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/raid1/www/Hosts/bankrupt/TCR_Public/050608.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 8, 2005, Vol. 9, No. 134 Headlines AAIPHARMA INC: Obtains Court Approval on $210 Mil. DIP Financing ADELPHIA COMMS: Selling Puerto Rico Cable Operations for $520 Mil. ADIRONDACK 2005-1: Moody's Rates $5 Million Class E Notes at Ba3 AJPM INVESTMENT: Case Summary & 3 Largest Unsecured Creditors ALABAMA METAL: Moody's Assigns B1 Rating to $130 MM Term Loan ALOHA AIRGROUP: Wants to Assume Sabre Consulting Agreement AMERICAN MEDICAL: Voluntary Chapter 11 Case Summary AMERIQUEST MORTGAGE: Fitch Rates $11M Class M Certs. at BB+ AMPHENOL CORP: Good Performance Prompts S&P to Upgrade Ratings ARGONAUT TECH: Completes $21.2 Million Asset Sale to Biotage AB ARUNBHAI PATEL: Case Summary & 10 Largest Unsecured Creditors ATA AIRLINES: Gets Court Nod to Assume GATX Ancillary Agreements ATA AIRLINES: Can Assume Continental Interline Agreement ATRIUM COMPANIES: Moody's Junks $174 Million Senior Discount Notes AVNET INC: SEC OKs Voluntary Delisting from Pacific Stock Exchange BAKER MOTORS: Case Summary & 20 Largest Unsecured Creditors BRAND SERVICES: Moody's Junks $150 Mil. Senior Subordinated Notes BRASOTA MORTGAGE: Committee Hires Foley & Lardner as Counsel BUILDERS PLUMBING: Chapter 7 Trustee Hires KPMG as Tax Consultant CAROLINA TOBACCO: Wants Court to Allow Fund Transfer CATHOLIC CHURCH: Portland's Exclusive Periods Extended to Dec. 31 CATHOLIC CHURCH: Ct. OKs Tucson's 3rd Amended Disclosure Statement CLARENT CORP: Trustee Has Until Aug. 26 to File Notices of Removal CLARENT CORP: Trustee Has Until Sept. 30 to Object to Claims COLLINS & AIKMAN: Aspen Reports 8.37% Stake in Collins & Aikman CONTINENTAL AIRLINES: Closes New $300 Mil. Secured Loan Facility DELTA AIR: May 2005 System Traffic Up 9.4% From Last Year DP 8 LLC: Vanderbilt Farms Files Plan of Reorganization DP 8 LLC: Interest Holders Tap Kevin Petersen as Manager EDDIE BAUER: Moody's Rates $300M Guaranteed Sec. Term Loan at Ba3 EDDIE BAUER: S&P Rates Proposed $300 Million Sr. Sec. Loan at B+ ENRON CORP: Asks SEC to Authorize Financing Until July 31, 2008 ENRON CORP: Calyon S.A. Holds $3.874 Million Allowed Claim ENRON CORP: China Basin Holds $1.5 Million Allowed Unsecured Claim EXIDE TECH: In Talks to Amend $365 Million Credit Facility FFCA SECURED: Fitch Junks 9 Classes of Franchise Loan Trusts FMC CORP: Moody's Reviews Ba1 Sr. Implied Rating & May Upgrade FRIENDSHIP VILLAGE: New Debt Cues Fitch to Lower Rating to BB+ GLOBAL CROSSING: Eight Securities Fraud Plaintiffs Amend Complaint GRAY TELEVISION: S&P Rates Proposed $400M Sr. Sec. Loan at BB- HEILIG-MEYERS: Court Approves Amended Disclosure Statement HIGH VOLTAGE: Wants to Hire Chanin Capital as Financial Advisor HIGH VOLTAGE: Equity Committee Taps Anderson Kill as Counsel HOUSTON RAMIREZ: Case Summary & 5 Largest Unsecured Creditors IMPAC FUNDING: Asset Deterioration Prompts Fitch to Lower Ratings JAPAN PACIFIC: Court Conditionally Approves Disclosure Statement KAISER ALUMINUM: Wants to Alter Ordinary Course Professional Order KERR GROUP: Sale Completion Cues S&P to Cut & Withdraw Ratings LITTLE LADY: Case Summary & 20 Largest Unsecured Creditors LTX CORP: Posts $45.7 Million Net Loss in Third Quarter 2005 MAGRUDER COLOR: Gets Interim Order on DIP Loans & Cash Collateral MAGRUDER COLOR: Look for Bankruptcy Schedules on July 18 MARIA BUITRON: Voluntary Chapter 11 Case Summary MERIDIAN AUTOMOTIVE: Two Claimants Balk at Reclamation Protocol MERRILL LYNCH: $4.1M Class B Certs. Get Low-B Rating from Fitch MISSALA MARINE: Case Summary & 17 Largest Unsecured Creditors MORTGAGE ASSET: Fitch Rates $412K Privately Offered Certs. at BB NAKOMA RESORT: Case Summary & 60 Largest Unsecured Creditors NEFF CORP: $500M Odyssey Sale Completion Cues S&P to Remove Watch NORTH AMERICAN: Wants Court to Approve Conduit Sales to Mittal NORTHWEST AIRLINES: May 2005 Load Factor Up 2.9 Points From 2004 O-CEDAR HOLDINGS: Chapter 7 Trustee Wants to Probe Stonebridge PACIFIC GAS: Inks Pact Releasing $7.2MM From San Francisco Escrow PARK PLACE: Fitch Rates $23.4 Mil. Privately Offered Certs. at BB PKCI: Case Summary & 23 Largest Unsecured Creditors PNM RESOURCES: Completes $1.024 Billion TNP Acquisition POWER COMMUNICATION: Case Summary & 52 Largest Unsecured Creditors PROVIDIAN FINANCIAL: Fitch Places Ratings on Watch Positive PROVIDIAN FINANCIAL: Wash. Mutual Sale Cues S&P to Watch Ratings PROVIDIAN NATIONAL: Moody's Reviews Junk Security Rating PURADYN FILTER: Files Plan of Compliance to Continue AMEX Listing ROOMSTORE INC: Emerges from Chapter 11 Protection SALOMON BROTHERS: Adequate Credit Support Cues S&P to Hold Ratings SEQUOIA MORTGAGE: Credit Enhancement Cues Fitch to Affirm Ratings SOLUTIA INC: Reaches Restructuring Proposal with Monsanto & Panel SPANISH BROADCASTING: Moody's Assigns B2 Rating to $100M Term Loan SPIKES ENTERPRISES: Case Summary & 4 Largest Unsecured Creditors S.R.P. HOSPITALITY: Case Summary & 20 Largest Unsecured Creditors SURFNET MEDIA: Delays Annual Report Filing to Complete Audit TESORO PETROLEUM: Moody's Reviews B2 Sr. Sub. Debt Rating TENAYA INVESTMENTS: Voluntary Chapter 11 Case Summary TEXAS-NEW: PNM Sale Completion Cues S&P to Lift Ratings TNP ENTERPRISES: To Redeem 10.25% Sr. Sub. Notes on July 6 UAL CORP: Posts $1.1 Billion Net Loss in First Quarter 2005 UAL CORP: PBGC Says Pension Plan Termination Doesn't Violate ERISA UAL CORP: Machinists Support Attendants on PBGC Stay Ruling US AIRWAYS: Pilots Hold Joint Session on America West Merger US AIRWAYS: May 2005 Revenue Passenger Miles Up 2% From Last Year VALENTINE PAPER: Case Summary & 20 Largest Unsecured Creditors VERITAS FINANCIAL: Taps Stewart Occhipinti as Litigation Counsel WELLS FARGO: Fitch Affirms Low-B Ratings on 4 Class-B Certificates WESTPOINT STEVENS: Gets Court Nod to Settle Nan Ya Litigation WINN-DIXIE: Wants Exclusive Plan Filing Period Extended to Oct. 19 WINN-DIXIE: Proposes Uniform Asset Sale Bidding Procedures WINN-DIXIE: Wants to Reject Four Contracts Effective June 16 * Chadbourne & Parke Expands Insurance Team with Five New Partners * Upcoming Meetings, Conferences and Seminars ********* AAIPHARMA INC: Obtains Court Approval on $210 Mil. DIP Financing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave aaiPharma Inc. and its debtor-affiliates authority to enter into a $210 million debtor-in-possession credit agreement with Silver Point Finance, LLC, as collateral agent, Bank of America, N.A., as a lender and as administrative agent for a group of lenders comprised of: * Sea Pines Funding LLC, * TRS Thebe LLC, * SIL Loan Funding LLC, * SPCP Group LLC, * SPF CDO I, LLC and * Goldman Sachs Credit Partners, L.P. Of the $210 million: -- $180 million will be used to replace the company's existing senior credit facility; and -- about $27 million will be used to finance continuing operations during the company's reorganization process. The DIP Facility will help ensure that vendors, suppliers and other business partners will continue to be paid under normal terms for goods and services provided during the period while the company is operating in chapter 11. Terms of the Postpetition Credit Agreement The Debtors' obligations under the DIP Facility is secured by: -- 100% of the capital stock of the Company's domestic subsidiaries; -- 65% of the capital stock of the Company's first-tier foreign subsidiaries; and -- all of the Company's assets and the assets of aaiPharma's existing and future domestic subsidiaries. Events of Default The Debtors will be in default under the DIP Facility if: a) they deviate from a budget negotiated among the parties, b) they fail to meet the sale process deadlines related to the proposed sale of the Company's Pharmaceuticals Division, c) the cases are converted to chapter 7 liquidation proceedings or a chapter 11 trustee is appointed, d) they grant certain other superpriority administrative expense claims or non-permitted liens or the liens securing the DIP Facility are invalidated, e) the Bankruptcy Court orders approving the DIP Facility are stayed, amended, or reversed, f) a plan of reorganization is confirmed or the chapter 11 cases are dismissed, or g) relief from the automatic stay is granted to a secured creditor allowing foreclosure or repossession of assets of the Company and its domestic subsidiaries with a book value in excess of a negotiated amount. Headquartered in Wilmington, North Carolina, aaiPharma Inc. -- http://aaipharma.com/-- provides product development services to the pharmaceutical industry and sells pharmaceutical products which primarily target pain management. AAI operates two divisions: AAI Development Services and Pharmaceuticals Division. The Company and eight of its debtor-affiliates filed for chapter 11 protection on May 10, 2005 (Bankr. Del. Case Nos. 05-11341 to 05-11350). Karen McKinley, Esq. and Mark D. Collins, Esq. at Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, the reported consolidated assets amounting to $323,323,000 and consolidated debts totaling $446,693,000. ADELPHIA COMMS: Selling Puerto Rico Cable Operations for $520 Mil. ------------------------------------------------------------------ Adelphia Communications Corporation (OTC: ADELQ) and ML Media Partners, L.P., entered into an agreement with a new entity (formed by MidOcean Partners, a New York and London-based private equity firm and its partner, Crestview Partners, a New York-based private equity firm) to sell their jointly owned San Juan Puerto Rico area cable operations. Under the terms of the transaction, MidOcean and Crestview will pay $520 million subject to customary purchase price adjustments, which equates to approximately $3,800 per subscriber. The system serves approximately 137,000 customers in the greater San Juan area. The transaction, once completed, will create a strong, stable operation that will continue to improve cable services in the San Juan area in ways that benefit its customers, its investors and the community. "We are extremely pleased to enter into this agreement with MidOcean and Crestview, who have a proven ability for employing their skills in concert with management teams at their portfolio companies to build stronger businesses," said Bill Schleyer, chairman and CEO of Adelphia. "They have the necessary cable sector expertise to provide our customers in Puerto Rico with opportunities for continued service improvements and the launch of advanced services through an upgraded cable system." "This is a positive deal for everyone involved," said Elizabeth McNey Yates, a partner in RP Media Management, the managing general partner of ML Media Partners, LP. "MidOcean and Crestview will acquire an attractive business and our Puerto Rico employees and management, who have worked hard to improve the operational and service performance of the systems, will benefit from an experienced and well-funded ownership group." Tyler Zachem, a managing director at MidOcean Partners, said, "This transaction is the culmination of a long and complex process which we began over a year ago. The operation has an excellent management team in place and dedicated employees who have helped to build this company over the years. We are excited about the opportunity to work with the team at Crestview to continue building on the company's previous successes." Cable industry veteran and Crestview Managing Director Jeffrey A. Marcus said, "We look forward to working with the team in Puerto Rico to optimize the potential of the cable television system. Cable is a core competency for Crestview and we are delighted to be partnering with MidOcean in this venture." "We are pleased to have arrived at a solution that benefits our customers and our 350 dedicated employees in Puerto Rico," added Mr. Schleyer. "We have been working with ML Media to identify the most appropriate manner to sell the joint venture and are pleased to have reached an agreement that maximizes the value to be realized from the venture. We are confident that this new ownership structure will be viewed as great news by all concerned in Puerto Rico. We're grateful to our employees for their exceptional performance under challenging circumstances." Since Sept. 30, 2002, the joint venture between Adelphia and ML Media Partners that owns and operates the Puerto Rico systems has been under Chapter 11 bankruptcy protection, separately administered from the larger Chapter 11 bankruptcy of Adelphia Communications. The Puerto Rico Joint Venture was not included in the previously announced asset sale of Adelphia Communications Corporation to Comcast Corporation and Time Warner Inc. The transaction is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York, regulatory approvals, financing by the buying group and other customary closing conditions. The closing of the transaction is expected to occur sometime in the fourth quarter of this year. Until the deal is completed, Adelphia will continue to manage daily operations. Advisors Lazard acted as financial advisors to Adelphia. Daniels & Associates acted as financial advisors to ML Media Partners. Willkie Farr & Gallagher acted as legal advisors to Adelphia for the transaction and the bankruptcy process. Proskauer Rose acted as legal advisor to ML Media Partners, L.P. for the transaction and the bankruptcy process. DH Capital acted as financial advisors for MidOcean and Crestview and Kirkland & Ellis acted as legal advisors for MidOcean and Crestview. Citigroup and JP Morgan are providing the debt financing. About ML Media Partners, L.P. ML Media Partners is a public limited partnership raised in 1986 to acquire, finance, hold, develop, improve, maintain, operate, lease, sell, exchange, dispose of and otherwise invest in and deal with media businesses and direct and indirect interests therein. ML Media Partners made direct operating investments in seven cable television systems, eleven radio stations and two network affiliated television stations. ML Media has liquidated all of its holdings with the exception of the cable properties in Puerto Rico. About MidOcean Partners MidOcean Partners -- http://www.midoceanpartners.com/-- is a premier private equity firm focused on the middle market. Based in New York and London, MidOcean is committed to investing in high- quality middle market companies with stable market positions and opportunities for growth in the United States and Europe. Targeted sectors include consumer and leisure, media and communications, business services, financial services and industrial sectors. MidOcean utilizes a broad foundation of expertise in its focus industries and its intercontinental platform to create value for its investors and partners. About Crestview Crestview Partners is a New York-based private equity firm established by Barry Volpert and Tom Murphy. Mr. Volpert and Mr. Murphy are former partners at Goldman, Sachs & Co. The firm is focused on investments in North America and Europe. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. ADIRONDACK 2005-1: Moody's Rates $5 Million Class E Notes at Ba3 ---------------------------------------------------------------- Moody's Investor Services announced today that it has rated these tranches of debt issued by Adirondack 2005-1, Ltd., a collateralized debt obligation. * Up to U.S. $1,070,100,000 Commercial Paper Notes (the "CP Notes") * U.S. $267,500,000 Class A-1LT-a Floating Rate Notes Due 2040 (the "Class A-1LT-a Notes") * Up to U.S. $1,070,100,000 Class A-1LT-b Floating Rate Notes Due 2040 (the "Class A-1LT-b Notes") * U.S. $60,800,000 Class A-2 Floating Rate Notes Due 2040 (the "Class A-2 Notes") * U.S. $57,700,000 Class B Floating Rate Notes Due 2040 (the "Class B Notes") * U.S. $30,400,000 Class C Deferrable Floating Rate Notes Due 2040 (the "Class C Notes") * U.S. $24,300,000 Class D Floating Rate Notes Due 2040 (the "Class D Notes") * Up to U.S. $5,000,000 Class E Floating Rate Notes Due 2040 (the "Class E Notes") Moody's has assigned these ratings: * Prime-1 to the CP Notes; * Aaa to the Class A-1LT-a Notes, the Class A-1LT-b Notes and the Class A-2 Notes; * Aa1 to the Class B Notes; * A2 to the Class C Notes; * Baa2 to the Class D Notes; and * Ba3 to the Class E Notes. AJPM INVESTMENT: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: AJPM Investment Group, Inc. 6159 Bel Air Lake Road Lithonia, GA 30038 Bankruptcy Case No.: 05-70263 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: June 6, 2005 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: Diana McDonald Suite C - George Towne Creek 2800 Peachtree Industrial Boulevard Duluth, GA 30097 Tel: (678) 542-2255 Total Assets: $3,035,030 Total Debts: $1,463,022 Debtor's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Plymarts Inc. Trade Debt $22,335 P.O. Box 4050 Norcross, GA 30091 Gilmore Drywall, Inc. $11,207 P.O. Box 81186 Conyers, GA 30093 Richard Roberts $4,480 dba Spring Forge 125 Lucy Lane Jackson, GA 30233 ALABAMA METAL: Moody's Assigns B1 Rating to $130 MM Term Loan --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Alabama Metal Industries Corporation's $130 million senior secured term loan and a B1 senior implied rating. The rating outlook is stable. The B1 ratings reflect: * AMICO's high financial leverage when adjusted to account for operating performance volatility due to the company's exposure to the economic cycle; * unpredictable industry pricing dynamics caused by volatile steel prices; and * modest tangible asset coverage of total debt. The B1 ratings also reflect Moody's belief that the company will: * continue to maintain a strong competitive position in its diverse niche products; * generate modest amounts of free cash flow for debt reduction; and * retain sufficient liquidity to offset any operating performance volatility. While AMICO's cash flow financial leverage appears modest against 2004 operating performance, Moody's believes this represents the peak of the economic and operating cycle. In 2004, the company increased unit volumes and realized selling price increases in excess of higher steel costs. In 2005, Moody's believes the company could experience a decrease in revenues given the decline in hot rolled coil steel prices and a slowdown in volume growth. Moody's estimates that, with these operating results, free cash flow to total debt could fall to approximately 10% and lease adjusted debt to EBITDAR could increase to 3.5x, which is consistent with the B1 rating given the size, cyclicality and other operating risks faced by the company. Given the business risks, Moody's believes the company needs to focus on reducing overall indebtedness to better position the company for any potential downturn in the economy. The B1 rating for the $130 million secured term loan reflects the fact that, upon closing, the term loan accounts for the preponderance of total debt outstanding, and therefore, represents the credit profile of the company as a whole. Although Moody's projects the company will remain free cash flow generative, the B1 rating takes into consideration Moody's concern that financial leverage is further exacerbated by a use of debt that exceeds invested capital and retained earnings, which is generally not indicative of strong recovery prospects in a distressed scenario. The stable outlook is supported by Moody's belief that the company has a defensible market position in diverse niche steel products that do not represent a significant cost percentage of any given project. The company's favorable competitive position vis-a-vis imports is further reinforced by its highly variable cost structure and considerable customer and geographic diversification, while imports are limited by high freight costs for products that do not ship well. In addition, Moody's believes that structural changes since 2001, due to consolidation in the steel industry, will mitigate against prices returning to those depressed levels. Therefore, Moody's expects the company will continue to generate modest amounts of free cash flow even in a difficult operating environment and will allocate at least 75% of its free cash flow to debt reduction as mandated by the credit agreement. Given the company's size, cyclicality and operating risk profile, Moody's believes the rating could be downgraded if free cash flow to total debt would fall and remain below 10% and total debt to EBITDAR would increase to 4.0x. Conversely, the rating could be upgraded if the company sustains average free cash flow to total debt in excess of 10% and total debt to EBITDAR of 3.0x. Despite Moody's expectation for continued free cash flow generation, the company will retain alternate sources of liquidity with the company only drawing $5 million on its $30 million senior secured revolver, giving the company $20 million of excess liquidity available upon closing. Moody's believes this is sufficient alternate liquidity given the only significant uses of cash being annual capital expenditures of between $4 million and $5 million and an annual debt amortization requirement of approximately $1.3 million. Alabama Metal Industries Corporation, headquartered in Birmingham, Alabama, is a leader in the manufacturing and distribution of Industrial Flooring/Grating and Expanded Metal Products throughout North America. ALOHA AIRGROUP: Wants to Assume Sabre Consulting Agreement ---------------------------------------------------------- Aloha Airgroup, Inc., and its debtor affiliate ask the U.S. Bankruptcy Court for the District of Hawaii for authority to assume a Master Agreement for System Usage and Professional Services with Sabre Inc. The Debtors tell that court that Sabre is familiar with Aloha Airlines' financial affairs and its business operations. Retaining another consultant, Aloha says, would waste money and delay implementation of the carrier's restructuring plan. The Debtors say that the decision to assume or reject an executory contract or unexpired lease is a matter within their "business judgment." Hiring a new consultant would not be an exercise of the Debtors' sound business judgment. The Debtors request that the Court enter an order authorizing them to assume the Sabre Consulting Agreement and all Work Orders executed by Aloha Airlines. The Honorable Robert J. Faris of the U.S. Bankruptcy Court for the District of Hawaii will convene a hearing today, June 8, 2005, at 9:30 a.m., to review the Sabre Contract. Sabre Consulting Agreement On October 15, 2003, Aloha Airlines entered into the Sabre Consulting Agreement with Sabre Inc. As part of the agreement, Sabre was expected to: (1) assess Aloha Airlines' pricing and revenue; (2) analyze Aloha Airlines' routes and identify new and potential service additions intended to improve Aloha Airlines' profitability; (3) advise Aloha Airlines in connection with the possible replacement of certain aircraft; (4) analyze Aloha Airlines' operating agreements; and (5) examine Aloha Airlines' profitability reporting methodology. The scope of consulting services provided by Sabre under the agreement is defined in various work orders. Aloha Airlines has executed six work orders. Under the agreement and the six work orders, Aloha will pay Sabre $154,000. Sabre continues to assist the Debtors in implementing their business plan for improved profitability. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERICAN MEDICAL: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: American Medical Enterprises, Inc. dba AME Laboratories 8285 Elrio, Suite 170 Houston, Texas 77054 Bankruptcy Case No.: 05-38729 Type of Business: The Debtor owns and operates medical laboratories located in Lubbock and Tyler, Texas. See http://www.amelaboratories.com/ Chapter 11 Petition Date: June 6, 2005 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Barbara Mincey Rogers, Esq. Waldron & Schneider, L.L.P. 15150 Middlebrook Drive Houston, Texas 77058 Tel: (281) 488-4438 Fax: (281) 488-4597 Total Assets: $2,281,949 Total Debts: $4,660,838 The Debtor did not file a list of its 20 Largest Unsecured Creditors. AMERIQUEST MORTGAGE: Fitch Rates $11M Class M Certs. at BB+ ----------------------------------------------------------- Ameriquest Mortgage Securities Inc.'s asset-backed pass-through certificates, series 2005-R4, are rated by Fitch Ratings: -- $1.756 billion publicly offered classes A-1A - A-2D 'AAA'; -- $410 million class M-1 certificates 'AA+'; -- $480 million class M-2 certificates 'AA+'; -- $29 million class M-3 certificates 'AA'; -- $25 million class M-4 certificates 'AA-'; -- $21 million class M-5 certificates 'A+'; -- $13 million class M-6 certificates 'A'; -- $10 million class M-7 certificates 'A'; -- $10 million class M-8 certificates 'A-'; -- $13 million class M-9 certificates 'BBB'; -- $13 million class M-10 certificates 'BBB-'; -- $11 million class M-11 certificates 'BB+'. Credit enhancement for the 'AAA' rated class A certificates reflects the 12.20% subordination provided by classes M-1 through M-11, monthly excess interest and initial overcollateralization of 0.50%. Credit enhancement for the 'AA+' rated class M-1 certificates reflects the 10.15% subordination provided by classes M-2 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'AA+' rated class M-2 certificates reflects the 7.75% subordination provided by classes M-3 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'AA' rated class M-3 certificates reflects the 6.30% subordination provided by classes M-4 through M-11 monthly excess interest and initial OC. Credit enhancement for the 'AA-' rated class M-4 certificates reflects the 5.05% subordination provided by classes M-5 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'A+' rated class M-5 certificates reflects the 4% subordination provided by classes M-6 through M- 11, monthly excess interest and initial OC. Credit enhancement for the 'A' rated class M-6 certificates reflects 3.35% subordination provided by classes M-7 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'A' rated class M-7 certificates reflects the 2.85% subordination provided by classes M-8 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'A-' rated class M-8 certificates reflects the 2.35% subordination provided by classes M-9 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'BBB' rated class M-9 certificates reflects the 1.70% subordination provided by classes M-10 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'BBB-' rated class M-10 certificates reflects the 1.05% subordination provided by class M-11, monthly excess interest and initial OC. Credit enhancement for the non-offered 'BB+' class M-11 certificates reflects 0.50% subordination provided by monthly excess interest and initial OC. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of Ameriquest Mortgage Company as master servicer. Deutsche Bank National Trust Company will act as trustee. As of the cut-off date, the Group I mortgage loans have an aggregate balance of $1,291,302,476. In addition to the loans included in the transaction at closing, this group also has a prefunding account with $322,826,406. The weighted average loan rate is approximately 7.846%. The weighted average remaining term to maturity is 352 months. The average cut-off date principal balance of the mortgage loans is approximately $153,891. The weighted average original loan-to-value ratio is 77.63% and the weighted average Fair, Isaac & Co. score was 613. The properties are primarily located in California (12.60%), Florida (12.38%), New York (6.82%), Texas (6.08%), and New Jersey (5.53%). As of the cut-off date, the Group II mortgage loans have an aggregate balance of $308,697,371. In addition to the loans included in the transaction at closing, this group also has a prefunding account with $77,174,380. The weighted average loan rate is approximately 7.629%. The WAM is 356 months. The average cut-off date principal balance of the mortgage loans is approximately $353,201. The weighted average OLTV ratio is 80.17% and the weighted average FICO score was 632. The properties are primarily located in California (39.12%), New York (9.92%), Florida (7.08%), New Jersey (5.84%), and Maryland (5.76%). The mortgage loans were originated or acquired by Ameriquest Mortgage Company, a specialty finance company engaged in the business of originating, purchasing and selling retail and wholesale subprime mortgage loans. AMPHENOL CORP: Good Performance Prompts S&P to Upgrade Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and bank loan ratings on Wallingford, Connecticut-based Amphenol Corp to 'BBB-' from 'BB+' to reflect sustained improvements in the company's financial profile, as demonstrated by reduced financial leverage, improved cash flow adequacy, and expected moderate financial policies, along with a history of relatively consistent, strong operating performance. The outlook is stable. "The ratings on Amphenol Corp. reflect a solid business profile and relatively moderate financial policies and leverage, offset in part by limited overall business profile diversity," said Standard & Poor's credit analyst Ben Bubeck. Amphenol manufactures connectors, cable, and interconnect systems for electronics, cable television, telecommunications, and other applications. It had $476 million of funded debt outstanding at March 31, 2005. Amphenol's financial profile is solid for the rating category, having moderated substantially since the leveraged recapitalization, when financial leverage peaked at 5.2x unadjusted total debt to EBITDA, in 1998. Debt reduction totaling $505 million and growth in EBITDA profitability has reduced total debt to EBITDA to 1.4x as of March 31, 2004. When adjusted for capitalized operating leases, securitized accounts receivables and unfunded pension and post-retirement obligations, total debt to EBITDA was 2.0x as of March 31, 2005, comfortable for the new rating level. The solid, although somewhat narrow, business profile is supported by a good track record of profitability and moderate revenue volatility, supported by long-standing significant positions across a diverse set of end markets, in electronics interconnector products, and a smaller position in the less profitable broadband cable market. Amphenol is the third-largest manufacturer of electronic interconnect products in the world, focusing on more profitable, less commodity-like, applications and product lines. The largest end market, aerospace, accounted for 24% of total sales in 2004, with the remaining 76% divided among six other market segments spanning communications, industrial and automotive. Amphenol's interconnect products have generated 11% average annual growth over the past ten years, reaching $1.3 billion -- 88% of revenues -- in 2004. In the broadband cable segment, Amphenol has a distant No. 2 position, behind CommScope, in the North American market. ARGONAUT TECH: Completes $21.2 Million Asset Sale to Biotage AB --------------------------------------------------------------- Argonaut Technologies (Nasdaq: AGNT) closed the sale of the assets of its chemistry consumables business and certain assets of its process chemistry business, which constitute substantially all of its assets except for its cash, to Biotage AB (Stockholm: BIOTa.ST) of Uppsala, Sweden. As a result of this transaction, the Company no longer has an operating business and plans to wind- up its assets and liabilities. The Company disclosed management changes consistent with its stated plan. Lissa Goldenstein, Argonaut's president and chief executive officer, David Foster, Argonaut's senior vice president and chief financial officer and Jeffrey Labadie, Argonaut's senior vice president, chemistry consumables group are departing. Gordon Tredger, Argonaut's senior vice president, instrumentation and integration, has been promoted to president and will manage its wind-up activities. "I am pleased to have an individual as talented and experienced as Gordon to manage our remaining assets and liabilities with the goal of preserving cash for our shareholders," stated Goldenstein, Argonaut's president and chief executive officer. "Jeff, David and I will remain available to assist Gordon with the immediate transition and we remain committed to maximizing shareholder value." Ms. Goldenstein will remain on Argonaut's board of directors. Asset Sale In March 2005, Argonaut prepared a proxy statement asking stockholders to approve a sale of the assets of Argonaut's chemistry consumables business and certain assets related to the process chemistry business, which constitutes substantially all of Argonaut's assets, to Biotage AB. If the asset sale is completed, Argonaut will be paid $21.2 million in cash by Biotage, and Biotage will assume specified liabilities. The purchase price will be decreased to the extent that the value of the working capital of the Company's chemistry consumables business at the closing of the asset sale is less than $7,080,000, and will be increased to the extent that the value of the working capital of the Company's chemistry consumables business is greater than $7,080,000. At the closing of the asset sale, $2,000,000 of the cash purchase price will be put into an escrow account to secure Argonaut's indemnification obligations under the purchase agreement. About Argonaut Technologies, Inc. Argonaut Technologies, Inc. is a leading provider of consumables, instruments, and services designed to help the pharmaceutical industry accelerate drug development. The company's products enable chemists to increase productivity, reduce operating costs, achieve faster time to market, and test the increasing number of targets and chemical compounds available for drug development. Argonaut Technologies develops products in close consultation and collaboration with scientists from leading pharmaceutical companies. More than 1,200 customers use Argonaut's products worldwide. Going Concern Doubt The Company delivered its annual report for the year ended Dec. 31, 2004 to the Securities Exchange Commission April 21, 2005. In that report, Ernst & Young LLP, the Company's Independent Registered Public Accounting Firm, state that the financial statements present fairly, in all material respects, the consolidated financial position of the Company and the consolidated results of its operations and its cash flows, in conformity with U.S. generally accepted accounting principles. The Ernst & Young LLP report also notes that the company has incurred recurring operating losses and negative cash flows from operating activities, and that this raises substantial doubt about the Company's ability to continue as a going concern. ARUNBHAI PATEL: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Arunbhai Soma Patel & Indumatiben Arun Patel dba Comfort Inn 4354 Wolforde Boulevard Acworth, Georgia 30101 Bankruptcy Case No.: 05-70284 Chapter 11 Petition Date: June 6, 2005 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: James K. Knight, Jr., Esq. 401 Atlanta Street Marietta, Georgia 30060 Tel: (770) 428-5250 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Citizens Bank & Trust Bank Loan $134,472 P.O. Box 2127 Carrollton, GA 30112 Mission Oaks Bank Loan $51,000 Fallbrook Capital Inc. 5256 South Mission Road, Suite 801 Bonsall, CA 92003 Amsouth Bank Loan $31,000 P.O. Box 11407 Birmingham, AL 35246-0009 Cherokee County Tax Trade Debt $25,000 Commissioner MBNA America Bank Loan $24,490 Choice Hotels International Trade Debt $15,784 Citi Bank Bank Loan $11,488 Citi Cards Bank Loan $10,000 SunTrust Bank Loan $7,203 Rooms To Go Value of Security: $2,300 $1,500 ATA AIRLINES: Gets Court Nod to Assume GATX Ancillary Agreements ---------------------------------------------------------------- As previously reported, ATA Airlines, Inc. and its debtor- affiliates sought the U.S. Bankruptcy Court for the Southern District of Indiana's authority to assume the GATX Ancillary Agreements. Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, reported that the parties have recently entered into a definitive amendment to the Boeing B757-200 aircraft lease. The terms of the Amendment are highly confidential and proprietary. The Amendment will be made available to the United States Trustee, counsels for Southwest Airlines, the DIP lender, the Official Committee of Unsecured Creditors, the Air Transportation and Stabilization Board, and to other parties, subject to confidentiality restrictions. Mr. Nelson added that the parties previously signed various documents in connection with the Lease: (i) the Tax Reimbursement Agreement, dated as of September 1, 1995, between GATX and ATA Airlines; (ii) the Aircraft Lease Framework Agreement, dated as of June 30, 1995, between GATX and ATA Airlines; and (iii) the Guaranty Of The Obligations Of American Trans Air, Inc., dated as of June 30, 1995, by ATA Holdings. * * * The Court authorizes the Debtors to assume the Ancillary Agreements. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Can Assume Continental Interline Agreement -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana approved ATA Airlines, Inc. and its debtor-affiliates' settlement agreement with Continental Airlines, Inc. As previously reported, ATA Airlines, Inc., and Continental Airlines, Inc., are parties to an Interline Agreement For Employee Reduced Fare Travel, dated as of May 9, 1997, and as amended on February 1, 2001. Under the Agreement, selected employees of the parties are eligible for reduced fare transportation on each other's airlines. Jeffrey Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that the Interline Agreement is essential to ATA Airlines. It allows the Debtor to move and position its flight crews and other employees where they are needed at substantially reduced costs. A dispute has arisen between ATA and Continental regarding ATA's performance under the Interline Agreement. To resolve the dispute, the parties entered into a settlement agreement under which: -- ATA Airlines will assume the Interline Agreement, as amended; and -- Continental will accept $30,759 as full and complete cure of any defaults by ATA Airlines under the Interline Agreement. The cure represents the amount ATA Airlines will be obligated to pay under Section 365(b)(1) of the Bankruptcy Code, upon the assumption of the Agreement. