/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050610.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 10, 2005, Vol. 9, No. 136 Headlines 698 FLUSHING: Case Summary & 2 Largest Unsecured Creditors 1500 BROADWAY: Case Summary & 20 Largest Unsecured Creditors ADELPHIA COMM: DOJ, SEC & Rigas Settlement Approval Draws Fire ADELPHIA COMM: Panel Asks Court to Reconsider Rigas Settlement ADVANCED MEDICAL: S&P Lifts Senior Secured Loan Rating to BB ALL COUNTY: Voluntary Chapter 11 Case Summary ALOHA AIRLINES: Names Jeff Kessler Interim Chief Financial Officer AMRESCO COMMERCIAL: Fitch Affirms Low-B Ratings on 3 Classes ARMSTRONG WORLD: Updates District Court on Pending Adversary Cases ATA AIRLINES: Chicago Express Gets Nod to Reject Three Agreements BANC OF AMERICA: S&P Assigns Low-B Ratings on Six Cert. Classes CATHOLIC CHURCH: Portland Judge Seals Two Victims' Depositions CELLSTAR CORP: Nasdaq to Halt Common Stock Trading Today CHESAPEAKE ENERGY: S&P Rates $600 Mil. Senior Unsec. Notes at BB- CHIQUITA BRANDS: Moody's Rates New $225M Sr. Unsec. Notes at B3 COMBUSTION ENG'G: Claimants' Rep Wants to Amend CIBC Agreement COMDIAL CORP: Wants to Hire Richards Layton as Bankruptcy Counsel COMDIAL CORP: U.S. Trustee Appoints 3-Member Creditors Committee CO-OPERATORS: Good Performance Prompts S&P to Upgrade Ratings CRAIG SIMMONS: Case Summary & 9 Largest Unsecured Creditors CROWN CASTLE: Completes $1.9 Billion Sr. Secured Debt Offering DIGITAL LIGHTWAVE: Shares Trade on OTCBB Under DIGL.OB Symbol DIRECTV HOLDINGS: S&P Rates Proposed $1 Bil. Senior Notes at BB- ENDURANCE SPECIALTY: S&P Rates Preferred Stock at BB+ ETOYS: Goldman Sachs Wins Dismissal of Three IPO-Related Claims FEDERAL-MOGUL: Wants Until October 1 to Remove State Court Actions GABLES RESIDENTIAL: Sells Assets to ING Clarion for $2.8-Bil Cash GE BUSINESS: S&P Rates $17 Million Class D Certificates at BB HARRY COLLINS: Voluntary Chapter 11 Case Summary HEALTHSOUTH CORP: Inks Pact Resolving SEC Dispute for $100 Million ICEFLOE TECH: Shareholders Approve Revised Stock Option Plan IKON OFFICE: Moody's Changes Ratings Outlook to Negative INTERSTATE BAKERIES: Closing Two San Francisco, CA Bakeries KAISER ALUMINUM: Committee Supports Intercompany Claim Settlements LB COMMERCIAL: Fitch Pares $9.1 Million Certs. 2 Notches to B- METCO PROPERTIES: Voluntary Chapter 11 Case Summary MIRANT CORP: Law Debenture Objects to Plan Solicitation Protocol MIRANT CORP: Brazos Plans to Transfer $4.3M Claim to Deutsche Bank MIRANT CORP: Equity Committee Wants to Expand Examiner's Powers ML CBO: Trust Liquidation Cues Moody's to Withdraw Note Ratings NATIONAL ENERGY: ET Debtors Want Court to Estimate Employee Claims NBTY INC: Inks Pact to Acquire Solgar Vitamin for $115 Million OCA INC: Inks Pact to Settle Subsidiary Lawsuits OCA INC: Lenders Extend Report Filing Deadline Until June 30 OWENS CORNING: Court Appoints Mediator for MiraVista Dispute PASADENA GATEWAY: Trusts Want Chapter 11 Case Dismissed POLYMER RESEARCH: Ch. 7 Trustee Taps Rosenzweig & Klein as Counsel POLYMER RESEARCH: Ch. 7 Trustee Taps Eisner LLP as Accountants PRINTPACK HOLDINGS: S&P Withdraws BB Rating On Company's Request PROVIDENT PACIFIC: Case Summary & 15 Largest Unsecured Creditors QWEST COMMS: Increases Sr. Debt Securities Offering to $1.75 Bil. RAHWAY HOSPITAL: Moody's Affirms Ba2 Rating on $22.6 Million Bonds RESIDENTIAL ACCREDIT: High Losses Spur Fitch to Junk Ratings RESORT AT SUMMERLIN: Combined Confirmation Hearing Set for June 16 REXAIR LLC: S&P Rates $144 Million Senior Secured Loan at B SALOMON BROTHERS: Good Credit Support Cues Fitch to Raise Ratings SECURITY CAPITAL: Taps UBS Securities to Run Formal Sale Process SERVICE CORPORATION: Moody's Rates Proposed $300M Sr. Notes at Ba3 SERVICE CORP: S&P Rates Proposed $300 Mil. Sr. Unsec. Notes at BB SPECIALTY CRUSHING: Case Summary & 20 Largest Unsecured Creditors SYRATECH CORP: Names Gregory Hunt as CFO & Exits Chapter 11 TECO AFFILIATES: Amended Joint Reorganization Plan Takes Effect TECO ENERGY: Completes $100 Million Floating Rate Note Sale TECO ENERGY: Completes Transfer Of Power Station Ownership TESORO PETROLEUM: Moody's Reviews B2 Sr. Subord. Note Rating TOM'S FOODS: Creditors Must File Proofs of Claim by August 1 TORCH OFFSHORE: Wants to Reject Tim Charter Party Agreement TROPICAL SPORTSWEAR: Panel Wants Shareholder Litigation Stayed TWO CITIZENS: S&P Puts Low-B Trust Sec. Ratings on Watch Negative UNI BORING: Voluntary Chapter 11 Case Summary UNITED PRODUCERS: Hires Development Specialists as Mgt. Consultant UNITED PRODUCERS: Taps Allen, Kuehnle & Stovall as Special Counsel UNITED PRODUCERS: Hires Garden City as Claims and Balloting Agent URS CORP: Moody's Rates Proposed $650M Sr. Credit Facility at Ba2 W.R. GRACE: Wants Plan Filing Period Stretched to November 23 WEST CLIFF: Voluntary Chapter 11 Case Summary WESTERN FOREST: Defers 50% of Interest Payment on Secured Bonds WINN-DIXIE: Can Sell Some Prescriptions & Inventory to CVS WINN-DIXIE: Court Okays Rejection of Agreements & Equipment Leases WINN-DIXIE: UST Withdraws Objection to Hiring XRoads Solutions WHX CORP: Files Second Amended Disclosure Statement WORLDCOM INC: National Patent Prepares for Trial in November * Canadian Government Introduces Insolvency Reform Package * Edwin Komen Joins Sheppard Mullin as IP Partner * Huron Consulting Adds 10 Experts to Firm * RSM Richter Merges with Calgary-Based Moody Shikaze * BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles ********* 698 FLUSHING: Case Summary & 2 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: 698 Flushing Realty Corporation 93 Broadway Brooklyn, New York 11211 Bankruptcy Case No.: 05-19195 Chapter 11 Petition Date: June 8, 2005 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: Wayne M. Greenwald, Esq. Wayne Greenwald, P.C. 99 Park Avenue, Suite 800 New York, New York 10016 Tel: (212) 983-1922 Fax: (212) 973-9494 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Torianne Thompson $6,000,000 c/o Renee Simon Lesser 420 Lexington Avenue, Suite 3456 New York, NY 10170 Belinda Gomez $300,000 1313 Halsey Street Brooklyn, NY 1500 BROADWAY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: 1500 Broadway Chili Company, Inc. dba Manhattan Chili Company 1500 Broadway New York, New York 10017 Bankruptcy Case No.: 05-14158 Type of Business: The Debtor operates a restaurant in New York. The restaurant offers Southwestern cuisine. Specialties include chili (11 varieties) and fajitas, with many vegetarian options. See http://www.manhattanchilico.com/ Chapter 11 Petition Date: June 8, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Ronald Scott Kaniuk, Esq. Taplin & Associates 340 Fifth Avenue, Suite 2418 New York, New York 10118 Tel: (212) 967-0895 Fax: 212-202-5217 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Small Business Business Loan $440,000 Administration Business Loan Express 645 Madison Avenue New York, NY 199222 Abramson Law Group Legal Fees $330,000 12 East 41st Street 8th Floor New York, NY 10017 ZAPCO 1500 Investment, L.P. Rent Overcharges $315,000 1500 Broadway New York, NY 10018 Small Business 9/11 EIDL Loans $212,500 Administration 200 West Santa Ana Boulevard, Suite 700 Santa Ana, CA 92701 Small Business 9/11 EIDL Loans $212,500 Administration 200 West Santa Ana Boulevard, Suite 700 Sanata Ana, CA 92701 Chase Small Business Revolving Line of $110,574 Financial Service credit G.P.O. Box 26489 New York, NY 10087-6489 Anchin Block & Anchin LLP Accounting Fees $56,000 1375 Broadway New York, NY 10018 Rewards Network Services iDine Dining Credit $49,000 2 North Riverside Plaza, Agreement Suite 950 Chicago, IL 60606 H. Schrier & Company, Inc. Dry Goods Purveyor $23,800 4901 Glenwood Road Brooklyn, NY 10474 Master Purveyors Inc. Meat Supplier $20,400 Hunts Point Coop Market, Building B-14 Bronx New York 10474 York International Agency Current Insurance $16,800 1 Executive Boulevard Policy w/Pay Plan Yonkers, NY 10701 Lawrence Rader Legal Fees $16,000 225 Broadway, Suite 400 New York, NY 10007 C & S Wholesale Produce Produce Purveyor $16,000 3411 Country Club Road Bronx, NY 10465 Standard Refrigeration HVAC Supplier $9,800 45-02 37th Avenue Long Island City, NY 11101 I. Halper Paper & Supplies Paper Supplier $8,100 P.O. Box 445 Orange, NJ 07050 Harry Wils & Company Dairy Purveyor $4,800 P.O. Box 2549 Secacus, NJ 07096 Riviera Produce $4,500 205 Jackson Street Englewood, NJ 07631 Con Edison Electric Bill $3,800 JAF Station P.O. Box 1702 New York, NY 10016-1702 Best Mexican Foods Specialty Products $2,600 307 North Street Purveyor Middletown, NY 10940 Cintas Corporation Linen Purveyor $2,600 500 South Research Place Central Islip, NY 11722 ADELPHIA COMM: DOJ, SEC & Rigas Settlement Approval Draws Fire -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Adelphia Communications Corporation and its debtor-affiliates asks the U.S. District Court for the Southern District of New York to review the Bankruptcy Court's approval of the settlement agreements among the Debtors, the Department of Justice, the Securities and Exchange Commission and the Rigases. The settlements resolve fraud lawsuits filed by the Securities and Exchange Commission against Adelphia Communications Corporation, et al. A full-text copy of the Bankruptcy Court's Amended Order is available for free at: http://bankrupt.com/misc/AmendedProposedOrder.pdf As reported in the Troubled Company Reporter on June 1, 2005, Judge P. Kevin Castel of the District Court approved the settlement. Judges Leonard B. Sand and Robert Gerber also approved the Settlement. Judge Sand oversees the criminal case against certain of the Rigases while Judge Gerber oversees the ACOM Debtors' Chapter 11 cases. Issues on Appeal The Creditors Committee asks the District Court to review two issues: 1. Whether the Bankruptcy Court erred in finding that three separate but related agreements by and among the Debtors and the Securities and Exchange Commission, the Debtors and the U.S. Department of Justice, and the Debtors and the Rigas Family were reasonable and in the best interests of the ACOM Debtors' estates; and 2. Whether the Bankruptcy Court erred in approving Settlement Agreements that improperly give discretion to the government to administer a restitution fund in a manner that permits distributions to statutorily subordinated victims in violation of the absolute priority rule set forth in the Bankruptcy Code. More Parties Appeal Judge Gerber's Order These parties also filed notices of appeal from the Bankruptcy Court's decision approving the three settlement agreements: 1. W. R. Huff Asset Management Co. LLC, 2. Ad Hoc Committee of Senior Shareholders of ACOM Preferred Stock, 3. Ad Hoc Adelphia Trade Claims Committee, 4. U.S. Bank National Association, as Indenture Trustee for the Arahova Notes, and 5. The consolidated class action plaintiffs in In re Adelphia Communications Corp. Securities & Deriv. Litig. Equity Committee Cross-Appeals Pursuant to Section 158(a)(1) of the Judiciary Procedures Code and Rules 8001(a) and 8002(a) of the Federal Rules of Bankruptcy Procedure, the Official Committee of Equity Security Holders of the ACOM Debtors cross-appeals from Judge Gerber's approval of the three Related Settlement Agreements. Appellate Court Denies Mandamus Petitions Two groups of creditors filed petitions for writs of mandamus with the U.S. Court of Appeals for the Second Circuit: (1) W.R. Huff Asset Management Co., LLC, Appaloosa Management, L.P., and Franklin Mutual Advisers LLC; and (2) Argent Classic Convertible Arbitrage Fund L.P., Argent Classic Convertible Arbitrage Fund (Bermuda) Ltd., Argent Lowlev Convertible Arbitrage Fund Ltd., and the commonly- managed funds UBS O'Connor LLC f/b/o UBS Global Equity Arbitrage Master Ltd. and UBS O'Connor LLC f/b/o UBS Global Convertible Portfolio and Eminence Capital LLC, on behalf of themselves and others similarly situated. The Petitioners ask the Appellate Court to vacate an order of the United States District Court for the Southern District of New York approving a forfeiture settlement among the United States and John J. Rigas, Timothy J. Rigas, and other members of the Rigas family that establishes a $715 million fund to compensate victims of a fraud perpetrated in part by John J. Rigas and Timothy J. Rigas. The petitions were brought under the Crime Victims' Rights Act of 2004, 18 U.S.C. Section 3771. In an opinion dated June 6, 2005, Circuit Judges Sonia Sotomayor and Peter W. Hall note that the Huff Petitioners argue that mandamus relief is warranted because the Settlement Agreement violates the CVRA in that it subjects them to "a Hobson's choice of either foregoing compensation from the approximately $715 million in Victim Fund proceeds or accepting a distribution (under an as-yet unknown plan of allocation) under unreasonable constraints that unnecessarily jeopardize the viability of their civil claims against other participants in the Adelphia fraud." According to the Huff Petitioners, the settlement violates the victims' rights under the CVRA to be treated fairly and to be provided with full and timely restitution. Argent Classic, et al. -- the Class Action Petitioners -- also assert that they were denied their right to restitution, arguing that: -- "[t]he Government sought an order designating this matter as a case involving multiple crime victims in order to avoid the victims' right to full and timely restitution"; and -- "[t]he District Court ignored the Government's failure to satisfy its obligations under the [CVRA] and under the [Attorney General] Guidelines [for Victim and Witness Assistance]." With respect to the notification provision of the CVRA, the Class Action Petitioners contend that the Government failed to make its "best efforts" to identify and personally notify all the crime victims, as required by Section 3771(c). The Appellate Court holds that the District Court did not abuse its discretion in approving the Settlement. Accordingly, the Second Circuit denied the petitions for mandamus. A full-text copy of the 16-page Opinion is available for free at: http://bankrupt.com/misc/CourtOfAppealsDecision.pdf Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMM: Panel Asks Court to Reconsider Rigas Settlement -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Adelphia Communications Corporation's Chapter 11 cases asks Judge Gerber to reconsider his order approving the ACOM Debtors' three related settlement agreements with the Department of Justice, the Securities and Exchange Commission and the Rigas Family. According to David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman, in New York, the Bankruptcy Court premised its approval of the Settlements on, among others, two significant factors: 1. The Government's intention to assert forfeiture claims against the Rigas Managed Entities and the reasonable probability that the Government would prevail over the Debtors and other parties on those claims; and 2. In light of the Government's conviction of Arthur Andersen LLP and the resulting catastrophic consequences, there was a "very real" risk that the Government would indict the Debtors and visit a similar harm upon them. However, since the approval the Settlements, new evidence has been discovered that not only undermines those two rationales, but also undermines the entire basis for the settlement, Mr. Friedman tells the Court. On June 3, 2005, the Government conceded to the Second Circuit Court of Appeals that it would not be able to obtain title to the Managed Entities through forfeiture because the Debtors and their prepetition lenders have superior claims. The Government's admission, Mr. Friedman says, "directly contradicts" what it told the Debtors about its intention to obtain a forfeiture of the Managed Entities, and its belief in the strength of its legal position in that regard. "Moreover, it contradicts what the Debtors and the Government told [the Bankruptcy] Court about the Government's ability to defeat the competing claims to the [Managed Entities]." The Creditors Committee believe that if the truth had been known about the Government's own view of its litigation position, the Debtors never would have agreed to the settlement and Judge Gerber would not have approved it. Mr. Friedman relates that on May 31, 2005, the U.S. Supreme Court reversed the conviction of Arthur Andersen in the litigation Arthur Andersen LLP v. United States, holding that criminal liability should only be imposed on those involved in and conscious of the wrongdoing. "Clearly that is not the case here," Mr. Friedman states. "Indeed, a significant part of the Government's case against the Rigases was the extent to which those individuals misled and defrauded the Debtors." According to Mr. Friedman, the Arthur Andersen Decision demonstrates that the Government's threat of indictment is entirely meritless. As previously reported, one of the Debtors' principal bases for entering into the settlement is the removal of the purported threat of an indictment. Had the Andersen decision been issued a couple of weeks earlier, Mr. Friedman says, the Government never would have been able to use the threat of an indictment to obtain an extortionate settlement and that the Debtors never would have acceded to that threat. In light of the new developments, the Bankruptcy Court's approval should be reconsidered and vacated, Mr. Friedman maintains. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVANCED MEDICAL: S&P Lifts Senior Secured Loan Rating to BB ------------------------------------------------------------ Standard & Poor's Ratings Services raised its rating on Advanced Medical Optics Inc.'s senior secured bank loan to 'BB' from 'BB-'; the recovery rating on the loan was revised to '1' from '2'. These ratings were removed from CreditWatch, where they were placed with positive implications Feb. 11, 2005. Other ratings on the company, including the 'BB-' corporate credit rating, were affirmed. The outlook is stable. "The upgrade reflects the high expectation for full recovery of bank loan principal in the event of a payment default as a result of the VISX Inc. acquisition, which was consummated on May 27, 2005," explained Standard & Poor's credit analyst Cheryl Richer. "In order to facilitate the financing of the merger, AMO and certain of its subsidiaries, as guarantors of the loan, entered into an amendment to the second amended and restated credit agreement. Although the amendment increased AMO's bank facilities by $200 million, the increase in debt is more than offset by the additional security that was obtained for lenders as a result of the acquisition; VISX has no encumbered assets. VISX's geographic asset mix is also favorable (it has a greater proportion of domestic assets than does AMO) in that debt is secured by a lien on domestic assets, but only 66% of the stock of foreign subsidiaries." The ratings on Santa Ana, California-based AMO reflect the risks associated with the ophthalmic company's aggressive efforts to build on its well-established position as a midsize player in the industry. Since its mid-2002 spin-off from Allergan Inc., AMO has focused on bolstering its relatively narrow business profile against changing eye-care technologies and competitive market factors. It has done so by launching new and evolved products and honing its operating efficiency. The company has increased its sales of and market share in foldable intraocular lenses (IOLs), IOL delivery systems, and phacoemulsification systems. The company's contact lens solutions business, particularly its COMPLETE line, continues to generate relatively predictable revenues. ALL COUNTY: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: All County Electrical Company 1510 Falls Avenue Waterloo, Iowa 50701 Bankruptcy Case No.: 05-02707 Type of Business: The Debtor installs and repairs residential, commercial and industrial electrical, telephone, data, fire and burglar alarm systems. See http://www.all-county-electrical.com/ Chapter 11 Petition Date: June 8, 2005 Court: Northern District of Iowa (Waterloo) Debtor's Counsel: John M. Titler, Esq. 320 Eighth Avenue Southeast P.O. Box 1168 Cedar Rapids, Iowa 52406-1168 Tel: (319) 363-5563 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. ALOHA AIRLINES: Names Jeff Kessler Interim Chief Financial Officer ------------------------------------------------------------------ Aloha Airlines named Jeffrey Kessler as interim Senior Vice President Finance, Chief Financial Officer and Treasurer. Mr. Kessler is a partner with Tatum CFO Partners, LLP, in its Atlanta restructuring practice. He has more than 21 years of financial operations experience focused primarily on helping companies in bankruptcy situations. "We are fortunate to have Jeff join our finance team," said David A. Banmiller Aloha's President and Chief Executive Officer. "With his specialized expertise in restructuring, Jeff will be a tremendous asset in helping Aloha move ahead with its reorganization plan." Tatum Partners is a nationally recognized firm that provides financial and information technology services to companies undertaking significant change. Prior to joining Tatum, Mr. Kessler was Managing Director for Partners for Corporate Renewal, Inc., a successful turnaround firm. As Acting Chief Financial Officer of Associated Grocers, Inc., a $1 billion food distribution cooperative in Seattle, Mr. Kessler was credited with restructuring over $250 million in debt obligations held by 20 independent creditors and negotiating over $93 million in new financing to effectuate the restructuring. He also was Senior Vice President of Finance and Corporate Development and Treasurer for Burnham Services Corporation and Senior Manager in the Philadelphia office of Coopers & Lybrand's Business Reorganization Services group. Mr. Kessler is a Certified Turnaround Professional and a Certified Public Accountant. He holds an MBA in Finance and a BBA in Accounting (magna cum laude) from Temple University and is a member of the AICPA, the Turnaround Management Association. In his new role at Aloha, Mr. Kessler will report to directly to Mr. Banmiller. He will be responsible for Aloha's day-to-day financial functions and liaison with lenders, banking institutions, lessors, and the investor community. Mr. Kessler will serve in this position on an interim basis while the company conducts a search for a new CFO. 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. AMRESCO COMMERCIAL: Fitch Affirms Low-B Ratings on 3 Classes ------------------------------------------------------------ AMRESCO Commercial Mortgage Funding I Corp.'s, mortgage pass- through certificates, series 1997-C1, are upgraded by Fitch Ratings: -- $31.2 million class G to 'BBB' from 'BBB-'. The following classes are affirmed by Fitch: -- $33 million class A-3 'AAA'; -- Interest-only class X 'AAA'; -- $24 million class B 'AAA'; -- $12 million class C 'AAA'; -- $21.6 million class D 'AAA'; -- $26.4 million class E 'AAA'; -- $9.6 million class F 'AAA'; -- $4.8 million class H 'BB+'; -- $7.2 million class J 'B'; -- $2.4 million class K 'B-'. Fitch does not rate the $11 million class L certificates. The upgrade is primarily the result of increased subordination levels due to loan payoffs and amortization. As of the May 2005 distribution date, the pool's aggregate principal balance has been reduced by 62% to $183.2 million from $480.1 million at issuance. Realized losses to date total $1 million or 0.21% of the original principal balance. Eight assets (24%) are in special servicing. Four of the specially serviced loans (12%) are cross-collateralized and secured by multifamily properties in Tulsa, Oklahoma. The loans, previously delinquent, have been brought current and were modified and are expected to be returned to the master servicer shortly. A foreclosure is in process for two of the loans (8%), secured by multifamily properties in Pasadena, TX. Additionally, two other assets became real estate owned in May (4%). Losses are expected on these four delinquent loans. ARMSTRONG WORLD: Updates District Court on Pending Adversary Cases ------------------------------------------------------------------ Armstrong World Industries, Inc. filed with the District Court a supplemental response to Judge Robreno's request for status reports. Rebecca L. Booth. Esq., at Richards, Layton & Finger, PA, in Wilmington, Delaware, relates that the United States Court of Appeals for the Third Circuit previously approved AWI's request to expedite its Third Circuit Appeal and referred to the merits panel the Official Committee of Unsecured Creditors' request to dismiss the Appeal due to lack of jurisdiction. Ms. Booth informs Judge Robreno that AWI has recently delivered to the Court of Appeals a brief supporting its Third Circuit Appeal. Ms. Booth says that AWI, the Creditors Committee, the Official Committee of Asbestos Claimants, and Dean M. Trafelet, the Legal Representative for Future Asbestos Personal Injury Claimants, are continuing to explore alternatives for AWI's emergence from Chapter 11. Moreover, AWI will continue to pursue its Third Circuit Appeal while it considers all of its options through further discussions with other parties. The parties intend to update the District Court on the progress of their discussions on June 20, 2005, and schedule a status conference during that week. Updates on Pending Adversary Proceedings AWI updates Judge Robreno on the progress of certain adversary proceedings and contested matters that were discussed at the status conference held by the District Court on April 25, 2005: A. Century Indemnity Company vs. AWI, Appeal No. 03-1087 AWI and a group of its insurers, including Century Indemnity Company, participated in a telephonic conference with the District Court regarding Century Indemnity's request to approve a Settlement Agreement and Stay of Appeal. The parties have subsequently agreed to withdraw, without prejudice, Century Indemnity's request for approval of the Century Settlement and to seek only to stay the appeal. The ACE USA Insurers will file an agreed form of order resolving the Century Motion in accordance with that agreement. B. Carlino/Wagman Appeal AWI and Carlino Arcadia Associates L.P., as successor to Carlino Development Group, Inc., and Wagman Construction, Inc., have entered into an agreement in principle resolving: * the Carlino Claimants' appeal from the Bankruptcy Court ruling that they are not entitled to recover lost profits following AWI's rejection of certain executory contracts; and * AWI's request to dismiss the appeal for lack of subject matter jurisdiction on the grounds that the appeal is of an interlocutory order, both of which are currently pending before the District Court. The parties expect to submit a stipulation and order to the Bankruptcy Court in time for a stipulation to be considered and approved by the Bankruptcy Court on or before the omnibus hearing currently scheduled for June 27, 2005. C. Maertin Appeal In April 2005, the District Court requested that AWI file a motion to support its contentions that the appeal of International Insurance Co., et al., from the Bankruptcy Court's order, dated May 3, 2005, approving the Stay Pending Appeal Stipulation among AWI and former professors and employees of Burlington County College, should be dismissed as moot. On May 12, 2005, AWI asked the District Court to dismiss the Maertin Appeal as moot. To date, no response has been filed yet by the Maertin Appellants. Payment of Special Advisors Ms. Booth also informs Judge Robreno that the fourth fee application of William Drier, Esq., and John Keefe, Esq., was recently approved in the "In re Owens Corning" matter. The counsel for the special advisors has advised AWI that they will be submitting a fee application in AWI's case shortly. AWI will disclose its position regarding the payment of the special advisors' fees once it has an opportunity to review the fee application, Ms. Booth says. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Chicago Express Gets Nod to Reject Three Agreements ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana gave Chicago Express Airlines, Inc., for authority to reject three Agreements. As previously reported in the Troubled Company Reporter on May 19, 2005, Chicago Express Airlines, Inc., and Pan Am International Flight Academy are parties to an Exclusive Training Services Agreement dated May 1, 2003. Under the Agreement, Chicago Express is entitled to use Pan Am exclusively for outside pilot training. Chicago Express and the Bank of Blue Valley are parties to a Plain Language Equipment Lease, pursuant to which Chicago Express leases de-icing equipment from the Bank. Chicago Express and Aeronautical Radio, Inc., are parties to a GLOBALink/VHF Aeronautical Data Communications Service Agreement and an Aeronautical Mobile Ground Station Administration Agreement. ARINC provides Chicago Express with various radio communications services. Chicago Express ceased flight operations on March 28, 2005, and as a result, Chicago Express has no use for the goods, services and equipment provided by the 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) BANC OF AMERICA: S&P Assigns Low-B Ratings on Six Cert. Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Banc of America Commercial Mortgage Inc.'s $1.641 billion commercial mortgage pass-through certificates series 2005-2. The preliminary ratings are based on information as of June 8, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Class A-1, A-2, A-3, A- 4, A-AB, A-5, A-M, A-J, XP, B, C, and D are currently being offered publicly. The remaining classes will be offered privately. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage (DSC) of 1.61x, a beginning LTV of 99.4%, and an ending LTV of 93.3%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Preliminary Ratings Assigned Banc of America Commercial Mortgage Inc. Series 2005-2 Class Rating Preliminary amount ----- ------ ------------------ A-1 AAA $23,600,000 A-2 AAA $137,100,000 A-3 AAA $236,800,000 A-4 AAA $206,700,000 A-AB AAA $66,510,000 A-5 AAA $478,931,000 A-M AAA $164,234,000 A-J AAA $108,805,000 XP AAA TBD B AA $43,111,000 C AA- $16,423,000 D A $28,741,000 E A- $16,423,000 F BBB+ $20,530,000 G BBB $18,477,000 H BBB- $18,476,000 J BB+ $8,212,000 K BB $6,159,000 L BB- $6,159,000 M B+ $4,106,000 N B $2,053,000 O B- $10,265,000 P N.R. $20,529,323 XC* AAA $1,642,344,323 * Interest-only class with a notional dollar amount. TBD -- To be determined. N.R. -- Not rated. CATHOLIC CHURCH: Portland Judge Seals Two Victims' Depositions -------------------------------------------------------------- F.B. and K.L. are plaintiffs in an action pending before the Oregon Circuit Court for Multnomah County, captioned as Case No. 0409-09193, F.B., et al. v. Franciscan Friars, et al. The Plaintiffs seek damages for sexual abuse against, among others, the Archdiocese of Portland in Oregon, the State of Oregon, and the Franciscan Friars of Oregon and California. F.B. is presently serving time in prison. In a stipulation approved by the U.S. Bankruptcy Court for the District of Oregon, the parties agree that the order authorizing the deposition of F.B. and K.L. will be sealed. Only these entities may view or obtain copies without prior written approval: (a) Tort Claimants F.B. and K.L. and their counsel; (b) The Archdiocese of Portland's representative or its counsel or special counsel; (c) Counsel for the defendants in the Multnomah County Case; (d) Counsel for the Tort Claimants Committee; (e) the Future Claimants Representative; and (f) the U.S. Trustee or its agents. The Deposition Orders will be sealed indefinitely or until the stipulated order is modified or vacated by a court of competent jurisdiction. Nothing will be construed as a prohibition against challenges in state court to the Plaintiffs' rights to proceed using pseudonyms. F.B. and K.L. are represented by Erin K. Olson, Esq., in the Archdiocese's bankruptcy cases. 