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/raid1/www/Hosts/bankrupt/TCR_Public/050622.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 22, 2005, Vol. 9, No. 146 Headlines A.B. DICK: Gets Court Okay to Hire TRG to Wind Down Business AFFINIA GROUP: Weak Performance Prompts S&P to Watch Ratings AGILYSYS INC: Will File Annual Report by June 29 AMERICAN BUSINESS: Files Final Report on Chapter 11 Obligations ARTISTDIRECT INC: Operating Losses Trigger Going Concern Doubt ASPEN TECH: Retires $56.7 Million of Convertible Debt AST SPORTS: Creditors Must File Proofs of Claim by June 30 ATA AIRLINES: AMR Leasing Seeks Payment of $5.39MM Admin. Expense ATA AIRLINES: Court Modifies Stay to Defend Against Sapp Lawsuit AVENUE GROUP: Auditors Express Going Concern Doubt in Form 10-K BEAR STEARNS: Fitch Slices Class BF's Rating to C from CCC CABLEVISION: Dolans Buying Telecom & Cable Business for $7.9 Bil. CABLEVISION SYSTEMS: Sale to Dolan Group Cues S&P to Watch Ratings CARDIMA INC: Defaults on Secured Loan & More Bad News CATHOLIC CHURCH: Portland Wants National Union Settlement Approved CENTRAL PARKING: Halts Talks on Possible Asset Sale CHESAPEAKE ENERGY: Prices Tender Offers for 8.125% & 9% Sr. Notes CNE GROUP: AMEX Says Fin'l Condition Impairs Ability to Operate COLLINS & AIKMAN: Committee Wants Akin Gump as Lead Counsel COLLINS & AIKMAN: Audit Panel Hires Davis Polk as Special Counsel COLLINS & AIKMAN: Hires McDonald Hopkins as Special Counsel CONSTELLATION BRANDS: Won't Pursue Offer for Allied Domecq COOPER-STANDARD: Poor Credit Measures Cue S&P's Negative Outlook CSC HOLDINGS: Fitch Places Low-B Debt Ratings on Watch Negative DECISIONONE CORP: Closes Texas & Pennsylvania Operations DMX MUSIC: Creditors Must File Proofs of Claim by September 5 DMX MUSIC: Wants to Extend Exclusive Plan Filing Until Aug. 15 DPL INC: Inks New $100 Million Unsecured Revolving Credit Facility ELECTRIC & GAS: April 30 Balance Sheet Upside-Down by $49,436 EQUIFIRST MORTGAGE: Good Credit Support Cues S&P to Hold Ratings FEDERAL-MOGUL: Asbestos Estimation Hearing Continues FEDERAL-MOGUL: Asbestos Panel Wants Peterson's Testimony Excluded GLOBOPAR: Three Creditors Move to Dismiss Involuntary Petition GOODYEAR TIRE: S&P Rates Proposed $400 Million Senior Notes at B- HAPPY KIDS: Deutsche Bank Wants Examiner Appointed HOLLYWOOD CASINO: Judge Callaway Confirms Plan of Reorganization IMPAX LAB: Wachovia Increases Bank Loan Commitment to $37 Million INTERMET CORP: Decatur Workers Receive Termination Notices K2 INC: Slow Debt Payment Prompts S&P's Negative Outlook KMART CORP: Court Denies 3 Claimants' Move to File Tardy Claims KMART CORP: Settles Enviro-Resources' Third Party Claim MAYTAG CORP: Bain-Blackstone-Haier Bids $1.275 Billion for Company MCI INC: 11 Officers Dispose of 27,158 Shares of Common Stock MEDICAL IMAGING: Case Summary & 20 Largest Unsecured Creditors METALFORMING TECH: Taps Bankruptcy Services as Claims Agent MIRANT CORP: Court Approves Wrightsville Settlement Agreements MIRANT CORP: Sammons Addresses Relevance of Till Case in Valuation MUELLER WATER: Inks $1.91 Billion Transaction with Walter Ind. MUELLER WATER: Sale to Walter Industries Cues S&P to Watch Ratings MUSHTAQ KANCHWALA: Case Summary & 20 Largest Unsecured Creditors NORSTAN APPAREL: Wants to Walk Away from CBA with Union Local 99 NORTH ATLANTIC: Inks $85 Million Refinancing Pact with Fortress NUR MACROPRINTERS: Talks with Several Potential Investors Begin OWENS CORNING: Files Status Report on Commercial Comm. Advisors PEGASUS SATELLITE: Bernstein Wants Court to Approve Final Payments PIVX SOLUTIONS: Accumulated Deficit Triggers Going Concern Doubt PRESIDENTIAL LIFE: Weak Risk Management Cues S&P to Lower Ratings RARITAN VALLEY: Case Summary & 47 Largest Unsecured Creditors ROYAL GROUP: Hires Deutsche Bank & Scotia Capital to Review Offers SAKS INC: Commencing Cash Tender Offers for $658 Million of Debt SECURITY CAPITAL: Look for Annual Report by June 24 SEMINOLE TRIBE: S&P Puts Ratings on Watch Positive SOH HOLDINGS: Case Summary & 60 Largest Unsecured Creditors SOUTH SIDE: Case Summary & 20 Largest Unsecured Creditors SPIEGEL INC: Eddie Bauer Emerges from Bankruptcy Protection STERLING FINANCIAL: Fitch Revises Outlook to Positive from Stable SUGAR CREEK: Case Summary & 13 Largest Unsecured Creditors TEKNI-PLEX: S&P Holds Junk Ratings Following Refinancing THERMOVIEW IND: Auditors Express Doubts & GE Stretches Loan Terms TOWER AUTOMOTIVE: Creditors Transfer $4,580,832 of Trade Claims TOWER AUTOMOTIVE: Wins Major Contracts from Two U.S. Automakers TOWER AUTOMOTIVE: Utility Companies Want Adequate Assurance TRICELL INC: Accumulated Deficit Triggers Going Concern Doubt TRUMP HOTEL: Court Okays Employment of Cushman & Wakefield TWIN LAKES: Voluntary Chapter 11 Case Summary UNITED AIRLINES: Reports Say Texas Pacific May Launch Takeover Bid USG CORP: Equity Committee Wants to Retain Houlihan Lokey VARELA ENTERPRISES: Creditors Must File Proofs of Claim by July 29 VARELA ENTERPRISES: Submits Plan and Disclosure Statement VERESTAR INC: Panel Hires Kasowitz Benson as Litigation Counsel WALTER INDUSTRIES: Acquiring Mueller Water for $1.91 Billion WALTER INDUSTRIES: Mueller Water Deal Cues S&P to Lower Ratings WEIGHT INTERVENTION: Asset Sale Hearing Slated for June 23 WESTPOINT STEVENS: Steering Committee Wants Right to Credit Bid WILLIAM CARTER: S&P Rates Proposed $625 Mil. Secured Loan at BB WILLIAM SUMMERS: Case Summary & 7 Largest Unsecured Creditors WILSON & ELLIS: Case Summary & 20 Largest Unsecured Creditors WINN-DIXIE: Plans to Reduce Stores by 326 & Cut Workforce by 28% WORLDCOM INC: Dist. Court Sets Settlement Hearing for September 9 W.R. GRACE: Court Enters Order Governing Asbestos Estimation Docs YUKOS OIL: Founder Mikhail Khodorkovsky Gets Nine-Year Jail Term * Jonathan Hersey Joins Sheppard Mullin as O.C. Litigation Partner * Robert Dremluk Joins Seyfarth Shaw as New York Partner * Alex Ostrow Participated in ABI's Bankruptcy Webinar Series * Upcoming Meetings, Conferences and Seminars ********* A.B. DICK: Gets Court Okay to Hire TRG to Wind Down Business ------------------------------------------------------------ The Honorable Randolph Baxter of the U.S. Bankruptcy Court for the District of Delaware gave A.B. Dick Company n/k/a Blake of Chicago Corp. and its debtor-affiliates permission to employ The Recovery Group, Inc., known as TRG, to maximize their remaining assets and supervise their wind down until Sept. 30, 2005. TRG designated Stephen S. Gray and John Calabrese as the Debtors' Chief Restructuring Officer and Assistant Chief Restructuring Officer to: (1) pursue and liquidate potential assets such as vendor debits, insurance refunds, workers' compensation audits and tax refunds; (2) provide financial and other data necessary to support confirmation of the Plan; (3) manage the estates' cash and oversee the winding down of A.B. Dick and its Canadian subsidiary; (4) comply with the United States Trustee's reporting requirements during the remainder of the cases; and (5) provide litigation support; and (6) oversee the payments of post-petition administrative expenses, to the extent possible. TRG professionals will be paid: Hourly Rate ----------- Stephen S. Gray $490 John Calabrese $395 Robert Scharnecchia $395 Linda Hein $300 Another TRG Consultant $300 About TRG TRG has provided turnaround and crisis management services to businesses, creditors, lenders and investors for more than 20 years. With a experienced senior management team and a staff of 40 consultants, TRG specializes in delivering comprehensive solutions for troubled mid to large-cap businesses. Headquartered in Niles, Illinois, A.B. Dick Company -- http://www.abdick.com/-- is a global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002) on July 13, 2004. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, LLP, and H. Jeffrey Schwartz, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, represent the Debtors in their restructuring efforts. Richard J. Mason, Esq., at McGuireWoods, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. A.B. Dick Company changed its name to Blake of Chicago, Corp., on Dec. 8, 2004, as required by the terms of the APA with Presstek. The Debtors delivered their Liquidating Plan of Reorganization and an accompanying Disclosure Statement explaining that Plan to the U.S. Bankruptcy Court for the District of Delaware on Feb. 10, 2005. AFFINIA GROUP: Weak Performance Prompts S&P to Watch Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating and all other ratings on automotive aftermarket product manufacturer Affinia Group Inc. on CreditWatch with negative implications. Debt at the Ann Arbor, Michigan-based company totaled $664 million at March 31, 2005. "The CreditWatch listing reflects the company's weaker-than- expected operating performance in the first quarter of 2005 and uncertain near-term prospects," said Standard & Poor's credit analyst Daniel R. DiSenso. Affinia's balance sheet is very leveraged and debt usage is expected to remain high indefinitely. Adjusted debt to adjusted EBITDA for the 12 months ended March 31 stood at 5x, well in excess of Standard & Poor's expected 3.5x to 4x. Adjusted EBITDA for the first quarter of 2005 was $22.4 million, down 36% from the same period the previous year, as performance was hurt by a number of factors, including an adverse sales mix, raw material price increases, reduced manufacturing overhead absorption, and higher-than-expected customer product returns. Moreover, there are costs and temporary inefficiencies associated with Affinia's restructuring initiatives that are also affecting performance. The company is currently in compliance with its bank credit facility financial covenants, but compliance could become very tight in the second quarter when working capital needs are at a seasonal peak. Standard & Poor's will review management's operating and financial plans. The ratings will be lowered if it appears that near-term operating performance will remain weak, thereby delaying debt reduction. Affinia is one of the largest domestic manufacturers of brand name automotive aftermarket products, most of which have No. 1 or No. 2 market positions. The product portfolio consists of brake components, filtration products, chassis components, and distribution operations. AGILYSYS INC: Will File Annual Report by June 29 ------------------------------------------------ Agilysys, Inc. (Nasdaq: AGYS) will file a 15-day extension with the Securities and Exchange Commission for the filing of its Form 10-K for the fiscal year ended March 31, 2005. The company is filing for the extension because it is not able to complete the preparation of its consolidated financial statements and management's assessment of internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, by the initial filing date of June 14, 2005. Also, the company is in the process of providing additional information to Ernst & Young, LLP, its independent public accounting firm, in order to complete their documentation and related audit procedures. The company expects to file its Form 10-K on or before June 29, 2005. Agilysys identified as a material weakness the inadequate internal controls over its vendor debit process. As a result of this material weakness, management is evaluating all systems and procedures relative to the vendor debit process with the objective of implementing process improvements. Martin Ellis, Agilysys executive vice president, treasurer and chief financial officer, said, "Agilysys is committed to the integrity of its financial reporting. We want to take this extra time to provide the additional information to Ernst & Young, LLP and to complete our review of internal controls as required by Section 404 of the Sarbanes-Oxley Act." Agilysys, Inc. -- http://www.agilysys.com/-- is one of the foremost distributors and premier resellers of enterprise computer technology solutions. It has a proven track record of delivering complex server and storage hardware, software and services to resellers, large and medium-sized corporate customers, as well as public-sector clients across a diverse set of industries. In addition, the company provides customer-centric software applications and services focused on the retail and hospitality markets. Headquartered in Mayfield Heights, Ohio, Agilysys has sales offices throughout the United States and Canada. AMERICAN BUSINESS: Files Final Report on Chapter 11 Obligations --------------------------------------------------------------- Pursuant to Rule 1019(5) of the Federal Rules of Bankruptcy Procedure, American Business Financial Services, Inc., and its debtor-affiliates deliver to the U.S. Bankruptcy Court for the District of Delaware their final report and accounting, and schedule of unpaid postpetition obligations, as of May 17, 2005. The Final Report is based and in reliance on the inquiry of company employees after the Debtors' Chapter 7 conversion, in which the Debtors have turned over to the Chapter 7 Trustee all records and property of their estates in their possession or control. David J. Coles, the Debtors' former chief restructuring officer, informs the Honorable Mary F. Walrath that the Final Report includes summaries of all receipts and disbursements made by the Debtors that were not included in one of their monthly reports during the pendency of their Chapter 11 cases. Mr. Coles reports that Home American Credit, Inc., paid $6,090 for the IO strip cash flows and $294,375 for the DIP Transfer. In addition, Home American disbursed to hundreds of creditors an aggregate of $147,800. American Business Credit, Inc., paid a total of $5,104,663 for disbursements and paid these receipts: IO Strip cash flows $6,090 Ocwen for Interim NSF Reimbursement 9,591 22,126 27,756 Transfers (from DIP accounts) 5,038,768 American Business Mortgage Services, Inc., paid $13,877,236 for disbursements and $13,813,750 for receipts, comprising of: IO strip cash flows $6,090 Mortgage lenders reservation 459 DIP transfer 1,025,805 Advances 12,573,710 Points and fees 165,974 Interest income 41,712 American Business Financial Services, Inc., indicates that the receipts they have paid starting from April 1, 2005, to May 17, 2005, consist of: IO cash flows 327,814 Net proceeds from servicing transfer 21,098,542 TSF from escrow 180,648 Servicer advances/radian 634,236 DIP Transfer 3,379,177 Loan sales prepetition inventory 55,857,066 Discount on loan sales -2,650,958 Servicing income 3,133,340 Interest payments 1,602,099 Principal payments 2,263,899 Interest income 32,598 Points and fees 3,285 2003-2 collection account 1,527,803 Accrued interest (loan sales) 305,316 ABFS also disbursed $91,259,650 to creditors. ABFS Consolidated Holdings, Inc., reports having paid $4,208,459 for the IO Cash Flows and disbursed an aggregate of $4,208,459 for DIP account transfers, trustee expenses and repayment of working capital loan. Mr. Coles also discloses schedules of unpaid debts, totaling around $8 million, incurred after the commencement of the Debtors' Chapter 11 cases. Among the largest creditors are: Creditor Claim Amount -------- ------------ Blank Rome Comisky and McCauley, LLP $2,280,031 Kelley Drye & Warren LLP 825,509 Phoenix Management Services, Inc. 596,057 Pryor Cashman Sherman & Flynn, LP 543,180 Giuliani Capital Advisors 481,453 Wanamaker Office Lease, LP 426,974 Getzler Henrich & Associates, LLC 307,585 HGH Associates 275,184 SSG Capital Advisors, LP 265,277 Sitrick and Company, Inc. 236,083 Hangley Aronchick Segal & Pudlin 172,375 Alvarez and Marsal 123,338 Maslon Edelman Borman and Brand, LLP 121,320 Pursuant to the Final DIP Financing Order, the Debtors, as of May 17, 2005, incurred these outstanding facility fees: Greenwich Capital Financial Products, Inc. $11,050,000 Greenwich Capital Tranche A 30,011,004 Greenwich Capital Tranche C 34,209,825 Moreover, the Debtors have unpaid "deferred payoff" obligations owing to Clearwing Capital, LLC, for $750,000, and the Patriot Group, LLC, for $250,000. Mr. Coles also discloses information relating to property disposed of during the Debtors' cases, either in the regular course of business or pursuant to a Court's order. The asset dispositions include: -- assets sold to Ocwen Federal Bank FSB; -- assets sold to various purchasers in anticipation of the Court's order dated May 16, 2005, authorizing the sale and abandonment of de minimis assets; -- mortgage loans sold by the Debtors in the ordinary course of business; and -- various state regulatory licenses that were surrendered by Home American Credit, Inc., and American Business Mortgage Services, Inc., after the Debtors' Petition Date but before their Chapter 7 conversion. Furthermore, the Final Report incorporates a schedule of the Debtors' contract with QCC Insurance Company, which contract they assumed on March 9, 2005. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARTISTDIRECT INC: Operating Losses Trigger Going Concern Doubt -------------------------------------------------------------- Gumbiner Savett Inc. expressed substantial doubt about ARTISTDirect Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's substantial operating losses and negative cash flow. The Company has incurred losses and negative cash flow from operations in every fiscal period since inception and has an accumulated deficit of $226,000,000 and $205,600,000 as of December 31, 2004 and March 31, 2005, respectively. For the year ended December 31, 2004, the Company incurred a net loss of $3,311,000 (including $2,248,000 from discontinued operations) and negative operating cash flows of $3,473,000. For the three months ended March 31, 2005, the Company incurred a net loss from continuing operations of $375,000 and had negative operating cash flows of $372,000. As of March 31, 2005, the Company had net working capital of $81,000 and stockholders' equity of $174,000, as compared to a net working capital deficiency of $18,438,000 (including liabilities of discontinued operations held for disposal of $18,920,000 million, almost all of which were liquidated effective February 28, 2005) and a stockholders' deficiency of $20,259,000 million as of December 31, 2004. Through December 31, 2003, ADI had funded substantially all of the operations of ARTISTdirect Records. Effective July 30, 2004, ADI's remaining $12,000,000 million funding obligation to ARTISTdirect Records was extinguished, and effective February 28, 2005, the ADI sold all of its interest in ARTISTdirect Records to Radar Records for a cash payment of $115,000. During 2003, the Company restructured its operations, laid off most of its staff and reduced operating costs. Subsequently, management has continued its efforts to improve and expand operations and cash flows at its online music network. However, it is uncertain whether the Company's available cash resources will be sufficient to meet anticipated capital requirements through December 31, 2005. If sufficient capital is not available, then the Company may not be able to fund its operations. To the extent that the Company is unable to obtain the capital necessary to fund its future cash requirements on a timely basis and under acceptable terms and conditions, the Company will not have sufficient cash resources to maintain operations, and the Company may consider a formal or informal restructuring or reorganization. ARTISTdirect Recordings Sale On Feb. 28, 2005, ADI completed the sale of 100% of the common stock of ARTISTdirect Recordings to Radar Records pursuant to a Transfer Agreement for a cash payment of $115,000, as a result of which ADI no longer had any equity or other economic interest in ARTISTdirect Records, and Radar Records became the owner of a majority of the membership interests in ARTISTdirect Records and also acquired the receivable reflecting the $33,000,000 of loan advances previously provided to ARTISTdirect Records by ADI. In conjunction with this transaction, at February 28, 2005, ADI wrote-off the intercompany balance due from ARTISTdirect Records ($80,000 at February 28, 2005), which was eliminated in consolidation. Radar Records acquired the common stock of ARTISTdirect Recordings subject to the rights of BMG. Radar Records also agreed to offer to investors who had provided bridge funding to ARTISTdirect Records, excluding Frederick W. Field and entities related or controlled by him, the right to acquire proportional shares (based on the amount of bridge funding made by each bridge investor in ARTISTdirect Records) of the common stock of ARTISTdirect Recordings on the same terms and conditions as set forth in the Transfer Agreement. As a result of the sale of all of the Company's interest in ARTISTdirect Records effective February 28, 2005, ARTISTdirect Records was accounted for as a discontinued operation and the Company has restated its consolidated financial statements for the three months ended March 31, 2004 to reflect such accounting treatment, and the assets and liabilities of ARTISTdirect Records were classified as "held for sale" through February 28, 2005. ARTISTdirect Inc. -- http://www.artistdirect.com/-- is a music entertainment company, headquartered in Los Angeles, California, that features an online music network appealing to music fans, artists and marketing partners. The ARTISTdirect Network is a network of Web-sites offering multi-media content, music news and information, community around shared music interests, music- related specialty commerce and digital music services. At Mar. 31, 2005, ARTISTDirect Inc.'s balance sheet showed a $174,000 stockholders' equity, compared to a $20,259,000 stockholders' deficit at Dec. 31, 2004. ASPEN TECH: Retires $56.7 Million of Convertible Debt ----------------------------------------------------- Aspen Technology, Inc. (NASDAQ: AZPN) retired all of its 5.25% convertible debentures, which reached maturity at the close of business on June 15, 2005. The convertible debt represented approximately $56.7 million of AspenTech's $59.2 million of debt at the quarter ended March 31, 2005, the end of the Company's third fiscal quarter. The remaining $2.5 million of the Company's debt primarily consists of certain notes acquired in acquisitions, of which approximately $0.8 will be retired upon the closing of the sale of a UK property by the end of June. The Company funded the payment through: -- $8.6 million of its existing cash; -- $5.8 million obtained from its sales of installments receivable under its existing receivables programs with Silicon Valley Bank and GE Capital Corporation; and -- $43.8 million through the sale of additional installments receivable under various financing transactions. As of March 31, 2005, the convertible debentures had represented $56.7 million of the Company's aggregate $59.2 million of long- term debt and obligations, including current portion. In addition to using some of its cash balance, the Company sold approximately $54 million of installments receivable for approximately $50 million in cash to retire the debt. The sale of receivables was accomplished through the use of a special purpose vehicle that entered into a financial transaction with a syndicate of financial institutions, as well as the sale of additional installments receivable to Silicon Valley Bank under its receivables program with the Company. The Company expects to pay approximately $2 million in legal, broker and other fees related to the transactions, which will be incurred in the quarter ending June 30, 2005. "By retiring our convertible debt, Aspen Tech has completed the process of achieving a strong and healthy balance sheet, which we set out to accomplish more than two years ago," said Charles Kane, Senior Vice President & CFO of AspenTech. "With a healthy cash balance, elimination of leverage on our balance sheet, and a clear market leadership position in the process industries, our customers can continue to invest confidently in our integrated, aspenONE solutions as part of their long-term strategy to improve their operational performance." Mark Fusco, CEO of Aspen Tech added, "The significant strengthening of our balance sheet combined with our previously announced operational initiatives puts Aspen Tech in a solid position entering Fiscal 2006. The successful retirement of our convertible debt is a major step forward in our efforts to re- establish long-term credibility with customers and investors." About the Company Aspen Technology Inc. -- http://www.aspentech.com/-- provides industry-leading software and professional services that help process companies improve the efficiency of their business processes, optimize their operational performance and enhance their financial results. The new generation of integrated aspenONE(TM) solutions gives manufacturers the capabilities they need to model, manage and control their operations, enabling real- time decision making and synchronization of the plant and supply chain. Over 1,500 leading companies already rely on AspenTech's software, including Aventis, Bayer, BASF, BP, ChevronTexaco, Dow Chemical, DuPont, ExxonMobil, Fluor, GlaxoSmithKline, Shell, and Total. * * * As reported in the Troubled Company Reporter on Apr. 5, 2005, Standard & Poor's Ratings Services removed its ratings on Cambridge, Ma.-based Aspen Technology Inc. from CreditWatch, where they were placed with negative implications on Nov. 1, 2004, and affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings. ASPEN TECHNOLOGY, INC., and ASPENTECH, INC., are the Borrowers under a Loan and Security Agreement dated as of Jan. 30, 2003 (as amended), with SILICON VALLEY BANK as Lender. ASPEN TECHNOLOGY, INC., and ASPEN TECHNOLOGY RECEIVABLES II LLC, are also Borrowers under a Loan Agreement dated as of June 15, 2005, under which GUGGENHEIM CORPORATE FUNDING, LLC, serves as Agent for NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE, and MIDLAND NATIONAL LIFE INSURANCE COMPANY as Lenders. At Mar. 31, 2005, Aspen Technology Inc.'s balance sheet showed a $20,241,000 stockholders' deficit, compared to a $28,363,000 equity at June 30, 2004. AST SPORTS: Creditors Must File Proofs of Claim by June 30 ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado set June 30, 2005, as the deadline for all creditors owed money by AST Sports Science, Inc., on account of claims arising prior to April 30, 2005, to file formal written proofs of claim. Creditors must deliver their claim forms to the: Office of the Clerk United States Bankruptcy Court U.S. Custom House 721 19th Street, First Floor Denver, Colorado 80202-2502 Headquartered in Golden, Colorado, AST Sports Science, Inc., offers performance nutrition products and services to its clients. The Company filed for chapter 11 protection on April 30, 2005 (Bankr. D. Colo. Case No. 04-19176). When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $500 thousand to $1 million. ATA AIRLINES: AMR Leasing Seeks Payment of $5.39MM Admin. Expense ----------------------------------------------------------------- Prior to the Petition date, AMR Leasing Corporation leased six Saab Model 340B aircraft to ATA Airlines, Inc. Scott Everett, Esq., at Haynes and Boone, LLP, in Dallas, Texas, notes that, in accordance with the terms of the Court Order, dated December 17, 2004, the Leases were rejected on these dates: Aircraft Effective Date -------- -------------- N312CE April 1, 2005 N314CE April 8, 2005 N315CE April 1, 2005 N316CE April 7, 2005 N317CE April 1, 2005 N318CE April 1, 2005 Following rejection of the leases, AMR sold four of the Saab Model 340B Aircraft. By e-mails dated March 21 and 22, 2005, GE Engine Services, Inc., notified AMR that GE asserted statutory repairman's liens on two engines, which are subject to the N314CE and N317CE leases, for unpaid maintenance services furnished by GE while the Aircraft were leased to the Debtors. The aggregate amount alleged to be due to GE is $1,383,267. On December 22, 2004, the Debtors filed Section 1110(a) of the Bankruptcy Code agreements with respect to each AMR aircraft, thereby agreeing to perform all obligations under the Leases. Under the terms of Section 1110, if a debtor is to retain possession of the leased aircraft and continue to reap the benefits of the automatic stay, it must "agree[] to perform all obligations of the debtor under such . . . lease. . . ." By this motion, AMR asks the U.S. Bankruptcy Court for the Southern District of Indiana to direct the Debtors to pay administrative expenses aggregating to $5,399,746 as damages for their failure to perform obligations that became due during the terms of the Leases. Failure to Perform Rental Obligations According to Mr. Everett, the Debtors have not paid their rental obligations due March 30, 2005: Aircraft Unpaid Rent -------- ----------- N312CE $50,000 N314CE 158,000 N315CE 158,000 N316CE 177,000 N317CE 150,000 N318CE 177,000 ----------- $870,000 Failure to Perform Maintenance Obligations AMR asserts $4,206,880 in damages on account of the Debtors' failure to perform their maintenance obligations under the Leases: (A) ECMP Program The Debtors are obligated under the Leases to cause the Aircraft engines to be maintained, inspected, serviced, repaired, overhauled, and tested in accordance with an FAA- approved program. The Debtors' FAA-approved program, AMR notes, required the engines to be on an ECMP program, but the engines were removed from the Program on February 8, 2005. Mr. Everett explains that engines not maintained on an FAA- approved program, including the 12 engines, are rendered unusable and unmarketable in the industry for failing to be on an ECMP Program, regardless of their operational condition. AMR estimates the damages for the value of the engines, had they been kept on an FAA-approved program, at $350,000 each, or $4.2 million in the aggregate. Mr. Everett says AMR will be able to use, sell, or lease the engines only after they are on an ECMP program. AMR will amend its claim for a lesser amount only if and when AMR is able to get the engines back on an ECMP program, which may require payment of substantial sums of money. (b) Airframe The Debtors are obligated to keep the Aircraft, airframe, engines, and propellers in good operating condition. However, according to Mr. Everett, the Debtors damaged the rear fuselage outer skin aft of the cargo door on Aircraft N316CE. AMR incurred $6,880 to repair the damage to Aircraft in conformity with the Saab repair statement. In addition, AMR has been told by a potential acquiror of the Aircraft that any acquisition price for the Aircraft will have to take into consideration the repairs, which over time may have to be done again. Thus, the Aircraft value has been permanently reduced due to the fuselage damage. Other Damages AMR accuses the Debtors of breaching the Leases for failing to keep an engine on Aircraft N314CE, S/N 340B-335, in operating condition. As a result, AMR incurred: (1) $4,722 to ship a replacement engine to South Bend, Indiana; (2) $10,750 to pay former Chicago Express employees to replace the broken engine so that the Aircraft could be flown to Abilene, Texas as required under the Rejection Order; and (3) $100,000 to repair the broken engine. In addition, the Debtors breached their "lien" obligations when GE asserted discharge liens on the two engines. Under each Lease's return conditions, the Debtors are required to return the Aircraft to AMR free and clear of all liens. Although this obligation falls "due" upon return, the obligation accrues throughout the term of the Leases, especially considering that the Lessee generally is obligated, at no expense to AMR, to discharge liens on the Aircraft. Mr. Everett contends that AMR is unable to re-sell or otherwise dispose of the engines because of the undischarged GE liens. AMR, thus, asserts damages amounting to $1,383,267. Moreover, AMR believes that the Debtors breached their return condition obligations in several respects: (1) The Debtors are obligated to return the Aircraft in good operating condition, with all of the Aircraft equipment, components, and systems functioning. AMR suffered damages as a result of the Debtors' failure to return Aircraft N314CE and N316CE and their associated engines in good operating condition. (2) The Debtors are obligated to return the Aircraft, engines, and propellers free and clear of all liens. AMR suffered damages as a result of the Debtors' failure to return each Aircraft engine free and clear of the asserted GE liens. (3) The Debtors are obligated to ensure that the Aircraft airframe meets specified conditions. The aggregate amount owed to AMR as a result of the Debtors' failure to meet the airframe return conditions is $322,866. (4) The Debtors are obligated to ensure that the Aircraft engines and components meet specified conditions. Because AMR is asserting damages for the full value of the 12 engines -- $4.2 million -- for the Debtors' breach of maintenance obligations, those damages would be inclusive of any damages for breaches of return conditions. If AMR is awarded administrative claims for less than the full value of the 12 engines, the return-condition damages for the engines should be added to the damages for breach of maintenance obligations. