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/raid1/www/Hosts/bankrupt/TCR_Public/050614.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, June 14, 2005, Vol. 9, No. 139 Headlines AAIPHARMA INC: Draws $180 Million Term Loan Under DIP Facilities AAIPHARMA INC: Wants Court to Approve Set-Off Pact with Cardinal ACCIDENT & INJURY: Wants Court to Approve Sale of Excess Assets ADELPHIA: Wants FCC Licenses Assigned to Time Warner & Comcast ALDERWOODS GROUP: Inks Employment Pact with Senior VP Mark Wilson ALLIED HOLDINGS: Likely Covenant Default Cues S&P to Junk Ratings AMCAST INDUSTRIAL: Committee Hires Integra Realty as Appraiser AMES DEPARTMENT: Court OKs Break-Up Fee on Charleston Asset Sale AMES DEPARTMENT: Auctioning Charleston Property Today AOL LATIN AMERICA: Time Warner & Investors Support Liquidation ARMSTRONG WORLD: Creditors Transfer 36 Claims Totaling $89.98MM BELLAIRE GENERAL: Judge Steen Appoints New Chapter 7 Trustee BOMBARDIER CAPITAL: Fitch Junks 15 Certificate Classes BROCKWAY PRESSED: Wants to Hire Perkins Coie as Bankruptcy Counsel BROCKWAY PRESSED: Taps Rally Capital as Financial Consultants CALL-NET ENTERPRISES: Fitch Assigns B- Rating to Sr. Secured Notes CENTRAL VERMONT: VPSB Rate Order Prompts S&P to Cut Rating to BB+ CHOICE COMMUNITIES: Committee Taps Whiteford Taylor as Counsel COMMUNITY HOME: Case Summary & 20 Largest Unsecured Creditors CYGNUS BUSINESS: Liquidity Concerns Prompt S&P to Lower Ratings D & K STORES: Wants Until Dec. 7 to Decide on Unexpired Leases DANKA BUSINESS: March 31 Balance Sheet Upside-Down by $216 Million ENRON CORP: Wants Court Nod on Four Settlement Pacts ENRON CORP: Wants Court Nod on EcoElectrica Settlement Pact ENRON CORP: SDC 7 Holds $1 Million Allowed Unsecured Claim EXIDE TECH: Completes Pension Waiver Process EXIDE TECH: Soros Entities Disclose 4.5% Equity Stake FEDERAL-MOGUL: Wants to Hire Hymans Robertson as Actuaries GLOBAL CROSSING: Forest City Holds $1.2 Mil. Allowed Unsec. Claim GREAT LAKES: Liquidity Concerns Prompt S&P to Junk Ratings GREENWICH CAPITAL: Fitch Holds Low-B Ratings on 6 Mortgage Certs. HOLLYWOOD CASINOS: Black Diamond Increases Offer to $169 Million HORSEHEAD INDUSTRIES: Sells Rosamond Property to MSBH for $270K INTERSTATE BAKERIES: Wants Until Jan. 19 to File Chapter 11 Plan JIMMIE LOTHRINGER: Case Summary & 20 Largest Unsecured Creditors KEYSTONE CONSOLIDATED: U.S. Trustee Alters Creditors' Committee KRISPY KREME: Ernst & Young Taking Bids for KremeKo's Assets KRISPY KREME: KremeKo Amends $1.5 Million DIP Financing LAIDLAW INT'L: FMR CORP. Discloses 13% Equity Stake MERIDIAN AUTOMOTIVE: Wants Until Sept. 25 to Decide on Leases MERIDIAN AUTOMOTIVE: Hires Lazard Freres as Investment Banker MERIDIAN AUTOMOTIVE: Can Pay Critical Vendors Up to $16 Million MGM MIRAGE: S&P Rates $500 Million Senior Notes at BB MID-WESTERN: Moody's Rates Planned $875M Facilities at B1 MID-WESTERN: S&P Rates Proposed $875 Mil. Secured Facility at BB- MIRANT CORP: Inks Settlement Pact with Perryville Energy MIRANT CORP: Dick Holds $11.5MM Secured Claim in Kendall's Case MORGAN STANLEY: Fitch Affirms Class B-5 Certificates at B MURRAY INC: Wants to Use PBGC's Cash Collateral MURRAY INC: Taps Giuliani Capital as Restructuring Consultant NATIONAL CENTURY: Battles Ensue Over Policy Proceeds Distribution NEWFIELD EXPLORATION: Fitch Rates $600M Unsecured Notes at BB+ NORTEL NETWORKS: Bill Owens Replaces Gary Daichendt as COO NRG ENERGY: Amends 4% Preferred Stock Registration with SEC OAKWOOD HOMES: Fitch Lowers Ratings on 24 Classes PARMALAT USA: S.p.A. Holds Allowed Unsecured Claim for $6 Million PILLOWTEX: Wants Bankruptcy Court to Close Pillowtex I Cases PROJECT FUNDING: Fitch Puts Four Classes on Rating Watch Negative PROXIM CORP: Wants to Hire Pachulski Stang as Bankruptcy Counsel PROXIM CORP: Wants Ordinary Course Professionals to Continue QUEST RESOURCE: March 31 Balance Sheet Upside-Down by $24.9 Mil. RAYTHEON COMPANY: Fitch Upgrades Pref. Securities a Notch to BBB- REGENCY GAS: Pipeline Expansion Prompts S&P's Watch Negative RELIANCE GROUP: Still Unable to File Financial Reports with SEC RESI FINANCE: Good Performance Cues S&P to Up Ratings on 4 Certs. ROGERS WIRELESS: High Debt Level Triggers Fitch's Low-B Ratings SFBC INT'L: S&P Rates Planned $90M Revolving Credit Facility at B+ SOUPER SALAD: Sun Capital Affiliate Makes Debt Investment SPIEGEL INC: Court Authorizes Cash Payment of Cure Amounts STATION CASINOS: Moody's Reviews Low-B Debt Ratings & May Upgrade SUMMIT SECURITIES: Wants to Employ Sorling as Special Counsel TECHNICAL OLYMPIC: Transeastern Purchase Cues S&P to Watch Ratings TECNET INC: Chapter 7 Trustee Wants to Sell Real Estate for $775K THAXTON GROUP: Wants Until September 6 to Remove Civil Actions TOM'S FOODS: Wants Until Sept. 4 to Make Lease-Related Decisions TRUMP HOTELS: Cushman & Wakefield to Market World's Fair Site TRUMP HOTELS: U.S. Trustee Objects to Closing Chapter 11 Case UAL CORPORATION: Wants to Assume Newark Airport Lease UAL CORP: Wants to Amend Section 1110 Finance Agreements UAL CORP: Wants Retired Pilots' Appeal Dismissed UNIFLEX INC: Wants to Assume L.E.S.S. France Agreement USINTERNETWORKING: Wants Court to Close Chapter 11 Cases VEO: East West Bank Wants to Conduct Rule 2004 Examination VEO: David Boone Wants to Withdraw as Bankruptcy Counsel VERIDIEN CORPORATION: Recurring Losses Spur Going Concern Doubt VICORP RESTAURANTS: Weak Performance Spurs S&P's Negative Outlook VILLAS AT HACIENDA: No Creditors Want to Serve on a Committee W.R. GRACE: Wants OK on Consulting Pact with SVP & General Counsel WEIRTON STEEL: Court Okays National Steel Settlement Pact WESTPOINT STEVENS: Files Amended Joint Plan of Reorganization WESTPOINT STEVENS: Classification of Claims & Interests Under Plan WISTON XIV: Files Chapter 11 Plan of Reorganization in Nebraska * Large Companies with Insolvent Balance Sheets ********* AAIPHARMA INC: Draws $180 Million Term Loan Under DIP Facilities ---------------------------------------------------------------- As reported in the Troubled Company Reporter on June 8, 2005, the U.S. Bankruptcy Court for the District of Delaware gave aaiPharma Inc. and its debtor-affiliates authority to enter into a $210 million debtor-in-possession credit agreement with Silver Point Finance, LLC, as collateral agent, Bank of America, N.A., as a lender and as administrative agent for a group of lenders comprised of: * Sea Pines Funding LLC, * TRS Thebe LLC, * SIL Loan Funding LLC, * SPCP Group LLC, * SPF CDO I, LLC and * Goldman Sachs Credit Partners, L.P. The Company satisfied the remaining conditions to borrowing under the DIP Facilities and drew the full $180 million term loan available under the DIP Facilities. The proceeds of this borrowing were used to repay in full the indebtedness outstanding under the Company's existing senior credit facilities. In addition to the $180 million term loan, the DIP Facilities include a $30 million revolving loan facility. The DIP Facility will help ensure that vendors, suppliers and other business partners will continue to be paid under normal terms for goods and services provided during the period while the company is operating in chapter 11. Terms of the Postpetition Credit Agreement The Debtors' obligations under the DIP Facility is secured by: -- 100% of the capital stock of the Company's domestic subsidiaries; -- 65% of the capital stock of the Company's first-tier foreign subsidiaries; and -- all of the Company's assets and the assets of aaiPharma's existing and future domestic subsidiaries. Headquartered in Wilmington, North Carolina, aaiPharma Inc. -- http://aaipharma.com/-- provides product development services to the pharmaceutical industry and sells pharmaceutical products which primarily target pain management. AAI operates two divisions: AAI Development Services and Pharmaceuticals Division. The Company and eight of its debtor-affiliates filed for chapter 11 protection on May 10, 2005 (Bankr. Del. Case Nos. 05-11341 to 05-11350). Karen McKinley, Esq. and Mark D. Collins, Esq. at Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, the reported consolidated assets amounting to $323,323,000 and consolidated debts totaling $446,693,000. AAIPHARMA INC: Wants Court to Approve Set-Off Pact with Cardinal ---------------------------------------------------------------- aaiPharma Inc. and its debtor-affiliates generate revenues from the sale of pharmaceutical products to various wholesalers. Cardinal Health Inc. is one of those wholesalers. At the same time, Cardinal provides the Debtors with various services including: distribution, logistics, warehousing, packaging and invoicing. As a result, Cardinal incurred prepetition debt to the Debtors for purchases of pharmaceutical products while the Debtors owed certain amounts to Cardinal for prepetition warehousing and distribution services. aaiPharma Inc., and its debtor-affiliates tells the U.S. Bankruptcy Court for the District of Delaware that the exact amounts are in dispute. The parties have talked and arrived at a global settlement. The Debtors ask the Court, pursuant to Bankruptcy Rule 9019, to approve their compromise and settlement agreement. The Debtors and Cardinal agree: 1) to offset their prepetition debts; 2) that Cardinal will pay the Debtors $2 million in cash; 3) that Cardinal will release all of its prepetition liens on the Debtors' inventory; and 4) that Cardinal will pay cash for all postpetition purchases and services. The Debtors tell the Court that the agreement with Cardinal will ensure that critical business relationships continue through the bankruptcy proceedings. Headquartered in Wilmington, North Carolina, aaiPharma Inc. -- http://aaipharma.com/-- provides product development services to the pharmaceutical industry and sells pharmaceutical products which primarily target pain management. AAI operates two divisions: AAI Development Services and Pharmaceuticals Division. The Company and eight of its debtor-affiliates filed for chapter 11 protection on May 10, 2005 (Bankr. Del. Case Nos. 05-11341 through 05-11350). Karen McKinley, Esq. and Mark D. Collins, Esq. at Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, the reported consolidated assets amounting to $323,323,000 and consolidated debts totaling $446,693,000. ACCIDENT & INJURY: Wants Court to Approve Sale of Excess Assets --------------------------------------------------------------- Accident & Injury Pain Centers, Inc., dba Accident & Injury Chiropractic and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for authority to sell some personal property previously used in their corporate headquarters and eleven clinics. The Debtors have no need for the personal property and it is unnecessary in their reorganization. A court-approved auction will be conducted by Rosen Systems, Inc., on June 21, 2005, at 14335 Inwood Road, #102, in Dallas, Texas. Rosen Systems will be paid a 10% commission from the sale proceeds. Comerica Bank, holding liens on the properties, doesn't object to the sale. A list of items to be auctioned is available for a fee at: http://ResearchArchives.com/t/s?1e Headquartered in Dallas, Texas, Accident & Injury Pain Centers, Inc. -- http://www.accinj.com/-- operates clinics that treat patients with highly advanced therapy equipment and techniques. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688). Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported estimated assets and debts of $10 million to $50 million. ADELPHIA: Wants FCC Licenses Assigned to Time Warner & Comcast -------------------------------------------------------------- In a joint application, Adelphia Communications Corporation, Time Warner Inc. and Comcast Corporation seek the Federal Communications Commission's permission to transfer control of or assign various FCC licenses and authorizations pursuant to Sections 214 and 310(d) of the Communications Act of 1934. The proposed transfer and assignment is associated with the sale of substantially all assets of ACOM to Time Warner NY Cable LLC and Comcast. The proposed transactions involve a series of agreements whereby Time Warner Cable Inc. and Comcast separately will acquire various cable systems that, in the aggregate, comprise substantially all of the domestic cable systems owned or managed by Adelphia for a total of $12.7 billion in cash. Adelphia provides cable service to approximately five million subscribers, making it the fifth largest cable television company and the seventh largest multichannel video programming distributor in the United States. Comcast is the nation's largest MVPD and will remain so upon completion of the Transactions. Comcast says it serves approximately 26.1 million subscribers in 35 states and the District of Columbia, or 28.2% of MVPD subscribers nationwide. Time Warner Cable states that it owns or manages cable systems serving 13.1 million cable subscribers in 27 states, making it the nation's second largest cable operator and third largest MVPD. A list of the licenses and authorizations to be transferred is available for free at http://ResearchArchives.com/t/s?19 Interested parties must file comments or petitions to deny the application no later than July 5, 2005. 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) ALDERWOODS GROUP: Inks Employment Pact with Senior VP Mark Wilson ----------------------------------------------------------------- On May 10, 2005, Alderwoods Group, Inc., entered into a letter agreement with Mark W. H. Wilson, effective as of May 1, 2005. Mr. Wilson is hired as Senior Vice President of Human Resources and will directly report to Paul Houston, the president and chief executive officer of Alderwoods. In a regulatory filing with the Securities and Exchange Commission, Mr. Houston discloses that the Wilson Employment Agreement provides for these terms: Base Pay: $205,000 gross per annum Bonus: Eligible to participate in the Alderwoods Executive bonus program, calculated at 40% to 80% of Mr. Wilson's salary. Stock Options: Continue to be eligible to participate in the stock option program at the Senior Vice President level. Benefits: Continue to be eligible to participate in the Alderwoods benefits program. Will be eligible for a $3,000 medical spending account. Club Membership: Eligible to expense up to $1,500 towards a club membership Car Allowance: Entitled to a car allowance of $600 a month Vacation: Eligible for four weeks vacation per year Employment Entitled to receive 12 months severance Termination: consisting of base salary and standard health and dental benefits if terminated for any reason other than just cause. All other benefits would cease on the last day of active employment. The health and dental benefits would cease if Mr. Wilson obtains alternate coverage during the 12-month period. Change of If there is a change of control, as defined Control: under the Alderwoods 2005 Equity Incentive Plan, and as a result of employment being terminated, Mr. Wilson will receive 24 months severance. Alderwoods Group is the second largest operator of funeral homes and cemeteries in North America, based upon total revenue and number of locations. As of June 19, 2004, the Company operated 716 funeral homes, 130 cemeteries and 61 combination funeral home and cemetery locations throughout North America. Of the Company's total locations, 59 funeral homes, 53 cemeteries and four combination funeral home and cemetery locations were held for sales as of June 19, 2004. The Company provides funeral and cemetery services and products on both an at-need and pre-need basis. In support of the pre-need business, the Company operates insurance subsidiaries that provide customers with a funding mechanism for the pre-arrangement of funerals. (Loewen Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As previously reported in the Troubled Company Reporter on July 27, 2004, Standard & Poor's Ratings Services it affirmed its 'B+' corporate credit rating on the funeral home and cemetery operator Alderwoods Group, Inc., and assigned its 'B' debt rating to the company's proposed $200 million senior unsecured notes due in 2012. At the same time, Standard & Poor's also assigned its 'BB-' senior secured bank loan rating and its '1' recovery rating to Alderwoods' proposed $75 million revolving credit facility, which matures in 2008, and to its proposed term loan B, which matures in 2009. The existing term loan had $242 million outstanding at March 27, 2004, but will be increased in size. The bank loan ratings indicate that Standard & Poor's expects a full recovery of principal in the event of a default, based on an assessment of the loan collateral package and estimated asset values in a distressed default scenario. The company is expected to use the proceeds from the new financings to redeem $320 million of 12.25% senior unsecured notes, repay a $25 million subordinated loan, and fund transaction costs. As of March 27, 2004, the company had $614 million of debt outstanding. ALLIED HOLDINGS: Likely Covenant Default Cues S&P to Junk Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on vehicle transporter Allied Holdings Inc. to 'CCC-' from 'CCC+' and its unsecured debt rating to 'CC' from 'CCC-'. The outlook on the Decatur, Georgia, company is negative. At March 31, 2005, Allied had $290 million in lease-adjusted debt. "The downgrade reflects uncertainty surrounding Allied Holdings' near-term financial covenant compliance and liquidity, given the challenging U.S. automotive sector and the company's hiring of a financial advisor to review strategic and financial alternatives," said Standard & Poor's credit analyst Kenneth Farer. The company's financial advisor is expected to present its recommendations to the company on or before June 22, 2005, after which Standard & Poor's will reassess its ratings and outlook. "Ratings could be lowered if covenant relief is not extended beyond June 22, 2005," Mr. Farer said. "Ratings on the company's unsecured notes could be lowered to selective default, 'SD' if a bond exchange or other debt restructuring arrangements are undertaken in a manner judged to be a distressed exchange." Despite some recent price increases, the car-hauling industry faces pricing pressure from the large auto manufacturers, which represent a majority of the company's revenues, and increasing labor costs. Generally, revenues for the industry closely follow trends of North American vehicle production figures, which are forecast to continue at weak levels compared to the past few years. New entrants are not expected, because of the substantial capital required for trucks, car-hauling trailers, and terminals. AMCAST INDUSTRIAL: Committee Hires Integra Realty as Appraiser -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Amcast Industrial Corporation sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, to hire Integra Realty Resources, Inc., as its real property appraiser, nunc pro tunc to May 4, 2005. Integra Realty will provide site inspection, research, data analysis and appraisal services in connection with the Committee's investigation of liens purportedly encumbering the Debtor's real property located at 1450 Musicland Drive in Franklin, Indiana. Integra will charge: a) a flat fee of $7,500 for professional appraisal services which includes any normal and customary out-of-pocket expenses including, but not limited to, travel related expenses to be paid upon delivery of a final report; and b) an hourly fee of $250 for necessary expert testimony and consultation. The Committee assures the Court that the employment and retention of Integra is in everybody's best interests. About Integra Realty Integra Realty is the largest property valuation and counseling firm in the United States with 51 offices coast to coast. Integra's Managing Directors are well known experts in their respective communities, and continue to provide professional real estate services to many of the nation's largest and most prestigious financial institutions, developers, corporations, law firms, and government agencies concerned with the value, use, and feasibility of real estate. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq., at Thompson Hine LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. AMES DEPARTMENT: Court OKs Break-Up Fee on Charleston Asset Sale ---------------------------------------------------------------- Ames Department Stores and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's permission to pay an $11,000 break-up fee to Simpson Properties, Inc., in the event they consummate the sale of the the property in Kahawha Mall on MacCorkle Avenue in Charleston, West Virginia with another buyer. As reported in the Troubled Company Reporter yesterday, the Debtors asked the Court to approve the sale of the Charleston Property to Simpson Properties, Inc., subject to higher and better offers, free and clear of all liens. Simpson proposed to buy the property for $550,000. To maximize the value of the property in Charleston, West Virginia, the Debtors will hold an auction for the Property. At the Debtors' request, Judge Gerber schedules the auction for today, June 14, 2005, at 10:00 a.m. Neil Berger, Esq., at Togut, Segal & Segal, in New York, relates that the Break-up Fee, which is 2% of the gross cash consideration in the Purchase Agreement, will: -- reimburse Simpson for certain of the expenses Simpson will incur in connection with the proposed transaction, including attorney's fees; and -- compensate Simpson for the substantial time and effort it has expended and will continue to expend as a stalking horse for competing bids. However, if Simpson submits a competitive bid for the Property at the Auction, then Simpson is deemed to have waived the right to the Break-up Fee, even if at the conclusion of the Auction, the Debtors select an alternative offer as the best bid for the Property. In the event that the closing with the successful bidder has not occurred within 30 days after termination of the Purchase Agreement with Simpson and it is entitled to receive the Break-up Fee in accordance with the Purchase Agreement, then the Break-up Fee will be paid to Simpson from the bid deposit. The Debtors believe that the nature of the assets subject to the Purchase Agreement and the size of the Break-up Fee demonstrate that the Break-up Fee will not chill the bidding process. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMES DEPARTMENT: Auctioning Charleston Property Today ----------------------------------------------------- Ames Department Stores and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to approve the sale of a property located at the Kahawha Mall on MacCorkle Avenue in Charleston, West Virginia to Simpson Properties, Inc., subject to higher and better offers, free and clear of all liens. Simpson proposed to buy the property for $550,000. To maximize the value of the property in Charleston, West Virginia, the Debtors will hold an auction for the Property. At the Debtors' request, Judge Gerber schedules the auction for today, June 14, 2005, at 10:00 a.m. The Debtors also obtained the Court's approval of these bidding procedures: (a) Bidders will be required to attend the Auction, and their bids will be subject to higher and better offers, if any, made at the Auction. After the initial offers, all bidding at the Auction will be in increments of at least $25,000. (b) All bids made at the Hearing will remain open and irrevocable until 11 days following the Hearing, and the second best bid, as determined by the Debtors, will remain open and irrevocable until a closing on the sale, so that they may be accepted and consummated subject to an appropriate order of the Court, if the bid selected at the Auction and approved by the Court is not consummated at the Closing. (c) All Bidders are deemed to have submitted to the exclusive jurisdiction of the Court with respect to all matters related to the Auction. (d) The Debtors will have the absolute right to modify or waive any terms of the submission of qualified offers and the bidding. (e) No bid will be considered unless the Bidder demonstrates to the Debtors' satisfaction that it has the present financial capability to consummate a purchase of the Property. (f) All bids will be "firm offers" and may not contain any contingencies to the validity, effectiveness and binding nature of the offer, including, without limitation, contingencies for financing, due diligence or inspection. (g) Any party wishing to submit a higher and better offer than that described in the Purchase Agreement with Simpson Properties, Inc., must deliver its offer in writing, to the Debtors c/o Togut, Segal & Segal LLP, attorneys for the Debtors, One Penn Plaza, New York, New York 10119, Attn: Neil Berger, Esq., with copies delivered directly to: -- the Debtors; -- Otterbourg, Steindler, Houston & Rosen, attorneys for the Statutory Creditors Committee; -- Eric H. London, Esq., attorney of Simpson; and -- Morgan, Lewis & Bockius LLP, attorneys for Kimco; so as to be received no later than June 10, 2005 by 4:00 p.m. The Court requires that submitted offers for the Property: -- be on substantially the same terms as set forth in the Purchase Agreement with Simpson Properties, Inc.; -- exceed the Purchase Price of $550,000 by at least $25,000; -- provide for a sale closing to occur not later than five days after all conditions to closing have occurred or have been waived; and -- be accompanied by a certified check or money order equal to 10% of the Purchase Price of the bid, which will be delivered and paid to Togut Segal & Segal LLP to be held in escrow pending the Court's determination of the sale and be: * applied toward the Purchase Price of the successful Bidder if its bid is approved by the Court and automatically deemed nonrefundable; * retained if the Sale to the Bidder is approved by the Court, but the successful Bidder fails to timely Close; or * refunded in full promptly after the Hearing if the bid is not approved. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) AOL LATIN AMERICA: Time Warner & Investors Support Liquidation -------------------------------------------------------------- Time Warner Inc., together with America Online, reached an agreement with the holders of the outstanding shares of AOL Latin America's Series C Preferred Stock -- Aspen Investments L.L.C. and Atlantis Investments L.L.C. (the "ODC Parties") -- to support the liquidation of the ailing Internet service provider. The agreement, however, is not yet finalized and does not require AOL- LA to wind-down or to file a bankruptcy petition. Liquidation Agreement Both parties agreed that, after paying potential costs and priority claims related to a liquidation of AOL Latin America, 60% of any proceeds would go to Time Warner, while ODC will receive 40% of the distributions. Affiliates of the Cisneros Group of Cos., a privately-held investment firm and an AOL Latin America investor, would receive the remainder. Time Warner also agreed to assume ownership of AOL Latin America's assets in Puerto Rico as partial repayment of claims AOL Latin America owes. The Company has not successfully completed any transaction to sell any of its operating businesses, since it explored strategic alternatives with its financial advisors in May 2004. However, the Company recently closed a transaction with Comunicaciones Nextel de Mexico, S.A. de C.V. and Servicios NII, S.A. de C.V. Time Warner, the holder of $160 million of the Company's senior convertible notes, has the right to require the Company to use the proceeds from any sale transaction to repay the senior convertible notes. As of March 31, 2005, approximately $1.3 million of AOL-LA's cash on hand served to collateralize certain Company obligations to employees. In total, the Company may be obligated to make payments amounting up to $1.8 million under these obligations in 2005 and 2006. An additional $0.7 million served to collateralize certain operational expenditures. AOL-LA's preferred stock has a current aggregate liquidation preference of approximately $626.0 million (excluding accrued, but unpaid, dividends). Even if the Company is successful in selling all of its businesses, the proceeds will not be sufficient to repay the senior convertible notes, and none of those proceeds will be available to the common stockholders. As a result, the Company does not believe that its common stock has, or will have, any value. The Company said that if it is unsuccessful in completing its sale transactions, it expects to cease its business operations and file for bankruptcy protection under the U.S. bankruptcy laws or other jurisdictions in which it operates its businesses. Any voluntary filing, AOL-LA said, would require the consent of its Series B Preferred Stock and Series C Preferred Stock holders, in addition to the authorization of its Board of Directors. America Online Latin America, Inc., is a leading interactive service provider in Latin America, deriving the bulk of its revenues principally from member subscriptions in Brazil, Mexico, Argentina and Puerto Rico. AOL-LA also generates additional revenues from advertising and other revenue sources, including programming services provided to America Online for Latino content area and revenue sharing agreements with certain local telecommunications providers. Beginning in 2004, AOL Latin America became a subsidiary of Time Warner for consolidation purposes. At March 31, 2005, AOL-LA's balance sheet showed a $153,769,000 stockholders' deficit, compared to a $149,527,000 deficit at Dec. 31, 2004. ARMSTRONG WORLD: Creditors Transfer 36 Claims Totaling $89.98MM --------------------------------------------------------------- The Clerk of the U.S. Bankruptcy Court for the District of Delaware recorded claim transfers, aggregating $89,986,780, from January 27, 2005, to June 6, 2005. Amroc Investments, Inc., purchased 20 claims from these trade creditors: * Lasentec Inc., * Dassault Falcon Jet Corp., * SGS US Testing Co. Inc., * Scott W. Boyd, * Walkett Group, * Schnader Harrison Segal Lewis, * Milamar Coatings TLC, * Delval Equipment Corp., * Allsouth Environmental, * Durrett Sheppard Steel * Tait Machine & Tool, * Herr Industrial Inc., * Bibb Tool & Cutter Inc., * Burgard Design, * Centurion Wireless Technologies, * VPI Corporation, * Industrial Piping System Inc., * Albert Seisler Machine Corp., * Gregory Salisbury Power Product, and * Harrelson Modular Construction Inc. Contrarian Funds, LLC, acquired eight claims, aggregating $471,018, from these transferors: * Avery Dennison Corporation, * Southern Erectors, Inc., * H.B. Fuller Company, * Talco Plastics, Inc., * Gateway Environmental Contractors, Inc., * Whistler Machine Works Inc., * Versatech Services Inc., and * Arnold Business Forms Co., Inc. Bear, Stearns & Co. Inc., sold two claims to D.E. Shaw Laminar Portfolios, L.L.C., totaling $33,360,417. Citadel Credit Trading Ltd. assigned its claim to Citadel Equity Fund Ltd. Jefferson Pilot assigned Claim No. 2552 to Lehman Brothers, Inc., who, in turn, transferred the claim to OCM Opportunities Fund IV L.P. Other claims that were assigned are: Transferor Transferee Claim Amount ---------- ---------- ------------ Treasurer, State of Michigan JP Morgan Chase $50,130,667 Consolidated Employee's Bank, N.A. Retirement Systems JPMorgan Chase Bank, N.A. CoMac Acquisition 5,041,298 Co., L.P. Prior Chemical Corporation SPCP Group, LLC 983,380 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) BELLAIRE GENERAL: Judge Steen Appoints New Chapter 7 Trustee ------------------------------------------------------------ The Honorable Wesley W. Steen of the U.S. Bankruptcy Court for the Southern District of Texas appointed Janet S. Casciato-Northrup as the chapter 7 trustee to oversee the liquidation of Bellaire General Hospital, L.P. The Honorable Marvin Isgur recused himself from the proceedings on May 13, 2005, after his prior affiliation with the appointed Chapter 7 Trustee, Ben B. Floyd, Esq., was discovered. Mr. Floyd resigned on June 3, 2005, after learning of potential conflicts of interest. As reported in the Troubled Company Reporter on June 7, 2005, Mr. Floyd believes the new chapter 11 trustee will submit a plan that will allow patients access to their medical records. He estimates the center has medical records for 10,000 patients. Headquartered in Houston, Texas, Bellaire General Hospital, L.P. -- http://www.bellairemedicalcenter.com/-- operates a hospital. The Company filed for chapter 11 protection on January 3, 2005 (Bankr. S.D. Tex. Case No. 05-30089). Daniel F. Patchin, Esq., at McClain, Leppert & Maney, P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. The Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding on April 29, 2005. The hospital's secured creditors -- Columbia Hospital of Houston and GE Credit Corp. -- decided to foreclose on the hospital's property after efforts to auction off the assets failed. BOMBARDIER CAPITAL: Fitch Junks 15 Certificate Classes ------------------------------------------------------ Fitch Ratings affirms 11 classes (representing approximately $129 million in outstanding principal) and downgrades 21 classes (representing approximately $779 million in outstanding principal) of Bombardier Capital Mortgage Securitization Corp. manufactured housing issues. Bombardier provided retail financing for manufactured homes before exiting the business in September 2001. Bombardier continues to service the loans from a servicing center in Jacksonville, Florida. When estimating future collateral losses, Fitch assumed a modest decline in default rates based on improving delinquency pipeline trends (ie, the rate at which repo property being liquidated is outpacing the rate at which borrowers are becoming delinquent). Voluntary prepayment rates and loss severities were also assumed to remain relatively consistent with current levels. Based on these assumptions, Fitch expects each pool to incur losses between 30% and 40% of the remaining pool balance. When included with losses already incurred, total cumulative losses as a percentage of the initial pool balance are expected to be between 35% and 45%. Based on the review, Fitch takes these rating actions: Series 1998-A -- Class A-3 affirmed at 'AAA'; -- Class A-4 affirmed at 'AAA'; -- Class A-5 affirmed at 'AAA'; -- Class M downgraded to 'BBB' from 'A'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1998-B -- Class A downgraded to 'BBB-' from 'A'; -- Class M-1 downgraded to 'CCC' from 'B'; -- Class M-2 remains at 'C'. Series 1998-C -- Class A downgraded to 'A' from 'AA'; -- Class M-1 downgraded to 'B' from 'BBB-'; -- Class M-2 downgraded to 'CC' from 'B'; -- Class B-1 remains at 'C'; Series 1999-B -- Class A-1A downgraded to 'CC' from 'B-'; -- Class A-1B downgraded to 'CC' from 'B-'; -- Class A-2 downgraded to 'CC' from 'B-'; -- Class A-3 downgraded to 'CC' from 'B-'; -- Class A-4 downgraded to 'CC' from 'B-'; -- Class A-5 downgraded to 'CC' from 'B-'; -- Class A-6 downgraded to 'CC' from 'B-'; -- Class M-1 remains at 'C'. Series 2000-A -- Class A-1 downgraded to 'CC' from 'CCC'; -- Class A-2 downgraded to 'CC' from 'CCC'; -- Class A-3 downgraded to 'CC' from 'CCC'; -- Class A-4 downgraded to 'CC' from 'CCC'; -- Class A-5 downgraded to 'CC' from 'CCC'; -- Class M-1 remains at 'C'. Series 2001-A -- Class A downgraded to 'A+' from 'AA-'; -- Class M-1 downgraded to 'BB-' from 'BBB'; -- Class M-2 downgraded to 'CC' from 'B-'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ BROCKWAY PRESSED: Wants to Hire Perkins Coie as Bankruptcy Counsel ------------------------------------------------------------------ Brockway Pressed Metals, Inc., asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for permission to employ Perkins Coie LLP as its general bankruptcy counsel. Perkins Coie is expected to: a) advise the Debtor of its duties and obligations as a debtor- in-possession in the continued management and operation of its business and property; b) take all necessary actions to protect and preserve the Debtor's estate, including prosecuting actions on behalf of the Debtor, defending any actions commenced against the Debtor, negotiating litigation in which the Debtor is involved, and objecting to claims filed against the Debtor's estate; c) appear in Bankruptcy Court on behalf of the Debtor when required, and prepare, file and serve applications, motions, complaints, notices, orders, reports and other documents and pleadings as may be necessary in connection with the Debtor's chapter 11case; and d) provide all other legal services to the Debtor that are necessary in its bankruptcy case. Daniel A. Zazove, Esq., a Partner at Perkins Coie, is the lead attorney for the Debtor. Mr. Zazove discloses that the Firm received an $85,000 retainer. Mr. Zazove charges $555 per hour for his services. Mr. Zazove reports Perkins Coie's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Stacey Ravetta Associate $275 Attila Kovacs-Szabo Paralegal $165 Perkins Coie assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Brockway, Pennsylvania, Brockway Pressed Metals, Inc. -- http://www.brockwaypm.com/-- manufactures a wide range of highly engineered metal parts and sub-assemblies. The Company specializes in automotive applications, including engine and transmission components, electronic actuators, steering components, cruise control devices, assembled camshafts, and gas springs. The Company filed for chapter 11 protection on June 8, 2005 (Bankr. W.D. Pa. Case No. 05-11891). When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. BROCKWAY PRESSED: Taps Rally Capital as Financial Consultants ------------------------------------------------------------- Brockway Pressed Metals, Inc., asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for permission to employ Rally Capital Services LLC as its financial consultants. The Debtor explains that it wants to retain Rally Capital as its financial consultants because of the Firm's extensive experience and knowledge in the field of debtor and creditor workouts, turnaround management, and restructuring of financially distressed operations. Rally Capital has also been the Debtor's primary pre-petition financial consultants and has extensive knowledge about the company's structure, operations, and financial condition. Rally Capital will provide financial consultancy services to the Debtor in relation to the restructuring of its business operations under chapter 11. Rally will also help the Debtor negotiate with its secured lenders and assist the company in obtaining post- petition financing. Steven Baer, a Principal at Rally Capital, discloses that the Firm received a $165,764 