/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050427.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, April 27, 2005, Vol. 9, No. 98 Headlines ABFC 2005-HE1: Moody's Rates Cert. Classes B-1 & B-2 at Low-B ADELPHIA COMMS: Files Time Warner & Comcast Sale Pact with SEC ADESA INC: Names J. Peisner VP for Investor Relations & Planning AEROGEN INC: Auditors Raise Going Concern Doubt in Annual Report ALASKA AIR: Posts $80.5 Million Net Loss in First Quarter 2005 ALPHATRADE: Achieves Positive Cash Flow & Cuts Debt by 39% in Q1 AMCAST INDUSTRIAL: Employs JP Morgan as Claims & Noticing Agent AMERICAN AIR: Moody's Says Credit Pact Changes Won't Alter Ratings AMOROSO CONSTRUCTION: Confirmation Hearing Continued to May 26 APPLICA INC: Hosting First Quarter Conference Call Tomorrow ATA AIRLINES: Inks Third Amendment to Southwest Credit Pact ATA AIRLINES: Can Assume 25 Contracts with Signature & ASII BRYAN MACHINING: Case Summary & 20 Largest Unsecured Creditors BUTLER ANIMAL: Moody's Junks Second Lien Term Loan CHIQUITA BRANDS: Investigation Delays Fresh Express Purchase CHYPS CBO: Fitch Lowers $55.9 Million Notes Two Notches to CC CLEANTEC SUPPORT: Case Summary & 17 Largest Unsecured Creditors CLONES SOCIETY: Files for Bankruptcy Protection in Canada CONE MILLS: Court Confirms Chapter 11 Plan of Liquidation CONTINENTAL AIRLINES: Posts $184 Million Net Loss in First Quarter CREDIT SUISSE: S&P Lifts Low-B Ratings on Six Certificate Classes DIGITAL VIDEO: Losses & Deficit Trigger Going Concern Doubt DMX MUSIC: Court Okays Sale Procedures & Auction Set for May 9 DRUGMAX INC: Losses Prompt Auditors to Raise Going Concern Doubt E*TRADE FIN'L: Earns $92 Million of Net Income in First Quarter ENERGEM RESOURCES: Intends to File Q1 Financials on April 29 ENUCLEUS INC: Funding Uncertainty Prompts Going Concern Doubt ENVIRONMENTAL ELEMENTS: Hires FTI as Turnaround Consultant EVANS & SUTHERLAND: Apr. 1 Balance Sheet Upside-Down by $2 Million FEDERAL-MOGUL: Names Ramzi Hermiz Senior VP for Sealing Systems FEDERAL-MOGUL: Names Michael Sobieski VP for Ignition & Wipers FINOVA CAPITAL: Wants to Clarify Plan Provisions FORCE PROTECTION: Auditors Raise Going Concern Doubt GENEVA STEEL: James T. Marcus Approved as Chapter 11 Trustee GLOBAL ENVIRONMENTAL: Losses & Deficit Trigger Going Concern Doubt GOLDSTAR EMS: Files for Chapter 11 Protection in S.D. Texas GOLDSTAR EMS: Case Summary & 20 Largest Unsecured Creditors GREENPOINT MORTGAGE: Moody's Rates $9.04MM Class M-8 Notes at Ba1 HART MICHIGAN: Corrective Measures Prompt S&P to Revise Outlook HEXCEL CORP: Stockholders' Deficit Widens to $68.3M at March 31 IMMERSION CORP: March 31 Balance Sheet Upside-Down by $7.9 Million JB OXFORD: Tardy 10-K Contains Going Concern Qualification KMART CORP: Engelbrecht Asks Court to Confirm Interest in Claim LONG BEACH: Moody's Places Ba1 Rating on $35MM Class B-1 Certs. LUNN 119TH: Wants to Hire DLA Piper as Bankruptcy Counsel LUNN 119TH: Section 341(a) Meeting Slated for April 28 MATRIX SERVICE: Closes $30 Million Private Debt Placement MCI INC: Reports 2004 Compensation for Highest Paid Officers MCI INC: Will Hold Annual Shareholders Meeting on May 16 MERIDIAN AUTOMOTIVE: Files for Chapter 11 Protection in Delaware MERIDIAN AUTOMOTIVE: Case Summary & 30 Largest Unsecured Creditors MERIDIAN AUTOMOTIVE: S&P's Corporate Credit Rating to Tumbles to D MESA TRUST: Moody's May Up Ba2 Rating on Class B After Review METRIS COMPANIES: Earns $27.6 Million of Net Income in 1st Qtr. MIRANT CORP: Creditors Say Plan Violates Absolute Priority Rule MIRANT CORP: Court Approves Arkansas Electric Bid Protections MIRANT CORP: Canal LLC to Pay Town of Sandwich $1.8 Mil. Tax Bill MIRANT CORP: Hires Alvarez and Marsal Tax Advisory Unit NEW CENTURY: Moody's Reviewing Ratings on 33 Certs. & May Upgrade NEW ORLEANS CITY CLUB: Closing its Doors for Good on June 1 NORAMPAC INC: Earns $12.4 Million of Net Income in First Quarter NORTHSTAR CBO: Fitch Keeps Junk Ratings on A-3 & B Note Classes NORTHSTAR CBO: Fitch Holds Junk Ratings on Classes A-2 & B Notes OCTANE ENERGY: Alberta Court Approves CCAA Plan of Arrangement OMNI ENERGY: Posts $14.3 Million Net Loss in Fiscal-Year 2004 OWENS CORNING: Has Until June 30 to Solicit Votes on Plan PLASTECH ENGINEERED: Moody's Pares Ratings & Says Outlook Negative PONDEROSA PINE: Wants to Use Prepetition Lenders' Cash Collateral PONDEROSA PINE: Look for Bankruptcy Schedules on May 23 PREMCOR INC: Inks $8 Billion Merger Pact with Valero Energy PREMCOR INC: Valero Buy-Out Plans Cue Moody's to Review Ratings PREMCOR INC.: Valero Energy Merger Cues S&P to Watch Ratings QWEST COMMS: Urges FCC to Block SBC-AT&T Merger RECYCLED PAPERBOARD: Gets Third Interim OK to Use Cash Collateral RESTRUCTURE PETROLEUM: Taps Tranzon Driggers as Auctioneer REXNORD CORP: Moody's Rates $312M Incremental Term Loan B at B1 REXNORD CORP: S&P Rates Proposed $312 Million Term Loan at B+ SECURITIZED ASSET: Fitch Rates $8.7 Million Private Offer at BB+ SEPRACOR INC: March 31 Balance Sheet Upside-Down by $351 Million SHAW GROUP: 93% of Noteholders Agree to Amend Sr. Note Indenture SR TELECOM: 8.15% Debentures Holders Okays Maturity Extension SR TELECOM: Payment Default Triggers S&P's D Ratings STELCO INC: Uses $114 Million of Financing Funds as of April 15 STRUCTURED ASSET: Moody's Rates Cert. Classes B-4 & B-5 at Low-B TECHNOPRISES: Tel Aviv Court Denies Temp. Liquidator Appointment TELEGLOBE COMMS: Expands Retention of Miles & Stockbridge & Cozen THERMADYNE HOLDINGS: Poor Performance Prompts S&P to Cut Ratings TORCH OFFSHORE: Committee Hires Alvarez & Marsal as Fin'l Advisors TRANS-INDUSTRIES: Auditors Raise Going Concern Doubt in Form 10-K TRINSIC INC: PwC Raises Going Concern Doubt in Annual Report USG CORP: Wants to Enter into IRS Settlement & Set-Off Agreement USM CORP: Lease Decision Period Extended to June 3 VALERO ENERGY: Inks Pact to Acquire Premcor for $8 Billion VALERO ENERGY: Premcor Purchase Cues Fitch to Review Ratings VALERO ENERGY: Premcor Buy-Out Plans Cue Moody's to Review Ratings VALERO LOGISTICS: Moody's Reviewing Ratings for Possible Downgrade VARTEC TELECOM: Wants to Sell Protel Shares & Other Assets W.R. GRACE: Asbestos Comms. Wants Sealed Air Settlement Pact OK'd W.R. GRACE: Hiring Beveridge & Diamond as Environmental Counsel WEIGHT INTERVENTION: List of 30 Largest Unsecured Creditors WEIRTON STEEL: Trustee Asks Court to Approve National Steel Pact WELLINGTON PROPERTIES: Case Summary & 16 Unsecured Creditors WESTPOINT STEVENS: Court Approves Avoidance Action Procedures * Cadwalader Expands Corp. Practice with Mark Roppel as Partner * Upcoming Meetings, Conferences and Seminars ********* ABFC 2005-HE1: Moody's Rates Cert. Classes B-1 & B-2 at Low-B ------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by ABFC 2005-HE1 Trust, and ratings ranging from Aa1 to Ba2 to mezzanine and subordinate certificates issued in the securitization. The securitization is backed by: * Option One Mortgage Corporation (81%), and * Accredited Home Lenders, Inc. (19%) originated or acquired adjustable-rate (88%) and fixed-rate (12%) subprime mortgage loans. The ratings are based primarily on: (1) the credit quality of loans, (2) subordination, (3) overcollateralization, and (4) excess spread. The credit quality of the loans backing the securitization is in line with the average loan pool backing recent subprime securitizations. Option One Mortgage Corporation will service the loans originated by Option One Mortgage Corporation and Countrywide Home Loan Servicing LP will service the loans originated by Accredited Home Lenders, Inc. Moody's has assigned Option One and Countrywide its top servicer quality rating as a primary servicer of subprime loans. The complete rating actions: Issuer: ABFC 2005-HE1 Trust Securities: ABFC Asset-Backed Certificates, Series 2005-HE1 * Class A-1SS, $488,803,000, Super Senior P&I, Variable, rated Aaa * Class A-1MZ, $54,312,000, Super Senior Support P&I, Variable, rated Aaa * Class A-2SS, $434,010,000, Super Senior P&I, Variable, rated Aaa * Class A-2MZ, $108,503,000, Super Senior Support P&I, Variable, rated Aaa * Class A-3A, $136,544,000, Senior P&I, Variable, rated Aaa * Class A-3B, $140,672,000, Senior P&I, Variable, rated Aaa * Class A-3C, $28,080,000, Senior P&I, Variable, rated Aaa * Class M-1, $92,610,000, Mezzanine P&I, Variable, rated Aa1 * Class M-2, $56,991,000, Mezzanine P&I, Variable, rated Aa2 * Class M-3, $31,166,000, Mezzanine P&I, Variable, rated Aa3 * Class M-4, $31,167,000, Mezzanine P&I, Variable, rated A1 * Class M-5, $31,167,000, Mezzanine P&I, Variable, rated A2 * Class M-6, $26,714,000, Mezzanine P&I, Variable, rated A3 * Class M-7, $20,481,000, Mezzanine P&I, Variable, rated Baa1 * Class M-8, $18,700,000, Mezzanine P&I, Variable, rated Baa2 * Class M-9, $12,467,000, Mezzanine P&I, Variable, rated Baa3 * Class B-1, $11,576,000, Subordinate P&I, Variable, rated Ba1 * Class B-2, $17,809,000, Subordinate P&I, Variable, rated Ba2 Class B-2 has 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. ADELPHIA COMMS: Files Time Warner & Comcast Sale Pact with SEC -------------------------------------------------------------- On April 25, 2005, Adelphia Communications Corp. filed with the Securities and Exchange Commission the asset purchase agreements it entered into with Time Warner NY Cable LLC, a Time Warner Cable Inc. subsidiary, and with Comcast Corporation. As previously reported, Time Warner and Comcast entered into definitive agreements with ACOM to acquire substantially all of ACOM's U.S. assets for an aggregate of $12.7 billion in cash and 16% of the common stock of Time Warner Cable. A full-text copy of the Asset Purchase Agreement between ACOM and Time Warner NY is available for free at: http://www.sec.gov/Archives/edgar/data/796486/000110465905017814/a05-7131_1ex2d1.htm A full-text copy of the Asset Purchase Agreement between ACOM and Comcast is available for free at: http://www.sec.gov/Archives/edgar/data/796486/000110465905017814/a05-7131_1ex2d2.htm According to Brad M. Sonnenberg, EVP, General Counsel and Secretary of ACOM, the purchase price is subject to customary adjustments to reflect changes in ACOM's net liabilities and subscribers as well as any shortfall in its capital expenditure spending relative to its budget during the interim period between the execution of the Purchase Agreements and the consummation of the transaction. ACOM will file a revised Plan of Reorganization and draft Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York that reflects the terms of the transaction. The closing of the transaction is subject to the Court's confirmation of the Plan, applicable regulatory approvals and other customary closing conditions. Subject to receipt of all necessary approvals, Mr. Sonnenberg estimates the closing of the transaction in about nine to 12 months. At the closing, 4% of the purchase price will be deposited into escrow to secure ACOM's obligations in respect of: -- any post-closing adjustments to the purchase price; -- its indemnification obligations for breaches of its representations, warranties and covenants pursuant to the Purchase Agreements; and -- its indemnification obligations with respect to assets and liabilities that it retains. Mr. Sonnenberg relates that the representations, warranties and covenants the parties agreed to in the Asset Purchase Agreements, include covenants that: a. require the parties to commence appropriate proceedings before the Bankruptcy Court to obtain approval of the Plan and to use commercially reasonable efforts to obtain the regulatory and other approvals required in connection with the transaction; and b. subject to certain exceptions, prohibit ACOM from soliciting, encouraging or responding to proposals relating to alternative business combination transactions. The Asset Purchase Agreements contain certain termination rights providing, among others, that upon termination of the Agreements under specified circumstances, ACOM may be required to pay Time Warner NY a termination fee of around $353 million and Comcast a termination fee of $87.5 million. Pursuant to a letter agreement dated April 20, 2005, if the Comcast Purchase Agreement is terminated prior to closing due to failure to obtain FCC or applicable antitrust regulatory approvals, Time Warner NY will acquire the cable operations of ACOM that Comcast would have acquired pursuant to the Comcast Agreement. In that event, Time Warner NY would be required to pay the $3.5 billion purchase price to have been paid by Comcast, less Comcast's allocable share of the liabilities (between $550 and $600 million) of the Century-TCI and Parnassos joint ventures between ACOM and Comcast. That purchase price may be satisfied at Time Warner NY's election in any combination of shares of Time Warner Cable's Class A Common Stock and cash. 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. 90; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADESA INC: Names J. Peisner VP for Investor Relations & Planning ---------------------------------------------------------------- ADESA, Inc. (NYSE: KAR), named Jonathan Peisner vice president of Investor Relations and Planning. Mr. Peisner succeeds Paul Lips, who was recently promoted to senior vice president of Operations for ADESA Corp. LLC, the company's used vehicle auction subsidiary. Mr. Peisner brings a strong investor relations and financial background to ADESA. Previously, he had served as managing director and founder of Axios Advisors, LLC, and Axios Capital Partners, LLC, independent investor relations and financial consulting advisory firms founded in 2003. Prior to establishing Axios, Peisner held senior level investor relations, planning and treasury positions in both the automotive and retail sectors, including treasurer of Collins & Aikman, (a Fortune 1000 automotive supplier), director of Investor Relations and Business Planning of Lear Corporation (a Fortune 150 automotive supplier) and assistant treasurer of Arbor Drugs, Inc. (an Inc. 1000 retailer). Peisner is a CPA and earned his Bachelor of Arts degree in Accounting from Michigan State University and MBA in Finance from Wayne State University. An investor relations practitioner since 1990, Mr. Peisner is a member of the National Investor Relations Institute and has served on NIRI's Small Cap Advisory Committee, Volunteer Advisory Network and has been a contributor to NIRI's "IR Body of Knowledge." He is also co-chairman of the Investor Relations Special Interest Group for the Financial Executives Networking Group. "I am pleased that Jon has joined ADESA to lead our investor relations and planning functions," stated Cam Hitchcock, executive vice president and chief financial officer for ADESA. "Peisner has been advising ADESA on investor relations matters since fall 2004 and has helped ADESA's senior management team shape and strengthen its investor communications program. He is a great addition to our team." Mr. Peisner's appointment to vice president of Investor Relations and Planning is effective immediately and he will report to Hitchcock. Along with his wife, Cheryl, and their three children, he will be relocating from West Bloomfield, Michigan to Carmel, Indiana. Headquartered in Carmel, Indiana, ADESA, Inc. (NYSE: KAR) -- http://www.adesainc.com/-- is North America's largest publicly traded provider of wholesale vehicle auctions and used vehicle dealer floorplan financing. The Company's operations span North America with 53 ADESA used vehicle auction sites, 30 Impact salvage vehicle auction sites and 83 AFC loan production offices. * * * As reported in the Troubled Company Reporter on June 4, 2004, Standard & Poor's Rating Services assigned its 'B+' rating to ADESA Inc.'s proposed $125 million senior subordinated notes due 2012, and affirmed its 'BB' corporate credit and senior secured ratings on the Carmel, Indiana-based operator of wholesale used-vehicle auctions and provider of used-vehicle floorplan financing. Moody's affirmed its B1 rating on those 7-5/8% senior unsecured subordinated notes due June 15, 2012, on Nov. 2, 2004. AEROGEN INC: Auditors Raise Going Concern Doubt in Annual Report ---------------------------------------------------------------- PricewaterhouseCoopers LLP raised substantial doubt about Aerogen, Inc.'s (Nasdaq: AEGN) ability to continue as a going concern after it audited the Company's 2004 financial statements, included in the Company's Annual Report on Form 10-K/A filed on April 19, 2005 As stated in the report, the Company has suffered recurring losses and negative cash flows from operations that triggered the going concern opinion. As of December 31, 2004, Aerogen had cash and cash equivalents of approximately $16.9 million. "We are pursuing a number of alternatives to maximize stockholder value, including strategic transactions, collaborative partnerships and the licensing on sale of certain of our intellectual property," the Company stated in its Annual Report. "If these efforts are not successful, we will need to raise additional capital before the end of 2005 to continue operations. Licensing or collaborative arrangements, if necessary to raise additional funds, may require us to relinquish rights to either certain of our products or technologies or desirable marketing territories, or all of these." About the Company Aerogen, a specialty pharmaceutical company, develops products based on its OnQ(R) Aerosol Generator technology to improve the treatment of respiratory disorders in the acute care setting. Aerogen also has development collaborations with pharmaceutical and biotechnology companies for use of its technology in the delivery of novel compounds that treat respiratory and other disorders. Aerogen is headquartered in Mountain View, California, with a campus in Galway, Ireland. For more information, visit http://www.aerogen.com/ ALASKA AIR: Posts $80.5 Million Net Loss in First Quarter 2005 -------------------------------------------------------------- Alaska Air Group, Inc. (NYSE:ALK) reported a first quarter net loss of $80.5 million, compared to a net loss of $42.7 million in the first quarter of 2004. First quarter results in 2005 include a charge of $144.7 million ($90.4 million, net of tax) resulting from the cumulative effect of a change in the way the company accounts for airframe and engine overhauls and a $7.4 million restructuring charge ($4.6 million, net of tax), primarily associated with a decision to terminate the lease at the company's Oakland heavy maintenance base. This quarter's results also include $90.0 million ($56.2 million, net of tax) in mark-to-market gains on fuel hedges that settle in future periods compared to $0.4 million ($0.3 million, net of tax) in 2004. Without these items, and excluding the impairment charge of $2.4 million ($1.6 million, net of tax) in the first quarter of 2004, the net loss would have been $41.7 million, during the first quarter of 2005 compared to a loss of $41.4 million in the first quarter of 2004. "Making excuses for our results would be easy based on the current environment of extremely high fuel prices, very little pricing power and a seasonally soft first quarter," said Bill Ayer, Alaska Air Group's chairman and chief executive officer. "But these realities, along with the cost reductions achieved by others in the industry, mean that we simply must have lower costs." Alaska Airlines' passenger traffic in the first quarter increased 8.9 percent on a capacity increase of 3.7 percent. Alaska's load factor increased 3.5 percentage points to 72.6 percent compared to the same period in 2004. Alaska's operating revenue per available seat mile (ASM) increased 2.6 percent, while its operating cost per ASM excluding fuel and restructuring charges decreased 0.7 percent. Alaska's pretax income for the quarter was $15.4 million. Excluding the restructuring charges of $7.4 million and the gains on fuel hedges that settle in future periods of $77.7 million in 2005 and $0.4 million in 2004, Alaska's pretax loss was $54.9 million for the quarter, compared to a pretax loss of $53.6 million in 2004. Horizon Air's passenger traffic in the first quarter increased 20 percent on a 13 percent capacity increase. Horizon's load factor increased by 4 percentage points to 69 percent compared to the same period in 2004. Horizon's operating revenue per ASM decreased 2.8 percent, while its operating cost per ASM excluding fuel and impairment charge decreased 4.4 percent. The decrease in Horizon's revenue per ASM and cost per ASM excluding fuel is largely due to the addition of Horizon's contract flying for Frontier Airlines, which began in January 2004. This flying represented 23 percent of Horizon's capacity during the first quarter and 10.1 percent of its passenger revenues compared to 16.2 percent of its capacity and 7.4 percent of its passenger revenues in the first quarter of 2004. Horizon's pretax income for the quarter was $4.6 million, compared to a pretax loss of $10.4 million in 2004. Excluding gains on fuel hedges that settle in future periods of $12.3 million and the impairment charge in 2004, Horizon's pretax loss was $7.7 million for the quarter, compared to $8.0 million in the first quarter of 2004. Alaska Air Group had cash and short-term investments at March 31, 2005, of approximately $764 million compared to $874 million at Dec. 31, 2004. A summary of financial and statistical data for Alaska Airlines and Horizon Air as well as a reconciliation of the reported non- GAAP financial measures can be found on pages 6 through 10. A conference call regarding the first quarter 2005 results will be simulcast via the Internet at 8:30 a.m. Pacific Time. It may be accessed through the company's website at http://www.alaskaair.com/For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at http://www.alaskaair.com/ * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, 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. ALPHATRADE: Achieves Positive Cash Flow & Cuts Debt by 39% in Q1 ---------------------------------------------------------------- AlphaTrade (OTCBB:APTD) achieved its first full quarter of positive cash flow from operations. It also reduced its long-term debt during the first quarter of 2005 from $2.13 million to $1.3 million, a decrease of 39%. "AlphaTrade has turned the corner," said Penny Perfect, AlphaTrade's chief executive officer. "Our subscriber base has grown to the point that we generate more cash than it takes to cover our operating expenses." AlphaTrade recorded a nominal loss of $310 for the quarter ended March 31, 2005, compared to a loss of $731,770 for the same quarter of 2004. When the following non-cash expenses are added back to the loss the Company results show a positive cash flow of $76,947. The non-cash expenses are $75,425 of consulting fees paid with shares of the Company's common stock and depreciation of $1,832. As a sign of their confidence in the viability of the company, its officers, through their management companies, have forgone their first quarter management fees of $120,000. These results reinforce and confirm the Company's status as a going concern. Additionally, the Company reduced its debt from $2,131,067 as of December 31, 2004 to $1,296,302 as of March 31, 2005, without any sales of its shares in private or public offerings. A major reason for the reduction was the decision of management to convert $735,000 owed to them to shares of the Company's common stock. As previously announced, AlphaTrade's revenue rose from $940,000 in 2003 to $1.92 million in 2004. Unaudited sales totaled $446,389 in the first two months of 2005, equivalent to an annualized rate of nearly $2.7 million. Gross margins also have been increasing, from 10% in 2003 to 31% in 2004, while the Company's net loss has fallen to $2.06 million in 2004 from $8.36 million in 2003. AlphaTrade has projected a gross profit of between $1.0 million and $2.0 million for 2005, up from $599,000 in 2004, bringing it close to its goal of full profitability by the end of 2005. Going Concern Doubt HJ & Associates, LLC, expressed substantial doubt about AlphaTrade's ability to continue as a going concern after it audited the Company's Form 10-K for the fiscal year ended Dec. 31, 2004. The Company has recorded significant losses from operations, has insufficient revenues to support operational cash flows and has a working capital deficit, which together triggered the going concern opinion. About the Company Through its flagship product, E-Gate, AlphaTrade (OTCBB:APTD) -- http://www.alphatrade.com/-- offers reliable and accurate real time financial data coupled with advanced trading analysis tools. E-Gate is a multi-lingual professional service that integrates sophisticated quote information with other timely financial information in an easy-to-use format. AMCAST INDUSTRIAL: Employs JP Morgan as Claims & Noticing Agent --------------------------------------------------------------- Amcast Industrial Corporation and its debtor-affiliates, sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of Ohio, to employ and retain JP Morgan Trust Company as claims and noticing agent. JP Morgan is expected to perform these services: (a) database set-up, including import and export of data to establish claims reconciliation site; (b) aid in claims reconciliation process and maintenance of online claims reconciliation site, and providing support services in connection therewith; (c) maintaining an up to date mailing list of all entities that have filed proofs of claim and making that list available to the Debtors upon request; (d) maintaining list of assignees or transferees associated with any proofs of claim or items listed on the Debtors' Schedules; (e) locator services to attempt to communicate with parties without current addresses; (f) printing and mailing of the Plan of Reorganization and Disclosure Statement, and to the extent required, amendments thereto via First Class Mail; (g) receiving, reviewing and tabulating the ballots cast, recording the date and time received, confirming completeness of each ballot, and certifying such ballot tally results; and (h) any additional services related to the balloting, tallying, ballot certification, claims reconciliation and mailing of Plan of Reorganization and Disclosure Statement as required. Victoria Pavlick, Vice President of JP Morgan, discloses the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Vice President $228 Senior Consultants $162 Consultants $124 Call Center Management $84 Administrative $52 Call Center Attendants $42 JP Morgan assures the Court that it does not represent any interest adverse to the Committee, the Debtors or their estates. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq., at Thompson Hine LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. AMERICAN AIR: Moody's Says Credit Pact Changes Won't Alter Ratings ------------------------------------------------------------------ Moody's Investors Service commented that the amendments to the liquidity facilities that provide credit support to American Airlines, Inc.'s Series 1999-1 Class A1, A2 and B Enhanced Equipment Trust Certificates would not affect the current ratings assigned to these certificates. The current ratings are Baa3 for the Class A1 and A2 certificates and Ba3 for the Class B certificates. The amendments to the liquidity credit agreements were made as a result of the phasing out of existing state guarantees for German public-sector financial institutions (Anstaltslast and Gewaehrtraegerhaftung) as agreed by the European Commission and the German authorities in July 2001. Obligations of Bayerische Landesbank (Moody's short-term rating of Prime-1 and its issuer rating is Aaa), including the liquidity facility for the Certificates, are subject to this change in government support. Essentially, the existing guarantees for public-sector financial institutions will be removed in July 2005, however, any liabilities incurred by these financial institutions before July 18, 2005 and maturing before the end of 2015, or issued before July 18, 2001 irrespective of their maturity, will continue to benefit from the "grandfathering" through these state guarantees. State support has been a fundamental underpinning of the ratings assigned to Bayerische Landesbank as well as those of other German Landesbanks. The original liquidity facility supporting the Certificates was structured as a 364 day renewable line of credit and as such, would have become a new commitment at its next maturity date and no longer supported by the German state. The revisions made to the liquidity facilities allowed the liquidity provider, Bayerische Landesbank, to "term-out" its commitment therefore retaining German state support through December 31, 2015. If such support is not maintained, the rating assigned to the liquidity facility provider could be adjusted downward. Should that rating decline to a level below A1, P-1, the Trustee for the Certificates would be required to either arrange for an alternate facility or make a drawing of funds to cash collateralize the bank's obligation. The changes in the documentation have the effect of continuing to tie the rating of the liquidity facility to that of the German state. Bayerische Landesbank is the initial provider of liquidity facilities for this transaction, which are designed to provide for drawings sufficient to pay interest on the Certificates up to the amount necessary to pay the equivalent of 18 months interest in the event of a shortfall or default in payments from American Airlines, Inc. The liquidity facilities do not provide for drawings to pay for principal or premiums on the Certificates. Any amounts outstanding under the liquidity facility have a lien prior to that of the certificate holders on the proceeds from any liquidation of the underlying aircraft collateral. AMOROSO CONSTRUCTION: Confirmation Hearing Continued to May 26 -------------------------------------------------------------- The Honorable Alan Jaroslovsky of the U.S. Bankruptcy Court for the Northern District of California will continue the hearing to consider confirmation of the Joint Liquidating Plan of Reorganization filed by Dennis J. Amoroso Construction Co., Inc., and its debtor-affiliate, Amoroso Investments, LLC. The hearing will continue at 10:00 a.m., on May 26, 2005. Judge Jaroslovsky approved the adequacy of the Debtors' Disclosure Statement on Feb. 4, 2005. As reported on the Troubled Company Reporter on Feb. 16, 2005, the Plan contemplates the appointment of a Liquidating Agent, who is charged with the obligation to take over the Debtors' remaining assets in trust, including principally the construction accounts receivable and the Travelers Bad Faith Litigation , reduce them to money, and distribute them to creditors in the priority set out in the Bankruptcy Code. The Plan groups claims and interests into eight classes. Unimpaired Claims consist of Priority Claims for Wages, Unpaid Contribution to Employee Benefit Plans, and Consumer Deposits to be paid in full on the Effective Date. Impaired Claims consist of: a) General Unsecured Creditors with claims amounting to over $500 will receive a Pro Rata payment from the liquidation of the Debtors' assets and the proceeds from a successful resolution of the Travelers Bad Faith Litigation and the Travelers Lien Litigation; b) Administrative Convenience Claims amounting to $500 or less will receive an immediate 75% lump sum dividend in full satisfaction of their claims; c) three claims receiving the same treatment are the Firemen's Fund Insurance Company, Travelers Casualty & Surety Co. of America and Kemper Insurance Company, which are all disputed and pending the resolution of those three disputes, the Plan provides that those claims will retain their equitable lien rights until the contingencies concerning those claims are resolved; d) Amoroso Family Claims will be deemed subordinated to the full payment of the Class 1, Class 2, Class 3, Class 4, Class 5 and Class 6 Allowed Claims; and e) Debtors' Equity Holders will be cancelled on the Effective Date and no dividends or other payments will be made to those claims on account of their stock and llc memberships. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050414035733 A full-text copy of the Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=050414035310 Headquartered in Novanto, California, Dennis J. Amoroso Construction Co., Inc., is a general contractor. The Company and its debtor-affiliate filed for chapter 11 protection on September 21, 2004 (Bankr. N.D. Calif. Case No. 04-12244). John H. MacConaghy, Esq., at Law Offices of John H. MacConaghy represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. APPLICA INC: Hosting First Quarter Conference Call Tomorrow ----------------------------------------------------------- Applica Incorporated (NYSE: APN) anticipates it will record a net loss in the first quarter of between $22 million and $23 million. The larger-than- estimated loss is primarily the result of: -- a write-down of inventory related to lower-than-anticipated consumer demand; -- increased product warranty returns and related expenses; and -- additional losses in the Mexico manufacturing operations. Applica will hold a conference call tomorrow, April 28, 2005, at 11:00 a.m., Eastern Daylight Time, to discuss its first-quarter results and trends in operations. Live audio of the conference call will be simultaneously broadcast over the Internet and will be available to members of the news media, investors and the general public. The conference call is expected to last approximately one hour. Broadcast of the event can be accessed on the Company's website -- http://www.applicainc.com/-- by clicking on the Investor Relations page. You may also access the call via CCBN at http://www.streetevents.com/ The event will be archived and available for replay through Monday, May 5, 2005, at midnight. About Applica Applica Incorporated -- http://www.applicainc.com/-- and its subsidiaries are marketers and distributors of a broad range of branded and private-label small household appliances. Applica markets and distributes kitchen products, home products, pest control products, pet care products and personal care products. Applica markets products under licensed brand names, such as Black & Decker(R), its own brand names, such as Windmere(R), LitterMaid(R), Belson(R) and Applica(R), and other private-label brand names. Applica's customers include mass merchandisers, specialty retailers and appliance distributors primarily in North America, Latin America and the Caribbean. The Company operates a manufacturing facility in Mexico. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, 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. ATA AIRLINES: Inks Third Amendment to Southwest Credit Pact ----------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Brian T. Hunt, Senior Vice-President and General Counsel of ATA Holdings Corp., discloses that ATA Holdings and Southwest Airlines Co. have agreed to further amend the December 23, 2004 Southwest Bid Proposal. The parties executed various amendments to extend the date on which the Minimum Consolidated EBITDARR and Minimum Adjusted EBITDARR financial covenants would be effective. Pursuant to the Third Amendment dated April 15, 2005, the financial covenants would be effective April 1, 2005. The Air Transportation and Stabilization Board and Unofficial Committee of Unsecured Creditors have consented to the Amendments. * * * As previously reported, Southwest Airlines Co. has committed to provide ATA Airlines, Inc., with up to $47,000,000 in postpetition financing pursuant to a Secured Debtor-in-Possession Credit and Security Agreement. Southwest Airlines agrees to provide up to $40,000,000 in cash plus a guaranty of up to $7,000,000 for amounts outstanding under two separate loans made to ATA Airlines by the City of Chicago to fund a jet bridge extension at Midway. On a final basis, Judge Lorch authorized the Debtors to borrow up to $47,000,000 from Southwest Airlines Co. pursuant to the terms of the DIP Credit Agreement and pay all requisite fees and expenses payable to or on behalf of Southwest Airlines. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Can Assume 25 Contracts with Signature & ASII ----------------------------------------------------------- Pursuant to Section 365 of the Bankruptcy Code, ATA Airlines, Inc. and its debtor-affiliates seek the United States Bankruptcy Court for the Southern District of Indiana's authority to assume 25 ground-handling and into-plane fueling agreements, as amended by a Resolution Agreement entered into by ATA Airlines, Inc., Signature Flight Support Corporation and Aircraft Service International, Inc. Signature and Aircraft Service International have asked the Court to lift the stay to terminate the Contracts. The Debtors opposed the Providers' request. After extensive negotiations, the Providers agreed to allow the Debtors to assume the Contracts, subject to certain modifications. Pursuant to the Resolution Agreement, the Providers will accept $245,525, as full and complete cure of any defaults that may exist under the Contracts. ATA Airlines will pay the Cure Amount in three installments without delay. Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that the Resolution Agreement, which includes information on pricing, is highly confidential and proprietary. The Debtors will provide copies of the Resolution Agreement to the U.S. Trustee, counsels for Southwest Airlines, Inc., the DIP lender, the Official Committee of Unsecured Creditors and the ATSB, and to other parties, subject to confidentiality agreements. Mr. Nelson says the Providers provide necessary services to ATA Airlines at numerous locations. Assumption of the Contracts, as amended, will allow ATA Airlines to continue to receive the necessary services on terms that are both fair and reasonable. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) BRYAN MACHINING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Bryan Machining, Inc. dba Innovative Machining, Inc. 12250 West 52nd Avenue Wheat Ridge, Colorado 80033-2024 Bankruptcy Case No.: 05-19738 Type of Business: The Debtor produces specialized parts in quantities from single prototypes to high production runs for engineers, scientists, inventors, technicians and mechanics. See http://www.innovativemachininginc.com Chapter 11 Petition Date: April 26, 2005 Court: District of Colorado (Denver) Judge: Howard R Tallman Debtor's Counsel: Jeffrey Weinman, Esq. Weinman & Associates 730 17th Street, Suite 240 Denver, Colorado 80202 Tel: (303) 572-1010 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 ------ --------------- ------------ Key Bank LOC Bank loan $152,155 PO Box 94831 Cleveland, OH 44101-4831 Wells Fargo Line Bank loan $75,005 Wells Fargo Business Payment Processing PO Box 54349 Los Angeles, CA 90054-0349 ADP Total Source Trade debt $46,784 12250 E Iliff Ave Ste 310 Aurora, CO 80014-1253 Robert Borum Loan $29,692 James Hanson Loan $29,692 MBNA America 1163 Trade debt $25,382 Advanta Trade debt $20,953 Earle M. Jorgensen Company Trade debt $17,080 Bank One Trade debt $16,802 MBNA 2513 Trade debt $14,394 Cutting Tool Supply, LLC Trade debt $13,956 Professional Plastics, Inc. Trade debt $12,396 CitiCard Trade debt $11,173 Mountain States Finishing Trade debt $10,736 Citi Business Card Trade debt $10,234 Qualitek Manufacturing Trade debt $8,563 MBNA America Trade debt $8,215 Shop Tools Trade debt $7,625 Compass Bank Visa Trade debt $6,192 Alpha Tool Corp. $5,855 BUTLER ANIMAL: Moody's Junks Second Lien Term Loan -------------------------------------------------- Moody's Investors Service assigned a B2 senior implied rating to Butler Animal Health Holding Company, LLC. Moody's also assigned a B2 rating to the company's senior secured first lien revolving and term loan B facilities, and a Caa1 rating to the second lien term loan. The outlook for the ratings is stable. This is the first time Moody's has rated Butler AHHC. On April 18, 2005, Oak Hill Capital Management and Darby Group Companies, the current owner of Burns Veterinary Supply, Inc., announced their definitive agreement to acquire W.A. Butler Company, LLC. Oak Hill and Darby will each own approximately 50% of the combined entity, Butler AHHC. Management will also be investors alongside Oak Hill and Darby. Operating assets of both predecessor companies will reside at Butler AHHC's 100% owned operating subsidiary, Butler Animal Health Supply, LLC. Proceeds from the new credit facilities, along with equity contributions by Oak Hill and the company's management, respectively, will be used to finance the purchase price of Butler, repay existing long term debt at Burns and pay for merger related fees and expenses. Darby's equity contribution will consist of Burns assets. The transaction is expected to close in June 2005, and remains subject to approval by the appropriate regulatory authorities. Ratings assigned are: * Senior implied rating -- B2 * $30 million 5-year senior secured first lien revolver -- B2 * $140 million 6-year senior secured first lien term loan B -- B2 * $30 million 7-year second lien term loan -- Caa1 * Senior unsecured issuer rating (non-guaranteed exposure) -- Caa2 The outlook for the ratings is stable. The ratings reflect: (1) Butler AHHC's high leverage; (2) Moody's expectation that free cash flow available for debt reduction will remain limited in the near term; (3) integration risks related to the acquisition of Butler; (4) vendor concentration; (5) the highly competitive environment the company operates in; and (6) consolidation pressures that may trigger debt-financed acquisitions. Positive factors recognized by Moody's ratings include: (1) Butler AHHC's leading position in the growing US market for distribution of companion animal healthcare products; (2) sound economics of the business model; broad customer diversification; (3) Moody's expectation of synergy driven earnings and cash flow growth in the near to medium term; (4) the solid performance track record at both predecessor companies; (5) adequate liquidity; and (6) management's significant experience in animal health care product distribution. The stable outlook anticipates a smooth operational and strategic integration of the two predecessor companies into the new, significantly larger Butler AHHC entity. Moody's anticipates that after the initial integration phase, sales will grow approximately in line with industry growth (about 5-6% annually), that profit margins will continue to expand as synergies are generated, and that cash from operations will fully cover capital expenditures and principal payments scheduled under the credit facilities. Moody's believes the proposed transaction is strategically sound and will strengthen Butler's business profile and competitive position in the $3.3 billion companion animal healthcare distribution market. The merger will bolster Butler's already leading market share, well ahead of the two key competitors, and increase the company's strategic importance to its vendors. In addition, it provides potential cost synergies from warehouse network consolidation, sales force optimization, cheaper sourcing and overhead reduction. Within about 18 months from the time of the acquisition, the company is targeting annual cost savings of $10 million, while incurring one time merger related costs of about $5.6 million. Cost savings of this order of magnitude would significantly boost earnings going forward (Moody's estimates pro forma EBITDA for fiscal 2004 at approximately $29 million before synergy effects). Moody's views the companion animal healthcare industry as fundamentally solid. Limited cyclicality, positive long-term trends in companion animal ownership, and growing availability and awareness of therapeutic options all support medium term industry growth forecasts in the mid single-digits. The combination of a wide range of vendor products and relatively few, typically small veterinary practices make third party distribution the preferred route to market for most products, both for manufacturers and veterinary practices. According to industry sources, the share of direct sales by manufacturers continued to shrink from about 22% in 1995 to 15% in 2002. Moody's believes that over the coming years this trend is more likely to continue than not. Moody's notes, however, that the merger entails significant financial risks related to the high debt burden, limited near term cash generation and challenges in relation to the extensive integration process over the next 18 months. Leverage pro forma for the transaction would have been high for the fiscal year ended December 31, 2004, with adjusted debt to EBITDAR of approximately 6.2 times (debt adjusted for operating leases). Moody's estimates that free cash flow plus 2/3rds rent to adjusted debt and fixed charge coverage will remain weak in fiscal 2005, at about 2.7% and 2.0 times, respectively. In addition, Moody's anticipates that cash from operations less capital expenditures will remain at low absolute levels in 2005 and 2006, reaching approximately $3 million and $9 million, respectively. These estimates reflect a high annual pre-tax interest burden of approximately $14 million, and compare to funded debt of about $173 million at closing of the transaction. Somewhat offsetting the risk of low near term free cash generation is the company's adequate liquidity, provided by the five-year $30 million senior secured first lien revolving credit facility. Over the next twelve months, we estimate that peak usage will not exceed $5 million. Peak usage typically occurs in April or May, as the company increases inventories in preparation for the tick and flea season. Moody's anticipates that the finalized credit agreement governing all senior secured facilities will contain