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Court Modifies Stay to Defend Against Sapp Lawsuit ---------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Indiana approved ATA Airlines, Inc.'s request to modify the stay so that it may continue to defend the civil case, Gerald Sapp vs. ATA Airlines, Inc., Case No. 49D12-0408-CT-001619, currently pending in the Marion County Superior Court 12, in Marion County, Indiana. As previously reported in the Troubled Company Reporter on May 9, 2005, Gerald Sapp originally filed the Complaint in the Tippecanoe County Superior Court No. 2 for the injuries he sustained as he ascended the stairs to a Chicago Express plane. ATA Airlines' insurer, United States Aviation Underwriters, retained Locke Reynolds LLP to defend ATA Airlines in the Sapp Lawsuit. Prior to the Petition Date, significant discovery and some motion practice had taken place in the Sapp Lawsuit. While Mr. Sapp has not yet made a settlement demand, USAU has informed Locke Reynolds that it has provided ATA Airlines with adequate liability insurance to cover the damages, including all costs of defense. According to Terry E. Hall, Esq., at Baker & Daniels, Mr. Sapp has agreed that his recovery, if any, will be sought solely from the insurance policy issued by USAU. Mr. Sapp also agreed not to seek to recover punitive damages from ATA Airlines. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVENUE GROUP: Auditors Express Going Concern Doubt in Form 10-K --------------------------------------------------------------- Weinberg & Company, P.A., expressed substantial doubt about Avenue Group Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing points to the Company's net loss, negative cash flow, accumulated deficit and working capital deficit. The Company had a net loss of $485,106, negative cash flow from operations of $382,375, an accumulated deficit of $24,697,330 and a working capital deficiency of $488,387 as of March 31, 2005. The Company is dependent on the proceeds of recent private placements and debt or equity financing or alternative means of raising working capital to finance its operations. Management plans to rely on the proceeds of recent private placements, loans from affiliates, at their discretion, and debt or equity financing to fund its operations. However, there is no assurance that the Company will be successful in achieving any such financing or raising sufficient capital to fund its operations and the further development of the Company. The Company completed private placements during 2004 for the sale of common stock. Avenue Group has limited sales and will require significant additional capital in the near term to support its operations and to implement its business strategies. During the first three months of 2005, Avenue Group's activities were principally devoted to raise capital through oil and gas activities in the Republic of Turkey arising out of the Farmin Agreement between Avenue Energy and the Sayer Group Consortium. Liquidity and Capital Resources Avenue Group has generated losses from inception and continues to incur losses. Having had a net loss of $485,106, a negative cash flow from operations of $382,375, a working capital deficit of $488,387, and an accumulated deficit of $24,697,330 as of March 31, 2005, there is substantial doubt as to the Company's ability to continue as a going concern. As of March 31, 2005, the Company had cash of only $60,715 across all entities. In addition to cash, a portion of its current assets consist of its investments in ROO and Langley, both of which are highly volatile equity securities which are thinly traded. Much of Avenue Group's working capital during 2005 to date has been generated through the sale of Langley shares. If the Company is unable to continue to generate cash through the sale of either, or both, of these securities its ability to operate may be materially and adversely affected. Sale of Langley Shares During the three months ended March 31, 2005, the Company sold an aggregate of 1,000,000 shares of Langley Park for gross proceeds of $289,632 and recorded a $13,950 gain on the sale which is included in Other Income. At March 31, 2005, the Company owns 5,057,269 shares of Langley Park common stock and has recorded $1,609 of unrealized losses related to this investment as of March 31, 2005 that are included in Other Comprehensive Income in the accompanying condensed consolidated balance sheet. In April 2005, the Company sold an additional 1,000,000 shares of Langley for the gross proceeds of $263,163. The proceeds from the sale of these shares are being used to fund our ongoing working capital requirements for 2005. Avenue Group, Inc. is engaged in oil and gas exploration and development businesses through interests in its operating subsidiary, Avenue Energy, Inc. In addition, the Company has an interest in the e-commerce and digital media business through its 17% equity interest, as of June 8, 2005, in ROO Media Corporation, and through its 50.1% equity interest, as of June 8, 2005, in Stampville.com, Inc. BEAR STEARNS: Fitch Slices Class BF's Rating to C from CCC ---------------------------------------------------------- Fitch has taken rating actions on these Bear Stearns ABS issues: Series 1999-2 Group 1 -- Classes AF-1 and AF-2 affirmed at 'AAA'; -- Class MF-1 affirmed at 'AA'; -- Class MF-2 affirmed at 'BBB'; -- Class BF downgraded to 'C' from 'CCC'. Series 1999-2 Group 2 -- Classes AV-1 and AV-2 affirmed at 'AAA'; -- Class MV-1 affirmed at 'AAA'; -- Class MV-2 affirmed at 'A'; -- Class BV affirmed at 'B'. The affirmations reflect credit enhancement consistent with future loss expectations and affect $25,418,310 of outstanding certificates. The downgrade on class BF from Group 1 is the result of poor collateral performance, losses incurred to date, and future loss expectations in relation to credit support levels. The downgrade affects $4,462,050 of outstanding certificates. Series 1999-2 is backed by two collateral loan groups: Group 1 (fixed-rate) and Group 2 (adjustable-rate) originated by Conseco Finance Corporation (69.17%), Amresco Residential Mtge. Corporation (20.92%), and five other originators (9.91%). EMC Mortgage Corporation, rated 'RPS1' by Fitch, is the master servicer. The Group 1 and Group 2 mortgage pools are not cross- collateralized. However, there is limited cross-collateralization in the form of excess spread. In Group 1 the three-month average monthly loss, after application of excess spread, is approximately $130,000. High losses have resulted in the decline of overcollateralization (OC), to $50,044. In addition, as of the May 2005 distribution, the 90-plus delinquency (including bankruptcies, foreclosures, and real estate owned) stands at 26.80%. The pool factor (outstanding loan principal as a percentage of the initial loan pool) is currently 18%. For the past two months excess spread in Group 2 has covered all losses, and OC is only slightly off target. Currently, the OC balance is $742,249 with a target of $803,329. The 90-plus delinquency is currently 28.34% and the pool factor is 9%. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ CABLEVISION: Dolans Buying Telecom & Cable Business for $7.9 Bil. ----------------------------------------------------------------- Charles F. and James L. Dolan, on behalf of members of the Dolan Family Group, proposed to acquire the cable and telecommunications businesses of Cablevision Systems Corporation (NYSE: CVC). Under the proposed transaction, transmitted last June 19, 2005, in a letter to the Cablevision Board of Directors, Rainbow Media Holdings would also be spun off to all Cablevision shareholders on a pro rata basis. The spin-off will include the national cable networks (AMC, IFC, WE), fuse, regional sports networks, Madison Square Garden, the New York Knicks, the New York Rangers, Radio City Music Hall, News 12 and Clearview Cinemas. $7.9 Billion Deal Concurrent with the spin-off of Rainbow, with an estimated value of $12.50 per share, the public shareholders of Cablevision would receive $21.00 per share in cash in connection with a merger of Cablevision with an entity owned by the Dolan Family Group. The transaction delivers an estimated value of $33.50 per share or an aggregate of $7.9 billion to public shareholders, and implies an enterprise value for the company's telecom and cable businesses of $13.6 billion. After the completion of the transactions, the Dolan Family Group would own 100% of the Cablevision telecom and cable businesses and approximately 20% of Rainbow. Special Committee Review In the letter sent to the Board, the Dolan Family Group noted that it anticipates that the Board will form a special committee of independent directors, which will retain its own legal and financial advisors, to respond to the proposal on behalf of Cablevision's public shareholders. The Dolan Family Group also noted that it is interested only in the proposed transaction and will not sell its stake in Cablevision. The total consideration to be received by the public shareholders represents a 25% premium over the Friday, June 17 closing price for Cablevision Class A common stock and a 27% premium to the average closing price for the last 30 days. Assuming an estimated value for Rainbow of $12.50 per share, the premium offered for Cablevision's core cable and telecommunications business is approximately 46%. On a per subscriber basis, the implied cable and telecom transaction value represents the highest value paid in a major cable transaction in recent years. Charles and James Dolan said, "Our proposal offers a substantial premium to Cablevision's public shareholders for the cable and telecom businesses, while enabling shareholders to benefit from unlocking the value of our premier programming, sports and entertainment properties. With new technologies and aggressive competitors redefining content delivery, the cable and telecommunications businesses have truly entered a new and challenging era. We strongly believe that a long-term, entrepreneurial management perspective - not constrained by the public markets' tendency to focus on short-term results - will better enable the cable company to meet its competitive challenges. We are prepared to shoulder the risks of full ownership and are confident the company will achieve success. "Our proposed transaction will also create a focused, well- capitalized content company including the national cable networks, outstanding regional sports networks, the New York Knicks and the New York Rangers, and one of the world's finest sports and entertainment arenas - Madison Square Garden. This 'pure-play' company will be well positioned for continued growth. We have long believed the value of these scarce assets was not fully reflected in Cablevision's stock price, and will be more readily recognized in a stand- alone company." Leadership After the Deal Upon the close of the transaction, the Dolan Family Group anticipates that Charles Dolan would continue to serve as the Chairman of Cablevision, James Dolan would be the CEO and Chairman of Rainbow and a director of Cablevision, and Tom Rutledge would be the CEO of Cablevision. Long-term programming and distribution agreements between the two companies will remain in place. $6.8 Billion Debt Financing Charles and James Dolan are being advised by Merrill Lynch & Co., Banc of America Securities LLC, and law firm Debevoise & Plimpton LLP. Merrill Lynch & Co. and Banc of America Securities LLC and certain of its affiliates have agreed to fully finance the cash consideration payable to the public stockholders. The total funds necessary to consummate the transaction (including refinancing Cablevision's existing credit facility) are expected to be approximately $6.8 billion. Out of Sight, Out of Mind According to the New York Times, the going private move is in response to investor concerns and pressures about the Company's direction. If the move pushes through, the Company will no longer be required to make regular disclosure to the Securities and Exchange Commission and to the public. The Company will be relieved of the pressure to meet quarterly earnings goal. To Expand and Now to Split The move to split the company came just months after it lost a bid to merge with Adelphia Communications Corporation to Time Warner Inc. and Comcast Corp. The Company offered $16.5 billion to merge with Adelphia. Cablevision Systems Corporation -- http://www.cablevision.com/-- is one of the nation's leading entertainment and telecommunications companies. Its cable television operations serve more than 3 million households in the New York metropolitan area. The company's advanced telecommunications offerings include its iO: Interactive Optimum digital television offering, Optimum Online high-speed Internet service, Optimum Voice digital voice- over-cable service, and its Lightpath integrated business communications services. Cablevision's Rainbow Media Holdings LLC operates several successful programming businesses, including AMC, IFC, WE and other national and regional networks. In addition to its telecommunications and programming businesses, Cablevision is the controlling owner of Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty. The company also operates New York's famed Radio City Music Hall, and owns and operates Clearview Cinemas. As of March 31, 2005, shareholders' deficit widened to $2.7 billion from a $2.6 billion deficit at December 31, 2004. * * * As reported in the Troubled Company Reporter on March 11, 2005, Standard & Poor's Ratings Services revised its outlook on Bethpage, New York-based cable operator Cablevision Systems Corp. to developing from positive. All ratings on Cablevision and related subsidiaries, including the 'BB' corporate credit rating, were affirmed. At Dec. 31, 2004, the company had $9.4 billion of total debt outstanding, excluding collateralized debt. "The outlook revision reflects reduced clarity regarding governance and implications on the company's strategic direction," explained Standard & Poor's credit analyst Catherine Cosentino. "Most recently, changes in the composition of the board of directors could potentially lead to a shift to a more risky overall corporate strategy, which could pressure ratings." In the past, the company has undertaken various business initiatives that have proved to be much riskier than its solid cable TV business, including the Wiz retail stores and the VOOM direct broadcast satellite business. The company has divested most of these higher risk operations and recently announced it is working toward finalization of a separation of the DBS operation from Cablevision. However, the new board representation may portend for a return to a less conservative business plan. Even before these board changes, the company's Madison Square Garden unit recently offered to pay the Metropolitan Transportation Authority $600 million to develop its West Side Hudson Rail Yards properties. Such real estate development is clearly outside Cablevision's purview as a cable TV, media, and entertainment operator, and could represent a substantial change in the company's risk profile. CABLEVISION SYSTEMS: Sale to Dolan Group Cues S&P to Watch Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its long-term ratings for Bethpage, N.Y.-based cable TV operator Cablevision Systems Corp. on CreditWatch with negative implications, including the 'BB' corporate credit rating. Standard & Poor's also placed its ratings on Cablevision's Rainbow Media Enterprises Inc. unit on CreditWatch, with negative implications, including the 'BB' corporate credit rating. However, our "1" recovery rating of the bank loan at unit Rainbow National Services LLC is not on Watch. "In addition, Cablevision's 'B-2' short term rating has been placed on CreditWatch with developing implications on a lack of information on the company's liquidity, pro forma for the Dolan family's proposed transaction related to Cablevision," said Standard & Poor's credit analyst Cathy Cosentino. These actions follow the announcement that the Dolan Family Group has proposed to acquire the cable and telecommunications businesses of Cablevision and spin off the non-cable assets (to be known as Rainbow Media Holdings, including RME) to existing shareholders. Despite this being proposed by the controlling shareholders, it still requires approval by the Cablevision board of directors. The Credit Watch for Cablevision reflects the fact that pro forma for the Dolan family group proposal pro forma debt to EBITDA for 2005 would be approximately 9.6x, compared with our prior expectation that it could fall to the mid-5x area because of ongoing cable cash flow growth. The proposal by the family group does not require additional debt at Rainbow Media Holdings. While we do not know the final capital structure for Rainbow Media Holdings, based on the assumption that the $1.4 billion level of RME debt currently outstanding remains at Rainbow Media Holdings, this would result in a highly aggressive financial profile for Rainbow Media Holdings with a debt to EBITDA in the 12x area, based on annualized EBITDA for the first quarter of 2005 and the assumption that there would not be appreciable new debt at the spun off entity. CARDIMA INC: Defaults on Secured Loan & More Bad News ----------------------------------------------------- Cardima, Inc. (Other OTC: CRDM) received a notification of default on a secured loan agreement from Agility Capital, LLC. Agility Capital declares that all amounts outstanding thereunder (including principal, interest, fees and expenses), are immediately due and payable. Agility Capital also froze the Company's bank accounts, containing approximately $350,000. CARDIMA, INC. is party to a secured Loan Agreement dated as of May 27, 2005, with AGILITY CAPITAL as Lender. Pursuant to the agreement, Agility funded $300,000 of the loan at closing. To secure its obligations under the Loan Agreement, the Company granted the Lender a security interest in substantially all of its assets, including its intellectual property. Correspondence from the Lender indicates that the Lender is unwilling to fund further loans under the Loan Agreement. The Company is in discussions with the Lender about these matters but is unable to predict the outcome. Pursuant to the terms of the Loan Agreement, all amounts outstanding thereunder, including interest and fees, become due and payable on the earliest of an Event of Default, Aug. 15, 2005, or certain other events. The Loan Agreement also provides that the Company shall pay the Lender an "Exit Fee" upon an Event of Default, and certain other expenses and fees of the Lender. The Exit Fee would be $450,000 based on the amount of loans currently outstanding. Interest accrues at 12% per annum, or 18% after an Event of Default. CFO Resignation On June 17, 2005, the Company's interim Chief Financial Officer and Secretary, Barry D. Michaels, resigned effective immediately. On June 17, 2005, the Board of Directors appointed Gabriel B. Vegh, the Company's Chairman and Chief Executive Officer, to the additional positions of acting Chief Financial Officer and Secretary. The Company will be unable to continue operations absent an immediate cash infusion, and the Company expects that its common stock will have no value upon a cessation of Company operations. As of June 17, 2005, the Company's cash balances, including the funds frozen by its secured lender, were insufficient to fund any ongoing operations after making provision for accrued and unpaid wages and other accrued obligations that would arise upon termination of employees. Sends Workforce Home On June 17, 2005, the Company's Board of Directors terminated the employment status of all employees to conserve resources. About the Company Cardima, Inc., has developed the REVELATION Tx, REVELATION T-Flex and REVELATION Helix linear ablation microcatheters, the NAVIPORT deflectable guiding catheters, and the INTELLITEMP energy management system for the minimally invasive treatment of atrial fibrillation (AF) The REVELATION Tx, REVELATION T-Flex and REVELATION Helix systems and the INTELLITEMP have received CE Mark approval in Europe. The Company has also developed and obtained approval for in the USA a Surgical Ablation System, which targets market application by cardiac surgeons to ablate cardiac tissue during heart surgery using radio frequency (RF) energy. Going Concern Doubt As reported in the Troubled Company Reported on Apr. 13, 2005, BDO Seidman LLP expressed substantial doubt about Cardima(R), Inc.'s ability to continue as a going concern after it completed an audit of the company's financial statements for the year ended Dec. 31, 2004. The Company delivered a copy of its annual report to the Securities and Exchange Commission last week. A similar explanatory paragraph has been included in Annual Report filings in each of the past three years by the Company's independent auditor. The Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. At March 31, 2005, the Company had approximately $1.7 million in cash and cash equivalents. Based on its 2005 operating plan, the Company believes that its cash balances as of March 31, 2005, will only provide sufficient capital to fund operations for a very limited period of time and will not be sufficient to fund operations into the third quarter of 2005. The Company is exploring potential funding opportunities including the sale of equity securities or entering into a strategic transaction relating to its Surgical Ablation System. CATHOLIC CHURCH: Portland Wants National Union Settlement Approved ------------------------------------------------------------------ On September 14, 2004, the Archdiocese of Portland in Oregon filed an adversary proceeding with the U.S. Bankruptcy Court for the District of Oregon against various insurance companies, particularly: 1. ACE USA, Inc., 2. Centennial Insurance Company, 3. Fireman's Fund Insurance Company, 4. General Insurance Company of America, 5. Interstate Fire & Casualty Company, 6. Interstate Insurance Group, 7. National Union Fire Insurance Company of Pittsburgh, 8. One Beacon America Insurance Company, 9. St. Paul Fire and Marine Insurance, and 10. Certain John Doe Insurance Companies Portland demanded insurance coverage for tort claims asserted against the Archdiocese. National Union issues a claims-made excess policy to Portland that covered abuse claims asserted against the Archdiocese up to the expiration date of August 31, 2000. The policy was excess of a similar claims-made policy issued by Lexington Insurance Company, with a self-insured retention of $150,000. The Lexington policy limits were exhausted by payments made to settle claims in 2000. Therefore, National Union dropped down to take the place of Lexington. A Tort Claimant asserted a claim during National Union's policy period in 2000. The Tort Claimant settled his case against the Archdiocese for $400,000. Therefore, Portland asserts that National Union would be responsible for $250,000 above the $150,000 self-insured retention. By this motion, Portland asks the Court to approve a settlement and release agreement with National Union. Under the proposed settlement, National Union will be paying the Archdiocese $250,000, which is the maximum amount the Archdiocese believes is currently due under the National Union policy. In exchange, Portland will dismiss National Union from the Adversary Proceeding, without prejudice. The parties will also mutually release each other from claims relating to the Tort Claimant's claim. Portland is unaware of any other claims made during National Union's coverage period for which National Union currently owes any sums to the Archdiocese. Thomas C. Sand, Esq., at Miller Nash, LLP, in Portland, Oregon, notes that the dismissal provided for in the Settlement Agreement allows the Archdiocese to re-file against National Union in the future if it is later determined that the claim exists and the parties are unable to resolve it. National Union will make payment within 90 days after Court approval of the Settlement becomes final. Mr. Sand asserts that the Settlement must be approved because: (a) Portland believes that it would likely succeed in the litigation against National Union. This is reflected in the Settlement Agreement, pursuant to which National Union agrees to pay the maximum amount due relating to the Tort Claimant's claim; (b) Portland does not believe there would be substantial difficulty in collection of an award in its favor, once reduced to judgment. However, there may be delay on the collection; (c) The Adversary Proceeding is a large and complex case against many insurance companies. Settling with National Union will allow the Archdiocese to focus its efforts and resources against the other insurance company defendants; and (d) By agreeing to settle the claim against National Union by obtaining the maximum amount due relating to the Tort Claimant's claim, the Archdiocese has not diminished the return for creditors. The settlement will conserve estate resources because Portland will no longer have to spend time and money pursuing National Union. Also, Portland is not hindering its ability to pursue further claims against National Union in the remote event that another claim should be made against the National Union policy. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTRAL PARKING: Halts Talks on Possible Asset Sale --------------------------------------------------- Central Parking Corporation (NYSE: CPC) terminated discussions regarding the potential sale of the Company. The Company expects to continue to review alternatives designed to enhance shareholder return, including a share repurchase program, changes in its dividend policy and other changes in the capitalization of the Company. On March 14, 2005, Central Parking disclosed that it had retained Morgan Stanley to assist in evaluating various strategic alternatives to maximize shareholder value, including a possible asset sale. Monroe J. Carell, Jr., Chairman and Chief Executive Officer said, "The Board has decided not to pursue a sale transaction at this time, and the Board has terminated discussions with potential buyers. After considering the Company's strong franchise and future prospects, the Board concluded that the Company can best enhance shareholder value by streamlining operations and focusing on core competencies and key markets with the greatest potential for growing profits." About the Company Central Parking Corporation, headquartered in Nashville, Tennessee, is a leading provider of parking and transportation- related services. As of March 31, 2005, the Company operated more than 3,400 parking facilities containing over 1.5 million spaces at locations in 37 states, the District of Columbia, Canada, Puerto Rico, the United Kingdom, the Republic of Ireland, Chile, Colombia, Germany, Mexico, Peru, Poland, Spain, Switzerland, Venezuela and Greece. * * * As reported in the Troubled Company Reporter on March 18, 2005, Standard & Poor's Ratings Services placed its ratings on Nashville, Tennessee-based Central Parking Corp., including the company's 'B+' corporate credit rating, on CreditWatch with negative implications. This means that the ratings could be affirmed or lowered following the completion of Standard & Poor's review. Central Parking has about $214.1 million total debt outstanding as of Dec. 31, 2004. The CreditWatch placement follows Central Parking's March 15 announcement that it engaged Morgan Stanley to assist in pursuing various strategic alternatives, which includes the possible sale or recapitalization of the company. Standard & Poor's continues to believe that the company will likely remain highly leveraged and that a potential sale or recapitalization transaction could result in a weaker financial profile for the company. The CreditWatch placement also reflects Standard & Poor's concern over recent management turnover following the resignation of Mark Shapiro, the company's Chief Financial Officer. CHESAPEAKE ENERGY: Prices Tender Offers for 8.125% & 9% Sr. Notes ----------------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) has calculated the consideration that it will pay to holders in conjunction with its previously announced tender offers and consent solicitations relating to its $245,407,000 aggregate principal amount of 8.125% Senior Notes due 2011 and its $300,000,000 aggregate principal amount of 9.00% Senior Notes due 2012, each of which commenced on June 7, 2005. The total consideration, including the consent payment, to be paid for validly tendered 8.125% Notes accepted for purchase was fixed at $1,070.75 per $1,000 principal amount of 8.125% Notes tendered. The total consideration, including the consent payment, to be paid for validly tendered 9.00% Notes accepted for purchase was fixed at $1,138.13 per $1,000 principal amount of 9.00% Notes tendered. Holders who validly tender their Notes by 5:00 p.m., New York City time, on June 20, 2005, will receive the applicable total consideration, which includes the consent payment of $20.00 per $1,000 principal amount of Notes accepted for purchase. Holders who validly tender their Notes by the Consent Date will receive payment for Notes accepted for purchase on the initial payment date, which is expected to be on or about June 21, 2005. The tender offers are scheduled to expire at 5:00 p.m., New York City time, on July 6, 2005, unless extended. Holders who validly tender their Notes after the Consent Date and prior to the Expiration Date will receive the total consideration minus the $20.00 consent payment per $1,000 principal amount accepted for purchase. Accordingly, holders who validly tender their 8.125% Notes after the Consent Date and prior to the Expiration Date will receive $1,050.75 per $1,000 principal amount of 8.125% Notes validly tendered and accepted. Holders who validly tender their 9.00% Notes after the Consent Date and prior to the Expiration Date will receive $1,118.13 per $1,000 principal amount of 9.00% Notes validly tendered and accepted. Payment for Notes tendered after the Consent Date will be made promptly after the Expiration Date. The total consideration to be paid for each validly tendered and accepted 8.125% Note and for each 9.00% Note was fixed at 11:00 a.m. New York City time on Monday, June 20, 2005, on the basis of the pricing formula set forth in the related Offer to Purchase and Consent Solicitation Statement dated June 7, 2005. All holders with Notes that are accepted for payment will also receive accrued and unpaid interest up to, but not including, the applicable date of payment for the Notes. In connection with the tender offers, the Company is soliciting consents to certain proposed amendments to eliminate substantially all of the restrictive covenants and events of default in the indentures governing the Notes. Holders may not tender their Notes without delivering consents or deliver consents without tendering their Notes. Each tender offer is subject to the satisfaction of certain conditions, including Chesapeake's receipt of tenders of Notes representing at least a majority in principal amount of the 8.125% Notes or 9.00% Notes, as applicable, and completion of a recently announced private offering of senior notes which will be used to finance the tender offers. Neither tender offer is conditioned upon the other, and either tender offer may be closed without the closing of the other. The terms of the tender offers are described in the Company's Offer to Purchase and Consent Solicitation Statement dated June 7, 2005, copies of which may be obtained from MacKenzie Partners, Inc., the information agent for the tender offers, at (800) 322-2885 (US toll-free) and (212) 929- 5500 (collect). The Company has engaged Bear, Stearns & Co. Inc. and Wachovia Securities to act as dealer managers and solicitation agents in connection with the tender offers. Questions regarding the tender offers may be directed to Bear, Stearns & Co. Inc., Global Liability Management Group, at (877) 696-2327 (toll-free) and (212) 272-5112 (collect) or Wachovia Securities, Liability Management Group, at (866) 309-6316 (toll-free) and (704) 715-8341 (collect). Chesapeake Energy Corporation -- http://www.chkenergy.com/-- is the third largest independent producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and Ark-La-Tex (including the Barnett Shale) regions of the United States. * * * As reported in the Troubled Company Reporter on June 10, 2005, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Chesapeake Energy Corp. At the same time, Standard & Poor's assigned its 'BB-' rating to Chesapeake's $600 million senior unsecured notes due 2018. The outlook is positive. Oklahoma City, Oklahoma-based Chesapeake will have about $3.7 billion of debt on a pro forma basis after this transaction. "Proceeds from the notes will be used to finance the announced tender for Chesapeake's senior unsecured notes due 2011 and 2012, roughly $454 million outstanding," said Standard & Poor's credit analyst Paul B. Harvey. "Any remaining proceeds will be used for general corporate purposes and to repay borrowings from its credit facility," he continued. CNE GROUP: AMEX Says Fin'l Condition Impairs Ability to Operate --------------------------------------------------------------- CNE Group, Inc. (AMEX:CNE) received notice from the American Stock Exchange Staff indicating that at Dec. 31, 2004, it did not meet certain of AMEX's continuing listing standards, specifically its: (i) Stockholders' Equity being less than $6,000,000 (Section 1003(a)(iii) of the AMEX Company Guide); and (ii) financial condition has become so impaired that it appears questionable that it will be able to continue operations and/or meet its obligations as they mature (Section 1003(a)(iv) of the AMEX Company Guide). AMEX requested the Company to submit a plan that would demonstrate to AMEX the Company's ability to regain compliance, which it did on June 8, 2005. On June 13, 2005, the Staff notified the Company that it had determined that the Plan does not make a reasonable demonstration of the Company's ability to regain compliance with the continued listing standards, as required by Section 1009 of the Company Guide and, as provided by Section 1009(d) thereof, the Staff has determined to proceed with the filing of an application with the Securities and Exchange Commission to strike the Company's common stock from listing and registration on AMEX. In accordance with Sections 1203 and 1009(d) of the Company Guide the Company has a limited right to appeal the Staff's determination at an oral hearing or one based on a written submission before a Listing Qualifications Panel within seven days after receipt of the notification of the Staff's determination. The Company intends to request an oral hearing to appeal the Staff's determination and will file this request on or before June 21, 2005, for which it will be required to pay a $5,000 fee together with the request. The Company can give no assurance that its appeal will be successful. Going Concern Doubt In its Form 10-Q for the quarterly period ended March 31, 2005, filed with the Securities and Exchange Commission, the Company said it has incurred substantial losses, sustained substantial operating cash outflows and has a working capital deficit at both March 31, 2005 and Dec. 31, 2004. These factors raise substantial doubt about the Company's ability to continue as a going concern. Its continued existence, the Company said, depends on its ability to obtain additional equity and/or debt financing to fund its operations and ultimately to achieve profitable operations. The Company is attempting to raise additional financing and has initiated a cost reduction strategy. At March 31, 2005 management believes that the working capital deficit, losses and negative cash flow will ultimately be improved by: (i) cost reduction strategies initiated in January and June 2004; and (ii) additional equity and debt financing activities in addition to those set forth in these financial statements. As reported in the Troubled Company Reporter on May 9, 2005, Rosen Seymour Shapss Martin & Company LLP audited CNE Group, Inc.'s consolidated financial statements for the year ending Dec. 31, 2004. Their report includes language stating that substantial doubt exists as to CNE's ability to continue as a going concern. The auditors observe that CNE's financial statements show an accumulated deficit at December 31, 2004, of approximately $21,500,000. The Company has incurred substantial losses from continuing operations and sustained substantial cash outflows from operating activities. Further, at December 31, 2004, CNE's balance sheet shows a $3,146,873 working capital deficit. CNE Group, Inc.'s primary operating subsidiaries are SRC Technologies, Inc. and U.S. Commlink, Ltd. SRC is the parent of Connectivity, Inc. and Econo-Comm, Inc. (d/b/a Mobile Communications). Connectivity, U.S. Commlink and Mobile Communications market, manufacture, repair and maintain remote radio and cellular-based emergency response products to a variety of federal, state and local government institutions, and other vertical markets throughout the United States. The Company has intellectual property rights to certain key elements of these products - specifically, certain communication, data entry and telemetry devices. The Company also generates revenue from its CareerEngine division that is engaged in the business of e-recruiting. This segment is not significant to the operations of the Company. COLLINS & AIKMAN: Committee Wants Akin Gump as Lead Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors Committee for Collins & Aikman Corporation and its debtor-affiliates' bankruptcy case, seeks the Court's authority to retain Akin Gump Strauss Hauer & Feld LLP as its co-counsel, effective as of May 26, 2005. As co-counsel, Akin Gump will: (a) advice the Committee with respect to its rights, duties and powers in the Debtors' Chapter 11 cases; (b) assist and advice the Committee in its consultations with the Debtors relative to the administration of the Debtors' Chapter 11 cases; (c) assist the Committee in analyzing the claims of the Debtors' creditors and the Debtors' capital structure and in negotiating with holders of claims and equity interests; (d) assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and of the operation of the Debtors' businesses; (e) assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning materials related to, among other things, the assumption or rejection of certain leases of non-residential real property and executory contracts, asset dispositions, financing of other transactions and terms of one or more plans of reorganization for the Debtors and accompanying disclosure statements and related plan documents; (f) assist and advice the Committee as to its communications to the general creditor body regarding significant matters in the Debtors' Chapter 11 cases; (g) represent the Committee at all hearings and other proceedings; (h) review and analyze applications, orders, statements of operations and schedules filed with the Court and advise the Committee as to their propriety, and to the extent deemed appropriate by the Committee, support, join or object thereto; (i) advice and assist the Committee with respect to legislative or governmental activities, including, if requested by the Committee, to perform lobbying activities; (j) assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interest and objectives; (k) prepare, on the Committee's behalf, any pleadings, in connection with its services; (l) investigate and analyze any claims against the Debtors' non-debtor affiliates; and (m) perform other legal services as may be required. Current hourly rates for Akin Gump's professionals are: Designation Billing Rate ----------- ------------ Partners $445 to $795 Special Counsel and Counsel $385 to $735 Associates $230 to $450 Paraprofessionals $65 to $195 The Committee believes that Akin Gump possesses extensive knowledge and expertise in the areas of law relevant to the Debtors' Chapter 11 cases and that Akin Gump is well qualified to represent the Committee. Before the Committee's formation, Akin Gump was retained by an ad hoc committee of unsecured creditors of the Debtors. Michael S. Stammer, Esq., a member of Akin Gump, assures Judge Rhodes that the firm is a "disinterested person" within meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Audit Panel Hires Davis Polk as Special Counsel ----------------------------------------------------------------- On March 17, 2005, Collins & Aikman Corporation publicly announced that during the course of finalizing its financial statements for fiscal year ended December 31, 2004, it had identified certain accounting for supplier rebates that led to premature or inappropriate revenue recognition or that was inconsistent with relevant accounting standards and the Debtors' policies and practices. Collins & Aikman further announced that it had initiated an internal review of these matters and that it expected that certain restatements of its financial results will be required. As part of that announcement, Collins & Aikman stated that it would not be able to file its Annual Report on Form 10-K containing fiscal 2004 audited financial statements with the United States Securities and Exchange Commission on time. Collins & Aikman stated that it required additional time to complete the review of the accounting issues, its financial reporting process, and its controls over financial reporting. On March 24, 2005, the company publicly disclosed that an Audit Committee had determined to conduct an independent investigation into these matters. The Audit Committee retained Davis Polk & Wardwell as independent counsel. In turn, Davis Polk retained Ernst & Young, a nationally recognized accounting and auditing firm, to provide forensic accounting services in connection with the Rebate Investigation. Although Davis Polk represented the Audit Committee and the certain non-management directors, not Collins & Aikman as a whole, Davis Polk's fees and expenses as well as those of E&Y were paid by the company. On May 12, 2005, Collins & Aikman announced that the scope of the Rebate Investigation would include its forecasts for the first quarter 2005 as well as other matters that have arisen in the course of the Rebate Investigation. Joseph M. Fischer, Esq., at Carson Fischer, P.L.C., in Birmingham, Michigan, relates that Davis Polk is seeking to determine the facts surrounding, the extent, and cause of any accounting or other financial irregularities within the scope of the Rebate Investigation. The ultimate goal of Davis Polk is to provide its findings to the Audit Committee, the Independent Directors, Collins & Aikman's auditors and certain government regulators. David Polk's findings will enable the company to generate accurate financial information to support business decisions and to obtain financial statements certified by an independent auditor. The findings of the Rebate Investigation are also likely to serve as the basis for the implementation of remedial measures and preventive practices and procedures. In representing the Audit Committee and the Independent Directors Davis Polk attorneys worked over 2,580 hours and, according to E&Y, directed 2,400 hours of work by the E&Y forensic team. Davis Polk, among other things: (1) provided, and continues to provide, advice and counsel to the Audit Committee and the Independent Directors in relation to the Rebate Investigation, including advice with respect to the conduct investigation and the fiduciary duties of the Audit Committee members and the Independent Directors in that regard; (2) developed a plan of investigation, including the forensic accounting procedures to be performed by E&Y, from conducting the Rebate Investigation; (3) reviewed, and continues to review with E&Y's forensic team, certain transactions within the scope of the Rebate Investigation to determine whether they were accounted for properly and, if not, what the proper accounting treatment should be; (4) conducted over 40 interviews of current and former executives and employees of the Debtors; (5) coordinated and conducted, and continues to coordinate and conduct, the retrieval, archival, and review of a significant amount of information, documents, and e-mail from the Debtors in both electronic and paper format with the assistance of the E&Y forensic team; and (6) worked closely with E&Y in connection with the execution of the Rebate Investigation. Mr. Fischer reports that while Davis Polk and E&Y have worked diligently, the Rebate Investigation has not yet been completed. Davis Polk believes that it will be necessary to conduct further interviews and to review thousands of additional documents before it will be able to conclude the investigation. Until the Rebate Investigation has been concluded, Collins & Aikman believes that it will be difficult to obtain audited financial statements. Accordingly, the Debtors ask the Court to authorize the Audit Committee and the Independent Directors to employ Davis Polk, nunc pro tunc to the Petition Date, as special counsel. The Debtors also seek permission to pay fees and expenses charged and incurred by Davis Polk in connection with its representation of the Audit Committee and the Independent Directors. Scope of Services As counsel to the Audit Committee and the Independent Directors, Davis Polk: (a) review certain transactions within the scope of the Rebate Investigation to determine whether they were accounted for properly, and, if not, what the proper accounting treatment should be; (b) interview current and former executives and employees of Collins & Aikman as well as other persons deemed relevant to the Rebate Investigation; (c) coordinate and conducting the retrieval, archival, and review of information, documents, e-mail from Collins & Aikman, in both electronic and paper format; (d) act as a liaison between the: (1) Audit Committee and the Independent Directors; and (2) the Official Committee of Unsecured Creditors, government regulators, and law enforcement agencies; (e) investigate other matters as may be requested and provide legal advice to the Audit Committee and the Independent Directors in connection with corporate governance and the bankruptcy process; and (f) perform other services and doing other acts in connection with the Rebate Investigation as appropriate. During the 12-month period prior to the Petition Date, Davis Polk received from the Debtors $1,115,547, including a $38,169 unapplied retainer for professional services performed and expenses incurred in connection with the Rebate investigation, and $468,771 for professional services performed and expenses incurred in connection with the prior investigation. The Debtors will pay Davis Polk professionals pursuant to its customary hourly rates: Professional Designation Rate ------------ ----------- ---- Martine M. Beamon, Esq. Partner $550 Dennis E. Glazer, Esq. Partner $785 Keith A. Berger, Esq. Associate $470 Kimberly A. Harris, Esq. Associate $475 Aimee Hector, Esq. Associate $340 Gregory S. Rowland, Esq. Associate $405 George A. Sirignano, Esq. Associate $265 David A. Stier, Esq. Associate $340 Jared R. Winnick, Esq. Associate $445 Erin Hoppin Legal Assistant $115 Dennis E. Glazer, Esq., a member of Davis Polk & Wardwell, assures the Court that the firm does not represent any party-in-interest in the Debtors' Chapter 11 cases in matters related to the Rebate Investigation. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Hires McDonald Hopkins as Special Counsel ----------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Eastern District of Michigan, to employ McDonald Hopkins Co., LPA, as special counsel, nunc pro tunc to May 17, 2005. Over the past three years, McDonald Hopkins served as the Debtors' regular outside counsel, providing legal advice on a number of matters. The Debtors and McDonald Hopkins have invested thousands of hours building the firm's knowledge and expertise on the various matters in which it has been involved. The Debtors, while unable to use McDonald Hopkins as their bankruptcy counsel, do not want to lose the knowledge and expertise McDonald Hopkins has developed. As special litigation counsel, McDonald Hopkins will: (a) represent the Debtors as their primary labor and employment counsel and serving as counsel on matters relating to labor neutrality agreements; (b) serve as the Debtors' primary counsel with respect to real estate, executive contracts, and commercial contracts; (c) represent the Debtors in litigation matters, including ongoing commercial and intellectual property litigation; (d) serve as national coordinating counsel for certain of the Debtors' litigation, including asbestos cases; and (e) serve as one of the Debtors' counsel on corporate transactions. The Debtors anticipate that one or two of McDonald Hopkins' lawyers may provide service to the Debtors on an in-house-type basis. The Debtors' legal department consists of just one lawyer -- Jay Knoll, the Debtors' General Counsel. The Debtors believe that one in-house lawyer is inadequate, thus, they are evaluating the possibility of hiring additional lawyers. In the interim, they propose to utilize McDonald Hopkins' lawyers to fill an immediate need. The Debtors will pay McDonald Hopkins pursuant to these current hourly rates: Shareholders $230 to $425 Associates $140 to $240 Legal Assistants $95 to $170 Law Clerks $70 According to McDonald Hopkins' books and records, through May 17, 2005, McDonald Hopkins received $1,730,550 from the Debtors during the preceding 12 months for legal services rendered and expenses incurred. As of May 17, 2005, McDonald Hopkins was owed 1,542,1455 for fees and expenses incurred, an amount McDonald Hopkins is not required and does not intend to waive. Shawn M. Riley, a shareholder of McDonald Hopkins, assures the Court that the firm does not represent or hold any interest adverse tot he Debtors or their estates with respect to matters on which it is to be employed. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 05; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSTELLATION BRANDS: Won't Pursue Offer for Allied Domecq ---------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR) disclosed that the consortium which includes Constellation, Brown-Forman Corporation (NYSE: BFB), Lion Capital and The Blackstone Group, after careful consideration following due diligence, has determined not to pursue an offer for Allied Domecq plc. Constellation Brands Chairman and Chief Executive Officer Richard Sands, stated, "Constellation approached this opportunity in a disciplined strategic and financial manner and does not believe that the economics justify an offer. Our basic premise is always that a transaction must create value for our stakeholders. Simply put, careful consideration and evaluation of the details following due diligence did not identify sufficient value for submitting an offer." Mr. Sands continued, "Constellation greatly appreciates the strong support we have received from our shareholders and consortium partners throughout this process. We continue to believe that there are additional opportunities to complement growth of our base business with strategic acquisitions in our industry, and we will remain a determined and disciplined buyer. As the largest wine company in the world, and the largest multi-category supplier of beverage alcohol in the U.S., Constellation looks toward building upon its outstanding track record of delivering true growth and value to our shareholders." Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Constellation Brands is also the largest fine wine company in the United States. Well-known brands in Constellation's beverage alcohol portfolio include: Corona Extra, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Franciscan Oakville Estate, Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and Blackthorn. * * * As reported in the Troubled Company Reporter on May 2, 2005, Standard & Poor's Ratings Services placed its 'A' long-term and 'A-1' short-term corporate credit and other ratings on Louisville, Kentucky-based Brown-Forman Corp. and the 'BB' corporate credit rating and other ratings on Fairport, New York-based Constellation Brands Inc. on CreditWatch with negative implications. The CreditWatch listings follow the confirmation by both companies that they are part of a consortium considering a potential takeover of Allied Domecq PLC (BBB+/Watch Neg/A-2). Although no offer has been made and no financial details have been disclosed regarding this potential transaction, Allied's current market value is substantial, at approximately $14.6 billion. "We believe that even a partially debt-financed acquisition of this size could weaken credit measures for both companies below levels appropriate for their current respective ratings," said Standard & Poor's credit analyst Nicole Delz Lynch. Furthermore, competitive bidding may drive the price even higher. On April 21, 2005, Pernod Ricard (unrated) made a $14.2 billion offer in conjunction with Fortune Brands Inc. (A/Watch Neg/A-1) for Allied. COOPER-STANDARD: Poor Credit Measures Cue S&P's Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Novi, Michigan-based Cooper-Standard Automotive Inc. to negative from stable. The ratings on the company, including the 'BB-' corporate credit rating, were affirmed. Cooper-Standard is a global manufacturer of fluid-handling systems, body-sealing systems, and active and passive vibration control systems for the automotive industry. The company, controlled by unrated GS Capital Partners 2000 LP and Cypress Group LLC, had total balance-sheet debt of $907 million at March 31, 2005. (The equity sponsors acquired Cooper-Standard from Cooper Tire & Rubber Co. in December 2004.) "The outlook revision reflects Standard & Poor's concerns about the company's ability to maintain credit protection measures consistent with the rating given current challenges," said Standard & Poor's credit analyst Nancy C. Messer. "The company's first-quarter 2005 EBITDA was $53.5 million, after being adjusted for several nonrecurring items. This is down 21% year-over-year because of lower light vehicle production volumes and higher material costs." Nearly 60% of the company's existing revenue base depends on sales to General Motors Corp. and Ford Motor Corp. Both of these companies are steadily losing market share and have significantly cut production volumes this year. Cooper-Standard expects to generate savings from lean manufacturing initiatives so that it can offset price concessions to customers and also counteract wage inflation. Cooper-Standard has won $53 million of net new business, two-thirds of which comes from non-Detroit based companies. Nonetheless, Standard & Poor's expects the company's EBITDA to fall short of plan for the year. Costs for the materials steel, EPDM (synthetic rubber), and natural rubber are at historically high levels, and the company will likely recover only part of these costs from customers. At the same time, original equipment manufacturers' weak production volumes have caused the company to absorb less of its fixed costs. Free cash flow generation, thus debt reduction, is likely to fall short of the company's plan, and credit measures may remain below the level expected for the ratings at year-end 2005 because the operating environment is expected to remain challenging throughout the year. Cooper-Standard's leverage was aggressive for the rating at March 31, 2005, with lease-adjusted total debt to EBITDA exceeding 4x, higher than our expectations of 3.5x to 4.0x. Trailing-12-month funds from operations (FFO) to adjusted total debt was 15%, which was in line with expectations but down from the year-end 2004 level. Liquidity remains adequate for the rating. The ratings on Cooper-Standard reflect the company's weak business profile and aggressive financial profile, characterized by aggressive leverage and weak cash flow protection. Business risks arise from the company's exposure to the highly competitive, price-sensitive, and cyclical automotive light vehicle market. In particular, Ford and GM, which are experiencing steady market share declines, account for a significant 57% of Cooper-Standard's sales. Cooper-Standard's position as the largest North American and global supplier of automotive sealing products is reflected in its No. 1 or No. 2 market positions for more than half its products. CSC HOLDINGS: Fitch Places Low-B Debt Ratings on Watch Negative --------------------------------------------------------------- Fitch Ratings has placed the 'BB-' senior unsecured debt rating and the 'B+' senior subordinated debt rating assigned to the restricted group of CSC Holdings, Inc. on Rating Watch Negative. Additionally, Fitch has also placed the 'BB' rating assigned to CSC's $2.4 billion guaranteed senior unsecured credit facility on Rating Watch Negative. CSC is a wholly owned subsidiary of Cablevision Systems Corporation. Approximately $6.4 billion of debt is affected by Fitch's action. Fitch's action follows a proposal made by controlling shareholders of CVC to take CVC private in a transaction valued at $33.50 per share. In accordance with the proposal, CVC will distribute CVC's equity interest in its wholly owned subsidiary Rainbow Media Holdings, LLC to CVC shareholders. Additionally, CVC public shareholders will receive $21.00 per share cash consideration in connection with the merger of CVC with an entity controlled by the controlling shareholders. The transaction, as currently envisioned, will result in CSC's current cable businesses and its Lightpath business being owned by a private entity. The funding requirements in connection with the transaction will be approximately $6.8 billion, all of which is expected to be debt financed. From Fitch's perspective, the proposed transaction materially increases CSC's financial risk and significantly erodes CSC's credit profile. From a consolidated view total debt, pro forma for the closing of the transaction, will increase to approximately $12.5 billion. Assuming the Telecommunications segment's LTM EBITDA as of the end of the first quarter of 2005 of approximately $1.257 billion, leverage pro forma for the transaction will increase to 9.95 times (x). Pursuant to the terms of the proposal, CSC will assume CVC's obligations under CVC's 8% senior notes due 2012 and the floating- rate notes due 2009. CSC also expects to enter into a new senior secured bank facility, the proceeds from which will be used to refinance the existing $2.4 billion bank facility. In addition, up to $4.25 billion of debt is expected to be issued at the holding company level. Fitch had expected the company to generate positive free cash flow during 2005. The proposed spin-off of the Rainbow businesses will alleviate CSC's funding burden associated with the developing Rainbow businesses particularly VOOM's 21 HD channels. Nonetheless, Fitch believes if the contemplated transaction is consummated, the higher leverage will constrain CSC's ability to generate free cash flow. In resolving the Rating Watch, Fitch will consider the final capital structure, credit profile, and recovery prospects of the entities created by the transactions, as well as the business and operational risks of the entities going forward. Due to the leveraging nature of the proposed transaction, Fitch expects a multinotch downgrade of the ratings upon closing of the transaction. Fitch's current ratings for CSC's restricted group reflect the operating advantages derived from the company's technologically upgraded network and its tightly clustered subscriber base. Fitch's ratings also incorporate the growth and continuing diversification of CSC's revenue generating units and positive basic subscriber trends. Fitch's ratings also reflect the increasing business risk and the potential negative impact on subscriber metrics, revenue growth, and margin performance stemming from the persistent competition for video subscribers from the DBS operators and for broadband subscribers primarily from the regional bell operating companies. Longer-term credit risks are centered on the increased competition for video business resulting from the RBOCs entering into the video business. DECISIONONE CORP: Closes Texas & Pennsylvania Operations -------------------------------------------------------- One month after emerging from bankruptcy, DecisionOne Corp. will close its call center located in Bryan, Texas. The closure, slated for July 31, 2005, will put 186 employees out of work. DecisionOne says displaced employees are being offered jobs elsewhere with the company. According to a report in the Austin Business Journal, DecisionOne told the Texas Workforce Commission that the closure is "sudden and unexpected." DecisionOne will also cease operations of its repair and distribution center in Malvern, Pa., by September 1, 2005, according to documents filed with the Pennsylvania Department of Labor and Industry. This move is designed to reduce the company's debt and strengthen its balance sheet. Headquartered in Frazer, Pennsylvania, DecisionOne Corporation -- http://www.decisionone.com/-- serves leading companies and government agencies with tailored information technology support services that maximize the return on technology investments, minimize capital and infrastructure costs and optimize operational effectiveness. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. D. Del. Case No. 05-10723). Mark D. Collins, Esq., and Rebecca L. Booth, Esq., at Richards Layton & Finger, P.A., and Michael A. Bloom, Esq., and Joel S. Solomon, Esq., at Morgan, Lewis & Bockius LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $107 million and total debts of $273 million. The Court confirmed the Company's Plan of Reorganization on April 19, 2005. DMX MUSIC: Creditors Must File Proofs of Claim by September 5 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware set September 5, 2005, at 4:00 p.m., as the deadline for all creditors owed money by DMX Music, Inc., and its debtor-affiliates, on account of claims arising prior to February 14, 2005, to file formal written proofs of claim. Creditors must deliver their claim forms to: Omni Management Group, LLC Claims Noticing Agent 16501 Ventura Boulevard, Suite 440 Encino, CA 91436-2068 Headquartered in Los Angeles, California, DMX MUSIC, Inc., -- http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in more than 100 countries. DMX MUSIC distributes its music and visual services worldwide to more than 11 million homes, 180,000 businesses, and 30 airlines with a worldwide daily listening audience of more than 100 million people. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 14, 2005 (Bankr. D. Del. Case No. 05-10431). The case is jointly administered under Maxide Acquisition, Inc. (Bankr. D. Del. Case No. 05-10429). Curtis A. Hehn, Esq., 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 estimated more than $100 million in assets and debts. DMX MUSIC: Wants to Extend Exclusive Plan Filing Until Aug. 15 -------------------------------------------------------------- DMX Music, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the time within which they alone have the exclusive right to file a plan of reorganization and disclosure statement. The Debtors ask the Bankruptcy Court to extend their exclusive plan filing period through August 15, 2005. The Debtors also ask the Court to extend their exclusive period to solicit plan acceptances of that plan through October 13, 2005. The Debtors tell the Bankruptcy Court they've been unable to develop an appropriate plan of liquidation because they have focused substantially all their efforts on the sale of their assets. As previously reported in the Troubled Company Reporter, the Bankruptcy Court approved DMX's sale of substantially all of its assets to THP Capstar, Inc., for $75 million. The Debtors believe they are now positioned to negotiate and confirm a liquidating chapter 11 plan that allocates those sale proceeds to their creditors. The Debtors assure the Court that the extension will not prejudice their creditors and other parties-in-interest in these chapter 11 cases. The Debtors add that the extensions will allow meaningful and reasonable opportunity to negotiate with their creditors and to propose and confirm a consensual plan. Headquartered in Los Angeles, California, DMX MUSIC, Inc., -- http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in more than 100 countries. DMX MUSIC distributes its music and visual services worldwide to more than 11 million homes, 180,000 businesses, and 30 airlines with a worldwide daily listening audience of more than 100 million people. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 14, 2005 (Bankr. D. Del. Case No. 05-10431). The case is jointly administered under Maxide Acquisition, Inc. (Bankr. D. Del. Case No. 05-10429). Curtis A. Hehn, Esq., 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 estimated more than $100 million in assets and debts. DPL INC: Inks New $100 Million Unsecured Revolving Credit Facility ------------------------------------------------------------------ DPL Inc. (NYSE:DPL) entered into a $100 million, 364-day unsecured revolving credit facility at its principal subsidiary, The Dayton Power and Light Company. The facility replaces an agreement, which expired May 31, 2005. It can be extended annually through May 30, 2010. "The revolving facility provides sufficient liquidity and financial flexibility for our general operations and working capital needs," said John Gillen, DPL Senior Vice President and Chief Financial Officer. Key Bank N.A. is the administrative agent and co-lender, and LaSalle Bank N.A. is the other co-lender. At the Company's discretion, the new facility can be increased up to $150 million. As of June 20, the Company had no outstanding borrowings under this credit agreement. Previous Unsecured Revolving Credit Agreement In June 2004, DP&L obtained a $100 million unsecured revolving credit agreement that extended and replaced its previous revolving credit agreement of $150 million. The new agreement, which expires on May 31, 2005, provides credit support for DP&L's business requirements during this period and may be increased up to $150 million. The facility contains two financial covenants including maximum debt to total capitalization and minimum earnings before interest and taxes to total interest expense. These covenants are currently met. DP&L had no outstanding borrowings under this credit facility at March 31, 2005 or at year-end 2004. Fees associated with this credit facility were approximately $0.6 million per year. Changes in debt ratings, however, may affect the applicable interest rate for DP&L's revolving credit agreement. DPL Inc. (NYSE: DPL) -- http://www.dplinc.com/-- is a regional electric energy and utility company. DPL's principal subsidiaries include The Dayton Power and Light Company; DPL Energy, LLC; and DPL Energy Resources, Inc. DP&L, a regulated electric utility, provides service to over 500,000 retail customers in West Central Ohio; DPLE engages in the operation of merchant peaking generation facilities; and DPLER is a competitive retail electric supplier in Ohio, selling to major governmental, industrial, and commercial customers. DPL, through its subsidiaries, owns and operates approximately 4,400 megawatts of generation capacity, of which 2,800 megawatts are low cost coal-fired units and 1,600 megawatts are natural gas fired peaking units. * * * As reported in the Troubled Company Reporter on April 21, 2005, Standard & Poor's Ratings Services raised its corporate credit ratings on DPL Inc. and its regulated subsidiary, Dayton Power & Light Company to 'BB' from 'BB-'. Standard & Poor's also affirmed its 'BBB-' rating on DP&L's first mortgage bonds. All the ratings were removed from CreditWatch with positive implications where they were placed on Feb. 14, 2005 following the company's announcement of its proposed asset sale of its investment portfolio. The outlook is positive. Dayton, Ohio-based DPL had about $2.1 billion of debt outstanding as of Dec. 31, 2004. The rating action follows the company's filing with the SEC of its audited financial statements 2004 Form 10-K with relatively minimal and immaterial restatements, and the recent completion of the sale of a significant portion of DPL's investment portfolio for net cash proceeds of about $520 million. "The sale of a sizable portion of its higher-risk investment portfolio, combined with the fact the company plans to use such cash proceeds toward debt reduction, bolsters DPL's overall creditworthiness by enhancing its business profile and should further improve its financial profile," said Standard & Poor's credit analyst Brian Janiak. "Nevertheless, the rating on DPL reflects the company's high debt leverage, weak cash flow coverage measures, adequate liquidity, and average consolidated business risk profile," said Mr. Janiak. Standard & Poor's also said that future upward momentum for DPL's credit ratings will be strongly correlated with the actual timing of the sale of its remaining interest of its investment portfolio assets and management's ultimate use of cash proceeds toward the balancing of debt reduction and reinvestment needs in its core operations. ELECTRIC & GAS: April 30 Balance Sheet Upside-Down by $49,436 ------------------------------------------------------------- Electric & Gas Technology, Inc. (OTCBB:ELGT) reported financial results for the third quarter of its fiscal year, ended April 30, 2005. Daniel A. Zimmerman, President and CEO of ELGT, said, "We have stated our primary short-term financial objective as being able to reverse the trends of the last several years and demonstrate profitability for this fiscal year. Our secondary objective has been to accomplish this by being profitable in each of the four quarters. This profit in our third quarter, although modest compared to the first two quarters, means that we are now three quarters of the way to reaching that goal." Results from continuing operations for the three months ended April 30, 2005 included sales of $2,024,000 compared to $1,653,341 for the same period a year ago. Year to date sales for the nine months ended April 30, 2005 were $6,634,915 compared to $4,569,005 for the same period last year. Income from continuing operations for three months was $1,628 as compared to a loss of $943,723 from the prior year for the same period. Income from continuing operations for nine months was $107,183 as compared to a loss of $1,434,160 from the prior year for the same period Mr. Zimmerman continued, "The revenue growth is particularly satisfying because it is a direct reflection of the commitment and hard work of all of the company's employees. The earnings results are a bonus in light of the dramatic clean up effort our management has undertaken. We will continue to focus on improving our balance sheet and financial stability as we work toward our primary long-term goal of increasing shareholder value." Commenting on business operations Mr. Zimmerman added, "This quick and steady improvement in financial performance is a result of the changes in strategic direction made prior to the beginning of this fiscal year. As important as producing profits is to the Company at this stage, it is only one measure of the over all turn-around that we are engaged in. We have expanded our capabilities and capacities in the contract manufacturing sector. We have introduced two new proprietary products for the natural gas industry and are progressing with three additional new designs, all of which are being developed and manufactured in-house. We are diversifying and expanding our market coverage and customer base. We have simplified the corporate structure and reduced its associated overhead. Perhaps most importantly in this critical turn-around year, we continue to leverage benefits from our initiative to consolidate operational functions." Mr. Zimmerman concluded by saying, "I would like to take this opportunity to thank all the stakeholders of ELGT who have given this management team their much needed support. This includes the many loyal customers, suppliers and shareholders whose confidence and encouragement has helped make this progress possible." About the Company Electric & Gas Technology, Inc. is a publicly traded company that, through its subsidiaries, operates in two main areas: (1) Utilities Products and (2) Contract Manufacturing. At Apr. 30, 2005, Electric & Gas Technology, Inc.'s balance sheet showed a $49,436 stockholders' deficit, compared to a $195,991 deficit at Jul. 31, 2004. EQUIFIRST MORTGAGE: Good Credit Support Cues S&P to Hold Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 57 classes of mortgage-backed securities from five transactions issued by Equifirst Mortgage Loan Trust. Approximately $1.78 billion in certificates is affected. The rating affirmations are based on credit support percentages that are sufficient to maintain the current ratings on the certificates. The credit support for these transactions comes from a combination of excess interest, overcollateralization, and subordination. Cumulative losses range from 0.00% to 1.13% of the original pool balances. Ninety-plus-day delinquencies, including REOs and foreclosures, range from 0.65% to 7.33% of the current pool balances. All of the loans were either originated by EFC Holdings Corp. or purchased in the secondary market and underwritten or re- underwritten in accordance with its guidelines. The guidelines are meant to assess both the borrower's ability to repay the loan and the adequacy of the value of the mortgaged property. Most of these loans are conventional, fixed- and adjustable-rate, fully amortizing, first-lien residential mortgage loans with original terms to maturity of no more than 30 years. Ratings Affirmed Equifirst Mortgage Loan Trust Series Class Rating ------ ----- ------ 2003-1 I-F1, II-A1 AAA 2003-1 M-1 AA 2003-1 M-2 A 2003-1 M-3 BBB 2003-2 I-A1, II-A2, III-A3 AAA 2003-2 M-1 AA 2003-2 M-2 A 2003-2 M-3 A- 2003-2 M-4 BBB+ 2003-2 M-5 BBB 2003-2 M-6 BBB- 2003-2 B-1 BB+ 2004-1 I-A-1, II-A-1 AAA 2004-1 II-A-2, II-A-3 AAA 2004-1 M-1 AA 2004-1 M-2 A+ 2004-1 M-3 A 2004-1 M-4 A- 2004-1 M-5 BBB+ 2004-1 M-6 BBB 2004-1 M-7 BBB- 2004-1 B-1 BB+ 2004-2 I-A-1, II-A-1 AAA 2004-2 II-A-2, II-A-3 AAA 2004-2 M-1 AA+ 2004-2 M-2 AA 2004-2 M-3 AA- 2004-2 M-4 A+ 2004-2 M-5 A 2004-2 M-6 A- 2004-2 M-7 BBB+ 2004-2 M-8 BBB 2004-2 M-9 BBB- 2004-2 B-1 BB+ 2004-2 B-2 BB 2004-3 A-1, A-2, A-3 AAA 2004-3 M-1 AA+ 2004-3 M-2 AA 2004-3 M-3 AA- 2004-3 M-4 A+ 2004-3 M-5 A 2004-3 M-6 A- 2004-3 M-7 BBB+ 2004-3 M-8 BBB 2004-3 M-9, M-10 BBB- 2004-3 B-1 BB+ 2004-3 B-2 BB FEDERAL-MOGUL: Asbestos Estimation Hearing Continues ---------------------------------------------------- The formal hearing to estimate the aggregate value of asbestos- related personal injury claims against Federal-Mogul Corporation and its debtor-affiliates continued for a third day in Camden, N.J., before the Honorable Joseph H. Rodriguez. Dr. Peterson on Future Asbestos Claims "How [would] you go about evaluating Turner & Newall's liability for future claims?" Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, asked Dr. Mark Peterson on the third day of the Estimation Trial. Dr. Peterson told the Court that he would use the same basis he used to value pending claims. The only difference is the need to use a forecast since the number of future claims is uncertain and unknown. Dr. Peterson explained that the forecast will be made for each future year and will take into account monetary inflation and the year of payment to discount the payments back to 2001 to present value. Dr. Peterson related that he made forecasts separately for each of the disease categories -- mesothelioma, lung cancer, other cancers and nonmalignant claims. Dr. Peterson did not forecast the unspecified category because it will not be paid anyway. Dr. Peterson said he used the trends and claim filings that were happening generally in asbestos litigation, and certain matters that would have continued and added pressures towards increasing the number of claims. Dr. Peterson also looked at the claim filings against other defendants in 2002 through 2004 to provide him of a sanity check of the events. According to Dr. Peterson, T&N's data have confirmed that trends were going up with regard to claim filings, and in 2001, there was a particular spike in nonmalignant claims. Dr. Peterson compared the number of occurrences of mesothelioma in a year to the number of claims filed against T&N in that same year. The number of occurrences, Dr. Peterson said, represent the potential number of claims that might have been filed against T&N. "The actual claims, of course, represent the actual experience of filings. And so by comparing the two, by dividing the number of claims by the incidence, we can calculate a rate of claiming." That rate of claiming, Dr. Peterson said, is the propensity to sue. Having determined what the past propensity to sue, Dr. Peterson looked at the absent levels -- the rate of claiming at the time that T&N entered into bankruptcy and the trends at that time. "We would expect that the claiming in the future would . . . begin at about the rate we've seen in the most recent time, but to the degree that [it] has been increasing or decreasing." To forecast nonmalignant diseases, Dr. Peterson used the standard method among most forecasters. He looked at what's been the historic relationship between the number of nonmalignant claims filed annually against T&N and the number of cancer claims. To further examine the history, Dr. Peterson told the Court that he looked at the empirical data on past experience. "There was considerable increase in the number of cancer claims in the last two years preceding the bankruptcy," Dr. Peterson noted. Dr. Peterson reiterated that the bankruptcies by other defendants contributed to filings against T&N in 2000 and 2001 until it filed for bankruptcy. Dr. Peterson noted that in recent years, the plaintiffs' lawyers have substantially increased their advertising to gain representation of asbestos-related cancer victims, particularly through the Internet. Dr. Peterson commented on the "spike" that occurred in the mid-1980s. "That occurred because of the entrance of [T&N] in the Center for Claims Resolution and in the Asbestos Claims Facility." Dr. Peterson emphasized that during the existence of the CCR, T&N essentially accepted and got liabilities for claims of all members, including claims that had been filed in the past before those entities are formed. But ignoring that spike, Dr. Peterson noted that there is increase in claims in recent years. Dr. Peterson took the trends and compared them with the epidemiological forecasts. Mr. Inselbuch asked Dr. Peterson where he gets the epidemiological forecast. There is only one peer reviewed medical study that provides the kind of information necessary to do epidemiological forecasting, Dr. Peterson told the Court. "It's a study by Drs. Nicholson, Perkel and Selikoff, who are the primary researchers really in this area working at Mount Sinai." Dr. Peterson related that in 1981 and 1982, the three doctors published a report on workers exposed on asbestos. The study made estimates of the relative amount of asbestos fibers that the workers were exposed to, looked at turnover in the labor populations in each of those asbestos industries, and then applied rates of development of medical disease, of cancers, to forecast future claims. The study forecasted from 1970 through 2030 the number of persons who would die each year from asbestos- related lung cancer and asbestos-related "meso" or another cancer, Dr. Peterson said. The study, Dr. Peterson continued, is the only peer reviewed study of its nature and also the most widely used epidemiological study both in litigation and within the medical community. Dr. Peterson noted that the National Cancer Institute Surveillance of Epidemiology and End Results provides data estimates of the annual number of deaths for every kind of cancer, including mesothelioma. The program monitors the occurrences and results of cancer in 13 sites around the country, including Ohio, Los Angeles, Long Beach and Honolulu. From those 13 sites, there can be an estimate of the total occurrence, the total deaths of mesothelioma in the country as a whole. Using the rates from the 13 sites, Dr. Peterson continued that it could be multiplied to the country as a whole, essentially adjusting for ages of each of the groups to provide an estimate for every cancer. As to mesothelioma, Dr. Peterson noted that he could not make a comparison between Dr. Nicholson's projections and the SEER counts for lung cancer because lung cancer is caused by other matters and other toxins than asbestos, primarily smoking. "So there will be many more lung cancer deaths in this country than Nicholson forecasts for that are asbestos-related, but for mesothelioma the only known cause is asbestos." Dr. Peterson related that in the recent years, SEER count is a bit lower but before 1990, the SEER counts were lower for a series of years compared to Nicholson. Dr. Peterson noted that the forecasts for mesothelioma from 1990 through 2001 were increasing but slowly. Dr. Peterson used other forecasts, including that made by KPMG Peat Marwick for the National Gypsum bankruptcy. KPMG forecast was made until the year 2050. To use the KPMG, the trends in the KPMG forecast extend Nicholson out further for 20 years. Nicholson's forecast was cut off until 2030. To project into the future, Dr. Peterson took a calculation of the propensity to sue and multiplied it by the incidence to estimate what will be the number of deaths occurring in the future years. "Could you describe to the Court how you went about then projecting the propensity to sue for Turner & Newall for the future?" Mr. Inselbuch asked. According to Dr. Peterson, he made two alternative calculations of the future propensity to sue -- the increasing model and the no increase model. Dr. Peterson told the Court that he would not be precisely right in his forecast. "Forecasting is a process of error. So it may go up faster or slower . . . and, indeed, if we look at what's happening to other defendants at this point in time in 2003, 2004, other defendants who were in the CCR and left, it suggests that I've underestimated the rate of increase." Dr. Peterson noted that the increase in propensity to sue is more plausible. Dr. Peterson is confident that his increasing model does not overestimate T&N's liability and even suggested that he probably have underestimated T&N's liability. "How did you go about forecasting other malignant claims?" Mr. Inselbuch asked. "It is precisely the same kind of calculation you calculate propensities to sue. And we did the same -- and had two alternative models, increase in propensity to sue we forecast will occur is one model and the second model is a propensity to sue will remain unchanged from the levels in [2000 and 2001]," Dr. Peterson replied. Using the no increase model, Dr. Peterson suggested that there would be about 77,000 future claims. "Having forecast the number of claims, how did you go about forecasting the value or the obligation to pay those claims that Turner & Newall would have?" Mr. Inselbuch asked. Dr. Peterson explained that he used the same values that he used to estimate the pending claims. Dr. Peterson said that those payments would increase with monetary inflation, which he estimated at 2.5%. Dr. Peterson said that the real value of those claims would be the same in 2010 and 2030 as they are in 2002. Dr. Peterson assumed that future settlements would occur two years after. "And so when I discount -- so I essentially apply inflation to two years past the year it's filed and I assumed that's when the claim would be paid." Dr. Peterson told the Court that he got the 2.5% increase for inflation from the Congressional Budget Office and looked at what's been the recent inflation over the last 10 and 15 years. Owens Corning's Estimation Mr. Inselbuch asked Dr. Peterson to comment on Judge Fullam's Order in Owens Corning's estimation. (1) Venue Shopping Dr. Peterson noted that "venue shopping" was one of the issues brought up in Owens Corning's estimation. Dr. Peterson said that venue shopping was not an issue that was as significant for Turner & Newall as it might have been for Owens Corning, and with the exception of one jurisdiction it probably wasn't terribly important to Owens Corning. "Judge Fullam specifically identified three jurisdictions, the State of Mississippi, the State of Texas, and Southern Illinois being places where there had been changes in the ability of plaintiffs who are not residents or didn't work in those jurisdictions to file. There have been changes in the venue rules of those three. The change in Texas occurred five or six years ago, it was about 1996 I believe, and so whatever impact that had has already been reflected in the data for Owens Corning, frankly, and also for Turner & Newall. But I've looked at that issue and the primary effect of the Texas venue statute was to make it more difficult for claimants who did not -- probably impossible for claimants who did not either reside in Texas or were not exposed in Texas to file lawsuits there. And so it did move some claims. Well, in talking with plaintiffs and defendants, what we've seen is that claims that were otherwise filed in Texas tend to be filed now in other states. It was -- the venue was in part used to deal with problems of statutes of limitations among Alabama and Georgia claims. So the claims, it didn't eliminate claims, it moved them." Adam Strochak, Esq., at Weil Gotshal & Manges LLP, interrupted the examination asserting that the expert's analysis on venue shopping is not contained in his Report. "Your Honor, an expert provides a report stating his opinions and the reasons for those opinions," Mr. Inselbuch reasoned. "In his testimony, he can answer questions. He certainly couldn't put in his report everything he thought about in connection with formulating his opinion. It seems to me fair to let the expert respond to questions that fairly would support or would argue against the adequacy of his opinion and the adequacy of his thinking process." To extent that the questions are directed to help support a conclusion that's already contained in the reports, Judge Rodriguez said he will permit that series of questions. Dr. Peterson continued his discussion on venue shopping. Dr. Peterson noted that with regard to Texas, some Texas lawyers who now had fewer cases from out-of-state began to go to other parts of Texas where they had not very aggressively sought to represent claims. "So they ended up bringing more claims into the litigation and getting higher values because these were now Texas victims in Texas. So the net effect of the Texas statute with regard to venue is, one, it probably didn't have much impact because cases that were in Texas got transferred elsewhere. They may have gotten slightly lower values in other states, it's hard to tell. The other impact is that it increased the pressures within Texas by having more Texas claimants in venues and jurisdictions that were more threatened, and so probably it was either a wash or actually increased the liability." As to Mississippi, Turner & Newall was able to get summary judgment to dismiss Mississippi cases because the plaintiffs there weren't able to identify Turner & Newall. As to Southern Illinois, Dr. Peterson said, it was a euphemism for Madison County, a particular county in Illinois that's infamous in asbestos litigation because of the large size of the verdicts there. It's a significant jurisdiction and venue issues there are significant as long as a defendant is very actively participating in litigation. "But that wasn't Turner & Newall. Turner & Newall, to my knowledge, hadn't tried a case in Madison County, it was not a litigating defendant. Even in the future I think it will not be a particular litigating defendant. In my estimates of the future liabilities against Turner & Newall, I did not make any assumption that those payments would go up because they were now going to be exposed to judgments in Madison County that they hadn't been before. So, the summary of that is that I did consider venue issues, I considered the specific issues and jurisdictions that Judge Fullam mentioned and they might -- they would have marginal effects at most." (2) Mass screenings According to Dr. Peterson, he also considered mass screenings in his estimation. "It's an issue that I think there is some uncertainty about, what would be the entrepreneurial activity of plaintiffs' lawyers using those methods." "I've taken [mass screenings] into account because my forecasts of the number of future nonmalignant claims under my increasing model are essentially less than what they received in the past, so I think it's probably reflected in the calculations that I do, but it's an argument that I think has some weight." (3) Erroneous X-ray Interpretations by Suspect B Readers "Despite raising this concern, Judge Fullam went on to say that B readers have an opportunity to get to a jury, so even though he may have been offended by them he recognized that these -- this may not have had a terribly great effect because those B readers can still get before juries and testify," Dr. Peterson noted. According to Dr. Peterson, there is a reduction, B readers are less a feature of the litigation in recent years. "They've already been weeded out, they've already been weeded out to some degree, and that's reflected in the recent data of claims filings against Turner & Newall." These doctors, Dr. Peterson said, are used less frequently now because a plaintiff's lawyer getting a new case in is not going to send someone for a B read to one of these suspect doctors because he won't get as much money as if he gets a B read in a doctor who has more