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/raid1/www/Hosts/bankrupt/TCR_Public/050428.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 28, 2005, Vol. 9, No. 99 Headlines ABDUL ALKASIR: Case Summary & 20 Largest Unsecured Creditors ACCIDENT & INJURY: Files Plan of Reorganization in N.D. Texas AIR CANADA: Faces Machinists Over Layoffs Grievance in Arbitration AIR ENTERPRISES: Files for Chapter 11 Protection in N.D. Ohio AIR ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors ATA AIRLINES: Can Assume Merchant Services Credit Card Agreements ATA AIRLINES: John Hancock Wants Compliance With Rejection Order ATX COMMS: Exits Chapter 11 as Leucadia National's Subsidiary BANC OF AMERICA: Moody's Puts Low-B Ratings on Three Cert. Classes BANC ONE: Fitch Upgrades $15 Million Class H to A- From BB+ BEAR STEARNS: Fitch Puts Low-B Ratings on Six 2003-Top12 Classes BOMBARDIER INC: Selling Capital's Inventory Finance Unit for $825M BORDEN CHEMICAL: Likely Merger & IPO Cue S&P to Put Low-B Rating BORDEN CHEMICAL: Moody's Revises Outlook to Developing BUTLER ANIMAL: S&P Junks Proposed $30 Million Second-Lien Loan CHASE MORTGAGE: Fitch Puts Low-B Ratings on 2 Private Offer Certs. CREDIT SUISSE: Poor Performance Prompts Moody's to Review Ratings CURON MEDICAL: Posts $2.97 Million Net Loss in First Quarter DEUTSCHE MORTGAGE: Fitch Affirms Low-B, Junk & Default Ratings DII INDUSTRIES: Court Approves Final Payment to Chapter 11 Experts DIXIE PRODUCE: Case Summary & 20 Largest Unsecured Creditors DOW JONES: Fitch Says Credit Risk of DJ.CDX.NA.HY Series Is Higher DRUGMAX INC: Auditors Raise Going Concern Doubt in Form 10-K ENRON: Bankruptcy Court Approves Gas Transmission Settlement ENRON CORP: Judge Gonzalez Okays SPCP & TECO Settlement EXAM USA: Likely Default Triggers Going Concern Doubt FISHER SCIENTIFIC: Noteholders Agree to Amend 8-1/8% Sr. Indenture H&E EQUIPMENT: Extends Consent Solicitation on Senior Notes HARBOURVIEW CDO: Moody's Junks $26.25 Mil. Class C Secured Notes HUNTINGTON ORCHARDS: Case Summary & 20 Largest Unsecured Creditors IKON OFFICE: Will Release Second Quarter Results Today INTERSTATE BAKERIES: 297 Trade Creditors Transfer $1.8MM in Claims INTERSTATE BAKERIES: To Consolidate Fla. Profit Center Operations IRVING TANNING: Committee Taps Pachulski Stang as Counsel J.P. MORGAN: Moody's Confirms Ba1 Rating on $11.57M Class L Certs. JESSUP CELLARS: Files Plan of Reorganization in Northern Ca. KMART CORP: Balks at Schuldiner's $90 Mil. Personal Injury Claim LAIDLAW INT'L: Greyhound Lines Gets 2-Year Loan Extension LUCID ENTERTAINMENT: Delays Filing of Annual & 1st Quarter Reports MAYTAG CORP: Fitch Downgrades $979 Senior Unsecured Notes to BB MCI INC: Moody's to Look at Net Debt & Synergies in Qwest Merger MEDPOINTE INC: Moody's Slices Rating on Sr. Sec. Facility to B2 MERIDIAN AUTOMOTIVE: Wants to Pay Up to $16MM to Critical Vendors METROPCS INC: Launching $150 Million Senior Note Tender Offer MGM MIRAGE: Mandalay Purchase Results in Downgrades from Fitch MGM MIRAGE: Mandalay Resort Acquisition Cues S&P to Cut Ratings MORGAN STANLEY: Fitch Puts Low-B Ratings on 6 2004 TOP 13 Classes MORTGAGE CAPITAL: Fitch Upgrades Two Low-B Ratings & Affirms Two MSM ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors NATIONAL ENERGY: Pittsfield Generating Holds $157.5M Damage Claim NATIONAL ENERGY: TransAlta Holds Allowed $372,142 Claim NATIONSRENT COS: Completes $150 Million Private Debt Placement NORSTAN APPAREL: U.S. Trustee Picks 7-Member Creditors Committee NORSTAN APPAREL: Creditors Committee Taps Kronish Lieb as Counsel NOVOSTE CORP: Nasdaq Warns of Possible Stock Delisting NUCORP LTD: Case Summary & 7 Largest Unsecured Creditors PALMDALE HILLS: S&P Rates $75 Million Second-Lien Facility at B- PREMIUM STANDARD: Moody's Rates New $125MM Senior Notes at B1 QWEST COMMS: Moody's to Look at Net Debt & Synergies in MCI Merger R&G FIN'L: Revisions Cues Fitch to Put Ratings on Watch Negative RADIO ONE: Moody's Places Ba2 Ratings on New $750M Sr. Sec. Debts RAVENEAUX LTD: Committee Wants to Hire Boyer & Miller as Counsel RAVENEAUX LTD: Wants to Tap Professor Lattin as Turnaround Advisor REGIONAL DIAGNOSTICS: Case Summary & 20 Unsecured Creditors RELIANCE GROUP: Liquidator Wants April 2005 Claims Report Okayed RESOLUTION PERFORMANCE: Moody's Revises Outlook to Developing SALOMON BROTHERS: Fitch Upgrades $8.4 Mil. Mortgage Certs. to BB+ SAVVIS COMMS: March 31 Balance Sheet Upside-Down by $84.7 Million SECURITIZED ASSET: Moody's Assigns Ba1 Rating to Class B-4 Certs. SERVICE CORP: Moody's Says Liquidity is Good Despite Cash Decline SMC HOLDINGS: Brings-In Shearman & Sterling as Co-Counsel SMC HOLDINGS: Hires Richards Layton as Bankruptcy Co-Counsel SOLECTRON CORP: Redeeming $500 Million 9.625% Senior Notes SPIEGEL INC: Court Nixes J.P. Morgan's Transaction Fee Claim SPIEGEL INC: Taps Houlihan Lokey to Value Trademark & Trade Name SPORTS CLUB: Reporting Delays Prompt AMEX Delisting Notice STELCO INC: Agrees to Treat Tricap as USWA's Financial Advisor SUSQUEHANNA MEDIA: Possible Sale Prompts S&P to Watch Ratings TECO ENERGY: Earns $32.7 Million of Net Income in First Quarter TEMBEC INC: Reorganizing SPF Sawmills in Abitibi-Temiscamingue TEMBEC INC: Will Release Second Quarter Financial Results Today THEGLOBE.COM: Inks $1.5 Million Financing with E&C Capital TOM'S FOODS: Gets Interim Okay for DIP Loan & Cash Collateral Use TOWN OF MULDROW: Case Summary & 8 Largest Unsecured Creditors TRENWICK GROUP: Section 304 Petition Summary TRIAD FINANCIAL: S&P Rates $200 Million Senior Notes at B- TROPICAL SPORTSWEAR: Brings-In Baker & McKenzie as Tax Counsel TSI TELSYS: TSX Reserves Common Shares for Issuance to Four Kings TSI TELSYS: TSX Reserves Common Shares for Issuance to Mutsui UAL CORPORATION: Files 12th Reorganization Status Report UAL CORP: Objects to IAA's Request for Admin. Claims Payment VICAR OPERATING: S&P Rates Proposed $500M Loan & Facility at BB- WINN-DIXIE STORES: Case Summary After Transfer to Jacksonville WORLDCOM INC: Court Dismisses Telnet Communications' Claim YOUNG BROADCASTING: Extends Consent Solicitation Until Tomorrow * Ronald DeKoven Joins Jenner & Block as Of Counsel ********* ABDUL ALKASIR: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Abdul Alkasir aka Alkasir Enterprises, Inc. aka Super Save & Gas for Less 9412 Calico Place Northwest Albuquerque, New Mexico 87114 Bankruptcy Case No.: 05-13153 Type of Business: The Debtor sells oil and gas. Chapter 11 Petition Date: April 20, 2005 Court: District of New Mexico (Albuquerque) Judge: James S. Starzynski Debtor's Counsel: Gerald R. Velarde, Esq. Law Office of Gerald R. Velarde, P.C. P.O. Box 2226 Albuquerque, New Mexico 87103-2226 Tel: (505) 248-1828 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ P.M.I $150,000 3615 NM SR 528 #106 Albuquerque, NM 87114 Kewa Gas Ltd. $94,000 2074 Galisteo #C-2 Santa Fe, NM 87505 Express Gasoline $42,000 1300 B. West Broadway Bloomfield, NM 87413 Robert's Oil $30,000 Capital One $17,661 Americredit $10,883 ViStar $8,700 N.M. Educators Fed. C.U. $7,000 Albuquerque Publishing Co. $3,000 Capital One $2,700 H&S Enterprises $1,916 Nextel $1,518 PNM Electric/Gas Service $1,500 Roto-Rooter $560 Robert Fiser $500 Cash & Carry Carpet, Inc. $500 Qwest $372 New Mexico Utilities $316 Home Security $277 J.P. Tule $273 ACCIDENT & INJURY: Files Plan of Reorganization in N.D. Texas ------------------------------------------------------------- Accident & Injury Pain Centers, Inc., and its debtor-affiliates delivered their Plan of Reorganization and a Disclosure Statement explaining that plan to the U.S. Bankruptcy Court for the Northern District of Texas. Terms of the Plan Continued Operations The Plan proposes to continue the Debtors' business with the same financial and ownership structure that existed during the Debtors' chapter 11 petition in connection with delivery of chiropractic and ancillary diagnostic services. Robert M. Smith will continue to lead the Debtors' businesses. Merger The Plan proposes the merger of all Debtors into Reorganized Accident & Injury Pain Centers, Inc. The Debtors' assets will be transferred to Reorganized A&I. The Debtors and Reorganized A&I will designate a compliance officer to help avoid future billing disputes over medical related receivables that lead to the filing of the Debtors' chapter 11 cases. The Debtors intend to designate Dr. Ken Thomas, Dean of Clinics at Parker Chiropractic College (or someone with similar regulatory compliance experience) to serve as the Compliance Officer. Continuance of Civil Action The Civil Action styled Allstate Insurance Company, et al. v. Receivable Finance Company, L.L.C., et al., Civil Action No. 01-CV-2247-N, will continue to be litigated post-confirmation. The Debtors' liability in this action, if any, will not be discharged under the Plan. Creditor Recovery Holders of allowed unsecured claims who elect to reduce their claims to $5,000 will receive that reduced amount in full, in cash, within 180 days of the scheduled distribution date. Professionals related to the Civil Action will be paid in full over five years. Holders of other unsecured claims will be repaid in full over six years. The Debtors will deposit $34,439 per month into an escrow account to pay for actual damages, if any, that may arise from the Civil Action. Holders of equity interests receive nothing under the Plan. Reorganized A&I will issue 100% of its common stock to Robert M. Smith. Headquartered in Dallas, Texas, Accident & Injury Pain Centers, Inc. -- http://www.accinj.com/-- operates clinics that treat patients with highly advanced therapy equipment and techniques. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688). Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported estimated assets and debts of $10 million to $50 million. AIR CANADA: Faces Machinists Over Layoffs Grievance in Arbitration ------------------------------------------------------------------ There is still no agreement between the International Association of Machinists and Aerospace Workers and Air Canada on a grievance over the announced closure of nine of its mainline stations. The arbitrator, Martin Teplitsky, has recalled representatives from both sides back to Montreal for a meeting on the matter. Air Canada announced earlier this year that it was shifting all of its service to nine Canadian cities to its regional Jazz subsidiary - a decision that could result in the layoff of 229 IAMAW members at Air Canada. The closures affect gate, baggage, cargo and ground handling workers in Charlottetown, Moncton, Saint John, Fredericton, Quebec City, Thunder Bay, Saskatoon, Regina and White Horse. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. As of December 31, 2004, Air Canada's shareholders' deficit narrowed to CDN$203 million compared to a $4.155 billion deficit at December 31, 2003. AIR ENTERPRISES: Files for Chapter 11 Protection in N.D. Ohio ------------------------------------------------------------- Air Enterprises, Inc., filed a voluntary petition for relief under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio. Section 363 Sale On Apr. 21, 2005, Air Enterprises executed a letter of intent with Resilience Capital Partners LLC, a Cleveland-based private equity firm setting forth the terms of a sale of substantially all of the assets of Air Enterprises' business pursuant to sections 363 and 365 of the Bankruptcy Code. Air Enterprises anticipates that papers seeking bankruptcy court authority for the proposed sale will be filed in the immediate future. Air Enterprises intends to operate in the ordinary course of business during the chapter 11 proceeding. "We are extremely pleased to move forward in the sale process with Resilience Capital Partners," said Dottie Gaffney, Chairman and CEO. "I want to thank our customers, suppliers, and employees for their patience and support through this difficult period and look forward to their continued support as we complete our emergence from bankruptcy." "Air Enterprises is a great company with a long, rich history in the highly-specialized air handling marketplace. Although the company is going through a difficult period, Resilience Capital Partners is in the corporate recovery business and we have no doubt the business will stabilize quickly and Bassem Mansour and I look forward to working with all of the company's constituents to affect this turn around," said Steven Rosen, a managing partner of Resilience Capital. In connection with its chapter 11 filing, Air Enterprises anticipates entering into a debtor-in-possession financing agreement that will provide the funding necessary for continued, uninterrupted operation of its business pending bankruptcy court approval of the proposed sale. Air Enterprises expects to complete the sale of the company within 60 days. About Resilience Capital Partners LLC Resilience Capital Partners is a private equity firm based in Cleveland, Ohio focused on investing in underperforming and turnaround situations. Resilience's investment strategy is to acquire smaller to middle market companies that have solid fundamental business prospects, but have suffered from a cyclical industry downturn, are under-capitalized, or have less than adequate management resources. Resilience typically acquires companies with revenues of $15 million to $200 million. Resilience was founded in 2001 by Bassem Mansour and Steven Rosen. Headquartered in Akron, Ohio, Air Enterprises, Inc., designs, engineers, manufactures and supports custom air handling systems. The Company filed for chapter 11 protection on Apr. 27, 2005 (Bankr. N.D. Ohio Case No. 05-52467). John J. Guy, Esq., at Guy, Lammert & Towne, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated liabilities between $1 million to $10 million. An estimate of its assets was not provided. AIR ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Air Enterprises, Inc. 735 Glaser Parkway, Akron, Ohio 44306-4166 Bankruptcy Case No.: 05-52467 Type of Business: The Debtor is the global leader in designing, engineering, manufacturing and supporting custom air handling systems. See http://www.airenterprises.com/ Chapter 11 Petition Date: April 27, 2005 Court: Northern District of Ohio (Akron) Judge: Marilyn Shea-Stonum Debtor's Counsel: John J. Guy, Esq. Guy, Lammert & Towne 106 South Main Street First National Tower #2210 Akron, Ohio 44308-1449 Tel: (330) 535-2151 Fax: (330) 535-9048 Estimated Assets: Not Stated Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Rae Corp $314,454 5th and Hunt Pryor, OK 74362-0981 Emjay Engineering $226,928 1706 Whitehead Road Baltimore, MD 21207-4003 Miller Transfer $176,660 PO Box 453 Rootstown, OH 44272 Outokumpu Heatcraft USA LLC $171,817 Gaffney Pdts $136,670 American Benefits Mgmt $134,615 Siegferth Inc $129,683 Landstar Ranger Inc $129,141 Aerofin Corp $109,006 Friemel Love Co $108,737 Twin City Fan and Blower Co $107,238 Advanced Thermal Solutions $106,356 Heat Pipe Technology Inc $100,556 Furbay Mansfield Elec Supply $75,686 Deca Inc $66,855 Crescent Electric Supply Co $60,970 Innergy Tech Inc $60,266 Reliance Mechanical Group $58,189 Dyna Tech $58,034 Tomkins Inds Inc $57,947 ATA AIRLINES: Can Assume Merchant Services Credit Card Agreements ----------------------------------------------------------------- On October 26, 2004, ATA Airlines, Inc. and its debtor-affiliates sought authority to assume a Merchant Services Airline Agreement, dated March 20, 1995, with Discover Financial Services, Inc., formerly known as Discover Card Services, Inc. Pursuant to the Agreement, the Debtors accept the Discover Card for the purchase of goods and services, in exchange for DFSI's subsequent payment to the Debtors for the purchases, subject to discounts, chargebacks, returns, fees and adjustments. In the event of a chargeback of a Card Sale, the Agreement permits DFSI to collect the amount of chargebacks from amounts owed to the Debtors for subsequent Card Sales. DFSI has the right to request the establishment of a reserve to protect itself from liability from valid chargebacks to secure the full performance of the Debtors under the Agreement. On February 7, 2005, DFSI objected to the Debtors' assumption of the Agreement until the parties executed an amendment that establishes the reserve. DFSI was wary of the impact of the contemplated sale of the Debtors' assets on the routes serviced by the Debtors. DFSI demanded adequate assurance of future performance. Charles V. Traylor, Esq., at Kortepeter, McPherson, Hux, Freihofer & Minton, in Indianapolis, Indiana, tells the United States Bankruptcy Court for the Southern District of Indiana that, prior to Petition Date, the parties agreed in principle to establish the reserve. In anticipation of the amendment, DFSI withheld settlement in the amount commensurate with the anticipated initial reserve, amounting to $3 million in prepetition sales as of February 7, 2005. After extensive negotiations, the parties entered into an amendment to the Agreement. The salient terms of Amended Agreement provide that: (a) DFSI is authorized to take appropriate steps to create a Reserve; (b) DFSI is authorized to make adjustments to the Reserves without further Court order; (c) In the event that the Reserve is not sufficient to satisfy the Debtors' obligations under the Agreement and the Amendment, DFSI will hold a superpriority claim pursuant to Section 507(b) of the Bankruptcy Code with respect to any deficiency; (d) Any superpriority claim held by DFSI will be subordinate to the superpriority claims of Southwest Airlines, Inc., and the Air Transportation Stabilization Board and Citibank, N.A., but not to any other claim of any other creditor; and (e) The Debtors will not propose a Plan that modifies DFSI's rights as provided under the Agreement and the Amendment. At the parties' behest, the Court authorizes the Debtors to assume the Agreement, as amended, nunc pro tunc to the Petition Date. 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: John Hancock Wants Compliance With Rejection Order ---------------------------------------------------------------- On January 3, 2005, the United States Bankruptcy Court for the Southern District of Indiana approved ATA Airlines, Inc. and its debtor-affiliates' request to reject a Boeing 727-290 Lease entered into between ATA Airlines, Inc., and John Hancock Leasing Corporation. George E.B. Maguire, Esq., at Debevoise & Plimpton LLP, in New York, tells Judge Lorch that as of April 11, 2005, the Debtors have not yet consummated the rejection. The Debtors failed to comply with the "installation" regulations of the Federal Aviation Administration. Upon inspection, John Hancock and its aircraft technical advisor, The Aircraft Group, discovered that: (a) numerous parts that are crucial to the operation of the Aircraft and the three Pratt & Whitney engines, originally attached to the airframe, are missing; (b) the Debtors have attached defective parts and certain parts lacking supporting documentation to the Engines; and (c) the Debtors purposefully failed to properly install the Engines on the Aircraft. Additionally, the Debtors have not delivered Aircraft records and documentations, including the "current manuals" which are required to confirm proper installation of the Engines. Mr. Maguire contends that while the Engines were tagged as serviceable upon delivery to the facilities of AAR Aircraft Services, the Debtors' aircraft service provider in Roswell, New Mexico, the subsequent attachment of unserviceable parts on the Engines has rendered the Engines unserviceable. The Debtors' failure to comply with the rejection has impaired John Hancock's ability to remarket the Aircraft to complete the calculation of rejection damages. Furthermore, by attaching Unserviceable Parts to the Leased Engines, the Debtors have decreased the value of the Leased Aircraft and Leased Engines. Pursuant to Section 365(d)(10) of the Bankruptcy Code, Mr. Maguire informs the Court that the Debtors incurred administrative expense obligations under the Lease, commencing on December 24, 2004, or 60 days after the Petition Date. These obligations include basic rent, accruing at a $83,590 rate per month. In light of the concerns presented, John Hancock asks the Court to: (a) declare that the Rejection Effective Date has not occurred; (b) compel the Debtors to comply with all of their obligations under the Rejection Order, including the installation of the Engines in accordance with the Current Manuals; (c) direct the Debtors to satisfy timely their obligations under the Lease accruing as of December 24, 2004; and (d) compel the Debtors to continue their insurance, maintenance and storage obligations through the occurrence of the Rejection Effective Date and for the next 20 days thereafter. 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) ATX COMMS: Exits Chapter 11 as Leucadia National's Subsidiary ------------------------------------------------------------- ATX Communications, Inc., emerged from chapter 11 protection after a 16-month bankruptcy proceeding. ATX's Plan of Reorganization, which was confirmed by the U.S. Bankruptcy Court for the Southern District of New York on April 13, 2005, took effect yesterday. This announcement marks the beginning of a new era for ATX, which this year celebrates its 20th year providing integrated communications solutions to its customers. The consummation of the Plan represents the discharge of all of the Company's pre- petition senior secured and other debt obligations, as well as the achievement of comprehensive settlement agreements that resolve ATX's outstanding litigation with incumbent local phone companies operated by SBC and Verizon. As provided in the Plan, with its formal emergence from Chapter 11, ATX becomes a majority owned subsidiary of Leucadia National Corporation (NYSE & PCX:LUK), a diversified holding company. During the reorganization period, ATX continued to initiate and expand customer relationships, enhanced its solutions portfolio, and made additions to its network infrastructure to better serve customers. Moving forward, the Company intends to focus on its integrated communications business in the Mid-Atlantic states and its consumer business in the Great Lakes region. "ATX has emerged from bankruptcy with a strong balance sheet and with the ability to continue to provide excellent service to its customers," said Jeff Coursen, who has been promoted to Executive Vice President and Chief Operating Officer of ATX. "I am extremely proud of our organization and how it has performed, and I am grateful for the strong loyalty of our customers." In his new role, Mr. Coursen will be responsible for all day-to- day operations of ATX. Additional promotions include Tim Allen, Executive Vice President of Sales and Marketing; Guy Fardone, Executive Vice President and General Manager of ATX's Commercial Division; and Chris Michaels, Executive Vice President, Chief Technology Officer, and General Manager of the Company's Consumer Division. Together, these four senior officers, who average more than a decade of service to the Company, form an experienced team to guide ATX into the future. Thomas Gravina, the Company's former President and CEO, will continue as Chairman of the Board of Directors. "This emergence represents the start of a new chapter for ATX - a company that has enjoyed two decades of strong relationships with its customers, employees, and vendors, as well as with the communities in which we live," said Mr. Gravina. David Larsen, an asset manager for Leucadia National Corporation, will oversee ATX's performance as the Company's new President. About Leucadia Leucadia National Corporation is a holding company engaged in a variety of businesses, including telecommunications (principally through WilTel Communications Group, Inc.), healthcare services (through Symphony Health Services, LLC), manufacturing (through its Plastics Division), real estate activities, winery operations, development of a copper mine (through its 72.5% interest in MK Resources Company) and property and casualty reinsurance. Headquartered in Bala Cynwyd, Pennsylvania, ATX Communications, Inc. -- http://www.atx.com/-- is a local exchange and interexchange carrier providing integrated voice and data services, and operates a nationwide asynchronous transfer mode network. ATX, CoreComm New York, Inc., and their affiliates filed for chapter 11 protection on January 15, 2004 (Bankr. S.D.N.Y. Case Nos. 04-10214 through 04-10245). Paul V. Shalhoub, Esq., and Marc Abrams, Esq., at Willkie, Farr, & Gallagher LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $664 million in total assets and $596.7 million in total debts. BANC OF AMERICA: Moody's Puts Low-B Ratings on Three Cert. Classes ------------------------------------------------------------------ Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by Banc of America Funding 2005-B Trust and ratings ranging from Aa2 to B2 to the mezzanine and subordinate certificates in the securitization. The securitization is backed by adjustable-rate alternative "A" mortgage loans originated by: * GreenPoint Mortgage Funding, Inc., * Banc of America Securities LLC, or * National City Mortgage Co., and acquired by Banc of America Funding Co. The 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 ARM loan pools backing recent alternative "A" securitizations. GreenPoint, Bank of America, National Association, and National City will service the mortgage loans in the securitized pool. The complete rating actions are: * Class 1-A-1 $96,530,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 2-A-1 $120,572,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-1 $279,069,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-1A $118,000,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-1B $32,000,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-2 $107,349,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-2A $78,000,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-2B $22,000,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-3A $47,675,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class 3-A-3B $23,039,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aaa * Class CB1 $4,760,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aa2 * Class CB2 $3,715,000 Variable-Rate Mortgage Pass-Through Certificates, rated A2 * Class CB3 $2,438,000 Variable-Rate Mortgage Pass-Through Certificates, rated Baa2 * Class 3-M-1 $21,698,000 Variable-Rate Mortgage Pass-Through Certificates, rated Aa2 * Class 3-M-2 $18,598,000 Variable-Rate Mortgage Pass-Through Certificates, rated A2 * Class 3-B-1 $12,787,000 Variable-Rate Mortgage Pass-Through Certificates, rated Baa2 * Class 3-B-2 $3,875,000 Variable-Rate Mortgage Pass-Through Certificates, rated Baa3 * Class 3-B-3 $5,424,000 Variable-Rate Mortgage Pass-Through Certificates, rated Ba2 * Class CB4 $1,857,000 Variable-Rate Mortgage Pass-Through Certificates, rated Ba2 * Class CB5 $1,394,000 Variable-Rate Mortgage Pass-Through Certificates, rated B2 BANC ONE: Fitch Upgrades $15 Million Class H to A- From BB+ ----------------------------------------------------------- Banc One /FCCC, commercial mortgage pass-through certificates, series 2000-C1 are upgraded: -- $23.6 million class G to 'AAA' from 'AA'; -- $15 million class H to 'A-' from 'BB+'. In addition, Fitch affirms these classes: -- Interest-only class X at 'AAA'; -- $13.9 million class C at 'AAA'; -- $8.6 million class D at 'AAA'; -- $15 million class E at 'AAA'; -- $8.6 million class F at 'AAA'. Fitch does not rate the $14.3 million class J certificates. The class A-1, A-2, and B certificates have paid in full. The upgrades are the result of increased subordination levels due to loan amortization and prepayments. As of the April 2005 distribution date, the pool's aggregate balance has been reduced 88.5% to $98.9 million from $857.1 million at issuance. Of the original 1,099 loans there are 181 remaining. The pool remains diverse with the top five loans representing 20% of the pool. Currently, one loan (1.3%) is in special servicing and is 90 days delinquent. The loan is collateralized by a multifamily property located in Lafayette, Indiana. The special servicer is pursuing foreclosure. Credit enhancement to class H is sufficient to absorb any loss on the specially serviced loan. Fitch remains concerned with the transaction's 75% concentration in Illinois, however, the originators possess local market expertise. BEAR STEARNS: Fitch Puts Low-B Ratings on Six 2003-Top12 Classes ---------------------------------------------------------------- Fitch Ratings affirms Bear Stearns 2003-Top12: -- $172.1 million class A-1 at 'AAA'; -- $150.6 million class A-2 at 'AAA'; -- $185.9 million class A-3 at 'AAA'; -- $487.3 million class A-4 at 'AAA'; -- Interest-only classes X-1 and X-2 at 'AAA'; -- $30.5 million class B at 'AA'; -- $31.9 million class C at 'A'; -- $13.1 million class D at 'A-'; -- $14.5 million class E at 'BBB+'; -- $7.3 million class F at 'BBB'; -- $7.3 million class G at 'BBB-'; -- $5.8 million class H at 'BB+'; -- $5.8 million class J at 'BB'; -- $2.9 million class K at 'BB-'; -- $2.9 million class L at 'B+'; -- $2.9 million class M at 'B'; -- $2.9 million class N at 'B-'. Fitch does not rate the $11.6 million class O. The rating affirmations reflect the minimal reduction of the pool collateral balance since issuance. As of the April 2004 distribution date, the pool has paid down 2.23%, to $1.14 billion from $1.16 billion at issuance. There are no delinquent or specially serviced loans. Eleven loans were credit assessed by Fitch at issuance: * West Valley Mall (5.6%); * Westshore Plaza (5.7%); * 200 Berkeley & Stephen L. Brown Buildings (4.4%); * Sun Valley Apartments (2.4%); * Town Square Mall (1.9%); * Cedar Knolls Shopping Center (1.7%); * 284 Mott Street (1.7%); * Eagle Plaza (1.5%); * Carriage Way (0.9%); * Deerfield Estates (0.9%); and * Wayne Town Center (0.8%). Fitch reviewed the most recent operating data available from the master servicer for these loans. Based on their stable performance and current occupancy the loans remain investment grade. Fitch continues to monitor the performance of the credit assessed loans. BOMBARDIER INC: Selling Capital's Inventory Finance Unit for $825M ------------------------------------------------------------------ Bombardier Inc. (TSX:BBD.MV.A)(TSX:BBD.SV.B) inks an agreement to sell Bombardier Capital's Inventory Finance Division to GE Commercial Finance for cash proceeds of approximately $825 million payable at closing and subject to customary adjustments. Bombardier Capital's inventory finance business is comprised of trade receivables in the marine, recreational products, recreational vehicles and manufactured housing industries. The price represents a gross pre-tax premium of $225 million US over the $2.2 billion US book value of the inventory financing assets being sold and the related securitized floor plan debt and other net liabilities of the inventory financing portfolio. GE Commercial Finance will also assume, after closing, the future servicing obligations of Bombardier Capital under current public securitizations. As a result of this transaction, Bombardier Capital will reduce the recorded debt and other net liabilities related to the inventory financing business by approximately $1.6 billion US. Some 280 employees based in Colchester, Vermont and Brossard, Quebec will be transferred to GE Commercial Finance. The sale is subject to obtaining the consent of regulatory authorities and fulfilment of other customary conditions. This transaction is the continuation of Bombardier Capital's orderly portfolio wind-down, initiated in 2001, and is in line with Bombardier's objective of maximizing shareholder value. Bombardier Capital will continue its activities of interim financing, as well as the orderly and timely wind-down of the remaining portfolios, including railcar leasing. About GE Commercial Finance GE Commercial Finance -- http://www.ge.com/--, which offers businesses around the globe an array of financial products and services, has assets of over $230 billion US and is headquartered in Stamford, Connecticut, USA. General Electric (NYSE: GE) is a diversified technology, media and financial services company dedicated to creating products that make life better. About Bombardier Inc. A world-leading manufacturer of innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment, Bombardier Inc. -- http://www.bombardier.com/-- is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2005, were $15.8 billion US and its shares are traded on the Toronto Stock Exchange (BBD). Bombardier, CRJ, CRJ200 and CRJ700 are trademarks of Bombardier Inc. or its subsidiaries. * * * As reported in the Troubled Company Reporter on Apr. 20, 2005, Standard & Poor's Ratings Services affirmed its ratings, including its 'BB' long-term corporate credit rating, on Bombardier Inc. and its subsidiaries. At the same time, Standard & Poor's removed the ratings on Bombardier from CreditWatch, where they were placed Dec. 13, 2004. The outlook is negative. The affirmation follows a review of Bombardier's fiscal 2005 results, a review of financial prospects for the next few years, and recent discussions with senior management regarding financial and strategic priorities. BORDEN CHEMICAL: Likely Merger & IPO Cue S&P to Put Low-B Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating and other ratings for Borden Chemical Inc. on CreditWatch with negative implications, citing the company's: (1) announcement of a sizable merger, (2) a large dividend payment, and (3) a proposed IPO. Standard & Poor's also placed its 'B+' corporate credit rating and other ratings for Resolution Specialty Materials LLC on CreditWatch with negative implications. At the same time, Standard & Poor's placed its 'B-' corporate credit rating and other ratings for Resolution Performance Products LLC on CreditWatch with positive implications. Columbus, Ohio-based Borden Chemical has over $850 million of total debt outstanding. Texas-based Resolution Performance Products has over $800 million of total debt, including payment- in-kind holding company notes. Texas-based Resolution Specialty Materials has about $173 million of total debt, including holding company notes. "The CreditWatch placements follow the announcement that Borden Chemical, Resolution Performance Products, and Resolution Specialty Materials will combine and undertake an initial public offering," said Standard & Poor's credit analyst George Williams. "The transactions also include a $550 million dividend payment to shareholders which is expected to occur following the combination but before the IPO." Borden Chemical, Resolution Performance Products, and Resolution Specialty Materials are each controlled by Apollo Management LP. At the time of the merger, Borden Chemical will change its name to Hexion Specialty Chemicals Inc. The dividend will initially be financed through additional borrowings and the issuance of series A preferred stock. The IPO is estimated at $800 million, but the amount of proceeds that will be raised by Hexion (relative to the amount that will be raised through a secondary offering by existing shareholders) has not been determined (the S-1 filing indicates minimum proceeds of $360 million to Hexion). Proceeds of the IPO will be used to redeem the preferred stock. The combinations and dividend payment are expected to occur in the second quarter of 2005. The IPO is projected to occur sometime between July and September 2005, following approval by the SEC. The proposed combination would be a meaningful strategic initiative for Borden, Resolution Performance Products and Resolution Specialty Materials, as it would create a company with a more diversified product portfolio, technology base, end market slate, and geographic sales base. Still, the combined entity will be highly leveraged and will include the weak profitability and exposure to commodity raw materials associated with Resolution Performance Products. On a pro forma basis, Hexion will have sales of almost $4.1 billion, including the sales of Germany-based Bakelite AG, a company that Borden Chemical is currently in the process of acquiring from Rutgers AG. Standard & Poor's will meet with Borden management and shareholder representatives to review the proposed combination and its business and financial strategies. Attention will be paid to the strength of the businesses being merged, the financial profile of Hexion pro forma for the combination, the dividend and the proposed IPO, and management's commitment to improving credit protection measures. The review could result in a modest downgrade for Borden Chemical and Resolution Specialty Materials, or if the strategic and financial benefits of this transaction are compelling, an affirmation of the existing ratings. At the same time, the review could result in a modest upgrade of Resolution Performance Products. Standard & Poor's will also examine the proposed capital structure of Hexion and its impact on the recovery prospects of the existing rated debt. BORDEN CHEMICAL: Moody's Revises Outlook to Developing ------------------------------------------------------ Moody's Investors Service affirmed the B2 senior implied ratings of Borden Chemical Inc. and Resolution Performance Products, LLC. Moody's also changed the outlook on the ratings of both companies to developing from negative following the announcement that Apollo Management, LP will merge three chemical businesses under its control to form a new company, Hexion Specialty Chemicals, Inc. The change in outlook reflects uncertainty over the terms of the new $675 million credit facilities, the change in collateral for secured note holders due to the merger of the companies, the further subordination of RPP's subordinated notes to environmental and pension liabilities at Borden, and the $200 million increase in debt at the combined company. Apollo will utilize a portion of the proceeds from the new credit facility ($200 million) and the proceeds of the contemplated common stock offering to fund a $550 million dividend. Moody's affirmation of Borden's and RPP's senior implied ratings reflects the benefits of their merger with Resolution Specialty Materials LLC (RSM; unrated by Moody's), including the increased size, improved business diversity, roughly $75 million of potential synergies, as well as an improved operating environment. However, Moody's noted that Borden's ratings had already considered some potential synergies between Borden and RPP. Furthermore, the B2 ratings reflect the substantial leverage of the combined entity with a pro forma total debt to EBITDA of upwards of 7 times, excluding synergies, and the expectation that free cash flow will remain depressed through much of 2005, due to the increasing investment in working capital, higher capex and ongoing pension contributions. The developing outlook reflects uncertainty over the impact of the merger on the various tranches of secured and subordinated debt as a result of the merger. While Moody's has affirmed the existing B2 senior implied ratings and would likely place a B2 senior implied rating on Hexion upon completion of the merger, Moody's could change its ratings on individual tranches of debt depending on changes to collateral access or priority in bankruptcy as a result of the merger. Due to the increased debt from the transaction, it is possible that Moody's could move the outlook back to negative once the structural issues are resolved, unless financial performance in the first quarter of 2005 has improved substantially from the 2004 levels. Borden Chemical, Inc., based in Columbus, Ohio, is a chemical producer of resins, formaldehyde, and coatings. The company reported revenues of $1.7 billion for the LTM ended December 31, 2004. Resolution Performance Products, LLC, headquartered in Houston, Texas, is a leading global producer of epoxy resins, and versatic acids and derivatives, and also is a leading merchant supplier of bisphenol-A. The company generated revenues of $1 billion for the LTM ended December 31, 2004. Resolution Specialty Materials, LLC, headquartered in Carpentersville, Illinois, produces base coating resins and additives for formulation into finished coatings, a range of specialty polymers for graphic art applications, composite polymers, textile chemicals and acrylic monomers. The company generated revenues of $768 million for the LTM ended Dec. 31, 2004. BUTLER ANIMAL: S&P Junks Proposed $30 Million Second-Lien Loan -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Dublin, Ohio-based Butler Animal Health Supply Company, LLC. The outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan rating to the company's proposed $30 million senior secured revolving credit facility due 2010 and $140 million senior secured term loan B due 2011, based on preliminary terms and conditions. A recovery rating of '3' also was assigned to this loan, indicating the expectation for meaningful recovery of principal (50%-80%) in the event of a payment default. In addition, a 'CCC+' bank loan rating was assigned to Butler's proposed $30 million secured second-lien term loan due 2012. A recovery rating of '5' also was assigned to this loan, indicating the expectation for negligible recovery of principal (0%-25%) in the event of a payment default. The lower ratings for the second- lien loan reflect the lenders' recovery prospects after considering the priority claims of the revolver and first-lien term loan lenders. Proceeds from the transaction will be used to recapitalize the company and finance the acquisition of W.A. Butler Co. Inc. by Oak Hill Capital Management, in conjunction with Darby Group Companies, the current owner of Burns Veterinary Supply. As a result of the transaction, Butler, the leading distributor of companion animal health care supplies, will be combined with Burns, the number-four player in the same industry. The combined company is named Butler Animal Health Supply Company, LLC. Pro forma for the transaction, total funded debt will be about $170 million. "The ratings reflect the integration risk associated with Butler's combination with Burns Veterinary Supply, a small EBITDA base that leaves limited cushion for operating challenges, and a highly leveraged financial profile stemming from a heavy debt load," said Standard & Poor's credit analyst Kristi Broderick. "These factors are somewhat mitigated by the company's position as the largest distributor in the niche companion animal health care supply industry." Privately held Butler holds the leading market share in the distribution of companion animal health care products to veterinarians in the U.S. The industry is highly fragmented, with only a few national distributors and many small regional distributors. Most veterinary practices purchase supplies from distributors while only a small percentage of products, about 15%, are sold directly to veterinarians from manufacturers. Revenues in this relatively small, but stable, industry sector are expected to show mid single-digit growth, reflecting strong emotional bonds for companion pets. CHASE MORTGAGE: Fitch Puts Low-B Ratings on 2 Private Offer Certs. ------------------------------------------------------------------ Chase Mortgage Finance Trust's mortgage pass-through certificates, series 2005-S1 are rated: -- $599.3 million classes A-1 through A-18, 2-A1 through 2-A3, A-P, A-X, and A-R (senior certificates) 'AAA'; -- $9.9 million class M certificates 'AA'; -- $2.7 million class B-1 certificates 'A'; -- $1.8 million class B-2 certificates 'BBB'; -- $1.2 million privately offered class B-3 certificates 'BB'; -- $0.9 million privately offered class B-4 certificates 'B'; -- $0.9 million the privately offered class B-5 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.90% subordination provided by: * the 1.65% class M, * the 0.45% class B-1, * the 0.30% class B-2, * the 0.20% privately offered class B-3, * the 0.15% privately offered class B-4, and * the 0.15% privately offered class B-5 certificate. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the primary servicing capabilities of Chase Home Finance LLC (rated 'RPS1' by Fitch). The trust consists of 1,216 one- to four-family first-lien residential mortgage loans with stated maturity of not more than 30 years with an aggregate principal balance of $600,153,808, as of the cut-off date, April 1, 2005. The mortgage pool has a weighted average OLTV of 66.37% with a weighted average mortgage rate of 5.752%. The weighted-average FICO score of the loans is 736. Loans originated under a reduced loan documentation program account for approximately 8.5% of the pool, cash-out refinance loans 28.9%, purchase loans 47.0%, condominium properties are 7.9%, co-ops are 2.5%, and second homes 8.5%. The average loan balance is $493,548, and the loans are primarily concentrated in California (29.6%), New York (19.8%), and Florida (10.3%). None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ Wachovia Bank, N.A. will serve as trustee. Chase Mortgage Finance Corporation, a special purpose corporation, deposited the loans in the trust that issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. CREDIT SUISSE: Poor Performance Prompts Moody's to Review Ratings ----------------------------------------------------------------- Moody's Investors Service has placed eleven classes of certificates issued in Credit Suisse First Boston's 2002-NP14 and 2003-NP6 securitizations under review for possible downgrade as a result of an ongoing surveillance effort. Both transactions were issued with non-performing mortgage loans as collateral. Nonperforming mortgage loans are typically defined as loans, which are delinquent by 90 days or more, are subject to bankruptcy or foreclosure proceedings, or are held as REO properties. The classes are being placed on review for downgrade based upon the poorer than anticipated performance of the underlying mortgage pools. Complete rating actions are: Issuer: CSFB Trust 2002-NP14 Review for Downgrade: * Class A, Currently: Aaa * Class M1, Currently: Aa2 * Class M2, Currently: A2 * Class B1, Currently: Baa2 * Class B2 , Currently: Ba2 Issuer: CSFB Trust 2003-NP6 Review for Downgrade: * Class A1, Currently: Aaa * Class A2, Currently: Aaa * Class M1, Currently: Aa2 * Class M2, Currently: A2 * Class B1, Currently: Baa2 * Class B2, Currently Ba2 CURON MEDICAL: Posts $2.97 Million Net Loss in First Quarter ------------------------------------------------------------ Curon Medical, Inc. (Nasdaq: CURN) reported financial results for the first quarter ended March 31, 2005. For the first quarter 2005, Curon Medical reported net sales of $857,000, compared to net sales of $906,000 in the first quarter of 2004, and $1.0 million in the fourth quarter of 2004. Net loss for the quarter was $2.97 million, compared with a net loss of $3.55 million in the first quarter of 2004, and $4.21 million in the fourth quarter of 2004. The first quarter results reflected the sale of six Stretta(R) Control Modules and ten Secca(R) Control Modules plus the placement of five additional Stretta Control Modules for evaluation. Sales also included 367 Stretta disposable Catheters and 210 Secca disposable handpieces. As of March 31, 2005, Curon Medical had cash, cash equivalents and investments totaling $2.9 million. Larry C. Heaton II, President and Chief Executive Officer of Curon Medical, said, "We are pleased to report that sales of our Secca System, which enables the minimally invasive Secca procedure for the treatment of Bowel Incontinence (BI), continued to improve during the quarter. This marks the fourth consecutive quarter of growth in Secca Control Module sales, total Secca disposable handpiece sales, re-orders of Secca disposable handpieces, and the number of customers reordering Secca disposable handpieces. We have additional near-term opportunities to facilitate adoption of this technology through our educational activities at physician professional society meetings, including the recent meeting of the Society of American Gastrointestinal and Endoscopic Surgeons (SAGES), which marked our debut of the Secca System to this society of primarily General Surgeons, and the meeting of the American Society of Colon and Rectal Surgeons (ASCRS) meeting in early May." "With the Stretta product line we focused our efforts during the quarter primarily on customers representing the existing installed base of approximately 300 Stretta Control Modules in the United States. Our near-term goal is to increase utilization by all of our existing U.S. customers, in particular those customers who have not performed procedures in some time. We were pleased to see these efforts during the quarter result in nine customers ordering disposables to perform Stretta procedures for the first time since before 2004, and in four customers upgrading their older generation Stretta Control Modules to the newest version. While these usage-focused activities do not generate the capital revenue associated with the sale of Control Modules to new customers, they do help build the foundation of quarterly recurring revenue needed to reach profitability," continued Mr. Heaton. "We believe that one issue that was potentially having a negative impact on adoption and utilization of the Stretta System during the first quarter has been resolved," said Jayne Little, Curon Medical's Director of Reimbursement. "During the quarter there was an element of uncertainty regarding the final amount of reimbursement a facility would receive for performing the Stretta procedure, and an expectation that the amount might be revised upwards. In late March, the Center for Medicare and Medicaid Services (CMS) published its April 2005 Update of the Hospital Outpatient Prospective Payment System (OPPS). In Appendix A of this document the payment rate for the Ambulatory Payment Classification (APC) 0422, which includes the Stretta procedure, was increased from $1,265 per procedure to $1,335 per procedure, effective April 1, 2005, and retroactive for all procedures performed since January 1, 2005. This APC establishes the amount a facility will be reimbursed when they perform a Stretta procedure on a Medicare patient. The payment rate is used as a baseline and adjusted for local wage variations. With the new payment rate, actual facility reimbursement for the Stretta procedure will now range from $977 to $2,584, depending upon location. With a final amount now established for 2005, customers and potential customers can now accurately calculate the level of reimbursement that their facility can obtain, which we believe may positively impact adoption and subsequent utilization of the Stretta procedure." On April 8, 2005 and April 19,2005, the Company signed definitive agreements for the private placement of common stock to institutional investors for a total of $12.0 million, before transaction fees and expenses. The placement is structured to be completed in two closings. The first closing occurred on April 8, 2005. The second closing is conditioned upon stockholder approval. In this first closing, the Company raised approximately $3.2 million in gross proceeds by issuing a total of 4,962,614 shares of common stock at a price of $0.65 per share, representing a 19 percent discount to the Company's April 7, 2005 $0.80 per share closing price. Investors received warrants to purchase an aggregate of 2,481,298 shares of common stock at a price of $1.00 per share. The warrants expire in 2010. Net proceeds to the Company from the first closing after estimated costs and expenses were approximately $2.6 million. An additional amount of approximately $8.8 million has been deposited to escrow and will be released to the Company in the event that the Company obtains stockholder approval for the subsequent sale of securities. The Company intends to seek stockholder approval at its upcoming Annual Meeting. In the event that stockholder approval is received, net proceeds to the Company from the second closing will be approximately $8.4 million. The terms of the subsequent closing are essentially identical to those from the first closing. SVB Alliant and The Robins Group LLC served as placement agents for the transaction. "The proceeds of the placement will strengthen our balance sheet and will be used for working capital purposes, primarily to fund the Company's continuing development of its core business related to the use of radiofrequency energy for the treatment of disorders of the gastrointestinal tract," said Alistair F. McLaren, Curon Medical's Chief Financial Officer. "With the addition of the funds being held in escrow pending stockholder approval, we believe that we would have sufficient cash on-hand to fund operations for at least the next twelve months." About The Secca System The Secca System provides physicians with devices to perform a minimally invasive outpatient procedure for the treatment of bowel incontinence in patients who have failed more conservative therapy such as diet modification and biofeedback. The Secca System utilizes the same technology and treatment concepts as the Stretta System. Using the Curon Control Module and the Company's Secca disposable handpiece, physicians deliver radiofrequency energy into the muscle of the anal sphincter to improve its barrier function. Curon Medical, Inc. -- http://www.curonmedical.com/-- develops, manufactures and markets innovative proprietary products for the treatment of gastrointestinal disorders. The Company's products and products under development consist of radiofrequency generators and single use disposable devices. Its first product, the Stretta System, received U.S. Food and Drug Administration clearance in April 2000 for the treatment of gastroesophageal reflux disease, commonly referred to as GERD. The Company's Secca System for the treatment of bowel incontinence received clearance from the FDA in March 2002. * * * Going Concern Doubt In its Form 10-K for the fiscal year ended Dec. 31, 2004, filed with the Securities and Exchange Commission, Curon Medical's auditors, PriceWaterhouseCoopers LLP, raised substantial doubt about the Company's ability to continue as a going concern due to Curon's recurring losses and negative cash flows from operations. "As of December 31, 2004, we had cash and cash equivalents on hand of $5.9 million and working capital of $6.6 million," the Company disclosed in its Annual Report. "We intend to finance our operations primarily through our cash and cash equivalents, marketable securities, future financing and future revenues. Although we recognize the need to raise funds in the near future, there can be no assurance that we will be successful in consummating any such transaction, or, if we did consummate such a transaction, that the terms and conditions of such financing will be favorable to us. We believe that our cash balances will not be sufficient to fund planned expenditures in the third quarter of 2005." DEUTSCHE MORTGAGE: Fitch Affirms Low-B, Junk & Default Ratings -------------------------------------------------------------- Deutsche Mortgage & Asset Receiving Corp.'s, commercial mortgage pass-through certificates, series 1998-C1 are upgraded by Fitch Ratings: -- $109 million class B to 'AAA' from 'AA'; -- $109 million class C to 'AA-' from 'A'. These classes are affirmed by Fitch: -- $767.5 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $99.9 million class D 'BBB'; -- $27.2 million class E 'BBB-'; -- $45.4 million class F 'BB+'. -- $45.4 million class G 'B'; -- $18.2 million class H 'B-'; -- $22.7 million class J 'CCC'; -- $22.7 million class K 'CC'; - -$4.5 million class L 'D'. The upgrades reflect the increased credit enhancement from loan payoffs and amortization. As of the April 2005 distribution date, the pool's aggregate certificate balance has been reduced by approximately 30% to $1.27 billion from $1.82 billion at issuance. In addition, 11 loans (8.7%) have been defeased since issuance. As of the April 2005 distribution date, six loans were 30 days delinquent (3.7%), one 90 days delinquent (0.64%), one in foreclosure (0.55%) and two real estate owned (0.54%). The largest group of delinquent loans was secured by five Homewood Suites hotels (4%). The loans are currently 30 days delinquent. The next largest delinquent loan (0.64%) is secured by a multifamily property in Orlando, Florida. The loan is 90 days delinquent. The loan is expected to payoff shortly. No losses are expected at this time. The second largest delinquent loan (0.55%) is secured by a multifamily property in Lexington, Kentucky. The loan is in foreclosure. The special servicer and the borrower are negotiating a possible settlement. Fitch remains concerned with 23 loans (9.8%) which are in special servicing. Realized losses in the pool total $77.2 million to date, or 4.25% of the original principal balance. Fitch will continue to monitor this transaction for developments on the loans in special servicing and any other potential issues. DII INDUSTRIES: Court Approves Final Payment to Chapter 11 Experts ------------------------------------------------------------------ Judge Fitzgerald entered a final order approving applications for compensation filed by 17 professionals employed by DII Industries, LLC and its debtor-affiliates in their Chapter 11 cases. Since the Petition Date, the approved fees and expenses for each of the Debtors' bankruptcy professional total: Professional Service Fees Expenses ------------ ------------ -------- Resolutions, LLC $21,450 $1,183 Young Conaway Stargatt & Taylor, LLP 677,784 99,067 Eric D. Green 139,950 3,032 Dresdner Kleinwort Wasserstein, LLC 1,216,667 97,322 Analysis Research & Planning Corporation 556,726 4,431 Meyer, Unkovic & Scott, LLP 76,059 5,776 Kirkpatrick & Lockhart Nicholson Graham LLP 11,718,005 1,147,986 Gollatz, Griffin & Ewing, P.C. 4,372,961 196,376 Houlihan Lokey Howard & Zukin 96,019 29,322 Hamilton, Rabinovitz & Alschuler, Inc. 442,385 9,672 Jenkens & Gilchrist, P.C. 771,246 183,028 Mesirow Financial Consulting, LLC 76,833 8,218 KPMG LLP 1,034,353 112,146 Gibson, Dunn & Crutcher, LLP 537,413 49,811 526,457 22,409 Cambridge Associates, LLC 100,000 0 King & Spalding 2,677,716 610,846 ------------ ---------- TOTAL $25,042,024 $2,580,625 ============ ========== The $221,008 prepetition retainer held by Young Conaway will be applied to any amounts owed by the Debtors, with the remaining portion to be reimbursed to them. Kirkpatrick & Lockhart's $296,722 prepetition retainer will be applied to any amounts owed by the Debtors. Headquartered in Houston, Texas, DII Industries, LLC, is the direct or indirect parent of BPM Minerals, LLC, Kellogg Brown & Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc., Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root International, Inc., (Delaware), and Kellogg Brown & Root International, Inc., (Panama). KBR and its subsidiaries provide a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. DII and its debtor-affiliates filed a prepackaged chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $6.255 billion in total assets and $5.295 billion in total liabilities. (DII & KBR Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIXIE PRODUCE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Dixie Produce & Packaging, LLC 5801 G Street New Orleans, Louisiana 70183 Bankruptcy Case No.: 05-13410 Type of Business: The Debtor is Southeast Louisiana's largest state-of-the-art fresh-cut salad and fruit production facility. Chapter 11 Petition Date: April 27, 2005 Court: Eastern District of Louisiana (New Orleans) Debtor's Counsel: Tristan E. Manthey, Esq. William H. Patrick, III Heller, Draper, Hayden, Patrick & Horn 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130 Tel: (504) 568-1888 Fax: (504) 522-0949 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ East Coast Brokers & Packers Inc. $887,831 PO Box 2636 PLant CIty, FL 33564-2636 Carolina Tomato $755,157 PO Box 13581 Colombia, SC 29201 Vilalge Farms $415,889 PO Box 18523 Newark, NJ 07191 Tonso Farms $225,162 Seminole Produce Distributor $175,129 Burton Tomato Farms $172,786 Chas Jones Produce LLC $102,037 West Coast Tomato Inc. FI $96,128 Russet Potato Exchange $85,616 Gonzalez Packing Co $81,327 JMB International $68,318 Meyer Tomato LLC $66,129 Keith Connell Inc. $64,931 MCC Electric, LLC $63,180 Rio Rico Farms $60,986 Dimare Rusking Inc. $60,889 Ryan Potato Company $59,288 Duda Texas (Lbx#116264) $48,742 RM & SM Farms $43,092 Oakshire Mushroom Sales $40,990 DOW JONES: Fitch Says Credit Risk of DJ.CDX.NA.HY Series Is Higher ------------------------------------------------------------------ Fitch Ratings announced the release of its analysis on the most recent roll of the Dow Jones CDX North American High Yield (DJ CDX.NA.HY) credit default swap -- CDS -- index from Series 3 to Series 4. Fitch has conducted the current analysis using the latest version of Vector V2.2, which was released on April 15, 2005. Consisting of 100 reference entities, the DJ CDX.NA.HY CDS index allows investors to gain exposure to various tranches of a diversified portfolio of the most liquid high yield corporate reference entities. Monthly credit assessments of various risk tranches and supporting analytics are available exclusively on Fitch's credit derivatives web site at http://www.fitchcdx.com/ The new roll was effective on March 13, 2005 with 5 1/4- and 10 1/4-year maturities. The credit risk of the DJ.CDX.NA.HY Series 4 index has increased as the weighted average rating of 'B+/B' is now one notch lower than the Series 3 pool weighted average rating of 'BB-/B+. There have been seven reference entity deletions and seven additions that have been made to reflect recent dealer liquidity polls. The list of the excluded and included reference entities is listed below. Exclusions -- Caesars Entertainment -- Hilton Hotels Corporation -- iStar Financial Inc. -- J.C. Penney Co. Inc. -- MCI, Inc. -- Millennium America Inc. -- Nextel Communications Inclusions -- Advanced Micro Devices, Inc. -- Bombardier Inc. -- Citizens Communications Company -- Delphi Corporation -- Intelsat, Ltd. -- Texas Genco LLC -- Visteon Corporation The top three industry concentrations in the DJ.CDX.NA.HY Series 4 index are: * Energy (13%), * Telecom (11%), and * Automobiles (9%). This compares to the Series 3 top three industry concentrations of: * Energy (12%), * Telecom (11%), and * Automobiles (7%). Additionally, the number of credits on Fitch Rating Watch Negative has increased from four to five. About FitchCDx.com FitchCDx.com is an integrated web-platform providing market- oriented, advanced analysis and data for the credit derivatives market - consolidating all of Fitch Ratings' analysis and research on credit derivatives. FitchCDx gives users unique access to a combination of market information and fundamental analysis. DRUGMAX INC: Auditors Raise Going Concern Doubt in Form 10-K ------------------------------------------------------------ DrugMax, Inc. (Nasdaq: DMAX), a specialty pharmacy and drug distribution provider, filed its Form 10-K with the U.S. Securities and Exchange Commission and reported financial results for the fourth quarter and year ended January 1, 2005. As previously reported, DrugMax completed its merger with Familymeds Group, Inc. on November 12, 2004. For accounting purposes, Familymeds, the specialty pharmacy company, was deemed to be the acquirer and therefore its financial results for the fourth quarter and year ended January 1, 2005 are included for the periods being presented. The results of the drug distribution business known as DrugMax are included from the merger date of November 12, 2004 through January 1, 2005. Results for the fourth quarter 2003 and year ended December 27, 2003 include the results of Familymeds only. In conjunction with the merger, the new DrugMax also has converted its fiscal year end from March 31 to a retail fiscal year ending on the Saturday closest to December 31, consistent with Familymeds' fiscal year end. Net revenues for the 14-week period ended January 1, 2005 increased 33.0 percent to $73.8 million, up from $55.5 million during the 13-week period ended December 27, 2003. Net revenues for the 53 weeks ended January 1, 2005 increased 9.7 percent to $239.2 million, up from $218.0 million during the 52- week period ended December 27, 2003. Fourth quarter and full year 2004 revenues benefited from an additional week and included $15.8 million of sales related to the drug distribution business since the merger between DrugMax and Familymeds became effective. EBITDA(1) for the fourth quarter 2004 was ($32.1) million compared to EBITDA of $0.8 million for the fourth quarter of 2003. Excluding goodwill impairment of $31.0 million and a $1.3 million merger-related non-cash compensation charge, adjusted EBITDA was $0.2 million for the fourth quarter of 2004 compared to $0.8 million for the fourth quarter of 2003. EBITDA for the full year 2004 was ($29.5) million compared to $0.3 million for the full year 2003. Adjusted EBITDA for the full year 2004 was $2.9 million compared to $0.3 million in 2003. Commenting on DrugMax's fourth quarter and full year 2004 results, Ed Mercadante, R.Ph., Co-Chairman and Chief Executive Officer of DrugMax, said: "We are encouraged by the progress we have achieved since the merger took place. The specialty pharmacy business is proceeding as planned and the integration of the drug distribution business is continuing. We are beginning to realize the purchasing synergies identified when bringing the two companies together. Importantly, our sales momentum continued throughout the first quarter 2005. We expect the Company's first quarter 2005 sales to be approximately $85 million, an approximate 50% improvement from the first quarter 2004. Going forward, our focus is on driving profitability as we continue to execute against building an integrated specialty drug distribution platform with multiple sales channels." Gross profit for the fourth quarter 2004 was $12.6 million, or 17.0 percent, compared to $12.4 million, or 22.4 percent, a year ago. Gross profit for the full year 2004 was $46.8 million, or 19.6 percent, compared to $47.4 million, or 21.8 percent, in fiscal 2003. The decrease in gross profit percentage is primarily the result of the inclusion of the lower gross profit drug distribution operations from the date of the merger through January 1, 2005, which negatively impacted gross profit percentage by approximately 4.3 percent and 1.3 percent in the fourth quarter and full year 2004, respectively. In addition, the company operated 77 corporate specialty pharmacies as of January 1, 2005 compared to 82 corporate specialty pharmacies as of December 27, 2003, thereby contributing to the overall gross margin dollar decline year-over-year. Selling, general and administrative (SG&A) expenses for the fourth quarter 2004 were $13.7 million, or 18.5 percent of revenues, compared to SG&A expenses of $12.0 million, or 21.6 percent of revenues, for the fourth quarter 2003. SG&A expenses for the full year 2004 were $46.7 million, or 19.5 percent of revenues, compared to SG&A expenses of $47.5 million, or 21.8 percent of revenues, in fiscal 2003. Negatively impacting SG&A expenses for the fourth quarter and full year 2004 was a non-cash compensation charge of $1.3 million related to restricted stock and stock options granted to certain Familymeds employees as part of the merger. Such charges will continue throughout 2005 as the restricted stock and stock options vest. Also negatively impacting SG&A expenses in the fourth quarter and full year 2004 was the inclusion of expenses relating to the drug distribution business from November 12, 2004 through January 1, 2005. Excluding the merger-related non-cash compensation charge, SG&A expenses for the fourth quarter and full year 2004 would have been $12.4 million, or 16.8 percent of revenues, and $45.4 million, or 19.0 percent of revenues, respectively. In accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," the Company conducted its annual impairment test related to the carrying value of its goodwill and other intangible assets. The impairment test resulted in a non-cash charge during the fourth quarter of $31.0 million, or $2.80 per basic and diluted share, to reduce the drug distribution operation goodwill and intangibles to their estimated fair value as of January 1, 2005. This non-cash charge resulted primarily from changes in the financial performance of the drug distribution business, such as inventory management agreements with major brand manufacturers that eliminated the benefits previously derived from forward buying of pharmaceutical products. Net loss(1) for the fourth quarter 2004 was $36.3 million, or a net loss of $3.27 per basic and diluted share, compared to a net loss of $1.6 million, or a net loss of $1.28 per basic and diluted share, for the fourth quarter 2003. Net loss for the full year 2004 was $39.8 million, or a net loss of $10.68 per basic and diluted share, compared to a net loss of $12.2 million, or a net loss of $9.45 per basic and diluted share, for the full year 2003. Excluding the non-cash compensation charge of $1.3 million associated with the merger, the impact of goodwill impairment of $31.0 million and a merger related non-cash interest charge of $1.7 million, DrugMax's adjusted net loss for the fourth quarter 2004 would have been $2.3 million, or an adjusted net loss of $0.21 per basic and diluted share. Excluding these charges the Company's adjusted net loss for the full year 2004 would have been $5.8 million, or an adjusted net loss of $1.57 per basic and diluted share. Financial Position Cash and cash equivalents were $2.3 million for the fiscal year ended January 1, 2005. As of January 1, 2005, $32.9 million was outstanding under the senior credit facility and $2.9 million was available for additional borrowings. Bank Loan Default As of January 1, 2005, the Company was not in compliance with certain covenants under the Senior Credit Facility backed by GENERAL ELECTRIC CAPITAL CORPORATION and BANK OF AMERICA, N,A. As a result, the lender can demand repayment of the $32.9 million outstanding as of Jan. 1, and could foreclose upon all or substantially all of the Company's assets and the assets of its subsidiaries. The Company expects to receive an amendment waiving covenant violations during the second quarter of 2005. Going Concern Doubt As a result of the Company's non-compliance, Deloitte & Touche LLP, the Company's independent registered certified public accounting firm, issued an unqualified audit report with an explanatory paragraph raising doubt about the Company's ability to continue as a going concern. Commenting further, Mr. Mercadante said: "Our operating performance reflects the ongoing progress we have achieved in the pharmacy business in particular. Specialty pharmacy, the engine that drives our model, performed very well in the fourth quarter and full year 2004. This business posted strong sales and made great strides in expanding into new sales channels such as physician groups and the Worksite Pharmacy at Mohegan Sun. As we complete the merger integration process, we will leverage the strength of our Familymeds operations and drive our integrated platform toward capturing the numerous higher gross margin growth opportunities we see before us." DrugMax highlights for the fourth quarter 2004 included: * Completing the merger between DrugMax and Familymeds on November 12, 2004; * Raising $17 million in a convertible preferred stock private placement on December 2, 2004; * Finalizing a new $65 million revolving credit facility on December 9, 2004 and * Opening a new Worksite Pharmacy location at the Mohegan Sun Casino that is dedicated to serving the casino's more than 10,000 employees and their dependants. About the Company DrugMax, Inc. -- http://www.drugmax.com/-- is a specialty pharmacy and drug distribution provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. DrugMax works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. The Company is focused on building an integrated specialty drug distribution platform through its drug distribution and specialty pharmacy operations. DrugMax operates two drug distribution facilities, under the Valley Drug Company and Valley Drug South names, and 77 specialty pharmacies in 13 states under the Arrow Pharmacy & Nutrition Center and Familymeds Pharmacy brand names. The DrugMax platform is designed to provide services for the treatment of acute and complex health diseases including chronic medical conditions such as cancer, diabetes and pain management. The Company often serves defined population groups on an exclusive, closed panel basis to maintain costs and improve patient outcomes. DrugMax offers a comprehensive selection of brand name and generic pharmaceuticals, non-prescription healthcare-related products, and diagnostic supplies to our patients, independent pharmacies, physicians, clinics, long- term care and assisted living centers. The Company's online product offering can be found at http://www.familymeds.com/ ENRON: Bankruptcy Court Approves Gas Transmission Settlement ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement between Enron North America Corp. and Gas Transmission Northwest Corp. f/k/a PG&E Gas Transmission Northwest Corp. The Settlement Agreement provides that: a. ENA will pay Gas Transmission $327,154 as administrative expense; b. The ENA Claim will be reduced to $3,275,653 and allowed as a general unsecured claim; c. The Enron Claim will be disallowed and expunged in its entirety; d. The parties will exchange a mutual release of claims relating to the Firm Agreements, the Enron Guarantee, the Parking Agreement, the Imbalance Agreement and the Parked Gas; e. Gas Transmission will withdraw the Administrative Expense Application with prejudice; and f. All right, title and interest in and to the Parked Gas will reside with, and will be held by, Gas Transmission free and clear of any claims or interests of ENA. As reported in the Troubled Company Reporter on March 29, 2005, prior to the Petition Date, Enron North America Corp. and Gas Transmission Northwest Corp. f/k/a PG&E Gas Transmission Northwest Corp., entered into: -- a number of firm transportation agreements; -- an imbalance service agreement; and -- a parking service agreement. Pursuant to the Parking Agreement, ENA parked on Gas Transmission's pipeline 10,787 MMBtu in net volume of natural gas. As of February 2005, the Parked Gas remains on Gas Transmission's pipeline. On October 15, 2002, Gas Transmission filed two claims against the Debtors: * Claim No. 13166 for $3,512,182 against ENA; and * Claim No. 13164 for $632 against Enron Energy Services, Inc. In the ENA Claim, Gas Transmission asserts amounts allegedly due under the Firm Agreements and the Parking Agreement. The Court later disallowed the EESI Claim at the Debtors' request. On May 3, 2004, Gas Transmission filed Claim No. 24766 against Enron Corp. for $3,512,182. Gas Transmission based the Enron Claim on amounts allegedly due pursuant to a guarantee by Enron on ENA's obligations under the Firm Agreements, the Imbalance Agreement and the Parking Agreement. On September 9, 2004, Gas Transmission filed an application for payment of a $2,881,345 administrative expense claim. The administrative expense claim represents: Actual transportation charges $482,120 Parking fees 323,151 Firm reservation charges 2,076,074 ENA contests Gas Transmission's administrative priority claim for the $2,076,074 firm reservation charges. With the exception of four days' use of the firm transportation capacity in December 2001, ENA contends it did not utilize the capacity under the Firm Agreements after the Petition Date. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 141; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Judge Gonzalez Okays SPCP & TECO Settlement ------------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, nine Enron entities -- Enron Corp., EPC Estate Services, Inc. f/k/a NEPCO, Enron Power Marketing, Inc., Enron Energy Services Operations, Inc., Enron Energy Services, Inc., Enron North America Corp., Enron Energy Services North America, Inc., Enron Energy Information Solutions, Inc., and NEPCO Power Procurement Company, a division of Enron Equipment Procurement Company -- asked the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement of claims held or controlled by SPCP Group LLC and TECO Energy, Inc. According Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, the Settlement is a comprehensive resolution of various claims, disputes and litigation involving the Enron Entities, and TECO Energy, SPCP Group, Frontera Generation Limited Partnership and Electric Reliability Council of Texas, Inc. Project Claims Prior to the commencement of its Chapter 11 case, NEPCO, an indirect wholly owned subsidiary of Enron, engaged in the business of designing, procuring necessary equipment for, constructing and starting up power generating facilities for clients around the world. Between June 2000 and February 2001, TECO contracted with NEPCO with respect to the construction of four power plants pursuant to four separate contracts. The Four Projects consist of: -- a Project located in Arkansas owned by Union Power Partners, LP; -- a Project located in Arizona owned by Panda Gila River, LP; -- a Project located in Mississippi owned by TPS McAdams, LLC; and -- a Project located in Arkansas owned by TPS Dell, LLC. Enron guaranteed NEPCO's performance with respect to the Projects under the NEPCO Contracts. After Enron commenced its chapter 11 case, but before NEPCO commenced its case, the Project Owners exercised their contractual right to terminate the NEPCO Contracts. Pursuant to the NEPCO Contracts, upon termination for cause, the Owners are entitled to recover from NEPCO their "costs to complete" the Project in excess of the fixed price established by the NEPCO Contracts. Mr. Troop relates that the Project Owners filed proofs of claim against NEPCO and Enron asserting claims for, among others, their actual or anticipated "costs to complete" the Projects in excess of the fixed price established by the NEPCO Contracts less the amount of any proceeds from letters of credit the Project Owners were able to draw with respect to the Projects: Project Owner Debtor Claim No. Claim Amount ------------- ------ --------- ------------ Union Power NEPCO 13761 $114,567,060 Enron 14244 114,567,060 NEPCO 23205 124,327,204 Enron 23204 124,327,204 Panda Gila NEPCO 13717 56,648,617 Enron 14229 56,648,617 NEPCO 23203 78,125,244 Enron 23206 78,125,244 TPS McAdams NEPCO 10820 1,876,641 Enron 10821 11,876,641 Enron 23207 19,724,430 NEPCO 23200 19,724,430 Enron 23329 19,724,430 TPS Dell NEPCO 10823 34,105,940 Enron 10822 34,105,940 NEPCO 23201 41,295,646 Enron 23202 41,295,646 The Project Claims against NEPCO are based on the NEPCO Contracts, Mr. Troop explains. The Project Claims against Enron are based on the NEPCO Guaranties. Similarly, the Debtors scheduled multiple contingent, unliquidated or disputed liabilities with respect to the Projects in their Schedules of Assets and Liabilities. TECO came to control each of the Projects and each of the Project Claims. Each of the Project Claims subsequently was transferred to SPCP, although TECO retained an interest in the Claims. The Debtors estimate the claims of SPCP with respect to the contracts for the four Projects to aggregate: -- $263,472,254 against NEPCO based on the NEPCO Contracts; and -- $263,472,254 against Enron based on the NEPCO Guaranties. During the course of informal discovery however, TECO, for itself and SPCP, asserted that the proper amount of its claims aggregate $305,403,418 against each of Enron and NEPCO. The "Swept Funds" Litigation On February 13, 2003, the Project Owners commenced an adversary proceeding against Enron, NEPCO and NPPC. The Project Owners alleged that the in-excess of $350,000,000 paid to NEPCO or NPPC in connection with the Projects that were "swept" into Enron's centralized cash management system, should be impressed with a constructive trust in the Owners' favor. The Project Owners subsequently transferred to TECO the Swept Funds Litigation and their interests in it. The Debtors dispute that TECO can succeed in the Swept Funds Litigation. Frontera Claims On October 11, 2002, Frontera filed Claim No. 10832 against EPMI and Claim No. 10831 against Enron, each for $7,212,926. Frontera transferred the Frontera Claims to TECO, which subsequently transferred the Claims to SPCP. The Frontera Claims assert that EPMI owes the claimholder $3,410,324 for electricity purchased and then sold, as so-called Ancillary Services, through ERCOT from July 1, 2001, through November 2001 -- the Frontera Energy Transaction. A claim for the same amount is asserted against Enron based on Enron's alleged guaranty of obligations owed by EPMI to Frontera -- the First Frontera Guaranty. Additionally, the Frontera Claims assert that EPMI owes $3,802,601 for various call options purchased from EPMI. A claim is also asserted in the same amount against Enron based on Enron's guaranty of obligations owed by EPMI to Frontera. Guaranty Avoidance Litigation On December 1, 2003, Enron commenced an adversary proceeding against Frontera, TECO and SPCP seeking to avoid the First Frontera Guaranty as a fraudulent transfer. TECO and SPCP dispute that the Frontera Guaranty can be avoided. EPMI objected to Claim No. 10832. ERCOT Litigation On January 3, 2002, Frontera commenced an adversary proceeding against EPMI and ERCOT. Frontera alleges that ERCOT owed $2,653,893 as of November 30, 2003 -- the Gross Amount, as payment for so-called "OOMC Services, OOME Services and Resource Imbalance" arising from electricity generated by Frontera from July 1, 2001, though November 30, 2001. ERCOT credited the Gross Amount to and debited it from EPMI as the "Qualified Scheduling Entity" for Frontera. Frontera has sought to compel ERCOT to pay the amount directly to Frontera, rather than to EPMI. EPMI disputed that Frontera has any interest in any funds owed EPMI by ERCOT. ERCOT now claims the right to setoff $1,380,995 against the Gross Amount due to EPMI claiming that this amount is owed to ERCOT by EPMI, as the "Qualified Scheduling Entity." At ERCOT's request, the Court on December 10, 2002, granted it relief from stay and ruled that ERCOT could setoff the amounts EPMI owed to ERCOT against the amounts ERCOT owed to EPMI. Mr. Troop says that there is a significant dispute among the parties about: -- the proper amount due from ERCOT and to whom, -- the proper amount due to ERCOT and from whom, and -- the proper amount of any set-off rights of ERCOT. The Debtors also scheduled various potential liabilities relating to Frontera and ERCOT in their Schedules. TECO BGA Claim On October 11, 2002, TECO BGA, Inc., filed Claim No. 10824 against EESO for $272,481. The TECO BGA Claim asserts a claim due under a contract with EESO. EESO has been unable to confirm the proper amount of the Claim. TECO BGA later transferred the Claim to TECO, which subsequently transferred the Claim to SPCP. The Debtors scheduled various potential liabilities relating to TECO BGA. Peoples Gas Claim On October 11, 2002, Peoples Gas System filed Claim No. 10829 for $3,191,613 against EESI, alleging amounts due in connection with an energy purchase transaction. EESI has been unable to confirm the proper amount of the Peoples Gas Claim. Peoples Gas transferred the Claim to TECO, which later transferred the Claim to SPCP. Peoples Gas also filed a claim against Enron in an unliquidated amount -- Claim No. 10827 -- which was subsequently withdrawn. Peoples Gas System filed Claim No. 10828 against ENA for $75,139. Claim No. 10828 was also withdrawn. The Debtors scheduled various contingent, unliquidated and/or disputed liabilities with respect to Peoples Gas. Settlement Agreement To resolve the Project Claims, the Swept Funds Litigation, the Frontera Claims, the Guaranty Avoidance Litigation, the ERCOT Litigation, the TECO BGA Claim, the Peoples Gas Claim, and the related disputes and Scheduled Liabilities, the Parties entered into the Settlement Agreement. The Settlement provides that: a. SPCP will be allowed a Class 67 claim against NEPCO for $237,623,726 and a Class 185 claim against Enron for the same amount. b. SPCP will share any distributions received on account of the allowed claims with TECO pursuant to a separate agreement. c. All other Project Claims, the Frontera Claims, the TECO BGA Claim and the Peoples Gas Claim will be withdrawn with prejudice and expunged. d. All related Scheduled Liabilities will be disallowed and expunged. e. The Swept Funds Litigation, the Guaranty Avoidance Litigation and the ERCOT Litigation will be dismissed with prejudice. d. Prior to the dismissal of the ERCOT Litigation, ERCOT will pay $1,272,898 to EPMI, representing the balance of funds and accrued interest held by ERCOT as of December 20, 2004, as adjusted for interest and any other charges under the ERCOT Protocols accruing from December 21, 2004, through April 14, 2005. e. EPMI's objection to Claim No. 10832 will be deemed withdrawn. f. The parties will release each other from all claims they may have against each other relating to the Withdrawn Claims, the Project Claims, the Scheduled Liabilities, the NEPCO Contracts, the NEPCO Guaranties, the Swept Funds Litigation, the Frontera Energy Transaction, the First Frontera Guaranty, the Guaranty Avoidance Litigation, the ERCOT Litigation, the TECO BGA Energy Transaction and the Peoples Gas Transaction. * * * Judge Gonzalez approves the Settlement. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 141; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXAM USA: Likely Default Triggers Going Concern Doubt ----------------------------------------------------- EXAM USA, Inc., incurred losses during the nine months ended February 28, 2005, totaling $1,181,748. EXAM USA may continue to incur losses during fiscal 2005 due to 1) increased costs to provide infrastructure necessary to operate as a public company, and 2) start-up costs incurred with the new store that opened in December 2004, as well as management's decision to increase payouts at that store to attract and retain customers. The Company's current liabilities exceed its current assets (working capital deficiency) totaling approximately $4.5 million caused by short-term notes due in August 2005 through October 2005. Management has historically had good relations with its banks and management believes the notes will be refinanced in the normal course of business based on historical actions. The Company is seeking United States notes aggregating $50 million, or more, or management would consider equity capital in the amount of $5 million, or more. EXAM USA has available credit from a financial institution in the amount of $5.7 million. In the event the Company requires capital, controlling shareholders will contribute additional capital as needed to continue to operate in the normal course of business, to the extent they are financially able to do so. There are no assurances that the notes will be refinanced when due, or the capital will be raised. In the event EXAM USA is unable to meet its obligations as they become due, there will likely be substantial doubt about its ability to continue as a going concern. The Company's obligations are collateralized by substantially all of its assets. As a common practice in Japan, the Company's collateral is not allocated to each commercial bank loan. Rather, the commercial banks hold an interest in substantially all of the Company's assets together; there are no first or second positions. Upon default of the loans, the Company's assets would be liquidated and the proceeds from the liquidation would be distributed to the commercial banks based on liquidation preference. Interest expense related to long-term debt amounted to $613,086 and $391,954, during the nine months ended February 28, 2005 and February 29, 2004 (unaudited), respectively. On December 27, 2004, the Company entered into an agreement whereby they obtained financing in the amount of 250,000,000 yen (approximately $2,400,000), which expires on November 30, 2009. In connection therewith, the Company agreed to a contract to pay interest at 1.11%, per annum on the face amount of the contract, offset by the receipt of interest at 3-month TIBOR -- Tokyo Interbank Offered Rate. Interest payments commenced starting February 2005 and are payable at the end of every three months thereafter until expiration. The effect of the arrangement was to increase interest expense by approximately $5,000 for the nine months end February 28, 2005. The Company was induced to enter into the interest swap contract to obtain financing. On the date the contract was executed, the fair value of the Company's total contract liabilities aggregated approximately $160,000 (therefore a cost of the borrowings), and accordingly, such amounts were reported as a discount to the notes, and accreted to interest expense using the effective interest method. The fair values of EXAM's interest rate swaps are the estimated amounts it would receive, or pay, to terminate the agreements as of the reporting dates as determined by the bank. As of February 28, 2005, the fair value of the outstanding swaps was $134,573. EXAM USA's level of indebtedness presents other risks to investors, including the possibility that the Company may be unable to generate cash sufficient to pay the principal of, and interest on, its indebtedness when due; and that it may not be able to meet tests and covenants of such debt agreements and achieve satisfactory resolution of such non-compliance with the lenders. In such an event, the holders of the Company's indebtedness may be able to declare all indebtedness owing to them to be due and payable immediately, and proceed against any collateral securing such indebtedness. These actions could limit EXAM's ability to borrow additional funds and would likely have a material adverse effect on its business and results of operations. EXAM Co., Ltd, previously known as Kisorin Co., Ltd. a Japanese corporation, was incorporated in 1969. On June 10, 2003, EXAM established EXAM USA, Inc., a Delaware corporation, to effect a share-exchange agreement with EXAM, whereby EXAM became a wholly owned subsidiary of EXAM USA. FISHER SCIENTIFIC: Noteholders Agree to Amend 8-1/8% Sr. Indenture ------------------------------------------------------------------ A majority of holders in principal amount of Fisher Scientific International Inc.'s (NYSE: FSH) outstanding 8-1/8% senior subordinated notes due 2012 provided the requisite consents to amend the indenture governing the notes. Holders who validly tendered their notes on April 27, the consent payment deadline, receive the total consideration, which includes a $30.00 per $1,000 principal amount consent payment. The tender offer remains open and is scheduled to expire at midnight EDT on May 11 unless extended. However, holders who tender after the consent payment deadline will receive the total consideration minus the $30.00 consent payment. Holders may no longer withdraw notes previously or hereafter tendered, except as described in the Offer to Purchase dated April 14, 2005. Requests for documents may be directed to Global Bondholder Services Corporation, the depositary and information agent for the offer, at 212-430-3774 (collect) or 866-804-2200 (U.S. toll-free). Additional information concerning the tender offer and consent solicitation may be obtained by contacting Banc of America Securities LLC, High Yield Special Products, at 704-388-9217 (collect) or 888-292-0070 (U.S. toll-free). About the Company Fisher Scientific International Inc. (NYSE: FSH) provides products and services to the scientific community. Fisher facilitates discovery by supplying researchers and clinicians in labs around the world with the tools they need. Fisher serves pharmaceutical and biotech companies; colleges and universities; medical-research institutions; hospitals; reference, quality-control, process- control and R&D labs in various industries; as well as government agencies. From biochemicals, cell-culture media and proprietary RNAi technology to rapid-diagnostic tests, safety products and other consumable supplies, Fisher provides more than 600,000 products and services. This broad offering, combined with Fisher's globally integrated supply chain and unmatched sales and marketing presence, helps make our 350,000 customers more efficient and effective at what they do. Founded in 1902, Fisher Scientific is a FORTUNE 500 company and is a component of the S&P 500 Index. Fisher has approximately 17,500 employees worldwide, and our annual revenues are expected to exceed $5.5 billion in 2005. Fisher Scientific is a company committed to high standards and delivering on our promises -- to customers, shareholders and employees alike. Additional information about Fisher is available on the company's Web site at http://www.fisherscientific.com/ * * * Moody's Investors Service and Standard & Poor's assigned single-B ratings to Fisher Scientific's: -- 6-3/4% senior subordinated notes due Aug. 15, 2014, -- 8% senior subordinated notes due Sept. 1, 2013, and -- 8-1/8% senior subordinated notes due May 1, 2012. H&E EQUIPMENT: Extends Consent Solicitation on Senior Notes ----------------------------------------------------------- H&E Equipment Services L.L.C. and H&E Finance Corp. extended to 5:00 p.m., New York City time, on Tuesday, May 3, 2005, the expiration date for their previously announced consent solicitation under the indentures governing their 11-1/8% Senior Secured Notes due 2012 and their 12-1/2% Senior Subordinated Notes due 2013. Seeks Waiver of Reporting Defaults The consent solicitation seeks to amend the indentures to increase the amount of indebtedness that the Company may incur under its senior revolving credit facility, and would extend the time by which the Company is required to file its 2004 Annual Report on Form 10-K and to comply with related 2004 information reporting requirements under the indentures. The Company and H&E Finance Corp. are seeking also a waiver of certain defaults under the indentures related to the Company's inability to file its 2004 Annual Report on Form 10-K and to comply with such 2004 information reporting requirements. Details of the proposed amendments and waivers are contained in the Company's Consent Solicitation Statement, dated April 11, 2005, and the related Consent Letter, which have been furnished to holders of the notes. The record date for the solicitation is April 8, 2005. The Company has retained Credit Suisse First Boston LLC and UBS Securities LLC to serve as solicitation agents for the solicitation, and Morrow & Co., Inc. to serve as the information and tabulation agent. Copies of the Consent Solicitation Statement and related information are available on request from the information agent by telephone at (212) 754-8000, or in writing at 445 Park Avenue, 5th Floor, New York, New York 10022. The consent solicitation and the payment of the consent fees remain subject to all of the terms and conditions contained in the Consent Solicitation Statement. Questions regarding the solicitation may be directed to: Credit Suisse First Boston LLC at (800) 820-1653 (toll free) or (212) 538-4807 (collect), and UBS Securities LLC at (888) 722-9555 x4210 (toll-free) or (203) 719-4210 (collect). About H&E Equipment Services L.L.C. H&E Equipment Services L.L.C. is one of the largest integrated equipment rental, service and sales companies in the United States of America, with an integrated network of 39 facilities, most of which have full service capabilities, and a workforce that includes a highly-skilled group of service technicians and separate and distinct rental and equipment sales forces. In addition to renting equipment, the Company also sells new and used equipment and provides extensive parts and service support. This integrated model enables the Company to effectively manage key aspects of its rental fleet through reduced equipment acquisition costs, efficient maintenance and profitable disposition of rental equipment. The Company generates a significant portion of its gross profit from parts sales and service revenues. HARBOURVIEW CDO: Moody's Junks $26.25 Mil. Class C Secured Notes ---------------------------------------------------------------- Moody's Investors Service downgraded three tranches of Notes issued by HarbourView CDO III, Ltd. According to Moody's, this rating action was prompted by rapid and severe deterioration in the overall credit quality of the underlying assets and loss of par due to defaults. Moody's noted that the CDO is failing its overcollateralization tests, and continues to violate its weighted average rating factor test. Affected Tranches: Tranche description: Class A First Priority Senior Secured Floating Rate Notes Due 2031 Previous Rating: Aaa on watch for possible downgrade New Rating: Aa3 on watch for possible downgrade Tranche description: Class B Second Priority Senior Secured Floating rate Notes Due 2036 Previous Rating: Aa2 on watch for possible downgrade New Rating: Ba1 on watch for possible downgrade Tranche description: Class C Third Priority Secured Floating Rate Notes Due 2036 Previous Rating: Ba3 on watch for possible downgrade New Rating: C Class Description: (1) U.S. $311,250,000 Class A First Priority Senior Secured Floating Rate Notes Due 2031 from Aaa on watch for possible downgrade to Aa3 on watch for possible downgrade. (2) U.S. $22,500,000 Class B Second Priority Senior Secured Floating rate Notes Due 2036 from Aa2 on watch for possible downgrade to Ba1 on watch for possible downgrade. (3) U.S. $26,250,000 Class C Third Priority Secured Floating Rate Notes Due 2036 from Ba3 on watch for possible downgrade to C. HUNTINGTON ORCHARDS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Huntington Orchards, Inc. 1259 North Etna Road Huntington, Indiana 46750 Bankruptcy Case No.: 05-11958 Type of Business: The Debtor sells greenhouse plants and fruits. Chapter 11 Petition Date: April 27, 2005 Court: Northern District of Indiana (Fort Wayne Division) Judge: Robert E. Grant Debtor's Counsel: Daniel Serban, Esq. 1016 Standard Federal Plaza 200 East Main Street Fort Wayne, Indiana 46802 Total Assets: $2,218,611 Total Debts: $2,182,318 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Phillip and Alice Foster $206,981 1259 North Etna Road Huntington, IN 46750 Wolf Brothers Farm $158,563 13622 South 700 West Wanatah, IN 46390 Carl Brehob & Sons $92,527 3821 Brehob Road Indianapolis, IN 46217 Edd's Supplies $57,905 Mike Ault Seed $44,837 Cordes Farms $44,034 Royster Clark $32,809 North Central CO-OP $26,735 Denise Schloemer $25,000 Steve Hileman $25,000 Dawn Stanley $25,000 Triwall $24,711 Kunkle Farms $17,100 Parrish Leasing $16,050 Advanta Business Card $15,793 Keith Overton $15,000 Citibusiness Platinum Select $13,477 Eason Horticultural $12,768 Pinter Brothers Greenhouse $11,888 Capital One B 1928 $11,790 IKON OFFICE: Will Release Second Quarter Results Today ------------------------------------------------------ IKON Office Solutions (NYSE:IKN) will report preliminary financial results for the second quarter of fiscal 2005 today, Apr. 28, 2005. The company also said it is conducting a review of its billing controls and reserve practices for trade accounts receivable, and that this review will not be completed by Apr. 28. Sarbanes-Oxley Act During an analysis of aged trade receivables conducted during the quarter, and in connection with performing self-assessment and testing of its internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, the company identified deficiencies in the processes and timeliness by which it issues and adjusts certain invoices. The identified deficiencies result from the centralization of billing centers and the migration to a new billing platform and relate to the company's U.S. trade accounts receivable, and do not affect receivables arising under the company's European, Canadian and Mexican operations, receivables owing from General Electric Capital Corporation ("GE") under the Company's leasing relationship with GE, or receivables arising under its Legal Document Service and Business Document Service businesses. In connection with these developments, management has initiated a comprehensive review to determine the extent to which certain trade receivables as of March 31, 2005 may be overstated due to billing errors and insufficient reserves relating to aged receivables. Preliminary sample data suggest that trade receivables as of March 31, 2005 may be overstated by an estimated $45 million out of a total trade accounts receivables balance of $376 million. Total accounts receivable as of March 31, 2005 were $721 million. Management believes that the estimated overstatement represents a cumulative effect over multiple periods, but stressed that the estimate relates to the company's balance sheet as of March 31, 2005, and is based only on the sample data assessed to date. As the company completes its detailed analysis, it will assess the accuracy of the estimate, evaluate the impact on prior periods, and determine the extent to which it will be required to restate results for any prior periods. Any impact is expected to be recorded as a non-cash charge that will not impact cash flow from operations. Due to the time and effort involved in completing the required analysis, the company anticipates that it will need to delay filing its Form 10- Q for the fiscal quarter ended March 31, 2005. Matthew J. Espe, IKON's Chairman and Chief Executive Officer commented, "We identified this issue and are acting quickly to fully resolve it. We are committed to taking every step to fix not only the current issue, but also its root causes so that we can remove any barriers to creating profitable growth going forward." The company anticipates that it will report preliminary second quarter results from continuing operations that are consistent with its previously communicated expectations of earnings per diluted share in the range of $0.14 to $0.16, excluding its previously announced restructuring charges and charges related to the pending review of its receivables and related reserves, with operating cash flows exceeding management expectations. The company also anticipates that it will report fiscal 2005 results from continuing operations that are consistent with its previously communicated expectations of earnings per diluted share in the range of $0.63 to $0.68, although at the low end of that range, again excluding the impact of the restructuring charges and the pending receivables and reserves review. As a result of the recently announced update to the requirements of the Securities and Exchange Commission relating to share based payments, the Company expects to begin expensing stock options in its first quarter of fiscal 2006. About the Company IKON Office Solutions -- http://www.ikon.com/-- the world's largest independent channel for copier, printer and MFP technologies, delivers integrated document management solutions and systems, enabling customers worldwide to improve document workflow and increase efficiency. IKON integrates best-in-class systems from leading manufacturers, such as Canon, Ricoh, Konica Minolta, EFI and HP, and document management software from companies like Captaris, EMC (Documentum), Kofax and others, to deliver tailored, high-value solutions implemented and supported by its global services organization - IKON Enterprise Services. IKON represents one of the industry's broadest portfolios of document management services, including professional services, on- site managed services, legal document services, customized workflow solutions, and comprehensive support through its service force of approximately 16,000 employees, including its team of about 7,000 customer service technicians and support resources worldwide. With Fiscal 2004 revenues of $4.65 billion, IKON has approximately 500 locations throughout North America and Western Europe. * * * As reported in the Troubled Company Reporter on Jan. 4, 2005, Moody's assigned a first time speculative grade liquidity rating of SGL-1 for IKON Office Solutions, indicating very good liquidity. The rating considers its $473 million of cash balances at September 2004, expectations of adequate cash flow from operations to finance capital expenditures, and good room under the covenants in its largely undrawn $200 million secured bank facility, all in the context of its public debt maturities, which total approximately $57 million over the next twelve months. INTERSTATE BAKERIES: 297 Trade Creditors Transfer $1.8MM in Claims ------------------------------------------------------------------ From December 15 to December 17, 2004, the Clerk of U.S. Bankruptcy Court for the Western District of Missouri recorded 297 claim transfers to: (a) Debt Acquisition Company of America V, LLC Creditor Claim Amount -------- ------------ 247 Express Courier Inc. $68 A-1 Auto Parts 921 A-1 Heating & Air Conditioning 105 ABC Fire Extinguisher Sales & Service 73 ABC Sewer & Drain Cleaning 115 A-C Electric Inc. 259 Action Heating And Cooling 349 Adams Refrigeration Co., Inc. 170 Advanced Tree Service 3,900 Air Brake & Equipment 574 Air Cleaning Specialists 128 Akron Bearing Co., Inc. 109 Allens Cleaning Co. 90 Allied Technical Services Corp. 5,037 Alsco 223 Animal Damage Control by Trapper Jon 60 Anthony Paterno 1,177 Apple 1 Art Studios 205 Arbury Cochran 105 Arrow Trailer Signs 159 Ashley Electric Inc. 331 Associated Fire Protection Inc. 68 Atlas Termite & Pest Control Inc. 95 Automatic Firing Inc. 442 Ayden Diesel Inc. 335 B & K Equipment 307 Ball Heating & AC Inc. 444 Barry Herter Union City Cleaning 180 Batzner Pest Mgmt., Inc. 133 Best Western Capital Inn 187 Bills Lawn & Garden 138 Bills Lock & Safe 134 Blair Unlimited 90 BLR Business & Legal Reports 938 Blue Eagle Towing 72 Bob Mehrman 580 Bold Machine Inc. 251 Bonanza Pest Control Inc. 81 Booker Window Cleaning 190 Brannon Electric Motor Co. 473 Brashear Hvac 498 Brown Electric Co. 65 Buffalo Spring & Equipment Inc. 571 Building Maintenance Service Co. 100 Buono Pest Control 160 Business & Legal Reports Inc. 1,741 Business Systems Inc. 103 Buzy Bee Board-Up 492 Calvins Distributing 118 Canteen 184 Caskey Pest Control 56 Catering by Design 600 Central Elevator Company Inc. 70 CGCO 01906_39S016 226 Chambers Heating & Plumbing 266 Charles Caldwell Lawncare 150 Charlie Miller Lawn Service 90 Cheryl Hazen 59 Cheryl Pratt 185 Chets Lock & Key Service 70 Cleancity Janitor Service Inc. 59 Climatengineering Inc. 153 Complete Commercial Cleaning 320 Consumers Hardware 50 Cooneys Locksmith 129 Copy Shoppe Printing Inc. 70-005 598 COR 70019033_39S011 88 Cosha Inc. 218 Crandallco Inc. 75 Creative Graphics Of Prior Lake IN 81 Creditors Edge 315 Crouch Fire And Safety 99 CSI of St. Louis Inc. 110 Cullum & Brown of Wichita Inc. 1,728 D&E Complete Lawn Care Service 140 Dan Horchers Service Inc. 350 Darryl Exum Kleen Cut Lawn Service 1,350 Data Imaging Solutions Inc. 518 Davenport Towing & Recovery 325 Daves Glass & Mirror Shop 430 Daves Towing Specialists 81 Davis Sign & Lighting 335 Dean Foods NC Inc., Cust. 115249 447 Defiance Publishing Co. 53 Denneys Lawn Care 568 Dobles GM Parts Depot 99 Don Bowles 290 Dons Mobile Glass Inc. 210 Door Tech 424 Dubak Elec. Maintenance Corp. 613 E & G Terminal Inc. 181 Econoclean Cleaning Service Commerce 1,350 Ed Schmidt Pontiac - GMC 99 Educational Services 695 Elwood Call-Leader 142 Employee Screening Serv. Inc. 60 ERT Waste Services 365 Evening Times 60 Farmington Auto Supply Co. 60 Fast Glass Inc. 1,178 Frankfort Plant Board 423 Fraser Advanced Information System 131 Garden st. Trailer jockey 1,991 Geo Cummings Landscaping 193 Georges Door Service Inc. 112 Gibson Heating & Air Conditioning Inc. 69 Greg Pearson 55 Hank Forshey 420 Hardmans Inc. 200 Harms Florist 156 Havelock Refuse 172 Hawkeye Fire & Safety Co. 60 Heritage Products Inc. 609 Holiday World & Splashin Safari 349 Homestead Inn 405 Horizon Glass Inc. 247 I-5 Glass Co. 90 Integrated Audio Systems 396 Interstate Batteries of Monroe 306 Interstate Batteries of Southwest Missouri 58 Interstate Battery of Chicago 134 Interstate Battery Systems 58 Island Environmental Services Inc. 1,013 Jacksons Tire Service Inc. 237 James A. Burton & Shirley J. Burton 88 James K. Russell 82 Jefferson City Auto Supply Co. 109 Jim & Harolds Garage 528 Jim Mcmichael Signs & Truck Painting 417 Jimmy's Wrecker Service Jimmy A. Howard 370 Jims Towing 170 Joe L. Wallace MD PA 160 Kathleen Boone Kathys Cleaning 150 Katy Otte 120 KCS Catering 113 Lampton Electric Inc. 246 Larry Tennant AllClean 210 Macfarlene Office Products Inc. 94 Macs Hydraulic Jack Service Inc. 264 Magic Scape 1,080 McCullough Water 100 Metro Airport Truck 507 Michael D. Wilcox 210 Middlesex Welding Sales Co., Inc. 78 Missoula Textile Srvs. 124-0000 81 Noonan Landscaping 1,688 Nor Air Freight Delivery Service 50 Nor-Cal Beverage Co. 273 Northern Weathermakers HVAC Inc. 911 Northwest Electric Motor Co. 657 Novak Sanitary Service 87 Nutec Systems Inc. 486 On-Site Pressure Washing 5,298 Ontario Sanitary 30466 54 Ontario Sanitary Svc. 30100 69 ORR Automotive 471 Palladium-Item 415 Palmer Spring Co. 89 Payne Sign Company 70 Peterbilt Of Springfield Inc. 938 Plunks Wrecker Service 156 Polar Water 79 Popes Janitorial Service 400 PSI 567 Purchase Ford 82 R & S Towing 313 R J Kimball Const. Inc. 129 R&S Erection San Francisco Inc. 190 Readys Ice Co. 63 Reno Drain Oil Service 50 Renzo Dairy 343 Ritz Food Service 154 Robert A. Milliken III 300 Robin Federmeyer 81 Rodney Jones 305 Rundes Welding & Driveline 84 Seymours Restaurant 436 Shawnee Biscuit Company 364 Shell Rapid Lube 234 Silvey Plumbing 125 Southern Historical New Inc. 300 Sunshine Dairy Foods 689 The Cleaning Team 70 Top Notch Lawn Care 50 Toshiba Business Solutions 285 Tricounty Sheet Metal 70 Village Motors Inc. 233 Walpole Tire Service LLC 151 Water Brothers Contractors Inc. 52 Waukegan Auto Radiator & AC 75 Weber Fire & Safety Equip Co. Inc. 305 WG&LC 12028-12028_53S679 602 Wheeler Heating & Air Conditioning 94 Windam Sparkle 51 Z & W Services 85 (b) Fair Harbor Capital, LLC Creditor Claim Amount -------- ------------ A-Accurate Auto Glass Ltd. $630 Atlanta Commercial Tire 965 Eldorado Forklift 4,411 Guadalupe Montes Solorioa&L Cleaning 1,275 Harris Plumbing and Heating 21,890 (c) Halcyon Fund, L.P. Creditor Claim Amount -------- ------------ Color Concepts $53,890 Coast Packaging 291,266 NPP Packaging Graphic Specialist Inc. 15,495 (d) KIA Factors, Inc. Creditor Claim Amount -------- ------------ Shook Hardy & Bacon LLP $277,504 (e) KS Capital Partners, L.P. Creditor Claim Amount -------- ------------ Conan Corporation $211,735 (f) Madison Niche Opportunities, LLC Creditor Claim Amount -------- ------------ Pan-glow $478,547 (g) Revenue Management Creditor Claim Amount -------- ------------ Admiral Security $1,269 Advanced Mobile Wash 2,317 Allied Equip. Service Corp. 1,156 Anthony Patio 1,177 Avon Electric Door Co. 1,032 Baker Commodities 3,700 Burge Publishing 1,756 Cantos Corp. 223 1,185 Coast Counties Truck & Equip. Co. 9,198 Commercial Door Company 1,258 Danny Wayne Cain 2,105 Ear hart Petroleum Inc. 26,558 El Johnston Inc. 1,086 Emergency Breakdown Svc. 1,600 Enviro-zyme International Inc. 1,500 Merit Oil Co. 98,826 Neals Truck Parts 6,821 Norths Bakery California Inc. 16,421 Point Spring & Driveshaft Co. 16,001 Ranco Security Inc. 11,572 Rennie and Clark Inc. 1,456 Retail Merchandising Services 16,824 RK Environment Services LLC 2,045 Roadside Equip Repair Inc. 1,981 Ron Hess 3,234 Sethness Products Co. 5,506 Silverbow Honey Co. Inc. 12,376 Sy-Cor Exhaust Systems 18,659 Toledo Auto Electric 4,299 Yoder Oil Service 14,518 (h) Sierra Liquidity Fund, LLC Creditor Claim Amount -------- ------------ ADA Coca Cola Bottling Co. $1,101 Fleet Products 7,188 H & H Diesel Service, Inc. 2,022 Jack of All Trades of Ohio 3,594 Pro Wash, Inc. 1,198 Select Media Group 8,825 Welcome Card 4,357 (i) Trade-Debt.net Creditor Claim Amount -------- ------------ AAA Auger $203 Able Disposal 771 Americinn Sauk Centre 399 Baker-Mitchell Co. 932 Bobby & Lawn Care 698 Butch's Key Shop 117 Charles M. Burnstead 558 Cantos Corp. 064 1,679 Evergreen Irrigation & Landscaping 135 Fairfield Sunoco 2,947 Ferrite Industries Inc. 208 Filter Fresh St. Louis 104 Flathead Electric Corp. 1000751 439 Foster Auto Body 382 George Wichs d/b/a Diamond State Lawn 545 Guaranty Glass Inc. 386 Harrison Mediquick 150 Henry Qwik Lube 285 Holiday Inn 517 Hopkins Chevrolet 267 Hyvee Food Stores 1387 200 Interstate Batteries of Greater Buffalo 630 Jacks Glass Inc. 200 Janssen Refrigeration 709 Jason Shaw Shaws Pressure Cleaning 1,223 Licatas 236 L I Hardware 329 L L Peet Construction 308 Michael D. Wilcox 210 Microtel Inn & Suites 173 Mow Money Lawn Services 900 Murzan Sanitary Systems Inc. 708 Napa-Marion 341 Overhead Door Company of Quincy 571 Paramount Pest Control 722 Queen City Office Machines Inc. 399 Reflections Unlimited 608 Roselee Wickman 100 Royal Publishing 295 Roy's Diesel Injection Service 442 Select Force Inc. 301 Service Now Heating & Air 158 Sparkle Wash of Denver 739 The Glass Authority 772 The Network Companies 131 Thomas Door Controls Inc. 174 Universal Mail Delivery Service 290 Valley Industrial & Family Medical 150 VIP Express 653 Wayne Products 380 Webber Office Supply 536 Webster Safe & Lock Company Inc. 161 Wiginton Fire Systems 900 Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: To Consolidate Fla. Profit Center Operations ----------------------------------------------------------------- Interstate Bakeries Corporation (OTC: IBCIQ) plans to consolidate operations in its Florida Profit Center, as part of IBC's previously announced operational and financial restructuring and subject to bankruptcy court approval. This includes the closing of its bakery in Miami and consolidating routes, depots and thrift stores in Florida and Georgia, where it maintains regional facilities. The Company said it expects to complete the consolidation of the Florida PC by July 15, 2005. The consolidation is expected to affect approximately 600 workers in the Florida PC. IBC will continue to service the marketplace from its bakeries in Columbus, Georgia, and Jacksonville and Orlando, Florida. These actions are a part of the Company's efforts to address continued revenue declines and its high-cost structure. Monthly consolidated operating reports filed with the bankruptcy court show that net sales for the third quarter (16 weeks ended March 5, 2005) were $1.003 billion, representing a 1.7 percent decline from the comparable period a year ago. "In light of continuing revenue challenges, we are taking steps to rationalize and refocus our under-performing operations into a sustainable, ongoing business that can operate outside of bankruptcy protection," said Tony Alvarez II, chief executive of IBC and co-founder and co-chief executive of Alvarez & Marsal, the global corporate advisory and turnaround management services firm. "These actions are intended to improve profitability by rationalizing marginal products," he said. "The Company will strengthen its focus on branded sales and deliveries, which we believe are key components in configuring the business for efficiencies in production, distribution, marketing and sales." Mr. Alvarez said that since filing to restructure under Chapter 11, the Company has undertaken a comprehensive review of its operations to determine the appropriate actions necessary to return to profitability. As a first step, the Company: * Closed the Florence, S.C. facility; * Implemented a reduction in force; * Reduced corporate costs; and * Reduced or suspended certain employee benefit programs. As a result of these initial actions, among others, and the impact of the Chapter 11 filing, IBC reported a cash balance of $95.4 million as of March 5, 2005, in the latest monthly consolidated operating report it filed with the bankruptcy court. The Company is now into the second stage of its restructuring process, which involves an exhaustive review of each of the Company's ten PCs on an individual basis. "We regret the difficulties for employees directly impacted by the consolidation in Florida," Mr. Alvarez said. "However, we believe it is critical that we eliminate unprofitable products and routes, streamline distribution, rationalize the number of brands and stock-keeping units and eliminate excess capacity, which will result in lower revenues in the Florida PC. In the long run, we are doing what we must to revitalize the company, preserve jobs and maximize the value of the enterprise for all our constituencies." "We've approached the PC review process in great detail, identifying the critical issues in our most challenging regions first. Much work remains to be done and the implementation of the PC restructurings present significant challenges and are not without execution risk," Mr. Alvarez said. In the next stage of the restructuring process, IBC plans to finalize its go-forward business plan, including the completion of a comprehensive marketing strategy. "Only after that is accomplished," Mr. Alvarez said, "will the Company begin to develop a plan of reorganization that will permit it to emerge from bankruptcy protection." The Company's preliminary estimate of charges to be incurred in connection with the Florida PC consolidation is approximately $10 million, including approximately $2 million of severance charges, approximately $5 million of asset impairment charges, and approximately $2 million in other charges. IBC further estimates that approximately $5 million of such costs will result in future cash expenditures. In addition, the Company intends to spend approximately $1 million in capital expenditures and an additional approximately $1 million in other accrued expenses to effect the consolidation. IBC currently contributes to over 40 multi-employer pension plans as required under various collective bargaining agreements. Many of these plans are underfunded in that their liabilities exceed their assets. The portion of a plan's underfunding allocable to an employer deemed to be totally or partially withdrawing from the plan as the result of downsizing, job transfers or otherwise is referred to as "withdrawal liability." To give an example of the size of the underfunding in IBC's pension plans, if IBC is deemed to have completely withdrawn from the two multi-employer pension plans with the largest underfunding, Bakery & Confectionary Union & Industry International Pension Fund and Central States, Southeast and Southwest Areas Pension Plan, the total withdrawal liability (which would be an unsecured claim in the bankruptcy case) is alleged by such plans to be approximately $530 million, in the aggregate. IBC does not believe a total withdrawal has occurred, and based on the facts presently known, does not believe that a total withdrawal will occur in the future. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. IRVING TANNING: Committee Taps Pachulski Stang as Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maine gave the Official Committee of Unsecured Creditors of Irving Tanning Company permission to employ Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., as its counsel. Pachulski Stang will: a) assist, advise and represent the Committee in its consultations with the Debtor regarding the administration of its bankruptcy case; b) assist, advise and represent the Committee in analyzing the Debtor's assets and liabilities, investigate the extent and validity of liens and participate and review any proposed asset sales, any asset dispositions, financing arrangements and cash collateral stipulations or proceedings; c) assist, advise and represent the Committee in any manner relevant to reviewing and determining the Debtor's rights and obligations of its leases and other executory contracts; d) assist, advise and represent the Committee in connection with any review of management, compensation issues, analysis of retention or severance benefits, or other management related issues; e) assist, advise and represent the Committee in investigating the acts, conduct, assets, liabilities and financial condition of the Debtor, the operation of the Debtor's business and the desirability of continuing any portion of the business; f) assist, advise and represent the Committee in its participation in the negotiation, formulation and drafting of a plan of liquidation or reorganization; g) assist, advise and represent the Committee in the performance of its duties and powers under the Bankruptcy Code, and in the evaluation of claims and on any litigation matters; and h) perform all other legal services to the Committee that are necessary in the Debtor's chapter 11 case. Robert J. Feinstein, Esq., a Member at Pachulski Stang, is the lead attorney for the Committee. Mr. Feinstein charges $625 per hour for his services. Mr. Feinstein reports Pachulski Stang's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Beth E. Levine Counsel $445 Ilan D. Scharf Associate $235 Denise A. Harris Paralegal $175 Designation Hourly Rate ----------- ----------- Shareholders $375 - $675 Counsel $325 - $445 Associates $235 - $365 Paralegals $55 - $175 Pachulski Stang assures the Court that it does not represent any interest materially adverse to the Committee, the Debtor or its estate. Headquartered in Hartland, Maine, Irving Tanning Company, -- http://www.irvingtanning.com/-- is a leading supplier of leather to global footwear, handbag and personal leather goods industries. The Company filed for chapter 11 protection on March 17, 2005 (Bankr. D. Maine Case No. 05-10423). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $22 million and total debts of $15 million. J.P. MORGAN: Moody's Confirms Ba1 Rating on $11.57M Class L Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of four classes and affirmed the ratings of eight classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2003-FL2 as follows: -- Class A, $112,144,944, Floating, affirmed at Aaa -- Class X-1A, Notional, affirmed at Aaa -- Class B, $16,000,000, Floating, affirmed at Aaa -- Class C, $14,500,000, Floating, affirmed at Aa1 -- Class D, $12,300,000, Floating, upgraded to Aa2 from Aa3 -- Class E, $10,300,000, Floating, upgraded to Aa3 from A1 -- Class F, $9,800,000, Floating, upgraded to A1 from A2 -- Class G, $10,300,000, Floating, upgraded to A2 from A3 -- Class H, $9,300,000, Floating, affirmed at Baa1 -- Class J, $10,300,000, Floating, affirmed at Baa2 -- Class K, $8,700,000, Floating, affirmed at Baa3 -- Class L, $11,569,459, Floating, affirmed at Ba1 The Certificates are collateralized by three loans, consisting of one whole mortgage loan and two senior participation interests, which range in size from 9.3% to 33.8% based on current principal balances. As of the April 15, 2005 distribution date, the transaction's aggregate certificate balance has decreased by approximately 36.4% to $325.2 million from $511.7 million at securitization. The trust consists of two segregated loan groups. Moody's does not rate Loan Group II, which consists of one floating rate mezzanine loan secured by interests in 277 Park Avenue. Since Moody's last full review on March 3, 2005 one loan paid off -- Dolce Portfolio Loan ($48.3 million). Moody's current weighted average loan to value ratio is 66.3%, compared to 66.1% at last review and 64.9% at securitization. Moody's is upgrading Classes D, E, F and G due to increased credit support and stable pool performance. The largest loan is the FelCor Portfolio Loan ($110.0 million -- 33.8%). The loan is secured by first priority mortgages on ten hotels located in eight states. The properties contain 2,455 rooms as follows: * Charleston Mills Holiday Inn, Charleston, South Carolina (214 rooms), * Lexington Hilton Suites, Lexington, Kentucky (174 rooms), * San Antonio Airport Holiday Inn Select, San Antonio, Texas (397 rooms), * DFW Embassy Suites, Irving, Texas (305 rooms), * Jacksonville Embassy Suites (277 rooms), * Raleigh/Durham Doubletree Guest Suites, Durham, North Carolina (203 rooms), * Rocky Point Doubletree Guest Suites, Tampa, Florida (203 rooms), * Bloomington Embassy Suites, Bloomington, Minnesota (219 rooms), * Tulsa Embassy Suites, Tulsa, Oklahoma (240 rooms), and * Old Mill Crowne Plaza, Omaha, Nebraska (223 rooms). The loan sponsor is FelCor Lodging LP. At securitization Moody's recognized average occupancy and an ADR of 68.2% and $98.62 respectively, resulting in RevPAR of $67.22. For the trailing 12-month period ended September 2004, the portfolio had average occupancy and ADR of 68.6% and $100.58 respectively, resulting in RevPAR of $69.04. Moody's LTV is 69.4%, compared to 71.6% at securitization. There is additional debt in the form of senior and junior mezzanine loans with a combined balance of approximately $35.0 million. The loan is shadow rated Baa3, the same as at securitization. The second largest exposure is the Hometown Portfolio Loan ($85.0 million - 26.1%). The loan is secured by first priority mortgages on 21 separate manufactured housing communities located in six states. The largest state concentration is Michigan with 3,086 sites, which represents 48.8% of the total portfolio of 6,084 sites. The second and third largest concentrations are in Indiana and Idaho with 14.8% and 11.8% respectively. The loan sponsor is Hometown America, LLC. Average portfolio occupancy as of September 2004 was 81.4%, compared to 84.2% at securitization. Moody's LTV is 63.0%, compared to 61.5% at securitization. The property is further encumbered by $35.0 million of subordinate debt in the form of a junior portion of the first mortgage. The loan is shadow rated Baa2, the same as at securitization. The third largest loan exposure is the Phoenix Spectrum Mall Loan ($30.2 million - 9.3%). The loan is secured by a first priority mortgage on fee and leasehold interests in a one-story regional shopping mall and entertainment center containing approximately 1,080,526 square feet of rentable area located in Phoenix, Arizona. The mall is anchored by Wal-Mart (Moody's senior unsecured rating Aa2) and Costco (Moody's senior unsecured rating A2). The mall has a third vacant anchor which had previously been ground leased to Dillard's Clearance Center. During the first quarter of 2004 the property was acquired by a partnership between Developers Diversified Realty and Coventry Real Estate Advisors. The purchase price was approximately $46.5 million. The new owners plan to redevelop the mall and modify the current layout. Since acquisition, the new borrower terminated the Dillard's ground lease and is currently in lease negotiations with two prospective anchor tenants. Additionally, the borrower has entered into a new 15-year lease with one of the property's two existing movie exhibitors at a significantly higher rental rate. The tenant will construct its own building to house a 14-screen theater for which it received a tenant improvement allowance of approximately $6.9 million ($110 PSF) from the borrower. Other significant tenants include Ross Dress for Less, PetsMart, and Walgreens. As of September 30, 2004 the property was 85.2% leased, compared to 91.4% at securitization. Moody's LTV is 64.9%, compared to 61.8% at securitization. The loan is shadow rated Baa3, the same as at securitization. JESSUP CELLARS: Files Plan of Reorganization in Northern Ca. ------------------------------------------------------------ Jessup Cellars, Inc., delivered its Plan of Reorganization to the U.S. Bankruptcy Court for the Northern District of California on April 13, 2005. Terms of the Plan Treatment of Impaired Classes of Claims Jessup will pay Los Amigos LLC in full in three equal installments: * 1/3 of its allowed secured claim on the effective date of the plan; * 1/3 of the Secured Claim on the 30th day after the Effective Date; and * 1/3 of the Secured Claim on the 60th day after the Effective Date. Visionary Investments will be paid its allowed secured claim together with 7% interest on a declining balance over 10 years, starting on the 30th day after the Effective Date and will continue every month after that. Unsecured Creditors will share pro tanto [sic.] in the proceeds the Debtor will receive from shareholders participating in the stock repurchase after payment of Los Amigos' Secured Claim and administrative claims. The estimated dividend is 6% to 10% and will be paid 60 days after the Effective Date. Holders of equity interest will receive nothing. Equity Holders will Fund the Plan On the Effective Date of the Plan, Equity Holders will fund the Plan by repurchasing their Equity Interests. The Debtor will issue 10,000 common shares that will be offered first to Equity Holders in proportion to their Equity Interest at $2.25 per share. If the Equity Holders do not exercise the option to acquire the remaining shares, the shares will be offered to the unsecured creditors at the asking price of $2.25 per share. Headquartered in Napa, California, Jessup Cellars, Inc. -- http://www.jessupcellars.com/-- is a wine maker using Napa valley and Sonoma valley grapes. The Company filed for chapter 11 protection on Dec. 13, 2004 (Bankr. N.D. Cal. Case No. 04-12890) Michael C. Fallon, Esq., in Santa Rosa, Calif., represent the Debtor in its restructuring efforts. The Debtor reported assets and debts amounting to around $1 million to $10 million when it filed for bankruptcy. KMART CORP: Balks at Schuldiner's $90 Mil. Personal Injury Claim ---------------------------------------------------------------- Stan Schuldiner asserts claims against Kmart Corporation arising from five prepetition personal injury lawsuits commenced in: (a) the United States District Court for the Eastern District of Pennsylvania -- the Federal Action; and (b) the Pennsylvania Court of Common Pleas -- the State Actions. In November 2004, Mr. Schuldiner sought a declaratory judgment that his claims were not discharged under Kmart's confirmed Chapter 11 Plan. On December 16, 2004, the U.S. Bankruptcy Court for the Northern District of Illinois entered an order setting February 16, 2005, as the deadline for Mr. Schuldiner to file a claim. On February 17, 2005, Mr. Schuldiner filed Claim No. 57812, a 90,000,000 unsecured, priority claim asserting personal injury and breach of contract damage claims. In the five prepetition personal injury lawsuits, Mr. Schuldiner alleges that he was beaten and sexually assaulted by a Kmart security guard in a public area of a Kmart store in Philadelphia, Pennsylvania, before being taken to the police. Mr. Schuldiner is also pursuing a claim for breach of contract arising from Kmart's alleged refusal to allow him to return a video game. Andrew N. Goldman, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP, in New York, tells the Bankruptcy Court that the Federal Action is still pending in Philadelphia though the State Actions were disposed of when Kmart was awarded summary judgment in August 1999. The claims asserted in the Federal Action are the same claims asserted in the State Actions. Section 507 of the Bankruptcy Code sets forth nine categories of claims that are entitled to priority in the bankruptcy cases: * Administrative claims; * Gap period claims; * Wages, salaries and commissions; * Employee benefit plan contributions; * Grain producers and United States fisherman; * Lay-away deposits of consumers; * Alimony, maintenance and support; * Taxes and customs duties; and * Commitments to regulatory agencies. Because claims for prepetition personal injury and breach of contract do not fall into any of the categories stated in Section 507 of the Bankruptcy Code, Kmart objects to Claim No. 57812 and asks Judge Sonderby to reclassify the Claim as a non-priority unsecured claim. Kmart also objects to the allowability, priority, and quantum of Claim No. 57812. Kmart asks the Bankruptcy Court to modify the discharge injunction to allow for the resolution of the Claim in the Federal Action. Having been awarded summary judgment in the State Actions, Kmart believes Claim No. 57812 is meritless and should be disallowed and expunged in its entirety. However, because majority of the claims brought by Mr. Schuldiner are personal injury, Kmart believes that it is most appropriate for the federal district court presiding over the Federal Action to resolve the matter of Kmart's alleged liability. Kmart believes that the outcome will likely be the same as in the State Court. 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) LAIDLAW INT'L: Greyhound Lines Gets 2-Year Loan Extension --------------------------------------------------------- Although Greyhound Lines' most recent financial forecast indicates they will remain in compliance with the financial covenants under the Greyhound Facility, Laidlaw's Senior Vice- President and Chief Financial Officer, Douglas A. Carty, discloses that increases in fuel prices, softness in discretionary travel or other unforeseen events or changes in assumptions may occur and result in material differences between Greyhound Lines' future results and the current financial forecast. Those differences could result in management concluding in the future that Greyhound Lines may not be able to remain in compliance with the financial covenants under the Greyhound Facility. Additionally, following the settlement of the matter brought before Georgia state court seeking to enforce a default garnishment judgment against Greyhound Lines, the lenders under the Greyhound Facility have confirmed to Greyhound Lines that no event of default exists under the Greyhound Facility. Prior to the March 10, 2005, settlement of the garnishment suit, the default judgment could have been deemed to be an event of default, Mr. Carty says. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc. -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Apr. 14, 2005, Standard & Poor's Ratings Services affirmed its ratings on Greyhound Lines Inc., including the 'CCC+' corporate credit rating. At the same time, the outlook is revised to positive from developing. "The outlook change reflects Greyhound's successful resolution of the default judgment pending against it and the potential for a higher rating if the company's restructuring actions are successful in improving operating performance and credit protection measures," said Standard & Poor's credit analyst Lisa Jenkins. Ratings are currently constrained by competitive market conditions and the company's high debt leverage. Greyhound is owned by Laidlaw International Inc. (BB/Watch Pos/--). Laidlaw does not guarantee Greyhound's debt and its financial support of Greyhound is currently limited to just $15 million. LUCID ENTERTAINMENT: Delays Filing of Annual & 1st Quarter Reports ------------------------------------------------------------------ Lucid Entertainment Inc. will delay the filing of its annual audited financial statements for the year ended Dec. 31, 2004, and its interim financial statements for the first quarter ended March 31, 2005, past their respective due dates of April 30, 2005, and May 30, 2005. The delay arises as a result of Lucid's recent business and operational challenges imposed by certain developments, which have all been previously disclosed, including: (i) the resignation of Lucid's Chairman and Chief Executive Officer (ii) the ceasing of the operations of Lucid's subsidiary in Manchester, England due to a failure to transfer the liquor serving license required for its operations and its defaults with lenders, creditors and loan guarantors, (iii) the resignation of a director of Lucid due to conflicts arising from the financial difficulties of Lucid's subsidiary operating in Manchester, England, (iv) Lucid's and some of its other subsidiaries' default under other material contracts and (v) the resignation of Lucid's chief accountant. As a result of these developments Lucid has been forced to manage some significant changes to its business and operations which among other things are limiting its ability to produce the information necessary in order to complete its annual audited financial statements and to fund the services of its accountants in the UK. This information is necessary for the preparation of Lucid's audited annual financial statements. Lucid anticipates that both its annual and interim financial statements will be filed no later than June 30, 2005. Until both its annual and interim financial statements are filed, Lucid intends to satisfy the requirements of the "alternate information guidelines" described in Ontario Securities Commission Policy 57- 603, including issuing by-weekly default status reports. Pursuant to this Policy, if Lucid's annual and interim financial statements are not filed by June 30, 2005, one or all of the Ontario Securities Commission, the British Columbia Securities Commission or the Alberta Securities Commission may impose an issuer cease trade order against Lucid. Given the delay in filing that is anticipated by Lucid, Lucid does not believe that it will be affected by this aspect of the Policy and has made an application to the Ontario Securities Commission, the British Columbia Securities Commission and the Alberta Securities Commission in order to obtain a management cease trade order covering certain insiders of Lucid. However, even if Lucid receives an approval for a management cease trade order, an issuer cease trade order may be imposed sooner by any of the securities commissions if Lucid fails to satisfy the requirements of the "alternate information guidelines" described above. Lucid Entertainment Inc. operates and develops branded entertainment and hospitality venues worldwide. MAYTAG CORP: Fitch Downgrades $979 Senior Unsecured Notes to BB --------------------------------------------------------------- Fitch Ratings has downgraded the senior unsecured rating on Maytag Corporation to 'BB' from 'BB+' and has withdrawn the commercial paper rating. The Rating Outlook is Negative. On Jan. 1, 2005, Maytag had approximately $979 million of senior unsecured debt and no commercial paper outstanding. The downgrade primarily reflects the expectation that MYG will establish a new credit agreement securing its receivables and inventories and thus subordinating its bondholders, much weaker operating performance than anticipated in the first quarter of 2005 combined with full-year projections that have been dramatically reduced, price increases that have fallen short of desired results, and continuing high fuel and energy related raw material costs. The Negative Outlook relates to the uncertainty regarding the need to do more in terms of cost controls, what steps management will take to improve manufacturing efficiencies, particularly at its Newton and North Canton facilities, labor disruptions that could result from renewed union negotiations, and the financial impact that will result from restructuring costs and potential write-offs. While MYG has already taken significant restructuring steps, continues to increase its global sourcing of finished goods and components, and expects to achieve its 'One Company' annual cost reduction goal of $150 million in 2005, results for this year will not show meaningful improvement. Regarding potential operational restructuring plans and their impact on reported results, the company is seeking a new credit agreement to provide substantially more covenant flexibility and funding stability. MYG is reviewing financing commitments from banks that will be secured by accounts receivable and inventories and expects to replace its existing facility during the second quarter of 2005. The company also expects to have refinancing plans in place during 2005 to meet $412 million of debt maturities in 2006. Compared with the prior year, first quarter results were weak, continuing the poor performance seen throughout 2004. A review of quarterly performance from the first quarter of 2004 shows constantly declining gross margins, weakening interest coverage, and rising leverage as measured by debt/EBITDA. Gross margins have decreased to 12.4% for the quarter ended April 2, 2005, from 17.9% in the first quarter of 2004. EBITDA/interest was 4.7 times for the 12 months ended April 2, 2005, down from 7.3x, while leverage rose to 3.5x from 2.4x over the same period. Moreover, the deterioration in MYG's credit profile has occurred during relatively strong industry conditions regarding new homes and remodeling/repair spending. Key for the remainder of 2005 will be MYG's ability to reduce costs and grow revenues. Fitch will be monitoring actions taken to deal with its high cost manufacturing facilities, as well as financing steps. MYG appears to have adequate liquidity in the short-term with strong indications from its bank group for a secured facility, which can be used to meet large maturities in 2006, if other financing is not put in place. Maytag faces significant competition from its traditional domestic and European competitors and will face rising competition from Asian competitors in its major segments of floor care and major appliances. The loss of major retailer Best Buy and Home Depot's decision to give more space to LG Electronics raises concerns. MCI INC: Moody's to Look at Net Debt & Synergies in Qwest Merger ---------------------------------------------------------------- Moody's Investors Service believes MCI Inc.'s declaration that the latest bid by Qwest Communications International is "superior" increases the possibility that Qwest rather than Verizon Communications Inc. will be the ultimate purchaser of MCI. If this were to occur, Moody's would assess the B2 Senior Implied ratings of both Qwest and MCI. Among other factors, the assessment would focus on the likely increase in net debt of the combined companies relative to Moody's view of the potential value of synergies to be obtained from the merger. As reported in the Troubled Company Reporter on Apr. 25, 2005, Qwest Communications International Inc. transmitted a letter to the Board of Directors of MCI, Inc., regarding its new and revised offer for MCI for up to $30 a share. Previous Qwest Proposal Qwest's previous proposal contained $13.50 in cash (excluding MCI's March 15 dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14.00 provided Qwest's share price is between $3.32 and $4.15) per MCI share. MCI/Verizon Merger Agreement On March 29, 2005, MCI and Verizon amended their joint merger agreement. Under that agreement, each MCI share would receive cash and stock worth at least $23.10, comprising $8.35 (excluding MCI's March 15 dividend payment of ($0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75. Verizon says its unfazed by Qwest's revised offer. Moody's Previous Actions 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. Moody's Proposes Priorities Moody's present B2 senior implied ratings on Qwest and MCI generally reflect operating struggles both companies face due to the intensely competitive nature of the telecommunications industry. Therefore, Moody's believes that free cash flow generation and debt reduction would need to remain priorities of the combined companies to reduce the risk of future credit deterioration. Moody's presently believes this will be challenging, since meaningful free cash flow will result only if a combined Qwest and MCI can successfully eliminate redundant network costs while also stabilizing top line revenue declines in both companies' core businesses. Revenue declines in the telecommunications sector remain a key ratings factor in Moody's analyses. Financial Difficulties Qwest has been suffering local access line losses at nearly four per cent per year for the past several years while MCI has been suffering double-digit revenue losses in its commercial and residential long distance businesses. While competition and regulation have been key contributors to this performance deterioration, both companies have also had to overcome serious accounting probes, financial restatements, and balance sheet overhauls. As a result, Moody's is concerned that both Qwest and MCI may not be adequately prepared for the serious competitive challenges that wireless substitution and cable telephony services pose. A combined Qwest and MCI would have to resell wireless service through an agreement with Sprint and Qwest has yet to articulate a facilities-based video solution as have, for example, Verizon and SBC. Synergies Moody's recognizes that, combined, Qwest and MCI could help each other save costs, particularly network operating costs and investment. Qwest has a technologically sound if underutilized long haul network, while MCI has a leading market share with enterprise and government customers. Therefore, Moody's believes that the opportunity for synergies may be significant. Whether or not it equals Qwest's announced $14.8 billion net present value estimate would be the focus of intensive consideration; this equates to $2.8 billion annually, though Qwest acknowledges some upfront investment will be required to unlock these savings. Moody's assessment of the rating impact on Qwest and MCI of a merger will be heavily impacted by our view of the magnitude and likelihood of achieving any synergies. Review Focus Moody's will also focus on the impact on Qwest's capital structure of a merger with MCI. Qwest presently has $17.3 billion in gross debt at five legal entities and MCI will be a sixth. As a result there is wide dispersion of ratings around Qwest's B2 senior implied rating and some of the greatest rating impact of a merger with MCI could be on the ratings of the debt at Qwest's various legal entities. Moody's believes that the pro forma balance sheet of a Qwest and MCI combination as currently contemplated will be liquid, but that the combination of cash dividends to MCI shareholders and Qwest's ability to match any shortfall in its share price with cash means pro forma net debt levels could be meaningfully higher. As a result, Moody's analysis will focus heavily on the achievability and magnitude of synergies. The ratings for Verizon are on review for downgrade while the ratings for MCI are on review for upgrade as a result of these two companies' agreement to merge. About Qwest Communications Qwest Communications International Inc. (NYSE: Q) -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Dec. 31, 2004, Qwest Communications' balance sheet showed a $2,612,000,000 stockholders' deficit, compared to a $1,016,000,000 deficit at Dec. 31, 2003. About MCI Inc. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 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. 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. MEDPOINTE INC: Moody's Slices Rating on Sr. Sec. Facility to B2 --------------------------------------------------------------- Moody's Investors Service lowered the ratings of MedPointe Inc. (senior secured credit facility to B2 from B1), concluding a rating review for possible downgrade initiated on March 18, 2005. Following this rating action, the rating outlook is stable. The downgrade reflects the recent termination of MedPointe's distribution agreement with AstraZeneca for Zomig (a treatment for migraines), which raises Moody's concerns about the following: (1) greater uncertainty about MedPointe's business strategy, which may increasingly rely on new comarketing arrangements or product acquisitions; (2) a delay in meaningful improvement in MedPointe's somewhat weak cash flow performance; and (3) increased concentration risk in Astelin, a nasal spray antihistamine for allergies. On February 18, 2005, AstraZeneca terminated its Zomig distribution agreement with MedPointe. During the preceding months, Zomig faced highly competitive marketing and promotional activity particularly from Pfizer, which markets Relpax. Although MedPointe had not yet begun to generate cash flows from the Zomig agreement, Moody's believes that the termination of the arrangement highlights the risks involved in product acquisitions or co-promotion strategies employed by MedPointe and other smaller specialty pharmaceutical companies. These vulnerabilities include the uncertain ability of smaller pharmaceutical companies to compete head-on with larger competitors that have large marketing budgets, as well as the challenges associated with finding viable product acquisition targets. Moody's believes that both large and small pharmaceutical companies are actively seeking new growth drivers and that the market is very competitive. In addition, product collaboration agreements can include substantial upfront payments, or minimum levels of promotional spending. This may also require incremental marketing and infrastructure investments in order to scale up the sales effort. On a reported basis, MedPointe's cash flow from operating activities has been negative, as has its free cash flow after capital expenditures. Moody's attempts to adjust MedPointe's cash flow from operations to reflect a number of items which may be unusual or non-recurring, including those related to Zomig, as well as payments to former Carter Wallace shareholders, retiree medical liabilities, and operating leases that have now been terminated. Some near-term volatility may occur in MedPointe's cash flow because of changes in the wholesaler distribution model industry-wide, leading wholesalers to generally reduce the amount of inventory held. Even after these adjustments, however, Moody's believes that MedPointe's underlying cash flow from operations is below $20 million annually, and its free cash flow below $10 million. Moody's expects only modest improvements in these levels over the next several years, driven by sales of Astelin and Optivar. More meaningful improvement could occur in 2007 or later, depending on several products in MedPointe's pipeline, including new formulations of several existing products. Following the Zomig agreement termination, Moody's notes that MedPointe will have increased concentration risk in Astelin, now likely to represent over one-half of MedPointe's 2005 revenue. Moody's near-term outlook for Astelin is favorable, because year- over-year scripts trends have been positive for the past 3 years. However, the prescription antihistamine market as a whole has been contracting owing largely to the availability of OTC Claritin, creating an uncertain market environment for Astelin and other products. Moody's notes that at the time of the initial assignment of the B1 rating in August 2001, the allergy market as a whole had more favorable growth dynamics. Key mitigating factors include recent restructuring initiatives, resolution of liabilities related to Carter-Wallace liabilities, and a good liquidity position. Moody's believes that MedPointe has sufficient liquidity from its cash balances and a $25 million undrawn revolver maturing in 2007. The company recently agreed to reduced bank debt by $15 million, and there are no principal maturities until 2008. Additionally, MedPointe should have ample cushion under its recently amended financial covenants. Following this rating action, the rating outlook is stable. Moody's expects that the largest driver of future changes in MedPointe's credit profile will be its product collaboration and acquisition activity. Within the current rating category, Moody's believes the company has the flexibility to perform modest cash financed acquisitions -- for instance in the range of $50 million to $100 million -- depending on the cash flow benefits expected to be derived. Although not expected by Moody's at this time, the ratings could face downward pressure if MedPointe performs acquisitions outside this range, without clear cash flow benefit, or if the script trends for Astelin began to contract. Eventually, Moody's believes the ratings could face upward pressure if MedPointe improves the diversity of its revenue and generates more meaningful levels of cash flow. To consider an upgrade, Moody's would expect cash flow from operations and free cash flows to debt metrics to exceed 15% and 10%, respectively, and greater revenue diversity. Ratings downgraded: * MedPointe Inc. -- Senior implied to B2 from B1 -- Senior secured bank credit facilities to B2 from B1 (comprised of a $25 million revolving credit facility maturing in 2007, a $22 million Term Loan A maturing in 2007, and a $131 million Term Loan B maturing in 2008) -- Senior unsecured issuer rating to B3 from B2 Based in Somerset, New Jersey, MedPointe Inc. manufactures and markets branded, specialty pharmaceuticals. MedPointe is a private company and is majority-owned by a group of equity sponsors led by the Carlyle Group and by the Cypress Group. MERIDIAN AUTOMOTIVE: Wants to Pay Up to $16MM to Critical Vendors ----------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates ask Judge Walrath for authority to spend up to $16,000,000, without further conversations with or oversight by the Bankruptcy Court, to pay (in full or in part) prepetition amounts owed to unidentified critical vendors and suppliers the Company determines, in its sole discretion, are essential to the Debtors' business operations. Meridian says this $16 million figure represents about 14.7% of the Company's total prepetition trade debt. Meridian believes that payment of these Critical Vendor Claims is vital to the Company's reorganization efforts because: (1) the Critical Vendors are often the only source from which the Debtors can procure certain goods or services, (2) failure to pay the Critical Vendor Claims would, in the Debtors' business judgment, result in the Critical Vendors refusing to provide goods or services to the Debtors post-petition, (3) the Critical Vendors provide goods and services to the Debtors on advantageous terms, and (4) in certain instances, the Critical Vendors would themselves be irreparably damaged by the Debtors' failure to pay their prepetition claims, resulting in the Debtors being forced to obtain goods and services elsewhere that would either be at a higher price or not of the quality required by the Debtors. Meridian believes that failure to pay the Critical Vendor Claims would likely result in: (A) the Debtors' inability to obtain necessary materials for their manufacturing operations, (B) temporary shutdowns of the manufacturing facilities operated by the Debtors' OEM customers, and (C) severe negative effects on the Debtors' OEM customers, which include most of the North American automotive industry. Meridian says this parade of horribles is due to the highly integrated nature of the OEM supply chain, the Debtors' central and key role in the supply chain, and the OEM customers' stringent quality requirements that limit the availability of alternative suppliers. As a result, the Critical Vendors' refusal to provide goods and services to the Debtors post- petition could have a ripple effect throughout the automotive industry, potentially resulting in shutdowns of the manufacturing facilities operated by the Debtors and their customers. James F. Conlan, Esq., at Sidley Austin Brown & Wood LLP, representing Meridian, assures the Court that the Debtors and their advisors have critically examined whether the payment of Critical Vendor Claims is necessary and will ensure that the Debtors have access to adequate amounts of trade credit on a post-petition basis. The Debtors intend to condition the payment of any Critical Vendor Claim on each Critical Vendor's agreement to continue supplying goods and services to the Debtors on terms that are consistent with the historical trade terms between the parties within the past 120 days or on the best terms they can negotiate. The Debtors expect that all recipients of Critical Vendor Payments will waive any reclamation claims. Recipients of Critical Vendor Payments must also agree to return the payment if they subsequently refuse to supply goods to the Debtors on Customary Trade Terms. The Debtors reserve the right to come back to Court to ask that the Critical Vendor Cap be increased at a later date if necessary. The Debtors say that the continued availability of trade credit in amounts and on terms consistent with those the Company enjoyed prepetition is critical because it will preserve working capital while maintaining optimal production levels. The retention or reinstatement of Customary Trade Terms will enable the Debtors to maximize the value of their businesses. Conversely, a deterioration in post-petition trade credit and a disruption or cancellation of deliveries of goods -- many of which are not readily replaceable -- would cripple the Debtors' business operations, increase the amount of funding needed by the Debtors post-petition (which might not be readily available), and ultimately impede the Debtors' ability to service their customers, thereby placing their customer base, as well as their successful reorganization, at risk. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- 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., Paul S. Caruso, Esq., and 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. METROPCS INC: Launching $150 Million Senior Note Tender Offer ------------------------------------------------------------- MetroPCS, Inc., commenced a cash tender offer to purchase any and all of its $150,000,000 aggregate principal amount 10-3/4% Senior Notes due 2011. In connection with the Tender Offer, MetroPCS is soliciting consents to proposed amendments that would eliminate certain restrictive covenants and default provisions contained in the indenture governing the Notes, and to the waiver of any and all defaults and events of default that may exist under the Indenture as of the date consents are accepted. The Consent Solicitation will expire at 5:00 p.m., New York City time, on Tuesday, May 10, 2005, unless extended or earlier terminated by MetroPCS. The Tender Offer will expire at 5:00 p.m., New York City time, on Tuesday, May 24, 2005, unless extended or earlier terminated by MetroPCS. Holders who tender their Notes pursuant to the Tender Offer must consent to the proposed amendments and the waiver, and holders may not deliver consents without tendering their Notes. The Tender Offer and the Consent Solicitation are being made pursuant to the terms and subject to the conditions set forth in MetroPCS' Offer to Purchase and Consent Solicitation Statement and the Letter of Transmittal and Consent, both dated April 26, 2005. The Consent Solicitation requires the consent of the holders of at least a majority in aggregate principal amount of the outstanding Notes. One of the several conditions of the Tender Offer and the Consent Solicitation is MetroPCS' ability to obtain financing necessary to complete the Tender Offer and the Consent Solicitation and certain related transactions. MetroPCS, Inc., through its wholly owned subsidiary MetroPCS Wireless, Inc., intends to enter into a new senior secured credit facility for up to an aggregate amount of $950 million to finance the Tender Offer and the Consent Solicitation. MetroPCS has engaged Bear, Stearns & Co. Inc. as Sole Lead Arranger and Book-runner, to arrange the Facility. The total consideration for each $1,000 principal amount of Notes validly tendered and not revoked on or prior to the Consent Date will be an amount in cash equal to the price, calculated in accordance with standard market practice, based on the assumptions that the Notes will be redeemed at $1,053.75 per $1,000 principal amount of Notes on October 1, 2007 (the first optional redemption date with respect to the Notes) and that the yield to the earliest redemption date is equal to the sum of: (A) the yield to maturity on the 2.75% U.S. Treasury Note due August 15, 2007, as calculated by Bear, Stearns & Co. Inc., based on the bid side price of such security as of 11:00 a.m., New York City time, on the tenth business day prior to the scheduled expiration date of the Tender Offer, plus (B) a fixed spread of 0.50% (50 basis points). Holders who validly tender (and do not validly withdraw) their Notes will also be paid accrued and unpaid interest up to, but not including, the date of payment for the Notes. If the Tender Offer and the Consent Solicitation are consummated, a consent payment of $30.00 per $1,000 principal amount of Notes, which is included in the total consideration, will be paid on the date the Notes are accepted for purchase and purchased from the holders who tender their Notes and provide their consents to the proposed indenture amendments at or prior to 5:00 p.m., New York City time, on the Consent Date. Notes tendered and consents delivered at or prior to 5:00 p.m., New York City time, on the Consent Date, may not be withdrawn or revoked after that time. Holders who tender their Notes after such date will not be eligible to receive the consent payment. Instead, holders who validly tender (and do not validly withdraw) their Notes after the Consent Date and on or prior to the Expiration Date will receive the purchase price for the Notes but not the consent payment. The purchase price for the Notes is equal to the total consideration minus the consent payment. Assuming the satisfaction or waiver of the conditions to consummation of the Tender Offer and the Consent Solicitation, payment of the total consideration for Notes validly tendered on or prior to the Consent Date is expected to be made promptly after MetroPCS obtains the financing necessary to complete the Tender Offer and the Consent Solicitation, but no later than promptly after the Expiration Date, if such Notes are accepted for purchase. Assuming the satisfaction or waiver of the conditions to consummation of the Tender Offer and the Consent Solicitation, payment of the purchase price for Notes validly tendered after the Consent Date and on or prior to the Expiration Date is expected to be made promptly after the Expiration Date if such Notes are accepted for purchase. MetroPCS has retained Bear, Stearns & Co. Inc. to act as Dealer Manager for the Tender Offer and as Solicitation Agent for the Consent Solicitation. Questions about the Tender Offer or the Consent Solicitation may be directed to the Global Liability Management Group at Bear, Stearns & Co. Inc. at (877) 696-BEAR (US toll-free) or (877) 696-2327. Copies of MetroPCS' Offer to Purchase and Consent Solicitation Statement and the Letter of Transmittal and Consent are available from the Information Agent, Mellon Investor Services LLC, by calling (877) 698-6870 (US toll- free). About MetroPCS, Inc. Dallas-based MetroPCS, Inc. -- http://www.metropcs.com/-- is a wholly owned subsidiary of MetroPCS Communications, Inc., and a provider of wireless communications services. Through its subsidiaries, MetroPCS, Inc., holds 21 PCS licenses in the greater Miami, Tampa, Sarasota, San Francisco, Atlanta and Sacramento metropolitan areas. MetroPCS offers customers flat rate plans with unlimited anytime local and long distance minutes with no contract. MetroPCS is among the first wireless operators to deploy an all-digital network based on third generation infrastructure and handsets. * * * As reported in the Troubled Company Reporter on March 4, 2005, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Dallas, Texas-based wireless carrier MetroPCS, Inc., to 'CCC' from 'CCC+'. The outlook is negative. "The downgrade reflects Standard & Poor's view that the company is subject to heightened default risk in light of its failure to file its financial statements with the SEC since the second quarter of 2004 due to an ongoing SEC investigation," said Standard & Poor's credit analyst Catherine Cosentino. The company has obtained waivers from its creditors through March 8 to avoid a technical default under the bond indenture. In the meantime, it has leveraged up with recent transactions, including the purchase of wireless spectrum licenses from Cingular Wireless LLC in Detroit and Dallas for $230 million and receipt of up to $240 million in related financing for this acquisition, as well as receipt by MetroPCS of up to $300 million in exchangeable senior secured loans for FCC licenses obtained in the recent spectrum auction by MetroPCS' 85%-owned designated entity Royal Street Communications LLC, in which MetroPCS has a non-controlling interest. MGM MIRAGE: Mandalay Purchase Results in Downgrades from Fitch -------------------------------------------------------------- Fitch Ratings has downgraded the long-term debt rating of MGM MIRAGE and Mandalay Resort Group. This resolves the Negative Rating Watch status put in place on June 7, 2004. The rating action follows the completion of MGM MIRAGE's acquisition of Mandalay Resort Group for total consideration of $4.9 billion in cash plus the assumption of $2.8 billion in debt. Approximately $8.0 billion of debt securities are affected by this action. The Rating Outlook is Stable. Fitch's ratings affected by this action are: MGM MIRAGE: -- New credit facility rated 'BB'; -- Senior notes downgraded to 'BB' from 'BB+'; -- Subordinated debt downgraded to 'B+' from 'BB-'. Mandalay Resort Group: -- Bank facility rating withdrawn; -- Senior unsecured notes downgraded to 'BB' from 'BB+'; -- Subordinated debt downgraded to 'B+' from 'BB-'. The one notch downgrade of all MGG and Mandalay debt ratings reflects the substantial increase in leverage and heavy discretionary spending plans that are expected to preclude MGG from reestablishing credit protection measures more consistent with the 'BB+' level category over the intermediate term. The acquisition will result in a material increase in debt to $13.2 billion initially from $5.5 billion at March 31, 2005, while pro forma trailing leverage and interest coverage will deteriorate to approximately 6.0 times and 3.0x versus 4.0x and 3.7x, respectively, at March 31, 2005. Pro forma for the pending sale of Mandalay's Detroit MotorCity interest for $525 million, debt will be reduced to $12.7 billion, while leverage should improve to 5.7x shortly after closing. However, Fitch believes MGG's announced growth projects will keep leverage outside the appropriate range for the 'BB+' category (above 5.0x) through at least 2006. Ratings concerns also center on the company's significant concentration in Las Vegas (pre- and postmerger) and continued risk that cash flow will be directed towards investment opportunities or share repurchases rather than further capital structure strengthening. Currently, there are numerous growth projects in the pipeline (UK Gaming, Macau, and the Detroit permanent facility) that have not yet been factored into the capital spending budgets for 2005 and 2006. Additional share repurchases appear highly unlikely, but MGG has significant room remaining under its current authorization, and was an aggressive purchaser of shares in 2003 and 2004. Ratings also consider formidable near-term competitive supply additions to the Las Vegas Strip, including Wynn Resort (April 2005) and Palazzo (March 2007), which could cannibalize MGG's high-end business and potentially slow the deleveraging process. Positive credit attributes include the company's strong brand equity, high quality assets, leading margins, and significant discretionary free cash flow. MGG's current management team has a strong track-record of integrating acquisitions and improving operations. The acquisition should solidify MGG's already leading position on the Las Vegas Strip and provide diversification away from the ultra high-end customer. MGG should also benefit the strategic and synergistic benefits of Mandalay's convention center and strong free cash flow generation. Overconcentration in Las Vegas is somewhat offset by the highly stable, casino-friendly regulatory environment of Las Vegas. Fitch is also encouraged by the earnings growth on the Las Vegas Strip and the optimistic outlook for 2005 of higher room rates and strong convention bookings. MGG has committed financing in place to finance the acquisition of Mandalay, including a $7.0 billion senior credit facility (comprising a $5.5 billion revolver and a $1.5 billion term loan) due in 2010, and cash of $395.7 million as of March 31, 2005. Fitch estimates peak usage of the bank facility at $5.8 billion (pre-Detroit asset sale) at closing. Cash from operations combined with revolver availability and cash-on-hand appear adequate to support the company's growth initiatives and meet debt maturities through at least 2006. Financial flexibility would be compromised if Mandalay noteholders choose to exercise their Change of Control option. Fitch considers redemption unlikely given that all issues are currently trading well above 101 redemption price; however, ratings may be revisited in the event that any or all of the bonds are put. The structure of the Mandalay transaction will be similar to the Mirage transaction executed in 1999. Mandalay will merge into one of MGG's wholly owned subsidiaries, and its existing bonds will remain at this subsidiary level. The ratings incorporate the assumption that collateral securing MGG's existing senior debt will be released shortly and that Mandalay will benefit from the downstream guarantees and cross guarantees from MGG's restricted subsidiary guarantors such that no structural subordination will exist in the new capital structure. Notably, redemption and maturity of $700 million in collateralized senior notes (6.950%, 6.625%, and 6.875%) during the first quarter allows the secured claims of MGM MIRAGE to be released at the company's option. MGM MIRAGE: Mandalay Resort Acquisition Cues S&P to Cut Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on MGM MIRAGE, including its corporate credit rating, to 'BB' from 'BB+,' following the closing of the company's $7.9 billion debt-financed acquisition of Mandalay Resort Group. This action is in line with expectations Standard & Poor's had previously communicated, in a bulletin dated Oct. 7, 2004, that a 100% debt-financed deal would result in a lowering of MGM's corporate credit rating by one notch. At the same time, the senior unsecured and subordinated debt ratings on Mandalay Resort Group were lowered to 'BB' from 'BB+' and 'B+' from 'BB-', respectively. Mandalay is now a wholly owned subsidiary of MGM, and its senior unsecured debt will benefit from guarantees by most subsidiaries of MGM. Concurrently, the corporate credit rating on Mandalay was withdrawn. All ratings were removed from CreditWatch where they were placed on June 7, 2004. Pro forma consolidated debt outstanding, taking into account the proceeds from the sale of the MotorCity casino, is approximately $12.7 billion. "The downgrade on MGM reflects the increase in financial leverage that has occurred as a result of the transaction, and our assessment that future development projects may result in MGM's debt leverage (as measured by total debt to EBITDA) remaining above 5x, more consistent with the new ratings. Still, we believe that the acquisition improves the overall business position of MGM by substantially expanding its presence in Las Vegas, the most widely recognized gaming market in the world," said Standard & Poor's credit analyst Michael Scerbo. Additionally, despite MGM's strong business profile being supportive of an investment-grade rating, management's active growth strategy is likely to result in debt leverage being maintained at a level that is more supportive of a high speculative grade rating over time. Raising the corporate credit rating on MGM to 'BB+' would depend on the company demonstrating the ability and willingness to maintain total debt to EBITDA in the 4x-5x range. Given the expected increase in intermediate-term capital spending, Standard & Poor's expects that this goal can be reached in a number of ways, including: -- A material common stock issuance; -- Meaningful asset sales with proceeds used to reduce debt; and/or -- Partnership opportunities and/or the presale of residential units to offset a substantial portion of Project CityCenter costs. MORGAN STANLEY: Fitch Puts Low-B Ratings on 6 2004 TOP 13 Classes ----------------------------------------------------------------- Fitch Ratings-New York-April 26, 2005 Fitch Ratings affirms Morgan Stanley Capital 2004 TOP 13: -- $97.2 million class A-1 at 'AAA'; -- $233 million class A-2 at 'AAA'; -- $127 million class A-3 at 'AAA'; -- $589.2 million class A-4 at 'AAA'; -- Interest only classes X-1 and X-2 at 'AAA'; -- $31.8 million class B at 'AA'; -- $12.1 million class C at 'AA-'; -- $24.2 million class D at 'A'; -- $12.1 million class E at 'A-'; -- $9.1 million class F at 'BBB+'; -- $10.6 million class G at 'BBB'; -- $9.1 million class H at 'BBB-'; -- $9.1 million class J at 'BB+'; -- $3 million class K at 'BB'; -- $3 million class L at 'BB-'; -- $3 million class M at 'B+'; -- $4.5 million class N at 'B'; -- $3 million class O at 'B-'; Fitch does not rate the $12.1 million class P. The rating affirmations reflect the minimal reduction of the pool collateral balance since issuance. As of the April 2004 distribution date, the pool has paid down 4.26%, to $1.19 billion from $1.21 billion at issuance. There are no delinquent or specially serviced loans. Seven loans were credit assessed by Fitch at issuance: * GIC Office Portfolio (7.54%), * Lakeland Square Mall (4.92%), * Great Hall Portfolio (3.08%), * Gallup Headquarters (2.03%), * Carlisle Commons (1.81%), * Hudson Mall (1.40%) and * Renaissance Manor. Fitch reviewed the most recent operating data available from the master servicer for these loans. Occupancy was stable to improved from issuance with only the Hudson Mall loan reporting a slight decline. Based on their stable performance the loans remain investment grade. MORTGAGE CAPITAL: Fitch Upgrades Two Low-B Ratings & Affirms Two ---------------------------------------------------------------- Fitch Ratings upgrades Mortgage Capital Funding, Inc.'s, multifamily/commercial mortgage pass-through certificates, series 1997-MC2: -- $43.5 million class C to 'AAA' from 'AA+'; -- $39.2 million class D to 'AAA' from 'A-'; -- $43.5 million class F to 'BB+' from 'BB'; -- $8.7 million class G to 'BB' from 'BB-'. In addition, Fitch affirms these certificates: -- $276.1 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $52.2 million class B 'AAA'; -- $19.6 million class H 'B'; -- $10.9 million class J 'B-'. Fitch does not rate the $26.1 million class E and the $12.2 million class K certificates. Class A-1 has been paid in full. The upgrades are the result of increased subordination levels due to loan payoffs and amortization. As of the April 2005 distribution date, the pool's aggregate principal balance has been reduced 38.9%, to $532.1 million from $870.6 million at issuance. Of the 181 original loans in the pool, 115 loans remain outstanding. The pool is well diversified by loan size, as evidenced by the top five loans representing 19.6%. The pool is also diversified by geographic location, with 16.8% of the pool collateralized by properties located in California. The pool contains six loans (4.6%) that are currently in special servicing. The largest specially serviced loan (1.5%) is secured by a retail outlet center in Burlington, North Carolina, and is 30 days delinquent. The loan transferred in March of 2005 as a result of monetary default. The occupancy at the center declined after the largest tenant vacated. The special servicer is awaiting receipt of an updated appraisal value before proceeding with disposition options. The second-largest specially serviced loan (1.1%) is secured by a hotel property in Brookfield, Wisconsin, and is 90 days delinquent. The loan did not pay off at its scheduled September 2004 maturity. The special servicer continues to explore workout options. The sixth-largest loan (3.1%), a full-service hotel in San Francisco remains a Fitch loan of concern. While the loan has remained current, the property had suffered a steady decline in performance due to reduced tourism to the area, as well as competition from competing hospitality properties. The most recent reported financials have shown a decline in performance since issuance. Fitch is awaiting updated financials. MSM ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: MSM Enterprises, Inc 477 Congress Street, 14th Floor P.O. Box 15215 Portland, Maine 04112-5215 Bankruptcy Case No.: 05-20695 Chapter 11 Petition Date: April 27, 2005 Court: District Maine (Portland) Judge: James B. Haines Jr. Debtor's Counsel: Bruce B. Hochman, Esq. Lambert Coffin 477 Congress Street, 14th Floor P.O. Box 15215 Portland, Maine 04101-5215 Tel: (207) 874-4000 Fax: (207) 874-4040 Total Assets: $777,093 Total Debts: $1,105,857 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Dr. Pepper/Seven Up, Inc. $9,614 P.O. Box 409501 Atlanta, GA 30384-9501 Northern Utilities $6,879 P.O. Box 830015 Baltimore, MD 21283-0015 Maines Paper and Food Services $6,630 25 Otis Street Westborough, MA 01581 Scarborough Sanitary Distribution $3,066 Richard P. Waltz Plumbing $2,679 Cummings, Inc. $2,000 Northeast Mechanical $1,888 Pine Tree Food Equipment $1,088 Portland Water District $1,082 George Weston Bakeries, I $1,043 Burger King Marketing $830 Wyllie Marketing, Inc. $804 Stanford Maintenance Services, Inc. $800 ERS Technologies $687 Portland Glass $594 Rudi the Plumber $557 Richard Cail $545 Advantage Gases & Tools $536 Coca Cola USA $527 Waste Management of Maine-Portland $524 NATIONAL ENERGY: Pittsfield Generating Holds $157.5M Damage Claim ----------------------------------------------------------------- On January 9, 2004, Pittsfield Generating Company, L.P., filed Claim No. 299 for at least $201,243,723 on account of, among other things, purported damages arising from USGen New England, Inc.'s rejection of their Power Purchase Agreement dated December 9, 1987. USGen's Plan of Liquidation contemplates that holders of Allowed Class 3 Claims resulting from the rejection of an executory contract will receive payment in full together with (i) Post- Petition Interest at a simple rate of 4% per annum accruing from the effective date of rejection to the Distribution Date or (ii) Modified Post-Petition Interest as defined in the Plan, as the case may be. After lengthy negotiations, USGen and Pittsfield agreed to resolve and fix Pittsfield's claim against USGen in a cost- effective and efficient manner. In a Court-approved stipulation, the parties agree that: 1. Claim No. 299 will be an allowed general unsecured claim for $157,500,000 in full and final satisfaction of any claims or rights which Pittsfield has or may have against USGen and its estate; 2. The Allowed Claim will not be disallowed, reduced, subordinated or subject to recoupment, offset or counterclaim for any reason; 3. The Allowed Claim will be paid: (a) in full in accordance with the treatment of Allowed Class 3 General Unsecured Claims under the Plan, together with Post-Petition Interest, or Modified Post-Petition Interest, as the case may be, accruing from the Rejection Date to the Distribution Date; or (b) should the Plan be modified or a plan other than the Plan be confirmed by the Court, in accordance with the treatment of allowed general unsecured claims under the Plan as modified or the other plan; 4. Pittsfield, on behalf of itself and each of its successors and assigns, releases USGen and its estate from any and all claims and causes of action. Any other proofs of claim filed by Pittsfield against USGen will be deemed waived and withdrawn; 5. Pittsfield releases New England Power Company from any and all claims and causes of action arising under or related to the Pittsfield PPA and any related agreements; and 6. USGen, on behalf of itself and each of its successors and assigns, releases Pittsfield and its partners and creditors from any and all claims and causes of actions. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: TransAlta Holds Allowed $372,142 Claim ------------------------------------------------------- Before filing for bankruptcy, NEGT Energy Trading - Power, L.P. and TransAlta Energy Marketing (US), Inc., were members of the Western System Power Pool and parties to the Western System Power Pool Agreement. As members of the WSPP, ET Power and TransAlta Energy entered into various transactions with each other to buy or sell electric energy and capacity. TransAlta subsequently terminated and liquidated all existing Confirmation Agreements with ET Power, and calculated the amounts due under the liquidated Confirmation Agreements. TransAlta filed Claim No. 134 against ET Power for $374,473, plus default interest based on the Termination Payment. At ET Power's behest, Judge Mannes approves the stipulation entered into by ET Power and TransAlta, which resolves all matters relating to Claim No. 134. The parties agree that Claim No. 134 is reduced and allowed as a general unsecured claim against ET Power for $372,142. The Allowed Claim will be treated in accordance with the provisions of the ET Debtors' Chapter 11 Plan of Liquidation. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONSRENT COS: Completes $150 Million Private Debt Placement -------------------------------------------------------------- NationsRent Companies, Inc., completed a private offering of $150 million in aggregate principal amount of 9.5% Senior Unsecured Notes due 2015. The Company intends to use the net proceeds for general corporate purposes and to repurchase its outstanding 6.5% convertible subordinated notes due 2008. This announcement is neither an offer to sell nor a solicitation to buy these securities. The securities have not been registered under the Securities Act of 1933 or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws. About the Company NationsRent is headquartered in Fort Lauderdale, Florida, and is one of the country's leading full service equipment solutions providers, operating 267 locations (including 100 at Lowe's Home Improvement locations) in 26 states. NationsRent stores offer a broad range of high-quality construction equipment with a focus on superior customer service at affordable prices with convenient locations in major metropolitan markets throughout the U.S. More information is available at http://www.nationsrent.com/ * * * As reported in the Troubled Company Reporter on Apr. 19, 2005, Standard & Poor's Ratings Services revised the outlook on its ratings for NationsRent Cos. Inc. to positive from stable and affirmed its 'B+' corporate credit and all other ratings on the company. At the same time Standard & Poor's assigned its 'B-' senior unsecured debt rating to the company's proposed offering of $150 million senior unsecured notes due in 2015 under Rule 144A with registration rights. "The outlook change is due to the better-than-expected credit measures, which, if sustainable, could lead to a modestly higher rating," said Standard & Poor's credit analyst John Sico. "The ratings may be raised over the next two years if better-than- expected credit measures can be sustained despite the inevitable industry downturn." NORSTAN APPAREL: U.S. Trustee Picks 7-Member Creditors Committee ---------------------------------------------------------------- The United States Trustee for Region 2 appointed seven creditors to serve on the Official Committee of Unsecured Creditors in Norstan Apparel Shops Inc. and its debtor-affiliate's chapter 11 case: 1. The CIT Group/ Commercial Services, Inc. Attn: Greg Gallo 1211 6th Avenue New York, New York 10035 Phone: 212 382-7023 2. Jes & Joy Attn: Richard Kim 1100 S. San Pedro St., #C-13 Los Angelos, California 90015 Phone: 213 749-8448 3. Apollo Jeans Attn: Morris Al Faks 1407 Broadway, Ste 2004 New York, New York 10018 Phone: 212 398-6585 4. Louise Paris, Ltd. Attn: Serkan Ozgun 1407 Broadway, Suite 1405 New York, New York 10018 Phone: 212 354-5411 5. Pure Design, Inc. 400 W. 30th Street Los Angeles, California 90007 Phone: 213 745-6428 6. Rosenthal & Rosenthal Attn: Joe Meyers 1370 Broadway New York, New York Phone: 212 358-1400 7. Accutime Watch Attn: Schuyler Carroll, Esq. 1001 6th Avenue New York, New York 10018 Phone: 212 484-3955 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Long Island City, New York, Norstan Apparel Shops Inc., operates 229 retail stores selling women's budget-priced apparel. The stores are located in 24 states throughout the Midwestern, Midsouthern, Mid-Atlantic and southeastern regions of the United States. The Company and its debtor-affiliates filed for chapter 11 protection on April 8, 2005 (Bankr. E.D.N.Y. Case No. 05-15265). Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $19,637,000 and total debts of $44,776,000. NORSTAN APPAREL: Creditors Committee Taps Kronish Lieb as Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Norstan Apparel Shops Inc. and its debtor-affiliate, Norstan Delaware Corp., asks the U.S. Bankruptcy Court for the Eastern District of New York for permission to employ Kronish Lieb Weiner & Hellman LLP as its counsel. Kronish Lieb is expected to: a) attend the meetings of the Committee, confer with the Debtors' management and counsel, and assist in negotiations with the Debtors and other parties in interest on an emergence plan; b) review financial information furnished by the Debtors to the Committee, and review and investigate the liens of purported secured party or parties; c) coordinate efforts to sell assets of the Debtors in a manner that maximizes the value for unsecured creditors, and review the Debtors' schedules, statement of affairs and business plan; d) advise the Committee as to the ramifications regarding all of the Debtors' activities and motions before the Court, and file appropriate pleadings on behalf of the Committee; e) review and analyze accountant's work product and reports to the Committee, and provide legal advice in relation to the Debtors' bankruptcy case; f) prepare various applications and memoranda of law submitted to the Court for consideration and handle all other matters of the Committee; and g) perform all legal services for the Committee that are necessary and proper in the Debtors' bankruptcy cases. Jay R. Indyke, Esq., a Partner at Kronish Lieb, is the lead attorney for the Committee. Mr. Indyke charges $585 per hour for his services. Mr. Indyke reports Kronish Lieb's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Lawrence C. Gottlieb Partner $695 Cathy R. Hershcopf Partner $525 Eric J. Haber Special Counsel $485 Jeffrey L. Cohen Associate $330 Brent Weisenberg Associate $295 Melissa S. Harrison Associate $255 Seth Van Aalten Associate $255 Michael Klein Associate $240 Kronish Lieb assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Long Island City, New York, Norstan Apparel Shops Inc., operates 229 retail stores selling women's budget-priced apparel. The stores are located in 24 states throughout the Midwestern, Midsouthern, Mid-Atlantic and southeastern regions of the United States. The Company and its debtor-affiliates filed for chapter 11 protection on April 8, 2005 (Bankr. E.D.N.Y. Case No. 05-15265). Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $19,637,000 and total debts of $44,776,000. NOVOSTE CORP: Nasdaq Warns of Possible Stock Delisting ------------------------------------------------------ Novoste Corporation (NASDAQ: NOVT) received a notice from the Nasdaq Stock Market indicating that the Company is not in compliance with the Nasdaq Stock Market's requirements for continued listing because, for the last 30 consecutive business days, the bid price of the Company's common stock has closed below the minimum $1.00 per share requirement for continued inclusion under Nasdaq Marketplace Rule 4450(a)(5). The notice does not by itself result in immediate delisting of the Company's common stock. Nasdaq stated in its notice that in accordance with the Nasdaq Marketplace Rules, the Company will be provided 180 calendar days, or until Oct. 18, 2005, to regain compliance with the Minimum Bid Price Rule. The notice also states that if, at any time before Oct. 18, 2005, the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Nasdaq staff will provide the Company written notification that it has achieved compliance with the Minimum Bid Price Rule. However, the notice states that if the Company does not regain compliance with the Minimum Bid Price Rule by Oct. 18, 2005, the Nasdaq staff will provide the Company with written notification that its common stock will be delisted from the Nasdaq Stock Market. In the event that the Company receives notice that its common stock is delisted from the Nasdaq Stock Market, Nasdaq rules permit the Company to appeal any delisting determination by the Nasdaq staff to a Nasdaq Listings Qualifications Panel. In addition, in the event that such a delisting determination was based solely on non-compliance with the Minimum Bid Price Rule, Nasdaq Marketplace Rule 4450(i) may permit the Company to transfer its common stock to the Nasdaq's Small Cap Market if the Company's common stock satisfies all criteria for initial inclusion on such market other than compliance with the Minimum Bid Price Rule. In the event of such a transfer, the Nasdaq Marketplace Rules provide that the Company would be provided an additional 180 calendar days to comply with the Minimum Bid Price Rule. Board Okays Unit's Wind-Down & Evaluates Options As reported in the Troubled Company Reporter on Feb. 24, 2005, Novoste Corporation's Board of Directors has determined that its vascular brachytherapy business is no longer viable and, as a result, has authorized a staged, wind-down of the business. The Board has determined that this decision is necessary to preserve the Company's cash resources and arises as a result of the continuing decline in revenue for the Company's VBT product. The Board continues to evaluate strategic alternatives, including liquidation and dissolution, and believes that it will be able to conclude its evaluation of alternatives within sixty days. However, it has determined that the strategic alternatives available to the Company do not include an ongoing requirement for a field sales force focused on disposable, medical devices. Accordingly, Novoste will reduce its U.S. workforce in the first quarter by 52 employees, from 97 employees. Novoste has posted recurring losses for the past three years. The company's latest publicly disclosed balance sheet shows $34 million in assets and $7 million in debt. As reported in the Troubled Company Reporter on Jan. 11, 2005, Novoste hired Asante Partners LLC in April 2004 to "identify and implement strategic and financial alternatives" -- including a shutdown, dissolution and liquidation of the company. About Novoste Corporation Novoste Corporation, based in Atlanta Georgia, develops advanced medical treatments for coronary and vascular diseases and is the worldwide leader in vascular brachytherapy. The Company's Beta- Cath(TM) System is commercially available in the United States, as well as in the European Union and several other countries. Novoste Corporation shares are traded on the NASDAQ National Stock Market under the symbol NOVT. For general company information, call (770) 717-0904 or visit the Company's website at http://www.novoste.com/ NUCORP LTD: Case Summary & 7 Largest Unsecured Creditors -------------------------------------------------------- Debtor: NuCorp Limited 15020 27th Avenue North Plymouth, Minnesota 55447 Bankruptcy Case No.: 05-32762 Type of Business: The Debtor specializes in marketing and administration of insurance policies and participation in reinsurance agreements. See http://www.nucorpltd.com/ Chapter 11 Petition Date: April 26, 2005 Court: District of Minnesota (St. Paul) Judge: Gregory F. Kishel Debtor's Counsel: William I. Kampf, Esq. Henson & Efron, P.A. 220 South Sixth Street, Suite 1800 Minneapolis, Minnesota 55402-4503 Tel: (612) 339-2500 Fax: (612) 339-6364 Financial Condition as of April 25, 2005: Total Assets: $997,000 Total Debts: $2,146,18 Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Ohio Department of Insurance Pending lawsuit $1,519,632 2100 Stella Court related to Columbus, OH 43215 liquidation of Attorney General Jim Petro insurance company c/o Kegler, Brown, Hill & Ritter Attn: John Brody 65 East State Street, Suite 1800 Columbus, OH 53215-4294 Insurance Advisors, Inc. $545,000 15020 27th Avenue North Plymouth, MN 55447 Audrey Richmond $325,000 3065 Lake Shore Boulevard Wayzata, MN 55931 GAB Robbins $12,388 9 Campus Drive Parsippany, NJ 07054 Advanta Visa $7,666 P.O. Box 30715 Salt Lake City, UT 84130-0715 Century Business Service $2,264 4900 Highway 169 North, Suite 200 New Hope, MN 55428 American Express $1,865 P.O. Box 650448 Dallas, TX 75265-0448 PALMDALE HILLS: S&P Rates $75 Million Second-Lien Facility at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' issuer credit rating to Palmdale Hills Property LLC. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' bank loan rating to a $200 million first-lien credit facility due 2010 and its 'B-' bank loan rating to a $75 million second-lien credit facility due 2011. Additionally, '1' and '4' recovery ratings are assigned to the respective bank loans. "The ratings reflect the somewhat speculative nature of the company's investment in a single large parcel of raw land that is entitled for residential development," explained Standard & Poor's credit analyst James Fielding. While initial debt levels appear reasonable based upon an appraisal of the company's total net value, this basis does not reflect the present market value of the land and relies upon current estimates of future sales revenues and development costs. Ultimate timing of and proceeds from future sales are uncertain, and adverse business, financial, or economic conditions would likely impair the company's capacity to meet its financial commitment on its obligations. "These risks are mitigated to an extent by the current strong demand for housing, the seasoned developer's successful track record, and adequate near-term liquidity," Mr. Fielding noted. Favorable longer term demographic trends and increasingly onerous supply constraints in the Los Angeles County housing market are expected to support future demand for home sites in this large, concentrated, and currently unimproved parcel of land. In the near term, development risk is mitigated by the manager's successful track record, and anticipated profit margins are adequate to absorb modest increases in costs. PREMIUM STANDARD: Moody's Rates New $125MM Senior Notes at B1 ------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 senior implied rating for Premium Standard Farms PSF), and assigned a B1 rating to the company's new $125 million senior notes due 2015. Moody's also affirmed the company's B2 unsecured issuer rating. Moody's does not rate PSF's $175 million senior secured revolving credit facility. The ratings outlook is stable. PSF intends to use proceeds from the new $125 million senior note along with excess cash to redeem the $175 million 9.25% senior unsecured notes due 2011, and to pay approximately $20 million of transaction fees and expenses. The refinancing takes advantage of favorable market conditions, and will result in lower overall financing costs. Upon the retirement of the 9.25% notes, Moody's will withdraw the ratings from these securities. Prior to the sale of the new $125 million in notes, PSF intends to undergo a reorganization in which its present parent holding company -- PSF Group Holdings, Inc. -- will be merged with and into Premium Standard Farms, Inc. Moody's also notes that these transactions are being accomplished prior to a secondary equity offering of PSF stock in which existing PSF equity holders will sell a portion of their stake to the public markets (no net equity proceeds will be received by PSF). PSF's ratings are limited by its exposure to the cyclical, volatile, and highly competitive pork industry, its relatively narrow product line, and its relatively small size. PSF operates in a cyclical and volatile industry, where prices and margins can vary significantly over time. Factors such as the balance of supply and demand for pork within the marketplace, the weather's impact on grain and hence animal feed prices, animal disease, and international trade disputes -- which are completely out of the company's control -- can cause dramatic swings in earnings and cash flow within the industry. The pork industry is also highly competitive, and includes large companies [such as Smithfield (Ba1) and Tyson (Baa3)], which have substantially-greater resources and market shares than does PSF. PSF's operations are also concentrated exclusively in the pork sector, making it more vulnerable to developments in this single industry than more diversified protein companies. The ratings are supported by: (1) PSF's vertical integration, which moderates the impact of cyclical price swings and provides opportunity for greater quality control of its product; (2) its focus on value-added products for premium niches; (3) its relatively new facilities and equipment, competitive cost position and regional diversification; and (4) a management team with significant industry experience. Moody's notes that while PSF's operating performance has been erratic over recent years, it has been very strong over the past 12 months. This can be attributed to several factors, including: (1) the benefits the pork industry has realized because of difficulties in the beef markets (due to the December 2003 discovery of BSE in the US and the closure of US borders to Canadian cattle); (2) Avian influenza in Asia (which has increased demand for US pork exports); (3) as well as the continued domestic popularity of high- protein diets. But while these factors have been very beneficial to PSF's earnings and cash flow over the past year, it is unlikely that such strong industry conditions will continue over the long term. The U.S. pork processing industry is highly competitive. Consolidation over the past few years has left the top three processors representing over 50% of the market, with the top ten controlling 90%. Pork production, while also consolidating, remains more fragmented with the top 10 producers controlling 34% of productive capacity. The sector is continuing to consolidate to achieve efficiencies and enhance capabilities to meet the demands of the quickly consolidating and highly competitive retail market through which much of the product ultimately is sold. Processors also have been investing to develop value-added and case-ready products. In addition, vertical integration is increasing, either through contractual arrangements with producers or direct ownership of hog production operations. Operational risks in the industry include hog disease and productivity issues, which can materially affect hog production profits, and the environmental impact of operations, which can constrain growth, attract litigation, and require investment. PSF currently is a medium-sized, integrated producer of fresh and processed pork, oriented toward higher value-added products. The company is the sixth largest pork processor (with approximately 4% market share of U.S. industry processing capacity) and the second largest U.S. pork producer (with a about 4.5% of production capacity). Its facilities are relatively new and cost competitive. They are spread among three geographic areas (North Carolina, Missouri, and Texas), which can mitigate potential disease and cost issues. The company's customer base has been stable and is diversified. PSF has a high degree of vertical integration through its direct ownership of hog production operations. The vertical integration dampens cyclical volatility because processing operations and hog production operations tend to be counter-cyclical. Vertical integration also enhances PSF's ability to standardize and control the quality of its input and final products, a critical element to effectively execute its marketing strategy of selling high value-added products of its product mix to non-commodity, premium and specialty markets. In addition, PSF is growing its exports, particularly to Japan, where premium product demand remains strong and margins are high. Sales to this market will be important for the company to sustain, given the high margins. PSF's operations are asset intensive, with high fixed costs, and it operates in a cyclical business, even taking into account its vertical integration. Given its high operating leverage, cyclical changes in commodity input and/or output prices can significantly impact margins. Also, inventory turns are low due to the length of the hog production cycle, requiring material working capital investment, and hog production facilities require a large investment in fixed assets, resulting in low asset turnover. PSF will have approximately $208 million in debt (pro forma as of 12/25/04) at the closing of the transaction. Following several years of heavy capital investment and current strong operating performance, PSF has been reducing its overall debt load, and expects to reduce debt further in the year ahead. Currently, capital spending of $44 million is running approximately $16 million below depreciation, providing excess cash flow for debt reduction. Should the company pursue additional debt financed acquisitions (part of its strategy), its leverage could increase. Free cash flow to lease adjusted debt was approximately 34% for the 12 months ended 3/31/05. EBITDA-CAPX/Interest of 7.1X over the same period was also very strong. The rating of the $125 million senior notes is notched down from the senior implied rating to reflect their effective subordination in the capital structure behind secured bank debt. The notes will be guaranteed on an unsecured basis by PSF's subsidiaries. The revolving credit is secured by substantially all the assets of PSF, excluding certain real property and equipment in North Carolina and Texas. Availability under the revolving credit is governed by a borrowing base consisting of accounts receivable, inventory, and real property. The indenture for the senior notes provides PSF with the ability to increase the amount of secured debt in the future -- largely due to additional borrowings under the secured revolver. Following the transaction, PSF will have approximately $71 million of secured debt and $11 million in letters of credit outstanding under its bank facility. The bank facility is currently $175 million, but can be increased to $200 million with the agreement of the Agent bank. Consequently, PSF could potentially increase secured debt by an additional $110 - $120 million after closing at current operating rates. The outlook for PSF's ratings is stable. While Moody's expects PSF's debt protection to weaken from current strong levels, we nevertheless expect the company's credit profile to remain within a range acceptable to its rating. Due to the cyclical nature of the pork industry, Moody's expects volatility in PSF's earnings and cash flow. As a result, Moody's expects PSF's credit metrics to be stronger than for a comparably rated company in a more stable segment of the food industry. Over time, Moody's expects PSF's free cash flow to debt ratio to range between 10% and 20%. PSF's ratings could be upgraded over time if it is able to effectively manage its growth, and increase its size and scale in order to further strengthen its fundamental operating performance and improve its return on assets. Additionally, an upgrade would require PSF to increase its product and geographic diversification, so as to moderate the volatility in earnings and cash flow caused by a single highly cyclical protein market. An upgrade would also require PSF to be able to maintain very solid operating performance even when industry conditions are not as favorable as in recent months, by showing an ability to sustain a ratio of free cash flow to debt over 15%. Conversely, PSF's ratings could come under downward rating pressure if its operating performance deteriorated (due to fundamental or cyclical industry issues), or its leverage increased due to leveraged acquisitions, for example, to the point where free cash flow to debt approached or fell below 8% and was unlikely to recover within 12 months. Rating assigned is: * $125 million senior unsecured notes at B1 Ratings affirmed are: * Senior implied rating at Ba3 * $175 million senior unsecured 9.25% notes due 6/15/11 at B1 * Senior unsecured issuer rating at B2 Premium Standard Farms, Inc., with headquarters in Kansas City, Missouri, is an integrated U.S. hog producer and pork processor with facilities in Missouri, North Carolina, and Texas. QWEST COMMS: Moody's to Look at Net Debt & Synergies in MCI Merger ------------------------------------------------------------------ Moody's Investors Service believes MCI Inc.'s declaration that the latest bid by Qwest Communications International is "superior" increases the possibility that Qwest rather than Verizon Communications Inc. will be the ultimate purchaser of MCI. If this were to occur, Moody's would assess the B2 Senior Implied ratings of both Qwest and MCI. Among other factors, the assessment would focus on the likely increase in net debt of the combined companies relative to Moody's view of the potential value of synergies to be obtained from the merger. As reported in the Troubled Company Reporter on Apr. 25, 2005, Qwest Communications International Inc. transmitted a letter to the Board of Directors of MCI, Inc., regarding its new and revised offer for MCI for up to $30 a share. Previous Qwest Proposal Qwest's previous proposal contained $13.50 in cash (excluding MCI's March 15 dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14.00 provided Qwest's share price is between $3.32 and $4.15) per MCI share. MCI/Verizon Merger Agreement On March 29, 2005, MCI and Verizon amended their joint merger agreement. Under that agreement, each MCI share would receive cash and stock worth at least $23.10, comprising $8.35 (excluding MCI's March 15 dividend payment of ($0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75. Verizon says its unfazed by Qwest's revised offer. Moody's Proposes Priorities Moody's present B2 senior implied ratings on Qwest and MCI generally reflect operating struggles both companies face due to the intensely competitive nature of the telecommunications industry. Therefore, Moody's believes that free cash flow generation and debt reduction would need to remain priorities of the combined companies to reduce the risk of future credit deterioration. Moody's presently believes this will be challenging, since meaningful free cash flow will result only if a combined Qwest and MCI can successfully eliminate redundant network costs while also stabilizing top line revenue declines in both companies' core businesses. Revenue declines in the telecommunications sector remain a key ratings factor in Moody's analyses. Financial Difficulties Qwest has been suffering local access line losses at nearly four per cent per year for the past several years while MCI has been suffering double-digit revenue losses in its commercial and residential long distance businesses. While competition and regulation have been key contributors to this performance deterioration, both companies have also had to overcome serious accounting probes, financial restatements, and balance sheet overhauls. As a result, Moody's is concerned that both Qwest and MCI may not be adequately prepared for the serious competitive challenges that wireless substitution and cable telephony services pose. A combined Qwest and MCI would have to resell wireless service through an agreement with Sprint and Qwest has yet to articulate a facilities-based video solution as have, for example, Verizon and SBC. Qwest Throws Punches at Competitors' Merger Plans As reported in the Troubled Company Reporter on Apr. 27, 2005, Qwest Communications International Inc. 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. Synergies Moody's recognizes that, combined, Qwest and MCI could help each other save costs, particularly network operating costs and investment. Qwest has a technologically sound if underutilized long haul network, while MCI has a leading market share with enterprise and government customers. Therefore, Moody's believes that the opportunity for synergies may be significant. Whether or not it equals Qwest's announced $14.8 billion net present value estimate would be the focus of intensive consideration; this equates to $2.8 billion annually, though Qwest acknowledges some upfront investment will be required to unlock these savings. Moody's assessment of the rating impact on Qwest and MCI of a merger will be heavily impacted by our view of the magnitude and likelihood of achieving any synergies. Review Focus Moody's will also focus on the impact on Qwest's capital structure of a merger with MCI. Qwest presently has $17.3 billion in gross debt at five legal entities and MCI will be a sixth. As a result there is wide dispersion of ratings around Qwest's B2 senior implied rating and some of the greatest rating impact of a merger with MCI could be on the ratings of the debt at Qwest's various legal entities. Moody's believes that the pro forma balance sheet of a Qwest and MCI combination as currently contemplated will be liquid, but that the combination of cash dividends to MCI shareholders and Qwest's ability to match any shortfall in its share price with cash means pro forma net debt levels could be meaningfully higher. As a result, Moody's analysis will focus heavily on the achievability and magnitude of synergies. The ratings for Verizon are on review for downgrade while the ratings for MCI are on review for upgrade as a result of these two companies' agreement to merge. About MCI Inc. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * 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 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. 