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/raid1/www/Hosts/bankrupt/TCR_Public/050505.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, May 5, 2005, Vol. 9, No. 105 Headlines A.P.I. INC: Insurers Agree to $13.9 Million Asbestos Settlement AADCO AUTOMOTIVE: Board Names Cal Parent as Director AARON & ALCENA STONE: Case Summary & 7 Largest Unsecured Creditors ALLIANCE ONE: Moody's Cuts Planned Sr. Unsec. Notes' Rating to B3 ALLIANCE ONE: S&P Puts Low-B Ratings on $1.1 Billion Loans & Notes APPLIED IMAGING: PwC Raises Going Concern Doubt in Annual Report ARTHUR CECIL & EUGENIE KLAPSTEIN: Section 304 Petition Summary ATA AIRLINES: Asks Court to Extend L/C Facility for 2 More Months AUDIO VISUAL: Moody's Rates Planned $120M Sr. Sec. Facility at B1 BEAR STEARNS: Fitch Puts Low-B Ratings on M-7 & M-8 Cert. Classes BONHAM HOUSING: Case Summary & 11 Largest Unsecured Creditors BRIDGE INFO: Welsh Carson Wants Disclosure About Distributions BUEHLER FOODS: Files for Chapter 11 Protection in S.D. Indiana BUEHLER FOODS: Case Summary & 79 Largest Unsecured Creditors CALEAST INDUSTRIAL: Moody's Pares Issuer Rating to Ba1 from Baa3 CALL-NET ENT: Posts $13 Million Net Loss in First Quarter 2005 CARLIN MESSENGER: Taps Leslie D. Jacobson as Bankruptcy Counsel CARMIKE CINEMAS: S&P Rates Proposed $455MM Sr. Sec. Facility at B CHARTER COMMS: Mar. 31 Balance Sheet Upside Down by $4.7 Billion CITATION CORP: Wants KPMG as Valuation Consultants COLUMBIA PLACE: Case Summary & 6 Largest Unsecured Creditors CONCENTRA OPERATING: March 31 Balance Sheet Upside-Down by $53-Mil COOL COOL WATER: Case Summary & 8 Largest Known Creditors CRI RESOURCES: Creditors Must File Proofs of Claim by May 15 CRI RESOURCES: Gets Court Nod to Tap Albert Weiland as Counsel DI DONATO: Case Summary & 40 Largest Unsecured Creditors DJD GOLF: Voluntary Chapter 11 Case Summary DANNY ARMSTRONG: Case Summary & 10 Largest Unsecured Creditors DATATEC SYSTEMS: Gets Exclusive Periods Extended to Aug. 11 DECISION ONE: Expects to Lay-Off 200 Customer Service Reps DONNKENNY INC: Plan's Involuntary Third-Party Releases Draw Fire EURAMAX INT'L: Soliciting Consents to Amend 9-1/2% Sr. Sub. Notes EXCITE@HOME: Unsec. Creditors Contribution to Bondholders is $18M EXOTIC CAR: Case Summary & 2 Largest Known Creditors FEDERAL-MOGUL: Names Peter Becker Customer Satisfaction VP FLEXTRONICS: Wants to Buy India-based Subsidiary's Public Equity GATEWAY GRAPHICS: Case Summary & 21 Largest Unsecured Creditors GLASS GROUP: Files its Schedules of Assets & Liabilities in Del. GREATHOUSE PACKAGING: Case Summary & 20 Largest Creditors GREAT SCOTT: Voluntary Chapter 11 Case Summary GRUPO IUSACELL: 14-1/4% Bondholders Deliver Acceleration Notice GRUPO IUSACELL: Asks Shareholders to Scrap U.S. Stock Trading H&M TRANSPORTATION: Case Summary & 20 Largest Unsecured Creditors HARRY LEE CORLEY: Voluntary Chapter 11 Case Summary HARTCOURT COS: Losses & Neg. Cash Flow Prompt Going Concern Doubt HAWAIIAN HOLDINGS: Expects 45M Outstanding Shares Following Exit HOLMES GROUP: Moody's Puts B1 Rating on New $85M Tack-On Term Loan HUFFY CORP: Brings-In Jefferson Wells for Internal Audit Work HUNTSMAN CORP: Reports Positive EBITDA & Net Loss in First Quarter HY & ZEL: Restructures Under CCAA Protection in Canada INTERSTATE BAKERIES: Closing Charlotte, N.C. Bakery JOHN BYRD: Case Summary & 3 Largest Unsecured Creditors KAISER ALUMINUM: Asks Court to Okay Avista et al. Consent Decree KAISER ALUMINUM: Wants Insurer's Confirmation Objections Overruled KIMBERLY OREGON: Files Schedules of Assets & Liabilities LOMA LINDA: S&P Lifts Ratings on $52.3 Million Series 1999 Bonds MAGELLAN HEALTH: Good Performance Cues S&P to Change Outlook MAGIC LANTERN: Auditors Doubt Going Concern Viability MAULDIN-DORFMEIER: Selling Equipment & Vehicles for $1.7 Million MAULDIN-DORFMEIER: St. Paul Won't Allow Use of Cash Collateral MCI INC: Fitch Keeps Sr. Debt B Rating on Watch Negative MCI INC: To Release 2005 First Quarter Results Today MERIDIAN AUTOMOTIVE: Committee Formation Meeting Set for May 9 MERIDIAN AUTOMOTIVE: First Creditors' Meeting Slated for June 3 MERIDIAN AUTOMOTIVE: Utilities Restrained from Halting Service MERIDIAN AUTOMOTIVE: Hires Trumbull Group as Claims Agent MID-AMERICA: Case Summary & 37 Largest Unsecured Creditors MID-AMERICA APT: Moody's Withdraws Ratings for Business Reasons MOLECULAR STAGING: Dissolves Under D.G.C.L. & Claims Due May 19 MURRAY INC: Creditors Must File Proofs of Claims by May 31 NRG ENERGY: Eyed Possible Merger with Mirant Corp. NANOMAT INC.: Trustee Wants Houston Harbaugh as His Counsel NATIONAL ENERGY: ET Power's Notice to Settle TransCanada Dispute NOBLE DREW: Files Schedules of Assets & Liabilities NORTHWESTERN: Magten & Law Debenture Want Confirmation Revoked OMNIGRACE THAILAND: Section 304 Petition Summary PC LANDING: Preston Gate's Role Expands to Include Hiring Experts PHOENIX COLOR: S&P Junks $35 Million Second Lien Loan R.I.A. MELBOURNE: Case Summary & 14 Largest Unsecured Creditors RELIANCE GROUP: Court Okays Interparty Agreement with J. Goodman SKIN NUVO: U.S Trustee Appoints 7-Member Creditors Committee SOUTHWEST RECREATIONAL: Trustee Wants to Sell SRI Stock for $50K TIAA STRUCTURED: Moody's Junks $35M Class C Senior Secured Notes TV AZTECA: Asks Shareholders to Scrap U.S. Stock Trading TECHNOLOGY SYSTEMS: Voluntary Chapter 11 Case Summary TEMBEC INC.: Weak Earnings Spur S&P's Negative Outlook THISTLE MINING: Affected Creditors Approve Reorganization Plan TORCH OFFSHORE: Inks Settlement Pact with ExxonMobil Corporation TORCH OFFSHORE: Wants to Sell Vessels to Cal Dive for $92 Million TORCH OFFSHORE: Wants Exclusive Period Extended Through August 5 UAL CORP: Wins Court Ruling on Air Wisconsin Transition Pact U.H. HOUSING: Voluntary Chapter 11 Case Summary UNITED HOSPITAL: Gets Interim Nod on Kimco/SB DIP Financing Deal UNUMPROVIDENT CORP: Earns $152.2 Million of Net Income in 1st Qtr. US AIRWAYS: Fitch Talks About Proposed America West Merger VAN ELWAY: Case Summary & 2 Largest Unsecured Creditors VERY LTD.: Files Schedules of Assets & Liabilities in New York VENTURE HOLDINGS: Forms New Venture Holdings; Sells All Assets VERIZON GLOBAL: Fitch Keeps Long-Term Debts on Watch Negative VSOURCE: Delays Form 10-K Filing to Reflect Exchange Offer VTEX ENERGY: Talking to Lender to Restructure $3.6 Million of Debt WET SEAL: Closes Equity Financing Transaction with Lenders WORLDCOM INC: Tax Claim Objection Deadline Extended to June 16 * Moody's Reports Canadian Default Rate Unchanged in 2004 ********* A.P.I. INC: Insurers Agree to $13.9 Million Asbestos Settlement --------------------------------------------------------------- A.P.I. Inc. sought and obtained approval from the U.S. Bankruptcy Court for the District of Minnesota to enter into a settlement agreement with St. Paul Fire and Marine Insurance Company and Travelers Casualty and Surety Company. A.P.I. sought coverage under the St. Paul policy and Travelers policy for certain Asbestos Claims. While the insurers have paid millions for the Asbestos Claims, the nature and extent of their obligations are unclear. The insurers claim that the applicable limit under the policies have been exhausted. The coverage dispute gave rise to litigation and negotiations spanning three years. With the aid of court-appointed mediator former Minnesota Supreme Court Justice James Gilbert, the parties were able to resolve the coverage dispute. Pursuant to the settlement agreement, the insurers agree to pay $13.9 million to the Debtor's estate. The insurers also agree to pay $146,281 of legal costs. The Asbestos Claimants Committee and Thomas H. Carey, the Future Claims Representative, participated in and approved the settlement agreement. Headquartered in St. Paul, Minnesota, A.P.I. Inc., f/k/a A.P.I. Construction Company -- http://www.apigroupinc.com/-- is a wholly-owned subsidiary of the API Group, Inc., and is an industrial insulation contractor. The Company filed for chapter 11 protection on January 5, 2005 (Bankr. D. Minn. Case No. 05-30073). James Baillie, Esq., at Fredrikson & Byron P.A., represents the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed total assets of $34,702,179 and total debts of $63,000,000. AADCO AUTOMOTIVE: Board Names Cal Parent as Director ---------------------------------------------------- AADCO Automotive Inc. elected Cal Parent as a new member to the Board of Directors. Mr. Parent has been the President of Synergetic Holdings Ltd. since 1999, and prior thereto held the position of President at Ross Roy Communications. Mr. Parent previously served as a director of the Corporation from 2001 to 2003 and has also had a long-standing relationship with the Corporation as an investor. The directors and management team of AADCO look forward to Mr. Parent's continued involvement with the Corporation. AADCO disclosed the resignation of Douglas Kemp-Welch from the board for personal reasons. The Board expressed its gratitude to Mr. Kemp-Welch for his commitment and dedication to the Corporation during the restructuring period. About the Company AADCO Automotive Inc. is a growing Canadian public company with a unique business model committed to complete vehicle dismantling to provide quality used OEM parts, recyclable core from insurance salvage and aftermarket parts to meet the needs of the collision/mechanical repair industry. AADCO serves over 3000 collision/mechanical repair clients across Ontario through it's LKQ parts division. AADCO maintains one of the largest unbolted inventories of quality used OEM parts in Canada at it's 87,000 sq. ft. facility In Brampton, Ontario. AADCO is the only auto recycler to have been awarded the ECOLOGO for environmental stewardship. At Dec. 31, 2004, AADCO Automotive's stockholders' deficit narrowed to $2,693,810 from a $2,928,010 deficit at June 30, 2004. AARON & ALCENA STONE: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------------ Debtors: Aaron W. Stone & Alcena Stone dba A.S. Stones Financial Properties 502 Johnson Street Manchester, Tennessee 37355 Bankruptcy Case No.: 05-04939 Type of Business: The Debtors are co-owners of A.S. Stones Financial Properties. The Debtors previously filed for chapter 11 protection on November 1, 2004 (Bankr. M.D. Tenn. Case No. 04-13281). Their partner, Danny Joe Armstrong, filed for chapter 11 protection on April 21, 2005 (Bankr. M.D. Tenn. Case No. 05-04941). Chapter 11 Petition Date: April 21, 2005 Court: Middle District of Tennessee (Nashville) Judge: George C. Paine Debtors' Counsel: Paul E. Jennings, Esq. Paul E. Jennings Law Offices, P.C. 805 South Church Street Suite 3 Murfreesboro, Tennessee 37130 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtors' 7 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ US Bank Comm. Loan Line of credit $35,000 P.O. Box 790401 St. Louis, MO 53279 US Bank Comm. Loan Line of credit $34,300 P.O. Box 790401 St. Louis, MO 53279 US Bank Elan credit card $13,663 P.O. Box 790408 St. Louis, MO 53179 Discover Card Credit card $8,870 P.O. Box 1521 Wilmington, DE 19886 Verizon Cell phone $418 404 Brock Drive Bloomington, IL 61701 Coffee Co. Trustee 2001, 2002 & 2003 Unknown 1341 McArthur Drive Taxes Manchester, TN 37355 Manchester City Taxes 2001, 2002 & 2003 Unknown 200 West 4th Street Taxes Mnchester, TN 37355 ALLIANCE ONE: Moody's Cuts Planned Sr. Unsec. Notes' Rating to B3 ----------------------------------------------------------------- Moody's Investors Service: * affirmed the B1 rating of the proposed senior secured credit facilities of Alliance One International Inc., * assigned a B1 rating to the new proposed $200 million Tranche B term loan of Intabex Netherlands BV, * downgraded the rating of the proposed senior unsecured notes to B3 from B2, and * withdrew the B3 rating of the company's proposed $200 million senior subordinated notes. The rating actions follow the revision announced on May 3, 2005 of the company's contemplated capitalization structure. Ratings affirmed: -- Alliance One * B1 for senior implied * B1 for a three-year $300 million secured revolving credit facility -- Intabex Netherlands BV * B1 for a three-year $150 million secured Tranche A term loan Rating downgraded: -- Alliance One * $450 million senior notes due in 2012 and 2013, to B3 from B2 Rating withdrawn: -- Alliance One * B3 for $250 million senior subordinated notes due in 2015 On May 3, 2005, Dimon and Standard Commercial announced the change in the capitalization structure to be put in place at closing of the merger between the two companies. In November 2004, Dimon and Standard Commercial announced their intent to combine under a 100% stock merger, with Dimon being the surviving corporation, which will be renamed Alliance One International Inc. The previously anticipated structure was comprised of: (1) a three-year $150 million secured term loan, with Alliance One International AG being the direct obligor. (2) a three-year $300 million secured revolving credit facility (3) $400 million senior notes due in 2012 and 2013 (4) $250 million senior subordinated notes due in 2015 The new anticipated structure is comprised of: (1) a three-year $150 million secured Tranche A term loan, with Intabex Netherlands BV being the direct obligor. (2) a five-year $200 million secured Tranche B term loan, with Intabex Netherlands BV being the direct obligor. (3) a three-year $300 million secured revolving credit facility (4) $450 million unsecured senior notes due in 2012 and 2013 Alliance One will guarantee the bank facilities lent to Intabex Netherlands BV, a subsidiary of the parent. For bank facilities, a pledge on domestic receivables and inventory (with a carve-out for inventory backed by customer advances) will be added to the pledge of capital stock of material domestic and first-tier foreign subsidiaries of Alliance One and its domestic subsidiaries. The obligor for the $150 million secured Tranche A term loan will be changed from Alliance One International AG to Intabex Netherlands BV. Intabex Netherlands BV, a subsidiary of Alliance One, will control 100% of Alliance One International AG. The affirmation of the B1 senior implied rating reflects the absence of change in total indebtedness brought by the new capitalization structure. The affirmation of the B1 rating of the $300 million revolving credit facility and the $150 million Tranche A term loan, as well as the assignment of the B1 rating to the $200 million Tranche B term loan, reflect our view that the additional collateral granted to bank lenders offsets the negative effect on recovery of bank facilities brought about by their $200 million dollar total increase. The downgrade of the $450 million unsecured senior notes to B3 from B2 reflects the increase in secured debt structurally senior to the unsecured senior notes, which will negatively affect the recovery potential of the notes. Headquartered in Wilson, North Carolina, Standard Commercial Corp. is the world's third-largest dealer of leaf tobacco with operations in more than 30 countries. Headquartered in Danville, Virginia, Dimon Incorporated is the world's second-largest dealer of leaf tobacco with operations in more than 30 countries. ALLIANCE ONE: S&P Puts Low-B Ratings on $1.1 Billion Loans & Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' rating to Danville, Virginia-based Alliance One International Inc. and Intabex Netherlands B.V.'s proposed $300 million senior secured revolving credit facility due 2008. In addition, Standard & Poor's assigned its 'BB-' ratings to Intabex's $150 million three-year term loan A and $200 million five-year term loan B. The 'BB-' rating is the same as the corporate credit rating on Alliance One. Standard & Poor's also assigned its 'B' rating to Alliance One's proposed $450 million of fixed rate senior notes due 2013. The senior note issue is two notches below the corporate credit rating because of the amount of priority obligations and secured debt ahead of the senior unsecured debt issue. Furthermore, Alliance One is both a holding company and directly owns certain U.S. operating assets of the merged companies. In addition, Standard & Poor's affirmed its 'BB-' corporate credit rating on Alliance One. The outlook is negative. Pro forma for the refinancing, total rated debt on Alliance One is about $1.1 billion. Also, the ratings on the following transactions were withdrawn (which were rated on April 13, 2005): (1) a $450 million senior secured credit facility consisting of $300 million revolving credit facility and a $150 million term loan A due 2008; (2) $400 million of senior fixed rate and floating rate notes due 2012 and 2013; and (3) $250 million of senior subordinated notes due 2015. Alliance One results from the planned merger of the number-two and number-three independent leaf tobacco dealers, DIMON Inc. and Standard Commercial Corp., respectively. Proceeds from the new rated issues will be used to: (1) repay all of DIMON's and Standard Commercial's existing senior credit facilities; (2) to repurchase DIMON's 9.625% senior notes due 2011 and 7.75% notes due 2013 and Standard Commercial's 8% senior notes due 2012; and (3) to redeem DIMON's 6.25% convertible subordinated debentures. Upon closing of Alliance One's new debt issues, the ratings on DIMON's and Standard Commercial's debt issues will be withdrawn. APPLIED IMAGING: PwC Raises Going Concern Doubt in Annual Report ---------------------------------------------------------------- PricewaterhouseCoopers LLP raised substantial doubt about Applied Imaging Corp.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The auditors point to the Company's recurring losses and negative cash flows from operations. As of Dec. 31, 2004, the Company had cash and cash equivalents on hand of $3.9 million, working capital of $603,000, and an accumulated deficit of $49.3 million. The Company intends to finance its operations primarily through its cash and cash equivalents, future financing and future revenues. "During 2005, we may have to raise additional funds through the issuance of equity or debt securities, or a combination thereof, in the public or private markets in order to continue operations, or sell the company," the Company stated in its Annual Report. "Additional financing and merger opportunities may not be available, or if available, may not be on favorable terms. The availability of financing or merger opportunities will depend, in part, on market conditions, and the outlook for our company. Any future equity financing would result in substantial dilution to our stockholders. If we raise additional funds by issuing debt, we may be subject to limitations on our operations, through debt covenants or other restrictions. If adequate and acceptable financing is not available, we may have to delay development or commercialization of certain of our products or license to third parties the rights to commercialize certain of our products or technologies that we would otherwise seek to commercialize. We may also reduce our marketing, customer support or other resources devoted to our products. Any of these options could reduce our sales growth and result in continued net losses." Financial Restatements In March 2005, the Company restated its consolidated financial statements for the years ended Dec. 31, 2003 and 2002 and for the quarters ended March 31, 2004 and June 30, 2004 to reflect adjustments which arose out of an investigation by its Audit Committee. As a result of the then active investigation, the Company was unable to timely file the Form 10-Q for the quarter ended September 30, 2004 or to announce its financial results for that period. As a result of the investigation, the Audit Committee determined that the Company had: -- incorrectly recorded revenue on sales contracts that included commitments for as yet undeveloped software upgrade applications for which vendor specific objective evidence for the fair value had not yet been established; -- incorrectly recorded revenue on certain sales contracts upon shipment rather than recording revenue when customer acceptance criteria had been met; and on certain other transactions where it had recorded revenue upon shipment of sales with participation by a third party financing company, but had not met all the revenue recognition criteria necessary to recognize revenue. -- incorrectly recorded revenue on certain transactions where additional revenue on extended warranty/post customer support (software maintenance and service) arrangements were inappropriately recognized resulting in incorrect revenue being recognized and/or deferred at the time of product shipment. Internal Controls As part of its investigation, the Audit Committee evaluated the effectiveness of certain internal controls and procedures. The Committee concluded that there existed material weaknesses in a number of areas in the Company's system of internal controls and procedures as of the date of the initial filing of its Dec. 31, 2003 Form 10-K. As a result of their evaluation, the Committee has directed management to implement measures designed to reasonably ensure that information required to be disclosed in the Company's periodic reports is complete, recorded, processed, summarized accurately and reported timely. "While we have implemented most of these measures, we cannot provide assurance that these additional measures, will be effective to reasonably ensure that information we are required to disclose in reports that we file with the SEC is recorded, processed, summarized accurately and reported within the time periods specified in Securities and Exchange Commission rules and forms," the Company said. "The effectiveness of our controls and procedures is limited by four factors: -- faulty human judgment and simple error, omissions or mistakes; -- fraudulent action of an individual or collusion of two or more people; -- inappropriate management override of procedures; and -- the possibility that our enhanced controls and procedures may still not be adequate to assure timely and accurate information. "If we fail to maintain effective internal controls and procedures for financial reporting in place, we could be unable to provide timely and accurate financial information, be subject to delisting, and to civil and criminal sanctions." Headquartered in San Jose, California, Applied Imaging Corp. -- http://www.aicorp.com/-- supplies automated imaging systems utilized in genetics and pathology laboratories for the analysis of chromosomes in cancer and prenatal disorders. The Company markets a wide range of imaging systems for fluorescence and brightfield microscopy applications. Applied Imaging has installed over 3,500 systems in over 1,000 laboratories in more than 60 countries. The Company is developing a non-magnetic cell separation technology for isolating and analyzing circulating tumor cells from the blood of cancer patients. ARTHUR CECIL & EUGENIE KLAPSTEIN: Section 304 Petition Summary ------------------------------------------------------------- Petitioner: Mackay & Company, Ltd. Debtors: Arthur Cecil and Eugenie Klapstein c/o Stephen J. Livingston, Esq. McLellan, Ross, LLP 600 West Chambers 12220 Stony Plain Road Edmonton, Alberta T5N 3Y4 CANADA Case No.: 05-07414 Type of Business: The Debtors are domiciled in and have their principal place of business in Canada. The Debtor's principal assets at the commencement of the Canadian Bankruptcy Cases were located in Canada. In the course of the proceedings, Mackay & Company learned of documents and possibly assets located in the United States. Included among the documents and assets are bank records and, upon information and belief, funds in checking accounts held by Bank One Arizona, NA (nka Chase Bank One), Bank of America, NA, and Wells Fargo Bank, NA (fka Norwest Bank) in Phoenix Arizona. Section 304 Petition Date: April 27, 2005 Court: District of Arizona (Phoenix) Judge: Chief Judge Sarah Sharer Curley Petitioners' Counsel: Joseph WM. Kruchek, Esq. Jennings, Strouss & Salmon, P.L.C. 8585 East Hartford Drive, #113 Scottsdale, Arizona 85255-5474 Tel: (480) 874-4700 Fax: (480) 874-9500 - and - Gary Befus, Esq. Walsh, Wilkins, Creighton, LLP 2800 - 6th Avenue, S.W. Calgary, Alberta T2P 4A3 CANADA No financial data was delivered to the U.S. Bankruptcy Court with the Sec. 304 Petition. ATA AIRLINES: Asks Court to Extend L/C Facility for 2 More Months ----------------------------------------------------------------- On November 12, 2004, the United States Bankruptcy Court for the Southern District of Indiana approved a stipulation between National City Bank of Indiana and ATA Airlines, Inc. and its debtor-affiliates, which authorized the Debtors to use a portion of the Bank's cash collateral in the Depository Accounts to the extent the funds exceed the aggregate face amount of outstanding letters of credit. As a condition to its consent to the Stipulation, the Bank was granted adequate protection, including, but not limited to, a holdback of Excess Funds equal to $150,000. On December 16, 2004, the Court authorized the Debtors to obtain postpetition financing from NCBI in the form of a renewal or extension of letters of credit issued by the Bank. The loan is governed by the terms of the parties' December 2002 Credit Agreement, as amended, all related loan documents and their November 12, 2004 Stipulation. Michael P. O'Neil, Esq., at Sommer Barnard Attorneys, PC, in Indianapolis, Indiana, tells Judge Lorch that the Debtors need to extend the maturity date for the Letter of Credit Facility for two months. The Debtors will use the extension to take care of expiring letters of credit, and to either negotiate a longer-term facility or obtain a new facility from a different lender. Mr. O'Neil points out that the letters of credit issued pursuant to the Credit Agreement are about to expire. One letter of credit expires on May 16, 2005. The extension will be governed by these additional terms: Maturity Date August 31, 2006 Amount of Commitment $38,000,000 Letter of Credit Fee Non-refundable annual commission fee for 125 Basis Points of the face amount of each letter of credit issued, payable upon the issuance, increase or renewal of each letter of credit. Unused Fee 25 Basis Points, payable quarterly in arrears. Extension Fee Two twelfths prorating of 0.125% of the amount of the letter of credit commitment rounded to the nearest thousand dollars, payable at closing. Collateralization Letters of credit issued in foreign currencies will be secured by cash collateral equal to 110% of the equivalent U.S. dollar amount of the letter of credit based on conversion of the foreign currency face amount of the letter of credit to U.S. dollars. ATA will cure any cash collateral deficiency caused by currency fluctuations upon request. In the event that the deficiency is not cured within 48 hours of notice, NCBI will be authorized to debit an ATA account for the amount necessary to cure any deficiency. Projections ATA will provide consolidated financial operating projections for the year ended December 31, 2005, with detail provided on a monthly basis. Extension Failure to deliver the Projections will limit the subsequent extensions to no longer than 90 days and require additional fee of $25,000 for each subsequent extension. Reporting Within 30 days after the end of each calendar month consolidated financial statements accompanied by operating statistics, and a variance report of operating performance against the fiscal year 2005 projections. Reimbursement All out of pocket expenses of NCBI and U.S. Bank are to be paid within 10 days of request by debit to ATA's operating account. Accordingly, the Debtors ask the Court to approve the extension, which will be crucial to their current operations and their successful reorganization. Pursuant to Section 364(c) of the Bankruptcy Code, Mr. O'Neil otes that the renewal or the issuance of the letters of credit will be secured by the existing and postpetition security interests against funds in the Depository Accounts. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) AUDIO VISUAL: Moody's Rates Planned $120M Sr. Sec. Facility at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Audio Visual Services Corporation's proposed $120 million senior secured credit facility. Moody's also assigned a senior implied rating of B1 and a stable outlook. The ratings reflect the company's exposure to trends or events that affect overall levels of business travel, revenue concentration with its top customers and a significant level of capital expenditures. The ratings also reflect the company's leading market position in the audiovisual services industry, long term contracts with major upscale hotels and the expected continued rebound in the business travel and corporate meeting market. Moody's assigned these ratings: * $20 million senior secured revolving credit facility due 2010, rated B1; * $100 million senior secured term loan facility due 2011, * rated B1; * Senior implied rating, rated B1; The ratings outlook is stable. The ratings are subject to the review of the final executed documents. Proceeds from the $100 million term loan and about $9 million of the company's cash on hand are expected to be used to repay existing senior secured indebtedness, related accrued interest and transaction expenses. The revolver is expected to be unused and fully available at closing. The company's results of operations have been sensitive to trends that affect levels of business travel. Revenues were flat from 2001 to 2003 reflecting the weak economy but increased by 11% in 2004 due to the rebound in business travel and hotel occupancy rates. The company has managed to steadily improve profitability by adjusting its cost structure in response to demand levels. Operating income was $9.3 million in 2004 compared to a loss of $1.2 million in 2002. The ratings reflect high barriers to entry and AVSC's leading position as a provider of in-house audiovisual services to hotels, resorts and conference centers throughout the United States. AVSC has an estimated 32% share of the hotel audiovisual market in the US while about 25% of this market is represented by hotels that have their own in-house audiovisual departments. The company is over 4 times as large as its nearest competitor. AVSC's revenues are concentrated with the three largest hotel chain customers representing about 50% of 2004 revenues. However, this risk is mitigated by the company's long standing relationships with its major customers and long term contracts with each individual hotel, which generally range from 3 to 6 years. The company's major customers also provide the company with geographic diversity through a nationwide network of hotel properties. Capital expenditures have been a significant cost to the company, ranging from 5% to 8% of sales over the last three years. These expenditures depend, in part, on the timing of the renewal of major customer contracts. There is the potential for new technology to cause an increase in required capital expenditures. The stable ratings outlook anticipates moderate sales growth in 2005 as the company benefits from the continued rebound in business travel and an increase in group and corporate meetings. Free cash flow from operations is expected to be utilized to reduce borrowings under the credit facility and for niche acquisitions. The ratings could be upgraded if revenue growth from existing or new customers is greater than expected and leads to sustainable free cash flow to debt in the 12%-15% range. The ratings could be downgraded if a significant decline in revenues or increase in required capital expenditures leads to sustainable free cash flow to debt of less than 8%. A large dividend or recapitalization that substantially increases leverage could also pressure the rating. The B1 rating assigned to the proposed senior credit facility reflects the first priority security interest in substantially all the tangible and intangible assets of the company and its domestic subsidiaries, including 100% of the capital stock of domestic subsidiaries. The term loan amortizes at a rate of .25% a quarter with the balance payable at maturity. The credit facility has a 50% excess cash flow sweep that remains in effect as long as the total leverage ratio remains above 1.75 times. Free cash flow was negative in 2004 reflecting in part the high level of capital expenditures incurred by the company in 2004. The company reduced capital expenditure levels in 2002 and 2003 due to flat revenues and increased expenditures in 2004 as demand levels increased. Free cash flow to debt is expected to be in the 8%-12% range in 2005 (excluding the payment of accrued interest on indebtedness refinanced). Debt to EBITDA was 2.3 times in 2004 and is expected to improve slightly in 2005. Audio Visual Services Corporation, headquartered in Long Beach, Calif., is the leading provider of audiovisual services, equipment rentals, staging and meeting services and related technical support to hotels, event production companies, trade associations, convention centers and corporations in North America and Europe. Revenue for the year ended December 31, 2004 was about $421 million. BEAR STEARNS: Fitch Puts Low-B Ratings on M-7 & M-8 Cert. Classes ----------------------------------------------------------------- Bear Stearns Asset-Backed Securities I Trust 2005-AQ1 asset-backed certificates are rated by Fitch Ratings: -- 2005-AQ1 $237,232,000 publicly offered classes I-A-1 through II-A-2 'AAA'; -- $22.886 million class M-1 certificates 'AA'; -- $15.784 million class M-2 certificates 'A'; -- $4.104 million class M-3 certificates 'A-'; -- $4.262 million class M-4 certificates 'BBB+'; -- $4.262 million class M-5 certificates 'BBB'; -- $4.419 million class M-6 certificates 'BBB-'; -- $4.262 million privately offered class M-7 certificates 'BB+'; -- $5.208 million privately offered class M-8 certificates 'BB'. Credit enhancement for the 'AAA' rated class A certificates reflects the 24.85% subordination provided by classes M-1 through M-8 certificates, monthly excess interest, and initial overcollateralization (OC) of 4.20%. Credit enhancement for the 'AA' rated class M-1 certificates reflects the 17.60% subordination provided by classes M-2 through M-8 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'A' rated class M-2 certificates reflects the 12.60% subordination provided by classes M-3 through M-8 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'A-' rated class M-3 certificates reflects the 11.30% subordination provided by classes M-4 through M-8 certificates monthly excess interest, and initial OC. Credit enhancement for the 'BBB+' rated class M-4 certificates reflects the 9.95% subordination provided by classes M-5 through M-8 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BBB' rated class M-5 certificates reflects the 8.60% subordination provided by classes M-6 through M-8 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BBB-' rated class M-6 certificates reflects 7.20% subordination provided by classes M-7 through M-8 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BB+' rated class M-7 certificates reflects the 5.85% subordination provided by classes M-8 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BB' rated class M-8 certificates reflects the 4.20% initial OC and monthly excess interest. In addition, the ratings reflect the integrity of the transaction's legal structure, as well as the capabilities of EMC Mortgage Corporation as master servicer. LaSalle Bank National Association will act as trustee. As of the cut-off date, the group I mortgage loans have an aggregate balance of $116,775,786. The weighted average loan rate is approximately 7.546%. The weighted average remaining term to maturity is 356 months. The average cut-off date principal balance of the mortgage loans is approximately $184,480. The weighted average original loan-to-value -- OLTV -- ratio is 89.20%, and the weighted average Fair, Isaac & Co. score was 616. The properties are primarily located in: * California (27.35%), * New York (15.58%), * Florida (10.19%), and * Illinois (6.49%). As of the cut-off date, the group II mortgage loans have an aggregate balance of $198,902,226. The weighted average loan rate is approximately 7.572%. The weighted average remaining term to maturity is 356 months. The average cut-off date principal balance of the mortgage loans is approximately $158,236. The weighted average OLTV ratio is 89.79%, and the weighted average FICO score was 617. The properties are primarily located in: * California (17.82%), * Florida (13.47%), * Illinois (8.19%), * New York (6.88%), * Michigan (5.59%), and * Arizona (5.34%) The loans were originated by Ameriquest Mortgage Company and purchased by Bear Stearns Asset-Backed Securities I LLC. Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing, and selling retail and wholesale subprime mortgage loans. BONHAM HOUSING: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Bonham Housing Finance Corporation Bonham City Hall 301 East 5th Street Bonham, Texas 75418 Bankruptcy Case No.: 05-30156 Type of Business: The Debtor is the developer and owner of Country Village of Bonham, a multifamily apartment property, located in Bonham, Texas. Chapter 11 Petition Date: May 2, 2005 Court: Eastern District of Texas (Paris) Judge: Brenda T. Rhoades Debtor's Counsel: Laurie D. Babich, Esq. Baker & McKenzie 2001 Ross Avenue, Suite 2300 Dallas, Texas 75201 Tel: (214) 978-3000 Fax: (214) 978-3099 Total Assets: $2,277,708 Total Debts: $5,280,000 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ JP Morgan Chase Bank-A Bond debt $3,520,000 as Indenture Trustee for Value of collateral: Series A 1996 Bondholders $2,000,000 600 Travis, 53rd Floor Value of security: Houston, TX 77002 $2,000,000 Cede & Co. $880,000 As Registered Holder for Series B 1996 Bonds Depository Trust Company 55 Water Street New York, NY 10004 JP Morgan Chase Bank-B Bond debt $880,000 Indenture Trustee for Value of security: Series B 1996 Bondholders $2,000,000 600 Travis, 53rd Floor Houston, TX 77002 Charles Schwab & Co., Inc. Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 Citigroup Global Markets Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 Crowell Weedon & Company, Inc. Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 Edward Jones Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 Merrill Lynch Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 Oppenheimer & Co. Inc. Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 RBC Dain Rauscher Unknown Incorporated c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 Wachovia National Bank Unknown c/o Automatic Data Processing, Inc. Investor Communications Svcs. 51 Mercedes Way Edgewood, NY 11717 BRIDGE INFO: Welsh Carson Wants Disclosure About Distributions -------------------------------------------------------------- These Welsh Carson Creditors ask the U.S. Bankruptcy Court for the Eastern District of Missouri to compel Scott Peltz, the plan administrator appointed in Bridge Information Systems Inc.'s chapter 11 case, to comply with the Debtor's Second Amended Joint Plan of Liquidation and the Plan Administrator Agreement: * Welsh, Carson, Anderson & Stowe VI, L.P.; * Welsh, Carson, Anderson & Stowe VII, L.P.; * Welsh, Carson, Anderson & Stowe VIII, L.P.; * Welsh, Carson, Anderson & Stowe IX, L.P.; * WCAS Capital Partners II, L.P.; * WCA Management Corporation; and * various other Welsh Carson entities and individuals Specifically, the Welsh Carson Creditors want to know how much was distributed to creditors pursuant to the Plan of Liquidation. They also want to know how much the Plan Administrator has paid his counsel. Conflicting Statements David Going, Esq., at Armstrong Teasdale LLP, in St. Louis, Missouri, reminds the Court that on January 24, 2005, the Plan Administrator's counsel told the Court that "there has not been, as of this date . . . a distribution within the meaning of Section 3.13 of the Plan Administrator agreement." According to Mr. Going, this representation appears to directly conflict the Plan Administrator's statement to the Welsh Carson Creditors over a year ago that he has made "periodic distributions" to "secured creditors" and to "certain administrative expense holders." If the distributions have indeed been made, Mr. Going points out that section 3.13 of the PA Agreement explicitly required the Plan Administrator to file within 30 business days thereof "a report . . . itemizing the receipt and distribution of all funds by the plan administrator, including all payments in respect of professional fees and expenses." Mr. Going recalls that on December 13, 2004, the Plan Administrator told the Court that he would "promptly file with the Court reports of his fees" as required by sections 6.04 and 5.5 of the Plan and the PA Agreement. Those sections, consistent with section 3.13 of the PA Agreement, explicitly require that the Plan Administrator file with the Court "periodic statements containing a detailed invoice for services performed" to provide "any party- in-interest" with the opportunity to object to the "compensation" received for those services. Unfulfilled Promises Despite all the promises and representations to the contrary, the Plan Administrator has not filed any report disclosing the fees he and his chosen counsel have charged the Debtor's estates, Mr. Going laments. The Plan Administrator's position is "untenable." The "heart" of the bankruptcy framework is disclosure, and a debtor's affairs are supposed to be conducted "in a transparent manner with an eye to the debtor's fiduciary obligations to the creditors," Mr. Going asserts. In these circumstances, it appears that counsel for the Plan Administrator has misstated the status of distributions either to the Court or to the Welsh Carson Creditors, Mr. Going argues. If distributions have indeed occurred, the Plan Administrator has violated its obligation to file the reports required under Section 3.13 of the Plan Administrator Agreement. If distributions have not yet occurred, the Plan Administrator should explain why it informed the Welsh Carson Creditors that they had. Bridge Information Systems Inc. filed a voluntary petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on February 15, 2001 (Bankr. E.D. Mo. Case Nos. 01-41593-293 through 01-41614-293, inclusive). On February 13, 2002, Judge McDonald confirmed a chapter 11 plan of liquidation, which, among other items, transferred ownership to the holders of Bridge's secured creditors. Thomas J. Moloney, Esq., Seth A. Stuhl, Esq., and Kurt A. Mayr, Esq., at Cleary, Gottlieb, Steen & Hamilton in New York served as lead counsel to Bridge in its chapter 11 cases. Gregory D. Willard, Esq., Lloyd A. Palans, Esq., and David M. Unseth, Esq., at Bryan Cave LLP in St. Louis, served as local counsel. BUEHLER FOODS: Files for Chapter 11 Protection in S.D. Indiana -------------------------------------------------------------- Buehler Foods Inc. and three of its subsidiaries filed for chapter 11 protection in the United States Bankruptcy Court for the Southern District of Indiana, Evansville Division. The bankruptcy filing was prompted by take-over delays of the 16 Winn- Dixie stores, which it bought in October 2004, that led to about $7 million in lost revenues. The Company earlier disclosed plans to close four former Winn- Dixie stores in Louisville and made plans to close four more supermarkets while in bankruptcy protection. Two Buehler stores in the Louisville area -- located in Lyndon Lane and on Dixie Highway -- will be closed along with stores in Princeton, Indiana, and Carmi, Illinois. Buehler Foods does not expect to close any more of its stores as part of its reorganization, which is expected to be complete by the end of the year, American City Business Journals said. Headquartered in Jasper, Indiana, Buehler Foods Inc. owns and operates grocery stores under the BUY LOW and Save-A-Lot banners in Illinois, Indiana, and Kentucky, North Carolina, and Virginia. The company also sells gas at about a dozen locations. In 2004, Buehler Foods acquired 16 Winn-Dixie stores in Louisville, Kentucky, and renamed them Buehler's Markets. Founded in 1940, the company is still run by the Buehler family. The Debtor and three subsidiaries filed for chapter 11 protection on May 4, 2005 (Bankr. S.D. Ind. Case No. 05-70961). Jerald I. Ancel, Esq., at Sommer Barnard Attorneys, PC, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated between $10 million to $50 million in assets and $50 million to $100 million in debts. BUEHLER FOODS: Case Summary & 79 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Buehler Foods, Inc. dba Buy Low 1100 West 12th Avenue Jasper, Indiana 47546 Bankruptcy Case No.: 05-70961 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Buehler, LLC 05-70962 Buehler of Carolinas, LLC 05-70963 Buehler of Kentucky, LLC 05-70964 Type of Business: The Debtor owns and operates grocery stores under the BUY LOW and Save-A-Lot banners in Illinois, Indiana, and Kentucky, North Carolina, and Virginia. The company also sells gas at about a dozen locations. In 2004 Buehler Foods acquired 16 Winn-Dixie stores in Louisville, Kentucky, and renamed them Buehler's Markets. Founded in 1940, the company is still run by the Buehler family. Chapter 11 Petition Date: May 4, 2005 Court: Southern District of Indiana (Evansville) Judge: Basil H. Lorch III Debtor's Counsel: Jerald I. Ancel, Esq. Sommer Barnard Attorneys, PC One Indiana Square, Suite 3500 Indianapolis, Indiana 46204 Tel: (317) 713-3500 Fax: (317) 713-3699 Estimated Assets Estimated Debts ---------------- --------------- Buehler Foods, Inc. $10 Million to $50 Million to $50 Million $100 Million Buehler, LLC $1 Million to $50 Million to $10 Million $100 Million Buehler of Carolinas, $1 Million to $50 Million to LLC $10 Million $100 Million Buehler of Kentucky, $10 Million to $50 Million to LLC $50 Million $100 Million A. Buehler Foods, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Pepsi-Cola Co., Indiana Trade Debt $881,039 Attn: Cynthia Smith 2680 Old Decker Road Vincennes, IN 47591 Royal Crown Bottling Corp. Trade Debt $555,171 P.O. Box 2870 Evansville, IN 47728-0870 C.L. Frank Distributors Trade Debt $455,712 2123 South Green St. Henderson, KY 42420 Earthgrains Co. Trade Debt $438,330 21066 Networks PLace Chicago, IL 60673-1210 Diversified Healthcare Trade Debt $332,956 P.O. Box 500461 St. Louis, MO 63150-0461 Frito-Lay, Inc. Trade Debt $243,555 Brower Greenhouse Trade Debt $182,653 Kraft Pizza Trade Debt $169,128 Coca Cola Bottling Co. Trade Debt $168,903 Empire Contractors, Inc. Trade Debt $163,166 Hill Floral Products Inc. Trade Debt $155,618 Anderson-Austin News Co. Trade Debt $143,466 Holland Dairies, Inc. Trade Debt $141,932 GECF Business Property Lease Buy-out loan $135,354 Lewis Bakery Trade Debt $132,756 Times Mail Trade Debt $132,735 Read's Heating, Air Refri Trade Debt $121,774 Cadick Poultry Co., Inc. Trade Debt $116,789 Nabisco Brands Inc. Trade Debt $103,160 Ice Cream Distributors Trade Debt $98,606 B. Buehler, LLC's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Save A Lot Ltd. Trade Debt $99,377 100 Corporate Office Drive Earth City, MO 63045 Pepsi Americas, Inc. Trade Debt $60,696 Attn: Cynthia Smith 2680 Old Decker Road Vincennes, IN 47591 The Earthgrains Company Trade Debt $38,507 21066 Network Place Chicago, IL 60673-1210 Mckee Foods Corporation Trade Debt $17,991 Frito-Lay, Inc. Trade Debt $16,449 Read's Inc. Trade Debt $12,968 Ole Mexican Foods, Inc. Trade Debt $8,702 Tortilleria, Inc. Trade Debt $5,790 Volz Eggs Inc. Trade Debt $5,600 Jasper Municipal Utilities Trade Debt $5,324 Prairie Farms Dairy Inc.- Trade Debt $5,222 Olney Cinergy Trade Debt $3,744 Cosner's Ice Co. Trade Debt $3,168 Pioneeer Brite Inc. Trade Debt $2,754 Aramark - KY Trade Debt $2,464 Retail Data Systems Trade Debt $1,826 St. Louis Behrmann Trade Debt $1,810 Merklay & Sons Trade Debt $1,750 Hobart Sales & Service-KY Trade Debt $1,591 C. Buehler of Carolinas, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Save A Lot Ltd. Trade Debt $301,816 100 Corporate Office Drive Earth City. MO 63045 Ole Mexican Foods, Inc. Trade Debt $23,179 6585 Crescent Drive Norcross, GA 30071 La Tortilleria, Inc. Trade Debt $22,518 2046 Althea Street Winston Salem, NC 27107 Earthgrains Baking Co's Inc. Trade Debt $21,731 Winston-Salem Journal Trade Debt $12,973 Lisy Corp. Trade Debt $12,739 Collinsville Investment Note Payable $12,000 Corp. McKee Foods Trade Debt $11,873 Bimbo Bakeries USA Trade Debt $11,861 Neese Country Sausage Inc. Trade Debt $8,184 Sanford Coca-Cola Bottling Trade Debt $7,906 Star Food Products Trade Debt $7,716 Flowers Baking Co. of Trade Debt $7,657 Jamestown, LLC Frito-Lay, Inc. Trade Debt $7,414 Farlow Produce Co. Inc. Trade Debt $5,521 RGIS Inventory Specialists Trade Debt $5,480 Coca Cola Bottling Co. Trade Debt $5,423 Retail Data Systems- Trade Debt $4,756 St. Louis All Fresh Produce Trade Debt $4,557 The Sanford Herald Trade Debt $4,125 D. Buehler of Kentucky, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Diversified healthcare, IN Trade Debt $1,507,952 P.O. Box 500461 St. Louis, MO 63150-0461 Retail Data Systems Trade Debt $877,832 4248 Belle Aire Lane Downers Grove, IL 60515 RC Canada Dry Bottling Co. Trade Debt $301,006 P.O. Box 34398 Louisville, KY 40232 Earthgrains Co. Trade Debt $252,971 21066 network Place Chicago, IL 60673-1210 C.L. Frank Distributors Trade Debt $252,001 2123 South Green Street Henderson, KY 42420 Frito-Lay, Inc. Trade Debt $166,293 C&S Millwork, INc. Trade Debt $160,538 Zero Zone Trade Debt $155,922 Souther Food Systems Trade Debt $130,202 Paramount CArds Trade Debt $124,298 Matrix Integration Trade Debt $110,552 Edy's Grand Ice Cream Trade Debt $110,390 Highview Painting & Striping Trade Debt $105,643 Co., Inc. Dean Milk Company Trade Debt $98,799 Dohmen Distribution Trade Debt $88,968 Partners S.E., LLC Hill Floral Products, Inc. Trade Debt $86,658 Kraft Pizza Trade Debt $85,518 David Simon Electric Trade Debt $83,872 Anderson News Co. Trade Debt $81,545 CALEAST INDUSTRIAL: Moody's Pares Issuer Rating to Ba1 from Baa3 ---------------------------------------------------------------- Moody's Investors Service downgraded CalEast Industrial Investors, L.L.C.'s issuer rating to Ba1, from Baa3. This rating action concludes a review of the rating for possible downgrade, which Moody's commenced following CalEast's announcement in January 2005 that it had decided to re-capitalize its core industrial portfolio by offering for sale a 50% joint venture interest, or select assets equal in aggregate to 50% of the portfolio. The agency anticipates that as part of this transformation, CalEast's leverage, particularly secured leverage, will increase, while fixed charge coverage will decrease. In addition, Moody's has withdrawn this rating for business reasons as described in Moody's Withdrawal Policy on www.moodys.com. These rating was downgraded, and withdrawn: * CalEast Industrial Investors, L.L.C. -- Issuer rating to Ba1, from Baa3 CalEast Industrial Investors, L.L.C., a joint venture of California Public Employees' Retirement System (CalPERS) and LaSalle Investment Management, acquires, owns, manages and develops industrial real estate. At December 31, 2004, CalEast controlled over 29.5 million square feet of warehouse, light industrial assembly and distribution properties in the USA, and its assets totaled $1.5 billion. CALL-NET ENT: Posts $13 Million Net Loss in First Quarter 2005 -------------------------------------------------------------- Call-Net Enterprises Inc., a national facilities-based provider of competitive telecommunications, data and Internet protocol solutions to households and businesses across Canada, reported financial results for the first quarter ending March 31, 2005. "We delivered very positive results during the first quarter, both as a results of the Bell/360 acquisition and reductions in carrier costs driven by regulatory changes," said Bill Linton, president and chief executive officer. "Our consumer division reported five per cent revenue growth and our business division grew by 23 per cent. Local service, data and wireless now provide 56 per cent of our total revenue and our cost of acquisition continues to improve quarter over quarter." Consolidated revenue for the first quarter of 2005 was $216 million, a $13 million or seven per cent increase from the same period last year. First quarter earnings before interest, taxes, depreciation and amortization (EBITDA) were almost $36 million, representing a $9 million or 35 per cent increase from the first quarter of 2004. Gross margin for the quarter was almost 55 per cent, up from 53 per cent in the same period last year. Call-Net continued to experience growth in its local service offer, adding over 30,000 new local service and business line equivalents during the first quarter. The total number of local service consumer and business line count now stands at 495,100, including 336,100 home phone lines and 159,000 business local line equivalents. Overall churn for the quarter was 2.1 per cent, down from 2.2 per cent in the same quarter last year. Consumer Services revenue improved by five per cent compared with the same quarter in 2004, as increases in home phone and wireless service revenue more than offset declines in dial-up Internet and long distance revenue. In the first quarter, 71 per cent of Consumer Services revenue came from customers who purchased more than one product, compared to 56 per cent in the first quarter of 2004. Business Services revenue grew by 23 per cent compared to the same quarter in 2004. Organic growth in local service and data and the full impact of the Bell/360 acquisition in late 2004, contributed to improvement in every product category except long distance. As anticipated, gains in consumer and business operations were offset by a continued decline in wholesale revenue this quarter. Wholesale revenue in the quarter totaled $39 million, reflecting a 19 per cent decrease from the same quarter last year. Revenue from wholesale comprises only 18 per cent of consolidated revenue, of which 66 per cent is long distance service. Carrier costs were $97 million in the first quarter or 45 per cent of revenue, up from 95 million in the same quarter last year. The increase is attributed to the addition of the Bell/360 base and costs associated with the increased volume of local, data and wireless services, offset by the effect of the CDN services decision (Telecom Decision CRTC 2005-6), which reduced access and other related services costs. Operating costs for the quarter were $83 million representing a $2 million or two per cent increase over the same period last year. The increase was due to the inclusion of the operations associated with the Bell/360 base of customers. Call-Net recorded a net loss in the quarter of $13 million, compared with a net loss of almost $30 million in the first quarter of 2004. "The improvements in operating performance combined with a very manageable financing cost and on-plan capital expenditures of $16 million, allowed us to improve our cash flow and our liquidity position in the quarter," said Roy Graydon, executive vice president and chief financial officer. "Call-Net generated free cash flow of $11 million in the quarter and ended the quarter with $80 million in cash and short-term investments." Regulatory During the quarter, the Canadian Radio-television and Telecommunications Commission (CRTC) issued three decisions that have a positive impact on the Company. In February, the CRTC lowered the price of competitor digital network services (CDN services), which are facilities and services provided to competitive local exchange carriers (CLECs), reducing Call-Net's carrier charges by approximately $25 million annually. In March, the CRTC directed Bell Canada and TELUS to grant CLECs direct access to their operational support systems (OSS). The ILECs have up to one year from the date of the decision to grant access, which will result in operational efficiencies and increased levels of customer satisfaction. In April the CRTC issued decisions on quality of service, local promotions, the price floor regime and a public notice with respect to a proceeding to establish criteria for deregulating local services. Generally these decisions continue to support the development and evolution of a competitive telecommunications environment. Outlook Call-Net's financial and operating performance in the first quarter is consistent with the guidance it provided for the full year 2005. The Company expects strong EBITDA performance in its core businesses to be tempered by the investments in rolling out high-speed Internet to Canadian consumer, increases in consumer marketing expenses, and integrating the Bell/360 assets into its network. About the Company Call-Net Enterprises Inc., (TSX: FON, FON.NV.B) primarily through its wholly owned subsidiary Sprint Canada Inc., is a leading Canadian integrated communications solutions provider of home phone, wireless, long distance and IP services to households, and local, long distance, toll free, enhanced voice, data and IP services to businesses across Canada. Call-Net, headquartered in Toronto, owns and operates an extensive national fibre network, has over 151 co-locations in five major urban areas including 33 municipalities and maintains network facilities in the United States and the United Kingdom. For more information, visit http://www.callnet.ca/and http://www.sprint.ca/ * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Moody's has upgraded Call-Net Enterprises Inc.'s Senior Implied rating to B3 from Caa2, upgraded its Senior Secured rating to B3 from Caa3 and upgraded its Issuer rating to Caa1 from Ca. Moody's says the outlook is stable. Debt affected by this action: * 10.625% Senior Secured Notes, (upgraded to B3 from Caa3) US$223 million As additionally reported in the Troubled Company Reporter on Dec. 3, 2004, Standard & Poor's Ratings Services lowered its ratings on Call-Net Enterprises, Inc., to 'B-' from 'B' on continued pricing pressures in long distance and expectations for increased competition in residential local services beginning in 2005. At the same time, Standard & Poor's lowered the ratings on Call-Net's 10.625% notes due Dec. 2008; US$223.1 million remains outstanding under the notes. S&P says the outlook remains negative. CARLIN MESSENGER: Taps Leslie D. Jacobson as Bankruptcy Counsel --------------------------------------------------------------- Carlin Messenger Service, LLC, sought and obtained from the U.S. Bankruptcy Court for the Middle District of Pennsylvania, permission to employ the Law Offices of Leslie D. Jacobson as its general bankruptcy counsel. Leslie D. Jacobson will: a) advise the Debtor in its duties and responsibilities as a debtor-in-possession in the continued operation and management of its business; b) assist the Debtor in filing all necessary Schedules and Statements pursuant to its bankruptcy petition; c) represent the Debtor in all matters pertaining to its chapter 11 case; and d) perform all other legal services to the Debtor which may arise in its chapter 11 case. Leslie David Jacobson, Esq., a Partner at Law Offices of Leslie D. Jacobson, is the lead attorney for the Debtor. Mr. Jacobson will bill the Debtor $250 per hour for his services. Mr. Jacobson discloses that his Firm has not yet received a retainer when the Debtor filed a request to approve his Firm's employment as the Debtor' counsel. Mr. Jacobson reports his Firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $250 Associates $175 Law Clerks $100 Paralegals $100 Law Offices of Leslie D. Jacobson assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Harrisburg, Pennsylvania, Carlin Messenger Service, LLC -- http://www.4sameday.com/harrisburg/-- provides courier services. The Company filed for chapter 11 protection on February 23, 2005 (Bankr. M.D. Pa. Case No. 05-00994). When the Debtor filed for protection from its creditors, it listed estimated assets of $50 million to $100 million and estimated debts of more than $100 million. CARMIKE CINEMAS: S&P Rates Proposed $455MM Sr. Sec. Facility at B ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on motion picture exhibitor Carmike Cinemas Inc. to positive from stable, based on the company's progress in improving its theater circuit quality. At the same time, Standard & Poor's affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings on the company. Standard & Poor's also assigned its 'B' rating to Carmike's proposed $455 million senior secured bank credit facility. This facility was assigned a recovery rating of '3', indicating expectations of a meaningful recovery of principal (50%-80%) in a bankruptcy default scenario. As of Dec. 31, 2004, Columbus, Georgia-based Carmike will have about $394 million in pro forma debt. "The rating reflects Carmike's less modern theater circuit compared with key peers, fairly high lease-adjusted leverage, the mature and highly competitive nature of the industry, and the potential for additional debt-financed acquisitions that could increase operating and financial risk," said Standard & Poor's credit analyst Steve Wilkinson. These factors more than outweigh Carmike's good competitive positions in its smaller markets, decent margins, and the more stable operating environment for the industry over the past several years. Following the GKC acquisition, Carmike will be the third-largest theater exhibitor in the U.S. by screen count, 2,436 screens in 310 theaters. The company's geographic diversity is good, with theaters in 37 states, primarily in the Southeast, but its thin presence in many regions limits operating efficiencies. Carmike has improved its circuit quality over the past several years by: (1) refurbishing about 80% of its screens, (2) closing 217 poorly performing venues, and (3) building several modern theaters. Although Carmike has good positions in its smaller markets, many of its venues lack popular features such as stadium seating and the high number of screens that permits a wider selection of movies and showtimes. As a result, some of its theaters remain vulnerable to new competition. Although this risk is slightly less pressing because the level of industry building activity is currently low and because many large theater groups do not target Carmike's mostly smaller markets, some competitors do target these markets. Continued progress in upgrading and expanding its circuit remains important to Carmike's longer term competitive position. With substantial bank credit availability to pursue more acquisitions, Carmike will need to focus on opportunities that have solid asset quality and are consistent with its small-market focus. Standard and Poor's positive outlook reflects the potential for Carmike's corporate credit rating to be raised to 'B+' over the next one to two years if it continues to: (1) increase EBITDA and discretionary cash flow while maintaining decent margins, (2) continued circuit improvement, and (3) lease-adjusted leverage no higher than the mid-5x area. Conversely, the outlook could be revised back to stable if severe competition hurts Carmike's profitability and cash flow or if the company pursues acquisitions too aggressively. Term loan proceeds of $170 million will be used to repay Carmike's existing bank debt and to fund the purchase of George Kerasotes Corporation (GKC), a small Midwestern theater chain. The bank facility also includes an undrawn $100 million revolving credit facility, and a $185 million delayed-draw term loan facility that may be drawn down in part or in full over the next two years. CHARTER COMMS: Mar. 31 Balance Sheet Upside Down by $4.7 Billion ---------------------------------------------------------------- Charter Communications, Inc. (Nasdaq: CHTR) reported financial and operating results for the three months ended March 31, 2005. The Company also provided its results compared to pro forma results for the first quarter 2004 reflecting the sales of certain cable systems in March and April 2004 as if these sales occurred on January 1, 2004. During the first quarter of 2005, Charter continued to implement a number of initiatives to improve customer care, service delivery, product innovation and deployment, and the effectiveness of the Company's marketing efforts, resulting in: (1) Increased average monthly total revenue per analog video customer of 11% compared to the pro forma first quarter of 2004; (2) The addition of 117,100 revenue generating units (RGUs), including 94,000 high-speed Internet (HSI) and 19,900 digital video customers, partially offset by a loss of 6,700 analog video customers; (3) Revenue growth of 7% and adjusted EBITDA growth of 6% compared to the pro forma first quarter of 2004.; and (4) Expansion of telephony footprint into Massachusetts. Charter Interim President and CEO Robert May said, "Our focus on disciplined operational improvement and execution is yielding stronger financial results, and more importantly, increased customer satisfaction for Charter. Our efforts to instill a renewed sense of superior customer service and operational excellence are gaining traction and clearly beginning to reap rewards. We are focused on our core strengths, as well as new opportunities, and our goal is to continue to improve our operating performance, stimulate growth and deliver value to our customers and shareholders." First Quarter Results First quarter 2005 revenues were $1.271 billion, an increase of $86 million, or 7%, over pro forma first quarter 2004 revenues of $1.185 billion and an increase of 5% over first quarter 2004 actual revenues of $1.214 billion. The increases in revenues are largely the result of growth in HSI revenues, as well as increased video, commercial and advertising sales revenues. "Our high-speed Internet products continue to attract significant customer interest, reflecting the momentum we see in our Internet and digital product categories," Mr. May said. "The 11% increase in average monthly total revenue per analog video customer is strong and underscores the success of our marketing strategy to target high quality, low churning customers and the value of advanced services including high-definition television (HDTV), digital video recorders (DVR), video on demand (VOD) and telephony." For the three months ended March 31, 2005, HSI revenues increased $50 million, or 30%, on a pro forma basis, reflecting 325,400 net additional HSI customers on a pro forma basis since March 31, 2004, as well as a 7% increase in average revenue per HSI customer in the first quarter of 2005 compared to the same 2004 period on a pro forma basis. Video revenues increased $14 million, or 2%, on a pro forma basis compared to the first quarter of 2004, primarily due to a 3% increase in average analog video revenue per analog video customer, a 7% increase in average digital video revenue per digital video customer on a pro forma basis, and an increase in digital customers served. On a pro forma basis, commercial revenues increased $11 million, or 20%, and advertising sales revenues increased $6 million, or 10%, compared to the year ago quarter. First quarter 2005 operating costs and expenses were $796 million, an increase of $61 million, or 8%, on a pro forma basis and an increase of $45 million, or 6%, on an actual basis, compared to the year ago quarter. The rise in first quarter 2005 operating costs and expenses over pro forma 2004 primarily resulted from a 10% increase in programming costs and a 16% increase in service costs. Costs to support service improvements and deploy new products, as well as increased equipment maintenance and higher fuel costs drove the rise in service costs. These increases were partially offset by a slight decrease in general and administrative costs, with improved bad debt performance from increased discipline in the sales process more than offsetting other cost increases. Charter reported income from operations of $51 million for the first quarter 2005 compared to first quarter 2004 income from operations of $60 million on a pro forma basis, and $175 million on an actual basis. Income from operations decreased on a pro forma basis primarily due to a $31 million asset impairment charge and a $17 million increase in depreciation and amortization, partially offset by the $25 million increase in adjusted EBITDA, a $10 million decrease in option compensation expense, and a $6 million decrease in special charges due to litigation costs recorded in the first quarter of 2004. The difference between 2004 actual and pro forma income from operations is primarily the result of the gain on the sale of assets in the first quarter of 2004. Net loss applicable to common stock for the first quarter of 2005 was $353 million. For the first quarter of 2004, Charter reported pro forma net loss applicable to common stock $391 million, and actual net loss applicable to common stock of $294 million. The $38 million decrease in net loss applicable to common stock for first quarter 2005 compared to the same pro forma year ago period is primarily the result of a decrease in income tax expense and benefits of various interest hedging and financing activities, partially offset by a decrease in income from operations. First Quarter Liquidity Adjusted EBITDA totaled $475 million for the three months ended March 31, 2005, an increase of $25 million, or 6%, on a pro forma basis, and an increase of $12 million, or 3%, on an actual basis, compared to the year ago period. Net cash flows from operating activities for the first quarter of 2005 were $153 million, compared to $115 million for the actual year ago quarter, primarily driven by reductions in accounts receivable. Expenditures for property, plant and equipment for the first quarter of 2005 totaled $211 million, compared to actual first quarter 2004 expenditures of $190 million. The increase was primarily driven by spending on scalable infrastructure related to telephony and digital simulcast, and support capital related to our investment in service improvements, offset by a decrease in the purchase of customer premise equipment. Un-levered free cash flow for the first quarter of 2005 was $264 million compared to actual un-levered free cash flow of $273 million for the first quarter of 2004. Charter reported negative free cash flow of $107 million for the first quarter of 2005 compared to actual negative free cash flow of $27 million for the first quarter of 2004, primarily due to a $71 million increase in interest on cash-pay obligations. As of March 31, 2005, Charter had $18.9 billion of outstanding indebtedness and $32 million of cash on hand. Net availability of funds under the Charter Communications Operating, LLC credit facility was approximately $1.2 billion. The Company believes cash on hand at March 31, 2005, cash flows from operating activities and the amounts available under its credit facilities will be sufficient to meet cash needs throughout 2005. Operating Statistics As of March 31, 2005, Charter served approximately 10,713,100 RGUs, a net increase of 117,100 RGUs during the first quarter. The increase in RGUs was driven by a net gain of 94,000 residential HSI customers during the quarter. Charter also added a net 19,900 digital video customers and 9,900 telephony customers during the quarter, and lost a net 6,700 analog video customers. As of March 31, 2005, Charter served approximately 5,984,800 analog video, 2,694,600 digital video, 1,978,400 residential high- speed Internet and 55,300 telephony customers. Financing As part of the Company's previously announced ongoing efforts to improve liquidity and extend maturities, in March 2005, Charter Communications Operating, LLC (Charter Operating) issued, in a private placement, approximately $271 million principal amount of new notes with terms identical to Charter Operating's 8.375% Senior Second Lien Notes due 2014, in exchange for $284 million of Charter Communications Holdings, LLC 8.25% Senior Notes due 2007. As previously announced in March 2005, CC V Holdings, LLC redeemed the $113 million of its 11.875% Senior Discount Notes due 2008. Charter Operating's revolver was used to fund the redemption. About the Company Charter Communications, Inc. -- http://www.charter.com/-- a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM) and Charter High-Speed(TM) Internet service. Charter also provides business-to-business video, data and Internet protocol (IP) solutions through Charter Business(TM). Advertising sales and production services are sold under the Charter Media(R) brand. At Mar. 31, 2005, Charter Communications' balance sheet showed a $4.8 billion stockholders' deficit, compared to a $4.4 billion deficit at Dec. 31, 2004. CITATION CORP: Wants KPMG as Valuation Consultants -------------------------------------------------- Citation Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Alabama, for permission to retain and employ KPMG, LLP, as their valuation consultants KPMG is expected to: (1) identify certain intangible assets rather than goodwill pursuant to Statement of Financing Accounting Standards No. 141 by evaluating the Debtors': * customer contracts and relationships, * trade names and trademarks (where applicable), and * supplier contracts and relationships; (2) provide an estimate of the fair value of identified intangible assets of the Debtors; (3) provide an estimated value of the remaining unidentifiable intangible assets and goodwill (if any) through the residual method; and (4) provide detailed narrative reports describing: * descriptions of assets, * estimates of useful lives of the same, * valuation methods applied, and * final valuation conclusions. The Company will pay KPMG $65,000, exclusive of expenses, upon completion of services. The Company assures the Court that KPMG does not represent any interest adverse to its estate. Headquartered in Birmingham, Alabama, Citation Corporation -- http://www.citation.net/-- designs, develops and manufactures cast, forged and machined components for the capital and durable goods industries, including the automotive and industrial markets. Citation uses aluminum, steel, gray iron, and ductile iron as the raw materials in its various manufacturing processes. The Debtors filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represent the Debtors. When the Company and its debtor-affiliates filed for protection from their creditors, they estimated more than $100 million in assets and debts. COLUMBIA PLACE: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Columbia Place Investment Group, LLP 590 Coldstream Court N.W. Atlanta, Georgia 30328 Bankruptcy Case No.: 05-68195 Chapter 11 Petition Date: May 2, 2005 Court: Northern District of Georgia (Atlanta) Judge: C. Ray Mullins Debtor's Counsel: Patricia S. Glover, Esq. Charlton & Glover, PC 87 Vickery Street Roswell, Georgia 30075 Tel: (770) 993-1005 Total Assets: $1,700,500 Total Debts: $1,590,129 Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gorne Beliard Services $24,000 3107 June Apple Road Decatur, GA 30034 Georgia Power Company Utility services $8,508 96 Annex Atlanta, GA 30396 Rock & Leitz, Attorneys Services $7,950 2985 Piedmont Road, N.E. Atlanta, GA 30305 Dekalb County Treasurer Sanitation service $1,336 1300 Commerce Street Decatur, GA 30030 BellSouth Telephone service $1,239 P. O. Box 740144 Atlanta, GA 30374-0144 Sterling Associates Services $257 3833 Roswell Road, Suite 114 Atlanta, GA 30342 CONCENTRA OPERATING: March 31 Balance Sheet Upside-Down by $53-Mil ------------------------------------------------------------------ Concentra Operating Corporation reported results for the first quarter ended March 31, 2005. For the quarter, the Company reported revenue of $276,367,000 and Adjusted Earnings Before Interest Taxes Depreciation and Amortization of $39,510,000. This compares to $271,893,000 in revenue and $39,004,000 in Adjusted EBITDA reported for the first quarter of 2004. Concentra computes Adjusted EBITDA in the manner prescribed by its bond indentures. A reconciliation of Adjusted EBITDA to net income is provided within this press release. Operating income for the quarter was $30,866,000 as compared to $28,832,000 in the year-earlier period. Net income for the first quarter increased to $9,183,000 from $8,173,000 in the first quarter of 2004. "Our results for the first quarter were in line with our expectations," said Daniel Thomas, Concentra's President and Chief Executive Officer, "Due primarily to growth in our Health Services business and improving margins in our Care Management business segment, we anticipate increasing rates of growth as the year progresses. "Our results for the quarter benefited from a strong performance in our Health Services division. Our medical centers achieved a same-center visit growth rate of 5.2% and a same-center revenue growth rate of 6.6%. These trends, when coupled with the increases we have achieved from our ancillary services and acquired centers, enabled us to grow our total revenue from this portion of our business by 15.1% and our gross profit by 16.0%. As we enter the second quarter, we remain optimistic about the trends we are seeing and the impact they should have on our business this year. "The growth we achieved in Health Services was offset by a year- over-year decline in the contribution from our Network Services segment," said Mr. Thomas. "This decrease primarily relates to the lingering effects of the California fee schedule change and a decline in our revenue from workers' compensation PPO services. While we believe these and other trends will moderate our overall growth during the current year, we continue to believe this portion of our business will produce attractive rates of growth in future years. "I'm also pleased that our efforts to reorganize our Care Management Services business during the second half of 2004 enabled us to produce an increase in our profitability from this segment during the first quarter," said Mr. Thomas. "We believe our first quarter results and our current business trends provide us with an opportunity to make 2005 a very successful year at Concentra." Concentra completed the first quarter of 2005 with $63,199,000 in unrestricted cash and investments and had no borrowings outstanding under its $100 million revolving credit facility. During the quarter, the Company achieved a reduction in its days sales outstanding to 58 days at March 31, 2005, from 61 days as of December 31, 2004. The Company also reported that on April 4, 2005, it prepaid $30,055,000 of its senior term debt pursuant to the covenants of its Senior Credit Facility. Concentra Operating Corporation, a wholly owned subsidiary of Concentra Inc., is the comprehensive outsource solution for containing healthcare and disability costs. Serving the occupational, auto and group healthcare markets, Concentra provides employers, insurers and payors with a series of integrated services which include employment-related injury and occupational health care, in-network and out-of-network medical