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/raid1/www/Hosts/bankrupt/TCR_Public/050523.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, May 23, 2005, Vol. 9, No. 120 Headlines 512 WEST: Voluntary Chapter 11 Case Summary ACCIDENT & INJURY: U.S. Trustee Picks 7-Member Creditors Committee ALASKA AIRLINES: Names Amanda Tobin Media Relations Manager ALASKA AIRLINES: Pilots Ask Court to Vacate Arbitration Decision AMERICA WEST: US Airways Merger Prompts Fitch to Watch Ratings AMERICA WEST: US Airways Merger Cues S&P to Retain Watch Negative ARMSTRONG WORLD: Exclusive Plan Filing Period Intact Until Sept. 5 ARI NETWORK: April 30 Balance Sheet Upside-Down by $5 Million ATA AIRLINES: Wants to Reject GE Capital Lease for Six Buses AUBURN FOUNDRY: Union Will Conduct Rule 2004 Exam on June 3 AUTOBYTEL INC: Nasdaq Extends Listing Compliance Date to May 31 AUXILIARY TANK: Case Summary & 20 Largest Unsecured Creditors BEAR STEARNS: Interest Shortfalls Prompt S&P to Watch Ratings BUEHLER FOODS: US Trustee Picks 9 Creditors to Serve on Committee CARROLS CORP: Lenders Waive Default Under Senior Credit Facility CASKET SHELLS: Voluntary Chapter 11 Case Summary CATHOLIC CHURCH: Spokane Publishes Sexual Abuse Claim Statistics CENTENNIAL CELLULAR: Moody's Upgrades 3 Sr. Notes' Junk Ratings CIDER RIDGE: Case Summary & 17 Largest Unsecured Creditors COLLINS & AIKMAN: Wants to Hire Carson Fischer as Local Counsel COLLINS & AIKMAN: Tandus' C&A Floorcoverings Unit Isn't Bankrupt COLO.COM: Asks Court for Final Decree Closing Bankruptcy Case COMBUSTION ENGINEERING: Committee Taps Frank/Gecker as Counsel COMBUSTION ENG'G.: Has Until July 6 to File Notices of Removal COMPUDYNE CORP: Asks for Oral Hearing to Stay Nasdaq Delisting CONTINENTAL AIRLINES: Implements Codeshare Pact with Island Air CREDIT SUISSE: Moody's Affirms $4.6M Class P Certificate at Caa2 CREDIT SUISSE: Moody's Junks Class M & N Mortgage Certificates CREDIT SUISSE: Losses Prompt Fitch to Withdraw Junk Ratings DELPHI CORP: Moody's Assigns B1 Rating to Proposed Term Loan B DT INDUSTRIES: Plan Filing Exclusivity Intact Until July 6 DT INDUSTRIES: Selling 1,527 Shares of Polaroid Holding Stock E.R. HOFFMAN: Case Summary & 2 Largest Unsecured Creditors ELDORADO RESORTS: Weak Performance Prompts S&P to Watch Ratings ENRON CORP: Edison Wants Administrative Expense Payment Allowed EXIDE TECHNOLOGIES: Moody's Reviews New $290M Notes' Caa1 Rating FEDERAL-MOGUL: U.S. Trustee Amends Creditors' Committee Membership FORD MOTOR: Declining Sales Prompt Fitch to Downgrade Ratings GATEWAY EIGHT: Prepares to Market & Sell American Express Building GOODYEAR TIRE: Moody's Confirms Debt's Low-B Ratings HEALTHEAST INC.: S&P Rates $26 Million Series 2005-3A Bonds at BB IMPERIAL SUGAR: Board Mulls Schultze's Takeover Offer INTEGRATED ELEC'L.: Covenant Violation Cues S&P to Watch Ratings INTEGRATED ELECTRICAL: Defaults on Facility EBITDA Requirement INTERSTATE BAKERIES: Wants to Employ ARMC as Risk Consultants INTERSTATE BAKERIES: Settles CitiCorp & CitiCapital Leases JAMES KENNEDY: Voluntary Chapter 11 Case Summary KAISER ALUMINUM: Court Approves HSBC Bank Claim Settlement LB-UBS: Moody's Junks $4.99 Million Class N Certificate LEHMAN BROTHERS: Credit Enhancement Prompts Fitch to Lift Ratings MAGELLAN AEROSPACE: Posts $14.5 Million Gross Profit in 1st Qtr. MERIDIAN AUTOMOTIVE: Moody's Withdraws Low-B Loan Ratings METROPCS INC: Expects to Complete Tender Offer Today MIRANT CORP: Expands Scope of Ernst & Young's Engagement MIRANT CORP: Dennis Goad Accepting $450K to Settle $70MM Claim MIRANT CORP: MAGi Comm. Wants MAGi Notes Properly Classified MOONEY AEROSPACE: Court Formally Closes Chapter 11 Case MORGAN STANLEY: Credit Enhancement Prompts Fitch to Lift Ratings MORTGAGE CAPITAL: Fitch Junks $7.6 Million Class K Certificates MOSLER INC: Hearing Tomorrow on Entry of a Final Decree NAKOMA LAND: Case Summary & 33 Largest Unsecured Creditors NATIONAL ENERGY: Portland General Holds $901,700 Allowed Claim NATIONAL ENERGY: Court Okays Brascan Energy Claims Settlement Pact NOMURA CBO: Overcollateralization Cues S&P to Watch Ratings NORTEL NETWORKS: HSR Waiting Period on PEC Acquisition Expires NORTH AMERICAN: S&P Cuts Senior Unsecured Debt Rating to CCC+ NORTHWEST AIRLINES: S. Boda Replaces H. Adler as Vice President NORTHWEST ALUMINUM: Can Sell Shares of Stock & Use Cash Collateral OAKWOOD HOMES: Poor Performance Prompts S&P to Watch Ratings OMNICARE INC: Moody's Assigns Ba3 Rating to New $334M Securities OWENS CORNING: Objects to Wallkill's $400,000 Environmental Claim OWENS CORNING: Has Until Dec. 5 to Make Lease-Related Decisions PAYLESS CASHWAYS: Judge Federman Dismisses Bankruptcy Case PEGASUS COMMUNICATIONS: Nasdaq Issues Delisting Notice PHOENIX COLOR: Moody's Reviews $105 Million Notes' Junk Rating PNC MORTGAGE: Moody's Affirms 6 Certs. Classes' Low-B Ratings PUBLICARD INC: March 31 Balance Sheet Upside-Down by $5.8 Million PURE FISHING: Disappointing Performance Cues S&P to Pare Ratings RELIANCE FINANCIAL: Reorganization Plan Took Effect on April 22 RESORTS INT'L: Weak Performance Cues S&P's Negative Outlook SHOPKO STORES: Earns $600,000 of Net Income in First Quarter SKILLED HEALTHCARE: Moody's Junks Planned $145M 2nd Lien Term Loan SKIN NUVO: Wants Kolesar & Leatham as Co-Counsel SOLUTIA INC: JP Morgan Wants Adversary Complaint Filed Under Seal SOLUTIA INC: Teachers Insurance Holds Allowed $20.4M Unsec. Claim SPIEGEL INC: $20 Million Earmarked for Creditor Trust Expenses STELCO INC; Welcomes George Adams as Mediator TACK ROOM: Case Summary & 20 Largest Unsecured Creditors TEKNI-PLEX: Moody's Junks Ratings on $583 Million Notes TEMBEC INC: Closes Four Manufacturing Plants in Restructuring THILMANY LLC: S&P Rates Proposed $175MM Sr. Sec. Facility at B+ TOMMY HILFIGER: Negative Operating Trends Cue S&P to Retain Watch TRANSMETA CORP: Robert Dickinson Joins Board of Directors TROPICAL SPORTSWEAR: PBGC Says Plan Is Unconfirmable TROPICAL SPORTSWEAR: South Pacific Objects to Asset Assignment TRUMP HOTELS: Exits Chapter 11 Protection with New Name US AIRWAYS: America West Merger Cues S&P to Watch Ratings US AIRWAYS: Court OKs Notice & Hearing Protocol in Claims Trading USGEN NEW ENGLAND: ISO New England Claim Estimated at $0 USI HOLDINGS: Attorney General Subpoena Cues S&P to Remove Watch VIRBAC CORP: Auditors Express Going Concern Doubts WELLS FARGO: Credit Enhancement Prompts Fitch to Lift Ratings WELLSFORD REAL: Adopts Liquidation Plan & Reverse Stock Split WICKES INC: Creditors Committee Taps BBK Ltd as Financial Advisors WICKES INC: Sells Real Property to Marken LLC for $425,000 WILLBROS GROUP: Reports on Status of Audit Committee Probe WORLDCOM INC: Gallegoses Can Pursue New Mexico Telemarketing Suit WORLDCOM INC: Court Approves Mississippi Tax Settlement Pact * BOND PRICING: For the week of May 16 - May 20, 2005 ********* 512 WEST: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: 512 West 135 LLC 512 West 135th Street Brooklyn, New York 11201 Bankruptcy Case No.: 05-13704 Chapter 11 Petition Date: May 19, 2005 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Debtor's Counsel: Neal M. Rosenbloom, Esq. Finkel Goldstein Rosenbloom Nash LLP 26 Broadway, Suite 711 New York, New York 10004 Tel: (212) 344-2929 Fax: (212) 422-6836 Total Assets: $2,001,000 Total Debts: $3,908 The Debtor does not have any Unsecured Creditors who are not insiders. ACCIDENT & INJURY: U.S. Trustee Picks 7-Member Creditors Committee ------------------------------------------------------------------ The United States Trustee for Region 6 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Accident & Injury Pain Centers, Inc., and its debtor-affiliate's chapter 11 cases: 1. KXAS (NBC-5) Attn: Jason C. Hutton 3900 Barnett St. Ft. Worth, Texas 76103 Phone: 817-654-6443, Fax: 817-654-6440 2. Allstate Insurance Co. Attn: Bruce T. Vest 1500 Citywest, Suite 800 Houston, Texas 77042 Phone: 713-430-4922, Fax: 713-430-2934 3. Ad Cetera, Inc. Attn: David Lamoureux 15540 Spectrum Dr. Addison, Texas 75001 Phone: 972-387-5577, Fax: 972-387-0034 4. Farmer, Fuqua & Huff, P.C. Attn: Stephen A. Fuqua 555 Republic, #490 Plano, Texas 75074 Phone: 214-473-8000, Fax: 214-473-8007 5. CRO Catering Attn: Mark Czaus 12200 Stemmons Frwy. Dallas, Texas 75234 Phone: 972-888-4277, Fax: 972-888-4279 6. Jones, Allen & Fuquay Attn: Laura Worsham 8828 Greenville Ave. Dallas, Texas 75243 Phone: 214-343-7400, Fax: 214-343-7455 7. Southwestern Bell Yellow Pages Attn: Steve Walters 1430 Empire Central, 4th Floor Dallas, Texas 75247 Phone: 800-479-2977 ext. 2044, Fax: 214-879-9187 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 Dallas, Texas, Accident & Injury Pain Centers, Inc. -- http://www.accinj.com/-- operates clinics that treat patients with highly advanced therapy equipment and techniques. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688). Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported estimated assets and debts of $10 million to $50 million. ALASKA AIRLINES: Names Amanda Tobin Media Relations Manager ----------------------------------------------------------- Amanda Tobin joined Alaska Airlines as manager of media relations. In this role, Ms. Tobin will serve as one of the airline's primary spokespersons to regional and national news media. "Amanda's decade of experience in both journalism and communications, coupled with her solid track record serving the needs of journalists, makes her a strong addition to Alaska's corporate communications team," said Caroline Boren, managing director of strategic and corporate communications at Alaska Airlines. Ms. Tobin comes to the airline from Puyallup, Wash.-based Good Samaritan Community Healthcare, where for the past two years she oversaw comprehensive communications strategies. She previously led public relations for Eureka, Calif.-based PBS station KEET. Starting her career as a journalist, Ms. Tobin has held a variety of broadcast news positions, serving as assistant news director, bureau chief, reporter and evening news anchor for CBS television affiliates. In addition to her professional roles, Ms. Tobin has been extensively involved in charity work. She served as co-host for the northern California Easter Seals Telethon, received the distinguished president award from Kiwanis International, and has served as board member for several non-profit organizations. Ms. Tobin earned both a master's degree in business administration and a bachelor's degree in journalism from Humboldt State University. She resides in Bellevue, Wash., and is an avid traveler. Alaska Airlines is the nation's ninth largest carrier. Alaska and its sister carrier, Horizon Air, together serve more than 80 cities in Alaska, the Lower 48, Canada and Mexico. For more news and information, visit the Alaska Airlines Newsroom on the Internet at http://newsroom.alaskaair.com/ Seattle-based Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. The company and its sister carrier, Horizon Air, together serve 80 cities in Alaska, the Lower 48, Canada and Mexico. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services lowered its ratings on Alaska Airlines Inc.'s 9.5% equipment trust certificates (ETCs) due April 12, 2012, to 'B+' from 'BB', as part of an industry wide review of aircraft-backed debt. All other ratings on Alaska Airlines and parent Alaska Air Group Inc., including the 'BB-' corporate credit ratings on both, are affirmed. The outlook remains negative. "The lower rating on the ETCs reflects Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of multiple, further bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Betsy Snyder. "Downgrades of aircraft-backed debt securities were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the analyst continued. ALASKA AIRLINES: Pilots Ask Court to Vacate Arbitration Decision ---------------------------------------------------------------- The Air Line Pilots Association filed a lawsuit against Alaska Airlines in the Federal District Court in Seattle. The pilots ask the federal court to vacate the April 30, 2005, decision that, among other things, reduced pilot pay by as much as 34 percent. ALPA contends that the Arbitration Board, with Richard Kasher as Arbitrator, violated the Railway Labor Act, which governs contracts between Airlines and their employee groups. Under the Act, a third-party arbitrator is allowed to settle contract disputes in the aviation industry. However, the Arbitration Board is required to follow rules agreed upon by the parties involved. The Complaint filed on May 13, 2005, charges that the Arbitration Board failed to follow these rules with respect to its decision on hourly wages, the issue work preservation - also known in the industry as code-sharing agreements - and the subject of profit sharing. With respect to work preservation, the rules required the Arbitrator to find and apply the average of competitor carriers. In the decision, the Arbitrator acknowledged an average, but failed to apply that average, thereby deviating from or ignoring the negotiated rules for the arbitration. The arbitration board also was constrained in its decision by the positions presented by the Carrier and Union, but failed to follow either position regarding profit sharing. The Complaint seeks injunctive relief and a return to the status quo as it existed prior to the arbitration decision. "The Association continues to desire to work with Management to find a fair, equitable and negotiated labor agreement," said Capt. Mark Bryant, chairman of the Alaska Airlines pilot union. "The Association hopes Management will join us in working toward that goal." Founded in 1931, the Air Line Pilots Association (ALPA) represents 64,000 pilots at 41 airlines in the United States and Canada including the 1,500 pilots who fly for Alaska Airlines. Alaska Airlines is the nation's ninth largest carrier. Alaska and its sister carrier, Horizon Air, together serve more than 80 cities in Alaska, the Lower 48, Canada and Mexico. For more news and information, visit the Alaska Airlines Newsroom on the Internet at http://newsroom.alaskaair.com/ Seattle-based Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. The company and its sister carrier, Horizon Air, together serve 80 cities in Alaska, the Lower 48, Canada and Mexico. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services lowered its ratings on Alaska Airlines Inc.'s 9.5% equipment trust certificates (ETCs) due April 12, 2012, to 'B+' from 'BB', as part of an industry wide review of aircraft-backed debt. All other ratings on Alaska Airlines and parent Alaska Air Group Inc., including the 'BB-' corporate credit ratings on both, are affirmed. The outlook remains negative. "The lower rating on the ETCs reflects Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of multiple, further bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Betsy Snyder. "Downgrades of aircraft-backed debt securities were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the analyst continued. AMERICA WEST: US Airways Merger Prompts Fitch to Watch Ratings -------------------------------------------------------------- Fitch Ratings has placed the 'CCC' senior unsecured debt rating of America West Airlines, Inc., and America West Holdings Corp. on Rating Watch Negative. This action follows the announcement by America West that it would seek to merge with US Airways Group, Inc., pending approvals from creditors and the U.S. bankruptcy court overseeing US Airways' Chapter 11 case. Fitch's rating action affects approximately $600 million of AWA's outstanding debt obligations. The strategic case for a merger between AWA and US Airways rests on the idea that route network scale and scope will be vital for both carriers to survive in an industry that is moving inexorably toward consolidation. With jet fuel prices still exceeding $1.50 per gallon and with domestic overcapacity continuing to undermine passenger yields and revenue per available seat mile performance, both AWA and US Airways face intensifying liquidity pressures moving into 2006. For US Airways in particular, a successful restructuring now appears largely dependent upon the availability of outside capital to support a postbankruptcy capital structure. The carriers intend to finance the merger through the addition of up to $1.5 billion in new capital, including $350 million from four equity sponsors. Also included in the new capital is $250 million that would be loaned to the merged carrier by Airbus. The carriers contemplate obtaining the remaining funding through agreements with various suppliers and partners, the release of certain cash reserves, and a $150 million equity rights offering. If the full amount of targeted capital is raised, the company's cash balance could approach $2 billion at the time the merger is consummated. Although the additional liquidity could provide critical support for the transaction and the viability of a postmerger entity, Fitch is concerned about the risk associated with integrating the carriers' labor forces and route networks. Optimization of a combined AWA-US Airways fleet could lead to capacity reduction and improved operating results versus the current scenario, but transition costs and potential labor disruption could drain cash from the merged airline. This could undermine liquidity at a time when reconstruction of highly levered balance sheets is essential. AWA faces scheduled principal payments of $86 million on its government-guaranteed term loan over the next year (next payment scheduled for September), but timely payment of obligations could be threatened if merger-related cash outflows complicate AWA's liquidity problems later in the year. America West's 'CCC' rating reflects ongoing concerns over the airline's limited cash flow generation capacity in an industry operating environment that remains very difficult in light of high jet fuel prices and domestic overcapacity. Although AWA's relative unit revenue performance improved in the first quarter, partly as a result of easy comparisons versus weak 2004 yields, the company still faces a challenging operating outlook for the remainder of 2005 if jet fuel prices remain near current levels. AWA's attempts to enter traditional legacy carrier stronghold markets (e.g. transcontinental routes) were largely unsuccessful in 2004, and the carrier lacks attractive growth opportunities at current unit cost levels. Moreover, revenue performance is likely to remain under pressure in 2005 as other low-cost carriers (LCCs), such as Southwest, AirTran, and JetBlue, take new aircraft deliveries and add capacity in markets served by AWA. Since the Air Transportation Stabilization Board (ATSB) approved a $429 million government-guaranteed loan that helped AWA avert a bankruptcy filing in January 2002, the airline has made only limited headway in its effort to build operating cash flow and liquidity. Unrestricted cash and investments on hand stood at $254 million on March 31, versus $306 million at year-end 2004. The poor operating outlook for the entire U.S. airline industry in 2005 provides little support for AWA's weak credit profile. Fitch believes that liquidity in a stand-alone case could be undermined significantly by January 2006 if crude oil prices remain at or near $50 per barrel. Resolution of the watch will likely follow the disclosure of the AWA-US Airways merger plan in future filings made to the SEC and the bankruptcy court, as well as the receipt of necessary approvals from relevant bodies (e.g. the ATSB, the bankruptcy court, and the U.S. Department of Justice). Fitch will be focused in particular on the scale of combined fleet restructuring, estimates of merger implementation costs, and the level of anticipated revenue and cost synergies. Potential labor disruption linked to the effort to resolve seniority and other integration issues will also be monitored closely. A downgrade could follow if AWA's liquidity profile in 2006 is eroded further or if timely payment of fixed obligations is jeopardized as a result of the proposed transaction. AMERICA WEST: US Airways Merger Cues S&P to Retain Watch Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services ratings on America West Holdings Corp. and subsidiary America West Airlines Inc., including the 'B-' corporate credit ratings on both entities, remain on CreditWatch with negative implications, where they were placed on April 21, 2005. The CreditWatch update follows the announcement that America West has agreed to acquire US Airways Group Inc., parent of US Airways Inc., both currently operating under Chapter 11 bankruptcy protection and rated 'D.' "The combined entity will face significant hurdles, particularly integration of its labor forces," said Standard & Poor's credit analyst Betsy Snyder. "However, the combined entity will benefit from stronger liquidity following new equity investments and loans, and a more extensive route network," the analyst continued. The acquisition, expected to be completed this fall, is subject to approval by the bankruptcy court overseeing US Airways' bankruptcy case. A significant portion of the companies' labor forces are members of the same national unions (e.g., pilots and flight attendants), which could aid integration somewhat. In addition, under bankruptcy, US Airways has reduced its labor expenses to levels comparable to those of America West, historically among the lowest in the U.S. airline industry. However, labor issues, which have plagued other airline combinations, could include potential problems associated with combining seniority lists (which determine employees' wages, promotions and benefits), a process that has tended to increase labor costs in previous combinations. America West will also face other risks associated with improving profitability at US Airways, a company close to three times its size. These risks are expected to be offset somewhat by revenue benefits of a more extensive route combined route network, with America West a strong presence in Las Vegas and Phoenix, and US Airways a strong presence along the East Coast. US Airways' membership in the Star Alliance (which America West is expected to join) will aid the combined entity's competitive position. The companies' aircraft fleets, after the termination of leases on 59 Airbus and Boeing aircraft, will be fairly similar, which will aid maintenance and crew costs. America West has indicated it expects substantial revenue and cost synergies ($600 million a year) from a combination with US Airways. In addition, the company's liquidity will be stronger than either on its own. Standard & Poor's will resolve the CreditWatch through an assessment of the combined companies' business and financial risk profiles. This assessment will focus on labor integration, cost and revenue synergies, and the company's its balance sheet and access to liquidity. Ratings could be affirmed if Standard & Poor's concludes that the combined entity's improved liquidity and expected synergies more than offset intermediate-term labor integration risks. Alternatively, ratings could be lowered modestly if America West is unable to reduce US Airways' losses, which would result in reduced liquidity. ARMSTRONG WORLD: Exclusive Plan Filing Period Intact Until Sept. 5 ------------------------------------------------------------------ Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware enlarged the period within which Armstrong World Industries, Inc., and its debtor-affiliates have the exclusive right to file a chapter 11 plan to September 5, 2005. The Court also enlarged the period within which the Debtors have the exclusive right to solicit acceptances for a chapter 11 plan to November 7, 2005. On February 23, 2005, Judge Robreno of the U.S. District Court for the District of Delaware issued a decision and final order denying the confirmation of Armstrong World Industries, Inc.'s Fourth Amended Plan, on the sole basis that the determination by the U.S. District Court for the District of Delaware that the issuance of the "Warrants" to AWI's equity holder violated Section 1129(b) of the Bankruptcy Code. AWI has filed notices of appeal from the decision and order with the United States Court of Appeals for the Third Circuit. AWI has asked the Third Circuit to expedite the consideration of its Appeal. As reported in the Troubled Company Reporter on Apr. 8, 2005, AWI has reached a global settlement of its ability for asbestos property damage and has recently entered into a settlement agreement with the United States Environmental Protection Agency, which resolves AWI's environmental liabilities at over 19 sites in various states at which the EPA has alleged AWI might be a potentially responsible party. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARI NETWORK: April 30 Balance Sheet Upside-Down by $5 Million ------------------------------------------------------------- ARI Network Services (OTCBB:ARIS) reported results for the third quarter ended April 30, 2005. Revenues for the third quarter of fiscal 2005 were $3.5 million, a 3% increase from revenues of $3.4 million for the third quarter of the prior year. Operating income was $554,000 in the third quarter of fiscal 2005, up from operating income of $246,000 for the comparable prior period. Net income was $495,000 for the third quarter of fiscal 2005, compared to net income of $180,000 for the same period in fiscal 2004. "As we expected, our profits continued to grow: it was our seventh consecutive quarter of year-over-year net income growth. Overall revenues also grew this quarter after a flat first half of this year, returning to the revenue growth trajectory that began in fiscal 2004. Compared to the third quarter of last year, revenues from the North American segment of the worldwide equipment industry - our core market - grew by 5%, more than offsetting declines in the non-North American segment and in the non- equipment market," said Brian E. Dearing, chairman and chief executive officer of ARI. "Overall, worldwide equipment industry recurring revenues increased 5% versus last year's third quarter, indicating a growing base of business." Dearing said the company's increased net income was due to the higher revenues and the reduction of approximately $250,000 in non-cash expenses as a result of the completion of the amortization of an acquisition. "Included in the equipment industry catalog and related revenues are the new revenues from Dealer Marketing Services, an exciting new product area for ARI, which includes ARI MailSmart(TM) and WebsiteSmart(TM), as well as from ServiceSmart(TM), a new product to help end users of equipment manage the maintenance of the units they operate. While we do not plan to break out these revenues formally until next year, I can tell you that these growth initiatives have generated nearly $250,000 in revenues so far this year," added Dearing. "Our newest product, which we introduced late in the third quarter, is ARI WarrantySmart(TM), an electronic warranty claim processing system to help dealers and manufacturers streamline the warranty administration process. Together, our new products provide a strong platform for expanding our business by obtaining new customers and enhancing relationships with our existing customers," said Dearing. "Also on a positive note, our cash balance at the end of the third quarter exceeded non-trade debt. At the same time, we are continuing to invest in new product development and in improving the performance of our European catalog business. We have increased our staff in Europe in order to move from a manufacturer-centric business model to the dealer-centric model which has been so successful for us in the United States," Dearing continued. Dearing also noted that ARI is among the small businesses who recently received a one-year extension from the Securities and Exchange Commission for meeting the requirements of Section 404 of the Sarbanes-Oxley Act. "We were on schedule to complete the necessary work this year. We will now be able to spread the remaining cost over a longer period of time," said Dearing. For the first nine months of fiscal 2005, ARI reported revenues of $10.0 million, compared to revenues of $9.9 million for the same period in the prior year. Operating income was $1.6 million for the first nine months of fiscal 2005, compared to operating income of $602,000 for the comparable prior period. Net income was $1.4 million for the first nine months of fiscal 2005, compared to net income of $427,000 for the first nine months of fiscal 2004. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $767,000 for the third quarter of fiscal 2005, up from $708,000 for the third quarter of fiscal 2004. For the first nine months of fiscal 2005, EBITDA was $2.3 million, up from $2.1 million for the same period in the prior year. "While we may have fluctuations in the rate of growth from quarter to quarter, overall we believe ARI is entering a period of renewed revenue growth. Our established core catalog business and innovative new products provide the platform for sustainable, profitable growth: profits from the catalog business enable us to invest in new products to drive growth, while the recurring nature of the revenue enables that growth to be sustainable. As indicated previously, we anticipate that we will report increased net income for the year, with EBITDA flat or up slightly as we continue to invest in new products and in improving our operations," said Dearing. Dearing added that the company received two awards from the Wisconsin business community in the third quarter - eInnovate's Technical Knock-Out Award and the IQ (Innovation Quotient) Award from Small Business Times magazine and the Wisconsin Technology Council. "I am very proud of our employees, whose creativity and dedication to our customers resulted in these awards." About the Company ARI is a leading provider of electronic parts catalogs and related technology and services to increase sales and profits for dealers in the manufactured equipment markets. ARI currently provides approximately 83 parts catalogs (many of which contain multiple lines of equipment) for approximately 70 equipment manufacturers in the U.S. and Europe. More than 86,000 catalog subscriptions are provided through ARI to more than 28,000 dealers and distributors in more than 120 countries in a dozen segments of the worldwide equipment market including outdoor power, power sports, ag equipment, recreation vehicle, floor maintenance, auto and truck parts aftermarket, marine and construction. The Company builds and supports a full suite of multi-media electronic catalog publishing and viewing software for the Web or CD and provides expert catalog publishing and consulting services. ARI also provides dealer marketing services, including technology-enabled direct mail and a template-based dealer website service that makes it quick and easy for an equipment dealer to have a professional and attractive website. In addition, ARI e-Catalog systems support a variety of electronic pathways for parts orders, warranty claims and other transactions between manufacturers and their networks of sales and service points. ARI currently operates three offices in the United States and one in Europe and has sales and service agents in England and France providing marketing and support of its products and services. At Apr. 30, 2005, ARI Network's balance sheet showed a $5,001,000 stockholders' deficit, compared to a $6,551,000 deficit at Jul. 31, 2004. ATA AIRLINES: Wants to Reject GE Capital Lease for Six Buses ------------------------------------------------------------ ATA Airlines, Inc., and General Electric Capital Corporation are parties to a Commercial Transportation Lease Agreement dated March 23, 2001, pertaining to six buses manufactured by Thomas Built Buses, Inc. ATA Airlines subleased the buses to Chicago Express, Inc., which used them to transport passengers to and from its airplanes and the terminal at Midway International Airport in Chicago, Illinois. Jeffrey Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, reminds the U.S. Bankruptcy Court for the Southern District of Indiana that Chicago Express ceased flight operations in March 2005, and as a result, the Debtors no longer have any use for the Buses. Accordingly, the Buses are no longer necessary to the Debtors' continued operations. Pursuant to Section 365(a) of the Bankruptcy Code, the Debtors seek the Court's authority to reject the Bus Lease effective April 29, 2005, the date the Debtors surrendered possession of the Buses. 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. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) AUBURN FOUNDRY: Union Will Conduct Rule 2004 Exam on June 3 ------------------------------------------------------------ The Honorable Robert E. Grant of the U.S. Bankruptcy Court for the Northern District of Indiana, Fort Wayne Division, directs Auburn Foundry, Inc., to submit to an examination pursuant to Bankruptcy Rule 2004 on June 3, 2005, at 10:00 a.m. The Glass, Molders, Potter, Plastics and Allied Workers International Union, AFL-CIO-CLC, requested the examination. The Union wants Auburn to produce records of all unpaid medical benefits for the bargaining unit's members and their dependents to prepare an administrative expense claim. Richard J. Swanson, Esq., at Macey Swanson and Allman, represents the Union. Headquartered in Auburn, Indiana, Auburn Foundry, Inc. -- http://www.auburnfoundry.com/-- produces iron castings for the automotive industry and automotive aftermarket industry. The Company filed for chapter 11 protection on February 8, 2004 (Bankr. N.D. Ind. Case No. 04-10427). John R. Burns, Esq., and Mark A. Werling, Esq., at Baker & Daniels, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. AUTOBYTEL INC: Nasdaq Extends Listing Compliance Date to May 31 --------------------------------------------------------------- Autobytel Inc. (Nasdaq:ABTLE), a leading Internet automotive marketing services company, disclosed that a Nasdaq Listing Qualifications Panel has extended to May 31, 2005, the deadline for the Company to come into full compliance with Nasdaq Marketplace Rule 4310(c)(14). Nasdaq Marketplace Rule 4310(c)(14) requires the Company to make, on a timely basis, all filings with the Securities and Exchange Commission required by the Securities Exchange Act of 1934, as amended. The Panel's decision to continue the listing of the Company's shares on The Nasdaq National Market is subject to the condition that the Company file, on or before May 31, 2005, its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004, its Annual Report on Form 10-K for the fiscal year ended December 31, 2004, its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, and all required restatements. In addition, the Company's continued listing is conditioned on the Company timely filing all periodic reports with the Securities and Exchange Commission and Nasdaq for all reporting periods ending on or before December 31, 2006. If the Company is unable to comply with the conditions for continued listing required by the Panel, then the Company's shares of common stock are subject to immediate delisting from The Nasdaq National Market. The Company cannot provide any assurance that it will be able to meet the May 31, 2005, deadline established by Nasdaq to come into compliance with Nasdaq Marketplace Rule 4310(c)(14). If the Company's shares of common stock are delisted from Nasdaq, they may not be eligible to trade on any national securities exchange or the over-the-counter market. If the Company's common stock is no longer traded through a market system, it may not be liquid, which could affect its price. In addition, the Company may be unable to obtain future equity financing, or use its common stock as consideration for mergers or other business combinations. The Company intends to appeal any decision to delist its shares from The Nasdaq National Market, but cannot provide any assurance that its appeal will be successful. Any such appeal will not stay the decision to delist the Company's shares. Financial Restatements As previously announced, the Company will restate its financial statements for the full 2002 fiscal year, the second and third fiscal quarters of 2003, the full 2003 fiscal year, and the first and second fiscal quarters of 2004. The Company currently believes that the aggregate impact of the expected restated items on its balance sheet is a reduction of $1.6 million in stockholders' equity at June 30, 2004, and the net impact on its statements of operations during the period from January 1, 2002 through June 30, 2004 is a reduction in net income of $2.7 million, of which $1.6 million impacted the first six months of 2004. This change in net impact from that previously reported is primarily the result of inappropriate revenue recognition in fiscal years 2002 and 2003 and the first and second fiscal quarters of 2004, and inappropriate derecognition of an accrual in 2003, which should have been derecognized prior to 2002. This information, however, has not been audited and is subject to change and until such time as the Company is able to file with the Securities and Exchange Commission its financial statements for these periods, its existing financial statements should not be relied upon. About the Company Autobytel Inc. (Nasdaq:ABTLE), a leading Internet automotive marketing services company, helps retailers sell cars and manufacturers build brands through marketing, advertising, data and CRM (customer relationship management) products and programs. The Company owns and operates the automotive websites http://www.Autobytel.com/http://www.Autoweb.com/ http://www.Carsmart.com/http://www.Car.com/ http://www.AutoSite.com/http://www.Autoahorros.com/and http://www.CarTV.com/as well as AIC (Automotive Information Center), a trusted industry source of automotive marketing data and technology for over 20 years. Autobytel is also a leader in dealership lead management and CRM solutions and owns and operates AVV, Inc., a top provider of dealership CRM and sales management products, and Retention Performance Marketing, Inc., (RPM(R)), which powers dealerships with cutting-edge customer loyalty and retention marketing programs. Autobytel was the most visited new car buying and research destination in 2004, reaching millions of car shoppers as they made their vehicle buying decisions. Autobytel's car-selling sites and lead management products are used by more of the nation's top-100 e-dealers than any other program. AUXILIARY TANK: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Auxiliary Tank and Truck Accessories, Inc. 2909 Broadway Boulevard Garland, Texas 75041 Bankruptcy Case No.: 05-35652 Type of Business: The Debtor is an auto parts retailer. See http://www.auxiliarytruck.com/ Chapter 11 Petition Date: May 19, 2005 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtor's Counsel: Randy Ford Taub, Esq. 1004 Crystal Springs Drive Allen, Texas 75013 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ International Profit Association $32,618 1250 Barclay Boulevard Buffalo Grove, IL 60089 Arrow Speed $6,782 10614 King William Drive Dallas, TX 75220 Verizon Superpages $6,171 P.O. Box 619009 DFW Airport, TX 75261 Platinum Plus for Business $5,316 Curt Manufacturing $4,862 Inviro Plastics, Inc. $3,520 G.T.S. Telephone $3,420 J&A Manufacturing $2,481 Northern Leasing Systems $1,864 Slide Systems $1,577 Data Magic $1,158 Dallas Morning News $1,150 Sam Taliaferro $900 Progressive Automotive Systems $855 G&K Services $786 Transfer Flow, Inc. $682 Lawson Products $620 Cavalier $483 Yellow Transportation $443 Del City $370 BEAR STEARNS: Interest Shortfalls Prompt S&P to Watch Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on classes G, H, and J of Bear Stearns Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates from series 2001- TOP2 on CreditWatch with negative implications. The rating actions reflect the strong likelihood of future interest shortfalls due to the recovery of approximately $560,000 in litigation expenses related to the 1601 McCarthy litigation. Once interest shortfalls commence due to the recovery, they are expected to continue for several pay periods. As litigation is ongoing, interest shortfalls are expected to reoccur as new litigation expenses are recovered in the future. As more details become available regarding the timing and duration of the interest shortfalls, Standard & Poor's may revise its ratings as appropriate. Ratings Placed On Creditwatch Negative Bear Stearns Commercial Mortgage Securities Inc. Mortgage pass-thru certs series 2001-TOP2 Rating ------ Class To From Credit Enhancement ----- -- ---- ------------------ G BB+/Watch Neg BB+ 3.68% H BB-/Watch Neg BB- 2.99% J B+/Watch Neg B+ 2.18% BUEHLER FOODS: US Trustee Picks 9 Creditors to Serve on Committee ----------------------------------------------------------------- The United States Trustee for Region 10 appointed nine creditors to serve on the Official Committee of Unsecured Creditors in Buehler Foods, Inc., and its debtor-affiliates' chapter 11 cases: 1. D&K Healthcare Resources, Inc. Attn: Chuck Levy 8235 Forysth Boulevard St. Louis, Missouri 63105 Tel: 314-727-3485, Fax: 314-727-2951 Email: CHUCKLEVY@DKHEALTHCARE.COM 2. PepsiAmericas, Inc. Attn: W. Scott Nehs 3501 Algonquin Road Rolling Meadows, Illinois 60008 Email: Scott.Nehs@pepsiamericas.com 3. Retail Data Systems of Chicago Attn: Brian Podraza 4248 Belle Aire Lane Downers Grove, Illinois 60515 Tel: 630-435-7200, Fax: 630-435-5705 4. C.L. Frank Distributors, LLC Attn: Timothy P. Slaughter 2 Plum Street Wilder, Kentucky 41076 Tel: 859-442-4673, Fax: 859-442-4671 Email: tslaughter@castellinmicompany.com 5. Royal Crown Bottling Corp. Attn: Nancy King Hodge 1100 Independence Avenue Evansville, Indiana 47714 Tel: 812-424-7978, Fax: 812-421-3038 Email: nkhodge@rc-eville.com 6. Times-Mail Attn: Mark P. Wozniak 813 16th Street P.O. Box 849 Bedford, Indiana 47421 Tel: 812-277-7221, Fax: 812-275-4194 Email: markw@tmnews.com 7. Cadick Poultry Co., Inc. Attn: John B. Cadick 1311 Main Street Grandview, Indiana 47615 Tel: 812-649-4491, Fax: 812-649-5327 Email: JOHH.CADICK@CADICKFOODS.COM 8. Kraft Foods Global, Inc. Attn: Sandra Schirmang, Sr. Three Lakes Drive Northfield, Illinois 60093-2753 Tel: 847-646-6719, Fax: 847-646-4479 Email: SSCHIRMANG@KRAFT.COM 9. Coca-Cola Enterprises, Inc. Attn: William Kaye 31 Rose Lane East Rockaway, New York 11518 Tel: 516-374-3705, Fax: 516-569-6531 Email: billkaye@jllconsultants.com 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 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 Company filed for chapter 11 protection on May 5, 2005 (Bankr. S.D. Ind. Case No. 05-70961). Jeral I. Ancel, Esq., at Sommer Barnard Attorneys, PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated asssets of $10 million to $50 million and debts of $50 million to $100 million. CARROLS CORP: Lenders Waive Default Under Senior Credit Facility ---------------------------------------------------------------- Carrols Corporation obtained a Consent and Waiver from its lenders under its Loan Agreement dated as of Dec. 15, 2004, waiving the previously disclosed Event of Default caused by Carrols' delay in delivering its annual financial statements for the 2004 fiscal year, and extending the time period to deliver such financial statements, as well as its financial statements for the first fiscal quarter of 2005, to July 31, 2005. Carrols Corporation is one of the largest restaurant companies in the U.S. currently operating 538 restaurants in 17 states. Carrols is the largest franchisee of Burger King restaurants with 347 Burger Kings located in 13 Northeastern, Midwestern and Southeastern states. It also operates two regional Hispanic restaurant chains that operate or franchise more than 200 restaurants. Carrols owns and operates 127 Taco Cabana restaurants located in Texas, Oklahoma and New Mexico, and franchises eight Taco Cabana restaurants. Carrols also owns and operates 64 Pollo Tropical restaurants in south and central Florida and franchises 25 Pollo Tropical restaurants in Puerto Rico (21 units), Ecuador (3 units) and South Florida. * * * As reported in the Troubled Company Reporter on May 13, 2005, Standard & Poor's Ratings Services lowered its ratings on Syracuse, N.Y.