customary limitations such as a 50% annual excess cash flow sweep and financial covenants related to maximum leverage and minimum interest coverage measures. Moody's expects that cushion for these financial covenants will be an appropriate 15%-20%. Moody's notes that the company operates in a highly competitive market environment, with two of Butler AHHC's key competitors also operating on a national scale, and one of them being part of a larger, financially stronger distribution group. In addition, we note that the combined entity will exhibit significant supplier concentration, with the top four vendors accounting for approximately 42% of total purchases. Vendor industry consolidation, changes of distribution strategy (e.g. by a shift from third party distribution to direct sales) or other factors disrupting sales volumes channeled through Butler AHHC may all affect sales, earnings and cash generation. Ratings could be lowered: (1) if cost synergies fall behind plan or turn out to be more costly than anticipated; (2) if cash flow improvement and debt reduction proceed slower than expected; or (3) in the unlikely event of a material debt-financed acquisition that adversely affects the capital structure. An upgrade will be less likely as long as Butler AHHC is going through its planned merger integration phase of about two years. Moody's could upgrade the ratings if earnings, cash flow and debt reduction targets are met. In particular, an upgrade would require free cash flow plus 2/3rds rent to adjusted debt to approach 10%, and fixed charge coverage to exceed 3 times, on a sustainable basis. The B2 ratings on Butler's senior secured first lien revolving credit and term loan facilities reflect their priority in the capital structure as supported by subsidiary company guarantees and by first lien collateral pledges comprising substantially all of the domestic assets of the borrowers and guarantors (including capital stock) and 65% of capital stock of first tier foreign subsidiaries. Despite these benefits, the senior secured first lien facilities are rated at the same level as the senior implied rating (B2) due to limited tangible asset coverage and because they represent the majority of the debt capital structure. The senior secured second lien term loan benefits from the same guarantees as the first lien debt and will be secured by perfected second priority liens on the assets backing the first lien debt. The second lien debt is rated Caa1, two notches below the senior implied rating, reflecting effective subordination to a material amount of first lien debt, as well as the fact that tangible asset coverage is unlikely to provide meaningful principal recovery for this debt class in a distressed scenario. Created by the recently announced combination of W.A. Butler Company, LLC and Burns Veterinary Supply, Inc., Butler Animal Health Holding Company, LLC is the leading distributor of companion animal healthcare products in the U.S. The company will be headquartered in Dublin, Ohio. Fiscal 2004 pro forma sales for the combined entity were about $445 million. CHIQUITA BRANDS: Investigation Delays Fresh Express Purchase ------------------------------------------------------------ Chiquita Brands International Inc. intends to purchase Fresh Express for $855 million. The move is aimed to lessen Chiquita's reliance on banana sales. The acquisition when completed would put Chiquita ahead in the bagged salad market. The deal would also give Chiquita a bigger presence in the fresh-cut fruit market, reports Joe Kay at the Associated Press. Spokesman Mike Mitchell told Mr. Kay that the proposed acquisition is currently on hold due to the Company's investigation of unspecified employees' conduct. Mr. Mitchell adds Chiquita also needs more time to evaluate legal matters regarding the deal's financing. Mr. Mitchell discloses Chiquita intends to close the sale in the second quarter of this year. Mr. Mitchell declined to say anything more on the investigation of employees' conduct, relates Mr. Kay. Specifics will be provided when Chiquita will file its quarterly report on May 10. The purchase of Fresh Express is expected to make Chiquita's reliance on banana sales to be reduced to 42% from 56%. The acquisition will add about $1 billion of revenues and $91 million of adjusted EBITDA to Chiquita's $3 billion 2004 revenue base and $172 million of adjusted 2004 EBITDA. About Fresh Express Headquartered in Salinas Valley, California, Fresh Express controls about 40% of an estimated $2.7 billion market for packaged salads. Acquired in 2001 by Performance Food Group, the highly regarded Fortune 500 distributor and fresh foods company, Fresh Express continues to lead the fresh-cut category not only in market share, but also in product innovation, technical advancements, food safety and success-driven customer partnerships with the nation's most respected and recognized retail grocery, foodservice and restaurant brands. About Chiquita Chiquita Brands International, Inc., is a leading international marketer, producer and distributor of high-quality bananas and other fresh produce, which are sold under Chiquita(R) premium brands and related trademarks. The company is one of the largest banana producers in the world and a major supplier of bananas in Europe and North America. The company also distributes and markets fresh-cut fruit and other branded, value-added fruit products. Additional information is available at http://www.chiquita.com/ * * * As previously reported in the Troubled Company Reporter on Apr. 5, 2005, Moody's Investors Service assigned a B1 rating to Chiquita Brands LLC's proposed new senior secured credit facilities. Moody's also assigned a B3 rating to the planned $150 million senior unsecured notes of Chiquita Brands International, Inc. (CBII, the holding company), downgraded CBII's existing senior unsecured notes to B3 from B2, and downgraded Chiquita's senior implied rating to B2 from B1. The ratings outlook is stable. These ratings actions conclude Moody's review of Chiquita's ratings, which was initiated on February 24, 2005, after the company's announcement that it intended to acquire the Fresh Express unit of Performance Food Group Company for $855 million in cash (approximately 9.4x Fresh Express' adjusted 2004 EBITDA). Proceeds from the proposed credit facilities, along with $50 million of debt secured by ships, $75 million of planned perpetual convertible preferred stock, and cash on hand will fund the acquisition of Fresh Express. The ratings recognize that the addition of Fresh Express provides important diversification to Chiquita's business, but also takes into account the significant cost of the acquisition, its largely debt funding, the consequent increase in financial leverage, the challenges in integrating the new business, which will increase Chiquita's sales by a third, and the continuing sensitivity of Chiquita's earnings and cash flow to the regulatory regime for banana imports in Europe, which will be modified by 2006. The specific regulatory changes in Europe are not yet agreed, and the extent of potential negative impact on Chiquita's profitability is uncertain but could be significant. Moody's ratings actions were: Chiquita Brands LLC: i) $150 million senior secured revolving credit, maturing 2010 -- B1 assigned; ii) $125 million senior secured term loan A, maturing 2010 -- B1 assigned; and iii) $375 million senior secured term loan B, maturing 2012 -- B1 assigned. Chiquita Brands International Inc.: i) $150 million senior unsecured notes, due 2015 -- B3 assigned; ii) $250 million 7.5% senior unsecured notes, due 2014 -- to B3 from B2; iii) Unsecured issuer rating -- to B3 from B2; iv) Senior implied rating -- to B2 from B1; and v) Ratings outlook -- stable. Moody's does not rate Chiquita Brands LLC's existing $150 million secured credit facility, secured shipping loans ($133 million pro forma after the Fresh Express acquisition), or the proposed $75 million of CBII perpetual convertible preferred stock. CHYPS CBO: Fitch Lowers $55.9 Million Notes Two Notches to CC ------------------------------------------------------------- Fitch Ratings has affirmed one and downgraded one class of notes issued by CHYPS CBO 1999-1, Ltd. These rating actions are effective immediately: -- $66,589,714 class A-2 affirmed at 'AAA'; -- $55,851,485 class A-3 downgraded to 'CC' from 'CCC'; -- $13,000,000 class B-1 remains at 'C'; -- $18,000,000 class B-2 remains at 'C'. CHYPS CBO 1999-1, Ltd. (CHYPS 1999-1) is a collateralized bond obligation -- CBO -- managed by Delaware Investment Advisors which closed Jan. 7, 1999. The collateral supporting CHYPS 1999-1 is composed of predominantly high yield bonds. CHYPS CBO is in its amortization period, whereby trading is restricted to the sale of defaulted and credit risk/credit improved securities. The class A-2 notes are insured for interest and principal by Financial Security Assurance Inc. -- FSA, currently rated 'AAA' by Fitch. Included in this review, Fitch discussed the current state of the portfolio with the asset manager. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios. Since the last rating action on March 10, 2004, the collateral has continued to deteriorate. The weighted average rating has decreased to approximately 'CCC-' from 'CCC', which includes defaulted assets representing approximately 30.6% of the $99.5 million of total collateral. The class A overcollateralization -- OC -- ratio has decreased to 57.5% as of the most recent trustee report, dated March 2, 2005, from 75.6% as of Feb. 2, 2004. As a result of the OC test failure, any excess interest after paying the class A-3 notes is applied to redeem the senior notes. On the last payment date, approximately $2.5 million of interest proceeds was applied to redeem senior notes. While the class A-3 notes are anticipated to receive future payments through the interest waterfall, it is unlikely that these notes will receive any payments, other than interest shortfall payments, through the principal waterfall. As a result of this analysis, Fitch has determined that the 'CCC' ratings assigned to the Class A-3 notes no longer reflect the current risk to noteholders. The class B notes are not expected to receive any future cash flow. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ CLEANTEC SUPPORT: Case Summary & 17 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Cleantec Support Services Group, Inc. CSSG, Inc. 23 South Main Street Freeport, New York 11520 Bankruptcy Case No.: 05-82466 Chapter 11 Petition Date: April 14, 2005 Court: Eastern District of New York (Central Islip) Judge: Melanie L. Cyganowski Debtor's Counsel: Richard S Feinsilver, Esq. 1 Old Country Road, Suite 125 Carle Place, New York 11514 Tel: (516) 873-6330 Fax: (516) 873-6183 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ New York State Insurance Fund $136,000 199 Church Street New York, NY 10007 Verizon $44,500 P.O. Box 6360 Syracuse, NY 13217 New York State Department of Taxation $37,000 P.O. Box 5300 Albany, NY 12227 HSBC $20,545 Suite 0627 Buffalo, NY 14270 Internal Revenue Service $20,000 10 Metrotech, 625 Fulton Brooklyn, NY 11201 Armstrong Maintenance $19,000 447 Madison Street Westbury, NY 11590 AMS Metro $13,912 c/o D&B REC 899 Eaton Avenue Bethlehem, PA 18025 Moss Associates $7,000 50 South Buckhout Street Irvington, NY 10533 L. Benet Mcmillan, Esq. $5,200 50 Clinton Street Hempstead, NY 11550 American Express $5,000 P.O. Box 360002 Fort Laudedale, FL 33336 New York State Department of Taxation $5,000 P.O. Box 5300 Albany, NY 12227 AKA Pest Control $4,400 160 Fifth Avenue New York, NY 10010 NEXTEL $3,523 c/o GC Services P.O. Box 32500 Columbus, OH 43232 Winston & Winston $2,800 18 East 41st Street New York, NY 10017 IQS Capital $1,700 c/o Newton and Associates 3001 Division Street Metarie, LA 70002 Rubin & Rothman $1,676 1787 Veterans Highway Islandia, NY 11749 Anthony Centone, PC $1,530 244 Westchester Avenue White Plains, NY 10604 CLONES SOCIETY: Files for Bankruptcy Protection in Canada --------------------------------------------------------- Route1 Inc. (TSXV:ROI), the sole shareholder of The Clones Society, Inc., decided to cease all operations of TCS imminently. TCS filed a voluntary assignment in bankruptcy on April 26, 2005. Raymond Chabot Inc. was appointed to act as trustee in the Debtor's bankruptcy proceedings. Route1 assumed sole ownership of the company when it amalgamated with The Prospectus Group in October 2004. "This decision completes our efforts to shed all historic business units from Prospectus Group," said Andrew White, Chief Executive Officer, Route1. "The Prospectus businesses were a financial burden and not core to our business strategy." Earlier this year Route1 elected to sell its Hypernet Inc. subsidiary to a management led group, in a deal whereby the group assumed sole ownership of the company and its sizeable financial liabilities. Route1 was unable to find a buyer for The Clones Society. Route1, Inc. -- http://www.route1.com/-- was founded with the vision of mobilizing the desktop PC. Drawing on years of experience in secure wireless applications, Route1 is bridging the gap between business needs and technology's limitations to deliver its Mobi family of products. The Company is listed on the TSX Venture Exchange and is headquartered in Toronto, Ontario with offices in New York, New York. The Clones Society, Inc., is an Ottawa-based provider of build-to- order computers, peripherals and services. CONE MILLS: Court Confirms Chapter 11 Plan of Liquidation --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware confirmed the Second Amended Chapter 11 Plan of Liquidation filed on Aug. 20, 2004, by Cone Mills Corporation and its debtor-affiliates. The Court set May 14, 2005, as the deadline for Cone Mills' creditors holding administrative claims to file proofs of those claims. Any party wishing to obtain a copy of the confirmation order at its own expense must send a written request to: Young Conaway Stargatt & Taylor LLP Attn: Pauline K. Morgan, Esq. 17th Floor, The Brandywine Building 1000 West Street P.O. Box 391 Wilmington, Delaware 19899-0391 The confirmation order can also be found at the Court's Web site http://www.deb.uscourts.gov/and is on file with the Clerk of the Bankruptcy Court at 6th Floor, 824 Market Street in Wilmington. About the Plan Under the Plan, Holders of Allowed General Unsecured Claims of less than $1,000,000 (including any Holder that elects on its Ballot to reduce its claim to $1,000,000) are projected to receive a cash distribution of 5% of the amount of their allowed claim on account of Class 3 Trade and Employee Claim classification and treatment. Holders of Allowed General Unsecured Claims in Class 8 (comprised primarily of the secured creditors' deficiency claims) are projected to receive an estimated 1.6% to 2.2% recovery. The Official Committee of Unsecured Creditors supported the Plan despite the modest distribution. The Committee concluded that a chapter 7 liquidation might yield nothing for the unsecured creditors. The secured creditors made concessions to allow some recovery by unsecured creditors. Headquartered in Greensboro, North Carolina, Cone Mills Corp. -- http://www.cone.com/-- is one of the leading denim manufacturers in North America and also produces fabrics and operates a commission finishing business. The Company and its debtor- affiliates filed for chapter 11 protection on September 24, 2003 (Bankr. Del. Case No. 03-12944). Cone Mills filed a Chapter 11 Liquidation Plan following a sale of substantially all of the company's assets to WL Ross & Co. in March 2004, for $46 million plus assumption of certain liabilities. WL Ross, in turn, merged Cone Mills' assets with Burlington Industries' assets to form International Textile Group. Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors. When the Company filed for protection from its creditors, it listed $318,262,000 in total assets and $224,809,000 in total debts. CONTINENTAL AIRLINES: Posts $184 Million Net Loss in First Quarter ------------------------------------------------------------------ Continental Airlines (NYSE: CAL) reported a first quarter 2005 net loss of $184 million, including a net special gain of $8 million related to the company's defined benefit pension plan. Excluding the special items, Continental recorded a net loss of $192 million for the quarter, which compares favorably to the First Call mean estimate of $3.10 loss per share. Extraordinarily high fuel prices and weak domestic yields continue to adversely impact results despite cost reduction efforts and recent fare increases in some domestic markets. Mainline fuel costs for the quarter increased $137 million over the first quarter of 2004, primarily due to a 39.5-percent increase in fuel prices compared to the same period last year. The price of West Texas Intermediate crude oil continued to trade at record levels during the quarter, closing at a peak of $56.72 per barrel on March 18, 2005. During the quarter, Continental's pilots, mechanics, dispatchers and simulator engineers ratified new collective bargaining agreements with the carrier. Changes to wages, work rules and benefits were also finalized with U.S.-based management and clerical, reservations, food services, airport, cargo, and customer service and certain international employees. Continental expects to achieve approximately $418 million of savings on an annual basis from these pay and benefit cuts and work rule changes when they are fully implemented. The company continues to work with the flight attendants, the only domestic group that did not ratify their agreement, along with Continental Micronesia employees and the remaining international work groups, to reach agreements on pay and benefit reductions. As a result of the ratifications, Continental issued to all domestic employees, other than flight attendants and officers, stock options for approximately 8.7 million shares of Continental's common stock with an exercise price of $11.89 per share. These options represent approximately 13 percent of the currently outstanding shares of common stock. "While we lost money in the first quarter, I appreciate the commitment shown by my co-workers who took painful yet necessary action to quickly ratify new agreements," said Chairman and Chief Executive Officer Larry Kellner. "Even though we still have more work to do, we have made significant progress to move our company closer to profitability." First Quarter Revenue and Capacity Passenger revenue for the quarter was $2.3 billion, 8.0 percent higher than the same period in 2004, due to increased capacity and fares on international flights and more regional flying. Consolidated revenue passenger miles (RPMs) for the quarter increased 11.4 percent year-over-year on a capacity increase of 4.0 percent, which produced a record consolidated load factor for the quarter of 76.8 percent, up 5.1 points over the same period in 2004. Consolidated yield declined 3.1 percent year-over-year. Consolidated passenger revenue per available seat mile (RASM) for the quarter increased 3.8 percent year-over-year due to record high load factors, partly as a result of Easter falling in March this year versus April last year. Mainline RPMs in the first quarter of 2005 increased 9.8 percent over the first quarter 2004 on a capacity increase of 2.8 percent. As a result, mainline load factor was up 4.9 points year-over-year to 77.5 percent. Continental's mainline yields during the quarter declined 2.4 percent year-over-year, as the company was forced to match Delta's domestic pricing structure. During the quarter, Continental continued to achieve domestic length-of-haul adjusted yield and passenger RASM premiums to the industry. International RASM for the quarter improved in all geographic regions compared to the first quarter of 2004. Operational Accomplishments Despite record high load factors and severe winter weather, Continental had relatively few flight cancellations and maintained a systemwide mainline completion factor of 99.4 percent for the quarter. The company recorded a U.S. Department of Transportation (DOT) on-time arrival rate of 75.8 percent. "Our solid operational performance and superior product continue to help us earn a unit revenue premium," said President Jeff Smisek. "We are working to ensure that Continental is one of the survivors as our industry restructures." During the quarter, Continental received approval from the DOT to initiate service to Beijing in the People's Republic of China from its hub at New York/Newark Liberty International Airport. With service beginning June 15, 2005, subject to government approval, Continental will be the only U.S. flag carrier linking the People's Republic of China with New York, one of the largest markets between the United States and China. In April, Continental also formally submitted an application to the DOT for approval to operate nonstop flights from Liberty to Shanghai, China. Also in April, Continental announced daily nonstop flights between Liberty and New Delhi, India. Service to New Delhi will begin Nov. 1, 2005, subject to government approval. The airline began codesharing with Air France in the quarter, allowing Continental customers to more easily access 12 additional destinations in Europe and the Middle East on flights operated by Air France from Charles de Gaulle airport in Paris. In January, international travelers on Continental began arriving at a new international arrivals building at the airline's Houston hub at Bush Intercontinental Airport. The building features the largest and most modern federal inspection facility in the U.S. First Quarter Financial Results Continental's mainline cost per available seat mile (CASM) increased 6.1 percent in the first quarter compared to the same period last year, primarily due to record high fuel prices. CASM increased 0.4 percent excluding special items and holding fuel rate constant. "The Continental team continued to keep its focus on controlling the costs that we have the ability to reduce," said Executive Vice President and Chief Financial Officer Jeff Misner. "While we're not done, we appreciate our co-workers' efforts as well as their personal sacrifice and look forward to getting all our cost savings initiatives implemented." The airline industry continues to suffer from the relentless burden of excessive fees and non-income related taxes. In the first quarter of 2005, Continental incurred $265 million in fees and non-income related taxes charged on passenger tickets by various governmental entities, up 9.5 percent year-over-year. In connection with the pay and benefit reductions, the company's previously announced enhanced profit-sharing program became effective for all employees participating in the reductions, except director level employees and officers. The program creates a much larger profit-sharing pool for employees than the old profit-sharing plan and is the best in the industry. With the unions' decision to implement their ratified agreements, Continental was able to confirm its previously announced Boeing order. The company expects to take delivery of eight leased 757- 300s starting this summer and has accelerated the delivery of six Boeing 737-800s into 2006. Beginning in 2009, Continental plans to acquire the first of 10 Boeing 787 aircraft. The company retired its remaining two MD-80 aircraft in January. Continental continues to improve the fuel efficiency of its fleet, having completed the installation of winglets on 35 737-800s to date. Winglets produce up to a 5-percent reduction in fuel burn and provide additional range. During the quarter, Continental recorded a net special gain of $8 million related to the company's defined benefit pension plan, consisting of a $51 million gain from the contribution of ExpressJet stock to Continental's defined benefit pension plan and a curtailment charge of $43 million related to the freezing of the portion of the company's defined benefit pension plan attributable to pilots. Continental ended the first quarter with approximately $1.38 billion in unrestricted cash and short-term investments. Continental Airlines -- http://continental.com/-- is the world's sixth-largest airline, serving 128 domestic and 111 international destinations -- more than any other airline in the world -- and serving nearly 200 additional points via codeshare partner airlines. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 51 million passengers per year. FORTUNE ranks Continental one of the 100 Best Companies to Work For in America, an honor it has earned for six consecutive years. FORTUNE also ranks Continental as the top airline in its Most Admired Global Companies in 2004. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, 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. As reported in the Troubled Company Reporter on Feb. 28, 2005, Standard & Poor's Ratings Services placed its single-B ratings on Continental Airlines Inc. equipment trust certificates and enhanced equipment trust certificates on CreditWatch with negative implications. S&P's rating action does not affect issues that are supported by bond insurance policies. "The CreditWatch review is prompted by Standard & Poor's concern that a prolonged difficult airline industry environment, characterized by high fuel prices, excess capacity, and intense price competition in the domestic market, has weakened the financial condition of almost all U.S. airlines and increased the risk of widespread simultaneous bankruptcies," said Standard & Poor's credit analyst Philip Baggaley. CREDIT SUISSE: S&P Lifts Low-B Ratings on Six Certificate Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B, C, D, E, F, G, H, J, K, and L of Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates series 2001-CKN5. Concurrently, all other outstanding ratings from this transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of April 2005, the trust collateral consisted of 193 commercial mortgages with an outstanding balance of $1.017 billion, down from 195 loans totaling $1.073 billion at issuance. The pool has paid down by 5.15%. The master servicer, KeyBank Real Estate Capital (KeyBank), reported partial-year 2004 or full-year 2003 net cash flow debt service coverage ratios (DSCRs) for 90.9% of the pool. Loans secured by cooperative housing corporations (co-ops), account for 14.04% of the pool. Three loans totaling $98.3 million, or 9.7% of the pool, have been defeased. Based on this information, and excluding defeasance and co-ops, Standard & Poor's calculated a pool DSCR of 1.27x, down from 1.37x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 31.5% of the pool, declined to 1.35x from 1.66x at issuance. This calculation is skewed downward by the largest loan, Ocean Towers Building, which is secured by a luxury co-op in Santa Monica, California that is across the street from the Pacific Ocean. It has a DSCR near break even, which is normal for this type of collateral. There was $8.5 million in reserves set aside at closing that has been substantially drawn down for completion of renovations at the property. Due to the completion of the renovation work, the co-op ordered a new appraisal in November 2004 that indicated a co-op value of $312.5 million. This is a significant increase in value from the November 2000 appraisal at securitization, which indicated a co-op value of $230 million. This property continues to exhibit low leverage and credit characteristics consistent with a loan rated 'AA+'. There are five loans, with a combined balance of $41.04 million, or 4.03% of the pool, that are with the special servicer, KeyBank. Three are secured by multifamily properties and two are secured by office properties. Three of the loans are in foreclosure and two are 90-plus days delinquent. Significant loans are discussed below. The two largest specially serviced assets, Sterling University Grove and Sterling University Meadows, have a combined balance of $28.4 million (2.8%). Both loans are currently 90-plus days delinquent and are secured by student housing. The Meadows property is located in Mount Pleasant, Michigan and serves the Central Michigan State University market. The Grove property is located in Tallahassee, Florida and serves the Florida State University market. Both properties are operating just below break-even and are listed for sale. Some loss is possible upon disposition. The remaining three specially serviced assets total $12.6 million (1.2%) and comprise two suburban office properties with low occupancies and a class C Dallas multifamily property. Losses are expected upon disposition of these assets. The servicer's watchlist includes 34 loans totaling $141.3 million (13.9%). The largest loan on the watchlist (the sixth-largest loan in the pool), the Alexandria Roselle Street portfolio, is on the watchlist due to declining performance. At year-end 2004, occupancy was 54% and DSCR was 0.74x. The property is located in San Diego and lost one tenant due to company consolidation and another at lease end. The master servicer reported that the borrower is confident in its ability to lease the vacant space and has had more leasing prospects recently. The borrower attributes this to increased leasing activity in San Diego, reducing the amount of available large spaces on the market. Another loan of concern on the watchlist is Eastgate Marketplace, which lost a major tenant, Garden Ridge (86% net rentable area), due to bankruptcy. However, this loan is the smallest of three crossed loans. The other two report DSCRs of 2.10x and 1.59x. Most of the other loans on the watchlist appear due to low occupancies, low DSCRs, or upcoming lease expirations, and were stressed accordingly by Standard & Poor's. Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit enhancement levels adequately support the current rating actions. Ratings Raised Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2001-CKN5 Rating ------ Class To From Credit Enhancement ----- -- ---- ------------------ B AAA AA 17.81% C AAA AA- 15.97% D AA A 13.60% E AA- A- 12.54% F A+ BBB+ 11.22% G BBB+ BBB 9.38% H BBB BBB- 8.19% J BBB- BB+ 6.74% K BB+ BB 4.77% L BB BB- 4.24% Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2001-CKN5 Class Rating Credit Enhancement ----- ------ ------------------ A-2 AAA 21.50% A-3 AAA 21.50% A-4 AAA 21.50% M B+ 2.92% A-X AAA N/A A-CP AAA N/A A-Y AAA N/A N/A - not applicable. DIGITAL VIDEO: Losses & Deficit Trigger Going Concern Doubt ----------------------------------------------------------- Stonefield Josephson, Inc., raised substantial doubt about Digital Video Systems, Inc.'s (Nasdaq: DVID) ability to continue as a going concern after it audited the Company's Form 10-K for the year ended Dec. 31, 2004. The Company suffered recurring losses from operations and has a negative working capital and a stockholders' deficit. "Our continued existence will depend in large part upon our ability to successfully secure additional financing to fund future operations," the Company said in its Annual Report. DVS Chairman and CEO Tom Spanier commented, "We are taking steps to address our current financial situation, and we continue to believe we will be successful." The Company filed a Registration Statement for a public offering, which seeks to raise approximately $5 million of equity capital. The offering has been deferred pending settlement of the $3,420,000 obligation arising from the legal dispute with its former chief executive officer, Mali Kuo. The lawsuit has been filed in the Superior Court of California, County of Santa Clara, against Ms. Kuo for breach of fiduciary duties, negligent performance of employment duties and breach of employment contracts. "This offering is a principal element of our plan to move toward profitable operations," the Company said. "Even after this offering, if in the future we are not able to achieve positive cash flow from operations or to secure additional financing as needed, we may again experience the risk that we will not be able to continue our operations. If we cannot successfully continue as a going concern, our stockholders may lose their entire investment." About the Company Established in 1992, Digital Video Systems, Inc. -- http://www.dvsystems.com/-- is a publicly held company specializing in the development and application of digital video technologies enabling the convergence of data, digital audio, digital video and high-end graphics. DVS is headquartered in Palo Alto, California, with subsidiaries and manufacturing facilities in South Korea and China and a subsidiary in India. DMX MUSIC: Court Okays Sale Procedures & Auction Set for May 9 -------------------------------------------------------------- DMX MUSIC, Inc., and its debtor affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware of uniform bidding procedures, sale procedures and overbid protections in connection with the sale of substantially all of the company's domestic operating assets of equity interests in certain foreign subsidiaries. Sale of Assets As previously reported in the Troubled Company Reporter, THP Capstar, Inc., has offered $75 million to purchase these assets and has signed an Asset Purchase Agreement. The Debtors tell the Bankruptcy Court that a prompt sale is critical in order to maintain the going concern value of their operations. The Debtors will pay a $2,250,000 break-up fee and reimburse THP Capstar for its expenses in the event a competing bidder tops THP Capstar's offer. The Debtors argue that this bid protection is: (a) an actual and necessary cost and expense of preserving Debtors' estates, (b) of substantial benefit to Debtors' estate, (c) reasonable and appropriate, in light of: 1. the size and nature of the proposed sale under the Asset Purchase Agreement, 2. the substantial efforts that have been and will be expended by THP Capstar, and 3. the benefits THP Capstar has provided to Debtors' estates and creditors and all parties in interest, notwithstanding that the proposed sale is subject to higher and better offers, (d) necessary to ensure that THP Capstar will continue to pursue its proposed acquisition of the Assets. The Debtors want the payment of fees approved because: (a) the protections afforded to THP by the fees were material inducements for, and express conditions of, THP's willingness to enter into the purchase agreement, and (b) THP is unwilling to hold open its offer to acquire the assets unless it is assured of the payment of the fees. Auction & Sale Hearing The Deadline for submission of qualified bids is 5:00 p.m., on May 6, 2005. The Debtors will conduct an Auction at 1:00 p.m., on May 9, 2005, at the offices of Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., 919 North Market Street, 16th Floor, in Wilmington, Delaware. Bids must be in writing and submitted to: (a) Counsel to the Debtors: Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 10100 Santa Monica Boulevard, 11th Floor Los Angeles, CA 90067 Attn: Brad Godshall, Esq. -- and -- Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 919 North Market Street, 16th Floor Wilmington, DE 19801 Attn: Laura Davis Jones, Esq. (b) Debtors' Financial Advisors: Giuliani Capital Advisors LLC 725 South Figueroa Street, Suite 431 Los Angeles, CA 90017 Attn: Marc Bilbao (c) Counsel to Official Committee of Unsecured Creditors: Drinker Biddle & Reath LLP 500 Campus Drive Florham Park, NJ 07932-1047 Attn: Robert K. Malone, Esq. -- and -- Drinker Biddle & Reath LLP 1100 North Market Street, Suite 1000 Wilmington, DE 19801 Attn: Andrew C. Kassner (d) Counsel to Royal Bank of Canada, as DIP Agent: Latham & Watkins Sears Tower, Suite 5800 Chicago, IL 60606 Attn: Richard Levy (e) Counsel for THP Capstar: Vinson & Elkins, L.L.P. 2001 Ross Avenue 3700 Trammel Crow Center Dallas, TX 75201 Attn: Paul E. Heath -- and -- Morris, Nichols, Arsht & Tunnell 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (f) The United States Trustee: Office of the United States Trustee 844 King Street, Suite 2313 Lockbox 35 Wilmington, DE 19801 The initial bid for all or substantially all assets under the purchase agreement by a qualified bidder, other than THP, will be $75 million, an amount equal to the purchase price of THP plus: (a) $2,250,000 equal to the break-up fee, and (b) $100,000. Any overbid must be in increments of at least $100,000. The bidder must tender a good faith deposit in the form of an electronic wire transfer or a certified check in the amount of the lesser of: (a) 10% of the proposed purchased price of the assets bid upon, and (b) $3,500,000, A Sale Hearing is set at 1:00 p.m., on May 10, 2005. 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. DRUGMAX INC: Losses Prompt Auditors to Raise Going Concern Doubt ---------------------------------------------------------------- DrugMax, Inc.'s Senior Credit Facility contains certain covenants that limit the way the Company conducts business. The Company violated certain of these covenants as of January 1, 2005, and as of that date, the lender could demand immediate repayment in full. In December 2004, DrugMax entered into a new secured Senior Credit Facility providing up to $65 million of financing. At January 1, 2005, the Senior Credit Facility had an outstanding principal balance of $32.9 million. The Facility's debt covenants require DrugMax to meet financial covenants, and imposes other limitations upon DrugMax that may limit the Company's flexibility in planning for and reacting to changes in its business, including its ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes. Failure to meet the debt covenants could result in acceleration of the debt. Also, because Company borrowings under the Senior Credit Facility are secured by liens on substantially all of the Company's assets and the assets of its subsidiaries, and the Company is in default under the Senior Credit Facility, its secured creditor could foreclose upon all, or substantially all, of the Company's assets and the assets of its subsidiaries. DrugMax violated certain of these covenants as of January 1, 2005, including the EBITDA and net worth financial covenants, and other covenants, and as of such date were, in default on this obligation. As of April 15, 2005, DrugMax had not yet received an amendment waiving covenant violations. Management expects to receive an amendment during the second quarter of 2005. However, there is no assurance that the lender will waive the violation and the lender could demand repayment of the $32.9 million outstanding as of January 1, 2005, and could foreclose upon all, or substantially all, Company assets and the assets of its subsidiaries. DrugMax currently does not have the ability to repay its indebtedness if the lender demands repayment, and further, it cannot assure that, if the need arises, the Company will be able to obtain additional financing, or to refinance its indebtedness on terms acceptable to it, if at all. Any such failure to obtain financing could have a material adverse effect on its business, results of operations and financial condition. Not only is the Company in default on its Senior Credit Facility, it has a history of losses. DrugMax incurred net losses of $39.8 million, $12.2 million and $10.1 million for the years ended January 1, 2005, December 27, 2003 and December 28, 2002, respectively. Going Concern Doubt The Company's independent registered public accounting firm, Deloitte & Touche LLP, has issued an opinion with an explanatory paragraph discussing the substantial doubt about DrugMax' ability to continue as a going concern for fiscal year January 1, 2005. The opinion from the independent registered public accounting firm on DrugMax' consolidated financial statements as of January 1, 2005 and December 27, 2003, and for each of the three years in the period ended January 1, 2005 was modified with respect to the substantial doubt surrounding the Company's ability to continue as a going concern. Credit Facility Amended On March 22, 2005, DrugMax entered into the first amendment to the Senior Credit Facility. The March 2005 Amendment provided for an increase in the reduction of permanent availability from $5.5 million to $7.5 million and allowed the Company to convert $23.0 million in accounts payable owed to ABDC (after having repaid $6,000,000 on March 23, 2005 in connection with the closing of a new vendor supply agreement) into: (a) a subordinated convertible debenture in the original principal amount of $11.5 million and (b) a subordinated promissory note in the original principal amount of $11.5 million. The Subordinated Debenture and Subordinated Note are guaranteed by DrugMax and certain of DrugMax' subsidiaries, including Valley Drug Company, Valley Drug Company South, Familymeds, Inc. and Familymeds Holdings, Inc., pursuant to Continuing Guaranty Agreements dated as of March 21, 2005. The Company also entered into a subordinated security agreement dated as of March 21, 2005, pursuant to which it agreed that upon the occurrence of certain defaults and the passage of applicable cure periods it shall be deemed at that point to have granted to ABDC a springing lien upon, and a security interest in, substantially all of DrugMax' assets to secure the Subordinated Debenture and the Subordinated Note. Should this occur, the Company shall be deemed in default of its Senior Credit Facility. However, pursuant to a subordination agreement dated March 21, 2005, ABDC has agreed to subordinate the Subordinated Debenture, the Subordinated Note, the Guarantees and the Security Agreement to all "Senior Debt". Senior Debt consists of all senior indebtedness now, or hereafter, owing, including indebtedness under the Senior Credit Facility and any debt incurred by the Company to replace, or refinance, such debt. DrugMax, Inc., is a specialty pharmacy and drug distribution provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. The Company works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. It is focused on building an integrated specialty drug distribution platform through its drug distribution operations and its specialty pharmacy operations. E*TRADE FIN'L: Earns $92 Million of Net Income in First Quarter --------------------------------------------------------------- E*TRADE FINANCIAL Corporation (NYSE: ET) reported results for its first quarter ended March 31, 2005, reporting net income of $92.0 million, compared to net income of $89.8 million in the prior quarter and $88.5 million in the same quarter a year ago. Net revenue for the first quarter totaled $420.3 million, a 3 percent increase over the prior quarter and a 5 percent increase over the year ago period, achieving a new quarterly record. The Company also reported record consolidated operating income of $135 million, a 22 percent increase over the prior quarter and a 14 percent increase over the year ago period. "The strength of our first quarter results again proves the power and flexibility of our integrated business model," said Mitchell H. Caplan, Chief Executive Officer, E*TRADE FINANCIAL Corporation. "We generated record quarterly revenue and consolidated operating income amid an uncertain economic environment. By focusing on operational efficiencies and leverage points within -- and between -- our retail and institutional segments, we continue to create franchise value." As previously announced, the Company is changing its segment reporting structure to reflect its customer-centric focus beginning with today's release of its first quarter results. Segment results will now be reported as retail and institutional as opposed to the previous structure of bank and brokerage. "We are now measuring and reporting our performance as it relates to the Company's key customer segments," said R. Jarrett Lilien, President and Chief Operating Officer, E*TRADE FINANCIAL Corporation. "Customer-centric management allows us to more effectively understand the dimensions of customer satisfaction while measuring our success in growing revenue per customer, profits per customer and overall customer engagement." Other selected highlights from the first quarter of 2005: -- Added 192,000 gross new retail accounts, with 134,000 in trading/investing and 58,000 in deposit/lending accounts -- Increased products per customer 12 percent to 1.9 from 1.7 a year ago and total segment income per customer by 13 percent to $47 from $41 a year ago -- Lowered online stock and options commissions from $19.99 to $14.99 for customers with less than $50,000 in combined assets or less than 5 trades per month and eliminated the $3 order handling fee -- Reduced online stock and options commissions to $11.99 from $12.99 for clients with over $50,000 in combined assets and less than 5 trades per month -- Created two additional pricing tiers for Active Traders ranging from $6.99 to $9.99 for stock and options commissions based on activity qualifications -- Increased annual yield on Money Market Checking and Sweep Deposit Accounts to as much as 2.50% APY and 1.00% APY, respectively, based on balance qualifications -- Began initial phase of E*TRADE Complete rollout, upgrading 50,000 accounts -- Announced Digital Security ID program, a ground-breaking, two-factor authentication solution for customers to prevent unauthorized account access -- Repurchased approximately 2.5 million outstanding shares for $32.5 million Historical monthly metric data from January 2003 to March 2005 can be found on the E*TRADE FINANCIAL investor relations site at http://www.etrade.com/ About the Company The E*TRADE FINANCIAL family of companies provides financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E*TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * As reported in the Troubled Company Reporter on Jan 21, 2005, Standard & Poor's Ratings Services affirmed its 'B+' long-term counterparty