claims review and repricing, access to specialized preferred provider organizations, first notice of loss services, case management and other cost containment services. Concentra provides its services to approximately 136,000 employer locations and 3,700 insurance companies, group health plans, third-party administrators and other healthcare payors. At March 31, 2005, Concentra Operating's balance sheet showed a $53,078,000 stockholders' deficit, compared to a $62,866,000 deficit at Dec. 31, 2004. COOL COOL WATER: Case Summary & 8 Largest Known Creditors --------------------------------------------------------- Debtor: Cool, Cool, Water LLC 1850 Route 46 East Ledgewood, New Jersey 07852 Bankruptcy Case No.: 05-24666 Chapter 11 Petition Date: May 3, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Barry W. Frost, Esq. Teich Groh 691 State Highway 33 Trenton, New Jersey 08619-4407 Tel: (609) 890-1500 Fax: (609) 890-6961 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 8 Largest Known Creditors: Entity Claim Amount ------ ------------ Blackstone Unknown 1224 East Katella Avenue, Suite 205 Orange, CA 92867 Donald F. Ennis, Esq. Unknown Duane Morris LLP 101 West Broadway, Suite 900 San Diego, CA 92101 GE Commercial Finance Unknown [Address Not Provided] J. R. Stanley Inc. Unknown 1850 Route 46 East Ledgewood, NJ 07852 Karl Reid Unknown The CIT Group Equipment Financing P.O. Box 27248 Tempe, AZ 85282 Mach I Funding Unknown 800 La Terraza Boulevard, Suite 230 Escondido, CA 92005 Nationwide Beverage Bottling Inc. Unknown 250 Airport Circle Corona, CA 92880 Southern Wine & Spirits of America Inc. Unknown c/o T. R. Sugano, Esq. Korshak, Kracoff, Kong & Sugano 2430 J Street Sacramento, CA 95816 CRI RESOURCES: Creditors Must File Proofs of Claim by May 15 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, set May 15, 2005, as the deadline for all creditors owed money by CRI Resources, Inc., on account of claims arising prior to March 1, 2005, to file their proofs of claim. Creditors must file their written proofs of claim on or before the May 15 Claims Bar Date. Copies of those forms must be delivered to: United States Bankruptcy Court Central District of California, Los Angeles Division Re: CRI Resources, Inc. Case No, LA 05-13899 300 N. Los Angeles Street Los Angeles, California 90012 and copies must be delivered to: CRI Resources, Inc. c/o William Prior 900 Wilshire Blvd., Suite 1520 Los Angeles, California 90017 Stephen F. Blegenzahn, Esq. Albert, Weiland & Golden, LLP 650 Town Center Drive, Suite 950 Costa Mesa, California 92626 Headquartered in Los Angeles, California, CRI Resources Inc. provides demolition services. The Company filed for chapter 11 protection on March 1, 2005 (Bankr. C.D. Calif., L.A. Div., Case No. 05-13899). Stephen F. Biegenzahn, Esq., at Biegenzahn Weinberg represents the Debtor's restructuring. When the Company filed for protection from its creditors, it listed total assets of $5,243,614 and total debts of $43,078,461. CRI RESOURCES: Gets Court Nod to Tap Albert Weiland as Counsel -------------------------------------------------------------- CRI Resources Inc. sought and obtained permission from the U.S. Bankruptcy Court for the Central District of California to employ Albert, Weiland & Golden, LLP, as its bankruptcy counsel. The Debtor is authorized to hire Albert Weiland, with compensation to be determined and paid as an expense of the estate upon noticed hearing and further order of the Court pursuant to 11 U.S.C. 330 or 331 of the Bankruptcy Code. The scope of the firm's services and its professional's hourly billing rates are not disclosed in the papers filed with the Bankruptcy Court. To the best of the Debtors' knowledge, Albert, Weiland & Golden, LLP does not hold any interest adverse to the Debtor or its estates. Headquartered in Los Angeles, California, CRI Resources Inc. provides demolition services. The Company filed for chapter 11 protection on March 1, 2005 (Bankr. C.D. Cal. Case No. 05-13899). When the Company filed for protection from its creditors, it listed total assets of $5,243,614 and total debts of $43,078,461. DI DONATO: Case Summary & 40 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: Di Donato International, Inc. 3660 Stony Point Road Santa Rosa, California 95407 Bankruptcy Case No.: 05-11036 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Domenico A. Di Donato & Maria Bove 05-11037 Chapter 11 Petition Date: May 2, 2005 Court: Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtors' Counsel: Christopher G. Costin, Esq. Beyers and Costin 917 College Avenue P.O. Box 878 Santa Rosa, California 95402 Tel: (707) 545-0142 -- and -- Paul M. Jamond, Esq. Law Offices of Paul M. Jamond 815 5th Street #200 Santa Rosa, California 95404 Tel: (707) 526-4550 Total Assets Total Debts ------------ ----------- Di Donato International, $5,033,240 $3,738,365 Inc. Domenico A. Di Donato & $1,251,921 $2,479,769 Maria Bove A. Di Donato International, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Trade debt $39,955 Special Procedures 1301 Clay Street, Stop 1400 S Oakland, CA 94612-5210 Robert Havens Trade debt Disputed $8,510 1308 Main Street #102 St. Helena, CA 95474 Southern Wine Spirit Trade debt $7,054 Dept 1915 PO Box 6100 San Francisco, CA 94161 BMI Trade debt $5,074 Spartan Protection Services Trade debt $4,905 Squirrell System Trade debt $2,969 West Sonoma County Disposal Trade debt $2,799 Mix 104.1 Trade debt $2,772 North Bay Water System $2,621 PG&E Trade debt $2,339 Money Mailer Trade debt $2,190 Republic Indemnity $2,158 Alliance One Trade debt $1,982 KSRT FM Trade debt $1,785 Young Market Co. Trade debt $1,621 City Of Santa Rosa Trade debt $1,537 Utilities Mesa Beverage Trade debt $1,150 Coil Refrigeration $979 Dust-Tex Trade debt $976 ASCAP Trade debt $735 B. Domenico A. Di Donato & Maria Bove's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ St. John, Carol $521,400 3449 Dry Creek Road Santa Rosa, CA 95448 Cascade Acceptance Corp. Value of collateral: $566,000 PO Box 400 $400,000 Mill Valley, CA 94942 Spain, Darrel Value of collateral: $399,000 c/o Max Broome, Esq. $840,000 703 2nd Street, 4th Fl. Santa Rosa, CA 95404 La Grande, Frank $96,000 McVey, Steve Value of collateral: $50,000 $840,000 Guzman, Ray $44,000 Teconi, Al $40,000 Galindo, Adrian $40,000 Lew, Don $18,000 Guerra Giovanni $14,000 Clement, Fitzpartick & $13,653 Kenworthy Peritore, Salvatore $12,500 Galindo, Adrian $12,000 Miller, Chris $10,199 Rodrriquez, Jose $10,000 Parks, Joe $10,000 Providian Financial $7,638 Capital One Services $7,269 Capital One Services $7,256 Irwin Well Drilling $5,777 DJD GOLF: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: DJD Golf, Inc. 618 West 29th Street P.O. Box 5 South Sioux City, Nebraska 68776 Bankruptcy Case No.: 05-02029 Type of Business: The Debtor operates a golf course. Chapter 11 Petition Date: May 2, 2005 Court: Northern District of Iowa (Sioux City) Debtor's Counsel: Donald H. Molstad, Esq. 505 6th Street, Suite 308 Sioux City, Iowa 51101 Tel: (712) 255-8036 Estimated Assets: Not Provided Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. DANNY ARMSTRONG: Case Summary & 10 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Danny Joe Armstrong 1110 Sycamore Drive Manchester, Tennessee 37355 Bankruptcy Case No.: 05-04941 Type of Business: The Debtor is a co-owner of A.S. Stones Financial Properties. The Debtor previously filed for chapter 11 protection on December 14, 2004 (Bankr. M.D. Tenn. Case No. 04-14994). His partner, Aaron W. Stone, also filed for chapter 11 protection on April 21, 2005 (Bankr. M.D. Tenn. Case No. 05-04939). Chapter 11 Petition Date: April 21, 2005 Court: Middle District of Tennessee (Nashville) Judge: George C. Paine Debtor's Counsel: Paul E. Jennings, Esq. Paul E. Jennings Law Offices, P.C. 805 South Church Street, Suite 3 Murfreesboro, Tennessee 37130 Fax: (615) 895-7294 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Household Credit card $12,266 P.O. Box 8873 Virginia Beach, VA 23450 Discover Credit card $9,853 P.O. Box 15251 Wilmington, DE 19886 Advanta Bank Credit card $7,549 P.O. Box 8088 Philadelphia, PA 19101 Coffee Co. Trustee 2002, 2003 & 2004 Taxes $7,119 City of Manchester 2002, 2003 & 2004 Taxes $6,233 MBNA Credit card $5,881 Lowes Credit card $1,938 ABBA Medical Medical $152 Harton Regional Medical Ctr. Medical $100 Suntrrust Credit card Unknown DATATEC SYSTEMS: Gets Exclusive Periods Extended to Aug. 11 ----------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware extended the exclusive periods during which Datatec Systems, Inc., and its debtor-affiliate, Datatec Industries, Inc., can file a chapter 11 plan through and including June 13, 2005. The Debtors have through Aug. 11, 2005, to solicit acceptances of that plan from their creditors, without interference from any other party- in-interest. Headquartered in Alpharetta, Georgia, Datatec Systems, Inc. -- http://www.datatec.com/-- specializes in the rapid, large-scale market absorption of networking technologies. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 14, 2004 (Bankr. D. Del. Case No. 04-13536). John Henry Knight, Esq., at Richards, Layton & Finger, P.A. and Bruce Buechler, Esq., at Lowenstein Sandler PC represent the Debtors' restructuring. When the Company filed for protection from its creditors, it listed total assets of $26,400,000 and total debts of $47,700,000. DECISION ONE: Expects to Lay-Off 200 Customer Service Reps ----------------------------------------------------------- The News on 6 (KOTV Channel 6 in Tulsa) reports that Decision One Corp. will layoff 200 customer service representatives in the coming weeks. The television station learned of the news Monday from an employee memo. New jobs will be created for technical support representatives, Decision One told The News on 6 the following day. Decision One employs 2,000 people in Tulsa, Oklahoma. Headquartered in Frazer, Pennsylvania, DecisionOne Corporation -- http://www.decisionone.com/-- serves leading companies and government agencies with tailored information technology support services that maximize the return on technology investments, minimize capital and infrastructure costs and optimize operational effectiveness. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. D. Del. Case No. 05-10723). Mark D. Collins, Esq., and Rebecca L. Booth, Esq., at Richards Layton & Finger, P.A., and Michael A. Bloom, Esq., and Joel S. Solomon, Esq., at Morgan, Lewis & Bockius LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $107 million and total debts of $273 million. The Court confirmed the Company's Plan of Reorganization on April 19, 2005. DONNKENNY INC: Plan's Involuntary Third-Party Releases Draw Fire ---------------------------------------------------------------- Alan Wallace, Robyn Meredith, Trading Co., Robyn Meredith, Inc., and H&W Partnership tell the U.S. Bankruptcy Court for the Southern District of New York they object to the involuntary third-party releases buried in the Second Amended Joint Plan of Reorganization filed by Donnkenny, Inc., and its debtor- affiliates. The Court approved the adequacy of the Debtors' Disclosure Statement on March 29, 2005. The five creditors specifically object to Section 12.01(b) of the Debtors' Plan. That provision provides relief to non-Debtors who are not entitled to releases and other similar relief under the Bankruptcy Code. Those third-party releases are contrary to the provisions of the Bankruptcy Code and are only permitted in case of extraordinary circumstances, which do not exist in the Debtors' chapter 11 cases and are not even specifically mentioned in the Plan. The five creditors contend that confirmation of the Plan would result in the claims of Objectors being discharged, and the claims of the Objectors against third parties who are not Debtors are also disposed of without any consideration by any Court, or any payment beyond that from the Debtors. In effect, the Objectors say, the Plan creates a trap for the unwary, by imposing an involuntary release of creditors claims in favor of officers and directors in the absence of unusual circumstances, simply by accepting a distribution from the Debtors. The five creditors suggest that the most efficient means to resolve their objection is to remove Section 12.1(b) from the Plan, and strike any parallel language from in any proposed confirmation order. The five creditors recommend that the Plan should be modified to include language that affirmatively and expressly states that the claims of Objectors against non-debtors are not released, discharged, enjoined or impacted in any way by the Plan or any order from the Court confirming the Plan. The confirmation hearing, and consideration of the five creditors' objection, will continue at 10:00 a.m., on May 16, 2005. Headquartered in New York City, Donnkenny, Inc., and its debtor- affiliates design, import, and market broad lines of moderately and better priced women's clothing. The Debtors filed for chapter 11 protection on Feb. 7, 2005 (Bankr. S.D.N.Y. Case No. 05-10712 through 05-10716). Bonnie Steingart, Esq., Kalman Ochs, Esq., and Christopher R. Bryant, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $45,670,000 in total assets and $100,100,000 in total debts. EURAMAX INT'L: Soliciting Consents to Amend 9-1/2% Sr. Sub. Notes ----------------------------------------------------------------- Euramax International, Inc., commenced a tender offer to purchase for cash any and all of its outstanding 8-1/2% Senior Subordinated Notes due 2011 on the terms and subject to the conditions set forth in its Offer to Purchase and Consent Solicitation Statement dated May 3, 2005 and the related Consent and Letter of Transmittal. In connection with the tender offer, the Company is soliciting consents to certain proposed amendments to the indenture governing the Notes. If all conditions to the tender offer and consent solicitation are satisfied, holders of the Notes who validly tender their Notes pursuant to the tender offer and validly deliver their consents pursuant to the consent solicitation by 5:00 p.m., New York City time, on May 16, 2005, and do not validly withdraw their Notes or revoke their consents by such date, will be paid a total consideration for each $1,000 principal amount of the Notes equal to the present value (minus accrued interest) of: (a) $1,042.50, the amount payable per $1,000 principal amount of the Notes on August 15, 2007, the first date on which the Notes are redeemable at a fixed price, and (b) an amount equal to the interest that would have been paid on the Notes from the date of payment up to and including the First Redemption Date, in each case determined on the basis of a yield to the First Redemption Date equal to the sum of: (i) the yield of the 3.25% U.S. Treasury Note due Aug. 15, 2007, plus (ii) a fixed spread of 50 basis points. In addition, holders who validly tender and do not validly withdraw their Notes in the tender offer will receive accrued and unpaid interest from the last interest payment date up to, but not including, the date of payment. In connection with the tender offer, the Company is soliciting consents to certain proposed amendments to eliminate substantially all of the restrictive covenants and certain events of default in the Indenture and to modify the defeasance and certain other provisions contained in the Indenture. The Company is offering to make a consent payment of $20 per $1,000 principal amount of the Notes (which is included in the total consideration described above) to holders who validly tender their Notes prior to the Consent Date. Holders who tender their Notes after the Consent Date will not receive the consent payment. Holders may not tender their Notes without delivering consents and may not deliver consents without tendering their Notes. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on June 1, 2005, unless otherwise extended or earlier terminated by the Company. Subject to the terms and conditions of the tender offer, payment for any Notes tendered will be made promptly after the Expiration Date. The tender offer is conditioned on, among other things: * there being validly tendered prior to the Expiration Date and not validly withdrawn at least a majority in aggregate principal amount of Notes outstanding; * the receipt of consents of holders of at least a majority of the then aggregate outstanding principal amount of the Notes with respect to, and execution of a supplemental indenture providing for, the proposed amendments to the Indenture; * receipt by the Company on or prior to the Expiration Date of net proceeds from the Related Financing Transactions (as defined in the Statement) or other available sources of cash, in each case, on terms and conditions satisfactory to the Company in its sole discretion and in an amount sufficient to pay the aggregate total consideration payable pursuant to the tender offer, plus all fees and expenses related to the tender offer and the consent solicitation; and * the consummation of the proposed merger of the Company with Emax Merger Sub, Inc., an affiliate of Goldman, Sachs & Co., on or prior to the Expiration Date. This announcement is not an offer to purchase, a solicitation of an offer to sell or a solicitation of consents with respect to any securities. The full terms of the tender offer and the consent solicitation are set forth in the Statement and in the related Consent and Letter of Transmittal. Credit Suisse First Boston LLC and Goldman, Sachs & Co. are the Dealer Managers and Solicitation Agents for the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation should be directed to CSFB at 800-820-1653 (Toll Free) or 212-538-0652 or to Goldman Sachs at (800) 828-3182 (Toll Free) or (212) 357-8664. Requests for documents should be directed to D.F. King & Co., Inc., the Information Agent for the tender offer and consent solicitation, at 48 Wall Street, New York, NY 10005, 800-848-2998 (Toll Free) or (212) 269-5550. Euramax International, Inc., is an international producer of value-added aluminum, steel, vinyl and fiberglass fabricated products with facilities located in all major regions of the continental United States as well as in the United Kingdom, The Netherlands and France. The Company's customers include original equipment manufacturers; commercial panel manufacturers and transportation industry manufacturers; rural contractors; home centers; home improvement contractors; distributors; industrial and architectural contractors; and manufactured housing producers. * * * As reported in the Troubled Company Reporter on Apr. 19, 2005, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and 'B' subordinated debt ratings on Euramax International Inc. on CreditWatch with negative implications. The CreditWatch placement followed the company's announcement that it has agreed to a merger plan with GSCP EMAX Acquisition LLC. GSCP EMAX is a newly formed company organized by Goldman Sachs Capital Partners and management of Euramax, in which, among other things, GSCP EMAX will acquire all outstanding stock of Euramax. sWe also note that as part of the transaction Euramax intends to redeem all of its 8.5% senior subordinated notes due 2011. At Dec. 31, 2004, Norcross, Georgia-based Euramax had $313 million of lease-adjusted debt outstanding. "Key drivers of further rating activity include pro forma debt leverage, the company's near-term business prospects and strategies, and the liquidity profile," said Standard & Poor's credit analyst Paul Kurias. EXCITE@HOME: Unsec. Creditors Contribution to Bondholders is $18M ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California determined that general unsecured creditors should contribute $18,371,483 to Plan Classes 5a and 5b (claims held by Bondholders) pursuant to At Home Corporation (dba Excite@Home) and its debtor-affiliates' Joint Plan of Liquidation, as of Feb. 18, 2005. The Honorable Thomas E. Carlson issued an order making that determination at the behest of Frank A. Morrow, who serves as trustee of the At Home General Unsecured Creditors' Liquidating Trust. The Liquidating Trustee wanted the amount of the Interclass Contribution owed by Class 5d to Classes 5a and 5b pursuant to Article 4.E.6 of the Debtors' Joint Plan of Liquidation judicially determined. The Liquidating Trustee was confused over the figures due to various duplicate claims and claim stipulations. Article 4.E.6 of the Plan provides, inter alia, that Class 5d (the General Unsecured Creditor Class) is required to contribute to Classes 5a and 5b (the Bondholder Classes) if the distributions to allowed Class 5d claimholders reach certain thresholds. The Court based the calculation on excess distributable funds on account of $132,273,348 and distributions of $113,901,865 by the Liquidating Trust to General Unsecured Claimholders on account of Claims totaling $125,973,032. Terms of the Plan On August 15, 2002, the Court confirmed the Debtors' Joint Plan of Liquidation. Under the Plan, all Senior Claims, including Allowed Administrative, Priority, Priority Tax and Secured Claims, are unimpaired and will be paid in full. The Plan also provides payment in full of a class of convenience claims consisting of unsecured claims of $2,500 or less or those claims reduced to $2,500 by their holders. All of the Debtors' assets, as well as all of the Debtors' causes of action against third parties, are split under the Plan between the two primary creditor constituencies in the cases: the holders of the Debtors' subordinated bonds and the Debtors' general unsecured creditors. The assets are administered by three liquidating trusts charged with liquidating the Debtors' assets and pursuing any remaining litigation, and the trusts make distributions to creditors. The Plan incorporates an agreement among the Debtors and the Official Committee of Unsecured Creditors. That agreement was hammered out through mediation with the Honorable Randall J. Newsome. Headquartered in Redwood City, California, At Home Corporation, dba Excite@Home, provides broadband access services for millions of consumers and businesses. Excite@Home has interests in one joint venture outside of North America delivering high-speed Internet services and three joint ventures outside of North America operating localized versions of the Excite portal. The Company and its debtor-affiliates filed for chapter 11 protection on Sept. 28, 2001 (Bankr. N.D. Calif. Case Nos. 01-32495 through 01-32525). The Court confirmed the Debtors' Joint Plan of Liquidation dated as of May 1, 2002, on Aug. 15, 2002. The Plan took effect on Sept. 30, 2002. EXOTIC CAR: Case Summary & 2 Largest Known Creditors ---------------------------------------------------- Debtor: Exotic Car Rental of Texas, Inc. 4708 Stonehearth Place Dallas, Texas 75287 Bankruptcy Case No.: 05-42253 Type of Business: The Debtor rents exotic and luxury cars. Chapter 11 Petition Date: April 28, 2005 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtor's Counsel: Charles R. Chesnutt, Esq. 18333 Preston Road, Suite 500 Dallas, Texas 75252 Tel: (972) 735-0757 Fax: (214)965-0254 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Known Creditors: Entity Claim Amount ------ ------------ MLSBF, L.P. Unknown c/o Brent Brown P.O. Box 1210 McKinney, TX 75070-1210 Skip Leake Unknown 611 Ryan Plaza Drive, Suite 610 Arlington, TX 76006-1786 FEDERAL-MOGUL: Names Peter Becker Customer Satisfaction VP ---------------------------------------------------------- President and Chief Executive Officer Jose Maria Alapont disclosed the appointment of Peter Becker, vice president, Customer Satisfaction, to the Strategy Board for Federal-Mogul Corporation (OTCBB:FDMLQ). Mr. Becker assumes responsibility for quality and global customer satisfaction for Federal-Mogul, and reports directly to Mr. Alapont. "Peter brings valuable experience and a strong understanding of our customers, suppliers and manufacturing operations," Mr. Alapont said. "His dedication to quality excellence in products and services will be a major driver of Federal-Mogul's global customer satisfaction." Previously vice president, Corporate Quality, for Federal-Mogul, Mr. Becker joined the company in May 2001, and was responsible for Federal-Mogul's global quality program. Before joining Federal-Mogul, Mr. Becker was CEO of FAG Komponenten AG in Schweinfurt, Germany. Prior to this, he held various management positions in general management, plant management, quality assurance, engineering and manufacturing in the United States and Europe with ITT Automotive and Valeo. Mr. Becker completed his diploma theses at Mercedes-Benz in Gaggenau, Germany, and earned his engineering degree at the Technical University in Darmstadt, Germany. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a $2.048 billion stockholders' deficit, compared to a $1.926 billion deficit at Dec. 31, 2004. FLEXTRONICS: Wants to Buy India-based Subsidiary's Public Equity ---------------------------------------------------------------- Flextronics International's (Nasdaq: FLEX) proposal to delist its India-based subsidiary Flextronics Software Systems Limited, previously known as Hughes Software Systems Limited, by purchasing all of its outstanding publicly-held shares. Flextronics currently owns 69.7 percent of FSS through its wholly owned subsidiary, Flextronics Sales & Marketing (L-A) Limited. Commenting on the proposal, Michael Marks, Flextronics' Chief Executive Officer stated "Completion of this transaction will enhance our operating flexibility, streamline our service offering in this area and provide an attractive exit opportunity to public shareholders. However, if we find that the ultimate terms of this proposal are not acceptable to Flextronics, we will examine alternative strategies for our Indian operations." Flextronics intends to acquire the outstanding shares of FSS in accordance with the delisting guidelines as set forth by the Securities and Exchange Board of India through a shareholder-led reverse book build process. Shareholders of FSS may tender their shares to Flextronics Sales and Marketing (L-A) Limited, at a price at or above the "floor price" to be determined in accordance with the SEBI guidelines (being the average price of the company's shares as quoted on the National Stock Exchange in the 26 weeks preceding the date of the public announcement to be issued under the SEBI guidelines). Flextronics is prepared to acquire the shares offered to it at Rs. 575 (US$13.23) per share, subject to all requisite shareholder and regulatory approvals being obtained, including the number of shares required for delisting being offered at this price. This price represents a premium of approximately 9.7 percent to the average of the closing prices of the FSS shares as quoted on the NSE in the six months preceding the date of this statement and a 4.5 percent premium to the closing price of Rs. 550 (US$12.66) per share on May 3, 2005, the last trading day before the delisting proposal was communicated to the Board of Directors of FSS. Additionally Flextronics believes that given the low liquidity in the FSS stock, the delisting offer would provide the public investors of FSS with an attractive exit opportunity. Flextronics reserves the right not to acquire the offered shares if the final price, as determined by the SEBI delisting guidelines is more than Rs. 575 (US$13.23) per share. All US$ translations are at the rate of Rs. 43.46/US$. About the Company Headquartered in Singapore (Singapore Reg. No. 199002645H), Flextronics -- http://www.flextronics.com/-- is a leading Electronics Manufacturing Services (EMS) provider focused on delivering innovative design and manufacturing services to technology companies. With fiscal year 2005 revenues of USD$15.9 billion, Flextronics is a major global operating company that helps customers design, build, ship, and service electronics products through a network of facilities in 32 countries on five continents. This global presence provides customers with complete design, engineering, and manufacturing resources that are vertically integrated with component capabilities to optimize their operations by lowering their costs and reducing their time to market. * * * As reported in the Troubled Company Reporter on Nov. 16, 2004, Moody's Investors Service assigned a Ba2 rating to Flextronics International Ltd.'s new $500 million 6.25% senior subordinated notes, due 2014. At the same time, the company was assigned a liquidity rating of SGL-1, reflecting Flextronics' significant on-hand liquidity, unfettered access to the sizeable $1.1 billion revolver and the expectation for generating moderately positive free cash flow (pre-Nortel payments) over the next twelve months. GATEWAY GRAPHICS: Case Summary & 21 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Gateway Graphics, Inc. 3131 Premier Drive Irving, Texas 75063 Bankruptcy Case No.: 05-35082 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Gateway Equipment Limited Partnership 05-35086 KSM Real Estate, L.P. 05-35102 Chapter 11 Petition Date: May 3, 2005 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Steven Thomas Holmes, Esq. Hunton & Williams Energy Plaza, 30th Floor 1601 Bryan Street Dallas, Texas 75201 Tel: (214) 979-3000 Estimated Assets Estimated Debts ---------------- --------------- Gateway Graphics, Inc. $1 Million to $1 Million to $10 Million $10 Million Gateway Equipment $1 Million to $1 Million to Limited Partnership $10 Million $10 Million KSM Real Estate, L.P. $1 Million to $1 Million to $10 Million $10 Million Gateway Graphics, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Top Level Printing Ink Trade Debt $182,300 9110 Premier Row Dallas, TX 75247 Attn: Billy Ragland Tel: (214) 267-9010 Olmsted-Kirk Paper Company Trade Debt $145,375 P.O. Box 970093 Dallas, TX 75397-0093 Attn: Dwight Williams Tel: (214) 637-7154 Bradner National Trade Debt $108,299 P.O. Box 730149 Dallas, TX 75373-0149 Attn: Sandra Neumeier Tel: (972) 446-2586 Clampit Paper Trade Debt $59,357 Enovation Graphic Services Trade Debt $48,578 RIS Paper Company Trade Debt $22,931 Bank One Trade Debt $15,523 Performance Specialty Service Trade Debt $14,865 United Parcel Service Trade Debt $12,581 Minuteman of Americus Trade Debt $11,747 Graphics Unlimited Trade Debt $10,874 Dove Logistics & Trade Debt $10,178 Transportation LLC American Express Trade Debt $9,716 Anchor Software LLC Trade Debt $9,147 Pacesetter Graphics Service Trade Debt $9,114 Corporation Star Uniform Rental Co., Inc. Trade Debt $8,792 On-Demand Temporary Labor Trade Debt $8,710 Kent Landsberg Trade Debt $7,738 Liberty Carton Company Trade Debt $6,947 Citibusiness Card Trade Debt $6,664 KSM Real Estate, L.P.'s Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Mortgage Loan $400,000 MO5248 P.O. Box 13278 Sacramento, CA 95813 GLASS GROUP: Files its Schedules of Assets & Liabilities in Del. ---------------------------------------------------------------- The Glass Group, Inc., delivered its Schedule of Assets and Liabilities with the U.S. Bankruptcy Court for the District of Delaware, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $20,330,000 B. Personal Property $99,179,497 C. Property Claimed as Exempt Not Applicable D. Creditors Holding Secured Claims $33,385,031 E. Creditors Holding Unsecured Priority Claims $8,822 F. Creditors Holding Unsecured Nonpriority Claims $14,941,457 ------------ ----------- Total $119,509,497 $48,335,310 Headquartered in Millville, New Jersey, The Glass Group, Inc. -- http://www.theglassgroup.com/-- manufactures molded glass container and specialty products with plants in New Jersey and Missouri. Its products include cosmetic bottles, pharmaceutical vials, specialty jars, and coated containers. The Company filed for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Del. Case No. 05-10532). Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. GREATHOUSE PACKAGING: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Greathouse Packaging Services LLC P.O. Box 290 Mount Sterling, Kentucky 40353 Bankruptcy Case No.: 05-51642 Type of Business: The Debtor manufactures corrugated and plastic packaging boxes and sheets. Chapter 11 Petition Date: May 2, 2005 Court: Eastern District of Kentucky (Lexington) Judge: William S. Howard Debtor's Counsel: W. Thomas Bunch, Sr., Esq. Bunch & Brock 271 West Short Street, Suite 805 P.O. Box 2086 Lexington, Kentucky 40588-2086 Tel: (859) 254-5522 Total Assets: $1,369,732 Total Debts: $2,399,035 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Greathouse Packaging & Assembly, Inc. $550,000 c/o A.C. Cooper Cooper Container 1 P.O. Box 730 Maynardville, TN 37807 American Corrugated 1 $282,691 Attn: Radonna Georgia Pacific 1001 Maddox Simpson Parkway Lebanon, TN 37090 Weyerhaeuser $206,536 Attn: Tom Wheat P.O. Box 75146 Charlotte, NC 28275-5146 Pratt Industries, Inc. $102,543 Box USA Group, Inc. $99,583 Evansville ARC, Inc. $59,239 Super Express Stop #5 $34,141 Innerpac $33,916 Bonfield Brothers $24,774 IPAK, Inc. $21,724 Rogers Foam Corp. $21,707 Garnett Wood Products $20,726 Associated Packaging $19,082 Appalacian Leasing Services, Inc. $17,802 AMEX $15,658 Advanta Bank Corp. $11,400 B&C Industries, Inc. $11,304 Multicell Packaging, Inc. $10,843 Perma R Products $8,520 Diamond Forest Resources, Inc. $8,107 GREAT SCOTT: Voluntary Chapter 11 Case Summary ---------------------------------------------- Lead Debtor: Great Scott Productions Inc. 834 North 7th Avenue Phoenix, Arizona 85007 Bankruptcy Case No.: 05-07677 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Great Scott Holdings, LLC 05-07679 Type of Business: The Debtor offers video production services. See http://www.greatscottprod.com/ Chapter 11 Petition Date: May 2, 2005 Court: District of Arizona (Phoenix) Judge: Chief Judge Sarah Sharer Curley Debtors' Counsel: Mark W. Roth, Esq. Hebert Schenk, P.C. 4742 North 24th Street, Suite 100 Phoenix, Arizona 85016 Tel: (602) 248-8203 Fax: (602) 248-8840 Estimated Assets Estimated Debts ---------------- --------------- Great Scott $500,000 to $1 Million to Productions Inc. $1 Million $10 Million Great Scott Holdings, $1 Million to $1 Million to LLC $10 Million $10 Million The Debtors did not file a list of its 20 Largest Unsecured Creditors. GRUPO IUSACELL: 14-1/4% Bondholders Deliver Acceleration Notice --------------------------------------------------------------- Grupo Iusacell, S.A. de C.V., (BMV: CEL, NYSE: CEL), received a notice dated March 21, 2005, from The Bank of New York, acting as trustee for the $350 million 14-1/4% notes due December 2006, informing that, due to Grupo Iusacell's non-payment of interest since June 1, 2003, an unspecified percentage of noteholders have requested the acceleration of principal and accrued interest on the notes. Bloomberg pricing data shows those 14-1/4% notes have traded around 30 cents-on-the-dollar for the past couple of months. "Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operate," the Company said when its disclosed receipt of the Acceleration Notice from the Indenture Trustee. About the Company Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE and BMV: CEL) -- http://www.iusacell.com.mx/-- is Mexico's second-largest wireless cellular and PCS service provider, behind America Movil. Grupo Iusacell's wireless service area covers approximately 90% of the country's total population. * * * As reported in the Troubled Company Reporter on May 4, 2005, Despacho Freyssinier Morin, S.C., completed its audit of Grupo Iusacell, S.A. de C.V.'s financial statements as of Dec. 31, 2004. In their audit opinion, the auditors express substantial doubt about the company's ability to continue as a going concern. The auditors point to two items: (A) The Company incurred in certain events of default related to its debt originally issued at long-term, which entitled the creditors with the right to request the immediate payment of the principal and interest; also, one subsidiary of the Company was sued before a New York Court. Under these circumstances, the Company classified its debt, originally issued at long-term, as short-term liabilities, and as a result, current liabilities exceeded current assets by Ps.10,300.9 millions (constant Mexican pesos of Dec. 31, 2004); and (B) The Company reported accumulated losses representing more than two thirds of its capital stock, which, in accordance with Mexican law is a cause of dissolution, and could be among the assumptions provided by the Concurso Mercantil Law in Mexico. Events of Default The Company has incurred in events of default under the agreements and/or instruments governing the loans which conform the Company's debt. Such events relate, mainly, to the failure in the payment of the principal and the corresponding interest, to technical defaults and non compliance of financial ratios, and to the change of control of the Company that occurred when the former shareholders, Verizon Communications, Inc. (Verizon) and Vodafone Group Plc. (Vodafone), sold the majority equity shares to Movil Access, S.A. de C.V., as well as other defaults detailed in such notes. These defaults entitled the creditors of most of the Company's debt to request the immediate payment of principal and corresponding accessories, in accordance with the executed agreements. As a result of the above, and in conformity with accounting principles generally accepted in Mexico, long-term debt, as described has been classified as short-term and, consequently, as of December 31, 2004, current liabilities exceed current assets by Ps.11,068.6 million approximately. On Jan. 14, 2004, a group of holders of the Secured Senior Notes Due 2004, issued by the Company's main subsidiary, filed a lawsuit in a New York Court against that subsidiary, for the immediate payment of principal and interest. The Company has incurred accumulated losses as of December 31, 2004, which have originated the total loss of the Company's capital stock, and a deficit in its stockholders' equity at that date. The loss of capital stock, in accordance with Mexican General Corporate Law, is cause of a possible dissolution of the Company; furthermore, the Company might be instituted in a reorganization proceeding under the Concurso Mercantil Law in Mexico. These circumstances raise substantial doubt about the Company's ability to continue as a going concern, which will depend, among other factors, on its debt restructure and/or, as the case may be, on obtaining or generating the additional resources necessary to settle its obligations and to cover its operating needs. GRUPO IUSACELL: Asks Shareholders to Scrap U.S. Stock Trading ------------------------------------------------------------- Grupo Iusacell, S.A. de C.V., (BMV: CEL; NYSE: CEL) will submit to the consideration of an extraordinary shareholders meeting the convenience to continue with its American Depository Shares program in the United States with shares listed in the New York Stock Exchange. The Company considers that renowned cases of regulatory non- compliance in the recent past, such as Worldcom, Enron, Adelphia, Parmalat, etc. have created over-regulation in the United States securities markets. As a result, issuers have had to divert time and resources to comply with excessive regulation, to the detriment of a more efficient management of the business. For foreign issuers in the United States, over-regulation considerably increases current costs and expenses, along with the risk of liability, and the benefits are very questionable. As a result of this, the shareholders meeting of Grupo Iusacell will consider the impact of the costs upon its business, as well as the current and future benefits of its ADSs program. If the shareholders' meeting decides to terminate the ADSs program, the Company would disclose it to investors and would send notice of this decision to Bank of New York. Pursuant to section 6.02 of the Deposit Agreement signed with BONY, the Company has the power to terminate it. Such termination would be notified to ADSs holders 90 days in advance of its termination. If the shareholders meeting decides to terminate the ADSs program: a) the Company would immediately communicate this decision to both BONY and the New York Stock Exchange; b) BONY would notify holders of ADSs; c) the Company would proceed to modify its F-6 format (ADSs Registry), reducing the issuance of ADSs to zero; and d) the Company would file its modified F-6 form with the SEC. Trading of ADSs may continue during the 90 days following the termination of the Deposit Agreement. During that period, ADSs holders may continue to exchange them for common shares listed on the Mexican Stock Exchange. Once the Deposit Agreement is terminated, the NYSE should suspend the trading of ADSs, should notify the SEC of the termination of the program, and request the delisting of the ADSs from the NYSE. In case that the delisting from the NYSE were to happen, the SEC would make it public. In that case, ADSs holders would have the following two options during the period of time determined by the shareholders meeting: 1) Give instructions to BONY to exchange its ADSs into common shares, or 2) exchange their ADSs into common shares and request their sale in the Mexican market. If there are less than 300 holders who are residents of the United States, the Company may ask the SEC to cancel the registration of the ADSs. In that case, the reporting obligations and other U.S. securities regulatory compliance requirements would cease to apply to the Company. We must highlight that the registry with the SEC and the listing with the NYSE are two independent acts, and as such, in case of an eventual delisting from the NYSE, the Company would continue complying with its reporting obligations with the SEC, for as long as its registry with this authority is maintained. The trading of shares in Mexico and the United States will remain in place until the shareholders meeting decides about it. If the shareholders' meeting decides not to terminate the ADSs program, the Company would maintain its outstanding stock in the US market as it is today, and ADSs holders would maintain the same rights they currently possess. In any event, the Company will timely disclose to investors the relevant events that take place. About the Company Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE and BMV: CEL) is a wireless cellular and PCS service provider in Mexico encompassing a total of approximately 92 million POPs, representing approximately 90% of the country's total population. Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operate. * * * As reported in the Troubled Company Reporter on May 4, 2005, Despacho Freyssinier Morin, S.C., completed its audit of Grupo Iusacell, S.A. de C.V.'s financial statements as of Dec. 31, 2004. In their audit opinion, the auditors express substantial doubt about the company's ability to continue as a going concern. The auditors point to two items: (A) The Company incurred in certain events of default related to its debt originally issued at long-term, which entitled the creditors with the right to request the immediate payment of the principal and interest; also, one subsidiary of the Company was sued before a New York Court. Under these circumstances, the Company classified its debt, originally issued at long-term, as short-term liabilities, and as a result, current liabilities exceeded current assets by Ps.10,300.9 millions (constant Mexican pesos of Dec. 31, 2004); and (B) The Company reported accumulated losses representing more than two thirds of its capital stock, which, in accordance with Mexican law is a cause of dissolution, and could be among the assumptions provided by the Concurso Mercantil Law in Mexico. Events of Default The Company has incurred in events of default under the agreements and/or instruments governing the loans which conform the Company's debt. Such events relate, mainly, to the failure in the payment of the principal and the corresponding interest, to technical defaults and non compliance of financial ratios, and to the change of control of the Company that occurred when the former shareholders, Verizon Communications, Inc. (Verizon) and Vodafone Group Plc. (Vodafone), sold the majority equity shares to Movil Access, S.A. de C.V., as well as other defaults detailed in such notes. These defaults entitled the creditors of most of the Company's debt to request the immediate payment of principal and corresponding accessories, in accordance with the executed agreements. As a result of the above, and in conformity with accounting principles generally accepted in Mexico, long-term debt, as described has been classified as short-term and, consequently, as of December 31, 2004, current liabilities exceed current assets by Ps.11,068.6 million approximately. On Jan. 14, 2004, a group of holders of the Secured Senior Notes Due 2004, issued by the Company's main subsidiary, filed a lawsuit in a New York Court against that subsidiary, for the immediate payment of principal and interest. The Company has incurred accumulated losses as of December 31, 2004, which have originated the total loss of the Company's capital stock, and a deficit in its stockholders' equity at that date. The loss of capital stock, in accordance with Mexican General Corporate Law, is cause of a possible dissolution of the Company; furthermore, the Company might be instituted in a reorganization proceeding under the Concurso Mercantil Law in Mexico. These circumstances raise substantial doubt about the Company's ability to continue as a going concern, which will depend, among other factors, on its debt restructure and/or, as the case may be, on obtaining or generating the additional resources necessary to settle its obligations and to cover its operating needs. H&M TRANSPORTATION: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: H&M Transportation, Inc. P.O. Box 271408 Tampa, Florida 33688-1408 Bankruptcy Case No.: 05-08879 Type of Business: The Debtor is a locally owned, family owned and operated trucking company, in business for over 20 years. Chapter 11 Petition Date: May 2, 2005 Court: Middle District of Florida (Tampa) Debtor's Counsel: Alberto F. Gomez, Jr., Esq. Morse & Gomez, PA 119 South Dakota Avenue Tampa, Florida 33606 Tel: (813) 301-1000 Estimated Assets: Not Provided Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Wright Express $115,318 97 Darling Ave South Portland, ME 04106 Quick Fuel $110,336 PO Box 88249 Milwaukee, WI 53288 Fleet One $77,019 5042 Linbar Drive Nashville, TN 37211 GCR Tire Center $32,996 National Semi-Trailer Corp. $28,634 Mr. Mostafa El Asri $24,000 Aurora Trailer Holdings $16,800 Robert Half $16,410 Resource Leasing Service $16,410 Callaghan Tire $15,000 Expressway Towing $9,900 First Financial Employee Leasing $9,133 EFS $8,061 Rush Truck Center $7,807 Lawrence H. Samaha $7,500 AAA Professional Security Services, Inc. $6,707 WPCI $6,449 Media General $5,578 GE Capital Vendor $5,475 Amscot $5,027 HARRY LEE CORLEY: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Harry Lee Corley 215 Stoneleigh Drive, Southwest Atlanta, Georgia 30331 Bankruptcy Case No.: 05-68326 Chapter 11 Petition Date: May 3, 2005 Court: Northern District of Georgia (Atlanta) Judge: Joyce Bihary Debtor's Counsel: David L. Miller, Esq. Law Offices of David L. Miller The Galleria, Suite 960 300 Galleria Parkway, Northwest Atlanta, Georgia 30339 Tel: (404) 231-1933 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor has no unsecured creditors who are not insiders. HARTCOURT COS: Losses & Neg. Cash Flow Prompt Going Concern Doubt ----------------------------------------------------------------- Kabani & Company, Inc., raised substantial doubt about The Hartcourt Companies, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. Kabani observes that the Company incurred a $15.4 million net loss in 2004 and a $750,000 loss in 2003. Negative cash flows from operations were $7.1 million in 2004 and $4.5 million in 2003. The Company says it's deployed a three-part plan to provide the necessary capital to continue its operations. The three steps called for Hartcourt to: (1) acquire profitable operations via stock exchanges transactions, (2) dispose of unprofitable operations, and (3) settle certain litigation matters and disputes. The Company plans to continue actively seeking additional funding and restructure the acquired subsidiaries to increase profits and minimize the liabilities. Executive Changes On Apr. 11, 2005, Richard Hyland resigned as the Company's Interim Chief Financial Officer due to cultural and language barriers working in China as well as his inability to commit the necessary time in Shanghai, the location of Hartcourt headquarters. The Company's board of directors appointed Carrie Hartwick as Interim Chief Financial Officer, effective April 14, 2005, and the Company will search for a new Chief Financial Officer. Ms. Hartwick joined the Company at the end of 2003 as Chief Financial Officer and President, and became the Chief Executive Officer in June, 2004. Ms. Hartwick resigned her position as Chief Financial Officer on Jan. 5, 2005, when Mr. Hyland assumed the position. She was employed as the Finance Director of Dell China/HK from 2000 to 2003. Prior to 2000, Ms. Hartwick served as the Finance Director of Gillette China and held various positions within Johnson & Johnson, including Finance Controller for Johnson & Johnson Shanghai. Ms. Hartwick holds a Bachelor of Accounting degree from Rutgers University. SEC Settlement On April 12, Hartcourt paid the remaining balance of a $1.1 million SEC judgment. As such, the Company has fully wrapped up the SEC case and is moving full speed ahead to the next phase of growth through acquisition of high growth and high profit margin technology companies in China. The Hartcourt Companies, Inc. -- http://www.hartcourt.com/-- incorporated in Utah in 1983, is a growth oriented company in the China's IT distribution and retail sectors. There are four main operations in this sector which are all located in China: 1) HuaQing Corporate Development Co., Ltd., located in Shanghai, China, a key distributor for Samsung Electronics, helps customers build their own PC system with components, technology and after sales support, 2) Guangdong NewHuaSun Computer Co., Ltd., a similar business to HuaQing, located in the Guangdong province covering the Southern China market, 3) Shanghai GuoWei Science and Technology Co., Ltd., a PC retailer in the Shanghai area with 13 retail outlets, and 4) Wenzhou ZhongNan Computer Group, a PC retailer covering the Zhejiang province. Through the strategic acquisition of controlling interest in profitable companies with leadership positions in regional markets, Hartcourt intends to integrate and consolidate the businesses to reach economy of scale and operating efficiency. HAWAIIAN HOLDINGS: Expects 45M Outstanding Shares Following Exit ---------------------------------------------------------------- Hawaiian Holdings, Inc. (Amex: HA; PCX) currently expects that it would have approximately 45 million shares of common stock outstanding after its wholly owned subsidiary, Hawaiian Airlines, Inc., emerged from bankruptcy protection. Also, the Company will have reserved for issuance shares for: (i) employees under their collective bargaining agreements (approximately 1.5 million shares), (ii) options already granted (approximately 1.5 million shares) and for future grants in the ordinary course (approximately 8 million shares), (iii) the future conversion under the convertible notes expected to be issued at emergence (which conversion rate has not been finalized but is expected to be at a premium to market) and (iv) warrants to be issued to RC Aviation (in an amount equal to 5% of the fully diluted shares). The timing and ultimate number of shares to be issued will be subject to a number of factors including market conditions at the time of emergence and the receipt of shareholder approval with respect to the increase in the number of authorized shares of the Company. There can be no assurance, however, that the Company will regain control of Hawaiian Airlines in the near future. Hawaiian Holdings is a Delaware corporation that has been public since August 2002, when Hawaiian Airlines, which had been publicly held, became its wholly owned subsidiary in an internal corporate reorganization. Hawaiian Airlines, Inc. -- http://www.HawaiianAir.com/-- is a subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA). Since the appointment of a bankruptcy trustee in May 2003, Hawaiian Holdings has had no responsibility for the management of Hawaiian Airlines and has had limited access to information concerning the airline. On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. The Bankruptcy Court confirmed the Chapter 11 Trustee's Plan of Reorganization on March 10, 2005. On March 31, 2005, Hawaiian Holdings' balance sheet showed a $63,387,000 stockholders' deficit, compared to a $61,292,000 deficit at Dec. 31, 2004. HOLMES GROUP: Moody's Puts B1 Rating on New $85M Tack-On Term Loan ------------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to The Holmes Group's new $85 million tack-on term loan and affirmed the B1 rating on the existing senior secured facilities and the B3 issuer rating. At the same time, Moody's withdrew the B3 second lien term facility rating. The rating outlook remains stable. Holmes' ratings reflect: (1) its high sales concentration in a few discount retailers, (2) its weakened balance sheet resulting from the May 2004 special dividend, (3) its high financial leverage, (4) the effects of higher steel and other input costs, and (5) the stiff competition inherent in the consumer products in which the company competes. The ratings are supported by: (1) the company's portfolio of stable and diverse products for the home, (2) the company's well known brand names, (3) the leading market positions for many of the products it sells, (4) its well established relationships with growing mass retailers, (5) the stability of its operating margin, and (6) the moderate decline in its leverage since the recap and special dividend. With half of the company's products supplied by its manufacturing subsidiary in China and half sourced from other producers, Holmes is well positioned to remain price competitive. The stable rating outlook assumes further gradual deleveraging and the prospectively favorable impact on interest expense and cash flow that the lower interest rate on the new Senior Secured Tack- on Term Loan and the Proposed Amendment and Restatement of its First Lien Credit Agreement should have. Sales in 2004, of $695 million, represented an 11% increase over 2003 and for the twelve months ended March 31, 2005, reached $698 million. Sales to its three largest customers, Wal-Mart, Target, and Kmart Sears, represented 50% of total sales in 2004. Holmes' high dependence on a few large discount retailers exposes it to the relatively demanding service requirements and inventory management criteria of this distribution channel. Higher material costs have caused a moderate reduction in gross margin for the March 2005 LTM period, but through expense efficiencies the company was able to limit the erosion of its operating margin. Leverage as measured by adjusted debt (funded debt + adjustments for rent and unfunded pension) / EBITDAR has declined from 4.9 times for the twelve months ended June 30, 2004, or just after the recap and dividend, to 4.6 times for the March 2005 LTM. Moody's notes that while Holmes produces a number of appliances for the kitchen and home environment, certain of these product categories are experiencing volume and sales declines, making the company dependent on new product launches. The opportunity for a ratings upgrade is limited by the competitiveness of the small appliance industry, but could occur if the company improves adjusted debt / EBITDAR to below 3.5 times, operating margin rises to above 12%, and interest cover improves to greater than 4 times and those levels are maintained for a sustained period. However, negative rating action could ensue if adjusted debt / EBITDAR increases to above 5.5 times, operating margin drops to below 8%, interest coverage goes below 2.5 times, or if another leveraged transaction were to take place. The $333 million Amended Term Facility will mature in 2010 and the $90 million Revolving Facility will mature in 2009. The term loan will require annual amortization payments of 1% of principal until maturity. The $90 million revolving credit facility provides ample seasonal liquidity. The facilities will be secured by all property and tangible and intangible assets, all of the capital stock of the company's domestic subsidiaries and 65% of the capital stock of foreign subsidiaries. The existing covenant structure, which will not be modified, includes a maximum debt / EBITDA, a minimum interest coverage ratio, and a minimum fixed charge coverage ratio, and provides the company with sufficient operating flexibility. This rating was assigned: * $85 million tack-on senior secured term loan of B1. These ratings were affirmed: * Senior implied rating at B1, * Issuer rating at B3. * $90 million senior secured revolving credit facility at B1, * $248 million senior secured first lien term loan at B1. This rating was withdrawn: * Senior secured second lien term loan of B3. The outlook is stable. The Holmes Group, with headquarters in Milford, Mass., is a leading manufacturer and marketing company of branded consumer products, including small appliances for the home environment and the kitchen. Its major brands include Rival, Crock Pot, Bionaire, Holmes, Seal-a-Meal, and Family Care. The Holmes Group reported sales of approximately $695 million for fiscal year 2004. HUFFY CORP: Brings-In Jefferson Wells for Internal Audit Work ------------------------------------------------------------- Huffy Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, for authority to retain Jefferson Wells International, Inc., as their internal auditors. Jefferson Wells is expected to assist the Debtors in the development of a project plan and activities to meet the compliance requirements of the Sarbanes-Oxley Act of 2002 which will allow Huffy to prepare audited financial statements for fiscal 2004 and establish an internal audit system. The Project Plan involves: Phase I: Developing the Project Plan This initial phase involves: -- conducting inventory of the available documentation of Huffy's internal controls related to Sarbanes-Oxley compliance; -- meeting with the Debtors' external auditor; and -- develop a detailed project work plan for revising the documentation. Phase II: Revise Documentation of Control Processes This phase will be used to: -- enhance the documentation of existing internal controls over financial reporting, disclosures and procedures, -- conduct a gap analysis, -- identify differences between expected and existing internal controls; and -- make recommendations with respect to gap identification and remediation. Phase III: Test Key Controls This final phase will be used to propose test scripts, programs and work papers related to Sarbanes-Oxley compliance summary and prepare remediation plans and recommendations relative to such compliance. Jefferson Wells' professionals' current hourly rates for auditing services are: Designation Rate ----------- ---- Directors $150 Engagement Manager $125 Information Technology Auditor $120 Internal Audit Staff $ 92 Beth Savage, at Jefferson Wells, assures the Court of her Firm's "disinteredness" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Miamisburg, Ohio, Huffy Corporation -- http://www.huffy.com/-- designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUNTSMAN CORP: Reports Positive EBITDA & Net Loss in First Quarter ------------------------------------------------------------------ Huntsman Corporation (NYSE: HUN) reported first quarter 2005 EBITDA of $241.2 million including $246.6 million of charges related to the early extinguishment of debt, restructuring and other charges resulting in Adjusted EBITDA of $487.8 million. This compares to EBITDA in the first quarter of 2004 of $207.8 million including restructuring and other charges of $15.9 million resulting in Adjusted EBITDA of $223.7 million. EBITDA for the fourth quarter of 2004 was $275.0 million including restructuring and other charges of $126.5 million resulting in Adjusted EBITDA of $401.5 million. The Company reported a net loss available to common stockholders of $99.5 million for the first quarter 2005 including preferred dividends of $43.1 million (which represents all of the dividends that were declared and will become payable from the issuance of its 5% mandatory convertible preferred stock until the mandatory conversion date) and after tax charges of $233.0 million for early extinguishment of debt and $8.3 million of restructuring and plant closing costs. Net income as adjusted to exclude these items was $184.9 million. This compares to a net loss available to common stockholders of $106.7 million in the first quarter 2004 including preferred dividends of $21.9 million and after tax charges of $1.9 million related to the early extinguishment of debt and $7.2 million of restructuring and plant closing costs. Net loss as adjusted to exclude these items in the first quarter of 2004 was $75.7 million. The proceeds from its initial public offering were used to reduce indebtedness throughout the second half of the first quarter, 2005. As a result its interest expense was higher than what it would have been if the IPO were completed at the beginning of the quarter. Peter R. Huntsman, President and CEO, stated, "The first quarter results represent our seventh consecutive quarter of improved revenues and Adjusted EBITDA and were achieved despite continued volatile and high energy and feedstock costs. Our product portfolio remains well balanced, with our differentiated segments contributing more than half our Segment Adjusted EBITDA in the 2005 first quarter. We continue to improve the bottom line, having delivered two-thirds of our $200 million global cost reduction initiative. Our outlook for 2005 remains optimistic as the fundamentals of our business continue to show general improvements. During the quarter, our net IPO proceeds of $1.5 billion were used to reduce our debt levels. Since the IPO we have prepaid our term loans by $75 million and we remain committed to using surplus cash flow to reduce our debt further." Three Months Ended March 31, 2005 vs. Three Months Ended March 31, 2004 Revenues for the three months ended March 31, 2005 increased to $3.4 billion, or 27%, from $2.6 billion during the same period in 2004. Revenue increases were experienced in all segments, primarily due to higher average selling prices. For the three months ended March 31, 2005, the Company generated EBITDA of $241.2 million, which included $233 million of expenses related to the early extinguishment of debt, $10.4 million of restructuring and plant closing costs and $3.2 million of loss on the sale of accounts receivable. This compares to first quarter 2004 EBITDA of $207.8 million, which included $1.9 million of losses from the early extinguishment of debt, $8.7 million of restructuring charges, $3.5 million of loss on the sale of accounts receivable and $1.8 million in legal and contract settlement expense. Adjusted EBITDA for the first quarter of 2005 was $487.8 million, a 118% increase relative to the comparable period in 2004. The increase in Adjusted EBITDA resulted from increases in its Polyurethanes, Performance Products, Pigments, Polymers, and Base Chemicals segments. Fourth quarter 2004 EBITDA and Adjusted EBITDA were $275.0 million and $401.5 million, respectively. Polyurethanes The increase in revenues in the Polyurethanes segment for the three months ended March 31, 2005 as compared to the same period in 2004 was primarily due to higher average selling prices for MDI. MDI average selling prices increased by 45% as a result of the combination of strong growth in higher value applications, continued strong supply/demand fundamentals, the strength of major European currencies versus the U.S. dollar, and higher raw material and energy costs. MDI sales volumes were higher by 1%. In addition, PO and co-product MTBE average selling prices and volumes were also higher. The increase in EBITDA in the Polyurethanes segment was the result of higher margins as average selling prices more than offset the increase of raw materials and energy costs. EBITDA also increased as a result of decreased administrative costs. EBITDA was negatively impacted by $1.9 million of restructuring charges recorded in the first quarter of 2005 compared to $4.8 million for the same period in 2004. Advanced Materials The increase in revenues in the Advanced Materials segment for the three months ended March 31, 2005 as compared to the same period in 2004 was primarily the result of a 8% increase in average selling prices, principally due to price increase initiatives in certain markets in response to improved demand and higher raw material costs and to offset the effects of the strength of the major European and Asian currencies versus the U.S. dollar. Sales volumes improved by approximately 1% as its ongoing portfolio re- alignment activities resulted in higher sales volumes in certain of its coatings, constructions and adhesives market group as well as its design and composite engineering market group which were largely offset by lower sales volumes of basic epoxy resins and electronic laminates products. EBITDA in the Advanced Materials segment was relatively flat as higher average selling prices were partially offset by higher raw material costs and energy costs. The foreign exchange loss in the three months ended March 31, 2005 was $12.9 million as compared to $2.7 million in foreign exchange gains for the same period in 2004. Performance Products The increase in revenues in the Performance Products segment for the three months ended March 31, 2005 as compared to the same period in 2004 was primarily the result of higher average selling prices for all major product lines partially offset by a 5% decrease in sales volumes. Average selling prices increased by 20% in response to higher raw material and energy costs and improved market conditions. Sales volume decreases were primarily the result of lower sales of certain surfactants products and LAB. The increase in EBITDA in the Performance Products segment principally resulted from higher margins as average selling prices increased more than raw material and energy costs. EBITDA was negatively impacted by a $1.0 million restructuring charge for the first quarter 2005. Pigments The increase in revenues in the Pigments segment for the three months ended March 31, 2005 as compared to the same period in 2004 was primarily due to a 12% increase in average selling prices, partially offset by 9% lower sales volumes. Average selling prices benefited from the strengthening of the major European currencies versus the U.S. dollar and price increase initiatives implemented during 2004 and first quarter of 2005. Volumes were lower primarily due to the rationalization of manufacturing capacity and lower demand. The increase in EBITDA in the Pigments segment was primarily the result of higher margins resulting from the increase in average selling prices and lower manufacturing costs and SG&A. EBITDA was negatively impacted by $2.9 million of restructuring charges recorded in the first quarter of 2005 as compared to $3.9 million in the comparable 2004 period. Polymers The increase in revenues in the Polymers segment for the three months ended March 31, 2005 as compared to the same period in 2004 was primarily the result of a 41% increase in average selling prices due to tighter market conditions and higher raw materials and energy costs. Sales volumes decreased by 6% primarily resulting from lower production and reduced demand. The increase in EBITDA in the Polymers segment was due primarily from higher margins as average selling prices increased more than raw material and energy costs. EBITDA was negatively impacted by a $1.9 million restructuring charge for the first quarter of 2005. Base Chemicals The increase in revenues in the Base Chemicals segment for the three months ended March 31, 2005 as compared to the same period in 2004 was primarily the result of a 41% increase in average selling prices in response to improved market conditions and higher raw material and energy costs. Sales volumes increased 1% in the 2005 period as compared to 2004. The increase in EBITDA in the Base Chemicals segment was primarily the result of higher margins as average selling prices increased more than raw material and energy costs. EBITDA was negatively impacted by a restructuring charge for the first quarter of 2005 of $2.7 million. Corporate and Other Corporate and other items include unallocated corporate overhead, loss on the sale of its accounts receivable, unallocated foreign exchange gains and losses, loss on the early extinguishment of debt, other non-operating income and expense, minority interest, and unallocated restructuring and reorganization costs. In the first quarter of 2005, the total of these items increased as compared to the comparable 2004 period primarily due to the charge on early extinguishment of debt of $233.0 million as compared to $1.9 million for the same period in 2004. Also, in the 2005 first quarter period the Company recorded unallocated foreign exchange losses as compared to unallocated foreign exchange gains for the comparable 2004 period. Liquidity, Capital Resources and Outstanding Debt As of March 31, 2005, the Company and its subsidiaries had $1.03 billion in combined cash and unused borrowing capacity, as compared to $1.02 billion at December 31, 2004. For the three months ended March 31, 2005, total capital expenditures were $59.8 million as compared to $55.8 million for the same period in 2004. During 2005, the Company expects to spend approximately $400 million on capital expenditures, including approximately $80 million on the LDPE facility being constructed at Wilton, UK. The Company's consolidated polyurethanes Chinese joint venture expects to spend an additional $51 million on capital projects in 2005 of which Huntsman has funded approximately $8 million and the remainder will be funded by its joint venture partners and local borrowings. On February 16, 2005, the Company completed an initial public offering of: (i) 55,681,819 shares of its common stock sold by us and 13,579,546 shares of its common stock sold by a selling stockholder, in each case at a price to the public of $23 per share, and (ii) 5,750,000 shares of its 5% mandatory convertible preferred stock sold by us at a price to the public of $50 per share. The net proceeds to the Company from the offering were approximately $1,500 million, substantially all of which were used to repay outstanding indebtedness of certain of its subsidiaries, including HMP Equity Holdings Corporation, Huntsman LLC and Huntsman International Holdings LLC. On February 16, 2005, the Company utilized approximately $42 million of the net proceeds from the offering to redeem, in full, certain indebtedness of Huntsman LLC. On February 28, 2005, it utilized approximately $1,217 million of the net proceeds together with $35 million in available cash to redeem all of the outstanding HMP Equity Holdings Corporation senior secured discount notes due 2008, approximately $452 million of the outstanding Huntsman International Holdings LLC senior discount notes due 2009, and $159 million of the Huntsman LLC senior secured notes due 2010. On March 14, 2005, the Company used $151.7 million of the net proceeds from the offering to redeem the remaining outstanding Huntsman International Holdings LLC senior discount notes due 2009 and $78 million of the Huntsman LLC senior notes due 2012. On March 17, 2005, the Company used approximately $27 million of net proceeds from the offering to redeem an additional $24 million of Huntsman LLC senior notes due 2012. On March 24, 2005, the Company made a voluntary prepayment in the amount of $75 million on its Huntsman International LLC senior credit facilities and during the first quarter reduced outstandings under its Huntsman LLC revolving credit facility by approximately $63 million. * * * As reported in the Troubled Company Reporter on Feb. 18, 2005, Moody's Investors Service upgraded the ratings of Huntsman LLC (senior implied upgraded to B1- HLLC), Huntsman International Holdings LLC (senior implied upgraded to B1- HIH), Huntsman International LLC (senior unsecured upgraded to B2- HI), and Huntsman Advanced Materials LLC (senior implied upgraded to Ba3 -- Advanced Materials). The action follows the successful initial public offering (IPO) transaction for Huntsman Corporation, along with a better understanding of Huntsman Corporation's future strategies to reduce debt and simplify its operating structure. Moody's affirmed the B1 senior implied rating and Caa1 senior unsecured rating of the new parent company Huntsman Corporation. The outlook for Huntsman Corporation's rating and ratings for the other rated companies is stable. It is Moody's belief that the IPO proceeds, to be used for debt reduction, will reach subsidiaries via equity injections as opposed to inter-company debt obligations. The rating actions reflect that Huntsman Corp. has successfully priced the IPO of its common stock. Huntsman Corp. is the new holding company that will own or control the existing Huntsman companies. Moody's expects HC to raise approximately $1.5 billion in net proceeds from the IPO offering along with the proceeds of an issue of mandatory convertible preferred stock, which Huntsman Corp. will use to repay indebtedness at various subsidiaries. The offerings raised some $150 million more in proceeds for debt reduction than was originally anticipated. Moody's believes that, subject to improvements in cash flow from operations, further material reductions in indebtedness are likely over the next several years. The rating incorporates Moody's belief that management will avoid large debt financed acquisitions to grow the group. While the rating upgrades incorporate strategic bolt-on acquisitions they are not expected to be material or to delay the expected improvement in credit metrics as debt is reduced. Existing Huntsman stockholders also participated in the offering and HC will not benefit from these secondary sale proceeds. Moody's believes the Huntsman family will continue to have effective control of the new public corporation. The ratings affirmed are: -- Huntsman Corporation * Senior Implied -- B1 * Issuer Rating -- Caa1 * Outlook -- Stable. HY & ZEL: Restructures Under CCAA Protection in Canada ------------------------------------------------------ Hy & Zel's Inc. obtained an order under the Companies' Creditors Arrangement Act to restructure its financial affairs. Hy & Zel's has entered into an accommodation agreement with its senior creditor and an agreement with its major supplier. The restructuring, which is expected to take place over the next 60 to 120 days, will be conducted under the supervision of Mintz & Partners Limited as court-appointed monitor. Mr. Zelick Goldstein, the Chief Executive Officer of Hy & Zel's said: "We intend to carefully examine all aspects of our operations, and are now taking steps to stabilize the business and return it to profitability. Our management team and employees will make every effort during the restructuring period to maintain the high level of service that our valued customers have come to expect from Hy & Zel's.". Hy & Zel's, which is headquartered in Thornhill, Ontario, operates a chain of 17 discount pharmacies located throughout Ontario. INTERSTATE BAKERIES: Closing Charlotte, N.C. Bakery --------------------------------------------------- Interstate Bakeries Corporation (OTC: IBCIQ) plans to consolidate operations in its Mid-Atlantic Profit Center (PC) by closing its bakery in Charlotte, North Carolina, and consolidating routes, depots and thrift stores in North Carolina, South Carolina and Virginia. The decision came as part of its previously announced efforts to address its continued revenue declines and high-cost structure. The Company expects to complete the consolidation of the Mid-Atlantic PC by July 23, 2005, subject to the U.S. Bankruptcy Court for the Western District of Missouri's approval. The consolidation is expected to affect approximately 950 workers in the Mid-Atlantic PC. As previously disclosed, the Company is currently undergoing an exhaustive review of each of the Company's ten PCs on an individual basis. As part of this process, IBC continues to eliminate unprofitable products and routes, streamline distribution, rationalize the number of brands and stock-keeping units (SKUs) and eliminate excess capacity. The Company believes these actions will strengthen its focus on branded sales and deliveries, which are key components in configuring the business for efficiencies in production, distribution, marketing and sales. Most of the production capacity at the Charlotte bakery will be transferred to the Rocky Mount, North Carolina, and Knoxville, Tennessee, bakeries. Distribution of IBC's branded products to most customers in the Mid-Atlantic PC will be unaffected by the closure. "Closing a bakery and consolidating routes, depots and thrift stores are not decisions we take lightly. We are sensitive of the impact this will have on all of our employees in the Mid-Atlantic region, but we must make the difficult decisions necessary to revitalize the Company and ensure a successful future for IBC," 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. "We hope to be able to complete our review of all PCs before the end of the year." The Company's preliminary estimate of charges to be incurred in connection with the Mid-Atlantic PC consolidation is approximately $15 million, including approximately $3 million of severance charges, approximately $8.5 million of asset impairment charges, and approximately $3.5 million in other charges. IBC further estimates that approximately $6 million of such costs will result in future cash expenditures. In addition, the Company intends to spend approximately $2 million for capital expenditures and accrued expenses to effect the consolidation. As previously disclosed, IBC currently contributes to more than 40 multi-employer pension plans as required under various collective bargaining agreements, many of which are underfunded. 