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. About Qwest Communications 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. R&G FIN'L: Revisions Cues Fitch to Put Ratings on Watch Negative ---------------------------------------------------------------- Fitch Ratings has placed the ratings of R&G Financial Corporation and its subsidiaries on Rating Watch Negative following the announcement that the company intends to revise its methodology in valuing residual interests retained in securitization transactions. This will result in the company restating earnings for 2003 and 2004 and will produce a delay in the release of first-quarter 2005 results. A list of ratings is provided at the end of this release. The rating action is in response to RGF's announcement that it plans to change the methodology used to value its residual interests (interest-only securities -- IOs) retained through securitization activity. As of Dec. 31, 2004, RGF carried IOs on its balance sheet at a fair value of $190 million. The company anticipates this asset will be written-down by approximately $90- $150 million, or between $55 and $95 million after tax. On a pro forma basis, a $95 million after-tax charge would reduce equity to total assets to approximately 7.50% from the reported 8.39%. Capitalization, after the charge, remains adequate for the current rating category. Fitch requires a more significant level of capital against RGF's higher risk assets, such as capitalized mortgage servicing rights and IOs. The company has stated that it is conducting a comprehensive review that will cover all the assumptions and processes used to value its IOs to calculate the gains on sale. The review will also test and evaluate the effectiveness of internal controls pertaining to financial reporting. The Rating Watch Negative will be evaluated following Fitch's review with management on future valuation methodology, risk management improvements, funding and liquidity in conjunction with the prospective changes to the business model. Fitch expects that the restatement process will be completed within a time frame that will allow RGF to resume normal financial reporting by the end of June 2005. The restated financials will allow Fitch to fully assess the actual write-down and resulting capital position. Fitch does not believe the negative financial news should significantly hinder retail business flow of RGF's residential mortgage operation. Ratings placed on Rating Watch Negative by Fitch R&G Financial Corporation: -- Long-term Senior Unsecured 'BBB'; -- Preferred stock 'BB+'; -- Individual 'B/C'. R&G Mortgage: -- Long-term senior unsecured 'BBB'. R-G Premier Bank: -- Long-term deposit obligations 'BBB+; -- Long-term non-deposit obligations 'BBB'; -- Short-term deposit obligations 'F2'. R-G Crown Bank: -- Long-term deposit obligations 'BBB+'; -- Long-term non-deposit obligations 'BBB'; -- Individual 'B/C'; -- Short-term deposit obligations 'F2'. Ratings affirmed R&G Financial Corporation R-G Crown Bank: -- Support '5'. R-G Premier Bank R-G Crown Bank: -- Short-term non-deposit obligations 'F3'. RADIO ONE: Moody's Places Ba2 Ratings on New $750M Sr. Sec. Debts ----------------------------------------------------------------- Moody's Investors Service assigned Ba2 ratings to Radio One, Inc.'s new $750 million in senior secured credit facilities ($450 million senior secured revolving credit facility, $300 million senior secured term loan). The proceeds of the transaction will be used to refinance the existing unrated senior secured credit facilities, including $210 million outstanding under the revolving credit facility (recently used to refinance a portion of the preferred securities). The transaction is neutral to leverage, but increases the overall size of the senior secured credit facility by $150 million and extends the company's maturity profile until 2011. The affirmation of the ratings and positive outlook reflects: (1) Radio One's continued strong operating performance, (2) the company's advantageous position in the African-American media industry, with an attractive station portfolio (#1 or #2 ranked clusters in 21 of the top 50 African-American markets), and (3) strong free cash flow generation that provides Radio One the ability to organically delever its balance sheet offset by Moody's belief that the company will continue to diversify into other forms of media, thus, posing the risk of potential cash-consumptive investment (e.g. content and programming). Moody's assigned these ratings: (i) a Ba2 rating to the $450 million senior secured revolving credit facility, and (ii) a Ba2 rating to the $300 million senior secured term loan B. Moody's affirmed these ratings: (i) the B2 ratings on the senior subordinated notes, (ii) the Ba3 senior implied rating, and (iii) the B1 senior unsecured issuer rating. The outlook is positive. The ratings remain constrained by: (1) Radio One's still high leverage of 5.8x (measured as total debt-to-EBITDA), (2) the likelihood that the company will continue to acquire radio stations to expand its presence in new and existing markets, and (3) the potential for further investment in its strategic diversification into new forms of media (i.e. TV, internet, content and programming). The ratings also reflect: (1) the highly competitive nature of the radio industry, (2) the inherent cyclicality of the advertising market, and (3) Moody's belief that radio is a mature industry with modest growth prospects. However, the ratings remain supported by: (1) the growth opportunity present in the attractive African American demographic that Radio One targets, (2) Radio One's ability to effectively leverage its cost structure across its radio station clusters, (3) the resulting high operating margins that lead the radio industry peer group (EBITDA margin of about 49.4% for YE 2004), and (4) strong free cash generation. The ratings also benefit from Radio One's strong management team and the company's willingness to conservatively finance investments with a mix of equity and debt (Moody's notes that Radio One has raised over $1.4 billion in equity to date). Moody's also notes that the ratings are supported by the notable asset value of the radio station portfolio, as well as, potential value of the TV One asset. The positive outlook incorporates Moody's expectation that absent any acquisitions or further investment in other media business, Radio One has the ability to quickly reduce debt through internally generated funds. For the ratings to move higher, Moody's expects leverage to remain closer to 5 times. Moody's notes that the company has benefited from its ability to use equity as currency to finance acquisitions. To the extent that the company's use of debt to finance additional large acquisitions significantly increases leverage, a reversion to the former stable outlook may be warranted. Pro forma for the transaction, Moody's expects Radio One's financial leverage (measured as total debt-to-EBITDA) to be about 6 times and pro forma cash interest coverage should remain at about 4 times before capital expenditures. Thus, the effect of the transaction is neutral to credit metrics. The senior secured credit facilities are guaranteed by substantially all the direct and indirect subsidiaries of the company (not including Reach Media or TV One LLC). The Ba2 ratings on the $750 million in senior secured credit facilities reflect their senior-most position in the company's capital structure and the benefit of a security interest in all of the stock of each of the guarantors and substantially all of the assets. The one notch differential from the Ba3 senior implied rating reflects the substantial asset coverage enjoyed by the bank group. The B2 rating on the senior subordinated notes reflects their effective and contractual subordination to the outstandings under the company's secured bank credit facilities. Radio One is the nation's seventh largest radio broadcasting company, operating 69 radio stations in 22 markets. In January 2004, Radio One launched TV One, an African-American targeted cable television network, as a joint venture with Comcast Corporation. RAVENEAUX LTD: Committee Wants to Hire Boyer & Miller as Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Raveneaux, Ltd., seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ Boyar & Miller, P.C. as their counsel, nunc pro tunc March 11, 2005. The Committee has chosen Boyar & Miller because Boyar & Miller: -- is well qualified to advise the Committee with respect to its duties, responsibilities and obligations in connection with Raveneaux's chapter 11 case, -- has substantial expertise and knowledge with respect to the issues presented in Raveneaux's chapter 11 case, -- has substantial experience with insolvency, reorganization and bankruptcy law, and -- has experience in litigation, real estate, and corporate matters. Boyar & Miller will: (a) advise and consult with the Committee concerning: 1. legal questions arising in the administration of the Debtor's estate, 2. the Unsecured Creditors' rights and remedies, and 3. all matters related to Raveneaux's chapter 11 case. (b) assist the Committee in preserving and protecting the Debtor's estate in accordance with the provisions of the Bankruptcy Code, (c) investigate and, with the Court's authority, prosecute preference, fraudulent transfer and other actions arising under the Debtor's avoidance powers and other causes of action, (d) perform any pleadings, motions, answers, responses, notices, orders, agreements, and any reports that are required for the protection of the Committee's interest and the orderly administration of the Debtor's estate, and (e) perform any and all other legal services for the Committee that are necessary and appropriate to faithfully discharge its duties. Trent L. Rosenthal, Esq., a shareholder in Boyar & Miller, P.C., discloses his Firm's professionals' current hourly billing rates: Designation Hourly Rate ----------- ----------- Shareholders $250 - $475 Counsel $310 Associates $150 - $225 Paralegals $85 - $100 To the best of the Official Committee of Unsecured Creditors' knowledge, Boyar & Miller and the partners, principals and professionals who will work in the engagement: (a) do not have connections with the Debtor, its creditors, or other party-in-interest, or their respective attorneys, and (b) are "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. Committee As previously reported in the Troubled Company Reporter, the United States Trustee for Region 7 appointed six creditors to serve on the Official Committee of Unsecured Creditors in Raveneaux, Ltd.'s chapter 11 case. On March 11, 2005, the Committee assembled and appointed Michael D. Watford as acting chairperson of the Committee. Headquartered in Spring, Texas, Raveneaux, Ltd. -- http://www.raveneaux.com/-- operates a country club, a golf course and tennis courts. The Company filed for chapter 11 protection on Feb. 24, 2005 (Bankr. S.D. Tex. Case No. 05-32734). Edward L. Rothberg, Esq., Hugh M. Ray, III, Esq., and Melissa Anne Haselden, Esq., at Weycer Kaplan Pulaski & Zuber, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $15 million and total debts of $11 million. RAVENEAUX LTD: Wants to Tap Professor Lattin as Turnaround Advisor ------------------------------------------------------------------ Raveneaux, Ltd., seeks the authority of the U.S. Bankruptcy Court for the Southern District of Texas to employ and retain Professor Thomas Lattin as its turnaround Consultant, nunc pro tunc March 9, 2005. Professor Thomas Lattin will: (a) conduct a review of the Debtor's business by analyzing management skills, information systems, financial controls and strategic positioning in the market place; (b) review Debtor's payroll history, financial statements and inventory detail, and prepare analysis and reports as the Debtor's financial condition; (c) provide a breakeven analysis and pro forma cash flow projection on steps to prevent erosion of critical assets for the benefit of the Unsecured Creditors of the Estate; (d) identify tactical areas for improvement which will increase profitability, cash flow and EBITDA; and (e) give testimony as needed. Professor Lattin will be paid a retainer of $5,000 and he requests a fee of $350 per hour plus reasonable out-of-pocket expenses. To the best of the Raveneaux's knowledge, Professor Thomas Lattin: (a) does not have connections with the Debtor, its creditors, or other party-in-interest, or their respective attorneys, and (b) is a "disinterested person" 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 Spring, Texas, Raveneaux, Ltd. -- http://www.raveneaux.com/-- operates a country club, a golf course and tennis courts. The Company filed for chapter 11 protection on Feb. 24, 2005 (Bankr. S.D. Tex. Case No. 05-32734). Edward L. Rothberg, Esq., Hugh M. Ray, III, Esq., and Melissa Anne Haselden, Esq., at Weycer Kaplan Pulaski & Zuber, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $15 million and total debts of $11 million. REGIONAL DIAGNOSTICS: Case Summary & 20 Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Regional Diagnostics, L.L.C. 4400 Renaissance Parkway, Suite L Warrensville Heights, Ohio 44128 Bankruptcy Case No.: 05-15262 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Regional Diagnostics Holdings, LLC 05-15264 TR Radiology, Inc. 05-15267 Type of Business: The Debtor owns and operates 27 medical clinics located in Florida, Illinois, Indiana, Ohio and Pennsylvania. See http://www.regionaldiagnostic.com/ Chapter 11 Petition Date: April 20, 2005 Court: Northern District of Ohio (Cleveland) Judge: Pat E. Morgenstern-Clarren Debtors' Counsel: Jeffrey Baddeley, Esq. Baker & Hostetler LLP 3200 National City Center 1900 East Ninth Street Cleveland, Ohio 44114-3485 Tel: (216) 621-0200 Fax: (216) 696-0740 Estimated Assets: $10 Million to $50 Million Estimated Debts: $50 Million to $100 Million Debtors' Consolidated List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dr. James Zelch Subordinated debt $11,283,333 2000 Auburn Drive Beachwood, OH 44122 Craig Pisani Subordinated debt $8,981,096 660 Madison Avenue New York, NY 10021 Richard A. Meringlo Subordinated debt $5,193,614 175 Federal Street Boston, MA 02110 Hitachi Medical Systems Trade debt $1,540,624 1959 Summit Commerce Park Twinsburg, OH 44087 Toshiba Trade debt $638,439 P.O. Box 91605 Chicago, IL 60693 Merge Technologies, Inc. Trade debt $403,263 1126 South 70th Street Suite S-107B Milwaukee, WI 53214 Centura X-Ray Trade debt $221,808 P.O. Box 71236 Cleveland, OH 44191 Aetna-Middletown Trade debt $133,051 Greensberg Traurig, P.A. Trade debt $120,238 Heidrick & Struggles, Inc. Trade debt $107,517 GE Healthcare Services Trade debt $96,744 Bracco Diagnostics, Inc. Trade debt $79,893 Crowe Chizek & Company LLC Trade debt $67,200 GE Medical Systems Trade debt $60,916 MXR Trade debt $55,573 QORVAL Trade debt $43,163 SourceOne Healthcare Trade debt $41,691 Mallinkrodt, Inc. Trade debt $38,220 GE Medical Systems Trade debt $32,606 IDX Systems Corporation Trade debt $30,231 RELIANCE GROUP: Liquidator Wants April 2005 Claims Report Okayed ---------------------------------------------------------------- M. Diane Koken, as Insurance Commissioner of the Commonwealth of Pennsylvania and Liquidator of Reliance Insurance Company, asks the Commonwealth Court to approve her April 2005 Report and Recommendations on Claims. Kandi D. Buckman, Esq., Special Funds Counsel at the Pennsylvania Insurance Department, in Harrisburg, Pennsylvania, tells Judge James G. Colins that the Report reflects Notices of Determinations issued by the Liquidator for which the objection period expired on September 30, 2004. The Report is comprised of three sections. The first section lists undisputed claims filed against the RIC estate. Of these claims, 20 are amended NODs that correct the class or allowed amount of a claim recommended by the Liquidator and approved by the Commonwealth Court. The second section of the Report contains a list of claims to which objections were filed and which were settled for $250,000 or less. Upon resolution, the Liquidator issued an Amended NOD for the settled claims reflecting the resolution of the dispute. In some cases, claimants withdraw their objection. The third section of the Report is a summary sheet (that includes the undisputed and settled claims) indicating the total number of NODs and the total amount allowed for each classification. The Liquidator asks Judge Colins to approve and allow the claims as listed in her April 2005 Report. Exhibits to the April 2005 Report is available for free at: http://www.reliancedocuments.com/page6.htm Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESOLUTION PERFORMANCE: Moody's Revises Outlook to Developing ------------------------------------------------------------- Moody's Investors Service affirmed the B2 senior implied ratings of Borden Chemical Inc. and Resolution Performance Products, LLC. Moody's also changed the outlook on the ratings of both companies to developing from negative following the announcement that Apollo Management, LP will merge three chemical businesses under its control to form a new company, Hexion Specialty Chemicals, Inc. The change in outlook reflects uncertainty over the terms of the new $675 million credit facilities, the change in collateral for secured note holders due to the merger of the companies, the further subordination of RPP's subordinated notes to environmental and pension liabilities at Borden, and the $200 million increase in debt at the combined company. Apollo will utilize a portion of the proceeds from the new credit facility ($200 million) and the proceeds of the contemplated common stock offering to fund a $550 million dividend. Moody's affirmation of Borden's and RPP's senior implied ratings reflects the benefits of their merger with Resolution Specialty Materials LLC (RSM; unrated by Moody's), including the increased size, improved business diversity, roughly $75 million of potential synergies, as well as an improved operating environment. However, Moody's noted that Borden's ratings had already considered some potential synergies between Borden and RPP. Furthermore, the B2 ratings reflect the substantial leverage of the combined entity with a pro forma total debt to EBITDA of upwards of 7 times, excluding synergies, and the expectation that free cash flow will remain depressed through much of 2005, due to the increasing investment in working capital, higher capex and ongoing pension contributions. The developing outlook reflects uncertainty over the impact of the merger on the various tranches of secured and subordinated debt as a result of the merger. While Moody's has affirmed the existing B2 senior implied ratings and would likely place a B2 senior implied rating on Hexion upon completion of the merger, Moody's could change its ratings on individual tranches of debt depending on changes to collateral access or priority in bankruptcy as a result of the merger. Due to the increased debt from the transaction, it is possible that Moody's could move the outlook back to negative once the structural issues are resolved, unless financial performance in the first quarter of 2005 has improved substantially from the 2004 levels. Borden Chemical, Inc., based in Columbus, Ohio, is a chemical producer of resins, formaldehyde, and coatings. The company reported revenues of $1.7 billion for the LTM ended December 31, 2004. Resolution Performance Products, LLC, headquartered in Houston, Texas, is a leading global producer of epoxy resins, and versatic acids and derivatives, and also is a leading merchant supplier of bisphenol-A. The company generated revenues of $1 billion for the LTM ended December 31, 2004. Resolution Specialty Materials, LLC, headquartered in Carpentersville, Illinois, produces base coating resins and additives for formulation into finished coatings, a range of specialty polymers for graphic art applications, composite polymers, textile chemicals and acrylic monomers. The company generated revenues of $768 million for the LTM ended Dec. 31, 2004. SALOMON BROTHERS: Fitch Upgrades $8.4 Mil. Mortgage Certs. to BB+ ----------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Inc.'s commercial mortgage pass-through certificates, series 2000-NL1 are upgraded by Fitch Ratings: -- $5.9 million class H certificates to 'AAA' from 'AA-'; -- $4.2 million class J certificates to 'AA' from 'BBB+'. -- $8.4 million class K to 'BB+' from 'BB'. In addition, Fitch affirms these classes: -- Interest-only class X at 'AAA'; -- $14.8 million class E at 'AAA'; -- $5 million class F at 'AAA'; -- $10.9 million class G certificates at 'AAA'; -- $3.3 million class L at 'B-'. Fitch does not rate the $4.4 million class M certificates. Classes A-1, A-2, B, C, and D have paid off in full. The upgrades reflect improved credit enhancement levels resulting from three loan payoffs that have occurred since Fitch's last upgrade of the transaction in February 2005. As of the April 2005 distribution date, the pool's aggregate certificate balance has decreased 79.3% to $56.8 million from $334.2 million at issuance. There is one 30-day delinquent loan but no loans in special servicing. None of the loans have lockout provisions and as such the deal is expected to continue to pay down. Currently, 98% matures in 2008. SAVVIS COMMS: March 31 Balance Sheet Upside-Down by $84.7 Million ----------------------------------------------------------------- SAVVIS Communications Corporation (NASDAQ:SVVS), a leading global IT utility, reported that revenue for the first quarter of 2005 totaled $162.2 million, up 50% from $108.1 million in the first quarter of 2004. Results for the 2004 quarter included one month of revenue attributable to the Cable & Wireless America operations acquired in March 2004. Compared to the fourth quarter of 2004, revenue decreased 2%, in line with company guidance, as growth in core Hosting and Managed IP VPN revenue was offset by anticipated declines in revenue from SAVVIS' two largest customers and from unmanaged bandwidth, reported in Other Network Services. SAVVIS' gross profit for the first quarter of 2005 grew 77%, to $53.1 million from $29.9 million in the first quarter of 2004. Sequentially, gross profit declined from $55.4 million in the fourth quarter of 2004. As a percentage of revenue, gross profit was 33% in the current quarter, up from 28% in the first quarter of 2004 and unchanged from the fourth quarter of 2004. SAVVIS' consolidated net loss for the current quarter was $20.9 million, an improvement of $13.3 million from the same quarter last year and an improvement of $0.8 million from the prior quarter. The first-quarter 2005 loss included $2.1 million of integration costs specifically related to the integration of CWA operations, compared to $1.9 million in the fourth quarter and $4.9 million in the first quarter of 2004. Adjusted EBITDA of $15.7 million increased $18.3 million, from negative Adjusted EBITDA of $2.6 million a year earlier, and decreased from $18.4 million in the fourth quarter 2004, which, as previously reported, included approximately $4.9 million of non-recurring benefits. Operating cash flow was $10.0 million in the first quarter, an increase of $7.5 million from a year earlier and $1.7 million from the prior quarter. First quarter 2005 operating cash flow included cash payments of $3.3 million for acquisition and integration costs, compared to payments of $1.0 million for those costs in the first quarter 2004 and $5.6 million in the fourth quarter. SAVVIS' cash position at March 31, 2005, was $50.3 million, down from $55.4 million at December 31, 2004, as cash capital expenditures of $14.1 million offset the positive operating cash flow. Rob McCormick, SAVVIS' chairman and chief executive officer, said, "We're off to a solid start in 2005, with Adjusted EBITDA improvement of $30.3 million from pro forma Adjusted EBITDA of negative $14.6 million a year ago, continued growth in our core Managed IP VPN and Hosting revenue, and excellent sales success in the quarter. Our focus today is on successfully executing our business strategy by demonstrating the value of our industry- leading virtualized utility services in the market, and continuing to grow our core revenue and Adjusted EBITDA, which we view as an important driver of stockholder value." In reporting its financial results for the first quarter of 2004, SAVVIS prepared information in two categories to assist investors in analyzing the company's performance: -- "Reported" results are in accordance with U.S. generally accepted accounting principles (GAAP). -- "Pro forma" results present the combined results of operations of the existing SAVVIS business and CWA as if the acquisition had occurred as of January 1, 2004, after giving effect to certain adjustments, including depreciation, accretion, interest, the issuance of Series B Convertible Preferred Stock and the issuance of additional debt. SAVVIS believes that providing pro-forma financial information assists investors and others in comparing financial trends of ongoing business activities. Total revenue for the first quarter increased 50% year-over-year, driven by revenue associated with the CWA assets acquired in March 2004 and growth in Managed IP VPN and Hosting revenue. Sequentially, revenue declined 2% from the fourth quarter of 2004, primarily reflecting anticipated declines in revenue from SAVVIS' two largest customers and pricing pressure in the wholesale services market, consistent with previous company announcements. Growth in Managed IP VPN revenue, up 6% sequentially, and in Hosting revenue, up 3% sequentially, offset much of the decline. Digital Content Management revenue was $9.6 million in the quarter, down $2.1 million from the fourth quarter, primarily due to a decrease in usage from a single customer. Diversified Revenue, defined as revenue from all customers except Reuters and Telerate, represented 84% of total revenue in the first quarter, up from 83% in the fourth quarter 2004 and from 71% in the first quarter of 2004. Gross profit, defined as total revenue less data communications and operations expenses, was $53.1 million in the current quarter, compared to $29.9 million in the first quarter of 2004 and $55.4 million in the fourth quarter of 2004. As a percentage of revenues, gross profit was 33% in the current quarter, up from 28% in the first quarter of 2004 and unchanged from the fourth quarter of 2004. Sales, general, and administrative expenses ("SG&A") for the quarter were $37.4 million as compared to $32.5 million for the same period last year and $37.0 million in the fourth quarter of 2004. As a percentage of revenue, SG&A was 23% in the current quarter, down from 30% of revenue in the same quarter of 2004 and up slightly from 22% in the fourth quarter of 2004. Balance Sheet and Cash Flow Net cash provided by operating activities in the first quarter 2005 was $10.0 million, compared to $2.5 million a year ago and $8.3 million in the fourth quarter of 2004. Operating cash flow included cash payments of $3.3 million of acquisition and integration-related costs to realize synergies in the first quarter 2005, $1.0 million in the first quarter 2004, and $5.6 million in the fourth quarter 2004. The balance sheet and cash position remain in line with management expectations, with $50.3 million in cash at March 31, 2005, and Days Sales Outstanding ("DSO") below 30 days. Financial Outlook Chief Financial Officer Jeff Von Deylen commented, "Solid revenue and Adjusted EBITDA performance in the first quarter was at the high end of our guidance, so we are refining our outlook for 2005, to an expectation of revenue in a range of $640-660 million and Adjusted EBITDA in a range of $55-65 million. Core Managed IP VPN and Hosting revenue now constitute 59% of total revenue at SAVVIS, continuing the trend of higher revenue contribution from higher- margin, value-added services where SAVVIS truly differentiates itself in the market. Additionally, we achieved strong operating cash flow in the quarter of $10.0 million and maintained a gross margin of 33%, testifying to the growing strength of our operating model." Based on current information, SAVVIS management's expectations for 2005 financial results include: -- Double-digit year-over-year growth in Hosting and Managed IP VPN revenue; -- Lower revenue from Reuters and Telerate, contributing 13- 15% of total annual revenue; -- Total revenue in a range of $640-660 million; -- Adjusted EBITDA in a range of $55-65 million; -- Positive operating cash flow; -- Cash capital expenditures in a range of $40-45 million; -- Cash debt service payments of approximately $15-16 million; and -- Cash payments for integration-related costs of $8-12 million. Operational Highlights -- Installed new business generating approximately $39 million of annualized revenue; backlog of approximately $30 million. -- Rapid commercial adoption of virtualized utility services platform, deploying more than 800 virtual firewalls, more than 420 virtual servers, and more than 120 terabytes of virtualized storage. -- New customers signed include enterprises such as: * Campmor; * G2 Switchworks; * Keenan and Associates; * Mayer, Browne, Rowe & Maw; * Progress Interactive; * whitbybird Ltd.; and * others to come. -- SAVVIS expanded relationships with existing customers including: * Ascent Media Group; * GoldenSource Corporation; * Gray Hawk Systems; * True Advantage; and * others to come. About the Company SAVVIS Communications (NASDAQ:SVVS) is a leading global IT utility services provider that delivers secure, reliable, and scalable hosting, network, and application services. SAVVIS' strategic approach combines the use of virtualization technology, a utility services model, and automated software management and provisioning systems. SAVVIS solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT infrastructure. With an IT services platform that extends to 47 countries, SAVVIS is one of the worlds' largest providers of IP computing services. For more information about SAVVIS, visit http://www.savvis.net/ At Mar. 31, 2005, SAVVIS Communications Corporation's balance sheet showed an $84,715,000 stockholders' deficit, compared to a $63,941,000 deficit at Dec. 31, 2004. SECURITIZED ASSET: Moody's Assigns Ba1 Rating to Class B-4 Certs. ----------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by Securitized Asset Backed Receivables LLC Trust 2004-EC1 and ratings ranging from Aa1 to Ba1 to the mezzanine and subordinate certificates in the deal. The securitization is backed by Encore Credit Corp originated adjustable-rate (84.38%) and fixed-rate (15.62%) sub-prime mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection from subordination, overcollateralization -- OC, and excess spread. The credit enhancement requirements reflect some benefit for due diligence performed on the collateral. The loans backing this deal are in line with other recent securitizations of this type of collateral from this originator. Countrywide Home Loans Servicing LP will service the loans. Moody's has assigned its top servicer quality rating to Countrywide for primary servicing of subprime loans. The complete rating actions are: Issuer: Securitized Asset Backed Receivables LLC Trust 2005-EC1 Securities: Mortgage Pass-Through Certificates, Series 2005-EC1 * Class A-1A, rated Aaa * Class A-1B, rated Aaa * Class A-2A, rated Aaa * Class A-2B, rated Aaa * Class A-2C, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated A2 * Class M-4, rated A3 * Class B-1, rated Baa1 * Class B-2, rated Baa2 * Class B-3, rated Baa3 * Class B-4, rated Ba1 SERVICE CORP: Moody's Says Liquidity is Good Despite Cash Decline ----------------------------------------------------------------- Moody's Investors Service downgraded the speculative grade liquidity rating of Service Corporation International from SGL-1 to SGL-2. The downgrade reflects the projected decline in cash and cash equivalent balances due to Moody's expectation of likely share buybacks and a projected tightening of covenant cushions under the company's revolving credit facility. The SGL-2 rating however reflects a good liquidity profile, with cash and cash equivalents on hand and projected cash flow from operating activities expected to exceed anticipated capital spending, debt maturities, dividends and funding of anticipated share buybacks in the next twelve months. The company's balance of cash and cash equivalents was about $288 million at December 31, 2004 and Moody's expects the company to generate cash flow from operations of over $200 million in the next twelve months. The company's expected cash needs in the next twelve months include capital expenditure requirements of $110 million, debt maturities of $85 million, common stock dividends of $30 million, and anticipated share buybacks. As of March 31, 2005, the remaining dollar value of shares that may be repurchased under the company's share repurchase program was about $86 million although Moody's believes the company will likely expand the program in 2005. Moody's expects debt levels to remain in the $1.2 billion range, while cash and cash equivalent balances will decline from current levels as the company implements share buybacks and considers acquisitions. Additional liquidity support comes from the company's $200 million secured revolver maturing in August 2007. As of December 31, 2004, there were no outstanding borrowings under the facility but availability was reduced by $67 million of outstanding letters of credit. No borrowings under the revolver are expected in the next twelve months. However, depending upon cash balance levels, availability under the revolver may be limited by the net leverage covenant later in 2005. The covenants under the revolving credit facility include a maximum net leverage limit and minimum interest coverage requirement. The credit agreement provides for a maximum net leverage limit of 4 times during the first and second quarter of 2005 and 3.5 times during the third and fourth quarter of 2005. The credit agreement provides for a minimum interest coverage requirement of 3.25 times during the first three quarters of 2005 and 3.5 times during the fourth quarter of 2005. Although Moody's expects the company to be in compliance with these covenants during 2005, projected cushion levels have declined. The SGL rating will be sensitive to the level of cash and equivalents maintained by the company, the ability of the company to maintain a sustainable level of free cash flow from operations and the degree of covenant cushion under the revolving credit facility. Service Corp., headquartered in Houston, Texas, is the largest provider of funeral and cemetery services in North America. Revenues for the year ended December 31, 2004, was about $1.9 billion. It has a senior implied rating of Ba3 and a stable outlook. * * * As reported in the Troubled Company Reporter on Oct. 19, 2004, Moody's Investors Service upgraded all the credit ratings of Service Corporation International and changed the company's outlook to stable from positive. Moody's upgraded these ratings: * $250 million 6.75% senior unsecured notes, due 2016, upgraded to Ba3 from B1 * $143.5 million 6.875% senior unsecured notes, due 2007, upgraded to Ba3 from B1; * $150 million 7.2% senior unsecured notes, due 2006, upgraded to Ba3 from B1; * $358.3 million 7.7% senior unsecured notes, due 2009, upgraded to Ba3 from B1; * $195 million 6.5% senior unsecured notes, due 2008, upgraded to Ba3 from B1; * $55.6 million 7.875% senior unsecured debentures, due 2013, upgraded to Ba3 from B1; * $63.8 million 6% senior unsecured notes, due 2005, upgraded to Ba3 from B1; * $51 million 8.375% senior unsecured notes, due 2004, upgraded to Ba3 from B1; * Senior unsecured shelf registration, upgraded to (P)Ba3 from (P)B1; * Senior Subordinated, Subordinated, and Junior Subordinated shelf registrations, upgraded to (P) B2 from (P)B3; * Senior Implied, upgraded to Ba3 from B1; * Senior Unsecured Issuer, upgraded to Ba3 from B1; * Speculative Grade Liquidity Rating, upgraded to SGL-1 from SGL-2. The ratings outlook has been changed to stable from positive. SMC HOLDINGS: Brings-In Shearman & Sterling as Co-Counsel --------------------------------------------------------- SMC Holdings Corp. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the District of Delaware to retain Shearman & Sterling LLP as co-counsel to Richards, Layton & Finger, P.A., for representation in their chapter 11 restructuring. Shearman has been the Debtors long-term counsel prior to the filing of the chapter 11 cases. Because of the prepetition work Shearman did for the Debtors, the Firm is well-versed with the Debtors' businesses and general legal affairs. Shearman will coordinate its efforts with Richards Layton to avoid duplication of services. Specifically, Shearman & Sterling will: a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession; b) pursue confirmation of the Plan and approval of the Disclosure Statement; c) prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports, and other legal papers; d) appear in Court to protect the interests of the Debtors; and e) perform all othe legal services for the Debtors, which may be necessary and proper in there proceedings. Douglas P. Bartner, Esq., a member at Shearman & Sterling, discloses his firm received approximately $1,207,400 from the Debtors for prepetition services and in anticipation of expenses to be incurred in the restructuring of SMC. Shearman & Sterling professionals' rates are: Designation Rate ----------- ---- Partner $575 - $750 Counsel/Associates $235 - $600 Legal Assistants $ 95 - $195 To the best of the Debtors' knowledge, Shearman & Sterling is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in St. Paul, Minnesota, SMC Holdings Corporation -- http://www.smartecarte.com/-- provide baggage cart, locker and stroller services at airports, train stations, bus terminals, shopping centers, ski resorts and entertainment facilities around the world. The Debtors and its four debtor-affiliates each filed separated chapter 11 petitions on February 10, 2005 (Bankr. D. Del. Case No. 05-10395). When the Debtors filed for protection from their creditors, they estimated assets and debts of more $100 million. SMC HOLDINGS: Hires Richards Layton as Bankruptcy Co-Counsel ------------------------------------------------------------ SMC Holdings Corp. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Richards, Layton & Finger, P.A. as co-counsel to Shearman & Sterling LLP during the Debtors chapter 11 cases. The Debtors require the professional services of Richards Layton because of its expertise in the field of bankruptcy. The Debtors also need attorneys who are practicing in Delaware and can be present at Court when emergency hearings are required. Richards Layton will coordinate with Shearman & Sterling to avoid duplication of services. In particular, Richards Layton will: a) advise the Debtors of their rights, powers and duties as debtors-in-possession; b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the estates; c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the estates; and d) perform all other necessary legal services in connection with the chapter 11 cases. Mark D. Collins, Esq., a director at Richards Layton discloses that his Firm received a $100,000 retainer from SMC. Professionals who will represent the Debtors and their hourly rates: Professional Rate ------------ ---- Mark D. Collins $485 Michael J. Merchant $305 Jason M. Madron $220 Amy L. Rude $140 To the best of the Debtors' knowledge, Richards Layton doesn't hold any interest materially adverse to the Debtors and their estates. Headquartered in St. Paul, Minnesota, SMC Holdings Corporation -- http://www.smartecarte.com/-- provide baggage cart, locker and stroller services at airports, train stations, bus terminals, shopping centers, ski resorts and entertainment facilities around the world. The Debtors and its four debtor-affiliates each filed separated chapter 11 petitions on February 10, 2005 (Bankr. D. Del. Case No. 05-10395). When the Debtors filed for protection from their creditors, they estimated assets and debts of more $100 million. SOLECTRON CORP: Redeeming $500 Million 9.625% Senior Notes ---------------------------------------------------------- Solectron Corporation (NYSE:SLR) has called for redemption on May 20, 2005, all of its 9.625 percent senior notes due 2009. There is $500 million aggregate principal amount of the notes outstanding. The notes will be redeemed at a total redemption price equal to the greater of (1) 104.813 percent of the principal amount of the notes, plus accrued and unpaid interest, and (2) a make-whole premium on the notes, plus, to the extent not included in the make-whole premium, accrued and unpaid interest to, but not including, the date of redemption. Under the terms of the indenture governing the notes, the make-whole premium with respect to the notes is the sum of the present values of the remaining scheduled payments of interest, principal and premium thereon as if the notes were redeemed on Feb. 15, 2006, discounted to the date of redemption on a semiannual basis at the treasury rate plus 50 basis points. All notes will be automatically redeemed on May 20, 2005, after which interest will cease to accrue. The company has reported cash flow from operations in the six months ended Feb. 25, 2005, of approximately $477 million and currently has a total cash balance of approximately $1.96 billion. The company is applying some of its liquidity to the redemption in order to eliminate the interest expense of the notes. A notice of redemption and a letter of transmittal (which may be used to surrender notes for redemption) are being mailed to all registered holders of the notes. Copies of the notice of redemption and the letter of transmittal may be obtained from the conversion and redemption agent, U.S. Bank, National Association, by calling Paula Oswald at 213-615-6043. Solectron Corporation -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, California, and had sales from continuing operations of $11.64 billion in fiscal 2004. * * * As reported in the Troubled Company Reporter on Jan. 13, 2005, Fitch Ratings affirmed Solectron Corporation's debt ratings: -- 'BB-' senior unsecured debt; -- 'BB+' senior secured bank credit facility; -- 'B' subordinated debt. Fitch says the Rating Outlook is Stable. Approximately $1.2 billion of debt is affected by Fitch's action. SPIEGEL INC: Court Nixes J.P. Morgan's Transaction Fee Claim ------------------------------------------------------------ Before filing for bankruptcy, Spiegel, Inc., and its debtor- affiliates operated several businesses, including retail clothing stores and First Consumers National Bank. FCNB issued traditional Visa, Mastercard and private label credit cards, which were used by consumers at Spiegel's Merchant Companies. By 2002, Spiegel decided to sell its credit card businesses and retained J.P. Morgan Securities, Inc., to help market and sell those FCNB- operated businesses. On February 20, 2002, Spiegel and J.P. Morgan entered into an Engagement Letter, pursuant to which J.P. Morgan would act as a financial advisor to Spiegel in connection with a possible transaction with a purchaser. The event or events that would trigger a possible transaction and entitlement to compensation are specifically defined in the J.P. Morgan Engagement Letter. FCNB's Liquidation By the Spring of 2002, the Comptroller of the Currency of the United States of America concluded an investigation into FCNB's affairs and executed a stipulation and consent order obligating FCNB to "cease and desist any and all transactions with any and all affiliates, (with limited exceptions)." The Consent Decree mandated that FCNB be sold, merged or liquidated. Since FCNB was rendered a non-entity, it chose liquidation in lieu of a sale. Liquidation appeared to be the most practical choice given the fact that upon execution of the Consent Decree, FCNB could no longer securitize its credit card receivables resulting in a loss in liquidity for Spiegel, and the Merchant companies were not getting reimbursed for credit card sales, so they stopped honoring the credit cards. On March 18, 2003, the Court authorized the Debtors to reject the private label credit card agreements with FCNB. By the Spring of 2003, Spiegel entered into an agreement with World Financial Network National Bank to replace FCNB and administer new private label credit cards for use at the Merchant Companies. The liquidation plan for FCNB was also approved by the Court and a liquidating agent was appointed in May 2003. J.P. Morgan's Claim and the Debtors' Objection On September 23, 2003, J.P. Morgan Securities, Inc., filed Claim No. 2192 for $3,528,995. Spiegel and J.P. Morgan do not dispute the fact that they entered into an Engagement Letter and that the firm received $500,000 from Spiegel in engagement and retainer fees. The parties acknowledge that the principal issue in dispute is whether J.P. Morgan rendered any services to Spiegel that would give rise to payment of a "Transaction Fee" as that term is defined in the Engagement Letter. In an objection filed with the Court, the Debtors assert that J.P. Morgan is not entitled to a Transaction Fee because: (1) J.P. Morgan failed to "complete a transaction" as contemplated by the Engagement Letter; (2) J.P. Morgan failed to "consummate a sale" of the credit card businesses; (3) the World Financial agreements "were not sale agreements" as contemplated under the Engagement Letter; (4) the "operating agreements" between the Debtors and World Financial did not involve a sale of a material portion of the Debtors' assets as contemplated by the term "Operating Agreements"; and (5) J.P. Morgan has not met its burden of showing that its claim is valid under Section 502 of the Bankruptcy Code. In response to the Debtors' Objection, J.P. Morgan asserts that: -- it was retained to assist the Debtors in finding a purchaser for some or all of the credit card businesses, including any person who would agree to originate credit card assets for Spiegel; -- its services were fully rendered, it presented a candidate and presented terms; -- the Engagement Letter provided that any of at least four different kinds of corporate transaction could qualify as a Transaction, including an agreement with respect to the future origination of credit card receivables; -- it would have earned a Transaction Fee if a transaction were to have closed with a purchaser during the period beginning November 1, 2001, and ending 18 months after the termination of the Engagement Letter; and -- the sale of Assets was not a pre-requisite to a transaction. Moreover, J.P Morgan contends that it performed extensive due diligence and approached a number of potential purchasers, including World Financial, and participated in negotiations between the Debtors and World Financial. Court Favors Debtors The Court notes that claim objections are fact-sensitive and the parties rely primarily on the language of the contract, rather than case law to substantiate their arguments. While it is not the Court's role to interpret or reform contracts, the Court says it is required to consider the language of the contract as it relates to the obligations of the parties that arise. Reducing the Engagement Letter to its essential terms, the Court says a transaction giving rise to a transaction fee under the Engagement Letter arises if one of these events occurs: (i) a merger, consolidation, material joint venture or other business combination; (ii) an acquisition of a material portion of the capital stock of the business; (iii) an acquisition of a material portion of the assets, properties and businesses by purchase, lease, license, exchange, joint venture, or agreement, with respect to the future origination of credit card assets; or (iv) a spin-off or split-off. The Court finds that all four definitions of possible transactions require some type of sale, and even the highly contested language under the third definition contemplates a sale. If the "Operating Agreement" were to be considered "outside of the scope of an acquisition or sale," it could have been delineated as a separate line item. The Court maintains that the term "transaction" in the third definition should be read in its entirety. Furthermore, the Court finds that J.P. Morgan failed to meet its burden with respect to its claim against the Debtors. J.P. Morgan was employed to help Spiegel consummate a sale, however, since the firm's actions did not conform to the definition of aiding a "transaction," it is, therefore, not entitled to a Transaction Fee. Accordingly, the Court sustains the Debtors' Objection and disallows J.P. Morgan's Claim No. 2192 in its entirety. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Taps Houlihan Lokey to Value Trademark & Trade Name ---------------------------------------------------------------- Miller Buckfire Ying & Co., LLC, the Spiegel, Inc., and its debtor-affiliates' financial advisor and investment banker, contacted 12 major financial institutions to solicit proposals for a $300 million credit facility. Miller Buckfire distributed certain information regarding the Eddie Bauer business to the prospective financing sources and answered related preliminary questions. Based on indicative proposals and Miller Buckfire's recommendations, the Debtors selected GE Corporate Financial Services, Inc., Credit Suisse First Boston LLC, and JPMorgan Chase Bank or their affiliates to finalize due diligence for the Senior Debt Facility. In March 2005, the U.S. Bankruptcy Court for the Southern District of New York authorized the Debtors to enter into and perform under work fee letters with the Prospective Lenders. The Prospective Lenders will simultaneously complete data room and on-site diligence. Marc B. Hankin, Esq., at Shearman & Sterling LLP, in New York, informs the Court that the Prospective Lenders require an estimate of the fair market value of the Eddie Bauer(R) trademarks and the trade names owned by Eddie Bauer because the Eddie Bauer Trademarks, among other assets, will serve as collateral under the Senior Debt Facility. In that regard, the Debtors determine that it would be more cost effective for them to hire a respected firm that provides valuation services to prepare a written report expressing conclusions on the aggregate fair market value of the Eddie Bauer Trademarks than for each of the Prospective Lenders to obtain a report from their financial advisors. By this application, the Debtors seek the Court's authority to employ Houlihan Lokey Howard & Zukin Financial Advisors, Inc., as their trademark and trade name valuation servicer. Houlihan Lokey is a specialty investment banking firm providing valuation, financial restructuring, and investment banking services and has operated throughout the United States since 1970. Mr. Hankin tells the Court that Houlihan Lokey has one of the most active financial restructuring groups in the nation and has provided financial advisory services to debtors, bondholders, committees, and other entities in numerous Chapter 11 cases. The Debtors contend that the valuation analysis to be performed by Houlihan Lokey is an essential step in obtaining their Senior Debt Facility contemplated by the Plan. The Debtors intend to pay Houlihan Lokey a $65,000 fixed fee for the preparation of the Report. The Debtors propose to pay $30,000 on approval of the employment and the balance on the submission of periodic billings from the firm. The Debtors further seek the Court's authority to reimburse Houlihan Lokey for all necessary out-of-pocket expenses incurred in preparation of the Report and the reasonable fees and expenses of legal counsel retained by the firm. The Debtors expect those expenses to be reasonably modest. For any legal fees and expenses in excess of $10,000, Houlihan Lokey will obtain and provide the Court with time records of its legal counsel in support of those fees and expenses. Gary Finger, Houlihan Lokey's director, attests that the firm does not hold or represent any interest adverse to the Debtors' estates and is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPORTS CLUB: Reporting Delays Prompt AMEX Delisting Notice -------------------------------------0-------------------- The American Stock Exchange notified The Sports Club Company, Inc. (AMEX:SCY) that it had not met certain of the Exchange's continued listing standards as set forth in the Exchange's Company Guide. Specifically, the Exchange noted that the Company's failure to timely file its Form 10-K for the fiscal year ended December 31, 2004, was a violation of Sections 134, 1101 and 1003(d). In order to maintain listing of the Company's Common Stock, $0.01 par value, on the Exchange, the Company must submit a plan by May 4, 2005, advising the Exchange of the action the Company has taken, or will take, that would bring it into compliance with the applicable listing standards on or before June 15, 2005. If the Exchange accepts the plan, the Company will remain listed during the plan period but will be subject to review by the Exchange to determine whether the Company is making progress consistent with the plan. If the Exchange does not accept the Company's plan, or if the plan is accepted but the Company is not in compliance with the continued listing standards as set forth in Sections 134, 1101 and 1003(d) by June 15, 2005, or does not make progress consistent with the plan during such period, the Exchange may initiate delisting proceedings with respect to the Common Stock. Further, the Exchange had notified the Company on Sept. 13, 2004, that it did not meet certain other of the Exchange's continued listing standards. Specifically, the Exchange noted that: (1) the Company's stockholders' equity is less than $2 million, and the Company has reported net losses in two of the its most recent fiscal years, in violation of Section 1003(a)(i); (2) the Company's stockholders' equity is less than $4 million, and the Company has sustained losses in three of its four most recent fiscal years, in violation of Section 1003(a)(ii); and (3) the Company has sustained losses which are so substantial in relation to the Company's overall operations or its existing financial resources, or the Company's financial condition has become so impaired, that it appears questionable, in the opinion of the Exchange, whether the Company will be able to continue operations or meet its obligations as they mature, in violation of Section 1003(a)(iv). The Exchange has afforded the Company an 18-month period (ending March 13, 2006) in which to regain compliance with these specific listing requirements. Therefore, even if the Company satisfies the plan and regains compliance with Sections 134, 1101 and 1003(d) by June 15, 2005, it will not be relieved of its obligations to regain compliance with Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iv) by March 13, 2006. Failure to gain compliance may subject the Company to delisting procedures. About the Company The Sports Club Company, based in Los Angeles, California, owns and operates luxury sports and fitness complexes nationwide under the brand name "The Sports Club/LA." Going Concern Doubt In its Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, The Sports Club Company said it has experienced net losses of $22.7 million and $18.4 million during the years ended December 31, 2002 and 2003, respectively. The Company has also experienced net cash flows used in operating activities of $4.4 million and $3.5 million during the years ended December 31, 2002 and 2003, respectively. Additionally, the Company is expected to incur a significant loss and net cash flows used in operating activities during the year ending December 31, 2004. The Company has had to raise funds through the offering of equity securities in order to make interest payments due on its Senior Secured Notes. These factors raise doubt about the Company's ability to continue as a going concern. STELCO INC: Agrees to Treat Tricap as USWA's Financial Advisor -------------------------------------------------------------- Stelco Inc. (TSX:STE) reached an agreement with the USWA on the next steps in the Company's capital raising process and restructuring. The agreement was submitted to and approved by the Superior Court of Justice (Ontario). Under the agreement, the parties agreed that Tricap Management Limited will be treated as a financial advisor to the USWA. Other terms of the agreement provide assurances, guidelines and timelines regarding the discussions and actions to be conducted by both parties in the coming weeks. Courtney Pratt, Stelco's President and Chief Executive Officer, said, "We're very pleased to have concluded this agreement with the USWA. It provides a clear framework within which we can work together and with other stakeholders. This will enable us all to focus on achieving our shared goal - the successful outcome of our restructuring process. "The Court-appointed Monitor and the Government of Ontario made strong contributions in helping us find common ground and conclude this agreement. "We'll now proceed to, among other things, develop a plan outline that can be brought before the Court and that will provide a focus for further discussion. The nature of that outline, which we will have by May 12, 2005, will be based on the sources of capital that Stelco and its advisors believe are available to the Company." 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. SUSQUEHANNA MEDIA: Possible Sale Prompts S&P to Watch Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Susquehanna Media Co., including the 'BB-' corporate credit rating, on CreditWatch with negative implications, following the company's recent announcement that its parent company is exploring the potential sale of Susquehanna Media's businesses. The York, Pennsylvania-based radio and cable system operator had $584 million in debt and debt-like preferred stock at Dec. 31, 2004. "The CreditWatch listing is based on concerns that Susquehanna Media's debt or leverage could be increased by a potential buyer to help finance the purchase of the company, or that its operating and cash flow diversity could be reduced by the breakup of its two main businesses or sale of some of its assets," said Standard & Poor's credit analyst Steve Wilkinson. A split of the radio and cable businesses is viewed as likely, given that these assets are not operationally integrated and are likely to appeal to different potential buyers. In resolving the CreditWatch listing, Standard & Poor's will evaluate the business diversity, capital structure, and strategic focus and competitive positioning of any surviving entity. The rating could be negatively affected by an increase in debt or debt to EBITDA, or reduced operating and cash flow diversity. TECO ENERGY: Earns $32.7 Million of Net Income in First Quarter --------------------------------------------------------------- TECO Energy, Inc. (NYSE: TE) reported first quarter net income of $32.7 million, compared to net income of $2.5 million in the first quarter of 2004. The first quarter net income from continuing operations was $51.5 million, compared to net income from continuing operations of $31.7 million for the same period in 2004. Discontinued operations in the quarter primarily reflect the operating results from the Union and Gila River power stations and the recently sold Commonwealth Chesapeake Power Station. The number of common shares outstanding was 9% higher for the quarter than it was for the same period in 2004, primarily due to the common shares issued in the settlement of the 9.5% adjustable conversion-rate equity security units. Chairman and CEO Sherrill Hudson said, "Our first quarter results get us off to a great start on our stated objectives for the year. Our strong earnings are a solid foundation for our businesses' performance going forward. The recent progress on the transfer of the Union and Gila River power stations and our closed sale of Commonwealth Chesapeake further reduce our already minimized merchant power risk." "Our Florida utilities continued to have strong customer growth, TECO Coal enjoyed strong selling prices and TECO Transport benefited from strong markets and improved operating performance," added Ms. Hudson. Segment Reporting Effective with the first quarter results, TECO Energy's segment reporting has been revised to separately report the results of TECO Guatemala, which includes the results for the San Jose and Alborada power stations and the 24% ownership interest in EEGSA, Guatemala's largest distribution utility. The results for these operations were previously reported in the "Other unregulated" segment. Following the sales of the larger energy services businesses, which were previously reported in the "Other unregulated" segment, the remaining small operations of TECO Solutions are now reported in the Parent/other results. Following the sales of the merchant power assets, the current-period TWG Merchant segment includes only the results for the uncompleted Dell and McAdams power stations and the costs associated with TWG Merchant parent. Prior periods also include the results for the ownership interest in the Texas Independent Energy (TIE) projects. Tampa Electric Tampa Electric's net income for the first quarter was $22.0 million, compared to $23.9 million for the same period in 2004. Results in 2005 reflect good customer growth, offset by milder weather than in 2004, higher depreciation expense from normal plant additions and a full quarter of Bayside Unit 2 depreciation. Operations and maintenance expenses were unchanged from 2004. There were no earnings in 2005 from the equity component of AFUDC (which represents allowed equity cost capitalized to construction costs), which was a decrease of $0.7 million from the 2004 period, due to the completion of the Gannon/Bayside repowering project in January 2004. Results in 2005 also reflect a $3.8 million reduction in pretax income due to the Florida Public Service Commission's decision in the third quarter of 2004 to disallow recovery of a portion of Tampa Electric's waterborne solid fuel transportation costs. Retail energy sales decreased almost 1% compared to the first quarter of 2004 as average customer growth of 2.1% was partially offset by mild weather, lower sales to weather-sensitive residential customers and lower sales to industrial-phosphate customers. Total heating and cooling degree-days for the Tampa area in the quarter were almost 15% below normal and 10% below 2004 levels. Peoples Gas Peoples Gas System reported net income of $12.8 million for the quarter, unchanged from the same period in 2004. Quarterly results reflected customer growth of 4.2% and higher therm sales to residential and commercial customers. Residential therm sales growth was limited by the mild weather early in the quarter. Peoples Gas is sensitive to heating degree days during the winter months, and statewide heating degree days for the period were above normal but below 2004 levels. Strong sales to commercial customers reflected growth in the Florida economy and high levels of tourism, which affect commercial sales to hotels and restaurants. Sales of low-margin transportation service for interruptible customers declined due to high gas prices. TECO Coal TECO Coal reported net income of $27.5 million on total sales of 2.3 million tons, compared to $15.4 million reported in the same period in 2004 on a similar level of sales. Synfuel sales, which are included in the total sales, were 1.6 million tons in both years. Results for the quarter reflect an average net selling price per ton almost 40% higher and average cash cost of sales, excluding synfuel costs, more than 10% higher than 2004. Results also include a $1.9 million pretax benefit as a result of the final adjustment to the calculation of the 2004 Section 29 tax credit rate by the Internal Revenue Service to $1.13 per million BTU, a $0.7 million after-tax mark-to-market gain on hedges placed to protect the synfuel benefits against rising oil prices, and an increased percentage of synfuel tax credits utilized by the third parties with membership interests in TECO Synfuel Holdings, LLC, as described below. These benefits were partially offset by a $2.4 million negative adjustment to deferred tax assets, due to a reduction in the Kentucky state income tax rate. TECO Synfuel Holdings, LLC, had previously sold 90% of its membership interest to two third parties, along with associated percentage rights to benefits in the business that adjust from time to time. Allocation of the benefits increased 8% in the first quarter such that 98% of the benefits went to the third parties. Under these transactions, TECO Coal is paid to provide feedstock, operate the synthetic fuel production facilities and sell the output while the purchasers have the risks and rewards of ownership, including being allocated 98% of the tax credits and operating costs. Due to TECO Energy's anticipated 2005 tax position and inability to record Section 29 tax credits to its account, this allocation decreases the operating loss and increases earnings and cash flow to TECO Coal. The third-party ownership structure of the synthetic fuel production facilities retains TECO Coal as the operator and decreases overall earnings per ton but increases cash generation per ton. The allocation of the additional 8% of the rights to the benefits is expected to continue until the end of the second quarter and then the absolute benefits received by the current third parties are scheduled to revert to 90%. TECO Transport TECO Transport recorded first quarter net income of $4.1 million, compared to $1.9 million, excluding $0.8 million of valuation adjustments on oceangoing equipment, in the same period in 2004. These results reflect higher river barge rates and increased northbound shipments at TECO Barge Line, increased movements of export coal through TECO Bulk Terminal and improved operating conditions and efficiencies. Higher fuel costs were partially offset by $0.7 million of mark-to-market gains on fuel hedges. TECO Guatemala TECO Guatemala reported first quarter net income of $11.5 million, compared to $11.1 million in the 2004 period. These results reflect higher capacity revenues and lower operations and maintenance expenses at the Alborada Power Station, higher energy sales from the San Jose Power Station and at EEGSA, lower Guatemalan taxes due to a tax rate change first implemented in the third quarter of 2004, and recognition of foreign tax credits. TWG Merchant TWG Merchant recorded a first-quarter loss of $5.7 million, compared to a loss of $15.6 million for the same period in 2004. The 2005 results primarily reflect allocated interest expense at the uncompleted Dell and McAdams power stations and overhead expenses of TWG Merchant. Results in 2004 included the losses from the ownership interest in the TIE projects, which was sold in July 2004. Parent/Other Parent/Other results in the first quarter were a $20.7 million loss, compared to a $17.0 million loss in the same period in 2004. Although total parent interest expense declined in the first quarter due to the retirement of the trust-preferred debt associated with the early settlement and final conversion of the variable conversion-rate equity security units, less interest was allocated to TWG Merchant. Discontinued Operations The net loss from discontinued operations for the 2005 first quarter was $18.8 million, compared to a net loss of $29.2 million in the same period of 2004. Discontinued operations in the first quarter of 2005 included the operating losses for the Union and Gila River power stations and the results for the Commonwealth Chesapeake Power Station. On January 26, 2005 the Union and Gila River project companies filed a pre-negotiated Chapter 11 case in Arizona, and at the time of the filing the project companies stopped recording the interest expense associated with the non- recourse project debt. The net loss from discontinued operations was approximately $14.4 million lower in the first quarter due to this change. Discontinued operations for the first quarter in 2004 now include the results from the Frontera and Commonwealth Chesapeake power stations and the results from the energy services businesses that have also been sold, as well as the Union and Gila River power stations, including the interest on the non-recourse debt. Cash and Liquidity TECO Energy's consolidated cash and cash equivalents, excluding all restricted cash, totaled $312.6 million at March 31, 2005. Restricted cash of $57.1 million includes $50.0 million held in escrow until the end of 2007 related to the sale of a 49 percent interest in the synthetic coal production facilities. Cash at March 31, 2005 excludes the San Jose and Alborada power stations' unrestricted cash balances of $23.5 million and restricted cash of $8.3 million, as these companies were deconsolidated due to the adoption of FIN 46R, Consolidation of Variable Interest Entities, effective Jan. 1, 2004. In addition, at March 31, 2005, aggregate availability under bank credit facilities was $517.4 million, net of letters of credit of $27.6 million outstanding under these facilities and $80 million drawn on Tampa Electric's credit facilities. At the end of the first quarter, total liquidity, including cash plus credit facilities, was $853.5 million, which included $400.7 million at Tampa Electric consisting of $345.0 million of undrawn credit facilities and $55.7 million of cash. TECO Energy parent had total liquidity of $399.5 million at March 31, 2005, consisting of $227.1 million of cash, and availability under its credit facilities of $172.4 million. First quarter TECO Energy consolidated cash flow from operations was $98.4 million, which included recovery of fuel costs previously underrecovered, payments for hurricane restoration costs at Tampa Electric that carried over from 2004, and the cash operating results of the Union and Gila River power stations. The results from the Union and Gila River power stations were offset by restricted cash proceeds of $24 million that were invested in the projects in 2004 and are recorded in the 'Investing Activities' section. Other sources of cash in the first quarter of 2005 were $42 million of proceeds from the third-party investors for synfuel production and $180 million of proceeds from the final settlement of the equity security units. Cash used in financing activities included dividends of $39 million on TECO Energy common stock and the repayment of $35 million of short-term debt at Tampa Electric. Capital expenditures for the quarter were $62 million. 2005 Outlook For 2005, TECO Energy is maintaining its estimate for earnings per share from continuing operations in a range of $0.95 to $1.05, consolidated cash flow from operations in a range of $250 million to $300 million and net cash generation at TECO Energy parent in a range of $320 million to $360 million. These forecasted results are based on the company's current expectations and assumptions, which are subject to risks and uncertainties, including those described below. Tampa Electric expects continued 2.5% annual customer growth with energy sales growth slightly above that, assuming normal weather for the remainder of the year. Peoples Gas expects customer growth of more than 4% in 2005. Operations and maintenance expenses at the utilities are expected to increase at about the level of inflation. Results at TECO Coal are expected to improve due to prices for coal sales being more than 40% higher, partially offset by production costs more than 10% higher than 2004 levels. TECO Coal also expects to benefit from continued strong earnings and cash flow from its synfuel facilities. These estimates of earnings and cash flow assume no reduction in Section 29 tax credits due to potential limitations that might result from oil prices exceeding the benchmark price. TECO Transport anticipates improved results from strong river market pricing due to better balance in the supply and demand for river barges as well as increased product movement through the bulk transfer terminal as imports and exports improve. TECO Guatemala expects to continue to provide strong earnings and cash flow with earnings about $7 million and cash flow about $5 million lower than 2004, reflecting tax benefits in 2004 that moderate in 2005. Estimated 2005 consolidated cash flow from operations of $250 million to $300 million reflects the expected improvements in the operating companies' results and includes the expected cash operating losses from the Union and Gila River power stations through the anticipated ownership transfer of these stations in May. Capital expenditures are expected to be about $300 million, and the company will pay $31.8 million upon the final transfer of the Union and Gila River power stations. Expected net cash generation also reflects the proceeds from the final settlement of the mandatorily convertible equity security units, the cash proceeds from the third-party ownership in TECO Coal's synfuel production facilities, the proceeds from the recently closed sale of the Commonwealth Chesapeake Power Station and the payment of common stock dividends. Common shares outstanding increased by 6.85 million shares on January 18, 2005 upon the final settlement of TECO Energy's equity security units, which is reflected in the 2005 earning-per-share forecast. Consistent with its objective to improve its financial position, TECO Energy may use available cash to reduce outstanding debt. Although the company does not expect to require capital from external sources to meet cash needs in 2005, except for short-term borrowings under Tampa Electric's credit facilities, it may issue debt securities to refinance existing debt if it is economic to do so. The company's 2005 forecast does not include any impact to earnings or cash flow that might result from early retirement of debt or refinancings. TECO Energy, Inc. (NYSE: TE) is an integrated energy-related holding company with core businesses in the utility sector, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and independent power. * * * As reported in the Troubled Company Reporter on Jan. 10, 2005, Fitch Ratings rates TECO Energy's senior unsecured debt at 'BB+' and preferred stock at 'BB', and says the outlook is stable. TEMBEC INC: Reorganizing SPF Sawmills in Abitibi-Temiscamingue -------------------------------------------------------------- Tembec Inc. will be reorganizing all of its SPF sawmills in Quebec's Abitibi-Temiscamingue region. The move is essential in the current business climate and will enable the Company to meet the challenges brought about by the strength of the Canadian dollar, the increasingly competitive marketplace, the continuing Canada-US softwood lumber dispute and the reduced availability of fibre supply. "The changes . . . will secure our Abitibi-Temiscamingue SPF sawmills for the future," stated James Lopez, Executive Vice President and President of the Tembec Forest Products Group. "The Quebec forest products industry is now facing a host of challenges, and Tembec is not immune", he said. In view of the current circumstances, we need to make some tough but necessary decisions. The announcement will assure the Company's sawmills are efficient, cost-effective and can effectively stand their ground in an increasingly competitive market." The public forest timber supply for Tembec's five sawmills targeted by the reorganization plan will decrease from 2.1 million to 1.7 million m3. The Company has previously taken steps to minimize this impact, including more effective recovery of non- merchantable wood, which is well above the industry average and will be increased further. Tembec believes that this reorganization, combined with a new approach to the distribution of timber allocations recently authorized by Quebec's Minister of Natural Resources, will make it possible for the Company to secure activities in Abitibi- Temiscamingue while minimizing the impact on its employees. Tembec's reorganization plan includes: - Tembec will permanently cease operations at the recently acquired sawmill in La Sarre as of May 13th. This mill currently employs approximately 150 people. - Tembec's Taschereau mill will operate mainly with a single production line, but with three shifts instead of two. - Tembec's Senneterre sawmill and the other sawmill owned by Tembec in La Sarre will continue operating with three shifts while the Bearn sawmill will continue operating with two. As a result of mitigating measures taken by the Company as well as new jobs opportunities in its other regional operations, including the new LVL plant in Amos -- Temlam, it is expected that employee lay-offs will be minimal. "The Company has carefully considered all options concerning this reorganization," said Mr. Lopez. "We did not only take economic factors into account but we also analysed the social impact to arrive at the best business decision, and we devised a course of action accordingly." During a series of meetings in each of the sawmills affected by the announcement, employees and union representatives were informed of the Company's decision and discussed the situation with management. The Company is committed to minimizing the repercussions of the reorganization plan and has offered to work with union representatives and managers to achieve that goal. As a result of the closure of the recently acquired sawmill in La Sarre, Tembec will record an unusual charge of $14.6 million relating to the reduction of the carrying value of the facility. Other closure costs amounting to $5.3 million will also be recorded. The after-tax effect of $13.1 million will be recorded in the June 2005 quarter. Tembec Inc. -- http://www.tembec.com/-- is a leading integrated forest products company, well established in North America and France. With sales of approximately $4 billion and some 11,000 employees, it operates 50 market pulp, paper and wood product manufacturing units, and produces chemicals from by-products of its pulping process. Tembec markets its products worldwide and has sales offices in Canada, the United States, the United Kingdom, Switzerland, China, Korea, Japan, and Chile. The Company also manages 40 million acres of forest land in accordance with sustainable development principles and has committed to obtaining Forest Stewardship Council -- FSC -- certification for all forests under its care by the end of 2005. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. * * * As reported in the Troubled Company Reporter on Jan. 6, 2005, Moody's Investors Service downgraded the senior implied, senior unsecured and issuer ratings of Tembec Inc.'s key operating subsidiary, Tembec Industries, Inc., to B2 from Ba3. The outlook was changed to stable from negative. As reported in the Troubled Company Reporter on Dec. 22, 2004, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured ratings on Tembec, Inc., and its subsidiary, Tembec Industries, Inc., to 'B' from 'BB-'. The outlook is currently stable. TEMBEC INC: Will Release Second Quarter Financial Results Today --------------------------------------------------------------- Tembec Inc. expects its operating results for the second quarter ended March 26, 2005, to be below its expectations. Previously, the Company had indicated that it expected EBITDA (earnings before interest, income taxes, depreciation, amortization and other non- operating expenses) to be approximately $30 million. While actual results are still expected to be ahead of those of the prior quarter, EBITDA will likely be approximately $15 million less than expected. Although pulp prices have improved, the rate of increase, primarily in the Asian market, has been slower than anticipated. Higher than expected energy and chemical costs also contributed to the shortfall. The lower EBITDA will reduce net earnings by approximately $10 million or $0.12 per share. The Company will release its March 2005 quarterly financial results today, April 28, 2005. Tembec Inc. -- http://www.tembec.com/-- is a leading integrated forest products company, well established in North America and France. With sales of approximately $4 billion and some 11,000 employees, it operates 50 market pulp, paper and wood product manufacturing units, and produces chemicals from by-products of its pulping process. Tembec markets its products worldwide and has sales offices in Canada, the United States, the United Kingdom, Switzerland, China, Korea, Japan, and Chile. The Company also manages 40 million acres of forest land in accordance with sustainable development principles and has committed to obtaining Forest Stewardship Council -- FSC -- certification for all forests under its care by the end of 2005. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. * * * As reported in the Troubled Company Reporter on Jan. 6, 2005, Moody's Investors Service downgraded the senior implied, senior unsecured and issuer ratings of Tembec Inc.'s key operating subsidiary, Tembec Industries, Inc., to B2 from Ba3. The outlook was changed to stable from negative. As reported in the Troubled Company Reporter on Dec. 22, 2004, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured ratings on Tembec, Inc., and its subsidiary, Tembec Industries, Inc., to 'B' from 'BB-'. The outlook is currently stable. THEGLOBE.COM: Inks $1.5 Million Financing with E&C Capital ---------------------------------------------------------- Theglobe.com (OTCBB:TGLO) received a commitment for additional financing from E&C Capital Partners, LLLP and certain other related parties in the amount of $1.5 million. Such parties will also have the option to invest an additional $2.5 million on or before July 22, 2005, so the total financing could reach $4 million. E&C is owned by the company's Chief Executive Officer and President, Messrs. Michael Egan and Edward Cespedes. The financing was in the form of secured demand convertible promissory notes with an interest rate of 10% per annum (payable quarterly). The notes will be due and payable on the 5th day following demand for payment. The notes will be secured by a lien on all of the assets of the theglobe and its subsidiaries. At the note holder's option, the notes may be converted into shares of common stock of theglobe.com. If the full $4 million is invested and all of the notes are converted, a total of eighty million shares of common stock of theglobe.com could be issued, subject to customary adjustments for stock splits, combinations and the like. The notes will not be registered under applicable securities laws and will be sold in reliance on an exemption from such registration. The note holders will be entitled to customary registration rights for any shares received upon conversion. Ed Cespedes, on behalf of E&C Capital, said, "We continue to believe in both theglobe.com's development stage businesses and its healthy subsidiary, SendTec. Accordingly, we continue to commit our own capital to the Company. We hope this investment alleviates any concerns that the Company's trading partners or shareholders may have about running out of cash in the short- term." Might Sell SendTec The Company intends to use the proceeds from the sale of the Convertible Notes for general working capital. The proceeds are intended to provide the Company with temporary liquidity to conduct its business while it seeks to raise additional capital, which may involve the potential sale of one or more of the Company's subsidiaries, including SendTec. Not Out of the Woods "Absent additional financing, in the event demand is made for repayment of the Convertible Notes, the Company will not have the resources to repay the Convertible Notes," Mr. Cespedes discloses in a regulatory filing. "Inasmuch as substantially all of the assets of the Company and its subsidiaries secure the Convertible Notes, in connection with any resulting proceeding to collect the indebtedness relating to the Convertible Notes, the Noteholders could seize and sell the assets of the Company and its subsidiaries, any or all of which would have a material adverse effect on the Company and its operations," Mr. Cespedes cautions. Going Concern Doubt Rachlin Cohen & Holtz LLP raised substantial doubt about Trans- Industries, Inc.'s (Nasdaq: TRNI) ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended December 31, 2004. The audit opinion cited the Company's recurring losses from operations and cash flow difficulties. Since introducing its Voice over the Internet Protocol (VoIP), the company reports an accumulated deficit of $260,574,874 as of December 31, 2004. The company recorded $1,661,975 of impairment charges in 2004 and $908,334 of similar charges in 2003. Net cash and cash equivalents used in operations totaled $17,732,632 for 2004. As of December 31, 2004, the company's sole source of liquidity consisted of $6,828,000 in cash and cash equivalents. That cash balance dwindled to $3,900,000 at March 25, 2005. The company said at that time that if it was unable to get significant cash infusions by the second quarter of 2005, then it would most likely suspend or shut down its VoIP operations. Headquartered in Fort Lauderdale, Florida theglobe.com, Inc. manages two primary lines of business. One line consists of the Company's historical network of three wholly owned businesses, each of which specializes in the games business by delivering games information and selling games in the United States and abroad. These businesses are Computer Games Magazine, the Company's print publication; the Computer Games Online Website -- http://www.cgonline.com/-- the online counterpart to Computer Games Magazine, and Chips & Bits, Inc. -- http://www.chipsbits.com/-- a games distribution company. The second line of business, voice over Internet protocol (VoIP) telephony services, includes voiceglo Holdings, Inc., a wholly owned subsidiary of theglobe.com that offers VoIP-based phone service to anyone with an Internet connection anywhere in the world. TOM'S FOODS: Gets Interim Okay for DIP Loan & Cash Collateral Use ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia gave Tom's Foods Inc. interim authority: a) to use Cash Collateral securing repayment of pre-petition obligations to Fleet Capital Corporation as the Pre-Petition Agent and the Pre-Petition Lenders; and b) to obtain post-petition financing from Fleet Capital in its capacity as the DIP Agent and from the DIP Lenders, and grant adequate protection to Fleet Street and the DIP Lenders. Pre-Petition Debt Under two Loan and Credit Agreements, the Debtor owes: Pre-Petition Lender Amount Owed ------------------- ----------- Fleet Capital & $8,500,000 Pre-Petition Lenders (under a Loan & Security Agreement dated Jan. 31, 200_) Fleet Capital & DIP Lenders $3,206,500 (under a pre-petition ----------- Letters of Credit) $11,706,000 DIP Financing and Cash Collateral The Bankruptcy Court authorizes the Debtor to obtain up to $5 million under a DIP Financing Note from Fleet Capital, the Post-Petition Lenders, and the Bank of New York, as the Senior Note Trustee. The Debtor will use the Fleet Capital and the Pre-Petition Lenders' Cash Collateral and Fleet Capital and the DIP Lenders' DIP Loans to pay for operating expenses, meet payroll and payroll taxes, to purchase raw materials and supplies, and pay certain expenses in the ordinary course of its business. The Debtor's interim use of the proceeds of the DIP Loan and the proceeds of the Cash Collateral will be in strict compliance with a Budget covering the period from April 9 to May 7, 2005. A full-text copy of the Budget is available at no charge at: http://bankrupt.com/misc/Tom'sFoodsInterimBudget.pdf Fleet Capital and the Pre-Petition Lenders have consented to the Debtor's use of the Cash Collateral. To adequately protect their interests, Fleet Capital and the Pre-Petition Lenders are granted perfected security interests and replacement liens on all of the collateral pledged to them prepetition. The Court will convene a hearing at 9:30 a.m., on May 2, 2005, to consider the Debtor's request for a final order approving the DIP Loan and allowing permanent use of the Cash Collateral. Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TOWN OF MULDROW: Case Summary & 8 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Town of Muldrow 100 South Main P.O. Box 429 Muldrow, Oklahoma 74948 Tel: (918) 427-3226 Bankruptcy Case No.: 05-71621 Debtor affiliate filing separate Chapter 9 petition: Entity Case No. ------ -------- Muldrow Public Works Authority 05-71622 Chapter 9 Petition Date: April 21, 2005 Court: Eastern District of Oklahoma (Okmulgee) Judge: Tom R. Cornish Debtor's Counsel: Leonard I. Pataki, Esq. Doerner Saunders Daniel & Anderson 320 South Boston, Suite 500 Tulsa, OK 74103-3725 Tel: (918) 582-1211 Fax: (918) 591-5360 Estimated Assets: $1 to $50,000 Estimated debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ODEQ Environmental $2,260,000 Oklahoma Depart of Regulatory Fines Environmental Quality P.O. Box 1677 Oklahoma City, OK 731011677 State of Oklahoma Promissory Note $259,413 Department of Commerce Collateral: Water & 900 North Stiles Ave. wastewater revenue P.O. Box 26980 Oklahoma City, OK 731260980 Bank of Oklahoma 1969 System Bonds $203,806 Corporate Trust Group 9520 N. May Ave, Suite 110 Oklahoma City, OK 73120 Armstrong Bank 1986 GMC Rescue Truck $12,209 P.O. Box 429 Value of security: Muldrow, OK 74948 $12,000 Armstrong Bank 1992 Ford $8,352 P.O. Box 900 Streetsweeper Muldrow, OK 749480900 Value of security: $8,000 Muldrow Public Works Authority's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ODEQ Environmental $2,260,000 OK Dept of Environmental Regulatory Fines Quality P.O. Box 1677 Oklahoma City, OK 731011677 State of Oklahoma Promissory Note $259,413 Department of Commerce Collateral: Water & 900 North Stiles Ave. wastewater revenue P.O. Box 26980 Oklahoma City, OK 731260980 Bank of Oklahoma 1969 System Bonds $203,806 Corporate Trust Group 9520 N. May Ave., Suite 110 Oklahoma City, OK 73120 TRENWICK GROUP: Section 304 Petition Summary -------------------------------------------- Petitioner: Mike Morrison John Wardrop Foreign Representatives Joint Provisional Liquidator Debtors: Trenwick Group, Ltd. Hamilton, Bermuda -- and -- LaSalle Re Holdings Limited Hamilton, Bermuda Case No.: 05-11193 & 05-11194 Type of Business: The Debtors are affiliates of Trenwick America Corporation. The Debtors, together with Trenwick America, filed for chapter 11 protection on August 20, 2003 (Bankr. D. Del. Case No. 03-12637). On November 2, 2004, the Honorable Judge Walrath dismissed Trenwick Group and LaSalle Re Holdings' chapter 11 cases. See http://www.trenwick.com/ Section 304 Petition Date: April 26, 2005 Court: District of Delaware Judge: Mary F. Walrath Petitioners' Counsel: Mark E. Felger, Esq. Cozen O'Connor 1201 North Market Street, Suite 1400 Wilmington, Delaware 19801 Tel: (302) 295-2087 Fax: (302) 295-2013 Total Assets Total Debts ------------ ----------- Trenwick Group, Ltd. $10 Million to $50 Million to $50 Million $100 Million LaSalle Re Holdings Limited $10 Million to $50 Million to $50 Million $100 Million TRIAD FINANCIAL: S&P Rates $200 Million Senior Notes at B- ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term counterparty credit rating to Huntington Beach, California-based Triad Financial Corp. (Triad). Concurrently, a 'B-' senior unsecured debt rating was assigned to Triad's $200 million senior notes due 2013. The debt issue will be used to purchase Triad Financial from the Ford Motor Credit Corporation. The outlook is stable. "The ratings reflect Triad's dependence on securitization for funding, lack of a track record as an independent entity, and concentration in the cyclical subprime auto market. Strong industry experience among management and improving financial performance support the ratings," said Standard & Poor's credit analyst Jeffrey Zaun. Triad's stable outlook balances the firm's positive operating momentum in an expanding economy against its dependence on securitizations for funding and its exposure to the volatile sub- prime auto market. Standard & Poor's will monitor Triad's profitability, asset quality and leverage. TROPICAL SPORTSWEAR: Brings-In Baker & McKenzie as Tax Counsel -------------------------------------------------------------- Tropical Sportswear Int'l Corporation and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, to employ Baker & McKenzie, LLP, as special tax counsel, nunc pro tunc to Feb. 10, 2005. The Debtors need Baker & McKenzie to handle foreign tax issues related to the sale of their assets to Perry Ellis International, Inc. As previously reported, Perry Ellis consummated the acquisition of substantially all of the domestic and outstanding capital stock of Tropical's U.K. subsidiary for $88.5 million in cash. Robert F. Hudson, Jr., Esq., and Ozzie A. Schindler, Esq., are the lead attorneys in the Debtor's chapter 11 case. Mr. Hudson will bill the Debtor at his current $640 hourly rates and Mr. Schindler will bill $450 per hour for his services. To the best of the Debtor's knowledge, Baker & McKenzie is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp. -- http://www.savane.com/-- designs, produces and markets branded branded apparel products that are sold to major retailers in all levels and channels of distribution. The Company and its debtor-affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., and Denise D. Dell-Powell, Esq., at Akerman Senterfitt, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $247,129,867 and total debts of $142,082,756. TSI TELSYS: TSX Reserves Common Shares for Issuance to Four Kings ----------------------------------------------------------------- TSX Venture Exchange approved TSI TelSys Corporation filing to reserve 150,000 common shares for the exercise of 150,000 bonus warrants to be issued to Four Kings Inc. in connection with a financing of $850,000 by way of a Line of Credit. Headquartered in Columbia, Maryland, TSI TelSys designs, manufactures and markets high-performance data acquisition, simulation and communication systems for the test range and aerospace communities and provides related engineering services. The Company has been a pioneer in utilizing reconfigurable architectures (Adaptive Computing) for communications and data processing, and has incorporated this technology into its product line since 1996. The Company is a leader in providing multi- mission satellite communications systems adaptable to virtually any protocol format and that support data rates up to a gigabit per second -- Gbps. At September 24, 2004, TSI TelSys' balance sheet shows a C$1,925,223 deficit, compared to a C$1,145,834 deficit at December 26, 2003. TSI TELSYS: TSX Reserves Common Shares for Issuance to Mutsui ------------------------------------------------------------- TSX Venture Exchange accepted for filing TSI TelSys Corporation's documentation to reserve 150,000 common shares for the exercise of 150,000 bonus warrants issued to Mutsui Capital Management Inc. in connection with a loan of $350,000. In addition, Mutsui Capital Management Inc. will also purchase additional stock from an existing shareholder. Headquartered in Columbia, Maryland, TSI TelSys designs, manufactures and markets high-performance data acquisition, simulation and communication systems for the test range and aerospace communities and provides related engineering services. The Company has been a pioneer in utilizing reconfigurable architectures (Adaptive Computing) for communications and data processing, and has incorporated this technology into its product line since 1996. The Company is a leader in providing multi- mission satellite communications systems adaptable to virtually any protocol format and that support data rates up to a gigabit per second -- Gbps. At September 24, 2004, TSI TelSys' balance sheet shows a C$1,925,223 deficit, compared to a C$1,145,834 deficit at December 26, 2003. UAL CORPORATION: Files 12th Reorganization Status Report -------------------------------------------------------- "The industry environment has not improved over the last three and one-half months nor have the structural long-term changes that have roiled the industry reversed," James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, reports. UAL Corporation and its debtor-affiliates are responding as best they can, but labor cost reductions, termination and replacement of defined benefit pension plans remain critical components of a successful reorganization. Irrespective of the progress made thus far, much work remains to be done. On April 6, 2005, the Debtors' representatives gave a business overview presentation to approximately 80 holders and trustees of the Aircraft Trustee group at a meeting in New York City. Some participants attended via web cast or telephonically. The meeting included a proposal to meet on a transaction-by- transaction basis to discuss the Debtors' March 11 restructuring proposals. Most aircraft financiers have deferred discussions with the Debtors. Fuel expense for February 2005 was $57,000,000 higher than February 2004. The Debtors will be closing reservation call centers in Seattle, Washington, effective June 4, 2005. Employees are being offered the opportunity to transfer to other call centers. The closing will save on rent, utilities, taxes and other expenses. The realignment of staff at remaining call centers will increase efficiency and maximize utilization at the other call centers. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Objects to IAA's Request for Admin. Claims Payment ------------------------------------------------------------ The Indianapolis Airport Authority and the Bank of New York Trust Company asked the U.S. Bankruptcy Court for the Northern District of Illinois to issue a summary judgment allowing the IAA's claim for UAL Corporation and its debtor-affiliates' Project Rentals in full as administrative expense. Henry A. Efroymson, Esq., at Ice Miller, in Indianapolis, Indiana, recounts that the Debtors asserted that the financial contract with IAA was a disguised financing arrangement and not a true lease. Mr. Efroymson says the Debtors' argument fails. The Debtors have already rejected the Lease; they cannot be permitted to take a contradictory position now. Also, the Master Lease is a true lease due to its economic characteristics. IAA owns the Leased Premises and holds a substantial reversionary interest. The Debtors admitted they never held any ownership interest. Regardless if the Court applies federal bankruptcy law or Indiana state law, the undisputed facts of this matter dictate that the Master Lease is a true lease. The Debtors argued that the Master Lease should be judicially severed into two separate agreements. Mr. Efroymson says that the Debtors have failed to meet the burden on this reasoning. The plain language of the Maser Lease indicates the parties' intent to agree to one interrelated contract. There was no intention, nor is there a practical way, to sever the Master Lease into two separate agreements. Mr. Efroymson explains that IAA's postpetition claim arises from the rent due under the Master Lease, as required by Section 365(d)(3) of the Bankruptcy Code. Application of Section 365(d)(3) protects IAA as landlord from the burdens imposed by Section 503(b) and prevents IAA from becoming an involuntary creditor of the Debtors' bankruptcy estates. Application of Section 365(d)(3) denies the Debtors the unfair advantage they seek -- to possess the Leased Premises for over five months after the Petition Date, only to reject the Lease at the last minute to avoid obligations under Section 365(d)(3). The Debtors want IAA to apply the monies in the Bond Fund or the Construction Fund to reduce the Project Rentals claim. Mr. Efroymson argues that either way, the Debtors' argument is flawed. If Section 365(d)(3) does not apply, then the Debtors cannot rely upon the Master Lease in arguing that the monies in either the Bond Fund or the Construction Fund should have been used to reduce IAA's administrative claim. If Section 365(d)(3) does apply, the automatic stay prevents the Bank of New York from accessing the monies in the Bond Fund and Construction Fund. The undisputed facts demonstrate the Debtors cannot prevail on any of the legal issues raised in its objection. Therefore, the Court should enter summary judgment in favor of the IAA and the Bank of New York and allow IAA's claim for the Project Rentals. Debtors Object to IAA's Summary Judgment Motion The Debtors dispute the assertion by the Indianapolis Airport Authority and the Bank of New York that the 6.5% Special Facility Revenue Bonds should be characterized as a true lease. The Debtors also refute the notion that the Financing Portions of the Master Lease are not severable from the Master Lease. The Debtors agree with the IAA that the Lease Portions of the Master Lease constitute a true lease. But the Master Lease also contains Financing Portions that address the financial transaction between the Debtors and the bondholders. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, tells Judge Wedoff that analysis of the economic substance of the Financing Portions are clear: they are not a true lease. The Debtors' rentals represent interest and principal payments on the Bonds, making the relationship one between borrower and lender, rather than landlord and tenant. On the issue of severability, Mr. Sprayregen says that the IAA and Bank of New York misapply Indiana law. Indiana law focuses on three factors when determining whether two agreements should be deemed one contract: a) whether the nature and purpose of the agreements differ; b) whether there is separate or allocable consideration; and c) whether the agreements are interrelated. All three factors indicate that the Financing Portions of the Master Lease should be severed from the Lease Portions, argues Mr. Sprayregen. Accordingly, the IAA and the Bank of New York are not entitled to summary judgment, while the Debtors are. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) VICAR OPERATING: S&P Rates Proposed $500M Loan & Facility at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' senior secured debt rating and '3' recovery rating to a proposed term loan and revolving credit facility issued by animal hospital and diagnostic laboratory operator Vicar Operating Inc. The company's proposed issues are a $425 million term loan maturing in May 2011 and a $75 million revolving credit facility maturing in May 2010. The recovery rating of '3' indicates a 50%-80% expected recovery of principal in the event of payment default. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on Vicar. The outlook is stable. Vicar, the operating entity of holding company VCA Antech Inc., intends to use the proceeds from the proposed term loan to retire approximately $220 million of existing bank debt and tender $170 million of existing senior subordinated notes. Though the transaction will increase the company's outstanding debt slightly, it will also significantly reduce Vicar's interest expense. After the transaction, the $425 million term loan will be Vicar's only outstanding debt. "The ratings on Los Angeles, California-based Vicar Operating Inc. reflect its narrow operating focus in a highly competitive industry with numerous local players," said Standard & Poor's credit analyst Jesse Juliano. "The ratings also reflect the questionable sustainability of the company's price increases and potential competition from drug and animal products retailers. However, Vicar benefits from its revenue diversity, derived from 315 animal hospitals, as well as its established laboratory platform and its lack of exposure to changes in third-party reimbursement." Given that Vicar's major business is animal hospitals and related laboratories, the company is exposed to unanticipated industrywide pressures such as regulatory changes and pricing changes to its services, supplies, and labor. Vicar's transaction volumes have declined slightly in the recent past (0.8% in 2004 and 1.5% in 2003), but the company has been able to improve same-facility performance through price increases, as well as favorable changes in mix and intensity of care. It is uncertain whether Vicar will be able to continue raising prices without facing volume declines. The existence of numerous competitors in Vicar's local markets could restrain the company's pricing flexibility and local market share. In addition, Vicar could lose some of its market share in the animal drug retail business if any new rivals emerge. Vicar also faces integration risks associated with its acquisitions, and the company might find it more difficult to recruit veterinarians, who are in short supply. Although the company has overcome these difficulties in the past, there is no guarantee that they can continue to do so. WINN-DIXIE STORES: Case Summary After Transfer to Jacksonville ---------------------------------------------------------------- Lead Debtor: Winn-Dixie Stores, Inc. 5050 Edgewood Court Jacksonville, Florida 32254 Bankruptcy Case No.: 05-03817 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Dixie Stores, Inc. 05-03818 Table Supply Food Stores Co., Inc. 05-03819 Astor Products, Inc. 05-03820 Crackin' Good, Inc. 05-03821 Deep South Distributors, Inc. 05-03822 Deep South Products, Inc. 05-03823 Dixie Darling Bakers, Inc. 05-03824 Dixie-Home Stores, Inc. 05-03825 Dixie Packers, Inc. 05-03826 Dixie Spirits, Inc. 05-03827 Economy Wholesale Distributors, Inc. 05-03828 Foodway Stores, Inc. 05-03829 Kwik Chek Supermarkets, Inc. 05-03830 Sunbelt Products, Inc. 05-03831 Sundown Sales, Inc. 05-03832 Superior Food Company 05-03833 WD Brand Prestige Steaks, Inc. 05-03834 Winn-Dixie Handyman, Inc. 05-03835 Winn-Dixie Logistics, Inc. 05-03836 Winn-Dixie Montgomery, Inc. 05-03837 Winn-Dixie Procurement, Inc. 05-03838 Winn-Dixie Raleigh, Inc. 05-03839 Winn-Dixie Supermarkets, Inc. 05-03840 Date of Transfer from the U.S. Bankruptcy Court for the Southern District of New York: April 14, 2005 Court: Middle District of Florida (Jacksonville) Judge: THe Honorable Jerry A. Funk Debtors' Counsel: D. J. Baker, Esq. Sally McDonald Henry, Esq. Rosalie Walker Gray, Esq. Skadden Arps Slate Meagher & Flom, LLP Four Times Square New York, NY 10036 Tel: (212) 735-2150 Fax: (917) 777-2150 - and - Sarah Robinson Borders, Esq. Brian C. Walsh, Esq. King & Spalding LLP 191 Peachtree Street Atlanta, GA 30303 Tel: (404) 572-4600 Fax: (404) 572-5100 - and - Stephen D. Busey, Esq. James H. Post, Esq. Cynthia C. Jackson, Esq. Smith Hulsey & Busey 225 Water Street, Suite 1800 Jacksonville, FL 32202 Tel: (904) 359-7700 Fax: (904) 359-7708 Debtors' Financial Advisor: Paul P. Huffard Senior Managing Director Blackstone Group L.P. 345 Park Avenue New York, NY 10010 Debtors' Business & Strategic Consultants: Bain & Company The Monarch Tower, Suite 1200 3424 Peachtree Road Atlanta, GA 30326 Debtors' Financial & Operations Restructuring Consultants: Dennis I. Simon Managing Principal Xroads Solutions Group, LLC 400 Madison Avenue, 3rd Floor New York, NY 10017 Tel: (212) 610-5600 Fax: (212) 610-5601 Debtors' Special Corporate Finance Counsel: Kenneth M. Kirschner, Esq. Kirschner & Legler, P.A. 300A Wharfside Way Jacksonville, FL 32207 Debtors' Special Real Estate Counsel: Douglas G. Stanford, Esq. Andrew K. Daw, Esq. Diana Ross-Butler, Esq. Simone S. Kenyon, Esq. Walter C. Little, Esq. Smith, Gambrell & Russell, LLP Bank of America Tower 50 North Laura Street, Suite 2600 Jacksonville, FL 32202 Claims Agent: Kathleen M. Logan President Logan & Company, INC. 546 Valley Road, Second Floor Upper Montclair, NJ 07043 Tel: (973) 509-3190 Fax: (973) 509-3191 WORLDCOM INC: Court Dismisses Telnet Communications' Claim ---------------------------------------------------------- Telnet Communications, Inc., purchased telecommunications services from WorldCom, Inc., for resale. In February 1996, to enable Telnet to re-bill customer for the Debtors' long distance services, WorldCom required Telnet to sign a "WorldCom's Commercial Application for Services" whereby Telnet committed to purchase $50,000 a month in long distance service over a three- year period. The Re-billing Arrangement The Debtors billed Telnet one rate for all of Telnet's customers' long distance use and then send Telnet a separate bill for each of Telnet's customers with Telnet's rate marked-up by a specific percentage set by Telnet on a customer-by-customer basis. This allowed Telnet to then send a bill to each of its customers at the marked-up rate. The difference in the two rates was to be Telnet's compensation. In February 1996, Telnet signed up for a tariffed product known as "WorldOne Option G." The one-year period that Telnet purchased long distance services from the Debtors was governed by WorldCom FCC Tariff No. 2. The Tariff provided for a software program package known as Call Manager PC, also referred to as PC Manager Rerate Software, which would enable Telnet to rerate its customers' bills so that Telnet could send bills to its customers with marked-up re-rates. In March 1996, the Debtors amended the Tariff to remove all mention of the Call Manager Software as one of its services. The relationship between the Debtors and Telnet ended in April 1997. Texas Action In 1998, Telnet filed a lawsuit in a Texas state court, which was later removed to federal court, alleging that the Debtors: -- misrepresented the reliability and accuracy of its billing services; -- failed to accurately bill Telnet and Telnet's clients; and -- failed to provide bills with the "call detail" allegedly promised by the Debtors' representative. Telnet asserted state law claims for breach of contract, fraud, misrepresentation, negligent misrepresentation, negligence, gross negligence, tortious interference, violations of the Texas Deceptive Trade Practices Act, and violations of the Federal Communications Act. On January 2, 2003, Telnet filed Claim No. 8297 against the Debtors, attaching as support the Third Amended Complaint it filed in the Texas proceeding. The Debtors asked the Court to dismiss Claim No. 8297. The Filed Rate Doctrine The Filed Rate Doctrine prescribes that the "rights and liabilities defined by the Tariff cannot be varied or enlarged by either contract or tort of the carrier." Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 227 (1998). Furthermore, it has been held that under this rule the tariff binds "both customers and carriers with the force of law." The Debtors argue that Telnet's Claim fail because it relies on representations not contained in the Tariff. Telnet has conceded that it purchased a tariffed product. The Debtors cite Central Office to demonstrate that Telnet's Claim cannot proceed. In Central Office, a reseller entered into a contract to sell a provider's services to the reseller's customers. The provider could not fill the volume of the reseller's customers. The reseller subsequently terminated the contract and filed a claim in state court. The Supreme Court held that the reseller's state law claims were preempted by the filed rate doctrine. The Tariff provides a specific remedy for damages arising in connection with the furnished services. The Debtors, therefore, argue that the only remedy available to Telnet is a per-minute credit for improperly billed minutes pursuant to the Tariff. The Debtors maintain that Telnet has not requested that form of relief. Thus, no relief can be granted. Telnet distinguishes Central Office on two grounds: (a) The Supreme Court dismissed the contract claim in Central Office because it was based on a contract, which was in direct conflict with the express terms of the tariff; and (b) Because Federal Communications Commission has abolished the requirement to file tariffs, the filed tariff doctrine is no longer applicable. The Bankruptcy Court notes that the court in Fax Telecomm., Inc. v. AT&T, 138 F.3d 479 (2d Cir. 1998) held that the FCC has unsuccessfully tried to regulate the doctrine out of existence by excusing carriers from filing rates and noted that, in practice the doctrine still applies. The Fax Telecomm court also noted that the application of the filed rate doctrine may lead to unjust results and only Congress or the Supreme Court are the proper forums to re-examine this doctrine. Judge Gonzalez finds that Telnet has not established that the Bankruptcy Court can disregard Central Office. Even if there was support for the proposition that Central Office should not be followed with the same force and effect as before the FCC rule changes, the Bankruptcy Court is bound by the Second Circuit decision of Fax Telecomm, which held that the filed rate doctrine still applies. Judge Gonzalez holds that Central Office continues to be the seminal case regarding the filed rate doctrine. The Court rules that the Tariff controls and the filed rate doctrine applies. Enforceability of the Limitation of Liability Clause Telnet alleges that the limitation of liability clause in the Tariff is overly broad, unreasonable and against public policy and therefore, unenforceable as a matter of law. Telnet maintains that courts, in general, have been suspicious of limitation of liability clauses and usually require a separate agreement in order to be enforceable. The Debtors maintain that because Telnet has remedies available under the Tariff, the limitation of liability clause is not "unfair" on its face. Furthermore, the Debtors argue that the only entity that can determine the "fairness" of a tariff provision is the FCC. The Court notes that in Telnet's case, there were no representations of any implied warranties in the Tariff and therefore, an action in fraud cannot be based on the present facts. Furthermore, neither party argues that the FCC has promulgated any regulation that limits a party's ability to waive implied warranties in a tariff. "It is not within [the Bankruptcy] Court's province to determine the fairness or equity of applying the filed rate doctrine," Judge Gonzalez contends. "To the extent that the Debtors did not know that the Call Manager Software was not functional at the time of the initiation of the Rebilling Agreement, Telnet is only entitled to damages pursuant to the terms of the Tariff. Any challenges regarding the 'fairness' of applying the filed rate must be brought to the FCC." Fraud and Misrepresentation Telnet alleges that the Debtors induced it into the contract due to fraudulent misrepresentations. The Debtors argue and the Court agrees that those actions are barred by the filed rate doctrine unless there was a fraudulent misrepresentation in direct conflict with terms of the Tariff. Telnet attempts to distinguish Central Office by arguing that the defendant in Central Office had included an explicit provision in its tariff that stated that it made no warranties as to the performance of the software. However, the Court notes, Telnet fails to acknowledge that the Debtors have essentially included the same disclaimer in the Tariff in the limitation of liability clause. According to Judge Gonzalez, the failure of the Call Manager Software to function properly is clearly a defect in the Debtors' service and, therefore, Telnet is only entitled to the remedies available in the Tariff. "If [the Bankruptcy] Court were to rule that the Debtors engaged in a fraudulent misrepresentation, it would have to conclude that there was either an express or implied warranty in the Tariff which was misrepresented. An examination of the Tariff reveals that this is simply not the case," Judge Gonzalez maintains. The Court rules that as a matter of law, Telnet's fraud and misrepresentation claims cannot be sustained. Telnet's Tortious Interference Claim Telnet's tortious interference claim is separate from Telnet's claim for inaccurate billing practices. Telnet alleges that the Debtors, in at least one instance, misrepresented to customers that they represented Telnet in addition to themselves. Telnet contends that the Debtors improperly converted Telnet's customers to the Debtors' customers through fraud and deceit. The Court notes that the alleged transactions were not derivative of any phone services to be provided by the Debtors and are therefore, not governed by the Tariff. The cause of action for tortious interference is one for tortuous interference with contract. Judge Gonzalez explains that the tortious interference with contract requires the existence of a valid contract between the plaintiff and a third party. Telnet, in not responding to the Debtors' legal argument and in not pleading the existence of any valid contract between themselves and a third party with which the Debtors interfered, has failed to state a cause of action for which relief could be granted. Thus, Judge Gonzalez dismisses Telnet's tortious interference claim. Furthermore, the Court denies Telnet's request to amend its complaint to cure any defects in its pleadings. The Court grants the Debtors' dismissal request in full. 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) YOUNG BROADCASTING: Extends Consent Solicitation Until Tomorrow --------------------------------------------------------------- Young Broadcasting Inc. (NASDAQ:YBTVA) disclosed that, in connection with its previously announced tender offer and consent solicitation for all of its $246,890,000 outstanding principal amount of 8-1/2% Senior Notes due 2008, it has amended the Total Consideration to be paid for Notes accepted for purchase in the Tender Offer and has extended the Consent Payment Deadline and the Expiration Time. As described in the Offer to Purchase and Consent Solicitation Statement dated April 11, 2005, the Total Consideration is determined by reference to a fixed spread above the yield to maturity of the 1.875% U.S. Treasury Note due Nov. 30, 2005. On April 22, 2005, which was the original Price Determination Date, YBI announced the Total Consideration to be paid for those Notes validly tendered and not validly withdrawn prior to the Consent Payment Deadline. YBI is now amending the fixed spread used to determine the Total Consideration from 75 basis points to 50 basis points. The amended Total Consideration will be determined as of 2:00 p.m., New York City time today, April 28, 2005, which is the new Price Determination Date. Consent Payment Deadline Extended In addition, YBI has extended the Consent Payment Deadline relating to the Consent Solicitation. The Consent Payment Deadline, which was scheduled to expire at 5:00 p.m., New York City time, on April 25, 2005, has been extended to 5:00 p.m., New York City time, on April 29, 2005, unless further extended or earlier terminated. Holders who validly tender their Notes by the Consent Payment Deadline will be entitled to a consent payment of $30 per $1,000 principal amount of Notes as part of the Total Consideration paid for Notes that are accepted for purchase and not validly withdrawn. Holders of Notes that have previously delivered consents are not required to redeliver such consents or take any other action in response to the extension of the Consent Payment Deadline. As of 5:00 p.m., New York City time, on April 25, 2005, YBI had received valid tenders of Notes from holders of approximately 39.92% or $98,549,000 aggregate principal amount of Notes outstanding. YBI has also extended the Expiration Time for the Tender Offer. The Tender Offer, which had originally been scheduled to expire at 5:00 p.m., New York City time, on May 9, 2005, will now expire at 5:00 p.m., New York City time, on May 13, 2005, unless further extended or earlier terminated. All other terms relating to the determination of the Total Consideration and the Tender Offer Consideration, and the other terms of the Tender Offer and the Consent Solicitation, will remain as described in the Statement. This announcement amends and supplements the Statement solely as described in this press release. The terms of the Tender Offer and the Consent Solicitation are more fully described in the Statement and related Letter of Transmittal and Consent. This announcement is neither an offer to purchase, nor a solicitation of an offer to purchase, nor a solicitation of tenders or consents with respect to, any Notes. The Tender Offer and the Consent Solicitation are being made solely pursuant to the Statement and the related Letter of Transmittal and Consent. YBI has retained Wachovia Securities, Lehman Brothers and Merrill Lynch to serve as the dealer managers and solicitation agents for the Tender Offer and the Consent Solicitation. Questions regarding the Tender Offer and the Consent Solicitation may be directed to Wachovia Securities at (704) 715-8341 or (866) 309- 6316, to Lehman Brothers at (212) 528-7581 or (800) 438-3242 or to Merrill Lynch at (212) 449-4914 or (888) ML4-TNDR. Requests for documents in connection with the Tender Offer and the Consent Solicitation may be directed to Global Bondholder Services Corporation, the information agent, at (212) 430-3774 or (866) 470-3900. About the Company Young Broadcasting Inc. (NASDAQ:YBTVA) owns ten television stations and the national television sales representation firm, Adam Young Inc. Five stations are affiliated with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV - Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN and WBAY-TV - Green Bay, WI), three are affiliated with the CBS Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA and KELO- TV - Sioux Falls, SD) and one is affiliated with the NBC Television Network (KWQC-TV - Davenport, IA). KRON-TV - San Francisco, CA is the largest independent station in the U.S. and the only independent VHF station in its market. * * * As reported in the Troubled Company Reporter on Apr. 22, 2005, Moody's Investors Service assigned B1 ratings to Young Broadcasting Inc.'s $295 million in new senior secured credit facilities ($20 million revolving credit facility due 2010, $275 million senior secured term loan B due 2013). Additionally, Moody's affirmed Young's existing ratings, including a B2 senior implied rating, and changed the outlook to negative. The proceeds from the issuance will be used to redeem the company's 8.5% senior notes due 2008. Thus, the transaction is neutral to leverage. The negative outlook incorporates Young's still high debt burden, operating margins that lag peers in the television broadcast sector, and our expectation that the company will continue to burn cash in the near-term. Accordingly, absent asset sales, the company is not able to meaningfully reduce debt. * Ronald DeKoven Joins Jenner & Block as Of Counsel --------------------------------------------------- Internationally prominent bankruptcy and finance attorney, Ronald DeKoven, has joined Jenner & Block as Of Counsel. Mr. DeKoven has been a recognized leader in several major international organizations that have been instrumental in formulating industry policy, precedent and legislation. Mr. DeKoven's substantial involvement in the European business community resulted in his becoming an Ad Eundum member of Gray's Inn, London, in 2003. He also is an Associate Member of 3/4 South Square, a well-known set of Chambers of English Barristers concentrating in Commercial and Business Law, with a particular emphasis on Insolvency and Banking. Mr. DeKoven's more than 35 years' experience in commercial law includes playing a significant role in several high profile cross- border insolvencies, including Federal-Mogul, TXU, Lloyd's of London, Equitas, Olympia and York, Barings, BCCI, Metallgessellschaft and Alpargatas, S.A. He also was involved with several major bankruptcies including Ames Department Stores, Allis Chalmers, and Long John Silver's. Jerold S. Solovy, Chairman of Jenner & Block, states that "Ronald DeKoven is a leader in bankruptcy and insolvency law nationally and internationally and we are honored that he has joined Jenner & Block." Mr. DeKoven will be a member of the Firm's Bankruptcy, Workout and Corporate Reorganization practice. Partner Daniel R. Murray, Chair of the practice, adds that: "Ron DeKoven's international experience serves as a strong complement to our practice and will enable us to continue our penetration of the international insolvency marketplace." Besides his insolvency practice, Mr. DeKoven has been a leader in developing sophisticated leasing structures for financial institutions. He also has considerable experience in drafting legislation as the Chief Reporter of Article 2A of the Uniform Commercial Code and in monitoring the interpretation of legislation as a former member of the Permanent Editorial Board for the UCC. In addition, Mr. DeKoven has served as a treaty delegate for the U.S. Department of State with respect to UNIDROIT, Rome, Italy, and as a member of the National Bankruptcy Conference, which monitors the creation and development of U.S. bankruptcy law. He is also an elected member of the American Law Institute and the National Bankruptcy Conference. Prior to joining Jenner & Block, Mr. DeKoven was the head of the leasing and bankruptcy practices at New York's Shearman & Sterling, a firm he was with for more than 20 years. Mr. DeKoven received his Juris Doctorate from the University of Chicago Law School and his B.A. from Stanford University. Ronald DeKoven serves as a Trustee and member of the Audit Committee of The American Cancer Society Foundation. He is also a member of the Development Council of the Oxford University Law Foundation. About the Firm Founded in 1914, Jenner & Block consistently delivers outstanding results in corporate transactions and secures major litigation victories for clients from the trial level through the United States Supreme Court. Its more than 400 attorneys located in Chicago, Dallas and Washington, DC offer substantial experience in a broad range of legal areas. The Firm has a substantial transactional and corporate practice, which focuses on mergers and acquisitions, securities, finance, private equity, real estate, tax, environmental, insurance, commercial law, technology, intellectual property, bankruptcy and reorganization, labor and employment, executive compensation, government contacts, health care and associations. ********* 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 Junior M. Pinili, 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 ***