rating on E*TRADE Financial Corp. E*TRADE Bank's counterparty ratings were affirmed at 'BB/B.' ENERGEM RESOURCES: Intends to File Q1 Financials on April 29 ------------------------------------------------------------ Energem Resources Inc. was not able to file its audited financial statements for its fiscal year ended Nov. 30, 2004, or its interim financial statements for the first quarter ended Feb. 28, 2005, on the Apr. 19, 2005, and Apr. 14, 2005, filing deadlines. The Company has undergone significant change and growth during the past year and has become involved in a number of new African jurisdictions from where certain data and information must be derived for the first time. This has proved more onerous than expected and has caused some unexpected delay in providing information for audit. No other difficulties have been experienced by the Company in producing its financial statements. As a result, the Company's auditor had informed the Company that the auditor would not be in a position to complete the reviews and related report for the Annual Financial Statements by April 19, 2005. The Company's auditor is dependent upon supporting information to be provided by other independent accounting firms regarding the Company's operations in various countries in Africa and these independent accounting firms have not yet been able to provide all of the required supporting information to the Company's auditor. The Company is furthermore unable to file its First Quarter Financial Statements until completion of its Annual Financial Statements. The Company expects to file both the Annual Financial Statements and the First Quarter Financial Statements by Friday, April 29, 2005. Issuer Cease Trade Order The securities commission or regulators may impose an issuer cease trade order if the Annual Financial Statements are not filed by June 19, 2005, and the First Quarter Statements are not filed by June 14, 2005. An issuer CTO may be imposed sooner if the Company fails to file its Default Status Reports on time. The Company intends to satisfy the provisions of the default status reports of (the) CSA Staff Notice 57-301 as long as it remains in default of the financial statement filing requirements by issuing, during the period of default, a Default Status Report on a bi-weekly basis. The Company advises that it is not subject to any insolvency proceeding. The Company advises that there is no other material information concerning the affairs of the Company that has not been generally disclosed. About the Company Energem Resources Inc. is a natural resources company listed on the Toronto Stock Exchange with projects in the energy and mining sectors in a number of African countries. Energem is committed to developing niche high margin natural resource projects in Africa and is currently active in 12 countries. Ventures encompass diamond mining and mineral exploration, mid- and up-stream oil and gas projects, energy and mining related manufacturing, trading and trade finance businesses operating off a common logistics platform and infrastructure. The company has offices and/or logistics and support infrastructure in Johannesburg, London, Beijing and a number of African countries. ENUCLEUS INC: Funding Uncertainty Prompts Going Concern Doubt ------------------------------------------------------------- eNucleus, Inc., received its final decree from the United States Bankruptcy Court for the Northern District of Illinois on November 6, 2003, successfully concluding the Company's restructuring and emergence from bankruptcy. Although the Plan resulted in a substantial reduction in debt, further improvements in the Company's liquidity position will be subject to the success of initiatives it is undertaking to increase sales and reduce operating expenses. As shown in the results of operations, eNucleus had net income of $0.445 million, of which approximately $0.792 million, relates to non-cash charges for stock based compensation and expenses, bankruptcy related expenses and depreciation and amortization charges. During 2003, the Company incurred a net loss of $3.5 million for the year ending December 31, 2003, of which $3.05 million was related to its restructuring and closing of its data center. The comparison of income and expenses for the years ended December 31, 2004 and December 31, 2003 are shown below: Year-Ended Year-Ended Dec. 31, 2004 % Dec. 31, 2003 % ------------- ------- ------------- ------- Revenue $3,204,456 100.0% $577,574 100.0% Operating expenses 2,209,394 69.0% 1,022,313 177.0% Interest and other income -- -- 10,305 1.8% Depreciation and amortization expense 770,319 24.0% 150,965 26.1% ------------- ------- ------------- ------- Net gain (loss) from operations 224,743 7.0% (606,009) -104.9% Net reorganization expense 21,795 0.7% 1,171,680 1581.3% Net income from TenderCity (242,352) -7.6% -- -- Write off of goodwill -- -- 1,674,622 289.9% ------------- ------- ------------- ------- Net income (loss) 445,300 13.9% ($3,452,311) -597.7% ============= ======= ============= ======= Going Concern Doubt The Company's has indicated that its continued existence is dependent on its ability to achieve future profitable operations and its ability to obtain financial support. The satisfaction of the Company's cash requirements hereafter will depend in large part on its ability to successfully generate revenues from operations and raise capital to fund operations. There can, however, be no assurance that sufficient cash will be generated from operations or that unanticipated events requiring the expenditure of funds within its existing operations will not occur. Management is aggressively pursuing additional sources of funds, the form of which will vary depending upon prevailing market and other conditions and may include high-yield financing vehicles, short or long-term borrowings or the issuance of equity securities. There can be no assurances that management's efforts in these regards will be successful. Under any of these scenarios, management believes that the Company's common stock would likely be subject to substantial dilution to existing shareholders. The uncertainty related to these matters and the Company's bankruptcy status raise substantial doubt about its ability to continue as a going concern. eNucleus, Inc., provides proprietary supply chain software applications, technologies and solutions to SME and Global 1000 companies. The Company's current software and service applications span 22 countries in five continents in multiple languages, and are used by over 50,000 individuals worldwide. ENVIRONMENTAL ELEMENTS: Hires FTI as Turnaround Consultant ---------------------------------------------------------- Environmental Elements Corporation's (OTC: EECP) Board of Directors engaged FTI Consulting, Inc., as a turnaround consultant to assist with its internal evaluation of strategic alternatives. Lisa Poulin of FTI Palladium Partners will assume the newly created position of Chief Restructuring Officer effective immediately. Ms. Poulin will report directly to EEC's Board and will have full executive authority to operate the company. EEC's Board also voted to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. On May 13, 2005, the Company will file a Form 15 with the Securities and Exchange Commission to effect the deregistration of its common stock. Upon the filing of the Form 15, the Company's obligations to file certain reports with the SEC, including Forms 10-K, 10-Q and 8-K, will immediately cease. The Company expects the deregistration to become effective 90 days after filing Form 15 with the SEC. The Company is eligible to deregister by filing a Form 15 because it has fewer than 300 holders of record of its common stock. Environmental Elements Corporation is a solutions-oriented provider of innovative technology for plant maintenance services, air pollution control equipment and complementary products. The company has served a broad range of customers in the power generation, pulp and paper, waste-to-energy, rock products, metal and petrochemical industries for over 55 years. As of December 31, 2004, Environmental Elements' equity deficit widened to $12.095 million from a $10.965 million deficit at March 31, 2004. EVANS & SUTHERLAND: Apr. 1 Balance Sheet Upside-Down by $2 Million ------------------------------------------------------------------ Evans & Sutherland Computer Corporation (Nasdaq:ESCC) reported financial results for the first quarter ended April 1, 2005. Sales for the first quarter were $13.9 million, down 22.1% from sales of $17.8 million in the first quarter of 2004. Net loss was $6.0 million, or $0.57 per share, compared to a net loss of $3.0 million, or $0.29 per share, in 2004. "The first quarter of 2005 was seasonally weak as expected," James R. Oyler, President and Chief Executive Officer said. "In addition, we had significant restructuring expenses in the first quarter that will lead to lower operating expenses for the remainder of the year. Our net cash reached the highest level in five years, and backlog was nearly unchanged and remains at the highest level in three years. The combination of high backlog and reduced operating expenses after the restructuring will drive improved results for the remainder of the year. "We experienced high research and development expenses during the quarter as we continue to prepare the Evans & Sutherland Laser Projector (ESLP) for commercial shipments beginning in the third quarter of this year. R&D expenses will decline as the ESLP enters production. "Based on our continued strong backlog and lower expenses in future quarters, our overall outlook for a small profit for the year remains unchanged." About the Company Evans & Sutherland -- http://www.es.com/-- produces professional visual systems to create highly realistic images for simulation, training, engineering, and other applications throughout the world. E&S visual systems are used in both military and commercial systems, as well as planetariums and interactive theaters. At Apr. 1, 2005, Evans & Sutherland 's balance sheet showed a $2,040,000 stockholders' deficit, compared to a $3,763,000 at Dec. 31, 2004. FEDERAL-MOGUL: Names Ramzi Hermiz Senior VP for Sealing Systems --------------------------------------------------------------- President and Chief Executive Officer Jose Maria Alapont disclosed the appointment of Ramzi Hermiz as senior vice president, Sealing Systems and a member of the Strategy Board for Federal-Mogul Corporation (OTCBB:FDMLQ). "Ramzi brings to Sealing Systems a broad knowledge of the global marketplace and an outstanding commitment to quality and customer service," Mr. Alapont said. "In his new position, he will lead the future of innovation and technology as well as the development of the global market base to drive the Sealing Systems profitable growth strategies worldwide." Previously vice president of Federal-Mogul's European Aftermarket, Hermiz joined Federal-Mogul in 1998 when the company purchased Fel-Pro, Inc. Since then, Mr. Hermiz has held positions of increasing responsibility, beginning with director, purchasing; followed by director, pull systems and inventory; and then vice president, global supply chain management. Before joining Fel-Pro in 1990, Mr. Hermiz was manager, purchasing and quality assurance for a manufacturer of residential lighting and other products. He began his career as a design and product engineer for a consulting firm serving the heavy-duty construction industry. Mr. Hermiz earned a master's degree in business administration from DePaul University in Chicago, Illinois, and a bachelor's degree in mechanical engineering from Marquette University in Milwaukee, Wisconsin. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a $2.048 billion stockholders' deficit, compared to a $1.926 billion deficit at Dec. 31, 2004. FEDERAL-MOGUL: Names Michael Sobieski VP for Ignition & Wipers -------------------------------------------------------------- Joseph Felicelli, executive vice president, Worldwide Aftermarket Operations, disclosed the appointment of Michael Sobieski to the position of vice president, global ignition and wiper products group for Federal-Mogul Corporation (OTCBB:FDMLQ), effective immediately. Mr. Sobieski will be responsible for the global operations of Champion(R) spark plugs and Anco(R) wiper blades for the aftermarket, original equipment manufacturing and original equipment service. "Mike's global experience in manufacturing and operations in both the original equipment and aftermarket sectors will support Federal-Mogul by driving product and service value and increasing customer satisfaction," said Mr. Felicelli. Mr. Sobieski, who joined the Federal-Mogul in 1998, most recently served as Director of European and South African Friction Operations based in Bad Camberg, Germany. Prior to that he served in multiple positions of increasing responsibility including director of operations, Friction; plant manager at Logansport, Ind. and Smithville, Tenn.; and engineering and production manager, Friction. Previous to joining Federal-Mogul, Mr. Sobieski worked for Siemens Automotive and Ford Motor Company. Mr. Sobieski earned a bachelor's degree from West Point and a master's degree from General Motors Institute, Flint, Mich. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a $2.048 billion stockholders' deficit, compared to a $1.926 billion deficit at Dec. 31, 2004. FINOVA CAPITAL: Wants to Clarify Plan Provisions ------------------------------------------------ Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that on November 18, 2003, December 29, 2004 and March 22, 2005, the U.S. Bankruptcy Court for the District of Delaware issued orders closing the cases of: Debtor Case No. Closing Date ------ -------- ------------ FINOVA Portfolio Services Inc. 01-0703 11/18/2003 FINOVA Group, Inc. 01-0697 12/29/2004 FINOVA (Canada) Capital Corp. 01-0699 12/29/2004 FINOVA Capital plc 01-0700 12/29/2004 FINOVA Loan Administration Inc. 01-0701 12/29/2004 FINOVA Technology Finance, Inc. 01-0704 12/29/2004 FINOVA Finance Trust 01-0705 12/29/2004 FINOVA Mezzanine Capital Inc. 01-0702 03/22/2005 Pursuant to each of the Final Decrees, the Court maintained jurisdiction of, among other things, the enforcement of the provisions of the Plan and the Confirmation Order, and the entry of orders in aid of confirmation and consummation of the Plan. Pursuant to the Plan, the Reorganized Debtors are required to set aside 5% of their net cash after provisions for payment of certain obligations and expenses to make distributions to equity interest in FINOVA Group. However, the Plan, Mr. Madron says, prevents distributions to the equity interests under certain conditions of financial impairment of the Reorganized Debtors. Because the Reorganized Debtors have determined that there is no reasonable chance that distributions can be made to equity interests, FINOVA Capital seeks the Court's authority to: (1) cease setting aside 5% of the Available Cash in a separate account held for the benefit of the equity interests in FINOVA Group; and (2) return the Available Cash in a separate account held for the benefit of the equity holders in FINOVA Group to the Reorganized Debtors for use in their businesses to pay expenses, debts and other obligations. Berkadia, LLC's affiliates, who own 50% of FINOVA Group's equity interests, would be entitled to half of approximately $57,800,000 in the Segregated Account or $28,900,0000 if dividends were ever paid. Nevertheless, FINOVA Group's Board of Directors has determined that, due to the Reorganized Debtors' financial prospects, the funds rightfully belong to the creditors, not equity holders. Indenture Provisions Pursuant to the Plan, holders of allowed unsecured claims against FINOVA Capital received, among things, cash equal to 70% of their allowed claims and 7.5% Senior Secured Notes Maturing 2009 with Contingent Interest Due 2016 of FINOVA Group in the face amount of 30% of their allowed claims against FINOVA Capital. FINOVA Capital entered into an intercompany note with FINOVA Group to back up payments to be made under the New Senior Notes and certain obligations to FINOVA Group's equity holders. Prior to August 21, 2001, the forms of the Indenture and the New Senior Notes were filed with the Court in a plan supplement that was incorporated as part of the Plan, pursuant to the Confirmation Order. According to Mr. Madron, the terms of the New Senior Notes are governed by the Indenture between FINOVA Group and The Bank of New York, as Trustee, dated as August 22, 2001. The Indenture provides that after the provision for payment of operating expenses and certain obligations, FINOVA Group will cause its subsidiaries, including FINOVA Capital, to use 95% of the Available Cash to pay principal and interest on the New Senior Notes and use 5% of the Available Cash to pay dividends to, or make repurchases of FINOVA Group's equity interests. The Indenture specifically provides that in the event that the distribution to or repurchase of equity would be: "[an] Impermissible Restricted Payment, the Company [FINOVA Group] shall retain such amounts and any such retained amounts shall accumulate and shall be used to make Restricted Payments at such time or from time to time when such Restricted Payments are not Impermissible Restricted Payments." An Impermissible Restricted Payment is defined as: "...a Restricted Payment that, if made by the Company or any of its Subsidiaries, would (i) render such entity insolvent, (ii) be a fraudulent conveyance by such entity or (iii) not be permitted to be made by such entity under applicable law." A Restricted Payment is a declaration or distribution of a dividend or any distribution to, or repurchase of, FINOVA Group's equity interests. While the Reorganized Debtors continue to pay their creditors in a timely manner, FINOVA Group concluded prior to making any payments on account of the Senior Notes that paying dividends to, or repurchasing, its equity interests would be Impermissible Restricted Payments. Therefore, FINOVA Group caused the 5% of the Available Cash to be deposited into the Segregated Account. As of April 1, 2005, there is approximately $57,000,000 in the Segregated Account. Mr. Madron reports that, using year-end 2004 figures, on a consolidated basis, FINOVA Group and its subsidiaries had cash of just over $480 million and net financial assets worth approximately $2.187 billion. Almost half of the financial assets consist of transportation assets, including many older, off-lease aircraft, which are generally not desirable to domestic commercial airlines and have limited prospects of substantially increasing in value. The Reorganized Debtors' remaining assets consist of financial assets, like loans and leases, secured by real estate, equipment or other property, which have not previously been liquidated. Because liabilities exceed assets by more than $1,000,000, Mr. Madron believes that the recovery rate on the remaining financial assets would have to be approximately 274% to make up for the shortfall in assets. Moreover, because the Indenture prohibits the Reorganized Debtors from engaging in new businesses, they do not have the ability to "grow" their way out of the current financial circumstances. Mr. Madron argues that because FINOVA Group cannot, and has no reasonable prospect that it will be able to, pay dividends in the future, there is no purpose in requiring FINOVA Group to hold the 5% of Available Cash in the Segregated Account. The amount should be available to satisfy the Reorganized Debtors' debts. Need to Clarify Plan Provisions Mr. Madron points out that while the Indenture contemplated that dividends will be retained if payments would be impermissible under applicable law, it did not describe what would happen to the amounts retained by FINOVA Group in the event that FINOVA Group would never be able to declare and pay dividends. Therefore, FINOVA Capital seeks clarification of the treatment of the funds retained by FINOVA Group if there is no reasonable chance that the retained funds will ever be able to be paid to FINOVA Group's equity holders. Mr. Madron assures the Court that FINOVA Group's equity holders will not be harmed by FINOVA Capital's request because the Plan contemplates that the 5% of Available Cash would be retained by FINOVA Group if applicable law prevents FINOVA Group from declaring or paying dividends from funds in the Segregated Account. The Plan's treatment of holders of the New Senior Notes, Mr. Madron adds, will also not be changed because the Plan contemplates that they will receive payment on account of the Notes and that the equity holders will not receive dividends if these dividends are not permitted under applicable law. Because the Plan's treatment of the New Senior Notes and FNV Group's equity will not be changed, Mr. Madron notes that FINOVA Capital's request does not seek modification of the Plan. Hearing on June 10 The Court will convene a hearing June 10, 2005, to consider FINOVA Capital's request. Responses to the request may be filed no later than June 3. Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. (Finova Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) FORCE PROTECTION: Auditors Raise Going Concern Doubt ---------------------------------------------------- Force Protection Inc. incurred a $10.2 million loss for the year ended December 31, 2004. Current assets exceed its current liabilities by $5.7 million. Realization of a major portion of the assets in the Company's balance sheet is dependent upon the Company's continuing operations, obtaining additional financing, and the success of its future operations. According to the Company's independent auditing firm, Jaspers, Hall, PC (formerly Michael Johnson & Co., LLC) of Denver, Colorado, on April 8, 2005, "The Company's recurring losses from operations and its difficulties in generating sufficient cash flow to meet its obligation and sustain its operations raise substantial doubt about its ability to continue as a going concern." As of December 31, 2004, the Company's cash and cash equivalents were $2,264,406, compared to $278,777 as of December 31, 2003; $3,210,136 as of March 31, 2004; $1,311,687 as of June 30, 2004 and $548,781 as of September 30, 2004. Force Protection's principal sources of capital have been cash flow from operations as it relates to the receipt of performance based payments, warrant exercises, borrowings from G.C. Financial Services and the sale of common stock. To date the Company has not had any recent borrowings from G.C. Financial Services. Management indicates that the Company currently has sufficient cash resources for the next two reporting periods, ending June 2005, excluding any major changes to the burn rate. The Company intends to seek a short term line of credit or other financing alternatives as necessary which may be required sooner if other large orders are secured. If Force Protection accepts an additional contract, its cash resources will be depleted for the purchase of materials, reducing cash resources and shortening the cash resources to cover only a few months. Management anticipates that the Company will require additional capital funding to meet its needs, which will include expanding workforce, funding further development on vehicle products and strengthening internal operations. Based on its current operating plan, management anticipates that additional financing will be required to finance growth in operations and capital expenditures in 2005 and in 2006. Force Protection Inc has had losses since its inception and expects losses to continue in the future. It may never become profitable. It has historically generated substantial losses, which, if continued, could make it difficult to fund its operations or successfully execute its business plan, and could adversely affect its stock price. The Company has generated significant net losses in recent periods, and experienced negative cash flows from operations in the amount of $4,371,480 for the year ended December 31, 2003, and $13,392,619 for the twelve-month period ended December 31, 2004. In recent years, some of the losses were incurred as a result of investments in new product development and marketing costs. While the Company has increased its investments, most notably $8 million in inventory, management anticipates that the Company will continue to generate net losses and may not be able to achieve or sustain profitability on a quarterly or annual basis in the future. In addition, because large portions of its expenses are fixed, Force Protection generally is unable to reduce expenses significantly in the short-term to compensate for any unexpected delay or decrease in anticipated revenues. As a result, it may continue to experience net losses, which, will make it difficult to fund its operations and achieve its business plan, and could cause the market price of its common stock to decline. Force Protection Inc. is headquartered in Ladson, South Carolina and is a complete design-to-manufacturing organization, creating or licensing designs, and creating tooling, and parts necessary to assemble the products in-house. The Company manufactures its vehicles using proprietary technology derived from South African vehicle development programs carried out from 1972 through 1994, and incorporates design developments into the vehicles to improve their protection and functionality. GENEVA STEEL: James T. Marcus Approved as Chapter 11 Trustee ------------------------------------------------------------ Geneva Steel LLC, the U.S. Trustee, the Emergency Steel Loan Guaranty Board, and the Official Committee of Unsecured Creditors of Geneva Steel asked on April 12, 2005, the U.S. Bankruptcy Court for the District of Utah, Central Division, for an order authorizing the appointment of a chapter 11 trustee. The U.S. Trustee, the Committee and the Board believe that it's in the best interests of creditors, equity security holders and other parties-in-interest to appoint a chapter 11 trustee after an examiner found certain irregularities. Geneva was persuaded by its Board of Managers to consent to the appointment. Joel T. Marker, the chapter 11 examiner appointed by the Bankruptcy Court found that certain confidential and privileged documents were leaked from the Committee to Geneva's CEO Ken Johnson and Paul Peterson. The examination was prompted by Sierra Energy, one of Geneva's creditors. Mr. Johnson will be stepping down from his perch on May 15, 2005. * * * The Honorable Glen E. Clark approved the request to appoint a chapter 11 trustee on April 18. James T. Marcus was appointed and approved chapter 11 trustee that same day. Headquartered in Provo, Utah, Geneva Steel LLC owns and operates an integrated steel mill. The Company filed for chapter 11 protection on January 25, 2002 (Bankr. Utah Case No. 02-21455). Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E. Garcia, Esq., at Kaye Scholer LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $262 million in total assets and $192 million in total debts. GLOBAL ENVIRONMENTAL: Losses & Deficit Trigger Going Concern Doubt ------------------------------------------------------------------ Global Environmental Energy Corp. had a $3,084,300 working capital deficit at February 28, 2005, as compared to a $1,758,800 deficit for the quarter ending February 28, 2004. During fiscal year 2004, the Company raised cash proceeds of $9,839,871 by issuing 6,559,914 shares of common stock to Diamond Ridge Advisors. In addition, the Company received $10,160,829 from Diamond Ridge via a line of credit. Stockholders' equity deficit of $2,403,100 at February 28, 2005, may be compared with $613,300 for the quarter ended February 28, 2004. After adding other income and expenses, the Company experienced a loss from its continuing operations before income taxes and discontinued operations of $1,351,600 for the quarter ending February 30, 2005, as compared to a loss of $1,184,400 for the same quarter last year. There are significant uncertainties with regard to the Company's ability to generate sufficient cash flows from operations or other sources to meet and fund its commitments with regard to existing liabilities and recurring expenses. The Company intends to finance its future operations from the proceeds of a subscription agreement for the sale of shares of common stock and an additional letter of credit obtained from a lender. Notwithstanding, certain factors, along with the expressed uncertainty surrounding the ability to generate sufficient cash flow, raises substantial doubt about the Company's ability to continue as a going concern. The Company's goal is to become a holding company which controls the assets and business activities of a fully integrated Energy Company whose interests include, 1) those being developed by Sahara Petroleum Exploration Corp (a Global subsidiary) in traditional oil and gas exploration and production; and 2) those being developed by Biosphere Development Corp (a Global subsidiary) with alternative energy sources, environmental infrastructure and electrical micro-power generation. To date the Company has been best known for its Biosphere Process(TM) System, which promotes the use of sustainable and renewable energy sources. Henceforth, the Biosphere Process(TM) System will be developed and marketed by Biosphere Development Corp. The Biosphere Process(TM) System is a central part of the Companies Eco Technology(TM) system, and can safely and efficiently process traditional and non-traditional waste materials into electricity and other beneficial by-products. In August of 2004, Life Energy & Technology Holdings, Inc., changed its name to Global Environmental Energy Corp. and immediately thereafter the Company changed its domicile from Delaware to the Commonwealth of the Bahamas. The NASD, on February 25, 2005, approved the Company's change of domicile and the Company began trading as a foreign corporation with the designation of an "F" on the symbol. At that time Global Environmental Energy Corp (Delaware) became a wholly owned subsidiary of Global Environmental Energy Corp. GOLDSTAR EMS: Files for Chapter 11 Protection in S.D. Texas ----------------------------------------------------------- Goldstar Emergency Medical Services, Inc., an emergency medical services provider, filed for chapter 11 protection in the United States Bankruptcy Court for the Southern District of Texas to continue to conduct its ordinary course of business while it develops a reorganization plan that will maximize the recovery of its creditors. "Chapter 11 enables us to preserve jobs and benefits for our employees and maintain our role in providing high quality healthcare to the communities we serve," Jason Boever, the Chief Operations Officer of GoldStar EMS told KBTV-4 News. "We will use this time to regain our financial health, while continuing to focus on operating with the highest integrity. We will emerge from Chapter 11 with our competitive spirit intact." The Company's Board of Directors agreed to seek Goldstar's reorganization under chapter 11 of the U.S. Bankruptcy Code, during the Board's special meeting held on Apr. 19, 2005. The Board also authorized and directed the Debtor to employ and retain Weycer, Kaplan, Pulaski & Zuber, P.C., to represent the Debtor in its restructuring efforts. Headquartered in Houston, Texas, Goldstar Emergency Medical Services, Inc., aka Goldstar EMS -- http://www.goldstarems.com/-- is one of the largest providers of emergency medical services in Texas with over 120,000 ambulance responses annually. Goldstar staffs Mobile Intensive Care capable ambulances, which are supplied and stocked with the most technologically advanced equipment available such as automatic vehicle locators, electronic data collection devices, Zoll Biphasic M series monitors and a litney of other premier medical products. Edward L Rothberg, Esq., and Melissa Anne Haselden, Esq., at Weycer Kaplan Pulaski & Zuber represent the Debtor in its restructuring efforts. When the Company filed for chapter 11 protection, it estimated between $10 million to $50 million in total assets and debts. GOLDSTAR EMS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Goldstar Emergency Medical Services, Inc. aka Goldstar EMS 17510 Red Oak Houston, Texas 77090 Bankruptcy Case No.: 05-36446 Type of Business: The Debtor is one of the largest providers of emergency medical services in Texas with over 120,000 ambulance responses annually. Goldstar staffs Mobile Intensive Care capable ambulances, which are supplied and stocked with the most technologically advanced equipment available such as automatic vehicle locators, electronic data collection devices, Zoll Biphasic M series monitors and a litney of other premier medical products. See http://www.goldstarems.com/ Chapter 11 Petition Date: April 25, 2005 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtor's Counsel: Edward L Rothberg, Esq. Melissa Anne Haselden, Esq. Weycer Kaplan Pulaski & Zuber 11 Greenway Plaza, Suite 1400 Houston, Texas 77046 Tel: (713) 961-9045 Fax: (713) 961-5341 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ LRJ Enterprises $368,239 4439 Gulfway Drive Port Arthur, Texas 77642 John Iceton $200,000 4840 Littlewood Beaumont, Texas 77706 409-835-0775 Lance Ringhaver $200,000 9797 Gipsonton Drive Riverview, FL 33569 WA Thomas Sr. & Barbara Thomas $151,674 Littleton Claims Group $144,484 Tri-Anim Health Services $106,932 Zoll Medical Corporation $106,924 R O Williams, Jr. $100,000 Fuelman $96,812 Silva $90,493 WA Thomas Jr. & Debra Thomas $88,527 Scan Health Inc. $74,702 AICCO, Inc. $66,134 Performax Insurance $44,797 Zoll Data Systems $39,492 Ford Quality Fleet Care Program $33,964 Boundtree Medical $25,863 Akin Doherty Klein & Feuge, CPAs $23,300 Philpott $22,562 B&L Mail $21,584 GREENPOINT MORTGAGE: Moody's Rates $9.04MM Class M-8 Notes at Ba1 ----------------------------------------------------------------- Moody's Investors Service has assigned ratings ranging from Aaa to Ba1 to notes issued by GreenPoint Mortgage Funding Trust 2005-HE1. The Aaa ratings are based primarily on the credit quality of the loans and the credit enhancement in the transaction. The credit quality of the loan pool is in-line with that of other average loan pools backed by home equity line of credit mortgage loans. The loans in the pool were originated by and will be serviced by GreenPoint Mortgage Funding, Inc. The complete rating actions are: * Class A-1A $387,000,000 Variable-Rate Asset-Backed Notes Aaa * Class A-1B $75,000,000 Variable-Rate Asset-Backed Notes Aaa * Class A-2 $112,000,000 Variable-Rate Asset-Backed Notes Aaa * Class A-3 $195,000,000 Variable-Rate Asset-Backed Notes Aaa * Class A-4 $73,664,000 Variable-Rate Asset-Backed Notes Aaa * Class M-6 $10,640,000 Variable-Rate Asset-Backed Notes Baa2 * Class M-7 $12,236,000 Variable-Rate Asset-Backed Notes Baa3 * Class M-8 $9,044,000 Variable-Rate Asset-Backed Notes Ba1 HART MICHIGAN: Corrective Measures Prompt S&P to Revise Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Hart, Michigan's outstanding water supply and sewage disposal system revenue refunding bonds to positive from stable based on the city's efforts to correct the system's structural budget imbalance and achieve self-support. These efforts include an increase in water and sewer rates, leading to improved debt service coverage levels, with additional rate increases programmed for future years. At the same time, Standard & Poor's affirmed its 'BB' rating on the bonds, reflecting: (1) a small, heavily concentrated customer base; (2) a service area exhibiting below-average income levels and cyclically high unemployment; and (3) a limited liquidity position, with a history of minimal unrestricted cash kept on hand. Although the system has been characterized by a history of erratic financial performance, the city implemented measures in fiscal 2004 to begin correcting the system's structural budget imbalance and achieve self-support. Following the recommendations of a formal rate study, the city raised monthly water and sewer rates 11% and 14%, respectively, effective December 2003, to a combined $53.96 per 7,500 gallons of usage. Rate increases alone, however, were insufficient to provide self-support, requiring additional measures, including a onetime land sale, to reverse operating losses. Debt service coverage in fiscal 2004 improved to 1.1x, from 0.8x the previous year. Water and sewer rate increases of 5% and 7%, respectively, are expected to be approved by the city's council and become effective July 2005. Although additional rate increases are programmed, it will take several more years for the city to correct the water and sewer fund's structural imbalance. HEXCEL CORP: Stockholders' Deficit Widens to $68.3M at March 31 --------------------------------------------------------------- Hexcel Corporation reported its financial statements for the first quarter 2005. Highlights of the quarter include: -- Net sales up 11% to $290.6 million with commercial aerospace up 19% compared to first quarter of last year -- Operating income up 39% to $32.9 million or 11.3% of net sales versus 9.0% in the same quarter last year -- Refinancing reduces future cost of debt by more than a third Constant Currency To assist in the interpretation of the Company's net sales trend, the value of total net sales and sales by market for the first quarter of 2005, as disclosed in this news release, has been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective period in 2004. Such estimated net sales are titled "constant currency" in this news release. Hexcel Corporation (NYSE/PCX: HXL) reported results for the first quarter of 2005. Net sales for the first quarter of 2005 were $290.6 million, 10.6% higher than the $262.8 million reported for the first quarter of 2004. In constant currency, revenues for the first quarter of 2005 were $286.2 million, or 8.9%, higher than the first quarter of 2004. Operating income for the first quarter of 2005 was $32.9 million compared to $23.7 million for the same quarter last year, a 38.8% increase. Operating income margins as a percentage of sales increased to 11.3% from 9.0% in the first quarter of 2004. Depreciation expense for the quarter was $12.3 million compared to $13.3 million in the first quarter of 2004, while business consolidation and restructuring expenses for the quarter were $0.4 million compared to $0.5 million in the first quarter of 2004. The Company refinanced substantially all of its debt during the quarter. The refinancing reduces ongoing interest expense, replaced a substantial amount of non-callable senior notes with pre-payable senior bank debt, and extended the maturities of most of the Company's long-term debt. As previously announced, the Company recognized a charge in the quarter of $40.3 million related to the redemption of existing debt. Including this charge, the net loss for the quarter was $22.4 million. Excluding this charge, net income for the quarter would have been $17.9 million compared to net income of $8.1 million in the first quarter of 2004. The non-cash expense related to deemed preferred dividends and accretion was $2.3 million compared to $3.1 million in the first quarter 2004. Net loss available to common shareholders for the quarter was $24.7 million, or $0.46 per diluted common share, compared to net income of $5.0 million, or $0.09 per diluted common share, for the first quarter of 2004. Had the $40.3 million refinancing expense not been incurred, the assumed conversion of the mandatorily redeemable convertible preferred stock, restricted stock units and stock options into shares of common stock would have been dilutive and a diluted weighted average common share count of 94.4 million would have been used in the computation of diluted earnings per share. Chief Executive Officer Comments Commenting on the quarter's results, Mr. David E. Berges, Hexcel's Chairman, CEO and President said, "The complete refinancing of our debt in the quarter was a watershed event that is a gratifying reward for three tough years of restructuring and careful cash management. The interest savings it provides will help accelerate our earnings growth beyond that which we expect will be realized from continued operating leverage on increasing revenues. This leverage was well demonstrated in the first quarter as we generated the highest operating income in over six years and delivered most of the improvement through to net income. On a year over year sales increase of $27.8 million, operating income improved by $9.2 million - a 33.1% rate on the incremental sales." Commenting on debt levels, Mr. Berges noted: "Historically, the Company has used cash in the first quarter of each year as working capital grows from the seasonal December lows and due to the timing of bond coupon, annual compensation, incentive and benefit payments. This quarter, we had three previously disclosed business developments that further increased our cash usage. First, the Company incurred $41.8 million in cash costs in implementing its debt refinancing and accrued interest was $9.7 million lower as of March 31, 2005 than it would have been had the Company not undertaken the refinancing. Second, we completed the recapitalization of our Chinese joint venture with a cash equity investment of $7.5 million increasing Hexcel's equity ownership interest to 40.48% from 33.33%. Last, during the quarter, the Company funded a litigation settlement entered into and accrued for in 2004 with a payment of $7.0 million plus interest. The underlying cash usage for the quarter after accounting for these three items was $16.6 million, in the same range as past years." Mr. Berges concluded: "With the refinancing complete, interest expense for the balance of 2005 will be about $4.0 million lower per quarter than it was in 2004. We anticipate positive cash flow over the remainder of the year as we expect improved performance will more than offset increased capital needs." Revenue Trends To provide a better understanding of the real underlying trends, we have again provided constant currency revenues in our discussion of revenue trends by market. In constant currency, commercial aerospace segment revenues were $130.0 million for the first quarter of 2005, an increase of 17.6% over revenues of $110.5 million reported for the first quarter of 2004. As previously announced, Airbus and Boeing raised their production levels for 2005. Because Hexcel delivers its products on average six months in advance of actual aircraft deliveries, the Company first saw the benefit of these production increases last summer and they continued to be evident this quarter. With further production increases anticipated in 2006, the Company expects growth in commercial aerospace sales to continue in the second half of 2005. Further, the continued ramp-up of production of the composite-laden Airbus A380 will provide Hexcel with added commercial aerospace revenue growth. Industrial market segment revenues in constant currency for the quarter were $91.2 million, an increase of 7.4% compared to revenues of $84.9 million last year. Sales of composites products to wind energy applications showed strong double-digit revenue gains this quarter compared to both the first and the fourth quarters of 2004 and led the overall growth of the industrial market segment due to both underlying growth in global wind turbine installations and share gains the Company made in 2004. The Company continues to anticipate significant growth from wind energy applications for full year 2005 compared to 2004. Demand for the Company's reinforcement fabrics used in ballistic applications remained robust, with the current quarter slightly down from the first and the fourth quarters of 2004 but within our expected range of quarterly variability. With the growth in aerospace demand, availability of carbon fiber for non-aerospace applications continued to tighten and as a result constant currency revenues from products used in recreational and other industrial applications were about 3% lower than in the first quarter 2004. All major carbon fiber suppliers have announced expansion plans which should benefit availability in the medium term. Space & defense revenues in constant currency of $48.4 million were down 6.2%, compared to revenues of $51.6 million in the first quarter of 2004. The first quarter of 2004 was the last quarter in which the Company recognized revenues from the Comanche program which was terminated in March of 2004. Sales to the Comanche program in the first quarter of 2004 were $3.8 million. Excluding these sales, first quarter 2005 space & defense revenues were up 1% in constant currency over the same quarter last year. The Company's revenues from military and space programs tend to vary from quarter to quarter more than revenues from programs in other market segments, due to customer ordering patterns and the timing of manufacturing campaigns. Electronics market segment revenues for the quarter in constant currency were $16.6 million, 5% higher than the first quarter 2004 revenues of $15.8 million. While the Company remains focused on high-technology and specialty applications for its electronic materials and is targeting further growth in this market, future performance in this segment remains difficult to predict. Taxes The Company recorded a tax provision of $3.6 million for the quarter primarily reflecting taxes on income of its foreign subsidiaries. The tax benefit for the loss by U.S. operations for the quarter resulting from the $40.3 million refinancing charge was not reflected in the tax provision for the quarter as the Company continues to adjust its tax provision rate through the establishment, or release, of a non-cash valuation allowance attributable to currently generated