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." Certain of the plans have filed proofs of claim in IBC's bankruptcy case alleging that partial withdrawals have already occurred, which claims are disputed by IBC. There is a risk that the recent consolidation could significantly increase the amount of the liability to IBC should a partial withdrawal from the multi- employer pension plans covering the Mid-Atlantic PC employees be found to have occurred. However, IBC is conducting the Mid-Atlantic PC consolidation in a manner that it believes will not constitute a total or partial withdrawal from the relevant multi-employer pension plans. Nevertheless, due to the complex nature of such a determination, no assurance can be given that withdrawal claims based upon IBC's prior action or resulting from this consolidation or future consolidations will not result in significant liabilities for IBC. Should a partial withdrawal be found to have occurred, the amount of any partial withdrawal liability arising from the underfunded multi-employer pension plans to which IBC contributes would likely be material and could adversely affect our financial condition and, as a general unsecured claim, any potential recovery to our constituencies. 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. Last week the Company disclosed the closing of its bakery in Miami, Florida, and the consolidation of routes, depots and thrift stores in its Florida PC. JOHN BYRD: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------- Debtor: John Harry Bryd Dba Byrd Construction Company 3340 Douglas Drive Washoe Valley, Nevada 89704 Bankruptcy Case No.: 05-51331 Type of Business: The Debtor is a solo proprietor doing business as Byrd Construction Company. Chapter 11 Petition Date: May 4, 2005 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Michael Lehners, Esq. 429 Marsh Avenue Reno, Nevada 89509 Tel: (775) 786-1695 Fax: (775) 786-0799 Total Assets: $6,986,900 Total Debts: $713,000 Debtor's 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service State Taxes $300,000 Special Procedures 1989 through 2001 110 City Parkway, Stop 5028 Las Vegas, NV 89106 Robert/Lyn Equipment Equipment Rental $36,000 21 La Cam Road Newbury Park, CA 91320 Barbara Byrd Lawsuit Unknown c/o David Sibler, Esq. P.O. Box 307 Penn Valley, CA 95946 KAISER ALUMINUM: Asks Court to Okay Avista et al. Consent Decree ---------------------------------------------------------------- Kaiser Aluminum Corporation and its debtor-affiliates ask Judge Fitzgerald to approve a consent decree settling environmental claims of the State of Washington and Avista Development, Inc., relating to the Spokane River, including Upriver Dam, in Spokane, Washington. Kaiser Aluminum & Chemical Corporation owns and operates an aluminum rolling mill near Spokane, known as the Kaiser Trentwood Works. The Trentwood Facility is permitted to discharge industrial wastewater into the Spokane River under the provisions of Washington's Water Pollution Control Law and the Federal Water Pollution Control Act. Avista is a successor to Pentzer Development Corporation, the past owner and operator of the Spokane Industrial Park, which is located on the Spokane River. Prior to 1994, Pentzer discharged industrial wastewater into the Spokane River under the provisions of Washington's Water Pollution Control Law and the Federal Water Pollution Control Act, or predecessor laws. Hazardous substances known as polychlorinated biphenyls have been found in fish, sediment, and water of the Spokane River. In June 2001, the Washington State Department of Ecology notified KACC, Liberty Lake Sewer & Water District and Avista of its preliminary finding that they were each potentially liable for the release of PCBs at the Site. Thereafter, the Department of Ecology notified Inland Empire Paper Company of its preliminary finding that Inland Empire was also potentially liable for the release of PCBs at the Site. Liberty Lake and Inland Empire are not signatories to the Consent Decree. In November 2002, KACC sought and obtained the Bankruptcy Court's permission to enter into a consent decree with the Department of Ecology and Avista. KACC and Avista agreed to undertake a focused remedial investigation and feasibility study to investigate the existence and extent of PCBs in sediments deposited at the Site, and to study and evaluate potential clean-up actions, should remedial action be required. The Department of Ecology filed the Upriver Dam RI/FS Consent Decree in a civil action it commenced against KACC and Avista in January 2003 in the Superior Court of the State of Washington for Spokane County so that any enforcement of the Upriver Dam RI/FS Consent Decree would be under the jurisdiction of the Spokane County Superior Court. The Superior Court entered the Upriver Dam RI/FS Consent Decree in February 2003. The 2002 Court Order also approved KACC's entry into a related agreement with Avista to share the costs of performing the RI/FS required by the Upriver Dam RI/FS Consent Decree. KACC and Avista, in cooperation with the Department of Ecology, have completed the RI/FS for the Site. Based on the results of the RI/FS, the Department of Ecology proposed a Cleanup Action Plan, which describes certain work to be performed to clean up the Site. Avista and the State of Washington also negotiated a proposed consent decree, pursuant to which Avista will implement the CAP. The CAP Consent Decree will not become effective until, among other things, the Consent Decree is approved and the Debtors make the payment to Avista required under the Consent Decree. The CAP Consent Decree and the CAP are subject to public comment and the approval of the Spokane County Superior Court. Both the State of Washington and Avista lodged claims against KACC with respect to the Site. The State of Washington, at the request of the Department of Ecology, filed Claim No. 7181, asserting, among other claims, a protective claim with respect to natural resource damages, natural resource trustee oversight costs and KACC's alleged injunctive obligation to perform future work to clean up the Site. The State of Washington estimates the Claim to be $52,000,000. Avista filed Claim No. 3104 asserting, among other claims, a claim with respect to KACC's obligation under the Participation Agreement, Avista's past costs associated with the Site and a protective claim as to KACC's alleged liability for future remedial actions associated with the Site. The Consent Decree settles, without admission of liability, the Spokane River Environmental Claims and requires the Department of Ecology to dismiss the Spokane Action as against KACC. The significant terms of the Consent Decree are: a. The Debtors will pay $1,000,000 into an account designated by Avista. The funds will be used to carry out tasks Avista is required to undertake under the CAP Consent Decree. The Debtors' payment represents approximately one-half of the estimated costs of the required tasks. Except for the Debtors' obligation to make the payment to Avista, the Debtors have no obligation under the Consent Decree to fund or perform any work at the Site; b. On the effective date of the Consent Decree and following the transfer of the funds, neither the Debtors nor any of their successors will have any further obligation under the Consent Decree with respect to the Site to fund or perform any remedial actions taken pursuant to the Washington State Model Toxics Control Act, RCW 70.105D, and any similar state law, and response actions taken pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., and any similar federal law, nor to provide any further funding to Avista; c. The State of Washington covenants not to sue the Debtors or their successors, assigns, officers, directors, employees and trustees with respect to the Site and any areas affected by a release or threatened release of hazardous substances from the Site, subject to a reservation of rights to bring any other actions, including any actions based on: (i) a failure to meet a requirement of the Consent Decree; (ii) liability for any other site -- subject to any separate settlement regarding the other site; (iii) criminal liability; and (iv) natural resource damages. Upon the Debtors' payment of the amount due under the Consent Decree, the Department of Ecology will dismiss KACC as a defendant in the Spokane Action; d. Avista will fully release and discharge the Debtors from any and all claims, causes of action, liabilities and obligations arising out of or relating to: (i) hazardous substances at the Site as of the effective date of the Consent Decree, so long as the claims are based on information that was known or should have been known to Avista as of the effective date of the Consent Decree; and (ii) tasks required by the CAP Consent Decree, except claims relating to a material change in the tasks arising from the Debtors' conduct occurring after the effective date of the Consent Decree. The Debtors will grant a similar release to Avista. e. The Debtors are entitled to protection to the maximum extent provided by the Washington State Model Toxics Control Act, RCW 70.105D against any existing or future third-party actions or claims, including claims for contribution, with respect to the Site; f. The parties to the Consent Decree agree that the portions of Claim No. 7181 that assert liabilities with respect to the Site and Claim No. 3104 will be deemed satisfied and expunged. Logan & Company, Inc., the Debtors' claims and noticing agent, will be authorized and empowered to expunge those portions of the claims. The United States Environmental Protection Agency was given an opportunity to comment on and be a signatory to the Consent Decree. The EPA declined and, as a result, is not a party to the Consent Decree. The Debtors believe that the Consent Decree is in the paramount interests of their creditors because it: -- takes into account their probabilities of success in litigating issues with Avista; -- avoids the uncertainty, risk and continuing costs associated with litigation; and -- does not require them to fund or perform any work at the Site, except for their obligation to pay Avista $1,000,000. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) KAISER ALUMINUM: Wants Insurer's Confirmation Objections Overruled ------------------------------------------------------------------ To recall, a group of insurers led by Century Indemnity Company complain that the Third Amended Joint Plans of Liquidation for Kaiser Alumina Australia Corporation and Kaiser Finance Corporation and for Alpart Jamaica, Inc., and Kaiser Jamaica Corporation are inherently and structurally unfair to insurers and, accordingly, are not "insurance neutral." The Insurers issued certain insurance policies that may provide coverage for certain bodily injury and property damage claims that have been, or that may be, asserted against Kaiser Aluminum Corporation and its debtor-affiliates. The Insurers inform the United States Bankruptcy Court for the District of Delaware that they hold certain contingent and unliquidated Claims arising from the Debtors' continuing contractual obligations under the Policies. The Insurers also have certain rights under the Policies, including, without limitation, the rights to receive monetary and non-monetary performance, and assert defenses, set- offs or recoupments arising from, related to, or in connection with, the Policies. While the Disclosure Statements explaining the Liquidation Plans acknowledge the possibility of certain Claims being asserted against the Debtors for which insurance coverage may be sought under the Policies -- including Claims allegedly arising out of exposure to asbestos, silica and other potentially harmful or hazardous substances -- the Insurers point out that the Plans provide for the liquidation of those Claims in a manner that is not consistent with the Insurers' Contractual Rights or does not require the performance of the Debtors' reciprocal Contractual Obligations. Liquidating Debtors Explain "Insurance Neutrality" Provisions Under Plans Kaiser Alumina Australia Corporation, Kaiser Finance Corporation, Alpart Jamaica, Inc., and Kaiser Jamaica Corporation state that the Insurers do not have standing to object to the Liquidation Plans because they are not "parties-in-interest" as required by Section 1128(b) of the Bankruptcy Code. The Liquidating Debtors note that the entirety of the Insurers' objections is based on the contention that the Liquidation Plans are not "insurance neutral" and do not preserve the Insurers' rights under the applicable insurance policies. According to the Liquidating Debtors, the Insurers' suggestion that Section 12.1 of the Liquidation Plans is somehow inadequate is absurd, not only because Section 12.1 itself makes clear that it applies notwithstanding any other provisions in the Liquidation Plans, including Section 4.2, but also because counsel for the Insurers, representing the "ACE Group of Insurers" -- which includes at least some if not all of the Insurers -- represented to the Court at the hearing on the Disclosure Statements that the insurance neutrality language of Section 12.1 "is acceptable to the ACE Insurers." The Liquidation Debtors inform Judge Fitzgerald that the language of Section 12.1 was negotiated with a large group of insurance companies at the time of the Disclosure Statements were approved. As a result of those negotiations, the Liquidating Debtors agreed to modify and expand Section 12.1 to include that: (a) Nothing in the Plan will diminish or impair the enforceability of any insurance policies that may cover Claims against either Debtor. (b) Nothing in the Plan or in the Confirmation Order will preclude any entity from asserting in any proceeding any and all claims, defenses, rights, or causes of action that it has or may have under or in connection with any insurance policy or insurance settlement agreement. Nothing in the Plan or the Confirmation Order will be deemed to waive any claims, defense, rights, or causes of action that any entity has or may have under the provisions, terms, conditions, defenses, or exclusions contained in those policies or settlements. (c) Notwithstanding the provisions of Section 12.1(b) and the substantial consummation of the Liquidation Plans, in connection with any possible insurance policies, the Court will retain jurisdiction over the Chapter 11 cases to issue or approve buybacks or those insurance policies under Section 363 of the Bankruptcy Code and to issue or approve injunctions, releases, and exculpations under the Bankruptcy Code for purposes of, inter alia, protecting any settling insurers against claims or demands made against the Debtors. In this regard, as between Kaiser Aluminum & Chemical Corporation and the Debtors, KACC will have full and sole right and authority to settle, release, compromise, and enter into buybacks by insurers of insurance policies as to which the Debtors, or any of them, have or may assert rights as an insured. The Debtors will not be entitled to any consideration or other value as a result of any exercise of those rights by KACC. The Liquidating Debtors point out that the phrases "[n]othing in the Plan or in the Confirmation Order" make clear that the insurance neutrality provisions cannot be overridden or undercut by other provisions in the Liquidation Plans, including Section 4.2. The Liquidating Debtors also note that their counsel emphasized at the Disclosure Statement Hearing that ". . . there is simply no impact on any insurance policy [under the Plans]." Hence, the Liquidating Debtors maintain that there is absolutely no basis for the Insurers to suggest that the Liquidating Plans are "not fair and equitable to Insurers." The Liquidating Debtors ask the Court to overrule the Insurers' Objections. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) KIMBERLY OREGON: Files Schedules of Assets & Liabilities -------------------------------------------------------- Kimberly Oregon Realty, Inc., delivered its Schedule of Assets and Liabilities to the U.S. Bankruptcy Court for the Southern District of California, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $15,900,000 B. Personal Property $1,749,818 C. Property Claimed as Exempt Not Applicable D. Creditors Holding Secured Claims $5,265,538 E. Creditors Holding Unsecured Priority Claims $47,622 F. Creditors Holding Unsecured Nonpriority Claims Not Applicable ----------- ----------- Total $17,649,818 $5,313,160 Headquartered in Rancho Santa Fe, California, Kimberly Oregon Realty, Inc., filed for chapter 11 protection on Mar. 22, 2005 (Bankr. S.D. Calif. Case No. 05-02313). When the Debtor filed for protection from its creditors, it estimated assets between $10 million to $50 million and estimated debts between $1 million to $10 million. LOMA LINDA: S&P Lifts Ratings on $52.3 Million Series 1999 Bonds ---------------------------------------------------------------- Standard & Poor's Rating Services raised its long-term rating to 'BBB-' from 'BB+' on Loma Linda, California's $52.3 million series 1999 revenue bonds, issued for Loma Linda University Medical Center, based on LLUMC's sustained operating profitability, solid market position, and steady balance sheet improvement, tempered by the center's modest liquidity. The outlook is stable. "LLUMC has shown continued operating profitability, as evidenced by five years of positive and improving operating margins, and strong operating income of $29.0 million and improved debt service coverage of 2.5x in 2004," Standard & Poor's credit analyst James Cortez said. "Additionally, LLUMC has a solid market position and a large revenue base, and has shown steady balance sheet improvement over several years due to stronger cash flow." "We expect overall liquidity to improve as a result of LLUMC's heightened cash flow," he added. Bond proceeds are secured by the gross revenues of LLUMC. LLUMC, with 654 staffed (789 licensed) beds (excludes behavioral medicine beds), is the largest facility in San Bernardino and Riverside counties service area. MAGELLAN HEALTH: Good Performance Cues S&P to Change Outlook ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Magellan Health Services Inc. to positive from stable. At the same time, Standard & Poor's affirmed its 'B+' counterparty credit rating on Magellan and its 'B+' issue credit ratings assigned to Magellan's $241 million 9.375% senior notes due November 2008 and its $185 million credit facility due August 2008. "The revised outlook reflects Magellan's better than expected profitability and cash flow since emergence from bankruptcy in January 2004 and the potential for the company to achieve sustained improvement in its underlying financial condition by year-end 2005," explained Standard & Poor's credit analyst Joseph Marinucci. By year-end 2005, Standard & Poor's expects Magellan's revenue to increase very modestly to slightly more than $1.8 billion and for pretax ROR, excluding realized gains/losses, to be 6.5%-7.5%. No special charges are expected. If Magellan were to achieve Standard & Poor's earnings expectations in 2005, pretax income would likely be $170 million-$190 million and debt leverage and interest coverage would be 25%-35% and be 6.0x-7.0x (excluding realized gains/losses), which are considered very conservative for the rating. An upgrade will be predicated upon Magellan meeting the previously referenced metrics. Standard & Poor's believes that Magellan is well positioned as the largest provider of managed behavioral health care services in the U.S. At year-end 2004, the company had about 1,700 customers and provided coverage for 57.1 million lives, which constitutes 30%- 35% of the marketplace. MAGIC LANTERN: Auditors Doubt Going Concern Viability ----------------------------------------------------- Schwartz Levitsky Feldman LLP, raised substantial doubt about Magic Lantern Group, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The auditing firm points to the Company's significant recurring losses, working capital deficiency, and lack of long-term financing. Mahoney Cohen & Company CPA, P.C., expressed similar doubts when they audited the Magic Lantern's 2003 financial statements. The Company's cash position at the current rate of operating activity is insufficient to cover operating costs to June 30, 2005. The Company's working capital deficiency at Dec. 31, 2004, was approximately $6,030,000, which has worsened since Dec. 31, 2003. Historically, the Company has sought financing from its major shareholders. Failing shareholder support and a longer-term financing solution, the sources of capital available to the Company include reduction of discretionary investments in the digitization program and sales and marketing programs designed to increase revenue over the next twelve months. Capital requirements for 2005 also include, in part, the repayment of an approximate $623,000 (CDN $750,000) loan, excluding accrued interest, by Sonoptic to its 25% shareholder, the Minister of Business New Brunswick -- formerly, Provincial Holdings Ltd. -- unless extended. The Company is currently in the process of renegotiating the terms of the loan, which was due on Sept. 30, 2003, and has received a no default letter from the Minister of Business New Brunswick, dated Oct. 3, 2003. Although annual extensions of the loan maturity date have been granted in the past there can be no assurance that the loan will be renewed and on terms favorable to the Company. Liquidity and Capital Resources As of April 21, 2005 the Company's cash position was $313,000 which, given the Company's debt obligations and accounts payable obligation would provide for continuing operations until June 30, 2005. The Company has aggressively sought out sources of capital infusion in both private equity and debt infusion. Management has pursued virtually all possible avenues to raise additional capital and the overwhelming hurdle has been the on-going losses since the Company's inception and its current debt position. Potential investors have significant interest in the technology offered by the Company's subsidiary, Sonoptic Technologies, Inc. located in New Brunswick and its VideoBaseT indexing and meta-tagging utility. The Company's core legacy business is of little or no interest to the investment community. In fact, it is a roadblock to investors looking for leading or cutting edge technology that has potent ially significant upside potential. Further, the Company has no other sources of liquidity at its disposal. Execution of Magic Lantern's business plan and the Company's branding strategies for its ongoing trademark licensing business may require capital resources substantially in excess of the Company's current cash reserves. Magic Lantern has historically relied on advances from its parent companies to address shortfalls in its working capital requirements. As reported in the Troubled Company Reporter on Jan. 14, 2005, Magic Lantern completed several restructuring initiatives to position it for future growth. These include: -- raising a total of approximately $4.2 million USD since September 2003; -- debt restructuring; -- the recent conversion of certain short-term debt into equity; and -- senior management appointments of seasoned entrepreneurial business executives, including Company CEO Bob Goddard, CFO Ron Carlucci and EVP of Global Sales and Marketing Jeff Lorenz. About the Company Magic Lantern Group, Inc. -- http://www.magiclanterngroup.com/-- operates several strategic subsidiaries and divisions, including its core business for nearly 30 years, the global distribution of videos and DVD's from more than 300 world-renowned producers. MAULDIN-DORFMEIER: Selling Equipment & Vehicles for $1.7 Million ---------------------------------------------------------------- Mauldin-Dorfmeier Construction asks the U.S. Bankruptcy Court for the Eastern District of California, Fresno Division, for authority to sell its equipment and vehicles to Stephen Passy & Associates and Martella Auction Co. for $1,740,000. A portion of the sale proceeds will be used to pay the Fireman's Fund and St. Paul Marine Fire and Insurance Company's secured claim. The Debtor believes it will net $830,000 after payment to the Fund and St. Paul. Headquartered in Fresno, Calif., Mauldin-Dorfmeier Construction, Inc., provides construction services. The Company is owned 50% each by Patrick Mauldin and Alan Dorfmeier, who are president and vice president, respectively. The Company filed for chapter 11 protection on Feb. 29, 2005 (Bankr. E.D. Calif. Case No. 05- 11402). When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. MAULDIN-DORFMEIER: St. Paul Won't Allow Use of Cash Collateral -------------------------------------------------------------- St. Paul Fire and Marine Insurance Company, a secured creditor of Mauldin-Dorfmeier Construction, Inc., tells the U.S. Bankruptcy Court for the Eastern District of California, Fresno Division, that it doesn't want the Debtor using cash that comes in when customers pay their bills. The Debtor pledged its accounts receivable to secure repayment of prepetition loan for nearly $1 million, and those postpetition cash collections constitute St. Paul's cash collateral. St. Paul makes it clear it has not consented to the Debtor's use of its cash collateral. St. Paul is, however, willing to let the Debtor's request and its objection remain sub judice while the Debtor gets approval to sell assets that will pay the loan off. Headquartered in Fresno, Calif., Mauldin-Dorfmeier Construction, Inc., provides construction services. The Company is owned 50% each by Patrick Mauldin and Alan Dorfmeier, who are president and vice president, respectively. The Company filed for chapter 11 protection on Feb. 29, 2005 (Bankr. E.D. Calif. Case No. 05- 11402). When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. MCI INC: Fitch Keeps Sr. Debt B Rating on Watch Negative -------------------------------------------------------- Fitch Ratings has maintained the Rating Watch Negative status of Verizon Global Funding's outstanding long-term debt securities, which are rated 'A+', and has maintained the senior unsecured debt rating of MCI, Inc., which is rated 'B', on Rating Watch Positive. The securities of both companies were placed on Rating Watch on Feb. 14, 2005, following the announcement that Verizon Communications, Inc., planned to acquire MCI. Verizon and MCI have entered into an amended agreement and plan of merger dated May 1, 2005, following a protracted bidding process in which Qwest Communications International, Inc., also pursued MCI. One of several underlying reasons for the Rating Watch Negative assigned to Verizon on Feb. 14 was the potential for the acquisition price for MCI to rise due to other bids. Since that time, Verizon has had to increase its offer twice for MCI in response to bids from Qwest. MCI's board of directors deemed Qwest's last offer, which was $30 per share in cash and stock, as superior to Verizon's then existing offer of $23.10 per share. In response to Verizon's and MCI's May 1 amended agreement, Qwest withdrew from the bidding process. However, Fitch notes that Qwest has not formally withdrawn its most recent offer, and that the acquisition remains to be approved by MCI's shareholders in a special meeting expected to take place in June or July 2005. Fitch will continue to monitor developments and comment as appropriate. The Rating Watch Negative assigned to Verizon as a result of the proposed acquisition of MCI incorporates the need to evaluate the moderately higher business risk profile of Verizon following the acquisition of MCI, the potential synergies to be achieved, the effect of integration-related operating and capital expenses on cash flows, and the outcome of the regulatory approval process. As the transaction is currently envisioned, a downgrade, should it occur, would be limited to one notch. If Fitch can attain a high degree of confidence regarding the combined entity's business and financial risk profile, the rating could be affirmed. The terms of the amended transaction call for MCI to pay out a special dividend of $5.60 per common share following the shareholder vote (to be reduced by any dividends declared by MCI between Feb. 14 and the closing of the merger), and for the remainder of the consideration to consist of no less than $20.40 in Verizon common stock per MCI common share. Although Verizon's funding for the closing portion of the transaction consists solely of common equity, prior to the shareholder vote Verizon has agreed to acquire for cash approximately $1.1 billion in MCI common stock (approximately 13.4% of MCI) from entities affiliated with investor Carlos Slim Helu. Following the acquisition of these shares Verizon will be entitled to its share of the dividends to be paid by MCI, thus reducing the net cost of the shares acquired from entities affiliated with Carlos Slim Helu to approximately $875 million. Through a closing adjustment mechanism, Verizon is largely insulated from increases in MCI's contingent liabilities pertaining to remaining bankruptcy claim settlements, and unresolved state and international tax claims. The merger consideration will be adjusted downward for total claims which exceed $1.775 billion. Taking into account the size of Verizon relative to MCI, the transaction is not expected to have a material effect on Verizon's credit protection measures. Verizon's liquidity is strong, as it has an undrawn $5 billion credit facility to back its commercial paper. The facility expires in June 2005, and has a two-year term-out option. In 2004, free cash flow after dividends and capital spending was approximately $4.3 billion. Intermediate-term liquidity needs are expected to be addressed through strong free cash flows and could be supplemented by additional asset sales. The transaction will be subject to regulatory and shareholder approval. After the necessary approvals are obtained, the transaction is expected to close, which could be in the first half of 2006. Material conditions arising from the regulatory approval process could have an impact on the final economics of the transaction and the ultimate credit profile of the combined company. At this time it has not been disclosed if Verizon will guarantee or legally assume MCI's outstanding debt. Without a guarantee, MCI's debt would likely be upgraded to two notches below Verizon's rating, but the notching could be more or less depending on an evaluation of the integration of MCI's assets into Verizon's operations. The Rating Watch Negative is also maintained on the existing long- term debt of other Verizon subsidiaries, as listed below, as well as on the implied senior unsecured rating of Verizon Communications. The 'F1' ratings assigned to Verizon Global Funding and Verizon Network Funding are not on Rating Watch Negative. Verizon Global Funding primarily funds the nonregulated operations of Verizon. Verizon Global Funding is a subsidiary of Verizon, and benefits from a support agreement with Verizon. These subsidiary ratings have been maintained on Rating Watch Negative: Cellco Partnership (Verizon Wireless) -- Notes 'A+'. GTE Corp. -- Debentures/notes 'A+'. NYNEX Corp. -- Debentures 'A+'. Verizon New York -- Debentures 'A+'. Verizon Credit Corp. -- Notes 'A+'. Verizon Florida -- Senior unsecured debentures 'A+'. Verizon New England -- Senior unsecured bonds 'A+'; -- Debentures 'A+'; -- Notes 'A+'. Verizon South -- Senior unsecured debentures 'A+'. GTE Southwest -- Senior unsecured debentures 'A+'. Verizon California -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Delaware -- Senior unsecured debentures 'A+'. Verizon Maryland -- Senior unsecured debentures 'A+'. Verizon New Jersey -- Senior unsecured debentures 'A+'. Verizon North -- First mortgage bonds 'A+' -- Senior unsecured debentures 'A+'. Verizon Northwest -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Pennsylvania -- Senior unsecured debentures 'A+'. Verizon Virginia -- Senior unsecured debentures 'A+'. Verizon Washington D.C. -- Senior unsecured debentures 'A+'. Verizon West Virginia -- Senior unsecured debentures 'A+'. These ratings remain on Rating Watch Negative where they were placed on May 25, 2004, due to the pending sale of Verizon Hawaii: Verizon Hawaii -- First mortgage bonds 'BBB-'; -- Debentures 'BB+'. These ratings are affirmed by Fitch: Verizon Global Funding -- Commercial paper 'F1'. Verizon Network Funding -- Commercial paper 'F1'. Fitch also maintains MCI on Rating Watch Positive: MCI Inc. -- Senior unsecured debt 'B'. MCI INC: To Release 2005 First Quarter Results Today ---------------------------------------------------- MCI, Inc. (Nasdaq: MCIP) will report its first quarter 2005 financial results before market open on Thursday, May 5, 2005. The Company will host a conference call that day at 8:30 a.m. EDT to discuss its results. A live webcast of the conference call will be http://www.mci.com/investor/ An archive of the presentation will be available for replay for 30 days. 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. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services placed its ratings on Denver, Co.-based diversified telecommunications carrier Qwest Communications International, Inc., and subsidiaries, including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's counter bid to Verizon Communications, Inc., for long-distance carrier MCI, Inc., for $3 billion in cash and $5 billion in stock. MCI also has about $6 billion of debt outstanding. The ratings on MCI, including the 'B+' corporate credit rating, remain on CreditWatch with positive implications, where they were placed Feb. 14, 2005 following Verizon's announced agreement to acquire the company. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by either Verizon or Qwest, both of which are more creditworthy entities. However, the positive CreditWatch listing of the 'B+' rating on MCI's senior unsecured debt assumes no change to the current MCI corporate and capital structure under an assumed acquisition by Qwest, such that this debt would become structurally junior to other material obligations. "The negative CreditWatch listing of the Qwest ratings reflects the higher business risk at MCI if its bid is ultimately successful," explained Standard & Poor's credit analyst Catherine Cosentino. As a long-distance carrier, MCI is facing ongoing stiff competition from other carriers, especially AT&T Corp. Moreover, MCI is considered to be competitively disadvantaged relative to AT&T in terms of its materially smaller presence in the enterprise segment and fewer local points of presence -- POPs. The latter, in particular, results in higher access costs relative to AT&T. Qwest also faces the challenge of integrating and strengthening MCI's operations while improving its own underperforming, net free cash flow negative long-distance business. These issues overshadow the positive aspects of Qwest's incumbent local exchange carrier business that were encompassed in the former developing outlook. As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. MERIDIAN AUTOMOTIVE: Committee Formation Meeting Set for May 9 -------------------------------------------------------------- The United States Trustee for Region 3, Kelly Beaudin Stapleton, will convene a meeting of Meridian Automotive Systems, Inc., and its debtor-affiliates' largest creditors at 1:00 p.m. on May 9, 2005, at the Wyndham Hotel, located at 700 King Street, in Wilmington, Delaware. The sole purpose of the meeting will be to form one or more committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. 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 that the 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 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 April 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. MERIDIAN AUTOMOTIVE: First Creditors' Meeting Slated for June 3 --------------------------------------------------------------- The United States Trustee for Region 3, Kelly Beaudin Stapleton, will convene a meeting of Meridian Automotive Systems, Inc., and its debtor-affiliates' creditors at 10:00 a.m. on June 3, 2005, at the J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, in Wilmington, Delaware. This is the first meeting of creditors required under 11 U.S.C. Section 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. 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 April 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. (Meridian Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) MERIDIAN AUTOMOTIVE: Utilities Restrained from Halting Service -------------------------------------------------------------- Section 366(a) of the Bankruptcy Code prohibits utilities from altering, refusing, or discontinuing service to a debtor for the first 20 days of a bankruptcy case. Section 366(b) provides that a utility company may, but need not, terminate services if a debtor has not provided adequate assurance of future performance. Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that in the operation of Meridian Automotive Systems, Inc., and its debtor-affiliates' manufacturing, distribution and office facilities, the Debtors incur expenses in the ordinary course of business for, among other things, water, sewer service, electricity, gas, local telephone service, long-distance telephone service, and waste disposal. The Debtors spend approximately $35,000,000 annually for various utility services, with an average monthly cost of approximately $3,000,000. These utility services are provided by approximately 64 Utility Companies nationwide. A non-exhaustive list of the Debtors' Utility Companies is available for free at: http://bankrupt.com/misc/meridianutilitycompanies.pdf According to Mr. Fredericks, any disruption to the Debtors' manufacturing and distribution operations by virtue of the cessation of utility services by the Utility Companies could bring the Debtors' operations to a grinding halt. This would damage customer relationship, revenues, and profits and would ultimately adversely affect the Debtors' restructuring efforts, to the detriment of their estates, creditors, and employees. In this regard, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to prohibit Utility Companies from: -- discontinuing, altering, or refusing service to the Debtors on account of any unpaid prepetition charges; or -- requiring the payment of a deposit or receipt of another security from the Debtors in connection with any unpaid prepetition charges. A Utility Company may, however, request additional adequate assurance of payment in the form of deposits or other security. If the Debtors believe that any Additional Assurance Request is unreasonable, and are unable to reach a compromise with the applicable Utility Company, the Debtors will promptly schedule a hearing for the Court to determine if additional assurances are necessary. The Debtors ask Judge Walrath to require any Additional Assurances Request to: 1. be made within the time required; 2. be made in writing; 3. set forth the location for which utility services are provided; and 4. include a summary of the Debtors' payment history relevant to the affected account, including any security deposits previously provided by the Debtors. Pending resolution of any Determination Hearing, any objecting Utility Company will be prohibited from discontinuing, altering, or refusing service to the Debtors on account of any unpaid charges for prepetition services. If any Utility Company timely submits an Additional Assurance Request that the Debtors believe is reasonable, then the Debtors will be entitled to comply with the request, without further notice or Court order. All Utility Companies will be deemed to be adequately assured of future payment by the Debtors unless and until the Debtors, in their sole discretion, agree to an Additional Assurance Request or the Court enters an order requiring that additional assurance be provided. The Debtors seek permission not to provide any deposits or any other forms of security to the Utility Companies because (x) their history of timely payment of prepetition invoices received from the Utility Companies and their current and projected available funds, (y) the security deposits they provided to many of the Utility Companies prior to the Petition Date, and (z) the administrative expense priority afforded to the Utility Companies for any unpaid postpetition services together constitute adequate assurance of payment. "[T]he Debtors could face a severe cash drain if the Utility Companies condition the provision of postpetition services to the Debtors on payment of deposits or other forms of adequate assurance," Mr. Fredericks explains. * * * Judge Walrath issues a Bridge Order prohibiting all Utility Companies from discontinuing, altering or refusing service to the Debtors on account of any unpaid prepetition charges, or discriminating against the Debtors, or requiring payment of a deposit or receipt of any other security for continued service as a result of the Debtors' bankruptcy filing or any outstanding prepetition invoices. Judge Walrath sets May 16, 2005, as the deadline by which objections to the Debtors' request and the Bridge Order must be filed. A final hearing, if required, on the Debtors' request will be held at 2:00 p.m. (prevailing Eastern Time) on May 23, 2005. If no objections are filed, the Court may enter the Final Order without further notice or hearing. 