-based Carrols Corp. and placed them on CreditWatch with developing implications. Both the corporate credit rating and the senior secured bank loan rating were lowered to 'CCC+' from 'B+', while the senior subordinated debt rating was lowered to 'CCC-' from 'B-.' "The downgrade and CreditWatch listing follow the company's disclosure that an event of default occurred under its senior credit facility as a result of Carrols' failure to timely furnish its audited financial statements for fiscal year 2004," said Standard & Poor's credit analyst Kristi Broderick. The senior secured credit facility is comprised of a $50 million five-year revolving credit facility and a $220 million six-year term loan B. Carrols has no outstanding borrowings (excluding $10.8 million of outstanding letters of credit) under the revolving credit facility and has $219.5 million principal outstanding on its term loan B. The company's delayed filing of its annual 10-K relates to a re- evaluation of accounting practices with respect to depreciation for leasehold improvements and buildings on leased land and its review of its accounting practices with respect to amortization of certain intangible assets and accounting for stock options. While Carrols has not yet filed its annual 10-K, it has concluded that it would be necessary to restate its financial statements for periods ended prior to Jan. 2, 2005. The event of default enables the lenders to terminate the revolving credit facility and accelerate the outstanding principal due on the term loan. This would clearly have an adverse effect on Carrols' financial condition. CASKET SHELLS: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Casket Shells Incorporated 432 First Street Eynon, Pennsylvania 18403 Bankruptcy Case No.: 05-52755 Type of Business: The Debtor is a leading manufacturer of quality burial caskets, specializing in customized caskets. See http://www.casketshellsinc.com/ Chapter 11 Petition Date: May 18, 2005 Court: Middle District of Pennsylvania (Wilkes-Barre) Judge: John J. Thomas Debtor's Counsel: Mark J. Conway, Esq. Law Offices of Mark J. Conway PC 502 South Blakely Street Dunmore, Pennsylvania 18512 Tel: (570) 343-5350 Fax: (570) 343-5377 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. CATHOLIC CHURCH: Spokane Publishes Sexual Abuse Claim Statistics ---------------------------------------------------------------- The Diocese of Spokane recently compiled and released a summary of statistics pertaining to sexual abuse claims against the diocese. Compiling the numbers served several purposes, said Father Steve Dublinski, Vicar General. First, the statistics provide harsh, black-and-white illumination of the situation so far. Understanding the breadth and depth of the situation reinforces its importance as a priority of diocesan life and ministry. Second, the report helps deliver the message of what's been done in the past. It provides a basis for present and future action as well. "Over and over again, Bishop Skylstad has asserted his commitment to openness and transparency," said Father Dublinski. "He has backed that up with concrete action, publicly and privately. Over and over again, the bishop and the diocese have been accused of cover-up, of secrecy. "Those kinds of accusations sometimes are made more out of anger and pain than out of fact," said Father Dublinski. "That's tragic, and it's understandable. But with the release of this information, we all hope that we can help people truly see just how committed this diocese remains to transparency and to action. Those aren't just words," he said. "Those are promises." The complete statistical breakdown is posted on the diocese's Web site http://www.dioceseofspokane.org/ Click on "A Safe Net for Children and Youth." Some 140 claimants, most male, have come forward with allegations of sexual abuse against priests and Religious of and/or serving in the Diocese of Spokane. Claims are broken down into four categories: Claims settled prior to the diocese's Chapter 11 filing in December 2004; unresolved claims in litigation; unresolved claims not in litigation, from individuals represented by counsel; and unresolved claims not in litigation, from individuals not represented by counsel. The earliest accusation of abuse dates back to 1932-36; the most recent, 1982-89. The largest damages claimed: $8 million. The least amount of damages claimed: $25,000. In most of the cases, the damage claim is unknown. Not all those who have reported sexual abuse to the diocese have wanted their name revealed, a request honored by the diocese. Some claimants have not requested that the alleged abuser's name be released, for a variety of reasons; in at least one instance, the alleged abuser is deceased; in another, the individual is deceased, and was not a priest of the Spokane Diocese to begin with. "The statistics are as clear as we can make them," said Father Dublinski. "From the date of the alleged abuse, to the date of the report to the diocese and, when applicable, the dates and amounts of settlements, these facts and figures are clear indicators of the bishop's commitment to resolving valid claims - with justice, equity, and fairness." The information helps everyone understand the situation, said Father Dublinski. Understanding can help assure it never happens again. By releasing the information to the secular media, perhaps the country's consciousness can be raised a bit, too, in terms of the extent of sexual abuse throughout American life and culture. It is a tragic situation that infects not just Churches -- and not just Catholic churches -- but schools, youth organizations and, most of all, families, regardless of social or economic standing. Understanding the extent of the problem is the first step in recognizing the problem, and then doing something about it. "Knowledge is power," said Father Dublinski. "Shared knowledge is shared power." The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTENNIAL CELLULAR: Moody's Upgrades 3 Sr. Notes' Junk Ratings --------------------------------------------------------------- Moody's Investors Service today upgraded the ratings of Centennial Cellular Operating Co. as described below. This concludes a review for possible upgrade initiated in January 2005. The rating outlook is stable. The affected ratings are: * Senior implied rating upgraded to B2 from B3; * Issuer rating upgraded to B3 from Caa1; * Senior Secured Credit Facilities due 2010/2011 upgraded to B1 from B2; * 10.125% Senior Notes due 2013 upgraded to B3 from Caa1; * 8.125% Senior Notes due 2014 upgraded to B3 from Caa1; and * 10.75% Senior Subordinated Notes due 2008 upgraded to Caa1 from Caa3. The ratings upgrade is based upon: * the growing profitability of Centennial; * its attainment of sustainable free cash flow; * as well as its recent initiative to use excess cash to reduce debt; * Moody's expectation that Centennial will continue to repay its obligations ahead of their maturity. * Moody's concerns regarding the company's high absolute debt level; * its business position in the US Wireless marketplace; and * the company's exposure to the less stable economy in the Dominican Republic. The B1 rating on the senior secured debt of the company reflects its priority position in the company's capital structure and Moody's opinion of the good collateral coverage available to these lenders as these obligations are secured by the stock and assets of all the company's material subsidiaries. The B3 rating on the senior unsecured notes reflects their subordination to the secured bank debt as well as the benefit these creditors receive because the co-obligor of these bonds is Centennial Puerto Rico Operating Company, an operating subsidiary that generates over 50% of consolidated EBITDA. The upgrade to Caa1 for the subordinated notes reflects the improved recovery prospects for this class as the principal amount of these obligations reduces. The stable outlook reflects Moody's opinion that Centennial has sufficient liquidity to meet its obligations over the intermediate term from cash on hand and undrawn revolver capacity. Further, Moody's expects Centennial to continue to generate meaningful amounts of free cash flow (cash from operations less capital expenditures) as its Caribbean operations grow offsetting higher near term capital spending and potential declines in US Wireless profitability. Going forward, the ratings would be positively affected should the ratio of free cash flow improve to above 8% or higher, although Moody's understands that this metric may come under near term pressure due to capital spending on the buildout of new markets in Michigan and the upgrade of the wireless network in Puerto Rico. The ratings would face downward pressure should free cash flow generation not prove sustainable, or the company increases its debt burden through strategic or other activity. In fiscal 2004, Centennial grew EBITDA 11.3% to $330.5 million (including the cable TV operations in Puerto Rico that were recently sold) as improvements in its Caribbean operations offset declines from it rural cellular operations in the US. Notably, Centennial generated free cash flow of $72.2 million in fiscal 2004, up from $59.4 in fiscal 2003. These favorable trends have continued through the first three quarters of the current fiscal year. For the last twelve months, free cash flow of $89.9 million represented 5.4% of total debt. Earlier this calendar year, Centennial sold its cable television operations in Puerto Rico for $155 million and is investing the proceeds to improve its competitive position in the US by augmenting the footprint of its Michigan cluster, as well as upgrading its wireless network in Puerto Rico. Additionally, Centennial recently repurchased $155 million of its 10.75% subordinated notes with excess cash (after an earlier $70 million repurchase of that issue). This combination of strong operating results and debt reduction are the primary drivers of the ratings upgrade. Going forward, Moody's expects Centennial to continue to generate free cash flow, despite materially higher capital expenditures in the near term, and that the company will continue to use excess cash to retire debt. Headquartered in Wall, New Jersey, Centennial has wireless operations in two rural areas of the continental US, and wireline and wireless operations in Puerto Rico and the Dominican Republic, with LTM revenues of approximately $900 million. CIDER RIDGE: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Cider Ridge L.L.C. 121 Brandy Highland Drive Oxford, Alabama 36203 Bankruptcy Case No.: 05-41754 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: May 19, 2005 Court: Northern District Of Alabama (Anniston) Debtor's Counsel: Harry P. Long, Esq. P.O. Box 1468 Anniston, Alabama 36202 Tel: (256) 237-3266 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ American Express Value of security: $8,870,000 25624 APX Financial Center $3,000,000 Minneapolis, MN 55474 Farmers & Merchants Bank $300,000 PO Box 390 Piedmont, AL 36272 Caterpillar Financial $114,764 PO Box 34001 Nashville, TN 37203-0001 ADL Engineering $63,404 Anniston Concrete $32,000 Alabama Power $12,990 Kirk Ponder $9,507 B,B & T Bank $7,310 B,B & T Bank $5,872 Young Oil $4,400 BSFS Equipment Leasing $2,407 Tractor Rental $750 ABS Business Systems $350 Cider Ridge Golf Course $266 Auto Supply $182 Alabama Power $175 Bel-Air Turf $168 COLLINS & AIKMAN: Wants to Hire Carson Fischer as Local Counsel --------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan for authority to employ Carson Fischer, P.L.C., as their co-counsel. Jay B. Knoll, Vice-President and General Counsel of Collins & Aikman Corporation, attests that Carson Fischer is particularly well-suited to serve as the Debtors' co-counsel because of its expertise in automotive insolvency matters. As co-counsel, Fischer will: (a) advise the Debtors regarding matters related to their customers including issues concerning possible customer accommodations to the Debtors, possible access and security issues, potential resourcing issues, and negotiate with customers regarding these issues; (b) advise the Debtors regarding their various relationships with vendors, existing supply contracts, continuity of supply issues and related matters, and negotiate with vendors concerning these issues; (c) advise the Debtors on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts; (d) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (e) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (f) take all necessary action to protect and preserve the Debtors' estates; (g) prepare motions, applications, answers, orders, reports, and papers necessary in the administration of the Debtors' estates; (h) take any necessary action on behalf of the Debtors to obtain confirmation of the Debtors' plan of reorganization; (i) represent the Debtors in connection with obtaining postpetition loans if necessary; (j) advise the Debtors in connection with any potential sale of assets; (k) appear before the Court, any appellate courts and the United States Trustee, and protect the interests of the Debtors' estates; and (l) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with Chapter 11 cases. Mr. Knoll assures the Court that the services of Carson Fischer is intended to be complementary and not duplicative of the services rendered by the Debtors' other co-counsel, Kirkland & Ellis, LLP. It is also contemplated that Carson Fischer will act with respect to those parties-in-interest and matters as to which Kirkland & Ellis may have a conflict. Carson Fischer received a $100,000 security retainer from the Debtors. In addition, Carson Fischer will bill for legal services at its standard hourly rates. The attorneys expected to counsel the Debtors and their hourly rates are: Joseph M. Fischer $495 Robert A. Weisberg $385 William C. Edmunds $350 Lawrence A. Lichtman $335 Christopher A. Grosman $235 Patrick J. Kukla $210 Gina M. Capua $150 Joseph M. Fischer, Esq., discloses that as part of its diverse practice, Carson Fischer appears in numerous cases, proceedings and transactions, some of which may represent claimants and parties in interest in the Chapter 11 Cases. Mr. Fischer is confident that based on a conflicts check, Carson Fischer does not represent any of the Debtors' creditors in connection with the Chapter 11 cases. Mr. Fischer assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. COLLINS & AIKMAN: Tandus' C&A Floorcoverings Unit Isn't Bankrupt ---------------------------------------------------------------- Tandus Group, Inc. reported Wednesday that its wholly owned subsidiary Collins and Aikman Floorcoverings, Inc. is not affiliated with the Collins & Aikman Corporation which has been identified in recent news articles surrounding its Chapter 11 filing and the resignation of its Chief Executive Officer. Collins and Aikman Floorcoverings, Inc. was an operating unit of Collins and Aikman Corporation until 1997 when it was then split off in a sale transaction led by its executive management team and a private equity sponsor. Since that time there have been no legal association or business relationship between the companies and they have operated independently. Collins and Aikman Floorcoverings, Inc. markets commercial carpets under the "C&A Floorcoverings" and "C&A" brand names. "The confusion caused by such similar company names and some common history is understandable; however, we want assure the marketplace that C&A Floorcoverings is healthy and stronger than ever," said Mac Bridger, CEO of Tandus. "With the synergies realized by being part of the Tandus Group, C&A is poised for even greater growth." On April 29, 2005, Tandus Group, Inc. reported its financial results for the fourth quarter and 2004 fiscal year ended January 29, 2005 for its Collins & Aikman Floorcoverings, Inc. and Subsidiaries. Net sales in fiscal 2004 increased a strong 9.5% and Adjusted EBITDA (as defined) for fiscal 2004 increased 19.5%. This announcement was made solely by Tandus Group, Inc. and was not sanctioned by anyone associated with Collins & Aikman Corporation. About the Company Tandus unites the industry's leading specialized flooring brands - Monterey, C&A, and Crossley. Drawing upon each brand's individual strengths, Tandus offers its customers single-source innovative product design and technology, comprehensive services, and environmental leadership. Based in Dalton, Ga., Tandus is a leading commercial floorcoverings company. More information can be found online at http://www.tandus.com/ COLO.COM: Asks Court for Final Decree Closing Bankruptcy Case ------------------------------------------------------------- Colo.com asks the U.S. Bankruptcy Court for the Northern District of California to enter a final decree to formally close its bankruptcy case. The Court confirmed the Debtor's First Amended Joint Plan of Liquidation on April 28, 2003. Pursuant to the confirmed Plan, all assets of the Debtor were to be liquidated and the proceeds distributed to the Debtor's creditors holding allowed claims. The Debtor tells the Court that entry of a final decree is appropriate because: a) all disputes regarding claims have been resolved and there are no more pending contested matters or adversary proceedings with the possible exception of miscellaneous collection activity in adversary proceedings in which the Debtor obtained a judgment that has not been satisfied; b) all allowed secured and priority claims have been paid in full and the Debtor has made three interim distributions to general unsecured creditors totaling $12,188,048.57, representing 4.1184% of those creditors' claims; c) virtually all the Debtor's assets have been liquidated, distributed or abandoned with the consent of the Creditors Committee except for approximately $302,000 cash on hand and the Debtor's interest in an Italian VAT refund claims of its Italian subsidiary; d) the Debtor will distribute to unsecured creditors in the near future the remaining cash on hand after payment of all administrative obligations and the Debtor will make a final distribution after it receives the proceeds from the Italian VAT refund claims after payment of any residual wind down costs; and e) all fess owed to the U.S. Trustee, including the 2004 fourth quarter fees have been paid and the Debtor will pay any remaining fees owed to the U.S. Trustee upon the Court's entry of a final decree order. Headquartered in Brisbane, California, Colo.com was a large collocation company with 22 data centers across the U.S. that filed for bankruptcy due to a slowdown in the Web hosting marketing business. The Company filed for chapter 11 protection on May 8, 2001 (Bankr. N.D. Calif. Case No. 01-31262). Richard M. Adler, Esq., at Law Offices of Winston and Strawn represents the Debtor in its restructuring efforts. COMBUSTION ENGINEERING: Committee Taps Frank/Gecker as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of Combustion Engineering, Inc., permission to employ Frank/Gecker LLP and substitute Frank/Gecker in place of Neal, Gerber & Eisenberg LLP as its counsel. The Committee chose Frank/Gecker as its counsel because of its experience in representing creditors' committees in chapter 11 cases and two attorneys with the Firm, Frances Gecker, Esq., and Joseph D. Frank, Esq., who previously worked at Neal Gerber, are most familiar with the Debtor's bankruptcy case. Frank/Gecker will: a) provide the Committee with legal advice with respect to its powers and duties the Debtor's bankruptcy case; b) assist the Committee in its investigation of the acts, conduct, assets, liabilities, financial condition, and operation of the Debtor's business and any other matters relevant to the Debtor's chapter 11 case; c) advise the Committee with respect to the confirmation of a plan of reorganization for the Debtor; and d) perform all other legal services for the Committee as required in the Debtor's chapter 11 case. Frances Gecker, Esq., a Partner at Frank/Gecker, is the lead attorney for the Committee. Ms. Gecker charges $475 per hour for her services. Ms. Gecker reports Frank/Gecker's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Joseph D. Frank Partner $425 Jeffrey M. Glass Partner $340 Micah R. Krohn Senior Counsel $330 Zane L. Zielinski Associate $210 Christina S. Smith Paralegal $165 Frank/Gecker assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Norwalk, Connecticut, Combustion Engineering, Inc., is the U.S. subsidiary of the ABB Group. ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impacts. The Company filed for chapter 11 protection on Feb. 17, 2003 (Bankr. D. Del. Case No. 03-10495). Curtis A. Hehn, Esq., at Pachulski Stang Ziehl Young & Jones and Jennifer Mo, Esq., at Kirkpatrick & Lockhart Nicholson Graham 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. COMBUSTION ENG'G.: Has Until July 6 to File Notices of Removal -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Combustion Engineering, Inc., an extension, through and including July 6, 2005, to file notices of removal with respect to pre- petition Civil Actions pursuant to 28 U.S.C. Section 1452 and Rule 9027 of the Federal Rules of Bankruptcy Procedure. On Aug. 8, 2003, the Honorable Alfred M. Wolin of the U.S. District Court confirmed the Debtor's Amended Plan of Reorganization. On Dec. 2, 2004, the U.S. Court of Appeals for the Third Circuit vacated Judge Wolin's confirmation order. The Debtor explains it is currently negotiating with its creditors and other parties-in-interest to formulate a revised chapter 11 plan. The Debtors tell the Court a further extension is warranted because: a) the extension will give the Debtor more opportunity to pursue a resolution of the matters raised in the Third Circuit Court Opinion and to obtain confirmation of a revised plan of reorganization; b) the extension will ensure that the Debtor does not forfeit valuable rights under Section 1452 of the Bankruptcy Code and the extension is in the best interests of the Debtor's estate and its creditors; and c) the extension will not prejudice the rights of the Debtor's adversaries in the Civil Actions since any party to a Civil Action that is removed may seek to have it remanded to the state court pursuant to 28 U.S.C. Section 1452(b). Headquartered in Norwalk, Connecticut, Combustion Engineering, Inc., is the U.S. subsidiary of the ABB Group. ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impacts. The Company filed for chapter 11 protection on Feb. 17, 2003 (Bankr. D. Del. Case No. 03-10495). Curtis A. Hehn, Esq., at Pachulski Stang Ziehl Young & Jones and Jennifer Mo, Esq., at Kirkpatrick & Lockhart Nicholson Graham 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. COMPUDYNE CORP: Asks for Oral Hearing to Stay Nasdaq Delisting -------------------------------------------------------------- CompuDyne Corporation (Nasdaq:CDCYE), an industry leader in sophisticated security products, filed a request for an oral hearing to stay the Nasdaq's delisting procedure. As previously reported, on May 4, 2005, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market stating that due to the Company's failure to timely file its Sarbanes-Oxley 404 Report, the Company was no longer in compliance with the requirements of Marketplace Rule 4310(c)(14). The Rule requires the Company to file with Nasdaq copies of all reports required to be filed with the Securities and Exchange Commission on or before the date they are required to be filed with the SEC. The Nasdaq Stock Market notified the Company that the Company's securities will be delisted from The Nasdaq Stock Market at the opening of business on May 13, 2005, unless the Company requests a hearing appealing the delisting with The Nasdaq Stock Market's Listings Qualifications Panel in accordance with the Marketplace Rules 4800 Series. Such a request for an appeal to the Panel will stay the delisting of the Company's securities pending the Panel's decision. The Company has timely filed its appeal to the delisting to the Panel and is working diligently to file its 404 Report. Internal Controls Management has determined that, as of Dec. 31, 2004, the Company did not maintain effective controls over the accounting for income taxes, including the determination of income taxes payable, deferred income tax assets and liabilities and the related income tax provision. Specifically, the Company did not have effective controls over the reconciliation of the difference between the tax basis and the financial reporting basis of the Company's assets and liabilities with the deferred income tax assets and liabilities. Additionally, there was a lack of oversight and review over the income taxes payable, deferred income tax assets and liabilities and the related income tax provision accounts by accounting personnel with appropriate financial reporting expertise. This control deficiency resulted in an audit adjustment to the fourth quarter 2004 financial statements. Additionally, this control deficiency could result in a misstatement of income taxes payable, deferred income tax assets and liabilities and the related income tax provision that would result in a material misstatement to annual or interim financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness. A material weakness is a control deficiency, or combination of control 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. Management further determined that, as of December 31, 2004, the Company did not maintain effective control over the accounting for and review of significant, non-routine transactions. Specifically, the Company did not have effective controls over the accounting for a non-routine change order to a customer contract to ensure that the accounting for the change order was in accordance with generally accepted accounting principles. This transaction impacted contract revenues, contract costs in excess of billings and accounts receivables. This control deficiency resulted in an audit adjustment to the fourth quarter 2004 financial statements. Additionally, this control deficiency could result in a misstatement of contract revenues, contract costs in excess of billings and accounts receivables that would result in a material misstatement to annual or interim financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness. The Company expects that these material weaknesses will result in an adverse opinion by the Company's independent registered public accounting firm on the effectiveness of the Company's internal control over financial reporting as of December 31, 2004. To address these material weaknesses, the Company has: (1) engaged an outside tax consultant, other than from the Company's independent registered public accounting firm, and intends to implement an ongoing training program to enhance the capabilities of its internal tax personnel; and (2) instituted new procedures requiring the accounting for all significant, non-routine transactions to be approved by the Corporate Accounting group. CompuDyne Corporation provides products and services to the public security markets. The Company operates in four distinct segments: Institutional Security Systems, Attack Protection, Federal Security Systems, and Public Safety and Justice. CONTINENTAL AIRLINES: Implements Codeshare Pact with Island Air --------------------------------------------------------------- Continental Airlines (NYSE: CAL) will begin codesharing with Island Air this fall, allowing Continental customers to conveniently access more community and resort destinations in Hawaii on flights operated by Island Air from Honolulu. Island Air serves more destinations in the state of Hawaii than any other airline. Cities to be served by Island Air from Honolulu International Airport under the 'CO' code include: Kahului and Kapalua West-Maui on Maui; Kona and Hilo on Hawaii; Lihue on Kauai; Lanai and Molokai. Continental customers will need to check in only once for these connecting flights, receiving seat assignments and boarding passes to their final destination as well as through service luggage transfers. "With the popularity of our Hawaii flights and the overall strong demand for service to Hawaii, we continue to look for more opportunities in the islands for our customers," said Mark Erwin, Continental's senior vice president Asia/Pacific and corporate development. "This agreement allows us to offer seamless service to all of the Hawaiian islands at all times." "We are excited to be able to partner with a leading carrier like Continental Airlines," said Robert Mauracher, CEO of Island Air. This codeshare agreement allows us to further expand our services to mainland markets. This partnership is a significant step forward for Island Air and we look forward to working with Continental Airlines for many years to come." Continental's service from Hawaii to its Houston, New York and Cleveland hubs provides travelers with connections to 280 destinations worldwide. The airline currently operates twice- daily nonstop flights between Houston and Honolulu; daily nonstop service between Houston and Kahului, Maui; between Newark Liberty International Airport and Honolulu; and between Los Angeles and Honolulu. The airline also operates service between Honolulu and Nagoya, Japan, Guam and the Marshall Islands. Members of Continental's frequent flyer program, OnePass, will be able to earn and redeem miles on Island Air flights. Continental Airlines -- http://continental.com/-- is the world's sixth-largest airline, serving 128 domestic and 111 international destinations -- more than any other airline in the world -- and serving nearly 200 additional points via codeshare partner airlines. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 51 million passengers per year. FORTUNE ranks Continental one of the 100 Best Companies to Work For in America, an honor it has earned for six consecutive years. FORTUNE also ranks Continental as the top airline in its Most Admired Global Companies in 2004. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services lowered its ratings on selected enhanced equipment trust certificates (EETCs) of Continental Airlines Inc. (B/Negative/B-3) as part of an industrywide review of aircraft-backed debt. Those and EETC ratings that were affirmed were removed from CreditWatch, where they were placed with negative implications Feb. 24, 2005. "The rating actions reflect Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of further multiple bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Philip Baggaley. "Downgrades of EETCs were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines and junior classes that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the credit analyst continued. As reported in the Troubled Company Reporter on Feb. 28, 2005, Standard & Poor's Ratings Services placed its single-B ratings on Continental Airlines Inc. equipment trust certificates and enhanced equipment trust certificates on CreditWatch with negative implications. S&P's rating action does not affect issues that are supported by bond insurance policies. "The CreditWatch review is prompted by Standard & Poor's concern that a prolonged difficult airline industry environment, characterized by high fuel prices, excess capacity, and intense price competition in the domestic market, has weakened the financial condition of almost all U.S. airlines and increased the risk of widespread simultaneous bankruptcies," said Standard & Poor's credit analyst Philip Baggaley. CREDIT SUISSE: Moody's Affirms $4.6M Class P Certificate at Caa2 ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of six classes and affirmed the ratings of twelve classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2001-CK6 as: -- Class A-2, $113,008,926, Fixed, affirmed at Aaa -- Class A-3, $578,921,000, Fixed, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class A-CP, Notional, affirmed at Aaa -- Class B, $39,057,000, Fixed, upgraded to Aaa from Aa2 -- Class C, $14,646,000, Fixed, upgraded to Aa2 from Aa3 -- Class D, $28,852,000, WAC Cap, upgraded to A1 from A2 -- Class E, $14,647,000, WAC Cap, upgraded to A2 from A3 -- Class F, $12,205,000, WAC Cap, upgraded to A3 from Baa1 -- Class G, $14,647,000, WAC Cap, upgraded to Baa1 from Baa2 -- Class H, $14,645,000, Fixed, affirmed at Baa3 -- Class J, $16,025,000, Fixed, affirmed at Ba1 -- Class K, $18,583,000, Fixed, affirmed at Ba2 -- Class L, $6,969,000, Fixed, affirmed at Ba3 -- Class M, $6,969,000, Fixed, affirmed at B1 -- Class N, $6,969,000, Fixed, affirmed at B2 -- Class O, $4,646,000, Fixed, affirmed at B3 -- Class P, $4,646,000, Fixed, affirmed at Caa2 As of the May 17, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 6.6% to $921.1 million from $986.4 million at securitization. The Certificates are collateralized by 196 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 7.5% of the pool, with the top ten loans representing 36.1% of the pool. Three loans, including the Bel Alliance GT 2 Portfolio Loan ($57.4 million - 6.2%), the second largest loan, have defeased and have been replaced with U.S. Government securities. The defeased loans represent 7.5% of the pool. Two loans have been liquidated from the pool, resulting in realized losses of approximately $284,000. Seven loans, representing 3.1% of the pool, are in special servicing. The largest loan in special servicing is the Biltmore Square Mall Loan ($26.0 million - 2.8%), the fifth largest loan, which was transferred to special servicing in April 2005 due to imminent default. The loan sponsor is Simon Property Group, Inc. (Moody's preferred stock rating Baa3; positive outlook). The property's occupancy has dropped to 65.0% from 82.0% at securitization. The loan was recently transferred to the special servicer and Moody's expects a significant loss. Moody's has estimated aggregate losses of $300,000 for the remaining specially serviced loans. Forty-four loans, representing 19.6% of the pool, are on the master servicer's watchlist. Moody's was provided with partial year or calendar year 2004 operating results for 93.5% of the performing loans. Moody's loan to value ratio is 89.3%, compared to 87.9% at securitization. The upgrade of Classes B, C, D, E, F and G is primarily due to increased subordination levels. The top three loans represent 15.5% of the outstanding pool balance. The largest loan is the Avalon Pavilions Loan ($69.4 million - 7.5%), which is secured by a 932-unit luxury multifamily property located approximately 7 miles east of Hartford in Manchester, Connecticut. The property's performance has recently been impacted by competitive market conditions, which have resulted in increased rental concessions and decreased revenue. The property was 94.0% occupied as of September 2004, compared to 96.0% at securitization. The loan is on the master servicer's watchlist. Moody's LTV is 97.2% compared to 86.7% at securitization. The second largest loan is the Washington Design Center Loan ($47.3 million - 5.1%), which is secured by a 387,500 square foot showroom/office building located in Washington, D.C. The showroom space primarily serves tenants in the residential furnishing and building products industries. The property's performance has been stable since securitization. The property is 97.0% occupied, compared to 95.0% at securitization. Moody's LTV is 86.5%, compared to 89.6% at securitization. The third largest loan is the Rockland Center Loan ($26.7 million - 2.9%), which is secured by a 259,300 square foot retail center located approximately 30 miles northwest of New York City in Nanuet, New York. The property 100.0% occupied, the same as at securitization, and is anchored by Pathmark, Office Depot and Petsmart. Moody's LTV is 87.2%, compared to 90.1% at securitization. The pool's collateral is a mix of: * retail (38.0%), * multifamily (27.7%), * office (10.7%), * mixed use (9.0%), * U.S. Government securities (7.5%), * industrial and self storage (6.1%) and * lodging (0.9%). The collateral properties are located in 36 states and Washington, D.C. The highest state concentrations are: * California (12.7%), * Texas (9.0%), * North Carolina (8.6%), * Connecticut (7.5%) and * Florida (7.1%). All of the loans are fixed rate. CREDIT SUISSE: Moody's Junks Class M & N Mortgage Certificates -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes, downgraded the ratings of three classes and affirmed the ratings of ten classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2001- CK1 as: -- Class A-1, $31,988,970, Fixed, affirmed at Aaa -- Class A-2, $149,000,000, Fixed, affirmed at Aaa -- Class A-3, $498,435,000, Fixed, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class A-Y, Notional, affirmed at Aaa -- Class A-CP, Notional, affirmed at Aaa -- Class B, $42,917,000, Fixed, upgraded to Aaa from Aa2 -- Class C, $45,441,000, Fixed, upgraded to A1 from A2 -- Class D, $12,621,000, Fixed, upgraded to A2 from A3 -- Class E, $12,623,000, Fixed, upgraded to A3 from Baa1 -- Class F, $20,196,000, Fixed, upgraded to Baa1 from Baa2 -- Class G, $17,672,000, Fixed, affirmed at Baa3 -- Class H, $17,450,000, Fixed, affirmed at Ba1 -- Class J, $27,421,000, Fixed, affirmed at Ba2 -- Class K, $7,479,000, Fixed, affirmed at Ba3 -- Class L, $7,478,000, Fixed, downgraded to B2 from B1 -- Class M, $14,957,000, Fixed, downgraded to Caa1 from B2 -- Class N, $4,986,000, Fixed, downgraded to Caa2 from B3 As of the May 18, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 7.5% to $921.8 million from $997.1 million at securitization. The Certificates are collateralized by 136 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 8.2% of the pool, with the top ten loans representing 41.3% of the pool. The pool includes two investment grade shadow rated loans, representing 7.6% of the pool, and a conduit component, representing 92.4% of the pool. Five loans, representing 3.5% of the pool, have defeased and have been replaced with U.S. Government securities. One loan has been liquidated, resulting in a realized loss of approximately $19,000. Five loans, representing 1.5% of the pool, are in special servicing. Moody's has estimated aggregate losses of $700,000 for all of the specially serviced loans. Thirty-three loans, representing 37.6% of the pool, are on the master servicer's watchlist. Watchlisted loans include four of the top ten loans in the pool. Moody's was provided with partial year or calendar year 2004 operating results for 99.0% of the performing loans. Moody's loan to value ratio for the conduit component is 87.9%, compared to 84.5% at securitization. The upgrade of Classes B, C, D, E and F is primarily due to increased subordination levels. The downgrade of Classes L, M and N is due to LTV dispersion. Based on Moody's analysis, 27.9% of the conduit pool has a LTV greater than 100.0%, compared to 1.0% at securitization. Eighteen loans, representing 7.0% of the pool, have debt service coverage of 0.9x or less based on the borrowers' reported operating performance and the actual loan constant. The largest shadow rated loan is the First Union Building Loan ($35.3 million - 3.8%), which is secured by a 256,000 square foot office condominium interest in two adjacent office buildings located in downtown Philadelphia, Pennsylvania. The property is 100.0% leased by Wachovia Bank (Moody's senior unsecured rating Aa2; lease expiration 2020). Moody's current shadow rating is Baa2, the same as at securitization. The second shadow rated loan is the 747 Third Avenue Loan ($34.7 million - 3.8%), which is secured by a 410,000 square foot office building located in midtown Manhattan. The building is occupied primarily by smaller tenants with the largest tenant occupying 7.3% of the premises. Although the property's occupancy has dropped to 92.4% from 98.0% at securitization, financial performance has improved due to higher rental rates. Moody's current shadow rating is Baa1, compared to Baa2 at securitization. The top three conduit loans represent 20.2% of the outstanding pool balance. The largest conduit loan is the Stonewood Center Mall Loan ($76.2 million - 8.2%), which is secured by a 1.0 million square foot regional mall located approximately 13 miles southeast of Los Angeles, in Downey, California. The mall is anchored by J.C. Penney, Robinsons-May, Sears and Mervyn's. The mall is 99.0% occupied, compared to 94.0% at securitization. Moody's LTV is 67.7%, compared to 74.4% at securitization. The second largest conduit loan is the 150 Spear Street Loan ($74.5 million - 8.1%), which is secured by a 256,000 square foot office building located in downtown San Francisco, California. The largest tenant is Providian Financial Corporation (Moody's senior unsecured rating B2; on review for possible upgrade; 31.0% NRA; lease expiration June 2006). The property was 98.0% occupied at securitization. It is expected that occupancy will drop to 73.0% at the end of this month due to the lease expiration of Wachovia Bank (12.0% NRA). Wachovia vacated its premises in January 2003 but has continued to make rental payments for the duration of its lease term. The property's net operating income has declined significantly since securitization as both occupancy and rental rates have declined, and it is expected that the property's performance will continue to be negatively impacted by the weak San Francisco office market. Moody's LTV is in excess of 100.0%, compared to 89.7% at securitization. The third largest conduit loan is the Central Plaza Loan ($36.3 million - 3.9%), which is secured by a 786,000 square foot office complex located in Los Angeles, California. The property 86.0% occupied, essentially the same as at securitization. The largest tenant is Pacific Bell (17.0% NRA; lease expiration July 2005). The property's net operating income has increased significantly due to increased rental rates. Moody's LTV is 75.0%, compared to 84.5% at securitization. The pool's collateral is a mix of: * office and mixed use (32.7%), * retail (29.4%), * multifamily (24.4%), * industrial and self storage (8.2%), * U.S. Government securities (3.5%) and * lodging (1.8%). The collateral properties are located in 33 states. The highest state concentrations are: * California (34.4%), * Texas (7.9%), * Pennsylvania (7.6%), * New York (6.8%) and * Florida (4.3%). All of the loans are fixed rate. CREDIT SUISSE: Losses Prompt Fitch to Withdraw Junk Ratings ----------------------------------------------------------- Fitch Ratings withdrew the 'C' rating of Credit Suisse First Boston (CSFB) Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 1999-C1 class N. The balance has been reduced to zero due to realized losses caused by the liquidation of the Blue Hills Office Park in Canton, Massachusetts. DELPHI CORP: Moody's Assigns B1 Rating to Proposed Term Loan B -------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of Delphi Corporation, senior implied to B2 from Ba2, and has assigned a B1 rating to the company's proposed new term loan B. Delphi is seeking to increase its term revolving credit facility from $1.5 billion up to $2.0 billion and to raise a new 6 year term loan from its banks. The $750 million term loan has been launched by the agent banks, and may be increased up to $1 billion. The rating actions reflect the outlook for further operating losses and negative free cash flow generation at Delphi as a result of: * lowered expectations of auto production volumes in North America, particularly from its largest customer, General Motors; * an uncompetitive cost structure in its North American operations; and * substantial funding requirements for its domestic pension plans and ongoing restructuring programs. By sourcing up to $1 billion from the term loan and increasing the amount of its committed term revolver under revised terms and conditions, the company will secure additional resources and improved capacity to address its legacy cost issues and $0.5 billion of maturing notes over the next year. However, in structuring the bank transactions as secured obligations the priority of unsecured creditors will be adversely affected, and the lower ratings for junior obligations within the company's capital structure consider the potential for lower recovery in distressed scenarios. Given the continued pressures on automotive production in North America, the company's continued concentration of sales to GM, and the need to take further, as yet unspecified, actions to achieve a more competitive cost structure, Moody's believes that Delphi's near term earnings prospects remain uncertain and that cash flow shortfalls could require further external funding which should be accomodated within the new credit structure. Consequently, the rating outlook is negative. Ratings downgraded were: Delphi Corporation: * Senior Implied to B2 from Ba2 * Bank revolving credit facility to B1 from Ba2 (incorporating the granting of security for the facility in conjunction with the new term loan) * Senior Unsecured to B3 from Ba2 * Shelf ratings to (P)B3 from (P)Ba2 for senior unsecured; to (P)Caa2 from (P)Ba3 for subordinated, and to (P)Ca from (P)B1 for preferred * Issuer rating to B3 from Ba2 Delphi Trust(s): * Backed preferred stock to Caa2 from Ba3 * Shelf ratings to (P)Caa2 from (P)Ba3 Ratings assigned were: Delphi Corporation: * Senior Secured term loan at B1 * Delphi Corporation's short term rating is unchanged at Not prime Delphi faces a significant challenge in achieving a turnaround of its auto parts business and stabilizing its financial position. The company's cost structure is burdened by significant legacy liabilities for retirees and high wage and benefit costs for active workers. The declining production volumes of North American auto makers, particularly GM, have reduced operating efficiency and exacerbated this weakness in the company's cost structure. At the same time, the company's margins have been squeezed by the continued price reductions granted to OEM's and rising prices for commodity materials such as steel and plastic resins. Moreover, the company continues to carry a number of business units in its Automotive Holdings Group that represent an ongoing drag on performance. While Delphi has pursued restructuring initiatives to address its cost structure, they have been more than offset by the current adverse trends, and more significant actions are needed to sustain the company's long term competitive viability. While the broader environment in which auto OEM's are seeking to achieve labor cost concessions could provide opportunities for Delphi to achieve some improvements in its cost structure, the company has not yet articulated a specific strategy. Consequently, Moody's anticipates that Delphi may continue to demonstrate weak performance, including operating losses and cash flow deficits for the foreseeable future. In addition to its operating weaknesses, Delphi must address several other business and financial challenges during the near term. These include: * addressing management succession at the CEO and CFO levels; * resolving accounting and SEC investigations which have delayed its filing of financial statements; * addressing possible material weaknesses in its internal controls which led to accounting irregularities; * resolving pending shareholder litigation; and * ensuring its continued access to adequate funding to address upcoming pension contributions and debt maturities. The proposed bank financing, in conjunction with existing cash resources, should provide adequate liquidity for near term needs, but is contingent on the company's ability to resolve its accounting issues and provide financial statement before the end of September. The ratings anticipate the successful completion of this financing within that timeframe. Ultimately, the company's rating outlook will be a function of a new management team's ability to define and execute a long term strategy to address the company's business and financial challenges and further improve the company's liquidity and funding structure. Delphi's financing initiatives will provide near term financing flexibility to allow the company to begin to address business challenges while meeting upcoming cash needs. Over the next 15 months Delphi will face contributions to its domestic pension plans of approximately $1.7 billion and the maturity of a $500 million note issue. Further, ongoing restructuring actions to lower its employment costs could add an additional $200 million in cash outflows over the same time frame. When combined with the adverse effects on cash flow of lower production volumes from General Motors, un- recouped higher raw material costs, and agreed customer price- downs, Delphi is expected to require additional external funding over the near term which the increased size of the revolver and funding from the new term loan address. Asset sale proceeds may supplement cash flow from operations, but Moody's would expect the net effect to result in the need for higher debt levels by mid- 2006 than the approximately $4.3 billion pro forma balance sheet level at March 31, 2005. When the present value of operating leases are included in adjusted debt as well as use of securitization and factoring facilities, the company's leverage would be in the mid-to-high 5 times range (Adjusted debt ex-pension/EBITDAR). The company's recent announcement of the need to establish a valuation allowance against its deferred tax assets is expected to result in substantial negative shareholders equity, but will not have a cash flow impact. Delphi's funding plans are designed to address the company's requirements by maintaining substantial balance sheet liquidity and committed revolving credit availability which in total could be up to approximately $3 billion. Nonetheless, the incremental leverage taken on results in higher carrying costs. Debt coverage ratios will weaken as the current and prospective challenging operating environment continues to adversely affect profitability and cash flows. With higher leverage, weaker debt protection measures, and negative cash flow, balanced by a meaningful liquidity profile, the senior implied rating has been reduced to B2. A negative outlook has been assigned in light of the potential need for higher levels of indebtedness, uncertainties associated with the values and timing of future asset sales, and continuing correlation to GM's North American production volumes and market share. Delphi is planning to put in place a secured six year bank term loan of between $750 million and $1,000 million. In addition, the company expects to