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) CELLSTAR CORP: Nasdaq to Halt Common Stock Trading Today -------------------------------------------------------- CellStar Corporation (Nasdaq: CLSTE) received notification from the Nasdaq Listing Qualifications Panel that its request for an extension to file its Form 10-K for fiscal 2004 and Form 10-Q for the first quarter of 2005 has been denied. Accordingly, the Company's common stock will be delisted from The Nasdaq Stock Market effective with the open of business on Friday, June 10, 2005. The Company has been unable to file its Form 10-K for fiscal 2004 and Form 10-Q for the first quarter of 2005 as a result of accounting issues related to certain accounts receivable and revenues in its Asia Pacific Region. As a result, the Company received a Nasdaq Staff Determination notice for each of the periods indicating that the Company had violated The Nasdaq Stock Market's continued listing requirement set forth in Marketplace Rule 4310(c)(14). The Company had requested that The Nasdaq Stock Market stay its delisting proceedings and grant the Company until May 31, 2005, to file its Form 10-K and as soon as possible thereafter, its Form 10-Q. On May 26, 2005, the Company announced that it would be unable to file its Form 10-K for fiscal 2004 by May 31, 2005. The Audit Committee of the Company's Board of Directors needs more time to complete its independent review of certain accounts receivable and revenue issues in the Asia Pacific Region. The Company has the option to request that the Nasdaq Listing and Review Council review this decision. However, such request will not operate as a stay of the Panel's decision. The Company has not determined at this time whether to request further Nasdaq review. As a result of the delisting, the Company's common stock may be quoted in the Pink Sheets, which provide electronic quotation information. However, the Company can give no assurance the common stock will be so quoted. Waiver On June 1, 2005, the Company said it obtained a waiver from its lenders under its domestic revolving credit facility to extend the date to file its Form 10-K for fiscal 2004 and its Quarterly Report on Form 10-Q for the first quarter of 2005 to July 15, 2005. Pursuant to the waiver, the Company's lenders also agreed to waive certain financial covenants for the quarters ended November 30, 2004 and February 28, 2005, and for the quarters ended prior to November 30, 2004, with which the Company would not have been in compliance due to the contemplated restatements of its financial statements. Investment Banking Advisor The Company has also retained the services of Raymond James & Associates, Inc., to act as its investment banking advisor to assist the Company with the evaluation of its financial and strategic alternatives. About the Company CellStar Corporation -- http://www.cellstar.com/-- is a leading global provider of value-added logistics services to the wireless communications industry, with operations primarily in the North American, Latin American and Asia-Pacific regions. CellStar facilitates the effective and efficient distribution of handsets, related accessories and other wireless products from leading manufacturers to network operators, agents, resellers, dealers and retailers. CellStar also provides activation services in some of its markets that generate new subscribers for wireless carriers. CHESAPEAKE ENERGY: S&P Rates $600 Mil. Senior Unsec. Notes at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Chesapeake Energy Corp. At the same time, Standard & Poor's assigned its 'BB-' rating to Chesapeake's $600 million senior unsecured notes due 2018. The outlook is positive. Oklahoma City, Oklahoma-based Chesapeake will have about $3.7 billion of debt on a pro forma basis after this transaction. "Proceeds from the notes will be used to finance the announced tender for Chesapeake's senior unsecured notes due 2011 and 2012, roughly $454 million outstanding," said Standard & Poor's credit analyst Paul B. Harvey. "Any remaining proceeds will be used for general corporate purposes and to repay borrowings from its credit facility," he continued. The positive outlook on Chesapeake is supported in large part by the company's hedging program that has locked in high natural gas prices, which should provide solid cash flow generation in the near term. Management must consistently demonstrate both the ability and willingness to apply excess cash flow to meaningfully reduce debt. Standard & Poor's further expects the company to continue to fund its acquisition program in a balanced manner. The outlook could be revised to stable in the event of a large debt-financed acquisition. CHIQUITA BRANDS: Moody's Rates New $225M Sr. Unsec. Notes at B3 --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating for Chiquita Brands LLC's proposed new senior secured credit facilities. Moody's also assigned a B3 rating for the planned $225 million senior unsecured notes of Chiquita Brands International, Inc. and affirmed the B3 rating on CBII's existing senior unsecured notes. Moody's also affirmed Chiquita's B2 senior implied rating. Also today Moody's withdrew ratings on credit facilities and notes rated on March 31, 2005, but were never issued -- having been replaced with the facilities and notes being initially rated today. The ratings withdrawn include the B1 ratings on credit facilities for Chiquita Brands LLC as well as the B3 ratings for a senior unsecured note which was to have been issued by CBII. The outlook on all ratings remains stable. The affirmation of Chiquita's senior implied rating and assignment of other ratings follows modest changes to the structure and terms of the financings for Chiquita's planned acquisition of the Fresh Express unit of Performance Foods Group. It also follows the disclosure that Chiquita and several other fruit companies are party to an investigation by the European Commission with regard to possible violations of European competition law. The rated credit instruments, together with $50 million in debt secured by ships, will be used acquire Fresh Express for $855 million in cash (approximately 9.4x Fresh Express' adjusted 2004 EBITDA). These ratings assume that the final terms of the transaction are as outlined in this press release, and that the company is successful in issuing the $225 million in senior unsecured notes at CBII prior to closure of the Fresh Express acquisition. The ratings recognize that the addition of Fresh Express provides important diversification to Chiquita's business. Ratings also take into account the: * significant cost of the acquisition; * its largely debt funding; * the consequent increase in financial leverage; * the challenges in integrating the new business, which will increase Chiquita's sales by a third; and * the continuing sensitivity of Chiquita's earnings and cash flow to the regulatory regime for banana imports in Europe, which will be modified by 2006. The specific regulatory changes in Europe are not yet agreed, and the extent of potential negative impact on Chiquita's profitability is uncertain but could be significant. The ratings also takes into account uncertainty surrounding the ultimate impact on Chiquita and the European fresh fruit industry of the EC's investigation of companies within the European fresh fruit sector. Chiquita has disclosed that its management recently became aware that certain of its employees had shared pricing and volume information over many years with competitors in Europe, and may have engaged in other conduct, in violation of European competition laws. These risks are partially mitigated by the fact that, due to Chiquita's voluntary notification and cooperation with the investigation, the EC has granted Chiquita immunity from any fines related to the conduct, conditioned on the company's continued cooperation, among other things Moody's ratings actions were: Ratings Assigned Chiquita Brands LLC: 1) $100 million senior secured revolving credit, maturing 2010 at B1 2) $125 million senior secured term loan B, maturing 2012 at B1 3) $375 million senior secured term loan C, maturing 2012 at B1 Chiquita Brands International Inc.: 1) $225 million senior unsecured notes, due 2015 at B3 Ratings Affirmed: Chiquita Brands International Inc.: 1) $250 million 7.5% senior unsecured notes, due 2014 at B3, 2) Unsecured issuer rating at B3, 3) Senior implied rating at B2 Ratings Withdrawn Chiquita Brands LLC: 1) $200 million senior secured revolving credit, maturing 2010 at B1 2) $150 million senior secured term loan A, maturing 2010 at B1 3) $350 million senior secured term loan B, maturing 2012 at B1 Chiquita Brands International Inc.: 1) $150 million senior unsecured notes, due 2015 at B3 Ratings outlook -- stable. Moody's does not rate Chiquita Brands LLC's existing $150 million secured credit facility, or the secured shipping loans ($50 million pro forma after the Fresh Express acquisition). Fresh Express, which is an industry leader in value-added and other fresh-cut produce in US retail and foodservice channels, will add significant business diversification to Chiquita in higher margin products in a growing food category. The acquisition will add about $1 billion of revenues and $91 million of adjusted EBITDA to Chiquita's $3 billion 2004 revenue base and $172 million of adjusted 2004 EBITDA. Bananas will drop to 42% of Chiquita's sales from 56%, though earnings exposure to European banana markets will remain material. While an important strategic business move for Chiquita, integration of the acquisition could pose challenges because it is a large addition to Chiquita in a new type of produce. Also, while Fresh Express' sales growth has been good, category growth is slowing, and margins have been declining. In addition, the acquisition cost is significant and financing is largely debt, increasing Chiquita's overall debt and leverage at a time when it still faces uncertainty about the outcome of new European banana import regulations. Chiquita's ratings are restrained by the sensitivity of its earnings to factors such as commodity input cost volatility (on fuel, shipping and packaging costs, as well as fruit and vegetable supplies, which can be impacted by weather, disease and pests). The company's earnings also are exposed to foreign exchange rates, particularly the Euro. In addition, the business can be affected by changing international trade regulations, and the company's overseas farm operations can be subject to political risks, labor issues, and litigation. Pro forma debt and lease adjusted enterprise leverage is high considering: * the company's low operating margins; * modest returns on assets; * the large intangible component to its pro forma balance sheet; * the uncertainty about the changes in European banana import regulations; and * the Fresh Express integration risks. The ratings gain support from the business/geographic diversification and scale gained with the Fresh Express acquisition, a business with higher margins than Chiquita, growing sales, and relatively steady earnings generation. Chiquita's earnings concentration on European bananas will reduce materially, though still be significant. The ratings also consider the well established market positions of both Chiquita and Fresh Express. Demand trends for both businesses' products are steady, with some underlying growth, and Chiquita has strong brand name awareness by consumers. The ratings also recognize Chiquita's risk management initiatives, which have included hedging a large part of its Euro exposure through 2006 to protect the profitability of its European operations from negative euro exchange rate movements. In addition, the ratings consider the liquidity provided by the revolving credit, which provides adequate seasonal availability and covenant levels that provide ample cushion. The stable ratings outlook accommodates potential for negative impact from the scheduled changes in European regulations in 2006. Ratings could be upgraded once the changes are agreed if the impact on Chiquita is moderate and free cash flow after capital spending and dividends is expected to be sustainably above about 8% of enterprise debt. The ratings also could gain support if earnings growth enables Chiquita to reduce debt levels materially while the market transitions in Europe. Ratings could be pressured by a combination of significant profit impairment resulting from the new regulations in Europe and pressures on earnings from uncontrollable cost increases and/or unfavorable banana supply/demand dynamics, and/or major integration difficulties with Fresh Express. Pro forma for the acquisition, Chiquita will have a $4 billion revenue base, $1.1 billion of debt, and $263 million of adjusted PF EBITDA based on 2004 financials. The company also will have significant operating leases. PF lease adjusted debt/EBITDA will be about 5x. Pro forma free cash flow after capital spending and dividends represents about 6% of debt. The balance sheet will have a significant goodwill and intangible component. PF EBITDA margins are about 6%, and EBITDA less capital spending provides 2.5x coverage of interest expense and 2.0x coverage of interest and dividends. Moody's recognizes that Chiquita's first quarter 2005 earnings were very strong, and if sustainable, would improve credit metrics. Regardless, uncertainty regarding the sustainability of this improvement leads us to be conservative in using these numbers. The company's EBITDA, however, could drop materially in 2006, when European banana import tariffs become effective, if tariff levels are set in the upper half of the range currently under discussion (Euro 75/MT to Euro 230/MT), materially weakening credit measurements. Moody's notes that the structure and terms of the financing being used to fund the Fresh Express acquisition have changed modestly since Moody's rated the initial structure on March 31, 2005. Changes include the extension of the planned expiration and an extended amortization schedule of some of the senior secured term debt at Chiquita Brands, as well as an increase in the size of senior unsecured notes to be issued by CBII to $225 million from $150 million. Finally, CBII will now not issue $75 million in preferred stock as it had originally planned, which increases the cash debt service of the financing. In Moody's view, the overall impact of these changes to the financing structure are modest and do not change the ratings or notching appropriate for these facilities. The senior secured credit facilities are notched up from the senior implied rating to reflect their effective and structural priority to $475 million of unsecured notes. Tangible asset coverage is not robust and coverage of principal would rely on realizing value in trademarks, but enterprise value at a low multiple of EBITDA would provide adequate coverage of principal. The Revolver and Term Loan B are guaranteed by the holding company and material US and Latin American subsidiaries; they are secured by the Chiquita trademark and a pledge of 100% of the stock of material US subsidiaries and 65% of the stock of material European subsidiaries. The Term Loan C is guaranteed by the holding company, and Fresh Express and each of Fresh Express' subsidiaries; Term Loan C will have security in the assets and stock of Fresh Express and its subsidiaries, including the Fresh Express trademark, but not new working capital or other new assets of Fresh Express going forward. The ratings on the unsecured notes are notched down to reflect their unsecured and structurally subordinated position in the company's capital structure. The notes are at the holding company, with no upstream guarantees. The planned new note issue will have some increased indenture flexibility compared with the existing notes. Asset coverage of the notes at par would require realization of a significant amount of intangible value on Chiquita's pro forma balance sheet. Chiquita Brands International has headquarters in Cincinnati, Ohio. The company is a global producer and marketer of fresh fruit, with a revenue base of $3 billion. Fresh Express is a marketer of fresh-cut produce, with a revenue base of $1 billion. COMBUSTION ENG'G: Claimants' Rep Wants to Amend CIBC Agreement -------------------------------------------------------------- David T. Austern, the Official Representative for Future Asbestos Personal Injury Claimants, in Combustion Engineering, Inc.'s chapter 11 proceedings, asks the U.S. Bankruptcy Court for the District of Delaware, for permission to modify the terms of his employment of CIBC World Markets Corp., as his financial advisor. Under the Second Amended Retention Letter, CIBC World will continue to: (a) analyze the financial position, cash flow requirements, operations, competitive environment and assets of ABB and its affiliates; (b) evaluate the financial effect of the implementation of any plan of reorganization upon the operations, assets and securities of ABB and its affiliates including, but not limited to, the liquidity and creditworthiness of ABB, its bank and public bond debt and the common stock of ABB; (c) assist and advise Mr. Austern in connection with finalizing the terms of the Debtor's proposed plan of reorganization and related plan documents, and confirmation and implementation of the Debtor's plan of reorganization; and (d) perform all other necessary professional services that Mr. Austern requests and as may be appropriate in connection with the chapter 11 proceedings. Joseph J. Radecki, Jr., Managing Director of CIBC World, tells the Court that under the Third Agreement, the Firm will be paid: (a) $100,000 per month beginning with the month of May 2005 through the month during which the Debtor's disclosure statement is approved; and (b) up through the month of the effective date of a plan of reorganization or termination of the Second Amended Retention Letter, whichever occurs first, the Firm shall be paid $25,000 per month, except for the month of confirmation for which the monthly fee will be $100,000. Mr. Austern believes that the Firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Court Approval of CIBC World's Retention On April 22, 2003, the Court authorized Mr. Austern to retain and employ CIBC World to provide postpetition financial services. Under the first agreement dated March 24, 2003, CIBC World was paid: (a) $25,000 per month beginning March 2003 until the month of confirmation of a restructuring plan, and (b) $75,000 for the month of confirmation. Court Approval of CIBC World's Second Agreement The Court approved Mr. Austern's request to amend the First Agreement on November 19, 2003. In the second agreement, CIBC was paid: (a) $75,000 for the month of May 2003; (b) $25,000 per month beginning June 2003, until the month of the effective date of a Chapter 11 plan of reorganization for the Debtor; and (c) $75,000 for the month in which a confirmation hearing occurs in the court. The Chapter 11 Filing ABB Ltd.'s U.S. subsidiary, Combustion Engineering, Inc., filed for chapter 11 protection on February 17, 2003, and delivered its prepackaged plan to the U.S. Bankruptcy Court for the District of Delaware that day to halt and resolve the tide of asbestos-related personal injury suits brought against the companies. Over the dozen years prior to the chapter 11 filing -- according to information obtained from http://www.LitigationDataSource.com-- the number of claims against Combustion Engineering, its affiliates, ABB and former joint venture partners, skyrocketed: Year Asbestos Claims Asserted Against CE ---- ----------------------------------- 1990 18,891 . 1991 19,000 . 1992 20,000 + 1993 21,000 + 1994 22,000 ++ 1995 23,842 +++ 1996 27,577 ++++++ 1997 28,976 +++++++ 1998 28,264 ++++++ 1999 33,961 ++++++++++ 2000 39,138 +++++++++++++ 2001 54,569 ++++++++++++++++++++++++ 2002 79,204 ++++++++++++++++++++++++++++++++++++++++ CE is named as a defendant in cases pending in multiple jurisdictions, with plaintiffs alleging injury as a result of exposure to asbestos in products manufactured or sold by CE or that was contained in materials used in CE's construction or maintenance projects. Combustion Engineering's History Combustion Engineering was formed in Delaware in 1912 as The Locomotive Superheater Co. and manufactured and sold superheaters for steam locomotives. From the 1930s forward, CE's core business is designing, selling and erecting power- generating facilities, including major steam generators. CE also services large steam boilers and related electrical power generating equipment. From the 1930s through the 1960s, asbestos insulation was used on many CE boilers. Bankruptcy Professionals Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart LLP, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent Combustion Engineering. The Blackstone Group, L.P., provides CE with financial advisory services. David M. Bernick, Esq., at Kirkland & Ellis, provides legal advice to ABB. The CE Settlement Trust, holding the largest unsecured claim against CE's estate, is represented by Hasbrouck Haynes, Jr. CPA, at Haynes Downard Andra & Jones LLP. COMDIAL CORP: Wants to Hire Richards Layton as Bankruptcy Counsel ----------------------------------------------------------------- Comdial Corporation and its debtor-affiliates ask the U.S. Bankruptcy for the District of Delaware for permission to employ Richards, Layton & Finger, P.A., as their general bankruptcy counsel. Richards Layton is expected to: a) advise the Debtors' of their rights, powers and duties as debtors and debtors-in-possession in the continued operation and management of their businesses and property; b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; and d) perform all other legal services that are necessary in connection with the Debtors' chapter 11 cases. John H. Knight, Esq., a Director at Richards Layton, discloses that the Firm received a $281,065 retainer. Mr. Knight charges $425 per hour for his services. Mr. Knight reports Richards Layton's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Paul N. Heath Associate $305 Kimberly D. Newmatch Associate $265 Jason M. Madron Associate $220 Amy L. Rude Paralegal $140 To the best of the Debtors' knowledge, Richards Layton is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. COMDIAL CORP: U.S. Trustee Appoints 3-Member Creditors Committee --------------------------------------------------------------- The United States Trustee for Region 3 appointed three creditors to serve on the Official Committee of Unsecured Creditors in Comdial Corporation and its debtor-affiliates' chapter 11 case: 1. McDonald Technologies International, Inc. Attn: Paul S. Nicholas 1920 Diplomat Drive Farmers Branch, Texas 75234 Phone: 972-869-7109, Fax: 972-241-2643 2. Maxi Switch, Inc. Attn: Edward Fong 2550 N. Dragoon, Ste. 100 Tucson, Arizona 85745 Phone: 520-294-5450, Fax: 520-294-6890 3. Boundless Manufacturing Services, Inc. Attn: Joseph Gardner 50 Engineers Lane, Unit 2 Farmingdale, New York 11735 Phone: 631-962-1470, Fax: 631-962-1471 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. CO-OPERATORS: Good Performance Prompts S&P to Upgrade Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit and financial strength ratings on Guelph, Ontario-based Co-operators General Insurance Co. to 'BBB+' from 'BBB'. At the same time, Standard & Poor's raised its Canadian national scale preferred stock rating on the company to 'P-3(High)' from 'P-3' and its global scale preferred stock rating to 'BB+' from 'BB'. The outlook is stable. "The insurer financial strength rating on CGIC reflects its position as one of Canada's larger property and casualty insurers; its diversified mix of personal and commercial products; the strength of its sister organization, Co-operators Life Insurance Co.; its strong ties to the co-operative/credit union system; and its strong capitalization, asset quality, and liquidity," said Standard & Poor's credit analyst Foster Cheng. CGIC's much improved operating performance is attributed to the general improvement within the sector, and to internal changes brought about by a new CEO and executive team that took over in 2001. The company's customer relationship management and multiproduct strategy are gaining traction, as client satisfaction is at an all-time high and customer retention remains stable. CGIC is viewed as a core subsidiary of The Co-operators Group Ltd. The challenges facing the company include the cyclical nature of this sector's operating performance, a very competitive business environment, the commodity-like nature of CGIC's products, and the consolidation occurring in the insurance and financial services industry. The stable outlook on CGIC reflects Standard & Poor's expectation the company will continue to experience strong and consistent operating performance. The company's ties to the co- operative/credit union system are viewed as a competitive advantage; this, together with the company's diversified mix of products, should help business franchise growth. CRAIG SIMMONS: Case Summary & 9 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Craig & Dial St. Claire Simmons 254 East 68th Street, Apartment 9A New York, New York 10021 Bankruptcy Case No.: 05-14154 Chapter 11 Petition Date: June 8, 2005 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsel: Arthur Morrison, Esq. 11 Skyline Drive Hawthorne, NY 10532 Tel: (914) 592-8282 Fax: (914) 592-3482 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Allen R. Zell, DDS Unknown 1730 Central Park Avenue Yonkers, New York 19710 Con Edison Unknown JAF Station P.O. Box 1702 New York, New York 10021 Providian Financial Unknown P.O. Box 6660509 Dallas, TX 75266 Rudin Management Unknown Surgical Associates of N.Y. Unknown The Buckley School Unknown The Spence School Unknown Vandenberg and Feliu, LLP Unknown Verizon Unknown CROWN CASTLE: Completes $1.9 Billion Sr. Secured Debt Offering -------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) completed the sale of its previously announced offering of $1.9 billion of Senior Secured Tower Revenue Notes, Series 2005-1, issued by certain of its indirect US subsidiaries in a private transaction. The Notes consist of five classes, which are all rated investment grade. The weighted average interest rate on the various classes of Notes is approximately 4.89%. Further, all of the Notes have an expected life of five years with a final maturity of June 2035. In addition, Crown Castle reiterated its previously announced full year 2005 Outlook. "We are very excited to have completed this securitized debt offering," stated Ben Moreland, Chief Financial Officer of Crown Castle. "This offering and the success of our previously announced tender offers for nearly all of our outstanding high- yield notes represent an exciting new day for Crown Castle. With this vastly simplified capital structure, we have eliminated virtually all restrictions on the use of cash generated by our business after debt service, significantly reduced our annual interest expense by approximately $50 million, or 32%, and created an on-going borrowing mechanism that will enable us to lever the growth that we expect in our business. Further, this financing positions Crown Castle to make investments that deliver higher levered rates of return given our lower cost of debt capital. With this financing now accomplished, we expect annualized recurring cash flow of approximately $0.92 per share for the second half of 2005. We remain focused on achieving our long-term goal of 20% to 25% annual growth in recurring cash flow per share through the expected growth in our core tower business, augmented by opportunistic investments, including possibly additional stock purchases." Crown Castle used the net proceeds received from the Notes to fund the purchase of its 10-3/4% Senior Notes, 9 3/8% Senior Notes, 7.5% Senior Notes and 7.5% Series B Senior Notes that were tendered and not withdrawn as of 5:00 pm (EDT) on June 7, 2005, pursuant to its previously announced tender offer, and to repay its outstanding Crown Castle Atlantic credit facility. Further, Crown Castle expects to use a portion of the net proceeds of the Notes to fund the announced redemption of its outstanding: -- 9% Senior Notes, -- 9-1/2% Senior Notes, -- 10-3/8% Senior Discount Notes, and -- 11-1/4% Senior Discount Notes, as well as to pay for any additional notes tendered prior to the expiration of the above-mentioned tender offer. The Company expects to use the balance of the net proceeds for general corporate purposes. The Notes provide Crown Castle with the flexibility to use cash flow generated by its subsidiaries after debt service for any corporate purpose, subject to certain restrictions. As a result, Crown Castle may invest its excess cash flow and subsequent borrowings in tower acquisitions, tower builds, common stock repurchases, dividends or other investments it deems attractive without the significant limitations that previously existed under its high-yield notes. The Borrowers' obligation to make interest payments under the Notes is entirely on a fixed interest rate basis. The Notes are comprised of five classes including $1.2 billion of Class A notes, receiving the highest investment grade rating of Aaa/AAA by Moody's Investor Services and Fitch Ratings, respectively. The Class A notes include: -- $948 million of a fixed rate series; and -- $250 million of a floating rate series (any floating rate payments in excess of the Borrowers' fixed rate obligation must be satisfied by a third party pursuant to a swap arrangement between the indenture trustee and such third party). The Class B through D notes are each comprised of $234 million of debt and are rated Aa2/AA, A2/A and Baa2/BBB by Moody's Investor Services and Fitch Ratings, respectively. The cash flow to service the Notes is derived from the site rental revenues and site rental gross margin, defined as site rental revenues less site rental cost of operations (exclusive of depreciation, amortization and accretion), from substantially all of the Crown Castle tower sites located in the US, which represent approximately 93% of Crown Castle's site rental revenues and 94% of Crown Castle's site rental gross margin. Crown Castle Australia, Crown Castle Mobile Media and certain other subsidiaries of Crown Castle are not parties to the Notes. The Indenture governing the Notes allows for the issuance of additional notes based on increases in cash flow from growth on the existing tower assets and from newly acquired or built tower sites. In order to issue additional notes, the debt service coverage ratio (defined generally as cash flow generated by the Borrowers divided by interest expense on the Notes), after giving effect to any new notes, must be equal to or greater than the debt service coverage ratio at the original Notes issuance. In addition, the Borrowers must obtain rating agency confirmation on the existing Notes and additional notes. Therefore, Crown Castle expects to be able to maintain its existing level of debt leverage. The Notes have an expected life of five years with a final maturity of June 2035. If the Notes are not refinanced or repaid by June 2010, the Borrowers will incur certain increases to the interest rates of the Notes and be required to use any excess cash flow of the Borrowers, which hold substantially all of Crown Castle's US tower sites, to repay the Notes. To date during the second quarter 2005, Crown Castle has spent $131.5 million to purchase 8.0 million shares of its common stock (inclusive of 6.1 million shares previously announced) at an average price of $16.47 per share. Crown Castle's cash and cash equivalents at March 31, 2005, pro forma for the closing of the Notes, the purchase of common stock prior to the date hereof, the previously announced purchases of 4% Convertible Notes during the second quarter, the tender and redemption of the high-yield notes described in this release and the repayment of the Crown Castle Atlantic credit facility, is approximately $251 million. About the Company Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers. Crown Castle offers significant wireless communications coverage to 68 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 10,600 and over 1,300 wireless communication sites in the U.S. and Australia, respectively. For more information on Crown Castle visit http://www.crowncastle.com/ * * * As reported in the Troubled Company Reporter April 25, 2005, Standard & Poor's Ratings Services placed its ratings for four wireless tower companies: (1) SpectraSite Inc. ('B+' corporate credit rating), (2) Crown Castle International Corp. ('B'), (3) AAT Communications Corp. ('B-'), and (4) SBA Communications Corp. ('CCC+'), as well as related entities -- on CreditWatch with positive implications. These ratings join those for American Tower Corp. (B-/Watch Pos/--), which were placed on CreditWatch with positive implications Jan. 14, 2005. These companies collectively have approximately $7 billion of debt outstanding. These CreditWatch listings relate to an industry review being conducted by Standard & Poor's of the tower leasing business and the position of the companies within this industry. "Strengthening business prospects could support higher ratings for the companies in this sector," said Standard & Poor's credit analyst Catherine Cosentino. "The wireless carriers, particularly the large national players, are expected to continue to increase their geographic footprint, coverage, and capacity to support increased minutes of use both for voice and expanding broadband services. Tower companies