02/15 58 Northwest Airlines 8.130% 02/01/14 62 Northwest Airlines 8.700% 03/15/07 68 Northwest Airlines 9.875% 03/15/07 70 Northwest Airlines 10.000% 02/01/09 59 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 74 Oakwood Homes 7.875% 03/01/04 30 Oakwood Homes 8.125% 03/01/09 25 Oscient Pharm 3.500% 04/15/11 74 O'Sullivan Ind. 13.375% 10/15/09 41 Orion Network 11.250% 01/15/07 50 Orion Network 12.500% 01/15/07 54 Outboard Marine 9.125% 04/15/17 1 Owens Corning Fiber 8.875% 06/01/02 65 Owens Corning Fiber 9.375% 06/01/12 65 Pegasus Satellite 9.625% 10/15/05 57 Pegasus Satellite 9.750% 12/01/06 60 Pegasus Satellite 12.375% 08/01/06 57 Pegasus Satellite 12.500% 08/01/07 60 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 64 Penn Traffic Co. 11.000% 06/29/09 57 Piedmont Aviat 9.900% 11/08/06 8 Piedmont Aviat 10.000% 11/08/12 0 Piedmont Aviat 10.250% 01/15/07 23 Piedmont Aviat 10.300% 03/28/06 7 Piedmont Aviat 10.350% 03/28/12 0 Pixelworks Inc. 1.750% 05/15/24 68 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 3 Polaroid Corp. 11.500% 02/15/06 0 Portola Packaging 8.250% 02/01/12 69 Primedex Health 11.500% 06/30/08 57 Primus Telecom 3.750% 09/15/10 48 Primus Telecom 8.000% 01/15/14 68 Psinet Inc 10.000% 02/15/05 0 Psinet Inc 11.500% 11/01/08 0 Railworks Corp. 11.500% 04/15/09 0 Radnor Holdings 11.000% 03/15/10 71 Read-Rite Corp. 6.500% 09/01/04 51 Realco Inc. 9.500% 12/15/07 40 Reliance Group Holdings 9.000% 11/15/00 24 Reliance Group Holdings 9.750% 11/15/03 2 RDM Sports Group 8.000% 08/15/03 0 RJ Tower Corp. 12.000% 06/01/13 54 Safety-Kleen Corp. 9.250% 06/01/08 0 Safety-Kleen Corp. 9.250% 05/15/09 0 Salton Inc. 10.750% 12/15/05 73 Salton Inc. 12.250% 04/15/08 60 Silverleaf Res. 10.500% 04/01/08 0 Solectron Corp. 0.500% 02/15/34 71 Specialty Paperb. 9.375% 10/15/06 75 Startec Global 12.000% 05/15/08 0 Syratech Corp. 11.000% 04/15/07 32 Teligent Inc. 11.500% 12/01/07 0 Teligent Inc. 11.500% 03/01/08 1 Tom's Foods Inc. 10.500% 11/01/04 73 Tower Automotive 5.750% 05/15/24 20 Triton PCS Inc. 8.750% 11/15/11 66 Triton PCS Inc. 9.375% 02/01/11 68 Tropical SportsW 11.000% 06/15/08 35 Twin Labs Inc. 10.250% 05/15/06 17 United Air Lines 6.831% 09/01/08 14 United Air Lines 6.932% 09/01/11 50 United Air Lines 7.270% 01/30/13 41 United Air Lines 7.811% 10/01/09 38 United Air Lines 8.030% 07/01/11 15 United Air Lines 8.250% 04/26/08 21 United Air Lines 8.310% 06/17/09 53 United Air Lines 8.700% 10/07/08 48 United Air Lines 9.000% 12/15/03 9 United Air Lines 9.060% 09/26/14 46 United Air Lines 9.125% 01/15/12 8 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.300% 03/22/08 38 United Air Lines 9.350% 04/07/16 48 United Air Lines 9.560% 10/19/18 38 United Air Lines 9.750% 08/15/21 8 United Air Lines 9.760% 05/13/06 48 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.110% 01/05/06 41 United Air Lines 10.110% 02/19/06 38 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 07/15/21 8 United Air Lines 10.360% 11/13/12 54 United Air Lines 10.360% 11/20/12 54 United Air Lines 10.670% 05/01/04 8 United Air Lines 11.210% 05/01/14 8 Univ. Health Services 0.426% 06/23/20 59 United Homes Inc. 11.000% 03/15/05 0 US Air Inc. 7.500% 04/15/08 0 US Air Inc. 8.930% 04/15/08 0 US Air Inc. 9.330% 01/01/06 42 US Air Inc. 10.250% 01/15/07 1 US Air Inc. 10.490% 06/27/05 3 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 6 US Air Inc. 10.700% 01/15/07 23 US Air Inc. 10.900% 01/01/08 3 US Air Inc. 10.900% 01/01/09 5 US Air Inc. 10.900% 01/01/10 5 US Airways Inc. 7.960% 01/20/18 48 US Airways Pass. 6.820% 01/30/14 40 Venture Hldgs 9.500% 07/01/05 1 Vesta Insurance Grp. 8.750% 07/15/25 72 WCI Steel Inc. 10.000% 12/01/08 51 Werner Holdings 10.000% 11/15/07 71 Westpoint Stevens 7.875% 06/15/05 0 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 51 Winsloew Furniture 12.750% 08/15/07 20 Winstar Comm 14.000% 10/15/05 1 Winstar Comm Inc. 10.000% 03/15/08 1 Winstar Comm Inc. 12.500% 04/15/08 0 World Access Inc. 4.500% 10/01/02 7 World Access Inc. 13.250% 01/15/08 4 Xerox Corp. 0.570% 04/21/18 50 ********* 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, Lucilo Pinili, Jr., 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 ***