increase its term revolving credit from $1.5 billion up to $2.0 billion. Delphi will provide collateral to the banks to raise the term loan and increase the revolving credit it (the company's existing $1.5 billion 364 day unsecured revolver will expire in mid-June 2005). The new term loan and the continuing revolving credit will have a first priority lien on substantially all of Delphi's domestic tangible and intangible assets with security interests over the company's domestic manufacturing assets limited to levels below the negative pledge basket in its indentures for unsecured notes. Funded amounts under the term loan and usage of the revolving credit will be subject to a borrowing base against US accounts receivable, inventory and limited amounts of PP&E. The bank credit agreement will revise the company's sole financial covenant to be a defined senior secured debt to defined consolidated last twelve month EBITDA. The latter will add-back certain non-cash restructuring expenditures and the non-cash portion of OPEB expense. Secured debt will include usage of the on-balance sheet accounts receivable securitization and factoring facilities but will be net of consolidated cash in excess of $500 million. The covenant level will be set at 2.75 times initially, but will step down in the second half of 2006 to 2.5 times, and to 2.25 times in 2007 and beyond. Under current expectations Delphi should maintain adequate room under this covenant. Current levels of U.S. working capital and agreed valuations of the PP&E would currently support up to $3 billion of commitments, but usage going forward will need to fit within the borrowing base limitation. The bank's collateral will also include shareholdings in certain domestic and international subsidiaries, with the latter limited to 65% interests, residual interests in receivables sold to the securitization conduit, and inter-company debt. The credit facilities will be guaranteed by all material domestic subsidiaries. As a result of the magnitude of pledged assets, the type of collateral, anticipated usage, and borrowing base structure, a B1 rating has been assigned to the first lien obligations, one notch higher than senior implied. The position of unsecured creditors will be adversely affected by the collateral given to the bank facilities. However, at least $1.2 billion of U.S. manufacturing PP&E is expected to remain un- encumbered. Pro-forma unsecured obligations will total approximately $2.6 billion at the end of March, inclusive of the trust preferred obligations. Senior unsecured obligations are expected to constitute roughly 50% of the pro forma balance sheet debt but have been assigned a B3 rating to recognize the priority interests of the first lien obligations. The wider notching reflects the prevalence of the collateral interests over the more liquid assets given to the bank facilities and the resultant lowered recovery expectations for unsecured obligations in a distress scenario. Preferred obligations of Delphi Trust are driven by the trust's investment in junior subordinated debt of Delphi. Factors which could lead to lower ratings include: * failure to complete the planned refinancing in a timely fashion; * persistent levels of negative free cash flow which would cause leverage to increase beyond 6 times; * inability to adapt its business to lower production volumes and define a business plan that facilitates a return to profitability and at least break even cash flow for 2006; and * any adverse developments in the company's accounting and SEC investigations or pending shareholder litigation. Factors which could stabilize the outlook include: * successful implementation of restructuring initiatives that restore operating profitability; * EBIT/interest coverage sustained at or above 1.5 times; * leverage retreating and sustained meaningfully below 5 times; and * a demonstrated ability to generate better than break-even levels of free cash flow net of pension obligations. Delphi Corp., headquartered in Troy, Michigan, is one of the world's largest suppliers of automotive components and had annual revenues of approximately $29 billion in 2004. DT INDUSTRIES: Plan Filing Exclusivity Intact Until July 6 ---------------------------------------------------------- DT Industries, Inc., and its debtor-affiliates sought and obtained an extension of their exclusive periods to file and solicit acceptances of a chapter 11 plan. The U.S. Bankruptcy Court for the Southern District of Ohio gave the Debtors until July 6, 2005, to file a plan, without interference from any other party-in- interest. The Court also gave the Debtors until September 4 to solicit acceptances of that plan. As previously reported, Julia W. Brand, Esq., at Coolidge Wall Womsley & Lombard, in Dayton, Ohio, contended that the size and complexity of the Debtors' chapter 11 cases warrants an extension of the Exclusivity Periods. She reminded the Court that there are 14 separate Debtors in this proceeding. When DT Industries, Inc., filed for bankruptcy, it was a publicly traded company that, along with several other Debtors, continued to operate its business, had hundreds of employees, and was a party to numerous executory contracts. As stated in their schedules, the Debtors had over $15 million in assets and over $150 million in debt when they filed for chapter 11 protection. Accordingly, the Debtors' cases are large and complex, presenting a substantial number of legal questions and challenges in the areas of bankruptcy, real estate, corporate law, labor, and intellectual property. For these reasons alone, Ms. Brand argued, an extension of the Exclusive Periods is warranted to allow the Debtors more time to formulate a plan. Ms. Brand told the Court that the Debtors are cooperating with their secured lenders, and, with the consent of the Official Committee of Unsecured Creditors, consummated the sale of substantially all of their assets to Assembly and Test Worldwide, Inc. The Debtors accomplished this feat in less than two months, after they extensively marketed their property and devised an expedited, but thorough, sale and auction process approved by the Court. The Debtors then continued their efforts to sell their United Kingdom subsidiaries. These efforts resulted in a Court-approved sale of the Debtors' United Kingdom subsidiaries, and certain inter-company debt owed by the Debtors' United Kingdom subsidiaries, to Managed Technologies Limited. Headquartered in Dayton, Ohio, DT Industries, Inc. -- http://www.dtindustries.com/-- is an engineering-driven designer, manufacturer and integrator of automated systems and related equipment used to manufacture, assemble, test or package industrial and consumer products. The Company and its debtor-affiliates filed for chapter 11 protection on May 12, 2004 (Bankr. S.D. Ohio Case No. 04-34091). Ronald S. Pretekin, Esq., and Julia W. Brand, Esq., at Coolidge Wall Womsley & Lombard, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $150,593,000 in assets and $142,913,000 in liabilities. DT INDUSTRIES: Selling 1,527 Shares of Polaroid Holding Stock ------------------------------------------------------------- DT Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division at Dayton, for authority to sell 1,527 shares of Polaroid Holding Company common stock. The stock came from a distribution on account of a claim that the Debtors hold against Polaroid Holding. The Debtors tell the Court they have sold substantially all of their assets and have ceased to operate. As such, the Polaroid stock is of no practical use to the Debtors. DT Industries' secured lenders have consented to the sale of the Polaroid Stock free and clear of liens. Headquartered in Dayton, Ohio, DT Industries, Inc. -- http://www.dtindustries.com/-- is an engineering-driven designer, manufacturer and integrator of automated systems and related equipment used to manufacture, assemble, test or package industrial and consumer products. The Company and its debtor-affiliates filed for chapter 11 protection on May 12, 2004 (Bankr. S.D. Ohio Case No. 04-34091). Ronald S. Pretekin, Esq., and Julia W. Brand, Esq., at Coolidge Wall Womsley & Lombard, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $150,593,000 in assets and $142,913,000 in liabilities. E.R. HOFFMAN: Case Summary & 2 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: E.R. Hoffman Properties, LLC 71 Tamal Vista Boulevard Corte Madera, California 94925 Bankruptcy Case No.: 05-11229 Chapter 11 Petition Date: May 19, 2005 Court: Northern District of California (Santa Rosa) Debtor's Counsel: John H. MacConaghy, Esq. Law Offices of John H. MacConaghy 466 1st Street East Sonoma, California 95476 Tel: (707) 935-3205 Total Assets: $6,608,156 Total Debts: $4,513,954 Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Belzer, Hulchihy & Murray Professional services $15,000 3650 Mt. Diablo Blvd Lafayette CA 94549 Clay Leong Professional services $7,005 51 East Campbell Avenue, Suite 101G Campbell CA 95008 ELDORADO RESORTS: Weak Performance Prompts S&P to Watch Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Eldorado Resorts LLC, including its 'B+' issuer credit rating, on CreditWatch with negative implications following the assessment that operating performance at the Eldorado Hotel & Casino for the first quarter ended March 31, 2005, was weaker than previously expected. In resolving the CreditWatch listing, Standard & Poor's will review the trends in the Reno market and assess the intermediate-term implications to credit measures and the entity's liquidity position. Standard & Poor's has determined that if a downgrade were to occur, it would be limited to one notch. ENRON CORP: Edison Wants Administrative Expense Payment Allowed --------------------------------------------------------------- The State of California established the California Power Exchange to operate wholesale markets and facilitate the trading of electricity, in conjunction with the California Independent System Operator Corporation. The Power Exchange and the ISO act as clearinghouses, arranging purchases and sales of power by the participants in the markets they operate and administer. Southern California Edison Company is an investor-owned utility engaged in the purchase, transmission, distribution and sale of electricity in California. Enron Corp. and its affiliates, Enron Power Marketing, Inc., Enron Energy Services, Inc. and Enron Energy Marketing Corp., as participants in the California power markets, purchase electricity through the Power Exchange and the ISO for resale to customers. In December 2002, the Debtors notified the ISO that they had substantially underreported the amount of electricity that EESI and EEMC reported in July 2001 through November 2002. The Debtors assert that the errors in reading meters caused their underreporting and that these errors occurred before and after the Petition Date. Philip Bentley, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, tells the Court that the Debtors did not specify the amounts of their underreported electricity. According to the Debtors, they do not have "reliable estimates of the dollar value magnitude of the combination of these errors" and believe the errors to be "quite likely to be material." The Debtors estimate the magnitude of the underpayment to the ISO to be between $15 million and $50 million. Because of the underreporting, the ISO billed Edison and other takers of electricity for their shares of the Debtors' underpayment in the form of Unaccounted For Energy charges. Although the precise amount of the charge attributable to the underreporting has yet to be established, the ISO billed Edison, and Edison paid, over $27 million in UFE charges for postpetition periods. On February 11, 2003, ISO notified Edison that the Debtors failed to further provide meter data or additional collateral to ISO to secure the underpayments, as required by the ISO Tariff. Therefore, ISO suspended the Debtors' trading and scheduling rights. ISO advised market participants that each seller of power to the ISO should directly pursue claims against the Debtors pursuant to the ISO Tariff. Accordingly, Edison asks the Court to allow, as an administrative claim, the Debtors' liability to Edison with regards to the underreporting. Since ISO has not provided Edison with any statement of the amounts owed by the Enron Entities for the underreporting, Edison seeks payment of an administrative claim in an unliquidated amount. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 142; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXIDE TECHNOLOGIES: Moody's Reviews New $290M Notes' Caa1 Rating ---------------------------------------------------------------- Moody's Investors Service placed the ratings for Exide Technologies, Inc. and its foreign subsidiary Exide Global Holdings Netherlands CV on review for possible downgrade. Management announced that a preliminary evaluation of Exide's results for the fourth quarter ended March 2005 strongly indicates that the company will be in violation of its consolidated adjusted EBITDA and leverage ratios as of fiscal year end. Moody's considers this is a significant event, given that these covenants were all very recently reset during February 2005 in connection with Exide's partial refinancing of its balance sheet. The company has initiated amendment negotiations with its lenders, but will not have access to any portion of the $69 million of unused availability under its revolving credit facility until the amendment process is completed. Exide had approximately $76.7 million of cash on hand as of the March 31, 2005 fiscal year end reporting date. However, this amount had declined to about $42 million as of May 17, 2005 due to the company's use of cash to fund seasonally high first quarter working capital needs, as well as approximately $8 million in pension contributions and a required $12 million payment related to a hedge Exide has in effect. These ratings were placed on review for possible downgrade: -- Caa1 rating for Exide Technologies' $290 million of proposed unguaranteed senior unsecured notes due March 2013; -- B1 ratings for approximately $265 million of remaining guaranteed senior secured credit facilities for Exide Technologies and Exide Global Holdings Netherlands CV, consisting of: * $100 million multi-currency Exide Technologies, Inc. shared US and foreign bank revolving credit facility due May 2009; * $89.5 million remaining term loan due May 2010 at Exide Technologies, Inc.; * $89.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; * Euro 67.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; -- B2 senior implied rating for Exide Technologies, Inc.; -- Caa1 senior unsecured issuer rating for Exide Technologies, Inc. Exide additionally has in place a $60 million floating rate convertible subordinated note due September 2013 which is not rated by Moody's. The decision to place Exide's ratings on review for possible downgrade incorporated several new developments. Exide incurred more than $15 million of unusual charges during the fourth quarter ended March 31, 2005 which management maintains will be non- recurring. These charges included: * about $4.5 million of inventory writedowns for obsolescence and physical adjustments; * about $6 million of reduced overhead cost absorption caused by a temporary lowering of production aimed at realizing a permanent reduction in inventory; and * about $5.5 million of costs incurred during the fourth quarter related to Sarbanes-Oxley compliance. Total spending on Sarbanes-Oxley compliance issues was very significant at approximately $12 million over the full fiscal year ended March 2005. Exide has not yet been informed by its auditors whether any material internal deficiencies will be cited. Management also acknowledged that the company incurred approximately $5 million of additional costs during the fourth quarter ended March 2005 for non-lead commodity costs associated with purchases of caustic soda, coke, petroleum, and plastic resin. While lead recovery exceeded 70% overall, Exide still incurred $8 million of additional lead costs during the most recent quarter. Capital expenditures are expected to exceed $90 million during fiscal 2006, up year-over-year from about $76 million. Much of the increased spending is essential for improving Exide's productivity, but the payback should be relatively quick. Gordon Ulsh, Exide's new CEO, joined the company in early April 2005. The company's board had been conducting a prolonged search that lasted about six months in order to fill this critical position. Mr. Ulsh identified a series of steps during the company's May 17, 2005 conference call, which he plans to implement with the goal of operating the company more strategically. Moody's will meet with Mr. Ulsh and other members of management before concluding the review process. In addition, Moody's will look for Exide to provide a revised financial plan, the audited fiscal year end report, preliminary first quarter fiscal 2006 results, and the terms of the bank amendment that is negotiated. Moody's review will be focused on: * prospective availability liquidity levels; * the anticipated cushion under revised covenants; * the likelihood that Exide will incur additional nonrecurring charges; * Moody's evaluation of the probability that Exide's updated financial plan accurately project results for the upcoming year and that the company will achieve cost savings and enhanced linking of related business functions; * the outcome of the review of internal controls under Section 404 of the Sarbanes-Oxley Act; * the current customer pricing environment and related competitive pressures; and * potentially other factors. Exide, headquartered in Lawrenceville, New Jersey, is one of the largest global manufacturers of lead acid batteries, with net sales approximating $2.65 billion. The company manufactures and supplies lead acid batteries for transportation and industrial applications worldwide FEDERAL-MOGUL: U.S. Trustee Amends Creditors' Committee Membership ------------------------------------------------------------------ Gramercy Capital LLC, one of the members of the Official Committee of Unsecured Creditors appointed in Federal-Mogul Corporation's Chapter 11 cases, has become Wilfrid Aubrey LLC. Accordingly, United States Trustee for Region 3, Kelly Beaudin Stapleton, amends the Creditors Committee's membership pursuant to Section 1102(a)(1) of the Bankruptcy Code. The Committee is currently composed of: 1. Wilfrid Aubrey LLC Attn: Nicholas W. Walsh 29 West 19th Street 3rd Floor, New York, NY 10011 Tel: 212-675-4906, Fax: 212-675-3626; 2. Aspen Advisors, LLC Attn: Neil Subin 152 West 57th Street New York, NY 10019 Tel: 212-223-0089, Fax: 212-697-4687; 3. U.S. Bank Trust National Association As Indenture Trustee Attn: Lawrence Bell 1420 Fifth Avenue 7th Floor, Seattle, WA 98101 Tel: 206-344-4654, Fax: 206-344-4630; 4. NTN Bearing Corporation of America Attn: Craig K. Dunn, 1600 E. Bishop Court Mt. Prospect, IL 60056 Phone: 847-298-7500 ext. 317, Fax: 847-294-1209; 5. Cummins, Inc. Attn: Paul W. Malone, II 500 Jackson Street, M/C 60701 Columbus, IN 47201 Phone: 812-377-9632, Fax: 812-377-3272; and 6. Leggett & Platt Aluminum Group Attn: Steffan B. Sarkin 75 N. East Avenue Suite 401, Fayetteville, AR 72701 Phone: 501-443-1455, Fax: 501-443-7058 Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a $2.048 billion stockholders' deficit, compared to a $1.926 billion deficit at Dec. 31, 2004. (Federal- Mogul Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) FORD MOTOR: Declining Sales Prompt Fitch to Downgrade Ratings ------------------------------------------------------------- Fitch Ratings downgraded the senior unsecured debt ratings of Ford Motor Corporation and Ford Motor Credit Corporation to 'BBB' from 'BBB+'. Ratings on the Capital Trust II securities have been downgraded to BB+ from BBB-. The rating outlook remains negative. Fitch also affirms the 'F2' commercial paper. The ratings of Hertz have been downgraded to 'BBB' from 'BBB+' and placed on Rating Watch: Evolving. A complete list of ratings is detailed at the end of this release. The downgrade reflects the impact of sales declines in key product categories, relentless price and product competition and higher commodity prices on Ford's automotive operating profitability. Despite relatively successful new product offerings, the support provided by healthy F-Series volumes, steady economic growth and solid industry sales volumes, Ford nevertheless faces breakeven to modestly negative cash flows in the automotive segment. On a consolidated basis, Ford retains very healthy liquidity resources, potentially supplemented by the sale of Hertz, which provide more than sufficient resources to reinvest in its auto operations and absorb costs related to the pending Visteon restructuring. Fitch views it as unlikely that Ford would be downgraded to non-investment grade in 2005. Sales volumes of Ford's key mid-size and large SUVs have declined sharply in 2005. In addition, price competition, new transplant product offerings and pending refreshments of domestic producers are likely to increasingly impact the profitability of Ford's core F-Series in 2005 and 2006. These segments represent a disproportionate share of Ford's operating profitability and are unlikely to be offset in the short term by progress Ford appears to be making in smaller vehicle segments. Over the intermediate term, Ford has made substantial progress in its cost structure and its transition to a flexible manufacturing base, producing a better balance between capacity and product offerings than is seen at GM. This has produced a more consistent competitive position and financial performance across the breadth of its product segments versus GM, supporting consolidated cash flows. However, the strong volume growth and margin advantage at the transplants, high structural and legacy costs at Ford, high commodity prices and the impact of foreign exchange indicate that it will be difficult to make significant margin progress through 2006. The financial burden of restructuring Visteon will fall chiefly on Ford. Ford has more than adequate liquidity to absorb these costs, which will require substantial cash outlays. Restoring competitiveness at the Visteon assets will only occur through facility closures, attrition and asset divestitures; steps which will likely occur over a multi-year period. The ability to accelerate these actions would quicken Ford's ability to gain greater cost competitiveness from a meaningful part of its North American supply chain. Liquidity remains a primary strength at Ford, with $22.9 billion in cash and S/T VEBA, plus an additional $5.2 in L/T VEBA and $13 billion at Ford Credit. Total debt at the automotive operations is $18 billion, with average maturities in excess of 25 years. Approximately $2.1 billion comes due in the next five years. Dividends from Ford Credit are likely to more than offset potentially modest negative cash flow from the auto operations (excluding activities related to Hertz and Visteon), allowing Ford to maintain its balance sheet strength. Margins have also been pressured by high commodity costs, losses at Jaguar, and foreign exchange issues. Even in the event of a drop in steel prices, existing contract terms may result in only modest relief until 2007. Foreign exchange has particularly hurt profitability at Volvo and Land Rover, although successful new product offerings and recent steady price performance at both entities speak well for long-term results. Jaguar continues to experience losses and still faces an extended turnaround schedule. Supplier issues are increasingly a concern for the OEMs, as financial struggles could result in higher costs for the OEMs. Tangible financial assistance such as favorable payment terms or capital investment assistance may be necessary to ensure supply chain performance. Higher costs related to adding suppliers or increased inventory levels could also occur. Fitch views the ratings of FMCC as highly linked to those of Ford given the close business relationship between the two entities, particularly given FMCC's focus on supporting Ford vehicles sales. Fitch recognizes FMCC's improving credit quality metrics, reasonable leverage, and adequate liquidity for the current ratings. In terms of liquidity, Fitch believes that FMCC has adequate sources of liquidity to address maturing debt obligations while still supporting parent company sales. Importantly, FMCC's assets mature faster than liabilities. In addition, FMCC has access to back-up lines of credit, secured financings, and whole loans sales. In combination, these sources should be sufficient to address maturing debt obligations at FMCC. To the extent FMCC increases its use of securitization and other secured fundings, Fitch will focus on the quality and quantity of unencumbered assets relative to unsecured debt in evaluating whether increased securitization funding introduces structural subordination. Fitch has lowered the senior debt ratings on the following Ford entities to 'BBB' from 'BBB+': * Ford Motor Co. * Ford Motor Credit Co. * FCE Bank Plc * Ford Capital B.V. * Ford Credit Canada Ltd. * Ford Holdings, Inc. * Ford Motor Co. of Australia * Ford Credit Australia Ltd. * PRIMUS Financial Services (Japan) * Ford Credit Co. S.A. de CV (Mexico) * Ford Motor Credit Co. of New Zealand Fitch has also lowered the following rating: * Ford Motor Capital Trust II -- Preferred stock to 'BB+' from 'BBB-'. The Outlook remains Negative for all ratings. * * * As reported in the Troubled Company Reporter on April 11, 2005, Ford Motor Co. delivered it's 2004 annual report on Form 10-K to the Securities and Exchange Commission on March 10, 2005. While financial results show some improvements from 2003, the company's performance has steadily declined over the past five years: Total Assets Total Liabilities ------------ ----------------- 1998 $237.5 +++ 1998 $213.5 + 1999 $270.2 +++++ 1999 $241.9 ++++ 2000 $284.4 +++++++ 2000 $265.1 ++++++ 2001 $276.5 ++++++ 2001 $268.1 ++++++ 2002 $295.2 +++++++ 2002 $283.9 ++++++++ 2003 $310.7 +++++++++ 2003 $298.4 +++++++++ 2004 $305.3 ++++++++ 2004 $288.4 ++++++++ Shareholder Equity Current Assets ------------------ -------------- 1998 $24.0 +++++++ 1998 $41.7 ++ 1999 $28.3 +++++++++ 1999 $44.9 +++ 2000 $19.3 ++++ 2000 $40.1 ++ 2001 $8.4 . 2001 $36.9 + 2002 $11.3 . 2002 $48.6 ++++ 2003 $12.3 + 2003 $61.2 +++++++ 2004 $16.9 +++ 2004 $59.2 +++++++ Current Liabilities Working Capital ------------------- --------------- 1998 $106.9 ++++++ 1998 ($65.2) 1999 $115.5 +++++++ 1999 ($70.6) 2000 $114.9 +++++++ 2000 ($74.8) 2001 $93.9 ++++ 2001 ($57.0) 2002 $61.5 . 2002 ($12.9) 2003 $112.7 +++++++ 2003 ($51.5) 2004 $122.8 ++++++++ 2004 ($63.6) Leverage Ratio Liquidity Ratio -------------- --------------- 1998 8.9 . 1998 0.4 +++ 1999 8.5 . 1999 0.4 +++ 2000 13.7 + 2000 0.3 +++ 2001 31.9 +++++++ 2001 0.4 +++ 2002 25.1 +++++ 2002 0.8 +++++++ 2003 24.3 +++++ 2003 0.5 +++++ 2004 17.1 +++ 2004 0.5 ++++ Net Sales Interest Expense --------- ---------------- 1998 $144.4 +++++ 1998 $0.8 +++++ 1999 $160.6 +++++++ 1999 $1.3 +++++++++ 2000 $170.1 ++++++++ 2000 $1.4 +++++++++ 2001 $162.4 +++++++ 2001 $1.4 +++++++++ 2002 $162.5 +++++++ 2002 $1.4 +++++++++ 2003 $164.3 ++++++++ 2003 $1.3 +++++++++ 2004 $171.6 ++++++++ 2004 $1.2 ++++++++ EBITDA Net Income ------ ---------- 1998 $23.3 +++++++ 1998 $22.0 +++++++ 1999 $24.9 ++++++++ 1999 $7.2 ++ 2000 $24.1 ++++++++ 2000 $3.4 + 2001 $10.7 +++ 2001 ($5.4) 2002 $16.1 +++++ 2002 ($1.0) 2003 $15.9 +++++ 2003 ($0.5) 2004 $11.4 +++ 2004 $3.5 + EBITDA Margin Profit Margin ------------- ------------- 1998 16.1%++++++++ 1998 15.2%+++++++ 1999 15.5%+++++++ 1999 4.5%++ 2000 14.2%+++++++ 2000 2.0%. 2001 6.6%+++ 2001 -3.3% 2002 9.9%++++ 2002 -0.6% 2003 9.7%++++ 2003 -0.3% 2004 6.6%+++ 2004 2.0%+ A free copy of Ford's latest annual report is available at: http://www.sec.gov/Archives/edgar/data/37996/000095012405001427/k91869e10vk.htm Ford estimates that it manufactures and sells 21% of all cars and trucks in the United States. General Motors' market share is about 28%; DaimlerChrysler captures 14%; Toyota's market share is about 11%; and Honda accounts for another 8%. U.S. automakers' share of the U.S. market has declined steadily for the past five years while Toyota, Honda, and other companies based in Europe, Korea and Japan have steadily increased. Ford employs approximately 327,500 workers. Ford's $162 billion in annual sales account for nearly 1-1/2% of the United States' gross domestic product. If Ford were a sovereign nation, it would rank as the 28th-largest country according to 2003 data from the World Bank -- larger than Finland, South Africa or Hong Kong, and smaller than Poland, Indonesia or Greece. Ford faces asbestos-related liability. Plaintiffs allege various health problems as a result of asbestos exposure, either from (i) component parts found in older vehicles (ii) insulation or other asbestos products in Ford's facilities or (iii) asbestos aboard Ford's former maritime fleet. Claims against the automaker have been rising: Date Active Claims ---- ------------- 12/31/01 18,000 ++++++++++++ 12/31/02 23,000 +++++++++++++++++ 02/28/03 25,000 ++++++++++++++++++ 02/03/04 41,500 ++++++++++++++++++++++++++++++ Ford does not disclose the number of claims filed against it after Feb. 3, 2004. Ford says that while annual payout and related defense costs in asbestos cases increased between 1999 and 2003, those amounts were not significantly higher in 2004. GATEWAY EIGHT: Prepares to Market & Sell American Express Building ------------------------------------------------------------------ Gateway Eight LP's only asset is a building in Providence known as the American Express Building. Gateway's largest creditor -- the Employees' Retirement System of Rhode Island -- holds a lien on the building on account of a $21 million loan. Gateway Eight went into bankruptcy after it failed to negotiate with the pension fund to restructure its debt which matured in December 2004. The Debtor's original plan was to turn over the building to the pension fund. Those negotiations fell through because the parties couldn't agree on the building's value. After months of haggling, the parties finally agreed on an acceptable valuation of the American Express building at $18.6 million. Gateway Eight now asks the U.S. Bankruptcy Court for the District of Massachusetts for authority to market the property. The pension fund agrees to this move and serves as the stalking horse bidder for the building with a $17.9 million offer. An auction will be held on a later date subject to court approval. "Our goal has been, and will continue to be, to make the system whole -- to get the retirement system its money back." Rhode Island General Treasurer Paul Tavares told Andrea L. Stape at Projo.com. "If we do, in fact, come out whole, we'll be extremely happy. And we walk away with a valuable lesson that pension funds should be very, very cautious about investing in these types of things in the future." Meghan Walt, Esq., at Brown Rudnick Berlack Israels represents the retirement system. Headquartered in Boston, Massachusetts, Gateway Eight Limited Partnership -- http://www.congressgroup.com/-- is a real estate development, construction, property & asset management and investment company. The Debtor filed for chapter 11 protection on Nov. 30, 2004 (Bankr. Mass. Case No. 04-19692). Macken Toussaint, Esq., at Goodwin Procter LLP, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. GOODYEAR TIRE: Moody's Confirms Debt's Low-B Ratings ---------------------------------------------------- Moody's Investors Service confirmed the ratings of Goodyear Tire & Rubber Company, senior implied at B1 and Speculative Grade Liquidity Rating at SGL-2, and changed the rating outlook to stable from negative. The actions result from * the resolution of several of the accounting concerns the company has faced; * remediation plans which management has implemented to address internal control issues cited in its 10-K report; and * continued momentum in the company's operating results and liquidity profile. The ratings and rating outlook anticipate that Goodyear's initiatives to resolve internal control and accounting matters will reduce the potential for significant future out of period adjustments to its financial statements and that the company will maintain a current status in its financial reporting with the Securities and Exchange Commission. With initiatives under way to address internal control matters, Goodyear's management should be able to focus on other core business matters, including improving the company's overall operating performance. The ratings anticipate that the recently improved financial performance of the company will be sustained, providing more sound financial metrics and facilitating some debt reduction through free cash flow generation. The ratings further assume that the company will maintain a good liquidity profile, including consistent free cash flow generation, sizable levels of balance sheet cash, and access to undrawn bank credit facilities. Ratings confirmed include: Goodyear Tire & Rubber Company: * Senior Implied, B1 * Senior Secured First Lien Revolving Credit, Ba3 * Second Lien Term Loans, B2 * Junior Lien Notes & Term Loans, B3 * Senior Unsecured, B3 * Issuer, B3 * Speculative Grade Liquidity Rating, SGL-2 Goodyear Dunlop Tire Europe B.V.: * First lien revolving credit, B1 * First lien term loan, B1 After completing an internal investigation into certain accounting irregularities, Goodyear filed its audited reports including its 10K for the year ended December 31, 2004 and prior period restatements with the SEC in March. The restatements were in line with previous commentary provided by the company and did not reveal any additional material changes. The company was cited in its Accountant's Letter for continuing internal control issues in two areas: account reconcilements and segregation of duties. Management has implemented remediation plans to address these deficiencies. However, in order for its auditors to formally remove their existing concerns on account reconcilement matters, the company will have to consistently file its financial statements on time and demonstrate that effective controls are in place to preclude significant out of period adjustments in the future. The company has recently filed its 10Q for the quarter ended March 31, 2005 within the required reporting period. Goodyear continues to cooperate with an SEC investigation into accounting matters at the company, but the timing and implications of any resolution of this investigation are uncertain. Goodyear's results for the first quarter reflected continued progress in the company's profitability, including: * benefits arising from higher volumes; * the favorable mix of products; * strong commercial vehicle markets; and * pricing actions to offset the higher costs of raw materials. Gains achieved in the replacement tire segment offset weaker volumes from the OEM consumer segment in North America and Europe. Importantly, Goodyear has continued to demonstrate margin improvement, and its credit metrics have strengthened. With interest coverage of roughly 2.4 times on a last twelve months basis, free cash flow to debt at 5%, and adjusted debt/EBITDAR just under 4 times, the company's performance is more supportive of the B1 senior implied rating. Goodyear's liquidity profile continues with substantial amounts of on-balance sheet cash, significant committed revolving credit availability, headroom under its financial covenants, but restrained scope of developing alternate liquidity sources given the prevalence of liens against its assets in North America and Europe. The SGL-2 rating reflects Moody's assessment that Goodyear's current sources of internal cash flow, unrestricted cash, and availability under committed facilities should comfortably cover its operating needs in the coming year, including contributions to its pension plans, capital expenditures and scheduled debt maturities. At the end of March Goodyear reported consolidated unrestricted cash of approximately $1.7 billion. In early April the company closed on a $3.65 billion refinancing of its bank credit facilities. At closing these provided approximately $1.0 billion of remaining and available revolver commitments to the parent and ?195 million to its European joint venture, Goodyear Dunlop Tire Europe B.V. The domestic revolver is on a borrowing base structure, the European facility is subject to financial covenant compliance. Combined with internal cash generation, these resources, supplemented by available European accounts receivable securitization capacity, produce a good liquidity profile over the next year even though the company has remaining debt maturities and higher pension contributions in 2005. Alternate liquidity sources also provide some flexibility as exhibited by the pending sales of the Sumatra plantations and farm tire operations in the U.S. (approximately $60 million and $100 million of anticipated proceeds respectively). Goodyear, headquartered in Akron, Ohio, is one of the world's leading manufacturers of tire and rubber products with 2004 revenues of $18.4 billion. The company manufactures tires, engineered rubber products and chemicals in 90 facilities in 28 countries and employs about 80,000 people. HEALTHEAST INC.: S&P Rates $26 Million Series 2005-3A Bonds at BB ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to Port Authority of the City of Saint Paul's $26.47 million series 2005-3A lease revenue bonds, issued for HealthEast Inc., Minnesota. In addition, Standard & Poor's affirmed its 'BB+' rating on $200.16 million of outstanding bonds, issued for HealthEast. The outlook is stable. "The rating on the series 2005-3A bonds is based on the current 'BB+' rating on HealthEast Inc.'s debt," said Standard & Poor's credit analyst Brian Williamson. The rating is one notch below the rating on HealthEast's outstanding debt. The port authority will use the bond proceeds, along with the $14.26 million series 2005-3B bonds, to purchase the HealthEast Midway Outpatient Center and the surrounding surface parking area. The eight-story building houses various HealthEast corporate office functions and outpatient services. The principal and interest on the 2005-3A bonds and the interest on the series 2005-3B bonds are the port authority's special limited obligations and payable solely from the basic rent payments to be made by HealthEast pursuant to its project lease's terms. The 2005-3B bonds' final principal payment will be secured by, and payable from, a residual value insurance policy that will be provided by RVI America Insurance Co. ('A'). However, under the project lease, HealthEast has the option to purchase the improvements from the port authority or exercise its right to extend the term of the project lease. In the event that HealthEast exercises its right to extend the project lease, it must notify the port authority on or before May 1, 2028, and deposit funds sufficient to pay the final principal payment on or before April 1, 2029, but no later than April 15, 2030. If HealthEast fails to give notice or funds are not deposited with the trustee, the trustee is directed under the indenture to make a claim under the residual value insurance policy and use the proceeds to make the final principal payment. The port authority, in its capacity as lessee under the ground lease, will enter into a leasehold mortgage, granting it a mortgage lien on its interest in the improvements and the land underneath the improvements in favor of the trustee. In addition, HealthEast is required to deliver an irrevocable letter of credit in the stated amount of $3.1 million to the trustee at the closing of the series A and B bond issuance. The trustee shall have the ability to draw amounts under the letter of credit up to the stated amount necessary to make up for any deficiencies in basic rent payments or other amounts due from HealthEast under the project lease. HealthEast, the parent corporation of HealthEast and its controlled affiliates (HealthEast Care System), is the only legal entity obligated to make basic rent payments and payments for other amounts due under the project lease. No other legal entity included in the HealthEast Care System will have any liability or obligation regarding the project lease. IMPERIAL SUGAR: Board Mulls Schultze's Takeover Offer ----------------------------------------------------- Imperial Sugar Company (Nasdaq: IPSU) confirmed Thursday that it received an unsolicited proposal from Schultze Asset Management, LLC, a current shareholder, to acquire all of its outstanding shares. Schultze offered to purchase each share for $17.00, subject to completion of due diligence and definitive documentation. The Company's Board of Directors plans to evaluate Schultze's indication of interest. About the Company Imperial Sugar -- http://www.imperialsugar.com/-- is one of the largest processors and marketers of refined sugar in the United States to food manufacturers, retail grocers and foodservice distributors. With packaging and refining facilities across the U.S., the Company markets products nationally under the Imperial(R), Dixie Crystals(R), Spreckels(R) and Holly(R) brands. For more information about Imperial Sugar. The Kempner family owns more than 15% of Imperial; Irish sugar maker Greencore owns another 15%. Imperial filed for Chapter 11 bankruptcy protection in early 2001 and later sold its Diamond Crystal Brands nutritional products business to Hormel Foods. Imperial Sugar filed for chapter 11 protection on January 16, 2001 (Bankr. D. Del. Case Nos. 01-00140 through 01-00176), confirmed a chapter 11 plan on August 7, 2001, and emerged from bankruptcy on October 2, 2001. Jack L. Kinzie, Esq., at Baker Botts L.L.P., represented the company in that restructuring proceeding. INTEGRATED ELEC'L.: Covenant Violation Cues S&P to Watch Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' corporate credit and 'CCC' subordinated debt ratings on Integrated Electrical Services Inc. on CreditWatch with negative implications. At March 31, 2005, the Houston, Texas-based provider of electrical contracting services had approximately $256 million of lease-adjusted total debt outstanding. The CreditWatch placement reflects the company's weakened liquidity position after violating a covenant under its bank credit facility. IES no longer has access to the facility, and it was holding just $27 million of cash as of May 10, 2005. The company is in discussions with its bankers to waive the covenant. Should the secured lenders refuse, it could lead to an acceleration of debt, which would require IES to cash collateralize about $40 million of letters of credit outstanding. Acceleration of bank debt could also cause the trustee of the company's subordinated notes to declare a default, and accelerate payment under that issue as well. This scenario would likely lead to a bankruptcy. "We currently believe that the senior lenders will work with IES to relieve the covenant breach because the company has used only a modest amount of the facility," said Standard & Poor's credit analyst Paul Kurias. IES also has healthy support in the capital structure from the debt below the senior issue, and it could glean further support from potential asset sales and the free cash that it typically generates in the June and September quarters. We plan to meet with management soon to discuss: (1) its lender negotiations; (2) its potential near- and intermediate-term financing alternatives to reduce financial stress and liquidity; and (3) its near-term business prospects. Nonetheless, S&P continues to monitor the situation very closely, and it may lower the ratings in a very short period of time if its views change. INTEGRATED ELECTRICAL: Defaults on Facility EBITDA Requirement -------------------------------------------------------------- Integrated Electrical Services, Inc. (NYSE: IES -News) reported results for its fiscal 2005 second quarter ended March 31, 2005. The company reported revenues of $287.5 million and a net loss for the second quarter of $13.2 million compared to revenues of $290.3 million and net income of $2.5 million for the second quarter one year ago. Fiscal 2005 second quarter revenues from continuing operations increased $2.0 million over the first fiscal quarter of 2005. Second quarter 2005 revenues decreased, however, from the previous year's second quarter total of $290.3 million. The slight revenue decline from the same quarter of the previous year is primarily the result of limited bonding and a reduction in larger bonded projects. As a result of the company's strategic review process, IES has decided to reduce its dependence on bonded work in an effort to improve profitability and return on capital invested. "While our performance in the second fiscal quarter was disappointing, we are extremely pleased by the steps we have taken to make IES a more solid company," stated Roddy Allen, IES' president and chief executive officer. "We have made a conscious effort to improve the margins of all new work that we obtain. While this has meant that our backlog has decreased, we are encouraged by the improvement in the margins of the new work we have been awarded. Our divestiture program is showing great progress, and the proceeds from it continue to improve our overall capital structure. In addition, we are addressing the identified material weaknesses by altering disclosure requirements, reporting relationships and internal controls. Our enterprise resource planning system, Forefront, is substantially in place, installed in all but three of our business units. We intend to complete implementation in fiscal 2006." David Miller, IES' chief financial officer, added "We will continue to concentrate on improving the company's cash flow and reducing the company's indebtedness. The incentive program we have in place rewards those operating entities with superior collections of receivables and higher profitability, and we believe that the program is working well. Proceeds from our divestiture program will allow us to continue to de-lever the company." Credit Facility Default As of March 31, 2005, the Company was in violation of the minimum EBITDA covenant of the Credit Facility, as amended and is in default. The Company is in discussions with its bank group to have the covenant waived or the facility otherwise amended to bring the company into compliance. If the company had been in compliance with all of its financial covenants under the Senior Secured Credit Facility at March 31, 2005, the availability under the line of credit would have been approximately $32.3 million. If the Senior Secured Credit Facility is accelerated because of the existing default, it can result in a cross default under our company's indentures with respect to the subordinated debt or convertible debt. Integrated Electrical Services, Inc. is a national provider of electrical solutions to the commercial and industrial, residential and service markets. The company offers electrical system design and installation, contract maintenance and service to large and small customers, including general contractors, developers and corporations of all sizes. * * * As previously reported in the Troubled Company Reporter on May 19, 2005, Moody's Investors Service has downgraded the ratings of Integrated Electrical Services, Inc. one notch to B3 senior implied and to Caa2 for its guaranteed senior subordinated debt of $173 million due 2009 and changed the outlook to negative. Moody's has downgraded these ratings: * Senior Implied, downgraded to B3 from B2; * Senior Unsecured Issuer Rating, downgraded to Caa1 from B3; * $173 million (remaining balance) of 9.375% senior subordinated notes due 2009 (in two series), downgraded to Caa2 from Caa1. The ratings outlook is changed from stable to negative. INTERSTATE BAKERIES: Wants to Employ ARMC as Risk Consultants ------------------------------------------------------------- Albert Risk Management Consultants is an independent risk management consulting firm that offers a full range of management consulting services related to risk identification and assessment, risk financing, insurance program design and procurement, claims management, contingency planning, safety and loss control, and vendor evaluation. By this application, Interstate Bakeries Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of Missouri for authority to employ ARMC as their loss management and risk management consultants, pursuant to the terms of a retention agreement dated May 5, 2005. A copy of the Agreement is available for free at: http://bankrupt.com/misc/armcagreement.pdf As the Debtors' loss management and risk management consultants, ARMC will: (a) work with the Debtors, their insurance carriers, and the claims administrators to evaluate, price and settle prepetition tort claims that have been properly filed and asserted against the Debtors; and (b) assist in the negotiation with the Debtors' insurance carriers to reduce the letters of credit that are being held as collateral on the prepetition insurance programs. The Debtors will pay ARMC $175 per hour plus reasonable out-of- pocket expenses for services performed related to the evaluation, pricing and settlement of prepetition tort claims filed against the Debtors. However, for tort claims in which the Debtors have reserved $10,000 or less, the firm may spend a maximum of one hour of time performing its services for each of the Small Claims. The firm must receive approval from the Debtors if it wishes to spend more than one hour on any Small Claim. Additionally, in the event the Debtors request that Judith Kokinda, a principal at ARMC, assist in negotiations with insurance carriers to reduce the letters of credit that are being held as collateral on the prepetition insurance programs, the Debtors will pay the firm $300 per hour plus reasonable out-of- pocket expenses for Ms. Kokinda's services. Any professionals utilized by ARMC will be retained as ordinary course professionals. ARMC President Alfred Nagelberg assures Judge Venters that the principals and professionals of the firm: -- do not have any connection with the Debtors, their creditors, or any other party-in-interest, or their attorneys or accountants; -- are "disinterested persons" under Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b); and -- do not hold or represent an interest adverse to the Debtors or their estate. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Settles CitiCorp & CitiCapital Leases ---------------------------------------------------------- CitiCapital Commercial Leasing Corp., formerly known as Associates Leasing, Inc., was the holder of a claim on two Komatsu Forklifts with VIN# 516531A and 603836A, under a Lease Agreement dated August 24, 2000. CitiCapital asked the U.S. Bankruptcy Court for the Western District of Missouri to compel Interstate Bakeries Corporation and its debtor-affiliates to either assume or reject the Lease since they were in default of its obligations. CitiCorp Del-Lease, Inc., doing business as CitiCorp Dealer Finance and CitiCapital Dealer Finance, also asked the Court to shorten the Debtors' time to decide whether to assume or reject five property leases: Property Description VIN# Lease Acct. No. -------------------- ---------- --------------- Mitsubishi Forks/Sideshifter AF82C05256 005-0082143-001 Komatsu Lift Truck 650661A 005-0684305-002 Caterpillar Lift Truck ETB5B00705 005-0684305-003 Komatsu Forklift 559125 005-0684305-004 Linde Lift Truck(s) 26921826 & 005-0684305-005 26921827 CitiCorp and CitiCapital complained that the Debtors have not made any payments to them pursuant to their Agreements since the Petition Date. The Debtors, in response, argued that certain of the Agreements are disguised security agreements that do not need to be assumed or rejected. Even to the extent they are executory contracts, the Debtors asserted that it is premature to require them to decide which contracts will be assumed or rejected until they complete their business plan and seek to emerge from bankruptcy. To resolve the dispute, parties agree that: (1) Until the time as the Court enters an order approving the Debtors' assumption or rejection of the Agreements or otherwise determines the nature of the Agreements, the parties will continue to do business with each other in accordance with the terms of the Agreements and any related agreements; (2) The Debtors will continue to retain the Mitsubishi forklift and pay to CitiCorp $130 per month for a maximum of 51 months, beginning January 18, 2005; (3) The Debtors will continue to retain the Komatsu lift truck and pay to CitiCorp $145 per month for a maximum of 45 months, beginning January 18, 2005. Postpetition payments voluntarily made by the Debtors for installments that came due contractually will be credited so that the first $145 payment the Debtors will be required to make is the payment due in May 2005; (4) The Caterpillar lift truck agreement has expired and the Debtors will purchase the equipment from CitiCorp for $12,955 without delay on additional terms mutually agreeable to the parties. Otherwise, the equipment will be surrendered; (5) The Debtors will make the regular $470 monthly payments due under the Komatsu forklift Agreement from the Petition Date, with 90 days to cure past due payments; (6) The Debtors will continue to retain the two Linde pallet jacks and pay to CitiCorp $237 per month for a maximum of 38 months, beginning January 18, 2005; and (7) The Debtors will continue to retain the two Komatsu forklifts and make regular monthly payments due under the Agreement of $612 per month from the Petition Date, with 90 days to cure past due payments. The parties ask the Court to approve their Stipulation. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) JAMES KENNEDY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: James J. Kennedy 3 Kirby Lane Chelmsford, Massachusetts 01824 Bankruptcy Case No.: 05-43405 Chapter 11 Petition Date: May 19, 2005 Court: District of Massachusetts (Worcester) Judge: Joel B. Rosenthal Debtor's Counsel: Joseph H. Baldiga, Esq. Mirick, O'Connell, DeMallie, Lougee 100 Front Street Worcester, Massachusetts 01608 Tel: (508) 791-8500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. KAISER ALUMINUM: Court Approves HSBC Bank Claim Settlement ---------------------------------------------------------- As previously reported, Kaiser Aluminum & Chemical Corporation asked the U.S. Bankruptcy Court for the District of Delaware to approve the Settlement Agreement. The terms of the Settlement are: (a) Claim No. 1124 will be allowed as: (i) a secured claim against KACC for $1,600,000; and (ii) a general non-priority unsecured claim against KACC for $18,045,788; (b) The secured portion of Claim No. 1124 will be paid within five business days after the entry of a final, non- appealable order approving the Settlement; (c) Except with respect to any claim HSBC or its predecessor, or both, may assert for its fees, charges, and expenses as Indenture Trustee, against any of the Debtors, whether asserted in Claim No. 1124 or otherwise, to the extent not expressly allowed pursuant to the Settlement, will be disallowed; and (d) KACC and HSBC reserve all right with respect to any application or claim of HSBC or its predecessor, or both, for payment of its fees, charges, and expenses as Indenture Trustee based on an assertion of substantial contribution under Section 503(b) or otherwise. The Court approved the Debtor's request. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. 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) LB-UBS: Moody's Junks $4.99 Million Class N Certificate ------------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes, downgraded the ratings of two classes and affirmed the ratings of nine classes of LB-UBS Commercial Mortgage Trust 2000-C4, Commercial Mortgage Pass-Through Certificates, Series 2000-C4 as: -- Class A-1, $86,838,041, Fixed, affirmed at Aaa -- Class A-2, $619,257,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $42,460,000, Fixed, upgraded to Aa1 from Aa2 -- Class C, $39,963,000, Fixed, upgraded to A1 from A2 -- Class D, $12,488,000, Fixed, upgraded to A2 from A3 -- Class E, $7,493,000, Fixed, upgraded to A3 from Baa1 -- Class F, $17,483,000, Fixed, affirmed at Baa2 -- Class G, $12,489,000, Fixed, affirm at Baa3 -- Class H, $22,479,000, Fixed, affirmed at Ba1 -- Class J, $12,488,000, Fixed, affirmed at Ba2 -- Class K, $7,493,000, Fixed, affirmed at Ba3 -- Class L, $7,493,000, Fixed, affirmed at B1 -- Class M, $9,990,000, Fixed, downgrade to B3 from B2 -- Class N, $4,996,000, Fixed, downgraded to Caa1 from B3 As of the May 17, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 8.4% to $915.6 million from $999.1 million at securitization. The Certificates are collateralized by 158 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 9.0% of the pool, with the top ten loans representing 32.2% of the pool. The pool includes two investment grade shadow rated loans, a conduit component and a credit tenant lease component, representing 12.9%, 85.1% and 2.0% of the pool, respectively. Eleven loans, representing 5.3% of the pool, have defeased and have been replaced with U.S. Government securities. Two loans have been liquidated from the pool, resulting in realized losses of approximately $254,000. Eleven loans, representing 6.3% of the pool, are in special servicing. The largest loan in special servicing is the second largest conduit loan, Exchange Park Center, which is discussed below. Moody's has estimated aggregate losses of $8.5 million for all of the specially serviced loans. Forty loans, representing 19.1% of the pool, are on the master servicer's watchlist. Moody's was provided with partial year or calendar year 2004 operating results for 89.9% of the performing loans. Moody's loan to value ratio for the conduit component is 83.7%, compared to 85.5% at securitization. The upgrade of Classes B, C, D and E is primarily due to stable overall pool performance and increased subordination levels. The downgrade of Classes M and N is due to realized and anticipated losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, 14.6% of the conduit pool has a LTV greater than 100.0%, compared to 0.0% at securitization. Sixteen loans, representing 8.0% of the pool, have debt service coverage of 0.9x or less based on the borrowers' reported operating performance and the actual constant. The largest shadow rated loan is the Westfield Shoppingtown South Shore Loan ($82.5 million - 9.0%), which is secured by a 1.2 million square foot regional mall located in Bay Shore (Long Island), New York. The center is anchored by Macy's, Sears, J.C. Penney and Lord & Taylor. All of the anchors are part of the collateral except for Lord & Taylor, which is on a ground lease. The mall's occupancy has increased to 98.0% from 94.0% at securitization. Moody's current shadow rating is A2, compared to A3 at securitization. The second shadow rated loan is the Westfield Shoppingtown Plaza Camino Real Loan ($36.0 million - 3.9%), which is secured by a 1.1 million square foot regional mall located approximately 35 miles north of San Diego in Carlsbad, California. The center is anchored by Macy's, which operates two stores, Robinsons-May, Sears and J.C. Penney. None of the anchors are part of the collateral. The mall is 97.0% occupied, essentially the same as at securitization. Moody's current shadow rating is Aaa, the same as at securitization. The top three conduit loans represent 9.9% of the outstanding pool balance. The largest conduit loan is the Johnson City Mall Loan ($39.4 million - 4.3%), which is secured by a 545,000 square foot regional mall located in Johnson City, Tennessee. The center is anchored by Proffitt's, which operates two stores, J.C. Penney, Sears and Goody's Family Clothing. The mall is 95.0% occupied, essentially the same as at securitization. Average sales for the in-line stores in 2004 were $364 per square foot, compared to $277 per square foot at securitization. Moody's LTV is 77.3%, compared to 85.8% at securitization. The second largest conduit loan is the Exchange Park Center Loan ($26.0 million - 2.8%), which is secured by a 629,000 square foot office complex located in Dallas, Texas. The loan was transferred to special servicing in May 2004 due to imminent default related to lease expirations. At securitization, the two largest tenants were AT&T, with 175,384 square feet, and American General Corporation, with 125,100 square feet. American General Corporation vacated the premises in 2004 and AT&T reduced its leased space to 64,000 square feet at lease expiration in January 2005. The property is currently 67.0% occupied, compared to 93.1% at securitization. Moody's LTV is in excess of 100.0%, compared to 89.5% at securitization. The third largest conduit loan is the Tompkins Square Apartments Loan ($25.9 million - 2.8%), which is secured by a 123-unit multifamily property located in the East Village area of New York City. The property is 100.0% occupied, the same as at securitization. Moody's LTV is 77.8%, compared to 83.6% at securitization. The pool's collateral is a mix of: * retail (35.3%), * multifamily (24.7%), * office and mixed use (21.7%), * industrial and self storage (6.2%), * U.S. Government securities (5.3%), * lodging (4.5%), * CTL (2.0%) and * healthcare (0.3%). The collateral properties are located in 27 states. The highest state concentrations are: * New York (20.1%), * California (11.7%), * Florida (10.5%), * Texas (9.7%) and * Virginia (7.1%). All of the loans are fixed rate. LEHMAN BROTHERS: Credit Enhancement Prompts Fitch to Lift Ratings ----------------------------------------------------------------- Fitch upgrades Lehman Brothers floating-rate commercial mortgage pass-through certificates, series 2000-LLF C7, as follows: -- $25.8 million class L to 'AAA' from 'BB+'; -- $25.2 million class M to 'BB-' from 'B+'. The following classes are affirmed by Fitch: -- Interest only class X-2 at 'AAA'; -- $3.6 million class N at 'B+'; -- $3.6 million class P at 'B'; -- $1.8 million class Q at 'B-'; -- $1.8 million class S at 'B-'; -- $1.4 million class T at 'B-'; -- $1.4 million class U at 'CCC'. Classes J-BO, K-BO, L-BO, J-CW, K-CW, L-CW, L-BL, and V are not rated by Fitch. BO classes relate to the Boykin loan. The following classes have been repaid in full: A, X-1, B, C, D, E, F, G, H, J, and K. The upgrades are due to the increased credit enhancement to the classes as a result of the repayment of the Francisco Bay Office loan. As of the May 2005 distribution, the total principal balance has paid down by 95.2% since issuance. The Boykin Hotel Portfolio loan, the only loan remaining in the pool, is collateralized by six full-service/limited service hotels. The net cash flow for the trailing 12 months ended Feb. 28, 2005 for comparable hotels increased 15.9% since TTM April 2004. The current Fitch DSCR was 1.18 times, compared with 1.02x for TTM April 30, 2004 and 1.65x at issuance. The TTM Feb. 28, 2005 revenue per available room increased 9.2% from TTM April 30, 2004. The loan matures July 2005. MAGELLAN AEROSPACE: Posts $14.5 Million Gross Profit in 1st Qtr. ---------------------------------------------------------------- Magellan Aerospace Corporation released Friday, May 13, 2005, financial results for the first quarter of 2005. The Company reported that the first quarter of 2005 reflects improved sales and margins from the fourth quarter of 2004. Customer demand in several key areas continues to increase as single aisle commercial aircraft build rates at both Boeing and Airbus continue to increase, while demand for business aircraft aeroengines are increasing at a significant pace. Defense programs are continuing at a steady pace, as the US government has confirmed production rates for the F-18 and F-22 aircraft and new orders were received for F-15 components. As well, repair and overhaul activity rates show no signs of decline. Boeing announced the cancellation of the B717 in the quarter, however, this will have no material impact on Magellan. Bid opportunities for new work are increasing, on both new aircraft programs such as the Boeing 787 and Airbus 350, but also on current production models as well. Consolidated revenues for the first quarter of 2005 were $144.9 million, an increase of $8.9 million, or 6.6%, from the first quarter of 2004. Revenues increased by $6.2 million, or 28.3% in the United Kingdom, which reflects the impact of expanded work scope under an Airbus contract signed in April 2004. Revenues declined by $0.8 million or 1.9% in the United States, while increasing by $3.5 million or 5.1% in Canada. Average Canadian-US exchange rates were 0.8150 in the first quarter of 2005 compared to 0.7588 in the first quarter of 2004. On a consolidated basis, revenues were approximately $8.0 million lower in the first quarter of 2005 than they would have been if foreign exchange rates had remained the same as in the first quarter of 2004. After adjusting for this impact, revenues reflect 12.5% year over year growth. Revenues generated by commercial product sales in the first quarter of 2005 represented 68% (66% in 2004) of total revenues while defense product sales comprised the remaining 32% (34% in 2004) of revenues. Gross profits of $14.5 million (10.0% of revenues) were reported for the first quarter of 2005 compared to $17.8 million (13.1% of revenues) during the same period in 2004. Margin percentage declined year over year due to the effect of lower foreign exchange rates for the Canadian dollar vs. the US dollar, a change in mix of products sold, and additional period costs to support anticipated increased demand expected to occur throughout 2005 and beyond. Margins have improved from the fourth quarter of 2004, due to improving efficiencies in manufacturing processes. The Corporation is focused on improving profitability levels and expects that gross profit, as a percentage of sales, will improve through the balance of 2005. Administrative and general expenses (net of foreign exchange loss) were $10.9 million, or 7.5% of revenues in the first quarter of 2005 compared to $10.2 million, or 7.5% of revenues in the same period of 2004. The increase in general and administrative expenses is due to increased sales levels. A net foreign exchange loss of $0.3 million was incurred in the first quarter of 2005, compared to a foreign exchange loss of $0.2 million in the first quarter of 2004. Interest expense increased due to increased average interest rates on bank indebtedness and long-term debt. Discount charges increased because of a larger volume of accounts receivables sold. Accretion charge represents the value of the call option related to the Corporation's convertible debentures that is expensed in the period and added to the face value of the convertible debentures. There was a recovery of income taxes of $0.9 million for the first three months of 2005, compared to a provision for income taxes of $1.4 million for the first three months of 2004. The minor change in effective tax rates is a result of a changing mix of income across the different jurisdictions in which Magellan operates. EBITDA for the first quarter of 2005 was $8.9 million, a decrease of $4.8 million from the first quarter of 2004, due to a decline in pre-tax income and lower depreciation. Depreciation was lower in the first quarter of 2005 than in the corresponding period in 2004 because of lower foreign exchange rates impacting the depreciation charge for the Corporation's US subsidiaries, and a lower capital asset base as a result of the sale operating leaseback transaction which occurred at the end of the first quarter of 2004. Financial Position The following chart outlines the significant changes in the consolidated balance sheets of the Corporation from December 31, 2004 to March 31, 2005. Balance Sheet Item Change Explanation (Expressed in thousands of dollars) Cash $ (3,853) Accounts receivable 21,752 Increase due to additional sales in current quarter and timing of collections Inventory 4,808 Increase due to increasing demand from customers Capital assets (1,613) Decrease due to depreciation Being greater than capital asset acquisitions, net of foreign exchange rate impact Bank indebtedness 27,958 Increase is due to increase in working capital balances and payments of long-term debt Convertible debentures 460 Increase due to non-cash accretion charge In the quarter ended March 31, 2005, the Corporation used $22.7 million of cash in its operations, compared to generating $2.2 million from operations in the first quarter of 2004. This was largely due to increased accounts receivable as a result of increased sales and the timing of receivables collections. Inventories rose in response to increasing demand from the Corporation's customers. In the first quarter of 2005, the Corporation invested $3.5 million in capital assets to upgrade its facilities and enhance its capabilities. Proceeds of $0.5 million were received in the first quarter of 2005 on the sale of equipment no longer used in operations. In the first quarter of 2004, the Corporation sold $15.0 million of capital assets at their net book value and entered into a five-year operating lease agreement to retain their use. In the first quarter of 2005, the Corporation drew on its operating credit in the amount of $27.6 million to fund growth in working capital. Also in the quarter, the Corporation repaid $4.4 million of long-term debt as scheduled. The Corporation is in discussions with its lenders to renegotiate its existing operating and long-term credit agreements. In conjunction with the proposed refinancing, the Corporation's lenders have required the Corporation to raise $20.0 million of new equity which the Corporation proposes to satisfy by issuing $20 million of convertible preferred shares. Default The preferred shares are expected to bear an 8.0% cumulative dividend, payable quarterly, and each preferred share is expected to be convertible into 3.33 common shares of the Corporation at the option of the holder. In addition, the preferred shares are expected to be redeemable at the option of the Corporation and retractable, under certain circumstances, at the option of the holder. The proceeds of the shares will be used to repay debt and for general corporate purposes. The Corporation had committed to its bankers to have the preferred share issue completed by April 29, 2005 and is in default of this commitment. The Corporation has received a waiver of this default and expects to have both the preferred share issue as well as new credit agreements in place by May 31, 2005. Update on Closure of Fleet Industries Operations at Fleet Industries are at present, in a wind-up mode, and the facility is expected to complete all operations by the end of the second quarter of 2005. At present, no further increases to the provision for the plant closure are expected. Change in Accounting Policy Effective January 1, 2005 the Corporation adopted the recommendation of the CICA contained in the amended Section 3860, "Financial Instruments", which require the Corporation to account for its convertible debentures as debt as opposed to equity. Management has computed the impact on the Corporation's financial statements in note 2 of the interim consolidated financial statements. All comments herein have incorporated the restated quarterly financial statements resulting from the change in accounting policy as computed in note 2. Outlook Magellan continues to look to the future with guarded optimism. While commercial airline results continue to be tempered by high fuel costs, many airlines are reporting higher utilization of equipment, better load factors and stronger yields. Significant orders for new aircraft have also recently been placed. Magellan expects the growth that it is experiencing to date in 2005 will continue over the next two years. The current strong demand for business jet engines is also expected to be sustained as well, with mid-size and micro-jets leading the way. Defense opportunities appear to be stable, with no reduction expected in the short-term. As these increases in sales take effect, Magellan hopes to see this growth reflected in its financial returns. About the Company Magellan Aerospace Corporation is listed on the Toronto Stock Exchange under the symbol MAL. The Corporation is a diversified supplier of components to the aerospace industry. Through its network of facilities throughout North America and the United Kingdom, Magellan supplies leading aircraft manufacturers, airlines and defense agencies throughout the world. MERIDIAN AUTOMOTIVE: Moody's Withdraws Low-B Loan Ratings --------------------------------------------------------- Moody's Investors Service withdrew all ratings for Meridian Automotive Systems, Inc. in conjunction with an April 26, 2005 voluntarily filing to reorganize under Chapter 11 of the Bankruptcy Code by the company and its eight domestic subsidiaries. Meridian indicated that it elected to file for reorganization in order to restructure its debt, which had become unsustainable in the current market environment due to the significant challenges posed by increases in steel and resin prices and the termination of the early payment programs by certain original equipment manufacturers. These factors, combined with reduced North American automotive production, caused Meridian's liquidity position to deteriorate below the level at which the company could continue to meet its obligations. Meridian received a commitment for up to $375 million in debtor-in-possession financing. The bankruptcy court has approved the use of $30 million of this facility on an interim basis. These specific ratings associated with Meridian Automotive Systems, Inc. were withdrawn: -- B2 rating for Meridian's $75 million guaranteed senior secured first-lien revolving credit facility due April 2009; -- B2 rating for Meridian's $235 million guaranteed senior secured first-lien term loan B due 2010; -- B3 rating for Meridian's $175 million guaranteed senior secured second-lien term loan C due April 2011; -- B2 senior implied rating; and -- Caa2 senior unsecured issuer rating. Meridian, headquartered in Dearborn, Michigan, is a leading supplier to the automotive industry of: * front and rear end modules, * bumper systems, * exterior composite plastic modules, * structural components, and * interior and lighting components. The company is privately owned by several insurance and financial institutions and management. Annual revenues approximate $1 billion. METROPCS INC: Expects to Complete Tender Offer Today ---------------------------------------------------- MetroPCS, Inc., announced that as of 5:00 p.m., New York City time, on May 10, 2005, it had received valid tenders and consents from holders of its 10-3/4% Senior Notes due 2011 with respect to 100% of the outstanding principal amount of the Notes in connection with its previously announced cash tender offer and consent solicitation for the Notes, which satisfies the Requisite Consents Condition as defined in MetroPCS' Offer to Purchase and Consent Solicitation Statement dated April 26, 2005. MetroPCS also announced that it has determined the total consideration to be paid in connection with the Tender Offer and Consent Solicitation. MetroPCS has executed a supplemental indenture governing the Notes to eliminate substantially all of the restrictive covenants and event of default provisions in the indenture, to amend other provisions of the indenture, and to waive any and all defaults and events of default that may exist under the indenture. Although the supplemental indenture has been executed, the amendments will not become operative until the tender offer is consummated and validly tendered Notes are accepted for purchase by MetroPCS. The total consideration for the Notes will be an amount in cash equal to $1,192.72 for each $1,000 principal amount of Notes. Holders of Notes will also be paid accrued and unpaid interest up to, but not including, the date of payment for the Notes. Under the terms of the Offer to Purchase, the total consideration for each $1,000 principal amount of Notes validly tendered and not revoked on or prior to the Consent Date was determined on the tenth business day prior to the scheduled expiration date of the Tender Offer (which business day was May 10, 2005). The total consideration was calculated in accordance with standard market practice: (A) based on the assumption that the Notes would be redeemed at $1,053.75 per $1,000 principal amount of Notes on October 1, 2007 (the first optional redemption date with respect to the Notes), and (B) utilizing a yield of 4.241%, which equals the sum of: (x) the yield to maturity on the 2.75% U.S. Treasury Note due August 15, 2007, as calculated by Bear, Stearns & Co. Inc., based on the bid side price of such security as of 11:00 a.m., New York City time, on May 10, 2005, plus (y) a fixed spread of 0.50% (50 basis points). Assuming the satisfaction or waiver of the conditions to the consummation of the Tender Offer and the Consent Solicitation, payment of the total consideration for Notes is expected to be made promptly after MetroPCS obtains the financing necessary to complete the Tender Offer and the Consent Solicitation, but no later than promptly after 5:00 p.m. today, New York City time unless extended, if the Notes are accepted for purchase. MetroPCS has retained Bear, Stearns & Co. Inc. to act as Dealer Manager for the Tender Offer and as Solicitation Agent for the Consent Solicitation. Questions about the Tender Offer or the Consent Solicitation may be directed to: Global Liability Management Group Bear, Stearns & Co. Inc. Phone:(877) 696-BEAR (US toll-free) (877) 696-2327 Copies of MetroPCS' Offer to Purchase and Consent Solicitation Statement and the Letter of Transmittal and Consent are available from: Information Agent Mellon Investor Services LLC Phone:(877) 698-6870 (US toll-free). About the Company Dallas-based MetroPCS, Inc., is a wholly owned subsidiary of MetroPCS Communications, Inc., and a provider of wireless communications services. Through its subsidiaries, MetroPCS, Inc. holds 21 PCS licenses in the greater Miami, Tampa, Sarasota, San Francisco, Atlanta and Sacramento metropolitan areas. MetroPCS offers customers flat rate plans with unlimited anytime local and long distance minutes with no contract. MetroPCS is among the first wireless operators to deploy an all-digital network based on third generation infrastructure and handsets. For more information, visit the MetroPCS web site at http://www.metropcs.com. * * * As reported in the Troubled Company Reporter on March 4, 2005, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Dallas, Texas-based wireless carrier MetroPCS, Inc., to 'CCC' from 'CCC+'. The outlook is negative. "The downgrade reflects Standard & Poor's view that the company is subject to heightened default risk in light of its failure to file its financial statements with the SEC since the second quarter of 2004 due to an ongoing SEC investigation," said Standard & Poor's credit analyst Catherine Cosentino. The company has obtained waivers from its creditors through March 8 to avoid a technical default under the bond indenture. In the meantime, it has leveraged up with recent transactions, including the purchase of wireless spectrum licenses from Cingular Wireless LLC in Detroit and Dallas for $230 million and receipt of up to $240 million in related financing for this acquisition, as well as receipt by MetroPCS of up to $300 million in exchangeable senior secured loans for FCC licenses obtained in the recent spectrum auction by MetroPCS' 85%-owned designated entity Royal Street Communications LLC, in which MetroPCS has a non-controlling interest. MIRANT CORP: Expands Scope of Ernst & Young's Engagement -------------------------------------------------------- At the Mirant Corporation and its debtor-affiliates' behest, the U.S. Bankruptcy Court for the Northern District of Texas expands the scope of Ernst & Young, LLP's employment as consultants to the Debtors to include evaluation of the accuracy, completeness and model logic tests of a calculation made by the Debtors in the course of calculating the "additional fuel cost allowance" described in a March 26, 2003 FERC "Order on Proposed Findings on Refund Liability." In connection with the analysis of the Calculation, the Debtors expect Ernst & Young to review books and records, gather and analyze available documents, interview personnel and perform financial and other analyses. Upon completion of the review of the Calculation, Ernst & Young will provide a written report of its findings. Ernst & Young also agreed to supply expert testimony at deposition, trial or other legal proceedings if requested. Ernst & Young will continue to coordinate its efforts with bankruptcy counsel and other financial advisors and consultants retained by the Debtors and clearly delineate its duties to prevent any duplication of effort. The Debtors will continue to pay the firm's customary hourly rates for services rendered that are in effect from time to time, as set forth in the Original Employment Application. Warren R. Nicholson, Partner at Ernst & Young, assures the Court that the firm and its professionals continue to be "disinterested persons" under Section 101(14) of the Bankruptcy Code. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Dennis Goad Accepting $450K to Settle $70MM Claim -------------------------------------------------------------- Mirant Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas to approve a settlement agreement that will resolve Claim No. 7765 for $70,000,000 asserted by Dennis Goad. The Settlement Agreement is between: (a) Mirant Corp., and other affiliates, subsidiaries, and parent companies; and (b) Dennis and Marjorie Goad, and involving: * Ahlstrom USA Inc., the successor in interest to Ahlstrom Industrial Holdings, Inc., and Pyropower Corporation; * Liberty Mutual Group, Ahlstrom's insurer; and * Associated Electric and Gas Insurance Services, Ltd. Under the terms of the Settlement Agreement, Mr. Goad will accept $450,000, after reimbursement of a net workers' compensation lien. Mr. Goad will execute a General Release in favor of the Debtors. Ian T. Peck, Esq., at Haynes & Boone, LLP, in Dallas, Texas, relates that the Settlement Agreement arose out of a personal injury suffered by Mr. Goad, an employee of Ahlstrom Industrial Holdings, Inc., and Pyropower Corporation. The injury allegedly occurred while Mr. Goad was working at a co-generational facility in Niagara County, New York, on April 22, 1993. The Niagara facility was managed by Southern Electrical International, Inc., and owned by United Development Group-Niagara, Inc., and United Development Group-Niagara, L.P. On August 15, 1994, Mr. Goad commenced an action against SEI in the Supreme Court of Greene County, New York. Mirant Services, LLC, is the successor to SEI. SEI and Ahlstrom were insured for bodily injury at the time of the injury. SEI's insurer was Associated Electric and Gas Insurance Services, Ltd. Wausau Insurance Companies and Employers Liability of Wausau, a Mutual Company insured Ahlstrom. Disputes between Ahlstrom and SEI and their insurance carriers arose concerning the responsibility for defending the Goad Litigation. The parties resolved the disputes through a Joint Defense and Indemnity Agreement, whereby the parties agreed on a division of litigation costs and potential liability in connection with the Goad Litigation. Ahlstrom agrees to pay $100,000, and Liberty Mutual will pay $282,750. Mirant Services will pay $50,000. The parties agree that Claim No. 7765 against Mirant Services will be allowed for $100,000. Under the AEGIS Policy, AEGIS will reimburse Mirant Services, LLC, for the $50,000 cash payment made to the Goads, Mr. Peck says. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: MAGi Comm. Wants MAGi Notes Properly Classified ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Mirant Americas Generation, LLC, asks the U.S. Bankruptcy Court for the Northern District of Texas to determine the proper classification and treatment of claims of holders of certain MAGi-issued long-term unsecured notes maturing in 2011, 2021, and 2031 under the Plan. The Ad Hoc Committee of MAGi Bondholders supports the MAGi Committee's Motion. The MAGi Committee wants to know whether the Plan properly classifies the MAGi Long-term Notes as unimpaired, separately from all other unsecured claims against MAGi including similar claims of the: -- senior unsecured MAGi notes maturing in 2006 and 2008; and -- MAGi credit facilities dated August 31, 1999, in the aggregate principal amount of $300 million, which matured in October 2004. According to Thomas Rice, Esq., at Cox Smith Matthews Incorporated, in San Antonio, Texas, the only rationale offered by the Debtors in support of the separate classification and treatment is the Debtors' belief that the MAGi Long-term Notes may be reinstated under the Plan in accordance with the provisions of Section 1124(2) of the Bankruptcy Code. Contrary to the Debtors' view, Mr. Rice says, the MAGi Long-term Notes are impaired under the Plan and may not be reinstated. Mr. Rice states that unimpairment under Section 1124(2) requires far more than "reinstatement" of the maturity of the claim under a plan. Section 1124(2) also requires that the plan: (a) cure any default that occurred before or after the commencement of the case; (b) compensate the holder of the claim or interest for any damages incurred in reliance on any contractual provision or applicable law breached by the debtor; and (c) not otherwise alter the legal, equitable or contractual rights to which the claim entitles the holder of the claim. The Debtors' Plan, Mr. Rice says, fails to do what Section 1124(2) requires. Additionally, Mr. Rice alleges that the Plan fails to compensate the holders of MAGi Long-term Notes for the damages that they will incur under the Plan as a result of: (1) the structural subordination of their claims to other unsecured claims against MAGi of equal rank and priority; (2) the grant of liens on the assets of MAGi's subsidiaries; (3) the dissipation of MAGi's assets as a result of consolidation; (4) the transfer of the shares of Mirant Mid-Atlantic, LLC; and (5) the release of intercompany claims. Mr. Rice expects the Debtors to argue that MAGi Long-Term Noteholders are not impaired by the Plan because their contractual rights are being reinstated. "The Debtors' contention is hollow and ignores the huge economic cost of the alteration of the Noteholders' legal and equitable rights." Section 1124(2)(C) expressly prohibits the result of the Debtors' actions. Although the Debtors purport to leave MAGi Long-term Noteholders in the same position they were before Chapter 11, Mr. Rice notes, the assets, liabilities, financial condition and creditworthiness of MAGi are inequitably altered pursuant to Plan. "It cannot seriously be contended that the legal and equitable rights of the Noteholders have not been altered, or that the claims of MAGi Long-term Notes are unimpaired," Mr. Rice insists. Mr. Rice maintains that Plan: * impairs the rights of the MAGi Long-term Noteholders; * does not fulfill the requirements of Section 1124; and * should not be permitted to go forward without requiring the Debtors to provide the MAGi Long-term Noteholders a vote on the Plan. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOONEY AEROSPACE: Court Formally Closes Chapter 11 Case ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware formally closed Mooney Aerospace Group, Ltd.'s bankruptcy proceeding at the Debtor's request. Mooney reports its confirmed Second Plan of Reorganization has been substantially consummated. Old shareholders received 2% of the new equity in Reorganized Mooney. Unsecured creditors received 46% of the new equity in the Reorganized Debtor. Mooney also reported it made full payments to the professionals it retained during the bankruptcy case and no contested matters and other adversary proceedings are pending in Court. Headquartered in Kerrville, Texas, Mooney Aerospace Group, Ltd. -- http://www.mooney.com/-- is a general aviation holding company that owns Mooney Airplane Co., located in Kerrville, Texas. The Company filed for chapter 11 protection on June 10, 2004 (Bankr. Del. Case No. 04-11733). Mark A. Frankel, Esq., at Backenroth Frankel & Krinsky LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,757,000 in total assets and $69,802,000 in total debts. MORGAN STANLEY: Credit Enhancement Prompts Fitch to Lift Ratings ---------------------------------------------------------------- Fitch Ratings upgrades six and affirms five issues from Morgan Stanley Dean Witter Capital I Inc. series 2002-WL1: Series 2002-WL1 Pool 1 * Class A affirmed at 'AAA'; * Class B-1 upgraded to 'AAA' from 'AA'; * Class B-2 upgraded to 'AA from 'A'; * Class B-3 upgraded to 'A' from 'BBB'; * Class B-4 upgraded to 'BBB' from 'BB'; * Class B-5 affirmed at 'B'. Series 2002-WL1 Pool 2 * Class 3B1 affirmed at 'AAA' ; * Class 3B2 affirmed at 'AAA'; * Class 3B3 affirmed at 'AAA' ; * Class 3B4 upgraded to 'AAA' from 'AA'; * Class 3B5 upgraded to 'AA' from 'A'. The upgrades reflect a substantial increase in credit enhancement relative to future loss expectations, and affect $5,191,832 of outstanding certificates. The affirmations reflect credit enhancement consistent with future loss expectations and affect $25,070,546 of outstanding certificates. As of the April 2005 distribution date, the CE levels for all classes from pool 1 are more than 10 times their original values. There have been zero cumulative losses and 94% of the collateral has paid down. The collateral for pool 1 consists of fully amortizing 15-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. The CE levels for all classes from pool 2 are more than 19 times their original values. Over 95% of the collateral has paid down and there's less than $80,000 in cumulative losses. The collateral for pool 2 consists of fully amortizing 30-year fixed- rate mortgage loans secured by first liens on one to four-family residential properties. MORTGAGE CAPITAL: Fitch Junks $7.6 Million Class K Certificates --------------------------------------------------------------- Fitch Ratings upgrades Mortgage Capital Funding, Inc.'s commercial mortgage pass-through certificates, series 1998-MC2, as follows: -- $58.1 million class C to 'AA-' from 'A+'. In addition, Fitch affirms the following classes: -- $415.4 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $48 million class B 'AAA'; -- $60.6 million class D 'BBB'; -- $37.9 million class E 'BBB-'; -- $12.6 million class F 'BB+'; -- $25.2 million class G 'BB'; -- $7.6 million class H 'BB-'; -- $15.1 million class J 'B-'. The $7.6 million class K certificates remain at 'CCC'. Fitch does not rate the $2.4 million class L certificates. The class A-1 certificates have paid in full. The upgrade is due to the increase in credit enhancement resulting from loan payoffs and amortization. As of the May 2005 distribution date, the pool has paid down 31.6% to $690.4 million from $1.01 billion at issuance. Fitch reviewed the credit assessment of the 375 Hudson Street loan (21.8%), which is secured by an 18-story, multi-tenant office building in downtown Manhattan. The rating of the loan is dependent upon Saatchi & Saatchi being treated as a credit tenant. The loan maintains an investment grade credit assessment. The performance of the second largest loan, Minneapolis City Center (14%), remains weak. The loan is secured by a mixed-use property consisting of 1.1 million square feet of office space, 370,000 sf of retail, 131,000 sf of storage space, a 584-room Marriott Hotel, and a 687-space parking garage. Servicer-reported net operating income as of year-end 2004 was down by 21% from YE 2003 and 70% since issuance. At the end of February 2005, the office and retail portions of the property were 92% and 60% occupied, respectively. A $15 million renovation project is underway and is scheduled for completion in the fall of 2005. The property, however, is not expected to stabilize for several years. In addition to the Minneapolis City Center loan, 21 loans (8.4%) are considered Fitch loans of concern due to decreases in debt service coverage ratio and occupancy or other performance issues. These loans' higher likelihood of default was incorporated into Fitch's analysis. MOSLER INC: Hearing Tomorrow on Entry of a Final Decree ------------------------------------------------------- A hearing on the motion for entry of a final decree in the chapter 11 case of Mosler, Inc., nka MDIP, Inc., will be held tomorrow, May 24, 2005 at 3:00 p.m., before the Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware. The hearing was originally scheduled on February 1, 2005, but was adjourned. The Court confirmed the Debtors' Second Amended Joint Plan of Liquidation on June 30, 2003, and the Plan became effective on August 1, 2003. In its motion asking for entry of a final decree closing its chapter 11 case pursuant to Section 350(a) of the Bankruptcy Code, Bankruptcy Rule 3022 and Rule 5009-1 of the Local Rules of Bankruptcy Practice and Procedure of the Bankruptcy Court, the Debtor told Judge Walsh that: a) it has consummated its Second Amended Joint Plan of Reorganization, and its estates have been fully administered; and b) the docket maintained in the Debtor's chapter 11 case reflects that there are no adversary proceedings or contested matters pending before the Court. The Debtors submit that these facts show that their chapter 11 cases are fully administered and can be formally closed by the court. MDIP, Inc., f/k/a Mosler, Incorporated, was a leading integrator of physical and electronic security systems, filed, along with its debtor-affiliates for chapter 11 protection on August 6, 2001 (Bankr. D. Del. Case No. 01-10055). Russell C. Silberglied, Esq., at Richards Layton & Finger, and Robert Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, represented the Debtors. When the Company filed for protection from its creditors, it estimated assets of $10 million to $50 million and estimated debts of more than $100 million. The Debtors' Second Amended Joint Plan of Liquidation was confirmed by the Honorable Gregory M. Sleet on June 30, 2003. NAKOMA LAND: Case Summary & 33 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Nakoma Land, Inc. 5150 Mae Anne Avenue #213 Reno, Nevada 89523 Bankruptcy Case No.: 05-51556 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Sierra Highlands, Inc. 05-51557 Grizzly Golf, Inc. 05-51558 The Garner Family 1994 Trust 05-51559 Melkon, Inc. 05-51560 Chapter 11 Petition Date: May 19, 2005 Court: District of Nevada (Reno) Debtors' Counsel: Alan R. Smith, Esq. Law Offices of Alan R. Smith 505 Ridge Street Reno, Nevada 89501 Tel: (775) 786-4579 Total Assets Total Debts ------------ ----------- Nakoma Land, Inc. $18,000,000 $15,252,580 Grizzly Golf, Inc. $18,000,000 $15,246,103 The Garner Family 1994 Trust $5,873,000 $15,212,127 Sierra Highlands, Inc. $4,033,000 $15,551,001 Melkon, Inc. $1,006,000 $15,214,528 A. Nakoma Land, Inc.'s 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Plumas County Tax Collector Real Property Tax $41,780 P.O. Box 176 Quincy, CA 95971 Felderstein Fitzgerald Attorneys fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Franchise Tax Board State income taxes $800 P.O. Box 942857 Sacramento, CA 94257-0540 B. Sierra Highlands, Inc.'s 22 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ J.O. Hazzard Subdivision Goods/Services $94,500 Cons. P.O. Box 188319 Sacramento, CA 95818-8319 Buffalo Communications Goods/Services $66,060 8221 Old Courthouse Road #351 Vienna, VA 22182 Sark Antaramian Goods/Services $61,385 5150 Mae Anne Avenue #213 Reno, NV 89523 Plumas County Tax Collector Real Property Tax $38,906 P.O. Box 176 Quincy, CA 95971 Ignacio Montero Goods/Services $17,000 P.O. Box 550 Portola, CA 96122 Design Works Goods/Services $16,119 P.O. Box 1664 Graeagle, CA 96103 Resort Sports Netword Goods/Services $16,000 P.O. Box 7528 Portland, ME 04112 Felderstein Fitzgerald Attorneys fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Golf Times, Inc. Goods/Services $5,500 P.O. Box 4827 Chico, CA 95927 Feather Publishing Goods/Services $3,780 P.O. Box B Quincy, CA 95971 Cox, Castle & Nicholson Goods/Services $2,598 2049 Century Park East Los Angeles, CA 90067 Interval International Goods/Services $2,505 Membership Processing P.O. Box 432170 Miami, FL 33243-2170 Bubba Newman Productions Goods/Services $1,750 3690 Grant Drive, Suite C Reno, NV 89509 Spa Villas FOA $1,015 State Comp Insurance Fund Goods/Services $957 P.O. Box 7854 San Francisco, CA 94120-7854 Franchise Tax Board State income taxes $800 P.O. Box 942857 Sacramento, CA 94257-0540 Bonnie Lubeck Goods/Services $468 131 Baypoint Drive San Rafael, CA 94901 Granite Bay Electronics, Goods/Services $468 Inc. P.O. Box 2816 Granite Bay, CA 95746 Alpine Appraial Goods/Services $375 10114 Dorchester Drive #700 Truckee, CA 96161 Norma J. Anderson Goods/Services $295 4263 Oak Knoll Drive Carmichael, CA 95608 David & Shirley Degenkolb Goods/Services $295 606 Fallen Leave Way Incline Village, NV 89451 Kevin & Christine Schultz Goods/Services $295 12560 Madrid Court Atascadero, CA 93422 C. Grizzly Golf, Inc.'s 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Plumas County Tax Collector Real Property Tax $35,303 P.O. Box 176 Quincy, CA 95971 Felderstein Fitzgerald Attorneys fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Franchise Tax Board State income taxes $800 P.O. Box 942857 Sacramento, CA 94257-0540 D. The Garner Family 1994 Trust's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Investor's Financial, LLC Deed of Trust $15,200,000 c/o Mark Combs Value of security: 4790 Caughlin Parkkway, $5,873,000 #519 Reno, NV 89509 Orrick Harrington & Attorneys fees $10,000 Sutcliffe 400 Capital Mall, Suite 3000 Sacramento, CA 95814 Plumas County Tax Collector Real Property Tax $2,127 P.O. Box 176 Quincy, CA 95971 E. Melkon, Inc.'s 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Felderstein Fitzgerald Attorneys fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Plumas County Tax Collector Real Property Tax $4,528 P.O. Box 176 Quincy, CA 95971 NATIONAL ENERGY: Portland General Holds $901,700 Allowed Claim -------------------------------------------------------------- Portland General Electric Company and NEGT Energy Trading - Power, L.P., are parties to a Master Purchase and Sale Agreement, pursuant to which the parties entered into various transactions to buy and sell power. ET Power's affiliate-debtor, National Energy & Gas Transmission, Inc., guaranteed ET Power's obligations under the Master Agreement. Portland General filed Claim Nos. 212 and 599 against ET Power, and Claim Nos. 213 and 600 against NEG, pursuant to amounts owed under the Master Agreement and relating to the Guarantee. Each of the four proofs of claim asserts $901,700. Subsequently, at the Debtors' behest, the Court expunged Claim Nos. 599 and 600 on the grounds that they were duplicative and late-filed. In January 2005, Reorganized NEG filed a provisional objection to Claim No. 213 to comply with the claim objection provisions under Reorganized NEG's Chapter 11 Plan of Reorganization, and to reserve all rights with respect to Claim No. 213. Consequently, Reorganized NEG, ET Power, and Portland General agreed to amicably settle the disputes among them relating to Claim Nos. 212 and 213 as embodied in a Court-approved stipulation. The terms of the Stipulation are: (a) Claim No. 212 is allowed as a general unsecured claim against ET Power for $901,700 and will be treated in accordance with the ET Debtors' Chapter 11 Plan of Liquidation; and (b) Claim No. 213 is allowed as a general unsecured claim against NEG for $901,700 and will be treated in accordance with the NEG Plan. 