will benefit from these trends, which should continue to bolster increased tower co-location." Reflecting the high operating leverage in this industry, gross profit margins are very high for companies in this sector and EBITDA margins tend to rapidly improve as additional tenants are added to existing towers. For 2004, gross profit margins for the tower leasing business were in excess of 60% for the group, and EBITDA margins ranged from about 30%-60%, with the lower end attributable to the effects of operations in the less-profitable site development business of SBA Communications Corp. While SBA has significantly higher leverage than its peers, at about 14x for 2004 on an operating lease-adjusted basis, its business profile may support a higher corporate credit rating than the current 'CCC+' (depending on Standard & Poor's assessment of its liquidity over the next few years) given its ongoing growth in lease rental revenues. As part of this review, Standard & Poor's will be evaluating its ratings guidelines for the sector to determine if the industry supports less stringent financial guidelines based on overall business characteristics. If we conclude that the business risk of the sector is stronger than that which we previously incorporated in our guidelines, we will provide new thresholds when the CreditWatch listings are resolved. The qualitative measures may also be revised to introduce metrics more representative of the current state of the industry, including such possible measures as revenue per tower and debt to revenue. The recent change in operating lease accounting adopted by the tower operators does not affect the business prospects or cash flow prospects for the industry. It has had the impact of increasing the size of reported minimum cash lease commitments for most of the tower companies. However, the increase in such minimum recognized commitments is also indicative of the high rate of contract renewal in this business, which is not expected to abate. Standard & Poor's will meet with management at the tower companies to discuss their financial policies, including stock repurchase and dividend plans, as well as the possibility for additional acquisitions in resolving the CreditWatch listings. DIGITAL LIGHTWAVE: Shares Trade on OTCBB Under DIGL.OB Symbol ------------------------------------------------------------- The Over The Counter Bulletin Board has approved for quotation Digital Lightwave, Inc.'s (OTCBB:DIGL) common stock under the symbol DIGL.OB. "In light of our recent delisting from the Nasdaq Small Cap Market, we have actively examined other trading alternatives and are pleased to announce our acceptance to the OTC Bulletin Board," stated Robert Hussey, CEO of Digital Lightwave. "Going forward, we continue to execute against our strategic goal of a return to profitability and hope to regain our Nasdaq listing at some point in the future." The OTC Bulletin Board is a quotation service that displays real- time quotes, last-sale prices, and volume information in domestic and certain foreign securities. Eligible securities include national, regional, and foreign equity issues; and warrants, units, and American Depositary Receipts (ADRs) not listed on any other U.S. national securities market or exchange. Although the OTCBB is operated by the NASD, it is unlike The Nasdaq Stock Market(R) or other listed markets where individual companies apply for listing and must meet and maintain strict listing standards; individual brokerage firms, or Market Makers initiate quotations for specific securities on the OTC Bulletin Board. Currently, approximately 6,500 securities are quoted on the OTCBB. About Digital Lightwave, Inc. Based in Clearwater, Florida, Digital Lightwave, Inc., provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. The Company designs, develops and markets a portfolio of portable and network-based products for installing, maintaining and monitoring fiber optic circuits and networks. Network operators and telecommunications service providers use fiber optics to provide increased network bandwidth to transmit voice and other non-voice traffic such as internet, data and multimedia video transmissions. The Company provides telecommunications service providers and equipment manufacturers with product capabilities to cost-effectively deploy and manage fiber optic networks. The Company's product lines include: Network Information Computers, Network Access Agents, Optical Test Systems, and Optical Wavelength Managers. The Company's wholly owned subsidiaries are Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd., and Digital Lightwave Latino Americana Ltda. At March 31, 2005, Digital Lightwave's balance sheet showed a $34,556,000 stockholders' deficit, compared to a $29,146,000 deficit at Dec. 31, 2004. DIRECTV HOLDINGS: S&P Rates Proposed $1 Bil. Senior Notes at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to the proposed $1 billion senior notes due 2015 of El Segundo, California-based satellite direct-to-home TV operator DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. The notes will be issued under Rule 144A with registration rights. The company will apply $500 million of proceeds to bank debt repayment and use the balance for general corporate purposes. The ratings on the company and parent The DIRECTV Group Inc., were affirmed. Both entities are analyzed on a consolidated basis. The outlook is stable. DIRECTV will have about $3.4 billion in debt pro forma for the new offering as of March 31, 2005. Although the financing increases gross debt to EBITDA by about half a turn to roughly 4x (unadjusted for operating leases) based on annualized first quarter 2005 results of the U.S. DIRECTV business, Standard & Poor's expects the company to achieve healthy EBITDA growth and discretionary cash flow during the next year that should strengthen the financial profile. The financing also extends debt maturities somewhat. "The ratings on DIRECTV continue to reflect aggressive subscriber growth and retention efforts in the intensely competitive pay-TV industry, including spending on advanced set-top boxes; elevated satellite capital expenditures needed to boost channel capacity; and substantial spending on high-profile sports programming," said Standard & Poor's credit analyst Eric Geil. These factors are responsible for reduced EBITDA profitability and negative discretionary cash flow during the past 12 months, which, together with a rising potential for share repurchases, weigh somewhat on the financial profile. Tempering factors include strong subscriber growth, scale advantages from the company's position as the second-largest multichannel TV provider, potential for sizable discretionary cash flow as the business matures, and operating benefits from News Corp.'s 34% controlling ownership stake. ENDURANCE SPECIALTY: S&P Rates Preferred Stock at BB+ ----------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB' counterparty credit and senior debt ratings on Endurance Specialty Holdings Ltd. (NYSE:ENH; Endurance). The outlook is positive. At the same time, Standard & Poor's assigned its 'BBB' preliminary senior debt rating, 'BBB-' preliminary subordinated debt rating and 'BB+' preliminary preferred stock rating to Endurance following the company's increasing its existing universal shelf to $750 million in debt capacity from the existing $250 million. "The ratings on Endurance reflect its strong competitive position supported by a diversified business platform, strong capital adequacy, and strong operating performance," explained Standard & Poor's credit analyst Damien Magarelli. "Offsetting these positives is Endurance's minimal use of reinsurance that could potentially lead to capital and earnings volatility, and a management team that has not been through difficult market cycles while at the company." Endurance has filed this universal shelf that will enable offerings of debt securities, preference shares, ordinary shares, depositary shares, and warrants. The company expects to use the net proceeds of these offerings for potential acquisitions and repurchases of debt securities, though no drawdowns are expected at this time, and for general corporate purposes. Endurance measured a debt to capital ratio of 17.7% and interest coverage of 35x at year-end 2004 in support of nonstandard notching. The outlook is based on Standard & Poor's expectation that Endurance will maintain strong earnings. Standard & Poor's expects capital adequacy to remain strong at more than 155% in support of the current rating. In addition, the company is expected to exhibit the risk-management skills and underwriting discipline to control the volume and profitability of business in a softening market, but this will be proven over the next few years. Endurance is expected to maintain debt leverage at less than 20% and interest coverage of more than 10x in support of nonstandard notching. Lastly, Standard & Poor's expects the company to continue to diversify and expand its U.S. insurance operations. ETOYS: Goldman Sachs Wins Dismissal of Three IPO-Related Claims --------------------------------------------------------------- The New York State Court of Appeals dismissed earlier this week three claims in a lawsuit which eToys Inc. filed in 1999 accusing Goldman Sachs Group Inc. of breaches of contract, fiduciary duty and professional malpractice as lead underwriter of eToys' 1999 Initial Public Offering. The complaint alleges that on Goldman's recommendation the IPO was priced at $20 per share. On the first day of trading 13 million shares changed hands with prices reaching over $85 per share. The extraordinary demand for eToys' shares -- and the high price the public was willing to pay for them -- continued for many months after the IPO with approximately 300 million shares trading at prices as high as $86. eToys alleged that Goldman knew that a substantially high price was warranted given the tremendous demand for the stock and existing market conditions but underpriced the shares to benefit its select customers from whom they expected, in return, investment banking business, brokerage commissions and other benefits. According to Bloomberg News, eToys claims Goldman Sachs "had an incentive" to advise it to underprice the IPO because when some of Goldman's clients made money, "Goldman Sachs was allegedly paid 20% to 40% of the clients' profits from trading." Goldman Sachs brought the case to a higher court of appeals in New York after a decision on May 24, 2005, by New York's Appellate Division, First Department, upheld eToys' complaints against Goldman. Although the higher court of appeals dismissed three of eToys' claims (breach of contract, professional malpractice and unjust enrichment); the Court however, allows the toy retailer to proceed to a trial on Goldman Sachs' breach of fiduciary duty and refile fraud allegations in the State Court in Manhattan. Goldman Sachs spokeswoman Andrea Rachman told Bloomberg News that the company couldn't comment on pending litigation. eToys, Inc., now known as EBC I Inc, operated a web-based toy retailer based in Los Angeles, California. The Company filed a Chapter 11 Petition on March 7, 2001. When the company filed for protection from its creditors, it listed $416,932,000 in assets and $285,018,000 in debt. eToys sold its assets and name to toy retailer KB Toys. The Company's SEC report on February 28, 2002, the Debtors listed 32,091,918 in total assets and 192,396,702 in total liabilities. Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell and Howard Steinberg, Esq., at Irell & Manella represent the Debtors as they wind-up their financial affairs. FEDERAL-MOGUL: Wants Until October 1 to Remove State Court Actions ------------------------------------------------------------------ Federal-Mogul Corporation and its debtor-affiliates and the Official Committee of Unsecured Creditors ask the Court to further extend the time by which the Debtors may file notices to remove civil actions pending as of the Petition Date, through and including October 1, 2005. According to Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, the Debtors are still evaluating actions in which one or more of them is a plaintiff, to determine which might be suitable for removal. Ms. McFarland says that with respect to actions unrelated to asbestos, the analysis is largely complete. Judge Lyons will convene a hearing on June 15, 2005, at 10:00 a.m., to consider the Debtors' request. Pursuant to Del.Bankr.LR 9006-2, the Debtors' Removal Period is automatically extended through the conclusion of that hearing. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. (Federal-Mogul Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) GABLES RESIDENTIAL: Sells Assets to ING Clarion for $2.8-Bil Cash ----------------------------------------------------------------- Gables Residential Trust (NYSE: GBP) and a private equity partnership sponsored by ING Clarion Partners, a wholly owned subsidiary of ING Groep, NV of the Netherlands, disclosed that a partnership managed by ING Clarion has entered into a definitive agreement to acquire the Company. The transaction represents the largest public to private REIT transaction in the multifamily sector. Under the terms of the agreement, the ING Clarion partnership will acquire all of Gables' common stock for $43.50 per share in cash. The per share purchase price represents a 14% premium over Gables closing share price on June 6, 2005, and an 18% premium over the prior 10 day average share price. The total consideration is approximately $2.8 billion, which includes the assumption and refinancing of approximately $1.2 billion of the Company's outstanding debt and the Company's outstanding Series C-1, Series D and Series Z preferred shares, which have a liquidation preference of approximately $120 million. Completion of the transaction, which is expected to occur by the end of the third quarter of 2005, is subject to approval by the Company's common shareholders and certain other customary closing conditions. The transaction has been unanimously approved by the Company's Board of Trustees, which will recommend that the common shareholders approve the transaction. Gables will continue to pay regular monthly dividends at an annualized rate of $2.41 per share through the closing of the transaction, including a pro rated dividend for the month in which the transaction closes. Holders of limited partnership interests in the Company's operating partnership will be given the choice of either receiving $43.50 in cash or participating through a limited partnership interest in an affiliate of the buyer. "The quality of our organization and assets is evident in ING Clarion's valuation. We believe that this transaction represents a compelling value for our shareholders," noted Chris Wheeler, Executive Chairman. "The transaction with ING Clarion demonstrates the intrinsic value of our associates and their ability to generate returns for our investors," said David Fitch, CEO. "This is great for both our shareholders and associates, allowing us to continue to execute our real estate strategy on a go-forward basis in a private setting." ING Clarion, the managing partner of the new partnership, will provide strategic oversight, fund governance and portfolio management skills to capture the benefits afforded by the private sector. These benefits are anticipated to include operating more opportunistically and with higher leverage, increasing development activities, entering new markets, and eliminating public company costs. The transaction is being financed by $400 million of equity provided by ING with the balance of the debt and equity capital arranged by Lehman Brothers Inc. and its affiliates. ING Clarion is a U.S. real estate investment firm with approximately $22 billion under management, including a multifamily portfolio of approximately 10,000 apartments. ING Clarion is a wholly owned subsidiary of ING Real Estate, a global real estate investment firm with $69 billion of assets under management, making it one the largest in the world. ING Real Estate is owned by ING, a global financial services firm specializing in insurance, banking and asset management. Wachovia Securities acted as financial advisor to Gables and Goodwin Procter LLP provided legal advice. Lehman Brothers Inc. acted as financial advisor to ING Clarion. King & Spalding LLP provided legal counsel to ING Clarion and Hogan & Hartson LLP, Weil Gotshal & Manges LLP, and Cadwalader, Wickersham & Taft provided legal counsel to Lehman Brothers. About Gables Gables Residential -- http://www.gables.com/-- is one of the largest apartment operators in the nation and currently manages 41,750 apartment homes in 162 communities. The Company owns or has an interest in 84 communities it owns with 21,163 stabilized apartment homes primarily in Atlanta, Houston, South Florida, Austin, Dallas, Washington, D.C. and San Diego/Inland Empire and has an additional 11 communities with 2,673 apartment homes under development or lease-up. * * * As reported in the Troubled Company Reporter on June 9, 2005, Moody's Investors Service downgraded the ratings of Gables Residential Trust (senior unsecured to Ba1) and placed the ratings under review for possible downgrade. According to Moody's, this rating action was prompted by Gables' announcement that it has entered into an agreement to be acquired by a partnership managed by ING Clarion Partners. GE BUSINESS: S&P Rates $17 Million Class D Certificates at BB ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to GE Business Loan Trust 2005-1's $713,081,663 business loan pass-through certificates series 2005-1. The preliminary ratings are based on information as of June 8, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit enhancement consisting of subordination, a funded spread account, and excess spread. The preliminary ratings are also based on General Electric Capital Corp.'s demonstrated servicing ability. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Preliminary Ratings Assigned GE Business Loan Trust 2005-1 Class Rating Amount ----- ------ ------ IO AAA SBF group IO component and the GECF group IO component** A-1 AAA $178,936,000 A-2 AAA $100,000,000 A-3 AAA $348,575,863 B* A $49,915,716 C* BBB $17,827,042 D* BB $17,827,042 X N.R N/A R N.R N/A * Excludes spread account and excess spread. ** SBF -- Small business finance lending division of General Electric Capital Corp. GECF -- GE Commercial Finance Business Property Corp. N.R. -- Not rated. N/A -- Not applicable. HARRY COLLINS: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Harry Dean Collins, Jr. & Shelly Kay Collins 14123 Allen Road Carterville, Illinois 62918 Bankruptcy Case No.: 05-41518 Chapter 11 Petition Date: June 9, 2005 Court: Southern District of Illinois (Benton) Debtor's Counsel: Douglas A. Antonik, Esq. Antonik Law Office P.O. Box 594, 411 Main Mount Vernon, Illinois 62864 Tel: (618) 244-5739 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor's did not file a list of its 20 Largest Unsecured Creditors. HEALTHSOUTH CORP: Inks Pact Resolving SEC Dispute for $100 Million ------------------------------------------------------------------ HealthSouth Corporation (OTC Pink Sheets: HLSH) reached an agreement with the Securities and Exchange Commission to resolve claims brought by the SEC against the Company in a civil action on March 19, 2003. The agreement does not address claims brought against any other party in that action. As a result of the agreement, HealthSouth will pay the SEC $100 million in five installments over a two-year period beginning in the fourth quarter of 2005, which may be used by the SEC to establish an investor fund pursuant to the Fair Fund provision of the Sarbanes- Oxley Act of 2002. "This agreement is both a major milestone in HealthSouth's recovery and a powerful symbol of the progress we have made as a company over the course of the last two years," said HealthSouth President and CEO Jay Grinney. "I would especially like to recognize Greg Doody, our General Counsel, and Skadden Arps, our outside counsel, for their hard work and contributions in reaching this important settlement. With the support of our employees across the country, HealthSouth has successfully put another issue behind us. We look forward to re-focusing our time and resources on what we do best -- serving the needs of our patients." "HealthSouth has faced several legal obstacles in the past two years as the result of the massive fraud perpetrated against us," said Greg Doody, HealthSouth General Counsel and Secretary. "This settlement with the SEC -- in conjunction with our Bondholder consent agreement in June of 2004 and our previous settlement with the U.S. Department of Justice - Civil Division, the Office of Inspector General, and the Centers for Medicare & Medicaid Services in December 2004 -- puts a substantial portion of our legal issues behind us and allows us to move forward." The Company stated that provisions for this settlement amount have been incorporated in its long-term financial projections and that the payments will be made without compromising the resources necessary to manage its facilities in a quality manner. The agreement resolves litigation brought by the SEC in 2003 regarding allegations of violations of the federal securities laws. As part of the settlement, HealthSouth also agrees to: -- retain the services of consultants in the areas of governance, internal controls and accounting to review policies and practices implemented under the new management team; -- provide training and education to appropriate officers; and -- continue to cooperate with the SEC and Department of Justice in their respective, ongoing investigations. About the Company HealthSouth is one of the nation's largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. HealthSouth can be found on the Web at http://www.healthsouth.com/ * * * Notice of Late Filing HealthSouth filed a Form 12b-25 with the Securities and Exchange Commission saying that it will not be filing its 2004 Form 10-K on time due to the company's ongoing accounting reconstruction and restatement efforts. The company is currently targeting the filing of its 2004 Form 10-K in the fourth quarter of 2005. The company says it plans to file a comprehensive Form 10-K for the years ended Dec. 31, 2000, through Dec. 31, 2003, by the middle of the second quarter 2005. This comprehensive Form 10-K will contain restated financial statements for periods which previously had been reported and initial financial statements for the other periods covered by the report. "Our external auditor is now auditing these documents and is taking steps to ensure a thorough review," said HealthSouth CFO John Workman. "We have been working extensively with external resources to ensure that our accounting records are reconstructed thoroughly and our financial statements and other disclosures are prepared properly. This process has consumed more than 500 man- years of external labor resources and required millions of lines of adjusting journal entries. It is our intention to not rush a process of this importance to reach an earlier, self-imposed deadline." ICEFLOE TECH: Shareholders Approve Revised Stock Option Plan ------------------------------------------------------------ icefloe Technologies Inc. (TSX VENTURE:ICY) received the requisite shareholder approval to amend its Articles of Incorporation to create a new class of shares as part of a long term incentive plan for icefloe's President and CEO. Management expects that the Class A Special Shares will allow icefloe to provide a meaningful long-term incentive to its President and CEO without impairing shareholder equity through excessive dilution. The Articles of Amendment will create Class A Special Shares with eight characteristics: 1) One thousand Class A Special Shares will be created. 2) The Class A Special Shares will have conversion rights at the sole option of the shareholder from the date of issue to the date of redemption, which date of redemption shall be not less than five (5) years from the date of issue. 3) The Class A Special Shares will be convertible into icefloe common shares in accordance with the formula set out in the Articles of Amendment. 4) The Class A Special Shares will not have voting rights other than statutory voting rights pursuant to the Ontario Business Corporations Act. 5) The Class A Special Shares will be entitled to dividends subsequent to any payment of dividends on icefloe common shares. 6) The Class A Special Shares will not be entitled to receive any of the remaining property of icefloe on the liquidation, dissolution or winding-up of icefloe, whether voluntary or involuntary. 7) The Class A Special Shares will be redeemable by icefloe, at the sole option of icefloe, at a price of $1.00 per Class A Special Share on a date five years after the date of issue. 8) The Class A Special Shares will have standard anti-dilution provisions. The Articles of Amendment also delete the authorized but unissued class of Class A Preference Shares from icefloe's Articles. The Class A Preference shares were adopted when icefloe was a private corporation, but are no longer required now that icefloe is a reporting issuer and a public corporation. The deletion of the Class A Preference Shares from the icefloe's Articles at this time will simplify icefloe's share structure. In conjunction with the deletion of Class A Preference Shares, the Articles of Amendment delete the references to Class A Preference Shares that were set out in the rights of icefloe common shares. The Articles of Amendment require TSX Venture Exchange and Ontario Ministry of Consumer and Business services final approval, which approvals are being sought at this time. Stock Option Plan icefloe shareholders also approved an amended stock option plan, which increases the number of options available for issuance and thereby provides icefloe with a better ability to attract, motivate and reward its employees, senior officers, directors and consultants. The New Option Plan is substantially similar to icefloe's current option plan except for an increase in the number of options available and some minor technical amendments. The number of icefloe common shares reserved for issuance pursuant to the New Option Plan is 1,449,918, representing approximately twenty percent (20%) of icefloe's issued and outstanding common shares. The New Option Plan requires TSX Venture Exchange final approval, which approval is being sought at this time. A formal announcement of the implementation of the Articles of Amendment and the New Option Plan will be made at the time of the change. About the Company Founded in March 2001, icefloe (TSX Venture Exchange: ICY) is a Canadian-based company dedicated to the development and commercialization of its proprietary chilling technology, which brings flash chilling capability in a portable form and enables the beverage industry to serve ice cold draft beer without excessive foam loss, anytime and anywhere. Since April 2001, icefloe has focused its efforts on securing patents for its platform technologies, while developing, field-testing, manufacturing and marketing commercial products using its unique technologies. Its wholly owned subsidiary, Draught Guys Inc., provides installation, sales and service for both traditional draft systems and icefloe's proprietary products in the Ontario market. icefloe commenced trading on Tier 2 of the TSX Venture Exchange on April 14, 2004 under the symbol "ICY". * * * Going Concern Doubt Icefloe Technologies' third quarter report for the period ending Sept. 30, 2004, contains management's expression of doubt about the company's ability to continue as a going concern. The company has incurred significant operating losses since inception due to its product development efforts and has a substantial working capital deficiency. The company's continued existence is dependent upon its ability to obtain continuing financing, a portion of which has been obtained April 1, 2004, through the completion of a reverse takeover transaction and closing of the private placement of securities also on April 1, 2004, and to attain profitable operations. IKON OFFICE: Moody's Changes Ratings Outlook to Negative -------------------------------------------------------- Moody's Investors Service changed the ratings outlook for IKON Office Solutions (senior implied at Ba2) to negative from stable. The change in outlook to negative reflects: (1) weak revenue patterns and strong pricing competition that continues to pressure margins, which in turn is necessitating cost reduction efforts and a streamlining of certain business activities; and (2) an accounting review of its US trade receivable balances that has delayed its ability to file its most recent financial statements. The rating action reflects Moody's expectation that revenue growth will remain challenging and that competitive pricing and/or product mix may continue to exert pressure on operating profitability over the intermediate term. IKON's revenue has declined between 1% and 7% over each of the last four quarters although the decline has been less if revenues are normalized for discontinued or deemphasized operations. Importantly, within overall revenue, equipment sales continue to decline (down by 5.6% and 3.2% in each of the first two quarters of fiscal 2005) with: (1) declines noted in higher end and more profitable segments five and six devices; (2) growth in lower end (and less profitable) segments; and (3) growth in color devices although IKON's growth is less than some key competitors and pricing has become increasingly aggressive in order to capture the color installed base in order to obtain more profitable after market business. As a consequence of its weak revenue pattern, changing mix, and aggressive price competition, in addition to the sale of its North American leasing operations last year, IKON's gross margins remain under some pressure, having declined from nearly 38% two years ago to an estimated 35.6% for the quarter ended March 2005. Excluding finance operations, gross margins have declined by about 1% over the same period. With most of these trends likely to persist, IKON has recognized the need to embark upon more aggressive cost reduction efforts. In this regard, IKON recently announced pretax restructuring charges of approximately $30 million aimed at: (1) exiting its off-site digital printing and fulfillment activities; (2) downsizing its legal document services facilities; (3) exiting the majority of its operations in Mexico; and (4) reducing administrative staff. Moody's expects that the cash outflow related to these actions will approximate $20 million. IKON is undergoing an accounting review relating to certain of its US trade receivables that surfaced during a review of billing controls and reserve practices during its Sarbanes-Oxley testing. Based on preliminary data, IKON estimates that US trade receivables of $372 million could be overstated by about $45 million, which will likely require a restatement of revenues and trade accounts receivable of prior period financial statements. Although the ultimate charge will be non cash, it will reduce net worth as defined in its $200 million bank facility, however, the covenant would still have ample cushion, unless the charge were notably higher. IKON has received a waiver from its bank group to file its March 2005 financials by June 30, 2005. IKON has not and is not expected to borrow under this bank facility, however, it does consistently use it for approximately $30 million to $40 million of letters of credit. IKON's liquidity remains solid as supported by our affirmation of its SGL-1 rating. The rating considers: * its $333 million of cash balances at March 2005; * expectations of adequate cash flow from operations to finance capital expenditures; and * good room under the covenants in its largely undrawn $200 million secured bank facility, all in the context of zero public debt maturities over the next twelve months. The next public debt maturity consists of a $245 million subordinated convertible note due May 2007 (see Speculative Grade Liquidity commentary). IKON's credit ratings could be downgraded to the extent that: (1) IKON is not able to file its March 2005 financials by June 30, 2005; and (2) it is not able to show an ability to reverse the decline in revenues (adjusting for exited businesses) and sufficiently streamline its cost structure to improve its operating margins to the 5% level on a sustainable basis. The ratings could be stabilized if IKON demonstrates clear progress in: * stabilizing revenue; * improving profit margins; * satisfactorily completes its review of its US trade receivables billing and control practices; and * files its fiscal second quarter financial statements. IKON Office Solutions, headquartered in Valley Forge, Pennsylvania is the largest independent copier distributor in North America and the United Kingdom. INTERSTATE BAKERIES: Closing Two San Francisco, CA Bakeries ----------------------------------------------------------- Interstate Bakeries Corporation (OTC: IBCIQ.PK) continues its efforts to address its declining revenues and high cost structure by consolidating operations in its Northern California Profit Center. The Company said it is closing two bakeries in San Francisco and consolidating production, routes, depots and thrift stores. Interstate Bakeries expects to complete the consolidation by Aug. 22, 2005, subject to bankruptcy court approval. The consolidation is expected to affect approximately 650 workers. "In order to ensure a long and successful future for IBC and to save as many jobs as possible the Company must continue making these difficult decisions. I appreciate the years of dedicated service and hard work by our employees and deeply regret the impact this news may have on them. We will make every reasonable effort to make this transition as smooth as possible," said Tony Alvarez II, chief executive of IBC and co-founder and co-chief executive of Alvarez & Marsal, the global corporate advisory and turnaround management services firm. The Company's preliminary estimate of charges to be incurred in connection with the Northern California PC consolidation is approximately $13.5 million, including approximately $6.0 million of severance charges, approximately $2.5 million of asset impairment charges and approximately $5.0 million in other charges. IBC further estimates that approximately $11 million of such costs will result in future cash expenditures. In addition, the Company intends to spend approximately $3 million in capital expenditures and accrued expenses to effect the consolidation. In addition to these asset impairment charges, IBC also expects to recognize charges to intangible assets related to trademarks and trade names that will be impaired as a result of the consolidation of operations announced yesterday. IBC is not able to provide an estimate of these changes currently. The two bakeries to close as a result of this announcement are the 77-year old Wonder/Hostess bakery and the 49-year old Parisian San Francisco bakery. Distribution of IBC's branded products to supermarkets in the Northern California PC will be unaffected by the closure. Recently, the Company disclosed the closing of its bakery in Miami, Florida, and Charlotte, North Carolina, and the consolidation of routes, depots and thrift stores in its Florida and Mid-Atlantic PCs. The Company also disclosed the consolidation of operations in its Northeast Profit Center (PC) by closing its bakery in New Bedford, Massachusetts, and consolidating production, routes, depots and thrift stores throughout the Northeast where it maintains regional facilities. Employee Plans As previously disclosed, IBC currently contributes to more than 40 multi- employer pension plans as required under various collective bargaining agreements, many of which are underfunded. The portion of a plan's underfunding allocable to an employer deemed to be totally or partially withdrawing from the plan as the result of downsizing, job transfers or otherwise is referred to as "withdrawal liability." IBC expects that the consolidation may result in total or partial withdrawal liability with respect to one plan covering employees in the Northern California PC, but does not believe the aggregate withdrawal liability under this plan will exceed approximately $500,000. Certain of the other plans to which IBC contributes have filed proofs of claim in IBC's bankruptcy case alleging that partial withdrawals have already occurred. IBC disputes these claims; however, there is a risk that the consolidation could significantly increase the amount of the liability to IBC should a partial withdrawal from any of the remaining multi-employer pension plans covering the Northern California PC employees be found to have occurred. Except with respect to the plan mentioned above, IBC is conducting the Northern California PC consolidation in a manner that it believes will not constitute a total or partial withdrawal from the relevant multi-employer pension plans. Nevertheless, due to the complex nature of such a determination, no assurance can be given that any additional withdrawal claims based upon IBC's prior action or resulting from this consolidation or future consolidations will not result in significant liabilities for IBC. Should these or other actions result in a determination that a partial or complete withdrawal from other plans has occurred, the amount of any partial or complete withdrawal liability arising from such underfunded multi-employer pension plans would likely be material and could adversely affect our financial condition and, as a general unsecured claim, any potential recovery to our constituencies. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. KAISER ALUMINUM: Committee Supports Intercompany Claim Settlements ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on November 11, 2004, Kaiser Aluminum Corporation, its debtor- affiliates and the Official Committee of Unsecured Creditors have reached an agreement to resolve a myriad of complex issues relating to the treatment of intercompany claims among the Debtors. The disposition of the Intercompany Claims is one of the key issues that must be addressed for the Debtors to proceed with the formulation and promulgation of plans of reorganization and liquidation. All the various creditor constituencies on the Creditors Committee support the Intercompany Settlement Agreement. Additionally, in support of the Debtors' efforts toward achieving ultimate resolution of their cases, the Debtors' postpetition lenders have agreed to amend the credit facility to accommodate the terms and conditions of the Intercompany Settlement Agreement. Although at this juncture, the Official Committee of Asbestos Claimants, Martin J. Murphy as the legal representative for future asbestos claimants, and Anne M. Ferazzi as the legal representative for the Future Silica Claimants have not agreed with or consented to the Intercompany Settlement Agreement, the Debtors and the Creditors Committee anticipate having further discussions with the creditors and the Future Claimants representatives before the hearing on the Intercompany Settlement Agreement. Kaiser Aluminum Corporation disclosed that the U.S. Bankruptcy Court for the District of Delaware, in a hearing on Feb. 1, 2005, approved the Intercompany Settlement Agreement. * * * William P. Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, informs the Court that certain members of the Official Committee of Unsecured Creditors, including JP Morgan Trust Company, the Pension Benefit Guaranty Corp., U.S. Bank National Association Corporate Trust Services, Farallon Capital, the United Steelworkers of America, and Law Debenture Trust Company of New York, incurred fees and expenses in connection with the negotiation, execution and court approval of the Intercompany Settlement Agreement. For this reason, the Creditors Committee seeks the Court's approval of the payment of fees and reimbursement of expenses incurred by the Committee Members, aggregating $673,980: Professional Amount ------------ ------ JP Morgan $100,753 U.S. Bank 165,344 Farallon 162,832 Law Debenture 245,051 The Creditors Committee also asks Judge Fitzgerald to compel the Debtors to reimburse of its Members' out-of-pocket expenses totaling $88,058: Professional Amount ------------ ------ JP Morgan $5,354 U.S. Bank 15,303 Farallon 16,027 Law Debenture 36,166 PBGC 4,657 USWA 10,551 Mr. Bowden submits that the professional services that were rendered on behalf of the Creditors' Committee members were reasonable, necessary and have directly contributed to the effective administration of the Debtors' Chapter 11 cases via the Court's approval of the Intercompany Settlement Agreement. After months of work by their legal and financial advisors analyzing the facts and legal issues, the Committee Members engaged in lengthy negotiations that led to a settlement of the issues contained in the Intercompany Settlement Agreement. Initially, over a six-week period in late 2003 and early 2004, the Creditors Committee met four times in person for all-day negotiating sessions and four times telephonically. At the end of January 2004, the Committee Members reached an initial agreement in principle among themselves on a settlement of the Intercompany Claims and other related intercompany issues. Shortly after that, the Creditors Committee shared the principal terms of the proposed settlement with the Debtors. Over a nine- month period, representatives of the Debtors and Creditors Committee engaged in arm's-length negotiations over the terms of the proposed settlement and met six times in person and had countless conference calls regarding the general terms of the proposed settlement and the specific language of the Intercompany Settlement Agreement. Moreover, numerous drafts of the Intercompany Settlement Agreement were prepared, circulated and reviewed by the Committee Members and their professionals before all issues were resolved and the Intercompany Settlement Agreement was finalized. Mr. Bowden maintains that the requested fees are not unusual given the magnitude and complexity of the cases and the time expended, and is commensurate with fees that have been awarded in Chapter 11 cases, as well as with the fees charged by other attorneys of comparable experience. 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) LB COMMERCIAL: Fitch Pares $9.1 Million Certs. 2 Notches to B- -------------------------------------------------------------- LB Commercial Conduit Mortgage Trust's, multiclass pass-through certificates, series 1995-C2, are downgraded by Fitch Rating as follows: -- $9.1 million class F to 'B-' from 'B+'. Fitch also affirms the following classes: -- $24.1 million class E 'AA'. Fitch does not rate the $7.8 million class G certificates. The downgrade to class F reflects anticipated losses on two of the specially serviced loans in this pool. Three assets (36%) are currently in special servicing, including two real estate owned (34%). The REO assets (30%) are secured by full-service hotels in Fort Worth, TX and losses are expected on both of them. As a result, class G is expected to be reduced to $0 and class F to experience a minimal loss. The pool has become more concentrated by loan size and property type, with the top five loans representing 75% of the pool and hotels representing 98%. As of the May 2005 distribution date, the pool's aggregate principal balance has been reduced by 84% to $41 million from $259.9 million at issuance. METCO PROPERTIES: Voluntary Chapter 11 Case Summary --------------------------------------------------- Lead Debtor: Metco Properties, Inc. P.O. Box 1050 Avondale, Arizona 85323-0350 Bankruptcy Case No.: 05-10372 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- James Thomas & Sheila Sue Mattingly 05-10377 Chapter 11 Petition Date: June 8, 2005 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum Sr. Debtor's Counsel: Dennis J. Wortman, Esq. Dennis J. Wortman, P.C. 2700 North Central Avenue, Suite 850 Phoenix, Arizona 85004-1162 Tel: (602) 257-0101 Fax: (602) 776-4544 Estimated Assets Estimated Debts ---------------- --------------- Metco Properties, Inc. $500,000 to $1 Million to $1 Million $10 Million James Thomas & $1 Million to $10 Million to Sheila Sue Mattingly $10 Million $50 Million The Debtors did not file lists of their 20 Largest Unsecured Creditors. MIRANT CORP: Law Debenture Objects to Plan Solicitation Protocol ---------------------------------------------------------------- Law Debenture Trust Company of New York objects to Mirant Corporation and its debtor-affiliates' proposed procedures in soliciting votes for the Debtors' chapter 11 plan. The proposed solicitation procedures appeared in the Troubled Company Reporter on May 20, 2005. Law Debenture is: 1. Successor Indenture Trustee under the Junior Subordinated Note Indenture dated October 1, 2000, between Mirant Corporation and Deutsche Bank Trust Company Americas, formerly known as Bankers Trust Company, as Indenture Trustee, under which Mirant issued $355,670,150 in Junior Subordinated Notes; and 2. Successor Property Trustee under The Amended and Restated Trust Agreement, dated as of October 1, 2000, among: a. Mirant, as depositor; b. Deutsche Bank Trust Company, as Delaware trustee; c. DBTCA, as property trustee; and d. the Administrative Trustees, under which $345,000,000 of 6-1/4% Preferred Securities Certificates were issued by the Trust to the Security holders. In its role as Property Trustee, Law Debenture holds legal title to the Junior Notes, while the Security holders are the beneficial owners thereof. Law Debenture complains that the voting procedures proposed by the Debtors do not provide for solicitation of the Security holders. James Matthew Vaughn, Esq., at Porter & Hedges, LLP, in Houston, Texas, points out that under the Indenture and the Trust Preferred Agreement, Law Debenture has no express right to vote on a Chapter 11 plan. Since Law Debenture only holds bare legal title to the Junior Notes, Mr. Vaughn contends that the Security holders being the beneficial holders of the Junior Notes should vote on the First Amended Plan. Additionally, under Rule 3017(e) of the Federal Rules of Bankruptcy Procedure, the Securityholders should be solicited to vote on the First Amended Plan. Because the Trust Preferred Agreement assumes that on Mirant's bankruptcy filing the Junior Notes will be distributed to the Security holders, and does not set forth any procedures for Law Debenture as Property Trustee to vote on a plan of reorganization on behalf of the Security holders, Mr. Vaughn says it is not clear how Law Debenture as Property Trustee could vote. Had the Junior Notes been distributed to the Security holders following Mirant's bankruptcy filing, as was required by the Trust Preferred Agreement, the Security holders would be voting on the First Amended Plan under the terms of the Proposed Voting Procedures Order, Mr. Vaughn points out. Thus, the Debtors' determination not to distribute the Trust Preferred Securities should not be a justification for not soliciting the Security holders. Moreover, even if distribution of the Junior Notes to Security holders is impractical due to certain securities law compliance fees, the ability of the Security holders to vote on the First Amended Plan is a separate matter, which should not be impeded because of that issue, Mr. Vaughn asserts. Should the Court overrule the Property Trustee's objection, Law Debenture asks the Court to direct the Debtors to send Solicitation Packages to the Security holders and to include in those packages a letter that will direct Law Debenture to vote on the Security holders' behalf. In this instance, Law Debenture will only vote on the basis of: (a) the Security holders' written instruction; and (b) an adequate indemnity from the instructing Security holders against any claims or liabilities arising from following their directions in casting the vote. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Brazos Plans to Transfer $4.3M Claim to Deutsche Bank ------------------------------------------------------------------ Brazos Electric and Power Cooperative, Inc., informs the U.S. Bankruptcy Court for the Northern District of Texas that it intends to transfer its Claim No. 7869 for $4,319,523 against Mirant Corporation and its debtor-affiliates to Deutsche Bank Securities, Inc. As reported in the Troubled Company Reporter on Feb 16, 2005, the Debtors and Brazos Electric settled their dispute over the Debtors' rejection of a Power Purchase and Sale Enabling Agreement inked among the Debtors, Brazos Electric, and Southern Company Energy Marketing, LP, the predecessor to Mirant Americas Energy Marketing, LP. Under the settlement agreements Brazos is allowed a $3,543,089 claim, in full and final satisfaction of all its prepetition claims against the Debtors. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Equity Committee Wants to Expand Examiner's Powers --------------------------------------------------------------- Mirant Corporation and its debtor-affiliates have identified certain claims and causes of action against their former parent company, The Southern Company. These claims and causes of action relate to Mirant's spin-off from the parent company. The potential the value of the claims exceeds $1.9 billion. Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., in Austin, Texas, tells the Court that without a tolling agreement, the statute of limitations on some of the potential claims and causes of action may expire as early as July 13, 2005. Accordingly, it is imperative to commence and pursue the litigation against Southern Company, as there's no enough time left. The Debtors on the other end have yet to produce a draft complaint detailing the relief that is purportedly to be sought, Mr. Taube informs the Court. Mr. Taube adds that it is futile for the Equity Committee to depend on either the Debtors or the Official Committee of Unsecured Creditors to appropriately pursue the claims because: (1) the Debtors have steadfastly refused to aggressively pursue them; and (2) the Creditors' Committee has failed to cooperate in any way with the Equity Committee's efforts to gather information about the claims. Accordingly, the Equity Committee believes that a neutral party should be appointed to pursue the estate's asset, and looks to William Snyder, the Chapter 11 Examiner, as the party to pursue the case. Mr. Taube reasons that among the duties specified for the Examiner is the investigation of claims against Southern Company. The Examiner has been investigating these claims and has made reports to Judge Lynn concerning the investigation, and believes there are valid claims that should be pursued. Because of the unique circumstances of the case, the Equity Committee asks the Court to expand the role and powers of the Examiner to include authority to pursue any and all potential claims and causes of action that the Debtors' estates may have possess against Southern Company. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) ML CBO: Trust Liquidation Cues Moody's to Withdraw Note Ratings --------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings on these Classes of Notes issued by ML CBO Series 1996-P-1 Limited: 1) US. $160,200,000 Class A Floating Rate Senior Secured Notes Due 2006; and 2) U.S. $25,100,000 Class B Second Senior Secured Notes Due 2008. According to Moody's, the ratings were withdrawn because the trustee liquidated the trust after a vote of the noteholders. ML CBO Series 1996-P-1Limited closed in May of 1996. The ratings of these tranches have been withdrawn: Issuer: ML CBO (Cayman) Limited Tranche Descriptions: * U.S. $162,200,000 Class A Floating Rate Senior Secured Notes Due 2006 Prior rating: A3 Current rating: Withdrawn * U.S. $25,100,000 Class B Second Senior Secured Notes Due 2008 Prior rating: Ca Current rating: Withdrawn NATIONAL ENERGY: ET Debtors Want Court to Estimate Employee Claims ------------------------------------------------------------------ Before filing for chapter 11 protection, NEGT Energy Trading Holdings Corporation employed individuals who engaged in the marketing and trading of electrical energy, capacity and ancillary services, fuel and fuel services, emission credits and other energy related products through various markets across North America, including the over-the-counter and futures markets. For the year 2001, in addition to a base salary, the Energy Traders were eligible to participate in a discretionary short term incentive plan which had two components -- a base award and a supplemental award. Dennis J. Shaffer, Esq., at Whiteford, Taylor & Preston LLP, Baltimore, Maryland, tells Judge Mannes that any Energy Trader who was awarded a discretionary supplemental incentive award for the year 2001 was notified in March 2002 of the amount of his or her award. Any discretionary supplemental incentive award up to a maximum amount of $500,000 was paid in March 2002, while any amount over $500,000 was deferred and was to be paid in equal installments with accrued interest in October 2002 and 2003. Mr. Shaffer discloses that ET Holdings paid the portions of the supplemental incentive awards that were due in March 2002 and October 2002. Due to ET Holdings' intervening bankruptcy, the deferred payments that were scheduled to be paid in October 2003 were not made. ET Holdings acknowledges that these payments are due; ET Holdings does not object to proofs of claim based on the deferred amount that was scheduled to be paid in October 2003. ET Holdings, however, did not award any discretionary supplemental incentive awards for the years 2002 or 2003, Mr. Shaffer says. Therefore, ET Holdings objects to any proofs of claim based on purported supplemental incentive awards for those years. The State Court Litigation On May 30, 2003, Judith A. Tanselle, Matthew S. Schwieder and Matthew D. Vincent, all former employees of ET Holdings, filed a complaint in the Circuit Court for Montgomery County, Maryland, against ET Holdings and PG&E Corporation. The lawsuit alleges various causes of action, all claiming that the Employees should have received discretionary supplemental incentive awards for the year 2002. The State Court Litigation was stayed as to ET Holdings pursuant to the automatic stay imposed under Section 362(a) of the Bankruptcy Code. On October 8, 2003, the Debtors removed the State Court Litigation to the Bankruptcy Court. At the Employees' request, however, the Bankruptcy Court: (a) lifted the automatic stay as to ET Holdings for the purpose of allowing the State Court Litigation to proceed; and (b) remanded the State Court Litigation to the State Court. Currently, the State Court Litigation is in the discovery phase. The Proofs of Claim The Employees filed three separate proofs of claim against ET Holdings. The Employee Claims are based on: (i) alleged supplemental incentive awards for the year 2002; (ii) treble damages asserted under the Maryland Wage Payment and Collection Law; and (iii) other, unspecified punitive damages. In addition, Ms. Tanselle's claim is based on 2001 Deferred Compensation. The components of the Claims are: Base Claim Penalty Claim ---------- ------------- J. Tanselle $1,083,727 $3,167,454 M. Schwieder 70,744 1,141,488 M. Vincent 296,393 1,592,786 Although the ET Debtors concede that ET Holdings owes Ms. Tanselle the 2001 Deferred Compensation, they dispute the validity of the 2002 Compensation Claims and the Penalty Claims. The ET Debtors assert that no amounts are owed to Messrs. Vincent and Schwieder and that ET Holdings owes Ms. Tanselle $80,000 on account of the 2001 Deferred Compensation. ET Holdings has no additional obligation to Ms. Tanselle. By this motion, the ET Debtors ask the Court to disallow the Penalty Claims as matter of law. Mr. Shaffer tells Judge Mannes that the Penalty Claims cannot be allowed regardless of the outcome of the State Court Litigation. Mr. Shaffer argues that the Penalty Claims are punitive rather than compensatory and, accordingly, should be disallowed as a matter of bankruptcy law. The Punitive Damages Claims are expressly punitive, as they are for unspecified "punitive damages," asserted for $1 million for each Employee. The Treble Damages Claims asserted under the Maryland Wage Payment and Collection Law are also punitive, Mr. Shaffer says. The Penalty Claims should also be disallowed pursuant to the ET/Quantum Plan and the express terms of the Confirmation Order. The ET/Quantum Plan is a liquidating plan that comports with distribution scheme that would apply in a Chapter 7 liquidation. The Debtors further ask the Court to establish the amount of the Base Claims as the maximum possible allowed amount of the Employee Claims for distribution purposes. "Estimating the Employee Claims in amounts that exclude the Penalty Claims would allow the ET Debtors to reduce the reserves for Disputed Claims associated with the Employee Claims by the amount of the Penalty Claims, thereby allowing for concomitantly larger interim distributions to creditors," Mr. Shaffer says. "It would also expedite and streamline the litigation process and, thereby, maximize distributions to creditors." Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. The Hon. Paul Mannes confirmed NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corporation, NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures' First Amended Plan of Liquidation on Apr. 19, 2005. The Plan took effect on May 2, 2005. (PG&E National Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) NBTY INC: Inks Pact to Acquire Solgar Vitamin for $115 Million -------------------------------------------------------------- NBTY, Inc. (NYSE: NTY) signed a contract to acquire substantially all the assets of Solgar Vitamin and Herb, a division of Wyeth Consumer Healthcare (Wyeth NYSE: WYE), for $115 million. Solgar(R), a prominent supplement company established in 1947, had sales for 2004 of approximately $105 million. Included in the acquisition are net assets of approximately $64 million. The purchase price will be adjusted based upon the actual net assets transferred at closing. The transaction is subject to regulatory and other customary approvals and is expected to close by August 2005. Solgar(R) manufactures and distributes premium-branded nutritional supplements including multivitamins, minerals, botanicals and specialty formulas designed to meet the specific needs of men, women, children and seniors. Solgar's headquarters and major manufacturing facility are located in Bergen County, New Jersey. Solgar's products are sold at nearly 5,000 health food stores, natural product stores, natural pharmacies and specialty stores across the United States. In addition, Solgar's products are sold internationally in 40 countries including North and South America, Asia, the Middle East, Europe, South Africa, Australia and New Zealand. NBTY Chairman and CEO Scott Rudolph, said, "Solgar will strengthen NBTY's presence in the health food store market. The Solgar brand will be focused on serving the needs of the independent health food store across the United States. It is a significant opportunity for NBTY to grow both domestically and internationally." Banc of America Securities LLC acted as the sole financial advisor to NBTY. About the Company NBTY Inc. -- http://www.NBTY.com/-- is a leading vertically integrated manufacturer and distributor of a broad line of high- quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets approximately 2,000 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Rexall(R), Sundown(R), MET-Rx(R), WORLDWIDE Sport Nutrition(R), American Health(R), GNC (UK)(R), DeTuinen(R) and Le Naturiste(TM). * * * As reported in the Troubled Company Reporter on June 9, 2005, Standard & Poor's Ratings Services placed its ratings on NBTY Inc., including its 'BB' corporate credit rating, on CreditWatch with negative implications. The Bohemia, New York-based vitamin, mineral, and supplement manufacturer had total debt outstanding of $292 million as of March 31, 2005. The CreditWatch listing follows the announcement by NBTY that it has signed a contract to acquire substantially all the assets of Solgar Vitamin and Herb for approximately $115 million. Solgar, an operating unit of Wyeth Consumer Healthcare, a division of Wyeth (A/Negative/A-1), manufactures and distributes nutritional supplements. The transaction is expected to be debt financed and is expected to close by August 2005, subject to regulatory approval. Standard & Poor's will review NBTY's near- and longer- term growth objectives, operating outlook, and overall financial policies to resolve the CreditWatch listing. OCA INC: Inks Pact to Settle Subsidiary Lawsuits ------------------------------------------------ OCA Inc. entered into an agreement to settle lawsuits and disputes pending between its subsidiary, OrthAlliance, Inc., and 60 affiliated practitioners who represent 54 affiliated practices. Under the terms of the settlement agreement, the practices bought out of their service agreements with OrthAlliance and all parties agreed to dismiss their claims. The Company anticipates that this settlement will result in a non-cash loss-on-sale of assets estimated at $6.1 million, net of income tax benefit, during the fourth quarter of 2004, in connection with the write-off of intangibles, goodwill and other assets associated with these practices. The Company is currently in talks with its bank lenders regarding an additional extension and waiver on its Form 10-K and Form 10-Q report filing deadline. The Company anticipates further delay in completing its 2004 financial statements by the June 30, 2005, extension. About the Company OCA Inc. -- http://www.4braces.com/-- is the leading provider of business services to orthodontists and pediatric dentists. The Company's client practices provide treatment to patients throughout the United States and in Japan, Mexico, Spain, Brazil and Puerto Rico. OCA INC: Lenders Extend Report Filing Deadline Until June 30 ------------------------------------------------------------ OCA, Inc.'s (NYSE:OCA) bank lenders agreed to extend until June 30, 2005, the deadlines under OCA's senior credit facility for filing its 2004 Form 10-K and Form 10-Q for the first quarter of 2005. The Company anticipates further delay in completing its 2004 financial close process and audit and in filing the Form 10-K and Form 10-Q, and is currently in discussions with its lenders about obtaining an additional extension and waiver. OCA has engaged Alvarez & Marsal, LLC, a leading corporate advisory firm, to facilitate discussions with the Company's lenders and to assist with finance, audit and other management functions. The extension under the credit facility limits the amount that the Company may borrow under its revolving line of credit until it files the Form 10-K and Form 10-Q. To provide the Company with additional capital and liquidity, OCA's Chief Executive Officer, Bart F. Palmisano, Sr., has committed to extend a $2 million unsecured loan to the Company. Mr. Palmisano also has terminated the Company's lease of an aircraft owned by an affiliate of Mr. Palmisano, saving the Company an estimated $1.1 million of lease and operating costs annually. The Company is also temporarily curtailing the capital-intensive development of de novo centers, which typically require expenditures of about $350,000 to $380,000 to develop in the United States. The Company developed 55 de novo offices in 2004 and 15 de novo offices during the first quarter of 2005, and had 13 de novo offices in development at March 31, 2005. Bart F. Palmisano, Sr., OCA's Chief Executive Officer, President and Chairman, commented, "Our core business remains strong and we are fully committed to ensuring that our affiliated practices have the services and support they need to continue providing high quality care to their patients. I am confident that the decisive actions being taken by OCA's Board and management will strengthen the Company and improve its financial flexibility." Financial Restatements The Company has identified certain errors in its calculation of patient receivables reported during 2004, and has determined that the amount of patient receivables reported at each of March 31, June 30 and September 30, 2004, was overstated by material amounts. The Company continues to review these receivables and their impact on patient revenue, and has not yet determined the amount by which they were overstated. The Company's Audit Committee has concluded that, due to these overstatements, these previously issued quarterly financial statements will need to be restated and should no longer be relied upon. The Company is also reviewing a number of other accounting matters and accounts, and has identified a number of potential prior period financial statement account errors. These matters do not impact the amounts reported to affiliated practices because these are determined on a cash basis. The Company is working with its current and former independent registered accounting firms to refine its estimates of potential adjustments. Special Committee The Company's Board of Directors has appointed a Special Committee to review certain journal entries recorded in the Company's general ledger, the circumstances in which they originated and their impact on the Company's financial statements. In addition, the Special Committee is reviewing certain alleged changes in data provided to the Company's independent registered public accounting firm. The Special Committee, comprised of independent directors Ashton J. Ryan, Jr. and Kevin M. Dolan, is engaging special counsel to advise it in connection with the review. Pending completion of the internal review, the Company has placed Bartholomew F. Palmisano, Jr., the Company's Chief Operating Officer, on administrative leave. Ashton J. Ryan, Jr., Chairman of the Board's Special Committee, said, "We are assembling an experienced team of lawyers and accountants to assist the Special Committee with its review. We will gather the facts as promptly as we can and take whatever action is appropriate." Bart F. Palmisano, Sr., commented further, "I pledge my personal cooperation, along with that of the entire management team, as the Special Committee conducts its review." About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the US, Europe, Asia, and Latin America, Alvarez & Marsal delivers a proven blend of leadership, problem solving and value creation. Drawing on its strong operational heritage and hands-on approach, Alvarez & Marsal works closely with organizations and their stakeholders to help navigate complex business issues, implement change and favorably influence outcomes About the Company OCA Inc. -- http://www.4braces.com/-- is the leading provider of business services to orthodontists and pediatric dentists. The Company's client practices provide treatment to patients throughout the United States and in Japan, Mexico, Spain, Brazil and Puerto Rico. OWENS CORNING: Court Appoints Mediator for MiraVista Dispute ------------------------------------------------------------ To facilitate the resolution of MiraVista-related claims, the U.S. Bankruptcy Court for the District of Delaware appoints Judge Coleman F. Fannin (Ret.), as Mediator, effective May 4, 2005. John and Kathleen Stratton, Robert and Linda Lopez, and Anne Rudin asked the Court in early 2004 to certify a class of holders of claims against Owens Corning defined as: "All owners of residential or commercial real property who Purchased MiraVista Tiles prior to October 5, 2000 and thereafter installed Mira Vista Tiles." The Claimants asked the Court to certify the Class as a non opt- out class under Rule 23(b)(1) of the Federal Rules of Civil Procedure. The Debtors and the MiraVista Claimants have exchanged barbs on the matter for more than a year already. The Mediator will report periodically to the Bankruptcy Court the status of the parties' negotiations. Del. Bankr. LR 9019-3(d) requires Judge Fannin to comply with the confidentiality of mediation proceedings and information disclosed during those negotiations. The reasonable fees and disbursements incurred by Judge Fannin will be borne by the Debtors and will be paid based on a $10,000 mediation fee per day, which will include all his costs and expenses for each partial or full day of mediation. All preparation and follow-up will be billed at an hourly rate of $750, which includes costs and expenses. The Debtors and counsel for the MiraVista Claimants will have the right to terminate the mediation process and the appointment of the Mediation at any time, subject to Court approval. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) PASADENA GATEWAY: Trusts Want Chapter 11 Case Dismissed ------------------------------------------------------- Robert Taylor, the substitute trustee for the Mary Beth Clawson 1986 Trust, Elizabeth Kathleen Riddle 1986 Trust, and The Elizabeth Marenfield 1986 Trust, asks the U.S. Bankruptcy Court for the Southern District of Texas, to dismiss the chapter 11 case of Pasadena Gateway Venture, Ltd. The Trusts are contesting ownership of the Debtor's single asset: a 280-acre tract of land that is located near the intersection of Highway 225 and Beltway 8 in Pasadena, Texas. That claimed interest is involved in State court litigation initiated by Beltway Green Partnership, Ltd., the entity that sold the real property to the Debtor for $7.5 million. The Debtor sought bankruptcy protection to stay this litigation. According to the Debtor, its dispute with the Trusts is preventing it from running its business, from selling or developing the Property, and from paying its obligations as they become due. Leonard H. Simon, Esq., at Pendergraft & Simon L.L.P., in Houston, Texas, the Trusts' counsel, asserts these facts point to a bad faith chapter 11 filing by the Debtor. The Trusts believes the state court is the proper venue to resolve the litigation. Mr. Simon says the two-party dispute "does not implicate the policies behind chapter 11." The Debtor and its secured creditor, First Continental Investment Co. Ltd., assert that the Debtor should stay under chapter 11 protection. The Debtor owes First Continental $2.5 million under an October 31, 2003, Loan Agreement, and a corresponding Promissory Note. Headquartered in Houston, Texas, Pasadena Gateway Venture, Ltd., filed for chapter 11 protection on April 3, 2005 (Bankr. S.D. Tex. Case No. 05-34900). Marilee A Madan, Esq., at Russell & Madan, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it reported estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. POLYMER RESEARCH: Ch. 7 Trustee Taps Rosenzweig & Klein as Counsel ------------------------------------------------------------------ Alan Nisselson, Esq., the chapter 7 Trustee overseeing the liquidation proceedings of Polymer Research Corp., sought and obtained permission from the U.S. Bankruptcy Court for the Eastern District of New York to employ Rosenzweig & Klein, LLP, as his counsel. The Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding on Feb. 25, 2005. Rosenzweig & Klein will: a) advise the Trustee of his powers and duties in the Debtor's chapter 7 case and to commence any actions appropriate in the case; b) assist and advise the Trustee of legal remedies and other steps necessary to maximize recovery to the estate for the benefit of the Debtor's creditors and other parties in interest; c) assist the Trustee in the review, analysis and possible objections to claims filed against the Debtor's estate; and d) provide all other legal services to the Trustee that are necessary in the Debtor's bankruptcy case. Mr. Nisselson, a Member at Rosenzweig & Klein, serves as his own counsel. Mr. Nisselson discloses that the Firm will seek compensation from the Debtor's estate for its retainer and professionals' fees and expenses pursuant to Sections 330 and 331 of the Bankruptcy Code. The chapter 7 Trustee has not yet received Rosenzweig & Klein's hourly billing rates for its professionals performing legal services. To the best of the Trustee's knowledge, Rosenzweig & Klein is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Brooklyn, New York, Polymer Research Corp. of America -- http://www.polymer-ny.com/-- was a company devoted to research and development of utilizing a proprietary process called chemical grafting. The Company filed for chapter 11 protection on October 1, 2004 (Bankr. E.D.N.Y. Case No. 04-24036). Randy M. Kornfeld, Esq., at Stavis & Kornfeld LLP, represents the Debtor. When the Debtor filed for chapter 11 protection, it listed $15,000,000 in total assets and $5,033,000 in total liabilities. The Court converted the Debtor's case to a chapter 7 liquidation proceeding on Feb. 25, 2005. Alan Nisselson, Esq., is the chapter 7 Trustee for the Debtor's estate. POLYMER RESEARCH: Ch. 7 Trustee Taps Eisner LLP as Accountants -------------------------------------------------------------- Alan Nisselson, Esq., the chapter 7 Trustee overseeing the liquidation proceedings of Polymer Research Corp., sought and obtained permission from the U.S. Bankruptcy Court for the Eastern District of New York to employ Eisner, LLP, as his accountants and financial consultants. Eisner LLP will: a) conduct necessary financial investigations, including the investigation of the possibility of transfers of assets for less than fair market value, the existence of insider transactions, preference payments and fraudulent transfers and the Debtor's significant pre-petition financial transactions; b) investigate and review the sources of cash capital and other funds obtained by Debtor, and to ascertain the manner by which those funds were disbursed, applied or invested; c) assist the Trustee in the review of claims, including those filed by taxing authorities and investigate the Debtor's pre-petition accounting operations; d) assist the Trustee in the investigation of the Debtor's pre-petition accounts, conduct, property, liabilities and financial condition, including the operation of its business; e) prepare the Estate's annual income tax returns; and f) perform all other accounting and financial consulting services as may be required by the Trustee in the Debtor's case David Ringer, C.P.A., a Partner at Eisner LLP, reports the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $340 Managers $210 - $290 Supervisors $160 - $210 Senior Staff $135 - $160 Staff Assistants and Paraprofessionals $85 - $135 To the best of the Trustee's knowledge, Eisner LLP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Brooklyn, New York, Polymer Research Corp. of America -- http://www.polymer-ny.com/-- was a company devoted to research and development of utilizing a proprietary process called chemical grafting. The Company filed for chapter 11 protection on October 1, 2004 (Bankr. E.D.N.Y. Case No. 04-24036). Randy M. Kornfeld, Esq., at Stavis & Kornfeld LLP, represents the Debtor. When the Debtor filed for chapter 11 protection, it listed $15,000,000 in total assets and $5,033,000 in total liabilities. The Court converted the Debtor's case to a chapter 7 liquidation proceeding on Feb. 25, 2005. Alan Nisselson, Esq., is the chapter 7 Trustee for the Debtor's estate. Rosenzweig & Klein, LLP, represents the chapter 7 Trustee. PRINTPACK HOLDINGS: S&P Withdraws BB Rating On Company's Request ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB' corporate credit and secured bank loan ratings on Printpack Holdings Inc. at the company's request. "Prior to today's rating action, the ratings and positive outlook reflected Printpack's position as a leading domestic player in the flexible packaging market," said Standard & Poor's credit analyst Franco DiMartino. Atlanta, Georgia-based Printpack, with revenues of more than $1 billion, enjoys a leading market share in packaging for salted snack foods, as well as niche positions in packaging for cookies, confectionery, and bakery products. However, these positives are offset by strong competition from alternative suppliers and substitute products, slow growth in core end markets, intensified pricing pressures, and temporary pressure on operating margins in light of increased raw-material costs, namely polyethylene and polypropylene resins. PROVIDENT PACIFIC: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Provident Pacific Corporation 1606 Juanita Lane, Suite A Belvedere, California 94920 Bankruptcy Case No.: 05-11435 Chapter 11 Petition Date: June 8, 2005 Court: Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtor's Counsel: Michael H. Lewis, Esq. Law Offices of Michael H. Lewis 555 Montgomery Street, #1155 San Francisco, California 94111 Tel: (415) 296-1460 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ J. Reilly Contracting, Inc. Trade debt $600,000 365 Ranchitos Del Sol Aptos, CA 95003 Kirkwood Mountain Resort Trade debt $112,000 P.O. Box 1 Kirkwood, CA 95646 L&W Supply Corp. Trade debt $90,741 1325 East Julian San Jose, CA 95116 Kirkwood Master Owners Assessment $28,147 Association Plastiras & Terrizzi Trade debt $9,800 Kirkwood Real Estate Trade debt $8,452 Image Advertising Trade debt $7,631 East Meadows Homeowners Trade debt $3,942 Association Sheldon Land Surveying, Inc. Trade debt $3,843 Babcock Design Trade debt $2,400 Blaise D' Angelo Trade debt $1,488 Jack Frost Trade debt $950 Mountain Utilities Trade debt $388 Glen Robinson Trade debt $360 Carl's Blue Printing Trade debt $101 QWEST COMMS: Increases Sr. Debt Securities Offering to $1.75 Bil. ----------------------------------------------------------------- Qwest Communications International Inc. (NYSE:Q) and its Qwest Corporation subsidiary priced an offering of $1.75 billion aggregate principal amount of senior debt securities. Reacting to strong demand, the company increased the previously announced offering by 40 percent from $1.25 billion to $1.75 billion. The debt securities will be issued in three series: -- an eight-year senior note series with a floating interest rate determined by LIBOR (London Interbank Offered Rate) plus 325 basis points, with an aggregate principal amount of $750 million at QC; -- a ten-year senior note series priced at 7.625 percent with an aggregate principal amount of $400 million at QC; -- a nine-year senior note series priced to yield 8.875 percent with an aggregate principal amount of $600 million at Qwest Communications International Inc. (QCII). "We're pleased with the strong demand and success of this offer," said Oren G. Shaffer, Qwest vice chairman and CFO. "This series of transactions further strengthens our financial position by improving liquidity and extending maturities, without altering our debt profile." The QC floating interest rate note and the ten-year note were priced at par. The QCII nine-year note with a coupon of 7.50 percent was priced at approximately $918.27 per $1,000 principal amount. The net proceeds of the offering will be used for general corporate purposes, including repayment of indebtedness, and funding and refinancing investments in the company and its subsidiaries' telecommunications assets. Concurrent with the initial announcement of this offering, the company announced an offer to purchase for cash up to $904 million aggregate principal amount of its specified series of outstanding debt securities at Qwest Services Corporation and QC. In addition, the company plans to call $750 million of its $1.25 billion Term Loan at QC. The sales of the fixed rate notes and the floating rate notes are expected to close on June 17, 2005. The company placed the securities in a private placement transaction pursuant to Rule 144A under the Securities Act of 1933, as amended. The notes have not been registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. About the Company Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At March 31, 2005, Qwest Communications' balance sheet showed a $2,564,000,000 stockholders' deficit, compared to a $2,612,000,000 deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on June 9, 2005, Standard & Poor's Ratings Services assigned its 'B' rating to Denver, Colorado-based telephone company Qwest Communications International Inc.'s proposed offering of senior unsecured notes due 2014 (a tack-on to the existing 7.5% notes due 2014), and its 'BB-' rating to incumbent local exchange carrier operating subsidiary Qwest Corp.'s proposed offering of senior unsecured notes due 2013 and 2015. All are 144A with registration rights. Qwest has not indicated the size of these respective note issuances, and has only specified that the combined offering is expected to be $1.25 billion. Proceeds from the three debt issues will be used for general corporate purposes, including funding or refinancing its investments in telecommunications assets. "The tack-on debt issue at Qwest is two notches lower than the BB-/Developing/B-2 corporate credit rating, to reflect its junior position relative to a substantial amount of other obligations, including approximately $7 billion of debt at Qwest Corp., pro forma for the new debt issuances and debt tenders," said Standard & Poor's credit analyst Catherine Cosentino. RAHWAY HOSPITAL: Moody's Affirms Ba2 Rating on $22.6 Million Bonds ------------------------------------------------------------------ Moody's Investors Service has affirmed the Ba2 rating on Rahway Hospital's Series 1998 bonds ($22.6 million outstanding). The rating outlook remains negative. The Ba2 rating is attributable to: Strengths * Legal affiliation with A2 rated Robert Wood Johnson University Hospital (New Brunswick) which we believe has aided Rahway with its financial and strategic planning and direction. * Third year of growing volumes after multiple years of declining trends. * Maintenance of cash position, due in part to the use of Series 2003 bond proceeds to fund expansion of emergency room and upgrade of radiology department, and a liquidity covenant which requires the hospital to maintain 65 days cash on hand for the next three years beginning in FY 2005. Weaknesses * Weak historical financial performance resulting in below average debt coverage measures, further challenged by a very high reliance on Medicare (63.8% of gross revenues). * A likely increase in debt with a $3.6 million loan guaranty by Rahway Hospital to fund the construction of a new fitness center in a higher growth area of central New Jersey. * Rapidly aging plant with only $2.5 million budgeted for capital in FY 2005, which is due, in part, to other liquidity pressures related to a required $3.3 million pension contribution in FY 2005. Recent Developments Rahway Hospital (now doing business as Robert Wood Johnson University Hospital at Rahway) continues to post weak earnings in spite of admissions growth. In FY 2004, the hospital reported an operating loss of $1.8 million (-1.8% operating margin) and $3.5 million operating cash flow which equates to a below average 3.4% operating cash flow margin. Aside from a one-year improvement in FY 2003 (breakeven results), FY 2004 margins are on par with historical performance levels. FY 2004 debt coverage indicators are below average with 10.4 times debt to cash flow and 1.6 times maximum annual debt service coverage. The absence of Medicare outlier revenues and higher-than-expected salary and benefit expenses contributed to FY 2004 results. Unrestricted cash held steady at $18.2 million (66 days cash on hand) and 55% cash-to-debt, in large part due to the use of the Series 2003 bond funds ($11 million) for the emergency department expansion and other capital needs. Leverage will increase during FY 2005 by $3.6 million as Rahway will provide a loan guarantee to fund a new Fitness Center in the Westfield/Scotch Plains area, even while the hospital's capital budget is a minimal $2.5 million in FY 2005. Cash flow would need to increase materially to provide greater capital resources to invest in the plant and reduce the very high age of plant (18.3 years) while still meeting the days cash on hand requirement. Moody's note that the pension plan has been frozen and a defined contribution plan in now in place, which should reduce long-term contributions into the plan. Irrespective of historical financial performance, Moody's view the legal affiliation with A2 rated Robert Wood Johnson University Hospital as a credit positive and believe that the "halo" affect of the affiliation has been a primary reason for the volume increases. RWJ has also aided Rahway in its managed care negotiations and other strategic planning. While not legally obligated on Rahway's debt, Moody's does not believe that it would allow Rahway to miss a debt service payment. Outlook The rating outlook remains negative and reflects Moody's belief that there will be continued financial pressure on Rahway Hospital which will likely contribute to below average debt coverage measures. What could change the rating - Up Much improved and sustainable financial performance and liquidity; further growth in volumes What could change the rating - Down Material decline in financial performance or liquidity; reversal of the recent volume growth, increased competition Legal Analysis Bonds are secured by a gross revenue pledge of Rahway Hospital. The Series 2003 bonds are backed by a Letter of Credit from Wachovia Bank and rated Aa2/VMIG1. Interest Rate Swaps Floating to Fixed Rate Swap with Wachovia Bank based on $11 million notional amount; expires 2010; the swap was favorable to Rahway Hospital in FY 2004; management reports that there are no collateral requirements Key Indicators (FY 2004) * Admissions: 7,594 * Total Operating Revenue: $102.2 million * Net revenue available for debt service: $4.6 million (assumes 6% return on unrestricted liquidity for investment income) * Total unrestricted cash: $18.2million * Total debt outstanding: $33.4 million * Operating cash flow margin: 3.4% * Cash-to-debt: 54% * Debt-to-cash flow: 10.4 times * Days cash on hand: 66.4 days * Maximum annual debt service coverage based on actual investment income: 1.18 times Moody's-adjusted maximum annual debt service coverage: 1.56 times (assumes 6% return on unrestricted liquidity for investment income) RESIDENTIAL ACCREDIT: High Losses Spur Fitch to Junk Ratings ------------------------------------------------------------ Fitch Ratings has taken action on these Residential Accredit Loan, Inc. mortgage-pass through certificates: Residential Accredit Loans, Inc., mortgage asset-backed pass- through certificates, series 2001-QS17 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 downgraded to 'CCC' from 'B'. The affirmations, affecting over $27.9 million of certificates, are due to stable collateral performance and small to moderate growth in credit enhancement. The negative rating action taken on class B-2 affecting $750,758 of certificates, is due to high delinquencies and losses. The future loss expectancy with regard to loans currently in foreclosure and REO is estimated to be just over $218,000. The collateral consists of conventional, fully amortizing 30-year fixed-rate, mortgage loans secured by first liens on one- to four- family residential properties. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ RESORT AT SUMMERLIN: Combined Confirmation Hearing Set for June 16 ------------------------------------------------------------------ The Honorable James M. Marlar of the U.S. Bankruptcy Court for the District of Nevada will convene a hearing at 1:30 p.m., on June 16, 2005, to consider the adequacy of the Disclosure Statement and a request to confirm the Liquidating Plan of Reorganization filed by The Resort at Summerlin, Limited Partnership and its debtor-affiliate, The Resort at Summerlin, Inc. On the Plan's Effective Date, all property of the Debtors' estates will be vested in Wilmington Trust Co., one of the Debtors' primary secured lenders and successor to the Administrative Agent. The Plan will be funded by the proceeds of the Debtors' assets, including those funds that are currently in the Debtors' operating accounts. The Plan groups claims and interests into 10 classes. Impaired Claims consist of: a) Senior Lender Claims, owed approximately $49 million will receive all assets and property of the Debtor, including: (i) the judgment of $3,000,000 entered by the Bankruptcy Court in favor of the Debtor against J.A. Jones Construction Company and all other claims and causes of action of the Debtor against J.A. Jones, (ii) all claims of the Debtor against the parties listed in Exhibit A of the Plan under the judgments and settlement agreements relating to claims by the Debtor against those parties, and (iii) all other claims and causes of action of the Debtor and all cash and bank deposits of the Debtor; b) PDS Claims will be entitled to all consideration provided to them under the terms of the "Order re Motion to Approve Settlement Agreement with PDS Gaming Corporation-Nevada f/k/a Financial Corporation-Nevada" entered by the Court on Dec. 14, 2001; c) Other Secured Claim holders will receive the property securing those claims, to the extent that any Allowed Other Secured Claims exist; d) Subordinated Note Claims will not receive any distribution under the Plan; e) General Unsecured Claims will not receive any distribution under the Plan; f) Equity Interests in The Resort at Summerlin Limited Partnership and Equity Interests in The Resort at Summerlin, Inc. will be cancelled on the Effective Date without further action by the Debtors or notice to the holders of those two equity interests. Unimpaired Claims consist of: a) Mechanics Lien Claims will be entitled to assert all rights available to those holders under applicable law and to the extent those claims holders assert unsecured claims, those claims will be classified under general unsecured claims; b) Other Priority Claims will receive, to the extent that Allowed Other Priority Claims exist, cash equal to the amount of those Allowed Claims and other treatment to which the Debtor and those claims holders will agree in writing; and c) Insured Claims will retain their legal, equitable or contractual rights under the Plan. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050609021059 A full-text copy of the Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=050609020700 Headquartered in Las Vegas, Nevada, The Resort at Summerlin, Limited Partnership owns and operates The Regent Las Vegas, a luxury hotel, casino and spa complex located in Las Vegas. The Company and its debtor-affiliate filed for chapter 11 protection on Nov. 21, 2000 (Bankr. D. Nev. Case No. 00-18878). Laurel E. Davis, Esq., at Lionel Sawyer & Collins represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $296,366,000 and total debts of $365,802,000. REXAIR LLC: S&P Rates $144 Million Senior Secured Loan at B ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Rexair LLC. At the same time, Standard & Poor's assigned its 'B' rating and a recovery rating of '5' to Rexair's proposed $144 million senior secured bank facilities, indicating that the secured lenders can expect negligible (0%-25%) recovery of principal in the event of a payment default. The bank loan rating and accompanying analysis are based on preliminary documentation and subject to review once final documentation has been received. The outlook is stable. Pro forma for the transaction, Troy, Michigan-based Rexair will have approximately $124 million of debt outstanding. "The ratings on Rexair reflect the risks of direct-sales distribution and the discretionary nature of its products, its narrow business focus, and aggressive financial profile," said Standard & Poor's credit analyst Jean C. Stout. Rexair, founded in 1935, is a leading manufacturer of premium household canister vacuum cleaning systems. The company sells its products through a network of independent global distributors, with about half of its sales and profits derived from the U.S. Still, the more than $3 billion U.S. vacuum cleaning industry is mature and highly competitive, with several significantly larger companies that possess greater financial resources. Moreover, Rexair holds only a nominal share of the overall U.S. vacuum cleaning market, even though it is a leading participant in the segment for premium-priced direct sale vacuums. In addition, given Rexair's participation in the premium priced sector of the market, weakening economic conditions could affect future financial performance. Indeed, Rexair has experienced unit volume declines recently. Furthermore, as a result of the proposed transaction, the company's overall financial profile and credit protection measures (adjusted for operating leases) will be appropriate for its rating. The transaction will add about $120 million of debt. SALOMON BROTHERS: Good Credit Support Cues Fitch to Raise Ratings ----------------------------------------------------------------- Fitch Ratings has taken these rating actions on the Salomon Brothers Mortgage Securities VII, Inc. mortgage pass-through certificates: SBMS VII, Inc., series 2002-HYB1 Group 1 -- Class A-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 upgraded to 'AAA' from 'AA'; -- Class M-3 upgraded to 'AAA' from 'A'; -- Class B-1 upgraded to 'AAA' from 'BBB'; -- Class B-2 upgraded to 'AA' from 'BB'. SBMS VII, Inc., series 2002-HYB1 Group 2 -- Class A-2 affirmed at 'AAA'. SBMS VII, Inc., series 2002-HYB1 Group 3 -- Class A-3 affirmed at 'AAA'. SBMS VII, Inc., series 2002-HYB1 Group 4 -- Class A-4 affirmed at 'AAA'. SBMS VII, Inc., series 2002-UST1 Group 1 -- Class A-1, PO affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AA+' from 'AA'; -- Class B-5 upgraded to 'A+' from 'A'. SBMS VII, Inc., series 2002-UST1 Group 2 -- Class A-2 affirmed at 'AAA'. The upgrades, affecting $6.57 million of outstanding certificates are being taken as a result of low delinquencies and losses, as well as significantly increased credit support levels. The affirmations, affecting $23.75 million of debt, are due to stable collateral performance and moderate growth in credit enhancement. The pools are seasoned from a range of 31 to 36 months. The pool factor (current principal balance as a percentage of original) is approximately 6% outstanding. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ SECURITY CAPITAL: Taps UBS Securities to Run Formal Sale Process ---------------------------------------------------------------- Security Capital Corporation (AMEX: SCC) disclosed that, upon the recommendation of the Special Committee of the Board of Directors, the full Board of Directors has determined to retain UBS Securities LLC to conduct a formal sale process for the Company in order to seek the highest price reasonably obtainable for the stockholders of the Company. It is expected that the formal sale process will commence promptly after the Company files its annual report on Form 10-K for the fiscal year ended Dec. 31, 2004, which the Company currently believes will be filed by June 17, 2005. Brian Fitzgerald, Chairman, President and CEO of the Company, recommended to the Board that it consider initiating a formal sale process as the best way to seek to maximize stockholder value. After interviewing various investment banking firms with respect to the attractiveness and advisability of such a formal sale process, the Board asked the Special Committee to provide its recommendation as to whether the Company should switch to a formal sale process. On May 27, 2005, the Special Committee recommended, and the full Board approved, the formal sale process and the retention of UBS Securities LLC to conduct the process. UBS Securities LLC was retained on June 6, 2005. In response to a question from the Special Committee, Brian Fitzgerald, who controls approximately 81% of the Company's common stock, has declared his full support for the formal sale process and has committed to sell the shares he controls if appropriate value is achieved in the transaction. As a declared seller in the formal sale process, Mr. Fitzgerald stated to the Board that he would not participate as a bidder in such process. While the formal sale process will be conducted by the full Board, the Special Committee and its legal and financial advisors will continue to be available to consider any conflicts of interest that may arise in the process or otherwise address any additional matters referred to the Special Committee by the Board. "We have made tremendous progress over the last year and one-half in addressing various challenges that the Company has faced," stated Mr. Fitzgerald. "At the same time, the market for control of companies such as ours has recovered considerably. The Company is now a stronger and more valuable property, and we owe it to all of our stockholders to seek out the best price reasonably obtainable for the Company under these much improved circumstances." Mr. M. Paul Kelly, a member of the Special Committee, added that "the Special Committee and its financial and legal advisors have worked hard over the past year and one-half to maximize value for the Company's public stockholders. The Committee fully supports the new course of action and believes that a formal sale process represents the most efficient way to achieve the best result for the public stockholders." Delisting Notice Security Capital Corporation received a letter from the American Stock Exchange, citing the Company's lack of compliance with the AMEX's continued listing standards and accepting the Company's plan to regain compliance with the AMEX's continued listing standards by June 30, 2005, which the Company delivered to the AMEX on May 18, 2005. AMEX advised the Company that it is not in compliance with the AMEX's continued listing standards because the Company failed to timely file its Form 10-K for the fiscal year ended Dec. 31, 2004 and its Form 10-Q for the quarter ended March 31, 2005, as required pursuant to Section 1101 of the AMEX Company Guide. The May 23, 2005, AMEX letter noted that the Company's failure to timely file the 2004 Form 10-K and the First Quarter Form 10-Q is a material violation of the Company's listing agreement with the AMEX and, therefore, pursuant to Section 1003(d) of the Company Guide, the Company's securities are subject to suspension and delisting from the AMEX. In addition, the Company is subject to the procedures and requirements of Section 1009 of the Company Guide. As reported in the Troubled Company Reporter on Apr. 25, 2005, Ernst & Young LLP, Security Capital Corporation's principal accountant, notified the Chairman of the Audit Committee of the Company's Board of Directors on April 15, 2005, that it declines to stand for re-appointment as the Company's principal accountant after completion of the current annual audit of the Company's financial statements for the fiscal year ended Dec. 31, 2004. The Company says it will not be able to retain an independent registered public accounting firm to replace Ernst & Young until immediately following the filing of the 2004 Form 10-K. About the Company Security Capital Corporation operates as a holding company and participates in the management of its subsidiaries, WC Holdings, Primrose Holdings Inc. and Pumpkin Masters Holdings Inc. WC is an 80%-owned subsidiary that provides cost-containment services relative to direct and indirect costs of corporations and their employees primarily relating to industrial health and safety, industrial medical care and workers' compensation insurance. WC's activities are primarily centered in California, Ohio, Virginia, Maryland and, to a lesser extent, in other Middle Atlantic states, Indiana and Washington. Primrose is a 98.5%- owned subsidiary involved in the franchising of educational childcare centers. Primrose schools are located throughout the United States, except in the Northeast and Northwest. Pumpkin is a wholly owned subsidiary engaged in the business of designing and distributing Halloween-oriented pumpkin carving kits and related accessories. SERVICE CORPORATION: Moody's Rates Proposed $300M Sr. Notes at Ba3 ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 rating to Service Corporation International's proposed $300 million of senior notes, affirmed existing ratings and maintained a stable rating outlook. The ratings benefit from: * consistent free cash flow generation; * the company's position as market leader in the death care industry; and * a stable revenue stream supported by a large backlog of preneed funeral and cemetery contracts. The ratings also reflect: * declining death rates in the near term; * the increasing trend toward cremation; and * the need to remediate numerous material weaknesses in internal controls. Moody's took these rating actions: * Assigned $300 million senior unsecured notes, rated Ba3; * Affirmed $250 million 6.75% senior unsecured notes, due 2016, rated Ba3; * Affirmed $351.1 million 7.7% senior unsecured notes, due 2009, rated Ba3; * Affirmed $195 million 6.5% senior unsecured notes, due 2008, rated Ba3; * Affirmed $55.6 million 7.875% senior unsecured debentures, due 2013, rated Ba3; * Affirmed $63.8 million 6% senior unsecured notes, due 2005, rated Ba3; * Affirmed $143.5 million 6.875% senior unsecured notes, due 2007 (rating to be withdrawn upon completion of the proposed tender offer), rated Ba3; * Affirmed $149 million 7.2% senior unsecured notes, due 2006 (rating to be withdrawn upon completion of the proposed tender offer), rated Ba3; * Affirmed senior unsecured shelf registration, rated (P)Ba3; * Affirmed senior subordinated, subordinated, and junior subordinated shelf registrations, rated (P) B2; * Affirmed senior implied, rated Ba3; * Affirmed senior unsecured issuer, rated Ba3; * Affirmed speculative grade liquidity rating, rated SGL-2; The ratings outlook is stable. The proceeds from the proposed $300 million of senior unsecured notes and cash on hand are expected to be utilized to finance a tender offer for all of the company's $149 million senior unsecured notes due 2006 and $143.5 million senior unsecured notes due 2007 and pay related fees and expenses. The ratings reflect Service Corp.'s position as the leading provider of funeral, cremation and cemetery services in North America. Service Corp.'s network is geographically diverse with businesses in 44 states and 7 Canadian provinces. The death care industry remains highly fragmented with about 80% of industry revenue generated by independent funeral and cemetery operators. Despite significant challenges, Service Corp's revenues from comparable (same store) operations have remained relatively stable over the last few years. Comparable funeral revenues and cemetery revenues were $1.1 billion and $0.6 billion, respectively, in each of 2003 and 2004. On the funeral side, the company has been successful in increasing average revenue per funeral using a national branding strategy based on its "Dignity Memorial" brand. Cemetery revenues have benefited from the company's focus on developing and selling high-end cemetery property such as private family estates. The ratings benefit from a significant backlog of over $5 billion of potential revenue derived from preneed funeral and cemetery contracts supported by trust funds or insurance contracts. However, future revenues and cash flows will be affected by the market performance of the trust funds, which are invested in hedge funds, equity and fixed income securities. The ratings also reflect certain challenges facing the deathcare industry. The number of funeral services performed by the company's comparable operations declined by 2% in 2004, consistent with trends reported by other public companies in the industry. Demographics for the industry are favorable over the long term with an increasing proportion of the population expected to be represented by people age 65 and over. However, the number of deaths in the United States is not expected to meaningfully increase in the near term due to increases in life expectancy from healthier lifestyles and improvements in medical care. Another significant industry challenge is the increasing trend towards cremations. Cremations typically generate lower revenue and gross profit than a traditional funeral service and burial. Service Corp.'s cremation mix has increased about 100 to 150 basis points each year and represented about 40% of total funeral services performed in 2004. The ratings also reflect Moody's consideration of the company's history of financial statement restatements and the material weaknesses in internal control reported by Service Corp. as of December 31, 2004. Service Corp. concluded that it did not maintain effective internal controls over financial reporting as of December 31, 2004 and identified numerous material deficiencies in such areas as revenue recognition and related receivables, lease accounting, accounts payable and merchandise inventories. Collectively, these were considered "Category B" weaknesses pursuant to the framework outlined in Moody's October 2004 Special Comment "Section 404 Reports on Internal Control: Impact on Ratings Will Depend on Nature of Material Weaknesses Reported". Service Corp. outlined a remediation plan to address the material weaknesses which includes: * training; * a new point-of-sale information system; and * in the short term, additional redundant, compensating and monitoring controls above the local operations level. The company is also planning for longer-term improvements in key business processes with an emphasis on preventative controls and system-based controls. Moody's will continue to evaluate the company's progress in remediating the internal control deficiencies. The stable ratings outlook anticipates relatively flat revenues and cash flow from operations. Moody's expects that the company's continued efforts to reduce costs and grow average revenue per funeral will offset pressure from declining death rates and increases in cremation rates. The stable outlook also anticipates the timely remediation of internal control weaknesses by the company. The outlook or ratings could be upgraded if there is a material deleveraging or improvement in funeral and cemetery volume such that free cash flow from operations and cash flow from operations to total debt can be sustained at approximately 15% and 25%, respectively. The outlook or ratings could be downgraded if: (1) a reduction in free cash flow due to greater than expected declines in funeral and cemetery volume, greater than expected increases in cremation rates or a sharp decline in trust performance results in a ratio of free cash flow to total debt that is expected to remain below 10%; (2) the company is unable to remediate internal control weaknesses in a timely manner; or (3) the company is required to pay a material amount to settle outstanding litigation. The affirmation of the SGL-2 speculative grade liquidity rating reflects a good liquidity profile, with cash and cash equivalents on hand and projected cash flow from operating activities expected to exceed anticipated capital spending, debt maturities, dividends and funding of anticipated share buybacks in the next twelve months. The company's balance of cash and cash equivalents was about $320 million at March 31, 2005 and Moody's expects the company to generate cash flow from operations of over $200 million in the next twelve months. The company's expected cash needs in the next twelve months also include: * capital expenditure requirements of $110 million; * debt maturities of $75 million (pro forma for the refinancing of the senior unsecured notes due 2006); * common stock dividends of $30 million; and * anticipated share buybacks. As of May 16, 2005, the remaining dollar value of shares that may be repurchased under the company's share repurchase program was about $47 million although Moody's believes the company will likely expand the program in 2005. Moody's expects cash and cash equivalent balances will decline from current levels as the company implements share buybacks and considers acquisitions. Additional liquidity support comes from the company's $200 million secured revolver maturing in August 2007. As of March 31, 2005, there were no outstanding borrowings under the facility but availability was reduced by $62 million of outstanding letters of credit. No borrowings under the revolver are expected in the next twelve months. However, depending upon cash balance levels, availability under the revolver may be limited by the net leverage covenant later in 2005. The covenants under the revolving credit facility include a maximum net leverage and minimum interest coverage requirement. The credit agreement provides for a maximum net leverage requirement of 4 times during the second quarter of 2005, declining to 3.5 times beginning with the third quarter of 2005. The credit agreement provides for a minimum interest coverage requirement of 3.25 times during the first three quarters of 2005, increasing to 3.5 times beginning with the fourth quarter of 2005. Although Moody's expects the company to be in compliance with these covenants with adequate cushion during the next twelve months, cushion levels may decline if cash and cash equivalent balances decline significantly and revolver borrowings are needed. The SGL rating will be sensitive to: * the level of cash and equivalents maintained by the company; * the ability of the company to maintain a sustainable level of free cash flow from operations; and * the degree of covenant cushion under the revolving credit facility. Free cash flow to debt (as adjusted to exclude unusual tax refunds and litigation settlements) was 11% in 2004 and is expected to remain at about the same level in 2005. Adjusted debt to EBITDAR (as adjusted to exclude net gains on dispositions and litigation settlements and to expense preneed selling expenses in accordance with a change in company's accounting policy adopted in January 2005) was 4.4 times in 2004 and is expected to remain at about the same level in 2005. The Ba3 senior implied rating reflects the preponderance of senior unsecured notes in the debt capitalization. The Ba3 rating assigned to the proposed senior notes reflects the senior unsecured nature of these obligations which will rank equally with all of the company's existing and future senior unsecured indebtedness. The senior notes will be effectively subordinated to borrowings under the senior secured credit facility and to all indebtedness and other obligations of its subsidiaries. Service Corp., headquartered in Houston, Texas, is the largest provider of funeral and cemetery services in North America. At December 31, 2004, the company owned and operated 1,216 funeral service locations and 400 cemeteries. For the year ended December 31, 2004, Service Corp. reported total revenues of $1.9 billion. SERVICE CORP: S&P Rates Proposed $300 Mil. Sr. Unsec. Notes at BB ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' debt rating to Service Corp. International's proposed $300 million senior unsecured notes due in 2017. Existing ratings on the company, including the 'BB' long-term corporate credit rating and 'B-1' short-term rating, were affirmed. The outlook remains negative. Pro forma for the new notes, the company will have $1.2 billion of debt outstanding. "The speculative-grade ratings on cemetery and funeral home operator Service Corp. International reflect the company's operating concentration in a competitive industry that features weak business trends with few near-term growth prospects and a rising consumer preference for lower cost services," said Standard & Poor's credit analyst David Peknay. "These risks are partly mitigated by the company's large base of operations, which affords it scale efficiencies and a revenue backlog." Service Corp. has further benefited from initiatives to strengthen its sales mix and an improving balance sheet. The company implemented several accounting changes over the past year, and has disclosed material weaknesses in its internal controls over financial reporting. Currently, Standard & Poor's does not believe these items will meaningfully affect future operating cash flow or liquidity. With about $1.7 billion of annual sales, Houston, Texas-based Service Corp. is the world's largest cemetery and funeral home operator. The company and its affiliates operate 1,169 funeral homes and 390 cemeteries in North America, and owns minority interests in funeral operations outside of North America. The industry is extremely fragmented, with many small, regional competitors. In addition, Service Corp., faces two notable large national players in North America--Alderwoods Group Inc. and Stewart Enterprises Inc. Service Corp.'s large-scale asset divestitures over the past few years to deal with the high leverage that resulted from its rapid growth during the 1990s is largely complete. Its last significant sale, the joint venture for its French operations, was completed in early 2004. Future growth will likely be limited to modest investments in funeral homes and high-interment cemeteries in metropolitan markets that offer cross-selling opportunities. SPECIALTY CRUSHING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Specialty Crushing, Inc. 7817 Oakport Street, #220 Oakland, California 94621 Bankruptcy Case No.: 05-43167 Type of Business: The Debtor supplies recycled aggregates to the construction industry. See http://www.specialtycrushing.com/ Chapter 11 Petition Date: June 9, 2005 Court: Northern District of California (Oakland) Judge: Leslie J. Tchaikovsky Debtor's Counsel: Chris D. Kuhner, Esq. Kornfield, Paul and Nyberg 1999 Harrison Street, #2675 Oakland, California 94612 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ San Francisco Port Commission $536,575 P.O. Box 7862 San Francisco, CA 94120-7862 Engineered Concrete Placement $298,250 18903 North Shore Drive Middletown, CA 95461 Oakland Army Base $192,305 File 30200 P.O. Box 60000 San Francisco, CA 94160 Ramos Oil Company $114,575 Helen Ninnis $66,000 Lehigh Sothwest Cement Co. $64,069 State Franchise Tax Board $60,000 Eighteen Trucking Co. $47,486 Moneymaker LowBed Service $44,434 EBMUD $37,000 Mag Trucking $33,884 Cemex $32,000 Fred Glueck $32,000 Unlimited Scales of America $30,685 Peterson CAT $27,412 Shapiro Buchman Provine & Patton LLP $25,003 Alameda County Tax Collector $25,000 GE Corp Plus $25,000 Gerry Ninnis $20,000 Wells Fargo Equipment Finance $19,260 SYRATECH CORP: Names Gregory Hunt as CFO & Exits Chapter 11 ----------------------------------------------------------- Syratech Corp. has named Gregory W. Hunt, Executive Vice President and Chief Financial Officer, and Alan Kanter, Executive Vice President of Sales and Product Marketing, as the company's Co- CEOs. Robert Meers, who had been CEO, has left the company at the end of his three-year contract. The company also noted that it successfully emerged from a previously announced voluntary Chapter 11 bankruptcy on June 2 with a new $45 million senior credit facility from CapitalSource Finance LLC. In the newly created role of Co-CEO, Messrs. Hunt and Kanter are committed to creating differentiation in the market through new product innovations and a continued focus on meeting consumer needs. Supporting the new product initiatives will be a renewed focus on creating stronger alliances with key retail partners solidifying distribution on Syratech's core product offerings. Their diverse backgrounds are well suited to complement each other as they lead the company toward continued growth. Mr. Hunt, who joined Syratech in 2001 as EVP-CFO, has more than 20 years' financial and operations management experience with private and public consumer product, manufacturing and real estate companies. He has extensive experience in corporate restructuring as well as strategic business plan development, acquisition profiling, and the management of corporate organizations and manufacturing operations. Mr. Hunt will retain his seat on the Company's board representing management. With over 25 years of experience in the tabletop industry, Mr. Kanter has been instrumental in developing Syratech into an industry leader in the tabletop, housewares and home decor segments. He has worked at Syratech since its inception in 1986 in a variety of positions, including responsibility for sales forecasting and overall management of Syratech's global sales force. In a joint statement, Messrs. Hunt and Kanter said, "Having successfully restructured our finances, Syratech is now well positioned for future growth. We have made great strides with the very successful addition of the Vera Wang Silver and Gift brand along with new product offerings within our core product groups. This has created the foundation for additional licenses and innovative platforms for growth." Headquartered in Boston, Massachusetts, Syratech Corporation -- http://www.syratech.com/-- manufactures, markets, imports and sells tabletop giftware and home decor products. The Debtor, along with its affiliates, filed for chapter 11 protection on Feb. 16, 2005 (Bankr. D. Mass. Case No. 05-11062). Andrew M. Troop, Esq. Arthur R. Cormier, Jr., Esq., Christopher R. Mirick, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $86,845,512 in total assets and $251,387,015 in total debts. The Court approved the Debtors' plan of reorganization on May 12, 2005. The plan took effect on June 2, 2005. TECO AFFILIATES: Amended Joint Reorganization Plan Takes Effect --------------------------------------------------------------- Craig D. Hansen, Esq., at Squire, Sanders & Dempsey L.L.P., in Phoenix, Arizona, informs the U.S. Bankruptcy Court for the District of Arizona that as of June 1, 2005, all conditions to the effectiveness of the Amended Joint Plan of Reorganization of Union Power Partners, LP, Panda Gila River, LP, Trans-union Interstate Pipeline, LP, and UPP Finance Co., LLC, have been satisfied. The Hon. Charles G. Case of the U.S. Bankruptcy Court for the District of Arizona confirmed the plan for a prepackaged Chapter 11 reorganization of the project companies, Union Power Partners, L.P., Trans-Union Pipeline, L.P. and Panda Gila River, L.P. on Apr. 19, 2005. Pursuant to the terms of the Plan and the Confirmation Order, the Debtors have completed the necessary steps to effectuate the Plan, including initiating distributions to the holders of allowed claims. Accordingly, the Plan has been substantially consummated, as the term is defined in Section 1101(2) of the Bankruptcy Code. Reorganized Panda Gila River, L.P., will be renamed Gila River Power, L.P. All property, rights, claims and obligations of Panda Gila will vest in, and be fully enforceable by Gila River. All executory contracts assumed by Panda Gila in the Chapter 11 cases will vest in, and be fully enforceable by Gila River. Discharge of Debtors Mr. Hansen notes that the occurrence of the Effective Date: (a) discharges the Debtors from all Claims -- other than the Class 4 Claims -- or other debts that arose before the Confirmation Date, and all debts of the kind specified in Section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not: * a proof of Claim based on the debt is filed or deemed filed under Section 501; * a Claim based on the debt is allowed under Section 502; or * the holder of a Claim based on the debt has accepted the Plan; (b) does not effect a discharge, release or novation of any of the Prepetition Credit Agreements Obligations, or cancellation of any of the Prepetition Credit Documents; (c) does not affect the Interests in Finance Co.; and (d) does not impair or discharge any Intercompany Claims of the Debtors against other Debtors arising under the Prepetition Credit Documents or Prepetition Act 9 Bond Documents. Injunction As of June 1, 2005, all entities that have held, currently hold or may hold a Claim or other debt or liability against or Interest in the Debtors that is discharged under the Plan are permanently enjoined from: -- commencing or continuing in any manner any Claim, action or other proceeding against the Debtors, or the Reorganized Debtors, which they possessed or may possess prior to the Effective Date; -- enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order with respect to any Claim against the Debtors, the Reorganized Debtors or their property, which they possessed or may possess prior to the Effective Date; -- creating, perfecting or enforcing any lien or encumbrance of any kind with respect to any Claim against the Debtors, the Reorganized Debtors or their property, which they possessed or may possess prior to the Effective Date; -- asserting a set-off, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtors, the Reorganized Debtors or their property, which they possessed or may possess prior to the Effective Date; -- commencing or continuing any action, in any manner, in any place, that does not comply with or is inconsistent with the provisions of the Plan or the Bankruptcy Code; and -- asserting any Claims that are subject to the releases as described in the Plan. Mr. Hansen says nothing contained in the Plan or the Confirmation Order will preclude any persons or entities from exercising their rights pursuant to, and consistent, with the Plan. Releases by Debtors The Debtors, in their individual capacity, and as debtors-in- possession for and on behalf of their Estates, will be deemed to forever release, waive, and discharge all Released Parties from any actions taking place on or prior to the Effective Date and directly or indirectly relating to any or all of: (a) the ownership, operation, management, financing, assets, properties, affairs, or any other aspect of any of the Debtors or the Projects; (b) the Released Documents or any of the transactions contemplated on them; and (c) any aspect of any of the dealings or relationships between or among any or all of the Banks and the Debtors. The Reorganized Debtors will be bound, to the same extent the Debtors are bound, by all of the releases in the Plan. The Confirmation Order permanently enjoins the commencement or prosecution by any entity, of any actions, or liabilities released pursuant to the Plan. Exculpation and Limitation of Liability The Debtors, the Reorganized Debtors, TECO and its affiliates, the Administrative Claimholders arising under the DIP Credit Agreements, the administrative agent under the DIP Credit Agreements, the L/C Bank under the DIP Credit Agreements, the Prepetition Banks Claimholders, the Prepetition Agent, the Steering Committee, the Prepetition Project L/C Bank and any of their present or former members, officers, directors, or employees, will not have or incur any liability to, or be subject to any right of action by, any of the parties, any Holder of a Claim or an Interest, or any other party-in-interest for: -- any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases; -- formulating, negotiating, or implementing the Plan, the Master Settlement Agreement, and the Master Release Agreement; -- the solicitation of acceptances of the Plan; -- the pursuit of confirmation of the Plan; -- the confirmation of the Plan; -- objections to the Plan; -- the consummation of the Plan; or -- the administration of the Plan or the property to be distributed under the Plan, except for their gross negligence or willful misconduct. However, nothing will exculpate any party from their obligations and liabilities under the Plan, the DIP Credit Agreements and the DIP Orders. Assumption of Contracts and Leases All of the Debtors' executory contracts and unexpired leases are assumed by the Reorganized Debtors, unless otherwise specifically rejected by other Court order. Continued Validity of Safe Harbor Contracts All assumed executory contracts and postpetition contracts entered into by the Debtors relating to the purchase, sale, transfer, or supply of electricity and natural gas, including, without limitation, futures, forward, swap, option, and transportation contracts, remain in full force and effect, and are valid and enforceable by, and against the Reorganized Debtors. Bar Dates for Filing Claims Mr. Hansen advises that all final requests for payment of the Administrative Claims of professionals retained by the Debtors or their estates in the Chapter 11 Cases arising on or before the Confirmation Date must be filed by July 1, 2005. All Persons seeking final payment on account of a Professional Claim must file a final application for allowance of compensation for services rendered and reimbursement of expenses incurred through the Confirmation Date in compliance with all of the terms and provisions of applicable Court orders governing payment of fees to Professionals. All requests for payment of Administrative Claims, including any claims for making a substantial contribution to the Chapter 11 Cases -- except for Professional Claims and Claims of the DIP Lenders -- must also be filed on July 1, 2005. All proofs of claim with respect to Claims arising from the rejection of any executory contract or unexpired lease must be filed on the same day. Holders who fail to timely file a request for payment or a proof of claim will be forever barred from asserting the Claims against the Debtors, the Reorganized Debtors, or against any of their successors and assigns. After the Effective Date, objections to Administrative Claims and all other Claims may be made and objections to Administrative Claims and Claims made before the Effective Date may be pursued by the Reorganized Debtors or any other Person properly entitled to do so after notice to the Reorganized Debtors and approval by the Bankruptcy Court. Objections to Claims must be filed by July 1, 2005. Objections to any request for payment of an Administrative Claim must be filed and served on the holder of the Administrative Claim by the later of (a) July 1, 2005, or (b) 30 days after the request for payment is filed. From and after the Effective Date, the Reorganized Debtors may litigate to Final Order, propose settlement of or withdraw objections to all pending or filed Disputed Claims and may settle or compromise any Disputed Claim without notice and a hearing and without Bankruptcy Court approval. Panda Gila River, L.P., Union Power Partners, L.P., Trans-Union Pipeline, L.P., and UPP Finance Co., LLC -- http://www.tecoenergy.com/-- own and operate the two largest combined-cycle natural gas generation facilities in the United States. The Debtors filed for bankruptcy protection on Jan. 26, 2005 (Bank. D. Ariz. Case No. 05-01143, and 05-01149 through 05-01151). Craig D. Hansen, Esq., Thomas J. Salerno, Esq., and Sean T. Cork, Esq., at Squire, Sanders & Dempsey L.L.P., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,196,000,000 in total assets and $2,268,800,000 in total debts. TECO ENERGY: Completes $100 Million Floating Rate Note Sale ----------------------------------------------------------- TECO Energy, Inc. (NYSE: TE) completed the sale of $100 million of floating rate notes on June 7, 2005. The company considers this second issuance to be a shorter-term supplement to the $200 million issuance that will provide additional flexibility in the execution of its debt redemption and financing plan, and provide a backstop to its synfuel and oil price hedge plans. In late May, the company issued $200 million of lower interest rate notes that, together with cash on hand, are being used to retire $380 million of higher- cost debt. In addition to these accomplishments, and to reflect other positive achievements this year, the company also is updating its 2005 earnings guidance. TECO Energy Chairman and CEO Sherrill W. Hudson said, "These achievements are the culmination of many months of effort by many of our people, and I'm proud of the work they've done to get us to this turning point. The transfer of the Union and Gila River power plants is one of the last steps in closing the merchant power chapter of TECO Energy's story, and the retirement of the high-cost debt improves both our earnings and our balance sheet. The success of our recent note offerings to facilitate our debt redemption and refinancing is a good indication that investors recognize the progress that TECO Energy has made and they see the value of our business strategy, which is focused on our five core businesses." Debt Refinancing On May 26, the company completed an institutional private placement of a new series of ten-year notes. The notes were issued at par in an aggregate principal amount of $200 million and bear interest at a rate of 6.75% per year. The offering produced net proceeds to the company of approximately $198.2 million, after deducting the initial purchasers' discount and estimated offering expenses. The 6.75% notes were issued as part of the company's debt redemption and refinancing plan. As part of this plan, the company is using the net proceeds of the 6.75% notes offering, in the short-term, together with cash on hand, to redeem in full the $380 million aggregate principal amount outstanding of the TECO Energy 10.5% notes due 2007. Thereafter, the company plans to use cash generated to call and retire in late 2005 and early 2006 the $200 million aggregate stated liquidation amount outstanding of the 8.5% trust preferred securities of TECO Capital Trust I. The company plans to do this as cash becomes available in 2005 and 2006, and as the synfuel-related cash it expects to generate in 2006 and 2007 becomes more certain. In addition to the early retirement of the $380 million of 10.5% notes due in 2007, the ultimate effect of these transactions will be a refinancing of the 8.5% trust preferred securities with the new 6.75% ten-year notes. Although the company's current intent is to call and retire the 8.5% trust preferred securities, there is no requirement to do so. The $100 million principal amount of floating rate notes due in 2010, sold on June 7, 2005, through an institutional private placement, bear interest at a rate of LIBOR plus 200 basis points. After deducting the initial purchasers' discount and estimated offering expenses, the aggregate net proceeds to the company were approximately $99.1 million. Executive Vice President Finance and CFO Gordon Gillette said, "The early retirement of the high-cost debt improves our balance sheet, results in improved financial coverage ratios and reduces interest expense, which helps earnings. The planned retirement of the 8.5% debt later this year and early next year will further improve earnings and coverage ratios." The company expects to record an after-tax charge in continuing operations of approximately $46 million, or $0.22 per share, for debt extinguishment related to the redemption of the $380 million of 10.5% notes in the second quarter of 2005. The charge on a pretax basis is expected to be approximately $75 million and will include approximately $57 million for the expected redemption premium and a non-cash charge of $18 million related to the remaining unamortized debt premium and issue costs. This charge is expected to be more than offset by the gain in discontinued operations associated with the final transfer of the Union and Gila River power stations discussed above. The company