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 April 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. (Meridian Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) MERIDIAN AUTOMOTIVE: Hires Trumbull Group as Claims Agent --------------------------------------------------------- The Trumbull Group, LLC, is a data processing firm that specializes in claims processing, noticing and other administrative tasks in Chapter 11 cases. Trumbull, according to Richard E. Newsted, President of Meridian Automotive Systems, Inc., has provided identical or substantially similar services in other large bankruptcy cases, which include, among others, Armstrong World Industries, Budget Group, Inc., Owens Corning, Kmart Corporation, and Safety Kleen. Thus, Meridian Automotive Systems, Inc., and its debtor-affiliates believe that the firm is well-qualified to provide services in their bankruptcy cases. By this application, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ Trumbull as claims and balloting agent in their bankruptcy cases to, among other things: (1) serve as the Court's noticing agent to mail notices to creditors and other parties-in-interest; (2) provide computerized claims, objection and balloting database services; and (3) provide expertise and assistance in claim and ballot processing and with the dissemination of other administrative information related to the Debtors' cases. Specifically, Trumbull will: (a) prepare and serve required notices in the Debtors' cases, including without limitation: (i) notice of commencement of the Debtors' bankruptcy cases and the initial meeting of creditors under Section 341 of the Bankruptcy Code; (ii) notice of the deadline established in the Debtors' cases for filing proofs of claim; (iii) notice of objections to claims; (iv) notice of any hearings on approval of a disclosure statement and confirmation of a plan of reorganization; and (v) other notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the Debtors' cases; (b) prepare notices for publication and coordinate media publication; (c) provide a declaration of service conforming to the Court's rules to the Debtors within five days after the mailing of a particular notice; (d) receive, review, accurately record, and maintain copies of all proofs of claim and proofs of interest filed and maintain official claims registers that include, among other things, these information: (i) the applicable Debtor; (ii) the name and address of the claimant and any agent, if the proof of claim or proof of interest was filed by an agent; (iii) the date received; (iv) the claim number assigned; (v) the asserted amount and classification of the claim; and (vi) any other information requested by the Debtors, any official committee of unsecured creditors or the Court; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers, including periodic audits of the claims information to satisfy the Clerk's Office that the claims information is being appropriately and accurately recorded in the Court's claims register; (f) transmit to the Clerk's Office a copy of the claims registers on a monthly basis, unless requested by the Debtors or the Clerk's Office on a more or less frequent basis; (g) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, as well as any other mailing lists as requested by the Debtors, to be available on request of a party-in-interest or the Clerk's Office; (h) provide 24-hour Internet access to the Debtors' counsel to the claims register and other claims information, and provide physical access to the public for examination of copies of proofs of claim or proofs of interest without charge during regular business hours; (i) record all transfers of claims approved by the Clerk's Office and provide notice of those transfers; (j) coordinate with the Debtors' counsel to identify, classify and categorize claims and generate detailed spreadsheet reports or specific claims information; (k) assist the Debtors with processing and compiling information for claims objection, and prepare exhibits, binders and service lists for claims objection motions; (l) assist the Debtors with compiling information for the schedules and statements of the Debtors' financial affairs, and processing these information in a format acceptable to the Court; (m) assist the Debtors with the preparation, mailing and tabulation of ballots for the purpose of voting to accept or reject a plan of reorganization or liquidation in the Debtors' cases, including, if applicable, mailing voting documents to registered record holders of bonds and common stock and coordinating the distribution of voting documents to street name holders of notes and stock by forwarding the appropriate documents to the banks or brokerage firms holding the securities, who in turn will forward them to the beneficial owners of voting; (n) handle requests for voting documents from any party who requests them, including creditors, brokerage firms and bank back-offices, institutional holders, and any parties- in-interest; (o) receive and examine all ballots and tabulate all ballots received prior to the voting deadline in accordance with established procedures, and prepare a ballot certification for filing with the Court; (p) promptly comply with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and (q) provide other services as may be mutually agreed between the Claims Agent and the Debtors. The Debtors will compensate Trumbull for its services on a monthly basis. The firm's hourly rates for consulting services are: Designation Hourly Rate ----------- ----------- Administrative Support $55 Data Specialist $65 - $80 Assistant Case Manager $85 Case Manager $100 - $125 Automation Consultant $140 Senior Automation Consultant $155 - $175 Operations Manager $110 - $185 Consultant $225 Senior Consultant $245 - $300 The Debtors also ask the Court to treat Trumbull's fees and expenses as an administrative expense of their bankruptcy estates, which will be paid in the ordinary course of business. William R. Gruber, Jr., Vice President of Trumbull, assures Judge Walrath that the firm is "disinterested," as that term is defined in Section 101(14) of the Bankruptcy Code. Moreover, the firm does not hold or represent any interest adverse to the Debtors or their estates and will not represent any other entity in connection with the Debtors' Chapter 11 cases. * * * Judge Walrath approves the Debtors' Application. 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 April 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. (Meridian Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) MID-AMERICA: Case Summary & 37 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Mid-America Corporation P.O. Box 3778 Ocala, Florida 34478 Bankruptcy Case No.: 05-04592 Type of Business: Burger King restaurant franchisee. Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Tennessee Operating Partners, LLC 05-04593 Chapter 11 Petition Date: May 1, 2005 Court: Middle District of Florida (Jacksonville) Judge: George L. Proctor Debtors' Counsel: Ronald Bergwerk, Esq. Post Office Box 17667 Jacksonville, Florida 32245 Tel: (904) 353-1533 Estimated Assets Estimated Debts ---------------- --------------- Mid-America $1 Million to $1 Million to Corporation $10 Million $10 Million Tennessee Operating $1 Million to $10 Million to Partners, LLC $10 Million $50 Million A. Mid-America Corporation's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Burger King Corporation $118,747 P.O. Box 932991 Atlanta, GA 31193-2991 Flowers Baking Co. of Morristown $2,183 P.O. Box 751151 Charlotte, NC 28275 Federal Heath Sign Company $2,196 P.O. Box 678203 Dallas, TX 75267-8203 Collier & Hagin, P.A. $1,700 Coca-Cola USA $1,356 Comer Electric Company, Inc. $1,025 Sicom Systems Inc. $995 FAST $825 S&D Coffee, Inc. $682 FESCO $649 The Lamar Companies $525 AA Air Co. $405 Awards Program Services, Inc. $384 Consolidated Commercial $322 Holston Gases $292 Commercial Electronics $266 Front Line Sales, Inc. $258 A&W Office Supply, Inc. $235 CSI of the Southeast $225 American 24 Hour Door Service $202 B. Tennessee Operating Partners, LLC's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Burger King Corporation $128,932 P.O. Box 932980 Atlanta, GA 31193-2980 Comer Electric Company, Inc. $3,441 2302 West Andrew Johnson Higway Morristown, TN 37814 F.M. George Safe & Lock Co. $3,093 P.O. Box 3398 Knoxville, TN 37917 Flowers Baking Co. of Morristown $2,596 Burger King Corporation $2,374 Neon Service Company, Inc. $1,850 Sicom Systems, INc. $1,118 CSI of the Southeast $900 Penn Ventillation $606 Awards Programs Services, Inc. $576 S&D Coffee $488 Coca-Cola USA $384 Holston Gases $366 Parallax Corporation $320 FESCO $247 AA Air Co. $240 American 24 Hour Door Service $224 MID-AMERICA APT: Moody's Withdraws Ratings for Business Reasons --------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of Mid-America Apartment Communities, Inc. Concurrently, Moody's has withdrawn these ratings for business reasons. These ratings were affirmed, and withdrawn: * Mid-America Apartment Communities, Inc. -- Preferred stock shelf at (P)B1 * Mid-America Apartments, L.P. -- Senior unsecured shelf at (P)Ba2, Subordinate shelf at (P)Ba3 Mid-America Apartment Communities, Inc. [NYSE: MAA] is a real estate investment trust that owns and manages apartments in the southeast and south-central United States. The REIT has grown from 5,580 apartments at the time of its initial public offering in January 1994 to 38,129 apartments today. The REIT is headquartered in Memphis, Tennessee, USA. MOLECULAR STAGING: Dissolves Under D.G.C.L. & Claims Due May 19 --------------------------------------------------------------- Notice of Dissolution of Molecular Staging Inc. and Deadline to File Claims PLEASE TAKE NOTICE that Molecular Staging Inc. ("MSI") has been dissolved in accordance with the Delaware General Corporation Law. All persons or entities having a claim against MSI, whether matured, contingent upon future events or otherwise conditional or unmatured, will present their claims against MSI in accordance with this Notice. Please note that: * All claims must be presented in writing and must contain sufficient information reasonably to inform MSI of the identity of the claimant and the substance of the claim. * The mailing address to which such claim must be sent is as follows: Palmeri Fund Administrators 16-00 Route 208 South Fair Lawn, NJ 07410-2503 Attn: MSI Administrator * All claims must be received by MSI on or before May 19, 2005. * All claims not received by May 19, 2005, will be barred. * MSI may make distributions to other claimants and MSI's stockholders or persons interested as having been such without notice to any claimants. * The aggregate amount, on an annual basis, of all distributions made by MSI to its stockholders for each of the three (3) years prior to the date of MSI's dissolution is: Year Amount ---- ----------- 2002 $0 2003 $0 2004 $26,610,000 MURRAY INC: Creditors Must File Proofs of Claims by May 31 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Tennessee, Nashville Division, set May 31, 2005, as the deadline for all creditors owed money by Murray, Inc., on account of claims arising prior to Nov. 8, 2004, to file their proofs of claim. Creditors must file their written proofs of claim on or before the May 31 Claims Bar Date, and those forms must be delivered to the Debtor's claims agent: Alix Partners LLC 2100 McKinney Avenue, Suite 800 Dallas, Texas 72501 Headquartered in Brentwood, Tennessee, Murray, Inc. -- http://www.murray.com/-- manufactures lawn tractors, mowers, snowthrowers, chipper shredders, and karts. The Company filed for chapter 11 protection on Nov. 8, 2004 (Bankr. M.D. Tenn. Case No. 04-13611). Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. NRG ENERGY: Eyed Possible Merger with Mirant Corp. -------------------------------------------------- NRG Energy, Inc., considered a potential merger with Mirant Corporation in 2004 to boost the value of its portfolio, The Wall Street Journal reports. Journal writer Rebecca Smith said NRG talked with a group of Mirant creditors to discuss a merger. Ms. Smith said a person at NRG with knowledge of the situation disclosed that the discussions halted because NRG was not sure of the direction of the California energy market, where both NRG and Mirant operate. Mirant and certain of its affiliates are debtors in Chapter 11 cases pending before the U.S. Bankruptcy Court for the Northern District of Texas. Judge Michael D. Lynn presides over Mirant's cases. According to Ms. Smith, NRG's proposition was revealed in April 2005 during a bankruptcy hearing on Mirant's enterprise value. NRG reportedly eyed Mirant as early as Summer of 2004 and valued Mirant at about $13 billion. Mirant's management said it wasn't aware of the talks. NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million convertible perpetual preferred stock. S&P says the outlook is stable. NANOMAT INC.: Trustee Wants Houston Harbaugh as His Counsel ----------------------------------------------------------- Joseph L. Cosetti, the chapter 11 Trustee in Nanomat, Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for authority to employ Houston Harbaugh, P.C., as his counsel. Houston Harbaugh is expected to: (1) give the Trustee legal advice with respect to the duties and powers in this case; (2) assist the Trustee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor, operations of the Debtor, and any other matter relevant to the case or to the liquidation of the assets of the estate; (3) participate with the Trustee in the formulation of an analysis of the causes of action available and to pursue those causes of action; (4) prepare and review legal documents and make court appearances relative to the collection of assets of the Debtor's Estate; and (5) perform such other legal services as may be required and are in the interest of the creditors. The Houston Harbaugh professionals who'll represent the Chapter 11 trustee are: Professional Hourly Rate ------------ ----------- Carlota M. Bohm, Esq. $260 Gregory A. Harbaugh, Esq. $245 Mary-Jo Rebelo, Esq. $250 Kevin L. Colosimo, Esq. $200 Other Attorneys $125-$250 Donna M. Huntermark (Paralegal) $70 The Firm assures the Court that it does not have any interest materially adverse to the Trustee, the Debtors and the Debtor's estates Headquartered in North Huntingdon, Pennsylvania, Nanomat, Inc. -- http://www.nanomat.com/-- is a leading manufacturer of nanomaterials, powders, and technologies. Nanomat filed for chapter 11 protection on March 18, 2005 (Bankr. W.D. Pa. Case No. 05-23245). Donald R. Calaiaro, Esq., at Calaiaro, Corbett & Brungo, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets and debts from $10 million to $50 million. NATIONAL ENERGY: ET Power's Notice to Settle TransCanada Dispute ---------------------------------------------------------------- NEGT Energy Trading - Power, L.P. and TransCanada Power Marketing Ltd. are parties a Master Agreement dated September 30, 1998. Pursuant to the Master Agreement, the parties entered into several contracts and arrangements, including credit support embodied in: -- an $18,000,000 Guarantee by National Energy & Gas Transmission, Inc., in favor of TransCanada Energy Ltd., and TransCanada Power. -- a $3,000,000 Guarantee by TransCanada PipeLines Limited and TransCanada PipeLine USA Ltd. in favor of ET Power. All executory contracts under the Master Agreement were subsequently terminated. Pursuant to the November 17, 2003, Court order authorizing procedures for settlement of trade contracts, ET Power and TransCanada entered into a settlement agreement and mutual release under which TransCanada will pay $684,223 to ET Power in full and final satisfaction of all claims arising out of the transactions and the Guaranties. The parties will release each other from any liabilities arising out of the Contracts and, to the extent not already released, release the Guaranties. Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston LLP, in Baltimore, Maryland, relates that the Settlement Agreement is advantageous to ET Power because the Settlement Amount approximates the maximum recovery that ET Power could otherwise achieve through litigation, without any of the attendant risks and costs. 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) NOBLE DREW: Files Schedules of Assets & Liabilities --------------------------------------------------- Noble Drew Ali Plaza Housing Corp. filed its Schedules of Assets and Liabilities with the U.S. Bankruptcy Court for the Southern District of New York, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $43,500,000 B. Personal Property 2,658,282 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $10,951,733 E. Creditors Holding Unsecured Priority Claims 4,041,637 F. Creditors Holding Unsecured Nonpriority Claims 4,028,904 ----------- ----------- Total $46,158,282 $19,022,275 Headquartered in Brooklyn, New York, Noble Drew Ali Plaza Housing Corp., filed for chapter 11 protection on March 25, 2005 (Bankr. S.D.N.Y. Case No. 05-11915). When the Debtor filed for protection from its creditors, it listed total assets of $43,500,000 and total debts of $18,639,981. NORTHWESTERN: Magten & Law Debenture Want Confirmation Revoked -------------------------------------------------------------- Magten Asset Management Corporation and Law Debenture Trust Company of New York want the order confirming NorthWestern Corporation and its debtor-affiliates' Second Amended and Restated Plan of Reorganization, and the Debtors' discharge, revoked. If the Court cannot grant that request, Magten Asset and Law Debenture want the disputed claims reserve adequately funded in accordance with the Plan's terms. The Disputed Claims Reserve was set up to protect holders of disputed claims that were left unresolved on Plan's effective date. Magten Asset and Law Debenture also ask the U.S. Bankruptcy Court for the District of Delaware to declare that because of gross negligence or willful misconduct in underfunding the Disputed Claims Reserve, the Debtors and certain of its executives are not entitled to exoneration or exculpation pursuant to Section 10.1 of the Plan. Magten Asset and Law Debenture brought their request to the Court through an adversary proceeding (Adv. Pro. No. 05-50866) commenced against the Debtors and certain of their executives on April 15, 2005. The Plaintiffs Magten Asset holds in excess of 33% of the Series A 8.45% Quarterly Income Preferred Securities or QUIPs. Law Debenture is the indenture trustee for the Unsecured Debt Securities relating to Trust Securities. The Complaint Magten Asset and Law Debenture allege that the Debtors obtained the Court's confirmation order by fraud. Magten Asset and Law Debenture allege that the Debtors knowingly and willfully failed to properly fund a disputed claims reserve in accordance with the provisions of the Plan and the Confirmation Order. The Defendants in the adversary proceeding include: * Michael J. Hanson President (Mar. 2004 to present) Chief Operating Officer (Aug. 2003 to Mar. 2004) Northwestern Corporation * Brian B. Bird Chief Financial Officer (Dec. 2003 to present) Northwestern Corporation * Thomas J. Knapp General Counsel (Nov. 2004 to present) Northwestern Corporation * Roger P. Schrum Vice President Human Resources and Communications (Dec. 2003 to present) Northwestern Corporation The Plaintiffs also alleges that the Defendants breached their fiduciary duty. The Plaintiffs, specifically, ask the Court for declaratory judgment: (1) resolving whether the Defendants acted with willful misconduct or gross negligence with respect to the controversy surrounding the adequacy of the Disputed Claims Reserve. (2) permitting the Plaintiffs to seek damages for the Defendants' fraudulent acts. The Plaintiffs' complaint came on the heels of the collapse of a settlement among the disputing parties. The Settlement That Could Have Ended it All As reported in the Troubled Company Reporter on Feb. 10, 2005, the Debtors reached an agreement in principle, which would have settled all pending legal actions, appeals, claims and disputes by and among NorthWestern, Magten Asset and Law Debenture. The agreement called for NorthWestern to distribute to Law Debenture as the Indenture Trustee for its own benefit and on behalf of Magten and other non-accepting Class 8(b) QUIPS holders * 382,732 shares of NorthWestern common stock, and * 710,449 warrants not yet distributed to Class 8(b) claimants that would have been distributed to those holders had they accepted the Company's confirmed plan of reorganization. Also, NorthWestern was to distribute to the Indenture Trustee for itself and on behalf of Magten and the non-accepting Class 8(b) QUIPS holders $17.4 million worth of common stock (or approximately 870,000 shares) that was set aside for QUIPS holders in reserves established for Class 9 pending litigation claims. Any fees and expenses asserted to be owed to Law Debenture as the Indenture Trustee were be paid from the distribution of the stock and warrants. NorthWestern said it would not make any cash distributions as part of the settlement. That's How the Cookie Crumbles As reported in the Troubled Company Reporter on Feb. 21, 2005, the Plan Committee, the successor to the Creditors' Committee formed during the pendency of the Company's Chapter 11 case, and its major shareholders objected to the settlement pact. Because the settlement will not be going forward and pursuant to the terms of the Company's confirmed Plan of Reorganization, 368,626 shares of NorthWestern common stock that was not distributed to "non-accepting" Class 8(b) creditors will be distributed on a pro rata basis to holders of allowed claims in Class 7 (unsecured note holders) and to holders of allowed claims in Class 9 (general unsecured). Holders of Class 7 claims will receive a supplemental distribution of 324,134 shares of NorthWestern common stock and holders of allowed claims in Class 9 are entitled to the remaining 44,492 shares. Also pursuant to the terms of the reorganization plan, 684,265 warrants that were not distributed to "non-accepting" Class 8(b) creditors have been cancelled. Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/ -- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. The Court entered a written order confirming the Debtors' Second Amended and Restated Plan of Reorganization, which took effect on Nov. 1, 2004. OMNIGRACE THAILAND: Section 304 Petition Summary ------------------------------------------------ Petitioner: Ong Yew Teil and Choa Swee Lin Directors of Omnigrace (Thailand) Ltd. and appointed as "Planners" of Omnigrace (Thaland) Ltd. by the Central Bankrupty Court of Thailand Debtor: Omnigrace (Thailand) Ltd. 641, Moo 5, Kanchanavanit Road Tambun Banpru, Hatyai Songkhla 90250 Thailand Case No.: 05-50143 Type of Business: The Debtor manufactures latex gloves. Prior to Dec. 2003, Omnigrace also manufactured a glove made of nitrile butadiene rubber. The Debtor has no manufacturing facilities, agents, property or other presence in the United States. On Nov. 7, 2002, Tillotson Corporation filed suit against Omnigrace in the United States District Court, Northern District of Georgia, Rome Division (Civ. Action No. 4:02-cv-0261- HLM). In that lawsuit, Tillotson asserts that the Debtor infringed on a patent held by Tillotson in its previous manufacture of nitrile butadiene rubber gloves. The Debtor filed a Petition for Bankruptcy Reorganization in Thailand on Sept. 3, 2004. The Central Bankruptcy Court of Thailand issued an order allowing the Debtor to undergo rehabilitation and business reorganization on Nov. 16, 2004. Like U.S. bankruptcy law, the Bankruptcy Act of Thailand imposes a stay of certain actions upon the Thailand bankruptcy court accepting a bankruptcy petition. The Planners ask the U.S. Court to enjoin continuation of the patent litigation. Section 304 Petition Date: May 3, 2005 Court: Northern District of Georgia (Rome) Petitioners' Counsel: Paul T. Carroll, Esq. Carroll & Associates P.O. Box 276 Rome, GA 30162-0276 Tel: (706) 295-3400 Fax: (212) 909 0666 Tillotson's Counsel: Anthony B. Askew, Esq. Kilpatrick Stockton 1100 Peachtree Street, Suite 2800 Atlanta, Georgia 30309-4530 No financial data was delivered to the U.S. Bankruptcy Court with the Sec. 304 Petition. PC LANDING: Preston Gate's Role Expands to Include Hiring Experts ----------------------------------------------------------------- The U.S. Bankruptcy for the District of Delaware gave PC Landing Corp. and its debtor-affiliates, permission to expand the scope of Preston Gates Ellis & Rouvelas Meeds LLP's engagement to enable the Firm to retain experts in connection with certain disputes in the Debtors' chapter 11 cases. On Oct. 25, 2002, the Debtors filed an application to retain Preston Gates as their special U.S. regulatory counsel. The Court approved the Debtors' application on Dec. 9, 2002. Since then, Preston Gates has been representing the Debtors in connection with permits, licenses, casements and other authorizations and associated agreements related to the operation of the Debtors' businesses. Some of the disputes to be covered by Preston Gates' expanded retention involve disputes with local, state and federal governmental entities related to fee and compliance issues under the Governmental Authorizations and Related Agreements that the Firm is seeking to resolve in a manner favorable to the Debtors. The disputes also involve alleged amounts the Debtors supposedly owe under certain of those Governmental Authorizations and Related Agreements. The Court orders that Preston Gates can include any fees and expenses of any experts it retains pursuant to the Court's Retention Order as expenses in the Firm's fee applications filed with the Court as required by the Administrative Order regarding interim compensation of professionals. To protect and preserve Preston Gates' work product in connection with the disputes it is representing for the Debtors, neither the Firm nor any expert it retains will be required to disclose any time detail regarding any expert's services except to the Court and the Office of the U.S. Trustee. Headquartered in Dallas, Texas, PC Landing Corporation and its debtor-affiliates, own and operate one of only two major trans- Pacific fiber optic cable systems with available capacity linking Japan and the United States. The Debtor filed for chapter 11 protection on July 19, 2002 (Bankr. Del. Case No. 02-12086). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets of over $10 million and estimated debts of more than $100 million. PHOENIX COLOR: S&P Junks $35 Million Second Lien Loan ----------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Phoenix Color Corp. to stable from negative. The outlook revision reflects Phoenix Color's improved liquidity position as a result of a planned new debt structure. In addition, the company's operating performance is expected to improve due to the sale of its unprofitable book manufacturing operations in December 2004. At the same time, Standard & Poor's assigned its 'B' ratings and recovery ratings of '3' to Phoenix Color's proposed $95 million first lien senior secured credit facilities, indicating a meaningful recovery (50%-80%) of principal in the event of a payment default. These facilities consist of a $15 million five- year first lien revolving credit facility and an $80 million six- year first lien term loan facility. Concurrently, Standard & Poor's assigned its 'CCC+' senior secured debt rating and recovery rating of '5' to the company's planned $35 million six and a half-year second lien term loan facility, indicating that second lien lenders would experience a negligible recovery (0%-25%) of principal in the event of a payment default. In addition, Standard & Poor's affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings on the Hagerstown, Maryland- based company. Proceeds from the new $130 million in credit facilities will be used primarily to redeem Phoenix Color's outstanding $105 million 10.375% subordinated notes due February 2009. The 'CCC+' rating on the subordinated debt issue will be withdrawn following its redemption. Phoenix Color's liquidity is adequate. Upon closing of the new credit facilities, the company is expected to have about $13 million available under its $15 million revolving credit facility. Phoenix Color historically has kept less than $1 million in cash on its balance sheet, and the company has used its revolver to fund its working capital needs. In addition, Phoenix Color is expected to generate free operating cash flow. "With the elimination of losses from discontinued operations and capital expenditures in 2005 of about $6 million, the company is expected to generate higher levels of free operating cash flow than in 2004. These funds are expected to be used primarily for debt reduction," said Standard & Poor's credit analyst Sherry Cai. R.I.A. MELBOURNE: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: R.I.A. Melbourne Limited Partnership 3355 Richmond Road, Suite 231A Beachwood, Ohio 44122 Bankruptcy Case No.: 05-16086 Chapter 11 Petition Date: May 3, 2005 Court: Northern District of Ohio (Cleveland) Judge: Arthur I. Harris Debtor's Counsel: Richard A. Baumgart, Esq. Dettelbach, Sicherman & Baumgart 1801 East 9th Street 1100 Ohio Savings Plaza Cleveland, Ohio 44114-3169 Tel: (216) 696-6000 Fax: (216) 696-3338 Total Assets: $9,991,317 Total Debts: $8,056,046 Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Brevard County Tax Collector 2005 Real estate $43,082 P.O. Box 2500 taxes accrued but Titusville, FL 327812500 not yet due and payable (estimated) Carrabba's/Central Florida I Prepaid rent $8,530 Limited Partnership applicable to month 2202 Northwest Shore Blvd, of May 2005 Fifth Floor (net of sales tax) Tampa, FL 33607 Cobb, Cobb & Cobb Prepaid rent $7,566 c/o Cobb Theatres III, LLC applicable to 6 Office Park Circle, month of May 2005 Suite 206 (net of sales tax) Birmingham, AL 35223 Economy Fence Company, Inc. Tenant improvements $6,561 4005 Kings Highway regarding BrightHouse Cocoa, FL 32927 Networks Dina & Fernas Talas Tenant security $5,000 dba Wish Upon A Star deposit 1561 Palm Bay Road Melbourne, FL 32905 BrightHouse Networks LLC Prepaid rent $4,608 2251 Lucien Way applied to month Maitland, FL 32751 of May 2005 (net of sales tax) Florida Department of Sales tax collected $1,762 Revenue 5050 West Tennessee Street Tallahassee, FL 323990120 City of Melbourne Utilities Water and sewer bills Unknown Division 900 East Strawbridge Avenue Melbourne, FL 32901 Florida Power and Light Electricity Unknown P.O. Box 025576 Miami, FL 33102 Four B-Fit, Inc. Lease agreement Unknown 2101 North University Drive Fort Lauderdale, FL 33322 Murad Darawoud Tenant Security $1,166 1573 Palm Bay Road Deposit recedived Melbourne, FL 32905 on 4/15/03 NUI/City Gas Co. of Florida Utilities - Gas Unknown Brevard Division 4180 South U.S. 1 Rockledge, FL 329555309 Pooja Cinemas LLC Listed for precaution- Unknown P.O. Box 51115 lease obligations Sarasota, FL 34232 River Breeze Antiques, Inc. Listed for precaution Unknown P.O. Box 703 -potential lease Grant, FL 32949 obligations RELIANCE GROUP: Court Okays Interparty Agreement with J. Goodman ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave the Official Unsecured Bank Committee and the Official Unsecured Creditors' Committee appointed in Reliance Group Holdings, Inc.'s chapter 11 proceedings, permission to enter into, and perform obligations under an Interparty Agreement with James A. Goodman. The Interparty Agreement will aid in the consummation of the First Amended Plan of Reorganization of Reliance Financial Services Corporation. The principal terms of the Interparty Agreement are: 1) Upon an event of Default, RGH will accept direction from Mr. Goodman: (A) to establish a reserve or to make resources available, to fund Mr. Goodman's indemnification rights under the Employment Agreement, and (B) to honor checks payable by Reorganized RFSC to third parties (other than Mr. Goodman), -- applicable to checks written before the event of Default, and -- Mr. Goodman may not direct the honoring of checks: (x) for more than $300, or (y) payable in an aggregate amount greater than $2,000, and (z) not applicable to checks written before the Event of Default that fund items or obligations of Reorganized RFSC for which Mr. Goodman may incur personal liability. 2) For six months after a Default, RGH will continue to pay Mr. Goodman's expenses, salary and hourly compensation, but not Mr. Goodman's incentive compensation. 3) RGH will have no obligation under the Interparty Agreement to accept direction on any funds other than: (A) the net remaining funds RGH receives by exercising its remedies under the Control Agreements, (B) funds held in Reorganized RFSC's deposit accounts as of the date of direction, (C) Mr. Goodman's rights and recourse to these funds will be limited under the Interparty Agreement. 4) Neither Mr. Goodman nor Reorganized RFSC may issue checks subsequent to a Default or direct that post-Default checks be honored if they draw on funds constituting RGH's Collateral. 5) Except as provided under the Interparty Agreement, (A) the Loan and Security Documents will remain in full force and effect; and (B) the Interparty Agreement will not represent a waiver of any right, power or remedy of RGH under the Loan and Security Documents. 6) Other than Mr. Goodman's right under the Interparty Agreement to assign his rights to his estate, his rights under the Interparty Agreement are non-assignable. 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) SKIN NUVO: U.S Trustee Appoints 7-Member Creditors Committee ------------------------------------------------------------ The United States Trustee for Region 17 appointed seven creditors to serve on the Official Committee of Unsecured Creditors in Skin Nuvo International, LLC, and its debtor-affiliates' chapter 11 cases: 1. Simon Property Group, L.P. Attn: Ronald M. Tucker, Esq. 115 W. Washington Indianapolis, Indiana 46204 Phone: 317-263-2346, Fax: 317-263-7901 2. General Growth Properties Attn: Samuel B. Garber, Esq. 110 North Wacker Drive Chicago, Illinois 60606 Phone: 312-960-5079, Fax: 312-960-5994 3. Intuit, Inc. Attn: Martin D. Goodman Merchants Exchange Bldg. 456 Montgomery St., Ste. 1300 San Francisco, California 94104 Phone: 415-397-7956, Fax: 415-397-6376 4. Stacatto Entertainment Attn: Dimitri Sotikaris and Kimberlie Chambers Phone: 702-277-1777, Fax: 702-277-1782 5. Bob Johnson 569 Stonewood Drive Vacaville, California 95681 Phone: 707-469-0371, Fax: 707-469-0571 6. Mark Karol 2669 Barrington Avenue #104 Los Angeles, California 90064 Phone: 310-694-0804 7. Mohan Kinra 1154 Eagle Cliff Ct. San Jose, California 95120 Phone: 408-406-2821, Fax: 408-323-1059 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 Henderson, Nevada, Skin Nuvo International, LLC, dba Nuvo International, LLC, and dba A&E Aesthetics, LLC -- http://www.nuvointernational.com/-- specializes in offering progressive anti-aging treatments and top quality products and the first medical cosmetic company to launch a chain of retail skin care clinics in shopping malls throughout the United States. Keith M. Aurzada, Esq., and Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Fled LLP represent the Debtors in their restructuring efforts. The Company and its debtor-affiliates filed for chapter 11 protection on March 7, 2005 (Bankr. D. Nev. Case No. 05-50463). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. SOUTHWEST RECREATIONAL: Trustee Wants to Sell SRI Stock for $50K ---------------------------------------------------------------- Ronald L. Glass, the chapter 11 Trustee of Southwest Recreational Industries, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the Northern District of Georgia, Rome Division, for authority to sell any and all outstanding stock or equity interests of the Debtors' Australian subsidiary SRI Sports Pty Ltd. to StarPoint Capital LLC for $50,000. Southwest Recreational conducts its business operations in Australia through SRI Sports. Southwest is the sole shareholder of SRI. Mr. Glass learned that SRI's books and records can't be located. Mr. Glass has also learned that SRI's only significant asset is $100,000 of cash on hand. Mr. Glass first thought of dissolving SRI, but didn't push through with it because legal fees would reach $50,000 to $75,000. Mr. Glass instead settled to sell the estate's equity interests in SRI for $50,000. Mr. Glass relates that the Australian subsidiary owes $950,000 to Southwest Recreation. Headquartered in Leander, Texas, Southwest Recreational Industries, Inc. -- http://www.srisports.com/-- designs, manufactures, builds and installs stadium and arena running tracks for schools, colleges, universities, and sport centers. The company filed for chapter 11 protection on February 13, 2004 (Bankr. N.D. Ga. Case No. 04-40656). Jennifer Meir Meyerowitz, Esq., Mark I. Duedall, Esq., and Matthew W. Levin, Esq., at Alston & Bird, LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed $101,919,000 in total assets and $88,052,000 in total debts. TIAA STRUCTURED: Moody's Junks $35M Class C Senior Secured Notes ---------------------------------------------------------------- Moody's Investors Service had taken rating action with respect to three classes of notes issued by TIAA Structured Finance CDO I, Ltd. Moody's lowered the ratings of two classes of notes: * to A1 (from Aa3), the U.S. $27,500,000 Class B Floating Rate Senior Secured Notes, due 2035; and * to C (from B1), the U.S. $35,000,000 Class C Fixed Rate Senior Secured Notes, due 2035. According to Moody's, both notes were under review for downgrade at the time of this rating action and the Issuer's Class B Notes would remain under review for further possible downgrade. Moody's had placed under review for downgrade the Issuer's U.S. $387,500,000 Class A-1 Floating Rate Senior Secured Notes, due November 2030 and U.S. $30,000,000 Class A-2 Fixed Rate Senior Secured Notes, due November 2030 (both tranches currently rated Aaa). This transaction is closed on December 14, 2000. According to Moody's, its rating action results primarily from continued significant deterioration in the weighted average rating factor of the collateral pool and overcollaterlization ratios. Moody's noted that, as of the most recent monthly report on the transaction, the weighted average rating factor of the collateral pool is 1495 (500 limit), that over 20% of the collateral pool currently has a Moody's rating of below Baa3 (10% limit) and that the Class C overcollateralization ratio is currently 89.85% (101.5% test). Issuer: TIAA Structured Finance CDO I, Ltd. Rating Action: Downgrade Class Description: U.S. $27,500,000 Class B Floating Rate Senior Secured Notes, due 2035 Prior Rating: Aa3 (under review for downgrade) Current Rating: A1 (under review for downgrade) Class Description: U.S. $35,000,000 Class C Fixed Rate Senior Secured Notes, due 2035 Prior Rating: B1 (under review for downgrade) Current Rating: C Rating Action: Review For Downgrade Class Description: U.S. $387,500,000 Class A-1 Floating Rate Senior Secured Notes, due November 2030 U.S. $30,000,000 Class A-2 Fixed Rate Senior Secured Notes, due November 2030. Prior Rating: Aaa Current Rating: Aaa (under review for downgrade) TV AZTECA: Asks Shareholders to Scrap U.S. Stock Trading -------------------------------------------------------- TV Azteca, S.A. de C.V. (BMV: TVAZTCA; NYSE: TZA; Latibex: XTZA), one of the two largest producers of Spanish language television programming in the world, will submit for approval of its shareholders at a Company Shareholders Meeting, the usefulness of continuing with the program of American Depositary Shares in the U.S. and that trades on the New York Stock Exchange. The Company believes that notable cases of non-compliance with regulatory framework in the recent past, such as Worldcom, Enron, Adelphia or Parmalat, generated an overregulated securities market in the United States. With this, issuers have been obligated to divert time and resources to comply with excessive regulation, affecting the efficient management of business. For foreign private issuers in the United States, the excessive regulation considerably increases current costs and expenses, as well as legal risks, and its benefits are highly questionable. Based on these considerations, TV Azteca's shareholders will consider the impact of the costs incurred on TV Azteca's business, as well as the present and future benefits that may be derived from its ADR program. In the event the Shareholder Meeting decides to terminate the ADR program, the Company will notify investors and will give notice of such decision to The Bank of New York (the Depositary). Pursuant to the provisions of Section 6.02 of the Deposit Agreement with the Depositary, the Company may terminate the Deposit Agreement. In the event that the Shareholders Meeting decides to terminate with the ADR program: a) the Company would give notice to the NYSE and the Depositary of such resolution; b) the Depositary would give notice to ADR holders; c) the Company would proceed to amend its Form F-6 (ADR registry) reducing the number of ADRs issued to zero and, d) the Company would file with the SEC the amended Form F-6. In this case, the exchange of ADRs in the market will remain in place for the 30 days following the termination of the Deposit Agreement. During this time, the ADR holders will be able to continue exchanging their ADRs for Certificados de Participacion Ordinaria (CPOs) currently traded in the Bolsa Mexicana de Valores (the Mexican Stock Exchange). After concluding the Deposit Agreement, the NYSE should suspend trading of ADRs in the market, notify the SEC of the termination and request permission from the SEC to delist the ADRs. In the event the delisting of the Company's ADRs, the SEC will make public notice of such fact. In that event, the ADR holders will have two available options during the time period established by the Shareholder Meeting: 1) instruct the Depositary to exchange their ADRs into CPOs or, 2) convert the ADRs into CPOs and request their sale. In the event that TV Azteca has fewer than 300 holders of the Company's ADRs that are US residents, the Company may request that the SEC cancel the registration of its ADRs and, in this case, the reporting obligations and other US securities regulations would no longer be applicable to the Company. It should be noted that registration with the SEC and the listing in the NYSE are separate events, and therefore in the case of an eventual delisting from the NYSE, the Company will continue to comply with its obligations to report information to the SEC as long as it is registered with such authorities. The trading of the Company's securities in the Mexican Stock Exchange will continue until the Shareholders Meeting makes a decision on the issue. If the Shareholders Meeting decides against terminating the Company's ADR program, the Company would continue to trade its securities in the United States market as it has until now and the ADR holders would maintain their current rights. In any event, the Company will inform the public in a timely manner of any relevant events that may occur. About the Company TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing US Hispanic market, and http://www.Todito.com/-- an Internet portal for North American Spanish speakers. * * * As reported in the Troubled Company Reporter on Jan. 11, 2005, the recent U.S. Securities and Exchange Commission filing of civil fraud charges against TV Azteca S.A. de C.V. and some of its officers will likely result in litigation and the continuation of legal risks for TV Azteca over the near future, according to Fitch Ratings. Fitch has incorporated a measure of litigation risk into the ratings of TV Azteca since early 2004 after the SEC launched an investigation into several related party transactions between Mexican wireless provider Unefon, a subsidiary 46.5% owned and controlled by TV Azteca until its spin-off last year, and investment company Codisco, co-owned by Ricardo Salinas Pliego, chairman of TV Azteca, and Moises Saba, chairman of Unefon. Litigation risk also includes several pending shareholder lawsuits. Independent of the SEC announcement and following the prepayment of all of TV Azteca's international debt securities on Dec. 23, 2004, Fitch has affirmed and withdrawn the 'B+' international scale foreign and local currency senior unsecured ratings of TV Azteca as well as the 'B+' rating of TV Azteca's $300 million 10.5% senior notes due 2007. The prepayment was funded with proceeds from a $125 million bank loan and a $175 million issuance of peso-denominated certificados bursatiles. Fitch rates the structured certificados bursatiles issuance 'AA' on the Mexican national rating scale and will continue to monitor this security. TV Azteca is the second-largest broadcasting company in Mexico. The company operates two national television channels, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca is controlled by holding company Azteca Holdings, which is not rated by Fitch. TECHNOLOGY SYSTEMS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Technology Systems International, Inc. A Nevada Corporation 3550 North Central Avenue, Suite 1200 Phoenix, Arizona 85012 Bankruptcy Case No.: 05-07799 Type of Business: TSI develops proprietary, wireless Radio Frequency IDentification (RFID), location and tracking technology, trade named "TSI PRISM," that's used for area security management, primarily in the correctional facilities market. The Debtor previously filed for chapter 11 on Dec. 3, 2003 (Bankr. D. Ariz. Case No. 03-21187) and emerged under a plan confirmed on Dec. 1, 2004. See http://www.tsilink.com/ Chapter 11 Petition Date: May 3, 2005 Court: District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Brian Sirower, Esq. Quarles & Brady Streich Lang LLP Two North Central, Suite 200 Phoenix, Arizona 85004-2391 Tel: (602) 229-5416 Fax: (602) 229-5690 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. TEMBEC INC.: Weak Earnings Spur S&P's Negative Outlook ------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on pulp and lumber producer Tembec Inc. and its subsidiary, Tembec Industries Inc., to negative from stable following the release of the company's second-quarter 2005 results. At the same time, Standard & Poor's affirmed its 'B' long-term corporate credit rating on Tembec and its subsidiary. "Liquidity is adequate, but Tembec's earnings and guidance for the remainder of the year continue to be exceptionally weak," said Standard & Poor's credit analyst Daniel Parker. Excluding a negative C$126 million seasonal change in working capital, Tembec had negative free cash flow of about C$12 million in the quarter. "We expect the working capital to turn positive in the next two quarters and with more than C$225 million in current availability, the company has enough liquidity to ride out multiple quarters of weak cash generation. We believe they will maintain full access to their bank lines, as we do not expect them to have difficulty complying with the covenants," Mr. Parker added. Nevertheless, Standard & Poor's believe the company will have difficulty generating enough cash from operations to cover its interest and maintenance capital spending requirements in 2005, which is clearly not sustainable in the medium term. Tembec should be generating free cash flow at this point in the cycle, with fairly strong prices for lumber, pulp, and paper. The company would benefit tremendously from a refund of the C$270 million in softwood lumber duties it has paid, but the exact amount (if any), and timing of a potential refund is difficult to predict, and might not occur this year. The ratings on Tembec reflect its: (1) highly volatile earnings, (2) very aggressive debt levels, and (3) a below-average cost position. These risks are partially offset by: (1) adequate liquidity, (2) a light debt maturity profile, and (3) significant operating leverage that is capable of generating strong cash flow at the peak of the cycle, as well as by some revenue diversity. Standard & Poor's expects earnings and cash flow to be weak in the next year. The debt load is onerous, and the company will likely be unable to reduce debt in the near term through internally generated cash. There are uncertainties surrounding several major factors that affect Tembec's results, specifically: (1) the value of the Canadian dollar; (2) the strength of lumber prices; (3) the strength of pulp prices; and (4) the resolution of the softwood lumber dispute, including any refund of duties. Even with optimistic assumptions, Standard & Poor's does not expect the company will be able to materially improve its credit profile this year. The outlook is negative. Although credit measures will remain very weak in 2005, Tembec has sufficient liquidity to manage through the difficult conditions in the near term. The ratings could be lowered if liquidity were to worsen, if pulp and lumber prices were to fall materially, or if the Canadian dollar appreciated further. If Tembec cannot improve its profitability, the company will need to look at other strategic options to reduce debt. THISTLE MINING: Affected Creditors Approve Reorganization Plan -------------------------------------------------------------- The requisite majority of Thistle Mining Inc.'s two affected creditors classes: * the Meridian creditors -- consisting of holders of claims in respect of Thistle's senior secured indebtedness; and * the Noteholder creditors -- consisting of holders of claims in respect of Thistle's senior secured indebtedness, approved the Company's plan of compromise and reorganization dated March 24, 2005, pursuant to the Companies' Creditors Arrangement Act. The creditors approved the Plan on May 3, 2005. Thistle will ask the Ontario Superior Court of Justice to sanction the Plan at a hearing to be held on May 10, 2005 at 10:00 a.m. The hearing will take place at 393 University Avenue in Toronto, Ontario. Any person wishing to appear at the hearing but who is not on the service list is required to file with the Court and serve on the solicitors for Thistle, Meridian Capital Limited, PricewaterhouseCoopers Inc., as monitor, and the other parties on the service list a notice of intention to appear by no later than 5:00 p.m. on May 5, 2005. At this time, it is expected that Thistle will emerge from its restructuring process in late May or early June 2005. Thistle Mining (TSX: THT and AIM: TMG) -- http://www.thistlemining.com/-- says its goal is to become one of the fastest gold mining growth operations in the world. Thistle has focused on acquiring companies with established reserves and will not be developing green field sites. The company operations in South Africa and Kazakhstan are in production, while the Masbate project in the Philippines is forecast to commence production in the latter half of 2005. The Company obtained an order on January 7, 2005, to commence Thistle's restructuring under the Companies' Creditors Arrangement Act. TORCH OFFSHORE: Inks Settlement Pact with ExxonMobil Corporation ---------------------------------------------------------------- Torch Offshore, L.L.C., and Torch Express, L.L.C., entered into a Contruction Contract with ExxonMobil Corporation on October 13, 2004. Pursuant to the terms of the contract, Torch agreed to install a pipeline for ExxonMobil in Mobile Bay, Alabama. The contract expired on January 6, 2005. Upon termination of the contract, Torch Offshore calculated ExxonMobil owed it some money. ExxonMobil disputed the Debtors calculations. The parties engaged in arms' length negotiations to resolve their dispute and hammered out a settlement agreement providing: * that ExxonMobil will pay Torch Offshore $639,480; * that Torch Offshore will turnover any unused materials for the project to ExxonMobil; and * for mutual releases. Accordingly, Torch Offshore asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to approve the settlement. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $201,692,648 in total assets and $145,355,898 in total debts. TORCH OFFSHORE: Wants to Sell Vessels to Cal Dive for $92 Million ----------------------------------------------------------------- Since Torch Offshore, Inc., and its debtor-affiliates filed for chapter 11 protection, they have been reviewing restructuring options to maximize recovery for all creditors. The Debtors' inability to generate a positive cash flow led them to the decision to sell substantially all of their assets. The Debtors' own 11 vessels: * Midnight Express * Midnight Brave * Midnight Carrier * Midnight Dancer * Midnight Eagle * Midnight Fox * Midnight Gator * Midnight Rider * Midnight Star * Midnight Wrangler * Sapphire and they're draining resources as operating costs escalate and because of other adverse operating conditions. In addition, the Debtors don't have sufficient cash to drydock these vessels. Further, three of the Debtors' vessels (Express, Wrangler and Eagle) were seized by the U.S. Marshal as a result of actions initiated by certain creditors. The Debtors retained Raymond James & Associates, Inc., as their investment banker and to solicit offers for the vessels and other assets. Raymond James negotiated for the sale to Cal Dive of all 11 vessels and related furniture, fixtures, furnishings and equipment for $92 million. The deal is expected to close by June 30, 2005. An auction to solicit for higher and better offers will be held on June 2, 2005, subject to the U.S. Bankruptcy Court for the Eastern District of Louisiana's approval. Cal-Dive is entitled to a $1,878,500 break-up in the event that it is not the successful bidder. Competing bids, if any, must be submitted by May 27 to: Torch Offshore Inc. Attn: David Phelps and Robert Fulton 401 Whitney Avenue, Suite 400 Gretna, Louisiana 70056 Heller, Draper, Hayden, Patrick & Horn, LLC Attn: Jan M. Hayden, Esq. and William H. Patrick, III, Esq., 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130 King & Spalding LLP Attn: Lawrence A. Larose, Esq. and George B. South, Esq. 1185 Avenue of the Americas New York, New York 10036-4003 Raymond James & Associates Attn: Raj Singh 250 Park Avenue, 2nd Floor New York, New York 10177 Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $201,692,648 in total assets and $145,355,898 in total debts. TORCH OFFSHORE: Wants Exclusive Period Extended Through August 5 ---------------------------------------------------------------- Torch Offshore, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Louisiana for an extension, through and including August 5, 2005, of the time within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, through Oct. 3, 2005. The Debtors give the Court four reasons that militate in favor of the extension: a) the Debtors' bankruptcy cases are large and complex, with secured claims exceeding $120 million and trade claims exceeding $25 million; b) since the Petition Date, the Debtors and their professionals have devoted substantial time and effort to stabilize their businesses, including resolving customer concerns regarding subcontractor liens and handling employee issues; c) the Debtors' and their professionals' ability to formulate a Chapter 11 Plan have been delayed because the Official Committee of Unsecured Creditors has filed several motions that have resulted in extended contested hearings relating to discovery, retention of professionals, the appointment of a chapter 11 trustee, approval of DIP financing, and the payment of professionals; and d) the Debtors are still focused on completing the sale of certain of their assets to Cal Drive International, Inc., which is expected to be completed by June 2005. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $201,692,648 in total assets and $145,355,898 in total debts. UAL CORP: Wins Court Ruling on Air Wisconsin Transition Pact ------------------------------------------------------------ As reported in the Troubled Company Reporter on Apr. 21, 2005, UAL Corporation and its debtor-affiliates sought the U.S. Bankruptcy Court for the Northern District of Illinois' authority to: a) enter into a Transition Agreement with Air Wisconsin Airlines Corporation; b) settle and resolve claims with Air Wisconsin; c) grant mutual general releases with Air Wisconsin; d) assume the Amended United Express and ground handling agreements; and f) file the Term Sheet, Transition Agreement and related documents under seal. The Debtors also asked Judge Wedoff to dismiss or deny with prejudice the Committee's request to access the Additional Payments. Creditors Committee Objects The Official Committee of Unsecured Creditors wants the Debtors' request denied because the Transition Agreement exposes the Debtors' estates to business risks and expenses, and is not in its the best interests. The Debtors are giving up too much and receiving too little, Fruman Jacobson, Esq., at Sonnenschein, Nath & Rosenthal, in Chicago, Illinois, argues. The Debtors will procure modest savings and the benefits of a planned transition with Air Wisconsin. However, the Debtors risk expensive serial transitions in the future by allowing Air Wisconsin to select the locations it will provide ground handling service. The Debtors relinquish too much control by granting Air Wisconsin the unilateral right to terminate the ground handling service at its sole discretion. The insubstantial benefits the Debtors will receive are offset by increased obligations they will assume, including the purchase of Air Wisconsin's equipment and the assumption of its liabilities under agreements with third parties. Under the Transition Agreement, Air Wisconsin garnered favorable terms to transition its ground handling in Chicago to the Debtors. The transition will follow a schedule so the Debtors can phase in their own ground handling operation. Air Wisconsin granted the Debtors a negligible fee reduction that decreases over time as the Debtors assume the ground handling. Mr. Jacobson notes that under the Agreement, the Debtors may be compelled to purchase unneeded ground handling support equipment. In addition, the Debtors will take over Air Wisconsin's ground handling at Denver in exchange for a modest reduction in fees. Air Wisconsin will continue to provide "above the wing" ground handling at Dulles, will take on ground handling at 19 spoke cities and transition out of five other locations. Air Wisconsin can force the Debtors to purchase its ground handling equipment at five locations. At 12 other locations, Air Wisconsin can require the Debtors to assume its obligations under unknown airline operating agreements, use agreements and facilities leases -- some of which the Debtors may not have ever seen. If Air Wisconsin terminates the Agreement, the Debtors lose the modest savings and incur the costs of transition. This does not satisfy the Debtors' business needs and actually puts the Debtors in peril. Meanwhile, Air Wisconsin is freed through releases from any restraint to pursue its business alliance with US Airways, which will be funded by the Debtors' $90,000,000 in overpayments. The facts make it clear that the Transition Agreement "is not an exercise of the Debtors' sound business judgment or a settlement that serves the estates' best interests," Mr. Jacobson says. Debtors Say the Committee is Confused The Debtors clarify that they would like to recover the entire $90,000,000 from Air Wisconsin and avoid the knife's edge separation that would disrupt its operations. Unfortunately, the risk and uncertainty associated with litigation render that scenario highly unlikely. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, tells the Court that the Debtors approached their negotiations with Air Wisconsin in a realistic, business-oriented manner to eliminate the risk of a tortured parting with an important partner. The Debtors had to weigh the benefits of facilitating an orderly transition of flight and ground handling services against the costs of settling their $90,000,000 claim against Air Wisconsin. The Debtors would like to pursue the $90,000,000 in Additional Payments, but the attendant uncertainties are significant. It would likely take over a year to resolve any litigation, considering appeals. But the Debtors need to transition out of the Air Wisconsin services now. The Debtors cannot make Air Wisconsin wait out the litigation and enter into a transition agreement later. The results of litigation are far from guaranteed. Adding further difficulty, the legal burden would be placed on the Debtors to demonstrate that the Additional Payments were unenforceable penalties. By entering into the Transition Agreement now, the Debtors preserve an orderly and less costly transition with Air Wisconsin, Mr. Sprayregen says. The Debtors appreciate the Committee's efforts. The Committee seeks to enhance the Debtors' recovery and improve their business situation. However, the Committee's goals are not feasible. Mr. Sprayregen assures the Court that the Transition Agreement is a fair and reasonable compromise that provides substantial benefits to both parties. The Committee is correct in that Air Wisconsin will receive benefits from the Transition Agreement. However, the Committee should focus on what the Debtors receive, and on this score, the Debtors receive a tremendous benefit from the Transition Agreement. Air Wisconsin Supports the Agreement The Transition Agreement is the result of difficult, arm's-length negotiations between the Debtors and Air Wisconsin. Peter C. Blain, Esq., at Reinhart, Boerner & Van Deuren, in Milwaukee, Wisconsin, notes that the parties had to find solutions to their disputes to phase out their relationship with minimal disruption to their respective businesses and customers. The Committee's objection is devoted to complaining that the Transition Agreement affords benefits to Air Wisconsin as well as the Debtors. "Apparently, the Committee believes that arm's- length compromises of legitimate disputes between a debtor and another party must be one-sided to be approved," Mr. Blain says. The Transition represents hard-fought, arm's-length negotiations between adverse parties. The Debtors had no incentive to give up anything more than necessary to get what they wanted. Mr. Blain maintains that the Committee's objection is really another effort to recover the $90,000,000 in Additional Payments. However, the Committee stands no chance of prevailing on its claim. A court cannot reform the economic terms of a contract. The Committee's objection "makes no sense except as an attempt to extract nuisance value from AWAC," states Mr. Blain. Creditors will benefit when the Debtors realize reduced transition costs, a smooth transition, and new, lower-cost, permanent arrangements for the services Air Wisconsin currently provides. * * * The Hon. Eugene Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois finds that the Air Wisconsin deal is beneficial to the Debtors' estate and should be approved. The leases for aircraft bearing Tail Nos. N405AW, N406AW, N407AW, N408AW and N409AW will remain prepetition agreements. The Debtors must provide 180 days' written notice to Air Wisconsin before terminating or rejecting the aircraft leases. The Ground Handling Agreement, dated April 15, 2005, is deemed assumed. On the Effective Date, Air Wisconsin will refund the Debtors any Additional Payments made within the 49 days prior to April 6, 2005, plus $6,500,000, as well as any Additional Payments made after the filing of the Debtors' request. The Creditors Committee's request and related claims are withdrawn with prejudice. 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) U.H. HOUSING: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: U.H. Housing Corp. aka U.H. Housing Corporation aka United Hospital Housing Corporation c/o United Hospital Medical Center 406 Boston Post Road Port Chester, New York 10573 Bankruptcy Case No.: 05-22864 Type of Business: The Debtor owns an apartment building, with 132 units having 440 rental rooms. The building is adjacent to New York United Hospital Medical Center. UH Housing was organized for the purpose of providing reasonable and convenient housing and auxiliary facilities for staff members and employees of UHMC and their immediate families. The Debtor is an affiliate of UHMC, which filed for chapter 11 protection on December 17, 2004 (Bankr. S.D.N.Y. Case No. 04-23889). A summary of UHMC's chapter 11 filing appeared in the Troubled Company Reporter on December 20, 2004. Chapter 11 Petition Date: May 3, 2005 Court: Southern District of New York (White Plains) Debtor's Counsel: Lawrence M. Handelsman, Esq. Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Tel: (212) 806-5426 Financial Condition as of March 31, 2005: Total Assets: $2,678,943 Total Debts: $2,067,704 The Debtor has no unsecured creditors who are not insiders. UNITED HOSPITAL: Gets Interim Nod on Kimco/SB DIP Financing Deal ---------------------------------------------------------------- The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York gave New York United Hospital Medical Center permission, on an interim basis: a) to obtain post-petition financing by entering into a post- petition financing agreement with Kimco Capital Corporation and SB Capital Group LLC; and b) to grant mortgages, security interests, liens and superpriority claims to Kimco Capital, as Administrative Agent for the Post-Petition Lenders. Pre-Petition Debt and Use of DIP Financing The Debtor owes $9,911,784.34 under a Pre-Petition Loan Agreement to the Dormitory Authority of the State of New York. As of March 31, 2005, the outstanding Dormitory Authority DIP Obligations totaled approximately $2 million. The Debtor will use the proceeds of the DIP Loans to fund the orderly liquidation of its assets and to service its pre-petition outstanding obligations under the Pre-Petition Loan Agreement with the Dormitory Authority. Post-Petition Financing and Adequate Protection Judge Hardin allows the Debtor to borrow up to $2,250,000 under the Post-Petition Agreement dated April 28, 2005, between the Debtors and Kimco Capital, SB Capital and the Post-Petition Lenders. The Debtor is also permitted to obtain up to $1 million of loans from the Dormitory Authority in accordance with the Dormitory Authority DIP Loan Agreement. To adequately protect their interests, Kimco Capital and the Post- Petition Lenders are granted valid, binding, enforceable and perfected first-priority Liens in all post-petition owned or acquired properties and assets of the Debtor. To adequately protect its interests, the Dormitory Authority is granted valid, binding, enforceable and perfected Liens on all of the Debtor's Post-Petition Collateral to secure an amount equal to the sum of the aggregate diminution of value, if any, of the Dormitory Authority's Post-Petition Collateral. Headquartered in Port Chester, New York, New York United Hospital Medical Center is a 224-bed, community healthcare provider and a member of the New York-Presbyterian Healthcare System, serving several Westchester communities, including Port Chester, Rye, Mamaroneck, Rye Brook, Purchase, Harrison and Larchmont. The Company filed for chapter 11 protection on December 17, 2004 (Bankr. S.D.N.Y. Case No. 04-23889). Lawrence M. Handelsman, Esq., at Stroock & Stroock & Lavan LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $39,000,000 and total debts of $78,000,000. UNUMPROVIDENT CORP: Earns $152.2 Million of Net Income in 1st Qtr. ------------------------------------------------------------------ UnumProvident Corporation (NYSE: UNM) reported its results for the first quarter of 2005. The Company reported net income of $152.2 million for the first quarter of 2005, compared to a net loss of $562.3 million for the first quarter of 2004. Included in the results for the first quarter of 2005 are net realized after tax investment losses of $2.1 million, compared to net realized after tax investment gains of $16.1 million in the first quarter of 2004. Included in net realized after tax investment gains and losses are after tax gains of $1.2 million in the first quarter of 2005 and $26.6 million in the first quarter of 2004 reflecting the increase in the fair value of DIG Issue B36 derivatives. Also included in the results for the first quarter of 2004 is the impact of the restructuring of the Closed Block Individual Income Protection business, which reduced results $967.0 million before tax and $701.0 million after tax. The restructuring charges included a charge for reserve strengthening of $110.6 million before tax and the write-off of intangible assets of $856.4 million before tax. The first quarter of 2004 also includes income from discontinued operations totaling $7.0 million after tax. Income from continuing operations was $154.3 million in the first quarter of 2005, compared to $115.6 million in the first quarter of 2004, excluding the net realized after tax investment gains and losses and the first quarter of 2004 restructuring charges. The Company believes operating income or loss, a non- GAAP financial measure which excludes realized investment gains and losses, is a better performance measure and a better indicator of the profitability and underlying trends in the business. Realized investment gains and losses are dependent on market conditions and general economic events and are not necessarily related to decisions regarding the Company's underlying business. For a reconciliation to the most directly comparable GAAP measures, refer to the attached digest of earnings. Also included in the first quarter of 2005 is the release of $32.0 million of income tax liabilities that relate primarily to interest on the timing of expense deductions. The $32.0 million ($0.10 per diluted common share) increase to net income is reported as a reduction to income tax expense in the quarter. "Although our operating results in the first quarter improved over the year ago performance, they did not meet our expectations," said Thomas R. Watjen, president and chief executive officer. "The majority of our operations met or exceeded our plans, but that was more than offset by adverse experience in our U.S. group income protection claims operations, which we believe has been temporarily disrupted by the implementation of changes made in response to the multistate regulatory settlement agreements we entered into at year-end and other process improvement initiatives undertaken in 2004. I believe we are seeing the effect on our claims operations of trying to absorb a considerable amount of change in a short period of time. We anticipated some disruption in claim processing and in the timing of claim decisions, but we experienced more in the first quarter than we expected. I believe that we will gradually restore our performance to more acceptable levels, and I am working very closely with our benefits area management team to assure that we are taking the necessary actions to improve performance while continuing to fully comply with our settlement agreements and maintaining the level of quality desired." Results by Segment In the following discussions of the Company's segment operating results, "operating revenue" excludes net realized investment gains and losses. "Operating income" or "operating loss" excludes income tax, net realized investment gains and losses, and results of discontinued operations. The Income Protection segment reported operating income of $79.7 million in the first quarter of 2005, compared to $74.3 million in the first quarter of 2004. Within the segment, the group income protection line reported operating income of $42.3 million in the first quarter of 2005, compared to $30.3 million in the prior year first quarter. The benefit ratio for the group income protection line was 90.5 percent in the first quarter of 2005, compared to 89.4 percent in the first quarter of 2004. Claim recoveries and the timing of claim decisions were adversely impacted by disruption associated with the implementation of the organizational and procedural changes the Company made in response to the multistate regulatory settlement agreements entered into during the fourth quarter of 2004 and other process improvement initiatives. The Company currently believes this disruption is temporary and will not impact its long-term expectation for claim recovery rates. However, if the operational improvement the Company has projected occurs at a slower rate, there could be some additional costs in its claim operations over the next several quarters. Submitted incidence was generally flat in the first quarter of 2005 compared to the experience of the first quarter of 2004 and slightly higher as seasonally expected compared to the fourth quarter of 2004. The results in this business line also reflect improved earnings in the Company's U.K. subsidiary, Unum Limited, and in its U.S. group short-term income protection line of business. Also within this segment, the recently issued individual income protection line of business reported operating income of $21.2 million in the first quarter of 2005, compared to operating income of $29.3 million in the first quarter of 2004. The decline in earnings primarily reflects lower net investment income and a slight increase in the benefit ratio relative to the prior year first quarter results. The long-term care line, which includes the results of both group and individual long-term care, reported operating income of $13.0 million in the first quarter of 2005, compared to $11.0 million in the first quarter of 2004. Finally, the disability management services line of business reported operating income of $3.2 million in the first quarter of 2005, compared to $3.7 million in the first quarter of 2004. Premium income for the Income Protection segment increased 0.4 percent to $1,028.8 million in the first quarter of 2005, compared to $1,025.1 million in the first quarter of 2004. Within this segment, premium income for the group income protection line declined 1.7 percent to $773.9 million in the first quarter of 2005 from $786.9 million in the first quarter of 2004. Premium income for the recently issued individual income protection line increased 8.2 percent to $140.4 million in the first quarter of 2005 from $129.8 million in the first quarter of 2004. Finally, premium income for the long-term care line increased 5.6 percent to $114.5 million in the first quarter of 2005 from $108.4 million in the first quarter of 2004. New annualized sales (submitted date basis) for group long-term income protection fully insured products declined 15.8 percent to $54.8 million in the first quarter of 2005 from $65.1 million in the first quarter of 2004. The decline was attributable to lower sales at Unum Limited in the U.K. which offset a slight increase in new sales in the U.S. operations. New annualized sales (submitted date basis) for group short-term income protection fully insured products declined 37.7 percent to $16.0 million in the first quarter of 2005 from $25.7 million in the first quarter of 2004 due to declines in the overall employer market segment sales. New annualized sales (paid for basis) for recently issued individual income protection increased 3.7 percent to $30.5 million in the first quarter of 2005 from $29.4 million in the first quarter of 2004. Premium persistency in the Company's U.S. group long-term income protection business was 82.6 percent for the first quarter of 2005, compared to 84.8 percent for the full year 2004 and slightly higher than the Company's previous guidance. This decline is consistent with the Company's efforts to re-price portions of its in-force business in order to improve its profitability. Persistency in the Company's group short-term income protection line of business was 78.3 percent for the first quarter of 2005, compared to 80.6 percent for full year 2004 and slightly below the Company's previous guidance. The Life and Accident segment reported operating income of $71.3 million in the first quarter of 2005, compared to $56.9 million in the first quarter of 2004. The improved performance is attributable to lower paid incidence levels relative to the year ago experience. Premium income in this segment declined 4.0 percent to $470.4 million in the first quarter of 2005, compared to $490.1 million in the first quarter of 2004. New annualized sales (submitted date basis) in the group life line totaled $47.5 million in the first quarter of 2005, compared to $39.6 million in the first quarter of 2004. New annualized sales in the accidental death & dismemberment line of business totaled $3.4 million in the first quarter of 2005, compared to $2.5 million in the year ago quarter. New annualized sales in the brokerage voluntary life and other lines totaled $36.8 million in the first quarter of 2005, compared to $35.6 million in the first quarter of 2004. Premium persistency in the Company's U.S. group life line of business was 72.5 percent for the first quarter of 2005, compared to 84.0 percent for full year 2004 and below the Company's previous guidance. The decline in persistency was due to higher terminations of some larger cases which had been targeted for significant rate increases. The Colonial segment reported operating income of $43.8 million in the first quarter of 2005, compared to $36.6 million in the first quarter of 2004. The benefit ratio for this segment improved to 53.8 percent in the first quarter of 2005, compared to 55.5 percent in the first quarter of 2004, primarily due to a lower benefit ratio for the life product line. Premium income for this segment increased 6.8 percent to $193.5 million in the first quarter of 2005, compared to $181.1 million in the first quarter of 2004. New annualized sales in this segment declined 0.6 percent to $61.3 million in the first quarter of 2005 from $61.7 million in the first quarter of 2004. The Individual Income Protection - Closed Block segment reported operating income of $23.1 million in the first quarter of 2005, compared to a loss of $923.8 million in the first quarter of 2004. Included in the segment results for the first quarter of 2004 are the charges related to the restructuring of this segment. Recovery trends in this segment were generally lower in the first quarter of 2005 relative to the first quarter of 2004, reflecting the implementation of the claims management changes during the quarter. Premium income for this segment was $242.0 million in the first quarter of 2005, compared to $251.3 million in the first quarter of 2004. The Other segment, which includes results from products no longer actively marketed, reported operating income of $6.1 million in the first quarter of 2005, compared to $7.1 million in the first quarter of 2004. The Corporate segment, which includes investment earnings on corporate assets not specifically allocated to a line of business, corporate interest expense, and certain other corporate expenses, reported a loss of $39.2 million in the first quarter of 2005, compared to a loss of $46.7 million in the first quarter of 2004. The Company's average number of shares outstanding used to calculate the per diluted common share results was 307,610,852 for the first quarter of 2005, compared to 294,989,771 for the first quarter of 2004. Book value per common share at March 31, 2005 was $23.68, compared to $24.08 at March 31, 2004. About UnumProvident UnumProvident is the largest provider of group and individual disability income protection insurance in the United States and United Kingdom. Through its subsidiaries, UnumProvident Corporation insures more than 25 million people and paid $5.9 billion in total benefits to customers in 2004. With primary offices in Chattanooga, Tenn., and Portland, Maine, the company employs more than 12,000 people worldwide. For more information, visit http://www.unumprovident.com/ * * * As reported in the Troubled Company Reporter on Apr. 19, 2005, Moody's Investors Service confirmed the credit ratings of UnumProvident Corporation (UnumProvident - senior debt at Ba1) and the insurance financial strength ratings of UNUM Life Insurance Company of America and the company's other operating life insurance subsidiaries. Moody's said the outlook for the ratings is now negative. This rating action concludes a review for possible downgrade on UnumProvident's ratings that began on Nov. 22, 2004. The rating agency also assigned ratings to the company's new $1 billion multi-security shelf (senior debt at (P)Ba1). These ratings have been confirmed with a negative outlook: * UnumProvident Corporation -- senior unsecured debt of Ba1 -- mandatorily convertible units/preferred stock of Ba1 These ratings have been assigned, with a negative outlook, to the $1 billion multi-security shelf: * UnumProvident Corporation -- senior unsecured debt of (P)Ba1 -- subordinate debt of (P)Ba2 -- preferred stock of (P)Ba3 * UnumProvident Financing Trust II -- preferred stock of (P)Ba2 * UnumProvident Financing Trust III -- preferred stock of (P)Ba2 US AIRWAYS: Fitch Talks About Proposed America West Merger ---------------------------------------------------------- Recent news stories concerning a possible merger of bankrupt US Airways with America West Airlines (America West, senior unsecured debt rated 'CCC' by Fitch) suggests that the long awaited consolidation of the domestic airline industry may finally be beginning. Many airline industry observers believe such a consolidation, whether through mergers or liquidations, is needed to wring excess seat capacity out of the system, which, along with increased competition, has driven domestic air fares to historical lows and contributed to the industry's sustained weak financial performance. 