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATRIUM COMPANIES: Moody's Junks $174 Million Senior Discount Notes ------------------------------------------------------------------ Moody's Investors Service has downgraded the debt rating of Atrium Companies, Inc. and its parent, ACIH, Inc. to reflect the company's lowered expectations for 2005 and high leverage. The companies had been placed on review to reflect the news that Atrium received a subpoena issued by the United States Attorney in Dallas, Texas "concerning various accounting and financial records and documents of Atrium from 1999 through current periods, with the principal focus being on periods prior to the acquisition of Atrium in December 2003 by its current owners." Moody's has downgraded the ratings listed below and left them on review for possible downgrade. The affected ACIH ratings are: * Senior Implied, downgraded to B2 from B1; * $174 million (accretes from $125 million) senior discount notes due 2012, downgraded to Caa1 from B3; and * Senior Unsecured Issuer Rating, downgraded to Caa1 from B3. The affected Atrium Companies ratings are: * $50 million senior secured revolver, due 2009, downgraded to B2 from B1; and * $325 million senior secured term loan B, due 2011, downgraded to B2 from B1. The rating's downgrade reflects Atrium's recent performance and outlook relative to Moody's previous expectations and the belief that the company's 2005 performance will be more reflective of a B2 credit. The companies have announced new EBITDA guidance for 2005 of $90 million to $95 million compared to Moody's expectation that Atrium's EBITDA for 2005 would be above $100 million. Furthermore, Atrium has stated that its first quarter EBITDA was in the area of $13.2 million on sales of $176.5 million. Both of these figures are below Moody's expectation and are supportive of lower expectations. Moody's notes that in its press release dated December 3, 2004 it stated "the ratings and or outlook may decline if leverage were to increase even modestly, or if the company was unable to generate sufficient free cash flow to meaningfully pay- down debt over the next twelve months." In its analysis, Moody's will focus on the financial and operating outlook for the company as well as the impact of the United States Attorney in Dallas, Texas review concerning various accounting and financial records, and on the impact of any restatements. Moody's will also consider the likely impact of the recent changes in senior management including the placement of the company's Chief Executive Officer on a leave of absence, and the implications that may arise from the resignation of the company's CFO on May 13, 2005. The company has announced that Larry Solari, an independent director, will serve as Atrium's Chairman and Charles Schmid, also an independent director, will serve as its Chief Executive Officer. Moody's will also focus on the company's financial and operating performance and, in particular, its ability to improve its balance sheet and operate through its current accounting issues. Moody's notes that Atrium has not yet filed its annual 10k for 2004. Headquartered in Dallas, Texas, Atrium Corporation is one of the largest residential window manufacturers in the United States. AVNET INC: SEC OKs Voluntary Delisting from Pacific Stock Exchange ------------------------------------------------------------------ Avnet Inc. (NYSE:AVT) received notice from the Securities and Exchange Commission approving Avnet's voluntary withdrawal application with the Pacific Stock Exchange to withdraw its common stock from listing on the Pacific Stock Exchange, effective as of June 3, 2005. Avnet has resolved to withdraw from listing on the Pacific Stock Exchange as a cost-saving measure. Avnet will continue to list its common stock for trading on the New York Stock Exchange, which maintains the principal listing of its common stock. About Avnet Avnet Inc. -- http://www.ir.avnet.com/-- enables success from the center of the technology industry, providing cost-effective services and solutions vital to a broad base of more than 100,000 customers and 300 suppliers. The company markets, distributes and adds value to a wide variety of electronic components, enterprise computer products and embedded subsystems. Through its premier market position, Avnet brings a breadth and depth of capabilities that help its trading partners accelerate growth and realize cost efficiencies. Avnet generated more than $10 billion in revenue in fiscal 2004 (year ended July 3, 2004) through sales in 68 countries. * * * As reported in the Troubled Company Reporter on Apr. 29, 2005, Moody's Investors Service affirmed the debt rating of Avnet Inc. (senior unsecured at Ba2) and placed the debt ratings of privately-held Memec Group Holdings Ltd. (senior implied at B2) on review for possible upgrade following the announcement of Avnet's acquisition of Memec for $676 million in stock and cash. The ratings outlook for Avnet is stable. Avnet's rating affirmation is based on the transaction's largely neutral impact on the company's credit metrics (prior to expected cost synergies) due to the significant use of stock to fund the acquisition. Avnet will issue 24.011 million shares of common stock to Memec investors. In addition, the transaction will include a $64 million cash payment and the assumption of $194 million net debt of Memec. The transaction includes $459 million of shareholders loans of MEMEC that will be extinguished following close of the transaction. Avnet expects to repay at closing $194 million of net borrowings under Memec's $100 million Term Loan A and $100 million Term Loan B credit agreements, through cash on hand and borrowings under its undrawn $350 million credit facility. Pro forma debt will be $1.6 billion versus actual debt of $1.3 billion as of January 1, 2005. BAKER MOTORS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Baker Motors, Inc. 12214 Detroit Avenue Lakewood, Ohio 44107 Bankruptcy Case No.: 05-51717 Type of Business: The Debtor tows automobiles. Chapter 11 Petition Date: June 7, 2005 Court: Northern District of Ohio (Cleveland) Judge: Randolph Baxter Debtor's Counsel: Robert J. Fedor, Esq. Robert J. Fedor, Esq., LLC 1991 Crocker Road, Suite 222 Westlake, Ohio 44145 Tel: (440) 250-9709 Total Assets: $303,266 Total Debts: $2,352,753 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $1,325,000 Special Procedures Unit P.O. Box 99183 Cleveland, OH 44199 Internal Revenue Service Taxes $530,000 Special Procedures Unit P.O. Box 99183 Cleveland, OH 44199 Ohio Bureau of Workers Workers $150,000 Compensation Compensation Attn: Chris Klym, Esq. 24441 Detroit Road, Suite 200 Westlake, OH 44145 Ohio Department of Taxation Taxes $150,000 Attn: Chris Klym, Esq. 24441 Detroit Road, Suite 200 Westlake, OH 44145 Regional Income Tax Agency Taxes $65,000 P.O. Box 477900 Broadview Heights, OH 44147 Bureau of Wokers Compensation Workers $53,111 Attn: Chris Klym, Esq. Compensation 2441 Detroit Road, Suite 200 Westlake, OH 44145 Ohio Department of Taxation Taxes $22,000 Attn: Chris Klym, Esq. 24441 Detroit Road, Suite 200 Westlake, OH 44145 Ohio Motorists Association Value of Security: $7,168 6000 South Marginal $49,000 Cleveland, OH 44103 Bureau of Wokers Compensation Workers $6,322 Attn: Chris Klym, Esq. Compensation 24441 Detroit Road, Suite 200 Westlake, OH 44145 Ohio Motorists Association Value of Security: $1,870 6000 South Marginal $62,000 Cleveland, OH 44103 Ohio Department of Taxation Taxes $1,000 Attn: Chris Klym, Esq. 24441 Detroit Road, Suite 200 Westlake, OH 44145 Ohio Department of Taxation Taxes $1,000 Attn: Chris Klym, Esq. 24441 Detroit Road, Suite 200 Westlake, OH 44145 Regional Income Tax Agency Taxes $1,000 P.O. Box 477900 Broadview Heights, OH 44147 BRAND SERVICES: Moody's Junks $150 Mil. Senior Subordinated Notes ----------------------------------------------------------------- Moody's Investors Service lowered the ratings of Brand Services, Inc., including its senior implied rating to B2 from B1, the rating on its first lien senior secured bank credit facility to B2 from B1, and the rating on its senior subordinated notes to Caa1 from B3. At the same time, Moody's assigned a rating of B2 to the company's new first lien senior secured supplemental term loan and a B3 to its new second lien senior secured term loan. The ratings outlook is stable. The downgrades reflect the company's significant underperformance since 2003 relative both to Moody's expectations and to the company's own projections. As a result, financial metrics have tended to resemble that of a B2 rated company, with debt leverage and interest coverage being especially weak for the former B1 rating. The stable ratings outlook is based on Moody's expectation that the financing of the proposed acquisition of the assets of the Aluma Systems group of companies will be, at worst, a credit- neutral event, and that the free cash flow generating ability of Brand will remain intact, with the excess being used to delever the balance sheet. The ratings incorporate: * the cyclicality of Brand's main business segment; * its customer concentration; * the large amount of negative tangible net worth; and * the subpar financial metrics of the past two years. At the same time, the ratings consider Brand's industry: * leading position in industrial scaffolding and its strong position in commercial scaffolding; * its solid base of long-standing customers linked by multi- year contracts; * the apparent abatement of the weakness in capital spending by the utility sector; and * the company's free cash flow generating ability. Moody's took these rating actions with respect to Brand Services, Inc.: * Lowered the senior implied rating to B2 from B1 * Lowered the rating on the $50 million first lien senior secured revolver and the $20 million first lien senior secured letter of credit facility, both due October 16, 2008, to B2 from B1 * Lowered the rating on the $150 million (current balance $102.4 million) first lien senior secured Term Loan B due January 15, 2012 (as amended), to B2 from B1 * Lowered the rating on the $150 million of 12% senior subordinated notes due October 15, 2012 to Caa1 from B3 * Assigned a B2 rating to the proposed new $150 million first lien senior secured supplemental term loan due January 15, 2012 * Assigned a B3 rating to the proposed new $35 million second lien senior secured term loan due July 15, 2012 On May 19, 2005, Brand entered into an agreement to acquire the operating assets of the Aluma Systems group of companies of Toronto, Ontario, Canada for a price of Canadian $255 million (approximately US $208 million) in a transaction expected to close in July 2005. Net proceeds of $150 million from the supplemental term loan, $35 million from the 2nd lien term loan, $30 million from the sale of redeemable preferred stock to the company's sponsor (J.P. Morgan Partners), plus $10 -- 12 million of cash will be used to purchase the assets and pay transaction expenses. Pro forma for the transaction as currently proposed, total consolidated debt/EBITDA of Brand's direct parent company, Brand Intermediate Holdings, Inc., as of the twelve month period ended March 30, 2005 will improve modestly, from 5.8x to 5.5x. Moody's expects this metric to show improvement in the coming years. Brand's ratings reflect the fact that demand for non-residential building construction and capital projects is highly cyclical. Revenues derived from the utility industry, for example, swung from approximately $125 million in 2002 to approximately $52 million by 2004. In addition, when refining products are in a period of strong demand or the price of pulp is at a cyclical high, refineries and pulp and paper mills often delay overhauls as long as possible. Although the company maintains a list of top tier industrial and commercial customers, customer concentration is a concern, as the top nine clients accounted for 37% of total revenues in 2004 and the largest two clients, Shell and ExxonMobil, each accounted for over 10%. Loss of any one of these clients could have a material adverse effect on the company's operating results. After the transaction closes, Brand will have approximately $380 million of goodwill and other intangibles on its books, producing a negative tangible net worth position at closing of $143 million (vs. a book net worth of $237 million). While not unusual for B rated companies that have been through the LBO process, this negative tangible net worth, when combined with the low returns that the company has generated over the past few years (as measured by return on assets), suggests that the profitability of these operations must be dramatically improved in order to justify the high asset valuations. The company's metrics over the past several years have been weak for the former B1 rating and are not very strong for the new B2 rating. EBIT coverage of interest expense has been less than 1.0x for seven of the last 10 quarters and at 1.0x for two of the quarters, while debt/EBITDA has been in the mid-to-high 5x coverage range for the last 12 months. Return on assets (EBIT/assets) has been in the low-to-mid-single digit range since 2002. On the plus side, Brand is the largest overall provider of scaffolding services in the U.S. In the approximately $1.0 billion industrial scaffolding segment, it holds an estimated 24% market share and the number one position, and in the approximately $0.9 billion commercial scaffolding segment, it has an estimated 7% market share and the number three position. This size and scale afford it the ability to capture, augment and retain contracts with large national industrial customers such as: * oil refiners, * chemical and petrochemical companies, and * pulp and paper producers. Additionally, the company possesses an impressive customer base with long-standing relationships. Among Brand's top nine clients, four have been customers of the company for an average of 22 years, with the top two customers being clients for an average of 24 years. Most of the company's clients are linked by multi-year contracts. Utility capital spending, which has been in a sharp downtrend since 2003, shows signs of stabilizing, which would be a positive development for Brand, which derived 16% of its revenues in 2004 from the utility sector (down from 34% in 2002). Despite generating net losses since the first quarter of 2003 and experiencing a significant decline in one of its major end markets (utilities), the company has managed to pay down approximately $28 million of debt during this time period, which reflects its free cash flow generating ability. Going forward, Moody's expects free cash flow to be utilized principally for debt repayment. The $150 million first lien senior secured supplemental term loan is, like the existing Term Loan B and revolver, guaranteed by all of the company's domestic subsidiaries and is secured by substantially all tangible and intangible assets of the company and by a pledge of the capital stock of the company and its subsidiaries. The $35 million second lien senior secured term loan will benefit, on a second-priority basis, from the same guarantees and security. The existing $150 million senior subordinated notes are guaranteed on a senior subordinated basis by all of the company's existing and certain future domestic subsidiaries. Headquartered in Chesterfield, MO, Brand Services, Inc. is the largest North American provider of scaffolding services. Revenues and EBITDA in 2004 were approximately $334 million and $53 million, respectively. BRASOTA MORTGAGE: Committee Hires Foley & Lardner as Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Brasota Mortgage Company, Inc., and its debtor-affiliate sought and obtained permission from the U.S. Bankruptcy Court for the District of Florida, Tampa Division, to employ Foley & Lardner LLP as counsel, nunc pro tunc to April 29, 2005. The committee selected Foley & Lardner as its attorneys based on the Firm's extensive practice in representing unsecured creditors' committees in chapter 11 reorganization cases. Foley & Lardner will: a) provide legal advice with respect to the committees' powers and duties in this bankruptcy case; b) prepare all necessary applications, reports and other legal papers and answer orders in behalf of the committee; c) represent the Committee in matters involving contests with Debtors, alleged secured creditors and other third parties; d) review any post-petition financing, cash collateral matters, employment retention matters, and any proposed sale of assets; e) negotiate consensual plans of liquidation or reorganization; and f) perform all other legal services for the Committee that may be necessary in this bankruptcy case. Foley & Lardner's attorneys and legal assistants initially designated to represent the Committee and their hourly rates are: Professional Designation Hourly Rate ------------ ----------- ----------- W. Keith Fendrick, Esq. Partner $330 Lori V. Vaughan, Esq. Senior Counsel 250 Lisa Walker Paralegal 100 The Committee believes that Foley & Lardner is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Bradenton, Florida, Brasota Mortgage Company, Inc., is a full service mortgage lender. The Company and Funding Management Corporation filed for chapter 11 protection on April 4, 2005 (Bankr. M.D. Fla. Case No. 05-06215). Heath A. Denoncourt, Esq., at Hinshaw & Culbertson LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. The Court appointed Gerard A. McHale, Jr., as the Debtors' Chapter 11 Trustee. Michael C. Markham, Esq., and Angelina E. Lim, Esq., at Johnson, Pope, Bokor, Ruppel & Burns, LLP represent the Chapter 11 Trustee. BUILDERS PLUMBING: Chapter 7 Trustee Hires KPMG as Tax Consultant ----------------------------------------------------------------- David Grochocinski, the Chapter 7 Trustee overseeing Builders Plumbing & Heating Supply Co. and its debtor-affiliates' bankruptcy estates, sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois to employ and retain KPMG, LLP, as his tax appeals consultant, nunc pro tunc to May 18, 2005. KPMG will: a) work with the Trustee's advisors to develop the Trustee's legal and factual position for any appellate proceedings; b) assist the Trustee's advisors in filing a protest on behalf of the Trustee, request that denial of the refunds claimed be reviewed by the appellate body of the Internal Revenue Service, and respond to any rebuttal issued by the IRS, and supplement such protests, as needed; and c) negotiate refund issues with the IRS and represent the Trustee in any proceedings, including alternative dispute resolution procedures, to the extent such procedures are available and become necessary. The firm will charge its customary hourly rates which range from $650 per hour for partners and principals to $425 per hour for a paraprofessional. Mark S. Heroux, a partner in KPMG, LLP, assures the Court that the firm has no adverse interest in this matter and is well qualified to provide services to the Trustee. Headquartered in Addison, Illinois, Builders Plumbing & Heating Supply Co. is a plumbing product distributor. The Debtor and its affiliates filed for chapter 11 protection on December 5, 2003 (Bankr. N.D. Ill. Case No. 03-49243). Brian A. Audette, Esq., David N Missner, Esq., and Marc I. Fenton, Esq., at Piper Rudnick represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed assets of $62,834,841 and debts of $57,559,894. CAROLINA TOBACCO: Wants Court to Allow Fund Transfer ---------------------------------------------------- Carolina Tobacco Company maintains a checking account with the Bank of America, N.A. The Debtor has an electronic funds transfer arrangement with the Bank which allows Carolina Tobacco to debit its 93 customers' (distributors of cigarettes) bank accounts to collect its accounts receivable. The U.S. Customs Department, in turn, debits Carolina's checking account for federal excise taxes on its cigarette sales. Carolina Tobacco wants to continue using the Bank's electronic fund transfer (EFT) services to pay excise taxes to the Customs agency. Without a permit from the Customs Department, Carolina won't be able to continue its operations. The Bank won't allow Carolina Tobacco to continue using EFT unless Carolina pledges $1,000,000 from its savings account to secure any obligations in case an EFT transaction is reversed by one of Carolina's distributors. Carolina's savings account balance is $400,000 while its checking account has a $7,000,000 balance. Carolina wants to transfer $600,000 to its savings account from its checking account to reach the $1 million mark the Bank requires. Accordingly, Carolina Tobacco asks the U.S. Bankruptcy Court for the District of Oregon to allow the transfer of the funds from its checking account to its savings account. Headquartered in Portland, Oregon, Carolina Tobacco Company -- http://www.carolinatobacco.com/-- manufactures the Roger-brand cigarettes. The Company filed for chapter 11 protection on April 18, 2005 (Bankr. D. Ore. Case No. 05-34156). Tara J. Schleicher, Esq., at Farleigh Wada & Witt P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets OF $24,408,298 and total debts of $14,929,169. CATHOLIC CHURCH: Portland's Exclusive Periods Extended to Dec. 31 ----------------------------------------------------------------- As previously reported, the Tort Claimants Committee asked Judge Perris to deny the Archdiocese of Portland's request to further extend the period within which it has the exclusive right to: * file a plan until December 31, 2005; and * obtain acceptance of the plan until March 1, 2006. The Committee explains that the Archdiocese has already received a seven-month extension before. Another extension would only further delay the already protracted proceedings and allow the Archdiocese to use the Exclusive Periods and the delay as leverage. * * * Judge Perris extends the period within which the Archdiocese of Portland has the exclusive right to file a plan to November 15, 2005, and obtain acceptance of the plan to January 16, 2006. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Ct. OKs Tucson's 3rd Amended Disclosure Statement ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona approves the disclosure statement explaining the Third Amended Plan of Reorganization for the Diocese of Tucson over the objections of: 1. Four Tort Claimants; 2. Pacific Employers Insurance Company; and 3. The United States Trustee Judge Marlar finds that the Third Amended Disclosure Statement contains "adequate information" as defined in Section 1125 of the Bankruptcy Code to enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the Plan. * * * On May 25, 2005, the Diocese of Tucson delivered to the U.S. Bankruptcy Court for the District of Arizona a third amendment to its plan of reorganization and disclosure statement. The Third Amended Plan is the result of the collective effort and cooperation of the Diocese, the Official Committee of Tort Creditors and its professionals, the attorneys for a large number of tort claimants, the Guardian ad Litem and the Unknown Claims Representative and their counsel, the Bishop of the Diocese of Tucson, Rev. Gerald F. Kicanas, D.D., tells Judge Marlar. "These parties have worked very hard to try and reconcile the various needs and expectations of the various constituencies with the limited resources of the Diocese as well as to provide a reasonable and equitable framework for dealing with Unknown Tort Claims," according to Bishop Kicanas. Classification & Treatment of Claims The Plan reclassifies Class 1 Priority Employee Unsecured Claims as unimpaired. Class 2 Prepetition Property Tax Secured Claims is revised to Prepetition Date Secured Tax Claims and Class 7 Parish Claims is revised to Parish Loan Claims. Tucson's estimate of the Allowed Class 7 Claims is lowered to $4,700,000 from $6,962,867. Parish Loan Claims Bishop Kicanas explains that the Claims of the Parishes against the Diocese arise in two respects. The Parishes have Claims against the Diocese for the amount of their Unrestricted Deposits for return of their funds. In addition, a number of Parishes and affiliated entities have made unsecured loans to the Diocese to fund the 2002 Settlement. The balance of Settlement Loans as of the Petition Date was $4,700,000. The Unrestricted Deposits, which comprise the balance of the Parish Claims, total $2,200,000. As of the Petition Date, the Diocese had made no payments on the Parish Loans. The Diocese anticipates that either pursuant to a Bankruptcy Court order prior to the Effective Date or pursuant to the Plan, the Unrestricted Deposits will be returned to the Parishes. Treatment of Tort Claims Under Settlement Trust Pursuant to the Plan, the Special Arbitrator will consider each Tort Claim of a Settling Tort Claimant. The Special Arbitrator will Allow or Disallow the Claim. If the Tort Claim is Allowed, the Special Arbitrator will classify each Claim as a Relationship Tort Claim, a Tier One Claim, a Tier Two Claim, a California Tier Claim, a Tier Three Claim or a Tier Four Claim. If a Tort Claim is Disallowed, the Tort Claim will not be placed in a Tier and the Tort Claimant will take nothing under the Plan. Settling Tort Claimants with Allowed Tort Claims will receive at least the Initial Distribution Amounts for their Tiers: Initial Distribution Amount ------------------- Tier One $100,000 Tier Two 200,000 California Tier 300,000 Tier Three 425,000 Tier Four 600,000 Relationship Tort Claimant A Relationship Tort Claimant will receive 5% of the direct victim's Initial Distribution Amount. No distribution will be made to a Relationship Tort Claimant until the Tort Claim of the son or daughter or spouse has been Allowed. If the Claim of the direct Tort Claimant is Disallowed, the Claim of the Relationship Tort Claimant will also be Disallowed and the Relationship Tort Claimant will receive nothing under the Plan. If the Claim of the Tort Claimant is Allowed, the Relationship Tort Claimant will receive the Relationship Tort Claim Distribution Amount, provided that if there is more than one son or daughter who is a Tort Claimant with an Allowed Tort Claim, the Determination and Treatment of Unknown Tort Claims Relationship Tort Claim Distribution Amount will be limited to the highest Initial Distribution amount for a son or daughter regardless of how many children are Tort Claimants with Allowed Tort Claims. In addition, there will be only one Relationship Tort Claim Distribution Amount per family so that if two parents filed Relationship Tort Claims, regardless of whether they are married at the time of Allowance and payment, only one payment will be made and the parents can determine how the Relationship Tort Claim Distribution Amount will be split. Treatment of Tort Claims Under Litigation Trust Tort Claims of Non-Settling Tort Claimants will be determined by the Bankruptcy Court, a jury or the District Court -- depending on the rights asserted or waived by a Non-Settling Tort Claimant. Recovery will be limited to the lesser of: (i) the judgment; (ii) $425,000; or (iii) a Pro Rata share of the amount allocated to the Litigation Trust. Any jury trial or Court trial of a Non-Settling Tort Claimant will be held in the U.S. District Court for the District of Arizona, Tucson Division, or in the Bankruptcy Court. Any objection to a Non-Settling Tort Claimant's Claim prior to the Confirmation Date will constitute commencement of the action to determine the Allowance or Disallowance of the Tort Claim. Litigation Trust Funding If any Tort Claimants opt into the Litigation Trust, the Litigation Trust will be funded with 10% of the Initial Contribution, which is $15,700,000, to be paid to the Trustee from the Settlement Trust after the Effective Date, unless the Court determines that a lesser amount is sufficient to fund the Litigation Trust. The Court will determine the final allocation of the transferred Cash and Assets between the Settlement Trust and the Litigation Trust, if necessary, as part of the confirmation process. If few Tort Claimants opt into the Litigation Trust, the Diocese and the Tort Committee will request that a lesser amount be used to fund the Litigation Trust. In all events, there is a limitation on the recovery amount a Non-Settling Tort Claimant can receive regardless of the amount of the judgment entered in any litigation regarding the Tort Claim. If a Tort Claim is Disallowed, the Tort Claim will not be placed in a Tier and the Tort Claimant will take nothing under the Plan. Tort Compromise Claim Under certain circumstances, the Diocese and the Tort Committee can offer a Tort Claimant the opportunity to participate as a Tort Compromise Claim after the Effective Date so long as the Tort Claimant's Claim has not yet been Disallowed by the Special Arbitrator or an adverse ruling on the Tort Claim been rendered against a Non-Settling Tort Claimant. Tort Claimants who elect on the Ballot to have their Tort Claims treated as a Tort Compromise Claim will receive a lump sum one- time payment of $15,000 on the Effective Date. The Tort Claimant, the Diocese or the Tort Committee can request an evidentiary hearing and present witnesses and other evidence relevant to the evaluation of a Tort Claim or Unknown Tort Claim by the Special Arbitrator. The Tort Claimant or Unknown Tort Claimant, the Diocese or the Tort Committee can request the Special Arbitrator to issue subpoenas compelling the attendance of witnesses at the evidentiary hearing. The Special Arbitrator may also request from the Tort Claimant, the Tort Committee or the Debtor any materials that will aid the Special Arbitrator in evaluating a Tort Claim. The Special Arbitrator will give notice to the Reorganized Debtor, the Tort Claimant, and Stinson Morrison Hecker LLP and other professionals that the Tort Committee may retain, of the Allowance of any Tort Claim and the Tier in which the Special Arbitrator is Allowing the Tort Claim. The Reorganized Debtor, the Tort Claimant or the Tort Committee may object to the Allowance, including the Tier placement by written objection to the Special Arbitrator with 20 days of receiving the notice. The Special Arbitrator will serve notice on the Reorganized Debtor, the Tort Claimant and the Committee Professional if the Special Arbitrator is changing the Tier Placement or decision to Allow the Tort Claim. Establishment of Unknown Claims Reserve Tucson will establish a $5 million Unknown Claims Reserve from which Unknown Tort Claims that are Allowed by the Special Arbitrator will be paid. The Unknown Claims Reserve will be funded over a period of time from the remainder of the Initial Contribution, if any, and other sources. If the Court determines that the Unknown Claims Reserve should be reduced or upon termination of the Unknown Claims Reserve, any reduction or termination will be subject to the Sharing Arrangement. After application of the Sharing Arrangement, the amount not distributed to the Diocese will be used to increase the Distributions to the Settling Tort Claimants with Allowed Tort Claims in accordance with the Weighted Distribution Ratio. Bishop Kicanas discloses that the Trustee of the Settlement Trust will be directed to segregate $100,000 of the Initial Contribution Amount to allow the Unknown Claims Representative to investigate and, if necessary, pursue possible recoveries that might be within the Estate's strong-arm powers with respect to certain Avoidance Actions that will be assigned to him. This authority will not extend to the Parish property issue, which will be resolved by the Plan and any agreements with the Parishes. Review of Tort Claims Continues Rev. Kicanas tells the Court that 56 Tort Claims remain. However, 23 of the Claims require additional information prior to being Allowed either because they require additional proof as to the allegation, or they appear to be barred by the statute of limitations. The Third Amended Plan contemplates giving the Tort Claimants an election to have their Tort Claims treated as Tort Compromise Claims. The Diocese is presently working with the Official Committee of Tort Creditors and a group of the remaining Tort Claimants and their counsel to resolve allowance and treatment of their Tort Claims under the Settlement Trust. The Diocese anticipates that the Tort Committee will be filing objections to a number of Tort Claims. Lina Rodriguez as Special Arbitrator The Diocese, the Tort Committee and the Claims Representatives agree that Lina Rodriguez will serve as the Special Arbitrator. Ms. Rodriguez began her career in private practice at a Tucson law firm. She was appointed as a Pima County Superior Court Judge in 1984 and served 20 years in that position. She retired recently. While on the bench, Ms. Rodriguez presided over a variety of cases. She also served as an arbitrator and mediator both while she was a sitting judge and after. The parties believe that Ms. Rodriguez, given her breadth of experience, is particularly well suited for the position. She has also agreed to serve in that capacity. As Special Arbitrator, Ms. Rodriguez' decision will be final and unappealable. Settling Insurers Each insurance company or insurance broker providing an insurance policy to the Diocese for liability arising from or related to Tort Claims will be given an opportunity to participate in the Plan and become a Settling Insurer. Any Insurance Company that fails to settle with the Diocese on terms and conditions acceptable to the Diocese and approved by the Bankruptcy Court will not receive the benefits of a Settling Insurer under the Plan. Sharing Arrangement The Diocese and the Tort Committee have agreed on a Sharing Arrangement whereby, under certain circumstances, the Diocese will share in a percentage of the amounts to be distributed to the Settling Tort Claimants: (a) Any amounts in the Unknown Claims Reserve that are released for distribution to Settling Tort Claimants will be split so that 20% will be paid to the Diocese to be used for Special Projects and 80% will be paid to the Trustee of the Settlement Trust to make additional distributions to the holders of Allowed Settling Tort Claims in accordance with the terms of the Plan. (b) The Diocese may also receive additional amounts as may be agreed upon by the Diocese and the Committee prior to the Confirmation Date. (c) If the amounts paid into the Fund equal or exceed $20,000,000, then the Fund in excess of $20,000,000 will be shared: Amounts Paid into the Fund Sharing Arrangement -------------------------- ------------------- $20,000,000 to $21,000,000 10% to the Diocese 90% to the Trustee $21,000,000 to $22,000,000 20% to the Diocese 80% to the Trustee $22,000,000 to $23,000,000 30% to the Diocese 80% to the Trustee Over $23,000,000 40% to the Diocese 60% to the Trustee The Diocese will use any amounts received for Special Projects, which will include: (1) matters related the identification of sexual abuse, (2) the training and education of employees of the Diocese and other Catholic-related entities within the territory of the Diocese regarding, among other things: * reporting requirements under applicable law of any acts of suspected sexual abuse; * dealing with victims of sexual abuse; * establishing programs for the prevention of sexual abuse; * selection, education, screening, training and orientation of priests, teachers, deacons, volunteers and other workers in the Diocese regardless of whether the individuals are directly employed by or volunteer for the Diocese or employed or volunteer for any other Catholic-related entities; * establishment of youth programs and the training and supervision of leaders for the programs; * counseling and other programs for the treatment of the effects of sexual abuse whether provided directly by the Diocese, the Victim Assistance Program or some other entity or person; and * all costs associated with the Office of Child, Adolescent and Adult Protection or other similar entity established by the Diocese, and any other programs or activities related to the treatment of sex abuse victims and programs related to the prevention of sexual abuse, or any other programs which the Diocese reasonably determines will assist it in preventing incidents of sexual abuse by clergy, other workers or volunteers who work or volunteer in the Diocese and in other Catholic organizations within the Diocese's territory. Continuation of Tort Committee Rev. Kicanas clarifies that upon the occurrence of the Effective Date, the Tort Committee will continue for purposes specified in the Plan. Except with respect to certain provisions contained in the Plan regarding the Unknown Claims Reserve and any assigned Avoidance Actions, the Unknown Claims Representative and the Guardian ad Litem will be released from all rights and duties arising from or related to the Reorganization Case. A full-text copy of Tucson's Third Amended Disclosure Statement showing the changes is available for free at: http://bankrupt.com/misc/tucson_third_amended_disc_statement.pdf A full-text copy of Tucson's Third Amended Reorganization Plan showing the changes is available for free at: http://bankrupt.com/misc/tucson_third_amended_plan.pdf The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) CLARENT CORP: Trustee Has Until Aug. 26 to File Notices of Removal ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California gave Uecker & Associates, Inc., the Liquidating Trustee appointed pursuant to the confirmed chapter 11 plan of Clarent Corporation, more time, through and including Aug. 26, 2005, to file notices of removal with regard to pre-petition Civil Actions pursuant to 28 U.S.C. Section 1452 and Rules 9006 and 9027 of the Federal Rules of Bankruptcy Procedure. The Court confirmed the Liquidating Trustee's Second Amended Liquidating Plan of Reorganization on April 1, 2004. Pursuant to the confirmed Plan, Uecker & Associates is charged with liquidating the Debtor's estate. Uecker & Associates explains that various lawsuits were commenced against the Debtor and its former officers and directors. Those lawsuits are pending in courts across the country. Uecker & Associates reminds the Court that it approved a Memorandum of Understanding, which is a global settlement that tentatively resolves those actions and proceedings. Several of the Memorandum of Understanding's terms and requirements have yet to be fulfilled. Until the global settlement is finalized, Uecker doesn't want to lose the right to remove the underlying lawsuits from then remote courts to the Northern District of California. While the Bankruptcy Court has approved the Memorandum, many of the other conditions under the Memorandum will not likely occur for several months. Uecker & Associates submits that the extension is necessary in order to preserve its right to remove the civil actions in the event the Memorandum becomes null and void or otherwise of no force and effect, thereby protecting the estate's right to economically adjudicate lawsuits pursuant to 28 U.S.C. Section 1452 if the circumstances warrant removal for the civil actions. Furthermore, the extension will not prejudice any adversaries to the civil actions as those adversaries whose proceedings are removed may have their cases remanded pursuant to 28 U.S.C. Section 1452(b). Headquartered in Redwood City, California, Clarent Corporation provided voice solutions for next generation networks. The Company filed for chapter 11 petition on Dec. 13, 2002 (Bankr. N.D. Calif. Case No. 02-33504). Debra I. Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $402,393,000 and total debts of $101,539,000. The Court confirmed the Debtor's chapter 11 Plan on April 1, 2004. Uecker and Associates, Inc., is the Liquidating Trustee for the Debtor's confirmed Plan. Craig C. Chiang, Esq., at Buchalter, Nemer, Fields and Younger represents the Liquidating Trustee. CLARENT CORP: Trustee Has Until Sept. 30 to Object to Claims ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California gave Uecker & Associates, Inc., the Liquidating Trustee appointed pursuant to the confirmed chapter 11 plan of Clarent Corporation, an extension, through and including Sept. 30, 2005, to object to claims filed by the company's creditors. The Court confirmed the Liquidating Trustee's Second Amended Liquidating Plan of Reorganization on April 1, 2004. Uecker & Associates explains that it recently entered into a Court approved Memorandum of Understanding, which tentatively resolves a multitude of lawsuits pending across the country, principally involving allegations of securities fraud against the Debtor's former directors and officers. One of the disputes that the Memorandum tentatively resolves is the Settling directors and officers' claims for indemnification against the Debtor. Several of the Settling Ds & Os have filed proofs of claim against the estate for indemnification, allegedly arising from pre-petition indemnity agreements entered into with the Debtor. Under the terms of the Memorandum, the Settling Ds & Os will release and take steps to withdraw their proofs of claim Uecker & Associates says that while the Bankruptcy Court has approved the Memorandum, a veritable laundry list of requirements in the Memorandum have yet to be fulfilled. The Memorandum provides that if both the Bankruptcy Court and the District Court do not enter orders approving the Memorandum by July 31, 2005, then the Memorandum will be null and void and of no further force and effect, unless the settling parties agree to extend the deadline by written stipulation. Uecker & Associates gave the Court two reasons in support of the extension: a) the extension is necessary to ensure its ongoing right to object to the Settling Ds & Os claims, and to maintain its right object to certain other significant claims, unrelated to the Settling Ds & Os, that are also currently under review and the subject of ongoing settlement discussions; and b) the extension is in the best interests of the estate and its creditors, as it will preserve the Liquidating Trustee's right to object to significant claims in the event they are not resolved through either the Memorandum or ongoing settlement discussions. Headquartered in Redwood City, California, Clarent Corporation provided voice solutions for next generation networks. The Company filed for chapter 11 petition on Dec. 13, 2002 (Bankr. N.D. Calif. Case No. 02-33504). Debra I. Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $402,393,000 and total debts of $101,539,000. The Court confirmed the Debtor's chapter 11 Plan on April 1, 2004. Uecker and Associates, Inc., is the Liquidating Trustee for the Debtor's confirmed Plan. Craig C. Chiang, Esq., at Buchalter, Nemer, Fields and Younger represents the Liquidating Trustee. COLLINS & AIKMAN: Aspen Reports 8.37% Stake in Collins & Aikman --------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Aspen Advisors, LLC, and Nikos Hecht disclose that they are deemed to beneficially own 7,000,000 shares of Collins & Aikman Corp. common stock, which represent 8.37% of the 83,600,000 shares issued and outstanding at September 30, 2004. In addition, Aspen Partners Series A, a series of Aspen Capital Partners, LP, and Aspen Capital, LLC, disclose that they are deemed to beneficially own 5,770,500 shares of Collins & Aikman common stock, which represent a 6.9% equity stake in the Company. Aspen Partners directly owns 5,770,500 shares; private clients of Aspen Advisors own the other 1,229,500 shares. Aspen Capital is the general partner of Aspen Partners. Thus, Aspen Capital may be deemed to share beneficial ownership of the Common Shares owned directly by Aspen Partners. Mr. Hecht is the managing member of Aspen Capital and of Aspen Advisors. As the managing member and owner of a majority of the membership interest in Aspen Advisors and Aspen Capital, Mr. Hecht may be deemed to be the controlling person of Aspen Advisors and Aspen Capital and, through Aspen Capital, Aspen Partners. Aspen Advisors, as investment manager for Aspen Partners and its private clients, has discretionary investment authority over the Common Shares held by Aspen Partners and the private clients. Accordingly, Mr. Hecht may be deemed to be the beneficial owner of the Common Shares held by Aspen Partners and the private clients of Aspen Advisors. Aspen Partners and Aspen Capital disclaim any beneficial interest in the Common Shares owned by the accounts managed by Aspen Advisors. 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 Bankruptcy News, Issue No. 04; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONTINENTAL AIRLINES: Closes New $300 Mil. Secured Loan Facility ---------------------------------------------------------------- Continental Airlines and its two wholly owned subsidiaries, Air Micronesia, Inc., and Continental Micronesia, Inc., closed on a secured loan transaction pursuant to a Credit and Guaranty Agreement and several related security agreements. The total loan amount borrowed by the Company and CMI is initially $300 million. In certain circumstances, the amount that may be borrowed by CMI and the Company under the facility may be increased by up to $50 million within 30 days of the initial borrowings. The subsidiaries have unconditionally guaranteed the loan to the Company, and the Company and AMI have unconditionally guaranteed the loan to CMI. The loans have a term of six years and are non-amortizing, except for certain mandatory prepayments described below. The loans accrue interest at a floating rate per annum determined by reference to the three-month London Interbank Offered Rate, known as LIBOR, plus a margin of 5.375% per annum. The loans and guarantees are secured by certain U.S.-Asia routes and related assets of the Company, all of the outstanding common stock of AMI and CMI and substantially all of the other assets of AMI and CMI, including route authorities and related assets. The loan documents require the Company to maintain a minimum balance of unrestricted cash and cash equivalents of one billion dollars at the end of each month. The loans may become due and payable immediately if the Company fails to maintain the monthly minimum cash balance and upon the occurrence of other customary events of default under the Credit and Guaranty Agreement. If the Company fails to maintain a balance of unrestricted cash and cash equivalents of $1,125,000,000, the Company and CMI will be required to make a mandatory prepayment of the loans equal to one- seventh of the original amount of the loans. In addition, if the value of the collateral securing the loan, as shown in periodic appraisals, is less than a specified ratio, the Company and CMI will be required to post additional collateral or prepay the loans to maintain the specified loan to value ratio. Also, if AMI or CMI receives cash proceeds in certain circumstances from the sale of assets or similar events, the loans must be prepaid in the amount of such proceeds. The Company intends to use the loan proceeds for general corporate purposes. Merrill Lynch Mortgage Capital Inc. is acting as the administrative agent under the loan facility. The loans will be held by Merrill Lynch and a group of other lenders. 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. DELTA AIR: May 2005 System Traffic Up 9.4% From Last Year --------------------------------------------------------- Delta Air Lines (NYSE: DAL) reported traffic results for May 2005. System traffic for May 2005 increased 9.4 percent from May 2004 on a capacity increase of 5.7 percent. Delta's system load factor was 76.3 percent in May 2005, up 2.5 points from the same period last year. Domestic traffic in May 2005 increased 7.4 percent year over year, while capacity increased 4.2 percent. Domestic load factor in May 2005 was 74.9 percent, up 2.2 points from the same period a year ago. International traffic in May 2005 increased 16.3 percent year over year on an 11.2 percent increase in capacity. International load factor was 81.3 percent, up 3.6 points from May 2004. During May 2005, Delta operated its schedule at a 98.8 percent completion rate, compared to 99.0 percent in May 2004. Delta boarded 10,527,172 passengers during the month of May 2005, an increase of 4.1 percent from May 2004. Delta Air Lines -- http://delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 490 destinations in 85 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. At March 31, 2005, Delta Air's balance sheet showed a $6.6 billion stockholders' deficit, compared to a $5.8 billion deficit at Dec. 31, 2004. DP 8 LLC: Vanderbilt Farms Files Plan of Reorganization ------------------------------------------------------- Vanderbilt Farms, LLC, a creditor in DP 8, LLC's chapter 11 case, delivered a Disclosure Statement to the U.S. Bankruptcy Court for the District of Arizona explaining its First Amended Plan of Reorganization. Vanderbilt Farms submitted the reorganization plan on May 26, 2005. Vanderbilt Farms' Claim Vanderbilt Farms' claim comes from debt service and other carrying costs it shouldered on behalf of DP 8 in connection with the purchase of the Meridian Ranch, a 750-acre property located on the border between Pima and Maricopa counties in Arizona. Vanderbilt Farms made this accommodation to DP 8, which did not have sufficient funds to join the purchase, on the condition that its loan would be paid with 20% interest. Vanderbilt Farms obtained a loan from Bryant Stooks to pay for debt service and carrying costs associated with the Meridian purchase. Vanderbilt Farms also claims that it has a verbal agreement with Marty De Rito, the former majority owner of DP 8, stipulating a 50% share of profits from the Meridian Ranch. No written contract was signed to formalize this agreement. Sale of De Rito's Interest in DP 8 In June 2004, Mr. De Rito resigned as DP 8's manager and sold his 49% membership interest in DP 8 to Vanderbilt Farms. DP 8's membership structure at the time of Mr. De Rito's departure was: Member Interest ------ -------- De Rito 49.1136% Candice Company 34.3795% Lobollanta Dairy, Inc. 10.8050% J.B. Holdings, Inc. 3.9291% Southwest Properties, Inc. 1.7728% Kathy Aleman and Daryl Wolfswinkel gained control of DP 8 after Mr. De Rito's resignation. Ms. Aleman and Mr. Wolfswinkel have refused to recognize the validity of the membership interest sale. The First Amended Plan of Reorganization Vanderbilt Farms' Plan proposes to: a) resolve all disputes among the LLC members and restructure DP 8's management; b) determine its profit share claim in the Meridian property; and c) provide other members not wishing to remain in reorganized DP 8 a chance to sell their interests at a fair price. The Plan groups claims and interests into six classes. The first four classes, composed of administrative expenses; claims secured by liens on the real property; claims of the owners of property adjacent to the real Property, on which the Debtor and its co- tenants hold repurchase options; and claims not holding security or entitled to priority, will be paid in full, in cash, on the effective date of the Plan. Vanderbilt Farms' unsecured claim shall be satisfied by an unsecured promissory note from DP 8, bearing below-market interest at 4%. The note will mature two years after plan confirmation or the sale of the property. Holders of DP 8 membership interests can choose to receive a cash payment from Vanderbilt in exchange for their existing membership rights and interests. Withdrawing Members will no longer be members of DP 8, but will retain ownership of their respective economic interest until full payment is made. The Plan will be funded from the Debtor's cash on hand. Vanderbilt Farms will also advance any additional cash needed to make the payments. The Court will consider and rule on any objections or modifications to the Disclosure Statement at a hearing scheduled for June 30, 2005, at 1:00 p.m., at 230 N. First Ave., 7th Floor, Courtroom 702 in Phoenix, Arizona. Headquartered in Mesa, Arizona, DP 8 L.L.C., a real estate developer, filed for chapter 11 protection on July 30, 2004 (Bankr. Ariz. Case No. 04-13428). Dale C. Schian, Esq., at Schian Walker PLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection, it listed $13,626,000 in total assets and $3,663,678 in total debts. DP 8 LLC: Interest Holders Tap Kevin Petersen as Manager -------------------------------------------------------- Candice Company and Meridian Queen Creek Holdings, L.L.C., ask the U.S. Bankruptcy Court for the District of Arizona to appoint Kevin Petersen as the person to perform the duties of the debtor-in- possession in DP 8 L.L.C.'s chapter 11 case, on an interim basis. Candice Company, holding 34% of the voting ownership interest in DP 8, and Meridian Queen, holding 49% of the voting ownership interest in the Debtor, want Mr. Petersen to fill the vacancy left by the resignation of John Beerling as manager. The Debtor had three managers from 1999 until the resignation of Mr. Beerling. Candice explained that while unanimous consent of members will be required to remove a manager, a majority of members' interests can elect a replacement for a resigned manager. Mr. Petersen is a licensed real estate professional who is familiar with the real property owned by the Debtor and its co- tenants, and is well qualified to fill the role as the manager. No major decisions regarding the Debtor's property need to be made in the short term, Candice said. The Debtor is a manager-managed limited liability company according to Kathy Aleman and Daryl Wolfswinkel, whose affiliated companies control approximately 13% of the economic interests in the Debtor. A manager of a manager-managed limited liability company has full authority to act on behalf of the entity. Since Ms. Aleman and Mr. Wolfswinkel indicated that neither of them wish to continue to manage the debtor-in-possession, they asked the court to appoint a chapter 11 trustee. Candice argues that the appointment of a chapter 11 trustee is "too much medicine for too little ill under the circumstances of this case." Instead, the appointment of Mr. Petersen will provide a speedier and cheaper way to manage the Debtor's affairs. While Candice Company expects to review a disclosure statement accompanying the plan of reorganization filed by Vanderbilt Farms on May 26, 2005, Candice said the plan holds real promise as a long-term resolution of the issues which prompted the filing of the Debtor's chapter 11 case. Headquartered in Mesa, Arizona, DP 8 L.L.C., a real estate developer, filed for chapter 11 protection on July 30, 2004 (Bankr. Ariz. Case No. 04-13428). Dale C. Schian, Esq., at Schian Walker PLC, represents the Debtor in its restructuring efforts. Gerald K. Smith, Esq., at Lewis and Roca LLP, represents Candice Company. When the Debtor filed for protection, it listed $13,626,000 in total assets and $3,663,678 in total debts. EDDIE BAUER: Moody's Rates $300M Guaranteed Sec. Term Loan at Ba3 ----------------------------------------------------------------- Moody's Investors Service assigned these prospective ratings to Eddie Bauer, Inc.: * Senior Implied of (P)Ba3; * $300 Million Guaranteed Secured Term Loan of (P) Ba3. The outlook is stable. The proceeds of the term loan will be distributed to pre-petition general unsecured lenders in conjunction with the companies' planned exit from Chapter 11 in June 2005. The ratings are prospective until such time as the company emerges from bankruptcy. Upon emergence, the company also expects to have in place a $150 million revolving credit exit facility, which will not be rated. The Ba3 senior implied rating reflects: * the company's established and well recognized brand name; * its multi channel retail format which includes retail stores, catalog, and e-commerce; and * its solid free cash flow generation, and leverage and coverage metrics that are strong for the rating category. The ratings are also supported by the company's resonance with the male consumer, which differentiates it from most apparel retailers, as well as its strategic decision to exit the home business and its stable licensing revenue stream. The rating also considers the nature of the events that led to it filing for Chapter 11 in 2003 along with its parent company Spiegel, Inc. which were largely a result of a deterioration of Spiegel's credit card business and to a much lesser extent weak 2001 performance of Eddie Bauer. In addition, the rating encompasses the nature of the liabilities assumed by Eddie Bauer as a part of the bankruptcy process; these are predominantly a result of its guarantee of parent company obligations incurred to finance other subsidiaries' operating issues. In addition, the rating reflects the fact that the company was able to reject leases during the bankruptcy process which allowed it to exit underperforming stores. The rating is constrained by the company's: * weak performance of its retail stores with most of the operating income being earned by the outlet and direct divisions; * the potential need for further investment in IT; and * the company's significant over-capacity in its distribution center which makes it less efficient. In addition, the rating is constrained by the nature of the specialty apparel industry, which is highly seasonal, subject to intense competition, and fashion risk. Eddie Bauer's net sales for 2004 were approximately $1.2 billion, generating operating income of $108.4 million and EBIT margin of 8.8%. Moody's expects adjusted debt/EBITDAR for the fiscal year 2005 to be 4.4x, free cash flow to total debt to be 17%, and total coverage to be 3.7x. The company's solid free cash flow generation is supported by its ability to utilize approximately $250million of net operating losses going forward. The stable outlook reflects the company's ability to finance working capital and capital expenditures from internally generated cash flow, as well as Moody's expectation that it will maintain leverage and coverage ratios that are strong for the rating category over the next twelve months. The $300 million term loan is secured by a first lien on the trademark and distribution center and has a second lien on the inventory and accounts receivable. In addition, it is guaranteed by the domestic subsidiaries. The senior secured term loan is rated at the same level as the senior implied given its dominance in the capital structure, the strength of its collateral pool and distribution center, as well as the predominantly undrawn nature of the company's asset based revolver which provides additional asset coverage to the term loan. It is anticipated that the credit agreement will include two financial covenants, leverage and fixed charge coverage, as well as a 50% excess cash flow sweep. Moody's has assumed in its ratings that the covenant levels, once finalized, will include a reasonable amount of cushion. Ratings could move upward as the company demonstrates its ability to generate solid operating performance after its emergence from bankruptcy, as well as maintaining adjusted debt to EBITDAR below 4.0x and total coverage above 3.5x. Ratings could move downward should operating performance deteriorate such that free cash flow to adjusted debt falls below 5%. Headquartered in Redmond, Washington, Eddie Bauer, Inc. is a multi channel retailer that offers it products through its 381 retail and outlet stores in the U.S. and Canada along with its catalogs and e-commerce sites. Eddie Bauer, Inc. had revenues of approximately $1.2 billion in the year ended January 1, 2005. EDDIE BAUER: S&P Rates Proposed $300 Million Sr. Sec. Loan at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to specialty apparel retailer Eddie Bauer Holdings Inc. and a 'B+' bank loan rating to Eddie Bauer Inc.'s proposed $300 million senior secured term loan due 2011 and a '2' recovery rating. The outlook is positive. Proceeds of the term loan will be used to pay prepetition creditors pursuant to the Spiegel Inc.'s Plan of Reorganization in which Eddie Bauer Holdings will become the parent company of Redmond, Washington-based Eddie Bauer Inc. The term loan is part of the $450 million exit financing package for the company to emerge from Chapter 11. Concurrently, Eddie Bauer is also obtaining a five-year $150 million asset-based revolving credit facility. The company expects to emerge from Chap. 11 in June 2005 with total funded debt of about $300 million. The bank loan and recovery ratings indicate expectations for substantial (80% to 100%) recovery in the event of payment default. "The rating on Eddie Bauer Inc. reflects its participation in the highly competitive and fragmented specialty apparel retailing industry, substantial seasonality and fashion risk, as well as weak operating performance at its retail division," said Standard & Poor's credit analyst Ana Lai. In addition, Eddie Bauer will have substantial debt leverage pro forma for the transaction. Eddie Bauer's market position is supported by its recognized brand as a marketer of outdoor-inspired casual apparel. However, the $173 billion U.S. apparel industry is mature, highly competitive, and fragmented. In addition, the industry has to contend with continued price deflation due to production overcapacity, and a steady decline in consumer spending on apparel. The company competes with numerous specialty apparel retailers as well as department stores in the retail channel, and faces competitors such as L.L. Bean and Lands' End in the direct channel. Still, Eddie Bauer benefits from diversified distribution channels, with established outlet, direct and retail store channels. The operating performance of the outlet division has been consistent, providing over one-third of operating profits. The direct business has had satisfactory performance, generating good profitability. The retail channel has been restructured to improve its profitability. During the bankruptcy process, Eddie Bauer closed 88 underperforming stores. In addition, it plans to shut its unprofitable home concepts stores in 2005 and focus on the apparel business. Standard & Poor's expects Eddie Bauer to continue to rationalize its store base by reducing square footage at existing stores to improve its store productivity, which compares unfavorably to its peers. In addition to its apparel retailing business, the company also derives about 20% of its operating income from its licensing and international joint-venture operations. However, Standard and Poor's expects that earnings will be pressured as Eddie Bauer becomes a stand-alone company and incurs a higher fixed-expense structure following the 2004 sale of the Spiegel and Newport News catalog business. ENRON CORP: Asks SEC to Authorize Financing Until July 31, 2008 --------------------------------------------------------------- Pursuant to the Public Utility Holding Company Act of 1935, Enron Corp., on its behalf and on behalf of certain of its subsidiaries, asks the Securities and Exchange Commission to authorize certain financing, non-utility corporate reorganizations, dividends, affiliate sales of goods and services and other transactions, until July 31, 2008. According to Robert H. Walls, Jr., Enron's executive vice president and general counsel, the requested authorization will allow Enron and its subsidiaries to continue to operate their businesses. As previously reported, Enron registered as a holding company under the PUHCA on March 9, 2004. On that date, the SEC issued two orders: 1. The Omnibus Order, as amended by supplemental orders, authorized Enron and certain of its subsidiaries to engage in financing transactions, non-utility corporate reorganizations, the declaration and payment of dividends, affiliate sales of goods and services and other transactions needed to allow Enron to continue its businesses through the time leading up to the expected sale of Portland General Electric Company at which point Enron would deregister under the PUHCA. 2. The Plan Order authorizing the Debtors' Fifth Amended Joint Chapter 11 Plan, dated January 9, 2004. For the most part, Mr. Walls says, the authorizations requested in the application merely extend, until July 31, 2008, the authorizations granted by the SEC in the Omnibus and Supplemental Orders. In particular, the relief granted in the Omnibus Order and now restated in the application, include: -- authorization for intrasystem extensions of credit, cash management arrangements among Enron group companies other than Portland General, and for the issuance of debt by Portland General; -- permission for transactions involving the acquisition of securities, indemnifications and guarantees as they would occur in the context of the sale of any Enron group company (except Portland General) if the sale is in the ordinary course of business of a Reorganized Debtor and in furtherance of the Plan; -- general relief from the dividend and acquisition, retirement and redemption restrictions under the PUHCA to continue the administration of the Plan; -- authorization to restructure, rationalize and simplify or dissolve all of Enron's non-utility businesses and to implement settlements to simplify and restructure its businesses in furtherance of the Plan; -- authorization to engage in certain affiliate transactions; and -- approval of certain tax allocation agreements. If the SEC approves Enron's application, the authorizations would extend for three years the financing and other authorizations granted by the Commission in the Omnibus Order. Enron's authorizations under the Omnibus Order will terminate on July 31, 2005. Enron therefore asks the SEC to approve its application before July 31, 2005. A full-text copy of the Enron's Application is available for free at http://ResearchArchives.com/t/s?c 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. 143; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Calyon S.A. Holds $3.874 Million Allowed Claim ---------------------------------------------------------- Calyon S.A., as successor by merger to Credit Lyonnais S.A., filed proofs of claim against the Debtors for liabilities due under various prepetition contracts and for acts of fraud and misrepresentation under those contracts. The Debtors filed numerous objections to the Claims. To resolve their dispute, the Debtors and Calyon stipulate that: a. a portion of Claim no. 24959 representing Swap Transactions pursuant to the April 13, 1995 ISDA Agreement, will be deemed amended and assigned with a new claim number; b. the New Claim will allowed for $3,874,786 as a Class 4 general unsecured claim against Enron; and c. except for the Allowed Claim, other Calyon Claims or portions of the Calyon Claims are either withdrawn, expunged or disallowed. A chart showing the disposition of the Calyon Claims as agreed by the parties is available for free at: http://bankrupt.com/misc/CalyonClaimsDisposition.pdf 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. 143; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: China Basin Holds $1.5 Million Allowed Unsecured Claim ------------------------------------------------------------------ Enron Energy Services, Inc., asks the U.S. Bankruptcy Court for the Southern District Court for the New York to approve its settlement agreement with China Basin Ballpark Company, LLC, and San Francisco Baseball Associates LP. EESI, China Basin and San Francisco Baseball were parties to prepetition transactions for the sale of products or services. Pursuant to the Settlement Agreement, the parties agree that: 1. Each claim filed by or on behalf of China Basin and San Francisco against the EESI in connection with the Contracts will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable, expunged and disallowed, with the exception of: -- Claim No. 24791, which will be allowed as Class 12 unsecured claim for $500,000; and -- Claim No. 24792, which will be allowed as Class 12 unsecured claim for $1,500,000; and 2. Each scheduled liability related to the Counterparty will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable, expunged and disallowed. Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, asserts that the Settlement will clearly benefit the Debtor and its creditors because it will avoid future disputes and litigation concerning the Contracts. * * * Judge Gonzalez approves the Settlement Agreement. 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. 143; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXIDE TECH: In Talks to Amend $365 Million Credit Facility ---------------------------------------------------------- On June 2, 2005, Exide Technologies participated in a conference with its secured lenders to formally launch amendments to its $365 million senior credit facility. As previously reported, Exide said it expects to be in violation of its minimum consolidated EBITDA and leverage ratio financial covenants in the Credit Facility as of and for the fiscal year ended March 31, 2005. The Company estimates that its adjusted EBITDA for the fiscal year ended March 31, 2005, will be in the range of $100 million to $107 million. The expected covenant issues primarily relate to: -- the impact of commodity costs; -- the loss of overhead absorption due to an inventory- reduction initiative; -- other fourth-quarter inventory valuation adjustments; and -- costs associated with Sarbanes-Oxley compliance efforts. Presentation materials used during the conference are available for free at http://ResearchArchives.com/t/s?d Exide also disclosed that adjustments were made to reconcile its EBITDA for fiscal year 2005: Exide Technologies Adjusted EBITDA Reconciliation by Segment Fiscal Year Ended March 31, 2005 (in millions) Transportation Industrial Energy -------------- ----------------- North Europe North Europe America & ROW America & ROW ------- ------ ------- ------ Net income (loss) ($100.4)($112.1) ($19.7) ($108.1) Interest expense, net - - - - Income tax provision - - - - Fresh Start accounting adjustments, net - - - - Gain on discharge of liabilities subject to compromise - - - - ------ ------ ------ ------ EBIT (100.4) (112.1) (19.7) (108.1) Depreciation and Amortization 26.5 32.3 10.6 33.6 Goodwill impairment 122.0 117.6 37.4 122.4 Reorganization items, net - - - - Restructuring and Impairment 2.8 29.5 0.1 12.9 Other restructuring costs included in general and administrative expenses 0.7 - - 1.2 Currency remeasurement loss - - - - Loss on revaluation of foreign currency forward contract - - - - Unrealized gain on revaluation of warrants - - - - Loss (gain) on sale of capital assets 0.1 (0.1) 0.2 4.4 Non-cash increase in cost of sales from fresh start inventory step-up 0.9 1.0 0.2 1.4 Other non-cash losses (gains) 0.8 0.7 0.3 (1.8) ----- ----- ----- ----- ADJUSTED EBITDA $53.4 $68.2 $29.5 $68.1 ===== ===== ===== ===== Other Total ---------- ----------- Net income (loss) $1,595.8 $1,255.5 Interest expense, net 48.0 48.0 Income tax provision (benefit) 29.2 29.2 Fresh Start accounting adjustments, net (228.4) (228.4) Gain on discharge of liabilities subject to compromise (1,558.8) (1,558.8) ------- ------- EBIT (114.2) (454.5) ------- ------- Depreciation and Amortization 13.6 116.6 Goodwill impairment - 399.4 Reorganization items, net 26.8 26.8 Restructuring and Impairment 1.7 47.0 Other restructuring costs included in general and administrative expenses 3.0 4.9 Currency remeasurement loss 6.7 6.7 Loss on revaluation of foreign currency forward contract 13.2 13.2 Unrealized gain on revaluation of warrants (63.1) (63.1) Loss (gain) on sale of capital assets 2.1 6.7 Non-cash increase in cost of sales from Fresh Start inventory step-up - 3.5 Other non-cash losses (gains) ------- ------- ADJUSTED EBITDA ($112.0) ($107.2) ======= ======= Exide Technologies Adjusted EBITDA Reconciliation by Segment Three Months Ended March 31, 2005 (in millions) Transportation Industrial Energy -------------- ----------------- North Europe North Europe America & ROW America & ROW ------- ------ ------- ------ Net income (loss) ($3.8) ($17.5) $3.5 ($6.5) Interest expense, net - - - - Income tax provision - - - - Fresh Start accounting adjustments, net - - - - Gain on discharge of liabilities subject to compromise - - - - ------ ------ ------ ------ EBIT (3.8) (17.5) 3.5 (6.5) Depreciation and amortization 7.1 6.2 2.6 4.4 Goodwill impairment - - - - Reorganization items, net - - - - Restructuring and impairment 1.9 22.5 0.1 10.0 Other restructuring costs included in general and administrative expenses 0.7 - - 1.2 Currency Remeasurement loss - - - - Loss on revaluation of foreign currency forward contract - - - - Unrealized gain on revaluation of warrants - - - - Loss (gain) on sale of capital assets - (0.3) - 4.3 Non-cash increase in cost of sales from Fresh Start inventory step-up - - - - Other non-cash losses (gains) 0.2 0.2 0.6 0.4 ------ ------ ------ ------ ADJUSTED EBITDA $6.1 $11.1 $6.8 $13.8 ====== ====== ====== ====== Other Total ---------- ----------- Net income (loss) ($46.3) ($70.6) Interest expense, net 10.1 10.1 Income tax provision 0.9 0.9 Fresh Start accounting Adjustments, net - - Gain on discharge of Liabilities subject To compromise - - ------- ------- EBIT (35.3) (59.6) ------- ------- Depreciation and Amortization 4.2 24.5 Goodwill impairment - - Reorganization items, net 2.8 2.8 Restructuring and Impairment (1.1) 33.4 Other restructuring costs included in general and administrative expenses - 1.9 Currency Remeasurement loss (gain) 9.7 9.7 Loss on revaluation of foreign currency forward contract (8.6) (8.6) Unrealized gain on revaluation of warrants (1.6) (1.6) Loss (gain) on sale of capital assets 1.5 5.5 Non-cash increase in cost of sales from Fresh Start inventory step-up - - Other non-cash losses (gains) (1.5) (0.1) ------- ------- ADJUSTED EBITDA ($29.9) $7.9 ======= ======= Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on May 23, 2005, 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. As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'B-' from 'B+', and placed the rating on CreditWatch with negative implications. The rating action follows Exide's announcement that it likely violated bank financial covenants for the fiscal year ended March 31, 2005. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $750 million. The covenant violations would be a result of lower-than-expected earnings. Exide estimates that its adjusted EBITDA for the fiscal year ended March 31, 2005, will be only $100 million to $107 million, which is substantially below the company's forecast and 40% below the previous year. The EBITDA shortfall stemmed from high lead costs, low overhead absorption due to an inventory reduction initiative, other inventory valuation adjustments, and costs associated with accounting compliance under the Sarbanes- Oxley Act. Exide is working with its bank lenders to secure amendments to its covenants. "The company continues to be challenged by the dramatic rise in the cost of lead, a key component in battery production that now makes up about one-third of Exide's cost of sales," said Standard & Poor's credit analyst Martin King. FFCA SECURED: Fitch Junks 9 Classes of Franchise Loan Trusts ------------------------------------------------------------ Fitch takes these rating actions on the outstanding classes for these FFCA Secured Franchise Loan Trusts: Series 1996-C1: -- Class A affirmed at 'AAA'; -- Class B affirmed at 'AA'; -- Class C affirmed at 'A'; -- Class D affirmed at 'BBB'; -- Class E affirmed at 'BB'; -- Class F affirmed at 'B'; -- Class I-O affirmed at 'AAA'. Series 1997-1: -- Class A-2b affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class C-2 affirmed at 'A'; -- Class D-1 affirmed at 'BBB'; -- Class D-2 affirmed at 'BBB'; -- Class E-1 affirmed at 'BBB-'; -- Class E-2 affirmed at 'BBB-'; -- Class I-O affirmed at 'AAA'. Series 1998-1: -- Class A-1b affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class C-1 affirmed at 'A'; -- Class D-1 affirmed at 'BB'; -- Class I-O affirmed at 'AAA'. Series 1999-1: -- Class A-1a affirmed at 'AAA'; -- Class A1-b affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class B-1 downgraded to 'A' from 'AA-'; -- Class B-2 downgraded to 'A' from 'AA-'; -- Class C-1 downgraded to 'BBB' from 'A'; -- Class C-2 downgraded to 'BBB' from 'A'; -- Class D-1 downgraded to 'BBB-' from 'BBB+'; -- Class D-2 downgraded to 'BBB-' from 'BBB+'; -- Class I-O affirmed at 'AAA'. Series 1999-2: -- Class A-1a affirmed at 'A'; -- Class A-1b affirmed at 'BBB'; -- Class A-1c affirmed at 'AAA'; -- Class A-2 affirmed at 'A'; -- Class B-1 downgraded to 'B-' from 'BB'; -- Class B-2 downgraded to 'B-' from 'BB'; -- Class C-1 downgraded to 'CCC' from 'B+'; -- Class C-2 downgraded to 'CCC' from 'B+'; -- Class D-1 downgraded to 'CC' from 'B'; -- Class D-2 downgraded to 'CC' from 'B'; -- Class E-1 downgraded to 'C' from 'CCC'; -- Class E-2 downgraded to 'C' from 'CCC'; -- Class I-O affirmed at 'BBB'. Class A-1c is affirmed on the strength of an MBIA insurance policy. Series 2000-1: -- Class A-2 affirmed at 'AAA'; -- Class B downgraded to 'B' from 'BB'; -- Class C downgraded to 'CCC' from 'B'; -- Class D downgraded to 'CC' from 'CCC'; -- Class E downgraded to 'C' from 'CC'; -- Class I-O affirmed at 'BBB'. Class A-2 is affirmed on the strength of an MBIA insurance policy. The negative rating actions reflect additional reductions in the credit enhancement Fitch expects will be available to support each class in these transactions. These reductions are based on Fitch's expected recoveries on defaulted collateral. Fitch's recovery expectations are based on historical collateral-specific recoveries experienced in the franchise ABS sector. Rating affirmations are based on the transactions' performing within Fitch's expectations. FMC CORP: Moody's Reviews Ba1 Sr. Implied Rating & May Upgrade -------------------------------------------------------------- Moody's Investors Service placed the ratings of FMC Corporation (FMC -- Ba1 senior implied) on review for possible upgrade. FMC's existing debt ratings will likely be raised to Baa3 upon completion of an amended bank facility. The reviews are prompted by Moody's belief that the company has made significant progress reducing contingent liabilities and improving credit metrics, and that a general economic upturn will translate into improved performance for 2005 and 2006. In addition the review incorporates the new terms of the proposed bank facilities that will be unsecured and reflect the terms and conditions suitable for an investment grade profile. FMC's proposed senior secured credit facility consisting of a $350 million term loan A, and a $500 million revolving credit facility -- both to be extended to June 2010 will likely be raised to Baa3. Proceeds from the amended credit facility will be used to refinance the existing term loan A and to allow for the redemption of the $355 million 10.25% senior secured notes due 2009. FMC's ratings outlook, will be moved to stable. The other debt ratings that will be raised reflect the banks' willingness to forego a secured position such that all debt is now viewed as effectively pari passu. The actions are subject to a final review of the documentation of the proposed bank agreements. The SGL-2 rating was affirmed and will be withdrawn upon completion of the proposed bank agreements. Ratings placed on review for possible upgrade: -- $500 million revolver due 2010- currently Ba1 - will be raised to Baa3 -- $350 million term loan A due 2010 -- currently Ba1 - will be raised to Baa3 -- $45 million debentures due 2011 -- Ba2 - will be raised to Baa3 -- Medium-term notes due 2005 to 2008 -- Ba2 - will be raised to Baa3 -- Senior unsecured industrial revenue bonds due 2007 to 2032 -- Ba3 - will be raised to Baa3 -- $355 million 10.25% senior secured notes due 2009 -- Ba2 will be raised to Baa3 * -- $100 million senior secured letters of credit facility due 2009 -- Ba1will be raised to Baa3** -- Senior Implied Rating Ba1** -- Issuer Rating -- Ba3** Ratings affirmed -- Speculative Grade Liquidity Rating -- SGL-2** * Will be withdrawn upon redemption. ** Will be withdrawn upon completion of the new bank facilities The proposed Baa3 rating reflects FMC's moderate leverage with adjusted debt to EBITDA of 3.4 times for the period ended December 31, 2004. Other key factors include: * product, customer, and geographic diversification; * good business scale with 2004 revenues exceeding $2 billion; and * leading market positions in such products as peroxides, carrageenan, and soda ash (the company typically has number one or two market share in most of its product lines). In addition, Moody's believes FMC's results are somewhat less susceptible to the economic cycle than other chemical manufacturers due to the size of their agricultural and biopolymers businesses. Additionally, Moody's believes that the impact of rising petrochemical feedstock and energy costs is less than many other commodity chemical producers. The proposed ratings are also supported by: * improving operating margins; * the strong performance of the Agricultural segment; * improving supply/demand fundamentals within the Industrial Chemicals segment; and * the use of near-term asset sales to support debt reduction. However, the proposed ratings also reflect: * agricultural market risks including the seasonality of sales; * the significant influence of weather; and * the effect of crop prices and government subsidies on farmers' use of FMC's herbicide and insecticide products. The proposed ratings also consider: * continued spending for environmental remediation; * an underfunded pension balance; * operating leases; * the cylicality of the Industrial Chemicals segment; and * the potential for higher input costs to pressure operating margins. The rating of the amended credit facility reflects both its unsecured position along with the presence of domestic subsidiary guarantees. The primary borrowers under the credit facility will be FMC Corp. and certain foreign subsidiaries. Domestic borrowings under the credit facility will be guaranteed by FMC's direct and indirect material domestic subsidiaries and international borrowings will be guaranteed by FMC Corporation. The credit facility will be unsecured, a material change from the current facilities. Moody's does not believe that the guarantees, as currently structured, represent enough of a benefit to the banks to suggest notching differences with other debt. FMC's position as a borrower is further improved by the elimination of a mandatory prepayment provision and by the removal of limitations on acquisitions and dividends. In the event that both S&P and Moody's rate FMC investment grade, the material adverse change and litigation representations required at every borrowing will also be eliminated. FMC's existing $355 million 10.25% senior secured notes are to be redeemed as part of this refinancing. This debt is currently secured on a second-priority basis by certain domestic manufacturing and processing facilities and by FMC's shares of FMC Wyoming Corp., and are guaranteed by the same subsidiaries as the credit facility. The security falls away if FMC's bank facilities are unsecured. Many of the provisions (including limitation related to asset sales, additional indebtedness, and restricted payments) also fall away in the event that both S&P and Moody's rate the 10.25% notes investment grade. FMC's existing medium- term notes and debentures have substantially the same security provisions as the senior secured notes, and if the 10.25% notes are repaid the remaining medium-term notes and debentures will be equally and ratably positioned with the unsecured bank facility. The proposed ratings are further supported by FMC's moderate leverage and the proposed refinancing will reduce the company's annual interest expense by a run rate of approximately $20 million. FMC's reported interest expense in 2004 was just over $80 million. The company has announced its intention to reduce net debt to $600 million by the end of 2005. The ratings also incorporate more favorable industry dynamics within FMC's soda ash product line, whereby soda ash is the largest component of Industrial Chemicals revenues (FMC markets soda ash through its 87.5% interest in FMC Wyoming Corp.). Soda ash capacity utilization has significantly improved from the particularly weak levels experienced in 2000 and 2001, and current operating levels are close to 100% for operating units in the U.S. Moreover, the closure of American Soda by Solvay and price increases announced by the industry should significantly improve operating performance in 2005. Moody's recognizes that the company will not realize the full benefit of these price increases in 2005 as a significant portion of customer contracts contain price restrictions. Most of these restrictions should expire by the end of 2006. The proposed ratings also reflect improving fundamentals in phosphorous chemicals (Astaris) and hydrogen peroxide, which have also benefited from higher demand and industry capacity shut- downs. Within North America, FMC is a leading producer of hydrogen peroxide and Astaris is the second leading producer of phosphorous chemicals, behind Innophos. Moody's expects that FMC will benefit from the improving economy in North America and the tighter supply/demand balance for both of these products. Nevertheless, Moody's is concerned that Astaris is at a moderate cost disadvantage compared to Innophos, due to the lack of vertical integration and the inability to produce all of its downstream products from wet acid. Astaris, uses thermal acid to produce certain of its products. The proposed ratings also consider the strong performance of FMC's Agricultural segment, driven by a favorable global farm economy and above-normal pest pressures in Latin America. The Agricultural segment's EBITDA had been steady at $100 million over the three years ending 2003 and increased to just under $150 million in 2004. Operating margins have improved above 20%. Moreover, this segment should continue to post good earnings due to a healthy pipeline of new products and high crop prices. Moody's also derives comfort from the fact that insecticides (75% of Agriculture segment revenue) tend to be less susceptible to competition from GMO crops compared to herbicides. However, the ratings recognize that FMC is a small player in both insecticides and herbicides and actions by competitors could have a significant negative impact on FMC's financial performance. The proposed stable outlook reflects Moody's expectation that the company will generate at least $120 million of free cash flow in 2005, and that it will sustain or increase the current volume of business. The ratings could be further upgraded if stronger-than- expected demand or a further reduction in contingent liabilities results in a sustainable annual retained cash flow to adjusted debt above 35%. Conversely, the ratings or outlook could be lowered if a debt-financed acquisition or a reversal in recent positive demand trends results in adjusted debt to EBITDA exceeding 4.0 times or free cash flow to adjusted debt less than 10% over the next 12 months. Moody's notes that upon completion of management's often stated goal of reaching investment grade further debt reduction in 2006 and 2007 is likely to be limited. At some point, Moody's expects FMC to consider the reinstitution of dividends and other mechanisms to return cash to shareholders. Moody's believes that these shareholder efforts will remain consistent and balanced with the goal of maintaining an investment grade profile. The rating also derives support from FMC's proposed $500 million revolver that will be unsecured and its terms that mirror those of an investment grade facility. The ratings also acknowledge that the city of San Jose approved a two-phase purchase agreement with FMC with respect to 75 acres of property for a purchase price of $81 million. The initial phase of this agreement was completed in the first quarter for some $56 million. The proposed rating reflects an anticipated improvement in cash flow following a reduction in certain contingent obligations. The rating also derives support from: * the company's modestly drawn $500 million revolver; * a significant pro forma unrestricted cash balance; * a favorable debt maturity profile; and * improving earnings, primarily stemming from the strong performance of the agricultural business. However, the rating also reflects: * seasonality stemming from the agricultural business; * the likelihood for increased capital spending; and * that spending for environmental remediation and other legacy liabilities will continue to pressure cash flow. More specifically, Moody's estimates that the company will spend approximately $20 million in 2005 for the remediation and shutdown of the Pocatello, Idaho facility as well as other restructuring spending. Additionally, Moody's anticipates voluntary pension contributions continuing in 2005 and beyond (pension plan was funded 86.2% and 85.9% as of 2003 and 2004 year-end, respectively). Overall, Moody's expects the company will generate free cash flow in the range of $120 million in 2005 (excluding Astaris payments) and will be slightly higher in 2006. FMC Corporation (Ba1 senior implied) is a diversified chemicals company headquartered in Philadelphia, Pennsylvania. The company reported revenues of $2.0 billion for the period ended December 31, 2004. FRIENDSHIP VILLAGE: New Debt Cues Fitch to Lower Rating to BB+ -------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to these Friendship Village of Schaumburg bonds that which will be issued through the Illinois Finance Authority: -- $76.79 million series 2005A; -- $5 million series 2005. Fitch will rate the $45 million series 2005C variable-rate demand bonds at a later date. Fitch has also downgraded the following fixed-rate revenue bonds for FVS, also issued through the Illinois Health Facilities Authority: -- $6.2 million series 1994 to 'BB+' from 'BBB'. FVS' series 1997B variable-rate demand bonds, outstanding in the amount of $10 million, are not rated by Fitch. The proceeds of the 2005 bonds will be used to refund all of FVS' outstanding indebtedness, including the series 1994 and 1997 A&B bonds and will provide funds to construct approximately 170 additional independent living units, a wellness center and related common space. In addition, series 2005 bond proceeds will be used to fund a debt service reserve fund, fund capitalized interest for 24 months, fund letter of credit and remarketing fees for 24 months and pay the costs of issuance. The bonds are expected to price the week of June 27, 2005, through negotiation, led by Ziegler Capital Markets Group. The downgrade to 'BB+' is a result of the risks associated with the large expansion project and the additional debt being incurred by FVS, whose balance sheet will weaken significantly as a result of the additional debt with leverage ratios increasing and certain liquidity measures declining. Days cash on hand is reasonable at approximately 198 days, but below the Fitch median for 'BBB' rated continuing care retirement communities of 262 days. Proforma debt service as a percentage of revenues at fiscal year end 2005 will increase to a high 24% while proforma cash to debt will decrease to a low of approximately 15%. Fitch's additional concerns include fill-up risks associated with the new units and a competitive service area. Credit strengths include FVS' long history of providing services to the senior population in its service area, an experienced management team, the facility's sound historical operating history and high occupancy rates, and adequate historic coverage of pro forma maximum annual debt service of 1.2 times (x) and 1.5x in fiscal years 2004 and 2005, respectively. Friendship Village of Schaumburg is a Type B CCRC currently consisting of 467 independent living apartments, 28 independent living cottages, 98 assisted living units (including 23 dementia units) and 250 skilled nursing beds. The facility is located in Schaumburg, IL, approximately 30 miles northwest of downtown Chicago. FVS' disclosure language provides for annual audited financials and quarterly financial statements to be delivered to bondholders. Fitch views FVS' disclosure language favorably. GLOBAL CROSSING: Eight Securities Fraud Plaintiffs Amend Complaint ------------------------------------------------------------------ Eight plaintiffs filed an amended consolidated securities class action against Global Crossing Ltd. and certain of its officers and directors in the United States District Court for the Southern District of New York. Following Global Crossing's announcement that it expected to restate certain of its consolidated financial statements as of and for the year ended December 31, 2003, eight separate class action lawsuits all purporting to be brought on behalf of Global Crossing shareholders were commenced against the Company and certain of its officers and directors in the United States District Courts in New Jersey, New York and California. The cases were consolidated and transferred by the Judicial Panel on Multidistrict Litigation to Judge Gerard Lynch of the United States District Court for the Southern District of New York based on his past involvement in prior cases involving the Company. On February 18, 2005, the lead plaintiffs filed an amended consolidated class action complaint against the Company and two of its past and present officers. The consolidated amended complaint alleges that the Company defrauded the public securities markets by issuing false and misleading statements that failed to disclose or indicate that Global Crossing: (1) had materially understated its accrued cost of access liabilities by as much as $80 million; (2) lacked sufficient internal controls to prevent material misstatements; (3) lacked sufficient internal controls to properly record and report accrued cost of access liabilities and operating expenses; (4) financial statements were not prepared in accordance with generally accepted accounting principles; (5) did not, contrary to its representations, consistently monitor the accuracy of its systems that measured cost of access; (6) results were materially inflated; and (7) did not have a "clean" balance sheet. The consolidated amended complaint, on behalf of a class of persons who purchased or acquired the Company's common stock between December 9, 2003 and April 26, 2004, asserts claims under the federal securities laws, specifically Sections 10(b) and 20(a) of the Exchange Act. Plaintiffs contend that the Company's misstatement or omissions artificially inflated the price of the Company's stock, which declined when the "true" costs were disclosed. Plaintiffs seek compensatory damages as well as other relief. If the case is not settled, defendants anticipate filing a motion to dismiss the consolidated amended complaint. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. At March 31, 2005, Global Crossing's total liabilities exceed its total assets by $30 million. GRAY TELEVISION: S&P Rates Proposed $400M Sr. Sec. Loan at BB- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BB-' rating and a recovery rating of '1' to Gray Television Inc.'s proposed $400 million senior secured bank facility, indicating high expectation of a full recovery of principal in a default scenario. The new ratings are based on preliminary terms and conditions. At the same time, Standard & Poor's affirmed its 'B+' long-term corporate credit rating on Gray. The outlook remains positive. Proceeds of the proposed bank facility and a small amount of cash will be used to pay off the $374 million outstanding on Gray's existing bank facility. As of March 31, 2005, the Atlanta, Georgia-based firm had $623 million in debt and $40 million in debt-like preferred stock, pro forma for the refinancing and the repayment of $21.5 million in bonds in the second quarter. "The rating on Gray reflects its relatively high debt leverage, the slow growth and somewhat cyclical nature of TV advertising, and the potential for additional cash acquisitions, share repurchases, dividends, or other actions that may limit improvement of its credit measures," said Standard & Poor's credit analyst Steve Wilkinson. Gray owns and operates 31 major-network-affiliated TV stations in 27 small-to-midsize markets, generating more than 80% of revenue, and much smaller newspapers and paging businesses. The company's credit risks are only partially offset by the strong market position of the company's major-network-affiliated TV stations, decent geographic and network cash flow diversity, and the good margin and free cash flow potential of TV broadcasting. The company's TV business has leading and stable news and overall ratings in most of its markets. The company also has good geographic diversity, with no market representing more than 10% of its broadcast cash flow, which helps to limit the impact of regional economic volatility on advertising demand and operating results. Standard & Poor's outlook on Gray is positive, reflecting the potential for an upgrade if the company can maintain its debt plus preferred stock to EBITDA at less than 6x in an off-year in the election cycle. Maintaining discipline in the financing of potential acquisitions and in the company's use of its discretionary cash flow will be important upgrade considerations. Conversely, large debt-financed acquisitions, or share repurchases or other equity-friendly actions, could preclude any near-term upgrade potential. HEILIG-MEYERS: Court Approves Amended Disclosure Statement ---------------------------------------------------------- Heilig-Meyers Company and certain of its wholly owned subsidiaries -- Heilig-Meyers Furniture Company, Heilig-Meyers Furniture West, Inc., HMY Star, Inc., and MacSaver Financial Services, Inc. -- and the Official Committee of Unsecured Creditors filed a Second Amended and Restated Joint Liquidating Plan of Reorganization and an Amended and Restated Disclosure Statement with the U.S. Bankruptcy Court for the Eastern District of Virginia. The Bankruptcy Court approved the Disclosure Statement after conducting a hearing for the purpose of making a determination as to the adequacy of the Disclosure Statement. Heilig-Meyers is now authorized to distribute the Plan to its creditors and solicit their acceptances of that Plan. The Bankruptcy Court has scheduled a hearing on September 26 and 27, 2005, to consider confirmation of the Plan. The Plan contemplates the creation of a Liquidation Trust to liquidate and make distributions of assets, and to administer the resolution of the outstanding claims against the interests of the Companies pursuant to the applicable sections of the Bankruptcy Code. It is anticipated that the assets of the Liquidation Trust will include approximately 67% of the new common stock to be issued pursuant to the Plan of Reorganization of RoomStore, Inc., formerly HMY RoomStore, Inc., which was confirmed by the Bankruptcy Court on May 18, 2005, and became effective on June 1, 2005. Under the terms of the RoomStore Plan, RoomStore emerged as a reorganized business enterprise that operates 65 retail home furnishings stores located in Pennsylvania, Maryland, Virginia, North Carolina, South Carolina and Texas. Heilig-Meyers Company filed for chapter 11 protection on Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion in assets and $839 million in liabilities. When the Company filed for bankruptcy protection it operated hundreds of retail stores in more than half of the 50 states. In April 2001, the company shut down its Heilig-Meyers business format. In June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc. GOB sales have been concluded and the Debtors are liquidating their remaining Heilig-Meyers assets. Bruce H. Matson, Esq., Troy Savenko, Esq., and Katherine Macaulay Mueller, Esq., at LeClair Ryan, P.C., in Richmond, Va., represent the Debtors. HIGH VOLTAGE: Wants to Hire Chanin Capital as Financial Advisor --------------------------------------------------------------- The Official Committee of Unsecured Creditors of High Voltage Engineering Corporation and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Massachusetts for permission to employ Chanin Capital Partners LLC as its financial advisor. Chanin Capital will: a) review and analyze the Debtors' operations and financial condition, business plans and strategy, operating forecasts and management; b) analyze any merger, acquisition, divestiture, joint-venture, or new project transactions proposed by the Trustee; c) review and provide analysis and recommendations regarding any proposed dispositions of assets of the Debtors, post-petition financing, proposed operational changes, and the proposed non-ordinary course expenditures, including employee retention plans and other related programs; d) assist the Committee in developing, evaluating, structuring and negotiating the terms and conditions of a restructuring, plan of reorganization, or sale of substantially all of the Debtors' assets; e) provide the Committee with other financial advisory services with respect to the Debtors, including valuation, general restructuring advice, and expert testimony with respect to financial, business and economic issues, as requested by the Committee; and f) confer with the Trustee's financial advisors regarding any of the foregoing and appraise the Committee of same. Mark Rubin, a member of Chanin Capital, reports that the Firm will be paid: a) a monthly fee of $50,000; and b) a deferred fee equal to 4% of the incremental recovery to unsecured creditors in excess of 80%. Chanin Capital assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Wakefield, Massachusetts, High Voltage filed its second chapter 11 petition on Feb. 8, 2004 (Bankr. Mass. Case No. 05-10787). Douglas B. Rosner, Esq., at Goulston & Storrs, represents the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. Stephen S. Gray is the Chapter 11 Trustee for the Debtors' estates. John F. Ventola, Esq., at Choate, Hall and Stewart represents the Chapter 11 Trustee. HIGH VOLTAGE: Equity Committee Taps Anderson Kill as Counsel ------------------------------------------------------------ The Official Committee of Equity Interest Holders of High Voltage Engineering Corp. and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Massachusetts for permission to employ Anderson, Kill & Olick as its counsel. Anderson Kill will: a) advise the Equity Committee on its rights, duties and responsibilities in the Debtors' chapter 11 cases; b) assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and any other matters related to the Debtors' bankruptcy cases; c) assist the Committee in considering the sale or disposition of the Debtors' assets and in evaluating ant proposed chapter 11 plan; d) prepare applications, pleadings and objections on behalf of the Committee and represent the Committee in Bankruptcy Court hearings and other judicial proceedings; e) consult with the Debtors' counsel and their other professionals, and the U.S. Trustee concerning the administration of the Debtors' estates; and f) perform all other legal services that required and in the interest of the Committee and the equity interest holders creditors. Michael J. Venditto, Esq., a Member at Anderson Kill, is the lead attorney for the Equity Committee. Mr. Venditto charges $475 per hour for his services. Mr. Venditto reports Anderson Kill's professionals bill: Designation Hourly Rate ------------ ----------- Counsel $425 - $750 Associates $190 - $350 Paralegals $125 - $175 Anderson Kill assures the Court that it does not represent any interest materially adverse to the Equity Committee, the Debtors or their estates. Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates a group of three industrial and technology based manufacturing and services businesses. HVE's businesses focus on designing and manufacturing high quality applications and engineered products which are designed to address specific customer needs. The Debtor filed its first chapter 11 petition on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended Joint Chapter 11 Plan of Reorganization was confirmed on July 21, 2004, allowing the Company to emerge on Aug. 10, 2004. High Voltage filed its second chapter 11 petition on Feb. 8, 2004 (Bankr. Mass. Case No. 05-10787). In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. Stephen S. Gray is the Chapter 11 Trustee for the Debtors' estates. John F. Ventola, Esq., at Choate, Hall and Stewart represents the Chapter 11 Trustee. HOUSTON RAMIREZ: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Houston Ramirez Enterprises, Inc. dba 5+2 Child Learning Center P.O. Box 753049 Houston, Texas 77275 Bankruptcy Case No.: 05-38728 Type of Business: The Debtor operates a childcare center (perhaps two) near Houston, Texas. Chapter 11 Petition Date: June 6, 2005 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: J. W. Lowes, III, Esq. Law Office of J. W. Lowes, III, P.C. 1331 Gemini, Suite 200 Houston, Texas 77058 Tel: (281) 486-4550 Fax: (281) 486-1495 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 941 Taxes $125,882 P.O. Box 21126 Philadelphia, PA 19114 American Express - Blue Credit Card $21,008 P.O. Box 36002 FT. Lauderdale, FL 33336-0002 Sam's Club Credit Card $14,286 P.O. Box 4538 Carol Stream, IL 60197-4538 Office Max Credit Card $1,443 P.O. Box 9020 Des Moines, IA 50368-9020 Home Depot Credit Card $1,275 P.O. Box 105991, Department 24 Atlanta, GA 30348-5991 IMPAC FUNDING: Asset Deterioration Prompts Fitch to Lower Ratings ----------------------------------------------------------------- Fitch Ratings has taken rating actions on these Impac mortgage pass-through certificates issues: Impac SAC mortgage pass-through certificates, series 2001-5 Pool 1: -- Class AI affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'A+'; -- Class B affirmed at 'BBB'. Impac SAC mortgage pass-through certificates, series 2001-5 Pool 2: -- Class AII affirmed at 'AAA'. Impac SAC mortgage pass-through certificates, series 2001-6 Pool 1 -- Class AI affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'A+'; -- Class B downgraded to 'B' from 'BB'. Impac SAC mortgage pass-through certificates, series 2001-6 Pool 2: -- Class AII affirmed at 'AAA'. Impac CMB Trust Series 2002-6F: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'. The affirmations, affecting over $109.24 million of certificates, are due to stable collateral performance and moderate growth in credit enhancement. The negative rating action on the class B (SAC 2001-6) is the result of poor collateral performance and the deterioration of asset quality beyond original expectations, and affect $3 million of outstanding certificates. The pools are seasoned from a range of 33 to 45 months. The pool factors (current principal balance as a percentage of original) range from approximately 13% to 30% outstanding. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ JAPAN PACIFIC: Court Conditionally Approves Disclosure Statement ---------------------------------------------------------------- The Honorable Karen S. Jennemann of the U.S. Bankruptcy Court for the Middle District of Florida, Orlando Division, granted Japan Pacific Trading Corp. and its debtor-affiliates conditional approval of their Amended Disclosure Statement explaining their Amended Plan of Reorganization. The Amended Plan The Amended Plan of Reorganization calls for the consolidation of Japan Pacific Trading Corp., Florida Select Citrus, Inc. and American Mercantile Corporation's assets and liabilities and the cancellation of their outstanding common stock. American Mercantile will be the surviving entity. On the Plan's effective date, new common stock of the reorganized company will be distributed to Sherwood Investments (Overseas) Ltd., as payment for the $180,000 DIP Loan extended to the Debtors in October 2004. The Plan further outlines a structured payment, over time, to holders of allowed secured claims. A Liquidating Creditor Trust will be set up for the benefit of unsecured creditors. Treatment of Claims Priority, wage, vacation and commission claims will be fully paid in cash on the effective date. Cash to pay these claims will come from the sale of assets owned by Florida Select and the American Mercantile Corporation. The Sherwood DIP Loan will be exchanged for 100% of New Common Stock in the reorganized Debtor. Public Bank's $3.2 million claim, secured by a first lien on all real property of Florida Select and Japan Pacific, will be exchanged for a modified and extended Mortgage Note on the effective date. Sherwood, holding a $16,149,658 secured claim against Florida Select and Japan Pacific will retain its lien on the Debtors' real property, personal property and accounts receivable until the loan is paid in full over time with interest. The Lake County Tax Collector's secured claim, totaling $47,000, will be paid over a two-year period with interest at 7%. Sherwood holds another $16,149,658 secured claim against AMC. The claim will be exchanged for an 8% PIK Note. The Note will require a $50,000 monthly payment and is expected to mature in 5 years. General Unsecured Claims will be paid from a Liquidating Creditors Trust. Each beneficiary of the trust will receive a pro rata share of whatever money is recovered through avoidance actions. Equity interests will cancelled on the effective date. Objections to the Amended Disclosure Statement, if any, will be heard by the Court on June 22, 2005, at 1:00 p.m. A full text copy of the Amended Disclosure Statement is available at no charge at http://bankrupt.com/misc/japanpacific_DS.pdf Headquartered in Groveland, Florida, Japan Pacific Trading Corp. and its debtor-affiliates filed for chapter protection on Oct. 7, 2004, (Bankr. M.D. Fla. Case No. 04-11049). R. Scott Shuker, Esq., at Gronek & Latham LLP, represents the Debtors in their restructuring. When the Debtor filed for protection from its creditors, it estimated $1 million to $10 million in assets and $10 million to $50 million of liabilities. KAISER ALUMINUM: Wants to Alter Ordinary Course Professional Order ------------------------------------------------------------------ Kaiser Aluminum Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further amend the order authorizing them to employ and pay professionals they turn to in the ordinary course of their businesses. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware explains that the Debtors seek only to adjust the permissible average monthly amounts that can be paid to two Ordinary Course Professionals, particularly: -- reducing the maximum average monthly fees for Freshfields Bruckhaus Deringer from $50,000 to $35,000; and -- increasing the maximum average monthly fees for Perkins Coie LLP to $50,000. Perkins Coie, led by Mark Schneider, Esq., in Seattle, has been performing special investigatory environmental work for the Debtors, as ordinary course counsel. The Debtors recently decided to use Perkins Coie as the principal environmental consultant at their Trentwood location. Because Perkins Coie will be conducting additional work, the Debtors seek the Court's approval to increase the maximum average monthly fees allowed for the firm. Mr. DeFranceschi states that none of the other procedures or requirements in the Revised Ordinary Course Professionals Order will be modified. The Debtors will continue to seek specific Court authority to employ all professionals materially involved in the actual administration of their Chapter 11 cases. The Debtors will also continue to be required to file and serve periodic reports. 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. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) KERR GROUP: Sale Completion Cues S&P to Cut & Withdraw Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Kerr Group Inc. to 'B+' from 'BB-', and removed the ratings from CreditWatch. At the same time, Standard & Poor's withdrew the ratings. The CreditWatch implications were revised to negative from developing on May 6, 2005, following the announcement that Berry Plastics Corp. (B+/Stable/--), a 100%-owned operating subsidiary of BPC Holding Corp., would purchase Kerr from majority owner Fremont Capital Partners. The purchase price of approximately $445 million included the assumption of outstanding debt. "The downgrade and withdrawal of the ratings reflects the successful completion of the acquisition and repayment of the outstanding bank loan on June 3, 2005," said Standard & Poor's credit analyst Franco DiMartino. LITTLE LADY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Little Lady Sportswear Inc. 11 West End Road Totowa, New Jersey 07512 Bankruptcy Case No.: 05-51717 Chapter 11 Petition Date: June 6, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Brian L. Baker, Esq. Morris S. Bauer, Esq. Ravin Greenberg, PC 101 Eisenhower Parkway Roseland, New Jersey 07068 Tel: (973) 226-1500 Total Assets: $1,486,217 Total Debts: $3,576,374 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Matrix Textiles $416,080 1363 Bonnie Beach Place Commerce, CA 90023 Y&H Trading Corporation $138,148 1572 6th Street, Ground Floor Brooklyn, NY 11219 Romex Textiles Inc. $119,875 785 East 14th Place Los Angeles, CA 90021 Chase Small Business Financial Services $112,980 GPO Box #26489 New York, NY 10087-6489 C&A Fashion, Inc. $102,767 7710 New Utrecht Avenue Brooklyn, NY 11214 Howard Lesser $92,964 Sunny Advance $56,475 Trim Solutions $50,277 Wachovia Commercial Loan Services $50,251 Capital Factors, Inc. $48,784 Macy's $47,636 Xerox Apparel, Inc. $43,673 Medallion Business Credit $43,207 IDB Factors $43,205 Ultra Tex Knitting Inc. $41,640 Jagro Customs Brokers Inc. $33,430 American International $32,065 Evermax II Trimming Corporation $31,578 Fashion Avenue Belts & Accesories $29,026 United Parcel Service $27,511 LTX CORP: Posts $45.7 Million Net Loss in Third Quarter 2005 ------------------------------------------------------------ LTX Corporation (Nasdaq: LTXX) reported financial results for its fiscal third quarter ended April 30, 2005. Sales for the quarter were $25,534,000 as compared to prior quarter sales of $27,036,000. Net loss for the quarter was $(45,656,000), which included restructuring and asset impairment charges totaling $28,611,000, compared to a net loss for the 2005 second fiscal quarter of $(19,183,000). Sales were $70,333,000 for the third quarter of fiscal year 2004 and net income was $4,306,000. Total incoming orders were $39.1 million, up 25% from last quarter. The book-to-bill ratio was 1.53 to 1. Roger W. Blethen, chairman and chief executive officer, said, "Early in the third quarter we reduced expenses, lowering our breakeven and adding P&L leverage for the future. Restructuring actions we've taken over the past several quarters will lower the break even to $46 million by the end of our fourth quarter. Yesterday, we also announced the closing of a $60 million term loan with Silicon Valley Bank - this additional financing, combined with LTX's lower breakeven, has significantly improved our balance sheet." "There are indications that in some market segments, LTX's business is expanding due to capacity purchases and new applications ramping into volume production. This led to significantly higher orders in the third quarter, with product bookings up about 120%." "LTX's engineering organization continued to make strong progress during the quarter on several new versions of Fusion that address high growth areas of the market, and we plan to make product announcements in our fourth quarter. The stepped-up leverage in our financials, improved balance sheet and new market opportunities from our product strategy make LTX a stronger company." Fourth Quarter 2005 Outlook Revenue for the fourth quarter of fiscal year 2005 is now expected to be in the range of $37.5 million to $39.5 million, with gross margin at approximately 38%. The earnings per share is projected to be a loss in the range of $(0.09) to $(0.12), assuming 61.2 million fully diluted shares outstanding. This guidance does not include any provisions for special charges. The Company will conduct a conference call today, June 3, 2005, at 8:30 AM EDT to discuss third quarter results. The conference call will be simulcast via the LTX web site (www.ltx.com). Audio replays of the call can be heard through June 16, 2005 via telephone by dialing 888-286-8010; passcode 48332534 or by visiting our web site at www.ltx.com. LTX Corporation -- http://www.ltx.com/-- (Nasdaq: LTXX) is a leading supplier of test solutions for the global semiconductor industry. Fusion, LTX's patented, scalable, single-platform test system, uses innovative technology to provide high performance, cost-effective testing of system-on-a-chip, mixed signal, RF, digital and analog integrated circuits. Fusion addresses semiconductor manufacturers' economic and performance requirements today, while enabling their technology roadmap of tomorrow. * * * As reported in the Troubled Company Reporter on March 9, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Westwood, Massachusetts-based LTX Corporation to 'B-' from 'B', and its subordinated debt rating to 'CCC' from 'CCC+', based on expectations for lower earnings and cash flow for the April 2005 quarter. The outlook remains negative. "The downgrade also reflects increasing concerns that the company's use of cash will strain liquidity, in light of the August 2006 maturity of $150 million," said Standard & Poor's credit analyst Lucy Patricola. MAGRUDER COLOR: Gets Interim Order on DIP Loans & Cash Collateral ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave Magruder Color Company, Inc., and its debtor-affiliates, permission on an interim basis: a) to obtain post-petition loans, advances and other financial accommodations from Wachovia Bank National Association and enter into an Ratification and Amendment Agreement with Wachovia Bank and unnamed Guarantors; b) to grant Wachovia Bank super-priority administrative claim status pursuant to Section 364(c)(1) of the Bankruptcy Code; c) to continue using Cash Collateral securing repayment of pre- petition obligations to the Beal Bank, S.S.B. and the Weissglass Family Lenders and provide adequate protection to the Beal Bank and the Weissglass Family; and d) to modify the automatic stay under 11 U.S.C. Section 362. Pre-Petition Debt Under various financing and loan agreements, the Debtors owe: Pre-Petition Lender Amount Owed ------------------- ----------- Beal Bank $10,500,000 Wachovia Bank (under a Term Loan & Revolving Loans) $6,136,355 Weissglass Family $2,500,000 ----------- $19,136,355 Use of DIP Loans & Cash Collateral The Debtor will use the Wachovia DIP Loans and the Weissglass Family's cash collateral to fund the orderly continuation of their businesses, to minimize the disruption of their business operations, and to manage and preserve the assets of their estates in order to maximize recovery for all of their creditors. Post-Petition Financing Cash Collateral & Adequate Protection The Bankruptcy Court authorizes the Debtors to obtain up to $7,500,000, pursuant to the terms of the Ratification and Amendment Agreement with Wachovia Bank and the Guarantors. The Debtors' interim use of the proceeds of the DIP Loans and the proceeds of the cash collateral will be in strict compliance with a Court-approved budget for a 12-week period, from June 4 to Aug. 27, 2005. A full-text copy of a two-page Weekly Budget is available at no charge at: http://bankrupt.com/misc/MagruderColorBudget.pdf Adequate Protection Modification of the Automatic Stay To adequately protect its interests, Wachovia Bank is granted a valid and perfected first priority security interests and liens, superior to all other liens, claims and security interests that any creditors may have on the Debtors' estates. Wachovia Bank is also granted an allowed super-priority administrative claim having priority in right of payment over any of the Debtors' post- petition obligations, liabilities and indebtedness To adequately protect their interests, Beal Bank and the Weissglass Family are granted liens and security interests on all of the Debtors' Pre-Petition Collateral. The automatic stay provisions of Section 362 of the Bankruptcy Code are modified and vacated without further notice, application or order of the Bankruptcy Court to the extent necessary to permit Wachovia Bank to perform any act authorized by virtue of the Court's Interim Order or the Financing Agreements. The Court will convene a hearing at 10:00 a.m., on June 21, 2005, to consider the Debtors' request for a final order approving the DIP Loans and allowing permanent use of the cash collateral. Headquartered in Elizabeth, New Jersey, Magruder Color Company -- http://www.magruder.com/-- and its affiliates manufacture basic pigment and also supply quality products to the ink, paint, and plastics industries. The Company and its debtor-affiliates filed for chapter 11 protection on June 2, 2005 (Bankr. D.N.J. Case No. 05-2834). Bruce D. Buechler, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. When the Debtors filed protection from their creditors, they estimated assets and debts of $10 million to $50 million. MAGRUDER COLOR: Look for Bankruptcy Schedules on July 18 -------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave Magruder Color Company, Inc., and its debtor-affiliates more time to file their Schedules of Assets and Liabilities, Statements of Financial Affairs and Schedules of Executory Contracts and Unexpired Leases. The Debtors have until July 18, 2005, to file those documents. The Debtors explain that to prepare the Statements and Schedules, they must gather information from books and records from each of the four debtor-affiliates. Consequently, collection of that necessary information requires the expenditure of substantial time and effort on the part of the Debtors and their limited staff so they can prepare and complete the Schedules and Statements on or before the July 18 extension deadline. Headquartered in Elizabeth, New Jersey, Magruder Color Company -- http://www.magruder.com/-- and its affiliates manufacture basic pigment and also supply quality products to the ink, paint, and plastics industries. The Company and its debtor-affiliates filed for chapter 11 protection on June 2, 2005 (Bankr. D.N.J. Case No. 05-2834). Bruce D. Buechler, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. When the Debtors filed protection from their creditors, they estimated assets and debts of $10 million to $50 million. MARIA BUITRON: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Maria Estela Buitron aka Estela L. Buitron 1706 High Street Harlingen, Texas 78550 Bankruptcy Case No.: 05-10704 Chapter 11 Petition Date: June 6, 2005 Court: Southern District of Texas (Brownsville) Judge: Richard S. Schmidt Debtor's Counsel: Abelardo Limon, Jr. Esq. Limon Law Office PC 890 West Price Road Brownsville, Texas 78520 Tel: (956) 544-7770 Fax: (956) 544-4949 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of her 20 Largest Unsecured Creditors. MERIDIAN AUTOMOTIVE: Two Claimants Balk at Reclamation Protocol --------------------------------------------------------------- As previously reported, Meridian Automotive Systems, Inc., and its debtor-affiliates propose uniform procedures for the treatment and reconciliation of all Reclamation Claims: (a) Any vendor asserting a Reclamation Claim must satisfy all requirements entitling it to a right or reclamation under applicable state law and Section 546(c)(1) of the Bankruptcy Code; (b) The Debtors will file a notice with the Court listing those Reclamation Claims the Debtors deem to be valid and its amount. The Debtors will serve the Reclamation Notice on any official committee appointed in the Debtors' cases and on each Reclamation Claimant; (c) The Reclamation Notice will be filed by the Debtors no later than 60 days after the Court's entry of the Reclamation Order; (d) If the Debtors fail to file the Reclamation Notice prior to the expiration of the Notice Deadline, any Reclamation Claimant may ask the Court to determine the validity of its Reclamation Claim, provided that any request will not be filed prior to the expiration of the Notice Deadline; (e) All parties-in-interest will have 20 days from the date the Reclamation Notice is filed with the Court to object to the inclusion or exclusion in the Reclamation Notice of any Reclamation Claim or its amount. All Reclamation Claims in the Reclamation Notice that do not draw any objection will be fixed in the amount provided in the Reclamation Notice without further Court Order; (f) With respect to any Reclamation Claim on account of which a timely objection to the Reclamation Notice is filed, the amount of the Reclamation Claim will be fixed pursuant to an agreement of the relevant parties, or by Court Order; and (g) The Debtors reserve the right to further object to any Reclamation Claim fixed pursuant to these Reclamation Procedures or Court order on any other grounds, including that all Reclamation Claims are subject to a creditor's security interest in or lien on the goods subject to the Reclamation Claim. The fixing of a Reclamation Claim will not be deemed a final allowance of any Reclamation Claim. 2 Reclamation Claimants Object Delta Polymers Company and Empire Electronics, Inc., contend that the Reclamation Procedures include a reservation which, if granted, would allow the Debtors to strip reclamation claimants of their rights under Section 546(c) of the Bankruptcy Code at any time during the bankruptcy cases. In separate filings with the Court, the Claimants explain that under the proposed Reclamation Procedures, the Debtors will be entitled to effectively extinguish reclamation claimants' rights to reclaim goods by providing reclamation claimants with sham priority administrative expense claims or liens while at the same time preserving the Debtors rights to take away the claim or lien at a future date. The Debtors should not be allowed to establish procedures designed to lull reclamation claimants into a false sense of security, Delta Polymers asserts, thus keeping claimants from asserting their rights and allowing the Debtors to use inventory which would otherwise be segregated, only to embroil those same claimants in disputes over security interests at a later date. Delta Polymers has demanded the segregation and reclamation of goods totaling $62,977 that it delivered to the Debtors before the Petition Date. Empire has sought the return of $269,018 in prepetition goods sold to the Debtors. In addition, although the Debtors' request does not discuss this, Delta Polymers says the Order proposed by the Debtors seeks to interfere with its rights in dealing with the postpetition debtor-in-possession. The Debtors seek a ruling under Section 362 prohibiting reclamation claimants from "interfering in any way with the post-petition delivery of goods to or by the Debtors." Under this broad language, Delta Polymers tells Judge Walrath that the Debtors would be able to force reclamation claimants to do business with the Debtors on a postpetition basis with no corresponding consideration. Further, Delta Polymers notes, the Debtors seek this relief under Section 362, which deals with actions and claims arising prior to the Petition Date, not postpetition business dealings. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERRILL LYNCH: $4.1M Class B Certs. Get Low-B Rating from Fitch --------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc.'s mortgage pass-through certificates, series MLMI 2005-A4, are rated by Fitch Ratings as follows: -- $477 million classes I-A-1, II-A-1, II-A-2, II-A-IO, III-A and IV-A senior certificates 'AAA'; -- $11 million class M-1 'AA'; -- $5 million class M-2 'A'; -- $2.8 million class M-3 'BBB'; -- $2.8 million privately offered class B-1 'BB'; -- $1.3 million privately offered class B-2 'B'. The 'AAA' rating on the senior certificates reflects the 5% subordination provided by the 2.20% class M-1, 1% class M-2, 0.55% class M-3, 0.55% class B-1, 0.25% class B-2 and 0.45% class B-3 (not rated by Fitch). Classes M-1, M-2, M-3, B-1 and B-2 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. Fitch believes the above credit enhancement will be adequate to cover credit losses. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Wells Fargo Bank, N.A. (rated 'RMS1' by Fitch). The trust consists of 1,239 conventional, adjustable-rate mortgage loans secured by first liens on one-to-four family residential properties with an aggregate principal balance of $502,099,539 as of the cut-off date (May 1,2005). Each of the mortgage loans are fixed rate for a period of three, five, seven, or ten years, after which they are indexed off the one-year LIBOR or one-year US Treasury. The average unpaid principal balance as of the cut-off-date is $405,246. The weighted average original loan-to-value ratio is 73.86%. The weighted average FICO is 731. Cash-out refinance loans represent 12.10% of the loan pool. The three states that represent the largest portion of the mortgage loans are California (44.28%), Michigan (10.34%) and Florida (6.15%). MLMI, the depositor, will assign all its interest in the mortgage loans to the trustee for the benefit of certificate holders. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. Wachovia Bank, National Association, will act as trustee. MISSALA MARINE: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Missala Marine Services, Inc. 4111 North Cedar Street Pascagoula, Mississippi 39567 Bankruptcy Case No.: 05-13214 Chapter 11 Petition Date: June 6, 2005 Court: Southern District of Alabama (Mobile) Debtor's Counsel: Robert M. Galloway, Esq. Galloway, Smith, Wettermark & Everest, LLP P.O. Box 16629 Mobile, Alabama 36616-0629 Tel: (251) 476-4493 Total Assets: $6,885,000 Total Debts: $2,799,306 Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Business Credit Guaranty, Lawsuit, $1,219,102 Inc. Civil Action Case 400 Northridge Road No.: 2005-0039(3) Suite 600 Atlanta, GA 30350 Zoie Graham Judicial Foreclosure $890,118 908 Westwood Street on Secured Debt. Pascagoula, MS 39567 Secured with the assignment of subsidiary stock, note assignment, and real property. Jenny Kay Odom Judgment creditor $477,134 2424 Wilson attempting to executor Pascagoula, MS 39567 on the stock of Subsidiary companies Internal Revenue Service $115,524 William Boyd $24,878 Mississippi State tax $17,065 Sate of Alabama-Department $17,065 Of Revenue Jim Wallis & Sons Roofing Lawsuit- Civil Action $7,400 Inc. No. 2004-00202 Circuit Court of Jackson County, MS M&M Bank Lawsuit- Civil Action $7,400 No. 2004-00202 Circuit Court of Jackson County, MS Gary L. Roberts, PA 2004 Accounts $6,313 Page, Mannino, Peresch and 2004 Account $5,478 McDermott Kenneth Flottman, Esq. 2004 Account $5,042 LeFoldt & Co., P.A. 2004 Account $4,034 Armbrech, Jackson, DeMouy 2004 Legal services $2,748 Julie Parr Lawsuit- Civil Action $1 No. C196-0119(1) M&M Bank M&M Bank is proceeding $1 With a foreclosure action on real property encumbered by multiple mortgages Robert Graham Lawsuit- Civil Action $1 No. 2004-1081 JB MORTGAGE ASSET: Fitch Rates $412K Privately Offered Certs. at BB ---------------------------------------------------------------- Mortgage Asset Securitization Transactions, Inc.'s $273.6 million mortgage pass-through certificates series 2005-1, MASTR Asset Securitization Trust 2005-1 is rated by Fitch Ratings: -- $266.7 million classes 1-A-1, 2-A-1 - 2-A-9, 15-PO, 30-PO, 15-A-X, 30-A-X, A-LR, and A-UR senior certificates 'AAA'; -- $3,843,000 class B-1 'AA'; -- $1,647,000 class B-2 'A'; -- $961,000 class B-3 'BBB'; -- $412,000 privately offered class B-4 'BB'. Fitch does not rate the privately offered class B-5 or B-6 certificates. The 'AAA' rating on the senior certificates reflects the 2.85% subordination provided by the 1.40% class B-1, 0.60% class B-2, 0.35% class B-3, 0.15% privately offered class B-4, 0.20% privately offered class B-5 (not rated by Fitch), and 0.15% privately offered class B-6 (not rated by Fitch) certificates. The ratings on the class B-1 through B-4 certificates are based on their respective subordination. The trust will consist of two asset groups. The certificates whose class designation begins with 1 through 2 correspond to Groups 1 through 2, respectively. Additionally, the class 15-A-X and 15-PO certificates represent interests in loan Group 1, the class 30-A-X and 30-PO certificates represent interests in loan Group 2. The class A-LR, and A-UR certificates represent interest in loan Group 1. In certain limited circumstances, principal and interest collected from loans in a loan group may be used to pay principal or interest, or both, to the senior certificates related to one or more of the other loan groups. Group 1 contains contain 67 conventional, fully amortizing 15-year fixed-rate mortgage loans secured by first liens on one to four- family residential properties with an aggregate scheduled principal balance of $34,101,249. The average unpaid principal balance of the aggregate pool as of the cut-off date (May 1, 2005) is $508,974. The weighted average original loan-to-value ratio is 58.7%. The weighted average credit score of the borrowers is 741. Approximately 52.37% of the pool was originated under a reduced (non Full/Alternative) documentation program. Second homes and investor occupancies represent 3.58% and 1.33% of the pool, respectively. The weighted average mortgage interest rate is 5.366% and the weighted average remaining term to maturity is 175 months. The states that represent the largest portion of the aggregate mortgage loans are California (22.15%), Florida (11.68%), New York (9.31%), Virginia (7.50%), and Texas (6.88%), and Maryland (6.88%). All the other states represent less than 5% of the aggregate pool balance as of the cut-off date. Group 2 contains 457 conventional, fully amortizing 30-year fixed- rate mortgage loans secured by first liens on one to four-family residential properties with an aggregate scheduled principal balance of $240,422,796. The average unpaid principal balance of the aggregate pool as of the cut-off date (May 1, 2005) is $526,089. The weighted average OLTV is 67.6%. The weighted average credit score of the borrowers is 733. Approximately 43% of the pool was originated under a reduced (non Full/Alternative) documentation program. Second homes and investor occupancies represent 2.45% and 0.52% of the pool, respectively. The weighted average mortgage interest rate is 5.834% and the WAM is 356 months. The states that represent the largest portion of the aggregate mortgage loans are California (50.03%). All the other states represent less than 5% of the aggregate pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled, 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ MASTR, a special purpose corporation, deposited the loans into the trust, which issued the certificates. U.S. Bank National Association will act as trustee. For federal income tax purposes, elections will be made to treat the trust fund as multiple real estate mortgage investment conduits. NAKOMA RESORT: Case Summary & 60 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Nakoma Resort LLC 5150 Mae Anne Avenue #213 Reno, Nevada 89523 Bankruptcy Case No.: 05-51717 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Gold Mountain Ranch 05-51718 Dragon Golf LLC 05-51722 Type of Business: The Debtors are affiliates of Nakoma Land, Inc., which filed for chapter 11 protection on May 19, 2005 (Bankr. D. Nev. Case No. 05-51556), as reported in the Troubled Company Reporter on May 23, 2005. The Debtors operate a golf course, a restaurant and a resort. See http://www.nakomaresort.com/ Chapter 11 Petition Date: June 6, 2005 Court: District of Nevada (Reno) Judge: Gregg W. Zive 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 Resort LLC $4,115 $938,124 Gold Mountain Ranch $199,400 $775,107 Dragon Golf LLC Unknown $96,543 A. Nakoma Resort LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ John Deere Credit Lease payments $459,602 P.O Box 4450 Carol Stream, IL 60197-4450 Legacy Gas Goods & Services $53,425 P.O. Box 880 Graeagle, CA 96103 SLH Small Luxury Hotels Goods & Services $27,988 370 Lexington Avenue Suite 1506 New York, NY 10017 Creative Metal Casting/omc Goods & Services $27,571 Custom Gifts Inc. 15695 North 83rd Way Scottsdale, AZ 85260 State Comp Fund Goods & Services $25,129 P.O. Box 7854 San Francisco, CA 94120-7854 Feather Publishing Co. Inc. Goods & Services $22,670 P.O. Box B Quincy, CA 95971 RISO Products of Sacramento Lease Payments $15,211 3304 Monier Circle, Suite 110 Suite 110 Rancho Cordova, CA 95742 Pacific Seafood of Sacramento Goods & Services $11,255 c/o Northwest Farm Credit Services P.O. Box 3608 Spokane, WA 99220 FNF Funding Lease Payments $11,167 Department NO 979 Denver, CO 80291-0564 Cutter & Buck Inc. Goods & Services $10,771 P.O. Box 34855 Seattle, WA 98124-1632 NCGA/Northern California Golf Goods & Services $10,700 P.O. Box NCGA Pebble Beach, CA 93953 Felderstein Fitzgerald Attorneys Fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Lesco Attorneys Fees $10,000 15885 Sprague Road Strongsville, OH 44136 Goods & Services $9,619 Ahead Headgear Goods & Services $9,331 Attn: H/R Department 270 Samuel Barnet Boulevard New Bedford, MA 02745 Titleist Goods & Services $9,305 P.O. Box 88112 Chicago, IL 60695 Straight Down Clothing Goods & Services $8,721 Capital Factors P.O. Box 79 Memphis, TN 38101 American Hotel Register Goods & Services $8,009 100 South Milwaukee Avenue Vernon Hills, IL 60061 TFC Textron Lease Payments $7,682 Department LA 21121 Pasadena, CA 91185 Peggy (Margaret) Garner Goods & Services $7,599 P.O. Box 547 Portola, CA 96122 Gear for Sports Goods & Services $6,667 12193 Collections Center Drive Chicago, IL 60693 B. Gold Mountain Ranch's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nakoma Resort $181,602 5150 Mae Anne Avenue Reno, NV 89523 Yamaha Motor Corporation Lease Payments $140,320 Dept Ch 14022 Palatine, IL 60055 State Comp Insurance Fund Goods & Services $91,091 P.O. Box 7854 San Francisco, CA 94120-7854 Weintraub, Genshlea, Chediak Goods & Services $72,022 400 Capital Mall, 11th Floor Sacramento, CA 95814-4434 Portable Facilities Leasing Lease Payments $21,840 P.O. Box 1504 Loomis, CA 95650 Sysco Foods Goods & Services $14,639 Department 33300 P.O. Box 39000 San Francisco, CA 94139 Gold Mountain CSD Goods & Services $13,846 c/o Bequette & Kimmel 307 West Main Street Quincy, CA 95971 Newland & Winnen Goods & Services $13,712 1441 Casa Buena Drive 306 Corte Madera, CA 94925 Joel Halverson $11,700 P.O. Box 77 Portola, CA 96122 Felderstein Fitzgerald Attorneys Fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Gold Mountain Homeowners Homeowners Dues $9,595 Association 307 West Main Street Quincy, CA 95971 Jensen Precast Goods & Services $6,815 625 Bergin Way Sparks, NV 89431 Wells Fargo Leasing Lease Payments $5,985 P.O. Box 98789 Las Vegas, NV 89193 Art Associates Advertising Goods & Services $5,212 5450 Louie Lane Reno, NV 89511 NST Engineering-CSD Goods & Services $4,408 1495 Riverside Drive Susanville, CA 96130 Plumas Bank Goods & Services $3,677 120 North Pine Street Portola, CA 96122 Hertz Equipment Rental Rental Charges $2,951 P.O. Box 26390 Oklahoma City, OK 73126-0390 Blue Cross of California Insurance Premium $2,869 P.O. Box 54630 Los Angeles, CA 90054-0630 Geriak Consultants LLC Goods & Services $2,725 62 Geriak Road Stamford, CT 06905 Ewing Irrigation Products Goods & Services $2,504 2462 Polvorosa Avenue San Leandro, CA 94577 C. Dragon Golf LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ NCGA Goods & Services $22,890 File 30446 P.O. Box 60000 San Francisco, CA 94160 Yamas Controls Goods & Services $10,632 P.O. Box 953814 Saint Louis, MO 63195 Felderstein Fitzgerald Attorneys Fees $10,000 400 Capital Mall, Suite 1450 Sacramento, CA 95814-4434 Tehama Goods & Services $7,239 P.O. Box 1079 Denver, CO 80256-1079 Links Magazine Goods & Services $6,600 P.O. Box 7628 Hilton Head Isle, SC 29938 Golf the High Sierra Goods & Services $5,000 P.O. Box 300 Clio, CA 96106 Reno Tahoe Open Goods & Services $3,000 8700 Southwest Nimbus, Suite B Beaverton, OR 97008 RMC Nevada Goods & Services $2,642 333 Galletti Way Reno, NV 89512 Absolute Hire Goods & Services $2,507 3000 Lava Ridge Circle Roseville, CA 95661-3034 Executive Women's Golf Goods & Services $2,500 Association P.O. Box 7058 Citrus Heights, CA 95621-7058 Ecological Labs Goods & Services $2,442 P.O. Box 132 Freeport, NY 11520-0132 S & G Transportation Goods & Services $2,435 P.O. Box 543 Beckwourth, CA 96129 IZOD Goods & Services $2,385 550 South Wadsworth Boulevard, #200 Lakewood, CO 80226 Golf Today Goods & Services $2,000 206 South Mill Street Tehachapi, CA 93561 Gold Mountain Real Estate Goods & Services $1,800 P.O. Box 880 Graeagle, CA 96103 Golf Scorecards, Inc. Goods & Services $1,725 9735 Southwest Sunshine Court Beaverton, OR 97005 R & R Products Goods & Services $1,692 3334 East Milber Street Tucson, AZ 85714 Next Media Group Goods & Services $900 300 East 2nd Street, #1400 Reno, NV 89501 Franchise Tax Board State Income Taxes $800 P.O. Box 942857 Sacramento, CA 94257-0540 Geriak Consultants, LLC Goods & Services $782 62 Geriak Road Stanford, CT 06905 NEFF CORP: $500M Odyssey Sale Completion Cues S&P to Remove Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on equipment rental company Neff Corp., including the 'B+' corporate credit rating, and removed all ratings from CreditWatch, where they were placed on April 7, 2005, with negative implications. The outlook is stable. This action follows the purchase of the company by Odyssey Investment Partners in a transaction valued at about $500 million. The purchase was funded with unrated financing, including a new $225 million asset-backed lending facility, $80 million of privately placed subordinated notes, and a senior secured second- lien term loan of $245 million. Because the existing bank debt and existing subordinated debt are being redeemed, the ratings on those issues are being withdrawn. Miami, Florida-based Neff operates mainly in the Sunbelt through 66 locations. The ratings reflect its weak business position in the cyclical (albeit improving) equipment rental industry and its aggressive financial profile. Standard & Poor's previously indicated that the resolution of the CreditWatch listing would likely be a rating affirmation or a one- notch downgrade, a reflection of the company's weak business position and high debt levels. "There has been an improvement in industry fundamentals, however, as well as in Neff's operations, and the company has experienced an EBITDA expansion that we believe is sufficient for an affirmation," said Standard & Poor's credit analyst John R. Sico. "Our expectation is that leverage will be about 4.5x, which is commensurate with the current rating." While Standard & Poor's does not expect the industry to experience significant recovery in the near term, signs of some improvement have emerged. Rental rates have recently increased, a trend that continued through the first quarter of 2005. Also, the oversupply of construction equipment has diminished as the industry has deliberately aged the fleet and reduced capital spending. The industry has also benefited from higher utilization rates. Nonresidential construction spending began to recover in 2004 after declining about 20% from 2000 to 2003. This spending has increased modestly so far in 2005, and it is expected to improve seasonally. Standard & Poor's expect a tempered pace of recovery in the second half. The increases in rental rates and equipment utilization have helped Neff. The company's sales improved about 20% in 2004, and adjusted EBITDA margins are now more than 30%. Credit protection measures have also improved: Taking into account the Odyssey transaction, total pro forma debt to EBITDA should be about 4.5x by the end of 2005 and EBITDA to cash interest coverage should be about 2.5x (adjusted for operating leases). The company has held down its capital spending and generated positive free cash flow (after capital spending and net of equipment sales). However, the aging of its fleet, especially its core earthmoving equipment, has moderately increased maintenance and repair costs, and has also led to increased capital spending. Given the improved industry conditions and higher rental utilization, fleet modernization is in order. NORTH AMERICAN: Wants Court to Approve Conduit Sales to Mittal -------------------------------------------------------------- North American Refractories Company manufactures and sells refractory products. One of North American's clients is the International Steel Group which purchases refractory products from the Debtor for use at its steelmaking operations at various locations in the United States. Mittal Steel, one of the largest steel-making operators in the world, recently acquired ISG through a merger. Mittal hasn't been a customer of the Debtor although it does business with the non-debtor affiliates of North American Refractories. Mittal is now willing to purchase refractory materials from North American but Mittal wants the sale transaction handled by the Debtor's parent company, Veitsch Radex America, Inc. Veitsch agreed to sell North American refractory products to Mittal in return for a share of the profit on those sales. Under the agreement, Veitsch will purchase refractory products from North American and resell them to Mittal. Veitsch will pay the Debtor's costs plus estimated profit. The agreement will expire on Dec. 31, 2009. The Debtor contends that even if the proposed agreement is in the ordinary course of its business, it still needs the approval of the U.S. Bankruptcy Court for the Western District of Pennsylvania because the terms and conditions under the agreement differ from its usual practice. The Debtor urges the Court to approve its request as soon as possible to avoid disruption of its operations. Headquartered in Pittsburgh, Pennsylvania, North American Refractories Company, filed for chapter 11 protection on January 4, 2002 (Bankr. W.D. Pa. Case No. 02-20198). Paul M. Singer, Esq., of Pittsburgh represents the Debtor. When the Debtor filed for protection from its creditors, it listed $27,559,000,000 in assets and $18,634,000,000 in debts. NORTHWEST AIRLINES: May 2005 Load Factor Up 2.9 Points From 2004 ---------------------------------------------------------------- Northwest Airlines (NASDAQ:NWAC) reported a system-wide May 2005 load factor of 83.6 percent, 2.9 points above May 2004. Northwest flew 6.57 billion revenue passenger miles (RPMs) and 7.86 billion available seat miles in May 2005, a traffic increase of 6.3 percent and a capacity increase of 2.5 percent versus May 2004. 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. * * * As reported in the Troubled Company Reporter on June 7, 2005, Fitch Ratings downgrades six Northwest Airlines enhanced equipment trust certificate transactions. These rating changes are a result of the recent downgrade of Northwest Airlines by Fitch. The rating actions are: Northwest Airlines pass-through certificates, series 2003-1 -- Class D is downgraded to 'CCC+' from 'B'. Northwest Airlines pass-through certificates, series 2002-1 -- Class G-1 and G-2 are affirmed at 'AAA'*; -- Class C-1 and C-2 are downgraded to 'B' from 'BBB-'. * based on the strength of an MBIA policy Northwest Airlines European enhanced equipment trust certificates, series 2001-2 -- Class A is downgraded to 'A-' from 'A'; -- Class B is affirmed at 'BB-'. Northwest Airlines pass-through trusts, series 1996-1 -- Class A is downgraded to 'BB' from 'BBB-'; -- Class B is downgraded to 'B-' from 'BB-'; -- Class C is downgraded to 'CCC+' from 'B+'. NWA Trust no.2 -- Class A is downgraded to 'BBB+' from 'A-'; -- Class B is downgraded to 'BB' from 'BBB-'; -- Class C is downgraded to 'B+' from 'BB+'; -- Class D is downgraded to 'CCC+' from 'B+'. NWA Trust no.1 -- Class A is affirmed at 'BB-'; -- Class B is affirmed at 'B'. O-CEDAR HOLDINGS: Chapter 7 Trustee Wants to Probe Stonebridge -------------------------------------------------------------- Jeoffrey L. Burtch -- the chapter 7 trustee overseeing the liquidation of O-Cedar Holdings, Inc., and O-Cedar Brands, Inc. -- asks the U.S. Bankruptcy Court for the District of Delaware for permission to conduct examinations under Bankruptcy Rule 2004. Mr. Burtch wants to depose and obtain documents from Stonebridge Partners L.P., its four affiliates, and 20 individuals associated with Stonebridge. The Stonebridge entities are private equity investment firms which purchased the Debtors in 2000. The 20 individuals participated in the management of the Debtors' business operations prior to the petition date. The 20 individuals the Trustee wants to be examined are: * Andrew Thomas, * Michael S. Bruno, Jr., * Robert M. Raziano, * Gerald Erickson, * Jack Gainer, * Mark Carr, * Fred Leventhal, * Todd Leventhal, * Wayne G. Fethke, * Richard L. Heggelund, * Frank M. Schossler, * Barry Vickers, * Steven Koschnick, * Bradley E. Scher, * Francis Novak, * Robert E. Beasley, * Frank LaManna, * Frank DiCesare, * Frank Callan and * Mark Hollopeter. Having reviewed the Debtors' financial documents, the Trustee wants to know whether: -- the Debtors were insolvent in the fourth quarter of 2002 and -- the continued operations of the Debtors' businesses until the bankruptcy filing plunged the Debtors' deeper into insolvency. The Trustee wants to determine whether the Stonebridge board members knew or should have known about the Debtors' insolvent condition and ignored financial data showing significant losses to the estates. The Trustee contends that if the Debtors' assets were sold before the fourth quarter of 2002, the estates' creditors would have obtained a higher recovery on account of their claims. Headquartered in Springfield, Ohio, O-Cedar Holdings, Inc., through its debtor-affiliate, manufactures brooms, mops, and scrub brushes for household and industrial use. The Company filed for chapter 11 protection on August 25, 2003 (Bankr. Del. Case No. 03- 12667). John Henry Knight, Esq., at Richards, Layton & Finger, P.A., and Adam C. Harris, Esq., at O'Melveny & Myers LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed over $50 million in both assets and debts. On May 26, 2004, the cases were converted to chapter 7 and Jeoffrey L. Burtch was appointed trustee. PACIFIC GAS: Inks Pact Releasing $7.2MM From San Francisco Escrow ----------------------------------------------------------------- The City and County of San Francisco filed numerous proofs of claim in Pacific Gas and Electric Company's Chapter 11 case. In accordance with the Plan of Reorganization, Pacific Gas established an escrow fund for Class 5 Disputed Claims and deposited $22,358,872 on account of San Francisco's claims. Pursuant to an agreement entered on February 24, 2005, the parties settled certain of San Francisco's claims. Pacific Gas paid $7,200,512 to San Francisco pursuant to the settlement. Pacific Gas now wants to withdraw the same amount from the Class 5 Escrow fund. San Francisco has consented to that withdrawal. In a Court-approved stipulation, both parties agree that San Francisco has received the Settlement Amount. San Francisco further agrees that Pacific Gas may instruct the Escrow Agent for the Class 5 Escrow to release $7,200,512 to Pacific Gas, plus interest. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. Pacific Gas and Electric emerged from chapter 11 protection on April 12, 2004, paying all creditors 100 cents-on- the-dollar plus post-petition interest. PARK PLACE: Fitch Rates $23.4 Mil. Privately Offered Certs. at BB ----------------------------------------------------------------- Park Place Securities Inc.'s asset-backed P-T certificates, series 2005-WCW1, are rated by Fitch Ratings: -- $2,081,300,000 publicly offered classes A-1A, A-1B, A-2A, A-2B, A-3A through A-3D 'AAA'; -- $88.40 million class M-1 'AA+'; -- $76.70 million class M-2 'AA+'; -- $48.10 million class M-3 'AA'; -- $42.90 million class M-4 'AA'; -- $41.60 million class M-5 'AA-'; -- $39 million class M-6 'A+'; -- $35.10 million class M-7 'A'; -- $28.60 million class M-8 'A-'; -- $22.10 million class M-9 'BBB+', -- $19.50 million class M-10 'BBB', -- $20.80 million class M-11 'BBB-'. -- $23.40 million privately offered class M-12 'BB'. Credit enhancement for the 'AAA' rated class A certificates reflects the 19.95 credit enhancement provided by classes M-1 through M-12 certificates, monthly excess interest and initial overcollateralization of 1.25%. Credit enhancement for the 'AA+' rated class M-1 certificates reflects the 16.55% credit enhancement provided by classes M-2 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'AA+' rated class M-2 certificates reflects the 13.60% credit enhancement provided by classes M-3 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'AA' rated class M-3 certificates reflects the 11.75% credit enhancement provided by classes M-4 through M-12 certificates monthly excess interest and initial OC. Credit enhancement for the 'AA' rated class M-4 certificates reflects the 10.10% credit enhancement provided by classes M-5 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'AA-' rated class M-5 certificates reflects the 8.50% credit enhancement provided by classes M-6 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'A+' rated class M-6 certificates reflects 7% credit enhancement provided by classes M-7 through M- 12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'A' rated class M-7 certificates reflects the 5.65% credit enhancement provided by classes M-8 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'A-' rated class M-8 certificates reflects the 4.55% credit enhancement provided by classes M-9 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'BBB+' rated class M-9 certificates reflects the 3.70% credit enhancement provided by classes M-10 through M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'BBB' rated class M-10 certificates reflects the 2.95% credit enhancement provided by class M-11 and class M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the 'BBB-' rated class M-11 certificates reflects the 2.15% credit enhancement provided by class M-12 certificates, monthly excess interest and initial OC. Credit enhancement for the non-offered 'BB' class M-12 certificates reflects the monthly excess interest and initial OC. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of Countrywide Home Loans Servicing LP as Master Servicer. Wells Fargo Bank, N.A. will act as Trustee. As of the cut-off date, the Group I mortgage loans have an aggregate balance of $240,234,623,39. The weighted average loan rate is approximately 7.433%. The weighted average remaining term to maturity is 356 months. The average cut-off date principal balance of the mortgage loans is approximately $154,591. The weighted average original loan-to-value ratio is 78.87% and the weighted average Fair, Isaac & Co. score was 606. The properties are primarily located in California (21.60%), Florida (12.48%), Illinois (7.97%), and Arizona (6.13%). As of the cut-off date, the Group II mortgage loans have an aggregate balance of $758,368,103.58. The weighted average loan rate is approximately 7.411%. The WAM is 357 months. The average cut-off date principal balance of the mortgage loans is approximately $154,328. The weighted average OLTV ratio is 78.81% and the weighted average FICO score was 607. The properties are primarily located in California (22.06%), Florida (11.99%), Illinois (8.27%), and Arizona (5.30%). As of the cut-off date, the Group III mortgage loans have an aggregate balance of $1,001,397,352.83. The weighted average loan rate is approximately 7.022%. The WAM is 358 months. The average cut-off date principal balance of the mortgage loans is approximately $250,914. The weighted average OLTV ratio is 80.69% and the weighted average FICO score was 638. The properties are primarily located in California (44.26%), Florida (12.26%), Illinois (5.60%), and New York (5.40%). The transaction also has a prefunding account to purchase $600,000,000 of additional mortgage during the first three months of the deal. The loans were originated or acquired by Argent Mortgage Company, LLC, and Olympus Mortgage Company, both of which are affiliates of Ameriquest Mortgage Company, a specialty finance company engaged in the business of originating, purchasing and selling retail and wholesale subprime mortgage loans. PKCI: Case Summary & 23 Largest Unsecured Creditors --------------------------------------------------- Debtor: PKCI fka Porta-Kamp Construction Inc. P.O. Box 7064 Houston, Texas 77248-7064 Bankruptcy Case No.: 05-38863 Type of Business: The Debtor constructs portable camps and modular houses. Chapter 11 Petition Date: June 6, 2005 Court: Southern District of Texas (Houston) Judge: Wesley W. Steen Debtor's Counsel: Matthew Hoffman, Esq. Law Offices of Matthew Hoffman, P.C. 909 Fannin, Suite 2350 Houston, Texas 77010 Tel: (713) 654-9990 Fax: (713) 654-0038 Estimated Assets: $500,000 Estimated Debts: $7,700,000 Debtor's 23 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ American Door Unknown P.O. Box 55187 Houston, Texas 77255 American Tile Supply Unknown File 55276 Los Angeles, California 90074 Action Plumbing Supply Unknown 14620-K Hempstead Houston, Texas 77040 Baker HW Linen Company Unknown Citadel Architectural Products Unknown Commercial Interiors Unknown Container Bank Unknown Deer Park Lumber Company, Ltd. Unknown Dixie Plywood Company Unknown Elliott Electric Unknown Geary Pacific Supply Unknown Goodman Manufacturing Company Unknown Insulgard Corporation Unknown International Laminating Unknown Letsos Company Unknown Mercury Transportation, Inc. Unknown Sherwin Williams Unknown Southern Fastening Systems Unknown Specialty Products & Insulation Unknown Triple S Steel Supply Unknown West End Lumber Company, Inc. Unknown Windfern Construction Company, Ltd. Unknown Windfern Construction Company, Ltd. Unknown PNM RESOURCES: Completes $1.024 Billion TNP Acquisition ------------------------------------------------------- PNM Resources (NYSE:PNM) completed its acquisition of Fort Worth- based TNP Enterprises on June 6, 2005, just over 10 months after announcing the deal. Officials of both companies signed the final documents on June 5 in New York City. In July 2004, PNM Resources reported a proposed $1.024 billion acquisition of TNP Enterprises and its subsidiaries, Texas-New Mexico Power and First Choice Power. TNMP serves 49,000 electric customers in southern New Mexico and 207,000 transmission and distribution customers in Texas. First Choice Power is a competitive retail electric provider in Texas, serving an additional 56,000 electric customers. "The approval and regulatory processes went smoothly," said Jeff Sterba, PNM Resources chairman, president and CEO. "Employees from both companies did a fantastic job to put us in a position to close this acquisition in less than one year. Regulators in New Mexico, Texas and at the federal level were diligent in ensuring the acquisition was in the best interest of customers and both companies." With the acquisition and through its subsidiaries, PNM Resources now serves nearly 1.2 million customers: (a) 725,000 electric customers in Texas and New Mexico and (b) 471,000 natural gas customers in New Mexico. The new combined company will have consolidated operating revenues of more than $2.3 billion, 3,420 employees, 4,280 miles of electric transmission lines and 18,247 miles of electric distribution lines. PNM Resources emerged as a holding company in December 2001 from the state's largest utility, PNM. PNM is now the parent company of four subsidiaries: (1) PNM, a fully integrated electric and gas utility in New Mexico; (2) TNMP, an electric utility in New Mexico and a transmission and distribution company in Texas; (3) First Choice Power, a competitive retail electric provider in Texas; and (4) Avistar, an energy-related technology company based in Albuquerque. PNM Resources will remain headquartered in Albuquerque. TNP Redemption of Notes And Preferred Stock As part of the redemption of TNP notes, PNM Resources paid off a $110-million TNP term loan. TNP Enterprises reported in a separate news release that it will retire all outstanding 10.25- percent senior subordinated notes due 2010, and redeem all outstanding 14.5-percent senior preferred stock. The redemptions will occur on July 6, 2005. Acquisition Financing In March, PNM Resources completed its issuance of approximately $350 million of common equity and equity-linked securities. Additionally, as previously disclosed, PNM Resources intends to issue $100 million of debt. The proceeds of these combined issuances will be used to retire securities, a portion of the high-cost TNP debt and acquisition-related costs. In addition, Cascade Investment LLC has agreed to invest $100 million in equity-linked securities to be issued by the company in approximately 30 days. These proceeds will be used to retire the remaining high-cost debt. "Replacing the more expensive TNP debt and securities with our new financing will result in net savings well in excess of $40 million in annual interest expense," said John R. Loyack, PNM Resources senior vice president and chief financial officer. "The TNP acquisition will be included in our 2005 earnings guidance update in July, when we release second-quarter earnings." Savings generated from the acquisition are expected to generate at least 10 percent annual accretion to PNM Resources' earnings per share in the first full year after closing and 20 percent accretion to free cash flow. Executive Management Sterba disclosed an addition to the PNM Resources executive management team. Doug Hobbs, a 24-year TNMP veteran, is president and chief executive officer of TNMP and PNM Resources senior vice president of Customer & Delivery Services. In April, Sterba announced Jeff Shorter was named president of First Choice Power and a PNM Resources senior vice president. Shorter formerly was a senior officer at TXU Corp. and a Dallas-based energy consultant. About the Company PNM Resources (NYSE:PNM) -- http://www.pnmresources.com/-- is an energy holding company based in Albuquerque, New Mexico, with consolidated operating revenues of $2.3 billion. Through its utility and energy service subsidiaries, PNM Resources supplies electricity to 725,000 homes and businesses in New Mexico and Texas and natural gas to 471,000 customers in New Mexico. Its utility subsidiaries are PNM and Texas-New Mexico Power. Other subsidiaries include First Choice Power, a deregulated competitive retail electric provider in Texas, and Avistar, an energy research and development company. PNM Resources and its subsidiaries also sell power on the wholesale market in the West. * * * As reported in the Troubled Company Reporter on March 8, 2005, Moody's Investors Service has assigned a rating of Baa3 to PNM Resources, Inc.'s (PNMR) $400 million five-year unsecured bank credit facility. Moody's also assigned prospective ratings of (P)Baa3 and (P)Ba2 for PNM Resources' shelf registration for the issuance of senior unsecured debt and preferred stock. This is the first time that Moody's has assigned ratings to PNM Resources. POWER COMMUNICATION: Case Summary & 52 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Power Communication Services, Inc. 945 Yonkers Avenue Yonkers, New York 10704 Bankruptcy Case No.: 05-23193 Type of Business: The Debtor provides telecommunication services and integrates voice and data networks. The Debtor also specializes in fiber optic connectivity. Chapter 11 Petition Date: June 7, 2005 Court: Southern District of New York (White Plains) Debtor's Counsel: Jeffery A. Reich, Esq. Reich Reich & Reich, P.C. 175 Main Street, Suite 300 White Plains, New York 10601 Tel: (914) 949-2126 Fax: (914) 949-1604 Total Assets: $673,905 Total Debts: $1,572,782 Debtor's 52 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ James McGibney Loan to business $78,989 512 Westlake Drive from President Valhalla, NY 10595 Communication Supply Corp. Job materials $54,740 P.O. Box 7777-6650 Philadelphia, PA 19175 Peerless Insurance Company Insurance $41,561 P.O. Box 2051 Keene, NH 03431-7051 Wise Components, Inc. Job materials $38,415 79 Harborview Avenue Stamford, CT 06902 CWA/ITU Negotiated Pension payments $37,432 Pension Plan due for union 831 South Nevada Avenue employees Suite 120 Colorodo Springs, CO 80903 North Atlantic Job materials $29,637 Communications 1580 Ocean Avenue Bohemia, NY 11716 Anixter Inc. Claim for job $28,281 P.O. Box 847428 materials, judgment Dallas, TX 75284-7428 has been obtained ET Systems Job materials $26,664 55-55 58th Street Maspeth, NY 11378 Ren Telco Equipment rental $22,915 P.O. Box 45745 San Francisco, CA 94145-0745 Avon Datacom Corporation Job supplies $21,558 P.O. Box 827791 Philadelphia, PA 19182-7791 Benefield Electric Supplies $18,608 25 Lafayette Avenue White Plains, NY 10603 Gallant & Wein Corporation POW1 Job materials $16,745 11-20 43rd Road Long Island City, NY 11101 American Express Credit card debt $12,441 P O Box 36001 Ft. Lauderdale, FL 33336-0001 United Health Care Health insurance $11,916 Small Group Accounting for employees P.O. Box 41738 Philadelphia, PA 19101-1738 Cougar Management & Balance due on $11,479 Realty Services, Inc. surrendered office 265 Sunrise Highway, Ste 45 Space Rockville Center, NY 11570-4912 Midtown Electrical Supply Job materials $10,319 Corporation 157 West 18th Street New York, NY 10011 United Rentals Equipment rental $10,256 P.O. Box 19633a Newark, NJ 07195-0633 CWA Saving & Retirement Trust Union dues $9,125 501 Third Street Northwest Washington, DC 20001-2797 Midway Electric & Data Job materials $6,331 Supply LLC 131 Street New York, NY 10027-7980 GE Corporate Plus Credit card debt $5,462 P.O. Box 410420 Salt Lake City, UT 84141-0420 Texaco Credit card debt $4,502 P.O. Box 31129 Tampa, FL 33631-3129 HSBC Bank USA Credit card debt $4,352 P.O. Box 37278 Baltimore, MD 21297-3278 Ace Wire & Cable Co, Inc. Supplies $3,959 72-01 51st Avenue P.O. BOX 707 Woodside, NY 11377-7611 Home Depot Credit Services Credit card debt $3,559 P.O. Box 6029 Department 32 The Lakes, NV 88901-6029 Teltek Sales, Inc. Job materials $3,077 P.O. Box 423 Bala Cynwyd, PA 19004 Right Connection Job materials $2,495 3280 Sunrise Highway, Suite 297 Wantagh, NY 11793 Global Technologies PCS945 Job materials $1,429 P.O. Box 634531 Cincinnati, OH 45263-4531 Nextel Communications Cellular phone $1,424 P.O. Box 15372 services Wilmington, DE 19886-5372 Electronix Systems Central Alarm company $1,240 Station Alarms 1555 New York Avenue Huntington Station, NY 11746 Staples Office supplies $1,123 P.O. Box 9027 Des Moines, IA 50368-9027 Grainger Job materials $1,059 505 Sawmill River Road Elmsford, NY 10523-1093 Woodlawn Supply Job materials $1,013 772 Mclean Avenue Yonkers, NY 10704 Enviroprobe Service Inc. Job materials $850 221 Haddon Avenue Westmont, NJ 08108 The Travelers Insurance Co. Insurance $925 P.O. Box 13963 Philadelphia, PA 19101-3963 Hilti, Inc. Job materials $849 P.O. Box 382002 Pittsburgh, PA 15250-8002 Exxon/Mobil Credit card debt $795 P.O. Box 459 Carol Stream, IL 60197 AT&T Telephone services $782 P.O. Box 9001309 for 800 number Louisville, KY 40290-1309 Keyspan Energy Delivery Balance due for $658 P.O. Box 9083 electrical services Melville, NY 11747-9083 at previous business address in Plainview New York Verizon Wireless Cellular phone $623 P.O.Box 489 services Newark, NJ 07101-0489 Con Edison Utility services $565 Jaf Station P.O. Box 1702 New York, NY 10116-1702 Verizon Telephone services $546 P.O. Box 15124 Albany, NY 12212-5124 Arch Wireless Wireless services $470 P.O. Box 4062 Woburn, MA 01888-4062 County Chamber of Subscription $380 Commerce Inc. 235 Mamaroneck Avenue White Plains, NY 10605-1317 Cablevision Of Westchester Internet services $268 P.O. Box 526 Newark, NJ 07101-0526 Express Way Drive Service on vehicles $209 Thru Lube Centers P.O. Box 8066 Bridgeport, CT 06601-4066 Fleetwood Lock Alarm service $158 1085 Yonkers Avenue Yonkers, NY 10704 Callogic Answering Service $130 540 North Commercial St Manchester, NH 03101 Kleen Sweep Container Service Garbage pick up $114 P.O. Box 158 Yonkers, NY 10703 Lipa/Keyspan Balance due for $107 175 Old Country Road electrical services Hicksville, NY 11801 at previous business address in Plainview New York Crystal Rock Water Company Water cooler supplies $101 P.O. Box 10028 Waterbury, CT 06725-0028 Building Trades Assoc. Trade membership $95 630 Third Avenue, 7th Floor New York, NY 10017 Federal Express Overnight delivery $57 P.O. Box 1140 charges Memphis, TN 38101-1140 PROVIDIAN FINANCIAL: Fitch Places Ratings on Watch Positive ----------------------------------------------------------- Fitch Ratings affirmed the ratings of Washington Mutual, Inc. at 'A/F1' with a Stable Outlook, and its banking subsidiaries and has placed Providian Financial Corp., rated 'B+/B' with a Positive Outlook, and its subsidiaries on Rating Watch Positive. This action follows this week's announcement that Washington Mutual, Inc. will acquire Providian for approximately $6.45 billion, 89% of which is to be paid in WM stock. A complete list of ratings is available at the end of this release. This transaction is the realization of WM's long-standing plans to enter the credit card business and thus fits nicely into its stated retail strategy. While PVN has had significant business challenges in the past few years, the company's situation has improved considerably under the current management team. One of the last remaining hurdles in PVN's turn-around, i.e. access to more attractively priced and diversified funding, is addressed through this transaction. Going forward, the current PVN management team has been retained to run this business as a fourth business unit within WM, which Fitch views positively. Upon expected completion, the ratings of PVN will be equalized with those of WM. Recognizing the somewhat higher risk profile of credit card receivables versus WM's existing asset mix, which is dominated by prime residential mortgages, WM's pro forma capital targets are now somewhat higher, on both a stated and a tangible basis, which Fitch considers appropriate for the ratings assigned. Fitch anticipates that Providian National Bank will be merged into Washington Mutual Bank (formerly Washington Mutual Bank, FA) upon consummation of the transaction, which is anticipated by year-end 2005. The following ratings are placed on Rating Watch Positive: Providian Financial Corp. -- Senior debt at 'B+'; -- Short-term debt at 'B'; -- Support at '5'; -- Individual at 'D'. Providian National Bank -- Long-term deposits at 'BB'; -- Senior debt at 'BB-'; -- Subordinated debt at 'B+'; -- Short-term deposits at 'B'; -- Short-term debt at 'B'; -- Individual at 'C/D'; -- Support at '5'. Providian Capital I -- Trust-preferred at 'B-'. These ratings are affirmed by Fitch: Washington Mutual, Inc.: -- Senior debt affirmed at 'A'; -- Subordinated debt affirmed at 'A-'; -- Short-term debt affirmed at 'F1'; -- Individual affirmed at 'B'; -- Support affirmed at '5'; -- Outlook is Stable. Washington Mutual Bank (formerly Washington Mutual Bank, FA): -- Long-term deposits affirmed at 'A+'; -- Senior debt affirmed at 'A'; -- Subordinated debt affirmed at 'A-'; -- Short-term deposits affirmed at 'F1'; -- Short-term debt affirmed at 'F1'; -- Individual affirmed at 'B'; -- Support affirmed at '3'; -- Outlook is Stable. Washington Mutual Capital I -- Trust-preferred affirmed at 'A-'. Bank United Corp. -- Subordinated debt affirmed at 'A-'. Bank United FSB -- Senior debt affirmed at 'A'. Bank United Capital Trust -- Trust-preferred affirmed at 'A-'. PROVIDIAN FINANCIAL: Wash. Mutual Sale Cues S&P to Watch Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its outstanding ratings on Providian Financial Corp. (Providian; NYSE:PVN) and its subsidiaries, including its 'B' long-term counterparty credit rating on Providian, and placed the ratings on CreditWatch with positive implications. The action follows the announcement that Providian has agreed to be acquired by Washington Mutual Inc. Several years ago, Providian experienced material asset quality issues that resulted in several ratings downgrades. More recently, after replacing key management members, Providian shed itself of most of its legacy portfolio, and redirected its business strategy away from the deep subprime customer toward a middle-to-prime market focus, with particular emphasis on the middle-market customer. "The successful implementation of the revised strategy is evident in the progress Providian has made to-date in improving asset quality metrics specifically, and more generally, overall financial performance," said Standard & Poor's credit analyst John K. Bartko, C.P.A. The most significant long-term challenge Providian faced, like all of its asset-backed-funded brethren, revolved around the dependence on the often-volatile capital markets for funding. Although it is not likely to abandon the asset-backed funding alternative altogether, the linking of Providian's card business with Washington Mutual enhances Providian's funding profile by improving pricing and offering other alternatives such as a bank retail deposit component. As such, at the close of the transaction, the ratings on Providian will likely be equalized with those of Washington Mutual. PROVIDIAN NATIONAL: Moody's Reviews Junk Security Rating -------------------------------------------------------- Moody's Investors Service affirmed the ratings and stable outlook for Washington Mutual, Inc. (Senior Debt at A3) and its thrift subsidiaries (Deposits at A2). The rating agency also put the ratings of Providian National Bank (Deposits at Ba2) on review for possible upgrade. The ratings action follows Washington Mutual's announcement that it has agreed to acquire Providian Financial Corporation, parent of Providian National Bank. The ratings of Providian Financial Corporation (Senior Debt at B2) were placed on review for possible upgrade in January, and remain on review for upgrade. Moody's said the ratings affirmation for Washington Mutual reflects the conservative financing of the proposed transaction, with 89% of the $6.5 billion purchase price to be funded with equity, as well as its relatively modest impact on Washington Mutual's financials. The acquisition has a number of credit positives for Washington Mutual, the rating agency said, but also poses some challenges. These factors on balance also support a ratings affirmation. The acquisition's credit positives include an increase in Washington Mutual's earnings diversification and the potential future benefits the company may realize through the cross-sale of Providian's credit card products to Washington Mutual's current customer base. The acquisition also provides Washington Mutual with an experienced credit card management team and a sizable credit card platform which would have been difficult for the company to build on its own. The credit challenges include the challenges of managing the growth of Providian's sizable credit card lending business, the rating agency noted, and of integrating Providian's risk management practices and strategic decision making into those of Washington Mutual. These challenges are heightened because Providian's unsecured near-prime credit card lending business is considerably riskier and more volatile than Washington Mutual's traditional residential real-estate secured lending and retail deposit gathering activities. Moody's said the review for upgrade for Providian's ratings reflects the benefits the acquisition would provide to Providian's creditors from Washington Mutual's substantially larger and more diversified earnings base as well as its stronger core funding profile. The ratings review will conclude after all necessary approvals for the transaction have been received, at which point the rating agency expects that Providian's ratings will be raised to the level of Washington Mutual's ratings for similar instruments. These ratings were put on review for upgrade: Providian National Bank: -- the rating for deposits of Ba2/NP, the rating for other senior obligations and the issuer rating of Ba3, and the financial strength rating of D These ratings remain on review for upgrade: Providian Financial Corporation: -- the B2 rating for senior unsecured debt Providian Capital I: -- the Caa1 rating for trust preferred securities. Providian Financing I, II, III & IV -- the (P)Caa1 shelf ratings for trust preferred securities These ratings were among those affirmed: Washington Mutual Bank, F.A.: -- Deposits at A2/P-1, Senior debt at A2, Issuer at A2, Subordinated debt at A3, and the Financial Strength Rating at C+ Washington Mutual Bank, FSB: -- Deposits at A2/P-1, Issuer at A2, and the Financial Strength Rating at C+ Washington Mutual, Inc.: -- Senior debt at A3, Subordinated debt at Baa1, Trust Preferred securities at Baa1 Washington Mutual, Inc., headquartered in Seattle, Washington, is the largest thrift holding company in the U.S. and sixth largest among U.S. bank and thrift companies, with assets of $320 billion at September, 30, 2004. Providian Financial Corporation, headquartered in San Francisco, California, is the ninth largest credit card issuer in the U.S. with managed credit card receivables of $18.1 billion at March 31, 2004. PURADYN FILTER: Files Plan of Compliance to Continue AMEX Listing ----------------------------------------------------------------- puraDYN Filter Technologies Incorporated (AMEX:PFT) filed its proposed plan of compliance within the deadline set by the American Stock Exchange. The plan of compliance submitted is in accordance with the notice of non-compliance received from AMEX on April 28, 2005, The Company's common stock continues to be listed on the American Stock Exchange. Joseph V. Vittoria, Chairman, stated, "We believe the plan we have submitted to the AMEX addresses the issues of non-compliance and outlines our strategy in resolving these issues. We are hopeful that the AMEX will accept the plan and that our stock will continue to be listed on the Exchange." Mr. Vittoria continued, "We are now proceeding to finalization of the current, targeted equity raise and with our reduced overheads, we can now concentrate on growing the company's revenue through the many evaluations that are currently in place. "A number of investors recognize that while the Company may be facing liquidity issues, we do produce an asset needed by every type of company that uses a high volume of engine oil and whose bottom line is impacted by the rising cost of oil. "These same investors recognize that we are committed to achieving the goals set forth in our business plan and have remained supportive of the challenges we face in bringing our product to the marketplace." About the Company puraDYN Filter Technologies, Inc., (AMEX:PFT) designs, manufactures and markets the puraDYN(R) Bypass Oil Filtration System, the most effective filtration product on the market today. It continuously cleans lubricating oil and maintains oil viscosity to safely and significantly extend oil change intervals and engine life. Effective for internal combustion engines, transmissions and hydraulic applications, the Company's patented and proprietary system is a cost-effective and energy-conscious solution targeting an annual $13 billion potential industry. The Company has established aftermarket programs with several of the transportation industry leaders such as Volvo Trucks NA, Mack Trucks, PACCAR; a strategic alliance with Honeywell Consumer Products Group, producers of FRAM(R) filtration products; and continues to market to major commercial fleets. puraDYN(R) equipment has been certified as a 'Pollution Prevention Technology' by the California Environmental Protection Agency and was selected as the manufacturer used by the US Department of Energy in a three-year evaluation to research and analyze performance, benefits and cost analysis of bypass oil filtration technology. At Mar. 31, 2005, puraDYN Filter Technologies, Inc.'s balance sheet showed a $3,943,382 stockholders' deficit, compared to a $3,127,358 deficit at Dec. 31, 2004. ROOMSTORE INC: Emerges from Chapter 11 Protection ------------------------------------------------- RoomStore, Inc., formerly HMY RoomStore, Inc., headquartered in Richmond, Virginia, a leading furniture retailer, has emerged from Chapter 11 bankruptcy protection. RoomStore offers a wide selection of professionally coordinated home furnishings in complete room packages at value-oriented prices. RoomStore operates 65 stores located in Pennsylvania, Maryland, Virginia, North Carolina, South Carolina and Texas. Under the terms of the Plan, the existing equity interests in RoomStore have been cancelled and the unsecured creditors of RoomStore will receive new common stock of RoomStore in satisfaction of their claims. Heilig-Meyers Company, the former parent of RoomStore, is the single largest creditor of RoomStore and will receive approximately 67% of the new common stock. The Plan also includes a $35 million working capital facility with Bank of America, N.A., which was closed on June 1, 2005. Curtis C. Kimbrell, III, President and CEO of RoomStore acknowledged RoomStore's emergence would not have been realized without the support of its employees, customers and suppliers, and Creditors' Committee. "To our employees, we thank you for your perseverance, dedication, and hard work throughout this process. To our customers and suppliers, we are grateful for your continued support. To our Creditors' Committee, we thank you for being cooperative and constructive partners during the reorganization process. Mr. Kimbrell went on to comment that of the numerous restructuring achievements, there are four key areas that are the platform for RoomStore's future success: a tested management team, a new board of directors, strong relationships with critical vendors and service providers, and a strong balance sheet. The core members of the RoomStore management team not only implemented the restructuring initiatives, but also generated positive results from operating the business through the nearly five year restructuring process. They have deep knowledge of the business and industry and have developed and demonstrated strong skills in business fundamentals, logistics and customer service. On the effective date of the Plan, a new board of directors was installed consisting of Mr. Kimbrell and 4 independent directors. The independent directors include two prominent furniture industry veterans in Robert Shaffner, former chief financial officer of Klaussner Furniture Industries, Inc., and Ronald A. Kaplan, former president of Levitz Furniture. The remaining two directors are Eugene I. Davis and N. Martin Stringer. Mr. Kimbrell stated, "The wealth of home furnishings experience Mr. Shaffner and Mr. Kaplan bring to our board will be complimented well by the financial savvy and capital markets knowledge of Mr. Davis and Mr. Stringer. This is the combination that the RoomStore needs to meet its future goals." During the restructuring process, RoomStore was able to maintain and strengthen relationships with critical vendors and service providers. Notably, credit lines and payment terms have been expanded with key merchandise suppliers to ensure adequate inventory levels and a consistent flow of merchandise to support sales goals and a high level of customer service. Finally, RoomStore emerged with a strong balance sheet supported by a $35 million working capital facility from Bank of America, N.A. "Our strong balance sheet and working capital facility are more than adequate to support the business operations as well as expansion plans within our current markets," noted Mr. Kimbrell. He added, "The combination of these key ingredients makes for a wonderful opportunity for RoomStore, its employees, its vendors and its customers." RoomStore offers a wide selection of professionally coordinated home furnishings in complete room packages at value-oriented prices. RoomStore operates 65 stores located in Pennsylvania, Maryland, Virginia, North Carolina, South Carolina and Texas. Heilig-Meyers Company filed for chapter 11 protection on Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion in assets and $839 million in liabilities. When the Company filed for bankruptcy protection it operated hundreds of retail stores in more than half of the 50 states. In April 2001, the company shut down its Heilig-Meyers business format. In June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc. GOB sales have been concluded and the Debtors are liquidating their remaining Heilig-Meyers assets. The Debtors are working to effect a restructuring of their RoomStore business operations with the expectation of bringing that business out of bankruptcy as a reorganized company. Bruce H. Matson, Esq., Troy Savenko, Esq., and Katherine Macaulay Mueller, Esq., at LeClair Ryan, P.C., in Richmond, Va., represent the Debtors. SALOMON BROTHERS: Adequate Credit Support Cues S&P to Hold Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 97 classes from 32 series of mortgage pass-through certificates issued by Salomon Brothers Mortgage Securities VII Inc. The affirmed ratings reflect adequate actual and projected credit support percentages. As of the May 2005 remittance date, total delinquencies for the prime transactions ranged from 0.00% (10 transactions) to 17.76% for series 2000-UP1, while cumulative realized losses ranged from 0% (five transactions) to 1.04% (series 1994-20). Most of the prime transactions are well seasoned, with all but three having an outstanding pool balance of less than 4%. Total delinquencies for the subprime transactions (the transactions with LB, AQ, and NC suffixes) ranged from 12.79% (series 1998-NC3) to 27.46% (series 1999-AQ2). Cumulative realized losses ranged from 0.58% (series 2003-UP1) to 5.01% (series 1999-NC1). The transactions structured with overcollateralization and excess spread as credit support have been generating sufficient excess interest cash flow to cover losses in most cases. Furthermore, these transactions are at or close to their respective overcollateralization targets. In addition, except for series 2003-UP1, all of the subprime transactions have outstanding pool balances of less than 13%. Series 2003-UP1 has an outstanding pool factor of 40.19%. The transactions are backed by fixed- or adjustable-rate 30-year mortgage loans. These mortgage loans are secured by first liens on one-to-four family residential properties. Ratings Affirmed Salomon Brothers Mortgage Securities VII Inc. Mortgage pass-through certificates Series Class Rating ------ ----- ------ 1992-6 A-1, A-2 AAA 1992-6 M AA+ 1993-1 G, H-Z, PO, XS, M AAA 1993-7 A AA+ 1993-9 A-2, B-1, B-2 AAA 1993-9 B-3 AA 1993-9 B-4 BBB+ 1993-9 B-5 B 1994-1 B-1, B-2 AAA 1994-5 B-1, B-2 AAA 1994-11 A, IO, PO AAA 1994-17 A AAA 1994-19 A AAA 1994-20 A AAA 1994-4A 4A-A AA+ 1996-2 XS AAA 1996-5 A AAA 1997-LB6 A-5, A-6, XS, B-1 AAA 1997-LB6 B-2 AA 1997-LB6 B-3 BBB 1997-NC5 M-1 AAA 1998-AQ1 A-5, A-6, A-7, XS-N, XS-T AAA 1998-AQ1 B-1 AA 1998-AQ1 B-2 A 1998-NC1 A, M-1 AAA 1998-NC2 M-1 AAA 1998-NC3 A-5, A-6 AAA 1998-NC3 M-1 AA 1998-NC3 M-2 A 1998-NC4 M-2 A 1998-NC7 A-6, A-7 AAA 1999-2 A1-4, A1-6, A2, IO, PO AAA 1999-6 A-3 AAA 1999-AQ1 M-1, M-2 AAA 1999-AQ1 M-3 AA 1999-AQ2 M-1 AAA 1999-AQ2 M-2 AA+ 1999-AQ2 M-3 BBB 1999-NC1 A-2 AAA 1999-NC1 M-1 AA+ 1999-NC1 M-2 A 1999-NC1 M-3 BBB 1999-NC2 M-1 AAA 1999-NC2 M-2 A 1999-NC2 M-3 BBB 2000-1 A-1, A-2, IO, PO, B-1, B-2 AAA 2000-1 B-3 AA+ 2000-UP1 A-1, A-2 AAA 2001-2 A AAA 2001-2 M-1 AA 2001-2 M-2 A 2001-2 M-3 BBB 2003-1 A-1, A-2, S, IO, PO AAA 2003-1 B-1 A 2003-UP1 A, A-IO, M-1 AAA 2003-UP1 M-2 AA 2003-UP1 M-3 A+ SEQUOIA MORTGAGE: Credit Enhancement Cues Fitch to Affirm Ratings ----------------------------------------------------------------- Fitch Ratings affirms theses Sequoia Mortgage Trust issues: Series 2003-4 Pool 1 -- Class A at 'AAA'; -- Class 1-B-1 at 'AA'; -- Class 1-B-2 at 'A'; -- Class 1-B-3 at 'BBB'; -- Class 1-B-4 at 'BB'; -- Class 1-B-5 at 'B'. Series 2003-4 Pool 2 -- Class A at 'AAA'; -- Class 2-M-1 at 'AA+'; -- Class 2-B-1 at 'AA'; -- Class 2-B-2 at 'A'; -- Class 2-B-3 at 'BBB'; -- Class 2-B-4 at 'BB'; -- Class 2-B-5 at 'B'. Series 2004-1 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. Series 2004-2 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. The affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $1.358 billion of outstanding certificates. As of the May 2005 distribution, The pools are seasoned from a range of 15 to 21 months and pool factors (current principal balance as a percentage of original) range from approximately 71% to 80%. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ SOLUTIA INC: Reaches Restructuring Proposal with Monsanto & Panel ----------------------------------------------------------------- Solutia Inc. (OTC Bulletin Board: SOLUQ) reached an agreement-in- principle with Monsanto Company (NYSE: MON) and the Official Committee of Unsecured Creditors in its Chapter 11 case regarding the restructuring of the company. This agreement will serve as the framework for Solutia's Plan of Reorganization, which will contain the complete terms of the company's restructuring. Solutia anticipates filing its Plan of Reorganization and Disclosure Statement with the Bankruptcy Court later this summer. "This agreement-in-principle is a major milestone in the successful reorganization of Solutia. It provides significant relief from the historic liabilities that were a driving factor in our Chapter 11 filing, reduces the risk profile of the company in terms of contingent liabilities, and strengthens our balance sheet," said Jeffry N. Quinn, president and CEO, Solutia Inc. "This agreement is in the best interests of Solutia, our employees, retirees and other stakeholders. In combination with the steps we continue to take to improve business performance and enhance our strategic and competitive position, this agreement provides a solid foundation for a reorganized Solutia that is positioned for success." "As we have said throughout this process, our goal has been to resolve the issues related to Solutia's bankruptcy to best protect our shareowners' interests," said Terry Crews, Monsanto's chief financial officer. "This proposal, if approved by the court, would be a major step toward finality in the Solutia bankruptcy process, help create a viable Solutia, and allow Monsanto to continue to focus on our agricultural businesses." The agreement-in-principle provides for $250 million of new investment in reorganized Solutia. This investment will be in the form of a rights offering to unsecured creditors, who will be given the opportunity to purchase 22.7% of the common stock in the reorganized company. The purchase price for this stock may or may not coincide with market value or with the reorganization value of the company as determined by the Bankruptcy Court. Monsanto will backstop the rights offering (i.e. exercise the remaining rights if the offering is not fully subscribed). Of the proceeds from the rights offering, $200 million will be used post- emergence to satisfy specific liabilities as described below, and the remaining $50 million will be used post-emergence at the discretion of the reorganized company to provide additional funding for satisfaction of those liabilities. The liabilities Solutia assumed at the time it was spun off from Pharmacia Corporation included retiree benefit obligations, environmental remediation and litigation. The agreement-in- principle addresses these liabilities: 1) Pre-Spin retiree benefit obligations: $150 million of the proceeds from the rights offering will be used to satisfy, in part, retiree medical, disability and life insurance benefits of those individuals who receive these benefits from Solutia but who retired prior to the spinoff. 2) Environmental remediation: * Sites Never Owned or Operated By Solutia. Monsanto will be responsible for paying the remediation costs related to these sites. * Anniston and Sauget Off-Site Environmental Remediation. $50 million of the proceeds from the rights offering would be used for off-site remediation in Anniston, Ala. and Sauget, Ill. After the proceeds from this portion of the rights offering are exhausted, Monsanto will pay the next $50 million in remediation costs at those sites, less certain expenses incurred at those sites during Solutia's Chapter 11 case. Solutia would then be responsible for the remediation costs at those sites up to a pre- determined level, after which Monsanto and Solutia would each pay for 50 percent of costs. 