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. (Mirant Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: Court Okays Brascan Energy Claims Settlement Pact ------------------------------------------------------------------ As reported in the Troubled Company Reporter on Apr. 6, 2005, Brascan Energy Marketing, Inc., asserted Claim No. 353 for $7,537,550 against National Energy & Gas Transmission, Inc., and Claim No. 354 against NEGT Energy Trading - Gas Corporation for $7,537,550. Pursuant to an assignment agreement dated January 1, 2005, Brascan Energy assigned Claim No. 354 to Contrarian Funds, LLC. To settle amicably all matters relating to the Brascan Claims, NEGT, ET Gas, Brascan Energy and Contrarian Funds entered into a stipulation resolving the Brascan Claims. The parties agree that: (i) Claim No. 353 will be disallowed and expunged in its entirety; (ii) Claim No. 354 will be reduced and allowed as a general unsecured claim against ET Gas for $7,531,000, and will be considered an allowed claim under Section 502(a) of the Bankruptcy Code; and (iii) Pendency Interest will accrue on Claim No. 354 at a rate of 2.5%. In addition, Contrarian Funds agreed to accept and not to object to the ET Debtors' Plan, including any modifications or amendments thereto that do not affect the validity, amount, or priority of Claim No. 354 or the rate of Pendency Interest to be earned thereon. NEGT and ET Gas, therefore, ask the Court to approve their stipulation with Brascan and Contrarian. * * * The Court approves the stipulation. 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. (Mirant Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) NOMURA CBO: Overcollateralization Cues S&P to Watch Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class A-2 notes issued by Nomura CBO 1997-1 Ltd., a high-yield arbitrage CBO, on CreditWatch with positive implications. The CreditWatch placement reflects factors that have positively affected the credit enhancement available to support the class A-2 notes since the last rating action on Feb. 1, 2005. The primary factor was an increase in the level of overcollateralization available to support the notes. Since the last rating action, the transaction paid down $30.745 million, thereby improving the amount of overcollateralization available to support the class A-2 notes. According to the May 2, 2005, note valuation report, the class A-2 overcollateralization ratio test increased to 128.92% from 119.35% after giving effect to the May 2005 distribution. Standard & Poor's will be reviewing the results of the current cash flow runs generated for Nomura CBO 1997-1 Ltd. to determine the level of future defaults the rated class can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the rating currently assigned to the notes remains consistent with the credit enhancement available. Rating Placed On Creditwatch Positive Nomura CBO 1997-1 Ltd. Rating ------ Class To From ----- -- ---- A-2 B+/Watch Pos B+ Transaction Information Issuer: Nomura CBO 1997-1 Ltd. Co-issuer: Nomura CBO 1997-1 (Delaware) Corp. Collateral manager: Nomura Corporate Research and Management Underwriter: Bear Stearns Cos. Inc. Trustee: JPMorgan Chase Bank N.A. Transaction type: Cash flow arbitrage high-yield CBO NORTEL NETWORKS: HSR Waiting Period on PEC Acquisition Expires -------------------------------------------------------------- Nortel (NYSE:NT)(TSX:NT) disclosed that the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, relating to the proposed acquisition of PEC Solutions, Inc. (Nasdaq:PECS) by Nortel's U.S. subsidiary, Nortel Networks Inc. (NNI), has expired. As previously announced, the tender offer for all outstanding shares of common stock of PEC Solutions is currently scheduled to expire at 12:00 midnight, New York City time, on Tuesday, May 31, 2005. As reported in the Troubled Company Reporter on May 4, 2005, NNI will acquire PEC for an estimated US$448 million (net of cash acquired) through a cash tender offer for all of the outstanding shares of PEC at US$15.50 per share. Nortel expects the acquisition to be earnings per share neutral in 2005 and accretive thereafter. The acquisition of PEC is expected to provide the 'accelerator' for Nortel to compete more fully and completely in the government market. Nortel PEC Solutions will combine PEC's high-end professional services and Nortel's technology solutions to bring greater value - including a strong combined security offering - to existing partners, new partners, and customers in the U.S. government market. With approximately 1,700 employees, PEC has 30 program offices in the U.S. in nine states and the District of Columbia. PEC's customer base includes: * the U.S. Secret Service, * U.S. Coast Guard, * Office of the Chief Information Officer for Homeland Security, * the Transportation Security Administration -- TSA, * Immigration and Customs Enforcement, * the Department of Justice, * Federal Bureau of Investigation, * the U.S. Marshall Service, * the Department of Defense, * the U.S. Postal Service, and * the Department of Veteran Affairs. Upon completion of the transaction, expected in June 2005, PEC will be aligned with Nortel Federal Network Solutions to create Nortel PEC Solutions. Saffell will continue to lead Nortel's federal business. Nortel PEC Solutions will continue to be headquartered in Fairfax, Virginia. PEC Chief Executive Officer David C. Karlgaard, Ph.D., PEC President Paul G. Rice, and PEC Chief Operating Officer Alan H. Harbitter, Ph.D. all will remain on the senior executive leadership team. Terms and Conditions The merger agreement provides for Nortel to acquire PEC in a two- step transaction in which a cash tender offer will be made for all outstanding shares of PEC common stock at a price of US$15.50 per share, representing a premium of approximately 28 percent for PEC's stockholders based on the 30-day trailing average share price of PEC on the NASDAQ National Market for the period ending on April 25, 2005. The tender offer will be followed by a merger in which the holders of the remaining outstanding shares of PEC common stock will also receive US$15.50 per share in cash, without interest. Consummation of the transaction is subject to certain conditions, including the tender of a specified number of the shares of PEC, receipt of regulatory approvals, and other customary conditions. Certain of PEC stockholders, who collectively beneficially own approximately 53 percent of the fully diluted shares outstanding of PEC, have entered into certain agreements in connection with the merger agreement, including commitments to tender shares in the offer. In addition, these stockholders granted Nortel an option exercisable under certain circumstances to purchase a number of their shares representing 35 percent of the outstanding shares of PEC. The agreement has been unanimously approved by the boards of directors of both Nortel and PEC. BB&T Capital Markets and Windsor Group acted as financial advisor to Nortel for this transaction and JP Morgan represented PEC. Nortel Networks -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NORTH AMERICAN: S&P Cuts Senior Unsecured Debt Rating to CCC+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on construction service provider North American Energy Partners Inc. The long-term corporate credit rating was lowered to 'B-', the senior secured debt rating to 'B', and the senior unsecured debt rating to 'CCC+'. In addition, the company's new $60 million senior secured notes offering are rated 'B'. The new senior secured notes will be notched up from the corporate credit rating to reflect sufficient collateral and enhanced recovery prospects. At the same time, the ratings were removed from CreditWatch where they were placed Jan. 19, 2005, with negative implications. The outlook is negative. "The ratings were lowered to reflect Standard & Poor's overall assessment of the company's business and financial risk," said Standard & Poor's credit analyst Daniel Parker. "Although the financing will address the immediate liquidity problems and the covenant violations, we believe the company faces some significant challenges with regards to restoring profitability and improving its very aggressive financial profile," Mr. Parker added. Proceeds from the secured notes offering will be used to repay borrowings under the current bank facility, which was then cancelled. Concurrent with the senior secured notes offering, the company also obtained a new C$40 million revolving credit facility from a new syndicate, and issued C$7.5 million of preferred shares. The ratings on NAEP reflect the company's very aggressive financial profile and vulnerable business profile, which are partially offset by its leading market position in servicing oil sands projects. NAEP provides construction services such as site preparation, ore removal, piling, and pipeline installation to oil and gas and natural resource companies. The business profile reflects the major risks the company faces, which include: (1) delays or cancellations of oil sands projects, (2) additional competition, (3) margin pressures as oil sands producers try to lower costs, and (4) customer concentration risk. These risks are partially offset by the company's leading position in providing these services in its core market in the Province of Alberta. The outlook is negative. The company's financial profile is very aggressive and the company needs to execute a turnaround in profitability in an increasingly competitive environment. If profitability can be restored to previous levels (EBITDA of about C$60 million) and the company can generate positive free cash flow after capital expenditures, the outlook could be revised to stable. NORTHWEST AIRLINES: S. Boda Replaces H. Adler as Vice President --------------------------------------------------------------- Northwest Airlines (NASDAQ: NWAC) disclosed that Hector Adler, vice president-in-flight services, has advised the company that he intends to retire next month. Suzanne Boda, Northwest's vice president-station operations, will replace Adler as vice president-in-flight services. "Hector Adler, who headed our in-flight services group since 1992, has been instrumental in a number of in-flight enhancements including the evolution of Northwest's World Business Class into one of the top global business class offerings available. In addition, Hector led the airline's efforts to develop an on-board flight attendant leadership program which increased the level of on-board and destination-related services provided to our customers," said Phil Haan, executive vice president- international, alliances and information technology & chairman, Northwest Cargo. "We thank Hector for his 13 years of dedicated service to our airline and wish him well as he returns to the East Coast." "Suzanne brings 22 years of front-line customer service experience to her new position. Her varied domestic and international assignments as well as her commitment to ensuring an efficient travel experience for our customers are key reasons why she was asked to lead our in-flight group," Mr. Haan continued. Ms. Boda, who joined the airline in 1983, has been responsible for customer service at Northwest's 109 non-hub airports in the U.S., Canada and the Caribbean. She has also served as vice president of ground operations at Northwest's Memphis hub and managing director of customer service at Memphis. During her tenure at Northwest, she has held a number of customer service positions in Minneapolis and Los Angeles and worked in Tokyo as manager of marketing automation for the Pacific region. Ms. Boda is fluent in Japanese. She received bachelors' degrees in Asian studies and Spanish from Gustavus Adolphus College in St. Peter, Minn. Northwest Airlines is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,600 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. NORTHWEST ALUMINUM: Can Sell Shares of Stock & Use Cash Collateral ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon approved Northwest Aluminum Company and its debtor-affiliates' request: a) to sell certain assets outside of the ordinary course of business free and clear of all liens, claims and interests pursuant to 11 U.S.C. Section 3639(b); and b) to the extent the proceeds of the sale of those assets constitute cash collateral pursuant to 11 U.S.C. Section 363(a), use that cash collateral pursuant to 11 U.S.C. Section 363(c). The Court confirmed the Debtors' Third Modified Plan of Reorganization on March 1, 2005, and the Plan took effect on April 14, 2005. Stancorp Stock & Use of the Cash Collateral The Court authorized the Debtors to sell some or all of the 10,440 shares of stock that Golden Aluminum Company holds in Stancorp Financial Group, Inc. Golden Aluminum is an affiliate of the Debtors and was not reorganized under the Debtors' confirmed Plan. The Debtors explain that the Stancorp Stock is traded on the New York Stock Exchange, and as of April 12, 2005, the Stacorp Stock was trading at $84.20 per share. Consequently, the total market value of the stock is approximately $877,000 before any deduction for sales commissions or fees. The Debtors will use the proceeds of the stock sale and the proceeds of the sale that constitute cash collateral to pay smelter mothball costs, their ratable share of post-petition insurance premiums, and other ordinary course chapter 11 administrative expenses. Golden Northwest Aluminum Holding Company, the holding company for the reorganized Debtors, is the current holder of the First Mortgage Liens and the claims and interests of the First Mortgage Noteholders of the Debtors. Golden Northwest has consented to the sale of the Stancorp Stock free and clear of the First Mortgage Liens. The Debtors' use of the proceeds of the stock sale and the proceeds that constitute cash collateral will be in strict compliance with a six-week Budget covering the period from April 24, to June 5, 2005. A full-text copy of the Budget is available at no charge at: http://bankrupt.com/misc/NorthwestAluminumBudget.pdf Headquartered in The Dalles, Oregon, Northwest Aluminum Company -- http://www.nwaluminum.com/-- is a subsidiary of Golden Northwest Aluminum, Inc., engaged in the production of aluminum billet for hot extrusion, hot or cold impact extrusion, and hot or cold forging stock in most aluminum alloys. The Company and its debtor-affiliates filed for chapter 11 protection on November 10, 2004 (Bankr. D. Ore. Case No. 04-42061). The case is jointly administered under Golden Northwest Aluminum, Inc., (Bankr. D. Ore. Case No. 03-44107). Richard C. Josephson, Esq., at Stoel Rives LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. OAKWOOD HOMES: Poor Performance Prompts S&P to Watch Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services placed various ratings on Oakwood Homes Corp. -related manufactured housing securitizations on CreditWatch with negative implications. The CreditWatch placements reflect the continued poor performance exhibited by the underlying pools of manufactured housing installment sales contracts and mortgage loans, as well as the resulting deterioration of credit enhancement since Standard & Poor's last rating actions in September 2004. The performance of Oakwood's manufactured housing securitizations has been deteriorating since late 2002 as a result of industrywide problems, and, ultimately, its decision to file Chapter 11 bankruptcy. Historically, when a manufactured housing seller/servicer discontinues loan originations or declares bankruptcy, dealer relations are negatively impacted and, consequently, the ability to liquidate repossession inventory at acceptable recovery rates becomes impaired. This has been the case with Oakwood, and the resulting increase in loss severities, as well as default frequencies, has greatly affected transaction performance. The high level of repossessions and increased loss severities has caused credit support in Oakwood's manufactured housing securitizations to decline rapidly. Most of the transactions have experienced principal write-downs on their subordinate classes and, in some cases, on the mezzanine classes as well. In April 2004, Clayton Homes Inc., a subsidiary of Berkshire Hathaway Inc., completed its acquisition of Oakwood and is currently servicing the securitizations. Standard & Poor's expects to complete a detailed review of the credit performance of the securitizations listed below relative to the remaining credit support within the next two months in order to determine if any ratings actions are necessary. The ratings for each class could possibly move approximately one rating category. Ratings Placed On Creditwatch With Negative Implications Oakwood Mortgage Investors Inc. Series 1995-A Rating ------ Class To From ----- -- ---- B-1 A+/Watch Neg A+ Oakwood Mortgage Investors Inc. Series 1995-B Rating ------ Class To From ----- -- ---- B-1 BBB/Watch Neg BBB Oakwood Mortgage Investors Inc. Series 1996-B Rating ------ Class To From ----- -- ---- A-6 AAA/Watch Neg AAA Oakwood Mortgage Investors Inc. Series 1996-C Rating ------ Class To From ----- -- ---- A-6 AAA/Watch Neg AAA Oakwood Mortgage Investors Inc. Series 1997-A Rating ------ Class To From ----- -- ---- A-6 AAA/WatchNeg AAA B-1 B-/Watch Neg B- Oakwood Mortgage Investors Inc. Series 1997-B Rating ------ Class To From ----- -- ---- M-1 AA/Watch Neg AA Oakwood Mortgage Investors Inc. Series 1997-C Rating ------ Class To From ----- -- ---- M-1 A/Watch Neg A Oakwood Mortgage Investors Inc. Series 1998-A Rating ------ Class To From ----- -- ---- A-4 AA-/Watch Neg AA- A-5 AA-/Watch Neg AA- M-1 BB-/Watch Neg BB- Oakwood Mortgage Investors Inc. Series 1998-B Rating ------ Class To From ----- -- ---- A-3 AA/Watch Neg AA A-4 AA/Watch Neg AA A-5 AA/Watch Neg AA M-1 BB/Watch Neg BB Oakwood Mortgage Investors Inc. Series 1998-D Rating ------ Class To From ----- -- ---- A BBB+/Watch Neg BBB+ A-1 ARM BBB+/Watch Neg BBB+ OMI Trust 1999-C Rating ------ Class To From ----- -- ---- A-2 B/Watch Neg B OMI Trust 1999-D Rating ------ Class To From ----- -- ---- A-1 BB-/Watch Neg BB- M-1 CCC/Watch Neg CCC OMI Trust 1999-E Rating ------ Class To From ----- -- ---- A-1 B/Watch Neg B M-1 CCC/Watch Neg CCC OMI Trust 2000-C Rating ------ Class To From ----- -- ---- A-1 B+/Watch Neg B+ OMI Trust 2000-D Rating ------ Class To From ----- -- ---- A-2 B-/Watch Neg B- A-3 B-/Watch Neg B- A-4 B-/Watch Neg B- OMI Trust 2001-D Rating ------ Class To From ----- -- ---- A-1 B-/Watch Neg B- A-2 B-/Watch Neg B- A-3 B-/Watch Neg B- A-4 B-/Watch Neg B- OMI Trust 2001-E Rating ------ Class To From ----- -- ---- A-1 B-/Watch Neg B- A-2 B-/Watch Neg B- A-3 B-/Watch Neg B- A-4 B-/Watch Neg B- OMI Trust 2002-A Rating ------ Class To From ----- -- ---- A-1 BB-/Watch Neg BB- A-2 BB-/Watch Neg BB- A-3 BB-/Watch Neg BB- A-4 BB-/Watch Neg BB- M-1 CCC/Watch Neg CCC OMI Trust 2002-B Rating ------ Class To From ----- -- ---- A-1 BB/Watch Neg BB A-2 BB/Watch Neg BB A-3 BB/Watch Neg BB A-4 BB/Watch Neg BB M-1 B-/Watch Neg B- M-2 CCC/Watch Neg CCC OMI Trust 2002-C Rating ------ Class To From ----- -- ---- A-1 B/Watch Neg B M-1 CCC+/Watch Neg CCC+ M-2 CCC/Watch Neg CCC ABSC Manufactured Housing Contract Resecuritization Trust 2004-OAK1 Rating ------ Class To From ----- -- ---- A-1 A-/Watch Neg A- A-2 A-/Watch Neg A- A-3 A-/Watch Neg A- A-4 BBB-/Watch Neg BBB- OMNICARE INC: Moody's Assigns Ba3 Rating to New $334M Securities ---------------------------------------------------------------- Moody's Investors Service changed the rating outlook for Omnicare, Inc., to negative from stable. At the same time, Moody's assigned a Ba3 rating to Omnicare Capital Trust II's approximately $334 million in new Trust Preferred Income Equity Redeemable Securities. These new securities are being exchanged for Trust PIERS previously issued by Omnicare Capital Trust I. These securities were offered in conjunction with an exchange offer that expired on March 7, 2005. Omnicare did not receive any proceeds from this exchange offer. Moody's also affirmed the Ba3 rating on the $11 million of remaining Trust PIERS of Omnicare Capital Trust I, as well as Omnicare's other long-term debt ratings and speculative grade liquidity rating of SGL-1. The outlook change reflects Moody's concerns that the transition to a new reimbursement system for a large portion of Omnicare's patients and ongoing competitive pricing pressures create uncertainty regarding future margins in the pharmacy services business. In combination with these factors, Moody's said that the company's financial risk may increase over the near-term because of its plan to acquire Neighborcare. If Omnicare enters into a definitive agreement to buy Neighborcare and it results in a material increase in leverage, the ratings would likely be placed under review for possible downgrade. The negative outlook incorporates uncertainty associated with a new drug reimbursement model proposed under the Medicare Modernization Act of 2003 that will affect institutional pharmacies. While a significant portion of Omnicare's revenues (approximately 50%) are at risk for change, it is not yet clear how the new system will affect Omnicare's performance. Positive features of the Medicare Part D legislation include recognition for value-added services such as 24/7 access, and medication management services. In addition, it may be beneficial for Omnicare to negotiate rates with insurers instead of entering into contracts at pre-determined rates with individual states, many of which are placing constraints on Medicaid spending. However, other features, including the introduction of a new Prescription Drug Plan layer in the delivery system and the ability for PDPs to control drug formularies, create some degree of uncertainty and therefore, higher risk for the company. Moody's acknowledges that the changes proposed under the MMA become effective on January 1, 2006, and, thus, the nature and timing of the effects of MMA on Omnicare's future earnings remains unclear. The negative outlook is also based in part on heightened competition from retail drugstore chains and regional long term care pharmacies. Combined with prospects for additional debt associated with a possible Neighborcare transaction, Moody's believe it is less certain that Omnicare will maintain free cash flow to adjusted debt ratios of approximately 15%. Moody's also believes that the value that Neighborcare represents to Omnicare, especially at what appears to be a relatively rich purchase price, is made less certain by the anticipated reimbursement changes for this sector. If Omnicare raises its financial leverage to acquire Neighborcare and, as a result, the pro forma combined enterprise's ratio of free cash flow to adjusted debt falls below 15%, the ratings could be lowered. Alternatively, if cash flow levels deteriorate because of competitive forces or lower government reimbursement, the ratings could also face pressure. However, if Omnicare is able to sustain a ratio of free cash flow to adjusted debt of approximately 15% after considering the acquisition of Neighborcare and any downside risks associated with the implementation of MMA, the rating outlook could become stable. The Ba1 rating reflects Omnicare's leading market position as a provider of institutional pharmacy services. This market position should help better position Omnicare as the reimbursement method for institutional pharmacies undergoes dramatic change. We believe that PDPs will likely be the large health benefits companies and pharmacy benefit managers, that will need to contract with institutional pharmacies to provide services to seniors in nursing home settings that are also Medicaid eligible. The company's SGL-1 rating reflects our expectation that Omnicare will maintain relatively strong cash flow and low levels of capital spending over the next 12 months. Although the changes to the reimbursement model provide higher uncertainty and contribute to a negative outlook on the company's long-term debt ratings, the actual legislation would be effective during less than half of the next twelve month period. Moody's believes that cash flow levels should remain relatively steady over that time-frame. Moody's anticipates, however, that if the Neighborcare transaction is consummated, the liquidity rating could be downgraded because of the need to access external sources of liquidity to fund the purchase price of the transaction as well as higher working capital needs. Omnicare offered to exchange its Trust PIERS to avoid share dilution under new accounting guidelines. Under terms of the new securities, any conversion or put must be satisfied with cash versus equity. Moody's believes that these new terms could reduce Omnicare's financial flexibility by increasing the demands on its future liquidity. Currently, Moody's believes the likelihood of conversion is relatively low. However, if this likelihood increases, it could place pressure on the SGL-rating. Rating assigned with a negative outlook: Omnicare Capital Trust II: * Ba3 $334 million new convertible trust preferred securities, due 2033 Ratings affirmed with a negative outlook: Omnicare Capital Trust I: * Ba3 $11 million convertible trust preferred securities, due 2033 Omnicare Inc.: * Ba1 senior implied; * Ba1 issuer rating; * Ba1 senior unsecured bank credit facility; * Ba2 senior subordinated notes; * SGL-1 speculative grade liquidity rating. Omnicare, Inc, based in Covington, Kentucky, is the nation's largest provider of: * professional pharmacy, * related consulting and data management services for long-term care, * assisted living and * other institutional health care providers. OWENS CORNING: Objects to Wallkill's $400,000 Environmental Claim ----------------------------------------------------------------- Between 1965 and 1995, Owens Corning manufactured and sold fiberglass tanks for the underground storage of petroleum and water. Owens Corning sold its underground storage tank business to Fluid Containment, Inc., now known as Containment Solutions, Inc., in 1995. Owens Corning, however, retained liability for warranty and product-related claims with respect to the USTs it had manufactured. Wallkill Central School District alleges that an underground storage tank manufactured by the Debtors and located on the grounds of the Platekill Elementary School in Wallkill, New York, "failed," resulting in a spill of approximately 9,500 gallons of fuel into the surrounding environment. Wallkill blamed the Debtors for their failure to provide adequate warning of the consequences of pressurized tank. As a result, Wallkill filed Claim No. 890 against the Debtors. Wallkill attached to its proof of claim an addendum and a copy of an Owens Corning UST installation instruction manual. Pursuant to the Addendum, Wallkill seeks to recover damages resulting from the failure of a fiberglass UST manufactured by Owens Corning and located on Wallkill's property. Wallkill also asserts damages, including environmental cleanup costs, potential fines, costs of litigation and costs associated with adjacent property owners' claims for damages, which "appear to exceed $400,000 at present." Wallkill maintains that its Claim is entitled to priority treatment pursuant to Section 507(a)(1) of the Bankruptcy Code. The incident allegedly occurred after the Petition Date. The Debtors dispute the Claim in its entirety and ask the Court to disallow and expunge the Claim for three reasons: (1) Wallkill failed to provide adequate documentation in support of its claim; (2) Any loss incurred by Wallkill resulted from its failure to adhere to instructions; and (3) To the extent allowed, the Claim is not a priority administrative claim. J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells the Court that Containment Solutions Inc. and Owens Corning immediately investigated the incident. Large cracks were found in the inner and outer tank walls of the tank. The nature and position of these cracks, together with the sudden loss of the entire contents of the tank immediately following refueling, demonstrated that the tank had essentially exploded due to being overfilled under pressure. That conclusion, Ms. Stickles says, was consistent with the observations of witnesses who reported hearing a loud noise and vibration when the tank was being filled. Those witnesses also reported that the delivery truck filling the tank had pumped fuel into the tank under pressure, rather than by gravity feed. Ms. Stickles explains that fiberglass tanks like the one installed at Wallkill's location are designed to be operated under atmospheric pressure and should not be filled under greater pressure, unless the tank and the delivery truck are equipped with overfill shut-off equipment to prevent the tank from being overfilled. The installation instructions, which were provided to Wallkill when the UST was purchased and installed in 1990, warn against filling the tank under pressure in the absence of an overfill shut-off equipment. Ms. Stickles contends that the Debtors are not responsible for losses that result from Wallkill's failure to adhere to explicit instructions and from the apparent negligence of its contractors. Ms. Stickles points out that Wallkill's assertion that its losses resulted from the Debtors' failure to warn against the practice of filling fiberglass USTs under pressure is refuted by the instructions that presumably had been in Wallkill's possession and followed for 12 years. Moreover, there is no basis for characterizing the Claim as anything other than a general unsecured claim. Ms. Stickles says the courts in In re O'Brien Env't Energy, Inc., 181 F.3d 527, 532-33 (3d Cir. 1999); In re Harnischfeger Indus., Inc., 293 B.R. 650, 659 (Bankr. D. Del. 2003); and In re Dak Indus., Inc., 66 F.3d 1091, 1094 (9th Cir. 1995), used a two-prong test to determine whether a creditor has an administrative claim: (1) The claimant must show either that the debtor -- not the prepetition entity -- incurred the transaction on which the claim is based, or that the claimant furnished the consideration to the debtor -- not the prepetition entity; and (2) It must show that the transaction resulted in a direct benefit to the debtor. Ms. Stickles contends that Wallkill's claim does not satisfy either of the criteria. The Claim did not arise from any transaction with the debtor. It arose from a transaction with the predecessor entity, which manufactured the tank, sold it to Wallkill or Wallkill's predecessor, and provided the installation and operating instructions that warned against filling the tank under pressure in the absence of overfill shut-off equipment. Neither would payment of the Claim convey any benefit on the estate, Ms. Stickles further argues. "Owens Corning is not engaged in the manufacture and sale of fiberglass USTs; the predecessor entity sold that business almost ten years ago" Ms. Stickles notes. "Resolution of a claim concerning that business, in particular the adequacy of the instructions provided at the time of the sale of those tanks, can have no beneficial effect on the Debtor's remaining building materials businesses." Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Has Until Dec. 5 to Make Lease-Related Decisions --------------------------------------------------------------- U.S. Bankruptcy Court for the District of Delaware extended the deadline before which Owens Corning and its debtor-affiliates can assume, assume and assign, or reject their unexpired non-residential real property leases, through and including December 5, 2005. The Debtors sought the extension to avoid premature assumption of substantial, long-term liabilities under certain leases or forfeiture of benefits with some favorable leases. Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, related that the Debtors have made substantial and consistent progress in evaluating 347 unexpired non-residential real property leases. They have rejected 75 leases and assumed or assumed and assigned 22 others. As reported in the Troubled Company Reporter on Apr. 20, 2005, the Debtors are still party to around 165 Unexpired Leases, which are mostly for space used by them for conducting the production, warehousing, distribution, sales, sourcing, accounting and general administrative functions that comprise their businesses, and are important assets of their estates. Mr. Pernick explained that the assumption or rejection decisions are an integral part of the Debtors' reorganization process and accordingly should be dealt with globally through the plan confirmation process. Certain developments in the Debtors' bankruptcy cases have impacted the confirmation process. Recently, Mr. Pernick related, Judge Fullam issued a ruling estimating the present and future asbestos liability of Owens Corning at $7 billion. The Debtors cannot predict at this juncture whether any party will appeal Judge Fullam's ruling. Requiring the Debtors to assume or reject the Unexpired Leases at this point in their cases may foreclose them or other parties from pursuing plan modifications or alternative plan structures that rely on different dispositions of some or all of the Unexpired Leases than is presently contemplated, Mr. Pernick added. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) PAYLESS CASHWAYS: Judge Federman Dismisses Bankruptcy Case ---------------------------------------------------------- The Honorable Arthur B. Federman of the U.S. Bankruptcy Court for the Western District of Missouri dismissed the bankruptcy case filed by Payless Cashways, Inc., on May 19, 2005. Judge Federman's decision to dismiss the Debtor's chapter 11 case is based on the request filed by Silverman Consulting, Inc., the Chapter 11 Trustee overseeing the Debtor's chapter 11 proceeding. Craig R. Graff and Steven A. Nerger at Silverman Consulting convinced Judge Federman that the Debtor's bankruptcy case should be dismissed because: a) all of the Debtor's real and personal property has been liquidated and all assets, including potential causes of action, have been assigned or distributed in accordance with the priorities set forth in the Bankruptcy Code and the claims of the creditors of the estate as authorized or directed by the Bankruptcy Court; b) the Debtor is administratively insolvent and has only been able to make distributions to secured creditors and to holders of allowed administrative claims in the amount of 19.43% of their claims; and c) the Chapter 11 Trustee is unable to propose a confirmable chapter 11 plan and there is no benefit to the Debtor's creditors for the Trustee to continue the Debtor's chapter 11 case. Judge Federman concludes that these facts satisfy cause to dismiss the Debtor's bankruptcy case pursuant to 11 U.S.C. Section 1112(b). Judge Federman orders that Silverman Consulting will be responsible for the timely payment of fees to the Office of the U.S. Trustee that are incurred pursuant to 28 U.S.C. Section 1930(a)(6) and to serve the quarterly disbursement report on the U.S. Trustee through the date of the entry of the Court's dismissal order, and Silverman Consulting is authorized to destroy all remaining records of the Debtor's estate after March 31, 2008. Headquartered in Lee's Summit, Missouri, Payless Cashways, Inc., is a retail operator of building material stores. The Company filed for chapter 11 protection on June 4, 2001 (Bankr. W.D. Mo. Case No. 01-42643). Kathryn B. Bussing, Esq. and Benjamin F. Mann, Esq., at Blackwell Sanders Peper Martin LLP represent the Debtor. Arthur A. Chaykin, Esq., at Polsinelli Shalton & Welte represents the Chapter 11 Trustee. When the Company filed for chapter 11 protection it listed $552,962,000 in assets and $473,305,000 in debts. The Court dismissed the Debtor's bankruptcy case on May 19, 2005. PEGASUS COMMUNICATIONS: Nasdaq Issues Delisting Notice ------------------------------------------------------ Pegasus Communications Corporation (NASDAQ: PGTVE) received notice from Nasdaq that Pegasus' Class A common stock will be delisted effective with the open of business on Friday, May 20, 2005. Based on the delisting notice received from Nasdaq, the Company believes that the findings of fact reported to the Nasdaq Listing Qualifications Panel are incorrect. The Company intends to file a request for reconsideration by the Nasdaq Listing Qualifications Panel. Pursuant to Nasdaq's rules, the Company is required to file its request for reconsideration within seven calendar days of receiving the delisting notice and the Nasdaq Listing Qualifications Panel has until 15 calendar days after the delisting notice to respond to the request for reconsideration. Separately, the Company filed an appeal today with the Nasdaq Listing and Hearing Review Council seeking a review of the Nasdaq Listing Qualifications Panel's decision to delist. Neither this appeal nor the Company's intended request for reconsideration will stay the delisting unless and until the Listing Qualifications Panel or the Review Council decide otherwise. The Company anticipates that its Class A common stock will trade on the Pink Sheets during the period that it is not listed on Nasdaq. The notice of delisting follows: (a) an April 5, 2005 Nasdaq staff determination that the Company had failed to comply with the Nasdaq filing requirement, as set forth in Marketplace Rule 4310(c)(14), due to the fact that it had not filed its Annual Report on Form 10-K for the year ended December 31, 2004 with the SEC by March 31, 2005, (b) a May 5, 2005 hearing before a Nasdaq Listing Qualifications Panel, and (c) the May 18, 2005 filing of the Company's Form 10-K and the Company's request, submitted after the filing of the Form 10-K but before the notice of delisting, that the Nasdaq Listing Qualifications Panel grant Pegasus' request for an exception to allow Pegasus until June 15, 2005 to file its Form 10-Q for the quarter ended March 31, 2005. The Company is working diligently to file its first quarter Form 10-Q and anticipates filing the Form 10-Q on or before June 15, 2005. After the first quarter Form 10-Q is filed, the Company believes that it will be able to timely file its future reports since the circumstances that led to the late filings are nonrecurring and other than the untimely filing of its first quarter Form 10-Q the Company is otherwise in compliance with Nasdaq's requirements. About the Company Pegasus Communications Corporation (NASDAQ: PGTVE) provides wireless Internet access to residential and enterprise customers and is a licensee of 700 MHz spectrum covering in excess of 180 million people that will in future enable the delivery of broadband communications to fixed and mobile users in major markets such as New York, Boston, Philadelphia, Pittsburgh, Cleveland, Detroit, Chicago, Miami, Tampa, Phoenix, San Francisco, Sacramento, Portland and Seattle. At Dec. 31, 2004, Pegasus Communications Corporation's balance sheet showed a $215,199,000 stockholders' deficit, compared to $304,118,000 of positive equity at Dec. 31, 2003. PHOENIX COLOR: Moody's Reviews $105 Million Notes' Junk Rating -------------------------------------------------------------- Moody's Investors Service has placed the ratings of Phoenix Color Corp. on review for possible downgrade and has withdrawn the ratings of its proposed senior secured credit facilities. Details of the ratings action are: Ratings placed on review for possible downgrade: * $105 million senior subordinated notes, due 2009 -- Caa1 * Senior implied rating -- B2 * Issuer rating - Caa1 Ratings withdrawn: * $15 million first lien revolving credit facility, due 2010 -- B2 * $80 million first lien term loan facility, due 2011 -- B2 * $35 million second lien term loan facility, due 2011 -- Caa1 This action follows the company's announcement: (1) that it is revising the financial information and projections that were recently provided to Moody's in connection with a rating assignment; and (2) that it is no longer considering a refinancing of all or a portion of its outstanding debt. The review will assess the robustness of management's forecasting tools and will consider the implications of the proposed revisions of pro forma 2004 financial information and projections which management provided to Moody's and upon which Moody's based its credit opinion. Headquartered in Hagerstown, Maryland, Phoenix Color Corp. is a leading manufacturer of book components and multicolored books. The company reported sales of $99 million in 2004. PNC MORTGAGE: Moody's Affirms 6 Certs. Classes' Low-B Ratings ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of eight classes and affirmed the ratings of eleven classes of PNC Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series 2001-C1 as: -- Class A-1, $96,593,502, Fixed, affirmed at Aaa -- Class A-2, $560,781,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $33,060,000, Fixed, upgraded to Aaa from Aa2 -- Class C-1, $18,856,000, Fixed, upgraded to Aa3 from A2 -- Class C-2, $12,000,000, Fixed, upgraded to Aa3 from A2 -- Class C-2X, Notional, upgraded to Aa3 from A2 -- Class D, $11,020,000, Fixed, upgraded to A2 from A3 -- Class E, $8,816,000, Fixed, upgraded to A3 from Baa1 -- Class F, $13,224,000, Fixed, upgraded to Baa1 from Baa2 -- Class G, $7,714,000, Fixed, upgraded to Baa2 from Baa3 -- Class H, $16,530,000, Fixed, affirmed at Ba1 -- Class J, $14,326,000, Fixed, affirmed at Ba2 -- Class K, $5,510,000, Fixed, affirmed at Ba3 -- Class L, $8,816,000, Fixed, affirmed at B1 -- Class M, $4,408,000, Fixed, affirmed at B2 -- Class N, $2,204,000, Fixed, affirmed at B3 As of the May 12, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 6.2% to $826.5 million from $881.6 million at securitization. The Certificates are collateralized by 118 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 10.2% of the pool, with the top ten loans representing 37.2% of the pool. The pool includes two investment grade shadow rated loans, representing 19.3% of the pool, and a conduit component, representing 80.7% of the pool. Two loans, representing 1.1% of the pool, have defeased and have been replaced with U.S. Government securities. Two loans have been liquidated from the trust resulting in realized losses of approximately $5.1 million. Two loans, representing 2.7% of the pool, are in special servicing. Moody's has not estimated any losses for the specially serviced loans at this time. Twenty-five loans, representing 16.3% of the pool, are on the master servicer's watchlist. Moody's was provided with partial year or calendar year 2004 operating results for 97.0% of the performing loans. Moody's loan to value ratio for the conduit component is 84.9%, compared to 89.1% at securitization. Based on Moody's analysis, 10.4% of the conduit pool has a LTV greater than 100.0%, compared to 0.3% at securitization. The upgrade of Classes B, C-1, C-2, C-2X, D, E, F, and G is primarily due to improved overall pool performance and increased subordination levels. The largest shadow rated loan is the Danbury Mall Loan ($84.0 million - 10.2%), which is a participation interest in a first mortgage loan secured by a 1.3 million square foot regional mall located in Danbury, Connecticut. The first mortgage loan, which has a current outstanding balance of approximately $169.4 million, is comprised of three notes. Only Note A2 is in included in this transaction. Notes A1 and B secure the Certificates of Danbury Fair Mall Trust, Series 2001-DFM. The mall is anchored by Macy's, Sears, Filene's, J.C. Penney and Lord & Taylor. The property is 96.7% occupied, essentially the same as at securitization. Performance has been stable. Moody's current shadow rating is Aaa, the same as at securitization. The second shadow rated loan is the Mills Loan ($75.0 million - 9.1%), which is a participation interest in a first mortgage loan secured by two regional malls -- Potomac Mills and Gurnee Mills. The first mortgage loan, which has a current outstanding balance of approximately $341.7 million, is comprised of four notes. Only Note A2B is included in this transaction. Notes A1, A2A and B secure the Certificates of Potomac/Gurnee Mills Trust, Series 2001-XLPGM. Potomac Mills is a 1.6 million square foot regional center located in Prince William County in northern Virginia. Gurnee Mills is a 1.7 million square foot regional mall located north of Chicago in Lake County, Illinois. The overall occupancy of the two properties is 92.6%, compared to 95.3% at securitization and resulting in a slight decline in the portfolio's performance. Moody's current shadow rating is Aaa, the same as at securitization. The top three conduit loans represent 8.0% of the outstanding pool balance. The largest conduit loan is the River Center Loan ($27.9 million - 3.4%), which is secured by a 469,000 square foot office/industrial building located in Milwaukee, Wisconsin. The property is 84.0% occupied, essentially the same as at securitization. Major tenants include: * US Bank (Moody's senior unsecured rating Aa1; 17.0% NRA; lease expiration 2010), * Aurora Medical Group (13.0% NRA; lease expiration 2013) and * M&I Data Service (11.0% NRA; lease expiration 2010). Moody's LTV is 94.6%, compared to 98.3% at securitization. The second largest conduit loan is the Deer Grove Shopping Center Loan ($19.8 million - 2.4%), which is secured by a 214,000 square foot retail center located approximately 30 miles northwest of Chicago in Palatine, Illinois. The property is 98.7% occupied, compared to 100.0% at securitization. The center is anchored by Dominick's Grocery (29.0% GLA; lease expiration 2016) and Linens N' Things (23.4% GLA; lease expiration 2012). The property's performance has declined slightly due to lease turnover. Moody's LTV is 89.1%, compared to 87.0% at securitization. The third largest conduit loan is the Overland Crossing Shopping Center Loan ($18.4 million - 2.2%), which is secured by a 172,000 square foot retail center located in Overland Park, Kansas. The property is 100.0% leased, the same as at securitization. The center is anchored by J.C. Penney, Office Max and Circuit City. Moody's LTV is 88.0%, compared to 91.1% at securitization. The pool's collateral is a mix of: * retail (40.2%), * office and mixed use (24.1%), * multifamily (17.9%), * industrial and self storage (11.0%), * lodging (5.7%) and * U.S. Government securities (1.1%). The collateral properties are located in 32 states. The highest state concentrations are: * California (15.8%), * Connecticut (11.8%), * Illinois (11.2%), * Texas (8.2%) and * Maryland (7.5%). All of the loans are fixed rate. PUBLICARD INC: March 31 Balance Sheet Upside-Down by $5.8 Million ----------------------------------------------------------------- PubliCARD, Inc. (OTCBB:CARD) reported its financial results for the three months ended March 31, 2005. Revenues for the first quarter of 2005 decreased to $751,000, compared to $828,000 in 2004. Foreign currency changes had the effect of increasing revenues by 3%. Excluding the impact of foreign currency changes, revenues in 2005 decreased by 12% driven by a decline in direct sales to customers located in the United Kingdom as well as a decline in shipments to non-U.S. distribution partners. The Company reported a net loss for the quarter ended March 31, 2005 of $719,000, compared with a net loss of $503,000, a year ago. The 2004 results include a gain of $477,000 relating to an agreement to assign to a third party certain insurance claims against a group of historic insurers. The claims involved several historic general liability policies of insurance issued to the Company. As of March 31, 2005, cash and short-term investments totaled $1,527,000. Going Concern Doubt The Company sponsored a defined benefit pension plan that was frozen in 1993. In January 2003, the Company filed a notice with the Pension Benefit Guaranty Corporation seeking a "distress termination" of the Plan. In September 2004, the PBGC proceeded to terminate the Plan and was appointed as the Plan's trustee. As a result of the Plan termination, the Company's 2003 and 2004 funding requirements due to the Plan amounting to $3.4 million through September 15, 2004 were eliminated. As such, management believes that existing cash and short term investments may be sufficient to meet the Company's operating and capital requirements at the currently anticipated levels through December 31, 2005. However, additional capital will be necessary in order to operate beyond December 31, 2005 and to fund the current business plan and other obligations. While the Company is considering various funding alternatives, the Company has not secured or entered into any arrangements to obtain additional funds. There can be no assurance that the Company will be able to obtain additional funding on acceptable terms or at all. If the Company cannot raise additional capital to continue its present level of operations it is not likely to be able to meet its obligations, take advantage of future acquisition opportunities or further develop or enhance its product offering, any of which would have a material adverse effect on its business and results of operations and is likely to lead the Company to seek bankruptcy protection. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The independent auditors' reports on the Company's Consolidated Financial Statements for the years ended December 31, 2004, 2003 and 2002 contained emphasis paragraphs concerning substantial doubt about the Company's ability to continue as a going concern. The Company currently has no capacity for commercial debt financing. Should such capacity become available it may be adversely affected in the future by factors such as higher interest rates, inability to borrow without collateral, and continued operating losses. Borrowings may also involve covenants limiting or restricting its operations or future opportunities. About the Company Headquartered in Manhattan, PubliCARD, Inc., through its Infineer Ltd. subsidiary, designs smart card solutions for educational and corporate sites. The Company's future plans revolve around a potential acquisition strategy that would focus on businesses in areas outside the high technology sector while continuing to support the expansion of the Infineer business. However, the Company will not be able to implement such plans unless it is successful in obtaining additional funding, as to which no assurance can be given. More information about PubliCARD can be found on its web site http://www.publicard.com/ At Mar. 31, 2005, PubliCARD, Inc.'s balance sheet showed a $5,867,000 stockholders' deficit, compared to a $5,159,000 deficit at Dec. 31, 2004. PURE FISHING: Disappointing Performance Cues S&P to Pare Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on fishing tackle manufacturer Pure Fishing Inc., including its corporate credit rating to 'B+' from 'BB-'. The recovery ratings on both first- and second-lien bank loans remain unchanged, indicating that first-lien lenders can expect marginal recovery of principal (25%-50%) in the event of a bankruptcy, and that second-lien lenders can expect negligible recovery of principal in the event of a bankruptcy (0%-25%). The outlook is stable. Total debt outstanding at PFI as of March 31, 2005, was approximately $193.8 million, excluding operating leases. The downgrades reflect the company's lower-than-expected sales and earnings growth over the past several quarters, tight covenants, and its weaker-than-expected credit measures. "Due to the challenging operating environment, we believe that PFI will take longer than previously expected to reduce its debt," said Standard & Poor's credit analyst Mark Salierno. Spirit Lake, Iowa-based PFI's weaker performance for the past 12 months is due to revenue softness in the North American, European, and Asian markets. In addition, earnings suffered from rising commodity prices and increased logistics expenses related to streamlining the supply chain and the start-up of the company's European distribution center. Although sales and earnings have been below expectations, Standard & Poor's expects overall financial performance to stabilize in the near term. Failure to achieve stabilization, especially in the strategically important North American, European, and Asian regions, could lead to a negative outlook. Although less likely over the intermediate term, should the company reduce debt, and increase and maintain profitability to levels appropriate for a firm 'BB' category rating, the outlook could be revised to positive. RELIANCE FINANCIAL: Reorganization Plan Took Effect on April 22 --------------------------------------------------------------- Arnold Gulkowitz, Esq., at Orrick, Herrington & Sutcliffe, in New York City, on behalf of the Official Committee of Unsecured Creditors, advises the U.S. Bankruptcy Court for the Southern District of New York that, as of April 22, 2005, all conditions to consummation of the amended Plan of Reorganization for Reliance Financial Services Corporation were either satisfied or waived. Mr. Gulkowitz says the Creditors' Committee waived certain specific conditions and any other conditions to consummation of the Plan that were not yet satisfied. Accordingly, the RFSC Plan became effective on April 22. 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. The Court confirmed the Creditors' Committee's Plan of Reorganization on Jan. 25, 2005. (Reliance Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESORTS INT'L: Weak Performance Cues S&P's Negative Outlook ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Resorts International Holdings LLC to negative from stable. Concurrently, Standard & Poor's affirmed its ratings on Resorts, including its 'B+' corporate credit rating. The outlook revision follows disappointing first quarter performance (collectively) for the period ended March 31, 2005, by the four properties that Resorts now owns. While the properties were not acquired until April 26, 2005, the weak first quarter performance will now make it difficult for the company to achieve the improvement to credit measures that we previously expected. "We had noted earlier that credit measures were somewhat weak for the ratings, but had maintained a stable outlook under the expectation that the company's financial profile would improve meaningfully over the next couple of years. It is now likely that credit measures will remain weak for the ratings for a longer period, and there exists little room for further declines in operating performance at the current ratings level," said Standard & Poor's credit analyst Peggy Hwan. Financial performance for three of the four assets acquired by Colony Capital LLC were not publicly made available for the quarter ended March 31, 2005; however, the Atlantic City Hilton, which contributes roughly 30% of property level EBITDA to Resorts, experienced an 82% decline in EBITDA to $2 million for the quarter ended March 31, 2005 from $11 million in the same prior-year period. Revenues during this timeframe declined 13% year-over- year due in part to weather-related issues experienced in the early part of the quarter; however, the market as a whole experienced a 0.6% increase in gross gaming revenues for the quarter ended March 31, 2005. SHOPKO STORES: Earns $600,000 of Net Income in First Quarter ------------------------------------------------------------ ShopKo Stores, Inc. (NYSE: SKO) reported financial results for the first quarter ended April 30, 2005. Net income for the first quarter of 2005 was $600,000 compared with a net loss of $2.4 million last year. First quarter 2005 earnings included merger- related expenses of $1.1 million. Consolidated sales decreased 4.3 percent to $703.3 million in the first quarter of 2005 compared with $735.0 million for the comparable period last year. Consolidated comparable store sales decreased 4.8 percent. Commenting on the quarter, ShopKo Stores, Inc. chief financial officer and co-chief executive officer Brian Bender said, "The improvement in earnings is a result of focusing on profitable sales accompanied by disciplined expense control. Closely monitoring sales allowed us to appropriately adjust inventories, which declined 7.3 percent when compared to the same period last year." Consolidated gross margin as a percent of sales was 26.7 percent in the first quarter of 2005 compared with 25.0 percent last year. This increase is primarily attributable to a reduction in promotional activity as well as better-managed clearance inventory markdowns. Consolidated selling, general and administrative expenses for the first quarter of 2005 were essentially flat when compared to the same period last year. Consolidated SG&A expenses, as a percent of sales, however, increased to 23.0 percent from 21.9 percent last year primarily due to the decline in sales. Other Factors Consolidated inventories ended the first quarter at $597.3 million, which represents a $46.9 million or 7.3 percent decrease compared to the same period last year. Interest expense was $7.4 million compared with $8.6 million last year, a reduction of 14.1 percent, due primarily to lower debt levels. Debt declined by $102.7 million compared with the first quarter of 2004. The company's effective tax rate for the first quarter was 38.5 percent in 2005 compared to 39.0 percent in the first quarter of 2004. Capital expenditures were $2.8 million compared with $10.4 million last year, which included $6.1 million for expansion of the Omaha distribution facility. Second Quarter/Fiscal 2005 Outlook The business outlook excludes any consideration of the pending merger transaction and related expenses. The company expects its consolidated comparable store sales for the second quarter ending July 30, 2005 to be in the negative mid single digit range. Second quarter earnings are expected to be in the range of $0.20 to $0.30 per diluted share. For the fiscal year ending January 28, 2006, the company expects its comparable store sales to be flat to last year, and earnings per diluted share to be in the range of $1.45 to $1.60. Merger Transaction Update As previously reported, the company signed a definitive merger agreement on April 7, 2005 to be acquired by an affiliate of Goldner Hawn Johnson & Morrison Incorporated. The preliminary proxy statement with respect to the proposed transaction is expected to be filed with the Securities and Exchange Commission in the next few weeks and the company currently anticipates that the transaction will close late in the company's second fiscal quarter or early in the third fiscal quarter. About the Company ShopKo Stores, Inc. -- http://www.shopko.com/-- is a retailer of quality goods and services headquartered in Green Bay, Wisconsin, with stores located throughout the Midwest, Mountain and Pacific Northwest regions. Retail formats include 140 ShopKo stores, providing quality name-brand merchandise, great values, pharmacy and optical services in mid-sized to larger cities; 223 Pamida stores, 117 of which contain pharmacies, bringing value and convenience close to home in small, rural communities; and three ShopKo Express Rx stores, a new and convenient neighborhood drugstore concept. With more than $3.0 billion in annual sales, ShopKo Stores, Inc. is listed on the New York Stock Exchange under the symbol SKO. * * * As reported in the Troubled Company Reporter on April 18, 2005, Moody's Investors Service placed the long-term debt ratings of Shopko Stores, Inc., on review for possible downgrade following the company's announcement that it had signed a definitive merger agreement to be acquired by an affiliate of Goldner Hawn Johnson & Morrison. The downgrade reflects the anticipated significant increase in leverage as a result of the proposed transaction. The transaction is valued at slightly more than $1 billion and is expected to be funded predominantly from debt with only $30 million of the purchase price to be funded by equity. The company has received a commitment from Bank of America to provide $700 million in real estate financing and additional commitments from Bank of America and Back Bay Capital Funding LLC to provide $415 million in senior debt financing. The proceeds from these financings along with the $30 million of equity will be used to pay the merger consideration, refinance the borrowings under the existing revolving credit facility, fund the amounts due under the expected tender offer for the $100 million senior unsecured notes due 2022, plus all fees and expenses. In addition, the financing will be used to cover all future working capital needs. If substantially all of the senior notes are tendered the rating on those notes will be withdrawn. The review will focus on the debt protection measures of Shopko post acquisition as well as the company's business strategy going forward. These ratings are placed on review for possible downgrade: * Senior implied of B1; * Issuer rating of B2; and * Senior unsecured notes due 2022 of B2. SKILLED HEALTHCARE: Moody's Junks Planned $145M 2nd Lien Term Loan ------------------------------------------------------------------ Moody's assigned a B1 rating to Skilled Healthcare Group, Inc.'s proposed first lien credit facilities, consisting of a $50 million revolver and a $225 million first lien term loan, and a Caa1 rating to the proposed $145 million second lien term loan. Moody's also affirmed Skilled Healthcare's senior implied rating of B2. The rating action follows the announcement by Skilled Healthcare that it will use the proceeds from the new credit facilities to: * refinance the company's existing indebtedness; * pay related fees, expenses and prepayment penalties; and * fund a dividend of approximately $106 million to its shareholders. These ratings are affected: Ratings assigned: $50 million senior secured first lien revolving credit facility due 2010, rated B1 $225 million senior secured first lien term loan due 2012, rated B1 $145 million senior secured second lien term loan due 2013, rated Caa1 Ratings affirmed: Senior implied rating, B2 Senior secured first lien revolving credit facility due 2009, B1 (to be withdrawn on the close of the proposed transaction) Senior secured first lien term loan due 2010, B1 (to be withdrawn on the close of the proposed transaction) Senior secured second lien term loan due 2011, B3 (to be withdrawn on the close of the proposed transaction) The outlook is stable. The ratings reflect: * the company's high debt leverage following the transaction; * the decreased financial flexibility resulting from the conversion to debt of a significant portion of the company's equity; * lack of geographic diversification; * Skilled Healthcare's susceptibility to changes in government reimbursement programs either through Medicare or Medicaid; and * exposure to professional liability claims against the company. The ratings also reflect: * the improved cash generation since emerging from bankruptcy in August 2003; * Skilled Healthcare's leading position in the markets it serves; * the company's attractive quality mix, which has contributed to strong margin performance; and * recent acquisitions such as the Vintage Park Group in Kansas that help to diversify the company's geographic concentration. Additionally, several developments should help to limit the company's exposure to professional liability claims in the future, including: tort reform in Texas applicable to all cases filed on or after September 1, 2003, limitations on losses due to bankruptcy protection, and the implementation of an arbitration program. The ratings also reflect the recent announcement that proposed changes to Medicare reimbursement, including refinement of the resource utilization groups would likely result in no change in overall SNF Medicare payments in 2006 compared with fiscal 2005. Therefore, Moody's does not expect the change in reimbursement to have a significant effect on the revenue of the company in 2006. The stable outlook anticipates continued favorable operating performance for the company. A near-term stable reimbursement environment and moderate expectations for capital expenditures should provide the company with free cash flow available to decrease leverage. Moody's also expects the company to continue a measured approach to acquisitions. Additionally, the divestiture of the company's pharmacy business in March 2005 will allow for increased focus on the operations of the company's rehabilitation business and the delivery of its core inpatient services. Material deleveraging and debt reduction such that free cash flow to adjusted debt ratios reach a sustainable level above 10% could result in upward pressure on the ratings. However, other factors, such as the company's relative size and limited geographic diversity could constrain upward movement of the ratings. Skilled Healthcare is currently among the leaders in the industry in quality mix, defined as the proportion of revenues attributable to Medicare and commercial/private payors. If the company is unsuccessful in maintaining this mix of business resulting in pressure on its healthy EBITDA margins, then Moody's would likely see pressure on the ratings. Additionally, if the frequency and severity of professional liability claims were to increase, resulting in higher accruals and pressure on operating margins, or if the company's previous professional liability accruals were understated resulting in a higher accrual rate going forward with an associated reduction in operating margins, the ratings could be downgraded. Moody's would consider downgrading the rating if a combination of these or other factors result in cash flow from operations to adjusted debt ratios that are expected to remain below 5%. Pro forma for the transaction, the acquisition of the Vintage Park Group facilities in December 2004, and the sale of the pharmacy business in March 2005, adjusted cash flow coverage of debt for the twelve months ended March 31, 2005 would have been approximately 11% while adjusted free cash flow coverage of debt would have been approximately 9%. EBIT coverage of interest would have been approximately 2.2 times. Leverage, defined as adjusted debt to EBITDAR, would have been 5.7 times. Moody's believes that the use of EBITDA and related EBITDA ratios as a single measure of cash flow without consideration of other factors can be misleading. Pro forma for the transaction, Skilled Healthcare will have access to a $50 million revolving credit facility with no amounts drawn at closing. Moody's expects the company to generate adequate free cash flow following the refinancing and remain in compliance with applicable covenant requirements. However, Moody's expects liquidity to be tight with very modest cash balances maintained over the next few years. The first lien senior secured facility is rated one notch above the level of the senior implied rating to reflect that it is adequately collateralized by the company's 50 owned facilities. The second lien debt is notched two levels below the senior implied rating to reflect its second priority and the increased exposure to loss given the proposed $80 million increase in first lien facilities. Additionally, the facilities make up a significant portion of the company's pro forma capitalization increasing the probability of the absorption of losses at the second lien facility level. Moody's ratings are subject to our review of final documentation for the transaction. Headquartered in Foothill Ranch, CA, Skilled Healthcare Group, Inc. operates long-term care facilities and provides post-acute care and rehabilitation services. As of March 2005, the company operated 58 skilled nursing facilities and 13 assisted living facilities, with a total of 8,190 licensed beds, in California, Texas, Kansas and Nevada. For the twelve months ended March 31, 2005, Skilled Healthcare recognized revenues of $392 million. SKIN NUVO: Wants Kolesar & Leatham as Co-Counsel ------------------------------------------------ Skin Nuvo International, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nevada for permission to retain Kolesar & Leatham, Chtd., as their bankruptcy co-counsel, nunc pro tunc to March 7, 2005. Kolesar & Leatham will: a) render legal services with respect to the power and duties of the Debtors that continue to operate its business and manage its properties as debtors in possession; b) negotiate, prepare and file a plan or plans of reorganization and disclosure statements in connection with such plans, and otherwise promote the financial rehabilitation of the Debtors; c) take all necessary action to protect and preserve the Debtor's estates, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the Debtors, negotiations concerning all litigation in which the Debtors are or become involved, and the evaluation and objection to claims filed against the estate; d) prepare, on behalf of the debtors, all the necessary applications, motions answers, orders, reports and papers in connection with the administration of the Debtor's estates, and appear on behalf of the Debtors at all Court hearing in connection with the Debtor's cases; e) render legal advice and perform general legal services in connection with these chapter 11 cases. The Debtors paid Kolesar & Leatham a $25,000 retainer for prepetition services and to secure payment of a portion of the Firm's postpetition fees. Subject to the Court's approval, Kolesar & Leatham will charge the Debtors these customary hourly rates: Designation Rate ----------- ---- Partners and Counsels $300 - $375 Associates 225 - 290 Paralegals 100 - 150 Kolesar & Leatham's attorneys who will likely provide legal services on these chapter 11 proceedings will charge according to these hourly rates: Attorney Rate -------- ---- Nile Leatham, Esq. $375 Randolph L. Howard, Esq. 375 Elliot R. Eisner, Esq. 375 Matthew D. Saltzman, Esq. 300 James B. Macrobbie, Esq. 275 Joseph Mugan, Esq. 225 To the best of the Debtors' knowledge, Kolesar & Leatham is a disinterested person as that phrase is defined in Section 101(14) of the Bankruptcy Code. 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. SOLUTIA INC: JP Morgan Wants Adversary Complaint Filed Under Seal ----------------------------------------------------------------- JP Morgan Chase Bank, National Association, as Indenture Trustee, asks U.S. Bankruptcy Court for the Southern District of New York to allow it to file under seal its adversary complaint against Solutia, Inc., pursuant to the terms of a confidentiality stipulation. In the alternative, JP Morgan seeks the Court's permission to publicly file its adversary complaint against the Debtor. Eric A. Schaffer, Esq., at Reed Smith, LLP, in New York, reminds the Court that it expressly preserved JP Morgan's right to pursue claims arising out of the Debtor's attempt to strip JP Morgan's security interests in the Debtor's assets. A year ago, the Court permitted JP Morgan to examine Solutia, Inc., and request production of documents pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. As a condition to producing documents and witnesses in response to JP Morgan's 2004 discovery requests, Mr. Schaffer relates, the Debtor required JP Morgan to execute a confidentiality stipulation. The Debtor's financial advisor, Rothschild, Inc., also insisted on a confidentiality stipulation prior to producing documents and witnesses in response to JP Morgan's discovery requests, Mr. Schaffer says. Based on its Rule 2004 examination, JP Morgan has determined that certain causes of action exist against Solutia, Inc. According to Mr. Schaffer, JP Morgan has prepared a complaint against the Debtor based, in part, on documents that the Debtor has marked as "Confidential". Pursuant to the terms of the confidentiality stipulation, JP Morgan is constrained from using "Confidential Discovery Material" for litigation purposes without prior written consent from Solutia or obtaining a Court order. Mr. Schaffer tells the Court that JP Morgan asked for Solutia's permission to file its adversary complaint without a seal, but Solutia refused. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Conor D. Reilly, Esq., and Richard M. Cieri, Esq., at Gibson, Dunn & Crutcher, LLP. (Solutia Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Teachers Insurance Holds Allowed $20.4M Unsec. Claim ----------------------------------------------------------------- UMB Bank, N.A., as Collateral Agent for Teachers Insurance and Annuity Association of America, and Gateway Energy WGK Project, L.L.C., each filed a proof of claim in the chapter 11 cases of Solutia, Inc., and its debtor-affiliates asserting: -- $20.2 million in damages in the event Solutia, Inc., rejected certain Gateway Contracts; and -- $200,000 for other prepetition amounts due under the Gateway Contracts. On February 28, 2005, the Debtors obtained the U.S. Bankruptcy Court for the Southern District of New York's permission to: (a) reject a Service Agreement, dated as of June 8, 1998, between Gateway and Solutia; (b) resolve any rejection damage claims arising out of the rejection; and (c) enter into a services agreement with Environmental Management Corporation following Gateway's sale of the Gateway Facility to Environmental Management. Furthermore, the Court granted Teachers Insurance an allowed prepetition unsecured claim for $20,391,317 for damages resulting from Solutia's rejection of the Gateway Contracts and for other outstanding prepetition obligations. Accordingly, in a Court-approved stipulation, the parties agree that: (a) Teachers Insurance, as the transferee of all of Gateway's claims under the Gateway Service Agreement, has an allowed prepetition unsecured claim against Solutia for $20,391,317, reflecting the agreed-upon amount for damages; and (a) the Gateway Proof Of Claim will be disallowed. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Conor D. Reilly, Esq., and Richard M. Cieri, Esq., at Gibson, Dunn & Crutcher, LLP. (Solutia Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: $20 Million Earmarked for Creditor Trust Expenses -------------------------------------------------------------- James L. Garrity, Jr., Esq., at Shearman & Sterling LLP, informs the U.S. Bankruptcy Court for the Southern District of New York that, in accordance with Spiegel, Inc.'s First Amended Joint Plan of Reorganization, the cash amount to be paid to the Creditor Trust as the Creditor Trust Operating Expense Fund will be $20 million. The Operating Expense Amount includes a $250,000 allocation for any expenses associated with the pending Securities and Exchange Commission action against Spiegel, Inc., or other regulatory proceedings concerning Spiegel. Debtors Amend Cure Payment Schedule Mr. Garrity also relates that, to address the complaints filed by certain objecting parties-in-interest against the specific provisions of their Proposed Plan, the Debtors filed with the Court an Amended Cure Payment Schedule on May 13, 2005. A full-text copy of the 62-page Amended Cure Payment Schedule is available for free at: http://bankrupt.com/misc/Amended_Cure_Payment_Schedule.pdf Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) STELCO INC; Welcomes George Adams as Mediator --------------------------------------------- Stelco Inc. (TSX:STE) has commented on decisions made by the Superior Court of Justice (Ontario) following a hearing held earlier Thursday in the matter of the Company's Court-supervised restructuring. The Company welcomed the Court's establishment of a mediation process and the appointment of the Hon. George Adams, previously designated a CCAA Officer of the Court in the matter of Stelco's restructuring, to serve as the mediator. The mediation process, which reflects the outline contained in a Report of the Court- appointed Monitor dated May 12, 2005, will govern the discussions and negotiations regarding a restructuring plan for the Company. Mr. Adams is a highly-regarded mediator and arbitrator, former Superior Court Judge, former Chair of the Ontario Labour Relations Board, law professor and counsel. The mediator, with the assistance of the Court-appointed Monitor and any other stakeholder the mediator wishes to consult, will determine the nature, format and duration of the process itself. Stelco also welcomed the Court's direction that all participants in the mediation process shall express no views publicly on the matters being discussed in that process until the CCAA proceedings have been concluded. The Court dismissed motions brought by other parties that would have, among other things, reintroduced Island Energy Partnership into the Company's capital raising process and expanded the role of Tricap as a financial advisor to the USWA in that process. Courtney Pratt, Stelco's President and Chief Executive Officer, said, "We welcome the establishment of a confidential and mediated process and the appointment of George Adams as mediator. We believe that discussions conducted in a confidential setting assisted by a mediator will be much more likely to achieve progress than negotiating in public. We look forward to Mr. Adams' participation and contribution." The Company noted that while its plan outline will serve as the starting point for discussions under the mediation process, other stakeholders will be free to present other ideas within the procedures to be determined by the mediator. Monitor's Report On May 18, 2005, Stelco delivered its Thirtieth Report of the Monitor with the Court. The Report stated that the Hon. George Adams has indicated his willingness to serve as mediator. The Monitor adds that, should he be appointed mediator, Mr. Adams would be available to begin meeting with stakeholders regarding the process during the week of May 23, 2005. The Report adds that the Monitor would be prepared to participate in the process to whatever degree the Court directs or the mediator may request. Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on January 29, 2004, Stelco Inc. and certain related entities filed for protection under the Companies' Creditors Arrangement Act. TACK ROOM: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Tack Room Company, Inc. 942 Woodland Street Nashville, Tennessee 37206 Bankruptcy Case No.: 05-06100 Chapter 11 Petition Date: May 18, 2005 Court: Middle District of Tennessee (Nashville) Judge: Keith M. Lundin Debtor's Counsel: Robert James Gonzales, Esq. MGLAW PLLC 120 30th Avenue North Suite 1000 Nashville, Tennessee 37203 Tel: (615) 846-8000 Fax: (615) 846-9000 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Synovus Leasing $490,903 P.O. Box 23020 Columbus, GA 31902 Sysco Food Services $485,000 P.O. Box 11407 Birmingham, AL 35246 First State Bank $341,873 142 Main Street Sharon, TN 38255 Legends Bank $339,744 310 North 1st Street Clarksville, TN 37040 Estate Of David K. Wachtel $300,000 C/O John H. Rowland 211 Commerce Street, Suite 1000 Nashville, TN 37201 Amsouth Bank $268,171 1900 5th Avenue North Birmingham, AL 35203 Pate Santa Fe LLC $173,122 C/O Bob Pope P.O. Box 198888 Nashville, TN 37219-8888 Sherwil Inc. $146,043 C/O Bob Pope P.O. Box 198888 Nashville, TN 37219-8888 The Tack Room Of Leeds $100,000 C/O Bob Pope P.O. Box 198888 Nashville, TN 37219-8888 Great South Construction $35,000 2500 Pelham Parkway Pelham, AL 35124 Evans Meats Inc $25,000 P.O Box 12164 Birmingham, AL 35202 Wayne Browning $20,000 1300 Substation Road Pleasant View, TN 37146 Adams Brothers Produce $18,966 302 Finley Avenue West Birmingham, AL 35204 Forestwood Farms $7,500 P.O. Box 310728 Birmingham, AL 35231 Ecolab Institutional $4,900 P.O. Box 905327 Charlotte, NC 28290 Buffalo Rock Co. $4,300 34 West Oxmoor Road Birmingham, AL 35209 Cintas Corporation $3,210 5970 Greenwood Parkway Bessemer, AL 35022 Trinity Contractors $2,800 561 Simmons Drive Trussville, AL 35173 Alabama Landscape $2,370 9 2nd Street Birmingham, AL 35217 Quality Electric Co. $2,249 2079 Valleydale Terrace Birmingham, AL 35244 TEKNI-PLEX: Moody's Junks Ratings on $583 Million Notes ------------------------------------------------------- Moody's Investors Service downgraded the ratings of Tekni-Plex, Inc. reflecting continued pressure on profitability as concern about soft volume, high operating costs, and the challenging pricing environment persist. The susceptibility of margins to seasonality affecting roughly one third of consolidated revenue and the company's negative variance under expectations constrain the ratings. The ratings reflect the severity of Tekni-Plex's impaired financial condition throughout the near term. Competition and push back from customers are inhibiting the company from passing through price increases sufficient to keep pace with higher costs (e.g. resin and energy), resulting in declining profitability and cash flow. Today's ratings actions incorporate the company's recent announcement of $19 million in new equity plus approximately $11 million in commitments by its investor group - Weston Presidio is the lead investor (approximately $300 million invested equity to date by the group). The ratings outlook remains negative, reflecting Moody's opinion that timely liquidity enhancement is imperative in order to avoid further downgrades of the ratings. The company must address its outstandings under the existing senior secured credit facility. That facility had been the subject of covenant violations regarding minimum EBITDA and fixed charges coverage since the company's fiscal second quarter, ended December 31, 2004. Moody's took these ratings actions for Tekni-Plex: -- Affirmed the existing senior secured first lien credit facility at B3 -- Lowered the rating for the $268 million (net of repayments) 8.75% second lien senior note, due 2013, to Caa2 from Caa1 -- Lowered the rating for the $315 million 12.75% senior subordinated note, due 2010, to Ca from Caa2 -- Lowered the senior implied rating to Caa1 from B3 -- Lowered the senior unsecured issuer rating (non-guaranteed exposure) to Caa3 from Caa2 The ratings outlook remains negative reflecting continued concern about Tekni-Plex's ability to effectively manage its liquidity given, in Moody's opinion, the likely continuation of its precarious business and financial profile. There is deficit free cash flow and very high financial leverage with debt to last twelve months ended March 31, 2005 EBITDA approaching 15 times (even higher when adjustments are made for operating leases and preferred stock). EBIT has been and is expected to remain insufficient to cover cash interest expense. The affirmation of the credit facility rating reflects its priority position in the capital structure and acknowledges full collateral coverage. The downgrades of the ratings for the existing notes reflect the increased severity of loss under distress given the decline in enterprise value as well as reflecting the substantial subordination to senior obligations. Notching the senior subordinated notes three ratings below the Caa1 senior implied rating reflects the equity-like nature of the notes in the capital structure and denotes modest recovery in the event of default. Headquartered in Somerville, New Jersey, Tekni-Plex, Inc. is a diversified manufacturer of packaging products and materials for the consumer products, healthcare, and food industries. TEMBEC INC: Closes Four Manufacturing Plants in Restructuring ------------------------------------------------------------- Tembec Inc. disclosed another phase in its plan to restructure its Eastern Canadian operations, resulting in the closure of four of its manufacturing units. The Company believes that these closures are necessary in light of the stronger Canadian dollar and other fundamental issues that affect the competitiveness of these mills. "After making considerable efforts to stem the significant losses of these mills and find appropriate solutions to the challenges that they are facing, the Company came to the conclusion that it had no choice but to shut down these operations," said Tembec President and CEO, Frank Dottori. The announcement points out that: -- Tembec's Saint-Raymond mill, located in Saint-L,onard-de- Portneuf, Quebec, will cease operations on May 28, 2005, affecting 165 employees. The mill produces 68,000 tonnes of Hi-Brite papers annually. -- The Company will gradually cease operations at the Tembec Davidson sawmill in Mansfield-et-Pontefract, Quebec, affecting 209 employees. The site produces 55,000 mfbm of pine and hardwood lumber annually. -- Tembec will shut down sawing operations at the TKL sawmill in Temiscaming, Quebec, as of July 11, 2005, affecting 29 employees. The sawmill produces 15,000 mfbm of pine and hardwood lumber annually. The chip plant operations will continue. -- Marks Lumber Ltd, a wholly-owned Tembec remanufacturing facility located in Brantford, Ontario, will shut down as of May 17, affecting 56 employees. The facility has been processing SFP lumber at a rate of 50,000 mfbm per year. During a series of meetings held last week at each site affected, employees and union representatives were informed of the Company's decision. As a result of Tuesday's announcement, the Company will record an unusual charge of $98.3 million related to the reduction in the carrying value of these facilities. Other closure costs of $13.7 million will also be recorded. The after-tax effect of $75.7 million will be recorded in the June 2005 quarter. During the last twelve months, the facilities generated sales of $112.7 million and negative EBITDA of $14.7 million. Tembec Inc. -- http://www.tembec.com/-- is a leading integrated forest products company well established in North America and France, with sales of approximately $4 billion and some 11,000 employees. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. * * * As reported in the Troubled Company Reporter on May 5, 2005, 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. THILMANY LLC: S&P Rates Proposed $175MM Sr. Sec. Facility at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to U.S. specialty paper producer Thilmany LLC. The outlook is stable. In addition, Standard & Poor's assigned its 'B+' bank loan rating and '3' recovery rating to the company's proposed $175 million senior secured credit facility. The '3' recovery rating indicates the likelihood of meaningful (50%-80%) likelihood of recovery principal in event of a payment default. Credit facility proceeds of $147 million and equity of $45 million will be used to purchase the industrial papers business of International Paper Co. (IP) (BBB/Negative/A-3). Private merchant banking firm Kohlberg & Company LLC and IP will indirectly own Thilmany, 89% and 11%, respectively. "We expect the company's free cash flow to remain modestly positive and relatively stable and that financial leverage will remain at or below current levels," said Standard & Poor's credit analyst Dominick D'Ascoli. "Should financial leverage increase because of acquisition activity, operating disruptions, or a decline in profitability, the outlook could be revised to negative. In addition, any substantial decline in liquidity could result in a negative rating action. The company's vulnerable business profile precludes any positive rating action." Kaukauna, Wisconsin-based Thilmany participates in the small and mature niche markets of the specialty paper industry. Operations are concentrated at the company's Kaukauna paper mill, which produces 41% of its pulp requirements. Thilmany will remain closely tied to IP. Numerous supply agreements with IP provide Thilmany with 100% of its wood chip requirements for 10 years, 42% of its pulp requirements for 10 years, and approximately 14% of its paper making capacity for 12 years. While the company would probably be able to procure its wood needs from other suppliers, costs would likely increase. Moreover, the supply agreement for use of a paper machine at one of IP's mills leaves Thilmany partially dependent on IP for its production. Production concentration and significant reliance on IP heighten credit risk. TOMMY HILFIGER: Negative Operating Trends Cue S&P to Retain Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services ratings on Tommy Hilfiger USA Inc., including its 'BB-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Nov. 3, 2004. The men's and women's sportswear, jeanswear, and childrenswear company had about $343 million in long-term debt outstanding as of Dec. 31, 2004. The ratings remain on CreditWatch and reflect Standard & Poor's concern regarding the company's negative operating trends, including the continued decline in revenues and the significant contraction in pre-tax earnings for the quarter ended December 2004. (The company currently does not report after-tax earnings and has not filed 10Qs, due to a previously disclosed government investigation. The U.S. Attorney's office for the Southern District of New York is conducting an investigation regarding commission payments to a foreign subsidiary.) The company reported weaker-than-expected results for the quarter ended December 2004, primarily in its U.S. wholesale segment, which continued to experience significant revenue drop, and higher-than-expected markdowns for the fall and holiday season. Tommy Hilfiger's wholesale revenues declined by about 19% for the quarter, driven primarily by a 30.8% contraction in its U.S. wholesale business. In addition, the company also revised its fiscal 2005 forecast downwards, reflecting the negative effect of lower revenues and higher markdowns. While the company currently has sufficient liquidity resources, Standard & Poor's remains concerned with potential constraints that could affect the company's financial resources due to the additional legal costs arising from the government investigation and the class action lawsuits against the company. Standard & Poor's will continue to closely monitor developments as they occur. Resolution of the CreditWatch will depend on the outcome of the company's internal investigation and Standard & Poor's review of the company's business strategies and operating trends. TRANSMETA CORP: Robert Dickinson Joins Board of Directors --------------------------------------------------------- Transmeta Corporation (NASDAQ: TMTA) disclosed that a semiconductor veteran has joined Transmeta's board of directors. Mr. Robert V. Dickinson brings more than 30 years of related integrated circuit industry experience and will provide valuable insight during the next critical phase of the company's development. The company recently announced that it will deploy its innovative technologies and intellectual property through licensing, synergistic engineering services and customized processor development. "I am very pleased to announce the appointment of this seasoned industry leader to our board of directors," said Murray A. Goldman, chairman of the board, Transmeta Corporation. "Bob's proven leadership and relevant experience in guiding companies through successful business transformations will be invaluable for Transmeta going forward. We are excited to leverage his contributions and insights in the next phase of our growth." "I am delighted to be joining Transmeta's board at such an exciting time," commented Mr. Dickinson. "I look forward to working with the other board members to ensure that Transmeta's management team have the insight and guidance they need in order to continue executing their transformation plan." Robert V. Dickinson has been president, chief executive officer, and a director of California Micro Devices Corporation since April 2001. From August 1999 to April 2001, he was vice president and general manager of the Optical Storage Division of Cirrus Logic, Inc., a semiconductor manufacturer, where, starting in 1992, he served in several other senior executive roles including president of its Japanese subsidiary. Previously, he held senior management positions at Western Digital Corporation, a semiconductor and disk drive manufacturer, from 1988 to 1992, following its acquisition of Verticom, Inc., where he served as president and chief executive officer, from 1987 to 1988. Mr. Dickinson has an A.B. from UC Berkeley and an M.S. from the University of Washington, both in physics. He was also a Sloan Fellow at the Stanford Graduate School of Business. Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, Transmeta first became known for designing, developing and selling its highly efficient x86-compatible software-based microprocessors, which deliver a balance of low power consumption, high performance, low cost and small size suited for diverse computing platforms. We also develop advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices. To learn more about Transmeta, visit http://www.transmeta.com/ * * * Going Concern Doubt "[T]he Company's recurring losses from operations raise substantial doubt about its ability to continue as a going concern," ERNST & YOUNG LLP says in its audit report dated March 25, 2005, addressed to the company's Board of Directors and Stockholders. At Dec. 31, 2004, the Company had $53.7 million in cash, cash equivalents and short-term investments compared to $120.8 million and $129.5 million at December 31, 2003 and December 31, 2002, respectively. The Company believes that its existing cash and cash equivalents and short-term investment balances and cash from operations would not be sufficient to fund its operations. TROPICAL SPORTSWEAR: PBGC Says Plan Is Unconfirmable ---------------------------------------------------- The Pension Benefit Guaranty Corporation is an agency of the United States, which administers a pension plan termination insurance program. The PBGC's primary role is to protect the pension benefits of American workers in the private sector who are participants in covered pension plans. When an underfunded pension plan terminates, the PBGC becomes the statutory trustee of the plan and pays certain guaranteed benefits to participants with its insurance funds. The PBGC has the power to collect unpaid premiums from contributing sponsors. The agency tells the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, that the Amended Joint Chapter 11 Plan filed by Tropical Sportswear International Corp. and its debtor- affiliates violates certain provisions of the Employee Retirement Income Security Act of 1974 and the bankruptcy code. The PBGC tells the Court that it didn't receive notice of the Debtors' bankruptcy until February 15, 2005. The lapse, the PBGC says, is a violation of Title IV of the ERISA code. The PBGC relates Tropical Sportswear sponsors the Savane International Corp. Bargaining Unit Pension Plan. Under the Debtors' Plan, Tropical Sportswear will become the pension plan administrator. An active participant reduction of the Savane Pension Plan occurred in December 2004 after the Debtors closed a plant in New Mexico. The Debtors, according to the PBGC, acknowledge that the Savane Pension is underfunded and anticipate termination of the plan by the PBGC. The PBGC estimates the unfunded benefit liabilities of the pension plan at $5.4 million. The Pension Benefit Guaranty's Objections Substantive Consolidation The PBGC, as statutory trustee of the plan, asserts claims for unfunded benefit liabilities, unpaid contributions and unpaid premiums against the six Debtors. The substantive consolidation of the Debtors, the PBGC states, is improper because the Debtors failed to meet the applicable provisions under the Employee Retirement Income Security Act of 1974 for joint and several liability. The Debtors, the PBGC adds, also failed to meet Reider's two-prong test to establish need for consolidation. Exculpatory and Release Provisions of the Plan Certain provisions of the Plan, the PBGC points out, violate ERISA's release provisions. The Plan relieves Robin Cohan and the Liquidating Trust from fiduciary duties. The PBGC asserts that there is no need to release anyone because the Debtors are liquidating and exculpation will not rehabilitate the businesses. Review of the Plan Under the Plan, the Debtors and the Holders of Allowed Claims will execute a Liquidating Trust Agreement on the Effective Date. The Trust Agreement provides for the establishment of the Liquidating Trust with the sole purpose of liquidating and distributing the Trust Assets, in accordance with Treasury Regulation section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business. On or before the Effective Date, the Liquidating Trust Committee will be formed, and will appoint a Liquidating Trustee. On the Effective Date, the Debtors, after making the initial Distributions to Holders of Allowed Claims pursuant to the Plan, will transfer to the Liquidating Trust all of their right, title, and interest in all of the Trust Assets and any other remaining Property of the Debtors and their Estates, free and clear of any Lien, Claim or Interest in that Property of any other Person except as provided in the Plan. The Plan groups claims and interests into five buckets. Unimpaired claims consist of: a) Priority Non-Tax Claims to receive Cash payments on or after the Effective Date; b) Secured Superpriority Claims of CIT as Agent under the DIP Facility to receive before the Effective Date Cash equal to all DIP Financing Obligations and upon the termination or reimbursement in full of all letters of credit issued under the DIP Facility, CIT, to return any remaining Cash Collateral payable to the Debtors to the Liquidating Trustee for deposit in the Liquidating Trust; and c) Claims by the Customs Bond Agent, who holds Cash of the Debtors amounting to $5.3 million, will be authorized, on or before the Effective Date to apply the Cash and all other amounts owing to the Bond Agent, and upon satisfaction in full of all the obligations of the Debtors, the remainder of the Cash held by the Bond Agent will be delivered to the Liquidating Trustee for deposit in the Liquidating Trust. Impaired claims consist of: a) Allowed General Unsecured Claims, with an approximate amount of $110 million, will receive on or after the Effective Date, either their Pro Rata Share of the Cash in the Unsecured Claim Distribution Fund, or they can elect to have their Claims treated as Convenience Claims and receive a one time Distribution of 40% of the Allowed amount of its Convenience Claim; and b) Subordinated Claims and Intercompany Claims will neither receive nor retain any property under the Plan, while Holders of Interests will be cancelled on the Effective Date and will also neither receive nor retain any property. Full-text copies of the Disclosure Statement and Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050321024442 -- and -- http://www.researcharchives.com/bin/download?id=050321024853 Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp. -- http://www.savane.com/-- designs, produces and markets branded branded apparel products that are sold to major retailers in all levels and channels of distribution. The Company and its debtor-affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., and Denise D. Dell-Powell, Esq., at Akerman Senterfitt, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $247,129,867 and total debts of $142,082,756. TROPICAL SPORTSWEAR: South Pacific Objects to Asset Assignment -------------------------------------------------------------- South Pacific Apparel Pty Limited asks the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division for relief from an order allowing Tropical Sportswear International Corporation to assign certain executory contracts and leases to Perry Ellis International, Inc. The Stock Purchase Agreement The contracts and leases refer to the Stock Purchase Agreement, signed on September 29, 2004 under Australian law, providing for the sale of Farah-Australia and Farah New Zealand, the Debtor's subsidiaries, to South Pacific for $3 million. The agreement grants a sub-license allowing South Pacific to use the Debtor's trademarks on apparel manufactured, marketed and sold by Farah in Australia, New Zealand, Papua New Guinea and certain various islands in the South Pacific. Debtor's Asset Sale After filing for chapter 11 protection on December 16, 2004, the Debtors moved to assume and assign certain executory contracts and to sell substantially all its assets to Perry Ellis, including the trademarks. Rejection Motion The Debtors filed a motion to reject the sub-license agreement with South Pacific on March 4, 2005 upon the instructions of Perry Ellis. Perry Ellis then informed South Pacific that, as the new owners of the trademarks free and clear of the sub-license agreement, it has no obligation to honor the contract executed between the company and the Debtors. Perry Ellis further threatened South Pacific with a trademark-infringement lawsuit if it does not agree to a new interim license of the trademarks. To protect its interests on the trademarks, South Pacific filed an objection to the rejection motion on April 19, 2005. The Court granted South Pacific's request for emergency relief enjoining the Debtors from collecting amounts due under the Stock Purchase Agreement or from enforcing any security interests granted against South Pacific's property. A final evidentiary hearing to discuss the sub-license rejection is scheduled on July 5, 2005, at 9:00 a.m. South Pacific's Motion for Relief In a separate motion for relief filed April 25, 2005, South Pacific asked the court to modify the Sale Order to incorporate the terms of the sub-license agreement. The modification will, in effect, allow Perry Ellis to step into the Debtor's shoes under the sub-license agreement. As assignee, Perry Ellis will remain subject to all previous obligations and rights existing between the Debtor and South Pacific. This will permit South Pacific to continue to market, use and sell apparel exhibiting the Trademarks in accordance with the terms and conditions of the sub-license. About Tropical Sportswear Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp.-- http://www.savane.com/-- designs, produces and markets branded apparel products that are sold to major retailers in all levels and channels of distribution. The Company and its debtor- affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., and Denise D. Dell-Powell, Esq., at Akerman Senterfitt, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $247,129,867 and total debts of $142,082,756. About Perry Ellis International Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories, and fragrances, including dress and casual shirts, golf sportswear, sweaters, dress and casual pants and shorts, jeans wear, active wear and men's and women's swimwear to all major levels of retail distribution. Additional information about Perry Ellis is available at http://www.pery.com/ TRUMP HOTELS: Exits Chapter 11 Protection with New Name ------------------------------------------------------- Trump Hotels & Casino Resorts, Inc. (OTCBB: DJTE.OB) successfully completed its plan of reorganization which was confirmed on Apr. 5, 2005, thereby marking the Company's formal emergence from the reorganization proceedings voluntarily commenced on Nov. 21, 2004. The Company has also changed its name to Trump Entertainment Resorts, Inc. As previously announced, the Plan, which was supported by an overwhelming percentage of the Company's equity and bondholders, provides for many financial and strategic benefits, including: -- a $544 million reduction of total publicly-traded indebtedness from approximately $1.8 billion to $1.25 billion; -- $102 million of annual cash interest savings resulting from a reduction in the company's publicly-traded indebtedness; -- a reduction in the weighted average cost of debt from 12% to 7.7%; -- a ten-year extension of the maturity of the Company's publicly-traded indebtedness to 2015; -- access to a $500 million Senior Credit Facility priced at LIBOR + 2.50%; -- funding for deferred capital expenditures and future expansions of the Company's properties; and -- flexibility for growth in additional gaming jurisdictions, ability to monetize non-strategic assets and the opportunity to capitalize on the world-renowned Trump brand on a global basis. Donald J. Trump, the Company's Chairman and Chief Executive Officer, commented, "I am very proud of what we have accomplished in this deal, and I am excited about the opportunities we now have. The significant reduction in total indebtedness, interest expense and the availability of a favorable credit line give us the flexibility and wherewithal to bring our existing properties to a new level and to enter into new markets. I would like to thank all of the participants who have helped bring this process to a swift conclusion. I believe that this will be a wonderful company." Scott C. Butera, the Company's President and Chief Operating Officer, added, "The plan is one of the most successful recapitalizations in the history of the gaming industry, and we feel a great sense of accomplishment and optimism. Completing this plan in such a short time frame is a tribute to Mr. Trump and his unparalleled business acumen, as well as to the enthusiastic cooperation of our investors. Our successful reorganization will give us the opportunity to create significant shareholder value by optimizing our existing asset base, strategically monetizing non- core assets and ultimately expanding the Trump Entertainment brand both domestically as well as internationally." Mr. Butera then continued, "Mr. Trump has achieved the highest levels of success in all of his other business ventures. I am confident that he will follow suit in the newly recapitalized Trump Entertainment Resorts." Under the Plan, the reorganized Company issued approximately 40 million shares of new common stock, after giving effect to a reverse stock split of 1,000-to-one. The Company's holding subsidiary, Trump Entertainment Resorts Holdings, L.P., and its funding subsidiary, Trump Entertainment Resorts Funding, Inc., have also issued an aggregate of $1.25 billion principal amount of 8-1/2% Senior Secured Notes due 2015 secured by a second lien on substantially all of the Company's real estate assets. Shares of the Company's new common stock will trade in the over-the-counter- market under the ticker symbol "DJTE.OB" with CUSIP number 89816T103. The Company intends to apply to have its new common stock listed on the New York Stock Exchange or other national securities market in the near future. The Senior Notes will trade in the over-the-counter-market with the CUSIP number 89816WAA4. The Company's one-year Class A Warrants issued to existing stockholders under the Plan to purchase an aggregate of approximately 3,425,000 shares of the Company's new common stock for a purchase price of $14.60 per share will also trade in the over-the-counter market with the CUSIP number 89816T111. The Company has also obtained a Senior Credit Facility of up to $500 million, secured by a first priority lien on substantially all of the Company's assets, which will enable the Company to refurbish and expand its current properties and permit the Company to enter into new and emerging markets. Concurrently with the consummation of the Plan today, the Company has drawn down $150 million of the Senior Credit Facility with an initial interest rate of 5.59% (LIBOR + 2.50%) to fund payments under the Plan. The Senior Credit Facility also gives the Company access to a $150 million delayed draw loan earmarked for the construction of a new hotel tower at the Company's Trump Taj Mahal Casino Resort in Atlantic City, New Jersey and a $200 million revolver. Mr. Trump concluded, "The Trump brand has never been more successful, and I look forward to creating at Trump Entertainment Resorts what I have created in the real estate and media industries. Given my belief in the importance of on-site, day-to- day management and because of the fact that I am extremely busy with my real estate holdings, numerous building projects and the very successful 'Apprentice' television franchise, I am looking forward to selecting a world class chief executive officer to ensure the successful execution of the company's strategic vision and to maximize the great financial platform that we now have in place." Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005. US AIRWAYS: America West Merger Cues S&P to Watch Ratings --------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on enhanced equipment trust certificates of US Airways Group Inc. unit US Airways Inc. (both rated 'D') on CreditWatch with developing implications, following the announcement that America West Holdings Corp. (B-/Watch Neg/--) has reached an agreement to acquire US Airways. The CreditWatch listing does not apply to 'AAA' rated EETCs, which are insured by bond insurers and whose ratings are affirmed. The 'D' corporate credit ratings on US Airways Group and US Airways are not affected, as they are determined by the companies' bankruptcy proceedings; new corporate credit ratings will be assigned upon emergence from Chapter 11 reorganization. The merger is subject to various conditions, including approval by the US Airways bankruptcy court and Air Transportation Stabilization Board, which guarantees a large loan to US Airways. "Resolution of the CreditWatch review of EETCs will be based on the credit quality of the new consolidated entity, the credit of US Airways Inc. (which will continue to operate as a separate subsidiary over the intermediate term), the perceived importance of the aircraft collateral backing each EETC to the new company, and on particular aspects (e.g., level of overcollateralization) of each individual EETC," said Standard & Poor's credit analyst Philip Baggaley. "Based on these considerations, it currently appears that ratings will be either affirmed or upgraded, with downgrades seen as less likely," the credit analyst continued. US AIRWAYS: Court OKs Notice & Hearing Protocol in Claims Trading ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia approved US Airways, Inc., and its debtor-affiliates' proposed notice and hearing procedures that must be satisfied before transfers of claims against, and equity securities in, the Debtors are deemed effective. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explained that the Debtors must protect and preserve Net Operating Losses totaling more than $600,000,000. The Debtors can maintain the NOLs by establishing notice and hearing procedures for trading of claims and equity securities. If left unrestricted, improper trading could severely limit the use of the NOLs and could have negative consequences for the Debtors, their estates and the reorganization process. To preserve the flexibility to craft a plan of reorganization that maximizes the NOLs' value, the Debtors will closely monitor transfers of claims and equity securities. If noncompliant transfers are contemplated, the Debtors must be able to act accordingly to preserve the NOLs. Specifically, trading of claims and equity securities could adversely affect the Debtors' NOLs if: (a) too many 5% blocks of equity securities are created, or too many shares change hands from these blocks, so that, an ownership change within the meaning of Section 382 of the Internal Revenue Code is triggered; or (b) ownership of the Debtors' claims currently held by "qualified creditors" is transferred, prior to consummation of the plan, and those claims would be converted under a plan of reorganization into a 5% or greater block of the Reorganized Debtors' stock. The Debtors propose these procedures for trading in equity securities: -- Any entity designated a Substantial Equityholder will file with the Court, and serve a notice of this status upon the Debtors and their counsel, within 10 days of earning this designation; and -- Prior transferring equity securities that would increase the amount of US Airways Group, Inc., common stock owned by a Substantial Equityholder, the recipient will file with the Court, and serve on the Debtors and their counsel, advance written notice of the intended equity securities transfer. Mr. Leitch related that the Debtors have estimated net operating losses of in excess of $600,000,000, which will probably grow by the time the Debtors emerge from Chapter 11. The NOLs translate into future tax savings in excess of $200,000,000, based on a 35% corporate federal income tax rate. Section 172 of the IRC permits corporations to carry forward NOLs to offset future income, reducing federal income tax liability and improving their cash position. However, the usefulness of the NOLs could be limited under Section 382 of the IRC, due to trading and accumulation of claims and equity securities prior to consummation of the Plan of Reorganization. Section 382 limits the taxable income that can be offset by NOL carryforwards in any taxable year following an ownership change. An "ownership change" occurs if the ownership percentage of the stock by one or more 5% shareholders has increased by more than 50% over the lowest percentage of stock owned by the shareholders during the 3-year testing period ending on the date of the ownership change. Mr. Leitch told Judge Mitchell that if too many investors transfer their securities before the effective date of a Plan, an ownership change, which falls outside the ambit of these special bankruptcy provisions, may be triggered, thus limiting the NOLs. The Debtors want to ensure that they are able to maximize the use of their NOLs to reduce federal income taxes on income earned after reorganization. Mr. Leitch assured the Court that the request is narrowly tailored to apply only to investors that would cross the IRC threshold of an aggregate principal of $100,000,000 or more. The Debtors will impose the notice and hearing requirements only on investors that may fall outside the de minimis rule, and thus could jeopardize the Debtors' ability to satisfy the requirements of the IRC Section 382(l)(5) safe harbor. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) USGEN NEW ENGLAND: ISO New England Claim Estimated at $0 -------------------------------------------------------- In January 2004, ISO New England Inc. filed a proof of claim against USGen New England, Inc. for purported damages arising from the trade of electricity and other energy-related products at wholesale under (i) the Restated New England Power Pool Agreement, (ii) the ISO-NE FERC Electric Tariff for Transmission Dispatch and Power Administration Services, (iii) the Restated NEPOOL Open Access Transmission Tariff, and (iv) a Bid Mitigation Agreement. The Claim asserts: (a) a $694,463 liquidated prepetition amount; plus (b) unliquidated amounts that ISO New England asserts may become due and owing in the event of an adverse ruling in a proceeding before the Federal Regulatory Commission that concerns the Bid Mitigation Agreement. By this motion, USGen asks the Court to estimate ISO New England's Contingent Unliquidated Claim and establish the maximum amount at $0, or alternatively, disallow the Claim in its entirety. John Lucian, Esq., at Blank Rome LLP, in Baltimore, Maryland, relates that the Contingent Unliquidated Claim is based on a dispute that has been ongoing between ISO New England and certain of its customers before the FERC since 2000. The controversy centers on whether ISO New England has a refund obligation to its customers based on the disputes surrounding ISO New England's authority under various bid mitigation agreements. Mr. Lucian relates that USGen, as an owner and operator of electric power generating facilities, was a member of NEPOOL and sold its power at wholesale to ISO New England which in turn sold the power to its customers, some of whom were retail suppliers that sold to the individual customers, the end users. From time to time ISO New England would enter into contracts with the power generators referred to as bid mitigation agreements. ISO New England would negotiate and enter into these agreements in situations where it concluded that certain generating facilities needed to operate in order to maintain reliability of the NEPOOL system but, because of local transmission constraints, there was not sufficient competition to assure that each generator's bid price would be the product of a competitive market. In essence, the agreements took all of these generating facilities out of the normal market bidding process and set in advance the price ISO New England would pay for their operation during certain periods of high electricity demand. These prices were passed along to ISO New England's customers, including the retail suppliers. Fixed Claim The $694,463 Fixed Claim consists of: -- $1,770,464 in monthly remittances due to USGen on account of prepetition transactions for the months of July 2003 and September 2003; and -- $2,772, 479 in collateral amount. In 2005, USGen sought and obtained the Court's order disallowing the Fixed Claim pursuant to an agreement between USGen and ISO New England to set off and recoup the Fixed Claim against the Cash Collateral. The Court held that the Fixed Claim was satisfied through set-off and recoupment, without prejudice to ISO New England's continued assertion of the Contingent Unliquidated Claim. Contingent Unliquidated Claim According to Mr. Lucian, the Contingent Unliquidated Claim was asserted against both USGen and NEGT Energy Trading - Power, L.P., based on joint and several liabilities in connection with the Bid Mitigation Agreement. ET Power was subsequently designated the single NEGT entity holding membership in NEPOOL and the single contracting entity with respect to all wholly owned NEGT entities. Accordingly, the counter-party to the Bid Mitigation Agreement is ET Power. However, the Bid Mitigation Agreement involved only the operation by USGen of its Salem Harbor generating facility, and all funds paid to ISO New England to ET Power pursuant to the Bid Mitigation Agreement were remitted by ET Power to USGen. Moreover, ET Power and USGen are parties to an agreement pursuant to which USGen is obligated to indemnify ET Power from claims ISO New England might bring against it arising out of USGen's activities in NEPOOL. Contingent Claim Could Exceed $57 Million USGen's Second Amended Plan of Liquidation provides that contingent or unliquidated claims are deemed to be "Disputed Claims" and that, by the Plan effective date, a Disputed Claim Reserve will be established in an amount necessary to satisfy any distributions that would be made to holders of Disputed Claims in Class 3 if those Claims were to become Allowed Claims under the Plan. Mr. Lucian tells the Court that ISO New England informed USGen that its Contingent Unliquidated Claim could exceed $57 million and insists that USGen hold that amount in the Disputed Claims Reserve. USGen disputes that there is any liability whatsoever to ISO New England. The Contingent Unliquidated Claim is so speculative and remote that USGen believes that the Claim should be estimated at zero and no funds should be held in the Disputed Claims Reserve with respect to that Claim. USGen FERC Proceeding Mr. Lucian relates that ISO New England and ET Power entered into the Bid Mitigation Agreement dated November 2000 with respect to the power produced by USGen at its Salem Harbor facility. IS0 New England then filed the Bid Mitigation Agreement with the FERC. The FERC accepted the Bid Mitigation Agreement for filing and it has been in effect consistent with FERC procedures. The Agreement expired in accordance with its terms on March 31, 2003. ISO New England also entered into similar Bid Mitigation Agreements with, among others, affiliates of Mirant Corporation. ISO New England also filed these other agreements with the FERC. Mr. Lucian notes that various customers of ISO New England have asserted that they should not have been obligated to pay for all the costs ISO New England incurred pursuant to the various bid mitigation agreements, and that they are entitled to a refund from ISO New England. Among other things, the Customers assert that the bid mitigation agreements should have been filed with the FERC pursuant to Section 205 of the Federal Power Act and that failure to do so 60 days prior to the effectiveness of the mitigation agreements gives rise to a refund obligation. The Customers also argue that for various reasons the rates charged to them by ISO New England are not just and reasonable within the meaning of the Federal Power Act. The Customers have been relentless in their challenge of the effectiveness of the bid mitigation agreements; yet, they have been wholly unsuccessful. So far, the FERC has ruled four times that good cause justified waiver of the 60-day prior notice requirement and that no refunds were owed by ISO New England to its customers. The FERC's rulings were appealed to the U.S. Court of Appeals for the D.C. Circuit and remanded to the FERC to clarify its earlier rulings. The FERC did so in its Order on Remand where it said: "we found, and find again, that extraordinary circumstances are present here that justified the [FERC] . . . granting waiver of the 60-day prior notice requirement with respect to the mitigation agreements." These "circumstances" included the facts that: (a) The agreements were for "critical services" necessary to "assure system reliability"; and (b) mitigation agreements are often negotiated on short notice and "by their very nature do not always lend themselves to being filed 60 days before service commences." For these reasons, the FERC again ruled that ISO New England owed no refunds. The Customers currently seek rehearing in the Mirant proceeding of the FERC's Order on Remand. The FERC has not yet ruled on the request for rehearing and its orders remain in full force and effect. Mr. Lucian informs the Court that the FERC has indicated that it will likely apply its ruling in the Mirant proceeding to the USGen FERC Proceeding, but it has not done so and it is speculative as to when the FERC will take any action with respect to the USGen FERC Proceeding. In the meantime, and critical for the Bankruptcy Court's determination, the USGen Bid Mitigation Agreement was accepted by the FERC and at no time during the USGen FERC Proceeding was the effectiveness of the Agreement stayed or vacated. ISO New England has no claim against USGen with respect to the Bid Mitigation Agreement. Mr. Lucian explains that for ISO New England to have even a hint of a colorable claim against USGen, the FERC must: 1. reverse its four prior rulings and find ultimately that the Customers do have a claim for a refund against ISO New England in the Mirant proceedings; and 2. apply that reversed ruling in the USGen FERC Proceeding which, will itself be subject to the appellate process and may involve years of litigation. Additionally, should the Customers prevail in the USGen FERC Proceeding and obtain a final, non-appealable ruling that the Bid Mitigation Agreement was improper and that ISO New England owes a refund to its Customers, ISO New England must then engage in a further prolonged proceeding to determine if, and to what extent, USGen may owe a refund to ISO New England for the Salem Harbor Plant-generated power sold to ISO New England during the relevant time period -- only then would ISO New England be able to assert that it has a quantifiable claim against USGen. In sum, the Contingent Unliquidated Claim is so remote and hypothetical that it should be estimated at zero. If the Claim is not estimated at zero then confirmation of USGen's Plan may be impaired. Likewise, if USGen is compelled to reserve the $57 million asserted by ISO New England then USGen and its stakeholders will be subject to years of costly litigation and endless delay, thereby unfairly impeding the conclusion of USGen's Chapter 11 case. Section 502(c) Authorizes the Court to Estimate the ISO Claim Mr. Lucian argues that ample authority exists under the Bankruptcy Code and applicable case law to support USGen's request. Section 502(c) of the Bankruptcy Code provides in pertinent part that: "There shall be estimated for purpose of allowance under this section -- (1) any contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case." The Section 502(c) language is mandatory and requires the Court to estimate an unliquidated or contingent claim if failure to do so would hinder or delay the administration of USGen's Chapter 11 case. Moreover, when deciding if estimation will prevent undue delay, courts are often guided by considerations of judicial economy. Circumstances Warrant ISO Claim Disallowance Even if the FERC were to suddenly reverse itself, Mr. Lucian asserts that ISO New England has no claim against USGen or ET Power. There is no FERC proceeding, let alone an FERC order, directing USGen or ET Power to refund any portion of the payments that ET Power received from ISO New England under the Bid Mitigation Agreement. Rather, if the FERC were to reverse itself, the refund obligation for failing to file the Bid Mitigation Agreement falls not on USGen but on ISO New England. Furthermore, not only would the FERC need to reverse itself on the merits, it would need to commence an entirely new proceeding to determine whether -- and if so the extent to which -- any refund is due from USGen to ISO New England. * * * After lengthy negotiations, USGen New England, Inc., and ISO New England, Inc., desire to estimate and limit ISO-NE's Contingent and Unliquidated Claim against USGen and to resolve any and all estimation issues and USGen's Estimation Motion in a cost- effective and efficient manner. In a Court-approved stipulation, the parties agree that: (a) The Contingent and Unliquidated Claim will be estimated for purposes of allowance at $0. Except as otherwise provided, USGen will have no obligation whatsoever to reserve any funds for distribution or otherwise on account thereof. However: (i) ISO-NE will be entitled to retain possession of the Collateral and interest, in the existing financial assurance account, only in strict conformity with the terms set forth; and (ii) separate and apart from the Collateral, a Disputed Claims Reserve will be established equal to any difference between the amount of the Collateral and the amount of refunds owed under any ruling by the FERC or any appellate court in an FERC Proceeding requiring refunds with respect to the Mitigation Agreement, only if the FERC Ruling occurs prior to the Initial Distribution Date and fixes the amount of refunds owed by USGen or NEGT Energy Trading-Power, L.P., in connection with the Mitigation Agreement in an amount greater than the Collateral. (b) To the extent that the Disputed Claims Reserve is established with respect to the Contingent and Unliquidated Claim, it will be administered, disposed of, and resolved consistent with the Plan provisions. After the Initial Distribution Date, if no amounts are required to be placed in the Disputed Claims Reserve, any recovery on account of ISO-NE's Contingent and Unliquidated Claim will be limited to the Collateral only. (c) After the Initial Distribution Date, the Collateral will only be disposed of in this manner: * If no FERC Ruling has been issued on or before December 31, 2006, or if the latest ruling by the FERC or an appellate court issued on or before December 31, 2006, provides that no refunds are due in relation to the Mitigation Agreement, then: -- the entirety of the remaining Collateral, without offset or recoupment, and inclusive of all remaining accumulated interest, will be returned immediately to the Plan Administrator, and in no event later than five business days after December 31, 2006, subject only to the payment rights set forth; and -- ISO-NE will have no further claim or right thereto, and the Contingent and Unliquidated Claim will be deemed disallowed with prejudice. * If on or before December 31, 2006, an FERC Ruling has been issued and ISO-NE has calculated the associated refunds and without further Court: -- ISO-NE will be entitled to apply the Collateral in full and complete satisfaction of USGen's obligations for the Contingent and Unliquidated Claim; -- any Collateral not applied will be returned by ISO-NE to the Plan Administrator within five business days after December 31, 2006, without offset or recoupment, and inclusive of all remaining accumulated interest, and without further demand by USGen; and -- ISO-NE will have no further claim or right and any remaining Contingent and Unliquidated Claim will be deemed disallowed with prejudice. (d) If an FERC Ruling has been issued on or prior to December 31, 2006, and USGen provides ISO-NE written notice of its election to appeal that FERC Ruling, or written notice that it contests the ISO-NE refund calculations, the ISO-NE refund will be stayed until the earlier of a final non-appealable disposition of the matter, or written notice by USGen to ISO-NE that it no longer intends to pursue an appeal. (e) If a court on appeal, or the FERC in a subsequent proceeding, orders that no refunds are due under the Mitigation Agreement, or otherwise fixes, determines or limits the amount of the refunds due under the Mitigation Agreement, or if USGen determines that it no longer intends to pursue an appeal or contest a determination of refunds, ISO-NE will apply the Collateral to satisfy the refunds determined to be due and owing, and return the remaining Collateral inclusive of all remaining accumulated interest, if any, to the Plan Administrator within five days after the date when the order becomes final and non-appealable. (f) USGen and ISO-NE each reserves all rights to take any positions each deems appropriate to protect its interest in the FERC Proceedings and any related appeals or proceedings, and USGen reserves all defenses to any claims or refund calculations asserted by ISO-NE. (g) Through December 31, 2005, USGen will be responsible to ISO-NE for any and all routine charges, true-up amounts and reconciliations, which it incurs under the NEPOOL Documents and RTO Documents, applicable, as final settlement data becomes available and billing adjustments are made. To the extent that USGen has any liability to ISO-NE with respect to the Routine Charges, then and in that event, the Routine Charges, up to the aggregate sum of $1,000,000, will be paid to ISO-NE directly from the Collateral, and any balance of the Collateral will be retained by ISO-NE pursuant to the terms and conditions of the Stipulation. USGen or Plan Administrator will pay to ISO-NE any Routine Charges in excess of $1,000,000 directly from funds in its possession or control in the ordinary course. (h) The Routine Charges, if any, will be paid by USGen to ISO- NE when due in accordance with the NEPOOL Documents and RTO Documents, provided that ISO-NE at its option will have the right to pay, from the Collateral, any unpaid amounts due hereunder at any time that the payments are late. (i) ISO-NE and USGen will use commercially reasonable efforts to effectuate termination, effective as of April 1, 2005, of USGen's NEPOOL membership and the Market Participant Service Agreement. Except to the extent provided, USGen will have no liability with respect to the FERC Proceedings and any related proceedings, and in no event will USGen have any liability with respect to the FERC Proceedings and any related proceedings in connection with the NEPOOL Documents, the RTO Documents, USGen's NEPOOL membership and its Market Participant Service Agreement. (j) Nothing in the Stipulation will be deemed or construed as an acknowledgment of any liability whatsoever by USGen to ISO-NE with respect to the Contingent and Unliquidated Claim. (k) USGen and ISO-NE exchange mutual releases except for (i) the Routine Charges, (ii) the retention and application of the Collateral, and (c) any other obligations hereunder. (l) With respect to the joint and several liability of USGen and ET Power to ISO-NE on the NEPOOL Documents and the RTO Documents, that liability will be limited to USGen only. However, nothing is intended to affect the rights of ISO- NE in and to the ET Collateral. ISO-NE waives and withdraws with prejudice its claim against ET Power as same relates in any manner whatsoever to the Contingent and Unliquidated Claim, including the ISO-NE/ET Power Claim. (m) As part of the settlement, ISO-NE: * waives and withdraws Claim No. 340, with prejudice; * agrees that its sole source of recovery for any liability that ET Power may have to ISO-NE will be the ET Collateral and the accumulated interest thereon; and * is authorized by USGen to satisfy any liability from the ET Collateral upon written notice to USGen of that action. (n) USGen stands in the shoes of ET Power with respect to the ET Collateral and has all rights under the NEPOOL and RTO Documents with respect thereto. (o) ISO-NE will apply the $798,342 it is currently holding on behalf of ET Power against certain prepetition obligations of ET Power. Headquartered in Bethesda, Maryland, USGen New England, Inc., an affiliate of PG&E Generating Energy Group, LLC, owns and operates several electric generating facilities in New England and purchases and sells electricity and other energy-related products at wholesale. The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported assets amounting to $2,337,446,332 and debts amounting to $1,249,960,731. The Debtor filed its Second Amended Plan of Liquidation and Disclosure Statement on March 24, 2005 (PG&E National Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) USI HOLDINGS: Attorney General Subpoena Cues S&P to Remove Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' counterparty credit and bank loan ratings on USI Holdings Corp. (NASDAQ:USIH), and removed the ratings from CreditWatch where they were placed on Nov. 1, 2004, with negative implications, after USI received a subpoena from the New York State Attorney General. The outlook is negative. The company's senior secured credit facility totals $245 million. In the first quarter of 2005, the company amended its credit agreement to increase its borrowing under the existing senior credit facility by $90 million to finance acquisitions. "The ratings were removed from CreditWatch because our concerns about the company's ability to meet its restrictive debt covenants in the near term, due to the potential loss of contingent commission income, have been somewhat allayed," explained Standard & Poor's credit analyst Donovan Fraser. "USI has continued to collect contingent commission income and has indicated that it expects to continue to do so in 2006 based on 2005 contingent commission agreements currently in place." In 2004, USI shouldered additional legal expenses of $700,000 in responding to the various insurance industry investigations. The company remains under subpoena, but Standard & Poor's believes the company incurred the bulk of legal expenses regarding the investigations in 2004. In 2004 and 2003, USI collected $19 million and $17 million in contingent commission income, respectively. In the first quarter of 2005, contingent commission income measured $18 million compared with $13.5 million in the first quarter of 2004. The increase of $5.5 million is primarily due to acquisition related activity. Historically, the company has collected the majority of contingent commission income in the first two fiscal quarters. USI's $245 million senior secured credit facilities consist of a $215 million term loan and a $30 million revolving credit facility. The term loan matures in August 2008, whereas the revolver matures in August of 2007. The ongoing investigations by various legal and regulatory entities into the payment of contingent commissions has led to the decision by various insurance companies and insurance brokers to suspend or end certain compensation agreements. In the first quarter of 2005, the three major global insurance brokers paid more than $1 billion to resolve many of the regulatory inquiries. The fines are approximately equivalent to one year of contingent commission income. Standard & Poor's does not have any immediate liquidity concerns as USI has more than $38 million in cash on hand in addition to $28 million available under its revolving line of credit as of March 31, 2005. There is now greater clarity around the near-term feasibility of contingent commission payments and the upper bounds on any prospective fines that might be discerned by recent settlements. The negative outlook reflects that USI historically has operated, and continues to operate, at the boundaries of its restrictive debt covenants and because the company remains under subpoena from various regulatory entities. In the event that contingent commissions were eliminated from the company's prospective revenue stream, Standard & Poor's would immediately review its ratings on the company for a possible downgrade. In addition, Standard & Poor's believes that there exists some execution and integration risk associated with the company's latest acquisitions. VIRBAC CORP: Auditors Express Going Concern Doubts -------------------------------------------------- PricewaterhouseCoopers LLP audited Virbac Corporation's financial statements for the year ending December 31, 2003. At the conclusion of that engagement, PwC said a number of uncertainties raise substantial doubt about Virbac's ability to continue as a going concern. In its audit report, PricewaterhouseCoopers states that the Company is party to various claims and litigation related to alleged violations of federal securities laws. The outcome of these matters cannot be predicted and could have a material adverse effect on the Company. The Company entered into a forbearance agreement with its lenders that expired on May 6, 2005. There can be no assurance the Company's lenders will agree to either a further extension of the forbearance agreement or a new credit agreement. In addition, in 2004 the Company's majority shareholder advanced the Company $9.0 million under secured subordinated notes due on October 9, 2005. The Company does not currently have sufficient cash on hand nor does it anticipate it will have sufficient cash to repay its borrowings to its majority shareholder at the current maturity date of October 9, 2005. Furthermore, the Company has suffered recurring losses from operations. These matters raise substantial doubt about its ability to continue as a going concern. About the Company Virbac Corporation, located in Fort Worth, Texas is a leading companion animal health company with products in the pharmaceutical, dermatological and oral hygiene markets for pets. Virbac provides a broad array of health care products to our customers under the brand and product names Allerderm(R) Dermatological Products, C.E.T.