credibility and will provide the opportunity of getting a larger settlement. Dr. Peterson added that plaintiffs' lawyers can always use a different B reader at trial in order to have a stronger case. In some cases, x-rays from some doctors are not accepted. "I agree with Judge Fullam that the litigation system isn't perfect, that there are things that he doesn't like about it, things that I don't like about it, but I'm forecasting how the system operates, not how I think it should operate." (4) Overpayment to Unimpaired Claimants "Overpayment is a difficult concept for me. There is a market for these claims and the defendants are sophisticated with regard to the strength of evidence that is submitted and they pay less to weaker claims, so I think that's reflected in there," Dr. Peterson said. (5) Group Lawsuits Dr. Peterson relates that plaintiffs' law firms file on one complaint a wide range of claims, mesothelioma claims and unimpaired nonmalignant claims. The defendant is forced to settle or enters into settlements in which it settles both nonmalignant and mesothelioma claims. "The filing of the complaint itself doesn't mean they'll be tried together or they have to be settled together, it's a convenience and efficiency with regard to being able to file. It reduces the operating cost of law firms a bit, that's about it's only impact, but it's the grouping of claims for resolution at trial that have an impact." Dr. Peterson believes that group settlement is the way to go. "There is too many to do otherwise." In the past, T&N was able to reduce its overall liability by settling the claims by groups. (6) Punitive Damages Dr. Peterson noted that punitive damages were not an issue for T&N because it wasn't a litigating defendant. Dr. Peterson said that punitive damages are rare, and they are unpredictable. Punitive damages, Dr. Peterson said, have relatively little impact on the cases in which they arise. Dr. Peterson believes that punitive damages would have an impact if a defendant takes the case to trial and the judge allows punitive damages to get to a jury. "So I think it's an unpredictable matter that has effect for a small number of claims which aren't really relevant here because this is not a litigating defendant and has, according to the people that reached the settlement, both plaintiffs and defense lawyers, had no impact on the settlement. So, I considered it. In the end, I think that I don't disagree with Judge Fullam's opinion, and it's certainly not a relevant consideration here." U.K. Liabilities Dr. Peterson told the Court that his approach in estimating U.K. liabilities was the same approach he used in estimating U.S. liabilities. There were a couple of changes to reflect the different litigation circumstance in the U.K. and differences in the epidemiology between the United States and the U.K. Dr. Peterson took the data from T&N's database for U.K. claims. He did similar analyses and compared them with an epidemiological forecast of future asbestos-related deaths. Dr. Peterson said that he familiarized himself with the English litigation system and environment in which T&N operated. He spoke with lawyers in the U.K. and made two trips to the U.K. to learn and to talk about it. Dr. Peterson related that he made two different complementary predictions in the U.K., by separating the claims as "shared liability" and "Turner & Newall liability." One of the differences between the United States and the U.K. asbestos litigation is that T&N is by far the dominant manufacturer of asbestos products and dominant asbestos defendant in the U.K., Dr. Peterson said. "It's kind of like Manville plus Owens Corning plus Turner & Newall in this country, it plays a role that's not, there's no equivalent in the United States." Dr. Peterson noted that most of the claims against T&N tend to arise from among employees. According to Dr. Peterson, he projected a forecast of the indemnity for pending claims similar to that approach he made in the U.S. In general, Dr. Peterson told the Court that asbestos products' use and consumption in the U.K. lagged the United States by 10 years or so. There is no epidemiological model in the United Kingdom that is similar to the Nicholson model in the United States, Dr. Peterson said. Dr. Peterson used the Nicholson epidemiology instead of a mesothelioma model made recently by a certain U.K. health agency. Dr. Peterson noted that the method he used was also accepted by the experts who were working for the U.K. parties of interest as an appropriate approach and used the method in their own work. Dr. Peterson noted that there is an increasing number of claims against T&N and the U.K. as a result of the fact that the incidence was growing, not because the propensities to sue were growing. Dr. Peterson assumed that there would be no increase in the propensities to sue in the U.K. because: * the data were consistent with no increase; and * based on his discussions with people in the U.K., there did not seem to be an expectation or bases for continuing growth and claims in the U.K. as observed in the U.S. To project the U.K. filings against T&N for the future, Dr. Peterson used the Nicholson epidemiology lagged by 10 years and the number of claims filed against T&N over the last five years to calculate propensities to sue for the two cancer groups: * lung cancer and other cancers; and * mesothelioma. Dr. Peterson calculated the propensities to sue. He forecasted the future claims by using those same propensities to sue multiplying them by the epidemiological forecasts of cancer deaths in future years to derive estimates of how many people would file claims in the U.K. against T&N for mesothelioma and lung cancer. For the non-malignant diseases, Dr. Peterson used the multiple of the number of non-malignant claims to the cancer claims historically. "Did you calculate the indemnity for future claims and, if so, how did you do that?" Mr. Inselbuch asked. Dr. Peterson said that he used the same approach that he used in the United States, taking into account factual differences in the nature of the litigation thereby disaggregating the claims between the shared liability and T&N only. Dr. Peterson said he calculated the present value of both the pending and future U.K. claims against T&N by increasing them at 2.5% inflation. Dr. Peterson notes that he came up with a value for pending and future U.K. claims against T&N for each of the subgroups and added them together, amounting to GBP229 million. Dr. Peterson told the Court about two expert reports that commented on his February 2004 Report -- the EMB Consulting Group and Tillinghost. Dr. Peterson said that the two experts criticized some issues in his report and agreed with his general principles. EMB and Tillinghost agreed with Dr. Peterson that in the future, the number of claims that would be filed against T&N would increase. EMB's report was done for the law firm Denton, Wilde & Papte, and was performed on behalf of the administrators of T&N Limited. Tillinghost's report was prepared for the law firm of Allen & Overy, who is counsel to Alexander Forbes Trustee Services Limited and T&N Pensions Trustee Limited. Dr. Peterson believes that his forecast is conservative in many ways and not aggressive. He noted that even his increasing model assumes that T&N would receive fewer claims in all future years except for 2001 when the claims are annualized. "It's based on dollar values that are the lowest calculation that I could provide the Court based upon each historic experience in looking at what would be each likely future. It's the lowest number I could -- it's a number that's lower than what's typically being paid by other asbestos defendants who, on an ongoing basis, would face the lower exposure to damages than would Turner & Newall." Dr. Peterson assumed that nonmalignant claims would tamp down in the future. Cross-Examination Adam Strochak, Esq., at Weil Gotshal & Manges LLP, cross-examined Dr. Peterson. Mr. Strochak asked Dr. Peterson whether or not his forecast is a discounted cash flow forecast. Mr. Strochak described "discounted cash flow forecast" as forecasting the cash flow necessary to pay the claims as if they arose in the tort system absent a bankruptcy for a certain period. Dr. Peterson told the Court that the description is fundamentally correct but he wouldn't label it as that. Dr. Peterson said cash flow is a different thing. Mr. Strochak asked Dr. Peterson about three reports he prepared for the T&N case -- the November 2004 report, a supplemental report and a rebuttal report to Dr. Robin Cantor's expert report. Mr. Strochak told Dr. Peterson that none of those reports provide any statistical data or analysis demonstrating the accuracy of Dr. Peterson's forecasts. Dr. Peterson informed the Court that that there's some discussion of it in his November 2004 report but clarified that it's not a statistical analysis, rather a comparison of forecasts and actual results. Dr. Peterson noted that the actual numbers are not in the three reports, only the inferences that he draws from having made the comparisons and some discussions in the reports. "But I have to go back and review the report to know, to recall specifically what's in there, but certainly there are no numbers in there with regard to that issue." Mr. Strochak reminded Dr. Peterson of his testimony that he derived his forecast values from the scheduled values in the trust distribution procedures that have been proposed in T&N's case. "I wouldn't put it that way. I derived values that I described in my testimony, I derived a range of values and then I used the trust distribution values with an adjustment for inflation as a conservative alternative of it. But I have a whole derivation of values in my report and selected to use a number that was more conservative in derivation," Dr. Peterson told the Court. In contrast with Owens Corning, Dr. Peterson said that he did not forecast that the Owens Corning settlement values were going to increase in the future. Dr. Peterson noted however that Owens Corning was subject to "very different kinds of circumstances." Dr. Peterson explained "there wasn't the change in Owens Corning's position in the asbestos liability -- asbestos litigation at the time of its bankruptcy like there was for [T&N]." Owens Corning, according to Dr. Peterson, wasn't a member of the Center for Claims Resolution. Mr. Strochak pointed out that Owens Corning's participated in the national settlement program, which was very similar in certain ways to CCR. Dr. Peterson informed the Court that although there were some similarities, there was one major difference -- the NSP was Owens Corning's program based on its liability as a single defendant. "It's the best it could do negotiating inventory settlements given that it was the lone defendant out -- a lone defendant, not a group, and it was the defendant that everyone was shooting at. So it had already arrived at the status that Turner & Newall was on its way to becoming." According to Dr. Peterson, Owens Corning didn't enjoy all of the advantages of CCR membership. "That's one of [the] reasons why is the values were greater. So the program is the same, but they were carried out by very different entities and that has an extremely important ramifications for the amount of money that, and the savings that CCR members could achieve." Dr. Peterson testified on Flexitallic and Ferodo, which were subsidiaries of Federal-Mogul. Dr. Peterson noted that Flexitallic and Ferodo are different from each other and they're different from T&N. Dr. Peterson said that Ferodo is a friction product defendant, and didn't have many claims like most friction product defendants. Ferodo, Dr. Peterson said, settled relatively few claims and its exposures primarily for mesothelioma and not other diseases. Flexitallic, on the other hand, had many claims because Flexitallic's product, a disk type gasket was brightly colored and brightly labeled and it was ubiquitous and very easily identified so many people sued Flexitallic, Dr. Peterson related. "But the product, at least according to Flexitallic and the Hanly firm, almost never releases asbestos. So it's a case -- it's a defendant that got lots of claims because of product identification but there's a serious causation problem with regard to the product. But Flexitallic got lots of claims. Ferodo didn't get so many. But neither one of them is a defendant like any of the others that are on that list. To have included them would have been misleading to the Court because their experiences are just not representative of the kind of past experience or like the future experience for Turner & Newall." Dr. Peterson noted that Flexitallic and Ferodo were CCR members. Dr. Peterson clarified to the Court that he begun his estimation using the Nicholson method. As the SEER data seems more consistent with KPMG, Dr. Peterson moved to using the KPMG model because it seemed more empirically sound. But with the 2002 data, Dr. Peterson saw that, in fact, Nicholson was more empirically sound, so he went back to using the Nicholson method. Dr. Peterson confirmed that the use of the Nicholson forecast increases the value of future claims by about 10%. He indicated that it is consistent with the sensitivity analyses he made. "It's in the range typically of seven to 10% difference. Dr. Peterson also confirmed that that he reported 1.16 million in forecasted future claims in his increasing model as compared to 1.35 million in the October 2002 forecast. Dr. Peterson explained that 200,000 decrease in the number of claims represents in part the elimination of duplicates. "I think there were some other technical issues that resulted in that." Dr. Peterson said that the total forecast as of February 2004 for pending claims is $565 million and the future claims is $5.1 billion, with a grand total of $5,728,000,000 for all pending and future claims. Mr. Strochak's cross-examination of Dr. Peterson, and testimony by the PD Committee's expert, Dr. Robin Cantor, continues this week. The parties agreed to submit proposed findings of fact and conclusions on law on June 28, 2005. Closing oral arguments will be on July 14, 2005, at 10:00 a.m. 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 Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Asbestos Panel Wants Peterson's Testimony Excluded ----------------------------------------------------------------- The Official Committee of Asbestos Property Damage Claimants appointed in Federal-Mogul Corporation and its debtor-affiliates' chapter 11 cases asks Judge Rodriquez to bar Mark Peterson, the consultant retained by the Asbestos Claimants Committee, from testifying about claim values derived from the trust distribution procedures. The PD Committee asserts that estimating claim values from the TDPs that Dr. Peterson himself concocted is not an accepted, or even logical, claims estimation methodology. Dr. Peterson provides opinions that either do not flow from the data and methodology he proffers or fails to make use of any methodology or data whatsoever, Theodore J. Tacconelli, Esq., at Ferry, Joseph & Pearce, P.A., in Wilmington, Delaware, alleges. Mr. Tacconelli tells the District Court that in the Owens Corning bankruptcy case Dr. Peterson criticized the methodologies of a claims estimation expert as "muddled amalgams based sometimes on values in tort litigation and at other times values that might be paid by a bankruptcy trust created in [the Owens Corning] proceedings." Dr. Peterson's report in the Federal-Mogul case, however, relies on exactly what he condemned as a "muddled amalgam" of claim values; he has reached his estimate by using a portion of T&N Ltd.'s own claims history combined with the TDP values agreed upon by his own client. The TDP values are nothing more than the method by which Dr. Peterson's clients have agreed among themselves, with his own input, to allocate the value they will receive under the Plan, Mr. Tacconelli says. The PD Committee also wants Dr. Peterson barred from testifying about the alleged impact of a book written by Geoffrey Tweedale in 2000 on the rate of claims to be filed against T&N and the value of the claims. Dr. Peterson speculates that the publication of the Tweedale book about T&N's corporate conduct with regard to asbestos would have made the company a bigger target for plaintiffs after 2001. Mr. Tacconelli says Dr. Peterson uses this theory as the basis for justifying his assumptions that there would be more claims against T&N, and they would be more expensive for the company to resolve. However, Dr. Peterson has failed to even review the documents which the Tweedale book is based on, Mr. Tacconelli maintains. Dr. Peterson also had no idea how many copies of the book were actually in print, and had never heard of the book until December 2002 -- more than two years after its publication. During deposition, Dr. Peterson admitted that his opinions were formed during casual conversations on a wide range of topics with various attorneys and was not based on a rigorous scientific or technical inquiry. ACC & Futures Rep Object The PD Committee's request is groundless and should be denied, the Official Committee of Asbestos Claimants and the Futures Representative contend. Kathleen J. Campbell, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, reminds Judge Rodriguez that federal courts around the country, as well as the United States Senate Judiciary Committee and other institutions with a need to estimate asbestos personal injury liabilities, have repeatedly recognized Dr. Peterson as qualified to render an opinion -- using the same methodological approached he has used in Federal-Mogul's case. The PD Committees' contention that Dr. Peterson's values are "derived from" the TDP, is simply wrong, Ms. Campbell says. The values Dr. Peterson uses are his best -- conservative -- estimate of resolution costs had T&N remained in the tort system. Moreover, Dr. Peterson's understanding of foreseeable influences on T&N's asbestos liability was not based on mere anecdotal interviews, the PD Committee suggests. "The basis of Dr. Peterson's understanding is his extensive asbestos litigation experience, coupled with discussions he had with plaintiff and defense attorneys." Ms. Campbell insists that Dr. Peterson took into account not only T&N's own settlement history but also related trends, along with factors driving those trends, including: -- the fact that T&N's mesothelioma settlement averages had tripled in the three years preceding bankruptcy; -- T&N's loss of protection as a member of the Center for Claims Resolution; -- the publication of the Tweedale book; -- the effect of bankruptcies of other major defendants on T&N's liability; and -- the historic ratios of mesothelioma settlement averages to other types of disease claims for T&N and multiple asbestos personal injury defendants. * * * At the hearing on June 15, 2005, Adam P. Strochak, Esq., at Weil Gotshal & Manges, LLP, in New York, representing the PD Committee, proposed that the parties proceed with the direct and the cross-examination of Dr. Peterson and reserve argument on the Limine Motion until after it's been heard. "[T]hat way the Court would have a better idea of exactly what we think is inappropriate to be admitted into evidence," Mr. Strochak explained. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, agreed on behalf of the Asbestos Claimants Committee and the Futures Representatives. "That's fine with us," Mr. Inselbuch said. 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 Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) GLOBOPAR: Three Creditors Move to Dismiss Involuntary Petition -------------------------------------------------------------- GMAM Investment Funds Trust I, Foundation for Research and WRH Global Securities Pooled Trust have agreed to withdraw the involuntary bankruptcy petition they filed a year and a half ago against Globo Comunicacoes e Participacoes S.A. The three US- based funds hold some $94 million of the Company's $1.9 billion debt. In a motion dated June 13, 2005, the creditors ask the U.S. Bankruptcy Court for the Southern District of New York to dismiss the involuntary bankruptcy petition they filed against Globopar on December 11, 2003. The involuntary petition had been previously dismissed on March 3, 2004, but the Bankruptcy Court reversed its decision following an appeal from the petitioning creditors. Globopar has maintained that the U.S. Bankruptcy Court holds no jurisdiction over its restructuring since it has no assets, operations, or revenue in the United States. The withdrawal of the chapter 11 petition comes on the heels of an out-of-court restructuring agreement with the Company's bank creditors. As reported in Troubled Company Reporter Latin America on May 19, 2005, Globopar secured approval of its debt restructuring proposal from holders of a supermajority of its multiple layers of outstanding bond debt. On May 5, 2005, all of Globopar's Brazilian and international creditor banks signed an agreement related to the renegotiation of the bank debt. Globopar says that the involuntary petition is not related to its out-of-court restructuring and the dismissal of the bankruptcy case will not affect the restructuring negotiations. Objections to the move to dismiss the involuntary petition must be filed with the Bankruptcy Clerk in Manhattan on or before 4:00 p.m. on June 27, 2005, and served on counsel to the Petitioners: Bonnie Steingart, Esq. John Brewer, Esq. Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 If no objection is filed, Judge Beatty may grant the motion without a hearing. Globopar is one of the world's largest television broadcasters, as well as one of Brazil's largest publishers of newspapers, magazines and books. The Company defaulted on its debt in late 2002 after a 35% drop in the value of the Brazilian real, and a slowdown in the economy, slashed revenue. Three creditors filed an involuntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 03-17814) against the company on December 11, 2005. GOODYEAR TIRE: S&P Rates Proposed $400 Million Senior Notes at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Goodyear Tire & Rubber Co.'s proposed $400 million senior notes due 2015. At the same time, the 'B+' corporate credit rating on the company was affirmed. Akron, Ohio-based Goodyear has total debt of about $6.6 billion and $6.3 billion of underfunded employee benefit liabilities. The ratings outlook is stable. Proceeds from the notes will be used partly to repay borrowings under the company's U.S. secured credit facility and to replenish cash used to repay other debt. "The ratings on Goodyear reflect the company's stressed financial profile, characterized by low earnings in North America, a highly leveraged capital structure, and heavy underfunded employee benefit liabilities," said Standard & Poor's credit analyst Martin King. "These factors more than offset the company's business strengths, including its position as one of the three largest global tire manufacturers, its good geographic diversity, its strong distribution, and a well-recognized brand name." Goodyear has reported improved performance during the past year, resulting from higher sales, price increases, improved product mix, and cost reductions, which were only partially offset by higher raw material costs. New product introductions, increased consumer demand, and market-share gains in high-profit tire categories contributed to the improved results. However, Goodyear's profit margins remain subpar, particularly in its North American tire business, which represents about 50% of total sales and generates only limited operating income. Goodyear's North American operations are challenged by high costs, by tough competition, by reduced market share in certain segments, and by high medical, pension, energy, and raw material costs. Several initiatives to reduce costs have had positive results, including a plant closure and headcount reductions. However, Standard & Poor's expects that incremental benefits in 2005 and beyond will be less and that Goodyear will continue to report low profit margins in North America for the next few years. Meanwhile, Goodyear faces substantial cash obligations during the next two years, when Standard & Poor's believe cash flow generation will be limited: * Required pension contributions will total about $500 million during 2005 and $700 million during 2006. * Debt maturities total about $350 million in 2006. * Substantial spending on capital investments and debt service are expected. Although the new debt issue will enhance Goodyear's liquidity following the June 6 repayment of a $516 million debt issue, the company may need to raise additional new capital during the next two years to both satisfy its cash obligations and keep this liquidity adequate. Goodyear had cash balances on March 31, 2005, totaling $1.7 billion, with about $1.2 billion considered excess. Much of Goodyear's cash is located outside North America, while the bulk of its financial obligations are located within, requiring concerted efforts during the next few years to repatriate funds. Liquidity could be supplemented by several planned asset sales. HAPPY KIDS: Deutsche Bank Wants Examiner Appointed -------------------------------------------------- Deutsche Bank Trust Company Americas fka Bankers Trust Company asks the U.S. Bankruptcy for the Southern District of New York to direct the appointment of an examiner in Happy Kids Inc. and its debtor-affiliates' bankruptcy cases. Deutsche Bank wants an independent examiner to: a) investigate and report on the conduct and related-party transactions of current insider management and equity owners; b) oversee the sale of the Debtors under Section 363 of the Bankruptcy Code or under a plan of reorganization; c) make recommendations with respect to competing plans of reorganization; and d) report on the propriety of requiring any purchaser under a plan to retain existing management. According to Deutsche Bank, the Debtors operate a valuable enterprise in a lucrative industry, but, current management team, led by Jack Benun, has consistently found ways to remove profits from their balance sheets and strip the enterprise of its value. The estates' money, the Bank continues, disappears into a black hole of unchecked related-party transactions, exorbitant salaries, expensive automobiles and other perks. The Debtors owe Deutsche Bank $24,000,000. After the Bank learned it'll get a minimal recovery, it insisted that the Debtors consider selling all of their assets. The Bank notes that to date, the Debtors haven't done anything to secure a viable offer for their assets. The Bank believes that the Debtors are only making half-hearted attempts at selling their business. The Bank urges the Court to approve the appointment of an examiner to ensure the Debtors' compliance with their fiduciary duties to maximize value for their creditors. Michael Luskin, Esq., at Luskin, Stern & Eisler, LLP, represents Deutsche Bank. Headquartered in New York, New York, Happy Kids Inc. and its affiliates are leading designers and marketers of licensed, branded and private label garments in the children's apparel industry. The Debtors' current portfolio of licenses includes Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $54,719,000 and total debts of $82,108,000. HOLLYWOOD CASINO: Judge Callaway Confirms Plan of Reorganization ---------------------------------------------------------------- The Honorable Stephen V. Callaway of the U.S. Bankruptcy Court for the Western District of Louisiana confirmed Hollywood Casino Shreveport's chapter 11 plan of reorganization. The plan will allow for the sale of the casino to Eldorado Resorts LLC. El Dorado intends to apply to the Louisiana Gaming Control Board to change the name of the casino to Eldorado Casino- Shreveport. The Debtor's second largest bondholder, Black Diamond Capital Management LLC, offered to buy the property, and topped Eldorado's $152 million offer by $17 million. The majority of the creditors, however, opted to vote for the Eldorado acquisition. Part of the confirmed Plan is the restructuring of HCS I, Inc., the managing partner of Hollwood Casino. Under the proposed restructuring, holders of the Company's existing secured notes are to receive $140 million of new first mortgage notes, $20 million of PIK Preferred Equity Securities, a 25% non-voting equity interest in the reorganized company, and cash in an amount to be determined, in exchange for existing secured notes in the principal face amount of $189 million plus accrued interest. 