U.S. and Belgian net pre-tax income (losses). This practice will continue until such time as the U.S. and Belgian operations, respectively, have evidenced the ability to consistently generate income such that in future years management can reasonably expect that the deferred tax assets can be utilized. While the performance of the Company's U.S. operations has improved significantly in recent quarters, the Company needs to evidence sustained performance in its reported results before it can conclude to reverse its valuation allowance. Until such time as it reverses the valuation allowance, the Company will continue to report earnings without a tax provision on its U.S. pre-tax income (losses). Although it will record a U.S. tax loss for the year due to the first quarter 2005 refinancing charge, the Company expects that its U.S. operations will be profitable in the remaining quarters of 2005. Considering these factors, the Company anticipates that its tax provision rate for the remaining three quarters of 2005 will be in a range of 12 - 17% of its pre-tax income. The Company's tax rate remains sensitive to the ratio of U.S. pre-tax income to the pre-tax income of its foreign subsidiaries. Debt and Interest Expense Interest expense during the quarter was $11.9 million compared to $12.4 million in the first quarter of 2004. Included in interest expense in the first quarter of 2005 was an additional expense of $1.0 million, net of interest income, due to the lag between the issuance on February 1, 2005 of the 6.75% senior subordinated notes due 2015 and the partial redemption of the 9.75% senior subordinated notes on March 3, 2005. The Company expects to begin fully reflecting the benefits of lower interest rates resulting from its refinancing in the second quarter of 2005. About the Company Hexcel Corporation is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high- performance reinforcement products, composite materials and composite structures for use in commercial aerospace, space and defense, electronics, and industrial applications. As of March 31, 2005, Hexcel Corporation reported a shareholder's deficit of $68,300,000 compared to $24,000,000 in December 31, 2004. IMMERSION CORP: March 31 Balance Sheet Upside-Down by $7.9 Million ------------------------------------------------------------------ Immersion Corporation (Nasdaq:IMMR), reported revenues of $5.8 million for the quarter ended March 31, 2005 compared to revenues of $5.4 million for the first quarter of 2004. Net loss on a Generally Accepted Accounting Principles -- GAAP -- basis for the first quarter of 2005 was $3.1 million, compared to a net loss of $6.2 million for the first quarter of 2004. As of March 31, 2005, Immersion had cash and cash equivalents totaling $26.9 million as compared to $25.5 million as of December 31, 2004. "In April, we reached a major milestone in our mobility business," said Vic Viegas, Immersion CEO. "Verizon Wireless and the two leading mobile service operators in Korea, SK Telecom and KTF, released Samsung mobile phones with Immersion's VibeTonz(TM) technology. We also announced content relationships with American Greetings Interactive, Indiagames, and Pulse Interactive. All of these companies develop content for multiple mobile phone platforms and distribute it to many of the world's largest mobile service operators. All have produced VibeTonz-enabled downloadable ringtones or games soon to be available on Verizon's Get It Now service. "On March 24, 2005, the U.S. District Court for the Northern District of California entered a judgment in favor of Immersion in our patent infringement suit against Sony Computer Entertainment, Inc. and Sony Computer Entertainment of America, Inc. (Sony). This judgment awarded Immersion $82.0 million in past damages plus pre-judgment interest in the amount of $8.7 million, for a total of $90.7 million. We remain confident of our position in the anticipated appeals process. Our cash balance puts us in a stable position for both defending our intellectual property and investing in new growth opportunities," concluded Mr. Viegas. About the Company Founded in 1993, Immersion Corporation is a recognized leader in developing, licensing and marketing digital touch technology and products. Bringing value to markets where man-machine interaction needs to be made more compelling, safer, or productive, Immersion helps its partners broaden market reach by making the use of touch feedback as critical a user experience as sight and sound. Immersion's technology is deployed across automotive, entertainment, medical training, mobility, personal computing, and three-dimensional simulation markets. Immersion and its wholly- owned subsidiaries hold more than 270 issued patents worldwide. As of March 31, 2005, Immersion Corporation reported a shareholder's deficit of $7,885,000 compared to $5,967,000 in December 31, 2004. JB OXFORD: Tardy 10-K Contains Going Concern Qualification ---------------------------------------------------------- JB Oxford Holdings, Inc. (Nasdaq: JBOH) received notice on April 19, 2005, from The NASDAQ Stock Market indicating that the Company was not in compliance with NASDAQ's requirements for continued listing set forth in NASDAQ Marketplace Rule 4310(c)(14) as a result of the Company's failure to timely file its annual Report on Form 10-K for its fiscal year ended December 31, 2004 with the Securities and Exchange Commission. While the notice did not by itself result in immediate delisting of the Company's common stock, NASDAQ stated in its notice that unless the Company requests a hearing with a NASDAQ Listing Qualifications Panel, the Company's common stock would be delisted from NASDAQ at the opening of business on April 28, 2005. In addition, the trading symbol for the Company's common stock was changed from "JBOH" to "JBOHE" effective as of the opening of business on April 21, 2005. On April 21, 2005, the Company filed its Annual Report on Form 10-K with the Securities and Exchange Commission. On April 22, 2005, the Company was notified by The Nasdaq Stock Market that based upon the filing of its 2004 Form 10-K, it was now in compliance with Marketplace Rule 4310(c)(14) and accordingly the matter was closed. Accordingly, the Company's stock will not be delisted and the Company has been advised by The NASDAQ Stock Market that its stock will recommence trading under the symbol "JBOH" at the opening of business on April 26, 2005. Going Concern Doubt BDO Seidman, LLP, the Company's independent registered certified public accounting firm, has issued an unqualified audit report with an explanatory paragraph as to the Company's ability to continue as a going concern due to its recurring operating losses, limited access to capital markets and significant pending litigation. BDO Seidman expresses doubt because JB Oxford: -- has incurred recurring operating losses, -- has sold its significant business operations, -- has limited access to capital markets; -- has significant pending litigation; and -- faces significant uncertainty with respect to the outcome of an SEC investigation into alleged late trading conducted by the Company. About the Company JB Oxford Holdings, Inc. (Nasdaq:JBOH), through its JB Oxford & Company and National Clearing Corp. subsidiaries, provides clearing and execution services, and discount brokerage services with access to personal brokers, online trading and cash management. The company's one-stop financial destination at http://www.jboxford.com/was developed to be the easiest, most complete way for consumers to manage their money. The site features online trading, robust stock screening and portfolio tracking tools as well as up-to-the-minute market commentary and research from the world's leading content providers. JB Oxford has branches in New York, Minneapolis and Los Angeles. KMART CORP: Engelbrecht Asks Court to Confirm Interest in Claim --------------------------------------------------------------- On Kmart Corporation's bankruptcy petition date, Engelbrecht Bros., Inc., leased a certain real property located in Newburgh, Indiana, to Warrick Associates. Warrick, in turn, subleased the real property -- designated by Kmart Corporation as Store No. 5863 -- pursuant to a written sublease. Pia N. Thompson, Esq., at Sonnenschein Nath & Rosenthal LLP, in Chicago, Illinois, relates that on the Petition Date, Warrick was obligated to Bank One Trust Company, NA, as Indenture Trustee under an indenture, for bond financing that was secured by: (a) a mortgage on the real property owned by Engelbrecht where Store 5863 was situated; (b) the rents, issues, leases, and profits of the real property; (c) the Sublease; and (d) the unconditional guaranty of Kmart. Pursuant to the documents that evidenced and governed the bond financing, Warrick assigned the Sublease and its rents and leases to Bank One. Kmart rejected the Sublease pursuant to Section 365(a) of the Bankruptcy Code. On the Petition Date, Kmart was obligated to Warrick for certain amounts due under the Lease. As a consequence of the rejection of the Lease, Kmart further became obligated to Warrick for the damages resulting from the rejection, subject to a statuary cap stated in Section 502(d)(6) of the Bankruptcy Code. On July 29, 2002, Bank One filed Claim No. 37955 for lease rejection damages predicated on a Collateral Assignment of Rents and Leases in which Warrick assigned all rights and interests in the Sublease as security to Bank One. On July 30, 2002, Warrick filed Claim No. 40405 with respect to the claims due under the Lease and its rejection. Bank One also filed Claim No. 3412 on July 26, 2002, predicated on Kmart's guaranty. Ms. Thompson explains that Claim No. 3412 is separate and apart from Claim No. 40405, and should not be construed as a release or waiver of any rights that Bank One has with respect to Claim No. 37955 or Claim No. 40405. Ms. Thompson argues that Warrick has no right to any distribution under Claim No. 40405 because it has assigned its right and interest to the Sublease and the rents, profits and benefits to Bank One. As a result of the assignment, the Indenture Trustee "stepped into the shoes" of Warrick and is, therefore, the proper party to maintain Claim No. 40405. Ms. Thompson informs Judge Sonderby that Bank One fully transferred and assigned Claim No. 3412 and Claim No. 37955 to Engelbrecht on January 29, 2003, and notice of the transfer of claim pursuant to Rule 3001(e)(2) of the Federal Rules of Bankruptcy Procedure was filed with the United States Bankruptcy Court for the Northern District of Illinois on February 13. In this regard, Engelbrecht asks the Court to declare that it is the sole and rightful holder of Claim No. 40405. 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) LONG BEACH: Moody's Places Ba1 Rating on $35MM Class B-1 Certs. --------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued in Long Beach Mortgage Loan Trust, Series 2005-1, securitization of hybrid adjustable-rate (92%) and fixed-rate subprime residential mortgage loans (8%), originated by Long Beach Mortgage Company. In addition, ratings ranging from Aa1 to Ba1 were assigned to other classes of certificates issued in the transaction. The ratings on the certificates are based on the quality of the underlying mortgage loans, primary mortgage insurance on a part of the collateral, subordination, available excess spread, and overcollateralization. Navneet Agarwal, a Moody's analyst, said that the credit quality of the Long Beach originated loans backing the transaction is about average for the subprime mortgage market, and comparable to mortgage pools backing Long Beach's recent transactions. Long Beach targets borrowers with relatively strong credit scores and strong mortgage payment history. The weighted-average FICO score of 633 for the obligors in this pool is slightly higher than in subprime transactions with similar hybrid adjustable rate and fixed rate mortgage loan concentration. Long Beach is a specialty finance company engaged in the business of originating, purchasing, and selling subprime mortgage loans. It originates loans through a large network of mortgage brokers and re-underwrites all loans prior to funding. The complete rating actions are: Issuer: Long Beach Mortgage Loan Trust 2005-1 Securities: Asset Backed Certificates, Series 2005-1 Originator and Master Servicer: Long Beach Mortgage Company Sub-Servicer: Washington Mutual Bank FA * Class I-A1, $1,912,475,000, rated Aaa * Class II-A1, $528,000,000, rated Aaa * Class II-A2, $215,000,000, rated Aaa * Class II-A3, $151,526,000, rated Aaa * Class M-1, $159,250,000, rated Aa1 * Class M-2, $99,750,000, rated Aa2 * Class M-3, $61,250,000, rated Aa3 * Class M-4, $61,250,000, rated A1 * Class M-5, $43,750,000, rated A2 * Class M-6, $42,000,000, rated A3 * Class M-7, $35,000,000, rated Baa1 * Class M-8, $35,000,000, rated Baa2 * Class M-9, $35,000,000, rated Baa3 * Class B-1, $35,000,000, rated Ba1 LUNN 119TH: Wants to Hire DLA Piper as Bankruptcy Counsel --------------------------------------------------------- Lunn 119th LLC and its debtor-affiliate, Lunn 26th LLC, ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ DLA Piper Rudnick Gary Cary US LLP as their general bankruptcy counsel. DLA Piper is expected to: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their properties and businesses; b) advise the Debtors in connection with any planned sale of assets or business combinations, with any post-petition financing and cash collateral arrangements and other issues relating to financing and capital structure; c) advise the Debtors in the evaluation of the assumption or rejection of unexpired leases and executory contracts, and on legal issues relating to tax, banking, insurance, securities, corporate, business operations, contracts, joint ventures, real property and regulatory matters; d) prepare on behalf of the Debtors all motions, applications, answers, order, reports and papers necessary to the administration of the Debtors' estates; e) negotiate and prepare on behalf of the Debtors any disclosure statement and plan of reorganization, their related agreements and documents, and take necessary action to obtain confirmation of that plan; and f) provide all other legal services that are necessary in the Debtors' chapter 11 cases. David M. Neff, Esq., a Partner at DLA Piper, is the lead attorney for the Debtors. Mr. Neff discloses that the Firm has not received any retainer from the Debtors for its engagement of the Firm. Mr. Neff charges $495 per hour for his services. Mr. Neff reports DLA Piper's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- David G. Lynch Partner $520 William Choslovsky Counsel $410 Nina H. Taylor Paralegal $195 Designation Hourly Rate ----------- ----------- Partners/Counsel $425 - $520 Associates $235 - $410 Legal Assistants/Support Staff $90 - $195 DLA Piper assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Chicago, Illinois, Lunn 119th LLC and its affiliate, Lunn 26th LLC, are owned by Robert J. Lunn, the managing member of the LLCs. Lunn 119th and Lunn 26th filed for chapter 11 protection (Bankr. N.D. Ill. Case Nos. 05-11666 and 05-11672) on March 30, 2005. An asbestos environmental cleanup proceeding (Case No. 03-CH 15247) brought by the City of Chicago is pending against the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. LUNN 119TH: Section 341(a) Meeting Slated for April 28 ------------------------------------------------------ The U.S. Trustee for Region 11 will convene a meeting of Lunn 119th LLC, and its debtor-affiliate's creditors at 1:30 p.m., on April 28, 2005, at the Office of the U.S. Trustee, 227 W. Monroe Street, Room 3340, Chicago, Illinois. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Chicago, Illinois, Lunn 119th LLC and its affiliate, Lunn 26th LLC, are owned by Robert J. Lunn, the managing member of the LLCs. Lunn 119th and Lunn 26th filed for chapter 11 protection (Bankr. N.D. Ill. Case Nos. 05-11666 and 05-11672) on March 30, 2005. An asbestos environmental cleanup proceeding (Case No. 03-CH 15247) brought by the City of Chicago is pending against the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. MATRIX SERVICE: Closes $30 Million Private Debt Placement --------------------------------------------------------- Matrix Service Co. (Nasdaq: MTRX), a leading industrial services company, completed a private placement of $30.0 million of 7.0% Senior Unsecured Convertible Notes due 2010. The notes are convertible into shares of common stock at a conversion price of $4.69 per share. Interest will be payable in advance for the period to and including April 25, 2007, and is subject to adjustment upward or downward in certain circumstances. The net proceeds to Matrix will be approximately $24.6 million. The Company intends to use $20.0 million of the net proceeds to repay its Term Note B, which currently bears 18% interest and to use the remaining net proceeds to provide additional liquidity for working capital needs. The Company has agreed to file a registration statement with the SEC covering the resale of the shares underlying the notes within 30 days. The notes and shares of common stock issuable upon conversion of the notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. About the Company Matrix Service Company -- http://www.matrixservice.com/-- provides general industrial construction and repair and maintenance services principally to the petroleum, petrochemical, power, bulk storage terminal, pipeline and industrial gas industries. The Company is headquartered in Tulsa, Oklahoma, with regional operating facilities located in Oklahoma, Texas, California, Michigan, Pennsylvania, Illinois, Washington and Delaware in the U.S. and Canada. Revolver Availability Increases With the funding of this private placement of convertible subordinated junior securities, the company's revolving line of credit will increase to the lesser of $35,000,000 or 80% of the borrowing base and Matrix's bank group has indicated they will provide an incremental $10 million of short term financing to provide additional liquidity primarily for trade creditors. As previously reported in the Troubled Company Reporter, the Company received a waiver from its senior lenders of their rights and remedies arising from any current violations under the Credit Agreement on April 8, 2005. The waiver expires at the end of the business day on June 15, 2005. In connection with the waiver, the Credit Agreement was amended to increase funds available under the revolving line of credit to the lesser of $32,000,000 or 75% of the borrowing base. Matrix Service's Lenders are: * J.P. MORGAN CHASE BANK, N.A., as Agent * WACHOVIA BANK, NATIONAL ASSOCIATION * UMB BANK, N.A. * WELLS FARGO BANK, NA and * INTERNATIONAL BANK OF COMMERCE, successor in interest to LOCAL OKLAHOMA BANK Matrix Service disclosed to the Lenders that it violated one or more of the financial covenants buried in the Credit Agreement (which are detailed in the April 1, 2005, edition of the Troubled Company Reporter) and the Company failed to make a $1,905,853 payment due March 7, 2005, under what are known as the Hake Group Acquisition Documents. MCI INC: Reports 2004 Compensation for Highest Paid Officers ------------------------------------------------------------ In a regulatory filing with the Securities and Exchange Commission, MCI, Inc., discloses the compensation of the Company's Chief Executive Officer and four most highly compensated executive officers for each of the three years in the period ended December 21, 2004: Annual Compensation ------------------------------- Salary Bonus Other Comp. Name/Position Year ($000's) ($000's) ($000's) ------------- ---- -------- -------- ------------ Michael D. Capellas 2004 1,557.7 5,000.0 - President, 2003 1,500.0 1,500.0 - Chief Executive Officer 2002 28.8 2,049.3 - Wayne E. Huyard 2004 726.9 745.0 - President, 2003 694.2 1,168.0 - U.S. Sales and Service 2002 547.6 150.0 - Robert T. Blakely 2004 726.9 871.3 48.4 Executive V-Pres., 2003 484.6 826.8 - Chief Financial Officer Anastacia D. Kelly 2004 675.0 839.4 118.5 Executive V-Pres. 2003 252.5 504.3 118.5 and General Counsel Jonathan C. Crane 2004 562.5 603.8 37.1 Executive V-Pres., 2003 480.8 870.0 - Strategy and Corporate 2002 373.8 50.0 - Development Restricted All Other Stock Awards Compensation Name/Position Year ($000's) ($000's) ------------- ---- ------------ ------------- Michael D. Capellas 2004 18,000 624.8 President, 2003 - 60.4 Chief Executive Officer 2002 - - Wayne E. Huyard 2004 2,000 1,411.2 President, 2003 - 10.0 U.S. Sales and Service 2002 - 10.0 Robert T. Blakely 2004 3,400 167.0 Executive V-Pres., 2003 - - Chief Financial Officer Anastacia D. Kelly 2004 1,625.0 228.1 Executive V-Pres. 2003 - - and General Counsel Jonathan C. Crane 2004 1,500 108.7 Executive V-Pres., 2003 - - Strategy and Corporate 2002 - - Development Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * 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. MCI INC: Will Hold Annual Shareholders Meeting on May 16 -------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, MCI, Inc., disclosed that it will hold its Annual Meeting of Shareholders on May 16, 2005, at 9:30 a.m. at the Westfields Marriott, located at 14750 Conference Center Drive in Chantilly, Virginia. At the Annual Meeting, MCI shareholders will be asked to: (a) elect nine directors to hold office for one year or until their successors are elected and qualified: * Beresford, Dennis R. * Capellas, Michael * Gregory, W. Grant * Haberkorn, Judith R. * Harris, Laurence E. * Holder, Eric * Katzenbach, Nicholas deB. * Neporent, Mark * Rogers, Clarence B. (b) ratify the selection of independent auditors of the Company for fiscal year 2005 -- the MCI Board of Directors has named KPMG as independent registered public accountants to examine the consolidated financial statements of the Company for fiscal year 2005; and (c) act on other business as may properly come before the meeting, including any adjournment or postponement of the meeting. Eligible stockholders of record at the close of business on April 15, 2005, will be entitled to vote at the meeting. A full-text copy of MCI's Definitive Notice & Proxy Statement is available for free at: http://www.sec.gov/Archives/edgar/data/723527/000119312505080675/ddef14a.htm Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * 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. MERIDIAN AUTOMOTIVE: Files for Chapter 11 Protection in Delaware ---------------------------------------------------------------- Meridian Automotive Systems, Inc., filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The Company and its eight domestic subsidiaries filed their voluntary petitions for relief in the United States Bankruptcy Court for the District of Delaware. Meridian elected to file for reorganization in order to restructure its debt, which has become unsustainable in the current market environment. Meridian says it needs to restructure its balance sheet in order to face the challenges posed by increases in steel and resin prices and the termination of the early payment programs by certain original equipment manufacturers. These factors, combined with reduced production by OEMs, have had an adverse impact on Meridian's liquidity position in recent months. Thomas Divird, Meridian's Chief Executive Officer, said, "Meridian has very strong operations, great relationships with a diversified customer base and high quality products. However, we need to reduce our debt and simplify our capital structure in order to remain competitive under current market conditions. After considering many options, we determined that Chapter 11 provides Meridian with the most prudent approach to restructure our balance sheet while maintaining normal operations. We expect to emerge from this process with a more appropriate capital structure that will allow us to be stronger and more efficient in the future." DIP Financing In conjunction with the filing, Meridian has secured commitments for up to $375 million in debtor-in-possession financing from JPMorgan, subject to court approval. This financing will be used to refinance Meridian's current First Lien facilities and provide sufficient liquidity to continue normal operations. Richard E. Newsted, Meridian's President, said, "Combined with our normal cash flow, the DIP financing that we have secured gives substantial assurance that we will be able to operate normally and continue to meet commitments to our customers throughout this process." Meridian has requested, and expects to receive, court approval to continue to pay employee salaries, wages and benefits in the ordinary course. Meridian will pay suppliers for the post- petition delivery of goods and services in the ordinary course. Meridian's operations in Mexico, Canada and Brazil were not included in the filing. The Company has established a Supplier Call Center to answer questions from its suppliers. The toll-free phone number is 866-845-1979. Meridian has retained the law firm of Sidley Austin Brown & Wood LLP as its restructuring counsel. FTI Consulting is acting as the Company's financial advisor. The Road to Chapter 11 Richard E. Newsted, Meridian's President, explains that the Company has faced "challenging industry conditions, including exponential increases in costs of essential commodities such as resin, nickel and steel, ongoing pricing pressure from OEMs, elimination of accelerated payment programs from certain OEMs, increased labor costs, and cyclical demand." These conditions, Mr. Newsted continued, have resulted in a steady deterioration of the Company's liquidity position and have forced Meridian into chapter 11 to restructure its balance sheet. Mr. Newsted points to a series of recent developments that reduced Meridian's liquidity position: * First, the market share and overall production of the Company's largest North American OEM customers has declined in recent years. Meridian typically supplies its OEM customers on a requirements basis, and is not guaranteed any set volume of business from the OEMs, Therefore, when Meridian's OEM customers decrease their production levels, the volume of the Company's business simultaneously decreases. * Second, Meridian has recently experienced exponential increases in the cost of certain essential commodities, including resin, nickel and steel. Many of the Company's supply contracts with OEM customers are for fixed prices and do not allow Meridian to pass along increased raw material costs. This leaves Meridian unprotected from the recent escalation in the cost of key raw materials. * Finally, during the third quarter of 2004, certain of Meridian's OEM customers gave notice that they were terminating their accelerated payment programs for all of their suppliers. Termination of these programs has had a materially adverse impact on Meridian's short-term liquidity position by pushing back the dates by which the Company receives payments from the OEMs. These events made it clear to Meridian that the Company would not be able to continue servicing its debt obligations at existing levels. Mr. Newsted says that the Company anticipates working with its principal economic stakeholders to effect an overall balance sheet restructuring during the course of its Chapter 11 Cases. Headquartered in Dearborn, Michigan, Meridian Automotive Systems supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on Apr. 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., and Paul S. Caruso, Esq., Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. MERIDIAN AUTOMOTIVE: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Meridian Automotive Systems-Composites Operations, Inc. aka Cambridge Industries, Inc. 550 Town Center Drive, Suite 475 Dearborn, Michigan 48126 Bankruptcy Case No.: 05-11168 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Meridian Automotive Systems, Inc. 05-11169 Meridian Automotive Systems-Angola Operations, Inc. 05-11170 Meridian Automotive Systems-Construction, Inc. 05-11171 Meridian Automotive Systems-Detroit Operations, Inc. 05-11172 Meridian Automotive Systems-Grand Rapids Operation, Inc. 05-11173 Meridian Automotive Systems-Heavy Truck Operations, Inc. 05-11174 Meridian Automotive Systems-Shreveport Operations, Inc. 05-11175 Meridian Automotive Systems-Mexico Operations, LLC 05-11176 Type of Business: Meridian Automotive Systems is a leading producer and supplier to the North American automotive industry of front- and rear-end modules, bumper systems, exterior composite plastic modules, exterior structural components, interior components and modules, and exterior lighting components. The Company currently supplies parts for 19 of the 20 best selling vehicles in North America and a significant number of other popular light trucks, sport utility vehicles, passenger cars, and class 8 heavy trucks produced by the major automotive original equipment manufacturers, including General Motors, Ford, DaimlerChrysler, Toyota, Honda, Subaru, Mazda, Mitsubishi, Freightliner and Volvo. See http://www.meridianautosystems.com/ Chapter 11 Petition Date: April 26, 2005 Court: District of Delaware Judge: Mary F. Walrath Debtors' Lead Counsel: James F. Conlan, Esq. Larry J. Nyhan, Esq. Paul S. Caruso, Esq. Bojan Guzina, Esq. SIDLEY AUSTIN BROWN & WOOD LLP Bank One Plaza 10 South Dearborn Chicago, Illinois 60603 Telephone (312) 853-7000 Debtors' Local Counsel: Robert S. Brady, Esq. Edmon L. Morton, Esq. Edward J. Kosmowski, Esq. Ian S. Fredericks, Esq. Young, Conaway, Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, Delaware 19899 Tel: (302) 571-6600 Fax: (302) 571-1253 Debtors' Financial Advisor: FTI Consulting U.S. Trustee: Frank J. Perch, III, Esq. Assistant United States Trustee Office of the U.S. Trustee 844 King Street, Suite 2207 Lockbox 35 Wilmington, Delaware 19801 Telephone (302) 573-6491 Fax (302) 573-6497 Financial Condition as of March 31, 2005: Total Assets: $530 Million Total Debts: $815 Million Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Metropolitan Life Insurance Company 10 Park Avenue P.O. Box 1902 Morristown, NJ 07962 Attn: Claudia Cromie Tel: (973) 647-3421 Fax: (973) 355-4780 Attn: Lisa Glass Tel: (973) 355-4366 Fax: (212) 251-4563 Subordinated Notes $65,724,044 The Northwestern Mutual Life Insurance Company 720 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Timothy P. Wagener II Tel: (414) 665-5365 Fax: (414) 665-7124 Attn: Karen Stevens Tel: (414) 665-7133 Fax: (414) 665-7016 Subordinated Notes $44,086,308 Caisse de Depot et Placement du Quebec c/o Capital D'Amerique CDPQ, Inc. 1000, Place Jean Paul Riopelle Montreal, Quebec H2Z 2B3 Attn: Luc Houle Fax: (514) 847-2492 Subordinated Notes $13,358,020 Ford Motor Company 5850 New King Court Troy, MI 48098-2692 Attn: Cindy Perkins Tel: (248) 267-2661 Fax: (248) 267-2578 Trade Debt $7,161,992 Walbridge Albinger 613 Abbott Street Detroit, MI 48226-2521 Attn: Randy Abdallah Tel: (313) 963-8000 Fax: (313) 965-4835 Trade Debt $4,808,070 Windsor Mold 4035 Maiden Road Windsor, Ontario NPC 2G4 Attn: Ken Bierer Tel: (519) 972-9032 Fax: (519) 972-3788 Trade Debt $4,725,021 Bose Corporation-OEM 2000 Carolina Pines Drive Blythewood, SC 29016 Attn: Clifton Ward Tel: (803) 714-8430 Fax: (803) 714-8320 Trade Debt $3,631,914 Visteon Automotive Systems One Village Center Drive Van Buren Twp., MI 48111-5711 Attn: Greg Garman Tel: (734) 710-2761 Fax: (734) 736-5637 Trade Debt $3,189,718 Concours Mold, Inc. 3400 St. Etienne Boulevard Windsor, Ontario NSW 5E1 Attn: Andy Aiton Tel: (514) 944-9933 Fax: (514) 944-9935 Trade Debt $2,943,600 Ridgeview Industries 27273 Mile Road NW Grand Rapids, MI 49544 Attn: Scott Berg Tel: (616) 453-8636 Fax: (616) 435-3651 Trade Debt $2,841,177 JSP International 273 Great Valley Parkway Malvern, PA 19355 Attn: Pat Rich Tel: (610) 651-8610 Fax: (610) 651-8601 Trade Debt $2,748,275 Century Tool & Gage Company 200 South Alloy Drive Fenton, MI 48430 Attn: Mike Cummings Tel: (810) 629-0784 Fax: (810) 629-9284 Trade Debt $2,662,860 Saint Gobain Vetrotex America 4515 Allendale Road Wichita Falls, TX 76310 Attn: Pam Koch Tel: (800) 433-0922 Fax: (940) 689-3449 Trade Debt $2,542,712 Ashland Chemical Company P.O. Box 2219 Columbus, OH 43216 Attn: Roger Adkins Tel: (614) 790-3953 Fax: (614) 790-3735 Trade Debt $2,358,737 Windward Capital Partners, LP 712 Fifth Avenue, 21st Floor New York, NY 10019 Attn: Peter Macdonald Tel: (212) 382-6516 Fax: (212) 382-6534 Consulting Fees $2,245,064 H.H. "Buddy" Wacaser 370 Lower Station Camp Creek Gallatin, TN 37066 Attn: H.H. "Buddy" Wacaser Tel: (313) 253-3544 Severance Pay $2,108,334 Delphi Delco Electronics Systems One Corporate Center P.O. Box 9005 Kokomo, IN 46904-9005 Attn: Richard Peters Tel: (313) 996-3661 Fax: (313) 996-3697 Trade Debt $1,843,380 Magic Steel Sales, LLC 4242 Clay Avenue SW Grand Rapids, MI 49548 Attn: Greg Elksnis Tel: (616) 532-4071 Fax: (616) 532-0565 Trade Debt $1,783,305 ITS/International Tooling 731 Broadway N.W. Grand Rapids, MI 49501 Attn: Ed Metzler Tel: (616) 459-8285 Fax:(616)459-8292 Trade Debt $1,707,890 Advanced Tooling Systems 1166 Seven Mile Rd. Comstock Park, MI 49321 Attn: Drew Boersma Tel: (616) 784-7513 Fax: (616) 784-4780 Trade Debt $1,588,332 Omega Tool Corporation 2045 Solar Crescent Oldcastle, Ontario NRO 1LO Attn: Louis Zonta Tel: (519) 737-1201 Fax: (519) 737-7719 Trade Debt $1,483,840 ABB Flexible Automation Inc. 1250 Brown Road Auburn Hills, MI 48326 Attn: Lauranc Delaurier Jr. Tel: (800) 435-7365 Fax: (248) 391-7370 Trade Debt $1,356,632 Greenville Tool & Die Co. 1215 South Lafayette Street P.O. Box 310 Greenville, MI 48838 Attn: Terry Swan Tel: (616) 754-5693 Fax: (616) 754-5500 Trade Debt $1,266,200 H&H Metal Source 3909 Turner NW Grand Rapids, MI 49504 Attn: Brian Harris Tel: (616) 364-0113 Fax: (616) 364-0904 Trade Debt $1,259,443 Alpha Owens Corning 2552 Industrial Drive Valparaiso, IN 43686 Attn: James Plaunt Tel: (734) 995-6779 Fax: (734) 995-6784 Trade Debt $1,229,003 All Tech Engineering 1030 58th Street SW Wyoming, MI 49509 Attn: Bruce Bunker Tel: (616) 406-0681 Fax: (616) 406-0690 Trade Debt $1,210,392 Solvay Engineered Polymers 1200 Hartnon Road Auburn Hills, Ml 48326 Attn: Jean Meador Tel: (817) 792-1892 Fax: (817) 792-2851 Trade Debt $1,115,370 Plastech Engineered Products 38070 Ecorse Road Romulus, MI 48174 Attn: Scott E. Rezebek Tel: (734) 713-4916 Fax: (734) 641-0606 Trade Debt $1,025,904 Dupont Company 950 Stephenson Highway Troy, MI 48083 Attn: Tab Semanision Tel: (248) 583-4543 Fax: (248) 583-8192 Trade Debt $892,193 Rohm & Haas Company 2701 East 170th Street Lansing, IL 60438 Attn: Andy Cooper Tel: (708) 474-7000 Fax: (708) 868-7490 Trade Debt $817,535 MERIDIAN AUTOMOTIVE: S&P's Corporate Credit Rating to Tumbles to D ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Meridian Automotive Systems Inc. to 'D' from 'CCC+' following the company's Chapter 11 bankruptcy filing. Dearborn, Mich.-based Meridian has total debt of about $600 million, including the present value of operating leases. "The bankruptcy filing was precipitated by very difficult industry conditions," said Standard & Poor's credit analyst Martin King, "including reduced vehicle production, pricing pressure, and higher raw material costs that led to reduced earnings and cash flow generation and constrained liquidity." At the same time, Standard & Poor's placed the recovery ratings on the senior secured bank facility on CreditWatch with positive implications. Meridian has received a commitment for $375 million in debtor-in-possession financing, subject to court approval, which will be used to refinance first-lien debt and provide liquidity to continue normal operations while the company is in bankruptcy, although the allocation of proceeds is unknown. "We will review any financials and restructuring plans that may become available, to assess the impact on recovery prospects," Mr. King said. "The '4' first-lien recovery rating could be raised if we believe lenders will receive more than 50% recovery, and the '5' second-lien rating could be raised if lenders are expected to receive more than 25% recovery. If sufficient information is not available in the near term, we will withdraw the recovery ratings." Meridian's operating performance has deteriorated because of the industry pressures. Although the most recent company financial reports date back to the third quarter of 2004, we believe Meridian's earnings and cash are substantially short of the company's business plan. Liquidity is believed to be very thin, because of poor cash flow generation and the termination of various customers' accelerated accounts receivable programs. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ All ratings affected by this rating action can be found on Standard & Poor's public Web site at http://www.standardandpoors.com/under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. MESA TRUST: Moody's May Up Ba2 Rating on Class B After Review ------------------------------------------------------------- Moody's Investors Service has placed under review for possible upgrade thirty-three certificates from eighteen deals originated by New Century Mortgage Corporation. The transactions, issued in 1999-2000, are backed by first lien adjustable- and fixed-rate subprime mortgage loans. The certificates are being placed on review for upgrade based on the level of credit enhancement provided by the excess spread, overcollateralization, and the subordinate classes. The projected pipeline losses are not expected to significantly affect the credit support for these certificates. The seasoning of the loans and low pool factor reduces loss volatility. The most subordinate classes from Morgan Stanley Dean Witter Capital I Inc, Series 2001-NC1 and CWABS, Inc, Series 2001-CB1 deals are placed on review for possible downgrade because existing credit enhancement levels are low given the current projected losses on the underlying pools. The transactions have taken losses and pipeline loss could cause eventual erosion of the overcollateralization. Moody's complete rating actions are: Review for upgrade: Issuer: Salomon Brothers Mortgage Securities VII * Series 1999-NC3; Class M2, current rating A2, under review for possible upgrade * Series 1999-NC3; Class M3, current rating Baa2, under review for possible upgrade * Series 1999-NC4; Class M2, current rating A2, under review for possible upgrade * Series 1999-NC4; Class M3, current rating Baa2, under review for possible upgrade * Series 1999-NC5; Class M2, current rating A2, under review for possible upgrade Issuer: ABFC 2002-NC1 Trust * Class M1, current rating Aa2, under review for possible upgrade * Class M2, current rating A2, under review for possible upgrade * Class M3, current rating Baa2, under review for possible upgrade Issuer: New Century Home Equity Loan Trust * Series 2000-NC1; Class M2, current rating A2, under review for possible upgrade. * Series 2002-1; Class M2, current rating A2, under review for possible upgrade * Series 2002-1; Class M3, current rating Baa2, under review for possible upgrade * Series 2002-1; Class M4, current rating Baa3, under review for possible upgrade Issuer: PaineWebber Mortgage Acceptance Corp IV, Series 2000-HE1 * Class M1, current rating Aa2, under review for possible upgrade Issuer: Morgan Stanley Dean Witter Capital I Inc * Series 2001-NC2; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-NC3; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-NC4; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-NC4; Class M2, current rating A2, under review for possible upgrade * Series 2002-NC1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-NC1; Class M2, current rating A2, under review for possible upgrade * Series 2002-NC4; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-NC4; Class M2, current rating A2, under review for possible upgrade Issuer: MASTR Asset Securitization Trust 2002-NC1 * Class M1, current rating Aa2, under review for possible upgrade * Class M2, current rating A2, under review for possible upgrade Issuer: GSAMP 2002-NC1 Trust * Class M1, current rating Aa2, under review for possible upgrade * Class M2, current rating A2, under review for possible upgrade Issuer: Asset Backed Securities Corporation * Series 2002-HE1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-HE1; Class M2, current rating A2, under review for possible upgrade * Series 2002-HE2; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-HE2; Class M2, current rating A2, under review for possible upgrade Issuer: MESA Trust * Series 2001-1; Class M, current rating Baa2, under review for possible upgrade * Series 2001-1; Class B, current rating Ba2, under review for possible upgrade * Series 2001-2; Class M, current rating Baa2, under review for possible upgrade * Series 2001-2; Class B, current rating Ba2, under review for possible upgrade Review for downgrade: Issuer: Morgan Stanley Dean Witter Capital I Inc * Series 2001-NC1; Class B1, current rating Baa3, under review for possible downgrade Issuer: CWABS, Inc * Series 2001-BC1, Class B2, current rating Baa2, under review for possible downgrade METRIS COMPANIES: Earns $27.6 Million of Net Income in 1st Qtr. --------------------------------------------------------------- Metris Companies Inc. (NYSE:MXT) reported net income of $27.6 million for the quarter ended March 31, 2005. This compares to net income of $41.6 million for the quarter ended March 31, 2004. "We are very pleased with the operating results posted in the first quarter," said Metris Chairman and Chief Executive Officer David Wesselink. "We saw substantial improvement in the performance of our credit card portfolio. The three-month average excess spread in the Metris Master Trust was 6.47%, which was considerably higher than the fourth quarter 2004 three-month average of 4.86%. As of March 31, 2005, the two-cycle plus delinquency rate in the Metris Master Trust was 8.3%, the lowest in almost four years, while the first-cycle delinquency rate of 4.1% in the Metris Master Trust is the lowest in our history. The decline in delinquencies is an encouraging sign for loss rates in the months ahead." Operating Data New account originations for the quarter ended March 31, 2005 were 163,000. Gross active accounts were 2.2 million as of March 31, 2005, compared to 2.2 million as of December 31, 2004 and 2.4 million as of March 31, 2004. The Company's managed credit card loans were $6.2 billion as of March 31, 2005, compared to $6.6 billion as of December 31, 2004 and $7.5 billion as of March 31, 2004. The Company's owned credit card loan portfolio was $62.0 million as of March 31, 2005, compared to $74.1 million as of March 31, 2004. The managed two-cycle plus delinquency rate was 8.3% as of March 31, 2005, compared to 9.1% as of December 31, 2004 and 10.4% as of March 31, 2004. The owned two-cycle plus delinquency rate was 10.0% as of March 31, 2005, compared to 11.4% as of December 31, 2004 and 15.0% as of March 31, 2004. The managed net charge-off rate was 14.5% for the first quarter of 2005, compared to 15.5% in the previous quarter and 17.8% for the first quarter of 2004. The owned net charge-off rate was 10.1%, compared to 13.2% in the previous quarter and 71.0% in the first quarter of 2004. Metris Master Trust Data The three-month average excess spread in the Metris Master Trust was 6.47% for the period ended March 31, 2005, compared to 4.86% for the period ended December 31, 2004 and 4.61% for the period ended March 31, 2004. The three-month average excess spread in the Metris Master Trust for the period ended March 31, 2005 includes an incremental 28 basis points of yield due to recoveries resulting from sales of certain charged-off receivables, including cease and desist, efforts exhausted and dismissed bankruptcies. Sales of these types of charged-off receivables are not conducted monthly, but are conducted periodically dependent on market pricing. The reported two-cycle plus delinquency rate in the Metris Master Trust was 8.3% as of March 31, 2005, compared to 9.2% as of December 31, 2004 and 10.5% as of March 31, 2004. The three-month average gross default rate of the Metris Master Trust was 17.1% for the period ended March 31, 2005, compared to 17.5% for the period ended December 31, 2004 and 19.3% for the period ended March 31, 2004. Liquidity and Funding Consolidated total liquid assets were $307.2 million as of March 31, 2005, representing an $89.9 million decrease from $397.1 million as of December 31, 2004. The amount of total liquid assets held by our wholly owned subsidiary, Direct Merchants Credit Card Bank, N.A., was $183.2 million as of March 31, 2005 and $167.5 million as of December 31, 2004. The liquidity reserve deposit, which is not included in total liquid assets, was $64.0 million as of March 31, 2005, compared to $79.7 million as of December 31, 2004. Outstanding corporate debt was $324.2 million and $373.6 million as of March 31, 2005 and December 31, 2004, respectively. Off- balance-sheet funding was $4.9 billion, with $200 million in unused conduit capacity as of March 31, 2005, compared to $5.3 billion of off-balance-sheet funding with $840 million in unused conduit capacity as of December 31, 2004. The decrease in the unused conduit capacity was primarily due to the defeasance of the $900 million series 2002-3 asset-backed securities from the Metris Master Trust that the Company announced on February 1, 2005. Series 2002-3 was defeased through use of the two-year conduit facility and was scheduled to mature in May 2005. The Company also issued $52.8 million of asset-backed securities from the Metris Secured Note Trust 2004-2 during January of 2005. The asset-backed securities are set to mature on October 20, 2006 and were rated Ba2/BB+ by Moody's Investors Service, Inc., and Fitch Inc., respectively. Proceeds from