(R) Home Dental Care, Soloxine(R) Tablets, Euthasol(R) Euthanasia Solution, Ketochlor(TM) Shampoo, VIRBAMEC(TM) Pour-on, BOVIMEC(TM) Pour-on, Preventic(R) Tick Collars, Petrodex(R) & Petromalt(R), Zema(R), Mardel(R), Francodex(R) and Pet-Tabs(R). WELLS FARGO: Credit Enhancement Prompts Fitch to Lift Ratings ------------------------------------------------------------- Fitch has taken rating actions on the following Wells Fargo Asset Securities Corporation issues: Series 2002-10 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AAA' from 'AA'; -- Class B-3 upgraded to 'AA-' from 'A'; -- Class B-4 upgraded to 'A-' from 'BBB'; -- Class B-5 upgraded to 'BB' from 'B'. Series 2002-14 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AAA' from 'AA'; -- Class B-3 upgraded to 'AA' from 'A'; -- Class B-4 upgraded to 'A' from 'BBB'; -- Class B-5 upgraded to 'BB+' from 'B'. Series 2003-5 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. Series 2003-B -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'A'; -- Class B-4 upgraded to 'BB+' from 'BB'; -- Class B-5 upgraded to 'B+' from 'B'. The affirmations reflect pool performance and credit enhancement consistent with expectations and affect $396,705,270 of outstanding certificates. The upgrades, affecting $18,027,542 of outstanding certificates, reflect an increase in credit support levels, low losses, and low delinquencies. As of the April 2005 distribution, the CE levels for classes B-2, B-3, B-4, and B-5 from series 2002-14 are more than five times their original levels. In addition, there are no delinquent loans, zero cumulative losses, and over 80% of the collateral has paid down. The CE levels for classes B-2, B-3, B-4, and B-5 from series 2002-10 are more than four times their original levels. Currently less than 2% of the loans in the deal are delinquent, there are zero cumulative losses, and 80% of the collateral has paid down. Both deals are backed by 30-year fixed-rate mortgages that were made in connection with employee relocation programs. The current CE levels for all classes from series 2003-5 and 2003- B are more than two times their original levels. There is only one loan delinquent from series 2003-B, and cumulative losses, as a percentage of the original pool balance, total less than 0.01%, and over 70% of the collateral had paid down. There is also one loan delinquent in series 2003-5, zero cumulative losses, and over 50% of the collateral has paid down. Series 2003-5 is backed by 30-year fixed-rate mortgages, and series 2003-B is backed by 30- year adjustable-rate, hybrid, and traditional mortgages. WELLSFORD REAL: Adopts Liquidation Plan & Reverse Stock Split ------------------------------------------------------------- Wellsford Real Properties, Inc.'s (AMEX:WRP) Board of Directors has approved a Plan of Liquidation and a 1 for 100 Reverse Stock Split and a 100 for 1 Forward Stock Split of its common shares. The Plan and the Stock Split are each subject to the separate approval of the Company's stockholders at an annual meeting, to be announced, which will be held subsequent to the mailing of a proxy. The Company previously reported that in March 2004, the Board authorized and retained the financial advisory firm, Lazard Ltd, to advise the Company on various strategic financial and business alternatives available to it to maximize stockholder value. These included a recapitalization, acquisitions, disposition of assets, liquidation, the sale or merger of the Company and alternatives that would keep the Company independent. After consideration of the alternatives available to the Company, the Board has determined and recommends that liquidation is advisable and in the best interests of the Company's stockholders. The Board also recommends the implementation of the Stock Split, which could make the Company's operations more cost effective whether or not the Plan is approved by Stockholders. Under the Plan, the Company intends to sell its assets, to pay or provide for its liabilities, and to distribute its remaining cash to its stockholders. The Board currently estimates that stockholders could receive $18.00 to $20.50 per share in total distributions over the liquidation period including an initial distribution of $12.00 to $14.00 per share within 30 days after the later of the closing of the sale of the Palomino Park rental apartments and stockholder approval of the Plan. The estimated time frame for payment of these proceeds will be described in the proxy statement to be filed. A Stock Split would reduce the number of record holders of the Company's common stock to below 300, thereby making the Company eligible for: (i) deregistration under the Securities Exchange Act of 1934, as amended, and (ii) the de-listing of its common stock from the American Stock Exchange. Accomplishing these objectives would relieve the Company of the costs associated with complying with the various reporting and governance requirements of the Securities and Exchange Commission and American Stock Exchange. This action also would save the Company significant expenses associated with Sarbanes-Oxley Act reporting requirements. It is anticipated that only stockholders owning 99 or fewer pre-split common shares of the Company would receive $20.50 per pre-split share in cash for their shares. Currently, the Company has 6,467,639 common shares outstanding and it is anticipated that approximately 4,000 common shares will be purchased by the Company in order to complete the Stock Split. Mr. Jeffrey Lynford, Chairman and CEO stated, "Your Board of Directors, after significant analysis, has approved a plan of liquidation, which we believe will most likely maximize stockholder value. Since the Company's public trading volume is very low, approximately 4,000 shares per day, there is no significant current market liquidity for our stockholders. With the adoption and implementation of this plan, significant cash could be distributed. The initial distribution could range between $78 million and $91 million, and our total distributions could range between $116 million and $133 million." Wellsford Real Properties, Inc., is a real estate merchant banking firm headquartered in New York City which acquires, develops, finances and operates real properties, constructs for-sale single family home and condominium developments and organizes and invests in private and public real estate companies. WICKES INC: Creditors Committee Taps BBK Ltd as Financial Advisors ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Illinois gave the Official Committee of Unsecured Creditors of Wickes Inc., permission to employ BBK, Ltd., as its special financial advisors. The Committee chose BBK Ltd. as its special financial advisors because of the Firm's extensive experience and knowledge of business accounting practices and its ability to analyze and examine certain transactions of the Debtor. BBK Ltd. will first act as the Committee's consultants in analyzing and examining certain discovery materials obtained by the Committee's special counsel, Miller Canfield, which are related to the Debtor' pre-petition financial transactions. BBK Ltd. will provide all other financial advisory services to the Committee and will work closely with Miller Canfield and other professionals retained by the Committee to ensure there will be no duplication of services that are charged to the Debtor's estate. The hourly rates of BBK Ltd.'s professionals are: Designation Hourly Rate ------------ ----------- Principals $375 Senior Directors $325 Directors $300 Senior Consultants $275 Consultants $195 Analysts $150 Paraprofessional Staff $ 70 BBK Ltd. assures the Court that it does not represent any interest materially adverse to the Committee, the Debtor or its estate. Headquartered in Vernon Hills, Illinois, Wickes Inc. -- http://www.wickes.com/-- is a retailer and manufacturer of building materials, catering to residential and commercial building professionals, repairs and remodeling contractors and project do-it-yourself consumers Wickes, Inc., and GLC Division, Inc., filed for chapter 11 protection on January 20, 2004 (Bankr. N.D. Ill. Case No. 04-02221). The Court dismissed GLC's case on Feb. 17, 2005. Richard M. Bendix Jr., Esq., at Schwartz Cooper Greenberger & Krauss represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it listed $155,453,000 in total assets and $168,199,000 in total debts. WICKES INC: Sells Real Property to Marken LLC for $425,000 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois approved Wickes Inc.'s request: a) to sell certain real property outside of the ordinary course of business free and clear of liens, claims, encumbrances and interests; and b) to approve the Purchase Agreement and provide for the Court's Sale Order to take effect immediately upon entry of the Sale Order notwithstanding the stay provided for by Bankruptcy Rule 6004. The Court approved the sale transaction on April 21, 2005. The Debtor tells the Court that the real property is no longer necessary for it operations and the proceeds of the sale will be used for payment of administrative expenses and for distribution to creditors. The Debtor and Marken LLC entered into a Purchase Agreement on April 7, 2005, calling for the sale of the Debtor's real property located in Kokomo, Indiana, to Marken for $425,000. That Purchase Agreement included the Debtor's agreement to assume and assign executory contracts and unexpired leases to Marken LLC. The Debtor relates that the Purchase Agreement was the product of lengthy good faith negotiations with Marken LLC. Headquartered in Vernon Hills, Illinois, Wickes Inc. -- http://www.wickes.com/-- is a retailer and manufacturer of building materials, catering to residential and commercial building professionals, repairs and remodeling contractors and project do-it-yourself consumers Wickes, Inc., and GLC Division, Inc., filed for chapter 11 protection on January 20, 2004 (Bankr. N.D. Ill. Case No. 04-02221). The Court dismissed GLC's case on Feb. 17, 2005. Richard M. Bendix Jr., Esq., at Schwartz Cooper Greenberger & Krauss represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it listed $155,453,000 in total assets and $168,199,000 in total debts. WILLBROS GROUP: Reports on Status of Audit Committee Probe ---------------------------------------------------------- Willbros Group, Inc. (NYSE: WG) provided an update on its Audit Committee's independent internal investigation and on its expected financial results. The Audit Committee has substantially completed its investigation. The Company and its external auditors are reviewing and analyzing the results of the Audit Committee's investigation in order to finalize the Company's financial statements. Audit Committee Investigation As previously reported in January 2005, the Company's Audit Committee, with the assistance of independent counsel, has been carrying out an investigation into the activities of James K. Tillery, the former President of Willbros International, Inc., and other employees and consultants of WII and its subsidiaries. WII and its wholly owned subsidiaries operate internationally outside the United States and Canada. WII is a wholly owned subsidiary of Willbros Group, Inc. Mr. Tillery resigned without severance benefits from Willbros International, Inc. on January 6, 2005, as a direct result of senior management's preliminary investigation into a tax matter in Bolivia. After Mr. Tillery's resignation, the Company discovered numerous documents and encrypted computer files indicating that Mr. Tillery may have been concealing other improper activities. Senior management promptly brought this information to the attention of the Audit Committee, which then launched its own independent investigation. The investigation conducted by the Audit Committee confirmed that Mr. Tillery and others who directly or indirectly reported to him violated Company policies and possibly the laws of several countries, including the United States. Based on the Audit Committee's independent investigation and on information obtained by senior management, the Company has determined the following: -- Mr. Tillery and other Willbros International employees or consultants owned interests in enterprises with whom Willbros International did business, and may have usurped corporate opportunities, received payments and other improper benefits from consultants, suppliers or competitors. Mr. Tillery and these others appear to have benefited personally as a result of such transactions. Their failure to disclose such activities may constitute a violation of United States law, or the laws of other countries. -- Mr. Tillery and other Willbros International employees or consultants may have directly and indirectly promised to make, made, caused to be made, or approved payments to government officials in Bolivia, Nigeria and Ecuador, and possibly to client personnel in one or more of those countries. Mr. Tillery may have also acquiesced in, or approved, a prior commitment by another to make an improper future payment in Mexico. These activities and, in some cases, their possible mischaracterization on Willbros International's financial records, may constitute violations of the United States Foreign Corrupt Practices Act, other laws of the United States, or the laws of other countries. -- Under the direction of Mr. Tillery and other Willbros International employees or consultants, certain subsidiaries of WII filed false tax returns, failed to file required tax returns, and failed to pay certain taxes in locations outside the United States. -- Mr. Tillery and other Willbros International employees or consultants may have engaged in discussions with competitors and others regarding bids for projects outside the United States. These discussions may have been in violation of United States law or the laws of other countries. -- Following Mr. Tillery's resignation, Willbros International employees and former consultants may have contravened Company directives and continued to carry out some of the activities described above. The process and results of the Audit Committee's investigation have been voluntarily reported to both the United States Securities and Exchange Commission and the United States Department of Justice, which are currently investigating these matters. The Company is cooperating fully with these governmental authorities. The Company, including the Audit Committee, is continuing to examine certain of Willbros International's operations to determine whether there are any other improper or illegal activities by Mr. Tillery or others. It is possible that additional instances of improper or illegal behavior could be identified in the future. The Company has already taken a variety of remedial actions in response to the findings of the Audit Committee and will continue to evaluate the necessity of taking additional remedial actions. The Company cannot predict the outcome of any investigations conducted by the SEC, the DOJ or other governmental authorities, whether they will result in legal proceedings against the Company, or whether the Company will be subject to civil or criminal fines or penalties or other regulatory action which could have a material adverse effect on the Company's business and results of operations. If the Company or one of its subsidiaries is found to have violated the FCPA, that entity could be subject to civil penalties of up to $650,000 per violation and criminal penalties of up to the greater of $2 million per violation or twice the gross pecuniary gain resulting from the improper conduct. The Company and its subsidiaries could also be barred from participating in future United States government contracts. There may be other penalties that could apply under other laws of the United States or the laws of other countries. In addition to the liability of the Company or its subsidiaries that could arise out of the governmental proceedings described above, there are other adverse effects that could occur as a result of the foregoing, including: -- the net, uninsured expense of responding to anticipated investigations by governmental authorities and fulfilling the Company's obligations to fund director and officer legal costs could adversely affect results of operations. -- the Company's refusal to make improper payments, or to permit others to do so on its behalf, may negatively affect ongoing international operations, particularly in Nigeria. -- the competitors of the Company may be able to exploit these circumstances to the disadvantage of the Company. The discovery of the circumstances described above has also led the Audit Committee and the Company to conclude that material weaknesses existed in the Company's internal controls and procedures. The Company is in the process of implementing an enhanced system of internal controls and procedures designed to eliminate these recently discovered weaknesses including, among others: -- realignment of the reporting of the financial staff in all business units directly to the Corporate Controller's Office; -- adoption of a more frequent rotation policy for the operations and financial staff at the business unit level; -- implementation of an enhanced, stand-alone FCPA Compliance Program; -- implementation of an enhanced Whistle Blower policy; -- appointment of a senior-level Company employee reporting to the Audit Committee with primary responsibility for implementation, oversight and enforcement of Corporate Governance Policies; -- expansion of internal audit staff; -- internal control improvements related to cash disbursements; and -- expanded review by corporate tax personnel of all tax liability accounts on a quarterly basis. There is no assurance that enhanced controls and procedures will eliminate all future inaccuracies or potential violations of law. The Company has initiated certain recovery measures against some who have compromised the interests of the Company. The Company will continue with its recovery effort and is assessing all of its options in that regard. Expected Financial Restatement The previously announced financial restatements for the years ended December 31, 2002, and 2003, and the first three quarters of 2004 will incorporate the results of the Audit Committee's investigation, and a review of the Company's financial records. The estimated financial impact of those restatements on the referenced periods are expected to be as follows: For the year ended December 31, 2002, reductions in net income ranging from $4.3 to $5.0 million and consisting of: -- $3.1 to $3.3 million related to Bolivian taxes, penalties and interest; and -- $1.2 to $1.7 million related to underpayment of Nigerian payroll taxes and other accounting adjustments. For the year ended December 31, 2003, reductions in net income ranging from $1.5 to $2.1 million and consisting of: -- $1.0 to $1.3 million related to Bolivian taxes, penalties and interest; and -- $0.5 to $0.8 million related to underpayment of Nigerian payroll taxes and other accounting adjustments. For the three quarters ended September 30, 2004, reductions in net income ranging from $1.4 to $2.1 million and consisting of: -- $1.0 to $1.4 million related to Bolivian taxes, penalties and interest; and -- $0.4 to $0.7 million related to underpayment of Nigerian payroll taxes and other accounting adjustments. The total financial statement impact of the restatements for the periods discussed above is currently estimated to be a reduction in net income ranging from $7.2 to $9.2 million. During this same timeframe the Company recorded net income before restatements of approximately $20.8 million. Expected 2004 Results Based on current information, the Company expects to report a loss in the range of $11.5 to $12.0 million for the full year 2004. In addition to the restatement amounts noted above, full year 2004 results were negatively impacted by: -- increased reserves for accounts receivable and warranty work, primarily in Nigeria; -- reductions of estimated contract margins on work in progress at year- in Nigeria; and -- increases in general and administrative expenses related to external audit and Sarbanes-Oxley compliance. The investigation disclosed that during the years ended December 31, 2002, 2003 and 2004, the Company: (1) made related party payments of $33.2 million, and (2) recorded $10.8 million in revenue with respect to entities where Mr. Tillery appears to have had an ownership interest or over whose operations he appears to have exercised some level of control. The related party payments were mainly in connection with marine vessel charters, diving services and consulting services for projects in Nigeria, Bolivia and Ecuador. First Quarter 2005 As reported previously, the Company incurred costs of approximately $1.5 million associated with the performance of the Audit Committee's independent internal investigation through March 1, 2005. Total costs for the investigation in the quarter ended March 31, 2005 were approximately $4.0 million, including the previously reported amount. Currently, management expects to record revenue of approximately $135 to $140 million and a loss of approximately $5.0 to $7.0 million for the quarter ended March 31, 2005, including the costs for the internal investigation. In addition to the investigation costs noted above, first quarter 2005 results were negatively impacted by: -- increased contract and indirect costs in Nigeria; -- the Company declining to perform a contract in Ecuador; and -- lower than anticipated margins on liquids extracted at the Company's Opal facility. Estimates Subject To Change All of the estimates presented above are subject to change based upon the further review and analysis of the results of the Audit Committee's investigation by management and the Company's external auditors. Guidance For 2005 The Company is withdrawing its guidance for the remainder of 2005 due to the following uncertainties associated with its operations this year: -- ongoing costs associated with current and anticipated investigations; -- increased costs associated with actions taken to improve internal controls; and -- potential negative impact on contract margins in Nigeria due to changes in management, business relationships and business practices. Credit Facility Based on the anticipated results for 2004 and the first quarter of 2005, the Company expects to have a technical default under its Credit Agreement related to non-compliance with a financial covenant. The Company is currently working with its banks to obtain a waiver of this covenant and believes that it will obtain the waiver. However, until this waiver is finalized, the Company cannot access the credit facility for the issuance of new letters of credit or borrowings. There are no borrowings under the credit facility as of this date and there are currently approximately $45 million in letters of credit outstanding under the facility. Willbros Group, Inc. is an independent contractor serving the oil, gas and power industries, providing engineering and construction, and facilities development and operations services to industry and government entities worldwide. WORLDCOM INC: Gallegoses Can Pursue New Mexico Telemarketing Suit ----------------------------------------------------------------- Jerry, Lorraine and Angelica Gallegos ask the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow them to prosecute their lawsuit against the WorldCom, Inc. and its debtor-affiliates. Daniel Yohalem, Esq., in Sante Fe, New Mexico, relates that on September 7, 2001, the Gallegoses filed a lawsuit against WorldCom, Inc., in the United States District Court for the District of New Mexico. The Gallegoses seek compensatory damages, punitive damages and attorney's fees under federal law of the injuries they suffered as a result of the Debtors' "illegal telemarketing activities." Mr. Yohalem asserts that the Gallegoses suffered emotional distress when an MCI telemarketer, acting on the job and within the scope of his employment, made a racially motivated obscene and threatening phone call to the Gallegoses in their home. The telemarketer's behavior was directly attributable to the Debtors' improper hiring, training, supervision, compensation and disciplinary practices. The Gallegoses filed proofs of claim against the Debtors in connection with the incident: Claimant Claim Amount -------- ------------ Jerry Gallegos $200,000 Lorraine Gallegos 250,000 Angelica Gallegos 150,000 Debtors Object Mark A. Shaiken, Esq., at Stinson Morrison Hecker LLP, in Kansas City, Missouri, points out that the automatic stay was terminated upon the discharge of the Debtors, no later than the Effective Date of the Plan of Reorganization on April 20, 2004. The stay was replaced by the permanent injunction of Section 524(a)(2) of the Bankruptcy Code. Thus, for the Gallegoses' request to be granted, Mr. Shaiken says, the Gallegoses would have to obtain relief from the effect and operation of the Confirmation Order, not relief from the automatic stay. However, Mr. Shaiken points out that no relief from the Confirmation Order is available to the Gallegoses. "The Gallegoses did not address any of the grounds for relief from a final order as set forth in Rule 60(b) of the Federal Rules of Civil Procedure." Parties Stipulate To resolve their dispute, the Debtors and the Gallegoses stipulate and agree that the automatic stay and the Section 524(a) discharge injunction will be modified to the extent applicable, to allow the Gallegoses to litigate the issues in the Mexico Action to completion in the United States District Court for the District of New Mexico. The parties will be permitted to pursue any appeals of any decisions from the New Mexico Court to any federal court with appellate jurisdiction over the New Mexico Court, for the sole purpose of establishing the amount of each of the claims. Upon the entry of a Final Judgment or order determining the Claim Amount, the provisions of the Plan will govern the allowance and payment of all or a portion of the Claim Amount. The Gallegoses will not be permitted to collect any portion of the Claim Amount except through distributions under the Plan. The Automatic Stay and the Discharge Injunction will remain in full force and effect with respect to the Collection Efforts. Judge Gonzalez approves the Parties' Stipulation. 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. 90; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Court Approves Mississippi Tax Settlement Pact ------------------------------------------------------------ The Reorganized WorldCom, Inc. and its debtor-affiliates ask the Court to approve their settlement agreement with the State of Mississippi with respect to certain tax claims. Mississippi filed claims, arising out of a WorldCom royalty program, including Claim Nos. 38127, 38134, 38135, 38136 and 38343. Mississippi has agreed to withdraw Claim Nos. 38135, 38136 and 38127. Mississippi asserts approximately $1 billion in taxes, penalties and interest relating to the Claims. The Reorganized Debtors have objected to the Claims. After extended negotiations, the Reorganized Debtors and Mississippi agreed to resolve all disputes related to the Claims and certain other issues. The salient terms of the Settlement Agreement are: (a) The Claims will be disallowed, dismissed and expunged in full and with prejudice. Mississippi will release the Reorganized Debtors from all claims relating in any way to the Tax Claims. Any claim related to the Royalty Program and the Reorganized Debtors' obligation to pay taxes, interest, and penalties relating to the Royalty Program are released. (b) Mississippi's surviving claims are unrelated to the Royalty Program: Creditor Claim No. Claim Amount -------- --------- ------------ Mississippi State Treasurer N/A $364,866 Mississippi Corporate Income and Franchise N/A 6,174 State of Mississippi N/A 3,148 Mississippi Dept. of IT Services 12435 62,870 (c) The Reorganized Debtors will pay these amounts and transfer property to or for Mississippi's benefit, as payments of tax and interest and not as penalties: Creditor Amount/Property -------- --------------- Mississippi $100,000,000 A WorldCom building and adjacent property located at 515 Amite, in Jackson, Mississippi Attorneys acting as Special Assistant Attorneys General for Mississippi $14,000,000 Children's Justice Center of Mississippi $4,200,000 (d) In the event that Mississippi files an action against a non-released third party relating to the Tax Claims or the Royalty Program, and the third party brings a claim against MCI or other released parties for contribution or indemnification, the Agreement includes a mechanism to prevent any further liability to MCI or other released parties, through a reduction of any recovery by Mississippi from the non-released party. Mississippi may also be required to transfer to MCI rights to the proceeds of any award to Mississippi against a non-released party, if necessary to ensure that MCI has no liability to a non- released party. MCI must pay its own defense costs if a contribution or indemnification claim is brought against it by a non-released party, and must use its reasonable best efforts to defend any action. (e) Except as provided, all parties will bear their own costs, expenses and fees. (f) The Parties agreed to certain technical tax, accounting and related issues necessary to: -- resolve all Claims for tax years ending on or before December 31, 2002, on a final basis; and -- agree on Mississippi's treatment of discrete tax issues for tax years after 2002. Jerome L. Epstein, Esq., at Jenner & Block LLP, in Washington, D.C., points out that the Agreement furthers the interest of creditors at large in several ways. It settles Mississippi's Claims for approximately $900 million less than the total amount claimed or demanded. By resolving disputed claims issues without litigation, the Agreement reduces transaction costs and expedites resolution of one of the most significant claims remaining in the claims resolution process. * * * The Court approved the settlement agreement. 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. 91; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOND PRICING: For the week of May 16 - May 20, 2005 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 46 ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 6 Adelphia Comm. 6.000% 02/15/06 6 Advanced Access 10.750% 06/15/11 72 Aetna Industries 11.875% 10/01/06 7 Allegiance Tel. 11.750% 02/15/08 21 Allegiance Tel. 12.875% 05/15/08 1 Allied Holdings 8.625% 10/01/07 48 Amer. & Foreign Power 5.000% 03/01/30 73 Amer. Color Graph. 10.000% 06/15/10 64 Amer. Plumbing 11.625% 10/15/08 14 Amer. Restaurant 11.500% 11/01/06 60 Amer. Tissue Inc. 12.500% 07/15/06 2 American Airline 7.377% 05/23/19 66 American Airline 7.379% 05/23/16 68 American Airline 8.839% 01/02/17 70 American Airline 8.800% 09/16/15 74 American Airline 10.180% 01/02/13 70 American Airline 10.190% 05/26/16 73 American Airline 10.600% 03/04/09 66 American Airline 10.680% 03/04/13 65 Ames True Temper 10.000% 07/15/12 74 Amkor Tech Inc. 5.680% 03/15/07 70 Amkor Tech Inc. 7.125% 03/15/11 72 Amkor Tech Inc. 7.750% 05/15/13 73 Amkor Tech Inc. 10.500% 05/01/09 72 AMR Corp. 4.500% 02/15/24 70 AMR Corp. 9.200% 01/30/12 71 AMR Corp. 9.750% 08/15/21 61 AMR Corp. 9.800% 10/01/21 64 AMR Corp. 9.880% 06/15/20 62 AMR Corp. 10.000% 04/15/21 66 AMR Corp. 10.125% 06/01/21 68 AMR Corp. 10.150% 05/15/20 60 AMR Corp. 10.200% 03/15/20 62 AMR Corp. 10.290% 03/08/21 63 AMR Corp. 10.400% 03/15/11 62 AMR Corp. 10.450% 11/15/11 63 Anadigics 5.000% 10/15/09 65 Apple South Inc. 9.750% 06/01/06 20 Armstrong World 6.350% 08/15/03 72 Armstrong World 6.500% 08/15/05 73 AT Home Corp. 0.525% 12/28/18 22 AT Home Corp. 4.750% 12/15/06 30 ATA Holdings 12.125% 06/15/10 45 ATA Holdings 13.000% 02/01/09 45 Atlantic Coast 6.000% 02/15/34 16 Atlas Air Inc. 8.770% 01/02/11 29 Atlas Air Inc. 9.702% 01/02/08 51 Autocam Corp. 10.875% 06/15/14 73 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 8 BBN Corp. 6.000% 04/01/12 0 Bearingpoint Inc. 2.500% 12/15/24 72 Bearingpoint Inc. 2.750% 12/15/24 72 Bethlehem Steel 10.375% 09/01/03 0 Broadband Tech. 5.000% 05/15/01 0 Budget Group Inc. 9.125% 04/01/06 0 Burlington Northern 3.200% 01/01/45 61 Burlington Inds. 7.250% 08/01/27 4 Calpine Corp. 4.000% 12/26/06 73 Calpine Corp. 4.750% 11/15/23 47 Calpine Corp. 7.750% 04/15/09 47 Calpine Corp. 7.875% 04/01/08 47 Calpine Corp. 8.500% 07/15/10 66 Calpine Corp. 8.500% 02/15/11 51 Calpine Corp. 8.625% 08/15/10 47 Calpine Corp. 8.750% 07/15/07 56 Calpine Corp. 8.750% 07/15/13 70 Calpine Corp. 9.875% 12/01/11 66 Calpine Corp. 10.500% 05/15/06 75 Charter Comm Hld. 8.625% 04/01/09 69 Charter Comm Hld. 9.625% 11/15/09 68 Charter Comm Hld. 10.000% 04/01/09 72 Charter Comm Hld. 10.000% 05/15/11 65 Charter Comm Hld. 10.250% 01/15/10 67 Charter Comm Hld. 10.750% 10/01/09 69 Charter Comm Hld. 11.125% 01/15/11 70 Chic East ILL RR 5.000% 01/01/54 55 Coeur D'Alene 1.250% 01/15/24 67 Collins & Aikman 10.750% 12/31/11 42 Comcast Corp. 2.000% 10/15/29 42 Comdisco Inc. 7.230% 08/16/01 0 Comprehens Care 7.500% 04/15/10 0 Continental Airlines 7.461% 04/01/13 73 Corecomm Limited 6.000% 10/01/06 5 Covad Communication 3.000% 03/15/24 73 Cray Research 6.125% 02/01/11 34 Curagen Corp. 4.000% 02/15/11 57 Curative Health 10.750% 05/01/11 70 Delta Air Lines 2.875% 02/18/24 31 Delta Air Lines 7.299% 09/18/06 51 Delta Air Lines 7.700% 12/15/05 72 Delta Air Lines 7.711% 09/18/11 48 Delta Air Lines 7.779% 11/18/05 72 Delta Air Lines 7.779% 01/02/12 50 Delta Air Lines 7.900% 12/15/09 32 Delta Air Lines 7.920% 11/18/10 45 Delta Air Lines 8.000% 06/03/23 32 Delta Air Lines 8.270% 09/23/07 70 Delta Air Lines 8.300% 12/15/29 25 Delta Air Lines 8.540% 01/02/07 32 Delta Air Lines 8.540% 01/02/07 45 Delta Air Lines 9.000% 05/15/16 21 Delta Air Lines 9.200% 09/23/14 42 Delta Air Lines 9.250% 03/15/22 25 Delta Air Lines 9.300% 01/02/10 63 Delta Air Lines 9.300% 01/02/10 68 Delta Air Lines 9.300% 01/02/11 32 Delta Air Lines 9.320% 01/02/09 42 Delta Air Lines 9.750% 05/15/21 25 Delta Air Lines 10.000% 08/15/08 34 Delta Air Lines 10.000% 06/01/10 36 Delta Air Lines 10.000% 06/18/13 50 Delta Air Lines 10.060% 01/02/16 50 Delta Air Lines 10.125% 05/15/10 30 Delta Air Lines 10.140% 08/14/11 68 Delta Air Lines 10.140% 08/26/12 47 Delta Air Lines 10.375% 02/01/11 32 Delta Air Lines 10.375% 12/15/22 25 Delta Air Lines 10.430% 01/02/11 53 Delta Air Lines 10.500% 04/30/16 45 Delta Air Lines 10.790% 03/26/14 30 Delta Air Lines 10.790% 03/26/14 37 Delphi Auto System 7.125% 05/01/29 68 Delphi Corp. 6.500% 08/15/13 71 Delphi Trust II 6.197% 11/15/33 41 Diva Systems 12.625% 03/01/08 0 Duane Reade Inc. 9.750% 08/01/11 74 Dura Operating 9.000% 05/01/09 64 Dura Operating 9.000% 05/01/09 62 Duty Free Int'l 7.000% 01/15/04 25 DVI Inc. 9.875% 02/01/04 9 Eagle-Picher Inc. 9.750% 09/01/13 66 Eagle Food Center 11.000% 04/15/05 2 Edison Brothers 11.000% 09/26/07 0 Enron Corp. 6.400% 07/15/06 30 Enron Corp. 6.500% 08/01/02 33 Enron Corp. 6.625% 10/15/03 33 Enron Corp. 6.625% 11/15/05 33 Enron Corp. 6.725% 11/17/08 31 Enron Corp. 6.750% 09/01/04 31 Enron Corp. 6.750% 09/15/04 30 Enron Corp. 6.750% 07/01/05 0 Enron Corp. 6.750% 08/01/09 30 Enron Corp. 6.875% 10/15/07 32 Enron Corp. 6.950% 07/15/28 33 Enron Corp. 6.950% 07/15/28 30 Enron Corp. 7.000% 08/15/23 33 Enron Corp. 7.125% 05/15/07 34 Enron Corp. 7.375% 05/15/19 33 Enron Corp. 7.625% 09/10/04 29 Enron Corp. 7.875% 06/15/03 30 Enron Corp. 8.250% 09/15/12 1 Enron Corp. 8.375% 05/23/05 33 Enron Corp. 9.125% 04/01/03 33 Enron Corp. 9.875% 06/15/03 11 Epic Resorts LLC 13.000% 06/15/05 2 Evergreen Intl. Avi. 12.000% 05/15/10 71 Exide Tech. 10.500% 03/15/13 74 Exodus Comm. Inc. 10.750% 12/15/09 0 Exodus Comm. Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 42 Fedders North Am. 9.875% 03/01/14 64 Federal-Mogul Co. 7.375% 01/15/06 21 Federal-Mogul Co. 7.500% 01/15/09 21 Federal-Mogul Co. 8.120% 03/06/03 28 Federal-Mogul Co. 8.160% 03/06/03 27 Federal-Mogul Co. 8.250% 03/03/05 28 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.370% 11/15/01 28 Federal-Mogul Co. 8.460% 10/27/02 28 Federal-Mogul Co. 8.800% 04/15/07 20 Fibermark Inc. 10.750% 04/15/11 65 Finova Group 7.500% 11/15/09 43 Firstworld Comm 13.000% 04/15/08 1 Foamex L.P. 9.875% 06/15/07 49 Foamex LP/CAP 10.750% 04/01/09 75 Ford Motor Co 6.500% 08/01/18 75 Ford Motor Co 6.625% 02/15/28 71 Ford Motor Co 7.400% 11/01/46 70 Ford Motor Co 7.700% 05/15/97 71 Ford Motor Co 7.750% 06/15/43 72 Ford Motor Credit 5.750% 01/21/14 74 Ford Motor Credit 6.000% 03/20/14 75 Ford Motor Credit 6.000% 03/20/14 74 Ford Motor Credit 6.150% 01/20/15 74 Ford Motor Credit 6.250% 01/20/15 75 Ford Motor Credit 7.500% 08/20/32 74 Fruit of the Loom 8.875% 04/15/06 0 General Motors 7.400% 09/01/25 69 General Motors 8.100% 06/15/24 70 General Motors 8.250% 07/15/23 72 General Motors 8.375% 07/15/33 72 General Nutrition 8.500% 12/01/10 73 GMAC 5.100% 09/15/09 74 GMAC 5.250% 01/15/14 71 GMAC 5.350% 01/15/14 71 GMAC 5.700% 06/15/13 73 GMAC 5.700% 12/15/13 74 GMAC 5.750% 01/15/14 73 GMAC 5.850% 05/15/13 73 GMAC 5.850% 06/15/13 74 GMAC 5.850% 06/15/13 74 GMAC 5.850% 06/15/13 71 GMAC 5.900% 12/15/13 74 GMAC 5.900% 01/15/19 70 GMAC 5.900% 01/15/19 68 GMAC 5.900% 02/15/19 68 GMAC 5.900% 10/15/19 64 GMAC 6.000% 07/15/13 75 GMAC 6.000% 11/15/13 72 GMAC 6.000% 12/15/13 75 GMAC 6.000% 02/15/19 66 GMAC 6.000% 02/15/19 66 GMAC 6.000% 02/15/19 71 GMAC 6.000% 03/15/19 65 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 66 GMAC 6.000% 03/15/19 69 GMAC 6.000% 03/15/19 69 GMAC 6.000% 04/15/19 67 GMAC 6.000% 09/15/19 67 GMAC 6.000% 09/15/19 65 GMAC 6.050% 08/15/19 68 GMAC 6.050% 08/15/19 68 GMAC 6.050% 10/15/19 67 GMAC 6.100% 09/15/19 66 GMAC 6.125% 10/15/19 69 GMAC 6.150% 12/15/13 74 GMAC 6.150% 08/15/19 66 GMAC 6.150% 09/15/19 70 GMAC 6.150% 10/15/19 65 GMAC 6.200% 04/15/19 66 GMAC 6.250% 12/15/18 68 GMAC 6.250% 01/15/19 70 GMAC 6.250% 04/15/19 73 GMAC 6.250% 05/15/19 67 GMAC 6.250% 07/15/19 67 GMAC 6.300% 08/15/19 70 GMAC 6.300% 08/15/19 68 GMAC 6.350% 04/15/19 67 GMAC 6.350% 07/15/19 68 GMAC 6.350% 07/15/19 73 GMAC 6.400% 12/15/18 72 GMAC 6.400% 11/15/19 70 GMAC 6.400% 11/15/19 67 GMAC 6.500% 06/15/18 69 GMAC 6.500% 11/15/18 69 GMAC 6.500% 12/15/18 72 GMAC 6.500% 12/15/18 70 GMAC 6.500% 05/15/19 72 GMAC 6.500% 02/15/20 72 GMAC 6.600% 08/15/16 74 GMAC 6.600% 05/15/18 71 GMAC 6.600% 06/15/19 75 GMAC 6.600% 06/15/19 70 GMAC 6.650% 06/15/18 71 GMAC 6.650% 10/15/18 74 GMAC 6.650% 10/15/18 74 GMAC 6.650% 02/15/20 74 GMAC 6.700% 08/15/16 73 GMAC 6.700% 06/15/18 72 GMAC 6.700% 06/15/18 72 GMAC 6.700% 11/15/18 70 GMAC 6.700% 06/15/19 72 GMAC 6.700% 12/15/19 71 GMAC 6.750% 07/15/16 73 GMAC 6.750% 08/15/16 73 GMAC 6.750% 09/15/16 73 GMAC 6.750% 03/15/18 75 GMAC 6.750% 07/15/18 71 GMAC 6.750% 09/15/18 74 GMAC 6.750% 10/15/18 75 GMAC 6.750% 11/15/18 75 GMAC 6.750% 05/15/19 73 GMAC 6.750% 06/15/19 74 GMAC 6.750% 06/15/19 71 GMAC 6.750% 06/15/19 74 GMAC 6.800% 09/15/18 72 GMAC 6.800% 10/15/18 74 GMAC 6.875% 07/15/18 74 GMAC 6.900% 06/15/17 73 GMAC 6.900% 07/15/18 73 GMAC 6.900% 08/15/18 72 GMAC 7.000% 06/15/16 74 GMAC 7.000% 06/15/16 74 GMAC 7.000% 05/15/17 74 GMAC 7.000% 06/15/17 73 GMAC 7.000% 07/15/17 74 GMAC 7.000% 07/15/17 74 GMAC 7.000% 02/15/18 74 GMAC 7.000% 05/15/18 74 GMAC 7.000% 08/15/18 73 GMAC 7.000% 02/15/21 70 GMAC 7.000% 09/15/21 70 GMAC 7.000% 06/15/22 70 GMAC 7.000% 11/15/23 74 GMAC 7.000% 11/15/24 72 GMAC 7.000% 11/15/24 67 GMAC 7.000% 11/15/24 68 GMAC 7.000% 04/15/18 74 GMAC 7.125% 04/15/17 73 GMAC 7.125% 07/15/17 75 GMAC 7.125% 10/15/17 74 GMAC 7.150% 07/15/17 75 GMAC 7.150% 01/15/25 68 GMAC 7.150% 03/15/25 70 GMAC 7.250% 09/15/17 75 GMAC 7.250% 04/15/18 75 GMAC 7.250% 08/15/18 74 GMAC 7.250% 09/15/18 72 GMAC 7.250% 01/15/25 72 GMAC 7.250% 03/15/25 73 GMAC 7.300% 12/15/15 68 GMAC 7.300% 01/15/18 75 GMAC 7.375% 04/15/17 74 GMAC 7.375% 04/15/18 73 GMAC 7.500% 12/15/16 75 Golden Books Pub 10.750% 12/31/04 1 Golden Northwest 12.000% 12/15/06 10 Graftech Int'l 1.625% 01/15/24 60 Graftech Int'l 1.625% 01/15/24 63 GST Network Funding 10.500% 05/01/08 0 Guilford Pharma 5.000% 07/01/08 74 Gulf States STL 13.500% 04/15/03 0 HNG Internorth. 9.625% 03/15/06 31 Icon Health & Fit 11.250% 04/01/12 71 Icos Corp. 2.000% 07/01/23 71 Idine Rewards 3.250% 10/15/23 75 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 03/15/11 74 Inland Fiber 9.625% 11/15/07 50 Intermet Corp. 9.750% 06/15/09 51 Intermune Inc. 0.250% 03/01/11 70 Iridium LLC/CAP 10.875% 07/15/05 16 Iridium LLC/CAP 11.250% 07/15/05 16 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 16 Isis Pharmaceutical 5.500% 05/01/09 75 Jordan Industries 10.375% 08/01/07 50 Kaiser Aluminum & Chem. 12.750% 02/01/03 12 Key Plastics 10.250% 03/15/07 1 Kmart Corp. 6.000% 01/01/08 12 Kmart Corp. 8.990% 07/05/10 70 Kmart Corp. 9.350% 01/02/20 25 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 40 Kulicke & Soffa 0.500% 11/30/08 66 Lehman Bros. Holding 6.000% 05/25/05 68 Lehman Bros. Holding 7.500% 09/03/05 36 Level 3 Comm. Inc. 2.875% 07/15/10 45 Level 3 Comm. Inc. 6.000% 09/15/09 47 Level 3 Comm. Inc. 6.000% 03/15/10 43 Liberty Media 3.750% 02/15/30 55 Liberty Media 4.000% 11/15/29 60 Loral Cyberstar 10.000% 07/15/06 74 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 MacSaver Financial 7.875% 08/01/03 5 Metaldyne Corp. 11.000% 06/15/12 69 Metamor Worldwide 2.940% 08/15/04 1 Mirant Corp. 2.500% 06/15/21 70 Mirant Corp. 5.750% 07/15/07 72 Mississippi Chem. 7.250% 11/15/17 4 Molten Metal Tec 5.500% 05/01/06 0 Muzak LLC 9.875% 03/15/09 42 MSX Intl. Inc. 11.375% 01/15/08 67 New Orl Grt N RR 5.000% 07/01/32 72 North Atl Trading 9.250% 03/01/12 71 Northern Pacific Railway 3.000% 01/01/47 62 Northwest Airlines 7.626% 04/01/10 70 Northwest Airlines 7.875% 03/15/08 46 Northwest Airlines 8.070% 01/02/15 53 Northwest Airlines 8.130% 02/01/14 50 Northwest Airlines 8.700% 03/15/07 59 Northwest Airlines 8.875% 06/01/06 71 Northwest Airlines 8.970% 01/02/15 62 Northwest Airlines 9.875% 03/15/07 61 Northwest Airlines 10.000% 02/01/09 48 Northwest Airlines 10.500% 04/01/09 69 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 74 NWA Trust 9.360% 03/10/06 75 NWA Trust 11.300% 12/21/12 67 Oakwood Homes 7.875% 03/01/04 17 Oakwood Homes 8.125% 03/01/09 24 Oscient Pharm 3.500% 04/15/11 74 O'Sullivan Ind. 13.375% 10/15/09 36 Orion Network 11.250% 01/15/07 50 Orion Network 12.500% 01/15/07 54 Outboard Marine 9.125% 04/15/17 1 Owens Corning 7.000% 03/15/09 65 Owens Corning 7.500% 05/01/05 68 Owens Corning 7.500% 08/01/18 73 Owens Corning Fiber 8.875% 06/01/02 75 Pegasus Satellite 9.625% 10/15/05 58 Pegasus Satellite 12.375% 08/01/06 56 Pegasus Satellite 12.500% 08/01/07 58 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 61 Penn Traffic Co. 11.000% 06/29/09 46 Pharm Resources 2.875% 09/30/10 74 Piedmont Aviat 9.900% 11/08/06 8 Piedmont Aviat 10.000% 11/08/12 0 Piedmont Aviat 10.250% 01/15/07 23 Pixelworks Inc. 1.750% 05/15/24 68 Polaroid Corp. 6.750% 01/15/02 1 Polaroid Corp. 7.250% 01/15/07 1 Polaroid Corp. 11.500% 02/15/06 1 Portola Packaging 8.250% 02/01/12 63 Primedex Health 11.500% 06/30/08 45 Primus Telecom 3.750% 09/15/10 25 Primus Telecom 5.750% 02/15/07 35 Primus Telecom 8.000% 01/15/14 53 Primus Telecom 12.750% 10/15/09 46 Psinet Inc 10.000% 02/15/05 0 Psinet Inc 11.500% 11/01/08 0 Railworks Corp. 11.500% 04/15/09 0 Radnor Holdings 11.000% 03/15/10 61 RDM Sports Group 8.000% 08/15/03 0 Read-Rite Corp. 6.500% 09/01/04 56 Reliance Group Holdings 9.000% 11/15/00 18 Reliance Group Holdings 9.750% 11/15/03 4 Rite Aid Corp. 6.875% 12/15/28 69 Rite Aid Corp. 7.700% 02/15/27 74 RJ Tower Corp. 12.000% 06/01/13 54 Salton Inc. 10.750% 12/15/05 45 Salton Inc. 12.250% 04/15/08 36 Silicon Graphics 6.500% 06/01/09 66 Solectron Corp. 0.500% 02/15/34 67 Solutia Inc. 7.375% 10/15/27 74 Specialty Paperb. 9.375% 10/15/06 65 Startec Global 12.000% 05/15/08 0 Syratech Corp. 11.000% 04/15/07 32 Tekni-Plex Inc. 12.750% 06/15/10 65 Teligent Inc. 11.500% 03/01/08 1 Tops Appliance 6.500% 11/30/03 0 Tower Automotive 5.750% 05/15/24 20 Trans Mfg Oper 11.250% 05/01/09 50 Triton PCS Inc. 8.750% 11/15/11 61 Triton PCS Inc. 9.375% 02/01/11 62 Tropical SportsW 11.000% 06/15/08 35 United Air Lines 6.831% 09/01/08 18 United Air Lines 6.932% 09/01/11 53 United Air Lines 7.270% 01/30/13 41 United Air Lines 7.811% 10/01/09 40 United Air Lines 8.030% 07/01/11 24 United Air Lines 8.250% 04/26/08 20 United Air Lines 8.390% 01/21/11 54 United Air Lines 8.700% 10/07/08 45 United Air Lines 9.000% 12/15/03 6 United Air Lines 9.020% 04/19/12 32 United Air Lines 9.060% 09/26/14 45 United Air Lines 9.125% 01/15/12 7 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.300% 03/22/08 38 United Air Lines 9.560% 10/19/18 38 United Air Lines 9.750% 08/15/21 8 United Air Lines 10.110% 01/05/06 42 United Air Lines 10.110% 02/19/06 42 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 07/15/21 7 United Air Lines 10.360% 11/13/12 54 United Air Lines 10.670% 05/01/04 7 United Air Lines 11.210% 05/01/14 8 Univ. Health Services 0.426% 06/23/20 64 United Homes Inc. 11.000% 03/15/05 0 Uromed Corp. 6.000% 10/15/03 0 US Air Inc. 9.330% 01/01/06 42 US Air Inc. 10.250% 01/15/07 5 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 6 US Air Inc. 10.700% 01/15/07 23 US Air Inc. 10.900% 01/01/08 3 US Airways Inc. 7.960% 01/20/18 48 US West Cap. 6.500% 11/15/18 73 US West Cap. Fdg 6.875% 07/15/28 71 Utstarcom 0.875% 03/01/08 60 Venture Hldgs 9.500% 07/01/05 1 Visteon Corp. 7.000% 03/10/14 63 WCI Steel Inc. 10.000% 12/01/04 69 Westpoint Stevens 7.875% 06/15/05 0 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 50 Winstar Comm 14.000% 10/15/05 1 Winstar Comm Inc. 10.000% 03/15/08 0 World Access Inc. 4.500% 10/01/02 7 World Access Inc. 13.250% 01/15/08 6 Xerox Corp. 0.570% 04/21/18 47 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili, Jr., and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***