would also incur additional small non-cash charges for debt redemption when the trust preferred securities are called and retired. Early Debt Redemption On May 26, the company instructed the Trustee, The Bank of New York, to give notice for the early redemption on June 27, 2005 of all of the $380 million of the 10.5% TECO Energy notes due in 2007. The notes are redeemable at a price expected to be equal to the sum of the present values of the remaining scheduled payments of principal and interest, discounted at a rate equal to an average corresponding treasury security yield plus 0.5%, plus accrued and unpaid interest to the redemption date. Updated Guidance TECO Energy is updating its guidance for full-year earnings per share from continuing operations, excluding charges or gains, from the previous range of $0.95 to $1.05 per share to a new range of $1.05 to $1.15 per share. The company expects to update its cash flow forecast for investors at the time it announces second quarter results. In addition to positive first quarter results, the higher earnings forecast is based on lower interest expense at the TECO Energy parent level due to the redemption of all of the $380 million of TECO Energy 10.5% notes at the end of June, and the improved performance expected at TECO Coal. Revised expectation for the coal company reflect higher than expected Section 29 tax credit rates following the true-up for 2004 actual inflation and the agreement to allocate an additional 8% of the benefits of ownership in its synfuel production facilities to the current third-party owners for the first half of 2005, which increases earnings and cash flow and reduces the number of tons produced at an operating loss to TECO Coal's account. This forecast includes the effects of mild winter and spring weather on Tampa Electric and assumes average weather conditions for the remainder of the year. The forecast also assumes continued good performance from Peoples Gas, TECO Guatemala and TECO Transport. The forecast assumes that there is no reduction in the Section 29 tax credits related to synfuel production due to high oil prices in 2005. For 2005, TECO Coal hedged approximately 35% of the cash flow benefits with financial instruments that strike beginning at NYMEX oil prices of $56 to $62 per barrel. NYMEX oil prices would have to exceed $62 per barrel for the remainder of 2005 to reach the trigger price that would reduce the tax credit for that year. Synfuel Oil Price Risk Hedging TECO Energy is seeking to protect the cash benefits of TECO Coal's synfuel production activities from high oil prices through the use of financial instruments, as market conditions permit, to hedge approximately half of the total annual cash benefit for 2006 and 2007. CFO Gordon Gillette noted, "We are positioning the company to have adequate cash to pay off all of the 2007 parent maturities, as evidenced by our recent actions and plans, and our hedging plan is driven by this goal. During the 2006 through 2007 period, the company is targeting to exceed its announced target liquidity levels through cash on hand and unused bank credit facilities including the proceeds from the $100 million five-year notes transaction completed [June 7]." In the current oil price environment, the company believes the most cost effective strategy will be to protect the "back end," or highest portion of the tax credit phase-out at NYMEX oil prices roughly between $65 and $72 per barrel, in the event of a complete loss of the tax credit, and continue to bear the risk of the "front end" or the initial loss of the tax credits on the lower end of the oil price curve. TECO Coal has hedged approximately 10% of the 2006 cash flow benefits that it plans to protect against high oil prices with instruments that strike at NYMEX prices of $65 per barrel, and seeks to hedge additional amounts as market conditions permit. TECO Energy, Inc. (NYSE: TE) is an integrated energy-related holding company with core businesses in the utility sector, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and independent power. * * * As reported in the Troubled Company Reporter on June 7, 2005, Fitch Ratings has assigned a 'BB+' rating to TECO Energy, Inc.'s new $100 million issue of senior floating rate notes due May 1, 010. The notes rank equally with TECO's existing senior unsecured debt. The net proceeds of this offering, together with cash on and, is expected to be used to redeem or repurchase in full the 380 million of 10.5% notes due 2007. The Rating Outlook of TECO Energy, Inc. is Stable. TECO is a holding company that owns electric and gas utilities in Florida as well as coal, barge, Guatemalan power and other small operations. Together, the two regulated utilities are expected to provide approximately 80% of income in 2005. Tampa Electric serves over 625,000 electric customers in West Central Florida and Peoples Gas System serves over 310,000 gas customers throughout Florida. TECO ENERGY: Completes Transfer Of Power Station Ownership ---------------------------------------------------------- Shirley M. Payne, Vice President - Corporate Tax and Accounting and Assistant Secretary of TECO Energy, Inc., discloses in a filing with the Securities and Exchange Commission that on June 1, 2005, TECO completed the sale and transfer of ownership of its indirect subsidiaries -- Union Power Partners, L.P., Panda Gila River, L.P., Trans-Union Interstate Pipeline, L.P., and UPP Finance Co., LLC -- to an entity owned by the Debtors' lenders. In connection with the transfer and the related release of liability, TECO and its affiliates paid: -- $31.8 million, consisting of $30 million to the Debtors' lenders as consideration for the Master Release Agreement and Amendment to Undertakings dated as of January 24, 2005; and -- $1.8 million as reimbursement of legal fees for two non- consenting lenders in the Debtors' recently concluded Chapter 11 proceeding. The Debtors reimbursed $400,000 to TECO and its affiliates associated with transition services provided. Additionally, as part of the transaction, TECO entered into a Representation and Indemnification Agreement in which TECO agreed to indemnify the new owners of the Subsidiaries for: 1. breaches of standard representations and warranties; 2. certain potential taxes related to the transfer of the Gila River project; and 3. liabilities related to lawsuits specifically related to disclosures about the Projects. "These representations and warranties are the same as those included in the applicable agreement negotiated by the parties when the transfer was to be consensual," Ms. Payne explains. Ms. Payne clarifies that the Representation Agreement is not intended to provide factual information about the parties. She explains that the representations and warranties contained in the Agreement were made only for purposes of the agreement and as of specific dates, were solely for the benefit of the parties to the agreement, and may be subject to limitations agreed by the contracting parties, including being qualified by disclosures between the parties. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, they should not be relied upon by investors as statements of factual information. A full-text copy of the Master Release Agreement and Amendment to Undertakings is available for free at: http://ResearchArchives.com/t/s?17 A full-text copy of the Representation and Indemnification Agreement is available for free at: http://ResearchArchives.com/t/s?16 Panda Gila River, L.P., Union Power Partners, L.P., Trans-Union Pipeline, L.P., and UPP Finance Co., LLC -- http://www.tecoenergy.com/-- own and operate the two largest combined-cycle natural gas generation facilities in the United States. The Debtors filed for bankruptcy protection on Jan. 26, 2005 (Bank. D. Ariz. Case No. 05-01143, and 05-01149 through 05-01151). Craig D. Hansen, Esq., Thomas J. Salerno, Esq., and Sean T. Cork, Esq., at Squire, Sanders & Dempsey L.L.P., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,196,000,000 in total assets and $2,268,800,000 in total debts. The Court confirmed the Debtors' pre-packaged plan of reorganization on Apr. 19, 2005. The plan took effect on June 1, 2005. TECO Energy, Inc. (NYSE: TE) is an integrated energy-related holding company with core businesses in the utility sector, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and independent power. * * * As reported in the Troubled Company Reporter on June 7, 2005, Fitch Ratings has assigned a 'BB+' rating to TECO Energy, Inc.'s new $100 million issue of senior floating rate notes due May 1, 010. The notes rank equally with TECO's existing senior unsecured debt. The net proceeds of this offering, together with cash on and, is expected to be used to redeem or repurchase in full the 380 million of 10.5% notes due 2007. The Rating Outlook of TECO Energy, Inc. is Stable. TECO is a holding company that owns electric and gas utilities in Florida as well as coal, barge, Guatemalan power and other small operations. Together, the two regulated utilities are expected to provide approximately 80% of income in 2005. Tampa Electric serves over 625,000 electric customers in West Central Florida and Peoples Gas System serves over 310,000 gas customers throughout Florida. TESORO PETROLEUM: Moody's Reviews B2 Sr. Subord. Note 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. TOM'S FOODS: Creditors Must File Proofs of Claim by August 1 ------------------------------------------------------------ The United States Bankruptcy Court for the Middle District of Georgia, Columbus Division, set August 1, 2005, at 4:00 p.m., as the deadline for all creditors owed money on account of claims arising prior to April 6, 2005, against Tom's Foods Inc. to file proofs of claim. All Governmental units must file proofs of claims on or before on October 3, 2005. Creditors must file written proofs of claim on or before the August 1 Claims Bar Date and those forms must be sent to: If sent by mail: Tom's Foods Inc. c/o JP Morgan Trust Company, N.A. P.O. Box 56636 Jacksonville, FL 32241-6636 If delivered by hand, or overnight courier: Tom's Foods Inc. c/o JP Morgan Trust Company, N.A. 8475 Western Way, Suite 110 Jacksonville, FL 32256 Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TORCH OFFSHORE: Wants to Reject Tim Charter Party Agreement ----------------------------------------------------------- Torch Offshore, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Louisiana for permission to reject the Uniform Tim Charter Party Agreement for offshore service vessels entered into by and between Cable Shipping, Inc., and the Debtors on January 30, 2004. The Debtors explains they have no further need or use for the M/V Midnight Hunter, which is chartered from Cable Shipping in accordance with the Tim Charter contract. The Tim Charter is a burden to the Debtors and it would be in the best interests of the estate to walk away from the contract. In connection with the rejection of the contract, Cable shipping's $435,000 administrative claim will be paid in full without further delay. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $201,692,648 in total assets and $145,355,898 in total debts. TROPICAL SPORTSWEAR: Panel Wants Shareholder Litigation Stayed -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Tropical Sportswear Int'l Corp., and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Middle District of Florida to enforce the automatic stay and prohibit continued prosecution of a class action lawsuit pending in the U.S. District Court for the Middle District of Florida (Case No. 8:03-CV-1958-T23TGW). The lawsuit was commenced by Richard R. Reina and other shareholders against: * the Debtors; * Michael Kagan, Chief Executive Officer; * William Compton, former Chief Executive Officer; * N. Larry McPherson, Chief Financial Officer; and * Christopher B. Munday, President. Robert B. Glenn, Esq., at Glenn Rasmussen Fogarty & Hooker, P.A., in Tampa, Florida, tells the Court that on the effective date of the Debtors' Amended Joint Chapter 11 Plan of Liquidation, Gary W. Burns, of Bridge Associates, as trustee for TSLC I, Inc., will commence an action against the Debtors' current and former directors and officers for, among other things: * breach of fiduciary duty, * fraud, * waste, and * mismanagement. TSLC I is the creditors' liquidating trust created under the plan. Mr. Glenn says the Shareholder Litigation and the Trustee Action are based on the same set of facts, and substantially similar allegations and are brought against the same defendants. Mr. Glenn asserts that the Court should subject the Shareholder Litigation to the automatic stay until the resolution of the Trustee Action. This helps ensure that any recoveries resulting from litigation against the directors and officers are distributed pursuant to the Plan, in accordance with the priority scheme established by the Bankruptcy Code, Mr. Glenn contends. According to Mr. Glenn, the assets, which the shareholder attempt to recover through the litigation, are property of the Debtors' estate, and any recoveries should flow to the debtors' creditors. Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp. -- http://www.savane.com/-- designs, produces and markets branded branded apparel products that are sold to major retailers in all levels and channels of distribution. The Company and its debtor-affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., and Denise D. Dell-Powell, Esq., at Akerman Senterfitt, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $247,129,867 and total debts of $142,082,756. TWO CITIZENS: S&P Puts Low-B Trust Sec. Ratings on Watch Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB+' ratings on SATURNS Trust No. 2001-2 and PreferredPLUS Trust Series CZN-1 on CreditWatch with negative implications. The CreditWatch placements follow the May 27, 2005, placement of the corporate credit and senior unsecured debt ratings on Citizens Communications Co. on CreditWatch with negative implications. SATURNS Trust No. 2001-2 and PreferredPLUS Trust Series CZN-1 are swap-independent synthetic transactions weak-linked to the underlying securities, Citizens Communications Co.'s 7.05% debentures due Oct. 1, 2046. The rating actions reflect the current credit quality of the underlying securities. A copy of the Citizens Communications Colorado-related research update, dated May 27, 2005, is available on RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ Ratings Placed On Creditwatch Negative SATURNS Trust No. 2001-2 $26 million callable units series 2001-2 Rating ------ Class To From ----- -- ---- Units BB+/Watch Neg BB+ PreferredPLUS Trust Series CZN-1 $34 million PreferredPLUS 8.375% trust certificates Rating ------ Class To From ----- -- ---- Certs BB+/Watch Neg BB+ UNI BORING: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Uni Boring Co., Inc. 7261 Commerce Boulevard Koppernick Park Canton, Michigan 48188 Bankruptcy Case No.: 05-58779 Type of Business: The Debtor is a drilling and boring contractor. Chapter 11 Petition Date: June 9, 2005 Court: Eastern District of Michigan (Detroit) Judge: Phillip J. Shefferly Debtor's Counsel: Stephen M. Gross, Esq. Lindahl Gross Lievois, P.C. 30150 Telegraph, Suite 225 Bingham Farms, Michigan 48025 Tel: (248) 646-5070 Total Assets: Unknown Total Debts: Unknown The Debtor's List of its 20 Largest Unsecured Creditors was not available at press time. UNITED PRODUCERS: Hires Development Specialists as Mgt. Consultant ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, gave United Producers, Inc., permission to employ Development Specialists, Inc., as its management consultant. Development Specialists will: a) analyze the company's books and records; b) evaluate, analyze and recommend reorganization strategies; c) establish, implement and control the Debtor's cash management system; d) implement the Debtor's Operating Plan; e) negotiate, if appropriate, permitted bankruptcy sales of the Debtor's assets; f) negotiate with creditors concerning reorganization alternatives; g) prepare monthly operating budgets with supporting documentation; h) assist the Debtor with the administration of the estate; i) accomplish asset sales, if appropriate; and j) undertake other tasks and duties as may be required Development Specialists is a well-known restructuring, consulting and management firm that has been ranked as one of the top turnaround firms in the United States for the last five years. Bradley Sharp, the Firm's Senior Vice President, will serve as lead professional on this engagement. Mr. Sharp has substantial experience in providing crisis management and consulting services to companies in various industries including telecommunications, consumer finance and agriculture. Mr. Sharp will be paid $435 per hour for his services. Development Specialists received a $548,166 retainer prior to United Producer's chapter 11 filing on April 1, 2005. The Firm appropriated $248,166 from the retainer to cover pre-bankruptcy services and expenses. United Producers assures the Court that Development Specialists does not represent any interest adverse to the Debtor or its estate. Headquartered in Columbus, Ohio, United Producers, Inc. -- http://www.uproducers.com/-- offers marketing, financing, and credit services to its member livestock producers in the U.S. corn belt, southeast, and midwest areas. The company and its debtor- affiliate filed for chapter 11 protection on Apr. 1, 2005 (Bankr. S.D. Ohio Case No. 05-55272). Reginald W. Jackson, Esq. at Vorys, Sater, Seymour and Pease, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. UNITED PRODUCERS: Taps Allen, Kuehnle & Stovall as Special Counsel ------------------------------------------------------------------ United Producers, Inc., sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, to employ Allen, Kuehnle & Stovall LLP as its special counsel. Allen, Kuehnle & Stovall will serve as special counsel in the event that Vorys, Sater, Seymour and Pease LLP, United Producer's bankruptcy counsel, has a conflict of interest with respect to the Debtor's more than 96,000 creditors or potential creditors. Allen, Kuehnle & Stovall will: a) assist the Debtor in reviewing, estimating and resolving certain claims asserted against the Debtors' estate; b) commence and conduct any litigation necessary or appropriate to assert rights held by the Debtors, protect assets of Debtor's estate or otherwise further the goal of completing the Debtors' successful reorganization; and c) perform all other necessary or appropriate legal services as special counsel, as required, in connection with this chapter 11 case for or on behalf of the Debtors, because of a conflict on the part of Vorys Sater. The Debtor has paid the firm a $25,000 retainer for services rendered or to be rendered and for reimbursement of expenses. The Debtor did not disclose the hourly rates to be paid for Allen, Kuehnle & Stovall's professionals. United Producers assures the Court that Allen, Kuehnle & Stovall does not represent any interest adverse to the Debtor or its estate. Headquartered in Columbus, Ohio, United Producers, Inc. -- http://www.uproducers.com/-- offers marketing, financing, and credit services to its member livestock producers in the U.S. corn belt, southeast, and midwest areas. The company and its debtor- affiliate filed for chapter 11 protection on Apr. 1, 2005 (Bankr. S.D. Ohio Case No. 05-55272). Reginald W. Jackson, Esq. at Vorys, Sater, Seymour and Pease, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. UNITED PRODUCERS: Hires Garden City as Claims and Balloting Agent ----------------------------------------------------------------- United Producers, Inc., and its debtor-affiliate, sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, to retain and employ The Garden City Group, Inc., as their Noticing, Claims and Balloting Agent. Garden City is expected to: (a) assist the Debtors with all required notices in these cases including, among others: * notice of objections to claims; * notices of any hearings relating to approval of a disclosure statement and confirmation of a plan of reorganization in these cases; and * other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for the orderly administration of these chapter 11 cases; (b) file with the Clerk's Office a certificate or affidavit of service, after the service of a particular notice, that includes: * a copy of the notice served; * a list of persons upon whom the notice was served, along with their addresses; and * the date and manner of service; (c) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; (d) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; (e) provide such other claims processing, noticing and related administrative services as may be requested from time to time by the Debtors; (f) receive, examine and maintain copies of all proofs of claim filed in these cases; (g) maintain an independent claims register in the Debtors' cases by docketing all proofs of claim in claims database that includes: * the name and address of the claimant and any agent thereof, if the proof of claim was filed by an agent; * the date the proof of claim was received by the Court; * the claim number assigned to the proof of claim by the Court; and * the asserted amount and classification of the claim; (h) maintain an up-to-date mailing list for all entities that have filed proofs of claim and making the list available upon request to the Clerk's Office or any party in interest; (i) provide access to the public for examination of copies of the proofs of claim filed in these cases without charge during regular business hours; (j) monitor all transfers of claims pursuant to Bankruptcy Rule 3001(e); (k) oversee the distribution of applicable solicitation materials to each holder of a claim against the Debtors; (l) responding to mechanical and technical distribution and solicitation inquiries; (m) receive, review and tabulate the ballots cast, and making determinations with respect to each ballot as to its timeliness, compliance with the Bankruptcy Code, Federal Rules of Bankruptcy Procedure and procedures ordered by this Court subject, if necessary, to review and ultimate determination by the Court; (n) report the results of the balloting to the Court; and (o) perform such other related plan-solicitation services as may be requested by the Debtors. David Isaac, President of Garden City, tells the court that the Firm has received a $10,000 retainer. Mr. Isaac assures the court that the Firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Columbus, Ohio, United Producers, Inc. -- http://www.uproducers.com/-- offers marketing, financing, and credit services to its member livestock producers in the U.S. corn belt, southeast, and midwest areas. The company and its debtor- affiliate filed for chapter 11 protection on Apr. 1, 2005 (Bankr. S.D. Ohio Case No. 05-55272). Reginald W. Jackson, Esq. at Vorys, Sater, Seymour and Pease, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. URS CORP: Moody's Rates Proposed $650M Sr. Credit Facility at Ba2 ----------------------------------------------------------------- Moody's Investors Service today assigned a Ba2 rating to URS Corporation's proposed $650 million senior credit facility, consisting of a $300 million six-year revolver and $350 million six-year term loan. Concurrently, Moody's placed all credit ratings of URS on review for possible upgrade. The proposed senior credit facility is part of a refinancing plan that includes a tender offer for $130 million of 11 1/2% senior notes due 2009, which is to be largely funded with a proposed offering of 3.69 million shares of common stock (current market value of approximately $128 million). The proposed credit facility is expected to replace: * the existing $225 million senior secured revolver due 2007; * the $83.6 million senior secured term loan A due 2007; and * the $270.2 million term loan B due 2008. The review for possible upgrade will focus on the expected improvement in the credit profile of the company from the secondary equity offering and the related debt reduction. Upon completion of the secondary offering and use of such proceeds for debt repayment, Moody's currently expects to upgrade all of the company's credit ratings by one notch. Moody's affirmed the company's speculative grade liquidity rating of SGL-1, reflecting the company's very good liquidity profile. The lower debt and interest rates implied by the proposed refinancing are expected to be positive for projected liquidity. Moody's assigned these ratings: -- Ba2 rating to proposed $300 million senior revolver due 2011 -- Ba2 rating to proposed $350 million senior term loan due 2011 Moody's placed these ratings on review for upgrade: -- $300 million proposed senior revolver due 2011 rated Ba2 -- $350 million proposed senior term loan due 2011 rated Ba2 -- $130 million 11.5% senior notes due 2009 rated Ba3 (the rating on the senior notes will be withdrawn if substantially all of the notes are retired in the tender offer). --Ba2 senior implied rating --Ba3 senior unsecured issuer rating Moody's withdrew these ratings: -- $225 million senior secured revolver due 2007 rated Ba2 -- $83.6 million senior secured term loan A due 2007 rated Ba2 -- $270.2 million senior secured term loan B due 2008 rated Ba2 The ratings benefit from: * the company's improving balance sheet and operating performance; * stable customer base; * recurring revenue stream; * growing order backlog; * expectation that US government spending on defense and homeland security will continue to benefit private sector firms; and * track record of executing on the stated financial policy to reduce debt and leverage. The ratings are constrained by: * URS's participation in a highly competitive industry that exhibits relatively low barriers to entry; * modest EBITDA margins; and * significant utilization of working capital. The Ba2 rating assigned to the proposed credit facility, notched at the senior implied level, reflects the preponderance of senior debt in the capital structure. The credit facility is expected to be secured by a pledge of 100% of the common stock of domestic subsidiaries, as long as the credit facility ratings remain two notches below investment grade or lower. If ratings are one notch below investment grade or higher, the facility is expected to be unsecured. Financial covenants are expected to include minimum interest coverage and maximum debt to total capital ratios and to be less restrictive than those under the facility being replaced. Based in San Francisco, California, URS Corporation is an engineering firm that provides a range of: * professional planning, * design, * program and construction management, and * operations and maintenance services. Revenues for the twelve month period ended March 31, 2005 were approximately $3.5 billion. W.R. GRACE: Wants Plan Filing Period Stretched to November 23 ------------------------------------------------------------- W.R. Grace & Co. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the periods within which they have the exclusive right to: (a) file a Chapter 11 plan of reorganization through and including November 23, 2005; and (b) solicit acceptances for that plan through and including January 23, 2006. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, tells Judge Fitzgerald that the Debtors continue to make progress in developing a confirmable Chapter 11 plan and that they need more time to continue moving forward with those aspects of their bankruptcy cases that need to be resolved first. As previously reported, the Debtors filed their Disclosure Statement and Plan of Reorganization on November 13, 2004, and their First Amended Disclosure Statement and Joint Plan of Reorganization on January 13, 2005. The Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders are joint proponents of the Amended Plan. The Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Asbestos Property Damage Claimants and the Futures Representative do not currently support the Plan. At a hearing on January 21, 2005, the Court directed the Debtors to work with the Asbestos Committees and the Futures Representative to develop case management procedures for estimating the value of the asbestos-related claims, and the estimation process has since been set in motion. Discovery with respect to the Debtors' asbestos PD liabilities is progressing, while a hearing is set for August 17, 2005, with respect to the PI Proof of Claim and Questionnaire and Case Management Order. Ms. Jones relates that extending the Exclusive Periods would allow the Debtors to continue moving toward the ultimate estimation of asbestos-related claims, and therefore toward confirmation of a plan of reorganization, without the distraction of addressing competing plans. Ms. Jones contends that regardless of the means chosen by the Court to estimate the Debtors' asbestos liabilities, the process will almost certainly be a time-consuming and complex one toward which the Debtors and the Asbestos Parties must devote a tremendous amount of time and a large number of resources. Moreover, the Debtors and certain of the asbestos parties continue to engage in discussions concerning a consensual plan. Ms. Jones says that an extension would allow the Debtors to continue to utilize their resources in a manner that will most effectively and expediently further the estimation process while also providing them the opportunity to continue discussions with other constituents regarding amendments that could result in a consensual plan. Ms. Jones ascertains that the Debtors are not seeking a further extension to unduly pressure creditors, nor will the extension harm the Debtors' creditors or other parties-in-interest. Instead, the Debtors only wish to continue to pursue a resolution of asbestos-related claims that will be fair and equitable to them and their asbestos claimants. The Court will convene a hearing on June 27, 2005, to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Exclusive Plan Proposal Period is automatically extended through the conclusion of that hearing. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WEST CLIFF: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: West Cliff Shopping Plaza I, Limited Partnership P.O. Box 763773 Dallas, Texas 75376 Bankruptcy Case No.: 05-36555 Type of Business: The Debtor owns and operates a shopping mall. Chapter 11 Petition Date: June 8, 2005 Court: Northern District of Texas (Dallas) Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (972) 991-5591 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. WESTERN FOREST: Defers 50% of Interest Payment on Secured Bonds --------------------------------------------------------------- Western Forest Products Inc. will be taking down-time at certain operations during the summer, and also deferring payment of 50% of the interest due on its 15% secured bonds as it is permitted to do, in a measured response to maintain liquidity. Operations Down-Time In response to lower than expected sales and to reduce the amount of cash tied up in log and lumber inventories the Company will be taking down-time at both its logging and sawmilling operations over the summer. Logging operations will be curtailed starting at various dates in July and all will be idle through to the end of August. Critical road and bridge building programs may continue throughout this period. The Duke Point sawmill will take down-time from June 30 to Aug. 2 to coincide with the installation of new equipment. The Ladysmith sawmill will take down-time from July 18 to Aug. 15, the Saltair sawmill from July 4 to Aug. 2, and the Cowichan Bay sawmill from Aug. 8 to September 2. The Nanaimo sawmill will continue to operate on two shifts with the Silvertree mill continuing on one shift. "Taking this down-time should enable us to reduce our log and lumber inventories by approximately $40-$50 million," says Reynold Hert, President and Chief Executive Officer. Additionally, the Company has rescheduled the annual Squamish pulp mill maintenance shutdown to mid-August. This will allow the Company to spread out the timing of significant cash expenditures. US$221 Million Secured Bond Interest Deferral The Company will defer payment of 50% of the interest due on June 30 as permitted under the terms of the bond indenture. The unpaid interest amounting to approximately Canadian $10.3 million carries interest at 15% and can be repaid at anytime during the bonds' life, and in any event no later than July 28, 2009. "Taking down-time is a difficult thing to do as it obviously affects the livelihood of our employees and their families," says Hert. "However, we feel these steps along with the deferral of 50% of the interest payment are prudent measures that allow us to better manage and preserve our liquidity so that we can continue to work on our long-term strategy of improving the overall business fundamentals." About Western Forest Western Forest Products Inc. is an integrated Canadian forest products company and the second largest coastal woodland operator in British Columbia. Principal activities conducted by Western and its subsidiaries include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, value-added remanufacturing and producing NBSK pulp. Over 95% of Western's logging is conducted on government owned timberlands in British Columbia. All of Western's operations, employees and corporate facilities are located in the coastal region of British Columbia and its products are sold in 30 countries worldwide. WINN-DIXIE: Can Sell Some Prescriptions & Inventory to CVS ---------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida to sell certain pharmaceutical prescriptions and inventory, which are not necessary for their reorganization. Store #2091 in Reidsville, North Carolina, is a supermarket store slated for sale or closure under the Debtors' Asset Rationalization Plan. The lease on the North Carolina Store expired at the end of April 2005. According to Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, the Debtors do not believe that the North Carolina Store fits into their long-term business plans. Thus, the Debtors decided to cease operations there. CVS Realty Co. offered to purchase the Assets for $147,619 -- $85,000 for the prescriptions and $62,600 for the inventory. After reviewing all offers for the Assets, the Debtors determined that CVS's offer was the highest and otherwise best bid for the Assets. 