retainer. Mr. Baer charges $350 per hour for his services. Mr. Baer reports Rally Capital's professionals bill: Professional Hourly Rate ------------ ----------- Howard Samuels $350 Dan Lee $250 Daryl Falcone $250 Richard Walko $250 Jeffrey Samuel $150 Rally Capital assures the Court that it does not represent any interest materially adverse to the Debtor or their estate. Headquartered in Brockway, Pennsylvania, Brockway Pressed Metals, Inc. -- http://www.brockwaypm.com/-- manufactures a wide range of highly engineered metal parts and sub-assemblies. The Company specializes in automotive applications, including engine and transmission components, electronic actuators, steering components, cruise control devices, assembled camshafts, and gas springs. The Company filed for chapter 11 protection on June 8, 2005 (Bankr. W.D. Pa. Case No. 05-11891). Robert S. Bernstein, Esq., at Bernstein Law Firm, P.C., and Daniel A. Zazove, Esq., at Perkins Coie LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. CALL-NET ENTERPRISES: Fitch Assigns B- Rating to Sr. Secured Notes ------------------------------------------------------------------ Fitch Ratings has initiated coverage of Call-Net Enterprises Inc. and assigned a 'B-' rating to its senior secured notes. Fitch also places the ratings of Call-Net on Rating Watch Positive due to the CDN$330 million all-stock acquisition of Call-Net by Rogers Communications Inc. (rated 'BB-' by Fitch). Approximately US$223 million of debt securities are affected by these actions. Call-Net's 'B-' rating incorporates its highly speculative credit profile as confirmed by the considerable dependence on long distance services, constrained revenue growth prospects, limited financial flexibility, and the competitive position in relation to the well-capitalized incumbent carriers. Call-Net has focused on shifting its product mix over the last two years from long distance to local, although the long distance segment still generates approximately 45% of its revenue, compared with 63% in 2002. Fitch recognizes the modest improvements to Call-Net's credit profile, with gross margin increasing to over 55% during the first quarter of 2005, significant cost savings from recent regulatory rulings, past debt reduction efforts, and modest free cash flow generation. On May 11, RCI announced the company had entered into a definitive agreement to acquire Call-Net in an all-stock transaction including the assumption of US$223 million in secured debt, which matures in 2008. Under terms of the agreement, RCI will issue one non-voting share (9 million total) in exchange for 4.25 shares of Call-Net stock. With the acquisition, RCI will realize material operating synergies and accelerate its entry into the residential telephony market. The transaction is expected to close in the third quarter with Call-Net becoming a restricted operating subsidiary of RCI. While the secured notes contain a change of control provision, Fitch does not expect bondholders to tender the debt, since the notes are trading at a premium to the redemption price. However, in January 2006, the debt can be redeemed at the company's option with a make whole premium. Similar to other long distance operators, Call-Net's long distance revenues have eroded over the past several years due to intense pricing pressure. Industry trends are negative for the long distance sector and are not expected to improve going forward. Characteristics of the industry include a high degree of price competition, overcapacity, and technological substitution. Accordingly, during 2004, Call-Net's revenue for the consumer and carrier long distance segments declined 11% and 20%, respectively. In addition, the introduction of VoIP (voice over Internet protocol) services in 2005 will likely further pressure industry pricing and introduce more competition in the local market. Fitch believes the company's liquidity position is adequate for its rating level, supported by its cash position ($80 million at the end of March 2005), modest free cash flow prospects, and no near-term maturities. In addition, the company has fully utilized its accounts receivable securitization program at $55 million. Given Call-Net's limited financial flexibility, the company's capital spending program is constrained, which confines growth prospects. Consequently, capital intensity in 2004 was 7% of revenues. Call-Net's leverage metric has improved over the last year primarily through debt reduction. LTM Debt to EBITDA (including right of way and accounts receivable securitization) is 3.5 times (x) compared with 4.4x at the end of 2003. From a regulatory perspective, the recent decisions by the Canadian Radio and Telecommunications Commission continue to emphasize its commitment toward ensuring sustainable facilities- based competition and fostering competition in Canada's local exchange market, which benefits Call-Net's position as a competitive local exchange carrier (CLEC). In February, the CRTC lowered the price that CLECs like Call-Net pay for access to competitor digital network access facilities and services. This ruling provides greater regulatory clarity for Call-Net and reduces carrier costs by approximately $25 million per year, thereby adding more stability to Call-Net's cash flows. In May, the CRTC issued a ruling that regulates VoIP pricing for only the incumbent telecom carriers, restricting their ability to price VoIP services below cost. Fitch believes the CRTC will continue regulating the local telephony market until incumbent operators have lost significant market share (at least mid-teens) to the CLECs. CENTRAL VERMONT: VPSB Rate Order Prompts S&P to Cut Rating to BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Central Vermont Public Service Corp. to 'BB+' from 'BBB-'. At the same time, Standard & Poor's removed the rating from CreditWatch, where it was placed with negative implications on April 4, 2005. The outlook is stable. Central Vermont is an investor-owned electric utility serving roughly 150,000 customers in Vermont. The company has approximately $134 million in total debt outstanding, primarily first mortgage bonds, most of which are privately placed and unrated. The downgrade is in response to an April 2005 Vermont Public Service Board rate order requiring Central Vermont to provide customers with a rate refund of approximately $6 million in June 2005 and to reduce rates by 2.75% effective April 1, 2005. "The rate order represents an adverse shift in the company's regulatory environment, which heightens its business risk over the foreseeable future," said Standard & Poor's credit analyst Jeanny Silva. Standard & Poor's also said that the mandated rate refund and decrease weaken the company's credit-protection measures. Furthermore, the rate order's impact on cash flows limits the company's ability to generate positive discretionary cash flow, which is a material difference from previous years. The stable outlook reflects the expectation that the company's financial profile will not deteriorate beyond current projections. CHOICE COMMUNITIES: Committee Taps Whiteford Taylor as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Choice Communities, Inc.'s chapter 11 case, sought and obtained permission from the U.S. Bankruptcy Court for the District of Maryland to employ Whiteford, Taylor & Preston L.L.P. as its counsel, nunc pro tunc to Feb. 14, 2005. Whiteford will: a) advise the Committee with respect to its powers and duties; b) prepare any necessary applications, motions, pleadings, orders, reports and other legal papers, and appear on the Committee's behalf in proceedings instituted by, against, or involving the Debtor, the Committee or this chapter 11 proceeding; c) assist the Committee in the investigation of the acts, liabilities and financial condition of the Debtor, its assets and business operations, the disposition of the Debtor's assets, and any other matters relevant to this case and the interests of unsecured creditors; d) assist the Committee in coordinating its efforts to maximize distributions to unsecured creditors; and e) perform legal services for the Committee as may be necessary or desirable in the interests of the unsecured creditors. Whiteford will coordinate with other professionals that the Committee may employ to achieve the Committee's goal to maximize recoveries to unsecured creditors with optimum efficiency. The Committee will retain Whiteford on an hourly basis at its standard hourly rates. The Firm did not disclose its hourly rates in court documents. The Firm's hourly rates will not, to the best of the Committee's knowledge, exceed normal and reasonable charges for similar representation and legal services provided by firms of similar reputation, ability and experience. Whiteford, Taylor & Preston L.L.P. assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Baltimore, Maryland, Choice Communities, Inc., owns and operates a licensed 180-bed nursing facility. The Company filed for chapter 11 protection on Jan. 24, 2005 (Bankr. D. Md. Case No. 05-11536). Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and estimated debts between $10 million to $50 million. COMMUNITY HOME: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Community Home Health Services Inc. 3360 East Livingston Avenue Columbus, Ohio 43227 Bankruptcy Case No.: 05-60131 Type of Business: The Debtor operates a home health agency. The Debtor previously filed a chapter 11 petition on Dec. 26, 2002 (Bankr. S.D. Ohio Case No. 02-67013). Community Home Health Services Inc. Plus, an affiliate of the Debtor, filed for chapter 11 protection on April 8, 2005 (Bankr. S.D. Ohio Case No. 05-55750). Plus previously filed a chapter 11 petition on Dec. 26, 2002 (Bankr. S.D. Ohio Case No. 02-67014). Chapter 11 Petition Date: June 10, 2005 Court: Southern District of Ohio (Columbus) Debtor's Counsel: Grady L. Pettigrew, Esq. Cox Stein & Pettigrew Co. LPA 115 West Main, 4th Floor Columbus, Ohio 43215 Tel: (614) 224-1113 Fax: (614) 228-0701 Total Assets: $496,180 Total Debts: $1,389,167 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Capital Plus, Inc. $18,000 Attn: John Hopper 7620 Olentangy River Road, Suite 210 Columbus, OH 43235 Margaret Martinez $3,269 [Address not provided] Heather Thompson $1,827 4049 Henna Way Columbus, OH 43228 Victoria Tungaraza $1,538 1387 Mentor Drive Westerville, OH 43081 Elena Vokhgelt $1,470 [Address not provided] Lillie Robinson $1,450 [Address not provided] Kiana Ross $1,319 [Address not provided] Amber Reed $1,130 2837 Walnut Creek Columbus, OH 43224 Kimberly Crabtree $1,100 [Address not provided] Zamzam Mohammed $902 4347 Northview Court Columbus, OH 43228 Abdirahman Alin $900 506 Carpenter Ridge Columbus, OH 43228 Ruth Germany $900 7624 Wyndover Place Blacklick, OH 43004 Wenhuei Ho $880 281 Loveman Avenue Worthington, OH 43085 Anthony Hammond $840 7046 Bennell Drive Reynoldsburg, OH 43068 Theresa Williams $807 521 Basset Avenue Columbus, OH 43203 Timothy Prewitt $800 1351 Miller Avenue Columbus, OH 43206 Barbara Shilling $760 308 South Oakley Columbus, OH 43204 Ellen Williams $720 4410 Belcher Court Columbus, OH 43224 Sinath Nuon $480 1481 Miller Avenue Columbus, OH 43206 Windsor Ramsey $460 1270 Roberts Place Columbus, OH 43207 CYGNUS BUSINESS: Liquidity Concerns Prompt S&P to Lower Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Cygnus Business Media Inc. and its parent company CommerceConnect Media Holdings Inc., which are analyzed on a consolidated basis, to 'B-' from 'B'. At the same time, Standard & Poor's lowered its first-lien and second-lien bank loan ratings on Cygnus to 'B-' from 'B', and 'CCC' from 'CCC+', respectively. The respective recovery ratings of '4' and '5' on the first- and second-lien loans are unchanged. The outlook was revised to negative from stable. "The downgrade is due to earnings softness and liquidity concerns stemming from Cygnus' tenuous compliance with its bank covenants, said Standard & Poor's credit analyst Steve Wilkinson." The ratings could be lowered further if the company cannot maintain compliance with its bank covenants or resolve its looming January 2006 debt maturities by the end of the third quarter. A return to a stable outlook would require Cygnus to refinance or retire its holding company debt, maintain an appropriate cushion of compliance with its bank covenants, and show positive revenue, earnings, and cash flow trends. The Westport, Connecticut-based business-to-business publisher and event organizer had $199 million in debt and $42 million in mandatorily redeemable series A preferred stock on March 31, 2005. The ratings on Cygnus reflect its: * poor liquidity, * high leverage, * large near-term debt maturities, * small cash flow base, * reliance on acquisitions to support its revenue and cash flow in recent years, and * weak operating environment. These risks are only partially offset by the company's cash flow diversity, and the niche competitive positions of its complementary trade publications, expositions, and related operations serving 15 industry sectors. Cygnus' financial risk is high with consolidated lease-adjusted debt to EBITDA of about 8.4x for the 12-months ended March 31, 2005. Leverage, including the holding company's mandatorily redeemable series A preferred stock, a portion of which was repaid with debt in the company's 2004 refinancing and which Standard & Poor's views as debt-like, is even steeper at about 10x. Lease- adjusted EBITDA coverage of interest is thin at about 1.6x, and very poor at 0.8x when considering the pay-in-kind preferred stock dividends. D & K STORES: Wants Until Dec. 7 to Decide on Unexpired Leases -------------------------------------------------------------- D & K Stores, Inc., asks the U.S. Bankruptcy Court for the District of New Jersey for: (a) authority to extend the time within which it must assume, assume and assign, or reject five nonresidential real property leases to Dec. 7, 2005; and (b) approval of a designation rights agreement between the debtor and Hilco Real Estate, LLC. The Debtor, in consultation with the creditors committee, has identified certain leases that may have value to the estate. The Debtor wants to extend the time to assume or reject five leases because at this juncture the Debtor has entered into negotiations to sell and assign these leases but has not concluded its negotiations. The five leases are: Store No. Location Lessor Expiration --------- -------- ------ ---------- 091 1840 Heights Plaza Heights Associates 2/28/08 Shopping Center U.S. Steel Tower Natrona 600 Grant Street Heights, PA 15065 44th Floor Pittsburgh, PA 15219 155 Westgate Shopping Russell Road 2/28/07 Center Associates 911 Central Avenue 865 Providence Highway Albany, NY 12206 Dedham, MA 02026 716 Great Eastern Great Eastern 1/31/08 Shoppers Center Corporation 932 South 191 West Hamilton Road Nationwide Blvd. Columbus, OH 43213 Suite 200 Columbus, OH 43215 9 Store #766 AM Fairlane 6/30/10 Fairlane Village Mall Village Mall, LLC Route 61 North c/o Metro Commercial Pottsville, PA 17901 Management 303 Fellowship Road Mount Laurel, NJ 08054 10 Store #1002 Stop & Shop 10/31/05 Bay Harbor Plaza 1385 Hancock Street 55 Brick Boulevard 10th Floor Brick, NJ 08723 Quincy, MA 02169 Designation Rights Agreement with Hilco The Debtor has negotiated a Designation Rights Agreement with Hilco Real Estate, LLC. Hilco will pay the Debtor for the right to market these five leases: Store No. Location Lessor Expiration --------- -------- ------ ---------- 126 Franklin Village Laurel of Kittanning 2/28/08 Shop Center P.O. Box 472 19A Route 422 Latrobe, PA 15650 Kittanning, PA 16201 135 College Hills GMS Management 7/31/07 Shopping Center Company, Inc. 1835 Beall Avenue c/o National City Bank Wooster, OH 44691 P.O. Box 73914-N Cleveland, OH 44193 733 Store #8 & 9 Indian Head Plaza 1/31/07 1334 Lakewood Road Associates Toms River, NJ 08755 c/o JK Management LLC 1051 Bloomfield Avenue Clifton, NJ 07012 755 Lakewood Shopping Lakewood Plaza 9 1/31/07 Center Associates, LP 1700 Madison Avenue Kramont Operating Lakewood, NJ 08701 Partnership, LP P.O. Box 978 Plymouth Plaza Suite 20 Plymouth Meeting, PA 19462 765 Carteret Shopping J.L.J. Associates 3/31/07 Center 801 Roosevelt Avenue 777 Roosevelt Avenue Carteret, NJ 07008 Carteret, NJ 07008 The Debtor will receive $60,000 if all five of the Hilco Leases are assigned. If none are assigned, the Debtor will still receive $30,000. Hilco will retain any profit less the amount paid to the Debtor. The Debtor believes the Hilco Agreement is beneficial because the Hilco Leases are deemed rejected by the Debtor. Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed for chapter 11 protection on April 8, 2005 (Bankr. D.N.J. Case No. 05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer & Shaver, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts from $10 million to $50 million. DANKA BUSINESS: March 31 Balance Sheet Upside-Down by $216 Million ------------------------------------------------------------------ Danka Business Systems PLC (NASDAQ: DANKY) reported fourth quarter revenue of $300.2 million and an operating loss of $48.7 million excluding restructuring and goodwill impairment charges. For the full year, Danka reported revenue of $1.233 billion and an operating loss of $41.6 million excluding restructuring and goodwill impairment charges. The results include an increase to its U.S. trade receivables allowance for doubtful accounts of $17.8 million in the fourth quarter. Including the previously announced goodwill impairment charges of $70.9 million and restructuring charge of $12.7 million, the Company reported a total operating loss of $132.3 million for the fourth quarter and $122.6 million for the full year. "I was disappointed by our fourth quarter results, including some of the significant one-time, non-cash charges we had to take in the quarter," commented Danka Chief Executive Officer Todd Mavis. "I was encouraged by the progress we made during the quarter in executing on several elements of our ongoing Vision 21 program, including reducing worldwide headcount, facility closures and other initiatives which, when completed, are expected to reduce expenses by $60-$73 million annually when fully realized. We improved aspects of our working capital position in the quarter, including decreases in inventories of 19%, a two day improvement in Days Sales Outstanding and positive cash generation. We also put into place the foundation to create broader and more profitable relationships with our best customers, upgraded and added to our sales forces in the U.S. and U.K., and enhanced our products and services matrix in support of our high-value Managed Print Services solution. Overall, the fourth quarter capped a very difficult year for Danka," continued Mavis. "In fiscal year 2006, we must move quickly to capitalize on our market opportunities, continue refining our product offerings, ensure a cost structure that works for our business and achieve consistency in our execution." Danka intends to timely file its Form 10-K filing for fiscal 2005. As required by Section 404 of the Sarbanes-Oxley Act, the Company will be disclosing that it has material weaknesses in internal controls relating to its information technology general controls, revenue and billing processes, inventory and rental assets custody and tracking processes, its financial statement close process and its income tax process. "We conducted an exhaustive management assessment of internal controls as required by Sarbanes-Oxley," said Mavis. "This assessment has identified several areas in which the Company's processes require improvement. The Company implemented important improvements within fiscal 2005 and will continue aggressive remediation activities throughout fiscal 2006." The Company also announced that Chief Financial Officer, Mark Wolfinger, will retire from the Company effective at the end of June. Mr. Wolfinger has been the company's CFO since 1998 and has played an integral role in guiding the company through a series of financial transactions and restructuring. "We thank Mark deeply for his many significant contributions to Danka and wish him the best in his retirement," said Mavis. About the Company Danka Business Systems PLC delivers value to clients worldwide by using its expert technical and professional services to implement effective document information solutions. As one of the largest independent providers of enterprise imaging systems and services, the company enables choice, convenience, and continuity. Danka's vision is to empower customers to benefit fully from the convergence of image and document technologies in a connected environment. This approach will strengthen the company's client relationships and expand its strategic value. For more information, visit Danka at http://www.danka.com/ At Mar. 31, 2005, Danka Business Systems PLC's balance sheet showed a $216,687,000 stockholders' deficit, compared to a $64,755,000 deficit at Mar. 31, 2004. ENRON CORP: Wants Court Nod on Four Settlement Pacts ---------------------------------------------------- Reorganized Enron Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve four settlement agreements between: Debtor Party Counterparty ------------ ------------ Enron Gas Liquids, Inc. Williams Power Company, fka Enron Liquid Fuels, Inc. Williams Energy Marketing & Enron Clean Fuels Company Trading Company Enron Corp. Renaissance Reinsurance Ltd. Enron North America Corp. Enron Energy Services, Inc. County of San Mateo Enron North America Corp. FirstEnergy Corp. Enron Power Marketing, Inc. Ohio Edison Company, Inc. American Transmission Systems The Debtors entered into one or more prepetition contracts with the Counterparties. Following discussions, the parties agreed that: 1. Williams, FirstEnergy and San Mateo County will pay the Reorganized Debtors payments as are due under the Contracts; each scheduled liability or proof of claim reflecting sums owed to Williams, FirstEnergy and San Mateo County will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable expunged and disallowed in its entirety; and the Reorganized Debtors and Williams, FirstEnergy and San Mateo County will exchange mutual releases of claims related to the Contracts and any pending litigation. 2. Renaissance's Claim No. 1852 against ENA for $278,700 will be allowed as a prepetition, general unsecured class 5 claim. Renaissance's Claim No. 1854 against Enron Corp. for an unliquidated amount no less than $278,700, will be allowed as a Class 185 Claim against Enron Corp. for $97,545, which represents the allowed amount of the ENA Claim minus a 65% discount. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 143; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Wants Court Nod on EcoElectrica Settlement Pact ----------------------------------------------------------- On October 31, 1997, EcoElectrica, L.P. entered into contracts in connection with its power plant, desalination plant, and liquid natural gas import terminal and storage facility with entities indirectly owned or controlled by Enron Corp. The contracts include these agreements: 1. Tolling Agreement with Enron LNG Power (Atlantic) Ltd., 2. LPG Agreement with The Protane Corporation, 3. Onshore Construction Contract with Enron Power I (Puerto Rico), Inc., and 4. Offshore Supply Contract with Enron Equipment Procurement Company. Enron and Enron Power Corp. guaranteed the Contracts. The second and final phase of the Onshore Contract, Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, relates, was completed by Enron Puerto Rico ahead of schedule, entitling it to an early completion bonus for $1,326,968 and other payments for $1,290,000, subject to interests at 2% per annum. EcoElectrica withheld timely payment of the Completion Bonus pending resolution of its general warranty claims against EEPC and Enron Puerto Rico for: -- $851,396 in completing the Warranty Claims, and -- $195,000 paid to the Environmental Protection Agency in response to a Notice of Violation from the Agency. EcoElectrica asserted that it may set off a portion of the Completion Bonus in satisfaction of those claims, and that doing so is not stayed by Section 362(a) of the Bankruptcy Code because Enron Puerto Rico is not a Debtor. EcoElectrica wired $1,864,868 to Enron Puerto Rico, which represented the Completion Bonus plus interest through July 31, 2004, less the alleged offset. In a Settlement Agreement, the Enron Entities, EcoElectrica and ABN AMRO Bank N.V., representing various lenders who financed the Contracts, agree that: a. The Enron Entities will retain the net payment; b. The parties will exchange mutual releases of claims related to the Contracts; c. Each claim filed by or on behalf of EcoElectrica or ABN Amro against the Enron Entities in connection with the Contracts will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable, expunged and disallowed; and d. Each scheduled liability related to EcoElectrica or ABN Amro will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable, expunged and disallowed. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 144; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: SDC 7 Holds $1 Million Allowed Unsecured Claim ---------------------------------------------------------- SDC 7 filed Claim No. 2045 for $1,015,484 in Enron Energy Services North America, Inc.'s Chapter 11 case for damages arising out of a Building Lease Agreement dated January 7, 1998. The leased premises is located at Alcosta Boulevard, San Ramon, California. The Debtors rejected the Agreement effective March 15, 2002. Prior to rejection, the Debtors paid SDC two postpetition payments, one of which was $113,491 as payment for rent and operating expenses for the entire month of March 2002. In a Court-approved stipulation, the parties agree that: 1. The SDC Claim will be reduced and allowed as a Class 32 General Unsecured Claim for $1,004,501; 2. SDC will pay EESNA $50,000 for the Postpetition Overpayment; 3. The SDC Claim will be paid in accordance with the Plan, provided that, the first $50,000 of the Distribution will be retained by the Debtors in satisfaction of SDC's Reimbursement Obligations; 4. In the event that the SDC Distribution is insufficient to pay the $50,000 in full, the Reorganized Debtors expressly retain all of their rights and interests in the Reimbursement Obligation; and 5. All Scheduled Liabilities related to SDC are disallowed in their entirety in favor of the Allowed Claim. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 145; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXIDE TECH: Completes Pension Waiver Process -------------------------------------------- Exide Technologies (NASDAQ: XIDE) completed the process of obtaining its pension waivers for Plan Years 2003 and 2004. On Nov. 17, 2004, the Internal Revenue Service granted Exide a temporary waiver of unfunded liabilities of approximately $50 million for Plan Years 2003 and 2004, subject to satisfying certain conditions, including securing the waived amounts in a manner acceptable to the Pension Benefit Guaranty Corporation. As of June 13, 2005, Exide has reached agreement with the PBGC regarding acceptable security for the waived pension liabilities which will be paid over a five-year period through 2010. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on May 23, 2005, Moody's Investors Service placed the ratings for Exide Technologies, Inc. and its foreign subsidiary Exide Global Holdings Netherlands CV on review for possible downgrade. Management announced that a preliminary evaluation of Exide's results for the fourth quarter ended March 2005 strongly indicates that the company will be in violation of its consolidated adjusted EBITDA and leverage ratios as of fiscal year end. Moody's considers this is a significant event, given that these covenants were all very recently reset during February 2005 in connection with Exide's partial refinancing of its balance sheet. The company has initiated amendment negotiations with its lenders, but will not have access to any portion of the $69 million of unused availability under its revolving credit facility until the amendment process is completed. Exide had approximately $76.7 million of cash on hand as of the March 31, 2005 fiscal year end reporting date. However, this amount had declined to about $42 million as of May 17, 2005 due to the company's use of cash to fund seasonally high first quarter working capital needs, as well as approximately $8 million in pension contributions and a required $12 million payment related to a hedge Exide has in effect. These ratings were placed on review for possible downgrade: -- Caa1 rating for Exide Technologies' $290 million of proposed unguaranteed senior unsecured notes due March 2013; -- B1 ratings for approximately $265 million of remaining guaranteed senior secured credit facilities for Exide Technologies and Exide Global Holdings Netherlands CV, consisting of: * $100 million multi-currency Exide Technologies, Inc. shared US and foreign bank revolving credit facility due May 2009; * $89.5 million remaining term loan due May 2010 at Exide Technologies, Inc.; * $89.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; * Euro 67.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; -- B2 senior implied rating for Exide Technologies, Inc.; -- Caa1 senior unsecured issuer rating for Exide Technologies, Inc. As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'B-' from 'B+', and placed the rating on CreditWatch with negative implications. The rating action follows Exide's announcement that it likely violated bank financial covenants for the fiscal year ended March 31, 2005. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $750 million. The covenant violations would be a result of lower-than-expected earnings. Exide estimates that its adjusted EBITDA for the fiscal year ended March 31, 2005, will be only $100 million to $107 million, which is substantially below the company's forecast and 40% below the previous year. The EBITDA shortfall stemmed from high lead costs, low overhead absorption due to an inventory reduction initiative, other inventory valuation adjustments, and costs associated with accounting compliance under the Sarbanes- Oxley Act. Exide is working with its bank lenders to secure amendments to its covenants. "The company continues to be challenged by the dramatic rise in the cost of lead, a key component in battery production that now makes up about one-third of Exide's cost of sales," said Standard & Poor's credit analyst Martin King. EXIDE TECH: Soros Entities Disclose 4.5% Equity Stake ----------------------------------------------------- Soros Fund Management LLC discloses in a regulatory filing with the Securities and Exchange Commission that it has ceased to own more than 5% of Exide Technologies' common stock. From April 25 to May 20, 2005, SFM LLC sold 699,300 Exide shares: Date of Transaction Shares Sold Price Per Share ------------------- ----------- --------------- April 25, 2005 22,500 $12.1388 April 26, 2005 31,000 $12.3143 April 27, 2005 200 $12.1500 May 6, 2005 5,000 $10.8162 May 17, 2005 250,000 $6.2040 May 17, 2005 150,000 $6.8140 May 18, 2005 15,600 $6.1548 May 19, 2005 75,000 $5.4000 May 19, 2005 5,000 $5.4070 May 19, 2005 95,000 $5.3632 May 20, 2005 50,000 $5.2245 According to Richard D. Holahan, Jr., Assistant General Counsel of Soros Fund Management, SFM LLC and its chairman, George Soros, may be deemed the beneficial owner of 1,110,852 shares held for Quantum Partners' account. This consists of: (i) 823,000 Shares; and (ii) 287,852 Shares issuable upon conversion of the Convertible Notes. The Shares represent a 4.5% equity stake in Exide. Mr. Holahan also reports that on May 17 to 19, 2005, SFM LLC, for the account of Quantum Partners, sold $7 million, $3 million and $2 million, of Exide's 10-1/2% senior notes, due 2013. All the transactions were over-the-counter sales. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on May 23, 2005, Moody's Investors Service placed the ratings for Exide Technologies, Inc. and its foreign subsidiary Exide Global Holdings Netherlands CV on review for possible downgrade. Management announced that a preliminary evaluation of Exide's results for the fourth quarter ended March 2005 strongly indicates that the company will be in violation of its consolidated adjusted EBITDA and leverage ratios as of fiscal year end. Moody's considers this is a significant event, given that these covenants were all very recently reset during February 2005 in connection with Exide's partial refinancing of its balance sheet. The company has initiated amendment negotiations with its lenders, but will not have access to any portion of the $69 million of unused availability under its revolving credit facility until the amendment process is completed. Exide had approximately $76.7 million of cash on hand as of the March 31, 2005 fiscal year end reporting date. However, this amount had declined to about $42 million as of May 17, 2005 due to the company's use of cash to fund seasonally high first quarter working capital needs, as well as approximately $8 million in pension contributions and a required $12 million payment related to a hedge Exide has in effect. These ratings were placed on review for possible downgrade: -- Caa1 rating for Exide Technologies' $290 million of proposed unguaranteed senior unsecured notes due March 2013; -- B1 ratings for approximately $265 million of remaining guaranteed senior secured credit facilities for Exide Technologies and Exide Global Holdings Netherlands CV, consisting of: * $100 million multi-currency Exide Technologies, Inc. shared US and foreign bank revolving credit facility due May 2009; * $89.5 million remaining term loan due May 2010 at Exide Technologies, Inc.; * $89.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; * Euro 67.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; -- B2 senior implied rating for Exide Technologies, Inc.; -- Caa1 senior unsecured issuer rating for Exide Technologies, Inc. As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'B-' from 'B+', and placed the rating on CreditWatch with negative implications. The rating action follows Exide's announcement that it likely violated bank financial covenants for the fiscal year ended March 31, 2005. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $750 million. The covenant violations would be a result of lower-than-expected earnings. Exide estimates that its adjusted EBITDA for the fiscal year ended March 31, 2005, will be only $100 million to $107 million, which is substantially below the company's forecast and 40% below the previous year. The EBITDA shortfall stemmed from high lead costs, low overhead absorption due to an inventory reduction initiative, other inventory valuation adjustments, and costs associated with accounting compliance under the Sarbanes- Oxley Act. Exide is working with its bank lenders to secure amendments to its covenants. "The company continues to be challenged by the dramatic rise in the cost of lead, a key component in battery production that now makes up about one-third of Exide's cost of sales," said Standard & Poor's credit analyst Martin King. FEDERAL-MOGUL: Wants to Hire Hymans Robertson as Actuaries ---------------------------------------------------------- One of the principal unresolved issues in Federal-Mogul Corporation and its debtor-affiliates' Chapter 11 cases and administration proceedings in the United Kingdom is the valuation and treatment of claims relating to the T&N Pension Scheme. The T&N Pension Trustees allege that the T&N Pension Scheme is currently underfunded. The Trustees relate that in a termination event under the United Kingdom pensions legislation, the funding deficiency in the T&N Pension Scheme is estimated at GBP1.8 billion. John J. Gasparovic, Federal Mogul Corporation's Senior Vice President and General Counsel, relates that for many months now, the Debtors and other Plan Proponents have attempted to engage the T&N Pension Trustees in negotiations to reach a consensual determination of claims held by the T&N Pension Trustees. But the negotiations have yet to reach a successful outcome. Due to the length and tenor of the negotiations, the Debtors see the need to employ a consultant to provide actuarial advice and expert assistance relating to the T&N Pension Scheme. In particular, Federal-Mogul believes that it will be essential to have access to detailed analyses of the various options related to the T&N Pension Scheme. The analyses will be crucial with respect to ongoing negotiations concerning the Plan and may be used in potential future litigation related to the T&N Pension Scheme, Mr. Gasparovic notes. Mr. Gasparovic tells the U.S. Bankruptcy Court for the District of Delaware that the actuaries to the T&N Pension Scheme, Mercer Human Resources Consulting, recently concluded its latest triennial valuation of the assets and liabilities for the T&N Pension Scheme. Mr. Gasparovic believes that it is essential for Federal-Mogul and the other Plan Proponents to understand from an actuarial point of view whether the methodology utilized by Mercer was appropriate and provided the most accurate assessment of the T&N Pension Scheme's assets and liabilities. In that way, Federal- Mogul and the other Plan Proponents may participate fully and appropriately in negotiations with the T&N Pension Trustees. Federal-Mogul began to interview various firms in the United Kingdom that provide pensions-related actuarial and consulting services. Mr. Gasparovic notes that the number of firms capable of providing the kind of services in connection with a pension scheme as large as the T&N Pension Scheme is limited. Federal- Mogul was quickly able to identify three suitable firms. After interviewing those firms, Federal-Mogul identified Hymans Robertson LLP as the firm best suited to provide actuarial and consulting services. The Debtors ask the Court to authorize them to employ Hymans Robertson to provide expert actuarial advice, analysis and consulting services related to the T&N Pension Scheme, nunc pro tunc to April 19, 2005. About Hymans Robertson & its Professionals Hymans Robertson is an independent limited liability partnership that has provided advisory and management services with respect to occupational pension schemes in the United Kingdom since 1921. Hymans Robertson's core services include actuarial consultancy and pension scheme design and management. The proposed lead consultants are Ronnie Bowie and Clive Fortes. Mr. Bowie has been a partner with Hymans Robertson since 1981, and has been actively involved in the provision of actuarial and consulting services to companies and trustees since 1980. In addition, Mr. Bowie served as Chairman of the Pensions Board of the Faculty and Institute of Actuaries from July 2002 to July 2004. Mr. Fortes has been a partner since 1997 and is the head of the firm's actuarial practice. Mr. Fortes has advised both trustees and companies in the management of pension arrangements and on scheme wind-ups. Mr. Fortes is a member of the main committee of the Association of Consulting Actuaries and was previously a member of the Pensions Committee of the Association of Consulting Actuaries. The Debtors believe that Mr. Bowie and Mr. Fortes are well qualified to perform the actuarial services. Services to be Rendered Hymans Robertson is expected to: (a) review and analyze the actuarial assumptions and calculations of Mercer with respect to the T&N Pension Scheme; (b) develop and analyze alternative methods to account for the funding or assumption of the T&N Pension Scheme; (c) provide consulting services related to the T&N Pension Scheme as is necessary in the negotiation of a plan of reorganization. These services may include advising Federal-Mogul in connection with negotiations with pensions regulators in the United Kingdom and the Pension Protection Fund, a newly created independent funding service for pensions in the United Kingdom that serves a function roughly similar to that of the Pension Benefit Guaranty Corporation in the United States; and (d) provide other actuarial and consulting services with respect to the T&N Pension Scheme, including possible expert witness testimony, as needed. Fees and Expenses Hymans Robertson will bill the Debtors on an hourly basis: Professional Hourly Rate ------------ ----------- Ronnie Bowie GBP550 Clive Fortes GBP425 Others GBP200 - GBP350 The rates are subject to periodic adjustments to reflect economic and other conditions, and are typically adjusted on an annual basis. Mr. Fortes assures Judge Lyons that Hymans Robertson does not represent or hold any material adverse interest to the Debtors or their estates with respect to matters on which the firm is to be employed. The Debtors believe that Hymans Robertson is "disinterested" pursuant to Section 327 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure. 