the issuance were used to make an optional $50 million prepayment on the Company's Senior Notes due 2006. The Company expensed approximately $2.0 million in costs and charges related to the prepayment. Subsequent to March 31, 2005, the Company issued $544 million in series 2005-1 asset-backed securities from the Metris Master Trust. Following the issuance of series 2005-1, unused conduit capacity increased to $850 million as of April 20, 2005. In addition, the Company made an optional prepayment of $75 million on its senior-secured credit agreement due May 2007, which will result in approximately $6.5 million in costs and charges. The impact of these transactions will be reflected in the second quarter of 2005. Results of Operations Revenues Revenues for the quarter ended March 31, 2005 were $150.5 million, a $28.1 million or 15.7% decrease from $178.6 million for the quarter ended March 31, 2004. Securitization income was $108.1 million for the quarter ended March 31, 2005, a reduction of $10.9 million from the comparable period in 2004. This decrease is primarily due to a $28.0 million increase in loss on new securitizations and a $42.9 million decrease in the change in fair market value revenue, partially offset by a $14.0 million increase in interest-only revenue and a $32.1 million decrease in transaction and other costs. The increase in the loss on new securitizations resulted primarily from the loss on the defeasance of Series 2002-3, partially offset by a gain on the $52.8 million 2004-2 BB bond issuance during the current period. The decrease in the change in fair market value revenue from the first quarter of 2004 is primarily due to a $42.3 million decrease in the change in fair market value related to the change in conduit borrowings and receivable attrition, and an $8.6 million decrease due to lower levels of trapped excess spread released. These decreases were partially offset by a $10.3 million increase in fair market value due to the reduction of the discount rate for contractual retained interest, transferor and restricted cash from 16.0% to 15.0%. The increase in interest-only revenue resulted from a 186 basis point increase in average excess spread partially offset by a $1.3 billion reduction in average principal receivables. The $32.1 million decrease in transaction costs resulted from a reduction in financing activity during the first quarter of 2005 over the comparable period in 2004. Servicing income on securitized receivables was $29.4 million, a decrease of $6.8 million from the first quarter of 2004 due to a $1.3 billion reduction in average principal receivables in the Metris Master Trust. Credit card loan fees, interchange and other income was $2.8 million, a decrease of $8.0 million from the first quarter of 2004 due primarily to the reduction in average owned credit card loans of $61.4 million between the two periods. Enhancement services income was $3.5 million for the first quarter of 2005, a decrease of $4.0 million from the first quarter of 2004 primarily due to the declining number of memberships resulting from a declining portfolio. The $1.8 million gain on sale of membership and warranty business resulted from the recognition of the remaining deferred portion of the gain due to the expiration of our obligations under a temporary servicing agreement with the purchaser. Expenses Total expenses were $108.2 million for the quarter ended March 31, 2005, a $6.1 million decrease from $114.3 million for the quarter ended March 31, 2004. This decrease was primarily due to lower compensation, data processing services and communications, credit protection claims and occupancy expenses due to a reduction in gross active accounts. Partially offsetting this decrease was credit card account and other product solicitation and marketing expenses, which were $19.1 million during the first quarter of 2005 compared to $15.9 million for the quarter ended March 31, 2004. This increase of $3.2 million was due primarily to the increase in account marketing. About the Company Metris Companies Inc. (NYSE:MXT), based in Minnetonka, Minn, is one of the largest bankcard issuers in the United States. The Company issues credit cards through Direct Merchants Credit Card Bank, N.A., a wholly owned subsidiary headquartered in Phoenix, Ariz. For more information, visit http://www.metriscompanies.com/ or http://www.directmerchantsbank.com/ * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Moody's Investors Service raised the ratings of Metris Companies, Inc. (senior unsecured to B3 from Caa2) and its bank subsidiary Direct Merchants Credit Card Bank NA (issuer to Ba3 from B1). The rating outlook is stable. The rating agency said the upgrade reflects the improvements in Metris's asset quality. These improvements have led to positive earnings at the company as well as the release of trapped cash from its securitization conduits, and have also bolstered ABS investor confidence, giving the company improved access to the securitization market and greater funding flexibility. The ratings action concludes a ratings review begun on January 13, 2005. These ratings were upgraded: Metris Companies Inc.: * the rating for the senior unsecured notes due July 2006 to B3 from Caa2. Direct Merchants Credit Card Bank, N.A.: * the rating of the bank for long-term deposits to Ba2 from Ba3; * the issuerrating and rating for other senior long-term obligations to Ba3 from B1; and * the financial strength rating to D from D-. MIRANT CORP: Creditors Say Plan Violates Absolute Priority Rule --------------------------------------------------------------- Sierra Liquidity Fund, LLC, and certain other unsecured creditors ask the U.S. Bankruptcy Court for the Northern District of Texas to deny approval of the Debtors' Disclosure Statement on three points: (1) Sierra Liquidity Fund, LLC and 10 other unsecured creditors are unable to determine how much postpetition accrued interest they can expect to receive and at what interest rate; (2) The Debtors failed to provide adequate information with respect to feasibility of the Plan; and (3) The Debtors violated the "absolute priority rule." The other unsecured creditors are: (1) Sierra Nevada Liquidity Fund & The Coast Fund LP, (2) Contrarian Funds LLC, (3) Argo Partners, (4) Longacre Master Fund, Ltd., (5) Madison Distressed Strategies LLC, (6) Madison Liquidity Investors 116, LLC, (7) Madison Liquidity Investors 123, LLC, (8) Madison Liquidity Investors 124, LLC, and (9) Madison Niche Opportunities, LLC. According to Michael D. Warner, Esq., at Warner Stevens, L.L.P., in Fort Worth, Texas, the Disclosure Statement estimated the Postpetition Accrued Interest at $154 million for Mirant Americas Generation Unsecured Claims. But there is no clear statement as to how that amount was calculated, what interest rate was used and over what period of time interest accrued. The Disclosure Statement also states, however, that Postpetition Accrued Interest will be distributed "to the extent it is determined by Final Order" that the holder of MAG Unsecured Claims is also entitled to receive Postpetition Accrued Interest. "The message given to MAG Unsecured Creditors is therefore garbled," Mr. Warner says. " At one point, the Debtors put an exact figure on the amount of Postpetition Accrued Interest they will receive ($154 million). At other points, however, the Debtors state that they amount of the interest is dependent on further Court order." Mr. Warner emphasizes that if the amount of interest is dependent on the Court's order, that interest rate could range dramatically from a federal judgment rate of less than 2%, to a state judgment rate of 8%, or a Claim's contract rate of 18% or higher. Information regarding the Plan's feasibility is also inadequate: (1) The Debtors failed to identify the Exit Lender and the availability of funding post-confirmation. Sierra Liquidity and other creditors therefore have no way of judging whether to vote for the Plan; and (2) The failure to state the amount of Postpetition Accrued Interest could affect the Debtors' cash position going forward. Mr. Warner explains that the Debtors must identify the party supplying exit financing and the terms thereof for creditors to make their own determination of the likelihood of the Debtors being able to survive and prosper post-confirmation. Sierra Liquidity finds it unfair to have disclosure of the terms of exit financing only after voting has concluded because financing issues are exactly the types of matters that creditors should be voting on. The Debtors also violated the "absolute priority rule" by proposing that MAG Convenience Claims receive no postpetition interest while allowing MAG Equity Interests to retain "all of the legal, equitable and contractual rights." Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Approves Arkansas Electric Bid Protections ------------------------------------------------------------- Mirant Corporation and its debtor-affiliates intend to compensate Arkansas Electric Cooperative Corporation for serving as a "stalking horse." As reported in the Troubled Company Reporter on April 15, 2005, AECC inked a $85,000,000 Deal with the Debtors to buy assets comprising, among other things, (i) a nominal 548 megawatt gas-fired combined cycle power generating facility located in Wrightsville, Arkansas, (ii) the real property on which the Facility and the Entergy substation are located, and (iii) various other assets to be assumed or assigned including, certain contracts, permits and easements. The Debtors want to offer AECC bid protections in the event they chose to consummate the sale of the Wrightsville Facility Assets to another buyer. Specifically, the Debtors sought and obtained the Court's authority to pay a $2,125,000 breakup fee and reimburse up to $300,000 in expenses AECC incurred after October 18, 2004, in connection with AECC's due diligence examination and review, documentation, enforcement, negotiation or closing of the transaction. The Breakup Fee and Reimbursable Expenses will be payable upon the Debtors' entry into and consummation of a Third Party Sale pursuant to the Auction from the first cash proceeds of the sale. The Breakup Fee and Reimbursable Expenses will be deemed administrative expenses with priority under Section 507(a)(1) of the Bankruptcy Code. The Debtors also seek permission to reimburse up to $300,000 of AECC's expenses in the event the parties' Sale Agreement is terminated by AECC due to a material breach by the Debtors of any of their representations, warranties, covenants or agreements which is incapable of being cured or is not cured within 60 days after written notice. The Breakup Fee and the maximum permitted Reimbursable Expenses constitute approximately 2.85% of the Purchase Price. The Debtors believe that the Bid Protections are (i) reasonable, given the benefits to the estates of having a definitive purchase and sale agreement and the risk to AECC that a Third Party offer ultimately may be accepted, and (ii) necessary to preserve and enhance the value of the Debtors' estates. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue Nos. 58 & 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Canal LLC to Pay Town of Sandwich $1.8 Mil. Tax Bill ----------------------------------------------------------------- Mirant Canal, LLC, a Mirant Corporation debtor-affiliate, sought and obtained the U.S. Bankruptcy Court for the Northern District of Texas' permission to pay $1,836,063 to the Town of Sandwich, in Massachusetts, on account of prepetition real and personal property taxes levied on the Debtor's facility for the 2003 tax year. Mirant Canal owns a power plant in Sandwich. The Facility is capable of producing approximately 1,109 MW of generating capacity and is designed to operate during periods of peak and intermediate demand. Mirant Canal is the Town's largest taxpayer. As of the Petition Date, Mirant Canal owed the Town $1,836,063 for the 2003 Taxes. Of this amount, (i) $1,638,293 relates to unsecured personal property taxes entitled to priority status under Section 507(a)(8) of the Bankruptcy Code and (ii) $219,541 relates to secured real property taxes. Mirant does not contest the amount of the 2003 Taxes. The Debtors note that, under their Plan of Reorganization, Priority Tax Claims will be paid in full plus Post-Confirmation Interest, and the Secured Tax Claims are entitled to receive cash or other property, at the Debtors' sole option, equal to the full allowed amount of the Secured Tax Claims. Accordingly, given that under the terms of the Plan the Town most likely will be entitled to receive the full amount of the 2003 Taxes, the Debtors find the payment of 2003 Taxes at this time appropriate. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Hires Alvarez and Marsal Tax Advisory Unit ------------------------------------------------------- Mirant Corporation and its debtor-affiliates advise the Bankruptcy Court that they have employed Alvarez and Marsal Tax Advisory Services, LLC, in accordance with the order authorizing the employment of professionals used in the ordinary course of business. Alvarez and Marsal Tax Advisory Services will provide state and local tax services to the Debtors, including: -- consulting on various state and local tax matters as they arise; -- assistance with state tax return preparation; and -- audit defense and planning. J. Mark McCormick, managing director at Alvarez and Marsal Tax Advisory Services, assures the Court that the firm does not hold or represent an interest materially adverse to the Debtors. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEW CENTURY: Moody's Reviewing Ratings on 33 Certs. & May Upgrade ----------------------------------------------------------------- Moody's Investors Service has placed under review for possible upgrade thirty-three certificates from eighteen deals originated by New Century Mortgage Corporation. The transactions, issued in 1999-2000, are backed by first lien adjustable- and fixed-rate subprime mortgage loans. The certificates are being placed on review for upgrade based on the level of credit enhancement provided by the excess spread, overcollateralization, and the subordinate classes. The projected pipeline losses are not expected to significantly affect the credit support for these certificates. The seasoning of the loans and low pool factor reduces loss volatility. The most subordinate classes from Morgan Stanley Dean Witter Capital I Inc, Series 2001-NC1 and CWABS, Inc, Series 2001-CB1 deals are placed on review for possible downgrade because existing credit enhancement levels are low given the current projected losses on the underlying pools. The transactions have taken losses and pipeline loss could cause eventual erosion of the overcollateralization. Moody's complete rating actions are: Review for upgrade: Issuer: Salomon Brothers Mortgage Securities VII * Series 1999-NC3; Class M2, current rating A2, under review for possible upgrade * Series 1999-NC3; Class M3, current rating Baa2, under review for possible upgrade * Series 1999-NC4; Class M2, current rating A2, under review for possible upgrade * Series 1999-NC4; Class M3, current rating Baa2, under review for possible upgrade * Series 1999-NC5; Class M2, current rating A2, under review for possible upgrade Issuer: ABFC 2002-NC1 Trust * Class M1, current rating Aa2, under review for possible upgrade * Class M2, current rating A2, under review for possible upgrade * Class M3, current rating Baa2, under review for possible upgrade Issuer: New Century Home Equity Loan Trust * Series 2000-NC1; Class M2, current rating A2, under review for possible upgrade. * Series 2002-1; Class M2, current rating A2, under review for possible upgrade * Series 2002-1; Class M3, current rating Baa2, under review for possible upgrade * Series 2002-1; Class M4, current rating Baa3, under review for possible upgrade Issuer: PaineWebber Mortgage Acceptance Corp IV, Series 2000-HE1 * Class M1, current rating Aa2, under review for possible upgrade Issuer: Morgan Stanley Dean Witter Capital I Inc * Series 2001-NC2; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-NC3; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-NC4; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-NC4; Class M2, current rating A2, under review for possible upgrade * Series 2002-NC1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-NC1; Class M2, current rating A2, under review for possible upgrade * Series 2002-NC4; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-NC4; Class M2, current rating A2, under review for possible upgrade Issuer: MASTR Asset Securitization Trust 2002-NC1 * Class M1, current rating Aa2, under review for possible upgrade * Class M2, current rating A2, under review for possible upgrade Issuer: GSAMP 2002-NC1 Trust * Class M1, current rating Aa2, under review for possible upgrade * Class M2, current rating A2, under review for possible upgrade Issuer: Asset Backed Securities Corporation * Series 2002-HE1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-HE1; Class M2, current rating A2, under review for possible upgrade * Series 2002-HE2; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-HE2; Class M2, current rating A2, under review for possible upgrade Issuer: MESA Trust * Series 2001-1; Class M, current rating Baa2, under review for possible upgrade * Series 2001-1; Class B, current rating Ba2, under review for possible upgrade * Series 2001-2; Class M, current rating Baa2, under review for possible upgrade * Series 2001-2; Class B, current rating Ba2, under review for possible upgrade Review for downgrade: Issuer: Morgan Stanley Dean Witter Capital I Inc * Series 2001-NC1; Class B1, current rating Baa3, under review for possible downgrade Issuer: CWABS, Inc * Series 2001-BC1, Class B2, current rating Baa2, under review for possible downgrade NEW ORLEANS CITY CLUB: Closing its Doors for Good on June 1 ----------------------------------------------------------- Keith Brannon, writing for The Biz Network, says that executives planning a power lunch in the Big Easy at the New Orleans City Club located at 1525 St. Charles Ave. will have to find another option. When the private club filed for chapter 11 protection on Feb. 3, 2005, General Manager Gary Cohn disclosed that the Club employed 40 workers. Half have been sent home. The club closed its doors to the public this month. Some private events in its second-floor banquet facilities will be held this month and next, but the Club will close for good on June 1. Mr. Brannon relates that the Club originally catered to those in the oil and gas industry, starting as The Petroleum Club in the 1940s. It grew along with the energy industry in the city and eventually changed its name to the Energy Club. The club had 1,400 members a decade ago and once held a prominent space at the top of the Energy Centre in downtown New Orleans. It opened at its present location three years ago. The club changed its name to the New Orleans City Club to broaden its membership. Now less than 20 percent of its 900 members work in the sector, and the Club's struggled to increase its membership the past few years. Zea Rotisserie & Grill has reportedly signed a lease for the St. Charles Ave. location and plans to open a restaurant in the building in August, Mr. Cohn told Mr. Brannon. The club will likely convert its Chapter 11 proceeding to a Chapter 7 liquidation and let a Chapter 7 Trustee sell its remaining assets and pay creditors, Mr. Cohn added. New Orleans City Club, Inc., filed for chapter 11 protection on Feb. 3, 2005 (Bankr. E.D. La. Case No. 05-10758). A copy of the Debtor's chapter 11 petition is available at no charge at http://bankrupt.com/misc/05-10758-001.pdf The Debtor is represented by: Daniel A. Smith Healey & Smith 650 Poydras Street, Suite 2345 New Orleans, LA 70130 Telephone (504) 581-6700 Fax (504) 581-6709 The United States Trustee appointed an Official Committee of Unsecured Creditors on April 15, 2005. Bankruptcy Court records don't show that the Committee's moved to retain any professionals. The Debtor estimated assets and liabilities of $100,000 to $500,000 in its bankruptcy petition. The Debtor filed its Schedules of Assets and Liabilities and Statement of Financial Affairs with the Court on Feb. 22, 2005. NORAMPAC INC: Earns $12.4 Million of Net Income in First Quarter ---------------------------------------------------------------- Norampac Inc. reports net income of $12.4 million or $8.4 million excluding specific items for the first quarter of 2005. This compares to net income of $8.9 million or $3.4 million excluding specific items for the same quarter in 2004. Consolidated selected information (in millions of Canadian dollars) ---------------------------- - First quarter Fourth quarter ---------------------------- - 2005 2004 2004 ---------------------------- - Sales 320.0 292.0 305.4 Operating income 23.6 20.3 36.0 Operating income excluding specific items 18.1 9.2 28.3 Net income 12.4 8.9 26.5 Net income excluding specific items 8.4 3.4 15.8 ---------------------------- - Commenting on the results, Mr. Marc-Andre Depin, President and Chief Executive Officer, stated: "The first quarter results were improved due to the higher pricing level compared to last year. The stronger Canadian dollar combined with higher freight, fiber, and energy costs continue to put pressure on our financial results. For the next quarter, we will continue in our efforts to implement our recently announced price increases and to closely manage our controllable costs." Quarterly Highlights: -- Despite a stronger Canadian dollar, average reported Canadian selling prices were higher in both the containerboard and the corrugated products segments; -- A $7 million gain on disposal of a property following the decision to close down the Concord corrugated products plant; -- Unrealized loss of $1 million in the first quarter of 2005 versus an unrealized gain of $11 million in the first quarter of 2004 on financial instruments related to some commodity hedging contracts due to the CICA guidelines on hedge accounting; and -- The Company's North American primary mill capacity utilisation rates remained at 95%, therefore, at the same level as the last quarter. Sales amounted to $320 million in the first quarter of 2005, compared to $292 million for the corresponding quarter in 2004. The increase in sales for the first quarter of 2005 compared to 2004 is attributable to a higher pricing level and this despite a stronger Canadian dollar. Shipments of containerboard were approximately at the same level in the first quarter of 2005 compared to the same quarter in 2004, and were up by 4% compared to the fourth quarter of 2004. Shipments of corrugated products were approximately at the same level in the first quarter of 2005 compared to the same quarter in 2004 and were down by 2% compared to the fourth quarter of 2004. Operating income excluding specific items amounted to $18.1 million in the first quarter of 2005, compared to $9.2 million for the corresponding quarter in 2004. The increase in operating income excluding specific items is mainly attributable to higher selling prices in both the containerboard and the corrugated products segments, which were partially offset by higher costs related to fiber, transportation, energy, maintenance and profit sharing. Norampac (S&P, BB+ Long-Term Corporate Credit Rating, Stable Outlook) owns eight containerboard mills and twenty-six corrugated products plants in the United States, Canada and France. With an annual production capacity of more than 1.6 million short tons, Norampac is the largest containerboard producer in Canada and the 7th largest in North America. Norampac, which is also a major Canadian manufacturer of corrugated products, is a joint venture company owned by Domtar Inc. (TSX: DTC) and Cascades Inc. (TSX: CAS). NORTHSTAR CBO: Fitch Keeps Junk Ratings on A-3 & B Note Classes --------------------------------------------------------------- Fitch Ratings affirms one class of notes issued by Northstar CBO 1997-2 Ltd./Corp. This affirmation is a result of Fitch's review process and is effective immediately: -- $29,887,504 class A-2 affirmed at 'BB-'; -- $90,000,000 class A-3 remains at 'CC'; -- $33,300,000 class B remains at 'C'. Northstar 1997-2 is a collateralized debt obligation managed by ING Investment Management Company which closed July 15, 1997. The collateral supporting Northstar 1997-2 is composed of high-yield corporate bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Since the last rating action, the class A-2 noteholders have received principal distributions amounting to $48.1 million. The remaining balance of $29.8 million represents 18.3% of the originally rated balance. The collateral quality has continued to erode. As of the April 2005 trustee report, defaulted assets account for $66 million, or 72% of the total collateral balance of $91.25 million. As of the last payment date, all rated liabilities are current on interest, since principal proceeds are used to pay any interest shortfall to the class A-3 and class B noteholders. The overcollateralization -- OC -- test does not divert cash flows toward redemption of the A-2 notes until after the payment of class B interest. Due to the ongoing event of default caused by low OC levels, the asset manager cannot sell any collateral including defaulted obligations. Given this restriction, the source of principal proceeds is limited to calls/tenders and maturities. When the calls and tenders stop, the structure will enter into a different event of default stemming from payment shortfall to the class A-3 notes because there will be no principal to make up the interest shortfall. When this happens, with the approval of the senior noteholders, the liabilities of Northstar 1997-2 will become due, and the collateral will be liquidated and used to retire debt in a sequential manner. Currently there are enough principal proceeds to supplement interest shortfalls for the next payment period. The class B notes are further supported by a $10 million letter of credit that can be applied toward any interest shortfall or principal shortfall. The rating of the class A-2 notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class A-3 and class B notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. As a result of this analysis, Fitch has determined that the current ratings assigned to the class A-2 notes still reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ NORTHSTAR CBO: Fitch Holds Junk Ratings on Classes A-2 & B Notes ---------------------------------------------------------------- Fitch Ratings maintains the ratings of class A-2 notes and class B notes issued by Northstar 1997-1 CBO, Ltd., which closed Jan. 21, 1997. Northstar 1997-1 CBO is a collateralized bond obligation supported by high yield bonds. -- $133,385,979 class A-2 notes 'CC'; -- $21,000,000 class B notes 'C'. Fitch reviewed the credit quality of the individual assets constituting the portfolio and discussed the transaction's performance with ING Investment Management Company, the asset manager. Since the previous rating action the collateral has deteriorated. Defaulted securities constitute $66.8 million (71%) of the total collateral balance of $93.7 million, excluding eligible investments, compared with April 2004 reported levels of $57.8 million (43%) defaulted assets. The class A-2 overcollateralization -- OC -- test has eroded to 29.1% from 54.3% as of one year ago. At the last payment date, Feb. 15, 2005, the collateral did not produce sufficient interest proceeds to pay the coupon on the class A-2 notes. As a result, principal proceeds of $1.5 million were applied to pay unpaid interest to the class A-2 notes. The class B notes paid interest entirely from principal collections. The remaining principal of $11.8 million was applied to attempt to cure the class A OC test. As of the most recent trustee report, there are not enough principal proceeds to supplement the projected interest shortfall on the class A-2 notes on the August 2005 payment date. Since the collateral manager is prohibited from selling collateral, calls/tenders and maturities are the only major source of principal monies. If there is not enough principal to pay the interest shortfall on the class A-2 notes, Northstar 1997-1 will enter into an event of default, and the remaining collateral will be liquidated and paid to the class A-2 noteholders upon their approval. Deal information and historical data on Northstar 1997-1 CBO is available on the Fitch Ratings web site at http://www.fitchratings.com/ OCTANE ENERGY: Alberta Court Approves CCAA Plan of Arrangement -------------------------------------------------------------- Octane Energy Services Ltd. (TSX-V: OES) received the approval of its creditors and the Court of Queen's Bench of Alberta for its plan of arrangement. The Company expects to implement the plan under the arrangement and then terminate proceedings under the Companies' Creditor Arrangement Act. Subsequent to termination of the CCAA, Octane will continue to be listed on the TSX Venture Exchange and will have some real estate holdings and cash along with certain available tax losses. Management of Octane intends to pursue certain identified opportunities to enhance shareholder value. Octane Energy Services Ltd.'s wholly owned subsidiary Pronghorn Controls Ltd. remains intact and outside of the CCAA process. Octane Energy Services Ltd.'s wholly owned subsidiaries, Octane Energy Services, Inc., and Octane Energy Services (BC), Inc., were placed into receivership by consent after close of business on Friday, December 4, 2004. In addition, the role of the court appointed monitor was expanded at the parent company (Octane Energy Services Ltd.) and includes a receivership over the equipment held in that corporate entity. Octane is an oilfield services company whose main business is providing electrical and instrumentation services through its subsidiary Pronghorn, Pronghorn remains outside of the CCAA process and continues to operate in the ordinary course of business. The common shares of Octane trade on the TSX Venture Exchange under the symbol "OES". OMNI ENERGY: Posts $14.3 Million Net Loss in Fiscal-Year 2004 ------------------------------------------------------------- OMNI Energy Services Corp. (Nasdaq: OMNI) reported a net loss in its 2004 results despite a 44% increase in revenues over the same year ended December 31, 2003. The Company said that after taking $7.8 million of accounting charges, including: -- $4.2 million of impairment charges recorded as a part of the restructuring of its aviation division; -- $2.0 million of non-cash accounting charges related to the issuance and redemption of a portion of the Company's 6.5% Subordinated Convertible Debentures; and -- $2.1 million in other charges, including $0.5 million of preferred stock dividends, the Company reported a net loss from continuing operations of $11.2 million for the year ended December 31, 2004. After a $3.1 million charge taken in connection with discontinuing a segment of its aviation operations, the Company reported a net loss available to common stockholders of $14.7 million on revenues of $51.6 million for year ended December 31, 2004. For the year ended December 31, 2003, OMNI previously reported net income from continuing operations of $3.7 million on revenues of $35.8 million. After a $0.2 million charge for losses on certain of its 2003 discontinued operations and $0.5 million on preferred stock dividends, net income available to common stockholders totaled $3.0 million for the 2003 year. On the 2004 results, James C. Eckert, OMNI's Chief Executive Officer commented, "During 2004 we re-aligned the Company into separate and distinct business segments to provide efficiency and to improve the long-term profitability of OMNI. In doing so, we incurred approximately $9.3 million in non-recurring expenses including: (i) $1.5 million to consolidate our aviation operations and re-certify and re-value the carrying value of portions of our aviation fleet; (ii) $0.7 million of start-up costs incurred to commence certain long-term aviation contracts; (iii) $4.2 million of asset impairment charges taken in our aviation division; and, (iv) $0.3 million in one-time corporate governance cost required by the Sarbanes-Oxley Act of 2003. Our net loss for 2004 was $14.3 million. Excluding $9.3 million in non-recurring charges, and assuming a full year of operations of Trussco, Inc., which we acquired on June 30, 2004, our pro forma EBITDA totaled $12.1 million, a 68% increase over the $7.2 million reported in 2003." Pro forma EBITDA, which is a non- GAAP financial measure, is provided herein to assist investors in better understanding the Company's financial performance. "Wetter than normal weather conditions in mid-2004 caused a number of our seismic drilling projects to be deferred into the fourth quarter of 2004 and into the first quarter of 2005. Normally, the fourth and first quarters of our fiscal year are our slowest periods for our seismic drilling operations," added Mr. Eckert. "While these project delays resulted in less than expected performance results in 2004 for our seismic drilling operations, early 2005 daily seismic drilling revenues ran at record levels. In fact, daily drilling revenues in early 2005 were significantly higher than comparable seismic drilling revenues during any operating period for the past five years. Additionally, seismic drilling margins in early 2005 appear to be improving over this division's margins in 2004 as utilization improves. Also, early indications point towards a possible increase in 2005 of our higher margined transition zone work over 2004 levels." "We remain pleased with the strong level of revenues and the impressive profit margins reported by our environmental unit but, there is still room for improvement," continued Mr. Eckert. "In 2005, we expect to focus on maximizing this business unit's asset and personnel utilization by consolidating various operational, marketing and administrative functions. This focus will also concentrate on reducing and eliminating non-essential facilities and administrative overhead," added Mr. Eckert. "The 2004 restructuring of the aviation division should position the Company for improved profitability, but this business unit remains our most challenging task," continued Mr. Eckert. "In November 2003, we acquired American Helicopters, Inc. In 2004, we expanded the size and capacity of our aviation fleet. This expansion was obviously beyond the capabilities of management infrastructure of our aviation division," said Mr. Eckert. "To address this problem, we initiated the consolidation of our aviation division. In September 2004 we started: (i) re-certifying American's aviation fleet under OMNI's FAA certificate; (ii) eliminating duplicative administrative positions; (iii) terminating contracts which were operating at less than acceptable rates for our transportation services; and (iv) eliminating non-essential personnel, bases and operating facilities. "While we have returned this business unit to near, break-even levels, the resurrection of this division remains our biggest challenge for 2005 and beyond," said Mr. Eckert. Events of Default On Feb. 25, 2005, OMNI received notice of certain alleged events of default under certain of its 6.5% Convertible Debentures, dated Feb. 12, 2004, and April 15, 2004, issued to Portside Growth and Opportunity Fund for $2,500,000 and $1,250,000, respectively. As a result of these defaults, Portside demanded that OMNI redeem all of the debentures held by it, in the aggregate principal amount of $2,765,625, on March 2, 2005. Portside also notified OMNI of its intention to commence a civil action against OMNI to obtain a judgment with respect to all amounts owed to it under the debentures. Headquartered in Carencro, La., OMNI Energy offers a broad range of integrated services to geophysical companies engaged in the acquisition of on- shore seismic data and through its aviation division, transportations services to oil and gas companies operating in the shallow, offshore waters of the Gulf of Mexico. The company provides its services through several business units: Seismic Drilling, Aviation, Permitting, Seismic Survey and Environmental. OMNI's services play a significant role with geophysical companies who have operations in marsh, swamp, shallow water and the U.S. Gulf Coast also called transition zones and contiguous dry land areas also called highland zones. OWENS CORNING: Has Until June 30 to Solicit Votes on Plan --------------------------------------------------------- Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware extends Owens Corning and its debtor-affiliates' exclusive period within which they may solicit acceptances of their Chapter 11 Plan without interference from any other party- in-interest through and including June 30, 2005, without prejudice. In the event that, prior to June 30, the Third Circuit Court reverses the District Court's October 5, 2004, Order granting the Debtors' request for the substantive consolidation of their estates, the Bankruptcy Court directs the Debtors to schedule a status conference. The status conference is set on the next omnibus hearing date after the issuance of the ruling. At the status conference, the Debtors will advise the Bankruptcy Court of the ruling and address the Plan Proponents' intentions with regard to their Disclosure Statement and Plan. Parties-in-interest may seek to terminate or modify the Exclusive Periods proposed by the Debtors. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLASTECH ENGINEERED: Moody's Pares Ratings & Says Outlook Negative ------------------------------------------------------------------ Moody's Investors Service downgraded all ratings for Plastech Engineered Products, Inc. Plastech and its critical customers are being adversely affected by the challenges currently destabilizing the North American automotive industry. As a result, Plastech's leverage, cash flow performance, and liquidity fell well short of expectations during 2004. Management's revised estimates regarding prospective results are also decidedly more conservative. The outlook following these rating actions is negative. These specific ratings were downgraded: * Downgrade to B1, from Ba3, of the ratings for Plastech Engineered Products, Inc.'s $465 million ($438 million remaining) of guaranteed senior secured first-lien credit facilities, consisting of: -- $100 million revolving credit facility due March 2009; -- $75 million ($60 million remaining) term loan A facility due March 2009; -- $290 million ($278 million remaining) term loan B facility due March 2010; * Downgrade to B2, from B1, of the rating for Plastech Engineered Products, Inc.'s $50 million guaranteed senior secured second-lien term loan facility due March 2011; * Downgrade to B1, from Ba3, of the senior implied rating; * Downgrade to B3, from B2, of the senior unsecured issuer rating. The rating downgrades reflect that Plastech's 2004 operating performance and liquidity fell well short of its original plan, and the company's credit protection measures were negatively impacted. Plastech's total debt/EBITDAR leverage (including the present value of operating leases as debt) rose above 5.0x as of fiscal year end December 31, 2004. Cash plus unused effective availability under Plastech's revolving credit facility notably declined below $10 million at year end, but management indicates that this liquidity amount has since improved to about $40 million. The company also had to obtain waivers of several fiscal year end financial covenant violations under the credit agreement. The deterioration of Plastech's operating results was evident despite the fact that the company's February 2004 acquisition of LDM Technologies appears to have been a good business fit, has been fully integrated into Plastech's operations, and is already generating the $25 million of budgeted annualized synergies. Offsetting these benefits were a series of negative industry pressures that were out of management's ability to control. Plastech is heavily concentrated with the Big 3 domestic OEM's in the North American market and is therefore vulnerable to lowered production volumes and market shares, as well as delayed program launches. In addition, Plastech was pressured by its customers to agree to a significantly higher percentage of non-contractual pricedowns in an effort to maintain customer relationships and solidify its future book of business. Certain annual sales levels to Johnson Controls, Inc., per the terms of the Plastics Component Sourcing Agreement with Plastech are also lower than anticipated. JCI's ability to meet the minimum sales levels for 2005 and forward under the agreement is uncertain. As a purchaser of high volumes of plastic, Plastech is also heavily exposed to rising prices for oil derivatives. The negative rating outlook centers on Moody's concerns regarding the potential duration of the current confluence of unfavorable industry conditions, expectations for ongoing customer price compression, uncertainty regarding JCI's ability to meet its previously anticipated volume levels under the critical PCSA contract, and the potential impact of rising oil prices on both the cost of oil derivatives as well as the ongoing popularity of high-content SUV's with consumers. The rating downgrades affecting Plastech were confined to one notch based upon the fact that LTM and prospective EBIT interest coverage remain satisfactory at about 2.0x or better, the acquisition of LDM appears to have been accretive, and the existence of an automatic hedge within the PCSA agreement with JCI related to the level of 2005 productivity giveback payments to be made by Plastech. In addition, during April 2005 Plastech executed an amendment to the credit agreement resetting all financial covenants based upon the company's revised base case plan. On that basis, Plastech should have full access to its revolving credit facility over the near-to-intermediate term without risk of violating covenants. Plastech additionally received $22 million of gross proceeds during the first quarter of 2005 related to the sale of a minority joint venture interest in Singapore. Several unusual commercial uses of cash aggregating more than $15 million and an approximately $10 million pre-buy of resin inventory in anticipation of commodity price increases are in the process of reversing. Plastech is also making use of its natural recession hedge by bringing certain "extended enterprise" outsourced production back in-house and thereby improving capacity utilization and margin performance for that business. Future events that would likely result in additional ratings downgrades include the inability of Plastech to stabilize unused liquidity near $50 million, a material acquisition, persistently high customer pricedowns, continued increases in raw materials prices which are not offset by customers, further declines in production levels, or significant volume shortfalls under the PCSA agreement. Future events that could result in an improved outlook and eventual rating upgrades could include additional enhancements to improve average unused liquidity to $75 million or more, a positive result to ongoing discussions with JCI regarding ways to enable JCI to meet previously anticipated sales levels or to otherwise find a mutually agreeable solution to the sales shortfall situation, stabilizing commodity prices, additional new business awards with solid margins, and geographic diversification of the customer base. Plastech, headquartered in Dearborn, Michigan, is a leading designer and manufacturer of primarily plastic automotive components and systems for OEM and Tier I customers. These components and systems incorporate injection-molded plastic parts, blow-molded plastic parts, and a small percentage of stamped metal components. They are used for interior, exterior and under-the- hood applications. Annual revenues approximate $1 billion. PONDEROSA PINE: Wants to Use Prepetition Lenders' Cash Collateral ----------------------------------------------------------------- Ponderosa Pine Energy, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey for permission, on an interim basis: a) to use Cash Collateral securing repayment of pre-petition obligations to the Secured Parties, and the Chase Bank Group, led by JP Morgan Chase Bank as successor-in-interest to The Chase Manhattan Bank as agent; and b) grant adequate protection to the Chase Bank Group and the Secured Parties for use of the Cash Collateral. Under various Pre-Petition Credit Agreements, the Debtors owe approximately $134.6 million to the Chase Bank Group and the Secured Parties. The Debtors need access to the Cash Collateral securing repayment of those loans to pay Subcontract Employees, obligations under the Operating Agreement, fuel suppliers and service providers, and to minimize disruption to their businesses and operations. The Debtors' request authority to use the Cash Collateral until May 14, 2005, in accordance with a Weekly Budget projecting: 4/16/05 4/23/05 4/30/05 5/7/05 5/14/05 ------- ------- ------- ------ ------- Beginning Cash Balance $1,895,757 10,415,108 10,295,108 5,594,198 5,109,948 Total Expenses 120,000 4,700,910 484,250 368,000 ---------- ---------- ---------- --------- -------- Ending Cash Balance $1,895,757 10,295,108 5,594,198 5,109,948 4,741,948 The Chase Bank Group and the Secured Parties have consented to the Debtors' use of the Cash Collateral. To adequately protect the interests of the Chase Bank Group and the Secured Lenders, the Debtors have proposed to grant them a perfected first priority senior security interests and liens on all cash, pre-petition and post-petition property, and partnership interests of the Debtors. The Debtors ask the Court to hold a final hearing and enter a final order allowing them permanent use of Cash Collateral on May 23, 2005. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D. N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PONDEROSA PINE: Look for Bankruptcy Schedules on May 23 ------------------------------------------------------- Ponderosa Pine Energy, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey for more time to file their Schedules of Assets and Liabilities, Statements of Financial Affairs, Statements of Executory Contracts and Unexpired Leases. The Debtors want until May 23, 2005, to file those documents. The Debtors explain that to prepare the Schedule and Statements, they must gather information from books and records for each of the seven debtor-affiliates. Consequently, collection of the necessary information for those documents require the expenditure of substantial time and effort on the part of the Debtors. The Debtors relate that in view of the size, scope and complexity of their bankruptcy cases, Bankruptcy Rule 1007(c) permits the extension of the time for the filing of the Schedules and Statements. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D.N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PREMCOR INC: Inks $8 Billion Merger Pact with Valero Energy ----------------------------------------------------------- Premcor Inc. (NYSE: PCO) and Valero Energy Corp. (NYSE: VLO) executed a merger agreement for Valero to acquire Premcor in an $8 billion transaction. As a result, Valero will add four refineries and 790,000 barrels per day of throughput capacity to its system, making it the largest refiner in North America. With this acquisition, Valero will have total assets of $25 billion and annual revenues of nearly $70 billion, which would rank it No. 15 on the current listing of the Fortune 500. Adding Premcor's refineries in Port Arthur, Texas; Memphis, Tennessee; Delaware City, Delaware; and Lima, Ohio will give Valero 19 refineries with a total throughput capacity of 3.3 million BPD. "This transaction is one of the largest and most strategic acquisitions in Valero's history," said Bill Greehey, Valero chairman and chief executive officer. "We are acquiring several very strategic refineries for significantly less than their combined replacement value, and we'll be improving the profitability of these plants by capturing synergies, improving their reliability and yields, and increasing their capacities. "This acquisition gives us the best geographic diversity among U.S. refiners with a presence in all of the major refining regions, which further increases our earnings stability. What's more, it complements our complex refining system and increases the amount of sour crude oil that we process. "I can't think of a better acquisition for Valero and our shareholders because it's expected to be significantly accretive to our earnings and cash flow per share based on both our internal forecast and First Call consensus estimates. We estimate that we'll benefit from $350 million in annual synergies in the second year after closing. These will include reduced administrative costs, lower interest expenses, crude oil cost savings due to our purchasing leverage, and operational profit improvements that require limited capital investment. And, we think that once we have a chance to evaluate each facility more thoroughly, we will find that there are even more synergy opportunities, just as we did with the Ultramar Diamond Shamrock acquisition. "This acquisition is also good news for consumers because we have a track record of investing in and expanding our refineries. In fact, from 1996 through the end of this year, we will have increased our refining system's throughput capacity by more than 380,000 BPD -- the size of two world-scale refineries -- by expanding our existing facilities. Not only do we have the expertise, we also have a strong balance sheet, an investment- grade credit rating, access to low-cost capital and good cash flow, which enables us to make the costly 'stay-in-business' environmental investments, as well as the capital investments necessary to continue increasing our refining capacity," Mr. Greehey said. Jefferson F. Allen, Premcor's chief executive officer, said, "This transaction provides Premcor's shareholders with a meaningful increase in the value of their investment, as the terms of the agreement represent a 24.6 percent increase over the closing price of our stock on April 22, 2005. In addition, our shareholders will retain the option to continue participating in the industry through common stock ownership in Valero, which, with this transaction, will become the largest refiner in the United States and, more importantly, has long been a high-quality, financially strong growth company focused on creating shareholder value." Thomas D. O'Malley, Premcor's chairman and holder of more than one million shares of Premcor's common stock, said, "This transaction creates the number one investment vehicle in the very attractive U.S. refining sector. The resulting company has the financial strength to take advantage of the many internal opportunities available within Premcor's existing refining system to expand capacity, provide more clean fuels to the American consumer, and continue to strengthen its performance from an environmental and safety perspective. Valero has proven over the past ten years to be an extremely efficient operator and has demonstrated a unique ability to grow both externally and internally. I intend to remain a long-term and large shareholder of the new Valero. "Premcor's board of directors, after a very careful review of the transaction, unanimously voted in favor of it. I sincerely appreciate the confidence our shareholders have shown in our management and, in particular, the level of support we have received from our large shareholders, the Blackstone Group and Occidental Petroleum, and their direct representatives," O'Malley said. Terms of the Transaction The equity portion of the $8 billion transaction will be paid 50 percent in stock and 50 percent in cash. At closing, Premcor shareholders will receive 46.7 million shares of Valero stock, valued at approximately $3.5 billion as of April 22, 2005. The cash portion, which equates to $3.4 billion, will be financed with a combination of cash on hand and bank debt. In addition, Valero will assume an estimated $1.8 billion of Premcor's existing long- term debt, offset by $800 million in cash as of Dec. 31, 2004. By year-end, Valero expects the combined company to have $2 billion of available cash so it anticipates issuing approximately $1.4 billion in new debt. Under the terms of the merger agreement, Premcor shareholders will have the right to receive either 0.99 shares of Valero common stock, or $72.76 in cash for each share of Premcor stock they own, or a combination of the two, subject to pro-ration so that 50 percent of the total Premcor shares are acquired for cash. The merger consideration represents an approximate 20 percent premium to the recent 30-day trading range of Premcor's stock price. Taking the effect of the acquisition into account, Valero's debt- to- capitalization ratio is expected to be approximately 33 percent at the end of 2005, which is in line with the company's peer group. And, Valero expects to retain its investment-grade credit rating upon closing of the merger. Win-Win for Valero & Premcor Shareholders "This is a win-win situation for the shareholders of both companies," said Mr. Greehey. "Valero shareholders will benefit because the transaction is expected to be approximately 14 percent accretive to earnings per share and about 13 percent accretive to cash flow per share in the first year. And, with increased profitability, more liquidity and better visibility, we think that the market should realize the great value of our stock and assign a higher multiple. "And, Premcor shareholders will receive a substantial premium, lock in a solid return with the cash portion of the agreement, and receive shares in Valero so they'll have an opportunity to benefit from the upside potential," he said. A Great Fit for Valero "Tom O'Malley, Jay Allen and their team have done an outstanding job of building Premcor into a first-rate energy company, and their refineries are a great fit for our system and they meet our acquisition criteria. Each of these refineries has a throughput capacity well in excess of 100,000 BPD; has good logistics; enhances our geographic diversity; and has upgrade potential," said Mr. Greehey. "Plus, there are significant benefits to bringing Premcor's refineries into Valero's much-larger refining system. In addition to the operational synergies, the refineries will benefit from our expertise in upgrading and expanding refineries, our experience in sour crude processing and our significant purchasing leverage. "With this acquisition, we will have the most conversion capacity of any U.S. refiner at around 2 million BPD. Of course, the more conversion capacity that you have, the heavier and more sour feedstocks you can run and the more gasoline and diesel you can make, which allows you to capture better margins. "On a combined basis, our system would initially be processing around 1.8 million BPD of sour feedstocks. And, as projects such as the major expansions at Port Arthur and Aruba come online, we will be increasing our sour crude advantage," he said. A New Era in Refining "This acquisition couldn't come at a better time," Mr. Greehey said. "2005 is off to a great start and we are right on track to have another record year. Our first quarter earnings were 111 percent higher than the same period last year, and of course, we had a record first quarter in 2004. Because of the positive outlook, we believe that our trend of record-setting quarterly results will continue into 2006 and beyond. "Clearly, the refining industry has entered a new era. As a result, we believe that we will continue to see higher highs and higher lows for both sour crude oil discounts and product margins in the future," he said. Valero's leverage to sour crude discounts is one of the biggest contributors to its record earnings, Mr. Greehey noted. As oil demand continues to grow, the increase is being met by medium and heavier sour crude oil, which makes up approximately 70 percent of Valero's crude slate. Since there are a limited number of refineries capable of upgrading these crude oils, there is a growing surplus of these feedstocks, which helps keep sour crude discounts at historic levels. According to Mr. Greehey, Valero expects sour crude discounts to be at least 46 percent better in 2005 than they were in 2004, which would improve the company's operating income by $1.6 billion this year. "On top of that, there is limited refining capacity to meet the growing demand for refined products, and it's going to be that way for quite some time," Mr. Greehey said. "Even if major expansion projects were put in place today, it would take four to five years to complete the engineering, get the necessary permits and build the units. What's more, the bulk of most refiners' capital is tied up meeting Tier II sulfur specifications through 2006 so investments in expansion projects will likely be limited. As a result, refining margins should remain strong for the foreseeable future. "2005 is shaping up to be another year of record earnings for Valero. And, with such strong fundamentals and this great acquisition, our future has never looked brighter," he said. Timing & Transition The boards of directors of both companies unanimously approved Valero's acquisition of Premcor, which is subject to the approval of Premcor's shareholders and customary regulatory approvals. The transaction is expected to close Dec. 31, 2005, and both companies expect a smooth transition. There will be no changes to Valero's senior management or board of directors. Lehman Brothers acted as a financial advisor to Valero, and Morgan Stanley served as a financial advisor to Premcor. About the Refineries Port Arthur, Texas Refinery Premcor's flagship refinery in Port Arthur has a throughput capacity of 250,000 BPD and a replacement value of approximately $4.4 billion. The refinery processes heavy, sour crude oil, earning it a Nelson Complexity rating of 11.6. In 2001, Premcor invested $830 million in a delayed coker to enable the plant to run heavy, sour crude, and negotiated a contract through 2011 for 210,000 BPD of Maya crude oil, which has sold at an average discount of nearly $17 per barrel year-to-date compared to West Texas Intermediate, a benchmark crude. Valero will benefit from several investments in the plant, including the recent expansion of the coker to 105,000 BPD from 85,000 BPD, and the current expansion of the crude and vacuum units, which will increase the refinery's ability to process lower cost, heavy sour crude oil and increase crude capacity to 325,000 BPD from 250,000 BPD. Port Arthur's production includes conventional, premium and reformulated gasoline, as well as diesel, jet fuel, petrochemicals, petroleum coke and sulfur. Located on a 4,000- acre site on the Texas Gulf Coast, the refinery has an extensive logistics system, including waterborne, pipeline and truck rack access. Delaware City, Delaware Refinery The Delaware City refinery has the capacity to process 180,000 BPD of low-cost, heavy sour and high acid crude oil. As a result, this high-conversion, heavy crude oil refinery has a Nelson Complexity rating of 11.8. Premcor purchased the refinery from Motiva in 2004 for $800 million, which is approximately 22 percent of its $3.7 billion replacement value. Contributing to the plant's efficient operations are its 1,800-tons-per-day petroleum- coke gasification unit and the 160-megawatt cogeneration power plant. The refinery primarily produces light products, including conventional and reformulated gasoline, diesel, low sulfur diesel and home heating oil, and it has the ability to produce ultra low sulfur diesel. Located along the Delaware River, this refinery has access to pipeline, barge and truck rack facilities. Memphis, Tennessee Refinery The Memphis refinery primarily processes sweet crude oil and has a throughput capacity of 190,000 BPD. After approximately $570 million in investments over the past seven years, the refinery has been upgraded into a modern and highly efficient facility with an estimated replacement value of $1.8 billion. Nearly 100 percent of its production is light products, including conventional, premium and reformulated gasoline, diesel, jet fuel and petrochemicals. Its location on a 223-acre site along the Mississippi River's Lake McKellar enables it to serve many upriver markets at a significant cost advantage. It also has an extensive logistics system, including access to a crude oil pipeline, a jet fuel pipeline, a large truck rack and a dock adjacent to the plant. Lima, Ohio Refinery With a throughput capacity of 170,000 BPD, the Lima refinery has a Nelson Complexity rating of 8.5 and an approximate $1.8 billion replacement value. While the refinery currently processes sweet and light sour crude oil, it has 23,000 BPD of coking capacity. Additionally, Valero will study plans for a project with EnCana to "sour up" its crude slate so that the refinery can process heavy sour crude oil shipped from Canada. Located on a 650-acre site midway between Toledo and Dayton, the refinery enables Valero to enter the attractive, upper Midwest market. The Lima refinery produces conventional, premium and reformulated gasoline, diesel, jet fuel and petrochemicals. It receives foreign waterborne and domestic crude oil via pipeline, and distributes products by pipeline, rail and truck. About Premcor Inc. Premcor Inc. -- http://www.premcor.com/-- is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products in the United States. The company owns and operates refineries in Port Arthur, Texas, Lima, Ohio, Memphis, Tennessee and Delaware City, Delaware with a combined crude oil throughput capacity of approximately 790,000 barrels per day. About Valero Energy Corporation Valero Energy Corporation -- http://www.valero.com/-- is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenue of approximately $55 billion. The company owns and operates 15 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. * * * Moody's Investors Service placed: -- Premcor Inc.'s Ba3 senior implied and B1 non-guaranteed senior unsecured issuer ratings; -- Premcor Refining Group's -- PRG-- Ba2 senior secured rating of a $1 billion bank facility; -- PRG's Ba3 rated senior unsecured notes; -- PRG's B2 rated senior subordinated notes; and -- Port Arthur Finance Corporation's Ba3 rated senior secured notes under review for possible upgrade. At the same time, Fitch has placed the debt ratings of Premcor Inc. on Rating Watch Positive. Fitch rates Premcor's debt as follows: Premcor Refining Group: -- $1 billion secured credit facility 'BB+'; -- Senior unsecured notes 'BB'; -- Senior subordinated notes 'B+'. Port Arthur Finance Company L.P.: -- Senior secured notes 'BB+'. At the same time, Standard & Poor's placed its 'BB-' corporate credit rating on Premcor on CreditWatch with positive implications. PREMCOR INC: Valero Buy-Out Plans Cue Moody's to Review Ratings --------------------------------------------------------------- Moody's Investors Service placed Valero Energy Corporation's ratings under review for possible downgrade in response to Valero's announcement that it plans to acquire Premcor Inc. for approximately $8 billion, including the assumption of about $1.8 billion of debt. Premcor's ratings remain on review for possible upgrade, continuing a review initiated on February 23, 2005. The equity portion of the purchase will be funded with 50% cash and 50% Valero stock. Valero expects to fund the cash portion with a combination of cash on hand and debt. The transaction is subject to the approval of Premcor's shareholders and customary regulatory reviews and is expected to close by December 31, 2005. Ratings under review for possible downgrade are Valero Energy Corporation's Baa3 rated senior unsecured notes, debentures, medium-term notes, and bank debt, its Ba1 rated subordinated debentures, its shelf registration for senior unsecured debt/subordinated debt/preferred stock rated (P)Baa3/(P)Ba1/(P)Ba2, and its Ba2 rated mandatory convertible preferred stock. Ratings under review for possible upgrade are Premcor Inc.'s Ba3 senior implied and B1 non-guaranteed senior unsecured issuer ratings, Premcor Refining Group's (PRG) Ba2 senior secured rating of a $1 billion bank facility, PRG's Ba3 rated senior unsecured notes, PRG's B2 rated senior subordinated notes, and Port Arthur Finance Corporation's Ba3 rated senior secured notes. Moody's decision to review Valero's ratings for possible downgrade reflects the potential for a substantial increase in Valero's financial leverage as a result of the acquisition in the event that refining margins, which tend to be highly unpredictable, were to decline from today's lofty levels. The review also considers the relatively rich purchase price of the transaction. Based on Moody's estimate of the acquisition cost at approximately $1,016 per complexity barrel, the transaction appears expensive when compared to other recent refinery acquisitions. Furthermore, debt could account for 60% of the total acquisition cost if cash builds by year-end are less than anticipated. The combined entity's pro-forma financial leverage (net of cash) at 12/31/04 is approximately $408 per complexity barrel (including the debt of Valero L.P., a master limited partnership for which Valero is the general partner), the highest among the investment grade refining company peers. Management expects large cash balances at the end of 2005 as a result of high refining margins to reduce the amount of debt required to finance the acquisition at closing, which Moody's would view as a key aspect of the ratings review. If Valero is unable to reduce the leverage impact of the transaction through sufficient cash builds, Moody's believes a one-notch downgrade of Valero's Baa3 senior unsecured debt rating is possible. During the review process, Moody's will focus on: (1) the benefits to Valero of the acquisition, including a significant increase in refining capacity, greater geographic diversification, certain operating synergies, and increased exposure to heavy sour crudes, (2) management's track record with prior acquisitions in improving refining operating performance and realizing synergies, (3) FTC divestitures, if any, and their impact on the company's operations and financial position, (4) the likelihood that Valero and Premcor will build up cash balances at least in line with management's expectations prior to closing in order minimize the debt required to finance the acquisition, (5) Valero's and Premcor's heavy capital requirements, including substantial environmental capital expenditures, (6) the post-merger capital structure, including upstream and downstream guarantees, (7) management's financial policies with respect to share buybacks and dividends, and (8) management's future growth strategy for the combined company and for Valero L.P. The equity portion of the purchase consideration has been fixed at approximately $3.5 billion as of April 22, 2005. The ultimate increase in Valero's financial leverage to finance the cash portion of the acquisition, as well as management's plan to reduce post-merger debt with free cash flow, are highly dependent on refining margins remaining reasonably strong over the next two years. On a pro-forma basis, assuming the acquisition closed on March 31, 2005, Moody's estimates that Valero's gross balance sheet debt would increase by about $5.7 billion to $9.8 billion, and its off-balance sheet debt would increase by $0.6 billion. However, if refining margins remain robust in 2005, Valero anticipates a substantial cash build by year-end (approximately $2.0 billion, including Premcor's cash), which would reduce the net amount of additional debt to approximately $1.4 billion. Despite recent strength in U.S. refining margins, Moody's believes margins will continue to be volatile and cyclical, which could affect earnings and levels of internal cash generation and possibly result in higher debt levels. Moody's believes that debt levels could be also negatively impacted by higher than anticipated investment needs associated with the Premcor assets in order to comply with environmental regulations and improve refinery performance. Premcor has heavy environmental capital needs through 2006, has suffered from relatively low utilization rates at its Memphis and Lima refineries, and remains challenged to improve operating performance at the Delaware City Refinery. Valero Energy Corporation is the largest independent refining and marketing company in the United States and is headquartered in San Antonio, Texas. Premcor Inc. is an independent refining and marketing company headquartered in Old Greenwich, Connecticut. PREMCOR INC.: Valero Energy Merger Cues S&P to Watch Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Valero Energy Corp. to 'BBB-' from 'BBB' and placed the rating on CreditWatch with negative implications on the company's announcement that it will acquire Premcor Inc. in an $8.7 billion transaction. In addition, Standard & Poor's placed its 'BB-' corporate credit rating on Premcor on CreditWatch with positive implications. At the close of the transaction, the ratings on Premcor are expected to be equalized with the ratings on Valero, reflecting the guaranty by Valero of Premcor's debt. "The CreditWatch listing for Valero reflects our concerns that refining margins could weaken considerably in advance of the close, jeopardizing Valero's plans for rapid deleveraging," said Standard & Poor's credit analyst John Thieroff. The company plans to be able to apply $2 billion of its own cash as well as that of Premcor toward the purchase price, based on its expectation that top of the cycle refining margins and historically high heavy/sour crude discounts will continue. "The ratings on Valero will most likely be affirmed should at least midcycle refining margins persist for the remainder of 2005 and terms of the transaction not change meaningfully," said Mr. Thieroff. Additional sizable acquisitions in the near term, unless funded with a very large component of equity would likely trigger a downgrade, as would significant share repurchases done in advance of material deleveraging. QWEST COMMS: Urges FCC to Block SBC-AT&T Merger ----------------------------------------------- Qwest Communications International Inc. (NYSE: Q) files comments at the Federal Communications Commission, opposing approval of the pending merger of SBC Communications and AT&T. In what is possibly the most significant matter to come before the FCC since the divestiture of the Bell System, this merger would constitute a significant setback to federal and state policymakers' efforts to bring about competition in the telecommunications industry. This mega-merger would harm both retail and wholesale customers through higher prices, reduced service quality and less choice and innovation. "The combination of SBC and AT&T as proposed would set our industry back years," said Steve Davis, Qwest senior vice president of public policy. "SBC proposes to acquire its largest competitor and greatest strategic threat. It is inconceivable that this transaction could be in the public interest without the imposition of significant conditions and required divestitures." To protect the public, it is essential that if the merger application is not denied outright, then the FCC must condition its approval, at a minimum, on significant divestitures of facilities and other related overlapping operations in SBC's 13- state operating territory. In addition, because the proposed merged company will benefit from the elimination of AT&T as a competitor -- and benefit from the elimination of other competitors' access to AT&T's wholesale services and access facilities -- other significant conditions must be imposed in order to attempt to level the playing field. The proposed merger also threatens emerging competition from wireless, Voice over Internet Protocol (VoIP) and other broadband technologies. Qwest has been an industry advocate in promoting competition. It is the only incumbent telecommunications provider to reach commercial wholesale agreements with both AT&T and MCI. On April 14, Qwest filed a protest with the Public Utilities Commission of California opposing SBC's merger with AT&T. California has an especially prominent role to play in the national debate given the large presence of SBC and AT&T, and early moves by SBC to gain approval of its transaction there. 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. RECYCLED PAPERBOARD: Gets Third Interim OK to Use Cash Collateral ----------------------------------------------------------------- Recycled Paperboard Inc. sought and obtained permission from the U.S. Bankruptcy Court for the District of New Jersey to continue using cash collateral, on an interim basis, securing repayment of prepetition obligations to Valley National Bank. The Debtor ceased processing new orders and is shipping in-house orders, collecting accounts receivable and otherwise preserving its assets. The orderly liquidation of the Debtor's business is dependent upon its ability to use Cash Collateral. The Debtor does not have sufficient funds to meet its payroll and pay other continuing expenses necessary for the orderly liquidation of the business without access to the Cash Collateral. The Debtor is directed to timely make the principal and interest payments in the amount of $31,000 per month, as further adequate protection to the Bank for the Debtor's use of Cash Collateral. Additionally, the Debtor is directed to transfer amounts in excess of $200,000 to the Bank on the last day of each month after paying all budgeted items. The Debtor is also directed to pay all real estate taxes for the months of April and May 2005. The prepetition debt with Valley National Bank is already secured by first-priority liens and security interests on all of the Debtor's real estate, and existing and after-acquired inventory, equipment, other than the Cogeneration Plant because it is subordinated to Caterpillar Financial Corporation, account receivables, and general intangibles. Cash Collateral Hearing The Honorable Judge Morris Stern set the final hearing on May 2, 2005, at 10:00 a.m. in Courtroom 3A of the U.S. Bankruptcy Court in Newark, New Jersey to consider the Debtor's application for continued use of Cash Collateral. Any objections must be in writing and filed not later than 4:00 p.m. on April 28, 2005, with the Clerk of the Court in Newark and served on: (a) Counsel to the Debtor: David L. Bruck, Esq. Greenbaum, Rowe, Smith & Davis, LLP Metro Corporate Campus One P.O. Box 5600 Woodridge, NJ 07095-0988 (b) Counsel to Valley National Bank: Lisa Bonsall, Esq. McCarter & English, LLP Four Gateway Center 100 Mulberry Street P.O. Box 652 Newark, NJ 07101-0652 Headquartered in Clifton, New Jersey, Recycled Paperboard Inc., manufactures recycled mixed paper and newspaper to make index, tag & bristol, and blanks. The Company filed for chapter 11 protection on November 29, 2004 (Bankr. D.N.J. Case No. 04-47475). David L. Bruck, Esq., at Greenbaum, Rowe, Smith & Davis LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $17,800,000 and total debts of $41,316,455. RESTRUCTURE PETROLEUM: Taps Tranzon Driggers as Auctioneer ---------------------------------------------------------- Stephen L. Meininger, Chapter 7 Trustee of Restructure Petroleum Marketing Services, Inc., seeks authority from the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, to hire Tranzon Driggers, a licensed auctioneer. Tranzon Driggers will liquidate the Debtor's assets at an auction sale and will: (a) pay actual and necessary expenses for the sale of the assets of the Debtors, and (b) receive a commission of 10%, comprised of a Buyer's Premium to be assessed to all buyers, as well as all documented marketing expenses. The Chapter 7 Trustee believes that Tranzon Driggers is a "disinterested persons" as defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b) of the U.S. Bankruptcy Code. Headquartered in Tampa, Florida, Restructure Petroleum Marketing Services, Inc., is a motor fuel franchisee operating a gas station and convenience store. The Debtor, along with its debtor- affiliates, filed for chapter 11 protection on October 29, 2003 (Bankr. M.D. Fla. Case No. 03-22395). Harley E. Riedel, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts from $1 million to $10 million. REXNORD CORP: Moody's Rates $312M Incremental Term Loan B at B1 --------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of Rexnord Corporation, a leading mechanical power transmission components manufacturer. At the same time, Moody's has assigned a B1 rating to the company's $312 million incremental term loan B in connection with an acquisition. The rating outlook remains stable. The ratings are subject to review of the final documentation of the financing transaction. Rexnord is acquiring Falk Corporation, a subsidiary of the Hamilton Sunstrand division of United Technologies Corporation, for a purchase price of $295 million, or 9.5 times LTM (12/31/04) EBITDA. Falk, based in Milwaukee, Wisconsin, is a manufacturer of gears and couplings to the industrial mechanical power transmission market. Proceeds of the incremental term loan will be used to fund the purchase price of $295 million and to pay associated fees and expenses of $17 million. Rexnord is controlled by the Carlyle Group, a private equity firm, through a $915 million acquisition from Invensys plc in November 2002. New rating assigned: * B1 for the proposed $312 million incremental term loan B, due 2011. Ratings affirmed: * B3 for the $225 million of senior subordinated notes, due 2012, * B1 for the existing senior secured credit facility, * B1 senior implied rating, and * B2 issuer rating The rating affirmation and assignment recognize Rexnord's improving financial performance over the past two years, the currently favorable end-market conditions, as well as the strategic benefits of the Falk acquisition. The ratings further consider the combined entity's strong position in a number of niche markets, high percentage of aftermarket replacement sales, and the solid management team. On the other hand, the ratings are constrained by the company's substantially increased debt load and high financial leverage, broad exposure to cyclical end-markets and the associated fluctuations in financial performance, as well as potential integration risks related to the Falk acquisition. The stable outlook reflects favorable current market conditions over the near term and potential synergies stemming from the Falk acquisition, balanced by a potential slowdown in end-market activities over the medium term. The ratings or outlook could be favorably impacted by a more conservative financial posture, stronger earnings and cash flow generation, and evidence that recent results can be sustained throughout a business cycle. Conversely, the ratings or outlook could be pressured by difficulties in integrating the Falk acquisition, a substantial decline in end-market conditions, or the pursuit of additional large-sized debt-financed acquisitions. Moody's notes that Falk's strong brand recognition in the gears and couplings products will widen Rexnord's product offering and strengthen its competitive position in those markets. The Falk acquisition will also expand Rexnord's end-markets into mining and aggregate/cement industries. In addition to some potential synergies from the acquisition, Rexnord expects that Falk's large installed base could become a potential source of meaningful aftermarket parts and services revenues. Nevertheless, despite the increased product and end-market diversification, the combined entity remains exposed to the broad cyclical industrial economy. As a result, Moody's expects Rexnord's financial and operating performance to continue to experience fluctuations through business cycles, as evidenced by the substantial declines in sales volume and operating profits in the last downturn and subsequently a solid recovery in the current cyclical upturn. In fiscal 2004 (ended March 2004), Rexnord's financial and operating performance was under considerable pressure as a result of the broad industrial recession and industry-wide distributor inventory reductions. Subsequently in fiscal 2005 (ended March 2005), as the industrial economy bounced back, Rexnord's sales grew 13% while EBITDA was up 26% from the prior year. In addition to increased demand, Rexnord's improved cost structure and efficiency as a result of the restructuring efforts during the downturn also contributed significantly to the performance improvement. Since the Carlyle acquisition in late 2002, Rexnord has reduced its debt by approximately $88 million to approximately $507 million at the end of March 2005. Pro forma for the acquisition and debt financing, Rexnord will have total debt of approximately $817 million, or 4.8 times pro forma adjusted EBITDA of $171 billion. EBITDA less capex will cover interest coverage 2.2 times. Over the next two years, Moody's expects Rexnord's cash flow generation to be modest, with free cash flows representing about 5-6% of total debt, due mainly to high interest expense, cash restructuring costs, and pension contributions. Rexnord has improved its working capital efficiency over the past two years, and further gains are possible as it continues to focus on improving inventory turns. The combined company is expected to run capital spending in the $35-40 million a year, or 3.5-4% of sales. Moody's expects Rexnord to have adequate liquidity over the next 12 months, supported by both projected positive free cash flow as well as a $75 million committed revolver which will be undrawn at closing. The B1 rating on the $312 million incremental term loan B due 2011 reflects its seniority in the company's debt structure but weak tangible asset coverage. The senior credit facility will be secured by a first priority lien on the capital stock as well as all assets of the company and subsidiaries, and will be guaranteed on a senior secured basis by all of the company's current and future subsidiaries as well as the holding company, RBS Global, Inc. Rexnord Corporation, based in Milwaukee, Wisconsin, is a leading mechanical power transmission components manufacturer in the US, with estimated LTM (March 2005) revenues and EBITDA of approximately $1 billion and $170 million, respectively, pro forma for the Falk acquisition. REXNORD CORP: S&P Rates Proposed $312 Million Term Loan at B+ ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating and 'B-' subordinated debt ratings on Rexnord Corp., and removed the ratings from CreditWatch, where they were placed with negative implications on April 5, 2005. At the same time, Standard & Poor's assigned a 'B+' senior secured rating to the company's proposed $312 million incremental term loan B due December 2011. A recovery rating of '3' was assigned to Milwaukee, Wisconsin-based Rexnord's bank loan facility, indicating that lenders should experience a meaningful recovery of principal, in the 50%-80% range, in the event of a bankruptcy. The outlook is stable. The CreditWatch listing followed the power transmission equipment manufacturer's announcement that it was acquiring Falk Corp. from United Technologies Corp. (A/Stable/A-1) for $295 million. The affirmation and removal from CreditWatch recognizes that the incremental financial risk that Rexnord will have following the close of the transaction will be consistent with the ratings. We estimate that total debt to EBITDA will increase to 4.9x from 4.3x at March 31, 2005, relative to our expectations of 4x-5x for the credit measure. The rating affirmation also takes into account: (1) Falk's complementary and strategic fit with Rexnord's core operations, (2) the potential for some cost savings, and (3) the good margins and unlevered free cash flow generation that Falk should generate in the next couple of years. Standard & Poor's expects Rexnord to continue to operate in the 4x-5x total debt (including S&P's operating lease adjustments) to EBITDA range. "The speculative-grade ratings on Rexnord reflect its vulnerable financial profile, sufficient financial flexibility, and its fair business risk profile as a leader within a variety of niche industrial markets," said Standard & Poor's credit analyst Joel Levington. Rexnord manufactures: (1) mechanical power transmission components, such as: * bearings, *engineered and roller chain, *belt conveyor chain and components, *couplings, *seals, and (2) clutches and brakes for a broad range of industrial markets. Markets served are characterized as modest in size, somewhat consolidated, and have relatively long product life cycles. Key end markets, including energy, aerospace, forest products, and construction equipment, are highly cyclical. The addition of Falk will further diversify Rexnord's end-market exposures. However, certain markets that are important to Falk, including aggregates, mining, and construction equipment, are also very cyclical. Near term, the credit profile should modestly improve due to solid end-market demand and high operating leverage. A negative outlook or downside rating action could occur if Rexnord were to exhibit even more aggressive financial policies, or if it were unable to reduced debt meaningfully enough to absorb the next cyclical downturn relative to our ratio expectations. SECURITIZED ASSET: Fitch Rates $8.7 Million Private Offer at BB+ ---------------------------------------------------------------- Securitized Asset Backed Receivables LLC -- SABR, mortgage pass- through certificates, series 2005-FR1 are rated by Fitch: The senior certificates rated 'AAA' are: -- $459.3 million privately offered classes A-1A and A-1B; -- $201.3 million classes A-2A, A-2B, and A-2C. In addition, Fitch rates: -- $92.6 million class M-1 'AA'; -- $46.3 million class M-2 'A'; -- $15.3 million class M-3 'A-'; -- $10.5 million class B-1 'BBB+'; -- $12.2 million class B-2 'BBB'; -- $9.2 million class B-3 'BBB-'; -- $8.7 million privately offered class B-4 'BB+' (collectively, the subordinate certificates). The 'AAA' rating on the offered and unoffered senior certificates reflects the 24.35% total credit enhancement provided by: * the 10.60% class M-1, * the 5.30% class M-2, * the 1.75% class M-3, * the 1.20% class B-1, * the 1.40% class B-2, * the 1.05% class B-3, * the 1.00% unoffered class B-4, and * the overcollateralization -- OC. The initial and target OC is 2.05%. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure, as well as the capabilities of Saxon Mortgage Services, Inc. (rated 'RPS2+' by Fitch) as servicer and Wells Fargo Bank, National Association as trustee. The collateral pool consists of 4,596 fixed- and adjustable-rate mortgages. As of the closing date, the mortgage loans have an aggregate balance of approximately $873.3 million. The weighted average loan rate is approximately 7.276% and the weighted average remaining term to maturity is 358 months. The average principal balance of the mortgage loans as of the cut-off date is approximately $190,006. The weighted average original loan-to- value ratio is 81.09% and the weighted average borrower credit score was 610. The properties are primarily located in: * California (31.06%), * New York (12.72%), and * New Jersey (7.73%). All of the loans were originated or acquired by Fremont Investment and Loan. Fremont is a California state chartered industrial bank headquartered in Anaheim, Calif. Fremont currently operates five wholesale residential real estate loan production offices. Fremont conducts business in 45 states and its primary source of origination is through licensed mortgage brokers. SEPRACOR INC: March 31 Balance Sheet Upside-Down by $351 Million ---------------------------------------------------------------- Sepracor Inc. (Nasdaq: SEPR) reported its consolidated financial results for the first quarter of 2005. For the three months ended March 31, 2005, Sepracor's consolidated revenues were approximately $119.0 million, of which revenues from pharmaceutical product sales were approximately $106.6 million. The net loss for the first quarter of 2005 was approximately $22.6 million. These consolidated results compare with consolidated revenues of $99.5 million, of which revenues from pharmaceutical product sales were approximately $85.1 million, and a net loss of $50.4 million for the three months ended March 31, 2004. Included in the net loss for the quarter ended March 31, 2004 is a charge of $30.7 million to selling and marketing expense, related to the termination, effective December 31, 2004, of an agreement to co-promote XOPENEX. As of March 31, 2005, Sepracor had approximately $772.1 million in cash and short- and long-term investments. About the Company Sepracor Inc. is a research-based pharmaceutical company dedicated to treating and preventing human disease through the discovery, development and commercialization of innovative pharmaceutical products that are directed toward serving unmet medical needs. Sepracor's drug development program has yielded an extensive portfolio of pharmaceutical compound candidates with a focus on respiratory and central nervous system disorders. Sepracor's corporate headquarters are located in Marlborough, Massachusetts. At March 31, 2005, Sepracor Inc. reported a $351,182,000 stockholders deficit, compared to a $331,115,000 deficit at Dec. 31, 2004. SHAW GROUP: 93% of Noteholders Agree to Amend Sr. Note Indenture ---------------------------------------------------------------- The Shaw Group Inc. (NYSE: SGR) said that, pursuant to its previously announced cash tender offer and consent solicitation for any and all of its outstanding 10-3/4% Senior Notes due 2010, over 93% of the $253.0 million aggregate principal amount outstanding of the Senior Notes have been tendered and, as a result, Shaw has received the consents necessary to adopt certain proposed amendments to the indenture governing the Senior Notes. The proposed amendments will eliminate substantially all of the restrictive covenants of the indenture. Holders who validly tendered their Senior Notes by 5:00 p.m., New York City time on April 19, 2005, and consented to the proposed amendments will receive the total consideration of $1,146.81 per $1,000.00 principal amount of Senior Notes accepted for purchase. The total consideration includes a consent payment of $25 per $1,000 principal amount of Senior Notes. As of the Consent Time, approximately $237.5 million in aggregate principal amount of the Senior Notes had been tendered in the Offer. Acceptance of and payment for Senior Notes tendered before the Consent Time is expected to be on April 26, 2005, subject to satisfaction or waiver of the conditions to the Offer described in Shaw's Offer to Purchase. Shaw intends to execute a supplemental indenture shortly, and, upon payment for such Senior Notes, the amendments will become operative. Senior Notes in the aggregate principal amount of $15,748,000 remain outstanding and subject to the Offer which is scheduled to expire at 5:00 p.m., New York City time, on May 4, 2005, unless extended. Holders who validly tender their Notes after the Consent Time and prior to the Expiration Time will receive the purchase price of $1,121.81 per $1,000.00 principal amount of Senior Notes accepted for purchase. Payment for Senior Notes tendered after the Consent Time and prior to the Expiration Time is expected to be on or about May 5, 2005. All holders whose Notes are accepted for payment will also receive accrued and unpaid interest up to, but not including, the applicable date of payment for the Notes. UBS Securities LLC is acting as dealer-manager and solicitation agent; D.F. King & Co., Inc. is acting as information agent; and The Bank of New York is acting as tender agent in connection with the Offer. The terms and conditions of the Offer are set forth in Shaw's Offer to Purchase, which was distributed to the holders of the Senior Notes when the Offer commenced. Subject to applicable law, Shaw may, at its sole discretion, waive any condition applicable to the Offer or extend or terminate or otherwise amend the Offer. The consummation of the Offer for the Senior Notes is subject to certain conditions. The conditions are fully described in the Offer to Purchase. Copies of the Offer to Purchase, Letter of Transmittal and related documents may be obtained from the information agent at (800) 848-3416. This announcement is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of an offer to sell securities, with respect to any Senior Note. The Offer may only be made pursuant to the terms of the Offer to Purchase and the accompanying Letter of Transmittal. Each holder of the Senior Notes should read the Offer to Purchase and the Letter of Transmittal when it receives them, as they contain important information. None of the Company, the dealer manager and solicitation agent, the information agent or the tender agent makes any recommendation in connection with the Offer or the consent solicitation. About the Company The Shaw Group Inc. -- http://www.shawgrp.com/-- is a global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services for government and private sector clients in the power, process, environmental, infrastructure and emergency response markets. A Fortune 500 Company, The Shaw Group is headquartered in Baton Rouge, Louisiana, and employs approximately 18,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. * * * As reported in the Troubled Company Reporter on Apr. 11, 2005, Moody's Investors Service has placed the long-term ratings of The Shaw Group Inc. on review for possible upgrade following the company's announcement that it intends to utilize the proceeds from an approximately $270 million secondary equity offering to tender for all outstanding 10.75% senior unsecured notes due 2010, effectively retiring virtually all long-term debt. Ratings placed on review include: * Ba3 -- senior implied * Ba3 -- 10.75% senior unsecured notes due 2010 * B1 -- senior unsecured issuer rating As reported in the Troubled Company Reporter on Apr. 8, 2005, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and senior secured ratings on The Shaw Group Inc. on CreditWatch with positive implications. At the same time, we also placed our 'B+' senior unsecured and 'B' preliminary subordinated shelf ratings on CreditWatch with positive implications. SR TELECOM: 8.15% Debentures Holders Okays Maturity Extension ------------------------------------------------------------- SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA) received a waiver from the required majority of its Debenture holders extending the maturity date of the Corporation's 8.15% Debentures, due April 22, 2005, to June 30, 2005, unless otherwise agreed to by the required majority of the Debenture holders. SR Telecom has also received a waiver from the lenders to its service provider subsidiary in Chile, Comunicacion y Telefonia Rural S.A. CTR's lenders, Export Development Canada and the Inter-American Development Bank, have waived compliance with certain financial and operational covenants contained in CTR's loan documents to May 1, 2005. The waivers have been granted pending final agreements from the restricted group of Debenture holders and CTR's lenders with respect to the Corporation's proposed recapitalization initiative, which was announced on April 18, 2005. SR TELECOM (TSX: SRX, Nasdaq: SRXA) designs, manufactures and deploys versatile, Broadband Fixed Wireless Access solutions. For over two decades, carriers have used SR Telecom's products to provide field-proven data and carrier-class voice services to end- users in both urban and remote areas around the globe. SR Telecom's products have helped to connect millions of people throughout the world. * * * As reported in the Troubled Company Reporter on Jan. 24, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on wireless communications equipment provider, SR Telecom, Inc., to 'CC' from 'CCC'. At the same time, the senior unsecured debt rating on the company's C$71 million debentures due April 22, 2005, was lowered to 'CC' from 'CCC'. In addition, the ratings were placed on CreditWatch with negative implications. A 'CC' rating indicates that the company's obligations are currently highly vulnerable to nonpayment. The ratings actions and CreditWatch placement follow the Montreal, Quebec-based company's announcement concerning its refinancing efforts as well as revised financial guidance. SR TELECOM: Payment Default Triggers S&P's D Ratings ---------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating and senior unsecured debt ratings on telecommunications equipment provider SR Telecom Inc. to 'D' from 'CC' following the missed principal and interest payments on the company's C$71 million 8.15% debentures that were due April 22, 2005. At the same time, the ratings were removed from CreditWatch, where they were placed Jan. 20, 2005. "Irrespective of whether SR Telecom is successful in its efforts to recapitalize the company, a payment default has occurred," said Standard & Poor's credit analyst Joe Morin. Although SR Telecom has reached an agreement in principle to exchange the debentures for a combination of new convertible secured debentures and common shares, the recapitalization is subject to final documentation and a number of conditions, including a restructuring of debt at Chilean subsidiary CTR. STELCO INC: Uses $114 Million of Financing Funds as of April 15 --------------------------------------------------------------- Stelco Inc.'s (TSX:STE) Monitor's Twenty-Sixth Report in the matter of the Company's Court-supervised restructuring has been delivered to the service list has been filed with the Court this morning. Portions of the Report review previously announced developments. The Report also provides considerable information on the operations and finances of the Company. Product and Shipment Summary This information includes a production and shipping summary by business operation for the first quarter of 2005 and compared to the same period in 2004, a review of market and pricing conditions, cash flow results for the period January 29, 2005 to April 15 of this year, and cash flow forecasts for the period April 16, 2005 to July 8, 2005. Stelco's integrated steel operations produced 1,020,000 net tons in the first quarter of 2005 compared to 1,133,000 net tons for the same period in 2004. Production for the consolidated business including mini-mill operations stood at 1,256,000 net tons in the first quarter of 2005 compared to 1,366,000 net tons for the first quarter of 2004. Shipments from the integrated business totalled 973,000 net tons in the first quarter of 2005 compared to 1,052,000 net tons for the same period in 2004. Shipments from the consolidated business stood at 1,200,000 net tons for the first quarter of 2005 compared to 1,266,000 net tons for the same period in 2004. Financing Agreement Utilization As of April 15, 2005, the facility utilization pursuant to the Existing Stelco Financing Agreement was $114.0 million. During the period January 29, 2005, to April 15, 2005, the total facility utilization of the Existing Stelco Financing Agreement decreased by $92.8 million. As summarized in the cash flow forecast appended to the Monitor's Report, the Report notes that Stelco is forecasting that the total facility utilization of the Existing Stelco Financing Agreement will decrease by $71.4 million to $42.6 million between April 16, 2005 and July 8, 2005. Asset Sale The Report also notes that Welland Pipe hopes to seek Court approval of a sale transaction concerning that company's U&O Mill in the near future and that Welland Pipe's land and buildings have been listed for sale with a listing price of $4 million. The Monitor also notes that the purchaser of the Company's idled Plate Mill did not close the transaction for the sale of that facility on the scheduled date of April 15, 2005. The Report adds that the Company is evaluating its options in this regard. Stay Extension The Monitor also discusses the Company's application to extend the stay period under its Court-supervised restructuring. The stay is currently scheduled to expire at midnight on April 29, 2005. The Company is seeking to extend the stay period to July 8, 2005. The Monitor recommends that the Court grant the application on the basis that the extension is in the interests of all stakeholders. The Monitor notes its belief that an extension is necessary to maintain operational and financial stability while the Company continues discussions with stakeholders, pursues the capital raising process, completes the claims procedure and develops a restructuring plan. Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. STRUCTURED ASSET: Moody's Rates Cert. Classes B-4 & B-5 at Low-B ---------------------------------------------------------------- Moody's Investors Service has assigned ratings of Aaa to the senior certificates issued by Structured Asset Mortgage Investments II Trust 2005-AR1. The ratings are based on the expected performance of the loans, the credit enhancement provided by the subordination of the subordinate certificates, and the structural and legal protection in the transaction. The ratings of the subordinate certificates are based on the respective subordination of the junior most certificates. The complete rating actions are: Issuer: Structured Asset Mortgage Investments II Trust 2005-AR1 * Class A-1, $536,229,300, rated Aaa * Class A-2, $211,745,300, rated Aaa * Class X-1, IO, rated Aaa * Class X-2, IO, rated Aaa * Class M, $12,670,700, rated Aaa * Class B-1, $19,210,300, rated Aa2 * Class B-2, $13,079,400, rated A2 * Class B-3, $9,809,600, rated Baa2 * Class B-4, $4,496,100, rated Ba2 * Class B-5, $2,861,200, rated B2 TECHNOPRISES: Tel Aviv Court Denies Temp. Liquidator Appointment ---------------------------------------------------------------- The District Court in Tel Aviv denied motion for the appointment of temporary liquidator for Technoprises, Ltd. (OTC Bulletin Board: TNOLF) and its system application subsidiary, Entertainment Application Virtual Reality EverySystems (EVR). The motion was made in connection with the application for the liquidation of the Company and its subsidiary EVR, that was filed on March 29, 2005, by former employees of EVR and certain debenture holders of the Company, and currently scheduled to be heard on June 29, 2005. The District Court criticized the manner in which the plaintiffs filed the application for the appointment of a temporary liquidator, without any legal basis and without any evidences. Upon hearing the Court's objections, the plaintiffs advised the Court of their election to withdraw the application for the appointment of a temporary liquidator. The District Court stated that they made the wise decision, because there was no doubt that such an application caused damages to the Companies. The Court also made an allusion that in such circumstances, it intended to condemn in the future to Court expenses for such applications, and even stated that it "relied on Technoprises' lawyer Safrir Ostanshinsky that he would remind the Court of this in case it would forget it." About the Company Technoprises -- http://www.technoprises.com/-- is a global provider of Computer Services, Communication equipment, Software and programming. It provides communications solutions, broadband applications and developing Content Management Software. Technoprises is headquartered in Israel, with its primary subsidiary, Technoprises USA, Inc. (T-USA), based in New York City. Technoprises Ltd. (TNOLF) is traded on the OTCBB. Its largest shareholder is Apros & Chay MB Ltd. Technoprises was formed through the strategic roll-up of companies to optimize synergies of their respective businesses. Telematik Cross Media (TCM) - specializing in content management, Entertainment Application Virtual Reality EverySystems (EVR) - making an end-to-end range of devices for information delivery, Watchow Desktop portal and Araneo TV over IP. EVR designs and markets broadband access systems, consisting of: -- CPE (Consumer Premises Equipment); -- Cable Modem Termination System (CMTS) - head-end device -- VoIP devices: (voice over the internet); -- Video server for pay-per-view applications; -- Provisioning and router server for easy network access; and -- Management system for monitoring broadband networks. TELEGLOBE COMMS: Expands Retention of Miles & Stockbridge & Cozen ----------------------------------------------------------------- Teleglobe Communications Corporation and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the District of Delaware to expand the retention and employment of Miles & Stockbridge, P.C., and Cozen O'Connor as conflicts and special litigation counsel to the Debtors, nunc pro tunc to January 31, 2005. The Debtors have identified a potential defendant that is in possession of the Debtors' property. The Debtors' anticipate filing an action against that target defendant under Section 542 of the U.S. Bankruptcy Code. However, Richards, Layton & Finger, P.A., has a conflict that precludes it from commencing the Turnover Action. Accordingly, the Debtors have determined that it is necessary to hire special conflicts counsel to represent them in the Turnover Action. Teleglobe does not identify the target defendant nor the amount of money it's looking to recover. Headquartered in Reston, Virginia, Teleglobe Communications Corporation is a wholly-owned indirect subsidiary of Teleglobe Inc., a Canadian Corporation. Teleglobe currently provides services in more than 220 countries via a fully integrated network of terrestrial, submarine and satellite capacity. During the calendar year 2001, the Teleglobe Companies generated consolidated gross revenues of approximately $1.3 billion. As of December 31, 2001, the Teleglobe Companies has approximately $7.5 billion in assets and approximately 44.1 billion in liabilities on a consolidated book basis. The Debtors filed for chapter 11 protection on May 28, 2002 (Bankr. D. Del. Case No. 02-11518). Cynthia L. Collins, Esq., and Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, PA, represent the Debtors in their restructuring efforts. THERMADYNE HOLDINGS: Poor Performance Prompts S&P to Cut Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Thermadyne Holdings Corp. to 'B-' from 'B+', and subordinated debt rating to 'CCC' from 'B-'. At the same time, a negative outlook was assigned. Total debt at Dec. 31, 2004, stood at about $246 million. "The rating downgrade on Thermadyne reflects the firm's weakened financial profile resulting from high-volume inefficiencies, causing operating margin and EBITDA to decline, and debt to increase," said Standard & Poor's credit analyst Daniel R. DiSenso. The St. Louis, Missouri-based company generated $29 million of negative free cash flow in 2004. Credit measures are much weaker than expected. At year-end 2004, debt, adjusted for operating leases, to EBITDA was about 5.8x, and funds from operations to debt was about 4%. Standard & Poor's had expected these ratios to be 4x and 10%-15%, respectively. Liquidity is constrained but adequate for near-term operating needs, although the company is subject to refinanced risk in early 2006. The ratings reflect Thermadyne's weak financial profile as evidenced by its: (1) highly leveraged balance sheet, (2) weak cash flow protection, (3) constrained liquidity, and (4) refinancing risk. These factors overshadow Thermadyne's position as one of four leading participants in the large, but fragmented, and intensely competitive and cyclical global welding equipment industry. Thermadyne, which emerged from bankruptcy in May 2003, completed its manufacturing facility relocation and consolidation in 2004. However, this rationalization, coming at a time of a rapid ramp-up of customer orders, caused operational inefficiencies. In addition, Thermadyne had to build safety stocks to service its customers. Currently Thermadyne has too much invested in working capital (36% of sales), and has bloated selling, general, and administrative costs (26% of sales). The company has a multifaceted plan to deal with these issues, and is also strengthening the financial function to address shortcomings related to the effectiveness of internal control over financial reporting. However, it will take time for management to successfully address such issues, and the plan is being executed at a time when the company has elevated financial risk. For the 'B-' corporate credit rating, Standard & Poor's expects the company to maintain average liquidity of no less than $15 million, and debt leverage to diminish, with adjusted debt to EBITDA improving to 5x this year. Failure of Thermadyne to make steady progress in improving operating performance and reducing working capital could result in increased financial stress and a consequent ratings downgrade. Conversely, if management makes sufficient progress in executing its multifaceted plan the outlook could be revised to stable or positive in the second half of 2005. TORCH OFFSHORE: Committee Hires Alvarez & Marsal as Fin'l Advisors ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Torch Offshore, Inc., and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Eastern District of Louisiana for permission to retain Alvarez & Marsal, LLC, as their financial consultant. Alvarez & Marsal is expected to: a) review and evaluate the current and prospective financial and operational condition of the Debtors, including but not limited to cash receipts and disbursement forecasts; short term and long term business plans and various plans of reorganization that may be considered or pursued by the Debtors; and review appraisals, DIP financing, asset sale and plans to recapitalize or reorganize the Debtors; b) assist the Committee and its counsel in evaluating and responding to various developments or motions during the course of the chapter 11 case, including providing expert testimony; and c) provide other services that may be required by the Committee which are also acceptable to the Firm. Dean Swick, a Managing Director at Alvarez & Marsal, is the lead professional in this engagement. Mr. Dean discloses the hourly billing rates of his Firm's professionals: Designation Billing Rate ----------- ------------ Managing Director $500 - $750 Director 350 - 450 Associate/Analyst 175 - 350 Mr. Swick's billing rate is $600 per hour. To the best of the Committee's knowledge, Alvarez & Marsal holds no interest materially adverse to the Debtors and their estates. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden,Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $201,692,648 in total assets and $145,355,898 in total debts. TRANS-INDUSTRIES: Auditors Raise Going Concern Doubt in Form 10-K ----------------------------------------------------------------- Plante & Moran, PLLCP raised substantial doubt about Trans- Industries, Inc.'s (Nasdaq: TRNI) ability to continue as a going concern after it audited the Company's Form 10-K for the fiscal year ended December 31, 2004. The audit opinion cited the Company's recurring losses from operations, cash flow difficulties, and the fact the Company is in default of the terms of its credit facility. In March 2004, the Company received an influx of capital of $1.5 million from a member of the Company's Board of Directors in exchange for convertible preferred stock and common stock warrants. In July, 2004, the Company sold a Rochester Hills, Michigan facility and used the proceeds to repay bank debt and trade accounts payable. In August 2004, the Company completed a refinancing agreement with Huntington National Bank and repaid outstanding debt due the previous lender. Additionally, in August 2004, the Company raised an additional $1.5 million from the sale of subordinated convertible debt to the director referred to above. Management believes the actions set forth above, as well as successful completion of its continuing restructuring program will enable the Company to continue as a going concern. If the Company is not successful in implementing these plans, management may be forced to curtail certain operations or sell or discontinue certain product lines. Bank Loan Default As reported in the Troubled Company Reporter on August 25, 2004, Trans-Industries obtained a $6,000,000 line of credit from Huntington Bank secured by all of the Company's assets. The credit line is a three-year facility with an interest rate of 1.25% over the bank's prime lending rate. Huntington Bank is represented by: Elizabeth Dellinger, Esq. Baker & Hostetler LLP 1900 East Ninth Street, Suite 3200 Cleveland, Ohio 44114 As of December 31, 2004, the Company is in violation of certain provisions in its credit agreement with Huntington, including covenant requirements relating to tangible net worth, leverage ratio, and minimum fixed charge ratio and, as a result, all debt obligations to Huntington Bank are callable at December 31, 2004. The Company has not sought waiver of these covenant violations from Huntington Bank and the lender could elect to declare a default, rendering all amounts outstanding immediately due and payable and terminating all commitments to extend further credit. In the event of a declaration of default, if the Company is unable to repay outstanding amounts the lender could proceed against the collateral securing the indebtedness. "If Huntington Bank declares a default or otherwise accelerates the payment of the Company's obligations, there is no assurance that the Company's assets or cash flow would be sufficient to repay the amounts due. As a result of these circumstances," Trans- Industries says. Huntington has not accelerated or demanded payment to date. The Company continues to have frequent discussions with Huntington Bank. Trans-Industries says the relationship is cooperative, cordial and professional. The Company and Huntington Bank are currently discussing options, including additional equity infusion, to alleviate the credit facility issues. The Company expects Huntington Bank to continue to extend the Company credit during this period of resolving the credit issues. About the Company Trans-Industries, Inc., provides lighting systems and related components to the mass transit market as well as a supplier of information hardware and software solutions on Intelligent Transportation Systems and mass transit projects. ITS utilizes integrated networks of electronic sensors, signs and software to monitor road conditions, communicate information to drivers and help transportation authorities better manage traffic flow across their existing infrastructures. At Dec. 31, 2004, Trans-Industries' balance sheet showed $15.7 million in assets and $13.3 million in liabilities. Net sales in 2004 were $27.7 million, down 17% from net sales a year earlier. The Company employs approximately 160 people, supplemented as necessary by temporary workers. TRINSIC INC: PwC Raises Going Concern Doubt in Annual Report ------------------------------------------------------------ PricewaterhouseCoopers expressed substantial doubt about Trinsic, Inc.'s (NASDAQ/SC:TRIN) ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. "The Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern," PwC stated in its audit report. In general, a "going concern" qualification relates to an entity's ability over the coming year to meet its obligations as they become due without substantial disposition of assets outside the normal course of business, restructuring of debt, externally forced revisions of its operations, or similar actions. Trey Davis, Trinsic's chief executive officer, said, "We are disappointed with this qualification, but not discouraged. We have made considerable efforts to ensure that we will be able to obtain funding and to generate cash flow from operations adequate to fund our business. Recently, we entered into a Receivables Sales Agreement with Thermo Credit, which will enable us to replace our current credit facility with Textron Financial. We have also substantially reduced our payroll, and importantly, we just entered into a commercial agreement with Verizon Communications whereby we will have access to Verizon's Wholesale Advantage platform. This agreement will give us access to the same network elements, features and functions as we purchased from Verizon under the previous regulatory regime known as UNE-P (Unbundled Network Element Platform). As a result, and despite the qualification, we are focused on moving Trinsic forward." About Trinsic Trinsic, Inc. -- http://www.trinsic.com/-- offers consumers and businesses traditional and IP telephony services. Trinsic's products include proprietary services, such as Web-accessible, voice-activated calling and messaging features that are designed to meet customers' communications needs intelligently and intuitively. Trinsic is a member of the Cisco Powered Network Program and makes its services available on a wholesale basis to other communications and utility companies, including Sprint. Trinsic, Inc., changed its name from Z-Tel Technologies, Inc. on January 3, 2005. USG CORP: Wants to Enter into IRS Settlement & Set-Off Agreement ---------------------------------------------------------------- Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that USG Corporation files consolidated federal income tax returns for itself and for its consolidated subsidiaries. On September 29, 2003, USG filed an application for tentative refund associated with losses incurred for its consolidated tax year ended December 31, 2002. The refund application reflected the carry-back of a net operating loss from USG's tax year ended December 31, 2002, and an overpayment of federal income taxes equal to $10,462,777 for its tax year ended December 31, 1997. Mr. DeFranceschi notes that the Internal Revenue Service agrees with the fact and amount of the overpayment for USG's 1997 tax year resulting from the carry- back of the 2002 net operating loss. In addition, Mr. DeFranceschi informs the U.S. Bankruptcy Court for the District of Delaware that the IRS has completed an audit of USG's consolidated federal income tax returns for the tax years ended December 31, 1997, December 31, 1998, and December 31, 1999, and has adjusted USG's taxable income for each of those years. The adjustments result in these underpayment or overpayment of federal income taxes: Increase/(Decrease) Underpayment/(Overpayment) Tax Year to Taxable Income of Income Taxes -------- ------------------- -------------------------- 1997 $1,170,274 $409,595 1998 (1,447,974) (506,791) 1999 12,983,124 4,582,994 After applying the 1998 overpayment to the 1997 and 1999 underpayments, and after accounting for interest payable by USG to the IRS with respect to the 1997 underpayment -- $30,213 to March 15, 1999 -- interest payable by the IRS to USG with respect to the 1998 overpayment -- $5,726 to March 15, 2000 -- and interest payable by USG to the IRS with respect to the 1999 underpayment -- $499,150 to the Petition Date -- the parties agree that USG owes the IRS a net $5,009,435 of federal income taxes and prepetition interest for its 1997-1999 tax years. The IRS proposes to apply the net underpayment and prepetition interest owed for USG's 1997-1999 tax years against the overpayment for USG's 1997 tax year and then pay the $5,453,341 net amount to USG. USG agrees to the set-off and payment. USG also agrees to the set-off of the 1998 overpayment against the 1997 and 1999 underpayments. By this motion, the Debtors ask the Court to approve the settlement agreement and authorized the IRS to set off the refund owed to USG against the amounts that USG owes to the IRS. Furthermore, the Debtors ask the Court to lift the automatic stay to allow the set-off. Mr. DeFranceschi notes that lifting the automatic stay is appropriate because the set-off that the Debtors and the IRS seek to effectuate results from mutual prepetition debts. Approval of the underlying settlement will permit the Debtors to resolve their claims with the IRS and receive a refund presently on account of their overpayments. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) USM CORP: Lease Decision Period Extended to June 3 -------------------------------------------------- USM Corporation sought and obtained an extension from the U.S. Bankruptcy Court for the District of Massachusetts of the time within which it must assume, assume and assign, or reject its two unexpired leases of nonresidential real property. The new deadline is June 3, 2005. The Debtor's operations consist of manufacturing and distribution facilities located at 30-32 Stevens Street in Haverhill, Mass. The Haverhill Lease is the principal place of business of the Debtor, and the location of substantially all of the Debtor's assets and operations. The other lease is a distribution facility located at 28 Perkins Street in Bridgewater, Mass. The extension will allow the Debtor and other parties-in-interest adequate time to evaluate the leases and assess the role of those leases in the financial reorganization of the Debtor. Headquartered in Haverhill, Massachusetts, USM Corporation -- http://www.hudsonmachinery.com/-- manufactures, sells, and distributes shoe machinery and parts to the footwear industry in North and Central America. It also manufactures, sells, and distributes industrial cutting machines and accessories. USM Corporation emerged from a chapter 11 reorganization in May 2002 (Bankr. D. Mass. Case No. 01-16082). The Company filed for chapter 11 protection on February 4, 2005 (Bankr. D. Del. Case No. 05-10272, transferred Feb. 10, 2004, to Bankr. D. Mass. Case No. 05-40541). Christopher Martin Winter, Esq., Michael R. Lastowski, Esq., and Jennifer L. Hertz, Esq., at Duane Morris, LLP, represent the Debtor in its restructuring efforts. The Debtor estimates its assets between $1 million and $10 million and debts between $1 million and $10 million. VALERO ENERGY: Inks Pact to Acquire Premcor for $8 Billion ---------------------------------------------------------- Valero Energy Corp. (NYSE: VLO) and Premcor Inc. (NYSE: PCO) executed a merger agreement for Valero to acquire Premcor in an $8 billion transaction. As a result, Valero will add four refineries and 790,000 barrels per day of throughput capacity to its system, making it the largest refiner in North America. With this acquisition, Valero will have total assets of $25 billion and annual revenues of nearly $70 billion, which would rank it No. 15 on the current listing of the Fortune 500. Adding Premcor's refineries in Port Arthur, Texas; Memphis, Tennessee; Delaware City, Delaware; and Lima, Ohio will give Valero 19 refineries with a total throughput capacity of 3.3 million BPD. "This transaction is one of the largest and most strategic acquisitions in Valero's history," said Bill Greehey, Valero chairman and chief executive officer. "We are acquiring several very strategic refineries for significantly less than their combined replacement value, and we'll be improving the profitability of these plants by capturing synergies, improving their reliability and yields, and increasing their capacities. "This acquisition gives us the best geographic diversity among U.S. refiners with a presence in all of the major refining regions, which further increases our earnings stability. What's more, it complements our complex refining system and increases the amount of sour crude oil that we process. "I can't think of a better acquisition for Valero and our shareholders because it's expected to be significantly accretive to our earnings and cash flow per share based on both our internal forecast and First Call consensus estimates. We estimate that we'll benefit from $350 million in annual synergies in the second year after closing. These will include reduced administrative costs, lower interest expenses, crude oil cost savings due to our purchasing leverage, and operational profit improvements that require limited capital investment. And, we think that once we have a chance to evaluate each facility more thoroughly, we will find that there are even more synergy opportunities, just as we did with the Ultramar Diamond Shamrock acquisition. "This acquisition is also good news for consumers because we have a track record of investing in and expanding our refineries. In fact, from 1996 through the end of this year, we will have increased our refining system's throughput capacity by more than 380,000 BPD -- the size of two world-scale refineries -- by expanding our existing facilities. Not only do we have the expertise, we also have a strong balance sheet, an investment- grade credit rating, access to low-cost capital and good cash flow, which enables us to make the costly 'stay-in-business' environmental investments, as well as the capital investments necessary to continue increasing our refining capacity," Mr. Greehey said. Jefferson F. Allen, Premcor's chief executive officer, said, "This transaction provides Premcor's shareholders with a meaningful increase in the value of their investment, as the terms of the agreement represent a 24.6 percent increase over the closing price of our stock on April 22, 2005. In addition, our shareholders will retain the option to continue participating in the industry through common stock ownership in Valero, which, with this transaction, will become the largest refiner in the United States and, more importantly, has long been a high-quality, financially strong growth company focused on creating shareholder value." Thomas D. O'Malley, Premcor's chairman and holder of more than one million shares of Premcor's common stock, said, "This transaction creates the number one investment vehicle in the very attractive U.S. refining sector. The resulting company has the financial strength to take advantage of the many internal opportunities available within Premcor's existing refining system to expand capacity, provide more clean fuels to the American consumer, and continue to strengthen its performance from an environmental and safety perspective. Valero has proven over the past ten years to be an extremely efficient operator and has demonstrated a unique ability to grow both externally and internally. I intend to remain a long-term and large shareholder of the new Valero. "Premcor's board of directors, after a very careful review of the transaction, unanimously voted in favor of it. I sincerely appreciate the confidence our shareholders have shown in our management and, in particular, the level of support we have received from our large shareholders, the Blackstone Group and Occidental Petroleum, and their direct representatives," O'Malley said. Terms of the Transaction The equity portion of the $8 billion transaction will be paid 50 percent in stock and 50 percent in cash. At closing, Premcor shareholders will receive 46.7 million shares of Valero stock, valued at approximately $3.5 billion as of April 22, 2005. The cash portion, which equates to $3.4 billion, will be financed with a combination of cash on hand and bank debt. In addition, Valero will assume an estimated $1.8 billion of Premcor's existing long- term debt, offset by $800 million in cash as of Dec. 31, 2004. By year-end, Valero expects the combined company to have $2 billion of available cash so it anticipates issuing approximately $1.4 billion in new debt. Under the terms of the merger agreement, Premcor shareholders will have the right to receive either 0.99 shares of Valero common stock, or $72.76 in cash for each share of Premcor stock they own, or a combination of the two, subject to pro-ration so that 50 percent of the total Premcor shares are acquired for cash. The merger consideration represents an approximate 20 percent premium to the recent 30-day trading range of Premcor's stock price. Taking the effect of the acquisition into account, Valero's debt- to- capitalization ratio is expected to be approximately 33 percent at the end of 2005, which is in line with the company's peer group. And, Valero expects to retain its investment-grade credit rating upon closing of the merger. Win-Win for Valero & Premcor Shareholders "This is a win-win situation for the shareholders of both companies," said Mr. Greehey. "Valero shareholders will benefit because the transaction is expected to be approximately 14 percent accretive to earnings per share and about 13 percent accretive to cash flow per share in the first year. And, with increased profitability, more liquidity and better visibility, we think that the market should realize the great value of our stock and assign a higher multiple. "And, Premcor shareholders will receive a substantial premium, lock in a solid return with the cash portion of the agreement, and receive shares in Valero so they'll have an opportunity to benefit from the upside potential," he said. A Great Fit for Valero "Tom O'Malley, Jay Allen and their team have done an outstanding job of building Premcor into a first-rate energy company, and their refineries are a great fit for our system and they meet our acquisition criteria. Each of these refineries has a throughput capacity well in excess of 100,000 BPD; has good logistics; enhances our geographic diversity; and has upgrade potential," said Mr. Greehey. "Plus, there are significant benefits to bringing Premcor's refineries into Valero's much-larger refining system. In addition to the operational synergies, the refineries will benefit from our expertise in upgrading and expanding refineries, our experience in sour crude processing and our significant purchasing leverage. "With this acquisition, we will have the most conversion capacity of any U.S. refiner at around 2 million BPD. Of course, the more conversion capacity that you have, the heavier and more sour feedstocks you can run and the more gasoline and diesel you can make, which allows you to capture better margins. "On a combined basis, our system would initially be processing around 1.8 million BPD of sour feedstocks. And, as projects such as the major expansions at Port Arthur and Aruba come online, we will be increasing our sour crude advantage," he said. A New Era in Refining "This acquisition couldn't come at a better time," Mr. Greehey said. "2005 is off to a great start and we are right on track to have another record year. Our first quarter earnings were 111 percent higher than the same period last year, and of course, we had a record first quarter in 2004. Because of the positive outlook, we believe that our trend of record-setting quarterly results will continue into 2006 and beyond. "Clearly, the refining industry has entered a new era. As a result, we believe that we will continue to see higher highs and higher lows for both sour crude oil discounts and product margins in the future," he said. Valero's leverage to sour crude discounts is one of the biggest contributors to its record earnings, Mr. Greehey noted. As oil demand continues to grow, the increase is being met by medium and heavier sour crude oil, which makes up approximately 70 percent of Valero's crude slate. Since there are a limited number of refineries capable of upgrading these crude oils, there is a growing surplus of these feedstocks, which helps keep sour crude discounts at historic levels. According to Mr. Greehey, Valero expects sour crude discounts to be at least 46 percent better in 2005 than they were in 2004, which would improve the company's operating income by $1.6 billion this year. "On top of that, there is limited refining capacity to meet the growing demand for refined products, and it's going to be that way for quite some time," Mr. Greehey said. "Even if major expansion projects were put in place today, it would take four to five years to complete the engineering, get the necessary permits and build the units. What's more, the bulk of most refiners' capital is tied up meeting Tier II sulfur specifications through 2006 so investments in expansion projects will likely be limited. As a result, refining margins should remain strong for the foreseeable future. "2005 is shaping up to be another year of record earnings for Valero. And, with such strong fundamentals and this great acquisition, our future has never looked brighter," he said. Timing & Transition The boards of directors of both companies unanimously approved Valero's acquisition of Premcor, which is subject to the approval of Premcor's shareholders and customary regulatory approvals. The transaction is expected to close Dec. 31, 2005, and both companies expect a smooth transition. There will be no changes to Valero's senior management or board of directors. Lehman Brothers acted as a financial advisor to Valero, and Morgan Stanley served as a financial advisor to Premcor. About the Refineries Port Arthur, Texas Refinery Premcor's flagship refinery in Port Arthur has a throughput capacity of 250,000 BPD and a replacement value of approximately $4.4 billion. The refinery processes heavy, sour crude oil, earning it a Nelson Complexity rating of 11.6. In 2001, Premcor invested $830 million in a delayed coker to enable the plant to run heavy, sour crude, and negotiated a contract through 2011 for 210,000 BPD of Maya crude oil, which has sold at an average discount of nearly $17 per barrel year-to-date compared to West Texas Intermediate, a benchmark crude. Valero will benefit from several investments in the plant, including the recent expansion of the coker to 105,000 BPD from 85,000 BPD, and the current expansion of the crude and vacuum units, which will increase the refinery's ability to process lower cost, heavy sour crude oil and increase crude capacity to 325,000 BPD from 250,000 BPD. Port Arthur's production includes conventional, premium and reformulated gasoline, as well as diesel, jet fuel, petrochemicals, petroleum coke and sulfur. Located on a 4,000- acre site on the Texas Gulf Coast, the refinery has an extensive logistics system, including waterborne, pipeline and truck rack access. Delaware City, Delaware Refinery The Delaware City refinery has the capacity to process 180,000 BPD of low-cost, heavy sour and high acid crude oil. As a result, this high-conversion, heavy crude oil refinery has a Nelson Complexity rating of 11.8. Premcor purchased the refinery from Motiva in 2004 for $800 million, which is approximately 22 percent of its $3.7 billion replacement value. Contributing to the plant's efficient operations are its 1,800-tons-per-day petroleum- coke gasification unit and the 160-megawatt cogeneration power plant. The refinery primarily produces light products, including conventional and reformulated gasoline, diesel, low sulfur diesel and home heating oil, and it has the ability to produce ultra low sulfur diesel. Located along the Delaware River, this refinery has access to pipeline, barge and truck rack facilities. Memphis, Tennessee Refinery The Memphis refinery primarily processes sweet crude oil and has a throughput capacity of 190,000 BPD. After approximately $570 million in investments over the past seven years, the refinery has been upgraded into a modern and highly efficient facility with an estimated replacement value of $1.8 billion. Nearly 100 percent of its production is light products, including conventional, premium and reformulated gasoline, diesel, jet fuel and petrochemicals. Its location on a 223-acre site along the Mississippi River's Lake McKellar enables it to serve many upriver markets at a significant cost advantage. It also has an extensive logistics system, including access to a crude oil pipeline, a jet fuel pipeline, a large truck rack and a dock adjacent to the plant. Lima, Ohio Refinery With a throughput capacity of 170,000 BPD, the Lima refinery has a Nelson Complexity rating of 8.5 and an approximate $1.8 billion replacement value. While the refinery currently processes sweet and light sour crude oil, it has 23,000 BPD of coking capacity. Additionally, Valero will study plans for a project with EnCana to "sour up" its crude slate so that the refinery can process heavy sour crude oil shipped from Canada. Located on a 650-acre site midway between Toledo and Dayton, the refinery enables Valero to enter the attractive, upper Midwest market. The Lima refinery produces conventional, premium and reformulated gasoline, diesel, jet fuel and petrochemicals. It receives foreign waterborne and domestic crude oil via pipeline, and distributes products by pipeline, rail and truck. About Premcor Inc. Premcor Inc. -- http://www.premcor.com/-- is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products in the United States. The company owns and operates refineries in Port Arthur, Texas, Lima, Ohio, Memphis, Tennessee and Delaware City, Delaware with a combined crude oil throughput capacity of approximately 790,000 barrels per day. About Valero Energy Corporation Valero Energy Corporation -- http://www.valero.com/-- is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenue of approximately $55 billion. The company owns and operates 15 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. * * * Moody's Investors Service placed Valero Energy Corporation's Baa3 rated senior unsecured notes, debentures, medium-term notes, and bank debt, its Ba1 rated subordinated debentures, its shelf registration for senior unsecured debt/subordinated debt/preferred