'While an industry consolidation may or may not completely address the economic issues facing the domestic airlines, such activity may have ramifications for the nation's airports, particularly at the individual level,' said Dan Champeau, Managing Director, U.S. Public Finance, Fitch Ratings. 'U.S. airports may lose service and revenues in the short term; however, a vibrant domestic airline industry remains necessary for long-term growth,' Champeau added. In the long run, domestic airports stand to gain from a vibrant domestic airline industry so actions that serve to strengthen the economic stature of the airlines should benefit the nation's airports as a whole over time. However, in the short-term, should such a consolidation remove excess capacity and result in increased pricing power for the airlines, airports may experience revenue declines in non-airline sources due to reduced passenger activity stemming from higher airfares and reduced service levels. Fitch believes that a portion of recent gains in passenger traffic exceeds natural growth attributable to the expanding economy but are more a reaction to the price environment that may be vulnerable to a moderate increase in airfares. Credit concerns become more apparent at individual airports that serve as major operations centers for carriers that may be involved in potential mergers and liquidations. Fitch's 2005 Airport Industry Outlook focused on the possibility of one or more airlines liquidating and the affect on the nation's airports. Fitch believes that large origination and destination -- O&D -- airports in healthy service areas or airports with a diverse mix of airlines, including some of the more financially stable carriers are likely to fare relatively well compared with second and third tier connecting hubs and certain small-hub airports that may lose service and related revenues. A liquidation would likely result in greater short-term disruption to the domestic aviation network than a merger, as the bankrupt airline's operations would cease and terminal space become dormant, reducing overall service levels. While the surviving carriers would likely backfill this service, it would take time for them to realign their schedules and secure the equipment and manpower to provide such service. Also, the timing of the liquidation, the financial status of the surviving carriers, and the markets that become available would affect the nature of a post liquidation recovery. In addition, valuable terminal space may become subject of prolonged bankruptcy proceedings as the creditors seek to recover as much value as can be salvaged in the liquidation process. While airlines typically do not own their gates at airports, long-term leases are often a transferable asset that may be subject to a court ordered-auction or other assignment in the bankruptcy process. While mergers may prove less disruptive, as service levels are gradually adjusted as the two entities realign their operations, they still may pose credit concerns for airports. In a situation where one entity is under protection of Chapter 11 of the U.S. bankruptcy code, as is US Airways, the merger partners could use the bankruptcy process in their realignment efforts by possibly rejecting the bankrupt carrier's use and lease agreements regarding unwanted terminal space and implementing other reorganization strategies. This could lead to reductions in service and a realignment of network hubs. Fitch continues to recognize the inherent economic strengths of the nation's airports, which result in a significant overall differentiation of their industry's credit quality relative to that of the domestic airlines. Should the airline industry eventually undergo significant consolidation, Fitch will evaluate the affect on the nation's airports on a case-by-case basis, with any rating actions reflecting the ramifications on various credit factors, including the economic underpinnings of the air service market, the strength of the airport's balance sheet strength, financial margins and cost structure, status of its capital plan and fixed obligations, and management's ability to quickly adjust to its new operating environment. VAN ELWAY: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Van Elway Enterprises, Inc 1 South Piermont Drive North Barrington, Illinois 60010 Bankruptcy Case No.: 05-09036 Type of Business: The Debtor owned the Ironwood Golf Course before its foreclosure. Chapter 11 Petition Date: May 3, 2005 Court: Middle District of Florida (Ft. Myers) Debtor's Counsel: Louis S. Erickson, Esq. Golden Gate Legal Center 11725 Collier Boulevard, Suite F Naples, Florida 34116 Tel: (239) 353-1800 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ David Vanco $900,000 1 South Piermont Drive North Barrington, IL 60010 Internal Revenue Service $54,000 P.O. Box 17167 Fort Lauderdale, FL 33316 VERY LTD.: Files Schedules of Assets & Liabilities in New York -------------------------------------------------------------- Very, Ltd., filed its Schedules of Assets and Liabilities with the U.S. Bankruptcy Court for the Southern District of New York, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $22,700 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $250,000 E. Creditors Holding Unsecured Priority Claims $768,993 F. Creditors Holding Unsecured Nonpriority Claims $891,556 ------- ---------- Total $22,700 $1,910.549 Headquartered in New York, Very, Ltd., owns and operates a high- class, first-rate nightclub. The Debtor filed for chapter 11 protection on April 5, 2005 (Bankr. S.D.N.Y. Case No. 05-12248). When the Debtor filed for protection from its creditors, it listed $100,000 is assets and total debts of more than $1 million in debts. VENTURE HOLDINGS: Forms New Venture Holdings; Sells All Assets -------------------------------------------------------------- Venture Holdings Co. L.L.C. formed a new company -- New Venture Holdings L.L.C. -- and has appointed a new management team. The Debtors' prepetition lenders now own the company. Harbert Distressed Investment Master Fund, a division of the Birmingham, Ala.-based Harbert Cos., owns a 40% stake in the new company, Dan Heaton at The Macomb Daily reports. Eugene I. Davis has been elected Chairman of the Board and interim Chief Executive Officer. He has served as Chairman of the Executive Committee of Exide Technologies Inc., was Chairman and Chief Executive of RBX Industries, Inc., and is a Director of Oxford Automotive Europe. Kirk Aubry, former executive vice president of Textron Automotive will be Chief Operating Officer. Christopher Smith, former CEO of Venture's Deluxe Engineering will be Chief Financial Officer. "This is great news to see a new supplier emerge from a company that had been in bankruptcy," Mr. Aubry told Sheena Harrison at Crainsdetroit.com, adding that the new company has a "clear balance sheet and no debt." Kirk Aubry is former executive vice-president of Textron Automotive Co. Inc. Other appointed executives for New Ventures: "Venture's new ownership group gives us a solid foundation of financial support, a track record for sound investment, and a commitment to grow this company going forward," Mr. Davis said. "We have an experienced and dedicated work force, strong customer relationships and a renewed focus and enthusiasm to make Venture the industry's premier supplier of automotive systems and components." "We have already begun an aggressive revitalization program focused on increasing plant efficiency and utilization, stabilizing ongoing operations and pursuing growth opportunities," Mr. Aubry said. "For the near term, we'll continue to operate using the Venture name. "Obviously we face some big challenges in a tough, competitive industry but we've already overcome bigger challenges and are in an outstanding position to forge ahead," Mr. Aubry continued. "We're focused on building a lean organization, maximizing our plant output and quality and exceeding our customers' expectations. That's the only way we can make Venture the kind of company it has to be to succeed in this market." Venture is a full-service Tier One automotive supplier with capabilities in design, engineering, and integration of individual systems or complete vehicle modules. Founded in 1974, the company has some 6,300 employees in 28 facilities in the United States, France and the Czech Republic. Annual sales in 2004 totaled just under $1 billion to the leading OEMs including DaimlerChrysler, Ford and General Motors in North America and VW/Audi, Renault, Peugeot, Nissan, Toyota, Hyundai, Kia, Skoda Suzuki and Opel in Europe. Based in Fraser, Michigan, Venture Holdings Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. Mich. Case No. 03-48939) on March 28, 2003. Deluxe Pattern Corporation and its debtor-affiliates filed for chapter 11 protection on May 24, 2004 (Bankr. E.D. Mich. Case No. 04-54977). Together, Venture and Deluxe are part of a worldwide full-service automotive supplier, systems integrator and manufacturer of plastic components, modules and systems. As of March 31, 2002, the Debtors had total assets of $1,459,834,000 and total debts of $1,382,369,000. VERIZON GLOBAL: Fitch Keeps Long-Term Debts on Watch Negative ------------------------------------------------------------- Fitch Ratings has maintained the Rating Watch Negative status of Verizon Global Funding's outstanding long-term debt securities, which are rated 'A+', and has maintained the senior unsecured debt rating of MCI, Inc., which is rated 'B', on Rating Watch Positive. The securities of both companies were placed on Rating Watch on Feb. 14, 2005, following the announcement that Verizon Communications, Inc., planned to acquire MCI. Verizon and MCI have entered into an amended agreement and plan of merger dated May 1, 2005, following a protracted bidding process in which Qwest Communications International, Inc., also pursued MCI. One of several underlying reasons for the Rating Watch Negative assigned to Verizon on Feb. 14 was the potential for the acquisition price for MCI to rise due to other bids. Since that time, Verizon has had to increase its offer twice for MCI in response to bids from Qwest. MCI's board of directors deemed Qwest's last offer, which was $30 per share in cash and stock, as superior to Verizon's then existing offer of $23.10 per share. In response to Verizon's and MCI's May 1 amended agreement, Qwest withdrew from the bidding process. However, Fitch notes that Qwest has not formally withdrawn its most recent offer, and that the acquisition remains to be approved by MCI's shareholders in a special meeting expected to take place in June or July 2005. Fitch will continue to monitor developments and comment as appropriate. The Rating Watch Negative assigned to Verizon as a result of the proposed acquisition of MCI incorporates the need to evaluate the moderately higher business risk profile of Verizon following the acquisition of MCI, the potential synergies to be achieved, the effect of integration-related operating and capital expenses on cash flows, and the outcome of the regulatory approval process. As the transaction is currently envisioned, a downgrade, should it occur, would be limited to one notch. If Fitch can attain a high degree of confidence regarding the combined entity's business and financial risk profile, the rating could be affirmed. The terms of the amended transaction call for MCI to pay out a special dividend of $5.60 per common share following the shareholder vote (to be reduced by any dividends declared by MCI between Feb. 14 and the closing of the merger), and for the remainder of the consideration to consist of no less than $20.40 in Verizon common stock per MCI common share. Although Verizon's funding for the closing portion of the transaction consists solely of common equity, prior to the shareholder vote Verizon has agreed to acquire for cash approximately $1.1 billion in MCI common stock (approximately 13.4% of MCI) from entities affiliated with investor Carlos Slim Helu. Following the acquisition of these shares Verizon will be entitled to its share of the dividends to be paid by MCI, thus reducing the net cost of the shares acquired from entities affiliated with Carlos Slim Helu to approximately $875 million. Through a closing adjustment mechanism, Verizon is largely insulated from increases in MCI's contingent liabilities pertaining to remaining bankruptcy claim settlements, and unresolved state and international tax claims. The merger consideration will be adjusted downward for total claims which exceed $1.775 billion. Taking into account the size of Verizon relative to MCI, the transaction is not expected to have a material effect on Verizon's credit protection measures. Verizon's liquidity is strong, as it has an undrawn $5 billion credit facility to back its commercial paper. The facility expires in June 2005, and has a two-year term-out option. In 2004, free cash flow after dividends and capital spending was approximately $4.3 billion. Intermediate-term liquidity needs are expected to be addressed through strong free cash flows and could be supplemented by additional asset sales. The transaction will be subject to regulatory and shareholder approval. After the necessary approvals are obtained, the transaction is expected to close, which could be in the first half of 2006. Material conditions arising from the regulatory approval process could have an impact on the final economics of the transaction and the ultimate credit profile of the combined company. At this time it has not been disclosed if Verizon will guarantee or legally assume MCI's outstanding debt. Without a guarantee, MCI's debt would likely be upgraded to two notches below Verizon's rating, but the notching could be more or less depending on an evaluation of the integration of MCI's assets into Verizon's operations. The Rating Watch Negative is also maintained on the existing long- term debt of other Verizon subsidiaries, as listed below, as well as on the implied senior unsecured rating of Verizon Communications. The 'F1' ratings assigned to Verizon Global Funding and Verizon Network Funding are not on Rating Watch Negative. Verizon Global Funding primarily funds the nonregulated operations of Verizon. Verizon Global Funding is a subsidiary of Verizon, and benefits from a support agreement with Verizon. These subsidiary ratings have been maintained on Rating Watch Negative: Cellco Partnership (Verizon Wireless) -- Notes 'A+'. GTE Corp. -- Debentures/notes 'A+'. NYNEX Corp. -- Debentures 'A+'. Verizon New York -- Debentures 'A+'. Verizon Credit Corp. -- Notes 'A+'. Verizon Florida -- Senior unsecured debentures 'A+'. Verizon New England -- Senior unsecured bonds 'A+'; -- Debentures 'A+'; -- Notes 'A+'. Verizon South -- Senior unsecured debentures 'A+'. GTE Southwest -- Senior unsecured debentures 'A+'. Verizon California -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Delaware -- Senior unsecured debentures 'A+'. Verizon Maryland -- Senior unsecured debentures 'A+'. Verizon New Jersey -- Senior unsecured debentures 'A+'. Verizon North -- First mortgage bonds 'A+' -- Senior unsecured debentures 'A+'. Verizon Northwest -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Pennsylvania -- Senior unsecured debentures 'A+'. Verizon Virginia -- Senior unsecured debentures 'A+'. Verizon Washington D.C. -- Senior unsecured debentures 'A+'. Verizon West Virginia -- Senior unsecured debentures 'A+'. These ratings remain on Rating Watch Negative where they were placed on May 25, 2004, due to the pending sale of Verizon Hawaii: Verizon Hawaii -- First mortgage bonds 'BBB-'; -- Debentures 'BB+'. These ratings are affirmed by Fitch: Verizon Global Funding -- Commercial paper 'F1'. Verizon Network Funding -- Commercial paper 'F1'. Fitch also maintains MCI on Rating Watch Positive: MCI Inc. -- Senior unsecured debt 'B'. VSOURCE: Delays Form 10-K Filing to Reflect Exchange Offer ---------------------------------------------------------- Vsource, Inc., is unable to file its annual report for the fiscal year ended January 31, 2005, within the prescribed time period without unreasonable effort or expense. The Company expects to file its Form 10-K on, or before, May 17, 2005. Vsource indicates it requires the additional time because: -- the Company needs to complete the preparation of its consolidated financial statements to reflect the effects of the exchange offer and related transactions consummated on November 22, 2004, which transactions were reported in detail in: (a) the Company's Exchange Offer and Consent Solicitation Circular, which was filed as an exhibit to the Company's Schedule TO, filed with the Securities and Exchange Commission, and (b) the Company's Current Report on Form 8-K filed with the SEC on November 29, 2004; and -- the Company's management consists only of two individuals, its Chief Executive Officer and General Counsel, assisted by an administrative assistant, and these limited resources impact the Company's ability to gather the relevant data, complete disclosures and verify information to complete the financial information and its year-end financial statements. In the fourth quarter of Fiscal 2005, as a result of the Exchange Offer and related transactions, the Company disposed of its ownership interest in Vsource Asia Berhad, its former principal operating subsidiary. Consequently, the Company no longer provides business process outsourcing services and has ceased operating any active business, apart from limited consulting services it provided to third parties and for which it received revenue in the amount of $254,000 during Fiscal 2005. Accordingly, the results of the BPO-related operations conducted by Vsource Asia will be classified as discontinued in the Form 10-K. In Fiscal 2005 and through the Exchange Offer, Vsource Asia generated $13.9 million in revenues or approximately 96% of the Company's combined revenues. Further, it is expected that the financial statements for the year ended January 31, 2005 included in the financial statements will show a gain on disposal of Vsource Asia in the amount of approximately $21.6 million. VSource, Inc. provides enterprise-wide, Internet-based applications. The Company's Virtual Source Network allows companies to create an Internet-based procurement system to automate all aspects of corporate procurement. VSource's network accommodates electronic sending, receiving, approval and payment of supplier invoices. At Oct. 31, 2004, Vsource Inc.'s balance sheet showed a $24,728,000 stockholders' deficit, compared to a $16,591,000 deficit at Jan. 31, 2004. VTEX ENERGY: Talking to Lender to Restructure $3.6 Million of Debt ------------------------------------------------------------------ VTEX Energy, Inc. (OTC Bulletin Board: VXEN) reached agreement with its primary senior, secured lender, Old Jersey Oil Ventures, Inc., to consolidate and restructure in excess of $3 million in debt. This agreement will consolidate into a single secured facility, debt currently classified as a line of credit from a related party ($1.8 million), a production payment from a related party ($0.9 million) and a portion of advances from related parties and accrued interest ($0.9 million). This new facility will accrue interest for the first six months, with interest only payable over the next year. Thereafter, interest and principal will be amortized over the following four years. "The effect of this agreement is to move $3.6 million of our short term debt and accrued interest to long term debt," said Stephen Noser, President of VTEX. "It is a major step forward in our efforts to improve the Company's financial condition." Going Concern Doubt For the year ended April 30, 2004, VTEX Energy Inc.'s independent registered public accounting firm issued a going concern opinion. The Company has historically incurred net losses from operations and has incurred net losses of approximately $1,594,000 and $962,000 for the nine months ended January 31, 2005 and 2004, respectively, and losses are expected to be incurred in the near term. Current liabilities exceeded current assets by approximately $7,161,000 and $5,222,000 at January 31, 2005 and April 30, 2004, respectively, and the accumulated deficit is approximately $21,902,000 at January 31, 2005. Amounts outstanding and payable to creditors are in arrears and the Company is in negotiations with creditors to obtain extensions and settlements of outstanding amounts. "Management anticipates that significant additional expenditures will be necessary to develop the Company's properties, which consist primarily of proved reserves that are non-producing, before significant positive operating cash flows will be achieved," the Company stated in its Form 10-Q for the quarterly period ended Jan. 31, 2005. "Without outside investment from the sale of equity securities or debt financing our ability to execute our business plan will be limited. These factors are an indication that the Company may be unable to continue in existence." Management's plans to alleviate these conditions include: -- the renegotiation of certain trade payables, -- settlements of debt amounts with stock, -- deferral of certain scheduled payments, and -- sales of non core properties, as considered necessary by management. In addition, management is pursuing business partnering arrangements for the acquisition and development of additional properties as well as debt and equity funding through private placements. VTEX Energy, Inc., is a Houston based, independent energy company, engaged in the acquisition, development and production of oil and natural gas reserves. The Company currently has two properties, Bateman Lake Field located in St. Mary's Parish, Louisiana, and Mustang Island Field located offshore Kleberg County, Texas. WET SEAL: Closes Equity Financing Transaction with Lenders ---------------------------------------------------------- Specialty retailer The Wet Seal, Inc. (Nasdaq:WTSLA) closed an equity financing transaction with: * S.A.C. CAPITAL ASSOCIATES, LLC * PRENTICE CAPITAL PARTNERS QP, LP * PRENTICE CAPITAL PARTNERS, LP * PRENTICE CAPITAL OFFSHORE, LTD * GMM CAPITAL, LLC * GOLDFARB CAPITAL PARTNERS LLC * UBS FINANCIAL SERVICES AS CUSTODIAN F/B/O CHARLES G. PHILLIPS ROLLOVER IRA * WLSS CAPITAL PARTNERS, LLC * SMITHFIELD FIDUCIARY, LLC * D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P. * D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, LTD. and * RIVERVIEW GROUP, LLC The company obtained legal advice in this transaction from: Alan Siegel, Esq. Ackneil M. Muldrow III, Esq. AKIN GUMP STRAUSS HAUER & FELD LLP 590 Madison Avenue New York, New York 10022 The investors obtained legal counsel from: Eleazer N. Klein, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Under the terms of its Securities Purchase Agreement with these investors, the Company issued a new class of preferred stock that is convertible into 8,200,000 shares of the Company's Class A common stock and stock purchase warrants to acquire 7,500,000 shares of Class A common stock, in each case subject to certain anti-dilution provisions, for an aggregate purchase price of $24.6 million. In addition, certain of the investors in the financing acquired 3,359,997 shares of Class A common stock for an aggregate purchase price of approximately $6.41 million through the exercise of all of their outstanding Series A Warrants and a pro rata portion of their outstanding Series B Warrants issued in the Company's January 2005 financing. The Company's outstanding bridge financing facility was retired at the closing. Those investors in the financing who were lenders under the facility applied the outstanding principal and interest, which was approximately $12.0 million, as partial consideration for the acquisition of the convertible preferred stock and the warrants. The Company received approximately $18.0 million in net proceeds from the transaction, after giving effect to the retirement of the bridge facility and the payment of transaction expenses. The net proceeds will be used for general working capital purposes. Annual Report Filing In its Form 10-K for the fiscal year ended Dec. 31, 2004, filed with the Securities and Exchange Commission, the Company's auditors, Deloitte & Touche LLP expressed: -- an unqualified opinion on the management assessment of the effectiveness of the Company's internal control over financial reporting; and -- an adverse opinion on the effectiveness of the Company's internal control over financial reporting because of material weaknesses. The Company conducted an evaluation of the effectiveness of the design and operation of its internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. Based on its evaluation, management concluded that certain conditions exist that constitute "material weaknesses" in its internal control over financial reporting for the fiscal year ending January 29, 2005, as defined by the Public Company Accounting Oversight Board's (PCAOB) Auditing Standard No. 2. The conditions that led to the material weaknesses in its internal control over financial reporting are associated with: 1) insufficient resources and level of technical accounting expertise within the Company's financial closing and reporting functions and 2) lack of timely preparation, review and approval of account analysis and reconciliations for certain accounts. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a result, management will be unable to conclude that the Company's internal controls over financial reporting are effective as of January 29, 2005. With the assistance of its reconstituted audit committee, management said it is committed to remediating these material weaknesses as expeditiously as possible. Continued Losses The 13 weeks ended Jan. 29, 2005, constituted Wet Seal's tenth consecutive quarter reflecting negative comparable store sales and operating losses. This operating performance was primarily due to negative sales trends at its Wet Seal division. Overall, the Company experienced a comparable store sales decline of 11.4% for the 13 weeks ended January 29, 2005. The 13-week decline resulted primarily from a decrease in the number of sales transactions associated with the Wet Seal division. The continued sales decline has eroded operating margins, primarily as a result of the de-leveraging of our company's cost structure and higher markdown volume. These factors plus a $16.4 million charge for store closures were the principal contributors to the Company's net loss of $47.8 million for the quarter. Bankruptcy Warning In light of its poor operating performance, diminished liquidity and poor credit standing, the Company initiated a series of steps to maximize shareholder value. This began with the appointment of a special committee of its board of directors mandated to engage a financial advisor and evaluate strategic alternatives, including a potential reorganization under Chapter 11 of the United States Bankruptcy Code. Management Changes In November 2004, Peter Whitford resigned from his position as the Company's Chief Executive Officer and Chairman of the board of directors and Allan Haims resigned as President of the Wet Seal division. In December 2004, the Company appointed Joel N. Waller, the former Chief Executive Officer of Wilsons Leather, to the positions of President and Chief Executive Officer, effective Feb. 1, 2005. Mr. Waller became a director of the company effective Dec. 27, 2004. In addition, in March 2005, Joseph Deckop resigned from his position as Executive Vice President of Central Planning and Allocation. As a part of its turn-around strategy, all of the members of the Company's board of directors, other than its chairman, Henry D. Winterstern, and Alan Siegel, have either retired or resigned. Recently the Company appointed Mr. Waller, Sidney M. Horn, Harold D. Kahn and Kenneth M. Reiss to its board of directors. The board of directors appointed Mr. Reiss as Chairman of the Audit Committee. The entire board of directors, with the exception of Mr. Waller, will act as a Compensation Committee until such time as the board of directors is expanded. Store Closures In December 2004, the Company disclosed the closing of approximately 150 Wet Seal stores as part of its turn-around strategy. The Company appointed Hilco to manage the inventory liquidations for the store closures and Hilco Advisors to negotiate with the respective landlords for purposes of lease terminations and buyouts. Wet Seal completed the store closing effort on March 5, 2005. "We closed a total of 153 stores related to our turn-around strategy and any future closures will be the result of natural lease expirations where we decide not to extend, or are unable to extend, a store lease," the Company stated in its Annual Report. "We ceased use of property at 103 stores on or about January 29, 2005 and took a charge of approximately $13.2 million for the estimated cost of lease buyouts and related costs. In addition, for all the stores we identified for closure, we took a non-cash charge of approximately $4.4 million in the fourth quarter ended January 29, 2005 for the write down of the carrying value of these impaired assets to realizable value. We also recognized a non- cash benefit of $1.2 million, related to the write-off of deferred rent associated with the closing stores. We expect to take a charge of $6.1 million for the balance of store closures that will occur in our first quarter ending April 30, 2005." Headquartered in Foothill Ranch, California, The Wet Seal, Inc. -- http://www.wetsealinc.com/-- is a leading specialty retailer of fashionable and contemporary apparel and accessory items. The Company currently operates a total of 398 stores in 46 states, the District of Columbia and Puerto Rico, including 307 Wet Seal stores and 91 Arden B. stores. The Company's products can also be purchased online at http://www.wetseal.com/or http://www.ardenb.com/ WORLDCOM INC: Tax Claim Objection Deadline Extended to June 16 -------------------------------------------------------------- As previously reported, WorldCom, Inc. and its debtor-affiliates sought additional time to object to proofs of claim and requests for payment of administrative claims that were filed by taxing authorities after March 1, 2004, or which appear to include certain types of claims as component. Although the Debtors have substantially completed an analysis of the Remaining Tax Claims, Sylvia Mayer Baker, Esq., at Weil, Gotshal & Manges, in New York, explains that the extension of the Remaining Tax Claim Objection Deadline for another 45 days is essential. The Debtors have met numerous times with multiple States and have devoted substantial time analyzing and responding to questions from the States as part of the negotiation process. Settlement discussions with the majority of States are currently in an intense and critical phase. Furthermore, hundreds of claims filed by taxing authorities assert large Additional Claims based in whole or in part on complicated legal, tax and accounting issues. The Debtors need more time to negotiate with the States to obtain a settlement of some or all of the Remaining Claims given the complexity of the issues and the number of states involved. * * * At the Debtors' behest, the United States Bankruptcy Court for the Southern District of New York further extends the Remaining Tax Claim Objection Deadline to and including June 16, 2005. 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. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Moody's Reports Canadian Default Rate Unchanged in 2004 --------------------------------------------------------- The default rate for speculative-grade rated Canadian issuers ended 2004 at 1.8%, unchanged from 2003, Moody's Investors Service reported today in its third annual Canadian default study. The default rate for all rated Canadian issuers (including investment- grade rated issuers), was also unchanged in 2004 at 0.6%. Only two Canadian public bond defaults were recorded in 2004. Of the two 2004 defaults, only one was rated by Moody's: Hollinger, Inc., which missed the interest payment on C$161 million of its senior secured notes but paid the amount before the end of its grace period. The second default in 2004 was Stelco, Inc., a steel producer that Moody's does not rate, which had C$240 million of bonds outstanding when it filed for bankruptcy protection. Although Moody's has been rating Canadian issuers since as early as 1909, the latest report documents the historical default and recovery rates of Canadian corporate bond issuers since 1989, when debt issuance and the number of issuers obtaining credit ratings began to grow at an accelerated rate. Between 1989 and 2004, 64 Canadian corporate issuers defaulted on a total of C$ 32 billion in bonds. Of the 64, 34 issuers totaling C$ 28 billion in bonds were rated by Moody's. Defaults by issuers in the telecommunications sector represent nearly half of all defaults in Canada since 1989 by total dollar volume. Six of the ten largest defaults in Canada were by issuers in the telecommunications sector. No Moody's-rated Canadian corporate bond issuers have defaulted so far in 2005. However, two unrated Canadian bond issuers have already defaulted, hinting that the default rate for Canadian issuers may be nearing a turning point. "Although Moody's does not separately forecast Canadian default rates, we expect that many of the factors driving our prediction of higher global default rates -- including rising interest rates and lower average credit quality of new speculative-grade issuance -- will also impact the Canadian default rate over 2005-2006," said Sharon Ou, lead author of the study. Moody's predicts that the global speculative-grade default rate will rise from its current 2.2% level to 3.2% by March 2006. The results of Moody's Canadian default study show that credit ratings possess a strong negative correlation with realized default and credit loss rates: the lower the credit rating, the higher the average default rate. The average one-year default rate rises from 0.2% for investment-grade rated Canadian issuers to 28.8% for issuers rated Caa and below. Notably, no Canadian issuers with Aaa, Aa, or A ratings have defaulted within five years of holding those ratings since 1989. Moody's Canadian ratings have been highly successful in anticipating defaults. On average, Canadian issuers that ultimately defaulted were rated B1 three years before default. By the time default occurs, the average rating falls to Caa2. Moody's study also finds variations in default rates across rating categories and investment holding periods have been very similar in the U.S. and Canada. For example, the average speculative- grade five-year default rate was 24.1% for Canadian issuers compared to 24.7% for U.S. issuers. "The similarity of default rates across rating categories shows that Moody's considers the various local factors that make Canadian companies different from their peers in the U.S., and consistently reflects those differences in our ratings of Canadian issuers," said Andrew Kriegler, Managing Director in Toronto. Moody's report, "Default and Recovery Rates of Canadian Corporate Bond Issuers, 1989-2004," is available in the Ratings Analytics section of Moodys.com ********* 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 ***