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) GLOBAL CROSSING: Forest City Holds $1.2 Mil. Allowed Unsec. Claim ----------------------------------------------------------------- Pursuant to the Court-approved procedures for resolving objections to claims, the Global Crossing Estate Representative has settled certain objections to two proofs of claim filed against the GX Debtors. Under the settlement terms, the GX Representative and Forest City Commercial Management, Inc., have agreed that Forest City's Claim No. 2412, aggregating $1,192,485, will be deemed an allowed general unsecured claim for $1,171,766. Claim No. 2412 will be treated in accordance with the terms of the GX Debtors' Plan, provided that the payment against Claim No. 2412 will not be made until the time as the avoidance action commenced by the GX Representative against Forest City is fully and finally resolved by settlement, adjudication or otherwise. In addition, Verisign, Inc.'s Claim No. 6494, originally asserting $257,973, will be deemed an allowed general unsecured claim for $184,243. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. At March 31, 2005, Global Crossing's total liabilities exceed its total assets by $30 million. GREAT LAKES: Liquidity Concerns Prompt S&P to Junk Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating and senior secured debt ratings on dredging company Great Lakes Dredge & Dock Corp. to 'CCC+' from 'B-'. At the same time, Standard & Poor's lowered its subordinate debt rating to 'CCC-' from 'CCC'. All ratings are placed on CreditWatch with negative implications. "The lower ratings reflect our heightened concerns about the company's liquidity profile," said Standard & Poor's credit analyst Paul Kurias. Great Lakes has a June 15 bond interest payment of approximately $6.8 million, while the availability on its revolving credit facility at March 31 was only $11 million. Given the lumpiness of working capital in the dredging business, financial flexibility could be very tight. At the previous rating, Standard & Poor's had expected the company to maintain about $20 million of liquidity, but that does not appear reasonable at this time, partly because of some recent starting delays for company dredging projects in the New York region. Great Lakes operates the largest fleet of dredging equipment in the U.S. and has averaged a combined-bid market share of more than 40% over the past three years. In addition to its dredging business, the company owns an 85% stake in North American Site Developers Inc., a provider of commercial and industrial demolition services in Boston, Massachusetts. That business accounts for about 10% of total revenues. At March 31, 2005, total debt including the present value of operating leases was $347 million, resulting in total debt to EBITDA of more than 10x for the previous 12 months. Near-term business prospects in the dredging sector appear robust; however, Great Lakes' tight liquidity may constrain the company as it tries to obtain sizable project awards. Standard & Poor's will meet with management to discuss its near- term strategies to enhance liquidity. However, the ratings could be lowered again if financial flexibility tightens further. GREENWICH CAPITAL: Fitch Holds Low-B Ratings on 6 Mortgage Certs. ----------------------------------------------------------------- Greenwich Capital Commercial Mortgage Trust's mortgage pass- through certificates, series 2002-C1 are affirmed by Fitch Ratings: -- $54.9 million class A-1 'AAA'; -- $80.8 million class A-2 'AAA'; -- $137.8 million class A-3 'AAA'; -- $608.2 million class A-4 'AAA'; -- Interest-only class XPB 'AAA'; -- Interest-only class XP 'AAA'; -- Interest-only class XC 'AAA'; -- $46.5 million class B 'AA'; -- $11.6 million class C 'AA-'; -- $14.5 million class D 'A+'; -- $20.4 million class E 'A'; -- $16 million class F 'A-'; -- $16 million class G 'BBB+'; -- $17.4 million class H 'BBB'; -- $14.5 million class J 'BBB-'; -- $20.4 million class K 'BB+'; -- $20.4 million class L 'BB'; -- $8.7 million class M 'BB-'; -- $5.8 million class N 'B+'; -- $8.7 million class O 'B'; -- $4.4 million class P 'B-'. Fitch does not rate the $22.8 million class Q certificates. The affirmations are due to stable loan performance and limited paydowns since issuance. As of the May 2005 distribution date, the pool's aggregate certificate balance has decreased 2.8%, to $1.13 billion from $1.18 billion at issuance. The pool suffered a $1.86 million principle loss in August of 2004. The unrated Q class absorbed the loss. The A-note of 311 South Wacker Drive is the largest loan (6.34%) in the pool, and no longer maintains an investment grade credit assessment. As of year-end 2004, occupancy decreased to 71% as of YE 2004 from 82% at issuance. Based on YE 2004 financials, the Fitch stressed debt service coverage has declined to 1.18 times (x) versus 1.40x at issuance. The property's financial performance has declined due to a lower average rental rate as well as the loss of some tenants following their lease expirations. Management is actively marketing the property and has several prospective tenants, although near-term rollover remains a concern. The B-note to this loan (1.31%) also resides within the trust. Currently, three loans (2.86%) are in special servicing, with losses projected on one of these loans. This loan (0.1%) is secured by a multifamily property located in Natchitoches, LA and is currently 90 days delinquent. The special servicer is pursuing foreclosure on the property. HOLLYWOOD CASINOS: Black Diamond Increases Offer to $169 Million ---------------------------------------------------------------- Black Diamond Capital Management, a major bondholder of Hollywood Casino Shreveport, increased its offer to buy the financially troubled company from $160,000,000 to $169,000,000. HCS I, Inc., the managing partner of Hollywood Casino, entered into an investment agreement with Eldorado Resorts LLC providing for the acquisition of the casino by Eldorado for $153,600,000. The company's creditors have voted for the sale of the property to Eldorado. Robert W. Raley, Esq., counsel for Black Diamond, said in published reports that the offer is in cash. Black Diamond's new offer will be discussed in a special meeting of Hollywood's board of directors this week. According to the Shreveporttimes.com, Black Diamond is hoping that even if Hollywood doesn't take the offer, the Bankruptcy Court will decide that Hollywood has an obligation to its creditors and won't confirm the plan of reorganization drafted by Eldorado. "To this point (Hollywood lawyers) have just been taking a hard line," Mr. Raley told the Shreveporttimes. "I don't understand why they've invested so much following through on something, whether it's better or not." About Eldorado Resorts Eldorado Resorts LLC owns and operates the Eldorado Hotel & Casino in Reno, Nevada, and is a joint venture partner with Mandalay Resort Group in the Silver Legacy Resort Casino, also located in Reno. The Eldorado Hotel & Casino, had net operating revenues of $133,000,000 in 2003, has over 84,000 square feet of gaming space, including over 1,800 slot machines and approximately 75 table games, 817 guest rooms, 12,000 square feet of convention space and is renowned for its eight restaurants. The Silver Legacy Resort Casino had 2003 net operating revenues of $152,000,000. The Silver Legacy has over 87,000 square feet of gaming space, including over 2,000 slot machines and 80 table games, 1,170 guest rooms, 90,000 square feet of exhibit and convention space, and operates six distinctive restaurants. Headquartered in Shreveport, Louisiana, Hollywood Casino Shreveport operates a casino hotel and resort featuring riverboat gambling. Its creditors led by Black Diamond Capital Management filed an involuntary chapter 11 protection on September 10, 2004 (Bankr. W.D. La. Case No. 04-13259). Robert W. Raley, Esq. at 290 Benton Road Spur, Bossier City, LA 71111 and Timothy W. Wilhite, Esq. at Downer, Hammond & Wilhite, LLC, represent the petitioners in their involuntary petition against the Debtor. The Company owed $34,958,113 to the petitioners. HORSEHEAD INDUSTRIES: Sells Rosamond Property to MSBH for $270K --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the sale of Horsehead Industries, Inc., and its debtor- affiliates' property in Rosamond, California to MSBH Land Corporation for $270,000. The Property consists of approximately 80 acres situated in the California desert at 1050 Sierra Highway, Rosamond, California. The sale includes five buildings, the land surrounding them, and some personal property. Approximately 100 feet beyond the property boundary is the Edwards Air Force Base property boundary. Previous Asset Sales On Dec. 12, 2003, the Court authorized the sale of the Debtors' businesses and substantially all of their assets to Horsehead Acquisition. The sale closed on Dec. 23 and 24, 2003. The Court also gave the Debtors permission to sell their unimproved real property, adjacent to its former Monaca plant, to SCB Services Corp. for $3 million. The sale is subject to higher and better offers. The Court will hold a sale hearing tomorrow, June 15, 2005, to sell the property to the highest bidder emerging from an auction yesterday. The Debtors anticipate using the proceeds of these asset sales to fund a yet-to-be-proposed chapter 11 plan. Horsehead Industries, Inc., d/b/a Zinc Corporation of America, was the largest zinc producer in the United States, and its affiliates filed for chapter 11 protection on August 19, 2002 (Bankr. S.D.N.Y. Case No. 02-14024). Laurence May, Esq., at Angel & Frankel, PC represents the Debtors in their restructuring efforts. On December 12, 2003, the Court authorized the sale of the Debtors' businesses and substantially all of their assets to Horsehead Acquisition Corp. The sale closed on Dec. 23 and 24, 2003. The Debtors are in the process of selling their remaining assets. When the Company filed for protection from its creditors, it listed $215,579,000 in assets and $231,152,000 in debts. INTERSTATE BAKERIES: Wants Until Jan. 19 to File Chapter 11 Plan ---------------------------------------------------------------- Interstate Bakeries Corporation ask the U.S. Bankruptcy Court for the Western District of Missouri to extend their exclusive period to: (1) file a plan of reorganization through January 19, 2006; and (2) solicit acceptances of that plan through March 20, 2006. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, informs the Court that the Debtors are now into the second stage of their restructuring process, which involves an exhaustive review of each of their 10 profit centers on an individual basis. To date, the Debtors have completed the review of profit centers in the Florida and Georgia region, the Mid-Atlantic region, and northeast region of the United States. Based on these reviews, the Debtors intend to implement changes that will affect nearly every bakery, depot and route within the three profit centers. The Debtors, Mr. Ivester reports, are in various stages of reviewing their remaining profit centers. They plan to complete the reviews of the remaining profit centers and implement the changes indicated by the reviews before year-end. "The Debtors, however, recognize that the business changes resulting from such reviews entail certain implementation risks," Mr. Ivester says. "[I]t cannot be determined with precision that forecasted sales will be achieved in terms of either sales volume or gross margin." The Debtors anticipate that there will be a period of transition before the true impact of the projected efficiencies can be realized. According to Mr. Ivester, understanding the impact of any changes made in the 10 profit centers will be essential in the next stage of the restructuring process and the development of a long-term business plan. Once the Debtors have formulated a long-term business plan, the Debtors anticipate testing the business plan. The Debtors, therefore, need more time to: -- continue to work diligently towards a successful reorganization; -- to review the other seven profit centers and implement changes based on the reviews; -- formulate a long-term business plan; and -- engage in all necessary discussions with the Debtors' constituencies regarding a plan of reorganization prior to January 19, 2006. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04- 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) JIMMIE LOTHRINGER: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Jimmie R. & Sandra J. Lothringer dba Lothringer Farms P.O. Box 647 Dilley, Texas 78017 Bankruptcy Case No.: 05-53445 Type of Business: The Debtors have a 25% stake in South Texas Grass Farm LLC; 90% stake in Rio Bravo Exploration, LLP; 33.3% stake in Randall's Pride Sweet Potato Co., L.P.; and own shares of 123 ID, Inc. Chapter 11 Petition Date: June 13, 2005 Court: Western District of Texas (San Antonio) Debtors' Counsel: Dean William Greer, Esq. 2929 Mossrock, Suite 105 San Antonio, Texas 78230 Tel: (210) 342-7100 Total Assets: $19,422,016 Total Debts: $11,157,859 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Helena Chemical Company Chemicals $487,175 P.O. Box 846350 Dallas, TX 75284-6350 Stoller USA, Inc. Chemicals $209,238 4001 West Sam Houston Parkway #1 Houston, TX 77043 Majestic Produce Sales Loan $175,000 4220 North Bicentenial Drive McAllen, TX Wilbur - Ellis Co. Chemicals $131,994 3809 West Monte Cristo Edinburg, TX 78541 Wilbur - Ellis Co. Chemicals $62,483 3809 West Monte Cristo Edinburg, TX 78541 Citibank VISA Credit Card $48,114 Box 6414 The Lakes, NV 88901-6414 Frio County Appraisal Taxes $43,464 District P.O. Box 878 Dilley, TX 78017 Farm Plan Credit Card $35,000 P.O. Box 77000 Detroit, MI 48277-0178 Amadas Industries, Inc. Peanut Combine Parts $30,403 P.O. Box 890324 Charlotte, NC 28289-0234 Wilbur - Ellis Co. Chemicals $26,489 3809 West Monte Cristo Edinburg, TX 78541 Security Service Federal Vehicle Loan $20,994 Credit Union Value of security: 16211 La Cantera Parkway $10,000 San Antonio, Texas 78256-2419 Bank of America Visa Credit Card $16,653 P.O. Box 15480 Wilmington, DE 19850 Frio County Taxes $16,196 500 East San Antonio, Box 20 Pearsall, TX 78061-3145 Bank One/Chase Credit Card $15,048 P.O. Box 15298 Wilmington, DE 19886-5548 Toyota Financial Services Purchase Money $13,465 P.O. Box 650686 Value of security: Dallas, TX 75205-0686 $7,500 Petty Oil Oil, diesel $11,567 P.O. Box 1212 Pearsall, TX 78061 L. W. Mumme, District Oil $9,995 Drawer A Dilley, Texas 78017 Discover Card Living Expenses $7,544 P.O. Box 15192 Wilmington, DE 19850-5192 Providian Visa Credit Card $7,194 P.O. Box 660509 Dallas, TX 75266-0509 Smith Company Aerial services $6,365 5105 Spur 581 Pearsall, TX 78061 KEYSTONE CONSOLIDATED: U.S. Trustee Alters Creditors' Committee --------------------------------------------------------------- The U.S. Trustee for Region 11 amended his appointment of the members of the Official Committee of Unsecured Creditors in Keystone Consolidated Industries, Inc., and its debtor-affiliates' chapter 11 cases. The U.S. Trustee replaced Pacholder Associates with JP Morgan High Yield Partners LLC. The six creditors currently serving on the Committee are: 1. The Bank of New York, as Indenture Trustee c/o Martin Feig 101 Barclay St. (8 West) New York, New York 10286 Tel: 212-815-5383; Fax: 212-815-5131 2. JP Morgan High Yield Partners LLC Attn: Scott Telford 8044 Montgomery Rd., Suite 382 Cincinnati, Ohio 45326 3. Ameren Cilco Attn: Edward C. Fitzhenry P.O. Box 66149 St. Louis, Missouri 63166 Tel: 314-554-3533, Fax: (314) 554-4014 4. Peoria Disposal Company Attn: Steven C. Davison 4700 N Sterline Ave. Peoria, Illinois 61615 Tel: 309-686-8033, Fax: 309-688-9611 5. Midwest Mill Service Attn: Ken Walmsley 9300 Dix Ave. Detroit, Michigan 48209 Tel: 313-429-2281, Fax: 313-849-9441 6. Independent Steel Workers Alliance Attn: Roy Griffith 106 Bolivia Bartonville, Illinois 61607 Tel: 309-697-0126, Fax: 309-697-0130 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company filed for chapter 11 protection on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22422). Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, it listed $196,953,000 in total assets and $365,312,000 in total debts. KRISPY KREME: Ernst & Young Taking Bids for KremeKo's Assets ------------------------------------------------------------ Ernst & Young Inc., the Monitor appointed in KremeKo Inc.'s CCAA proceedings, outlined a process to sell the Debtor's assets on June 6, 2005. The Ontario Superior Court of Justice approved the sale process on May 13, 2005. Although some issues regarding other restructuring alternatives being considered by KremeKo remain unresolved, the Company, E&Y said, decided to start marketing its assets with the approval of its secured lenders -- GE Canada and BNS. The Company thinks an asset sale, rather than a restructuring, may maximize value for stakeholders. Restructuring Efforts Since its CCAA filing, KremeKo undertook a number of restructuring initiatives including the closure of four unprofitable stores, the reduction of staff at its head office, and the establishment of the Key Employment Retention Program. The Court approved the KERP on May 19, 2005. The Company also entered into a wholesale agreement with Shell Canada. The Company began selling its products at 115 Shell stations during the first week of June 2005. The Company said it expects to further improve operations as it implements additional cost reduction initiatives over the course of the next several weeks. On May 12, 2005, the Ontario Ministry of Labour charged KremeKo with three violations under the Occupational Health and Safety Act in connection with a workplace accident at the Company's Heartland store on Aug. 13, 2004, where one of its employees was injured. The Company could pay a $1.5 million fine if the Court find it guilty. Stay of Proceedings KremeKo asked the Court to extend the CCAA stay until Aug. 5, 2005, to permit the sale process to unfold without disruption. An extension, in the Monitor's opinion, is in the best interests of the Company's stakeholders. KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. franchisee, filed an application with the Ontario Superior Court of Justice to restructure under the Companies' Creditors Arrangement Act, on Apr. 15, 2005. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 400 stores in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Krispy Kreme can be found on the World Wide Web at http://www.krispykreme.com/ KRISPY KREME: KremeKo Amends $1.5 Million DIP Financing ------------------------------------------------------- KremeKo Inc. amended a term sheet with Krispy Kreme Doughnut Corporation allowing the Company to borrow a maximum of $1.5 million in three tranches of $500,000 each. The availability of the tranches under the Amended Term Sheet is as follows: Tranche 1 - Available and committed from the beginning of the CCAA proceedings until July 22, 2005. Amounts outstanding are not repayable until the earlier of Aug. 15, 2005; the completion of the asset sale; and the occurrence of an event of default under the amended term sheet; Tranche 2 - Available and committed from the Tranche 1 Termination Date to the Maturity Date; and Tranche 3 - Available on the same basis as Tranche 2, although not as a committed facility but rather at Krispy Kreme's sole option. KremeKo projects negative cash flows for the nine-week period ending Aug. 5, 2005: KREMEKO, INC. Revised Cash Flow Forecast For the Nine-Week Period Ending Aug. 5, 2005 Receipts $4,628,000 Disbursements 6,014,000 ---------- Net Cash Flow (1,386,000) Opening Cash Balance 456,000 ---------- Closing Cash Balance ($930,000) ========== The Company says it will require access to the DIP facility during the week beginning June 20, 2005. As of June 8, 2005, KremeKo had not drawn on the available DIP financing. The Amended DIP Term Sheet is subject to the approval of the Ontario Court. KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. franchisee, filed an application with the Ontario Superior Court of Justice to restructure under the Companies' Creditors Arrangement Act, on Apr. 15, 2005. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 400 stores in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Krispy Kreme can be found on the World Wide Web at http://www.krispykreme.com/ LAIDLAW INT'L: FMR CORP. Discloses 13% Equity Stake --------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated May 10, 2005, Eric D. Roiter discloses that FMR Corp. is now deemed to beneficially own 13,026,973 shares of Laidlaw International, Inc., Common Stock: No. of Shares Percentage Beneficially Outstanding Reporting Person Owned of Shares ---------------- ------------- ----------- FMR Corp. 13,026,973 13.000% Edward C. Johnson 3d 13,026,973 13.000% Abigail P. Johnson 13,026,973 13.000% Fidelity Mgt & Research Co. 10,682,898 10.661% Fidelity Mgt Trust Company 1,603,275 1.600% Fidelity International Limited 740,800 0.739% Mr. Johnson 3d is Chairman of FMR Corp. and Abigail P. Johnson is a Director of FMR Corp. Members of the Mr. Johnson 3d's family are the predominant owners of Class B shares of common stock of FMR Corp., representing approximately 49% of FMR Corp.'s voting power. Mr. Johnson 3d owns 12.0% and Abigail Johnson owns 24.5% of the aggregate outstanding FMR Corp. voting stock. The Johnson family group and all other Class B shareholders have entered into a shareholders' voting agreement under which all Class B shares will be voted in accordance with the majority vote of Class B shares. Accordingly, through their ownership of voting common stock and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR Corp. (A) Fidelity Management & Research Company Fidelity Management & Research Company is a wholly owned subsidiary of FMR Corp. and an investment adviser. Fidelity Management & Research is the beneficial owner of 10,682,898 shares or 10.661% of the Laidlaw Common Stock outstanding, as a result of acting as investment adviser to various investment companies. Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the funds each has sole power to dispose of the 10,682,898 shares owned by the Funds. Neither FMR Corp. nor Mr. Johnson 3d, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity Management & Research carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees. (B) Fidelity Management Trust Company Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp. and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 1,603,275 shares or 1.600% of the Laidlaw Common Stock outstanding, as a result of its serving as investment manager of the institutional accounts. Mr. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 1,603,275 shares and sole power to vote or to direct the voting of 1,603,275 shares of Common Stock owned by the institutional accounts. (C) Fidelity International Limited Fidelity International Limited, and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. Fidelity International is the beneficial owner of 740,800 shares or 0.739% of Laidlaw Common Stock outstanding. Prior to June 30, 1980, Fidelity International was a majority- owned subsidiary of Fidelity Management & Research. On that date, the shares of Fidelity International held by Fidelity Management were distributed, as a dividend, to the shareholders of FMR Corp. Fidelity International currently operates as an entity independent of FMR Corp. and Fidelity Management & Research. The International Funds and Fidelity International's other clients, with the exception of Fidelity Management & Research and an affiliated company of Fidelity Management & Research, are non-U.S. entities. A partnership controlled by Mr. Johnson 3d and members of his family owns shares of Fidelity International voting stock with the right to cast approximately 39.89% of the total votes which may be cast by all holders of Fidelity International voting stock. Mr. Johnson 3d is also the Chairman of Fidelity International. FMR Corp. and Fidelity International are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals. Other than when one serves as a sub adviser to the other, their investment decisions are made independently, and their clients are generally different organizations. FMR Corp. and Fidelity International are of the view that they are not acting as a "group" for purposes of Section 13(d) under the Securities Exchange Act of 1934 and that they are not otherwise required to attribute to each other the "beneficial ownership" of securities "beneficially owned" by the other corporation within the meaning of Rule 13d-3 promulgated under the 1934 Act. Therefore, they are of the view that the shares held by the other corporation need not be aggregated for purposes of Section 13(d). However, FMR Corp. is making the filing on a voluntary basis as if all of the shares are beneficially owned by FMR Corp. and Fidelity International on a joint basis. Fidelity International may continue to have the International Funds or other accounts purchase shares subject to a number of factors, including, among others, the availability of shares for sale at what Fidelity International considers to be reasonable prices and other investment opportunities International Funds. Fidelity International has sole power to vote and the sole power to dispose of 740,800 shares. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc. -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Apr. 14, 2005, Standard & Poor's Ratings Services affirmed its ratings on Greyhound Lines Inc., including the 'CCC+' corporate credit rating. At the same time, the outlook is revised to positive from developing. "The outlook change reflects Greyhound's successful resolution of the default judgment pending against it and the potential for a higher rating if the company's restructuring actions are successful in improving operating performance and credit protection measures," said Standard & Poor's credit analyst Lisa Jenkins. Ratings are currently constrained by competitive market conditions and the company's high debt leverage. Greyhound is owned by Laidlaw International Inc. (BB/Watch Pos/--). Laidlaw does not guarantee Greyhound's debt and its financial support of Greyhound is currently limited to just $15 million. MERIDIAN AUTOMOTIVE: Wants Until Sept. 25 to Decide on Leases ------------------------------------------------------------- Section 365(d)(4) of the Bankruptcy Code provides a debtor with 60 days from the Petition Date to decide whether to assume or reject an unexpired non-residential property lease. The Court has the discretion to extend that deadline for cause. Absent assumption or rejection, an unexpired non-residential property lease will be deemed rejected and the non-residential property will be surrendered to the lessor. Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that Meridian Automotive Systems, Inc., and its debtor-affiliates are party to at least 12 major facility lease agreements, which include leases for office space locations and key production and warehousing centers: Lessor Location ------ -------- 2001 Centerpoint Parkway 2001 Centerpointe Parkway Suite 112, Pontiac, Michigan 48341 DEMBS/Roth Group 4280 Haggerty Road, Canton Michigan 48188 Ford Motor Land Development 550 Town Center Drive, Corporation Dearborn, Michigan 48126 GR Glen LLC 3196 Kraft Ave., S.E. Grand Rapids, Michigan 49512 Insite Angola, L.L.C. 300 Growth Parkway Angola, Indiana 46703 Jackson CIC 1020 E. Main Street Jackson, Ohio 45640 L.E. Tassel, Inc. 3075 Brenton Road, S.E. Grand Rapids, Michigan 49512 Meri (NC) LLC 6701 Stateville Blvd. Salisbury, North Carolina 28147 North-South Properties LLC 747 Southport Drive Shreveport, Louisiana P&E Realty Inc. 13811 Roth Road, Grabill, Indiana 46173 Rushville Manufacturing Mall 1350 Commerce Street Rushville, Indiana 46173 Westfield Industrial Center 13881 West Chicago Street Detroit, Michigan 48228 By this motion, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend by three months the deadline within which they must assume or reject the Real Property Leases, through and including September 25, 2005, without prejudice to their right to seek further extensions for cause. According to Mr. Morton, cause exists to extend the 60-day period because: (1) the Real Property Leases include many of the Debtors' primary production facilities, which are at the core of their operations and may be the subject of their ongoing operational restructuring; (2) the Debtors' Chapter 11 cases are large and complex; and (3) the Debtors have not had sufficient time to determine what role the Real Property Leases will play on a going-forward basis, since the Debtors' management and professionals have been consumed with, among other things: (i) obtaining interim approval of postpetition financing; (ii) obtaining interim and final approval of the first day motions; (iii) responding to information requests and concerns of the Official Committee of Unsecured Creditors and various constituencies; and (iv) handling the typical business emergencies that occurred immediately after commencement of the Debtors' cases. "If the Debtors are forced to prematurely assume the Real Property Leases, the consequences might include the Debtors being required to pay cure obligations under the Real Property Leases prepetition claims, and the elevation of lessor claims to administrative expense status prior to confirmation of a plan of reorganization," Mr. Morton tells Judge Walrath. "In addition, if the Debtors precipitously reject the Real Property Lease or are deemed to reject the real Property Leases by operation of Section 365(d)(4) of the Bankruptcy Code, they may forego significant value in such real Property Leases, thereby resulting in the loss of valuable property interests that may be essential to the Debtors' reorganization." Mr. Morton assures Judge Walrath that the Debtors intend to perform all of their undisputed obligations arising from and after the Petition Date in a timely fashion, including the payment of postpetition rent due, so as not to prejudice to lessors. Judge Walrath will hold a hearing to consider the Debtors' request at 10:30 a.m. (Eastern Time) on June 16, 2005. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Hires Lazard Freres as Investment Banker ------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Lazard Freres & Co. LLC as their investment banker, nunc pro tunc, to May 23, 2005. The Debtors believe that Lazard is well qualified and able to represent their interests in a cost-effective, efficient and timely manner. According to Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, the firm and its senior professionals have an excellent reputation for providing high quality financial advisory and investment banking services to debtors and creditors in bankruptcy reorganizations and other debt restructurings. "An experienced financial advisor such as Lazard fulfills a critical need that complements the services offered by the Debtors' other restructuring professionals," Mr. Brady tells Judge Walrath. "Broadly speaking, Lazard will concentrate its efforts on formulating strategic alternatives, negotiating with the Debtors' secured lenders, subordinated noteholders, and other creditor constituencies, and assisting the Debtors to formulate and implement a viable chapter 11 reorganization plan." As the Debtors' investment bankers, Lazard will: (a) review and analyze the Debtors' businesses, operations and financial projections; (b) evaluate the Debtors' potential debt capacity in light of their projected cash flows; (c) assist the Debtors in the determination of their capital structure; (d) assist in the determination of a range of values for the Debtors on a going concern basis; (e) advise the Debtors on tactics and strategies for negotiating with the holders of the Existing Obligations; (f) render financial advise to the Debtors and participate in meetings or negotiations with the creditor constituencies and rating agencies or other appropriate parties in connection with any Restructuring; (g) advise the Debtors on the timing, nature, and terms of new securities, other consideration or other inducements to be offered pursuant to the Restructuring; (h) advise and assist the Debtors in: -- evaluating potential capital markets transactions of the Debtors' public or private debt or equity offerings; -- evaluating and contacting potential capital sources as the Debtors may designate; and -- assist the Debtors in negotiating a financing, including DIP and exit financing; (i) assist the Debtors in preparing documentation within the firm's area of expertise that may be required in connection with the Restructuring; (j) assist the Debtors in identifying and evaluating candidates for a potential Sale Transaction including, without limitation, assistance and advice with respect to the structure of and negotiations relating to the Sale Transaction and participation in any solicitation and marketing efforts that may be undertaken by the Debtors in connection with a Sale Transaction, including the preparation of solicitation materials or similar documents and contact with third parties in connection with the Debtors' marketing efforts; (k) attend meetings of the Debtors' Board of Directors and its committees; (l) advise the Board of the firm's conclusions in respect of matters falling within the scope of its retention, including debt capacity, enterprise valuation and the valuation of debt and equity securities that may be issued in connection with a plan of reorganization; (m) provide testimony, as necessary, with respect to matters which the firm has been engaged to advise the Debtors on in any proceeding before the Court; and (n) provide the Debtors with other general restructuring advice. The Debtors represent that Lazard's services will not duplicate efforts of other professionals hired by the Debtors because the firm will (x) provide unique services to the Debtors and (y) coordinate efforts with the other professionals to avoid unnecessary duplication of services. Pursuant to an engagement letter and indemnification letter dated as of May 23, 2005, the Debtors agree to pay these fees to Lazard: (1) Monthly Advisory Fee A $150,000 monthly fee will be payable on execution of the Engagement Letter and on the 23rd day of each month thereafter until the earlier of the completion of the Restructuring or the termination of the firm's engagement. All monthly fees paid in respect of any months following the fourth month of the firm's engagement will be credited in whole or in part against any Restructuring or Sale Transaction fees in this manner: (i) One-half of all monthly fees paid with respect to the fifth through the 12th month of the firm's engagement will be credited; (ii) all monthly fees paid with respect to the 13th through the 18th month of the firm's engagement will be fully credited; and (iii) One-half of any monthly fee paid with respect to any month from the 19th month of the firm's engagement and thereafter will be credited; (2) Restructuring Fee A $4,000,000 Restructuring Fee, payable on the consummation of a Restructuring. (3) Sale Transaction Fee If the Debtors consummate a Sale Transaction incorporating all or a majority of the assets or equity securities of the Debtors, the firm will be paid a Sale Transaction Fee equal to the greater of (x) the Fee calculated based on the Aggregate Considerations as set forth in the Engagement Letter or (y) the Restructuring Fee. In the event that the Debtors consummate any Sale Transaction that is not contemplated under the Engagement Letter, the Debtors will pay the firm a Sale Transaction Fee calculated as set forth in the Engagement Letter, of which 1/2 will be credited against the Restructuring Fee or the Sale Transaction Fee. Any Sale Transaction Fee will be paid upon the consummation of the applicable Sale Transaction. (4) Financing Fee A financing fee equal to 5% of any of the aggregate gross proceeds raised in the form of equity or equity-linked capital and payable immediately upon closing of any Financing. One-half of any Financing Fee paid to the firm will be credited against any Restructuring Fee or Sale Transaction Fee, as applicable. More than one fee may be paid to Lazard. To the extent that the Debtors request the firm to perform additional services not contemplated by the Engagement Letter, the additional fees charged by the firm will be in writing and in advance. The Debtors will promptly reimburse Lazard for all reasonable out-of-pocket expenses, including expenses of outside counsel, if any; provided, however, that the firm will not incur counsel fees and expenses without prior notification to and consultation with, the Debtors. The Debtors will also indemnify the firm, except to the extent that any loss, claim, damage, liability or expenses is found by a court of competent jurisdiction to have resulted primarily from willful misconduct, gross negligence or bad faith. The Debtors do not owe Lazard any amount for any services performed or expenses incurred prior to the Petition Date. Barry W. Ridings, a managing director at Lazard, assures Judge Walrath that the firm: -- is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, as required by Section 327(a); -- holds no interest adverse to the Debtors or their estates in connection with matters for which it is to be retained; and -- has no connection with the Debtors, their creditors, the U.S. Trustee, or other parties-in-interest in the Debtors' cases or their professionals. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Can Pay Critical Vendors Up to $16 Million --------------------------------------------------------------- Judge Walrath authorizes Meridian Automotive Systems, Inc., and its debtor-affiliates to pay prepetition Critical Vendor claims in an amount not to exceed $16 million. The Debtors are directed to provide periodic notices to the Official Committee of Unsecured Creditors on payments made on account of Critical Vendor Claims. Judge Walrath also authorizes the Debtors to enter into a trade agreement with the Critical Vendors, including, but not limited to, these terms: (a) The amount of a Critical Vendor's estimated prepetition claim will be as mutually determined in good faith by the Critical Vendor and the Debtors. (b) The Critical Vendors will be bound by the Customary Trade Terms that were most favorable to the Debtors and in effect between the Critical Vendors and the Debtors on a historical basis for the period within 120 days of the Petition Date, or other trade terms as mutually agreed to by the parties. (c) The Critical Vendors will provide goods and services to the Debtors based on Customary Trade Terms. (d) Any payments made by the Debtors to a Critical Vendor who, after receiving payment of a prepetition claim, refuses to supply goods to the Debtors on Customary Trade Terms, will be deemed to have been in payment of then outstanding postpetition obligations owed to it. The Critical Vendor will immediately reimburse the Debtors to the extent that the aggregate amount of the payment exceed the postpetition obligations then outstanding, without the right of set-off or reclamation. (e) The Critical Vendors will not file or otherwise assert against the Debtors any lien on any remaining prepetition amounts for goods and services provided to the Debtors prior to the Petition Date. The Critical Vendors will immediately release all previously obtained Liens. (f) The Critical Vendors will not separately assert or otherwise seek payment of any reclamation claims. The Debtors may terminate a Trade Agreement, if a Critical Vendor has not complied with the terms and the provisions of the Trade Agreement or has failed to continue to provide Customary Trade Terms to the Debtors. The Debtors' execution of the Trade Agreement will not be deemed a waiver of any causes of action, including avoidance actions that the Debtors may have against any Critical Vendor. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000). MGM MIRAGE: S&P Rates $500 Million Senior Notes at BB ----------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to MGM Mirage's $500 million 6.625% senior notes due 2015. Proceeds from this offering will be used to repay debt outstanding under the company's revolving credit facility that was incurred to fund the acquisition of Mandalay Resort Group in April 2005. At the same time, Standard & Poor's affirmed its ratings on the Las Vegas-based gaming company, including its 'BB' corporate credit rating. The outlook is stable. Consolidated debt outstanding, taking into account $322 million in debt reduction since the closing of the transaction, is about $12.5 billion. "MGM's solid business profile is supported by its exceptional position on the Las Vegas Strip, which has been enhanced with the acquisition of Mandalay," said Standard & Poor's credit analyst Michael Scerbo. MGM already possessed a leading market position in Las Vegas, and the addition of the Mandalay properties further enhances MGM's position and transforms it into the largest operator of properties in the market. Its portfolio consists of some of the most up-to-date and highest quality properties on the Strip. These assets, which include Bellagio, MGM Grand, Mandalay Bay, and Mirage, are among the strongest performing casinos on the Strip. Location, asset quality, and entertainment/amenity attributes are keys to success in Las Vegas, providing assurance that these properties will continue to produce solid results over time. Conversely, the company also owns several second tier assets, including Luxor, Excalibur, Monte Carlo and Circus Circus that cater to a value conscious visitor and provide the company additional outlets with which to market its portfolio. MID-WESTERN: Moody's Rates Planned $875M Facilities at B1 --------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to Mid-Western Aircraft Systems, Inc.'s proposed $875 million senior secured credit facilities, consisting of a $700 million term loan due 2011 and a $175 million revolving credit facility due 2010. In addition, Moody's has assigned a senior implied rating of B1 to the company. The rating outlook is stable. Proceeds from the new term loan facility will be used to partially fund the acquisition of certain commercial aircraft aerostructure manufacturing facilities from The Boeing Company by Onex Partners LP for $920 million. Onex will contribute about $375 million in equity towards the acquisition. The ratings reflect the company's initial moderately leveraged capital structure as well as the benefits of its established position as a principal supplier of aerostructures, including: * fuselages, * struts, * engine nacelles, and * thrust reversers, for Boeing aircraft. The company's engineering capabilities and contractual arrangements with Boeing should provide it with a stable business position, and offer opportunities for revenue growth as recovery of the commercial aerospace sector progresses. However, the ratings anticipate that Mid-Western's financial leverage will increase over the near term as working capital and capital expenditure requirements associated with new aircraft program launches will result in operating cash flow deficits. While Mid-Western will benefit from contractual arrangements with Boeing that will help to fund these cash requirements, the company's financial metrics will weaken from their initial levels as a result of debt and other obligations incurred to fund these investments. The ratings also reflect the concentration of Mid-Western's revenue base, which will be heavily influenced by ongoing demand for Boeing's aircraft, particularly the 737, 777 and upcoming 787 models, and the challenges that the company will face in achieving its objective of expanding business with other aircraft manufacturers. Also, the ratings consider the business risks that the company will face as a stand-alone entity, including establishing effective labor relations while implementing cost reduction initiatives that are necessary to achieve its financial objectives. Upon close of the proposed transaction, the company will carry a modest amount of debt relative to its revenue base and operating earnings, and will commence stand-alone operations with a good liquidity position. Projected debt on close of $700 million will represent about 30% of estimated pro forma Mid-Western FY 2005 revenues (annualized), and about 3.2 times EBITDA. The company anticipates having all $175 million of the proposed revolving credit facility available upon close, and Moody's estimates that covenants under the facility will be set at levels that provide the company with full access to this facility over the near term. The company's liquidity profile will be augmented by several contractual arrangements with Boeing, including, among others, advance payments by Boeing to fund the development on the 787 platform as well as the subordinated note facility. Terms and conditions of this note will be set to permit drawing of the facility even if the company is in default under its existing bank debt. With this strong liquidity profile, Moody's anticipates that Mid-Western will have adequate financial resources to meet the significant investments necessary for upcoming aircraft program launches. Mid-Western's favorable liquidity profile is an important credit attribute as Moody's anticipates that the company will be heavily free cash flow negative over the next several years, owing to a substantial use of cash to cover working capital and CAPEX requirements associated with the company's investments in fixed assets (tooling in particular) and inventory related to work on current and future Boeing aircraft platforms, particular the new 787 aircraft line. The rating agency notes that a substantial majority of this investment will be funded, predominantly by advance payments on the 787 as well as from a sizeable note receivable from Boeing. To a smaller extent, the company will likely also supplement customer funding through additional drawing in its proposed revolving credit facility as well as on the new seller subordinated note facility. As such, Moody's expects Mid- Western's debt levels to increase over the next two years, along with a significant increase in long term liabilities related to advance payment funding, which amortizes with deliveries of the 787 aircraft. The ratings positively consider revenue support provided by Mid- Western's contract with Boeing as well as the company's history as an important manufacturing division within the OEM's production system. The company has exclusive contracts to build certain aerostructure components for essentially all of Boeing's commercial aircraft platforms, current and future derivative models, including the new 787 platform. Mid-Western will manufacture these parts at its production facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma, which are currently building all of Boeing's requirements for these structures as long-standing operations within Boeing's Commercial Airplanes Wichita Division. The contracts specify volume-based pricing, providing stability to Mid-Westerns' revenue base at the projected aircraft delivery levels, as well as coverage to fixed costs in the case of a period of low cyclical demand. However, positive aspects of the history and contractual relationship with Boeing are offset somewhat by the concentration of the company's revenues on one customer. Should delivery levels for Boeing's aircraft fall below expected levels, Mid-Western's credit fundamentals would likely suffer from the ensuing reduction in revenue and cash flow generation. Mid-Western is particularly sensitive to continued demand for the 737 aircraft over the near term and the successful launch of the 787 over the longer term. Also, Moody's notes that, despite the company's long history as an operating unit of Boeing, Mid-Western has essentially no track record as a stand-alone entity. In Moody's view, this implies a degree of risk associated with the management of a start-up enterprise in terms of, among other things, financial policy, overhead costs structure, and labor relations. The establishment of such a stand-alone track record, which would validate the company's current expectations for cost control, debt reduction, and contract performance, would enhance the company's credit profile over the long run. The B1 rating assigned to the senior secured credit facilities, the same as the senior implied rating, reflects the fact that these facilities essentially represent all of the company's senior debt commitments. The senior secured facilities are guaranteed by all significant direct and indirect subsidiaries of Mid-Western, and are secured, on a first-lien basis, by all of the company's tangible and intangible assets. The revolver and term loan rank senior to the proposed $150 million Boeing subordinated notes facility (not rated by Moody's). The stable outlook reflects Moody's expectations that Mid-Western will be able to seamlessly continue delivery of aircraft shipsets to Boeing according to the company's planned delivery schedule and that the company's existing liquidity resources will be sufficient to meet CAPEX or working capital requirements for new program development. The stable outlook also assumes that the company will successfully transition the production facilities being acquired and that no operating or labor relations disruptions will occur. Ratings or their outlook may be revised upward if the company were to become substantially free cash flow generative, after the major efforts for existing and new platform ramp-ups are largely completed, resulting in debt-to-EBITDA of under 3 times, and free cash flow of greater than 10% of total debt for a sustained period. Conversely, ratings could be subject to downward revision if required equipment and inventory investment exceed expectations, or if aircraft deliveries lag expectations, possibly resulting in a more prolonged period of negative free cash flow generation and additional borrowing, with debt-to-EBTIDA in excess of 4 times. These ratings have been assigned: * $175 million revolving credit facility due 2010, B1 * $700 million term loan due 2011, B1 * Senior implied, B1 Mid-Western Aircraft Systems, Inc., headquartered in Wichita, KS, with facilities in Wichita, Tulsa, OK, and McAlester OK, is a designer and manufacturer of: * fuselages, * struts, * nacelles, * thrust reversers, and * other complex components for Boeing. MID-WESTERN: S&P Rates Proposed $875 Mil. Secured Facility at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Mid-Western Aircraft Systems Inc. At the same time, Standard & Poor's assigned its 'BB-' bank loan rating and '2' recovery rating to the company's proposed $875 million secured credit facility, indicating the likelihood of substantial recovery of principal in the event of payment default. The outlook is stable. "The ratings on Mid-Western reflect high leverage, participation in the cyclical and competitive commercial aerospace industry, reliance on one customer (Boeing Co.) for essentially all sales, and significant near-term expenditures related to development of Boeing's new 787 midsize airliner and transition costs," said Standard & Poor's credit analyst Christopher DeNicolo. These factors are offset somewhat by the company's position as the largest independent supplier of structures for commercial aircraft and substantial customer advances to fund most of the 787 development costs. Mid-Western is the former Wichita Division of Boeing Commercial Airplanes and is being acquired by Onex Corp., a Canadian private equity firm, for approximately $920 million cash. The acquisition, structured as an asset purchase, will be financed with the proceeds from a $700 million bank term loan and $375 million of cash equity from Onex. Leverage will be fairly high with debt to capital of around 65% at close. Pro forma debt to EBITDA, with EBITDA as defined in the company's credit facility and which excludes certain nonrecurring and noncash items, should be around 3.5x in 2005. Debt to EBITDA is expected to gradually decline as earnings improve, despite higher debt levels to fund 787 development and transition costs, and a build-up of working capital. Mid-Western is the largest, independent (non-OEM) producer of commercial aerostructures (fuselage, nacelles, struts, horizontal and vertical stabilizers, wing structures, and other parts) and is Boeing's largest nonengine supplier. Essentially all sales are to Boeing. The company participates on all of Boeing's aircraft families, including providing the entire fuselage for the 737 and the forward fuselage for the 747, 767, and 777 series. Following the events of Sept. 11, 2001, Boeing reduced production almost 50% in response to the significant decline in air travel. In the past 12 months, both orders and deliveries have begun to recover as air travel increased and the financial condition of non-U.S. airlines improved. Cost-reduction efforts and an improving commercial aerospace market should result in increasing revenues and earnings and improving financial measures despite higher debt levels to fund near-term development costs and transition expenses. Overall, Mid-Western is expected to maintain a credit profile consistent with current ratings over the intermediate term. The outlook could be revised to negative if the company's financial profile deteriorates due to a slowing in the recovery of the commercial aerospace market, a failure to meet cost-reduction targets, or if 787 development costs are higher than expected. Based on current expectations, a revision of the outlook to positive is unlikely in the intermediate term. MIRANT CORP: Inks Settlement Pact with Perryville Energy -------------------------------------------------------- Mirant Corporation, Mirant Americas Energy Marketing, LP, and Mirant Americas, Inc., ask Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas for permission to enter into a settlement agreement with Perryville Energy Partners, LLC, and Perryville Energy Holdings, LLC, to resolve certain claims arising from a Tolling Agreement. The Tolling Agreement is a 21-year contract between MAEM and Perryville Partners entered on April 30, 2001, pursuant to which MAEM was obligated to purchase all of the electricity generated by Perryville Partners' power plant located in Perryville, Louisiana. On June 7, 2001, Perryville Partners borrowed money under a Construction and Term Loan Agreement from KBC Bank, N.V., and certain other banks and financial institutions. The Term Loan is secured by: -- substantially all the assets of Perryville Partners, including the Perryville plant; and -- a pledge of the limited liability company interests of Perryville Holdings in Perryville Partners. At the time of the Term Loan, Perryville Holdings and Mirant Perryville Investments, LLC, owned the equity interests in Perryville Partners on a 50%-50% basis. In June 2002, Perryville Holdings purchased MPI's 50% equity interest in Perryville Partners for cash and an assumption of certain debt. Mirant Corp. guaranteed certain of MAEM's obligations under the Tolling Agreement. Perryville Partners and MAI also entered into a Subordinated Loan Agreement whereby MAI agreed to lend to Perryville Partners $100 million. MAI provided an additional guaranty of MAEM's obligations under the Tolling Agreement up to the amount outstanding under the Subordinated Loan. The Tolling Agreement was rejected on September 15, 2003. On November 7, 2003, Perryville Partners asked the Court to allow and compel the Debtors to pay $7,165,632 on account of its administrative expense claim for services rendered to MAEM pursuant to the Tolling Agreement for the period of July 31, 2003, through the Rejection Date. The Debtors and the Mirant Creditors' Committee objected to the administrative claim. Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that MAEM's rejection of that Tolling Agreement ultimately gave rise to: (a) separate Chapter 11 filings by the Perryville Parties in the U.S. Bankruptcy Court for the Western District of Louisiana; and (b) the filing by Perryville Partners of proofs of claim in the Debtors' Chapter 11 cases for alleged rejection damages in excess of $1.0 billion. Perryville Partners filed four claims against the Mirant Debtors: 1. Claim No. 6261, a general unsecured claim against MAEM for damages caused by rejection of the Tolling Agreement and unpaid prepetition amounts owed to Perryville Partners under the Tolling Agreement; 2. Claim Nos. 6262 and 6263 -- a general unsecured claim and a secured claim against MAI for $98,650,000 under the MAI Guaranty; and 3. Claim No. 6264, a general unsecured claim against Mirant for $177,178,391 under the Mirant Guaranty. The Debtors and the Mirant Creditors' Committee objected to the Claims. MAI also filed a proof of claim in the Louisiana Bankruptcy Court against each of Perryville Parties for $98,700,000, based on the unpaid balance under the Subordinated Loan. According to Mr. Phelan, the Mirant Parties and the Perryville Parties have been engaged in extensive litigation over the Claims. On the eve of trial of the initial phase of the claims litigation, the parties reached an agreement in principal to resolve their disputes, Mr. Phelan relates. The substantive terms of the Settlement Agreement are: A. Allowance of Perryville Partners' Claims against the Mirant Debtors a. Claim No. 6261 will be allowed as a prepetition general unsecured claim against MAEM for $207 million, subject to reduction if Perryville Partners exercises its right to offset the Allowed Sub Debt Claim against the Allowed MAI Guaranty Claim; b. The $207 million claim will be bifurcated into two separate and independent claims against MAEM: * Claim No. 6261A -- a prepetition, general unsecured claim for $98.7 million; and * Claim No. 6261B -- a prepetition, general unsecured claim for $108.3 million; c. Claim No. 6262 will be allowed as a prepetition claim against MAI for $98.7 million; d. Claim No. 6264 will be allowed as a prepetition general unsecured claim against Mirant for $177,178,391; e. All other prepetition claims which Perryville Partners have, or may have, against any of the Mirant Debtors will be disallowed and expunged, including Claim No. 6263; and f. The Administrative Expense Claim will be deemed to have been satisfied in full by virtue of MAEM's prior postpetition payments to Perryville Partners for $2,360,304. B. Allowance of MAI Claim Against Perryville Debtors MAI will be deemed to have an allowed general unsecured claim against Perryville Partners in Perryville Partners' Chapter 11 case for $98.7 million as "Allowed Sub Debt Claim." The Allowed Sub Debt Claim will rank: (1) junior to any and all claims of the Perryville Partners Lenders; (2) pari passu with any and all prepetition general unsecured claims against Perryville Partners; and (3) senior to the equity interests of Perryville Holdings in Perryville Partners. All other prepetition claims which any of the Mirant Debtors have, or may have, against any of the Perryville Debtors, excluding the Allowed Sub Debt Claim, will be disallowed and expunged. C. Treatment of Allowed Perryville Partners Claims To the extent that the bankruptcy estates of the Mirant Debtors are not substantively consolidated, Perryville Partners will be entitled to assert each of its allowed claims against the respective the Mirant Debtor obligated thereon, and Perryville Partners would be entitled to a distribution on account of each of the claim so long as Perryville Partners' aggregate recovery is not in excess of the dollar amount of its allowed Rejection Damages Claim plus interest thereon calculated at the applicable rate from the Mirant Petition Date through the date of payment in full (but only to the extent that Perryville Partners is entitled to postpetition interest under the Bankruptcy Code). If the Mirant Debtors are substantively consolidated: (a) the Allowed Mirant Guaranty Claim would be eliminated; (b) the Allowed MAI Guaranty Claim would be eliminated, except to the extent that Perryville Partners would continue to have its right to offset the claim against the Allowed Sub Debt Claim; and (c) Perryville Partners would be limited to a distribution solely on account of the Allowed Rejection Damages Claim. The Perryville Parties agreed not to oppose the substantive consolidation of the Mirant Parties, and the Mirant Parties have agreed, if their bankruptcy estates are substantively consolidated in whole or in part, that Similar Claims to the Allowed Perryville Partners Claims will not be afforded more favorable treatment than the Allowed Perryville Partners Claims. Perryville Partners' aggregate recovery under a Confirmed Mirant Plan on account of all of the Allowed Perryville Partners Claims will not exceed the dollar amount of the Allowed Rejection Damages Claim plus interest thereon calculated at the applicable rate from the Mirant Petition Date through the date of payment in full (but only to the extent that Perryville Partners is entitled to postpetition interest under the Bankruptcy Code). Until the time as: (1) Perryville Partners elects to exercise or to not exercise its right to offset the Allowed MAI Guaranty Claim against the Allowed Sub Debt Claim; or (2) Perryville Partners' right to exercise the offset is extinguished pursuant to the Settlement Agreement, that property which would otherwise be distributable on account of Claim 6261A (if Perryville Partners were to elect not to exercise its right of offset) will be held in escrow for the benefit of Perryville Partners or its assignee. If Perryville Partners elects to exercise its right to offset the Allowed MAI Guaranty Claim against the Allowed Sub Debt Claim, the Escrowed Property will be released to the Mirant Debtors or otherwise distributed in accordance with the Confirmed Mirant Plan. If Perryville Partners sends notice to the Mirant Debtors that it elects not to exercise its right to offset the Allowed MAI Guaranty Claim against the Allowed Sub Debt Claim or if Perryville Partners has not made its election before the expiration of the Election Deadline, the Escrowed Property (and all further distributions on account of Claim 6261A) will be promptly delivered, without any holdback, reduction or offset whatsoever, to Perryville Partners or its assignee. The Election Deadline will be midnight on the later of March 31, 2006, and the Mirant Effective Date, unless the Mirant Parties and the Perryville Parties otherwise agree in writing to extend that deadline. 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. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Dick Holds $11.5MM Secured Claim in Kendall's Case --------------------------------------------------------------- Before filing for bankruptcy petition, Mirant Kendall LLC, a Mirant Corporation debtor-affiliate, hired Dick Corporation pursuant to a design and build agreement to upgrade its power plant facility in Cambridge, Massachusetts, for $68.5 million. Dick Corp., in turn, hired Harding & Smith Corporation as subcontractor for the piping work. St. Paul Company issued a performance bond that guaranteed Harding & Smith's performance of the piping work. Harding & Smith abandoned its subcontract before it was completed. As a result, St. Paul was required to finish Harding & Smith's work. On December 16, 2003, Dick Corp. filed Claim No. 7231 for $35,250,208 plus interest, attorney's fees, and other charges against the Debtors. Dick Corp. alleged that Mirant Kendall breached the Design and Build Agreement and caused Dick and its subcontractors to incur delays and cost overruns on the Project. St. Paul also filed Claim No. 7102 for $14,449,900 alleging that Dick Corp. breached the Harding & Smith subcontract, which resulted in damages. St. Paul asserted that it is entitled to recover the amount from Dick Corp. and National Fire Insurance Company of Hartford, the bonding company for Dick Corp. As an alternative source of security for its claim against Dick Corp., St. Paul filed a mechanic's lien on the Project for $9.5 million. Mirant Kendall objected to the two claims and initiated Adversary Case No. 04-04320 against Dick Corp. and St. Paul. Mirant Kendall demanded liquidated delay damages and backcharges for $11,754,000 as well as additional actual delay damages and lost profits. St. Paul filed an action in the Superior Court Department of the Trial Court of the Commonwealth of Massachusetts sitting in Middlesex County and captioned as St. Paul Mercury Insurance Co. v. Dick Corporation, et al., Civil Action No. 02-5195. Subsequently, Mirant Kendall, Dick Corp. and St. Paul participated in mediation sessions. As a result, the parties agreed to resolve their disputes. The salient terms of the Settlement Agreement are: (a) The Dick Claim will be deemed an allowed secured claim in Mirant Kendall's bankruptcy case for $11.5 million; (b) Interest will accrue on Dick Corp.'s allowed secured claim from February 1, 2005, to the Effective Date at the Prime Rate plus 3%; (c) All interest accrued on Dick Corp.'s allowed secured claim prior to the Effective Date will be paid in cash to Dick Corp. on the Effective Date; (d) Upon the Distribution Date, Mirant Kendall and MAGi will satisfy Dick Corp.'s allowed secured claim in the form of consideration to be provided to MAGi's general unsecured creditors under the Plan. If the Reorganization Consideration is delivered to Dick Corp. after the Effective Date, Mirant will pay Dick Corp. interest on the allowed secured claim from the Effective Date to the date of delivery of the Reorganization Consideration monthly in cash at the Prime Rate plus 3%; (e) Dick Corp. may choose to sell the Reorganization Consideration. If Dick Corp. receives in the sale cash amounting to less than the unpaid balance of its allowed secured claim, Mirant will pay to Dick Corp. in cash the difference between the unpaid balance of the allowed secured claim for which Reorganization Consideration was issued and the cash received by Dick Corp. on the disposition of the Reorganization Consideration; (f) If the Effective Date does not occur before December 31, 2005, Mirant Kendall will commence amortizing Dick Corp.'s allowed secured claim in equal quarterly installments commencing March 30, 2006, and with the final installment of all remaining sums to be paid on December 31, 2008. Installment payments will terminate on the distribution of the Reorganization Consideration. Mirant Kendall will pay interest monthly in cash at a rate equal the Prime Rate plus 3% on the unpaid portion of the allowed secured claim until the final installment is made or Mirant distributes the Reorganization Consideration in the amount of the remaining balance of Dick Corp.'s allowed secured claim; (g) Any distribution of Reorganization Consideration will be reduced accordingly by installment payments; (h) Dick Corp.'s Mechanic's Lien will be discharged on the issuance of the Reorganization Consideration or on payment of the final installment, whichever comes first; (i) Prior to the Distribution Date and as a condition precedent to the payment of Dick Corp.'s allowed secured claim, all of the Liens and Claims will be satisfied in full and dissolved, or Dick Corp. will obtain a Bond and provide all notices required by law to dissolve the Liens; and (j) Mirant will cooperate with Dick in seeking to address certain subcontractors' claims as well as Dick Corp.'s claims and defenses in any litigation involving Dick Corp.'s subcontractors and suppliers on the Cambridge Project including, Harding & Smith, St. Paul, and Delta Engineers. 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. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Fitch Affirms Class B-5 Certificates at B --------------------------------------------------------- Fitch Ratings has taken rating actions on Morgan Stanley Capital I Inc. series 1996-1: -- Class A is affirmed at 'AAA'; -- Class B-1 is affirmed at 'AAA'; -- Class B-2 is affirmed at 'AAA'; -- Class B-3 is upgraded to 'AA' from 'A'; -- Class B-4 is upgraded to 'BBB' from 'BB'; -- Class B-5 is affirmed at 'B'. The upgrades reflect a substantial increase in credit enhancement relative to future loss expectations and affect $691,537 of outstanding certificates. The affirmations reflect CE consistent with future loss expectations and affect $2,809,904 of outstanding certificates. As of the May 2005 distribution date, the CE levels for all classes are at least fives times their original levels. The CE levels for classes A, B-1, B-2, B-3, B-4, and B-5 are 69.12%, 40.61%, 23.50%, 10.39%, 4.12% and 1.84%, respectively. Currently, the deal is more than nine years seasoned and over 99% of the original collateral has paid off. Cumulative losses equal 0.17% (total loss as a percentage of the original pool balance) and none of the loans in the deal are delinquent. Despite an increase in CE percentage, class B-5 is affirmed at a rating of 'B' primarily due to the limited amount of credit support in absolute dollars ($65,475). When contrasted with an average outstanding loan size of approximately $238,000, an assumed loss severity, in the case of a liquidation, of 30%, and the fact that there have been several loans delinquent over the past few months (although as of the May distribution there are no delinquent loans), Fitch believes the dollar amount of credit support for the B-5 is not sufficient to merit an upgrade. Further collateral performance and credit enhancement statistics are available on the Fitch Ratings web site at http://www.fitchratings.com/ MURRAY INC: Wants to Use PBGC's Cash Collateral ----------------------------------------------- Murray, Inc., asks the U.S. Bankruptcy Court for the Middle District of Tennessee, Nashville Division, for authority to use cash collateral securing repayment of obligations to the Pension Benefit Guaranty Corporation. Murray needs access to the cash collateral to pay on-going operating and administrative expenses through plan confirmation and the resolution of its chapter 11 case. The PBGC holds an allowed secured claim of $6,980,891, plus interest, on Murray Inc.'s assets. The cash will be used in accordance with this seven-month budget: Budgeted Administrative & Priority Claims March to September 2005 Administrative Claims Wind-Down Expenses $10,331,000 Other Wind-Down Admin. Claims 9,730,000 Accrued Expenses 2,816,000 Other Admin. Claims 10,303,000 ------------ $33,180,000 Priority Claims $915,000 Other Secured Claims $6,981,000 ------------ Total Cash Disbursements $41,074,000 ============ The PBGC agrees to let the Debtor dip into the cash collateral on these conditions: a) the value of the Debtor's estate will not be less than $13 million, including cash on hand of at least $6.5 million and real estate of $6.5 million, during the budget period. The Debtor is required to inform the PBGC if the value of the Real Estate goes below $6.1 million. b) the value of the real estate interest will not be less than $10 million in cash on hand if it is sold. c) the debtor will provide a monthly budget with updated forecasts and actual expenses incurred. The Debtor will also provide a certification of cash on hand every week and a certification of real estate value every month. d) the Debtor will not exceed, without the PBGC's consent or further order of the Court, the amount budgeted for any line item by more than 10% on a monthly or cumulative basis. Any unused amount may be carried forward on the next month up to the 10% ceiling. Headquartered in Brentwood, Tennessee, Murray, Inc. -- http://www.murray.com/-- manufactures lawn tractors, mowers, snowthrowers, chipper shredders, and karts. The Company filed for chapter 11 protection on Nov. 8, 2004 (Bankr. M.D. Tenn. Case No. 04-13611). Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. MURRAY INC: Taps Giuliani Capital as Restructuring Consultant ------------------------------------------------------------- Murray, Inc., sought and obtained permission from the U.S. Bankruptcy Court for the Middle District of Tennessee, Nashville Division, to continue employing Giuliani Capital Advisors LLC as its restructuring advisor, through June 30, 2005. Giuliani Capital Advisors provides investment banking solutions and independent advice to leaders dealing with complex business challenges, strategic transactions, or financial distress. The Firm provides a full range of capital raising, mergers and acquisitions, and financial and operational restructuring services. Pursuant to the retention application approved by the Court on Dec. 15, 2004, Giuliani Capital will continue to: a) advise the Debtor's management on its development of the Debtor's business plan, cash flow forecasts and financial Projections; b) advise the Debtor's management with respect to available capital restructuring and financing alternatives, including recommending specific courses of action and assisting with the design, negotiation and implementation of alternative restructuring and transaction structures; c) advise the Debtor's management in the preparation of financial information that may be required by the Debtor's creditors and other stakeholders, and in coordinating communications with the parties-in-interest and their advisors; d) advise the Debtor's management in preparing for, meeting with and presenting information to parties-in-interest and their respective advisors, specifically including the senior lenders, other debt holders and potential sources of new financing and their respective advisors; e) advise and assist the Debtor's management with the design and implementation of key employee retention plan; and f) advise the Debtor's management with respect to the development of a Chapter 11 plan and related disclosure statement. Giuliani Capital will receive $100,000 in advisory fees for April and May 2005 and $75,000 for June 2005. The Debtor believes that Giuliani Capital is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Brentwood, Tennessee, Murray, Inc. -- http://www.murray.com/-- manufactures lawn tractors, mowers, snowthrowers, chipper shredders, and karts. The Debtor filed for chapter 11 protection on Nov. 8, 2004 (Bankr. M.D. Tenn. Case No. 04-13611). Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. NATIONAL CENTURY: Battles Ensue Over Policy Proceeds Distribution ----------------------------------------------------------------- Before it filed for bankruptcy protection, National Century Financial Enterprises, Inc., entered into two separate directors and officers insurance policies. The primary policy with Gulf Insurance Company provided D&O coverage totaling $5 million. The second excess policy, with Great American Insurance Company, provided coverage for $5 million upon the exhaustion of the Gulf D&O Policy. As previously reported, NCFE filed a complaint against Gulf Insurance and American Insurance seeking: a. a declaration that the insurance policies are not void as to the NCFE Entities on the basis of misstatements in the applications; b. for a declaration of a fair and equitable procedure for determining allocation of policy proceeds to all claimants; c. for a declaration of the proportional share of each claimant to the policy proceeds; and d. for an injunction enjoining Gulf Insurance and Great American from making any disbursements from the Policy proceeds other than in conformance with a determination by the Bankruptcy Court. Great American Asserts Rescission Great American asserts counterclaims seeking rescission of the D&O Policy or, in the alternative, declaratory judgment that the D&O Policy is null and void due to fraud and misrepresentations. Great American further contends that that judgment with regards to the claim and counterclaim should be made by the U.S. District Court for the Southern District of Ohio because it has jurisdiction pursuant to Sections 1334(b) and (e) of the Judicial Procedures Code. Great American Seeks Withdrawal of the Reference Subsequently, Great American asked the District Court to withdraw the reference to the Bankruptcy Court pursuant to Section 157(d) of the Judicial Procedures Code. At the hearing on the request, the District Court noted sharp disagreements between the parties as to whether the claims and counterclaims with respect to the Great American excess policy were core or non-core issues. Accordingly, the District Court ruled that the Withdrawal Motion was premature until the Bankruptcy Court decides the core or non-core issue. After due consideration, the Bankruptcy Court acceded to Great American's arguments that the proceeding is non-core. The Bankruptcy Court held that the adversary proceeding "involves a claimed right to insurance coverage and allocation created by state contract law and one that could be vindicated . . . in an ordinary breach of contract suit if NCFE was not bankrupt," and thus is outside of the Bankruptcy Court's core jurisdiction. Accordingly, Great American renewed its request that the District Court withdraw the reference to the Bankruptcy Court of the claims, counterclaims and crossclaims asserted in the adversary proceeding. Great American Case Stayed and Severed With scheduled proceedings for the allocation of proceeds from Gulf Insurance among the competing insureds, Great American requested that the claims and the rescission claims involving Great American be severed and proceeded with separately under Rule 21 of the Federal Rules of Civil Procedure. Great American argued that it has no stake or interest in the Gulf Allocation Proceedings but would suffer significant prejudice if it were not severed. Pending resolution of its Motion to Withdraw the Reference, Great American requested that the Adversary Proceeding against it be stayed on three grounds: (a) It is substantially likely that the District Court will grant the Motion because the Bankruptcy Court determined the claims and counterclaims are non-core and that, since Great American has asserted a demand for and is entitled to a jury trial, withdrawal of the reference is the only permissible means to adjudicate the disputed matters; (b) Great American will suffer irreparable harm if the adversary proceeding is not stayed, while the Debtors and other parties will suffer no substantial harm from a stay; and (c) The public interest will be served by the Bankruptcy Court's decision to stay the proceedings. The Bankruptcy Court approved the request and ordered the Clerk of Court to assign a new case number to the Great American Rescission Proceedings. Judge Calhoun also stayed the Great American Rescission Proceedings pending a ruling by the District Court on the Withdrawal Motion. Gulf Disburses $5 Million Gulf Insurance has deposited $5 million into the Bankruptcy Court in exchange for a discharge of liability under the D&O Policy. The proceeds are held in an escrow account at the U.S. Bank, National Association pending further Court order. The D&O Policy covers claims asserted against NCFE and its directors and officers in line with these clauses: Clause A -- Coverage for Loss incurred by NCFE's Directors and Officers in respect of Claims for alleged Wrongful Acts. Clause B -- Coverage for loss incurred by NCFE resulting from the company's indemnification of its Directors and Officers in respect of Claims for alleged Wrongful Acts Clause C -- Direct or "entity" coverage to NCFE for Loss arising from any Claim made directly against NCFE for alleged Wrongful Acts. The Unencumbered Assets Trust and the former directors and officers of the Debtors dispute the distribution of the proceeds from the D&O Policy: A. Lance and Barbara Poulsen John E. Haller, Esq., at Shumaker Loop & Kendrick LLP, in Columbus, Ohio, relates that the Poulsens are facing a number of cases filed in connection with their alleged actions as officers and directors of NCFE: -- various federal civil actions that have been consolidated by the Panel on Multi-District Litigation in the District Court; -- formal investigations of the Securities and Exchange Commission and the United States Attorney's office and United States Department of Justice concerning their activities with regard to NCFE; -- Debtors' pursuit of Rule 2004 discovery in the bankruptcy proceeding; and -- three adversary cases: * NCFE Debtors vs. GIC et al. * Bank One, N.A. v. Lance Poulsen, et al; and * Anderson v. Pine South, et al. The costs incurred by the Poulsens under those cases total: Case Fees Expenses ---- -------- -------- MDL Cases $397,860 $16,466 SEC Investigation 81,573 18,353 Bank One Litigation 3,679 0 Pine South Litigation 25,854 701 D&O Litigation 111,994 400 Rule 2004 Litigation 64,905 12,797 -------- -------- Total $685,865 $48,717 The Poulsens contend that the Court should find that they have suffered losses covered by the Gulf Policy in the amount of $734,580.76, that this amount be immediately advanced and that any liability incurred by them be covered under the Gulf Policy. B. Former Outside Directors Harold W. Pote, Thomas G. Mendell and Eric R. Wilkinson, as former outside directors of NCFE, believe they are entitled to coverage under the Clause A of the Gulf D&O Policy. The Former Outside Directors assert they suffered losses totaling $3,902,245, which are covered by the proceeds of the Policy. Michael H. Carpenter, Esq., at Carpenter & Lipps LLP, in Columbus, Ohio, relates that between March 28, 2002, and March 28, 2004, the Former Directors have been facing 10 cases: -- Pharos Capital Partners, L.P. v. Deloitte & Touche, L.L.P, et al., No. 2:03cv362 (S.D. Ohio); -- Metropolitan Life Ins. Co., et al. v. Bank One, N.A., et al., No. 2:03cv1882 (D.N.J.); -- Lloyds TSB Bank, plc v. Bank One, N.A., et al., No. 2:03cv2784 (D.N.J.); -- City of Chandler, et al. v. Bank One, N.A., et al., No. 2:03cv1220 (D. Ariz.); -- Parrett v. Bank One, N.A., et al., No. 2:03cv541 (D. Ariz.); -- State of Arizona, et al. v. Credit Suisse First Boston, et al., No. 2:03cv1618 (D. Ariz.); -- Crown Cork & Seal Co., Inc., et al., v. Credit Suisse First Boston et al., No. 2:03cv2084 (D. Ariz.); -- New York City Employees' Retirement System, et al. v. Bank One N.A., et al., No. 1:03cv9973 (S.D.N.Y.); -- ING Bank N.V. v. JPMorgan Chase Bank, et al., No. 1:03cv7396 (S.D.N.Y.); and -- Bank One, N.A. v. Poulsen, et al., No. 2:03cv394 (S.D. Ohio). Messrs. Pote and Mendell were also named as defendants in Amedisys, Inc., et al. v. JPMorgan Chase Bank et al., No. 3:03cv224 (M.D. La.), and Mr. Pote was named as a defendant in MedDiversified, Inc., et al. v. Poulsen, et al., No. 02cv12214 (D. Mass). The Former Outside Directors' expenditures: Former Director Total Costs --------------- ----------- Mr. Pote $1,366,598 Mr. Mendell 1,366,598 Mr. Wilkinson 1,169,049 The costs related to Parret v. Bank One and the Gulf Adversary Proceeding are excluded from the expenditures. C. Randy Ayers As former director and officer of NCFE, Randy Ayers believes that he is entitled to be reimbursed or covered by the Gulf D&O Policy for any losses he has incurred or will incur as a result of claims against him for alleged wrongful acts. According to Brian E. Dickerson, Esq., at Maguire & Schneider, LLP, in Columbus, Ohio, Mr. Ayers is facing numerous suits and investigations for which defense costs aggregate to $189,859: Cases Costs ----- -------- Bank One, N.A. V. Lance Poulsen, et al. $10,240 C2 03 394 State of Arizona, et al. v. CSFB Corp., et al. 19,019 CV-03-16 18-PHX-JWS Crown Cork & Seal Co., et al v. CSFB, et al. 6,255 CV-2:03ev2084 City of Chandler, et al. v. Bank One, N.A., 31,193 et al. CV2003-010173 Michael Mahoney, et al. v. John F. Andrews, 6,352 et al. 3:03-CV-467-25 TEM USDC John P. Houlihan v. John F. Andrews, et al 6,352 3:03-CV-656-J-32MMH USDC New York City Employees' Retirement System, 8,507 et al v. Bank One, N.A., et al. 03-CV-9973 Investigation by U.S. Securities and Exchange 33,018 Commission against Mr. Ayers commencing January 15, 2003 Investigation by the U.S. Attorney's Office 11,630 for the Southern District of Ohio against Mr. Ayers beginning December 10, 2002 Cases consolidated in the MDL Cases in the 76,324 District Court for the Southern District of Ohio Demand by purchasers of NCFE subsidiary notes for 288 Reimbursement under Illinois laws -------- Total Fees Paid as of September 3, 2004 $189,859 D. Unencumbered Assets Trust The Unencumbered Assets Trust asserts covered losses aggregating $2,661,152,383: * $2,609,891,501 on account of a Claim, which was allowed with respect to the unsecured portion of the $3 billion contractual claims filed by the Indenture Trustees for the NPF VI and NPF XII Noteholders; and * $51,260,882 for professional fees of the Debtors, the NPF VI and NPF XII Subcommittees and the Creditors Committee. Mary E. Tait, Esq., at Jones Day, in Columbus, Ohio, contends that those amounts are covered under Insuring Clause C of the Policy because: (1) NCFE and its subsidiaries are "Insured Companies"; (2) the Noteholder Deficiency Claim and the professional fees represent "Claims" made against the Debtors during the "Policy Period" or the "Discovery Period"; (3) the Claims were for "Wrongful Acts"; and (4) the Debtors suffered a "Loss." The Trust's covered losses however far exceed the D&O Policy's $5 million limit of liability. As a result, the Trust believes that the proceeds should be distributed to the insureds in an amount proportional to the total losses claimed under the Policy, i.e., each insured should be awarded an amount from the Policy proceeds that is proportional to the insured's covered losses vis-a-vis total covered losses. Ms. Tait says a proportional or pro rata distribution is appropriate because it is: -- consistent with bankruptcy law, policy and objectives; -- the most equitable allocation method under the circumstances; and -- consistent with the Gulf Policy and relevant case law. Ms. Tait points out that the D&O Policy does not contain a "priority of payments" clause prioritizing payments among the insureds or prioritizing certain kinds of Losses above others. Additionally, the coverage afforded the Insured Companies under Insuring Clause C is as fully broad as the individual insureds' coverage under Clause A. The Trust tells Judge Calhoun that the directors from JPMorgan Chase Bank, N.A. are not entitled to any defense costs under the D&O Policy. The Trust believes that those directors' employers are paying for the defense costs. Additionally, the Trust asserts that three Former Officers' covered losses should reduced to these amounts: Covered Loss ------------ Rebecca Parrett $386,449 Lance and Barbara Poulsen 517,932 Donald Ayers 189,859 These Former Officers covered losses are still subject to further reduction in unknown amounts, Ms. Tait notes. Based on its computations, the Trust asserts that its proportional share of the $5 million Gulf Deposit is 99.96%, or $4,998,000. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEWFIELD EXPLORATION: Fitch Rates $600M Unsecured Notes at BB+ -------------------------------------------------------------- Fitch Ratings has initiated coverage of Newfield Exploration Company and assigned a rating of 'BB+' to the company's senior unsecured debt and $600 million unsecured credit facility, and a rating of 'BB-' to the company's senior subordinated notes. The Rating Outlook is Stable. The ratings are supported by the company's conservative management team and growth strategy (including the company's hedging program), modest production costs and debt levels relative to the company's peer group, the high percentage of assets operated by the company, and the significant diversification of its asset base in recent years. Offsetting factors include higher finding and development costs and a lower reserve-to-production ratio relative to the company's peer group, as well as concerns over the potential for additional debt to finance future acquisitions. The company, however, also has a history of reducing debt following transactions, reflected by the repayment of $135 million of revolver borrowings since Sept. 30, 2004, reducing total balance sheet debt to $933 million at March 31, 2005. Like other independent upstream oil companies, Newfield is generating significant cash from operations and is reinvesting the bulk of the cash back into growing its reserve base. Cash flow from operations for the last 12 months ending March 31, 2005 totaled $1.04 billion with capital expenditures of $958 million. Credit protection metrics remain very strong as the company generated EBITDA of $1.16 billion over the 12-month period, which provided interest coverage of 19.6 times (x) and leverage, as measured by debt-to-EBITDA, of only 0.8x. Leverage, as measured by debt to barrel of oil equivalent of proven reserves were reasonable at year-end 2004 at $3.34/boe, and debt to proven developed producing reserves at $4.45/boe. Liquidity remains strong with only $63 million of cash borrowings and $25 million of letters of credit under its credit facility and $31 million of cash on hand. Newfield's focus has historically been on high production, short- lived reserves to maximize the value of the company's investments. This has been the strategy since Newfield was founded in the late 1980s, when the company began acquiring assets in the high decline, shallow water Gulf of Mexico. Under this approach, the company also benefits from having no lingering proven undeveloped reserves on its books. The strategy, however, also drives the key negative metrics in the analysis of Newfield - higher finding and development costs and lower reserve life - which are discussed further below. Newfield now has the size and flexibility to diversify its exploration portfolio, including its deep water and international efforts. The company's 2005 capital budget of $950 million includes $285 million targeted for exploration. Newfield's portfolio of exploration projects reflects a balance of low-risk, low-cost opportunities as well as higher risk, higher return opportunities such as the high-profile Treasure Island prospect being drilled by Newfield's partner, ExxonMobil. Another core strength of Newfield is the high percentage of properties the company operates as well as its mitigation of risk on its non-operated properties, such as Treasure Island, where Newfield's partners often pick up the bulk of the upfront exploration costs for the opportunity to participate in the play. The company supplements its organic efforts (100% reserve replacement three-year average from 2002 to 2004) with opportunistic acquisitions, including the purchase of Inland Resources Inc. in August 2004. Newfield's proven reserves have nearly doubled over the last three years to nearly 300 million barrels of oil equivalent at the end of 2004 from 156 mmboe at the end of 2001. Total reserve replacement has averaged 236% annually over the period. Newfield's approach to booking estimated reserves can be viewed as 'middle of the road,' as the company has avoided the pitfalls of being too conservative or too aggressive in its estimates. As a result, reserve reports reflect only minimal revisions each year, a key strength of the company. Although Newfield often pays what Fitch has historically viewed as full price for acquisitions, the company also locks in the economics of the transactions through hedging a significant percentage of its production. Newfield currently has more than 70% of its oil and gas production hedged through early 2006, primarily through swaps and collars, as well as significant hedges on its oil production through 2010. Newfield also manages its capital budget within its cash from operations and has been free cash flow positive since 2001. Given the location and quality of the company's core reserves, the bulk of its production has historically been priced at prevailing Henry Hub and West Texas Intermediate crude prices, which is reflected in the company's robust price realizations (average of $33.34/boe in 2004). Through the major acquisitions completed in recent years, Newfield now has a foothold in four major basins in the U.S. as well as modest offshore international operations in Malaysia, the North Sea, China, and Brazil. The company has yet to report any significant results from its international efforts, with only 2.5% of 2004 production and less than 2% of reserves at year-end coming from overseas. With development work ongoing with both the Grove discovery in the North Sea and the Abu Cluster offshore Malaysia as well as continued progress on the plan of development for the Bohai Bay project offshore China, Fitch expects increasing reserve bookings from international operations in 2005 and beyond. Despite industry wide cost inflation in recent quarters, Newfield remains very competitive with its production costs relative to its peers, averaging $6.85/boe of total operating costs in 2004. Costs have also remained under control despite the significant diversification in the company's asset base in recent years. The lower costs have also helped to offset the company's higher finding, development and acquisition costs (FD&A of $13.16/boe average from 2002 to 2004), giving the company a significant free cash flow per boe of production ($11.50/boe) relative to its peer group. Newfield's high finding costs relative to its peer group ($13.16/boe three-year average FD&A) is a key concern for Fitch. The primary drivers for the higher costs have been the nature of the company's core asset base in Gulf of Mexico, the efforts in recent years to grow and diversify its reserve base, and the desire to capitalize on the current high price environment. While this metric may improve in coming years due to the company's larger and more diversified asset base as well as through success from its exploration efforts, Fitch expects the company to continue to manage its investments by maximizing the economics of its drilling efforts and future acquisitions. The second core concern with Newfield is its low reserve life relative to its peer group. As noted, this stems from the company's historical focus on high-value, high-decline properties. Due to the company's diversification efforts in recent years, the proven-reserves-to-production ratio has improved significantly from 5.3 years at the end of 2001 to 7.3 years at the end of 2004. Further improvement, however, would require major changes to the company's strategy and, ultimately, its asset base, which Fitch currently views as unlikely. Despite Newfield's portfolio of drilling opportunities, Fitch views the likelihood of further sizable acquisitions to be fairly high. The rising costs to buy companies and properties, however, have placed increasing pressure on the leverage statistics of Newfield and other upstream companies relative to the low debt/boe metrics seen in recent years. The August 2004 acquisition of Inland Resources for $575 million added 54 million boe of proven reserves at a price of $10.58/boe. Newfield funded the transaction conservatively with $325 million of 6-5/8% 10-year notes and $323 million of common stock. A point of note, however, is that given rising acquisition prices, at 50% debt the Inland transaction was leveraging to Newfield with $5.29/boe of the funding coming in the form of debt, significantly higher than the company's year-end 2003 debt/boe of $2.92. Fitch believes, however, that management is not willing to grow for growth's sake and, as a result, the risk of the company making a bad acquisition or overleveraging appears limited. The company also has a history of reducing debt following transactions, as seen since the Inland transaction. The inherent risks of future acquisitions are also mitigated by the company's hedging strategy, its in-house analyses of potential purchases, and the flexibility afforded by the company's larger asset base. While Newfield continues to perform very well under the current commodity environment, the higher finding and development costs and low reserve life limit positive rating momentum at this point in time. Negative rating action would likely be considered under a highly leveraging acquisition. Newfield is a mid-sized oil and gas exploration and production company headquartered in Houston. The company has operations in several major regions of the United States (shallow and deep water Gulf of Mexico, Mid-Continent, South Texas, and Rocky Mountains), as well as international offshore operations in the North Sea off of the United Kingdom, Malaysia, China, and Brazil. At year-end 2004, the company's reserves had grown to nearly 300 mmboe, of which 75% was proven developed and 70% natural gas. NORTEL NETWORKS: Bill Owens Replaces Gary Daichendt as COO ---------------------------------------------------------- Nortel Networks Corporation (NYSE:NT)(TSX:NT) reported the resignation of Gary Daichendt, president and chief operating officer of the Company and Nortel Networks Limited, effective June 10, 2005. Bill Owens, vice chairman and chief executive officer, will assume these responsibilities. "Gary has made a major contribution to Nortel during his time here and has added value to our strategic initiatives and business plan," said Mr. Owens. "It has become apparent to Gary and me, however, that we have divergent management styles and our business views differ. I respect him for his decision and I wish him every success in his future endeavors." "While making the decision to leave Nortel was a difficult one, my time with the Company has confirmed that Nortel has world class technology and people," said Mr. Daichendt. "You can be certain that we will continue to focus on operational excellence as a broad-based carrier and enterprise networking company," said Mr. Owens. "We have a strong business and technology team with significant depth and experience that we will continue to build on." Nortel also announced that Gary Kunis, chief technology officer, who joined Nortel following the appointment of Mr. Daichendt, will also be leaving the Company. Mr. Kunis previously worked alongside Mr. Daichendt at Cisco Systems. Renewed Uncertainty Analysts said the executive departures renew uncertainty about the stability of Nortel's senior management team, The Wall Street Journal reports. The Company struggled with an accounting scandal that led to the ouster of 10 senior executives, including former chief executive Frank Dunn. The Company became current with its filings of its financial statements and expected good performance for the year. The resignations changed that outlook. Nortel Networks -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NRG ENERGY: Amends 4% Preferred Stock Registration with SEC ----------------------------------------------------------- On May 26, 2005, NRG Energy, Inc., filed an amendment to its registration statement dated March 30, 2005, with the U.S. Securities and Exchange Commission. The amended registration statement includes a prospectus, which relates to the offer and resale, from time to time, of up to 420,000 shares of 4% Convertible Perpetual Preferred Stock, par value $0.01, and the shares of NRG's common stock, par value $0.01, issuable upon the conversion of the preferred stock. NRG originally issued the preferred stock in a private placement on December 21, 2004. The selling stockholders will receive the proceeds from the sale of the preferred stock and common stock, but NRG will bear the costs relating to the registration of the preferred stock and common stock. At May 25, 2005, the last reported sale price of NRG's common stock was $34.75 per share. NRG does not intend to list the preferred stock on any national securities exchange or automated quotation system. The Offering A. Preferred Stocks Offered The selling holders will sell up to 420,000 shares of 4% Convertible Perpetual Preferred Stock, at par value $0.01 per share. B. Common Stock Offered The selling holders will sell up to 10,500,000 shares, based upon an initial conversion price of $40 per share of common stock. The conversion price is subject to adjustments. C. Liquidation Preference $1,000 per share of preferred stock D. Dividend Holders of preferred stock are entitled to receive, when, as and if declared by its board of directors, out of funds legally available, cash dividends at the rate of 4% per annum, payable quarterly in arrears on March 15, June 15, Sept. 15 and December 15 of each year, commencing March 15, 2005. Dividends on the preferred stock will be cumulative from the date of initial issuance. Accumulated but unpaid dividends cumulate dividends at the annual rate of 4%. For so long as the preferred stock remains outstanding, (1) NRG will not declare, pay or set apart funds for the payment of any dividend or other distribution with respect to any junior stock or parity stock, and (2) neither NRG, nor any of its subsidiaries, will, subject to certain exceptions, redeem, purchase or otherwise acquire for consideration junior stock or parity stock through a sinking fund or otherwise, in each case, unless NRG has paid or set apart funds for the payment of all accumulated and unpaid dividends, including liquidated damages, if any, with respect to the shares of preferred stock and any parity stock for all preceding dividend periods. NRG has not declared or paid dividends on its common stock, and the payment of dividends is limited by its credit agreement. On March 15, 2005, NRG paid dividends on its preferred stock. E. Conversion of Preferred Stock The preferred stock is convertible, at the option of the holder, at any time into shares of its common stock at an initial conversion price of $40.00 per share, which is equal to an approximate conversion rate of 25 shares of its common stock per share of preferred stock. The conversion price may be adjusted for certain reasons, including for any future common stock dividends, but will not be adjusted for accumulated and unpaid dividends or liquidated damages, if any. Upon conversion, holders will not receive any cash payment representing accumulated dividends, if any. Instead, accumulated dividends, if any, will be deemed paid by the issuance of the common stock received by holders on conversion. If a fundamental change occurs, NRG will adjust the conversion price as applicable. If NRG declare a cash dividend or cash distribution to holders of its common stock, the conversion price will be decreased to equal the price determined by multiplying the conversion price in effect immediately prior to the record date for the dividend or distribution by the fraction equal to: [(Pre-Dividend Sale Price) - (Dividend Adjustment)] -------------------------- (Pre-Dividend Sale Price) F. Optional Redemption of Preferred Stock NRG may not redeem any shares of preferred stock at any time before December 20, 2009. On or after December 20, 2009, NRG may redeem some or all of the preferred stock with cash at a redemption price equal to 100% of the liquidation preference, plus accumulated but unpaid dividends, including liquidated damages, if any, to the redemption date. The terms of the indenture governing its senior secured notes and its senior credit facility could restrict its ability to redeem shares of preferred stock for cash. If full cumulative dividends on the preferred stock have not been paid, the preferred stock may not be redeemed, and NRG may not purchase or acquire any shares of preferred stock other than pursuant to a purchase or exchange offer made on the same terms to all holders of preferred stock. The preferred stock is not subject to any mandatory redemption or sinking fund provision. G. Fundamental Change With Respect to Preferred Stock If NRG become subject to a fundamental change, each holder of shares of preferred stock will have the right to require us to purchase any or all of its shares with cash at a purchase price equal to 100% of the liquidation preference, plus accumulated and unpaid dividends, including liquidated damages, if any, to the date of purchase. Its ability to purchase all or a portion of preferred stock for cash is subject to its obligation to repay or repurchase any outstanding debt required to be repaid or repurchased in connection with a fundamental change and to any contractual restrictions then contained in its debt. NRG will not be required to repurchase any shares of preferred stock if the closing stock price of its common stock for the five trading days within the 10 consecutive trading days ending immediately before the later of the fundamental change or the public announcement thereof equals or exceeds 105% of the applicable conversion price of the preferred stock immediately before the fundamental change or public announcement. In addition, holders of shares of preferred stock will not have the right to require us to repurchase shares of preferred stock upon a fundamental change: -- unless the purchase complies with the indenture governing its senior secured notes and its anticipated amended and restated credit facility; and -- unless and until its board of directors has approved the fundamental change or elected to take a neutral position with respect to the fundamental change. H. Voting rights Each holder of preferred stock will have one vote for each share held by the holder on all matters voted upon by the holders of its common stock, as well as voting rights specifically provided for in its amended and restated certificate of incorporation or as otherwise from time to time required by law. In addition, whenever (1) dividends on the preferred stock or any other class or series of stock ranking on a parity with the preferred stock with respect to the payment of dividends are in arrears for dividend periods, whether or not consecutive, containing in the aggregate a number of days equivalent to six calendar quarters, or (2) NRG fail to pay the redemption price on the date shares of preferred stock are called for redemption or the purchase price on the purchase date for shares of preferred stock following a change of control, then, in each case, the holders of preferred stock will be entitled to vote for the election of two of the authorized number of its directors at the next annual meeting of stockholders and at each subsequent meeting until all dividends accumulated or the redemption price on the preferred stock have been fully paid or set apart for payment. The term of office of all directors elected by the holders of preferred stock will terminate immediately upon the termination of the rights of the holder of preferred stock to vote for directors. Upon election of any additional directors, the number of directors that comprise its board will be increased by the number of the additional directors. Holders of shares of preferred stock will have one vote for each share of preferred stock held. I. Ranking The preferred stock will be, with respect to dividend rights and rights upon liquidation, winding up or dissolution: -- junior to all its existing and future debt obligations; -- junior to each other class or series of its capital stock other than: * its common stock and any other class or series of its capital stock the terms of which provide that the class or series will rank junior to the preferred stock; and * any other class or series of its capital stock the terms of which provide that the class or series will rank on a parity with the preferred stock; -- on a parity with any other class or series of its capital stock the terms of which provide that the class or series will rank on a parity with the preferred stock; -- senior to its common stock and any other class or series of its capital stock the terms of which provide that the class or series will rank junior to the preferred stock; and -- effectively junior to all of its subsidiaries' (1) existing and future liabilities and (2) capital stock held by others. J. Use of Proceeds All of the shares of preferred stock and common stock offered are being sold by the selling stockholders. NRG will not receive any proceeds from the sale of preferred stock and common stock in this offering. NRG advises that an investment in the preferred stock or common stock involves a high degree of risk. A full-text copy of the Amended Registration Statement is available for free at http://ResearchArchives.com/t/s?1b Pro Forma Results NRG also filed additional pro forma results for the three months ended March 31, 2005. As previously reported, NRG filed a Form 8-K which set forth the Transactional Pro Forma Analysis reflecting the impact of the redemption and purchase of $415.8 million of the Company's 8% second priority senior secured notes due 2013, in connection with the registration of the Company's 4% Convertible Perpetual Preferred Stock. NRG reports that the proceeds for the Preferred Stock enabled NRG to redeem and cancel $375 million of the 8% Notes. The remaining $40.8 million of the 8% Notes were purchased in the market in early 2005. A full-text copy of NRG's unaudited pro forma statement of operations for three months ended March 31, 2005, is available for free at http://ResearchArchives.com/t/s?1a NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million convertible perpetual preferred stock. The outlook is stable. NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. OAKWOOD HOMES: Fitch Lowers Ratings on 24 Classes ------------------------------------------------- Fitch Ratings affirms 36 classes (representing approximately $749 million in outstanding principal) and downgrades 24 classes (representing approximately $694 million in outstanding principal) of Oakwood Homes Corp. manufactured housing transactions. The rating actions reflect the continued poor performance of the collateral and the increased rate of credit enhancement deterioration due to adjustments in servicing practices. Although Fitch expects the collateral performance to modestly improve, most bonds will not be able to re-establish the credit enhancement, which deteriorated as a result of the high rate of losses in recent months. Oakwood Homes Corporation was engaged in the production, sale, and financing of manufactured homes throughout the U.S. Oakwood filed for Chapter-11 bankruptcy protection in November 2002, and the company's operations and non-cash assets were subsequently acquired by Clayton Homes, Inc. in April 2004. Clayton Homes is a subsidiary of Berkshire Hathaway Inc. (rated 'AAA' by Fitch). The loans continue to be serviced at the servicing center in Greensboro, North Carolina under Clayton management. Since 2002, servicing policy changes have caused volatility in performance. In late 2002, Oakwood began liquidating repossessions solely through the wholesale channel and no longer made loan assumptions available to borrowers. The servicing fee was made senior (100 bps for transactions prior to 2000-D and 150 bps for subsequent transactions), which reduced available excess spread to cover losses. Additionally, outstanding servicing advances greater than five months were deemed unrecoverable and were netted out of the trust's cash flow in October 2002. After the acquisition by Clayton in 2004, servicing advances greater than two months were deemed unrecoverable and were netted out of the trust's cash flow over several distribution dates between May and July of 2004. Also, after the acquisition, borrowers were identified as delinquent if the borrower did not make agreed-upon repayments of advanced taxes and insurance. Previously, Oakwood reported a borrower as current if the principal and interest payment was made regardless of whether the borrower had repaid tax and insurance payments made on his behalf. Clayton identified this new policy, along with some transitional challenges, as the primary reasons why Oakwood's delinquency increased in the months following the acquisition. The increase in delinquency in late 2004 resulted in an increased rate of losses and an increased rate of credit enhancement deterioration in 2005. However, the rate of repossession liquidations in recent months has exceeded the rate of borrowers becoming delinquent. This has resulted in a decline in the overall delinquency rate and indicates that the liquidation rate and loss rate should decline in the future. When estimating expected losses, Fitch assumed liquidation rates would decline over a period of several years after remaining stable for the next 12 to 18 months. Voluntary prepayment rates and loss severities were assumed to remain consistent with current levels. Given these assumptions, Fitch expects losses on the remaining pool balance of 18%-20% for the 1995-1996 vintages, 25%- 30% for the 1997-1999 vintages and 35%-40% for the 2000-2001 vintages. A focus of the analysis was the manner in which principal and principal shortfall carryovers are distributed to the senior classes. Fitch makes a distinction in credit risk for senior classes that receive principal sequentially and are expected to pay off prior to the entire senior tranche becoming undercollateralized in a stressed scenario. If the class is expected to payoff prior to the undercollateralization of the senior tranche, distinctions in credit risk are made even in structures where losses are distributed pro rata among the outstanding senior classes or principal distribution converts from sequential to pro rata when the senior class becomes undercollateralized. Oakwood transactions employ a variety of senior class principal distribution methods throughout the different transactions. All Fitch-rated Oakwood transactions issued after 1997 with more than one senior class initially distribute principal sequentially among the senior classes. However, the