stock rated (P)Baa3/(P)Ba1/(P)Ba2, and its Ba2 rated mandatory convertible preferred stock under review for possible downgrade in response to Valero's announcement that it plans to acquire Premcor Inc. for approximately $8 billion, including the assumption of about $1.8 billion of debt. At the same time, Fitch rates Valero's debt as follows: -- Senior unsecured debt 'BBB-'; -- Unsecured credit facilities 'BBB-'; and -- Mandatory convertible preferred securities 'BB+'. VALERO ENERGY: Premcor Purchase Cues Fitch to Review Ratings ------------------------------------------------------------ Fitch Ratings has placed the debt ratings of Valero Energy Corporation on Rating Watch Negative following the company's announcement that it has entered into an agreement to acquire Premcor, Inc. Fitch rates the debt of Valero: -- Senior unsecured debt 'BBB-'; -- Unsecured credit facilities 'BBB-'; -- Mandatory convertible preferred securities 'BB+'. Fitch has also placed the debt ratings of Premcor Inc. on Rating Watch Positive. Fitch rates Premcor's debt: Premcor Refining Group: -- $1 billion secured credit facility 'BB+'; -- Senior unsecured notes 'BB'; -- Senior subordinated notes 'B+'. Port Arthur Finance Company L.P.: -- Senior secured notes 'BB+'. Valero has announced plans to acquire Premcor Inc. in a transaction valued at approximately $6.9 billion plus the assumption of approximately $1.8 billion in Premcor debt. Consideration for the equity portion of the transaction will be paid to Premcor shareholders 50% in Valero common stock and 50% in cash at a value of $72.76 per share of Premcor stock. Premcor shareholders will receive a fixed exchange ratio of 0.99 shares of Valero stock for each share of Premcor stock. Valero expects to issue approximately 46.7 million shares of Valero stock to Premcor shareholders at a value of approximately $3.5 billion for the equity consideration with the total cash consideration of approximately $3.4 billion. The cash consideration will be financed through proceeds from new debt and cash on hand from the combined company. The consideration represents a premium of 23% over the closing price of Premcor's stock on April 22, 2005. Valero expects the transaction to close by year-end 2005 pending shareholder and regulatory approvals. With the acquisition of Premcor, Valero would become the largest refiner in North America with approximately 2.8 million barrels per day -- mmbpd -- of crude oil capacity (including the Aruba refinery) with a total 19 refineries. Valero currently operates 15 facilities with a total capacity of 2.0 mmbpd of crude capacity. Premcor would add four refineries with 800,000 bpd of capacity. Valero would also have approximately 1.6 mmbpd of heavy and medium sour crude capacity (58% of its total crude capacity). Valero also expects to achieve significant synergies through the combined asset base, as well as improving the operations at each of Premcor's refineries. Furthermore, Premcor's Lima and Memphis refineries have historically run well below throughput capacity. While Fitch views the transaction positively as the Premcor assets will give Valero significantly greater size and geographic diversity, Fitch has concerns with the structure of the transaction and the significant debt that will remain both on and off Valero's balance sheet at close. The transaction will be immediately leveraging to Valero's current capital structure with the addition of Premcor's debt and the additional borrowings required. At March 31, 2004, Valero had approximately $4.0 billion of debt on its balance sheet and, adjusting for operating leases and the company's $600 million accounts receivable securitization program, total adjusted debt approximated $7.3 billion. At the end of 2004, Premcor had approximately $400 million of off- balance sheet financings for total adjusted debt of $2.2 billion. Both companies continue to perform very well under the current robust margin environment, and cash on hand from the combined entity will help limit the additional debt required at closing. Valero had $686 million of cash on hand at March 31, 2005, and Premcor had $822 million of cash and short-term investments at year-end 2004. The transaction valuation also reflects the significant escalation in refining equity valuations in the past 12 months. The consideration values Premcor's assets at approximately $11,000 per barrel of operable crude capacity. For comparison, Premcor acquired the Delaware City refinery in May 2004 at a valuation of $4,319 per barrel of crude capacity. Despite the strong current margins, the refining sector remains highly volatile. For example, the Gulf Coast 321 crack spread averaged a record $6.84 a barrel in the first quarter of 2005 after dipping to only $2.00 per barrel in February. Both companies also continue to benefit from the very wide light-heavy crude discount. The discount for Mexican Maya crude to West Texas Intermediate averaged more than $17.00 per barrel in the first quarter versus $9.23 per barrel in the same period of 2004 and $8.00 per barrel for the five-year average (2000-2004). As an independent refiner with modest retail presence, Valero will remain sensitive to swings in crude and refined product prices as a 'price-taker' for both its raw materials and finished products. The sector also remains highly capital intensive due to the significant investments being made for ongoing maintenance, the low sulfur fuels and other regulatory requirements, as well as for strategic investments. Capital expenditures are expected to be $2.0 billion for Valero in 2005 and more than $700 million for Premcor and will remain high through 2006. Fitch will continue to follow the performance of both companies throughout the year and announce the ratings of the combined organization at closing. Significant free cash flow and debt paydown will be required to maintain Valero's current credit ratings. VALERO ENERGY: Premcor Buy-Out Plans Cue Moody's to Review Ratings ------------------------------------------------------------------ Moody's Investors Service placed Valero Energy Corporation's ratings under review for possible downgrade in response to Valero's announcement that it plans to acquire Premcor Inc. for approximately $8 billion, including the assumption of about $1.8 billion of debt. Premcor's ratings remain on review for possible upgrade, continuing a review initiated on February 23, 2005. The equity portion of the purchase will be funded with 50% cash and 50% Valero stock. Valero expects to fund the cash portion with a combination of cash on hand and debt. The transaction is subject to the approval of Premcor's shareholders and customary regulatory reviews and is expected to close by December 31, 2005. Ratings under review for possible downgrade are Valero Energy Corporation's Baa3 rated senior unsecured notes, debentures, medium-term notes, and bank debt, its Ba1 rated subordinated debentures, its shelf registration for senior unsecured debt/subordinated debt/preferred stock rated (P)Baa3/(P)Ba1/(P)Ba2, and its Ba2 rated mandatory convertible preferred stock. Ratings under review for possible upgrade are Premcor Inc.'s Ba3 senior implied and B1 non-guaranteed senior unsecured issuer ratings, Premcor Refining Group's (PRG) Ba2 senior secured rating of a $1 billion bank facility, PRG's Ba3 rated senior unsecured notes, PRG's B2 rated senior subordinated notes, and Port Arthur Finance Corporation's Ba3 rated senior secured notes. Moody's decision to review Valero's ratings for possible downgrade reflects the potential for a substantial increase in Valero's financial leverage as a result of the acquisition in the event that refining margins, which tend to be highly unpredictable, were to decline from today's lofty levels. The review also considers the relatively rich purchase price of the transaction. Based on Moody's estimate of the acquisition cost at approximately $1,016 per complexity barrel, the transaction appears expensive when compared to other recent refinery acquisitions. Furthermore, debt could account for 60% of the total acquisition cost if cash builds by year-end are less than anticipated. The combined entity's pro-forma financial leverage (net of cash) at 12/31/04 is approximately $408 per complexity barrel (including the debt of Valero L.P., a master limited partnership for which Valero is the general partner), the highest among the investment grade refining company peers. Management expects large cash balances at the end of 2005 as a result of high refining margins to reduce the amount of debt required to finance the acquisition at closing, which Moody's would view as a key aspect of the ratings review. If Valero is unable to reduce the leverage impact of the transaction through sufficient cash builds, Moody's believes a one-notch downgrade of Valero's Baa3 senior unsecured debt rating is possible. During the review process, Moody's will focus on: (1) the benefits to Valero of the acquisition, including a significant increase in refining capacity, greater geographic diversification, certain operating synergies, and increased exposure to heavy sour crudes, (2) management's track record with prior acquisitions in improving refining operating performance and realizing synergies, (3) FTC divestitures, if any, and their impact on the company's operations and financial position, (4) the likelihood that Valero and Premcor will build up cash balances at least in line with management's expectations prior to closing in order minimize the debt required to finance the acquisition, (5) Valero's and Premcor's heavy capital requirements, including substantial environmental capital expenditures, (6) the post-merger capital structure, including upstream and downstream guarantees, (7) management's financial policies with respect to share buybacks and dividends, and (8) management's future growth strategy for the combined company and for Valero L.P. The equity portion of the purchase consideration has been fixed at approximately $3.5 billion as of April 22, 2005. The ultimate increase in Valero's financial leverage to finance the cash portion of the acquisition, as well as management's plan to reduce post-merger debt with free cash flow, are highly dependent on refining margins remaining reasonably strong over the next two years. On a pro-forma basis, assuming the acquisition closed on March 31, 2005, Moody's estimates that Valero's gross balance sheet debt would increase by about $5.7 billion to $9.8 billion, and its off-balance sheet debt would increase by $0.6 billion. However, if refining margins remain robust in 2005, Valero anticipates a substantial cash build by year-end (approximately $2.0 billion, including Premcor's cash), which would reduce the net amount of additional debt to approximately $1.4 billion. Despite recent strength in U.S. refining margins, Moody's believes margins will continue to be volatile and cyclical, which could affect earnings and levels of internal cash generation and possibly result in higher debt levels. Moody's believes that debt levels could be also negatively impacted by higher than anticipated investment needs associated with the Premcor assets in order to comply with environmental regulations and improve refinery performance. Premcor has heavy environmental capital needs through 2006, has suffered from relatively low utilization rates at its Memphis and Lima refineries, and remains challenged to improve operating performance at the Delaware City Refinery. Valero Energy Corporation is the largest independent refining and marketing company in the United States and is headquartered in San Antonio, Texas. Premcor Inc. is an independent refining and marketing company headquartered in Old Greenwich, Connecticut. VALERO LOGISTICS: Moody's Reviewing Ratings for Possible Downgrade ------------------------------------------------------------------ Moody's Investors Service placed Valero Logistics Operations, L.P.'s ratings under review for possible downgrade. The review was prompted by Moody's decision to review for possible downgrade the ratings of Valero Energy Corporation, the general partner of Valero Logistics. Ratings under review are Valero Logistics Operations, L.P.'s guaranteed senior notes rated Baa3 and its shelf registration for senior unsecured debt/subordinated debt rated (P)Baa3/(P)Ba1. The ratings of Valero Logistics Operations are tied to Valero Energy's ratings because of Valero Energy's control of Valero L.P.'s general partner, the strong operational links between Valero Logistics Operations and Valero Energy, and the partnership's long-term contractual arrangements with Valero Energy. Although Valero Energy no longer owns a majority of the partnership's units and no longer consolidates it in its financial statements, Moody's believes the partnership's assets remain strategic to Valero's core refining operations. Because these assets were built to support Valero's system, it could be difficult or uneconomic for Valero to find an alternative source of transportation or terminalling services in many of its markets. Valero Logistics Operations L.P. is a Delaware limited partnership that owns and operates product and crude oil pipelines and terminal facilities in the mid-continental and southwestern regions of the United States. It is headquartered in San Antonio, Texas and is a wholly owned operating subsidiary of Valero L.P., a master limited partnership whose general partner is controlled by Valero Energy Corporation. VARTEC TELECOM: Wants to Sell Protel Shares & Other Assets ---------------------------------------------------------- VarTec Telecom, Inc., tells the U.S. Bankruptcy Court for the Northern District of Texas that it wants to sell: a) 42,367,020 shares of Holding Protel, S.A. de C.V. (22,224,897 Series B voting shares and 20,142,123 Series N neutral non-voting shares); b) all right, title and interest in an Indefeasible Right of Use Agreement with Operadora Protel, S.A. de C.V.; and c) a $4,747,466 Letter of Credit relating to the provision of telecommunication services provided by Operadora. Potosi Inc. is the stalking horse bidder with a proposal to buy these assets for $1.6 million. VarTec has determined that the sale of these non-core assets will maximize their value to their estates. Houlihan Lokey Howard & Zukin Capital Group marketed and negotiated the sale of the assets to Potosi. An auction at Vinson & Elkin will be held on May 4, 2005, at 1:30 p.m. Competing bids, if any, must top Potosi's offer by $200,000 and bidding at the auction will be in $200,000 increments. Qualified bidders must submit any competing bids to: Vinson & Elkns L.L.P. Attn: William L. Wallander 3700 Trammell Crow Center 2001 Ross Avenue Dallas, Texas 75201 not later than May 2, 2005, at 4:00 p.m. Objections to the sale procedures, if any, must be submitted by April 29, 2005, at 12:00 p.m. The Honorable Steven Felsenthal will convene a sale hearing on May 5, 2005, at 2:30 p.m. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and 16 of its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. W.R. GRACE: Asbestos Comms. Wants Sealed Air Settlement Pact OK'd ----------------------------------------------------------------- The Official Committee of Asbestos Property Damage Claimants and the Official Committee of Asbestos Personal Injury Claimants, appointed in the chapter 11 cases of W.R. Grace & Co., and its debtor-affiliates together with Sealed Air Corporation and Cryovac, Inc., ask the U.S. Bankruptcy Court for the District of Delaware to approve, authorize and implement their Settlement Agreement and Release dated November 10, 2003. The Sealed Air Settlement Agreement provides that: -- Sealed Air and Cryovac will pay $512.5 million in cash plus interest and transfer 9,000,000 shares of Sealed Air Common Stock, for an aggregate consideration of $834 million; -- In return for the payment and transfer obligations, Sealed Air and Cryovac will receive the full benefit of an injunction under Section 524(g) and 105(a) of the Bankruptcy Code with respect to all Asbestos-Related Claims; -- The Confirmation Order and the Chapter 11 Plan must provide that the Asbestos Committees and the Debtors will release Sealed Air and Cryovac from all Asbestos-Related Claims as well as certain other liabilities; -- The Confirmation Order and Chapter 11 Plan must provide that the Asbestos Committees deliver a release from Fresenius Medical Care Holdings, Inc., and National Medical Care, Inc.; -- The Asbestos Committees will use their best efforts to structure the transactions contemplated to achieve favorable tax treatment to Cryovac and its affiliates; and -- The Confirmation Order and Chapter 11 Plan must provide that the 1998 Tax Sharing Agreement is an assumed agreement of the Debtors. The Settlement Agreement also requires the Asbestos Committees to support the approval of a disclosure statement that relates to a Chapter 11 Plan that satisfies the provisions of the Settlement Agreement. A full-text copy of the 30-page Renewed Motion is available for free at: http://bankrupt.com/misc/gracerenewedmotion.pdf Representing the PD Committee, Scott L. Baena, Esq., at Bilzin, Sumberg, Baena, Price & Axelrod, LLP, in Miami, Florida, remarks that it cannot be gainsaid that the centerpiece of the Plan as it is currently drafted is the Sealed Air Payment. Pursuant to the terms of the Plan, Mr. Baena notes, unless the aggregate amount of the Asbestos PD Fund, Asbestos PI-SE Fund and Asbestos Trust Expenses Fund exceeds the Sealed Air Payment, the Debtors are not even required to fund any amounts into the Asbestos Trust. According to Mr. Baena, while the Sealed Air Adversary Proceeding was set to go to trial shortly after the parties successfully negotiated a settlement on November 27, 2002, its ultimate outcome was and is at best uncertain. "Indisputably, the SAC Action engenders complex legal and factual issues. Indeed, the complexity of the SAC Action resulted in the District Court's truncation of the issues to be tried initially, leaving the other alleged claims for determination only if the Plaintiffs failed to prevail on constructive fraudulent transfer theories." The expense of prosecuting the SAC Action to a final judgment, which inevitably will include appellate proceedings, would be substantial, Mr. Baena says. In light of the amounts involved, Mr. Baena continues, even if successful, there is no assurance as to when and how much the Asbestos Committees would be able to collect. Furthermore, Mr. Baena adds, the prosecution of the SAC Action would entail the commitment of substantial human resources and the duration of the litigation would assuredly result in further delays in confirming a plan of reorganization for the Debtors. Approval of the Settlement Agreement, Mr. Baena says, is in the best interests of creditors of the Debtors estates for at least three reasons: (1) It will increase the funds available to fund a plan of reorganization both through the consideration to be provided by Sealed Air and Cryovac as well as facilitating the Fresenius Settlement, which itself requires that Fresenius and National Medicare release Sealed Air and Cryovac as a condition precedent to the payment obligation of Sealed Air and Cryovac. Both settlements in the aggregate will provide close to $1.2 billion to creditors of the Debtors' estates. (2) It will continue to allow the Asbestos Committees and the Debtors to focus their attention on other pending matters in the Debtors' cases, including the resolution of the Zonolite Attic Insulation science trial, the estimation of the Debtors' asbestos liabilities and confirmation of a plan of reorganization. (3) It will avoid the necessity of having to litigate Sealed Air and Cryovac's motion filed with the District Court seeking an order vacating Judge Wolin's Opinion and Order with respect to the proper standard to be applied in the determination of the Debtors' solvency. (4) The expense associated with the prosecution of the SAC Action will be fully and finally abated resulting in a net economic benefit to the Debtors' estates and their creditors, in the range of $1.2 billion. The Court will convene a hearing to consider the Debtors' request on May 16, 2005, at 12:00 p.m. Adversary Proceeding No. 02-2211, Asbestos Committees vs. Fresenius Medical Care Holdings, Inc., and National Medicare, Inc., was closed on February 4, 2005. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Hiring Beveridge & Diamond as Environmental Counsel --------------------------------------------------------------- Beveridge & Diamond, P.C., works on various environmental matters for W.R. Grace & Co., and its debtor-affiliates, including negotiations and potential litigation with the Army Corp of Engineers and the Department of Justice regarding the United States' proof of claim filed in connection with work to be performed under the Formerly Utilized Sites Remedial Action Program concerning Curtin Bay, Maryland. The United States wants to take certain remedial actions pursuant to FUSRAP in Curtis Bay, and, through its claim, seeks to recover costs in connection with any remediation performed for the site. In addition to the Curtis Bay FUSRAP Matter, Beveridge has also been representing the Debtors in a variety of environmental and real estate issues and related litigation for the past eight years. The Debtors state that they have employed the Firm as an ordinary course professional since the inception of their Chapter 11 cases. Accordingly, the Debtors want to continue their employment of Beveridge as their counsel based on the firm's unique knowledge and qualifications. The Debtors seek the Court's authority to employ Beveridge as special counsel to represent them in the Curtis Bay FUSRAP Matter and other environmental and real estate matters and related litigation. The Debtors explain that the Firm will not be rendering services typically performed by a debtor's general bankruptcy counsel or with other special counsel retained in their Chapter 11 cases. The Debtors tell Judge Fitzgerald that the services provided by Beveridge are necessary as they seek to resolve the claim filed by the Government and other environmental and real estate issues and related legal action. Patricia Saint James, Esq., an attorney at Beveridge, assures the Court that the Firm does not have any connection with the Debtors, their creditors or any other party-in-interest. Ms. Saint James attests that Beveridge does not hold or represent an interest adverse to the Debtors' estates in the matters with respect to which it is to be employed. The Debtors will pay Beveridge according to the Firm's standard hourly rates. The attorneys and paralegals primarily expected to work on the Debtors' Chapter 11 cases and their hourly rates are: Karl Bourdeau $485 Patricia Saint James $350 Pamela Marks $325 Jeanine Grachuk $295 Other Beveridge attorneys and paralegals may also serve the Debtors from time to time. In addition, Beveridge will seek reimbursement for necessary out-of-pocket expenses incurred. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) WEIGHT INTERVENTION: List of 30 Largest Unsecured Creditors ----------------------------------------------------------- Weight Intervention and Surgical Healthcare Holding, LLC, and its debtor-affiliates released a list of its 30 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Athena Diagnostics, Inc. Not Stated PO Box 849099 Boston, MA 02284-9099 CBS5 Not Stated CBS5 PO Box 53061 Phoenix, AZ 85072 Chicago Sun-Times, Inc. Not Stated 401 North Wabash Avenue Chicago, IL 60611 Clear Channel Broadcasting Not Stated 3964 Collections Center Drive Chicago, IL 60693 Comcast Spotlight Not Stated 12964 Collections Center Drive Chicago, IL 60693 Edwards Medical Supply Not Stated Dept 77-3432 Chicago, IL 60678-3432 KABB-FOX Not Stated c/o First Union PO Box 951587 Dallas, TX 75395-1587 KCPQ-TV Not Stated 1813 Westlake Avenue North Seattle, WA 98109 KING-TV Not Stated Department 890933 PPO Box 120933 Dallas, TX 75312-0933 KJZZ TV Not Stated 5181 Amelia Earhart Drive Slat Lake City, UT 84116 KOMO TV Not Stated Department 01022 Box 34936 Seattle, WA 98124-1936 KRGV Not Stated PO Box 5 Weslaco, TX 78596 KSAT TV Not Stated PO Box 1545 San Antonio, TX 78296 KSAZ-TV Not Stated 5709 Collection Center Drive Chicago, IL 60693 KSL-TV Not Stated Accounting 2nd Floor PO Box 1160 Salt lake City, UT 84110 KTVK Not Stated PO Box 29804 Phoenix, AZ 85038-9804 KTVX Television Not Stated Lockbox 4653 Collections Center Drive Chicago, IL 60693 KUTP Not Stated 4466 Collection Center Drive Chicago, IL 60693 KUTV-TV Not Stated PO Box 73066 Dallas, TX 75373-0667 National Broadcasting Co. Not Stated 30 Rockefeller Plaza, Room 5130E New York, NY 10112 Two by Four Not Stated 208 South Jefferson Street, #410 Chicago, IL 60661 WCIU Not Stated 26 North Halsted Street Chicago, IL 60661 West Mission Medical Office, LLC Not Stated 910 South Bryan, Suite 302 Mission, TX 78572 WFLA-TV Not Stated Remittance Processing Center PO Box 26425 Richmond, VA 23260-6425 WFLD-TV Not Stated PO Box 91427 Chicago, IL 60690 WFS-TV Not Stated 4045 North Himes Avenue Tampa, FL 33607-6651 WGN Not Stated 2501 Bradley Place Chicago, IL 60618 WLS-TV Not Stated 190 North State Street Chicago, IL 60601 WTTA-TV Not Stated PO Box 60419 Charlotte, NC 28260-0419 WXIX TV Not Stated PO Box 11407 Drawer 0963 Birmingham, AL 35246-0963 Headquartered in Downers Grove, Illinois, Weight Intervention and Surgical Healthcare Holding, LLC -- http://www.wishcenter.org/-- 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. The Company and its debtor-affiliates filed for chapter 11 protection on April 22, 2005 (Bankr. N.D. Ill. Case No. 05-16002 to 05-16015). Geoffrey S. Goodman, Esq., and Edward J. Green, Esq., at Foley & Lardner LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, each of the 14 Debtors estimated assets and debts from $1 million to $10 million. WEIRTON STEEL: Trustee Asks Court to Approve National Steel Pact ---------------------------------------------------------------- Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, relates that National Steel Corporation and Weirton Steel Corporation executed an asset purchase agreement on April 29, 1983, pursuant to which Weirton purchased substantially all of the assets of National Steel's Weirton Steel Division. The parties subsequently executed a Benefits Agreement and an Assumption and Assignment Agreement, under which certain employee benefit and environmental liabilities were allocated between National Steel and Weirton. On March 6, 2002, National Steel filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Northern District of Illinois. Since then, National Steel timely filed Unsecured Priority Claim No. 1919 for $2,769,328 against Weirton, allegedly arising under the Benefits Agreement. Similarly, Weirton filed General Unsecured Claim No. 4107 for $30,906,000 and Claim No. 4166 for $5,200 against National Steel, for contingent, prospective claims allegedly arising under the Assumption and Assignment Agreement. The NSC Creditor Trust alleged that the Weirton Claims are unliquidated, contingent claims for reimbursement or contribution, and therefore are not allowable. On the other hand, the Weirton Steel Corporation Liquidating Trustee alleged that the majority of National Steel's Claim is not entitled to priority status because the Claim arose outside of the statutory period for priority benefit claims under Section 507 of the Bankruptcy Code. The Weirton Trustee, National Steel and the NSC Creditor Trust wish to resolve their disputes and avoid the costs, risks, delay and uncertainty associated with litigation. Under their settlement agreement, the parties agree that: (i) Claim No. 1919 will be fixed and allowed as an unsecured priority claim against Weirton and the Weirton Trustee for $100,000, and will be paid as an allowed Class 3 claim in accordance with Weirton's confirmed Plan of Liquidation. (ii) Other than as to the Allowed National Steel Claim or as specifically provided in the Agreement, the Parties release and discharge each other from any and all claims and causes of action that each may have against the other, including, but not limited to, any claims or causes of action related to, or arising from, the Weirton Claims or the National Steel Claim. Mr. Freedlander asserts that the settlement agreement permits the Weirton Trustee to expeditiously resolve the Claims Dispute, which otherwise could: -- substantially delay the distribution process; -- increase costs associated with litigating the Claims Dispute; and -- result in a substantial dilution of the distributions to creditors holding allowed claims, if National Steel and the NSC Creditor Trust were to prevail. Accordingly, the Weirton Trustee asks the Court to approve its settlement with National Steel. Headquartered in Weirton, West Virginia, Weirton Steel Corporation was a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company was the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. The Company filed for chapter 11 protection on May 19, 2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward Friend, II administers the Debtors' cases. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph, Esq., at McGuireWoods LLP, represent the Debtors in their liquidation. Weirton sold substantially all of its assets to Wilbur Ross' International Steel Group. Weirton's confirmed Plan of Liquidation became effective on Sept. 8, 2004. (Weirton Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) WELLINGTON PROPERTIES: Case Summary & 16 Unsecured Creditors ------------------------------------------------------------ Debtor: Wellington Properties, LLC 4230 Garrett Road Durham, North Carolina Bankruptcy Case No.: 05-80920 Chapter 11 Petition Date: March 29, 2005 Court: Middle District of North Carolina (Durham) Judge: Thomas W. Waldrep, Jr. Debtor's Counsel: Brian D. Darer, Esq. Parker, Poe, Adams & Bernstein L.L.P. P.O. Box 389 Raleigh, North Carolina 27602-0389 Tel: (919) 828-0564 - and - John A. Northen, Esq. Northen Blue, L.L.P. P.O. Box 2208 Chapel Hill, North Carolina 27514-2208 Tel: (919) 968-4441 Total Assets: $11,625,087 Total Debts: $12,632,012 Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Accurate Disaster Recovery $38,140 Accurate Duct Cleaning, LLC 1209 Penselwood Drive Raleigh, NC 27604 NCHFA Compliance Monitoring $30,650 Attn: Cathi Day P.O. Box 28066 Raleigh NC 276118066 City of Durham $27,039 Department of Finance P.O. Box 30040 Durham NC 277023040 Hernandez Repair $8,460 P.O. Box 15024 Durham NC 277040000 Wilmar $7,921 P.O. Box 13539 Philadelphia PA 191013539 Trugreen Landcare $6,372 21486 Network Place Chicago IL 606730000 Clegg's Pest Control $2,625 P.O. Box 3089 Durham NC 277150000 Lone Wolf Publishing, Inc. $2,625 516 Brickhaven Drive Raleigh NC 276060000 HPC Publications $2,145 P.O. Box 402039 Atlanta GA 303842039 Duke Power Company $1,914 P.O. Box 1090 Charlotte NC 28201 Wall to Wall Carpet Care $1,760 P.O. Box 37146 Raleigh NC 276270000 Four Seasons Painting $960 1014 North Salem Street Apex NC 275020000 Oscar Painting Co. $630 4216 Garrett Road A18 Durham NC 277070000 Dodson Pest Control $504 P.O. Box 90423 Raleigh NC 276750423 National Tenant Network $140 P.O. Box 97157 Raleigh NC 276247157 Piedmont Metro $125 P.O. Box 13705 RTP NC 277090000 WESTPOINT STEVENS: Court Approves Avoidance Action Procedures ------------------------------------------------------------- WestPoint Stevens, Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to establish uniform procedures governing preference and fraudulent conveyance claims and actions asserted under Sections 544, 547, 548 and 500 of the Bankruptcy Code. Mark I. Chinitz, Esq., at Stein Riso Mantel, LLP, in New York, relates that the Debtors intend to commence over 300 Avoidance Actions. Many of the actions will raise certain identical issues like those relating to the Debtors' solvency and the prevailing industry payment standards, Mr. Chinitz says. Mr. Chinitz asserts that the proposed procedures will: -- reduce costs for all parties; -- allow the parties to litigate the Avoidance Actions in an efficient and timely manner; -- greatly reduce the time the Court will spend administering the Avoidance Actions; and -- protect the Debtors from dilatory defense tactics. Avoidance Action Procedures The Debtors propose to implement these procedures: * Rule 7026(f) of the Federal Rules of Bankruptcy Procedure (mandatory meeting before scheduling conference/discovery plan) is not applicable with respect to the Avoidance Actions; * No initial pretrial conference will be held pursuant to Rule 7016 of the Federal Rules of Bankruptcy Procedure and, accordingly, the summons issued by the Court and served by the Debtors will not set forth a date for a pretrial conference; * Bankruptcy Rule 7026 disclosures will be made within 14 days after the date the answer is filed; * No motion may be made without consent of the parties, or prior Court approval absent consent, which may be sought, by telephone conference with the Court, after prior written notice is provided to all other interested parties briefly outlining the relief requested, provided however, that: a. motions for default judgment and summary judgment may be made without the Court's prior approval; and b. routine procedural motions (e.g. motions to intervene or amend a pleading) may be made without the Court's prior approval provided that the moving party obtains the consent of all other interested parties. A letter request for a pre-motion conference with the Court will be sufficient to be deemed compliant with the requisite time period for the motion or answer; * Summary judgment motions will be filed no later than 30 days after the close of discovery in that Avoidance Action; * Document requests should not be overly-broad, and should be narrowly tailored to the relevant transactions and issues raised by the pleadings. Document requests by letter, fax or e-mail are authorized; * All initial document requests, Local Rule 7033-1(a) written interrogatories, and requests to admit must be served on the adverse party within 60 days of the date the answer is served and will not exceed 25 in number each including all discrete subparts. Notwithstanding any limitations contained in Local Rule 7033-1(b), interrogatories may be served with respect to defenses, if any, raised by a defendant in an Avoidance Action; * Any interim deadline may be modified by agreement of the parties, without application to the Court, or by application to the Court if the parties cannot reach agreement. The final deadline for completion of discovery in any Avoidance Action may not be modified or extended except upon leave of Court; * All fact and expert discovery, including depositions, will conclude six months following the date the answer is filed; * All expert depositions and party depositions will take place in the Southern District of New York; * Within 100 days after the answer is served, the parties will provide each other with a written list setting forth the names of any expert witnesses and the general area for which the testimony of those expert witnesses will be offered. Copies of any reports prepared by those witnesses will be produced at that time. The expert witness list will thereafter be modified only: a. on consent; b. by application to the Court for good cause shown; or c. by application to the Court on a showing that modification will not prejudice either party; * Upon consent, or upon order of the Court for good cause shown, any party can submit a rebuttal expert report within 45 days of receipt of the expert witness lists and reports; * Rule 7030 of the Federal Rules of Bankruptcy Procedure is modified limiting the Debtors to two depositions of each defendant's current or former employees without consent, or by leave of the Court absent consent for more than two depositions. The aggregate duration of the two depositions will be no more than 10 hours and will not take place over more than two days; * With respect to individualized discovery issues relating to, but not limited to, the defenses of waiver, estoppel, new value, ordinary course of business, reasonably equivalent value, set-off, recoupment, and accord and satisfaction, Bankruptcy Rule 7030 is modified limiting each defendant to two depositions of the Debtors' current or former employees without consent, or leave of the Court absent consent for more than two depositions. The aggregate duration of the two depositions will be no more than 10 hours and will not take place over more than two days; * With respect to discovery issues applicable to all, or to a multiplicity, of Avoidance Actions, including but not limited to, the Debtors' solvency and the prevailing industry payment standard, the Debtors will provide a written list within 30 days of the answer being served setting forth the names of any of their current or former employees to be offered as witnesses and the general area for which the testimony of those witnesses will be offered. The Debtors will not be: a. required to present any such person at trial; or b. precluded from offering witnesses that do not appear on their Witness List; * To minimize repetitive testimony and to preserve the parties' resources, the testimony of witnesses regarding common or similar issues may be consolidated. Bankruptcy Rule 7030 is modified such that, whenever the Debtors believe that any witness's testimony applies to more than one Avoidance Action, and it would be more efficient to have the witness testify in some or all of the Avoidance Actions at the same time, the Debtors will notify defendants and organize a conference to allow the parties to reach an agreement regarding the Avoidance Actions to which the witness's testimony will apply, and appropriate procedures involving coordination among defense counsel who want to participate in the deposition, the length of time allotted for the deposition, the date and time of the deposition, and other logistical issues. Failing agreement on these issues, the parties will seek guidance from the Court; * With respect to the settlement of any Avoidance Action, the Debtors will be authorized to consummate the proposed settlement without further Court order or giving notice to, or receiving consent from, any party other than the settling parties. Where an Avoidance Action has been commenced, upon consummation of the settlement the Debtors will dismiss the Avoidance Action if an answer has not been filed, by the filing of a Notice of Dismissal pursuant to Bankruptcy Rule 7041(a)(1)(i), or if an answer has been filed, by the filing of a Stipulation and Order of Dismissal pursuant to Bankruptcy Rule 7041(a)(1)(ii). Should any defendant in an Avoidance Action desire a specific order of the Court approving said settlement, either party, upon five days' Notice of Presentment served upon the other party, may submit the settlement to the Court for purposes of it being "So Ordered" by the Court; and * Within 30 days after the close of discovery the parties will notify the Court that discovery has been completed and request the scheduling of a final pre-trial conference and notify the parties of that final pre-trial conference date. Settlement Procedures For precautionary concerns and because some defendants may desire Court approval of a settlement, the Debtors seek the Court's permission to settle and compromise the Avoidance Actions without the necessity of filing a Bankruptcy Rule 9019 motion and, when necessary, have the Court "So Order" settlements upon five days' Notice of Presentment served by one party upon the other. Mr. Chinitz relates that while Bankruptcy Rule 9019(a) generally requires approval of settlements by motion on 20 days notice to, among others, all creditors, Rule 9019(b) makes clear that those requirements are not always necessary: "[a]fter a hearing on such notice as the court may direct, the court may fix a class or classes of controversies and authorize the trustee to compromise or settle controversies within such class or classes without further notice." Thus, Bankruptcy Rule 9019(b) provides a mechanism for streamlined settlement procedures where, as in WestPoint Stevens' case, there is a massive number of potential preference actions. The Debtors believe that absent an order governing discovery, motion and settlement procedures, the Court's docket may be clogged with hearings and the parties may incur substantial and unnecessary cost and expense. In addition, by allowing the Debtors to settle the Preference Actions without the need to notice parties and obtain Court approval, counsel could devote its resources to resolving the next case, rather than tending to the administration of cases that have already been settled, Mr. Chinitz states. * * * Judge Drain approves the Avoidance Action Procedures. Except as otherwise provided by the Federal Rules of Bankruptcy Procedure, the Local Bankruptcy Rules, the procedures with respect to Avoidance Actions will approximate the practices typically followed in plenary actions in the United States District Courts, Judge Drain says. Moreover, Judge Drain directs the Debtors to file a quarterly status report with the Court setting forth the present status of each Avoidance Action. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Cadwalader Expands Corp. Practice with Mark Roppel as Partner --------------------------------------------------------------- Mark A. Roppel, a former partner in the Mergers & Acquisitions Group of Shearman & Sterling LLP, has joined Cadwalader, Wickersham & Taft LLP as a partner in the Corporate/Mergers & Acquisitions Department, resident in New York. Mr. Roppel represents clients in a variety of domestic and cross border transactions including mergers, tender offers, private stock and asset purchases, leveraged acquisitions, restructurings, joint ventures and strategic alliances. "Mark is an outstanding addition to both our New York office and our corporate practice," stated Robert O. Link, Jr., Cadwalader's Chairman and Managing Partner. "He is a highly regarded lawyer who comes to us with extremely strong expertise gained on a wide range of client matters." "Mark represents a great opportunity for us as our Corporate/M&A Department continues to grow. He has been involved in a number of very exciting domestic and cross border transactions and his energy and expertise will be of great value to our clients. We are all excited to work with him," stated Louis Bevilacqua, Chairman of Cadwalader's Corporate/Mergers & Acquisitions Department. "I am looking forward to joining Cadwalader and collaborating with its teams of highly regarded practitioners not only in Corporate/M&A but also in the Banking, Capital Markets, Tax and Litigation Departments. Cadwalader's record of high profile transactions and intense focus on being a leading firm in M&A was an important consideration for me. I cannot imagine a better platform from which to serve a wide range of client needs," stated Mr. Roppel. Mr. Roppel joined Shearman & Sterling in 1994 and was elected partner in 2000. Prior to joining Shearman & Sterling, he was a corporate associate at LeBoeuf, Lamb, Leiby & MacRae LLP, where he worked on corporate and international transactions as well as securities and mergers and acquisitions matters. Mr. Roppel received his Bachelor of Civil Law (B.C.L.) and Bachelor of Common Law (L.L.B.) from McGill University, where he was the Senior Editor of the McGill Law Journal. He obtained an LL.M from Columbia University School of Law and served as an Associate Editor of the Columbia Business Law Review. He is admitted to practice in New York. Cadwalader, Wickersham & Taft, established in 1792, is one of the world's leading international law firms, with offices in New York, London, Charlotte, and Washington. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in securitization, structured finance, mergers and acquisitions, corporate finance, real estate, environmental, insolvency, litigation, health care, banking, project finance, insurance and reinsurance, tax, and private client matters. 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Contact: 1-703-739-0800 or http://www.abiworld.org/ October 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ October 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/ October 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, NY Contact: 516-465-2356 or http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, Texas Contact: http://www.iwirc.com/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Center Club, Baltimore, MD Contact: 703-912-3309 or http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sydney, Australia Contact: 9299-8477 or http://www.turnaround.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, MI Contact: 1-703-739-0800 or http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, NY Contact: 716-440-6615 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (West) Hyatt Grand Champions Resort Indian Wells, California Contact: 1-703-739-0800 or http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, NY Contact: 516-465-2356 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ March 30 - April 1, 2006 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, AZ Contact: 1-800-CLE-NEWS or http://www.ali-aba.org April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott Newport, Rhode Island Contact: 1-703-739-0800 or http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island Amelia Island, Florida Contact: 1-703-739-0800 or http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, FL Contact: http://www.ncbj.com/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, AZ Contact: http://www.ncbj.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, NV Contact: http://www.ncbj.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 ***