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: Court Okays Rejection of Agreements & Equipment Leases ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida gave permission to Winn-Dixie Stores, Inc., and its debtor-affiliates to reject certain unexpired leases and executory contracts effective June 2, 2005. The Contracts include a signage agreement, a telecommunications agreement and several equipment leases with respect to stores no longer operated by the Debtors. 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: UST Withdraws Objection to Hiring XRoads Solutions -------------------------------------------------------------- As previously reported in the Troubled Company Reporter on May 20, 2005, Felicia S. Turner, United States Trustee for Region 21, objects to the application of Winn-Dixie Stores, Inc., and its debtor-affiliates' employment of XRoads Solutions Group, LLC, as their financial and operations restructuring consultants. The U.S. Trustee asserts that the Debtors' proposed terms of retention and compensation of XRoads Solutions do not comport with the requirements of Sections 327 and 330 of the Bankruptcy Code * * * The U.S. Bankruptcy Court for the Middle District of Florida authorizes the Debtors to employ XRoads Solutions Group, LLC, as their financial and operations restructuring consultants. XRoads will provide 45 days' notice of any application for deferred fees or performance fees based on the consummation of one or more qualifying transactions. The notice will be provided to the United States Trustee, counsel for the Official Committee of Unsecured Creditors, counsel for the Debtors' secured lenders, and the parties named on the master service list. XRoad's application for any performance fee in excess of $1,500,000 will be permitted upon the Debtors' Board of Director's determination that the additional amount is warranted. 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). WHX CORP: Files Second Amended Disclosure Statement --------------------------------------------------- WHX Corporation delivered to the U.S. Bankruptcy Court for the Southern District of New York its Second Amended Disclosure Statement on June 7, 2005. The relevant modifications found in the Amended Disclosure Statement include: -- the value of the New WHX Common Stock to be issued under the Plan is lowered to $105 million from $113 million. -- holders of allowed senior notes totaling $96,664,295 will receive 92% on account of their claims (from an 85% recovery); -- holders of allowed preferred equity interests (lowered to $8.5 million from $16 million) will receive 8% of the New WHX Common Stock and warrants for 7% of the New WHX Common Stock at an exercise price of $11.20 per share; and -- unsecured claims holders estimated to be less than $10,000 will recover 100% of their claims. A full-text copy of the Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050609050004 * * * A summary of the Debtors' previous plan appeared in the Troubled Company Reporter on Mar. 15, 2005. The Plan groups claims and interests into seven classes. The Unimpaired Classes under the Plan consist of: a) Priority Non-Tax Claims that do not exceed $4,650 will be paid in full in the ordinary course of the Debtor's business; and b) Secured Claims that are secured by a valid, perfected and enforceable Lien on the Debtor's assets and will be treated in accordance with Section 1124 of the Bankruptcy Code. The Impaired Claims under the Plan consist of: a) Allowed Senior Note Claims; b) Allowed Other Unsecured Claims will receive Cash equal to the amount of those Allowed Claims; c) Series A Preferred Equity Interests with an aggregate estimated recovery amount of $7,811,076 will be cancelled on the Effective Date, and on the Distribution Date, those claim holders will receive their Pro Rata Share of 686,853 shares of New WHX Common Stock; d) Series B Preferred Equity Interests with an aggregate estimated amount of $9,247,329 will be cancelled on the Effective Date, and on the Distribution Date, those claim holders will receive their Pro Rata Share of 813,147 shares of New WHX Common Stock; and e) Common Equity Interests will be cancelled on the Effective Date and will receive no distributions under the Plan. Headquartered in New York City, New York, WHX Corporation -- http://www.whxcorp.com/-- is a holding company structured to acquire and operate a diverse group of businesses on a decentralized basis. WHX's primary business is Handy & Harman, a diversified industrial manufacturing company servicing the electronic materials, specialty wire and tubing, specialty fasteners and fittings, and precious metals fabrication markets. The Company filed for chapter 11 protection on March 7, 2005 (Bankr. S.D.N.Y. Case No. 05-11444). When the Debtor filed for protection from its creditors, it reported total assets of $406,875,000 and total debts of $352,852,000. WORLDCOM INC: National Patent Prepares for Trial in November ------------------------------------------------------------ National Patent Development Corporation (NPDV.OB) disclosed that the New York Supreme Court issued a decision on the motion made by Electronic Data Systems Corporation for summary judgment dismissing the fraud claims arising out of GP Strategies Corporation's 1998 acquisition of Learning Technologies from the Systemhouse subsidiaries of MCI Communications Corporation. In its June 6, 2005, decision, the court refused to dismiss any of GP Strategies' claims against EDS and Systemhouse. The claims relate to false representations concerning the financial condition of LT's United Kingdom operation and held that GP Strategies had presented evidence sufficient to raise triable issues of fact as to whether defendants provided GP Strategies with financial projections which they knew to be false or unreasonable, and made representations or omissions indicating that LT's United Kingdom operation was on track to achieve revenue targets which they knew it would be unable to achieve. However, the court dismissed GP Strategies' claim that it had been fraudulently induced to acquire LT based on false representations that Systemhouse was not for sale. In its complaint, GP Strategies demands actual damages in the amount of $117,900,000 plus interest, punitive damages in an amount to be determined at trial, and costs, subject to reduction for $12,273,575 in damages awarded in a related arbitration against EDS. A trial date of November 1, 2005 has been set. GP Strategies has requested a jury trial. The fraud action, which was commenced on January 3, 2001, against MCI, Systemhouse, and EDS, as successor to Systemhouse, had been stayed against MCI as a result of the bankruptcy of MCI. In February 2004, the Bankruptcy Court lifted the stay so that the state court could rule on the merits of MCI's summary judgment motion. MCI has asked the Bankruptcy Court to reinstate the stay and to rule on its summary judgment motion. GP Strategies has argued that it would be more efficient if the state court ruled on both summary judgment motions. The Bankruptcy Court has not yet decided whether it or the state court should determine MCI's summary judgment motion. In connection with the spin-off of the Company by GP Strategies, which occurred on Nov. 24, 2004, GP Strategies agreed to make an additional capital contribution to the Company in an amount equal to the first $5 million of any proceeds (net of litigation expenses and taxes incurred, if any), and 50% of any proceeds (net of litigation expenses and taxes incurred, if any) in excess of $15 million, received with respect to the foregoing litigation and arbitration claims. Pursuant to such agreement, GP Strategies has made a $5 million additional capital contribution to the Company out of the $18,428,486 proceeds of the arbitration award ($12,273,575 in damages, $6,016,109 in pre-award interest, and $138,802 of post-award interest). The net cash proceeds to GP Strategies were approximately $8,500,000 after legal fees and the distribution to the Company. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. * Canadian Government Introduces Insolvency Reform Package ---------------------------------------------------------- The Government of Canada has introduced a comprehensive insolvency reform package in Parliament to modernize the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act, as well as to create the legislative framework for the Wage Earner Protection Program, announced May 5, 2005. Extensive consultations with stakeholders showed a broad consensus that reforms were needed to ensure that Canada's insolvency system better responds to the needs of business, consumers and investors. "This reform is about better protecting those adversely affected by bankruptcy and about facilitating restructuring as an alternative to bankruptcy to save jobs and keep businesses viable," the Honorable David L. Emerson, Minister of Industry, said. "Good insolvency law is critical to a fair and efficient marketplace." The reform package includes changes to personal and corporate bankruptcy rules, as well as to restructuring provisions. Restructuring can preserve employment and can lead to better returns for creditors. The reform updates and improves current provisions in the system, for example, by exempting all RRSPs from seizure in bankruptcy and by reducing the period before student loans can be discharged. Other changes will also help curb the potential for abuse, particularly for individuals with large income tax debts. The Bill provides significant improvements to the protection of employees, notably introducing the Wage Earner Protection Program Act. This will provide workers with guaranteed payment of wages. Payment will no longer depend upon the amount of assets in their employers' estates. It will also ensure that workers get paid their wages quickly, so that they will get their money when they need it most. It is anticipated that 97 percent of unpaid wage claims would be fully paid under the WEPP. "The Wage Earner Protection Program will protect workers by providing a guaranteed payment of wages should their employer declare bankruptcy," the Honorable Joe Fontana, Minister of Labour and Housing, said. "Meeting the needs of workers is important to the health, well-being and financial success of all Canadians." The legislative package is an example of smart regulation in bringing more efficiency and effectiveness to the insolvency process. It will provide greater predictability to the corporate restructuring process under the CCAA and still preserve its flexibility. It will also enhance fairness, which plays a central role in insolvency given the competing interests among creditors, and between debtors and creditors. "Insolvency has a significant impact on our economy and affects the lives of many Canadians each year," said Minister Emerson. "Our system must be geared toward making our economy stronger and more competitive, as well as dealing with individuals in financial distress in a fair and equitable way." Information on the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act is available online at http://strategis.ic.gc.ca/ Information on the Wage Earner Protection Program is available at http://www.hrsdc.gc.ca/ * Edwin Komen Joins Sheppard Mullin as IP Partner ------------------------------------------------- Edwin Komen has joined the Washington, D.C. office of Sheppard, Mullin, Richter & Hampton LLP as a partner in its Entertainment & Media Group and Intellectual Property Practice Group. The addition of Mr. Komen further expands the multi-disciplinary Entertainment & Media group, which has grown in two years to include 38 lawyers whose primary focus is servicing entertainment, media and advertising industry clients. Mr. Komen, most recently with Arent Fox in Washington, D.C., specializes in all aspects of copyright, trademark and unfair competition law, with a particular emphasis on practice before the United States Copyright Office. He represents motion picture companies and other entertainment clients in transactional issues involving rights clearance and acquisition. "We're pleased to welcome Ed to the D.C. office," said Edward Schiff, managing partner of the firm's Washington, D.C. office. "He brings a wealth of copyright experience to the firm, and will add to the teamwork and interplay between the firm's D.C., New York and West Coast offices." Commented Mr. Komen, "Sheppard Mullin is a great firm with an excellent reputation. I am excited about developing my practice as part of the Entertainment & Media Group." Robert Darwell, co-chair of the Entertainment & Media Group, stated, "We are thrilled to add such an outstanding entertainment copyright guru to the Group. Ed is well-known and regarded by our studio and other entertainment clients." Mr. Komen's practice encompasses all issues surrounding copyrights, trademarks and related matters including the right of publicity, right of privacy, defamation and domain name registration. He often assists in preparing, prosecuting and securing copyright, trademark and service mark registrations for clients, with extensive knowledge of the rules and regulations governing practice and procedure before the United States Copyright Office and the Patent and Trademark Office's trademark division. Mr. Komen is familiar with all aspects of the Copyright Act of 1976, its predecessor the Copyright Act of 1909 and all earlier United States Copyright Acts, as well as the copyright laws of most major countries. He has also counseled on international copyright treaties and how they interact with domestic copyright laws. In addition to work with motion picture and television producers, such as New Line Cinema, Universal Studios, Focus Features, and Freemarket Films, Mr. Komen has represented clients from all fields of the intellectual property industry such as advertising, interactive software, online services, live theatrical productions, music publishing, record labels, architecture, photography, sculptural works, toys, apparel, textiles, carpets, industrial tools and products, automotive products, and virtually any other product or service whose value substantially depends on copyright or trademark protection. Mr. Komen serves on the editorial board of both Copyright World and the Journal of the Copyright Society of the U.S.A. He is a frequent contributor to Copyright World and has previously authored the U.S. Anti-Piracy section of the Fact Book published by the American Film Marketing Association, a trade association representing independent film producers. Mr. Komen is currently on the Advisory Board of the Montana State University Film School, where he also lectures on film law. Mr. Komen earned his law degree from George Washington Law School in 1976 and graduated, cum laude, from University of Southern California, with a BA in 1971. He received his undergraduate degree at USC's Film School and was a professional filmmaker prior to attending law school. Upon graduation from film school, Mr. Komen was in the Peace Corps stationed in Micronesia. About Sheppard, Mullin, Richter & Hampton LLP Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm with 430 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment and Media; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax, Employee Benefits, Trusts and Estate Planning; and White Collar Defense. The firm was founded in 1927. * Huron Consulting Adds 10 Experts to Firm ------------------------------------------ Huron Consulting Group (NASDAQ:HURN) disclosed the addition of Jeffrey Seymour as managing director in the Legal Business Consulting practice, the promotion of Allen Arnett to managing director in the Valuation practice, and the addition of eight managing directors in the Healthcare practice who were part of the previously announced Speltz & Weis LLC acquisition. "With Huron's continued growth, these individuals are the seasoned professionals that our clients demand," said Gary E. Holdren, chairman and chief executive officer, Huron Consulting Group. "We are thrilled that these outstanding individuals have chosen to join Huron. Each of them will make a great addition to our team." Allen Arnett has been serving chief financial officers for more than a decade by providing valuation services and advising companies on finance related issues. He has advised multinational and middle market companies across many industries on a wide range of value related issues. He joined Huron in 2003 from Standard & Poor's Corporate Value Consulting practice (formerly PricewaterhouseCoopers). Mr. Arnett, a CFA charterholder, is based in the company's Chicago office. Thomas A. DeMinico has been a leader in healthcare management for more than 15 years, advising major health care organizations, academic medical centers, and top urban hospitals. He has a broad range of healthcare consulting experience encompassing: strategic planning and partnering, operations including capacity and throughput management, and information technology. He provides turnaround strategies, service line business development, and process improvement to clients. Mr. DeMinico, part of the Speltz & Weis acquisition, will be based in Huron's New York office. Robert Fanning Jr. served as a hospital president and chief executive officer for more than 20 years. He has a proven track record in developing and implementing profitable strategies in acute care hospitals, integrated delivery systems, and long-term care facilities facing turnaround or distressed situations. Mr. Fanning, part of the Speltz & Weis acquisition, will be based in the company's New York office. Dawn M. Gideon has more than 20 years of experience as a senior healthcare executive in such diverse areas as operations management, organizational restructurings, consulting, strategic planning, and business development. She has also assisted healthcare organizations in the development and execution of turnaround plans, both within and outside of bankruptcy. Ms. Gideon, part of the Speltz & Weis acquisition, will be based in Huron's New York office. Peter A. Kelly has served as a healthcare executive for more than 20 years assisting in hospital acquisitions, mergers, system development and integration, hospital finance and regulatory affairs. He has also had extensive interaction and working relationships with local, state and federal agencies, elected officials on all levels, and labor unions. Mr. Kelly, part of the Speltz & Weis acquisition, will be based in the company's New York office. Jan R. Radke, MD, has spent more than 20 years as a physician executive serving in leadership positions in complex healthcare organizations. He has served as a chief medical officer, chief executive officer, medical director and associate dean, and has achieved considerable management and turnaround success in academic medical centers, multi-specialty physician group practices and tertiary level acute care facilities, and community hospitals. Dr. Radke, part of the Speltz & Weis acquisition, will be based in Huron's New York office. Jeffrey Seymour, a national leader in the field of e-discovery and computer forensics, has spent the majority of his career assisting counsel on litigation and investigation related matters. He has managed all facets of e-discovery and litigation support for large-scale litigation and investigation matters. He has experience designing, implementing and integrating a wide variety of third party and custom-built platforms and applications in support of large-scale engagements across multiple law firms and corporate clients. Prior to joining Huron, Mr. Seymour was a director in Navigant Consulting's Discovery Services practice. He will be based in the company's New York office. David Speltz, the nationally recognized healthcare turnaround advisor, has helped hospitals and other healthcare facilities improve their financial, operational, and market performance through organizational renewal. For more than 25 years, he has led senior management teams in successful turnaround and restructuring efforts in public, teaching, and community hospitals, often in highly competitive managed care environments. Mr. Speltz, founder of Speltz & Weis, will be based in Huron's New York office. Tim Weis has been a restructuring adviser and provided turnaround management services for healthcare organizations over the past 15 years. He has been a CFO at various distressed hospitals and hospital systems where he has developed and implemented turnaround plans with particular emphasis on managing creditor relationships, revenue cycle opportunities, improved financial reporting, and renegotiations of various contracts. Mr. Weis, founder of Speltz & Weis LLC, will be based in Huron's New York office. James Woods has focused on the utilization of real estate by healthcare providers. He has served as property manager for healthcare organizations in New York and California. Over his 20- year career, he has been responsible for the financing and development of a wide range of major healthcare projects. Mr. Woods, part of the Speltz & Weis acquisition, will be based in Huron's New York office. About Huron Consulting Group Huron Consulting Group -- http://www.huronconsultinggroup.com/-- is an independent provider of financial and operational consulting services. Huron's experienced and credentialed professionals apply their expertise in accounting, finance, economics, and operations to a wide variety of financially sound and distressed organizations, including Fortune 500 companies, medium-sized businesses, leading academic institutions, healthcare organizations, and the law firms that represent these various organizations. Huron was named the No. 1 company on Entrepreneur magazine's 11th Annual Hot 100 list. * RSM Richter Merges with Calgary-Based Moody Shikaze ----------------------------------------------------- RSM Richter, one of Canada's largest accounting and consulting firms, strengthened its national position as an alternative to the "big four" accounting firms by merging with Moody Shikaze Boulet LLP, a prominent Calgary-based accounting firm. The merged company will operate under the RSM Richter brand. The new partnership extends RSM Richter's national reach and offers clients senior-level insight, personal service and greater value in both Eastern and Western Canada. RSM Richter provides a full range of services to sophisticated, private companies from a team of more than 550 people at offices in Toronto, Calgary and Montr,al. "This merger strengthens RSM Richter's status as a smart, more client-focused alternative to the 'big four' accounting firms," said Peter Farkas, a managing partner of RSM Richter. "RSM Richter now offers nationwide access to a full suite of services - in both the West and the East, and in both English and French Canada." RSM Richter's Calgary office previously specialized in corporate restructuring, insolvency, business valuations and litigation support, while Moody Shikaze Boulet focused on tax, audit and assurance services. The new, merged Calgary office will offer a full suite of services that parallel RSM Richter's offerings to major clients in Toronto and Montr,al. "The growth of RSM Richter parallels the growth of Calgary as one of the best places to do business in Canada," said Steve Allan, a senior partner at RSM Richter's Calgary office. "The new, expanded RSM Richter team is excited to bring Western Canada the best of both worlds: global reach and expertise, with personal, customized local service." About RSM Richter RSM Richter -- http://www.rsmrichter.com/-- is one of Canada's largest accounting and consulting firms. Founded in 1926, the firm combines the creative, client-focused cultures of its Toronto, Calgary and Montr,al offices with the global reach of RSM International, one of the world's largest networks of independent accounting firms. RSM has more than 600 offices in over 70 countries. RSM Richter's specialties include corporate reorganization, audit, tax and consulting services. * BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles ----------------------------------------------------------- Author: Sallie Tisdale Publisher: Beard Books Softcover: 276 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587981645/internetbankrupt An earlier edition of "The Sorcerer's Apprentice" won an American Health Book Award in 1986. The book has been recognized as an outstanding book on popular science. Tisdale brings to her subject of the wide and engrossing field of health and illness the perspective, as well as the special sympathies and sensitivities, of a registered nurse. She is an exceptionally skilled writer. Again and again, her descriptions of ill individuals and images of illnesses such as cancer and meningitis make a lasting impression. Tisdale accomplishes the tricky business of bringing the reader to an understanding of what persons experience when they are ill; and in doing this, to understand more about the nature of illness as well. Her style and aim as a writer are like that of a medical or science journalist for leading major newspaper, say the "New York Times" or "Los Angeles Times." To this informative, readable style is added the probing interest and concern of the philosopher trying to shed some light on one of the central and most unsettling aspects of human existence. In this insightful, illuminating, probing exploration of the mystery of illness, Tisdale also outlines the limits of the effectiveness of treatments and cures, even with modern medicine's store of technology and drugs. These are often called "miracles" of modern medicine. But from this author's perspective, with the most serious, life-threatening, illnesses, doctors and other health- care professionals are like sorcerer's trying to work magic on them. They hope to bring improvement, but can never be sure what they do will bring it about. Tisdale's intent is not to debunk modern medicine, belittle its resources and ways, or suggest that the medical profession holds out false hopes. Her intent is do report on the mystery of serious illness as she has witnessed it and from this, imagined what it is like in her varied work as a registered nurse. She also writes from her own experiences in being chronically ill when she was younger and the pain and surgery going with this. She writes, "I want to get at the reasons for the strange state of amnesia we in the health professions find ourselves in. I want to find clues to my weird experiences, try to sense the nature of being sick." The amnesia of health professionals is their state of mind from the demands placed on them all the time by patients, employers, and society, as well as themselves, to cure illness, to save lives, to make sick people feel better. Doctors, surgeons, nurses, and other health-care professionals become primarily technicians applying the wonders of modern medicine. Because of the volume of patients, they do not get to spend much time with any one or a few of them. It's all they can do to apply the prescribed treatment, apply more of it if it doesn't work the first time, and try something else if this treatment doesn't seem to be effective. Added to this is keeping up with the new medical studies and treatments. But Tisdale stepped out of this problem- solving outlook, can-do, perfectionist mentality by opting to spend most of her time in nursing homes, where she would be among old persons she would see regularly, away from the high-charged atmosphere of a hospital with its "many medical students, technicians, administrators, and insurance review artists." To stay on her "medical toes," she balanced this with working occasional shifts in a nearby hospital. In her hospital work, she worked in a neonatal intensive care unit (NICU), intensive care unit (ICU), a burn center, and in a surgery room. From this combination of work with the infirm, ill, and the latest medical technology and procedures among highly-skilled professionals, Tisdale learned that "being sick is the strangest of states." This is not the lesson nearly all other health-care workers come away with. For them, sick persons are like something that has to be "fixed." They're focused on the practical, physical matter of treating a malady. Unlike this author, they're not focused consciously on the nature of pain and what the patient is experiencing. The pragmatic, results-oriented medical profession is focused on the effects of treatment. Tisdale brings into the picture of health care and seriously-ill patients all of what the medical profession in its amnesia, as she called it, overlooks. Simply in describing what she observes, Tisdale leads those in the medical profession as well as other interested readers to see what they normally overlook, what they normally do not see in the business and pressures of their work. She describes the beginning of a hip-replacement operation, the surgeon "takes the scalpel and cuts--the top of the hip to a third of the way down the thigh--and cuts again through the globular yellow fat, and deeper. The resident follows with a cautery, holding tiny spraying blood vessels and burning them shut with an electric current. One small, throbbing arteriole escapes, and his glasses and cheek are splattered." One learns more about what is actually going on in an operation from this and following passages than from seeing one of those glimpses of operations commonly shown on TV. The author explains the illness of meningitis, "The brain becomes swollen with blood and tissue fluid, its entire surface layered with pus...The pressure in the skull increases until the winding convolutions of the brain are flattened out...The spreading infection and pressure from the growing turbulent ocean sitting on top of the brain cause permanent weakness and paralysis, blindness, deafness...." This dramatic depiction of meningitis brings together medical facts, symptoms, and effects on the patient. Tisdale does this repeatedly to present illness and the persons whose lives revolve around it from patients and relatives to doctors and nurses in a light readers could never imagine, even those who are immersed in this world. Tisdale's main point is that the miracles of modern medicine do not unquestionably end the miseries of illness, or even unquestionably alleviate them. As much as they bring some relief to ill individuals and sometimes cure illness, in many cases they bring on other kinds of pains and sorrows. Tisdale reminds readers that the mystery of illness does, and always will, elude the miracle of medical technology, drugs, and practices. Part of the mystery of the paradoxes of treatment and the elusiveness of restored health for ill persons she focuses on is "simply the mystery of illness. Erosion, obviously, is natural. Our bodies are essentially entropic." This is what many persons, both among the public and medical professionals, tend to forget. "The Sorcerer's Apprentice" serves as a reminder that the faith and hope placed in modern medicine need to be balanced with an awareness of the mystery of illness which will always be a part of human life. ********* 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 ***