transactions vary in how they repay principal shortfall carryover amounts. Since all transactions in these vintages have principal shortfall carryover amounts and the shortfalls are paid prior to the current period's principal, the method of shortfall repayment has become significant. The 1998 vintage transactions repay the shortfalls on a pro rata basis among all senior classes. Fitch-rated transactions after 1998 initially repay principal shortfall carryover amounts sequentially among senior classes. However, for all transactions except 2000-D, once the shortfall carryover amount exceeds the first bond's outstanding certificate balance, principal is no longer due to that class and the carryover amount will no longer grow for that class. At that point, principal becomes due to the next senior class in the sequential order and shortfalls will begin to accrue for this next class. When more than one senior class has an unpaid shortfall carryover amount, the carryover amount is paid based on each bond's pro rata share as determined by the bonds' outstanding carryover amount as a percentage of the total shortfall carryover amount (rather than pro rata as determined by the bonds' outstanding principal balance). The structure of 2000-D is unique among Fitch-rated transactions issued after 1998 in that the principal shortfalls will continue to be repaid sequentially regardless of whether the shortfall carryover amount exceeds any senior bond's certificate balance. The practical implication of this structure for senior classes in transactions after 1998 is that they initially received principal sequentially and continued to receive principal sequentially while the shortfall carryover amounts were smaller than the certificate balance of the bond that was first in the sequential order. However, except for 2000-D, principal distribution has become increasingly pro rata as the shortfall carryover amounts continue to grow and exceed the balance of each bond in the sequential order. It is Fitch's expectation that the shortfall carryover amounts will cause the senior classes in these transactions to continue to pay on a pro rata basis, increasing the risk to tranches that had previously paid sequentially. Rating adjustments on senior classes reflects the transition to pro rata payment. Series 1995-A: -- Class A-4 affirmed at 'AA+'; -- Class B-1 downgraded to 'CC' from 'CCC'. Series 1995-B: -- Class A-3 affirmed at 'AAA'; -- Class A-4 affirmed at 'AA+'; -- Class B-1 downgraded to 'C' from 'CC'. Series 1996-A: -- Class A-4 affirmed at 'AA+'; -- Class B-1 downgraded to 'CC' from 'B-'; -- Class B-2 remains at 'C'. Series 1996-B: -- Class A-5 affirmed at 'AAA'; -- Class A-6 affirmed at 'A'; -- Class B-1 remains at 'C'. Series 1996-C: -- Class A-5 affirmed at 'AAA' -- Class A-6 affirmed at 'A' -- Class B-1 remains at 'C' Series 1997-A: -- Classes A-4 and A-5 affirmed at 'AAA'; -- Class A-6 affirmed at 'A'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1997-B: -- Classes A-4 and A-5 affirmed at 'AAA'; -- Class M affirmed at 'A-'; -- Class B-1 remains at 'C'. Series 1997-C: -- Classes A-3, A-4, A-5 and A-6 affirmed at 'AAA'; -- Class M affirmed at 'BBB+'; -- Class B-1 remains at 'C'. Series 1997-D: -- Classes A-3, A-4 and A-5 are affirmed at 'AAA'; -- Class M downgraded to 'BBB-' from 'BBB+'; -- Class B-1 remains at 'C'. Series 1998-B: -- Classes A-3, A-4 and A-5 affirmed at 'AA-'; -- Class M-1 downgraded to 'CCC' from 'B-'; -- Class M-2 remains at 'C'. Series 1998-C: -- Classes A and A-ARM affirmed at 'BBB+'; -- Class M-1 downgraded to 'C' from 'CC'; -- Class M-2 remains at 'C'. Series 1999-A: -- Class A-2 downgraded to 'BBB-' from 'AAA'; -- Class A-3 downgraded to 'BBB-' from 'AA-'; -- Classes A-4 and A-5 affirmed at 'BBB-'; -- Class M-1 downgraded to 'B-' from 'BB-'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'. Series 1999-B: -- Class A-2 downgraded to 'BB-' from 'AAA'; -- Class A-3 downgraded to 'BB-' from 'AA-'; -- Class A-4 downgraded to 'BB-' from 'BB+'; -- Class M-1 downgraded to 'C' from 'CC'; -- Class M-2 remains at 'C'. Series 1999-C: -- Class A-2 downgraded to 'B' from 'BB-'; -- Class M-1 downgraded to 'C' from 'CC'; -- Class M-2 remains at 'C'. Series 1999-E: -- Class A-1 downgraded to 'B' from 'BB'; -- Class M-1 downgraded to 'C' from 'CCC'; -- Class M-2 remains at 'C'. Series 2000-A: -- Class A-2 downgraded to 'CCC' from 'AA-'; -- Class A-3 downgraded to 'CCC' from 'BBB-'; -- Class A-4 downgraded to 'CCC' from 'BB'; -- Class A-5 downgraded to 'CCC' from 'B'; -- Class M-1 remains at 'C'; -- Class M-2 remains at 'C'. Series 2000-B: -- Class A-1 remains at 'C'; -- Class M-1 remains at 'C'. Series 2000-D: -- Class A-2 affirmed at 'AAA'; -- Class A-3 affirmed at 'A'; -- Class A-4 downgraded to 'CC' from 'CCC'; -- Class M-1 remains at 'C'. Series 2001-B: -- Class A-2 downgraded to 'BBB-' from 'AA'; -- Class A-3 downgraded to 'BBB-' from 'A-'; -- Class A-4 affirmed at 'BBB-'; -- Class M-1 remains at 'C'. PARMALAT USA: S.p.A. Holds Allowed Unsecured Claim for $6 Million ----------------------------------------------------------------- Parmalat Finanziaria S.p.A. and each of its affiliates timely filed proofs of claim against Parmalat U.S.A. Corporation and its U.S. debtor-affiliates. The Parmalat Affiliates are: * Parmalat S.p.A, * Parmalat Netherlands B.V., * Parmalat Finance Corporation B.V., * Parmalat Capital Netherlands B.V., * Dairies Holding International B.V., * Parma Food Corporation B.V., * Parmalat Soparfi S.A., * Olex S.A., Eurolat S.p.A., * Lactis S.p.A., * Coloniale S.p.A., * Hit S.p.A., * Hit International S.p.A., * Nuova Holding S.p.A., * Contal S.r.l., * Geslat S.r.l., * Newco S.r.l., * Eliair S.r.l., * Centro Latte Centallo S.r.l., * Panna Elena S.r.l., * Parmengineering S.r.l., * Parmatour S.p.A., * Fratelli Strini Costruzioni Meccaniche S.r.l., and * Curcastle Corporation N.V. The Parmalat Entity Claims were assigned Claim Nos. 479, 802-831, 833-874 and 879-881. On March 8, 2005, the Court authorized a settlement among various Parmalat Entities, General Electric Capital Corporation and its affiliated entities, and the Official Committee of Unsecured Creditors. Pursuant to its March 8 Order, the Court also approved a term sheet containing the conditions for a global settlement of claims between the U.S. Debtors and the Parmalat Entities. Subsequently, the U.S. Debtors and the Parmalat Entities have entered into a Global Settlement dated as of May 31, 2005, and stipulated that: -- the Parmalat Entities will withdraw all their claims, with prejudice, except for Claim No. 802 filed by Parmalat S.p.A. against Parmalat USA Corp.; and -- the U.S. Debtors will allow Claim No. 802 for $6,000,000. Accordingly, Judge Drain approves the Stipulation. Headquartered in Wallington, New Jersey, Parmalat U.S.A. Corporation -- http://www.parmalatusa.com/-- generates more than EUR7 billion in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company employs over 36,000 workers in 139 plants located in 31 countries on six continents. It filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The Bankruptcy Court confirmed the U.S. Debtors' Plan of Reorganization on March 7, 2005. (Parmalat Bankruptcy News, Issue Nos. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX: Wants Bankruptcy Court to Close Pillowtex I Cases ------------------------------------------------------------ Gilbert R. Saydah, Jr., Esq., at Morris, Nichols, Arsht & Tunnel, in Wilmington, Delaware, recounts that on November 14, 2000, 24 debtors voluntarily filed Chapter 11 petitions, jointly administered under Case No. 00-4211: * Pillowtex, Inc., * Pillowtex Corporation, * Beacon Manufacturing Company, * Fieldcrest Cannon, Inc., * Encee, Inc., * The Leshner Corporation, * Opelika Industries, Inc., * Pillowtex Management Services Company, * Amoskeag Management Corporation, * Bangor Investment Company, * Crestfield Cotton Company, * Downeast Securities Corporation, * FCC Canada, Inc., * Fieldcrest Cannon Financing, Inc., * Fieldcrest Cannon, International, Inc., * Fieldcrest Cannon, Licensing, Inc., * Fieldcrest Cannon SF, Inc., * Fieldcrest Cannon Transportation, Inc., * Leshner of California, Inc., * Manetta Home Fashions, Inc., * Moore's Falls Corporation, * PTEX Holding Company, * St. Marys, Inc., and * Tennessee Woolen Mills, Inc. On May 1, 2002, the U.S. Bankruptcy Court for the District of Delaware confirmed the Second Amended Joint Plan of Reorganization filed by the First Case Debtors. The Plan became effective on May 24, 2002. Under the confirmed Plan: (a) each holder of an Allowed Claim in Class 2 is entitled to receive cash equal to 10% of the amount of the Allowed Claim; and (b) each holder of an Allowed Claim in Class 6 is entitled to receive its pro rata share of (i) 600,000 shares of common stock of Reorganized Pillowtex, and (ii) warrants to purchase an aggregate of 3,529,412 shares of common stock of Pillowtex Corporation. Following the Effective Date, the First Case Debtors' disbursing agent, Wells Fargo, established a cash account from which the distributions were to be made to holders of Allowed Class 2 Claims. As of May 23, 2005, the balance of the Convenience Claims Account is $12,061. Mr. Saydah also points out that the First Case Debtors have established the Unsecured Claims Reserve, which contains shares of New Common Stock and New Warrants to be distributed from time to time upon the resolution of Disputed Claims. As of May 23, 2005, 62,650 shares of New Common Stock and New Warrants to purchase 370,006 shares of New Common Stock are held in the Unsecured Claims Reserve. Because no dividends or other cash distributions have been made in respect of the New Common Stock or the New Warrants, the Unsecured Claims Reserve does not contain any cash. Mr. Saydah informs Judge Walsh that as of May 23, 2005, the First Case Debtors' Plan has been substantially consummated, as that term is defined in Section 1101(2) of the Bankruptcy Code, because: (a) the First Case Debtors have transferred substantially all of the property proposed by the Plan to be transferred; (b) the Reorganized Debtors assumed the management of their businesses and properties as contemplated by the Plan; and (c) The Disbursing Agent has commenced distributions as contemplated by the Plan. In the year after the Plan Effective Date, the Reorganized Debtors were subject to continuing adverse market conditions. "The effect of those conditions, together with intense domestic and foreign competition, had a negative impact on the Reorganized Debtors' cash flows and results from operations," Mr. Saydah says. On July 3, 2003, 16 debtors commenced the Second Cases, which were jointly administered under Case No. 03-12339. The Second Case Debtors consists of: * Pillowtex Corporation, * Beacon Manufacturing, * Encee, Inc., * FC Online, Inc., * FCC Canada, Inc., * FCI Corporate LLC, * FCI Operations LLC, * Fieldcrest Cannon, Inc., * Fieldcrest Cannon Financing, Inc., * Fieldcrest Cannon Licensing, Inc., * Fieldcrest Cannon Transportation, Inc., * The Leshner Corporation, * Opelika Industries, Inc., * PTEX Holding Company, * PTEX, Inc., and * Tennessee Woolen Mills, Inc. By Order dated November 7, 2003, the Court fixed December 29, 2003, as the general bar date for filing proofs of claim in the Second Cases, and January 26, 2004, as the bar date for governmental units to file proofs of claim. The First and Second Case Debtors do not expect that any distribution will be available to holders of equity interests in Pillowtex. Accordingly, they believe that the New Common Stock and the New Warrants issued under the First Case Debtors' Plan -- including any shares of New Common Stock or New Warrants remaining in the Unsecured Claims Reserve to be distributed to holders of Disputed Claims in Class 6 -- have no value. The First and Second Case Debtors believe that the First Cases have been fully administered, as that term is used in Section 350 of the Bankruptcy Code and Rule 3022 of the Federal Rules of Bankruptcy Procedure. However, at the time the Reorganized Debtors commenced the Second Cases, there were several matters pending in the First Cases. Pursuant to Section 362, the Pending Matters have been stayed by the commencement of the Second Cases. Mr. Saydah explains that the Pending Matters relate to claims objections, requests for payment of administrative claims, and objections and other responses. A summary of the Pending Matters and their status at the time the Second Cases were filed is available at no charge at: http://bankrupt.com/misc/1Pillowtex_pendingmatters.pdf Based on the First and Second Case Debtors' records and information provided by their claims agent, substantially all of the Pending Matters involve an aggregate of $47.1 million Disputed Claims. Of these Disputed Claims, $29.3 million would be allowed, if at all, as Claims in Class 6 and would receive shares of New Common Stock and New Warrants. The First and Second Case Debtors believe that the Claims, even if allowed, would not be entitled to any recovery in the Second Cases. The remaining Disputed Claims, on the other hand, were filed as Administrative Claims, Priority Tax Claims, Priority Claims or Secured Claims, and relate to either late-filed claims, duplicative claims that have already been satisfied, claims for which the Reorganized Debtors believe there is no liability, or prepetition, unsecured non-priority claims that were improperly characterized as secured or otherwise entitled to priority. In addition to the Pending Matters, there are five claims that were filed in the First Cases after the applicable bar date with respect to which no objection was filed and no distribution was made: Claimant Claim No. Amount Status --------- --------- ------ ------ City of Rocky Mount, NC 2463 $9,828 Secured Washington County Collector, AR 2538 4,578 Priority Penske Truck Leasing 2539 118,366 Priority 2545 17,528 Priority State of NY Dept. of Labor 2547 368 Admin. Expense Against this backdrop, the Debtors ask the Court to: (a) enter an Order in each of the First and Second Cases, closing the First Cases; (b) excuse the First Case Debtors from preparing and filing any final report in the First Cases. The Second Case Debtors will file a consolidated final report with respect to the First and Second Cases in connection with the entry of a confirmation order in, or the closing of, the Second Cases. With respect to the Pending Matters, the Debtors ask the Court to approves these procedures: (1) All Pending Matters for which no proof of claim was timely filed in the Second Cases will be dismissed with prejudice; (2) The Pending Matters relating to claims in the First Cases that were properly preserved in the Second Cases by the filing of a proof of claim on or before December 29, 2003, will be transferred to, and resolved by the Court in connection with the Second Cases; (3) Pending Matters transferred to the Second Cases will be resolved pursuant to the ordinary claims resolution process in the Second Cases, except that any of the Pending Matters relating to claims in the First Cases that assert only general unsecured liabilities which would be allowed, if at all, only as claims in Class 6 under the Plan, will be deemed to have been allowed in the First Cases; (4) After the resolution or deemed allowance of a Pending Matter, the First and Second Case Debtors will determine the type and amount of the distribution, if any, to which any non-debtor party would have been entitled under the Plan in respect of the party's claim or interest as a result of the resolution or allowance of the Pending Matter; (5) A non-debtor party's right to receive the distribution will constitute a claim or an interest in the Second Cases; and (6) The Reorganized Debtors will have the right to object to any proof of claim filed in the Second Cases in whole or in part on account of an Adjusted Claim or Adjusted Interest on any ground that is available to them in the Second Cases. The Debtors propose that these procedures also be made applicable to the Late Filed Claims. With respect to any Late-Filed Claim that is transferred to the Second Cases, the Reorganized Debtors will have the right to object to the Late-Filed Claim in the Second Cases on any ground that would have been available to them in the First Cases. U.S. Trustee Objects Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, asks the Court to deny the First and Second Case Debtors' request. Ms. Beaudin says all of the outstanding operating reports in the First Cases have not been filed and all of the required fees due under Section 1930 of the Judiciary Procedures Code have not been paid. Ms. Beaudin points out that Pillowtex, Inc., and Pillowtex Management Services -- two of the First Case Debtors -- did not re-file bankruptcy in the Second Cases. For all of the First Case Debtors that became Second Case Debtors, Ms. Beaudin and the Second Case Debtors agreed to the amount and treatment of the outstanding quarterly fees from the First Cases. Accordingly, the Court entered an order allowing the quarterly fees of the First Case Debtors that became Second Case Debtors. The Order, however, does not apply to the Non-refiling Debtors, who owe operating reports and quarterly fees. The Non-refiling Debtors each have quarterly fee balances of $130,000. The balances are estimated because the Non-refiling Debtors have not filed operating reports since the first quarter 2002. Because the First Cases remain open and the Non-refiling Debtors did not file bankruptcy in the Second Cases, quarterly fees continue to accrue and operating reports continue to be due. Therefore, Ms. Beaudin argues that the Non-refiling Debtors do not meet the requirements of Section 2015(a) of the Federal Rules of Bankruptcy Procedure and Rule 5009-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware. Ms. Beaudin also objects to the First Case Debtors' request to be excused from filing a final report in the First Cases. Ms. Beaudin contends that the First and Second Cases are separate cases and have separate costs of administration, which need to be separately reviewed and assessed. Ms. Beaudin stresses that the final report is the mechanism for both the Clerk of the Court and the U.S. Trustee to track the costs of administration. A consolidated report for the First and Second Cases is of no help in performing this function. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) PROJECT FUNDING: Fitch Puts Four Classes on Rating Watch Negative ----------------------------------------------------------------- Fitch Ratings places four classes of notes issued by Project Funding Corporation I on Rating Watch Negative. -- $95,267,748.63 class I notes rated 'AA'; -- $3,066,012.21 class II notes rated 'BBB'; -- $3,175,455.64 class III notes rated 'BB'; -- $3,832,648.30 class IV notes rated 'B'. PFC I is a collateralized debt obligation administered by Credit Suisse First Boston, which closed March 5, 1998. PFC I was established to issue approximately $617 million in debt and equity securities and invest the proceeds in a static portfolio of amortizing project finance loans originated by CSFB. As of the April 15, 2005, payment date, there were 18 loans to 14 obligors, and the notes have paid down approximately 82% of their original balance. The notes of PFC I feature a pro rata principal payment and sequential payment of interest prior to the occurrence of certain triggers. To date, no such triggers have been achieved. Since the last rating action on Sept. 14, 2004, the collateral has deteriorated. Specifically, one borrower entered into Chapter 11 and subsequent to the filing, experienced a severe equipment malfunction that may lower its energy output. In addition, another obligor experienced deterioration in debt service coverage. While these events have not resulted in a payment default to date, under the borrowers' obligations to PFC I, the credit risk of these loans is no longer consistent with that of the underlying assessed ratings. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ PROXIM CORP: Wants to Hire Pachulski Stang as Bankruptcy Counsel ---------------------------------------------------------------- Proxim Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. as their general bankruptcy counsel. Pachulski Stang will: a) provide legal advice to the Debtors with respect to their powers and duties as debtors-in-possession in the continued operation and management of their businesses and property, including a possible sale of their assets and a proposed debtor-in-possession financing; b) prepare and pursue confirmation of a proposed plan of reorganization and approval for its accompanying disclosure statement; c) prepare on behalf of the Debtors, all necessary applications, motions, answers, orders, reports and other necessary legal papers, and appear in Bankruptcy Court to protect the interests of the Debtor before that Court; and d) provide all other necessary legal services for the Debtors that are necessary in their chapter 11 cases. Laura Davis Jones, Esq., a shareholder at Pachulski Stang, is the lead attorney for the Debtors. Ms. Jones discloses that the Firm received a $299,563.24 retainer. Ms. Jones charges $595 per hour for her services. Ms. Jones reports Pachulski Stang's professionals bill: Professional Hourly Rate ------------ ----------- Tobias S. Keller $450 Bruce Grohsgal $435 Maxim B. Litvak $365 Rachel Lowly Werkheiser $295 Patricia J. Jeffries $160 Louise Tuschak $145 Pachulski Stang assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in San Jose, California, Proxim Corporation, -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Company and its affiliates provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Company and its debtor-affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. D. Del. Case No. 05-11639). When the Debtors filed for protection from their creditors, they listed total assets of $55,361,000 and total debts of $101,807,000. PROXIM CORP: Wants Ordinary Course Professionals to Continue ------------------------------------------------------------ Proxim Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their business without bringing formal employment applications to the Court. In the day-to-day operation of their businesses, the Debtors customarily call on certain professionals, including accountants, attorneys, consultants and other professionals to represent them in matters arising in the ordinary course of their business. The Debtors explain that the uninterrupted services of the Ordinary Course Professionals are important to their continuing operations and their ultimate ability to reorganize under chapter 11. More importantly, the cost of preparing and prosecuting separate retention applications and fee applications for each of those Professionals will be significant and those costs will be borne by the Debtors' estates. The Debtors assure the Court that: a) no Ordinary Course Professional will be paid in excess of $35,000 per month and the aggregate monthly payments for all the Ordinary Course Professionals will not exceed $75,000; b) if any of the Ordinary Course Professional's monthly fees and expenses exceed $35,000, that Professional will be required to submit with the Court a formal application for approval of fees and expenses; and c) they will file with the Court no more than 30 days after the last day of January, May and September of each year that their chapter 11 cases are pending, a summary payment statement that includes: (i) the name of the Ordinary Course Professional and the aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred by that Professional during the statement period, and (ii) a brief statement of the type of services rendered. Although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, the Debtors do not believe that any of them have an interest materially adverse to the Debtors, their creditors and other parties-in-interest. Headquartered in San Jose, California, Proxim Corporation, -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Company and its affiliates provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Company and its debtor-affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. D. Del. Case No. 05-11639). Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $55,361,000 and total debts of $101,807,000. QUEST RESOURCE: March 31 Balance Sheet Upside-Down by $24.9 Mil. ---------------------------------------------------------------- Quest Resource Corporation, reported results for its first quarter ended March 31, 2005. The Company had a 4% increase in revenues for the three months ended March 31, 2005 with revenues of $12,051,000, as compared to revenues of $11,548,000 million for the three months ended March 31, 2004. This increase was possible through a combination of the addition of more producing wells and higher natural gas prices, which was partially offset by the natural decline in production from some of the Company's older gas wells. The Company recorded a net loss of $1.1 million for the quarter ended March 31, 2005, as compared to a net loss of $5.6 million for the quarter ended March 31, 2004. General and Administrative expenses were less for the three months ended March 31, 2005 at $971,000 as compared to $983,000 for the three months ended March 31, 2004. The Company is committed to increasing daily gas production and continuing its endeavor to maintain costs at a reasonable level. Liquidity and Capital Resources At March 31, 2005, the Company had current assets of $12.6 million, a working capital deficit of $6.4 million and had $1.4 million of net cash used by operations during the three months ended March 31, 2005. The working capital deficit totals $28.1 million. During the three months ended March 31, 2005, a total of approximately $14.2 million was invested in new natural gas wells and properties, new pipeline facilities, and other additional capital items. This investment was funded by an increase of approximately $12 million of additional notes issued to ArcLight and $2 million of additional borrowings under the term loans from the UBS Credit Agreement. An additional $3 million of notes is available for issuance to ArcLight. The Company used an additional $3 million of borrowings under the term loans from the UBS Credit Agreement to reduce the outstanding balance under its revolving credit facility during the first quarter. Net cash used by operating activities totaled $1.4 million for the three months ended March 31, 2005, as compared to $6.5 million of net cash provided from operating activities for the three months ended March 31, 2004 due primarily to the expanded operations of the Company and the delay between the time a well is drilled and the Company begins receiving payments for production from the well. The Company's working capital deficit was $6.4 million at March 31, 2005, compared to a $9.5 million working capital deficit at December 31, 2004. The change in the working capital deficit is due to the reduction of accounts payable, oil and gas payable and accrued expenses that were funded with the proceeds of additional term loan borrowings and additional subordinated notes issued in February 2005. Although the Company believes that it will have adequate additional reserves and other resources to support the future development plans, no assurance can be given that the Company will be able to obtain funding sufficient to support all of its' development plans or that such funding will be on terms favorable to the Company. UBS Credit Facility On July 22, 2004, Quest Cherokee entered into a syndicated credit facility arranged and syndicated by UBS Securities LLC, with UBS AG, Stamford Branch as administrative agent. The UBS Credit Agreement originally provided for a $120 million six-year term loan that was fully funded at closing and a $20 million five-year revolving credit facility that could be used to issue letters of credit and fund future working capital needs and general corporate purposes. As of March 31, 2005, Quest Cherokee had approximately $12 million of loans and approximately $2 million in letters of credit issued under the UBS Revolving Loan. Letters of credit issued under the UBS Revolving Loan reduce the amount that can be borrowed there under. The UBS Credit Agreement also contains a $15 million "synthetic" letter of credit facility that matures in December 2008, which provides credit support for Quest Cherokee's natural gas hedging program. A portion of the proceeds from the UBS Term Loan were used to repay the Bank One credit facilities. After the repayment of the Bank One credit facilities and payment of fees and other obligations related to this transaction, Quest Cherokee had approximately $9 million of cash at closing from the proceeds of the UBS Term Loan and $15 million of availability under the UBS Revolving Loan. About the Company Quest Resource Corporation's primary activity is the exploration, production, and transportation of natural gas in a 1,000 square mile region of southeastern Kansas and northeastern Oklahoma that is served by its 1,000-mile gas pipeline network. Quest is available on the Web at http://www.qrcp.net/ At Mar. 31, 2005, Quest Resource Corporation's balance sheet showed a $24,886,000 stockholders' deficit, compared to a $2,606,000 deficit at Dec. 31, 2004. RAYTHEON COMPANY: Fitch Upgrades Pref. Securities a Notch to BBB- ----------------------------------------------------------------- Fitch Ratings has upgraded Raytheon Company as follows: -- Senior unsecured debt to 'BBB' from 'BBB-'; -- Bank facility to 'BBB' from 'BBB-'; -- Commercial paper to 'F2' from 'F3'. RC Trust I -- Trust preferred securities to 'BBB-' from 'BB+'. The Rating Outlook is Stable. Approximately $5.5 billion of debt is affected by these actions. The upgrades are based on RTN's substantial debt reduction in the past eighteen months, improved credit statistics, solid performance in RTN's government and defense businesses, the recovery in the business jet market, and improved operating performance at Raytheon Aircraft. In addition, RTN has reduced its risks related to lawsuits, regulatory investigations, and the company's former Engineers & Constructors (E&C) segment. The upgrades also incorporate RTN's balanced cash deployment plan, which includes additional debt reduction and pension contributions. RTN's ratings reflect the competitive position of the company's defense businesses, high levels of U.S. defense spending, strong backlog, and liquidity position. Concerns center on rising risks within the Department of Defense budget due to the Quadrennial Defense Review, 'transformation,' and DoD leadership changes; increasingly shareholder-focused cash allocation; and uncertainty regarding the company's Chief Financial Officer position. Debt reduction is the main driver of the rating actions. RTN lowered its debt by $4.4 billion in the past four years, including $2.2 billion in 2004. In late 2004, RTN established a balanced cash deployment plan that includes approximately $500 million of debt reduction per year over the next three years, which the company should be able to achieve through the retirement of maturing debt. RTN also plans to make discretionary pension contributions of $200 million annually for the next few years to improve its pension deficit, which was $3.6 billion at the end of 2004. The cash deployment plan through 2006 also includes shareholder-focused actions such as dividend increases and a $700 million share repurchase program. Fitch believes that RTN will be able to carry out these actions using free cash flow (cash from operations less capital expenditures), which Fitch expects to be in the range of $1.3 billion to $1.5 billion per year during the next few years. Although RAC's margins are among the lowest in the general aviation industry, the segment's financial performance has improved, and Fitch now believes RAC will not be a significant drag on RTN's financial performance. RAC's revenues grew 16% in 2004 and operating margins were 2.6% compared to break-even margins in 2003 and losses in 2001 and 2002. RAC's free cash flow in 2004 was $134 million. RAC's better performance is the result internal efforts to improve operating effectiveness and the recovery in the business jet market. Fitch considers the business jet market to be the commercial aerospace industry's strongest segment in 2005, with unit deliveries up at least 15-20%. RTN expects RAC's sales to rise at least 7% in 2005 with operating margins around 4%. Fitch believes these estimates are consistent with the market environment. Two near-term risks for RAC are the final certification of the Hawker Horizon and the expiration of a union contract this summer. Fitch's previous concerns about contingent liabilities have been lessened by several recently completed or pending settlements totaling less than $500 million. In late 2004 and early 2005, RTN settled several class action securities lawsuits, including one in which the company agreed to pay $210 million cash and to provide warrants worth $200 million to the plaintiffs. RTN also offered to settle a SEC investigation into accounting practices at RAC. The $12 million offer still has to be approved by the SEC, but approval has been recommended by the SEC staff. The SEC continues to investigate RTN's CFO, who has been placed on administrative leave. RTN's government and defense businesses, which accounted for 74% of revenues in 2004, continue to benefit from the strong defense spending environment. Sales grew 11% in 2004, and operating margins rose to 10.9% from 9.3%, with the Network Centric Systems segment providing much of the improvement. These businesses also saw strong order growth with backlog increasing nearly 20% versus 2003. Although Fitch believes that the strongest DoD growth is in the past, absolute spending levels are high and are not expected to decline in the next several years. Fitch believes that the DoD budget will continue to rise in the next few years, but at a decelerating rate. While the size of the U.S. defense budget is a positive for defense industry credit quality, Fitch is increasingly concerned that there are program risks within the budget as the DoD evaluates spending priorities in the context of 'transformation'. RTN could be better insulated from DoD budget changes than some other defense contractors because of its focus on electronics rather than platforms. At March 27, 2005, RTN had a liquidity position of $1.6 billion, consisting of $457 million of cash and $1.7 billion of availability under its $2.2 billion credit facility, offset by $566 million of non-bank short-term debt and current debt maturities. RTN's debt-to-EBITDAP ratio for the last twelve months ending March 27, 2005, was 2.3 times (x) compared to 2.2x for 2004 and 3.5x in 2003. The slight increase for the last twelve months was related to seasonal cash outflows in the first quarter. With additional debt reduction in 2005, Fitch believes that RTN's debt-to-EBITDAP ratio could approach 2.0x by the end of the year. Interest coverage improved to 6.4x for the last twelve-month period compared with 5.5x in 2004 and 3.9x in 2003. REGENCY GAS: Pipeline Expansion Prompts S&P's Watch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on Regency Gas Services LLC on CreditWatch with negative implications. The Dallas, Texas-based company had about $248 million of long- term debt outstanding as of March 31, 2005. The rating action follows Regency's announcement that it will incur $125 million in capital expenditures to expand and extend its existing intrastate gas pipeline in Northern Louisiana. The expansion is expected to be complete before 2005 year-end and will be financed largely though debt. "The current ratings do not incorporate the substantial increase in debt that will be incurred as a result of this expansion," said Standard & Poor's credit analyst Plana Lee. "The expansion's immediate impact will significantly increase the company's leverage and pressure credit metrics at the current rating level." In addition, Standard & Poor's said that although the planned expansion could eventually lead to an improved business mix due to an increased proportion of fee-based (versus commodity price sensitive) cash flows, the realization of these cash flows remains uncertain at present. The CreditWatch listing will be resolved after a thorough review of the expansion's effect on Regency's business and financial profiles. Formed in 2003, Regency is a midstream gas gathering, processing, transmission, and marketing company with operations in Northern Louisiana, West Texas, and the Midcontinent region. RELIANCE GROUP: Still Unable to File Financial Reports with SEC --------------------------------------------------------------- Paul W. Zeller, President and CEO of Reliance Group Holdings, Inc., informs the Securities and Exchange Commission, that RGH has been unable to complete the work necessary to issue audited financial statements for fiscal year 2000 or any subsequent fiscal year. Unless this work is completed and an audit opinion is issued, it will not be possible to prepare a Form 10-Q for the fiscal quarter ended March 31, 2005. Mr. Zeller notes that RGH has still not filed certain SEC- required reports over the last 12 months, namely: -- Form 10-Q for the fiscal quarter ended March 31, 2004; -- Form 10-Q for the fiscal quarter ended June 30, 2004; -- Form 10-Q for the fiscal quarter ended September 30, 2004; and -- Form 10-K for the fiscal year ended December 31, 2004. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESI FINANCE: Good Performance Cues S&P to Up Ratings on 4 Certs. ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 17 classes of real estate synthetic investment securities from RESI Finance Limited Partnership series 2002-A, 2003-A, and 2003-B. At the same time, the ratings on the remaining classes from these series and on all subsequent series are affirmed. The raised ratings reflect the series' superior performance and increased percentages of loss protection provided through remaining credit support (subordination). Since the most subordinate class for each series, class B12, will not receive any principal allocations until all other class B interests have been reduced to zero, the remaining percentage of credit enhancement should increase over time (unless significant losses occur). Significant prepayments have lowered the current balances of series 2002-A, 2003-A, and 2003-B to approximately 4%, 22%, and 43%, respectively, of their original pool balances, resulting in increased percentages of loss protection provided through the remaining credit support. The series with raised ratings have experienced minimal delinquency levels and no realized losses, except for series 2002- A, which experienced a $16,749 loss (or 0.00014% of its original pool balance). For all series, the remaining credit support should be sufficient to support the certificates at their new or affirmed rating levels. These transactions are real estate synthetic investments (RESIs), synthetic securitizations of jumbo, "A" quality, fixed-rate, first-lien residential mortgage loans (the reference portfolio). Unlike traditional mortgage-backed securitizations, the actual cash flow from the reference portfolio is not paid to the holders of the securities. Rather, the proceeds from the issuance of the securities are invested in eligible investments. Interest payable to the security holders is paid from income earned on the eligible investments and payments from the Bank of America under a financial guarantee contract. Ratings Raised RESI Finance Limited Partnership Real estate synthetic investment securities Rating ------ Series Class To From ------ ----- -- ---- 2002-A B9 AAA AA+ 2002-A B10 AA+ AA 2002-A B11 A+ A 2003-A B3 AA+ AA 2003-A B4 AA AA- 2003-A B5 AA- A 2003-A B6 A+ A- 2003-A B7 A- BBB+ 2003-A B8 BBB+ BBB 2003-A B9 BBB- BB 2003-A B10 BB BB- 2003-B B3 A+ A 2003-B B4 A A- 2003-B B5 BBB+ BBB 2003-B B6 BBB BBB- 2003-B B7 BB+ BB 2003-B B8 BB BB- Ratings Affirmed RESI Finance Limited Partnership Real estate synthetic investment securities Series Class Rating ------ ----- ------ 2002-A B3, B4, B5, B6, B7, B8 AAA 2003-A B11 B 2003-B B9 B+ 2003-B B10 B 2003-B B11 B- 2003-CB1 B3 A+ 2003-CB1 B4 A 2003-CB1 B5 A- 2003-CB1 B6 BBB+ 2003-CB1 B7 BB+ 2003-CB1 B8 BB 2003-CB1 B9 BB- 2003-CB1 B10 B+ 2003-CB1 B11 B 2003-C B3 A 2003-C B4 A- 2003-C B5 BBB 2003-C B6 BBB- 2003-C B7 BB 2003-C B8 BB- 2003-C B9 B+ 2003-C B10 B 2003-C B11 B- 2003-D B3 A 2003-D B4 A- 2003-D B5 BBB 2003-D B6 BBB- 2003-D B7 BB 2003-D B8 BB- 2003-D B9 B+ 2003-D B10 B+ 2003-D B11 B 2004-A B3 A 2004-A B4 A- 2004-A B5 BBB 2004-A B6 BBB- 2004-A B7 BB 2004-A B8 BB- 2004-A B9 B+ 2004-A B10 B 2004-A B11 B- 2004-B B3 A 2004-B B4 A- 2004-B B5 BBB 2004-B B6 BBB- 2004-B B7 BB+ 2004-B B8 BB 2004-B B9 BB- 2004-B B10 B+ 2004-B B11 B 2004-C B3 A 2004-C B4 A- 2004-C B5 BBB 2004-C B6 BBB- 2004-C B7 BB 2004-C B8 BB- 2004-C B9 B+ 2004-C B10 B 2004-C B11 B- 2005-A B3 A 2005-A B4 A- 2005-A B5 BBB- 2005-A B6 BB+ 2005-A B7 BB 2005-A B8 BB- 2005-A B9 B+ 2005-A B10 B 2005-A B11 B- ROGERS WIRELESS: High Debt Level Triggers Fitch's Low-B Ratings --------------------------------------------------------------- Fitch Ratings has affirmed the ratings of Rogers Wireless and initiated coverage of Rogers Communications Inc and Rogers Cable. The rating affirmation of Rogers Wireless debt includes the senior secured debt rating of 'BB+' and a 'BB-' rating to the senior subordinated notes. Fitch also assigns a 'BB+' rating to Rogers Cable senior secured second priority notes and a 'BB-' rating to the senior subordinated guaranteed notes. At RCI, Fitch assigns a 'BB-' to RCI's senior unsecured debt, including the convertible debentures. The Outlook is Stable. Approximately $8.2 billion of debt securities are affected by these actions. The ratings on the Rogers Group of companies incorporates the relatively high debt levels, the negative free cash flow at a consolidated RCI, and the lack of meaningful restrictions on advancing funds between companies. Additionally, Fitch recognizes the strong business position of cable and wireless as evidenced by Rogers bundle of video, HSD, wireless, and cable telephony (launch in second half of 2005) services. Debt at the consolidated RCI should increase modestly in 2005, largely as a result of funding requirements at Rogers Cable, before stabilizing in 2006. Consolidated cash generation is expected to materially improve over the rating horizon driven by sizable cash flow improvements at Rogers Wireless, modest cash flow increases at Rogers Cable, and reduced capital spending at Rogers Cable. Consolidated leverage for 2005 should remain at approximately the same level as the end of 2004 (5.2 times [x]) with leverage improving moderately in 2006. RCI's liquidity position is adequate given the consolidated cash position, undrawn revolver capacity, Rogers Cable cash requirements, and the ability to effectively move funds between subsidiaries as required. At the end of the first quarter of 2005, RCI had $91 million of cash and approximately $1.9 billion of undrawn revolver capacity. RCI has US$225 million of convertible debentures maturing in November of 2005 and $235 million of debt maturing in 2006. Rogers Wireless maintains a $700 million bank credit facility maturing in 2010 that was undrawn at the end of the first quarter. Rogers Cable's bank credit facility is $1.075 billion consisting of two tranches: a $600 million revolving credit facility that matures in 2009 and a $475 million reducing revolver that also matures in 2009. The $475 million revolver commitment reduces annually by $119 million beginning in 2006. The bank credit facility covenants at wireless, and cable provides significant cushion under its most restrictive terms. In addition, RCI maintains significant flexibility in advancing funds throughout the company as the restricted payments basket at wireless and cable are not overly limiting with the expectations for the RP baskets to increase materially over time as operational cash flow grows. Furthermore, with this ability to transfer funds between the parent and its subsidiaries, Fitch has converged the secured debt and subordinated debt ratings of wireless and cable to reflect RCI's ability to move funds at its discretion. Cable's free cash flow deficit will likely increase to the range of $350 million to $450 million during 2005, largely the result of higher capital spending and working capital requirements. The increase in capital spending is driven by three primary capital initiatives: increase digital service penetration that leads to higher spending on set top boxes; accommodating high speed data subscriber growth and HSD speed improvement initiatives; and the launch of VoIP service. Fitch believes that cable's free cash flow will improve in 2006 and 2007, driven by growth in operating cash flows and a reduction in capital expenditures. However, Fitch expects that Rogers Cable will be a net user of cash during this timeframe. For the first quarter, Rogers Cable's leverage ratio (LTM basis) was 5.4x, including derivative instruments. Fitch expects leverage to increase to the range of 5.7x to 5.9x by the end of 2005, primarily the result of the company funding its 2005 cash requirement with debt. Moving forward, Fitch anticipate that debt levels will increase moderately to account for the company's funding requirements, however leverage is expected to decline moderately, reflecting the growth in operating cash flows. Fitch's ratings also reflect the scale and operating benefits of Rogers Cable's highly clustered cable systems and its position as the largest MSO in Canada. Incorporated into the ratings are the marketing and operating synergies Rogers Cable leverages from Rogers Wireless. Fitch believes that the company is well positioned to grow EBITDA and reduce capital expenditures, which will eventually lead to positive free cash flow generation. From Fitch's perspective, the company's operating profile as well as its competitive position relative to the direct broadcast satellite providers and incumbent telephone companies will strengthen as its revenue base and service diversity increase. Central to the company's strategy is the expected growth of its high margin HSD product and increasing the penetration of its digital service tier, including advanced digital services such as VOD, DVRs, and high definition television. In addition, Fitch believes that Rogers Cable's competitive position will be further enhanced with the roll out of its voice over Internet protocol based telephony service during the second half of 2005. Fitch expects initial commercial introduction of the VoIP service during the second half of 2005 and for the service to present meaningful impact on Rogers Cable's operational profile starting in 2007. Fitch expects that the addition of the cable telephony product will help ease basic subscriber erosion and uniquely position Rogers Cable with a quadruple play service offering. For Rogers Wireless, after the substantial increase in leverage at the end of 2004, Fitch expects significant improvement in the credit profile, particularly from cash generation over the next 2- 3 years. Rogers Wireless' leverage ratio was 5.3x at the end of the first quarter. By the end of 2006, Fitch expects Rogers Wireless' leverage to be below 4.0x. Expectations are for Rogers Wireless to improve its profitability as the company fully integrates the Microcell acquisition, continues to take its fair share of postpaid subscribers, and increases ARPU through growth in data and roaming revenue. Rogers Wireless further benefits from favorable industry characteristics of a three-player market, lower penetration rates than in the U.S, and relatively rational pricing that sets the stage for healthy revenue and cash flow prospects. Longer term, Fitch believes the Microcell acquisition better positions the company strategically against TELUS and Bell Mobility. During 2005, Rogers Wireless will integrate a substantial number of Microcell's 1,400 cell sites within its urban and suburban cores, which will further improve network quality thereby potentially reducing churn. This integration effort effectively accelerates several years of normal capital spending on 'in-fill' sites into 2005. In addition, as the only GSM operator in Canada, Rogers Wireless' international roaming traffic has become a major contributor to the company's cash flow, and Fitch expects this to increase going forward. Lastly, Rogers Wireless now controls the largest spectrum portfolio in Canada, giving the company significant flexibility to meet future operational requirements On May 11, 2005, RCI announced the company had entered a definitive agreement to acquire Call-Net Enterprises Inc. in a stock-based transaction. RCI will issue one class B nonvoting share of RCI for 4.25 shares of Call-Net, representing a value of $330 million. RCI will also assume US$223 million in senior secured notes and a fully drawn accounts receivable program of $55 million. For 2004, Call-Net generated $819 million of revenue and $105 million in EBITDA. Fitch believes the transaction is credit neutral for RCI with the company deriving benefits from Call-Net's long-haul network, business exposure, and overlapping telephony customers. SFBC INT'L: S&P Rates Planned $90M Revolving Credit Facility at B+ ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' senior secured rating to SFBC International Inc.'s proposed $90 million revolving credit facility maturing in 2009. The recovery rating is '3', indicating the expectation for a meaningful (50%-80%) recovery of principal in the event of a payment default. Existing ratings on the company, including the 'B+' corporate credit rating, were affirmed. The outlook is positive. "The speculative-grade ratings reflect SFBC's short record of success, strategy of aggressive growth through acquisitions, and position as a relatively small participant in the global market for outsourced clinical trial services," said Standard & Poor's credit analyst David Lugg. "These risks outweigh a moderate debt burden and prospects for improving free cash flow over the next few years." The late-2004 $245 million debt-financed acquisition of PharmaNet was the company's largest to date. PharmaNet added a complementary array of drug development services to SFBC's existing service offerings, which had focused mainly on drug characterization and early-stage safety tests. PharmaNet offers mid- to late-stage clinical trial services ranging from clinical study design to data management to safety surveillance following the marketing of drugs. It has particular clinical research expertise in the areas of oncology, central nervous system disorders, and cardiovascular health. PharmaNet also maintains a significant presence in Europe that added geographic diversity to SFBC's largely North American business. However, the company will be challenged to integrate these related, but dissimilar, operations while maintaining the high level of customer service required for success in this demanding and highly competitive market. Financial leverage is moderate, largely as a result of a March 2005 secondary equity offering that netted $108 million. Proceeds reduced the term loan that funded the PharmaNet acquisition by $70 million and set the stage for the current amended and restated credit facility. This new facility will replace the credit agreement of December 2004. Pro forma for the refinancing, Standard & Poor's expects debt to be about $223 million, down from nearly $260 million at the close of 2004. Credit measures, adjusted by capitalizing operating leases, are strong for the rating. Funds from operations to total debt will be about 23%, while total debt to EBITDA will be 3.0x. Extension of this financial profile will depend on SFBC's pace of acquisitions in pursuit of growth. SOUPER SALAD: Sun Capital Affiliate Makes Debt Investment --------------------------------------------------------- Sun Capital Partners, Inc., a leading private investment firm specializing in leveraged buyouts and debt and equity investments in market-leading companies, disclosed that one of its affiliates has purchased a participation in the existing senior debt of Souper Salad, Inc., from another private investment firm. Founded in 1978, SSI is one of the nation's largest all-you-care-to-eat soup and salad bar family restaurants with 91 stores in 13 southern and western states. Souper Salad filed for relief under Chapter 11 of the U.S. Bankruptcy Code on June 6, 2005. An affiliate of Sun Capital Partners, as well as the agent in the pre-petition credit facility, provided a debtor-in-possession loan to finance SSI through the bankruptcy process. Management continues to operate the Company as a debtor in possession as provided for by the bankruptcy provisions. M. Steven Liff, Managing Director, Sun Capital Partners, said, "Souper Salad is in a period of transition that we believe will result in the Company's being positioned to return to compete in the quick casual segment of the market. We are pleased that one of Sun Capital's affiliates has made an initial investment, and are anxious to make additional commitments in core locations and strategic operating plans to support future growth." About Sun Capital Partners, Inc. Sun Capital Partners, Inc. -- http://www.SunCapPart.com/-- is a leading private investment firm focused on leveraged buyouts and investments in market-leading companies that can benefit from its in house operating professionals and experience. With more than $2.5 billion of capital under management and with offices in Boca Raton, Los Angeles, New York, and London, affiliates of Sun Capital Partners have acquired more than 90 companies throughout the world with consolidated sales in excess of $20.0 billion. Headquartered in San Antonio, Texas, Souper Salad, Inc. -- http://www.soupersalad.com/-- operates 91 all-you-care-to-eat soup and salad bar family restaurants located in 13 states with primary concentrations in Texas (41 stores), Colorado (14 stores), and Arizona (13 stores). A selection of salad items, soups, pasta salads, lettuce wraps, baked potatoes, breads, and dessert items are made fresh daily at each location. The Company filed for chapter 11 protection on June 6, 2005 (Bankr. D. Ariz. Case No. 05-10160). Daniel P. Collins, Esq., at Collins, May, Potenza, Baran & Gillespie, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $16,115,715 in total assets and $50,383,179 in total debts. SPIEGEL INC: Court Authorizes Cash Payment of Cure Amounts ---------------------------------------------------------- Judge Lifland authorizes Spiegel Inc., and its debtor-affiliates to pay in cash the cure amounts of the unexpired leases and executory contracts for which the non-debtor counterparties did not file objections, pursuant to the Amended Cure Payment Schedule filed by the Debtors as supplement to their Amended Plan. A complete list of the Unexpired Leases is available for free at: http://bankrupt.com/misc/Unexpired_Leases.pdf A complete list of the Executory Contracts is available for free at: http://bankrupt.com/misc/Executory_Contracts.pdf Upon the Debtors' payments, all their defaults or other obligations under the Uncontested Leases and Contracts arising or accruing prior to May 25, 2005, will be deemed in all respects cured. Judge Lifland further allows the Debtors to pay, on the earlier of the Effective Date and the assumption date, the Cure Amounts of certain unexpired leases for which the non-debtor counter- parties filed objections in liquidated cure amounts. A complete list of the Contested Leases with Liquidated Cure Amounts is available for free at: http://bankrupt.com/misc/Liquidated_Cure_Leases.pdf In addition, the Court permits the Debtors to cure Combined Capital 1, LLC's claim under the Master Lease Agreement for $28,957. Any additional liquidated amounts for the Contested Leases and Contract will be included in the Disputed Administrative Claims Reserve in accordance with the Plan. The Debtors are also authorized to pay, on the earlier of the Effective Date and the assumption date, the cure amounts of certain unexpired leases for which the non-debtor counterparties filed objections asserting unliquidated cure amounts. Any additional liquidated amounts will be included in the Disputed Administrative Claims Reserve to be funded in accordance with the Plan, and paid along with all currently unliquidated cure amounts. A complete list of the Contested Leases with Unliquidated Cure Amounts is available for free at: http://bankrupt.com/misc/Unliquidated_Cure.pdf Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. The Court confirmed the Debtors' Modified First Amended Joint Plan of Reorganization, filed by the Debtors, on May 23, 2005. Spiegel will emerge from bankruptcy as Eddie Bauer Holdings Inc. Impaired creditors overwhelmingly voted to accept the Plan. (Spiegel Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) STATION CASINOS: Moody's Reviews Low-B Debt Ratings & May Upgrade ----------------------------------------------------------------- Moody's Investors Service placed the long-term debt ratings of Station Casinos, Inc.'s on review for possible upgrade and affirmed the company's SGL-2 speculative grade liquidity rating. This rating action considers the continued improvement in Station's operating results and asset profile as well as the company's favorable growth prospects. To date, Station has been able to pursue significant expansion activity while maintaining debt/EBITDA below 4.0x. Any ratings upgrade will consider management's ability and willingness to continue to finance its development activity at or near the current level of leverage. Moody's expects to complete its review within 45 days. The affirmation of Station's SGL-2 speculative grade liquidity rating indicates good liquidity and is based on Moody's expectation that internally generated cash flow combined with existing cash balances and availability under the company's bank credit facility will be sufficient to meet the capital spending and debt service requirements over the next twelve months. Station's SGL-2 further acknowledges that the company has a considerable amount of land held for development that could also be sold in the event the company wants or needs to raise cash. The SGL-2 rating also considers that Station continues to pursue significant further development in the Las Vegas locals market, which will absorb the company's free cash flow and require incremental debt. These ratings were placed on review for possible upgrade: -- Senior implied rating -- Ba2; -- Long-term issuer rating -- Ba3; -- $450 mil. 6% senior notes due 2012 -- Ba3; -- $450 mil. 6 ½% senior subordinated notes due 2014 -- B1; -- $350 mil. 6 7/8% senior subordinated notes due 2016 -- B1; and -- $17.3 mil. 9 7/8% senior subordinated notes due 2010 -- B1. This rating was affirmed: -- Speculative grade liquidity rating -- SGL-2. Station Casinos, Inc. (NYSE: STN) owns and operates fourteen hotel/casinos in the Las Vegas locals market including: * a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino; and * a 6.7% interest in the Palms Casino Resort. In addition, Station manages the Thunder Valley Casino for the United Auburn Indian Community in California. Net revenue for the latest twelve month period ended March 31, 2005 was slightly above $1 billion. SUMMIT SECURITIES: Wants to Employ Sorling as Special Counsel ------------------------------------------------------------- Summit Securities, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Washington for permission to employ Sorling, Northrup, Hanna, Cullen & Cochran, Ltd., as special counsel. The Debtors want to employ Sorling to prosecute their claims against the State of Illinois. Sorling will assist the Debtor in the collection of receivables arising from the non-payment of amounts owed by structured settlements payors. Those structured settlements relate to underlying litigation settlements, annuities, lottery prizes, and other investments. Sorling has represented the Debtors with respect to the collection of receivables arising from Structured Settlements for many years. Sorling Northrup will receive 1/3 of any recovery realized in the litigation, together with a reimbursement of all costs expended in the litigation. Summit Securities assures the Court that Sorling, Northrup, Hanna, Cullen & Cochran does not represent any interest adverse to the Debtor or its estate. Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. Metropolitan filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04-00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., at Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., at Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed total assets of $420,815,186 and total debts of $415,252,120. TECHNICAL OLYMPIC: Transeastern Purchase Cues S&P to Watch Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B+' issuer credit rating on Technical Olympic USA Inc. on CreditWatch with negative implications. At the same time, the ratings on the senior unsecured notes and the senior subordinated notes also are placed on CreditWatch negative. The CreditWatch placements follow the recent announcement that Technical Olympic has entered into a definitive agreement to acquire the homebuilding operations and assets of Transeastern Properties Inc. Approximately $810 million of rated Technical Olympic securities are affected. Privately held Transeastern will be acquired in a joint venture partnership between TOUSA Homes, a Technical Olympic subsidiary, and Arthur Falcone, CEO and principal owner of Transeastern. TOUSA Homes will be the managing partner. Specific terms of the transaction and conditions of the joint-venture agreement have not been disclosed. The CreditWatch placements reflect uncertainty regarding how this very large transaction will ultimately be capitalized, as well as its impact on Technical Olympic's overall financial profile. Given the size of the transaction and its strategic importance, Standard & Poor's will likely consolidate at least Technical Olympic's pro rata share of the joint venture for analytical purposes. While the company currently has ample liquidity to finance its anticipated investment in the joint venture, future capital requirements are less clear. The transaction will materially bolster Technical Olympic's competitive position in Florida, as the joint venture will control an estimated 22,000 home sites in many of the state's most important housing markets. According to publicly available information, Coral Springs, Florida-based Transeastern sold 2,385 homes in 2004 and generated $466 million in revenue. Technical Olympic anticipates that the newly capitalized venture will deliver more than 3,500 homes in 2006 and generate approximately $1 billion in revenue. To put these figures in context, Hollywood, Florida-based Technical Olympic, one of the nation's 20 largest homebuilders, sold 7,337 homes in 2004 and generated $2.1 billion in revenue. Standard & Poor's expects to meet with Technical Olympic's management to discuss the venture's near- and longer-term capital needs, the conditions of the joint-venture agreement, and Technical Olympic's capacity to integrate Transeastern's homebuilding operations. Potential outcomes range from the lowering of Technical Olympic's ratings by one notch to the affirmation of current ratings and the reassignment of a stable outlook. Ratings Placed On Creditwatch Negative Technical Olympic USA Inc. Rating ------ To From -- ---- Corporate credit B+/Watch Neg/-- B+/Stable/-- Senior unsecured notes B+/Watch Neg B+ Senior subordinated notes B-/Watch Neg B- TECNET INC: Chapter 7 Trustee Wants to Sell Real Estate for $775K ----------------------------------------------------------------- Scott M. Siedel, the chapter 7 Trustee overseeing the liquidation of TecNet Inc. and Enhanced Global Convergence Services, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for authority to sell a parcel of land and a building located in Nashua, New Hampshire. The Trustee has received an offer from Harbor Homes, Inc., to buy the property for $775,000. Harbor paid a $100,000 good faith deposit and agrees to forfeit the deposit if it fails to close the sale on a deadline to be agreed to by the parties. Jody Keeler, at Masiello Group, serves as the broker for the property. Ms. Keeler will receive a 6% commission of the sales price. Headquartered in Garland, Texas, TecNet, Inc., provides telecommunication services, filed for chapter 11 protection on April 8, 2004 (Bankr. N.D. Tex. Case No. 04-34162) and its case was converted to a chapter 7 liquidation proceeding on June 4, 2004. Scott M. Siedel serves as the chapter 7 Trustee. Mark A. Weisbart, Esq., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts of over $10 million and estimated debts of over $100 million. THAXTON GROUP: Wants Until September 6 to Remove Civil Actions -------------------------------------------------------------- The Thaxton Group, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend their time to file notices of removal until Sept. 6, 2005. The Debtors tell the Court they face several pending civil actions. However, the Debtors haven't had the opportunity to properly evaluate whether to remove any prepetition actions to the District of Delaware or let litigation continue in the remote courts. The Debtors' key management personnel are focused on negotiation and preparation of a plan of reorganization at this juncture, the Debtors tell the Court. Additionally, the Debtors are also intent on marketing and selling their under-performing business units to generate more cash and reduce operating costs. Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company and its debtor-affiliates filed for Chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $206 million in assets and $242 million in debts. TOM'S FOODS: Wants Until Sept. 4 to Make Lease-Related Decisions ---------------------------------------------------------------- Tom's Foods Inc. asks the U.S. Bankruptcy Court for the Middle District of Georgia, Columbus Division, to extend its time to decide whether to assume, assume and assign, or reject its nonresidential real property leases to Sept. 4, 2005. The Debtor tells the Court that it is much too early in the chapter 11 process to make reasoned decisions about whether its nonresidential real property leases are beneficial or burdensome. The company doesn't want to assume an unfavorable leases, and then saddle the estate with an unnecessary administrative claims. Similarly, the company doesn't want to reject a favorable lease, and forfeit value that should flow to stakeholders. The Court will consider the Debtor's request at a hearing today, June 14, 2005. 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. TRUMP HOTELS: Cushman & Wakefield to Market World's Fair Site ------------------------------------------------------------- THCP/LP Corporation and the Official Committee of Equity Security Holders jointly seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Cushman & Wakefield of Pennsylvania, Inc., as joint real estate broker for the parties, nunc pro tunc to April 12, 2005. The Debtors and the Equity Committee tell the Court that it is necessary for them to employ C&W to market the World's Fair Site on their behalf. The parties recognize C&W's extensive experience in marketing real property assets, particularly in the Atlantic City Region. The Debtors and the Equity Committee inform the Court that they have engaged C&W to prepare a marketing brochure in connection with the sale of the World's Fair Site so as to find an adequate purchaser in the time allotted in the Debtors' Plan of Reorganization, and to maximize value for non-affiliated shareholders. Pursuant to the terms of an Agency Agreement between the parties, C&W will earn a commission that is 3% the total sales price of the World's Fair Site. The commission will be due and payable in full at the time of the sale closing or the transfer of the property's title. The Sales Price will be computed so as to include the outstanding balance of the seller's mortgages, loans or other obligations that are expressly assumed by the purchaser. C&W will also be reimbursed for all necessary out-of-pocket expenses incurred in the preparation of the offering material and in marketing the property. John Denham, C&W's senior managing director, assures the Court that the firm does not represent any other entity having an interest adverse to those of the Debtors. Mr. Denham attests that C&W is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. NJ Sports Authority Responds The New Jersey Sports and Exposition Authority makes it clear that it does not take any position with respect to either the employment of C&W or to the nunc pro tunc aspect of the Application. The NJ Authority takes issue instead "with the description of the property to be sold," Jay Samuels, Esq., at Windels Marx Lane & Mittendorf, LLP, in Princeton, New Jersey, tells the Court. As previously reported, the NJ Authority and Trump Plaza Associates are parties to two agreements relating to the World's Fair Site: 1. A lease agreement relating to parking under the West Hall of the historic Atlantic City Convention Center, which was entered in connection with the development of a hotel on the World's Fair Site; and 2. An Easement Agreement pursuant to which an enclosed loggia was constructed across the front of the East Hall of the Atlantic Convention Center to provide direct enclosed pedestrian access between the Trump Plaza Casino and the World's Fair Casino. The NJ Authority asserts that the World's Fair Parking Lease cannot be assigned pursuant to the provisions of the Bankruptcy Code when applied to the terms of the parties to the Lease. The NJ Authority reserves all rights to take actions with respect to the current status or termination of that Lease. The East Hall Easement, Mr. Samuels relates, was terminated by Trump Plaza Associates as of January 1, 2000. The termination did not affect the obligations of Trump Plaza to restore the easement area to its original condition, Mr. Samuel says. However, it did terminate the executory nature of the relationship. Accordingly, the NJ Authority believes that the East Hall Easement "cannot be assumed or rejected by Trump Plaza, and certainly cannot be sold and assigned." Mr. Samuels informs the Court that those issues were already raised in a meeting with the counsel for the Creditors Committee and a representative of C&W on April 26, 2005. The issues have also been raised in communications with the Debtors' counsel. Irrespective of the description of the World's Fair Site contained in the Debtors' Plan and in the Application, the NJ Authority wants that its position relating to the property be disclosed to all potentially interested parties. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. TRUMP HOTELS: U.S. Trustee Objects to Closing Chapter 11 Case ------------------------------------------------------------- The United States Trustee for Region 3 objects to the closing of Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc., and its debtor-affiliates' Chapter 11 cases by the Clerk of the Bankruptcy Court. In order for a case to close, the Court must determine, pursuant to Section 350 of the Bankruptcy Code and Rule 3022 of the Federal Rules of Bankruptcy Procedure, that the estate has been fully administered, Assistant U.S. Trustee for Region 3 Anthony Sodono, III, states. A debtor is obligated to pay quarterly fees under Section 1930(a)(6) of the Judiciary Procedures Code. For the Debtors' Chapter 11 cases to be fully administered, all quarterly fees must be paid up to the date. Accordingly, the U.S. Trustee asks Judge Wizmur to schedule a hearing before it closes the Debtors' cases to determine whether the Debtors have fully administered its case in accordance with Section 350 of the Bankruptcy Code and Bankruptcy Rule 3022. The Debtors' Chapter 11 Cases should not be closed until the Debtors pay all outstanding quarterly fees, Mr. Sodono maintains. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. UAL CORPORATION: Wants to Assume Newark Airport Lease ----------------------------------------------------- UAL Corporation and its debtor-affiliates want to assume certain unexpired leases and agreements for Newark Liberty International Airport with the Port Authority of New York and New Jersey. The Debtors have evaluated the Newark Leases and negotiated modifications with the Port. The Debtors will assume the Newark Leases and pay a cure amount of $2,156,472. In exchange, the Port will modify the Leases to release the Debtors from obligations to lease surplus space, including one aircraft gate and an aircraft parking position. This will produce annualized savings of $5,600,000, or $115,000,000 over the remaining Lease term. The Port will also try to modify its leases with other airlines at the Airport, which may result in a $1,800,000 reimbursement to the Debtors for terminal construction costs. The Port will accept the Debtors' continued promise to pay rent and other charges under the Leases as adequate assurance. The Port will waive a number of its claims against the Debtors. The Port will partially assign two of the Debtors' gates to Air Canada, further reducing the Debtors' lease obligations. James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells the Court that the Debtors' request is justified because the Newark Leases are necessary components to the Debtors' continued presence at Newark Airport. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants to Amend Section 1110 Finance Agreements -------------------------------------------------------- UAL Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Northern District of Illinois' authority to enter into amendments, from time to time, with respect to leases and secured debt agreements related to aircraft ad other equipment that were previously the subject of elections pursuant to Section 1110(a) of the Bankruptcy Code. The Debtors also seek confirmation that their previous Section 1110(a) elections apply to the Finance Agreements, as modified by the Amendments. In accordance with Section 1110(a), the Debtors elected to cure defaults and agreed to perform their obligations with respect to various aircraft in their fleet. As a result, the Debtors are now required to perform obligations under each 1110(a) Finance Agreement, unless the Debtors reject the leases or abandon the aircraft. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, tells Judge Wedoff that at least one aircraft financier has agreed to enter into Amendments to 1110(a) Finance Agreements with the Debtors. Under the proposed Amendments, the Debtors will waive a certain right relating to release of collateral upon prepayment on the Debtors' owned aircraft. Under various secured debt agreements between the Debtors and the Counter Party, certain Debtor-owned aircraft act as collateral for both the Debtors' debt obligations that are the subject of Section 1110(b) agreements and the 1110(a) Finance Agreements. Under the Finance Agreements, if the Debtors prepay in full their obligations secured by mortgages on the aircraft, the aircraft would be released as collateral for the 1110(a) Finance Agreements. Under the Amendments, prepayment of debt obligations will not release the lien. Mr. Sprayregen assures the Court that the additional benefits to the Counter Party are outweighed by the benefits to the Debtors. The Amendments will assist the Debtors in reducing their costs for maintenance and operation of their aircraft fleet, a central component in the Debtors' overall reorganization strategy. However, by entering into a postpetition amendment of the Finance Agreements, the Debtors are not assuming the Agreement nor requesting that the Agreements be assumed. The Amended Finance Agreements also do not contemplate that the Debtors' obligations thereunder would become elevated, in toto, to postpetition agreements that the Debtors could not subsequently reject in connection with their Chapter 11 cases. Mr. Sprayregen notes that the Debtors will ask other aircraft financiers to adopt similar amendments to their 1110(a) Finance Agreements. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants Retired Pilots' Appeal Dismissed ------------------------------------------------ Marc J. Carmel, Esq., at Kirkland & Ellis, in Chicago, Illinois, contends that the United Retired Pilots Benefit Protection Association is appealing an interlocutory order. Therefore, there is no reason to grant the URPBPA leave to appeal. The only place for the URPBPA to pursue this issue is through an appeal of the order approving the Debtors' agreement with the Pension Benefit Guaranty Corporation. The URPBPA is attempting to re-litigate "representation" under Section 1113 of the Bankruptcy Code. Mr. Carmel points out that this issue was already decided by the U.S. District Court for the Northern District of Illinois when it dismissed the URPBPA's appeal of the order denying the URPBPA's request for an authorized representative. Mr. Carmel says that the URPBPA is collaterally estopped from pursuing this appeal if the Court's ruling would be predicated on use of an authorized representative. URPBPA Responds "[T]he retired pilots were wrongfully excluded from the Section 1113 proceedings that involved the Pilot Plan," Jack J. Carriglio, Esq., at Meckler, Bulger & Tilson, in Chicago, Illinois, asserts. The Bankruptcy Court approved the Letter Agreement that affects the Debtors' obligation to maintain the Pilot Plan. The Debtors' retired pilots received nothing in this transaction. Mr. Carriglio insists that the appeal must be heard because the Bankruptcy Court did not have authority to approve an agreement that bargained away the retired pilots' rights. Mr. Carriglio emphasizes that the order approving the Letter Agreement with the ALPA was the final order related to the Pilot Plan. Therefore, the URPBPA is entitled to appeal. The retired pilots "worked hard to earn their vested contract rights to receive retirement benefits from the Pilot Plan," explains Mr. Carriglio. The District Court should not disregard the retired pilots' basic right to protect contractually bargained-for benefits. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIFLEX INC: Wants to Assume L.E.S.S. France Agreement ------------------------------------------------------ Uniflex, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to assume its unexpired distributorship and license agreement with L.E.S.S. France Sarl and assign the Agreement to Uniflex Holdings, Inc. The Debtor sold substantially all of its assets to Uniflex Holdings for $6 million. The purchase price consisted of $1,274,000 in cash and a $4,726,000 credit bid on account of Holdings' secured claim. Part of the Purchase Agreement provided that Holdings may assume or reject some or all of the Debtor's unexpired leases and executory contracts. The Debtor tells the court that Holdings wants to assume the L.E.S.S. Agreement. Headquartered in Hicksville, New York, Uniflex, Inc. -- http://www.uniflexbags.com/-- makes custom-printed plastic bags and other plastic packaging for promotions and advertising. The Company filed for chapter 11 protection on June 24, 2004 (Bank. Del. Case No. 04-11852). Peter C. Hughes, Esq., at Dilworth Paxson LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated debts and assets of $10 million to $50 million. USINTERNETWORKING: Wants Court to Close Chapter 11 Cases -------------------------------------------------------- USinternetworking, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Maryland to enter a final decree closing their chapter 11 cases. Carol L. Hoshall, Esq., at Whiteford, Taylor & Preston L.L.P., in Baltimore, Maryland, tells the Court that the Debtors' Modified Second Amended Joint Chapter 11 Plan of Reorganization has been substantially consummated. The Debtors paid $31,534,781 to secured creditors, $1,268,263.36 less than what's proposed in the Plan. Under the Plan, secured creditors are to be paid $32,803,044. In September 2003, secured creditors Fleet, Heller, and Storagetek agreed to early payout with reduction of balance of payments. In December 2003 Compaq/HP agreed to early payout with reduction of balance of payments due. Priority creditors were paid $1,768,871 as proposed in the Plan. The Debtors paid their unsecured creditors $48,367,766, $17,769,586 less than what's proposed in the Plan. The Plan proposes to pay $66,137,352. In September 2003, unsecured creditors Fleet, Heller, Storagetek agreed to an early payout with reduction of balance of payments. In December 2003 Compaq/HP agreed to early payout with reduction of balance of payments due. The Debtors paid $8,254,091 to their professionals: Professionals Fees Paid ------------- --------- Accountants $6,933 Attorneys for Debtors 1,945,762 Other professional fees 6,153,396 U.S. Trustee quarterly fees 148,000 The Debtors paid creditors $81,671,418, $19,037,849 less than what's proposed in the plan. The Plan proposed to pay creditors $100,709,267. Unsecured creditors recovered 34% of their claims. Headquartered in Annapolis, Maryland, USinternetworking, Inc., -- http://www.usi.com/-- the largest independent Application Service Provider (ASP), specializes in managed enterprise solutions and on demand services for Fortune 1000 companies. USi delivers application outsourcing, remote management, professional services, ISV enablement, and eBusiness development and hosting to more than 150 world-class organizations in over 30 countries. The Company and its affiliates filed for chapter 11 protection on January 7, 2002 (Bankr. D. Md. Lead Case No. 02-50215). Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston, represents the Debtors. Lindsee P. Granfield, Esq., at Cleary, Gottlieb, Steen & Hamilton, represented the creditors' committee. A full-text copy of the DEBTORS' MODIFIED SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION dated May 3, 2002, is available at no charge at http://researcharchives.com/t/s?1cand a copy of Judge Derby's ORDER CONFIRMING DEBTORS' MODIFIED SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION dated May 7, 2002, and entered on May 8, 2002, is available at no charge at http://researcharchives.com/t/s?1d VEO: East West Bank Wants to Conduct Rule 2004 Examination ---------------------------------------------------------- East West Bank, a secured creditor of Veo, fdba Xirlink, Inc., asks the U.S. Bankruptcy Court for the Northern District of California, San Jose Division, for authority to conduct an examination pursuant to Rule 2004 of the Bankruptcy Code of Patrick Lin, the Debtors' Designated Individual. The Bank wants Mr. Lin to provide testimony about the Debtor's financial condition and matters affecting the administration of the estates. The Bank wants Mr. Lin to produce a long list of documents when he appears for his deposition. The Bank wants all records of: -- payments and transfers listed in the Debtor's Statement of Financial Affairs; -- withdrawals or distributions reflected in the Debtor's Statement of Financial Affairs; -- partnership or shareholder distributions made to partners or shareholders during the three year period prior to the Debtor's bankruptcy filing; -- communications concerning transfers, payments, and distributions; -- processes, procedures and protocols the Debtor employed in calculating the amount and timing of employee compensation; -- processes, procedures and protocols the Debtor employed in authorizing distributions or withdrawals of partners, shareholders and insiders; and -- financial statements during the three year period prior to the bankruptcy filing. Headquartered in San Jose, California, Veo fdba Xirlink, Inc. -- http://www.veo.com/--is a hardware technology company that develops quality digital imaging devices. The Company filed for chapter 11 protection (Bankr. N.D. Calif. Case No. 05-50680) on February 9, 2005. David A. Boone, Esq., at Law Offices of David A. Boone, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. On March 22, 2005, the chapter 11 case was converted to chapter 7. Suzanne Decker serves as the Chapter 7 Trustee. VEO: David Boone Wants to Withdraw as Bankruptcy Counsel -------------------------------------------------------- David A. Boone, Esq., at the Law Offices of David A. Boone, asks the U.S. Bankruptcy Court for the Northern District of California for permission to withdraw from the bankruptcy case of Veo fdba Xirlink, Inc. Upon conversion of the chapter 11 case to a chapter 7 proceeding, the Debtor ceased operations. All assets, including computers with accounting and sales data, were surrendered to East West Bank, a secured creditor. East West asserts a lien on all assets of the Debtor, including accounts receivables, bank accounts, inventory, fixtures, and leases. Mr. Boone said there is nothing left in the estate and there is nothing left to do as the Debtor's counsel. Headquartered in San Jose, California, Veo fdba Xirlink, Inc. -- http://www.veo.com/-- is a hardware technology company that develops quality digital imaging devices. The Company filed for chapter 11 protection (Bankr. N.D. Calif. Case No. 05-50680) on February 9, 2005. David A. Boone, Esq., at Law Offices of David A. Boone, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. On March 22, 2005, the chapter 11 case was converted to chapter 7. Suzanne Decker serves as the Chapter 7 Trustee. VERIDIEN CORPORATION: Recurring Losses Spur Going Concern Doubt --------------------------------------------------------------- Carter, Cartier, Melby & Guarino, C.P.A.s, P.A., expressed substantial doubt about Veridien Corporation's ability to continue as a going concern after it audited the Company's financial statements for the year eneded Dec. 31, 2004. The auditing firm points to the Company's: * continued losses; * stockholders' deficit; * working capital deficit; and * cash flow deficiency. At March 31, 2005, the Company had an accumulated deficit of $36,321,595. The Company has financed its ongoing business activities through a combination of sales, equity financing, sale of marketable securities and debt. The Company had a $1,049,129 working capital deficit as of March 31, 2005, compared to a $2,405,606 working capital deficit at March 31, 2004. Management is addressing the going concern issue in virtually every aspect of the Company's operation. Management continues to cut operating expenses and is successfully changing the product mix such that the Company is achieving improved margins. Because of its significant losses incurred since inception, Veridien has become substantially dependent on: (1) loans from officers, directors, and third parties, (2) private placements of its securities, (3) revenue from sales, and (4) liquidation of its marketable securities to fund operations. Management plans to utilize current debt financing arrangements, and to pursue additional equity and debt financing, while managing cash flow, in an effort to provide funds to increase revenues aimed at supporting operation, research and development activities. The Company's believes that its long-term success depends on revenues from operations, from product sales, and ongoing royalties from technologies. If such sources of funds are not adequate, Veridien may seek to obtain financing to meet operating and research expenses from other sources including, but not limited to, future equity or debt financings. As of May 12, 2005, the Company had cash of approximately $71,973 and during May and June, management expects cash flow of $300,000 from operating activities, private placements and possible sale of marketable securities. It is believed that this level of liquidity should be sufficient to operate the Company for more than 180 days. Management anticipates increasing sales, reduced operating expenses, and additional private placement funding will contribute to continuous operations of the Company. About the Company Veridien Corporation is a Life Sciences Company, incorporated in Delaware, focused on infection control, healthy lifestyle products and diagnostic products [staining reagent]. Over the Company's history it has invented, developed and patented its own unique products, sourced and marketed inventive products developed by others and in more recent times partnered with innovative pioneers to pursue development of proprietary technology. The Company has developed patented and unique products including surface disinfectants, antiseptic hand cleansers, instrument presoak, and sun protection products. At Mar. 31, 2005, Veridien Corporation's balance sheet showed a $4,401,973 stockholders' deficit, compared to a $4,402,355 deficit at Dec. 31, 2004. VICORP RESTAURANTS: Weak Performance Spurs S&P's Negative Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on VICORP Restaurants Inc. to negative from stable. The 'B+' corporate credit and 'B' senior unsecured debt ratings on the company are affirmed. "The outlook revision is based on declining operating performance at the company's Bakers Square concept and credit measures that are below Standard & Poor's expectations," said Standard & Poor's credit analyst Robert Lichtenstein. Same-store sales at Bakers Square dropped 3.7% and 5.5% in the first and second quarters of fiscal 2005, respectively, after decreasing 1% and 2.5% in all of 2004 and 2003, respectively. Although management is undertaking a repositioning of the Bakers Square concept, they are still at the early stages of the process, and success could be challenging. The ratings reflect the Denver, Colorado-based company's participation in the highly competitive restaurant industry, its small size, weak cash flow protection measures, and a highly leveraged capital structure. VICORP operates two family dining restaurant concepts, Village Inn and Bakers Square. The company has a small market position in the family dining sector of the restaurant industry. Moreover, the family dining sector has underperformed the overall restaurant industry and has weaker growth prospects because of changing consumer preferences as well as competition from restaurants in the casual, fast-casual, and quick-service sectors. Management plans to open about 25 stores in 2005, increasing its business risk, after several years of maintaining a relatively stable unit count. VILLAS AT HACIENDA: No Creditors Want to Serve on a Committee ------------------------------------------------------------- Ilene J. Lashinsky, the U.S. Trustee for Region 14, tells the U.S. Bankruptcy Court for the District of Arizona that there isn't sufficient interest among Villas At Hacienda Del Sol, Inc.'s unsecured creditors to allow her to appoint an Official Committee of Unsecured Creditors. Headquartered in Tucson, Arizona, Villas At Hacienda Del Sol, Inc. -- http://www.thevillasathaciendadelsol.com/-- filed for chapter 11 protection on March 28, 2005. (Bankr. D. Ariz. Case No. 05-01482). Matthew R.K. Waterman, Esq., at Waterman & Waterman, PC, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and liabilities ranging from $10 million to $50 million. W.R. GRACE: Wants OK on Consulting Pact with SVP & General Counsel ------------------------------------------------------------------ On September 1, 1998, David B. Siegel was elected as W.R. Grace & Co. and its debtor-affiliates' senior vice president and general counsel. Prior to his election as general counsel, Mr. Siegel served as corporate counsel for the Debtors from 1977 until 1993, and as vice president and deputy general counsel from 1993 until 1998. As general counsel, Mr. Siegel had been heavily involved in managing the Debtors' major pending litigation. In April 2001, soon after the Debtors' bankruptcy filing, Mr. Siegel was elected Chief Restructuring Officer of the Debtors. As CRO, Mr. Siegel managed most aspects of the Debtors' Chapter 11 cases, including the development and filing of the proposed plan of reorganization, the filing of litigation-related motions, and negotiating with members of the official committees involved in the bankruptcy. On April 26, 2005, after more than 28 years of service with the Debtors, Mr. Siegel retired and therefore ceased performing his duties as general counsel and CRO. The Debtors seek the U.S. Bankruptcy Court for the District of Delaware's authority to enter into a post-retirement agreement with Mr. Siegel for certain consulting services related to their pending litigation and Chapter 11 cases, to take effect as of May 1, 2005. Under the Consulting Agreement, Mr. Siegel would continue to monitor and analyze developments regarding the Debtors' pending litigation and the Chapter 11 cases and continue to provide advice and guidance to the Debtors. It is anticipated that Mr. Siegel would perform those services for approximately 20 hours per week, for 45 weeks, within each 12-month period during the term of the Agreement. According to the Debtors, the duration of the services represents a work schedule that is approximately one-half of Mr. Siegel's pre-retirement regularly scheduled 40-hour workweek. Moreover, as Mr. Siegel had been their lead representative in negotiating a consensual plan of reorganization, the Debtors also intend to continue his participation in future negotiations regarding a consensual plan. The Consulting Agreement further provides that Mr. Siegel could also be asked to provide additional consulting services related to his other former responsibilities with the Debtors. During Mr. Siegel's employment with the Debtors, he has also provided legal advice with regard to several other significant transactions and events. Thus, the Debtors anticipate that a continued access to Mr. Siegel's prior experience and legal advice regarding those transactions and events will be beneficial to them to the extent that they must address related issues even after his retirement. The Debtors assure the Court that Mr. Siegel would perform the consulting services as an independent contractor and would retain no authority to enter into agreements on their behalf, nor any management or supervisory authority. The Debtors also attest that their Board of Directors had approved the Siegel Consulting Agreement. David W. Carickhoff, Jr., Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, believes that the Debtors' pending litigation and Chapter 11 cases could be more efficiently managed if they were able to continue to benefit from Mr. Siegel's experience, advice and guidance regarding those matters. Mr. Carickhoff points out that Mr. Siegel has been involved in the Chapter 11 cases since the Petition Date and has, therefore, developed an overall perspective of the issues faced by the Debtors. Mr. Siegel's background and knowledge regarding the Debtors' Chapter 11 cases, along with his professional skills, will facilitate the Debtors' efforts to emerge from bankruptcy. Mr. Carickhoff contends that losing Mr. Siegel's services would unduly delay and complicate the Debtors' continued progress towards resolving pending litigation and advancing reorganization. As compensation for his consulting services, Mr. Siegel would receive a base monthly retainer equal to $37,500 per month, plus $500 for each hour that Mr. Siegel provides those services in excess of 900 hours during any 12-month term of the Agreement. Mr. Carickhoff notes that the base monthly retainer is slightly less than one-half hour of the amount of Mr. Siegel's pre- retirement targeted annual compensation. The Siegel Consulting Agreement may be terminated by the Debtors or Mr. Siegel at any time upon 60 days' written notice, without the obligation to make any post-termination payments. 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) WEIRTON STEEL: Court Okays National Steel Settlement Pact --------------------------------------------------------- As reported in the Troubled Company Reporter on Apr. 27, 2005, Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, relates that National Steel Corporation and Weirton Steel Corporation executed an asset purchase agreement on April 29, 1983, pursuant to which Weirton purchased substantially all of the assets of National Steel's Weirton Steel Division. The parties subsequently executed a Benefits Agreement and an Assumption and Assignment Agreement, under which certain employee benefit and environmental liabilities were allocated between National Steel and Weirton. On March 6, 2002, National Steel filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Northern District of Illinois. Since then, National Steel timely filed Unsecured Priority Claim No. 1919 for $2,769,328 against Weirton, allegedly arising under the Benefits Agreement. Similarly, Weirton filed General Unsecured Claim No. 4107 for $30,906,000 and Claim No. 4166 for $5,200 against National Steel, for contingent, prospective claims allegedly arising under the Assumption and Assignment Agreement. The NSC Creditor Trust alleged that the Weirton Claims are unliquidated, contingent claims for reimbursement or contribution, and therefore are not allowable. On the other hand, the Weirton Steel Corporation Liquidating Trustee alleged that the majority of National Steel's Claim is not entitled to priority status because the Claim arose outside of the statutory period for priority benefit claims under Section 507 of the Bankruptcy Code. The Weirton Trustee, National Steel and the NSC Creditor Trust wish to resolve their disputes and avoid the costs, risks, delay and uncertainty associated with litigation. Under their settlement agreement, the parties agree that: (i) Claim No. 1919 will be fixed and allowed as an unsecured priority claim against Weirton and the Weirton Trustee for $100,000, and will be paid as an allowed Class 3 claim in accordance with Weirton's confirmed Plan of Liquidation. (ii) Other than as to the Allowed National Steel Claim or as specifically provided in the Agreement, the Parties release and discharge each other from any and all claims and causes of action that each may have against the other, including, but not limited to, any claims or causes of action related to, or arising from, the Weirton Claims or the National Steel Claim. Mr. Freedlander asserts that the settlement agreement permits the Weirton Trustee to expeditiously resolve the Claims Dispute, which otherwise could: -- substantially delay the distribution process; -- increase costs associated with litigating the Claims Dispute; and -- result in a substantial dilution of the distributions to creditors holding allowed claims, if National Steel and the NSC Creditor Trust were to prevail. * * * The Court approves the stipulation. Headquartered in Weirton, West Virginia, Weirton Steel Corporation was a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company was the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. The Company filed for chapter 11 protection on May 19, 2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward Friend, II administers the Debtors' cases. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph, Esq., at McGuireWoods LLP, represent the Debtors in their liquidation. Weirton sold substantially all of its assets to Wilbur Ross' International Steel Group. Weirton's confirmed Plan of Liquidation became effective on Sept. 8, 2004. (Weirton Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Files Amended Joint Plan of Reorganization ------------------------------------------------------------- Westpoint Stevens, Inc. and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York their Amended Joint Plan of Reorganization and Disclosure Statement, on June 10, 2005. The Amended Plan was developed in connection with certain rulings and instructions from the Court during the Bidding Procedures hearing. The Debtors believe that approval of the Amended Plan is their best chance to maximize recoveries for their creditors. The Debtors have sought Court approval to sell all or substantially all of their assets at an Auction to be held on June 21, 2004, to the highest or otherwise best bidder. The consideration to be received from the sale will be distributed to creditors in order of their priority. Avoidance Actions and certain other assets not assumed by the Purchaser under the Asset Purchase Agreement are not being sold. Accordingly, the Debtors are establishing a Liquidating Trust, for the benefit of their creditors, to distribute the recoveries from the Avoidance Actions and any remaining assets, which are not being sold. Beneficial Interests There will be three sets of Beneficial Interests created and distributed in connection with the Liquidating Trust: * Series A Beneficial Interests will be created for the benefit of holders of Claims arising under the Second-Lien Lender Agreement on account of any superpriority Administrative Expense Claim awarded to the Second Lien Lenders by the Bankruptcy Court. In the event no superpriority Administrative Expense Claim is awarded to the holders of Second Lien Lender Claims, no Series A Beneficial Interests will be distributed. * If the value of the Liquidating Trust Assets exceeds the amount of the superpriority Administrative Expense Claim awarded to the Second Lien Lenders, or if no claim is awarded, then Series B Beneficial Interests will be created for the benefit of holders of Non-Assumed Administrative Expense Claims, Compensation and Reimbursement Claims, Priority Tax Claims, and Priority Non-Tax Claims. * Series C Beneficial Interests will be created for the benefit of holders of General Unsecured Claims, Noteholder Claims, and PBGC Claims. If the unpaid Second Lien Lender Claims exceed the amount of any superpriority Administrative Expense Claims awarded to the Second Lien Lenders by the Court, the excess will be treated as Class E General Unsecured Claims. In the event the value of the Liquidating Trust Assets does not exceed the amount of the superpriority Administrative Expense Claim awarded to the Second Lien Lenders by the Court, no Liquidating Trust will be created. The Avoidance Actions and other assets designated for the Liquidating Trust will be assigned directly to Wilmington Trust Company, as administrative agent for the Second Lien Lenders, for distribution to holders of Second Lien Lender Claims only. The Second Lien Lender Administrative Agent will be responsible for and required to: -- file local, state, and federal tax returns upon WestPoint's dissolution, -- request an expedited determination of the Debtors' tax liability, and -- represent the Debtors before the applicable taxing authorities. Liquidating Trustee The Second Lien Lender Administrative Agent will designate, with the consent of the Official Committee of Unsecured Creditors and the Debtors, a trustee to administer the Liquidating Trust if Series A Beneficial Interests are issued. In the event no Series A Beneficial Interests are issued, the Creditors Committee, with the Debtors' consent, will designate the Liquidating Trustee. The Liquidating Trustee's appointment will be effective on the Effective Date of the Plan without the need for a further Court order. The Liquidating Trustee will have the power and authority to: (a) hold, manage, sell, and distribute the Liquidating Trust Assets to the holders of Beneficial Interests; (b) hold, manage, sell, and distribute Cash or non-Cash Liquidating Trust Assets obtained through the exercise of its power and authority; (c) prosecute and resolve, in the names of the Debtors or the Liquidating Trustee, the Avoidance Actions; (d) prosecute and resolve objections to Disputed Claims; (e) perform other functions as are provided in the Amended Plan or the Liquidating Trust Agreement; and (f) administer the closure of the Chapter 11 cases. The Liquidating Trustee will be responsible for all decisions and duties with respect to the Liquidating Trust and the Liquidating Trust Assets. In all circumstances, the Liquidating Trustee will act in the best interests of all beneficiaries of the Liquidating Trust and in furtherance of the purpose of the Liquidating Trust. Beginning on the Effective Date, or as soon thereafter as is practicable, and at least annually, the Liquidating Trustee will distribute the Liquidating Trust Assets in accordance with the Liquidating Trust Agreement. The Liquidating Trustee may retain and reasonably compensate counsel and other professionals to assist in its duties as Liquidating Trustee on terms as the Liquidating Trustee deems appropriate without Court approval. The Liquidating Trustee may retain any professional who represented parties-in-interest in the Debtors' Chapter 11 cases. The costs and expenses of the Liquidating Trust, including fees and reasonable expenses of its retained professionals, will be paid out of the Liquidating Trust. The Liquidating Trustee and the Liquidating Trust will be discharged or dissolved when: (i) all Disputed Claims have been resolved; (ii) all Liquidating Trust Assets have been liquidated; and (iii) all distributions required to be made by the Liquidating Trustee under the Amended Plan have been made. The Liquidating Trust should be dissolved not later than five years from the Effective Date unless the Court, upon motion within the six-month period prior to the 5th anniversary, determines that a fixed period extension is necessary. When all Disputed Claims filed against the Debtors have become Allowed Claims or have been disallowed by Final Order, and all of the Liquidating Trust Assets have been distributed in accordance with the Amended Plan, the Liquidating Trustee will seek the Court's authority to close the Chapter 11 cases in accordance with the Bankruptcy Code and the Bankruptcy Rules. NewCo The Debtors disclose that the initial Board of Directors of NewCo, the entity formed to be the parent company of the Purchaser of all or substantially all of the Debtors' assets, will be revealed at or prior to the Confirmation Hearing. The officers of the Debtors immediately prior to the Effective Date will serve as the initial officers of NewCo and Purchaser. After the Effective Date, the officers of NewCo and Purchaser will be determined by their Boards of Directors. Liquidation Analysis The Debtors believe that under the Amended Plan, all holders of impaired Claims will receive property with a value not less than the value that holder would receive in a liquidation of the Debtors under Chapter 7 of the Bankruptcy Code. The Debtors' belief is based primarily on consideration of the effects that a Chapter 7 liquidation would have on the ultimate proceeds available for distribution to holders of impaired Claims and Equity Interests, including: (a) the increased costs and expenses of a liquidation under Chapter 7 arising from fees payable to a Chapter 7 trustee and professional advisors to the trustee; (b) the erosion in value of assets in a Chapter 7 case in the context of the rapid liquidation required under Chapter 7 and the "forced sale" atmosphere that would prevail; (c) the adverse effects on the Debtors' businesses as a result of the likely departure of key employees and the probable loss of customers; (d) the substantial increases in Claims, which would be satisfied on a priority basis or on parity with the holders of impaired Claims and Equity Interests of the Chapter 11 cases; (e) the reduction of value associated with a Chapter 7 trustee's operation of the Debtors' businesses; and (f) the substantial delay in distributions to the holders of impaired Claims and Equity Interests that would likely ensue in a Chapter 7 liquidation; and The liquidation analysis, valuation analysis and financial projections prepared by the Debtors will be filed with the Court prior to the Disclosure Statement Hearing. A full-text copy of the Debtors' Amended Chapter 11 Plan is available for free at: http://bankrupt.com/misc/wspt_amended_plan.pdf A full-text copy of the Debtors' Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/wspt_amended_ds.pdf A full-text copy of the Debtors' 2004 Annual Review is available for free at: http://bankrupt.com/misc/wspt_2004annual_review.pdf Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Classification of Claims & Interests Under Plan ------------------------------------------------------------------ Westpoint Stevens, Inc., and its debtor-affiliates' Amended Joint Plan of Reorganization groups claims and equity interests into 12 classes: Class Description Recovery under the Plan ----- ----------- ----------------------- N/A DIP Claims Paid in full Estimated Estimated recovery: 100% Amount: $113,137,000 N/A Assumed Paid in full or as otherwise agreed Administrative Expense Claims Estimated recovery: 100% N/A Non-Assumed Paid in full or as otherwise agreed Administrative Expense Claims Estimated recovery: 100% N/A Priority Paid in full or as otherwise agreed Non-Tax Claims Estimated recovery: 100% A Priority Paid in full or as otherwise agreed Tax Claims Estimated Recovery: 100% B Other Secured Assumed and paid in full by Purchaser Claims over a six-month period following the Effective Date Estimated Estimated Recovery: 100% Amount: $311,851 C First Lien Sale Proceeds Lender Claims Estimated Estimated Recovery: TBD Amount: $483,897,447 D Second Lien Sale Proceeds remaining after the Lender Claims First Lien Lender Claims have been paid in full and the Series A Beneficial Interests. Estimated Estimated Recovery: TBD Amount: $165,000,000 E General A pro rata distribution of: Unsecured Claims -- the Sale Proceeds remaining after the First Lien Lender Claims and Estimated Second Lien Lender Claims, and all Amount: other Administrative Expense $43,576,283 Claims have been paid in full or assumed; and -- the Series C Beneficial Interests Estimated Recovery: TBD F Noteholder A pro rata distribution of: Claims -- the Sale Proceeds remaining after the First Lien Lender Claims and Estimated Second Lien Lender Claims, and all Amount: other Administrative Expense $1,036,312,500 Claims have been paid in full or assumed; and -- the Series C Beneficial Interests Estimated Recovery: TBD G PBGC Claims A pro rata distribution of: -- the Sale Proceeds remaining after the First Lien Lender Claims and Estimated Second Lien Lender Claims, and all Amount: other Administrative Expense $214,000,000 Claims have been paid in full or assumed; and -- the Series C Beneficial Interests Estimated Recovery: TBD H Litigation All Litigation Claims not previously Claims allowed by Final Order are Disputed Claims. At such time as a Disputed Claim becomes an Allowed Claim, the Disbursing Agent will distribute to the holder its pro rata share of the property distributable with respect to the Class in which the Claim belongs. Estimated Recovery: TBD I Intercompany Eliminated and discharged by offset. Claims No distribution J Securities No Distribution Litigation Claims K Punitive No Distribution Damage Claims L Common Stock No Distribution Interests The information presented is based on calculations as of May 31, 2005. The estimation of recoveries assumes that: -- the Effective Date will occur on August 31, 2005; and -- the estimated aggregate amount of Allowed unsecured Claims against the Debtors is $1,294,000,000. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors filed their Amended Joint Plan of Reorganization and Disclosure Statement with the Bankruptcy Court on June 10, 2005. (WestPoint Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) WISTON XIV: Files Chapter 11 Plan of Reorganization in Nebraska --------------------------------------------------------------- Wiston XIV Limited Partnership filed its chapter 11 plan of reorganization with the U.S. Bankruptcy Court for the District of Nebraska on June 7, 2005. The Debtor has yet to file its Disclosure Statement explaining the Plan. Terms of the Plan The Debtor plans to maintain and manage its property while restoring it to its highest value. The Debtor will use the $1.5 million it borrowed from Hillcrest Bank for repairs. Three years after the effective date of the plan, the Debtor will sell its assets and use the proceeds to pay off its creditors pursuant to the Plan. Under the Plan, Hillcrest Bank will be paid monthly interest starting on the Plan's Effective Date. The interest will be based on the prime rate published on The Wall Street Journal and will be adjusted daily. The balance on the Hillcrest Bank Loan will be paid from the sale proceeds of the Debtor's assets. Hillcrest Bank will retain a first lien on the Debtor's assets until its claim is paid in full. The Debtor will pay Sapient Capital, LLC, monthly interest starting on the Plan's Effective Date, using the [so-called, without further description] In Re Wichman interest rate, as adjusted [without further explanation]. Sapient Capital will be paid after Hillcrest Bank's claim is satisfied in full from the Sale Proceeds. Sapient Capital will retain a second lien on the Debtor's assets until its claim is paid in full. Holders of general unsecured claims will be paid monthly interest on their claims at the In Re Wichman interest rate. General unsecured creditors will be paid after Hillcrest Bank's & Sapient Capital's claims are paid in full. The partnership's current equity holders will retain their interests. Headquartered in Stilwell, Kansas, Wiston XIV Limited Partnership filed for chapter 11 protection on Jan. 5, 2005 (Bankr. D. Nebr. Case No. 05-80037). Robert V. Ginn, Esq., at Brashear & Ginn, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts from $10 million to $50 million. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. PCSA (94) 299 86 Akamai Tech. AKAM (111) 202 75 Alliance Imaging AIQ (54) 608 14 Amazon.com AMZN (162) 2,472 720 AMR Corp. AMR (697) 29,167 (2,311) Atherogenics Inc. AGIX (54) 254 235 Blount International BLT (238) 434 115 Biomarin Pharmac BMRN (90) 181 3 CableVision System CVC (2,035) 11,141 410 CCC Information CCCG (113) 93 21 Centennial Comm CYCL (486) 1,467 124 Choice Hotels CHH (204) 276 (23) Cincinnati Bell CBB (593) 1,919 (8) Clorox Co. CLX (346) 3,756 (158) Compass Minerals CMP (69) 707 139 Conjuchem Inc. CJC (35) 19 13 Delta Airlines DAL (6,352) 21,737 (2,968) Deluxe Corp DLX (150) 1,556 (331) Denny's Corporation DENN (263) 496 (82) Domino's Pizza DPZ (526) 450 26 Eagle Hospitality EHP (26) 177 N.A. Echostar Comm-A DISH (1,830) 6,579 148 Flow Intl. Corp. FLOW (9) 136 (3) Foster Wheeler FWLT (520) 2,140 (213) Freightcar Amer. RAIL (23) 208 8 Graftech International GTI (35) 1,029 265 ICOS Corp ICOS (38) 285 170 IMAX Corp IMAX (40) 235 24 Investools Inc. IED (7) 50 (19) Isis Pharm. ISIS (104) 176 61 Knoll Inc. KNL (3) 570 67 Lodgenet Entertainment LNET (72) 287 22 Maytag Corp. MYG (78) 2,954 380 McDermott Int'l MDR (232) 1,450 34 McMoran Exploration MMR (24) 405 143 Neff Corp. NFFCA (43) 270 6 Nexstar Broadc - A NXST (30) 700 16 Northwest Airline NWAC (3,273) 13,821 (1,204) Northwestern Corp. NWEC (603) 2,445 (692) NPS Pharm Inc. NPSP (57) 351 261 ON Semiconductor ONNN (363) 1,112 237 Owens Corning OWENQ (4,132) 7,567 1,118 Primedia Inc. PRM (777) 1,883 164 Quality Distrib. QLTY (29) 386 15 Qwest Communication Q (2,564) 24,129 469 Revlon Inc. - A REV (1,065) 1,155 99 RH Donnelley RHD (127) 3,972 (57) Riviera Holdings RIV (27) 223 5 Rural/Metro Corp. RURL (184) 221 18 SBA Comm. Corp. A SBAC (104) 854 9 Sepracor Inc. SEPR (351) 974 605 St. John Knits Inc. SJKI (52) 213 80 Tivo Inc. TIVO (3) 160 50 US Unwired Inc. UNWR (84) 413 45 Valence Tech. VLNC (43) 16 1 Vector Group Ltd. VGR (31) 505 152 Vertex Pharm. VRTX (8) 484 202 Vertrue Inc. VTRU (50) 451 (81) Viropharma Inc. VPHM (32) 101 94 WR Grace & Co. GRA (629) 3,464 876 ********* 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. 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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 ***