3) Litigation costs and toxic tort claims: Monsanto will contribute up to $107 million, minus certain related expenses incurred during Solutia's Chapter 11 case, to be used by Solutia to make distributions under its Plan of Reorganization to certain holders of unsecured claims, including current tort claims. Such unsecured creditors may also receive common stock in the reorganized company under Solutia's Plan. Solutia will remain responsible for and will continue to pay the $5 million annual installment and the education fund obligations relating to the August 2003 Anniston PCB settlement. "Importantly, this agreement-in-principle does not require a termination of our pension plan, and it ensures that all environmental obligations related to the historic chemical business of our former parent will be satisfied," added Mr. Quinn. "Assuming that Solutia is reorganized in a manner consistent with the parties' agreement in principle," Mr. Crews said, "Monsanto's recorded reserves appear adequate at this time." Under the agreement-in-principle, the reorganized company will be an independent, publicly traded company. Solutia's secured debt and debtor-in-possession financing will be repaid in full from proceeds from an exit financing package to be arranged by the company to the extent that claims relating to such are allowed by the court. In consideration for its contributions described above, the resolution of its claim, and the settlement of ongoing and potential litigation in the case, among other things, Monsanto will receive common stock in the reorganized company. If Monsanto is required to make the full new money investment contemplated by the rights offering due to its backstop commitment, Monsanto's equity interest in the reorganized company would be 52.5%. The holders of allowed unsecured claims would receive the remaining 47.5% of the common stock in the reorganized company. The ultimate equity ownership of both the holders of unsecured claims and Monsanto will be subject to adjustment based on the amount of allowed unsecured claims in the case. It is not contemplated that the holders of Solutia's existing equity will receive any distribution. "Monsanto and the Unsecured Creditors' Committee and their respective advisors have been very constructive in working with the company to reach this agreement-in-principle," said Mr. Quinn. "We will continue to work with both of them and the other constituents in our case to confirm a plan of reorganization based on this agreement with the goal of emerging from Chapter 11 later this year." Submission of a Disclosure Statement and a Plan of Reorganization as contemplated by this agreement-in-principle is subject to the approval of the board of directors of Solutia, the negotiation of definitive documents, and various other conditions and contingencies, some of which are not totally in the control of the company, Monsanto, or the Unsecured Creditors' Committee. For example, certain other constituents in the case must agree to terms, which are conditions to the agreement-in-principle. In addition, the purchase price for the stock made available through the rights offering may or may not coincide with market value or with the reorganization value of the company as determined by the Bankruptcy Court. Confirmation of a Plan of Reorganization consistent with this agreement-in-principle is subject to various conditions, including Bankruptcy Court approval. 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 Richard M. Cieri, Esq., at Kirkland & Ellis. SPANISH BROADCASTING: Moody's Assigns B2 Rating to $100M Term Loan ------------------------------------------------------------------ Moody's Investors Service upgraded today the long term ratings of Spanish Broadcasting System, Inc. and concluded the review for possible upgrade initiated on August 31, 2004. Additionally, Moody's assigned B1 ratings to Spanish Broadcasting System, Inc.'s first lien senior secured credit facilities ($25 million first lien revolving credit facility and $300 million first lien term loan) and a B2 rating to the $100 million second lien term loan. The rating outlook is stable. The upgrade reflects the expectation of meaningful deleveraging and improvement in operating opportunities going forward, balanced by a still high debt burden and aggressive acquisition strategy. Moody's has assigned these ratings: i) a B1 rating to the $25 million first lien revolving credit facility ii) a B1 rating to the $300 million first lien term loan iii) a B2 rating to the $100 million second lien term loan Moody's has upgraded these ratings: i) the $75 million of Cumulative Exchangeable Redeemable Preferred Stock to Caa1 from Caa2 ii) the senior implied rating to B1 from B2, and iii) the senior unsecured issuer rating to B2 from B3. The outlook is stable. Proceeds from the transaction and cash on hand will be used to repay the company's $335 million 9 5/8% senior subordinated notes due 2009 and the existing senior secured credit facilities. Following the refinancing, Moody's will withdraw its ratings on these issues. The transaction results in no incremental leverage. The upgrade reflects SBS's more conservative capitalization, the resulting reduction in debt service, and an improved liquidity position, following the close of pending non-strategic asset divestitures (4 stations for aggregate gross proceeds of $202 million). The upgrade also incorporates Moody's view that SBS's strategic alliance with Viacom is a credit positive, analogous to an equity infusion in the company (10% equity investment in SBS). This partnership marks a departure from SBS' previous debt- financed acquisition strategy, as SBS acquired an additional radio station in the San Francisco area without the incurrence of any incremental debt. The upgrade also recognizes the strength of media giant, Viacom, as a financially conservative partner and the potential benefit to SBS through cross-promotional efforts on Viacom's CBS network and outdoor advertising properties. The company's ratings continue to benefit from the significant underlying asset value of its large market radio stations which provide ample coverage of total debt and preferred, even in the most reasonable downside scenarios. Additionally, SBS' ratings are supported by management's successful track record for improving operations and cash flow at its acquired stations. The fundamentally favorable economic and demographic trends within the Hispanic market and the increase in advertising targeting Hispanics continue to provide SBS with growth. Despite anticipated debt reduction efforts, SBS remains highly leveraged and SBS' ratings incorporate the likelihood that the company's aggressive acquisition strategy will persist. SBS operates in highly competitive urban markets. While SBS evidences a proven track-record, maintaining profitable growth may be challenging as programming costs and marketing expenditures increase in response to competition, often from better capitalized companies (especially in the LA market). SBS will remain vulnerable to the concentration of its cash flows and potential economic fluctuations in its three larger markets - NY, Miami and LA (at 30%, 25% and 24% of revenues, respectively). The stable outlook incorporates the likelihood that SBS will continue to grow revenues and improve profitability of existing and newly acquired stations. The ratings may enjoy further positive ratings momentum, if SBS remains focused on permanent debt reduction, favoring the use of its free cash flow and proceeds from pending asset sales to maintain leverage at or below 5 times total debt and preferred-to cash flow going forward. However, to the extent that the company uses debt to finance additional acquisitions or strategic diversification (e.g. Spanish language TV) and this increases leverage above current levels, the outlook may be revised to negative. Pro forma for the proposed transaction and asset sales, SBS's total debt-to-EBITDA is about 7.6 times and total debt + preferred-to-EBITDA is about 9 times for YE2004. Moody's expects leverage and interest coverage to improve meaningfully in the near term as the company intends to use $120 million of cash proceeds from pending asset sales to paydown their existing debt, strengthening SBS' balance sheet and financial flexibility. Additionally, Moody's expects leverage to further improve over time, as the acquired stations are integrated improving margins at these more developed stations. Moody's believes that SBS's sizeable pro forma cash balance of approximately $53 million provides the company with good liquidity. The B1 ratings on SBS's $325 million in senior secured first lien credit facilities reflects the senior-most position of this class of debt and the debt protection measures provided by the credit agreement. The facilities are secured by all of the capital stock and assets of the borrower and its subsidiaries, and also benefit from subsidiary guarantees (excluding certain Puerto Rico subsidiaries). The B2 rating on the $100 million in senior secured second lien term loan reflects their second-priority claim to the company's assets. The Caa1 rating on the existing preferred stock reflects their junior position to senior secured debt in the capital structure. Spanish Broadcasting, based in Miami, Florida, currently owns and operates 20 radio stations targeting the Hispanic radio audience. SPIKES ENTERPRISES: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Spikes Enterprises, Inc. dba Kentucky Fried Chicken dba KFC P.O. Box 142729 Fayetteville, Georgia 30214 Bankruptcy Case No.: 05-17180 Type of Business: The Debtor is a Kentucky Fried Chicken franchisee. Chapter 11 Petition Date: June 6, 2005 Court: Northern District of Georgia (Newnan) Judge: W. Homer Drake Debtor's Counsel: Paul Reece Marr, Esq. Paul Reece Marr, P.C. 300 Galleria Parkway, Northwest, Suite 960 Atlanta, Georgia 30339 Tel: (770) 984-2255 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 4 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Georgia Department of Sales tax, interest $53,042 Revenue and penalty Bankruptcy Insolvency Unit P.O. Box 3889 Atlanta, GA 30334 George Wingo Property taxes for $32,079 Fayette County Tax Peachtree City location Commissioner P.O. Box 70 Fayetteville, GA 30214 George Wingo Property taxes for $5,324 Fayette County Tax Fayetteville location Commissioner P.O. Box 70 Fayetteville, GA 30214 Richard R. Della Croce, Esq. Account payable $114 For ADT Security Services 9447 West 144th Place Suite 100 Orland Park, IL 60462 S.R.P. HOSPITALITY: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: S.R.P. Hospitality, Inc. dba Dallas Plaza Hotel 8331 Rockford Hall Drive Spring, Texas 77379 Bankruptcy Case No.: 05-38927 Type of Business: The Debtor owns and operates a hotel in Dallas, Texas. See http://www.dallasplazahotel.com/ Chapter 11 Petition Date: June 6, 2005 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Bennett G. Fisher, Esq. Fisher and Associates PC 1800 Two Houston Center 909 Fannin Street Houston, Texas 77010-0000 Tel: (713) 223-8400 Fax: (713) 609-7766 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ramada Franching System, Inc. $100,000 One Sylvan Way Parsippany, NJ 07054 GEXA Energy $68,630 P.O. Box 659410 San Antonio, TX 78265-9410 Ramada Franching System, Inc. $60,000 One Sylvan Way Parsippany, NJ 07054 United Elevator $46,882 2126 113th Street Grand Prairie, TX 75050 City Of Dallas $20,205 Special Collections Division P.O. Box 139076 Dallas, TX 75313 Carrier Corporation $17,650 2201 Midway #200 Carrolton, TX 75006 United Central Bank $15,173 4555 West Walnut Street Garland, TX 75042 City Of Dallas $13,339 Special Collections Division P.O. Box 139076 Dallas, TX 75313 Birch Telecom $11,890 P.O. Box 660111 Dallas, TX 75266-0111 City Of Dallas $11,481 Special Collections Division P.O. Box 139076 Dallas, TX 75313 MC Quary International $10,337 13600 Industrial Pak Boulevard Minneapolis, MN 55441 City Of Dallas $10,003 Special Collections Division P.O. Box 139076 Dallas, TX 75313 AT&T Long Distance $6,471 P.O. Box 78214 Phoenix, AZ 85062-8214 Trane $5,218 P.O. Box 845053 Dallas, TX 75284-5053 Conferon Global Services $5,092 2500 Enterprise Parkway East Twingsburg, OH 44087 City Of Dallas $4,968 Special Collections Division P.O. Box 139076 Dallas, TX 75313 Ben E. Keith $2,834 P.O. Box 901001 Fort Worth, TX 76101 Guest Supply $2,570 Guest Distribution P.O. Box 824700 Philadelphia, PA 19182-4700 Multi Sytem Inc. $2,260 CMI Legal Forwording Division P.O. Box 28851 Philadelphia, PA 19151 Cooper Moore $1,871 10430 Shady Trail #100 Dallas, TX 75220 SURFNET MEDIA: Delays Annual Report Filing to Complete Audit ------------------------------------------------------------ SurfNet Media Group, Inc. (OTCBB: SFNM) filed a Notification of Late Filing on Form 12b-25 with the Securities and Exchange Commission relating to its Annual Report on Form 10-KSB for the fiscal year ended February 28, 2005. SurfNet states in the report that its auditor did not begin audit field work until June 1, 2005, two days after the date upon which SurfNet's Annual Report on Form 10-KSB was due with the Securities and Exchange Commission. SurfNet expects that the auditor will complete the audit in a timely fashion and SurfNet will file its Annual Report with the SEC prior to June 30, 2005. When SurfNet files its Annual Report, the NASD will remove the "e" from SurfNet's symbol. The presence of an "e" does not constitute a trading halt or delisting, although some brokerage firms have policies that prevent trading until an "e" is removed. About SurfNet SurfNet Media Group -- http://www.surfnetmedia.com/-- founded in 1999, is an online broadcast media company and the leading producer and distributor of online, talk radio content, streaming over 100 programs weekly to targeted audiences on its flagship VoiceAmerica(TM) Channel, VoiceAmerica(TM) Business Channel and VoiceAmerica(TM) Health & Wellness Channel. Additionally, SurfNet is pioneering a unique, next-generation content distribution model based on its patented Metaphor(R) iportal, creating innovative "community centers" that transform any web site into a broadcast portal for syndication of online content, including on-demand libraries, webcasts, MP3 downloads, ecommerce, email, community links, blogs and podcasting. At Nov. 30, 2004, SurfNet Media's total liabilities exceed its total assets by $1,350,026. TESORO PETROLEUM: Moody's Reviews B2 Sr. Sub. Debt Rating --------------------------------------------------------- Moody's placed Tesoro Petroleum's ratings on review for upgrade, affecting its Ba3 senior implied rating, Ba2 senior secured note rating, and B2 senior subordinated note rating. The review would be completed in the near future, within the context of Tesoro's: * strategic plans; * acquisition appetite; * degree of expected internal and common equity funding for potential acquisitions; * still substantial lease-adjusted debt; and * the dimensions of any planned shareholder friendly initiatives. The more likely outcome would be a one notch upgrade. Since Tesoro's last upgrade in July 2004, sector conditions supported continued strong refining margins. Resulting cash flow greatly accelerated Tesoro's capacity to reduce lease-adjusted leverage incurred during its 2001 and 2002 phase of relatively major and leveraged acquisition activity. Generally strong sector margins beginning in 2003 have enabled Tesoro to reduce balance sheet debt by $1.1 billion from its 2002 peak. Tesoro has made it a priority to conserve cash flow for debt reduction, both as a necessity and to reduce the leverage risk premium hampering its equity performance. Key leverage and liquidity measures have improved very substantially over the last two years with the pace accelerating in the latter end of 2004 and in first quarter 2005. A tempering comment, however, is that Lease Adjusted Leverage and Lease + Bareboat Charter Adjusted Leverage remain high and that unfunded pension liabilities approximate $88 million. In 2004, the annual term bareboat charter expense was $68 million, excluding additional considerable spot charter costs. The $68 million in annual bareboat charter costs represents necessary financial payments for the use of capital assets (tankers) Tesoro deems to be vital to sustaining its planned scale and mode of operations, including moving intermediate feedstocks and finished products around its Pacific refineries (Alaska, Hawaii, Washington, and San Francisco). Additionally, operating lease expense is expected to approximate $55 million. Also, we anticipate that capital spending will rise materially. Having surmounted a key debt reduction goal, Tesoro may now dedicate substantial capital to upgrade the product yield, unit cost, and margin profiles of several of its refineries. Such projects would, however, strengthen the refining portfolio. It may also turn more attention to the desires of its equity stakeholders. While only modest dividends have been initiated, the possibility of equity buybacks may exist during periods of outlier cash flow. Nevertheless, Moody's believes Tesoro is committed to suitable fiscal discipline. This is all the more so since the company has already experienced the consequences of previous very highly leveraged acquisitions in a very capital intensive, volatile margin sector, and where working capital needs can surge forcefully during spiking and/or sustained very high prices. The ratings gain support from: * reduced leverage; * a currently strong margin environment; and * a regionally and operationally diversified refining portfolio consisting of six refineries focused on West Coast and Rocky Mountain markets. Its refineries span several regional crack spread environments, diversify its exposure to weakening regional crude oil supply trends, and range from high complexity deep conversion capability (168,000 barrels per day Golden Eagle in California) to low complexity light sweet refining capability: * Washington, 108,000 bpd; * Hawaii, 95,000 bpd; * Alaska, 72,000 bpd; * Mandan, North Dakota, 60,000 bpd; and * Salt Lake City, 55,000 bpd). This portfolio also diversifies exposure to important volatile crude cost differentials between expensive light sweet crude oil and cheaper heavy sour crude oils. Also, while indigenous crude oil supply for the Salt Lake City and Mandan refineries continues in secular decline, Tesoro is investing new pipeline interconnections to access Canadian supply. Declining California production impacts Golden Eagle but imported crude oil readily covers the shortfall with incremental costs passed on to the market. The ratings also remain restrained by: * still full leverage (especially lease-adjusted leverage) relative to inherently volatile margins; * inherent operating and margin risk at the regional and refinery levels; * the high proportion of earnings and cash flow generated by one refinery (Golden Eagle); * inherently volatile working capital needs; and * high natural gas and energy costs (currently abundantly offset by high crack spreads). Also, as U.S. crude oil production continues to fall regionally, Tesoro could incur higher unit costs as it imports higher proportions of crude oil. A few operating characteristics may limit Tesoro's ultimate upgrade potential. While Tesoro holds 6 refineries, with resulting benefits of diversification, its largest and most complex refinery (Golden Eagle) typically generates 55% of EBITDA. Tesoro's two largest refineries typically generate 76% of EBITDA. Golden Eagle has experienced significant unscheduled downtime over the years. A sustained multi-year period of minimal unscheduled downtime at Golden Eagle may assist the ratings. Tesoro's refining portfolio also carries comparatively high unit operating costs. Additionally, four of Tesoro's refineries are well below 100,000 barrels of daily capacity, have low complexity, have been historically protected to varying degrees by niche economics, and face inherent risks of eventual niche erosion. Moody's also believes that, while the generally low complexity of Tesoro's refineries may present significant opportunities for organic reinvestment opportunity to improve premium light product yield, unit cost savings, or the ability to economically run cheaper heavier and sour crude oil, such projects could consume significant cash prior to completion and first cash flow. In addition to the inherent high costs of its deep conversion refinery at Golden Eagle, the small scale of its refineries outside California also contributes to higher unit costs. However, Tesoro's substantial operating leverage works in its favor during strong refining environments. After the April 2005 repayment of the remaining secured term loan balance, balance sheet debt now approximates $1.150 billion, down from $1.612 billion at March 31, 2004 and $1.2 billion at year-end 2004. Lease and pension adjusted debt appears to now be in the $1.480 billion range, adjusted for eight times operating leases plus $88 million of unfunded pension liabilities. Adding roughly $65 million of marine charter expense, and capitalizing that at eight times, yields total pro-forma adjusted debt of $2.2 billion. These expenses cover refined product tanker bareboat charters for vessels essential to moving Tesoro's intermediate and finished product volumes amongst its Pacific Basin refineries and markets. Pro-forma Balance Sheet Debt/Capital is now roughly 45%. Adjusting for operating leases and unfunded pension fund costs yields a partially adjusted Debt/Capital figure of 54%. Further adjusting for marine charter costs yields fully adjusted Debt/Capital of 61%. Balance Sheet Debt/Complexity Barrel now approximates an attractive $239/Barrel and Debt/Distillation Capacity Barrels approximates $1,994/barrel. Lease and pension fund adjusted Debt/Complexity Barrels is a full $353/barrel and further adjusted for marine charters is $469/barrel. Lease, Pension Fund, and Charter Adjusted Debt/Distillation capacity remains high at $3,911/Distillation Capacity Barrel. Ratings under review for upgrade include: i) Ba2 rated senior secured bank facilities due 2007; ii) Ba2 rated 8% senior secured notes due 2008; iii) B2 rated 9.625% senior subordinated notes due 2008 and 9.625% senior subordinated notes due April 2012; and iv) Ba3 senior implied rating. Tesoro Petroleum Corporation is headquartered in San Antonio, Texas. TENAYA INVESTMENTS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Tenaya Investments, Inc. P.O. Box 165085 Irving, Texas 75016 Bankruptcy Case No.: 05-43048 Chapter 11 Petition Date: June 6, 2005 Court: Eastern District of Texas (Sherman) Debtor's Counsel: James L. Schutza, Esq. 7920 Beltline Road, Suite 650 Dallas, Texas 75254 Tel: (972) 774-9400 Fax: (972) 231-3983 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor does not have any unsecured creditors who are not insiders. TEXAS-NEW: PNM Sale Completion Cues S&P to Lift Ratings ------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Texas-New Mexico Power Co. to 'BBB' from 'BB+' and removed the rating from CreditWatch with positive implications. The upgrade follows the closing of PNM Resources Inc.'s (BBB/Stable/A-2) acquisition of TNP Enterprises Inc., the previous parent company of Texas-New Mexico Power. The rating on Texas-New Mexico Power now mirrors the corporate credit rating on PNM Resources Inc. and its electric and gas utility subsidiary, Public Service Co. of New Mexico (BBB/Stable/A-2). TNP Enterprises' debt has been called and will be paid down by July 6, 2005. As a result, the ratings on TNP Enterprises have been withdrawn. "The stable outlook reflects the expectation that PNM Resources will finance the TNP Enterprises acquisition with a sufficient amount of common equity and mandatory convertible debt to maintain the current 'BBB' corporate credit rating," said Standard & Poor's credit analyst Judith Waite. This view takes into account the fact that proceeds from the remarketing of convertible debt in 2008 will be used to pay down $300 million of maturing debt, while the capital structure is further strengthened by the issuance of $350 million of common equity. PNM Resources' solid business position is supported by the generally stable earnings of the regulated electricity and gas distribution systems of both utilities as well as by reasonably good growth in their respective service territories. TNP ENTERPRISES: To Redeem 10.25% Sr. Sub. Notes on July 6 ---------------------------------------------------------- TNP Enterprises, Inc., will redeem all outstanding 10.25% Senior Subordinated Notes due 2010, Series B, (Senior Notes) on July 6, 2005, at a redemption price equal to 105.125% of the principal amount of the Senior Notes, plus accrued and unpaid interest. All amounts paid in this redemption will be paid in cash. TNP will also redeem all outstanding 14.5% Senior Redeemable Preferred Stock, Series C & D, (Preferred Stock) on July 6, 2005, at a redemption price equal to 110% of the liquidation preference associated with the Preferred Stock, plus all accumulated and unpaid dividends, whether or not declared. All amounts will be paid in cash. The redemption of the Senior Notes and Preferred Stock is a result of the acquisition of TNP by PNM Resources, an energy holding company based in Albuquerque, N.M. That acquisition was reported in July 2004 and was completed on June 6, 2005. The redemptions of the Senior Notes and Preferred Stock eliminate the need for the change of control offers contemplated by the relevant governing instruments to occur in connection with the acquisition of TNP. Redemption Notices were sent to all holders of Senior Notes and Preferred Stock. These notices set out the redemption procedures for the holders of record. Holders of Senior Notes should contact Julie Salovich-Miller at The Bank of New York at 212-815-2491, and holders of Preferred Stock should contact George Dalton at The Bank of New York, at (212) 815-3643 for additional information concerning this redemption. About the Company TNP Enterprises is a Fort Worth-based holding company whose principal subsidiaries are Texas-New Mexico Power Company and First Choice Power. * * * As reported in the Troubled Company Reporter on May 12, 2005, Moody's Investors Service upgraded the debt ratings of TNP Enterprises, Inc. (TNP, senior unsecured to Ba2 from B1) and its principal operating utility subsidiary, Texas-New Mexico Power Company (TNMP, senior unsecured Baa3 from Ba2). The rating outlook for both TNP and TNMP is stable. The upgrades reflect the anticipated acquisition of TNP by larger and more conservatively financed PNM Resources (PNM, Baa3 senior unsecured / stable outlook), as well as an improving trend in TNP's financial profile and regulatory situation. The stable ratings outlook reflects Moody's belief that the pending acquisition of TNP by PNM is imminent, as the companies await a final recommendation from the New Mexico examiner and final approval from the New Mexico Public Service Commission. As part of the acquisition financing plan, PNM is expected to retire TNP's term loan facility shortly after the closing of the transaction, and call or otherwise redeem TNP's subordinated notes and preferred stock. Consequently, we expect the ratings for these securities to be withdrawn at the time of the redemption. For the latest twelve months ended March 2005, TNP generated approximately $130 million EBITDA (excluding carrying charges) and $90 million funds from operations (FFO), resulting in an approximately 11% FFO to total debt and 3x FFO interest coverage ratio, and had approximately $150 million of cash on hand. UAL CORP: Posts $1.1 Billion Net Loss in First Quarter 2005 ----------------------------------------------------------- UAL Corporation (OTCBB: UALAQ.OB), the holding company whose primary subsidiary is United Airlines, reported its first-quarter 2005 financial results. UAL reported a first-quarter operating loss of $250 million due primarily to continuing high fuel costs. This compares with a $211 million operating loss in the first quarter of 2004. UAL reported a net loss of $1.1 billion, or a loss per basic share of $9.23, which includes $768 million in reorganization items. Reorganization items include two large non-cash items: a) a curtailment charge of $433 million related to the Pension Benefit Guaranty Corporation's (PBGC) motion to terminate the company's defined benefit pension plan for ground employees; b) and $294 million in charges related to the rejection of aircraft. Excluding the reorganization items, UAL's net loss for the first quarter totaled $302 million, or a loss per basic share of $2.62. Resolving one of the most significant issues remaining in the company's restructuring, on Tuesday the Bankruptcy Court approved an agreement with the PBGC which provides for the settlement and compromise of various disputes and controversies with respect to United's defined benefit pension plans. "In an extremely tough industry environment, we made progress in executing our business plan," said Glenn Tilton, United's chairman, CEO and president. "By maintaining focus on United's customers, our employees turned in operational performance near top levels in the company's history. Our revenue plan is also tracking well against the reallocation of capacity to robust international markets, with more improvement to come. Progress to reduce costs throughout the system has been substantial and we are pressing ahead to further reduce costs and inefficiencies in all areas of the business." Restructuring Progress Continues Thus far in 2005, United continued to advance its restructuring activities. As part of the recent restructuring efforts, United: -- Requested and received Bankruptcy Court approval to extend until July 1, 2005 its exclusive right to file a Plan of Reorganization for the company, with the support of the company's Official Committee of Unsecured Creditors; -- Reached ratified labor agreements with four of its six unions and the company continues to work with the remaining unions to reach consensual agreements; and -- Received Court approval of a settlement agreement with the PBGC regarding the termination of all of United's defined benefit pension plans. Jake Brace, United's executive vice president and chief financial officer, said, "Termination and replacement of the pension plans is something we tried very hard to avoid, but it simply proved unavoidable. This is a difficult but necessary step which will move us significantly closer to exiting bankruptcy as a sustainable, viable enterprise." Revenue Results Results for the first quarter of 2005 reflect a 2 percent reduction in system capacity compared with the same period last year. During the quarter, passenger unit revenue decreased 1 percent and yield decreased 4 percent, compared to first quarter last year. Excluding $60 million of out-of-period revenue adjustments in the first quarter of 2004, United's system passenger revenue per available seat mile increased 1.3 percent, outpacing average industry performance. On a domestic mainline capacity decrease of 10 percent and again excluding the domestic portion of the revenue adjustment, United's domestic passenger revenue per available seat mile increased 1.0 percent, also outpacing average industry performance. System load factor increased 3 points to 78.2 percent, as traffic increased 2 percent. United is pleased with the results of its decisions to move capacity to international markets and to address the issue of overcapacity on domestic routes. Operating Expenses Total operating expenses for the quarter were $4.2 billion, up 1 percent from the year-ago quarter on a 2 percent decrease in capacity -- largely driven by fuel. Excluding UAFC and fuel, mainline operating expenses per available seat mile decreased 4 percent. Salaries and related costs were down 17 percent, or $216 million, primarily reflecting recent labor and management cost reductions and a 5 percent reduction in manpower. Fuel expense was $202 million higher than in the first quarter 2004. Average fuel price for the quarter was $1.46 per gallon (including taxes), up 36 percent year-over-year. The company had an effective tax rate of zero for all periods presented, which makes UAL's pre-tax loss the same as its net loss. Cash The company ended the quarter with an unrestricted cash balance of $1.4 billion, and a restricted cash balance of $885 million, for a total cash balance of $2.3 billion. The cash balance increased by $167 million during the quarter. "The fact that United is cash-flow positive in the face of record fuel costs demonstrates that restructuring is delivering results," Brace added. Operations During the first quarter, the annual Airline Quality Rating (AQR) study conducted by Wichita State University was released. According to the study, United was one of only four airlines -- and the only major U.S. carrier -- that improved service in 2004. Among the seven major carriers, United was number one in on-time arrivals for the twelve months ending March 2005, as reported by the U.S. Department of Transportation's May, 2005 Air Travel Consumer Report. In addition, employee productivity (available seat miles divided by employee equivalents) was up 4 percent for the quarter compared to the same period in 2004. Outlook United expects second-quarter system mainline capacity to be down about 3 percent year-over-year. System mainline capacity for 2005 is expected to be about 3 percent lower than 2004. The company projects fuel prices for the second quarter, including taxes and excluding the impact of hedges, to average $1.66 per gallon. The company has 20 percent of its expected fuel consumption for the second quarter hedged at an average of $1.31 per gallon, including taxes. Even if fuel prices are in the mid-fifty U.S. dollar per barrel range, United projects it would generate positive operating cash flow in the second quarter. United has made significant progress toward achieving the economic structure the company must have to build a competitive, sustainable business. United expects to see continued improvements in the second quarter as the company realizes the positive effects of additional restructuring savings, a shift in capacity to international markets, and business improvements initiatives already underway. UAL Corporation and Subsidiary Companies Unaudited Statements of Consolidated Operations Three Months Ended March 31, 2005 (In Millions) Operating revenues: Passenger - United Airlines $2,916 Passenger - Regional Affiliates 524 Cargo 172 Other 303 --------- Total operating revenues 3,915 Operating expenses: Salaries and related costs 1,033 Aircraft fuel 805 Regional affiliates 645 Purchased services 361 Aircraft rent 120 Landing fees and other rent 233 Depreciation and amortization 213 Aircraft maintenance 219 Commissions 77 Cost of sales 143 Other 316 --------- Total operating expenses 4,165 Earnings (loss) from operations (250) Other income (expense): Interest expense (109) Interest capitalized (5) Interest income 4 Reorganization items, net (768) Miscellaneous, net 58 --------- Total other income (expenses) (820) Loss before income taxes (1,070) --------- Credit for income taxes 0 --------- Net loss ($1,070) ========= Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: PBGC Says Pension Plan Termination Doesn't Violate ERISA ------------------------------------------------------------------ As reported in the Troubled Company Reporter on May 30, 2005, the Association of Flight Attendants-CWA, AFL-CIO, asked the United States District Court for the District of Columbia to issue an injunction against the Pension Benefit Guaranty Corporation to halt the involuntary termination of the United Air Lines Flight Attendant Defined Benefit Pension Plan. The AFA also seeks damages for losses suffered by Plan participants if the Plan is terminated in violation of ERISA. Robert S. Clayman, Esq., at Guerrieri, Edmond, Clayman & Bartos, in Washington, D.C., argues that under the Employee Retirement Income Security Act, the PBGC must make a cause determination prior to seeking either court enforcement or voluntary settlement with the administrator/employer of a pension plan to be involuntarily terminated. In this case, the PBGC did not make a cause determination before entering the PBGC Agreement with the Debtors. In addition, Section 4041 of ERISA requires the PBGC to initiate termination proceedings, not another party. The PBGC is pursuing involuntary termination of the AFA Plan, but the Debtors initiated termination. Pursuant to Section 4041 of ERISA, the PBGC cannot terminate the Plan under these circumstances. Mr. Clayman informs the District Court that the AFA membership stands to lose a significant portion of their retirement benefits. The AFA membership will suffer irreparable injury if the District Court fails to issue an injunction because flight attendants will make long-term decisions on matters such as employment, residence and other important future plans. These effects will not be easy to reverse after a judgment on the merits. PBGC Responds The Association of Flight Attendants failed to stop the Bankruptcy Court from approving the Pension Benefit Guaranty Corporation Agreement. Now the AFA attempts an end run of the Chapter 11 proceeding by bringing the suit, says Jeffrey B. Cohen, Esq., Chief Counsel at the PBGC, in Washington, D.C. The AFA is trying to stop the PBGC from performing its statutory duties. The AFA's legal theories lack merit and could wreak havoc on the nation's pension termination insurance program. Mr. Cohen explains the workings of the pension termination process. The Debtors invoked the "reorganization in bankruptcy" distress test, which requires a debtor to move for bankruptcy court approval of a distress termination. The bankruptcy court must find that unless the pension plan is terminated, the debtor will be unable to pay its debts under a plan of reorganization, and will be unable to continue outside of bankruptcy. Under the Employee Retirement Income Security Act, the PBGC cannot consummate a distress termination in violation a collective bargaining agreement. The debtor must amend or reject its collective bargaining agreement pursuant to Section 1113 of the Bankruptcy Code to facilitate the distress termination. During this time, the distress termination process is suspended. If a distress termination violates a collective bargaining agreement, the PBGC will suspend the distress termination proceeding. If the distress termination does not violate the collective bargaining agreement, the PBGC will reactivate the distress termination proceeding. The ERISA does not prevent the PBGC from initiating termination of a pension. The distress termination proceedings have been suspended; Judge Wedoff approved a stipulation between the Debtors and the PBGC to hold the Distress Termination Motion in abeyance. The proceedings may be resuscitated if any of the plans do not terminate. The PBGC staff has studied the termination of the Flight Attendant Plan, but has not reached a recommendation on termination. Mr. Cohen says that the AFA cannot succeed on merit because this action seeks too much, too soon. Contrary to AFA's assertions, the Agreement does not violate the ERISA. No distress termination proceedings are ongoing, at the Debtors' behest or otherwise. The hearing on distress terminations has been postponed indefinitely by the Bankruptcy Court. Since the AFA is seeking to enjoin termination proceedings, Mr. Cohen says there are no proceedings to enjoin. Mr. Cohen says that "the potential termination of the Flight Attendant Plan is only a small component of the Agreement." The parties can abort the PBGC Agreement if any of the plans are not terminated during the Chapter 11 process. The PBGC Agreement does not mandate the termination of the Flight Attendant Plan, but only the "initiation" of termination proceedings by PBGC staff. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Machinists Support Attendants on PBGC Stay Ruling ----------------------------------------------------------- As reported in the Troubled Company Reporter on May 27, 2005, the Association of Flight Attendants-CWA, AFL-CIO, asked the U.S. Bankruptcy Court for the Northern District of Illinois to stay the order approving the pension plan termination agreement between UAL Corporation and its debtor-affiliates and the Pension Benefit Guaranty Corporation. A stay is warranted, as there is a substantial likelihood that the AFA will succeed on the merits of its appeal, asserts Carmen R. Parcelli, Esq., at Guerrieri, Edmond, Clayman & Bartos, in Washington, D.C. The AFA was in the process of negotiating pension alternatives with the Debtors when the PBGC Agreement was announced. This development essentially ended discussions and closed litigation where the Debtors were required to demonstrate that AFA pension plan termination was critical to a successful reorganization. As a result, the Agreement deprived the AFA of its legal rights in litigation to which it was a party. The Debtors' entry into the PBGC Agreement constituted unilateral action in violation of Section 1113(f) of the Bankruptcy Code, Ms. Parcelli asserts. Without the PBGC Agreement, the Section 1113 process would have run its course. This subversion stripped the AFA of protections that Congress put in place when it enacted Section 1113. Without a stay, the AFA's members will suffer irreparable injury as they make life-altering, intractable decisions in anticipation of sharply reduced pension benefits. Many will sell their homes, relocate or pursue other work opportunities. In contrast, the Debtors will not suffer any significant harm from the stay. IAM Agrees with AFA The International Association of Machinists and Aerospace Workers, AFL-CIO, supports the request of the Association of Flight Attendants, AFL-CIO, for a stay pending appeal of the Debtors' agreement with the Pension Benefit Guaranty Corporation. According to Sharon L. Levine, Esq., at Lowenstein Sandler, in Roseland, New Jersey, the Bankruptcy Court should impose a stay because the AFA's appeal is likely to succeed. The Debtors violated the AFA's rights by unilaterally entering the PBGC Agreement without exploring all available alternatives, contrary to Section 1113(f) of the Bankruptcy Code. This violation will exact significant human costs if not addressed. * * * Judge Wedoff denies the AFA's request. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Pilots Hold Joint Session on America West Merger ------------------------------------------------------------ Leaders for the pilot groups of America West (NYSE: AWA) and US Airways (OTC Bulletin Board: UAIRQ), represented by the Air Line Pilots Association, Int'l (ALPA), held a joint session on June 6, 2005, to discuss issues of mutual concern relating to the proposed transaction between the two airlines. The pilot groups received briefings from ALPA staff and advisers on a range of issues, including US Airways' bankruptcy, transaction details, and merger policy. The pilot groups explored ways to work together toward each group's mutual benefit and future. Shared concerns about contract enforcement and enhancements, job security and protections, and pilot seniority were voiced. No discussions took place concerning seniority integration, since this process is governed by the provisions of ALPA Merger Policy. "The importance of the discussion was to look at alternatives to secure our future," said James "J.R." Baker, Master Executive Council (MEC) chairman for the America West pilots union. "Both pilot groups have made sacrifices in the past to help ensure the viability of their respective companies and want to ensure that these sacrifices are recognized by the new management team." "During this discussion, the members of both MECs learned how we can turn possible difficulties that may result from a potential merger process into opportunities. I am pleased that we have taken the first steps that will begin the process to align both pilot groups in order to attain our common goals, while at the same time respecting our separate concerns," said US Airways MEC Chairman Captain Bill Pollock. Following the joint session, each MEC met separately to discuss how to use the information presented to best represent the respective pilot groups. Presently, US Airways has received permission from the Bankruptcy Court to review alternate plans of reorganization proposals for a 30-day period, which will end on July 1, 2005. If no proposals are received by that date, the Merger Agreement and Investment Agreements will be considered the approved proposal without a court action, and US Airways intends to propose a plan of reorganization which implements those agreements. ALPA is the world's largest pilot union, representing 64,000 pilots at 41 airlines in the U.S. and Canada. Visit the ALPA Web site at http://www.alpa.org/ 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. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services placed selected ratings on America West Holdings Corp. and subsidiary America West Airlines Inc., including the 'B-' corporate credit rating on both, on CreditWatch with negative implications. Ratings on selected enhanced equipment trust certificates (EETCs) of America West Airlines Inc., which were placed on CreditWatch on Feb. 24, 2005, as part of an industry wide review of aircraft-backed debt, remain on CreditWatch. "The CreditWatch placement is based on the potential combination of America West with US Airways Inc. (rated 'D'), the major operating subsidiary of US Airways Group Inc. (rated 'D'), both currently operating under Chapter 11 bankruptcy protection," said Standard & Poor's credit analyst Betsy Snyder. "The combination could present significant labor integration and financial challenges, depending on how any such combination is structured." US AIRWAYS: May 2005 Revenue Passenger Miles Up 2% From Last Year ----------------------------------------------------------------- US Airways reported its May 2005 passenger traffic. Mainline revenue passenger miles for May 2005 increased 2.0 percent on a 1.4 percent increase in available seat miles, compared to May 2004. The 75.9 percent passenger load factor is a 0.4 percentage point increase compared to May 2004. Revenue passenger miles for US Airways mainline during the first five months of 2005 increased 3.7 percent on a 2.2 percent increase in available seat miles, compared to the same period in 2004. The passenger load factor for January through May 2005 was 74.3 percent, a 1.1 percentage point increase compared to the same period in 2004. US Airways Express -- the two wholly owned subsidiaries of US Airways Group, Inc., Piedmont Airlines, Inc. and PSA, Inc., as well as the MidAtlantic Airways division of US Airways, Inc. -- reported a 103.4 percent increase in revenue passenger miles for May 2005, on 92.5 percent more capacity, compared to May 2004. The passenger load factor was 65.3 percent, a 3.5 percentage point increase compared to May 2004. For the first five months of 2005, the US Airways Express entities reported a 128.0 percent increase in revenue passenger miles on 106.7 percent more capacity, compared to the same period in 2004. The passenger load factor was 61.6 percent, a 5.8 percentage point increase compared to the same period in 2004. US Airways ended the month of May 2005 completing 99.2 percent of its scheduled departures, compared to 99.3 percent in May 2004. 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. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services placed selected ratings on America West Holdings Corp. and subsidiary America West Airlines Inc., including the 'B-' corporate credit rating on both, on CreditWatch with negative implications. Ratings on selected enhanced equipment trust certificates (EETCs) of America West Airlines Inc., which were placed on CreditWatch on Feb. 24, 2005, as part of an industry wide review of aircraft-backed debt, remain on CreditWatch. "The CreditWatch placement is based on the potential combination of America West with US Airways Inc. (rated 'D'), the major operating subsidiary of US Airways Group Inc. (rated 'D'), both currently operating under Chapter 11 bankruptcy protection," said Standard & Poor's credit analyst Betsy Snyder. "The combination could present significant labor integration and financial challenges, depending on how any such combination is structured." VALENTINE PAPER: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Valentine Paper, Inc. 139 Joe Brown Road Lockport, Louisiana 70374 Bankruptcy Case No.: 05-14659 Type of Business: The Debtor produces technical and specialty papers. See http://www.valentinepaper.com/ Chapter 11 Petition Date: June 6, 2005 Court: Eastern District of Louisiana (New Orleans) Debtor's Counsel: David F. Waguespack, Esq. Lemle & Kelleher, L.L.P. 601 Poydras Street, 21st Floor New Orleans, Louisiana 70130-6097 Tel: (504) 585-6388 Fax: (504) 584-9142 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Universal Paper Corp. Trade $919,671 P.O. Box 2788 Ormond Beach, FL 32175 CBC Coating, Inc. Trade $430,895 1577 Solutions Center Chicago, IL 60677-1005 Alabama River Pulp Co., Inc. Trade $303,667 Department 3076 P.O. Box 2153 Birmingham, AL 35287-3076 Celanese Emulsions Trade $285,639 P.O. Box 533075 Atlanta, GA 30353-3075 CenterPoint Energy Gas Trade $211,339 Resource Koch Cellulose Am. Mark, Trade $175,543 LLC Unitex Chemical Corp. Trade $148,875 Cell Mark Pulp Trade $140,516 Nicolaus Paper Pension Trade $137,570 Entergy $132,000 Ekman & Co., Inc. Trade $96,179 C.H. Robinson Worldwide, Trade $87,303 Inc. Tembec Industries, Inc. Trade $85,920 Precision Roll Grinders, Trade $74,804 Inc. Nalco Company Trade $66,524 Kalamazoo Paper Chemicals Trade $65,520 Weavex Corp. Trade $61,446 Hercules Inc. Trade $56,805 M.A. Norden Trade $53,109 Alabama River Pulp Co., Inc. Trade $53,004 VERITAS FINANCIAL: Taps Stewart Occhipinti as Litigation Counsel ---------------------------------------------------------------- Veritas Financial Corporation asks the U.S. Bankruptcy Court for the Southern District of New York for permission to retain Stewart Occhipinti, LLP, as its special litigation counsel. The Debtor wants Stewart Occhipinti to sue its former counsel for professional malfeasance and provide other commercial litigation services. The Debtor believes that the firm is well qualified to represent it in these proceedings since the Firm is already familiar with the litigation after having handled the matter in State Court. Charles Stewart III, Esq., a member of Stewart Occhipinti, discloses that his Firm's professionals bill: Designation Hourly Rates ----------- ------------ Partners $325 Senior Associates $200 Junior Associates $135 Paralegals $90 To the best of the Debtor's knowledge, Stewart Occhipinti is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in New York City, New York, Veritas Financial Corporation is in the financial services business, and its principal activity is the ownership of a 63% shareholder interest in East Coast Venture Capital, Inc., a Specialized Small Business Investment Company, whose largest dealings involve financing New York City's 'black' radio cars and small businesses. The Company filed for chapter 11 protection on Feb. 10, 2005 (Bankr. S.D.N.Y. Case No. 05-10774). When the Debtor filed for protection from its creditors, it listed total assets of $30,731,500 and total debts of $5,757,900. WELLS FARGO: Fitch Affirms Low-B Ratings on 4 Class-B Certificates ------------------------------------------------------------------ Fitch has taken rating actions on these Wells Fargo Asset Securities Corporation issues: Series 2002-1 -- 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 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2003-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The affirmations reflect credit enhancement levels consistent with future loss expectations and affect $177,695,003 of outstanding certificates. As of the May distribution, enhancement levels for all classes from series 2002-1 are more than four times their original enhancement levels. In addition, 85% of the collateral has paid down. While there are three loans in foreclosure and five loans real estate owned, Fitch believes that the projected losses from these delinquent loans (calculated using broker price opinion values and FC and REO costs) do not pose a credit risk to the bonds at this time. The underlying collateral consists of conventional, 15-year and 30 year fixed-rate mortgage loans secured by one-to four-family residential properties. There have been modest increases in the CE levels for all classes from series 2003-1. As of the May distribution, over 35% of the collateral has paid down, and there are less than $15,000 in losses. There are five loans in FC and six loans in REO but, once again, Fitch believes that the potential losses from these delinquent loans do not present a credit risk to the bonds. The collateral consists of fully amortizing, one- to four-family, first-lien, 15-year and 30-year fixed-rate mortgage loans. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ WESTPOINT STEVENS: Gets Court Nod to Settle Nan Ya Litigation ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved WestPoint Stevens, Inc. and its debtor-affiliates' Settlement Agreement with the Nan Ya Defendants. As previously reported, WestPoint Stevens, Inc. and its debtor- affiliates commenced an action in the United States District Court for the Middle District of Alabama against: -- Nan Ya Plastics Corporation, America, -- Nan Ya Plastics Corporation, -- Robert Bradley Dutton, -- Wellman, Inc., -- Arteva Specialties, S.A.R.L., -- Arteva Services S.A.R.L., -- Troy F. Stanley, Sr., -- DAK Fibers LLC, and -- E.I. DuPont de Nemours and Company. The Action was amended in March 2004 to include certain other defendants. The Debtors alleged in its complaint that the defendants engaged in a conspiracy to fix, raise, maintain or stabilize the price of polyester staple fiber beginning 1999 and continuing until 2001. In January 2004, the Action was transferred to the United States District Court for the Western District of North Carolina, where it was consolidated with the actions of over 30 other parties setting forth similar causes of action. In the interests of reaching a compromise, the Debtors, certain of the other plaintiffs, and the Nan Ya Defendants entered into good faith, arm's-length negotiations to settle the claims arising in the Action and the other actions asserted against the Nan Ya Defendants. The negotiations culminated in a settlement agreement among the parties. The Settlement Agreement provides that the Debtors and the Other Settling Plaintiffs will receive a lump sum settlement payment from the Nan Ya Defendants in a joint settlement fund. In exchange, the Debtors and the Other Settling Plaintiffs agreed to release their claims against the Nan Ya Defendants. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Wants Exclusive Plan Filing Period Extended to Oct. 19 ------------------------------------------------------------------ Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the Petition Date during which a debtor has the exclusive right to propose a plan of reorganization. In addition, Section 1121(c)(3) of the Bankruptcy Code provides that if a debtor proposes a plan within the Exclusive Proposal Period, it has 180 days after the Petition Date to solicit acceptances of that plan. The Exclusive Periods are intended to afford the Debtors a full and fair opportunity to rehabilitate their businesses and to negotiate and propose one or more reorganization plans without the disruption and deterioration of their businesses that might be caused by the filing of competing plans of reorganization by non-debtor parties. However, Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, tells Judge Funk that although Winn-Dixie Stores, Inc., and its debtor-affiliates have made significant progress towards rehabilitation since the filing of the chapter 11 petition, the Debtors want to extend their Exclusive Periods to afford them additional time to develop, negotiate and propose one or more reorganization plans. By this motion, the Debtors ask the U.S. Bankruptcy Court for the Middle District of Florida to extend their Exclusive Period to: -- file a plan of reorganization to October 19, 2005; and -- solicit acceptances of that plan to December 20, 2005. The Debtors' Chapter 11 cases are large and complex, Ms. Jackson says. The Debtors' financial structure consists of: (a) an $800 million debtor-in-possession secured financing facility; (b) other prepetition secured obligations; (c) publicly-traded senior unsecured notes, with a remaining principal amount of approximately $300 million, due 2008; (d) trade, litigation and other general unsecured liabilities; and (e) publicly-held equity securities at the parent level. There are thousands of creditors and other parties-in-interest in the Debtors' Chapter 11 cases. In fact, proof of claim bar date notices have been sent to over 290,000 parties-in-interest. Ms. Jackson relates that the size and complexity of the Debtors' cases is further highlighted by their corporate structure and workforce. Winn-Dixie Stores, Inc., is the ultimate parent of a group of companies that includes the 24 Debtors. The Debtors, utilizing the services of 78,000 employees, conduct business through their corporate headquarters in Jacksonville, Florida. The Debtors' grocery stores and other facilities are located in nine States including Florida, Alabama, Georgia, North Carolina, Louisiana, Mississippi, South Carolina, Tennessee and Virginia. The Debtors also have affiliates in the Bahamas. "A premature termination of the Exclusive Periods would deny the Debtors a meaningful opportunity to negotiate and propose a confirmable plan, and would be antithetical to the paramount reorganization objective of Chapter 11," Ms. Jackson asserts. "A termination of the Debtors' Exclusive Periods at this time would encourage the development of competing multiple plans that could lead to unwarranted confrontations, litigation and increased administrative costs." Ms. Jackson assures the Court that the requested extension will not prejudice the legitimate interests of any creditor or other party-in interest. To the contrary, the proposed extension will advance the Debtors' efforts to preserve value and avoid unnecessary and wasteful motion practice. Given the current posture of these cases and certain unresolved issues, Ms. Jackson points out that it would be premature and counter-productive for any non-Debtor party-in-interest to initiate the plan proposal process. "Instead, the requested extension will increase the likelihood of a consensual resolution of these cases that preserves reorganization value much more than any plan that the Debtors might file at this time simply to preserve their exclusive rights -- or any creditor initiated plan process that lacks necessary foundation and support," Ms. Jackson maintains. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn-Dixie and its debtor- affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Proposes Uniform Asset Sale Bidding Procedures ---------------------------------------------------------- Before filing for chapter 11 protection, Winn-Dixie Stores, Inc., and their debtor-affiliates together with their financial advisors began a comprehensive analysis of their businesses to determine how best to maximize their value and to compete in today's marketplace. In connection with the market analysis, the Debtors announced a series of actions designed to improve their competitive position, which the Debtors refer to as their "Strategic Plan". In furtherance of the Strategic Plan, the Debtors and their advisors have continued to identify and market assets -- like corporate airplanes -- that should be sold as part of their restructuring efforts. In this regard, the Debtors ask the U.S. Bankruptcy Court for the Middle District of Florida to establish a general bidding procedure for the sale of: (a) any leases or executory contracts; and (b) any other assets with a value greater than $150,000. The Debtors designed a Bidding Procedures with the assistance of their advisors, based on industry standards, and are intended to generate interest and obtain the highest value for the sale of assets. The Bidding Procedures describe, among other matters, the manner in which bidders and bids become "qualified" and the required bid documents and deadlines. The Debtors will identify the assets to be sold and solicit letters of interest for the assets. The Debtors will distribute bid packages to bidders with acceptable offers and provide confidential information on assets to be sold pursuant to confidentiality agreements. In their sole discretion, the Debtors will select the bidder that made the best and highest offer for specific assets and file a motion for authority to consummate the sale. The Debtors will hold an auction if one or more competing offers are timely received. A full-text copy of the Bidding Procedures is available for free at: http://bankrupt.com/misc/winn-dixie-bidding-procedures.pdf Bid Protections The Debtors also ask the Court for authority to offer prospective purchasers a termination fee, overbid protection, or release protection. The Debtors believe that the Court's advance approval of the Bid Protections will significantly contribute to a robust auction process by inducing bidders to submit preemptive bids. D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that the terms of the Bid Protections are sensitive commercial information. If the Debtors are required to disclose the Bid Protections, the Debtors' negotiating leverage with prospective stalking horse bidders will be diminished. Accordingly, the Debtors ask the Court to file the Bid Protections under seal. By filing the Bid Protections under seal, prospective bidders will not know the amount and type of protection the Debtors are authorized to offer, enhancing the Debtors' bargaining powers. "The Debtors do not need to disclose the Bid Protections in advance of bidding for the protection of the public, the Debtors' respective creditors, or third parties. The Debtors will disclose any Bid Protections provided to a bidder in the Sale Motion for that purchaser's sale, which will be filed and served on all interested parties," Mr. Baker says. In the interim, the Debtors will provide an unredacted version of the Bid Protections to: (i) members of, counsel to, and financial advisors of the Official Committee of Unsecured Creditors; (ii) the DIP Lender and its legal and financial advisors; (iii) the office of United States Trustee; and (iv) other parties as may be ordered by the Court or agreed to by the Debtors under appropriate confidentiality agreements. The Debtors should not be required to provide the Bid Protections to any entity that is or may be a bidder or to a person or entity related or associated with that bidder, Mr. Baker adds. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn-Dixie and its debtor- affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Reject Four Contracts Effective June 16 ------------------------------------------------------------ Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Middle District of Florida to reject four executory contracts effective as of June 16, 2005. The Contracts consist of: -- a sponsorship agreement and a suite license agreement for the Jacksonville Veterans Memorial Arena, -- a sponsorship agreement for Florida State University, and -- a customer survey agreement. Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, tells Judge Funk that the cost to the Debtors of continuing to perform for the remaining term of the Contracts is estimated at over $1 million. By rejecting the Contracts, Ms. Jackson points out that the Debtors will avoid unnecessary expense and burdensome obligations that provide no tangible benefit to their estates or creditors. The Contracts are no longer necessary to the Debtors' businesses. To the extent that the parties to the Contracts assert rejection damages, the Debtors ask the Court to set the deadline for filing a proof of claim for that rejection on the later of: (a) 30 days after the date of entry of the order approving the rejection; or (b) the August 1, 2005 bar date established by the Court for filing proofs for claim. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn-Dixie and its debtor- affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Chadbourne & Parke Expands Insurance Team with Five New Partners ------------------------------------------------------------------ The international law firm of Chadbourne & Parke LLP is strengthening its insurance and reinsurance practice with the appointment of five partners from Denton Wilde Sapte. The partners will be joined by four associates and one paralegal from Denton Wilde Sapte and are being supported by a further recruitment drive. The team will join Chadbourne & Parke's multinational partnership (MNP) in London on June 13. The five partners joining Chadbourne & Parke are Adrian Mecz, Christopher Cardona, Michelle George, John Barlow and Mark Pring. The move follows the recent announcement that New York-based John Sarchio has returned to the Firm from White & Case as partner and co-chair of the global insurance and reinsurance group. "This team is the perfect choice to lead the expansion of our insurance and reinsurance practice in the London market," said Claude Serfilippi, managing partner of Chadbourne's London office. "Their extensive experience in handling high-value and high- profile disputes often across multiple jurisdictions makes them a great addition to the firm, bringing new depth to our insurance and reinsurance expertise and our ability to serve our clients' needs." The team joins Chadbourne's long established reinsurance and insurance practice. The group offers clients an experienced interdisciplinary legal team able to address virtually any legal issue affecting the reinsurance and insurance industry. The group counsels and represents insurers, reinsurers, intermediaries, financial institutions and governmental entities on matters arising in all aspects of property-casualty, life and health, and financial risk reinsurance and insurance business. David Raim, co-chair of Chadbourne's global insurance and reinsurance group in Washington, D.C. adds: "The addition of this team fits extremely well with our strategic plan. They are all talented lawyers who have worked with a diverse clientele within the insurance and reinsurance industry and their addition to Chadbourne will strengthen our presence in London as well as globally." About Chadbourne & Parke LLP Chadbourne & Parke LLP -- http://www.chadbourne.com/-- an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, corporate finance, energy, telecommunications, commercial and products liability litigation, securities litigation and regulatory enforcement, white collar defense, intellectual property, antitrust, domestic and international tax, reinsurance and insurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. The Firm has offices in New York, Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw (through a Polish partnership), Beijing and a multinational partnership, Chadbourne & Parke, in London. About Chadbourne & Parke A Multinational Partnership In London, the Firm conducts its practice through Chadbourne & Parke, a multinational partnership employing both English- qualified solicitors and U.S. lawyers who work closely with other Chadbourne offices to provide seamless service to international clients. The London partnership offers a range of legal services under both English and U.S. law and, in particular, focuses on project finance, privatization, energy, capital markets, banking, insurance and reinsurance, securitizations, structured finance, corporate finance, litigation and products liability. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- June 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Impact of the New Bankruptcy Code on Corporate Restructurings CityPlace Center Dallas, TX Contact: http://www.turnaround.com/ June 9-10, 2005 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Mid-Atlantic Regional Symposium Atlantic City, NJ Contact: 908-575-7333 or http://www.turnaround.com/ June 9-11, 2005 ALI-ABA Chapter 11 Business Reorganizations Charleston, South Carolina Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ June 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner The Bankers Club of Miami, FL Contact: 561-882-1331 or http://www.turnaround.com/ June 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Asset Based Deals: How to Get Turnarounds Financed Treasury Ballroom Portland, OR Contact: http://www.turnaround.com/ June 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ June 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ June 16-19, 2005 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ June 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Troubled Loan Workout Program IDS Center, Minneapolis, MN Contact: 703-912-3309 or http://www.turnaround.org/ June 21, 2005 TURNAROUND MANAGEMENT ASSOCIATION Sixth Annual Astros Baseball Outing Minute Maid Park, Houston, TX Contact: 713-839-0808 or http://www.turnaround.org/ June 21, 2005 TURNAROUND MANAGEMENT ASSOCIATION Detroit Eighth Annual Golf Outing Twin Lakes Golf & Swim Club, Oakland, MI Contact: 248-593-4810 or http://www.turnaround.org/ June 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION Wine Tasting Wine House Annex, Los Angeles, CA Contact: 310-458-2081 or http://www.turnaround.org/ June 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION Fifth Annual Charity Golf Outing Harborside International Golf Center, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ June 23, 2005 TURNAROUND MANAGEMENT ASSOCIATION AND COMMERCIAL LAW ASSOCIATION Insolvency and Turnaround Management Seminar NSW State Library Sydney, Australia Contact: http://www.turnaround.org/ June 23, 2005 TURNAROUND MANAGEMENT ASSOCIATION Third Annual Pacific Northwest Golf Tournament Washington National Golf Club, Auburn, WA Contact: acgseattle@acg.org or http://www.turnaround.org/ June 23-24, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Eighth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-595-3800 or dhenderson@renaissanceamerican.com June 24, 2005 TURNAROUND MANAGEMENT ASSOCIATION Golf Tournament RattleSnake Point Golf Club, Toronto Contact: http://www.turnaround.org/ June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon The Centre Club Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Family Night - Somerset Patriots Baseball Commerce Bank Ballpark, Bridgewater, NJ Contact: 908-575-7333 or http://www.turnaround.org/ June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION "Hands On" Turnarounds The Centre Club, Tampa, FL Contact: 703-912-3309 or http://www.turnaround.org/ July 1, 2005 TURNAROUND MANAGEMENT ASSOCIATION Long Island Chapter Manhattan Cruise (In Planning - Watch for Announcement) Departing from Manhattan Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ July 6, 2005 TURNAROUND MANAGEMENT ASSOCIATION SummerFest 2005 Milwaukee, WI Contact: 815-469-2935 or http://www.turnaround.org/ July 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Law Review (in preparation for the CTP exam) [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ July 13, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ July 14-17, 2005 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800 or http://www.abiworld.org/ July 21, 2005 NEW YORK SOCIETY OF SECURITY ANALYSTS Investing in Distressed and Defaulted Debt New York, NY Contact: http://www.NYSSA.org/ July 21-22, 2005 ALI-ABA Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 Boston, MA Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 26, 2005 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Organizational Assessment and Intervention Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ July 27-30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, S.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ August 1, 2005 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Annual Golf Outing Raritan Valley Country Club, Bridgewater, NJ Contact: 908-575-7333 or http://www.turnaround.org/ August 4, 2005 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Cambridge, Maryland Contact: 1-703-739-0800 or http://www.abiworld.org/ August 11-12, 2005 ALI-ABA Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 San Francisco, CA Contact: 1-800-CLE-NEWS; http://www.ali-aba.org August 12-13, 2005 CENTER FOR ENTREPRENEURSHIP Insolvencies in Transition Economies S"dert"rns H"gskola University College, Stockholm, Sweden Contact: http://www.sh.se/enterforum/ August 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue TBA Contact: http://www.turnaround.org/ August 17-21, 2005 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES NABT Convention Marriott Marquis Times Square New York, NY Contact: 803-252-5646 or info@nabt.com August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, NJ Contact: 908-575-7333 or http://www.turnaround.org/ August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Accounting Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ August 30, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon - Legal Roundtable (Regional Attorneys) Centre Club, Tampa, FL Contact: http://www.turnaround.org/ September 1-30, 2005 TURNAROUND MANAGEMENT ASSOCIATION Education Program Venue - TBA, Toronto, ON Contact: http://www.turnaround.org/ September 8-9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Golf Tournament and TMA Regional Conference Gideon Putnam Hotel, Saratoga Springs, NY Contact: 716-667-3160 or http://www.turnaround.org/ September 8-11, 2005 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference (Including Financial Advisors/Investment Bankers Program) The Four Seasons Hotel Las Vegas, Nevada Contact: 1-703-739-0800 or http://www.abiworld.org/ September 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA-LI Chapter Board Meeting Venue - TBA Contact: 516-465-2356 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Lender's Forum: Surviving Bank Mergers Milleridge Cottage, Long Island, NY Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ September 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Management Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Workout Lenders Panel Luncheon Union League Club, NYC Contact: 646-932-5532 or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION Third Annual Workout Lenders Panel Union League Club New York, NY Contact: 908-575-7333 or http://www.turnaround.org/ September 23, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop London, UK Contact: 1-703-739-0800 or http://www.abiworld.org/ September 22-25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Cross-Border Conference Grand Hyatt Seattle, Seattle, WA Contact: 503-223-6222 or http://www.turnaround.org/ September 26, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop Site to Be Determined London, England Contact: 1-703-739-0800 or http://www.abiworld.org/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Joint CFA/RMA/TMA Networking Reception Woodbridge Hilton, Iselin, NJ Contact: 908-575-7333 or http://www.turnaround.org/ October 7, 2005 AMERICAN BANKRUPTCY INSTITUTE Views from the Bench Georgetown University Law Center Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ October 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ October 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ October 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue to be announced Contact: http://www.turnaround.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/ October 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ October 25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon Centre Club, Tampa, FL Contact: http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, NY Contact: 516-465-2356 or http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, Texas Contact: http://www.iwirc.com/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Center Club, Baltimore, MD Contact: 703-912-3309 or http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sydney, Australia Contact: 9299-8477 or http://www.turnaround.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, MI Contact: 1-703-739-0800 or http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Speaker/Dinner Event Fairmont Royal York Hotel, Toronto, ON Contact: http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, NY Contact: 716-440-6615 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (West) Hyatt Grand Champions Resort Indian Wells, California Contact: 1-703-739-0800 or http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/ December 5-6, 2005 MEALEYS PUBLICATIONS Asbestos Bankruptcy Conference Ritz-Carlton, Battery Park, New York, NY Contact: http://www.mealeys.com/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, NY Contact: 516-465-2356 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, NY Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel Phoenix, AZ Contact: http://www.pli.edu/ March 22-25, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Desert Ridge, Phoenix, AZ Contact: http://www.turnaround.org/ March 30 - April 1, 2006 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, AZ Contact: 1-800-CLE-NEWS or http://www.ali-aba.org April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott Newport, Rhode Island Contact: 1-703-739-0800 or http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island Amelia Island, Florida Contact: 1-703-739-0800 or http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, FL Contact: http://www.ncbj.com/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, AZ Contact: http://www.ncbj.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, NV Contact: http://www.ncbj.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***