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. IMPAX LAB: Wachovia Increases Bank Loan Commitment to $37 Million ----------------------------------------------------------------- IMPAX Laboratories, Inc. (Nasdaq:IPXLE) received commitments from Wachovia Bank, National Association and Wachovia Capital Markets, LLC, to increase the Company's existing credit facility to up to $37 million, consisting of: -- a $35 million revolving credit facility, an increase from $25 million against which there is approximately $5 million outstanding; and -- $2.1 million representing the unpaid balance on IMPAX's existing term loan and equipment purchase term loan. The purpose of the increased facility is to refinance existing senior and convertible subordinated debt, provide working capital and to provide funds for general corporate purposes. The amended facility is subject to customary conditions, including the negotiation of a definitive agreement. The Company also reported that its available cash reserves at May 31, 2005 were approximately $78 million. IMPAX Laboratories, Inc. -- http://www.impaxlabs.com/-- is a technology based specialty pharmaceutical company applying its formulation expertise and drug delivery technology to the development of controlled-release and specialty generics in addition to the development of branded products. IMPAX markets its generic products through its Global Pharmaceuticals division and intends to market its branded products through the IMPAX Pharmaceuticals division. Additionally, where strategically appropriate, IMPAX has developed marketing partnerships to fully leverage its technology platform. IMPAX Laboratories is headquartered in Hayward, Calif., and has a full range of capabilities in its Hayward and Philadelphia facilities. * * * Notice of Default from Debtholder IMPAX received a notice, dated April 22, 2005, from a holder of more than 25% aggregate principal amount of its 1.250% Convertible Senior Subordinated Debentures due 2024, stating that the Company failed to file its Annual Report on Form 10-K for the year ended December 31, 2004 with the SEC as required by the governing Indenture and requiring that the Company remedy such default forthwith. Under the Indenture, if the Company fails to file the Annual Report within 60 days after the date of the notice, it will constitute an "event of default" under the Indenture and thereafter either the Trustee or the holders of 25% in aggregate principal amount of the Debentures then outstanding, by notice to the Company, may declare the principal of and premium, if any, on all the Debentures then outstanding and the interest accrued thereon to be due and payable immediately. As reported in the Troubled Company Reporter on May 25, 2005, the Company received a Nasdaq Staff determination letter indicating that IMPAX failed to comply with the requirement for continued listing set forth in NASDAQ Marketplace Rule 4310(c)(14) because IMPAX failed to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2005. As previously reported, on April 5, 2005 IMPAX received a Nasdaq Staff determination letter indicating that IMPAX failed to comply with the requirement for continued listing set forth in NASDAQ Marketplace Rule 4310(c)(14) because IMPAX failed to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 with Nasdaq and, therefore, IMPAX's common stock would be subject to delisting from The Nasdaq Stock Market. INTERMET CORP: Decatur Workers Receive Termination Notices ---------------------------------------------------------- Employees of Intermet Corporation's Decatur foundry found out on Friday, June 17, 2005, that they will lose their jobs on Sept. 5, Stephanie Potter at Herald & Review reports. The company announced the foundry's closure in March. Local 6-728 of the Paper, Allied-Industrial, Chemical & Energy Workers International Union members negotiated with company officials to keep the facility open. Company representatives told the Union people that at least $50 million is needed to keep the foundry going and nothing can be done about it. Robert Swinehart, the Union president, told the H&R staff that 258 union employees received notices of their termination dates with their paychecks. The earliest termination is for September 5 -- Labor Day. Union members and company representatives will meet on June 23 and 24 to discuss the terms of a closure agreement. Headquartered in Troy, Michigan, Intermet Corporation -- http://www.intermet.com/-- provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. Intermet, along with its debtor-affiliates, filed for chapter 11 protection on Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP represents the Debtors. When the Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. K2 INC: Slow Debt Payment Prompts S&P's Negative Outlook -------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on sporting goods manufacturer K2 Inc. to negative from stable due to operating challenges that have resulted in slower-than-expected debt pay down. At the same time, Standard & Poor's affirmed its 'BB' corporate credit and senior unsecured debt ratings on the Carlsbad, Calif.- based company. Approximately $418 million of debt is affected by this action. K2's debt leverage is expected to remain well above 3x over the near to intermediate term as it focuses on improving working capital management. "While K2 is expected to continue its aggressive acquisition strategy in the intermediate term, it will need to reduce debt leverage and generate free cash flow before a stable outlook is considered," said Standard & Poor's credit analyst Patrick Jeffrey. The ratings could be lowered over the near term if the company increases debt leverage (other than for seasonal borrowing needs) or faces significant operating issues. KMART CORP: Court Denies 3 Claimants' Move to File Tardy Claims --------------------------------------------------------------- Kevin V. Vullos and Lisa A. Vullos ask Judge Sonderby for leave to file administrative expense claims. Sylvia Louis seeks permission to file a prepetition proof of claim. The Vulloses argue that they did not receive notice of the Administrative Bar Date until after the filing of litigation in New York. Ms. Louis, on the other hand, argues that she did not receive notice of the Supplemental Bar Date until March 19, 2004. Kmart Objects David E. Gordon, Esq., at Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, in Chicago, Illinois, points out that the Vulloses filed their request 16 months after the June 20, 2003 Administrative Bar Date established by the U.S. Bankruptcy Court for the Northern District of Illinois. Ms. Louis' request was also filed nearly two years after the January 22, 2003 Supplemental Bar Date. Mr. Gordon also contends that Kmart gave Ms. Louis and the Vulloses timely and reasonable notice of the Bar Dates as required under Rule 2002(g) of the Federal Rules of Bankruptcy Procedure and applicable Court orders. Furthermore, Ms. Louis and the Vulloses fail to present sufficient facts and evidence to establish that their failure to timely file a proof of claim was due to excusable neglect. At Kmart's behest, Judge Sonderby denies both Ms. Louis' and the Vulloses' requests. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Settles Enviro-Resources' Third Party Claim ------------------------------------------------------- As previously reported in the Troubled Company Reporter on November 2, 2005, Enviro-Resources asked the Bankruptcy Court to lift the automatic stay and reopen Kmart's bankruptcy proceeding so it may file a proof of claim against Kmart. Enviro-Resources also wants the injunction lifted to allow it to reinstate its civil claim for contribution in the State Court up to the limit provided by Kmart's insurance coverage. Enviro-Resources II, Inc., and Enviro-Resources, Inc., are defendants in a personal injury lawsuit filed by Jacqueline McCormick before the Circuit Court of Cook County, Illinois, in 2003. The case arises out of a trip and fall incident that occurred on February 16, 2001, when Ms. McCormick was working at a Kmart store in Crestwood, Illinois. Ms. McCormick alleged negligence against Enviro-Resources arising from their conduct at the Kmart store. In March 2004, Enviro-Resources filed a third party complaint for contribution in the Pending Litigation against Kmart Corporation. In accordance with the Illinois Joint Tortfeasor Contribution Act, 740 ILCS 100/01 et seq., Enviro-Resources argued that if Ms. McCormick is entitled to recover from Enviro-Resources, then Kmart is required to contribute pro rata and to the maximum extent allowed by law commensurate with its degree of negligence in causing Ms. McCormick's injuries and damages. In response, Kmart sought to dismiss the Third Party Complaint based on its Chapter 11 filing. Kmart asserted that its Court- confirmed reorganization plan discharged it from prepetition claims and imposed an injunction against the commencement or continuation of litigation of any of those claims. Subsequently, Enviro-Resources voluntarily dismissed the Complaint. * * * Enviro-Resources II, Inc., Enviro-Resources, Inc., and Kmart Corporation settled the dispute pursuant to the terms of an agreed order: (a) Enviro-Resources II and Enviro-Resources may file a prepetition proof of claim with Kmart's claims agent, Trumbull Services, LLC; (b) Kmart reserves all rights to challenge the validity, priority and amount of the Claim, and to pursue any other claims, causes of action or potential offsets against the Claim; and (c) Kmart also reserves its rights in the Claims Resolution Procedure. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) MAYTAG CORP: Bain-Blackstone-Haier Bids $1.275 Billion for Company ------------------------------------------------------------------ Maytag Corporation (NYSE: MYG) received a preliminary non-binding proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P. and Haier America Trading, L.L.C. to acquire all outstanding shares of Maytag for $16 per share cash. On May 19, 2005, Maytag agreed to be acquired by an investor group led by Ripplewood Holdings LLC for $14 per share cash. Maytag reports that there are 79,698,173 shares of its common stock issued and outstanding as of April 2, 2005. At $14 per share, that puts a $1.115 billion value on Ripplewood's offer. At $16 per share, that values the Bain-Blackstone-Haier offer at $1.275 billion. According to the preliminary non-binding proposal, completion of due diligence is expected to take 6-8 weeks, and the proposal is conditioned, among other things, on the due diligence, along with the negotiation of a definitive agreement and necessary approvals. The proposal contemplates debt financing provided by Merrill Lynch & Co. on terms and conditions to be agreed upon among Merrill Lynch, Bain, Blackstone and Haier America. After a special committee meeting of the Board of Directors, Maytag stated that, while it intends to proceed with further due diligence with Bain, Blackstone and Haier America, there can be no assurance that the preliminary non-binding proposal would result in a definitive agreement. Howard Clark, Maytag's lead director, said, "We continue to support the Ripplewood transaction; however, we also believe that it is incumbent on us to pursue this possibility of achieving a higher price for our stockholders." Maytag Corporation is a $4.7 billion home and commercial appliance company focused in North America and in targeted international markets. The corporation's primary brands are Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R). At Jan. 1, 2005, Maytag's balance sheet reflected a $75,024,000 stockholders' deficit, compared to $65,811,000 of positive equity at Jan. 3, 2004. * * * As reported in the Troubled Company Reporter on Apr. 29, 2005, Moody's Investors Service downgraded Maytag Corporation's senior unsecured ratings to Ba2 from Baa3 and the short-term rating to Not Prime from Prime-3. At the same time the Ba2 senior unsecured note rating was placed on review for possible further downgrade. Moody's also assigned a new senior implied rating of Ba2. Moody's says the outlook for the ratings remains negative. The ratings downgraded are: * Senior unsecured rating to Ba2 from Baa3; the rating is placed on review for possible further downgrade * Issuer rating to Ba2 from Baa3, * Short term rating to Not Prime from P-3. The rating assigned: * Senior implied rating of Ba2. As reported in the Troubled Company Reporter on Apr. 28, 2005, Fitch Ratings has downgraded the senior unsecured rating on Maytag Corporation to 'BB' from 'BB+' and has withdrawn the commercial paper rating. Fitch says the Rating Outlook is Negative. On Jan. 1, 2005, Maytag had approximately $979 million of senior unsecured debt and no commercial paper outstanding. As reported in the Troubled Company Reporter on Apr. 26, 2005, Standard & Poor's lowered its long-term corporate credit and senior unsecured debt ratings on home and commercial appliance manufacturer Maytag Corp. to 'BB+' from 'BBB-'. At the same time, the 'A-3' short-term corporate credit and commercial paper ratings on the Newton, Iowa-based company were withdrawn. The ratings were removed from CreditWatch, where they were placed Jan. 28, 2005, following weaker-than-expected fourth quarter results and Standard & Poor's ongoing concerns about Maytag's ability to improve its operation performance. S&P says the outlook is stable. Total debt outstanding at April 2, 2005, was about $970 million. MCI INC: 11 Officers Dispose of 27,158 Shares of Common Stock ------------------------------------------------------------- In separate filings with the Securities and Exchange Commission, eleven officers of MCI, Inc., disclose that they recently sold or otherwise disposed of their shares of common stock in the Company: No. of Amount of Shares Securities Officer Designation Disposed Price Now Owned -------- ----------- -------- ----- ---------- Blakely, Robert T. Exec-VP & CFO 2,684 $25.63 272,071 Briggs, Pres.-Operations Fred M. & Technology 2,205 25.63 169,578 Capellas, Michael D. Pres. & CEO 7,190 25.63 1,099,595 Casaccia, Executive VP, Daniel, L. Human Resources 1,687 25.63 140,196 Crane, EVP, Strategy Jonathan C. Corp., Dev. 2,205 25.63 170,283 Hackenson, Elizabeth EVP, CIO 1,438 25.63 82,352 Higgins, Exec-VP, Ethics Nancy and Bus Conduct 1,868 25.63 128,067 Huyard, Pres-US Sales & Wayne Service 3,355 25.63 246,435 Kelly, Exec-VP & Gen. Anastasia D. Counsel 2,684 25.63 198,140 Slusser, Sr. VP & Eric Controller 576 25.63 52,845 Trent, Grace SVP Comm & Chief Chen of Staff 1,266 25.63 107,154 Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services placed its ratings on Denver, Co.-based diversified telecommunications carrier Qwest Communications International, Inc., and subsidiaries, including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's counter bid to Verizon Communications, Inc., for long-distance carrier MCI, Inc., for $3 billion in cash and $5 billion in stock. MCI also has about $6 billion of debt outstanding. The ratings on MCI, including the 'B+' corporate credit rating, remain on CreditWatch with positive implications, where they were placed Feb. 14, 2005 following Verizon's announced agreement to acquire the company. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by either Verizon or Qwest, both of which are more creditworthy entities. However, the positive CreditWatch listing of the 'B+' rating on MCI's senior unsecured debt assumes no change to the current MCI corporate and capital structure under an assumed acquisition by Qwest, such that this debt would become structurally junior to other material obligations. "The negative CreditWatch listing of the Qwest ratings reflects the higher business risk at MCI if its bid is ultimately successful," explained Standard & Poor's credit analyst Catherine Cosentino. As a long-distance carrier, MCI is facing ongoing stiff competition from other carriers, especially AT&T Corp. Moreover, MCI is considered to be competitively disadvantaged relative to AT&T in terms of its materially smaller presence in the enterprise segment and fewer local points of presence -- POPs. The latter, in particular, results in higher access costs relative to AT&T. Qwest also faces the challenge of integrating and strengthening MCI's operations while improving its own underperforming, net free cash flow negative long-distance business. These issues overshadow the positive aspects of Qwest's incumbent local exchange carrier business that were encompassed in the former developing outlook. As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. MEDICAL IMAGING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Medical Imaging Network, Inc. dba Advanced Radiology dba Boardman X-Ray/MRI dba Liberty Open MRI fdba Austintown X-Ray fdba Campbell X-Ray 819 McKay Court Boardman, Ohio 44512 Bankruptcy Case No.: 05-43631 Type of Business: The Debtor operates medical imaging centers. Chapter 11 Petition Date: June 20, 2005 Court: Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Melissa M. Macejko, Esq. Suhar & Macejko, LLC 1101 Metropolitan Tower P.O. Box 1497 Youngstown, Ohio 44501-1497 Tel: (330) 744-9007 Total Assets: $2,340,428 Total Debts: $6,839,290 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hitachi Medical Systems Loan $202,916 P.O. Box 714228 Columbus, OH 43271 Alpha Imaging Inc. Trade debt $61,939 4455 Glenbrook Road Willoughby, OH 44094 Hitachi Medical Systems Service work $44,541 1959 Summit Commerce Place Twinsburg, OH 44087 National Diagnostic Imaging Services agreement $22,850 P.O. Box 26010 Akron, OH 44319 Universal Medical Services Services agreement $20,216 P.O. Box 986 Beaver Falls, PA 15010 Carden Company Rent in arrears $20,021 8031 East Market Street Warren, OH 44484 Paul Burke Industries Supplier $14,850 6466 Columbus Road Northeast Louisville, OH 44641 Huntington Banks Credit card $10,747 P.O. Box 15583 purchases Wilmington, DE 19886 Mallinckrodt Supplier $10,050 P.O. Box 905835 Charlotte, NC 28290-5835 Aust. Ambulatory Surgical Rent in arrears $9,482 45 North Canfield Niles Road Austintown, OH 44515 Anthem Overpayments $9,209 P.O. Box 37180 Louisville, KY 40231 Eastman Kodak Company Lease payments in $8,195 P.O. Box 642079 arrears Pittsburgh, PA 15264 Source One Healthcare Supplier $7,779 P.O. Box 403209 Atlanta, GA 30384 FutureNet Technologies Service work $7,197 222 East Huntington Drive, Suite #208 Monrovia, CA 91016 Americorp Financial Lease payments in $6,845 877 South Adams Road arrears Birmingham, MI 48009 EKCC Lease payments in $6,525 P.O. Box 642999 arrears Pittsburgh, PA 15264 UHC Overpayment $6,459 P.O. Box 740801 Atlanta, GA 30374 CDW Computer Centers Service work $6,288 P.O. Box 75723 Chicago, IL 60675 Ohio Carpenters Overpayment $5,799 6281 Youngstown-Warren Road, Suite 240 Niles, OH 44446 DeLage Landen Financial Lease payments in $5,193 Services arrears P.O. Box 41601 Philadelphia, PA 19101 METALFORMING TECH: Taps Bankruptcy Services as Claims Agent ----------------------------------------------------------- Metalforming Technologies, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Bankruptcy Services LLC as their claims, noticing and balloting agent, nunc pro tunc to June 16, 2005. BSI specializes in providing consulting and data processing services to Chapter 11 debtors in connection with the administration, reconciliation and negotiation of claims and solicitation of votes to accept or reject plans of reorganization. BSI will: (a) notify all potential creditors of the filing of the bankruptcy petitions and the setting of the first meeting of creditors; (b) file affidavits of service for all mailings, including a copy of each notice, a list of persons to whom such notice was mailed, and the date mailed; (c) maintain an official copy of the Debtors' Schedules, listing creditors and amounts owed; (d) furnish a notice of the last date for the filing of proofs of claim and a form for filing a proof of claim to creditors and parties-in-interest; (e) docket all claims filed and maintain the official claims register on behalf of the Clerk of Court and providing to the Clerk an exact duplicate thereof; (f) specify in the claims register for each claim docket: 1. the claim number assigned 2. the date received 3. the name and address of the claimant 4. the filed amount of the claim, if liquidated 5. the allowed amount of the claim. (g) record all transfers of claims and provide notices of the transfer as required under Bankruptcy Rule 3001(e); (h) maintain the official mailing list for all entities who have filed proofs of claim; (i) mail the Debtors' Disclosure Statement, Plan, ballots and any other related solicitation materials to holders of impaired claims and equity interests; (j) receive and tally ballots and respond to inquiries respecting voting procedures and the solicitation of votes on the plan; and (k) provide any other distribution services as necessary or required. Kathy Gerber, senior vice president at BSI, disclosed that BSI's professionals' bill: Designation Hourly Rate ----------- ----------- Senior Manager & On-Site Consultant $210 Senior Consultant $185 Programmer $130 - $160 Associate $135 Data Entry Clerk $40 - $60 Schedule Preparation $225 To the best of the Debtors' knowledge, BSI and the professionals who will work in the engagement: (a) do not have connections with the Debtors, their creditors, or other party-in-interest, or their attorneys, (b) are "disinterested persons" as defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b) of the U.S. Bankruptcy Code, and (c) do not hold or represent any interest adverse to the Debtors' estates. Headquartered in Chicago, Illinois, Metalforming Technologies, Inc., and its debtor-affiliates manufacture seating components, stamped and welded powertrain components, closure systems, airbag housings and charge air tubing assemblies for automobiles and light trucks. The Company and eight of its affiliates, filed for chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos. 05-11697 through 05-11705). Joel A. Waite, Esq., Robert S. Brady, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor, represent the Debtors in their restructuring efforts. As of May 1, 2005, the Debtors reported $108 million in total assets and $111 million in total debts. MIRANT CORP: Court Approves Wrightsville Settlement Agreements -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approves the settlement agreements among Mirant Corporation and its debtor-affiliates, Wrightsville Power Facility, LLC, and Wrightsville Development Funding, LLC, with Pulaski County, Special School District, and the City of Wrightsville. The settlement agreements will facilitate the Debtors' sale of their Wrightsville Assets to Arkansas Electric Cooperative Corporation for $85 million Wrightsville Assets As reported in the Troubled Company Reporter on June 17, 2005, Mirant Corporation, Mirant Wrightsville Management, Inc., and Mirant Wrightsville Investment, Inc., are parties to a joint development venture with Kinder Morgan Power Company. The parties agreed to construct and operate a nominal 548 megawatt gas-fired combined cycle power generating facility located in Wrightsville, Arkansas. The development, construction and operation of the Facility were organized through Wrightsville Power Facility, LLC, while funding for the Facility was organized through Wrightsville Development Funding LLC. Wrightsville Management and Wrightsville Investment own a 51% interest in both WPF and WDF, while Kinder owns a 49% interest in each entity. Mirant Americas, Inc. owns 100% of the common stock of each of Wrightsville Management and Wrightsville Investment. On October 15, 2004, the parties executed a letter of intent. After extensive negotiations, the parties entered into an Asset Purchase and Sale Agreement, with a purchase price of $85,000,000 for the Assets. AECC will assume certain liabilities arising out of the ownership or operation of the Facility, excluding real and personal property taxes for any period prior to January 1, 2006. The Sale Agreement supersedes and replaces the LOI in its entirety. The settlement agreements are: A. The County Settlement Agreement The County, Wrightsville Power and Wrightsville Development, as holder of the Bonds, agree that: (a) the County will transfer the Scheduled Assets to Wrightsville Power or its designee; (b) Wrightsville will surrender the Bonds; and B. The School District Settlement Agreement Under the July 2000 Agreement, Wrightsville Power should have paid the School District $333,334 in annual payment on or before October 1 of the years 2001, 2002, and 2003. Payments were made in the years 2001 and 2002. But the commencement of the Debtors' Chapter 11 cases stayed the final payment by Wrightsville Power in October 2003. To settle all issues and disputes existing between Wrightsville Power and the School District, the parties propose that Wrightsville will pay the School District the final payment owed as soon as reasonably and legally practicable. The payment will be made from the proceeds of the Asset Sale. C. The City Settlement Agreement Although Wrightsville Power has substantially performed all of its obligations with the July 2000 Agreement, eight annual payments to the City for $120,000 remain unpaid over the next eight years. Thus, the parties propose that Wrightsville Power will pay the City $480,000 in lump sum to be placed in a municipal trust fund. The City will withdraw up to $120,000 per year for operations of the municipal government until the trust fund is depleted. A trustee will administer the trust to be funded by Wrightsville Power from the proceeds of the Asset Sale. In addition, Wrightsville Power will transfer to the City 6.66 acres of unimproved real property located due north of the Facility location via quitclaim deed. The Debtors ask Judge Lynn to approve the Settlement Agreement. 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: Sammons Addresses Relevance of Till Case in Valuation ------------------------------------------------------------------ Michael Sammons, a Mirant Corporation shareholder addresses the relevance of the case Till v. SCS Credit Corporation in the proceeding to determine Mirant and its debtor-affiliates' enterprise value. Mr. Sammons is a former member of the Official Shareholder Equity Committee who owns more than 300,000 of Mirant shares. Mr. Sammons tells the Court that it is understandable for the creditors to prefer a plan of reorganization, which provides them a 15-20% annualized return for many years to come. However, in the case of Till v. SCS Credit Corporation, 541 U.S. 465 (2004), the creditors are only entitled to a Plan comparable to an 8% return on new secured debt, assuming adequate collateral and ability to make principal and interest payments. With equilibrium power plant collateral value exceeding $10 billion, and EBITDA at $1.1 billion and increasing yearly, Mirant could easily support a $7 billion 30-year amortization schedule at a Till 8% interest rate, resulting in annual debt service payments of $620 million. Regardless whether Till can be applied to the Plan, Mr. Sammons believes that Till should certainly be considered insofar as an alternative Plan so as to provide creditors their entitlement, and $2 billion in equity value for the current owners. Assuming the Court finds within a reasonable business risk that Mirant would be able to make debt service payments of $620 million yearly, then the resulting equity value of $2 billion must be preserved in any alternative Plan, Mr. Sammons adds. "No [Plan] which provides less than $2 billion for current shareholders -- meaning the creditors would be receiving more than they are entitled to under Till -- could be confirmed." 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. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUELLER WATER: Inks $1.91 Billion Transaction with Walter Ind. -------------------------------------------------------------- Walter Industries, Inc. (NYSE:WLT) entered into a definitive agreement to purchase Mueller Water Products, Inc., a privately held, leading supplier of flow control products, for an aggregate value of approximately $1.91 billion. The consideration will consist of approximately $860 million in cash and the assumption of approximately $1.05 billion in Mueller debt, based on Mueller's balance sheet as of April 2, 2005, subject to adjustments as provided in the agreement. The acquisition complements the Company's U.S. Pipe subsidiary, creating a major water infrastructure and piping systems company with leading business positions, significant scale, and excellent prospects for growth. The transaction is expected to be accretive by $0.20 to $0.24 per fully diluted share in the first full year after closing; further, the estimated earnings accretion excludes approximately $25 to $35 million of ongoing annual operating synergies that are expected to be achieved within 24 months of the businesses being combined. Upon closing, U.S. Pipe will, as a legal matter, become part of Mueller, creating a separate wholly owned public reporting subsidiary that will have approximately $1.6 billion in revenues. By establishing a separate reporting entity, Walter is creating a subsidiary with meaningful scale, increasing its flexibility to pursue potential alternatives related to value creation at its other existing businesses. These include Jim Walter Resources, the Company's strong performing coal and natural gas unit. The Company recognizes the importance of capitalizing on opportunities to take advantage of robust coal market conditions at the best time and in the best manner to serve the interests of its shareholders. As announced in February of this year, Don DeFosset, Chairman and CEO of Walter Industries plans to retire. He has agreed to remain as Chairman and CEO until his successor has joined the Company. DeFosset will lead the integration process and assist in a smooth transition of leadership. "[Sun]day's announcement is another important milestone in our shareholder value creation program and a defining event in the development of our water systems business," Mr. DeFosset said. "We have been tracking Mueller's growth and compatibility with U.S. Pipe for some time, and we are excited to have the opportunity to bring these businesses together. The complementary fit of Mueller's water infrastructure and U.S. Pipe's water transmission business makes us ideal partners, well positioned to benefit from increased water infrastructure spending in North America." Dale B. Smith, Chief Executive Officer of Mueller, and Ray Torok, President of U.S. Pipe, will continue to be responsible for their respective businesses and will work together to achieve synergies under the leadership of Mr. DeFosset and his successor. Thompson Dean, Chairman of Mueller and Managing Partner of DLJ Merchant Banking said, "We are extremely pleased at this outcome for the DLJ Merchant Banking funds as well as the opportunities that this transaction creates for Walter Industries and Mueller going forward." Transaction Conditions and Financing The acquisition is expected to be completed in the third quarter of 2005, subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart- Scott-Rodino Antitrust Improvements Act, and the funding of the Company's committed financing. The requisite stockholders of Mueller, DLJ Merchant Banking Partners II, L.P. and its affiliated investment funds and Mueller's senior management have agreed to approve the merger. The purchase price will be financed by new bank credit facilities arranged by affiliates of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, both of whom are advising Walter Industries in connection with the acquisition. Simpson Thacher & Bartlett LLP is acting as the Company's outside legal counsel in connection with the acquisition. Review of Additional Opportunities The Company also said it has been working with Banc of America Securities LLC and Morgan Stanley & Co. Incorporated to advise it regarding additional strategies to further maximize shareholder value. The Company said the timing and structure of any strategic action would be based upon the financial performance of its respective operating segments, market conditions, tax consequences and other considerations, all of which will be fully analyzed in order to determine the most appropriate time and means to deliver value to shareholders. Walter Industries, Inc. -- http://www.walterind.com/-- is a diversified company with revenues of $1.5 billion, excluding Mueller. The Company is a leader in affordable homebuilding, related financing, and water transmission products, and is a significant producer of high-quality metallurgical coal for worldwide markets. Based in Tampa, Florida, the Company employs approximately 5,100 people. Mueller Water Products, Inc., based in Decatur, Illinois, is a leading North American full line supplier of water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution systems and piping systems. Its principal products are fire hydrants, water and gas valves, and a complete range of pipefittings, coupling hangers and related products. Mueller has earned a solid reputation for high quality products, with respected brand names such as Mueller, James Jones, Hersey Meters, Henry Pratt and Anvil. * * * As reported in the Troubled Company Reporter on April 8, 2005, Moody's confirmed the ratings of Mueller Group, Inc. (B2 senior implied rating), a wholly owned subsidiary of Mueller Water Products, Inc. The ratings confirmation was prompted by Mueller's successful filing of its 10-K for the fiscal year ended September 30, 2004 and 10-Q for the quarter ended January 1, 2005. The company's filing of these statements has cured technical violations under Mueller Group, Inc.'s credit facility, senior subordinated and senior secured notes, as well as Mueller Water Products, Inc.'s senior discount notes (unrated). The company received an unqualified opinion from its independent auditors. This concludes a review that was initiated on January 5, 2005. MUELLER WATER: Sale to Walter Industries Cues S&P to Watch Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on Walter Industries Inc. to 'BB-' from 'BB'. At the same time the ratings on Walter, Mueller Water Products Inc. (Mueller; 'B+'), and Mueller Group Inc. are placed on CreditWatch with negative implications. These actions follow the announcement that Walter has agreed to purchase Mueller for approximately $1.9 billion. The highly leveraged transaction will materially weaken Walter's pro forma financial profile. At March 31, 2005, Walter had approximately $182 million of recourse debt outstanding and Mueller had approximately $1.1 billion in total debt outstanding. Standard & Poor's initial pro forma leverage calculations at March 31, 2005, indicate that consolidated total debt to EBITDA for Walter will be about 5.5x, with debt leverage at its water business around 6.0x. Both figures exclude Standard & Poor's operating lease, pension, and capital finance company adjustments used for Walter's financing unit, which will likely increase these amounts. Both of these leverage amounts are significantly higher than Standard & Poor's previous expectations. Before taking further rating actions, Standard & Poor's intends to meet with management to discuss: * its near- and intermediate-term financing plans, including the company's pro forma capitalization and liquidity profile, * the business opportunities and integration risks that the transaction present, * the company's strategic objectives, and * the water group's legal structure as a wholly-owned public reporting subsidiary under Walter. Potential outcomes include the likelihood that existing ratings will be lowered. Tampa, Florida-based Walter is a diversified industrial conglomerate with strategic investments in the water transmission, natural resources, and affordable homebuilding and finance industries. In its fiscal year ended Dec. 31, 2005, the company generated a 7.7% operating margin on $1.2 billion of revenues. Decatur, Illinois-based Mueller manufactures a variety of products serving the water and gas industries, with trailing 12-month revenues of approximately $1.1 billion (at March 31, 2005) and an adjusted EBITDA margin of approximately 20%. Ratings Lowered And Placed On Creditwatch Negative Walter Industries Inc. To From -- ---- Corporate credit rating BB-/Watch Neg/-- BB/Stable/-- Sr Secd rev credit agreement BB-/Watch Neg BB Conv senior sub notes B/Watch Neg B+ Ratings Placed On Creditwatch Negative Mueller Water Products Inc. To From -- ---- Corporate credit rating B+/Watch Neg/-- B+/Stable/-- Senior unsecured debt rating B-/Watch Neg B- Mueller Group Inc. To From -- ---- Corporate credit rating B+/Watch Neg/-- B+/Stable/-- Senior secured debt rating B+/Watch Neg B+ Senior unsecured debt rating B-/Watch Neg B- MUSHTAQ KANCHWALA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Mushtaq B. Kanchwala 1050 Bluebird Lane Roselle, Illinois 60172 Bankruptcy Case No.: 05-24314 Type of Business: The Debtor owns a Chicago Street Pizza franchise. The Debtor previously filed for chapter 11 protection on Dec. 15, 2005 (Bankr. N.D. Ill. Case No. 04-46027). Chapter 11 Petition Date: June 20, 2005 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: Marc C. Scheinbaum, Esq. Cohen & Krol 105 West Madison Street, Suite 1100 Chicago, Illinois 60602 Tel: (312) 368-0300 Fax: (312) 368-4559 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Countrywide Home Loans 1050 Bluebird Lane $455,000 Mail Stop SV26B Roselle, IL 60172 P.O. Box 10229 Value of Security: Van Nuys, CA 91410-0229 $340,000 Banco Popular $329,500 Cohon Raizes & Regal LLP 208 South LaSalle Street Suite 1860 Chicago, IL 60604-1160 Unknown Interest in second $300,000 property in Alabama valued $360,000 loan currently $300,000. Debtor is not liable on mortgage on this property. Value of Security: $3,000 The Quality Cheese, Inc. Chicago Street $143,000 266 Glen Ellyn Road Pizza Bloomingdale, IL 60108 Greater Chicago Bank Business Loan $99,414 220 North Mannheim Road Bellwood, IL 60104 Murad Fazal Promissory Note $75,000 1737 South LaLonde Avenue Lombard, IL 60148 Midwest Bank Loan $63,335 Loan Operations Department 501 West North Avenue Melrose Park, IL 60160 Marc Realty $48,000 55 East Jackson, Suite 500 Chicago, IL 60604 Greater Chicago Bank 1050 Bluebird Lane $27,070 220 North Mannheim Road Roselle, IL 60172 Bellwood, IL 60104 Value of Security: $340,000 Value of Senior Lien: $455,000 American Express $16,878 Business Gold P.O. Box 297879 Fort Lauderdale, FL 33329-7879 Parkway Bank Loan $16,534 Loan Department Naveed Pizza 4800 North Harlem Avenue Enterprises, Inc. Harwood Heights, IL 60706 Moiz Kanshwala Loan $15,000 275 Fairhaven Drive Saint Charles, IL 60175 Infiniti Financial Services 2003 Infiniti QX4 $9,856 P.O. Box 0568 Carol Stream, IL 601320568 Yellow Pages Advertising Chicago Street $9,122 M. Leslie Kite & Associates, PC Pizza 1 North Franklin Suite 650 Chicago, IL 60606-3455 Capital Ventures Collections $4,500 Fuchs & Roselli Ltd. 311 South County Farm Road Suite A Wheaton, IL 60187 Discover Credit Card $3,920 P.O. Box 15255 Wilmington, DE 198865255 Peoples Energy Naveed K Inc. $3,591 Chicago, IL 606870001 Peoples Energy $3,504 Chicago, IL 606870001 United States Postal Service $3,500 Volvo Expired Lease $3,901 1700 Jay Ell Drive Richardson, TX 75081 NORSTAN APPAREL: Wants to Walk Away from CBA with Union Local 99 ---------------------------------------------------------------- Norstan Apparel Shops, Inc., asks the U.S. Bankruptcy Court for the Eastern District of New York for authority to reject a collective bargaining agreement with its office and distribution employees' Union Local 99 unit. The Union has 50 members working at the Debtor's Long Island warehouse. The Debtor operated 229 retail stores selling women's apparel. The Debtor's business was recently sold to a group of investors comprised of Gordon Brothers Retail Partners, DJM Asset Management, LLC, Rainbow Northeast Leasing, Inc., Simply Fashion Stores, Ltd., Hilco Real Estate LLC, and Hilco Merchant Resources, LLC. The sale was consummated on June 1, 2005. As a result of the asset sale, the Debtor tells the Court, it won't be selling women's apparel any longer. The Debtor intends to vacate its Long Island City warehouse in by June 30, 2005. In addition, the new owners of the business made it clear they won't assume the CBA and won't keep the Union in place. The company's management met with Union representatives to discuss the rejection of the CBA in light of the sale of the Debtor's business. The Union rejected the Debtor's initial proposal in April. Further negotiations culminated in a Stipulation with the Union. A full-text copy of that agreement is available for free at http://bankrupt.com/misc/norstan.pdf The Honorable Carla E. Craig will convene a hearing on July 7, 2005, at 1:00 p.m. to review the Stipulation and approve the Debtor's rejection of the CBA. Headquartered in Long Island City, New York, Norstan Apparel Shops Inc., dba Fashion Cents, operates 229 retail stores selling women's budget-priced apparel. The stores are located in 24 states throughout the Midwestern, Midsouthern, Mid-Atlantic and southeastern regions of the United States. The Company and its debtor-affiliates filed for chapter 11 protection on April 8, 2005 (Bankr. E.D.N.Y. Case No. 05-15265). Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $19,637,000 and total debts of $44,776,000. NORTH ATLANTIC: Inks $85 Million Refinancing Pact with Fortress --------------------------------------------------------------- North Atlantic Trading Company, Inc., entered into an $85 million senior secured bank facility with Fortress Credit Corp. The five- year facility consists of a $30 million term loan and $55 million revolving credit facility and is secured by substantially all of the assets of NATC and its subsidiaries. The facility will be used to refinance NATC's existing senior credit facility and to provide additional financial flexibility to NATC for working capital and other corporate purposes. "Creating a strong financial partnership with Fortress represents a key step in our plan to turn around our company," said Mr. Douglas Rosefsky, President and Chief Executive Officer of NATC. "Fortress has an excellent understanding of our business and we are pleased to have them become a significant partner going forward." Executive Changes Effective Jan. 19, 2005, David I. Brunson resigned as President and Chief Financial Officer of NAHC and the Company and all other positions held by Mr. Brunson at NAHC, the Company and its subsidiaries and affiliates. Douglas Rosefsky, who served as the companies' Chief Financial Officer since January 2005, has been appointed Chief Executive Officer and Brian Harriss has been appointed as Chief Financial Officer. Mr. Rosefsky is a managing director of Alvarez & Marsal, a global professional services firm, and his services are provided pursuant to the companies' engagement of that firm. Mr. Harriss, who replaces Mr. Rosefsky as Chief Financial Officer, had previously served in various senior finance, planning and business development positions at a number of market-leading consumer products and direct marketing companies, including PepsiCo., Inc., Cadbury Schweppes P.L.C., The Readers' Digest, Inc. and, most recently, Hanover Direct, Inc. Mr. Helms, who formerly served as both Chairman and Chief Executive Officer and is North Atlantic Holding Company's controlling stockholder, will continue as an executive Chairman and a full-time employee, focusing on the companies' general business strategies, strategic alliances, joint ventures, acquisitions and licensing arrangements. North Atlantic Trading Company, Inc., competes in the American tobacco market with leading brands in a variety of adult consumer segments. These strategic segments are premium cigarette papers, loose-leaf smokeless tobacco, make-your-own cigarette tobacco and premium manufactured cigarettes. The company's well known brands include: Zig-Zag, Beech-Nut, Durango, Trophy, Stoker's(TM), Our Pride(TM) and Old Hillside(TM). The company conducts its operations from Louisville, Ky., and Dresden, Tenn. At March 31, 2005, NATC's balance sheet showed an $18,146,000 stockholders' deficit, compared to a $13,796,000 deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on Feb. 2, 2005, Standard & Poor's Ratings Services lowered its ratings on smokeless tobacco processor and niche cigarette manufacturer North Atlantic Holding Company, Inc., and its wholly owned subsidiary, North Atlantic Trading Co. Inc., including its corporate credit rating to 'CCC+' from 'B'. At the same time, the CreditWatch implications were revised to developing from negative. The ratings remain on CreditWatch where they were originally placed on Nov. 18, 2004. About $347 million of rated debt on New York, New York-based North Atlantic is affected. As reported in the Troubled Company Reporter on Jan. 26, 2005, Moody's Investors Service downgraded the ratings of North Atlantic Trading Company, Inc., and placed them under review for possible further downgrade. The action follows the announcement of the resignation of the company's chief financial officer. The ratings downgraded and placed under review for possible downgrade: -- North Atlantic Trading Company: * Senior implied rating, to B3 from B2 * $200 million 9-1/4% global notes due 2012, to B3 from B2 -- North Atlantic Holding Company -- NAHC: * $75 million senior notes due 2014, to Caa3 from Caa1 The rating assigned and placed under review for possible downgrade: -- North Atlantic Holding Company -- NAHC: * Issuer rating, at Caa3 The ratings downgrade is driven by the uncertainty created by the resignation of the Company's chief financial officer announced in January 2005. Also, in exchange for various changes to the agreement governing its revolving credit maturing in February 2007, the Company has agreed to a reduction in the commitment amount from $50 million to $35 million. The departure of a key member of senior management only a few months after closing of a transaction significant for the Company raises uncertainty over the financial and operating direction of North Atlantic Trading, while it remains in a weak financial position. NUR MACROPRINTERS: Talks with Several Potential Investors Begin --------------------------------------------------------------- NUR Macroprinters Ltd. (Pink Sheets:NURM) has been contacted by and begun discussions with several parties regarding an investment in or strategic transaction involving NUR to replace the recently terminated proposed investment by Inspire Investments Ltd. NUR has also received a proposed offer from Dan Purjes, a major shareholder of NUR and a former Chairman of the Board, to make an investment in the company. Mr. Purjes has offered an investment of $1 million in the company and to follow this investment by attempting to raise an additional $9 million for the company by the end of 2005. Mr. Purjes has advised that the financial terms of this proposed investment are intended to be similar to those of the proposed Inspire investment. This offer is subject to a number of substantive closing conditions, including, among others: -- board approval, -- shareholders' approval, -- the lender banks' agreement to waive prior defaults and to forebear from declaring continuing defaults until the end of 2005; and -- the negotiation and completion of definitive documents. NUR is in discussions with its lender banks regarding these possibilities. Based on the current status of these discussions, NUR intends to continue to pay suppliers and to conduct its business in the ordinary course, subject to review by its lender banks. There can be no assurance that any of the proposals will result in a completed transaction or that the conditions described in the Purjes proposal can be satisfied. If the company is unable to conclude a satisfactory refinancing, it will consider alternative plans to address its immediate and long-term financing requirements, which alternative plans include, but are not limited to, seeking protection from creditors under the Israeli law. In light of the rapidly changing events, management will endeavor to report publicly on these events as promptly as appropriate. As reported in the Troubled Company Reporter on June 20, 2005, as a result of the termination of the Inspire agreement, NUR's previously announced restructuring agreement with its bank lenders -- Bank Hapoalim B.M., Bank Leumi le Israel B.M. and Israel Discount Bank Ltd. -- will terminate since the debt restructuring was conditioned upon the closing of the Inspire investment. The combination of the Inspire investment and the restructuring of NUR's outstanding bank debt was supposed to strengthen NUR's financial position by infusing $10 million in cash into the business, reducing NUR's current debt burden by 35% and rescheduling NUR's remaining $28 million of debt over the next 7 years under commercial terms that better suit NUR's business model. The termination of the restructuring agreement with NUR's bank lenders will result in the acceleration of NUR's outstanding bank debt. NUR's management intends to meet with its lender banks in order to discuss alternative restructuring plans. NUR is also actively considering alternative plans to address its immediate and long- term financing requirements, which alternatives include, but are not limited to, seeking protection from creditors under the Israeli bankruptcy laws. NUR's independent auditors completed their audit of NUR's 2004 financial statements. As a result of the termination of the Inspire investment and the termination of the restructuring agreement and acceleration of NUR's outstanding bank debt, NUR expects that its financial reports will include a "going concern" qualification in the Independent Auditor's report to be included in its Annual Report on Form 20-F. NUR Macroprinters (NURM.PK) -- http://www.nur.com/-- supplies wide-format inkjet printing systems used for the production of out-of-home advertising materials. From entry-level photo- realistic printers to high-throughput production presses, NUR's complete line of cost-effective, reliable printing solutions and companion inks are helping customers in over 100 countries worldwide address the full spectrum of wide-format printing requirements. NUR customers, including commercial printing companies, sign printers, screen printers, billboard and media companies, photo labs, and digital printing service providers, count on NUR to help them deliver the high quality and fast turnaround they need to meet their clients' exacting demands and succeed in today's competitive marketplace. OWENS CORNING: Files Status Report on Commercial Comm. Advisors --------------------------------------------------------------- At the omnibus hearing on May 16, 2005, in Owens Corning and its debtor-affiliates' chapter 11 cases, Judge Fitzgerald asked the Official Committee of Unsecured Creditors, Credit Suisse, Cayman Branch (formerly known as Credit Suisse First Boston), acting through its Cayman Branch, as Agent for the prepetition bank lenders under the June 26, 1997 Credit Agreement, and the subcommittee consisting of Designated Member John Hancock Life Insurance to submit a report to update the Court concerning the activities of the commercial creditor constituencies' advisors. The Commercial Committee, the Banks and the Bondholders complied and submitted their Report on June 17, 2005. The Committee consists of representatives of the Banks, bondholders and trade claimants. Davis Polk & Wardwell was retained as counsel, nunc pro tunc to October 25, 2000. Houlihan, Lokey, Howard & Zukin Capital serves as financial advisor. Owens Corning's obligations to the Banks under the Credit Agreement were guaranteed by a number of its subsidiaries, including IPM, Inc., which holds the stock of Owens Corning's foreign operating subsidiaries. Neither IPM nor the foreign subsidiaries are Debtors. The Debtors filed an adversary proceeding that sought to enjoin the Banks from exercising their rights and remedies against the non-Debtor guarantors, including IPM. To resolve that adversary proceeding, the parties negotiated a Standstill and Waiver Agreement, which the Court approved. Under the Standstill Agreement, Credit Suisse is entitled to be reimbursed by Owens Corning for its fees and expenses incurred in connection with its participation in the bankruptcy cases or the enforcement of any rights under the Credit Agreement. The Banks' advisors -- Capstone Advisory Group LLC, their financial advisor, and Weil, Gotshal & Manges LLP and Kramer Levin Naftalis & Frankel LLP, their counsel -- are thus paid pursuant to the Standstill Agreement. Concurrently with the negotiation of the Standstill Agreement, it became apparent that there were conflicting interests between the Banks and Bondholders within the Committee, centering around a key issue in the case -- whether the non-Bank constituencies could and would seek to vitiate the guarantees provided to the Banks under the Credit Agreement. Because of this conflict of interest, the Committee's advisors were precluded from ethically representing either side of this dispute. To solve that dilemma, the Bondholders -- with the agreement of the Debtors and the Banks -- sought Court authority to retain their own separate advisors. The "Designated Members" of the Committee retained Anderson Kill & Olick, P.C., in March 2001 as their counsel. BDO Seidman, LLP, was retained as special financial advisor in October 2001. These advisors represent the interests of the Bondholders to the extent they diverged from those of the Committee as a whole. Differing Roles of the Advisors A. Intercreditor Project The advisors for the Banks and the Bondholders participated extensively in the Intercreditor Project, the substantive consolidation trial and post-trial briefing, as well as the appeals process. The Committee advisors, disabled by the Bank/Bond conflict, played no role in these proceedings. The Intercreditor Project is a year-long effort involving extensive document discovery, negotiation of thousands of fact stipulations for use in trial on substantive consolidation, extensive efforts to mediate the dispute, and more than 40 depositions. B. Fraudulent Conveyance Adversary Proceeding The advisors to both the Banks and the Bondholders played key roles in the Debtors' adversary proceeding to avoid the Banks' subsidiary guarantees as alleged fraudulent conveyances. The Committee advisors played no role. The action has been removed to the District Court. The Bondholders sought permission to intervene as plaintiffs. The District Court stayed the fraudulent conveyance action pending resolution of the substantive consolidation dispute. It is expected that the stay will be lifted and the action will continue if substantive consolidation is denied. Unless the complaint is dismissed, the prosecution and defense of the fraudulent conveyance action will require discovery centering on, among other things, the solvency of the Debtors and, ultimately, a trial. Given the nature of the issues, it will be necessary for the Banks' and the Bondholders' financial advisors, as well as their counsel, to participate actively in the discovery process and in the trial of the fraudulent conveyance claims. In anticipation of a ruling from the Third Circuit on substantive consolidation, and in order to avoid any delay in the progress of the Debtors' Chapter 11 cases should the Third Circuit reverse Judge Fullam's order, it is important that the Bank and Bondholders advisors continue to prepare for resolution of the fraudulent conveyance dispute. C. Asbestos Claims Valuation It was originally expected that the Committee advisors would take the lead in challenging the estimation of the aggregate value of asbestos personal injury claims to be treated in a plan of reorganization -- an issue on which the Banks and the Bondholders initially were not in conflict. However, in June 2003, the Bondholder members of the Committee reached an agreement with the Debtors to support a plan of reorganization that, like the Debtors' plan currently on file, would be premised on substantive consolidation and a confirmation condition requiring that the combined asbestos claims of Owens Corning and Fiberboard be valued at $16 billion. The Banks have consistently opposed any such plan. The Term Sheet thus created an additional conflict -- on asbestos valuation -- between the Banks and the Bondholders, which meant that the Committee advisors would not be able to play a role in challenging the estimation of the asbestos valuations proffered by the Debtors, the Asbestos Claimants Committee and the Futures Representative. The Banks' advisors, in particular Weil Gotshal, were thus forced to step in on short notice and to play the lead role in discovery and at trial before Judge Fullam contesting the asbestos valuations proffered by the other constituencies. They are continuing in that role in the estimation appeal filed in the Third Circuit -- an appeal that has yet to be briefed or argued. D. Other Contested Issues Requiring Separate Advisors If the Court of Appeals reverses Judge Fullam's substantive consolidation order, absent an overall agreement in the case, there will likely be a divergence of views between the Banks and the Bondholders as to the value of the guarantor subsidiaries, and related disputes over the amount, seniority and enforceability of various intercompany claims. There may also be disputes between the Banks and Bondholders as to whether the Banks are entitled to postpetition interest and at what rate. In addition, the Asbestos Claimants Committee has threatened, if substantive consolidation is reversed, to seek recovery from the subsidiary guarantors under theories of successor liability, and the Bondholders have threatened a veil piercing action. The Bondholders and the Banks likely will be on opposite sides of each of these disputes, the Committee's advisors will be unable to represent either side. The Banks' and the Bondholders' advisors are continuing to prepare for the resolution of these issues, whether through trial or negotiation. The Debtors have confirmed that they, too, are working to analyze each of these issues and, in order to be in a position to move the case forward, want to make efficient use of the time while the parties await a decision from the Third Circuit. Plan Negotiations The parties have also been engaged in negotiations directed toward a possible consensual plan of reorganization. These negotiations require investigation and analysis of the same disputed issues that will otherwise have to be litigated: -- the value and solvency of the subsidiaries, -- the amount and character of intercompany claims, and -- the applicability and amount of postpetition interest. Case Monitoring & Administrative Activities The Committee's advisors continue to play a necessary role in monitoring the ongoing business activities of the Debtors, the day-to-day administration of the Debtors' estates and other areas where there is no conflict of interest among the members of the Committee. In plan negotiations, the Committee's advisors will take the lead in issues like plan feasibility, claims reconciliation processes, distribution mechanics, questions surrounding executory contract assumption or rejection, and other issues with which a commercial creditors' committee normally would be concerned. Adjustments to Fee Caps The parties agreed to reallocations of the financial advisor fees based on the shifting of the workload. The commercial creditors and their advisors have been diligent in avoiding unnecessary duplication of effort, and the Banks and Bondholders have properly deferred to the Committee's advisors on those issues that do not pose a conflict between the two Committee constituencies. Counsel for the Committee, Banks and Bondholders submit that the Debtors' estates have not been burdened with unnecessary fees and that, in fact, the aggregate cost to the estate of the commercial creditors' combined professionals has been equivalent to the cost of what one set of committee professionals would have incurred to protect the interests of the commercial creditors. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS SATELLITE: Bernstein Wants Court to Approve Final Payments ------------------------------------------------------------------ Bernstein, Shur, Sawyer & Nelson, served as co-counsel to Pegasus Satellite Communications, Inc. and its debtor-affiliates in their Chapter 11 cases. Bernstein Shur sought payment of these amounts from December 2004 through May 2005: Month Fees Expenses Total ----- ---- -------- ----- December 2004 $5,805 $469 $6,274 January 2005 7,136 1,588 8,724 February 2005 6,926 2,929 9,854 March 2005 10,701 951 11,651 April 2005 11,852 2,002 13,854 May 2005 6,554 304 6,858 As of June 8, 2005, the Debtors have paid Bernstein Shur $218,418. There remains a balance of $57,215, $4,242 of which represents a 10% holdback amount from the prior fee statements. As co-counsel, Bernstein Shur provided these services to the Debtors: Service Description Services Rendered ------------------- ----------------- Asset Disposition Attended to requests for bidding procedures; attended to correction to tower lease (Spectrasite) filing; attended to e-filing of motion to abandon/sell; attended hearing with respect to motion to abandon/sell; reviewed motion to approve stipulation Case Administration Drafted, reviewed or filed numerous pleadings and other documents with the Court, interacted with the Debtors related thereto, and attended various hearings before the Court, representing the Debtors Claims Administration Reviewed and attended hearings and Objections with respect to the Miller claim; reviewed and attended hearings with respect to the Russell claim; reviewed and docketed deadlines with respect to the Gatelinx claim Fee/Employment Filed various monthly fee Applications statements and certificates of no objection for professionals to the Debtors; filed various interim applications for compensation and reimbursement of expenses for professional to the Debtors Litigation Reviewed the complaint filed by Felton Street; discussed local practice with Sidley Austin; reviewed joint pre-trial statement; reviewed various e-filings and docketed court-related deadlines Plan and Disclosure Drafted and filed notices of Statement continued hearing on confirmation of plan hearing; had discussions with creditors objecting to plan; reviewed and filed all pleadings with respect to confirmation of plan Other Provided various other services to the Debtors, including, without limitation, the organization of financial information regarding the Debtors, the indexing and organization of pleadings, updating of service lists, docketing of court deadlines, and other administrative tasks necessary to efficiently manage the cases In this regard, Bernstein Shur asks the U.S. Bankruptcy Court for the District of Maine to compel the Debtors to pay $57,215, which includes fees amounting to $48,973 and expenses totaling $8,242. Bernstein Shur further asks the Court to approve the payment of a $4,242 additional interim compensation, representing 10% of the invoices submitted to the Debtors for the period of December 1, 2004, through April 30, 2005. Bernstein Shur also asks the Court to grant final approval of all allowed fees, which total $275,633, on a final basis. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) PIVX SOLUTIONS: Accumulated Deficit Triggers Going Concern Doubt ---------------------------------------------------------------- Singer Lewak Greenbaum & Goldstein LLP expressed substantial doubt about PivX Solutions, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's negative cash flow, accumulated deficit and limited working capital. At March 31, 2005, the Company had negative working capital of approximately $2,948,000. During the first quarter of 2005, the Company raised proceeds of $950,350, net of offering costs of $34,124, through the sale of, and the commitment to sell, a total of 1,968,950 shares of common stock. PivX plans to obtain additional working capital through additional private placements of its equity or debt securities. The Company plans to use the additional capital to continue its research, development, sales and marketing efforts. PivX has implemented significant cost reductions in headcount and overhead to reduce losses and improve viability. Loan Amendment On April 3, 2005, the Company entered into an amendment to a promissory note and revolving loan agreement effective January 20, 2005 between two executives and the Company. The Loan Amendment modifies the repayment provisions of the Note to provide that for a twenty-four month term beginning on May 15, 2005, and on the 15th of every month thereafter, the Company will collectively pay the executives $19,584 per month, for a total of $470,000 by the end of the term. In addition, pursuant to a letter agreement dated April 3, 2005, the executives agreed that for a period of six months beginning on May 15, 2005, they will not offer, sell, contract to sell, pledge, grant or otherwise dispose of more than 20,000 shares of common stock, par value $.001 per share, of the Company in any one month period. Limited Management Experience The Company changed management in an effort to stem significant losses and improve working capital. The new management, the Company says, lacks experience in the software industry, where technology changes are rapid, and product lives are relatively short in duration. The lack of experienced management causes inherent uncertainties about the ultimate success of the Company. Going Concern Considerations During the three months ended March 31, 2005, the Company incurred a net loss of $2,741,111 and had negative cash flows from operations of $1,788,710. In addition, the Company had an accumulated deficit of $12,680,350 at March 31, 2005. The Company's ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. Since inception, the Company has satisfied its capital needs primarily by issuing equity securities. With the introduction of its primary product into the market and following the results of the first evaluation sales, management now believes that it will begin to generate revenues during calendar 2005. There is no guarantee that the product will be accepted or provide a marketable advantage and therefore no guarantee that the product will ever be profitable. Bankruptcy Warning The Company reduced its headcount from 29 employees at March 31, 2005, to 15 as of June 8, 2005. Should PivX be unable to raise additional capital, it may be forced into, or new management may elect to file for, bankruptcy, which could significantly reduce the value of shareholder interests, as well as the carrying value of its assets and liabilities. The Company has experienced a net loss of $2.7 million for the first three months of 2005 and has also experienced net losses of $8,600,000 and $600,000 in fiscal 2004 and 2003, respectively, and expects to continue to incur significant net losses for the foreseeable future. While unable to predict accurately future operating expenses, management currently expects these expenses to increase substantially. PivX' cash position as of March 31, 2005 was that of an overdraft of approximately $106,000. PivX Solutions, Inc., formerly known as Drilling, Inc., is a vulnerability research and security solutions company providing security software and consulting services to a variety of businesses, consumers and government agencies. In August 2004, PivX completed its development of Qwik-Fix Pro(TM), a security software tool, which enables Microsoft computer users to be pro- actively protected from worms, viruses and malware. The first subscription sales of Qwik-Fix Pro (TM) were made in the quarter ended September 30, 2004. Qwik-Fix Pro is also sold under the name PreEmpt through various computer OEM/retailers. At Mar. 31, 2005, PivX Solutions, Inc.'s balance sheet showed a $430,378 stockholders' deficit, compared to a $1,211,660 postive equity at Dec. 31, 2004. PRESIDENTIAL LIFE: Weak Risk Management Cues S&P to Lower Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Presidential Life Insurance Co. (NY) to 'BB-' from 'BB+'. Standard & Poor's also said that it lowered its counterparty credit and senior debt ratings on Presidential Life Corp. to 'B-' from 'B+'. In addition, Standard & Poor's removed all the ratings from CreditWatch negative, where they had been placed on April, 1, 2005, following the release of the company's 10-K, which was delayed as a result of accounting errors. The outlook on both companies is stable. "The downgrade reflects our view that the company's weak risk- management framework increases Presidential's vulnerability to the broad array of risks that are embedded in its investment and operational profile," said Standard & Poor's credit analyst Jeff Watson. "The company takes an aggressive posture toward interest rate risk, liquidity risk, and credit risk and offers generous product features, which, combined with a weak risk management framework and weak controls, is not consistent with higher ratings." Although the company maintains a low expense structure, this structure limits the resources available to management to adequately monitor and manage its numerous risk exposures and maintain effective controls. The ratings reflect: * the company's aggressive investment and corporate strategies, * poor risk-management framework, * marginal capital adequacy, * volatile earnings profile, * inherent operational risk, and * narrow competitive position. Somewhat offsetting these challenges are the company's: * adequate liquidity profile, * improving NAIC risk-based capital levels, and * improved earnings in 2004. Total sales in 2005 are expected to remain low at about $250 million, as the company seeks to grow capital and improve its NAIC risk-based capital levels to more than 265% by year-end 2005. Capital adequacy remains low for the current rating but will increase to more than 100% based on Standard & Poor's model. The company's operating performance will remain at 2004 levels, as spread compression offsets continued improvement in limited partnership income. The pretax operating ROA is expected to be 1.50%-1.75%, which, on a risk-adjusted basis, is consistent with the ratings. Debt leverage should continue to fall in 2005 and will remain less than 30%. Interest coverage will be at least 4x. The investment profile is expected to remain aggressive, but management is beginning to take steps to reduce some of its risk exposures. The company has received state approval for its "Derivative Use Plan" and is expected to begin implementation in late-2005. The company will use the planned hedging strategy to better manage its interest rate risk and reduce the duration gap between assets and the liabilities they support. Standard & Poor's will closely monitor the effectiveness of the hedge and its impact on Presidential's risk profile, though the underlying strategies remain aggressive. RARITAN VALLEY: Case Summary & 47 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Raritan Valley Sheet Metal, Inc. 570 Sayre Avenue Perth Amboy, New Jersey 08861 Bankruptcy Case No.: 05-30428 Type of Business: The Debtor is a sheet metal contractor. Chapter 11 Petition Date: June 21, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: James B. Brown, Esq. Shore & Zahn, P.C. 5F Auer Court, P.O. Box 755 East Brunswick, New Jersey 08816 Tel: (732) 254-5500 Fax: (732) 254-5968 Estimated Assets: Unstated Estimated Debts: $1 Million to $10 Million Debtor's 47 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Robert Brown $434,816 83 Pine Hill Road Stockton, NJ 08559 SMW Fringe Benefit Funds $93,500 P.O. Box 847 Farmingdale, NJ 07727 Miller & Chitty Company, Inc. $51,400 P.O. Box 256 Kenilworth, NJ 07033 Empire Distributors $42,049 14 Ford Products Road Valley Cottage, NY 10989 Jen-Cyn Enterprises, Inc. $31,805 P.O. Box L522 Langhorne, PA 19047 Homans Association $19,053 1835 Burnett Avenue Union, NJ 07083 Shanker Law Group $17,188 101 Front Street Mineola, NY 11501 Ford Motor Credit $13,000 P.O. Box 220564 Pittsburgh, PA 15257 Hudd Steel Corporation $7,500 PO Box 10 South Plainfield, NJ 07080 Connell Foley $7,130 85 Livingston Avenue Roseland, NJ 07068 New Jersey Manufacturers Insurance Company $6,149 Sullivan Way - CN 00228 W. Trenton, NJ 08628 Cape Sales, Inc. $5,026 80 Red School House Pond Chestnut Ridge, NY 10977 Portney & Company $4,850 1086 Teaneck Road Teaneck, NJ 07666 Mason & Dixon Lines $3,718 P.O. Box 33298 Detroit, MI 48232 Air and Heat Company, Inc. $3,100 18 Ropes Place Newark, NJ 07107 Totowa Metal Fabricators Inc. $2,543 85 Fifth Avenue Paterson, NJ 07524 Yarde Metals Inc. $2,292 45 Newell Street Southington, CT 06489 United Crane Company $2,145 P.O. Box 8 Kenilworth, NJ 07033 Newrent Inc. $2,110 520 Belleville Pike Kearny, NJ 07032 Mechanical Equipment Supply Company $1,929 230 West Parkway, Unit 15A Pompton Plains, NJ 07444 Ardino Distributing $1,703 26 Stockton Street Bloomfield, NJ 07003 Napco Copy Graphics $1,678 P.O. Box 234 Lyndhurst, NJ 07071 Coward Environmental Systems $1,645 501 Birchfield Drive Mt. Laurel, NJ 08054 S.W. Anderson Sales Corporation $1,565 63 Daniel Street Farmingdale, NY 11735 Engineered Air, Inc. $1,372 1665 Busketon Pike Feasterville, PA 19053 Elizabethtown Gas $1,171 P.O. Box 1450 Elizabeth, NJ 07207 Star Gas $750 4360 Convery Boulevard Perth Amboy, NJ 08861 Bruce R. Koerner Cranes & Equipment $723 P.O. Box 647 Rockaway, NJ 07866 AT&T $703 P.O. Box 8212 Fox Valley, IL 60572 Carpenter & Paterson, Inc. $678 369 Jefferson Avenue Saddle Brook, NJ 07662 Nextel Communications $661 P.O. Box 821001 Philadelphia, PA 19182 Hilti Inc. $657 P.O. Box 382002 Pittsburgh, PA 15250 Peterson & Staeger, Inc. $651 P.O. Box 228 Keyport, NJ 07735 Home Depot $567 P.O. Box 6029 The Lakes, NV 88901 Industrial Welding Supply $515 4 Val Street Sayreville, NJ 08872 Samson Metal Service, Inc. $510 P.O. Box 421 Dayton, NJ 08810 PSE&G $483 295 North Broad Street Elizabeth, NJ 07207 Paychex, Inc. $315 135 Chestnut Ridge Road Montvale, NJ 07645 Prolift of New Jersey $281 1808 Brielle Avenue Ocean, NJ 07712 Selective Insurance $262 1 McCandless Street Linden, NJ 07036 Shallcross Bolt & Specialties $262 1 McCandless Street Linden, NJ 07036 Sheet Metal Contractors Association $255 P.O. Box 307 Dayton, NJ 08810 Siperstein Fords $196 P.O. Box 422 Jersey City, NJ 07303 Phil Anderson's Flowers $176 762 Green Street Iselin, NJ 08830 Staples $102 P.O. Box 9020 Des Moines, IA 50368 Madsen & Howell, Inc. $48 500 Market Street Perth Amboy, NJ 08661 O'Brien, Belland/Sheet Metal $0 2111 New Road Northfield, NJ 08225 ROYAL GROUP: Hires Deutsche Bank & Scotia Capital to Review Offers ------------------------------------------------------------------ Royal Group Technologies Limited (RYG.SV-TSX; RYG-NYSE) is evaluating strategic alternatives, including a sale of the Company, and has engaged Deutsche Bank and Scotia Capital as financial advisors to assist the company in evaluating interest from potential acquirors of the Company. The process will include a broad list of potential buyers as well as Cerberus Capital Management L.P. that previously submitted an unsolicited request for access to the Company's books and records, indicating that, if satisfied, it may make an offer of $14.00 per share. No offer for shares of Royal Group has yet been made by Cerberus. The Company will establish a data room and make other information available to parties interested in considering a transaction. PricewaterhouseCoopers LLP has been retained by Royal Group to assist with assembly of the data room. Royal Group also announced that the special committee has been reconstituted after its annual and special meeting, such that the members are now Robert Lamoureux (Chair), James Sardo, Irvine Hollis, Carol Hansell and Graham Savage. The special committee has also retained BMO Nesbitt Burns to provide the committee with independent advice as to the adequacy of any definitive proposal that may be received and Goodmans LLP as legal counsel. The Company anticipates that the process will require several months, but cautions that there is no assurance that a definitive proposal will emerge. Additionally, the special committee has not made any determination as yet whether a sale would be in the best interests of the Company or its shareholders. Royal Group Technologies Limited -- http://www.royalgrouptech.com/ -- manufactures innovative, polymer-based home improvement, consumer and construction products. The company has extensive vertical integration, with operations dedicated to provision of materials, machinery, tooling, real estate and transportation services to its plants producing finished products. Royal Group's manufacturing facilities are primarily located throughout North America, with international operations in South America, Europe and Asia. * * * As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on Royal Group Technologies Ltd. to 'BB' from 'BBB-'. At the same time, Standard & Poor's removed its ratings on Royal Group from CreditWatch, where they were placed with negative implications Oct. 15, 2004. The outlook is currently negative. The ratings reflect a transitioning management team, and short- term problems such as weak liquidity, weak internal controls, and near-term refinancing requirements. The ratings also reflect longer-term issues such as weakening profitability and a low return on capital. These risks are partially offset by the company's adequate annualized cash flow protection and moderate leverage. "Although the moderate debt leverage, steady free cash flow generation, and an underlying solid business profile have supported the ratings through a very difficult year, we now believe that the distractions caused by the criminal investigations and governance problems have resulted in (and exposed) both short- and long-term problems," said Standard & Poor's credit analyst Daniel Parker. "Accordingly, the overall business and financial profile do not currently support an investment-grade rating," added Mr. Parker. Despite significant improvement with regards to corporate governance, the company is still in transition as it seeks to hire a permanent chief executive officer and chief financial officer. The company has also proposed five new independent candidates to join the board following its annual general meeting. S&P believes it will take at least several quarters before new management and the board decide on any major strategic decisions, and before new management would be able to learn the business. The company has multiple business lines and requires a continued focus on efficiencies and operations to maintain its competitive position. In addition, the required initiatives to address the short-term issues could take at least several quarters. The outlook is negative. If the company does not address its weak liquidity and inefficient debt structure in the next eight months, the ratings could be lowered further. The current ratings can tolerate weak profitability and cash flow in the medium term, but only under the assumption that financial performance trends will not further deteriorate. Standard & Poor's believes profitability will be hampered by: (1) high resin prices, (2) a strong Canadian dollar, and (3) the potentially negative effects of rising interest rates on the housing and home renovation markets. SAKS INC: Commencing Cash Tender Offers for $658 Million of Debt ---------------------------------------------------------------- Saks Incorporated (NYSE: SKS) intends to commence cash tender offers and consent solicitations for three issues of its outstanding debt and consent solicitations with respect to three additional issues. In the tender offers, Saks is offering to purchase any and all of the following notes at the following prices per $1,000 principal amount of notes: Outstanding Principal Purchase CUSIP No. Amount Title of Security Price ----------- ------------ -------------------------- -------- 79377WAC2 $250,000,000 7 1/2% Notes due 2010 $990 79377WAM0 $208,105,000 7% Notes due 2013 $990 79377WAD0 $200,000,000 7 3/8% Notes due 2019 $990 Each tender offer expires at midnight on July 18, 2005, unless extended by Saks with respect to that issue. The purchase price for each issue of notes shown above includes an amount that Saks has designated as a consent payment of $20 in respect of the consents described below. If a tender offer is consummated, holders that validly tender their notes in that tender offer prior to 5:00 p.m., New York City time, on July 1, 2005, will receive the full purchase price. Holders that validly tender their notes after that time will receive the purchase price less the consent payment. In the consent solicitations, Saks is soliciting consents from holders of the above notes and the notes set forth below to amendments to the related indentures and waivers of defaults under those indentures. Saks is offering to pay a consent payment of $1 per $1,000 principal amount of notes to holders of the notes below that consent to the proposed amendments and waiver. Outstanding Principal CUSIP No. Amount Title of Security __________ ___________ ____________________________________ 79377WAL2 ----------- $230,000,000 2% Convertible Senior Notes due 2024 79377WAK4 79377 WAG3 ----------- $141,557,000 9 7/8% Notes due 2011 79377WAH1 79377WAA6 $190,324,000 8 1/4% Notes due 2008 The proposed amendments to each indenture would provide, among other things, that, until 5:30 p.m., New York City time, on Oct. 31, 2005, Saks' current inability to file reports under the Securities Exchange Act of 1934 with the Securities and Exchange Commission and the trustee under each indenture and to deliver to the trustee under each indenture compliance certificates and notices of default will not constitute defaults under each indenture. The proposed waiver would waive all defaults relating to the failure to comply with these obligations prior to the effectiveness of the proposed amendments. As previously announced, on June 14, 2005, Saks received a notice of default from a hedge fund that states that it owns more than 25% of the 2% Convertible Senior Notes due 2024, stating that Saks is in breach of these obligations. The consent solicitation for the Convertible Notes also seeks to rescind such notice of default. Saks has not received notices of defaults with respect to any other notes. The consent solicitations with respect to the 2% Convertible Senior Notes due 2024, the 9-7/8% Notes due 2011 and the 8-1/4% Notes due 2008 expire at 5:00 p.m. on July 1, 2005, unless extended by Saks with respect to that issue of notes. Saks' obligation to purchase notes in each tender offer is subject to customary conditions, including the receipt of consents from holders of a majority in aggregate principal amount of the notes with respect to which the tender offer is being made, and the closing of the previously announced sale of certain assets. The proposed amendments and waivers with respect to each issue will require the receipt of consents from a majority in aggregate principal amount of that issue. Holders that tender their notes in the tender offers will be deemed, as a condition to a valid tender, to have given their consent to the proposed amendments applicable to the issue of notes that they are tendering and to have waived defaults under the indenture relating to that issue. If the proposed amendments become effective with respect to an issue of notes, then all notes of that issue will be subject to the proposed amendments. Citigroup Global Markets Inc., Goldman, Sachs & Co., Banc of America Securities LLC and Wachovia Securities are acting as the dealer managers for the tender offers and the consent solicitations. Questions regarding the transaction and the procedures for consenting should be directed to the dealer managers at the following numbers: Citigroup Global Markets Inc. Goldman, Sachs & Co. Toll-free: (800) 558-3745 Toll-free: (800) 828-3182 Banc of America Securities LLC Wachovia Securities Toll-free: (888) 292-0070 Toll-Free: (866) 309-6316 Global Bondholder Services Corporation is the information agent for the tender offers and consent solicitations. Requests for documentation should be directed to Global Bondholder Services Corporation at: (212) 430-3774 (Banks and Brokers) or (866) 470- 3900 (toll free). Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE), which consists of 57 Saks Fifth Avenue stores, 52 Saks Off 5th stores, and saks.com. The Company also operates its Saks Department Store Group (SDSG) with 232 department stores under the names of Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie Scott, Bergner's, and Boston Store and 47 Club Libby Lu specialty stores. On April 29, 2005, the Company announced that it had entered into an agreement to sell 22 Proffitt's stores and 25 McRae's stores to Belk, Inc. The Company expects to complete the sale on July 5, 2005, subject to various closing conditions. * * * As reported in the Troubled Company Reporter on June 17, 2005, Moody's Investors Service downgraded the ratings of Saks Inc. and left the ratings on review for further possible downgrade following the company's announcement that it has received notice of a default under its $230 million senior convertible notes. The notice of default was triggered by the company's delay in filing its financial statements for the last fiscal year and for the first quarter of the current fiscal year as a result of the ongoing investigation into accounting and other financial matters. These ratings are downgraded: Saks, Inc.: * Senior implied from B1 to B2; * Senior unsecured debt guaranteed by operating subsidiaries from B1 to B2; * Senior unsecured long term issuer rating from B2 to B3; * Prospective ratings for prospective senior unsecured debt, subordinated debt and preferred stock issued from the company's shelf registration from (P) B1; (P) B3, (P) B3 to (P) B2; (P) Caa1, (P) Caa1. Proffit's Capital Trust I, II, III, IV, and V: * Preferred Stock Shelf from (P) B3 to (P) Caa1. SECURITY CAPITAL: Look for Annual Report by June 24 --------------------------------------------------- Security Capital Corporation (AMEX: SCC) disclosed that it is not yet in a position to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2004. The Company continues to work diligently to finalize the 2004 Form 10-K and expects to file the 2004 Form 10-K by June 24, 2005. The Company also disclosed that, on June 17, 2005, the Company notified the American Stock Exchange Listing Qualifications Staff of such further delayed expected filing date of the 2004 Form 10-K. The Company also notified the AMEX that it would be restating its financial statements for the fiscal years 2001, 2002 and 2003 and the first three quarters of 2004 to reflect a correction in the Company's accounting practices for leases and leasehold improvements. The effect of such restatement is a decline in the net income available to common stockholders for the fiscal years 2001, 2002 and 2003 and the first three quarters of 2004, in the aggregate, of approximately $94,000, $65,000, $94,000 and $138,000, respectively. The Company further disclose an update to its estimated operating results for the quarter and year ended December 31, 2004, which the Company had previously announced on April 18, 2005. The Company currently estimates that, for the quarter ended Dec. 31, 2004, income from continuing operations will be approximately $1,290,000 compared to $1,674,000 for the quarter ended December 31, 2003. The Company further estimates that income available to common stockholders for the quarter ended December 31, 2004 will be approximately $2,839,000 compared to $1,260,000 for the quarter ended December 31, 2003. The increase from the previously reported estimated income available to stockholders for the quarter ended December 31, 2004 is primarily attributed to the post-closing adjustment relating to the October 2004 sale of substantially all of the assets of Pumpkin Ltd. The Company currently estimates that, for the year ended Dec. 31, 2004, income from continuing operations will be approximately $4,826,000 compared to $5,258,000 for the year ended December 31, 2003. The Company further estimates that income available to common stockholders for the year ended December 31, 2004 will be approximately $2,321,000 compared to $2,831,000 for the year ended December 31, 2003. The Company's two reportable segments are employer cost containment and health services, and educational services. The employer cost containment and health services segment consists of WC Holdings, Inc., which provides services to employers and their employees primarily relating to industrial health and safety, industrial medical care, workers' compensation insurance and the direct and indirect costs associated therewith. The educational segment consists of Primrose Holdings, Inc., which is engaged in the franchising of educational child care centers, with related activities in real estate consulting and site selection services in the Southeast, Southwest and Midwest. Delisting Notice Security Capital Corporation received a letter from the American Stock Exchange, citing the Company's lack of compliance with the AMEX's continued listing standards and accepting the Company's plan to regain compliance with the AMEX's continued listing standards by June 30, 2005, which the Company delivered to the AMEX on May 18, 2005. AMEX advised the Company that it is not in compliance with the AMEX's continued listing standards because the Company failed to timely file its Form 10-K for the fiscal year ended Dec. 31, 2004 and its Form 10-Q for the quarter ended March 31, 2005, as required pursuant to Section 1101 of the AMEX Company Guide. The May 23, 2005, AMEX letter noted that the Company's failure to timely file the 2004 Form 10-K and the First Quarter Form 10-Q is a material violation of the Company's listing agreement with the AMEX and, therefore, pursuant to Section 1003(d) of the Company Guide, the Company's securities are subject to suspension and delisting from the AMEX. In addition, the Company is subject to the procedures and requirements of Section 1009 of the Company Guide. Filing Delays The filing of the Company's Form 10-Q for the quarter ended Sept. 30, 2004, was delayed as a result of the Company's previously announced internal investigation. The investigation was completed, and the Third Quarter Form 10-Q was filed on March 11, 2005. As a result of the delayed filing of the Third Quarter Form 10-Q, the Company needs additional time to complete its 2004 Form 10-K. The Company had expected to file its First Quarter Form 10-Q by June 15, 2005. The delay in filing the First Quarter Form 10-Q is due to the continued delay in the filing of the 2004 Form 10-K and the Company's need to select a new independent registered public accounting firm to replace Ernst & Young LLP, the Company's principal accountant, upon the completion of the Company's 2004 audit, which declined to stand for re-appointment as the Company's principal accountant. The Company says it will not be able to retain an independent registered public accounting firm to replace Ernst & Young until immediately following the filing of the 2004 Form 10-K. Security Capital Corporation operates as a holding company and participates in the management of its subsidiaries, WC Holdings, Primrose Holdings Inc. and Pumpkin Masters Holdings Inc. WC is an 80%-owned subsidiary that provides cost-containment services relative to direct and indirect costs of corporations and their employees primarily relating to industrial health and safety, industrial medical care and workers' compensation insurance. WC's activities are primarily centered in California, Ohio, Virginia, Maryland and, to a lesser extent, in other Middle Atlantic states, Indiana and Washington. Primrose is a 98.5%- owned subsidiary involved in the franchising of educational childcare centers. Primrose schools are located throughout the United States, except in the Northeast and Northwest. Pumpkin is a wholly owned subsidiary engaged in the business of designing and distributing Halloween-oriented pumpkin carving kits and related accessories. SEMINOLE TRIBE: S&P Puts Ratings on Watch Positive -------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the Seminole Tribe of Florida, including its 'BB' issuer credit rating, on CreditWatch with positive implications. The CreditWatch listing reflects continued good financial performance and further progress in addressing its previous governance-related issues. Standard & Poor's will meet with the Tribe and evaluate its intermediate-term operating and financing strategies in resolving the CreditWatch listing. SOH HOLDINGS: Case Summary & 60 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: SOH Holdings, LLC dba Quincy Big O Tires 7870 West Quincy Avenue Denver, Colorado 80123-2405 Bankruptcy Case No.: 05-25348 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- RWH Holdings, Inc. 05-25353 Bowles Tire Store, LLC 05-25360 Chapter 11 Petition Date: June 21, 2005 Court: District of Colorado (Denver) Judge: Michael E. Romero Debtors' Counsel: Jeffrey Weinman, Esq. Weinman & Associates 730 17th Street, Suite 240 Denver, Colorado 80202 Tel: (303) 572-1010 Estimated Assets Estimated Debts ---------------- --------------- SOH Holdings, LLC $100,000 to $1 Million to $500,000 $10 Million RWH Holdings, Inc. $100,000 to $1 Million to $500,000 $10 Million Bowles Tire Store, LLC $100,000 to $1 Million to $500,000 $10 Million A. SOH Holdings, LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ McFadden Village Apartment Corporation $900,000 Attn: Jeffrey Yellen 11021 Winners Circle, Suite 200 Los Alamitos, CA 90720-2879 Towne Industrial Park $46,102 Attn: Jeffrey Yellen 11021 Winners Circle, Suite 200 Los Alamitos, CA 90720-2879 Xcel Energy $9,562 P.O. Box 9477 Minneapolis, MN 55484-9477 TJ3 Advertising & Design $9,384 Big O Tires Bowles $8,014 Big O Tires $7,404 Tire Distributors, Inc. $7,132 Continental Western Group $4,228 Gordon Hughes & Bank, LLP $2,852 Johnson & Aucoin, P.C. $2,160 Aramark Uniform Services $1,981 Big O Tires C470 $1,966 Aramark Uniform Services $1,964 Easy Chair Media $1,858 Carquest Auto Parts $1,537 Payroll Ink, LLC $1,489 Johnson & Freidel, P.C. $1,480 Carquest Auto Parts $1,462 All Hour Door $1,410 WJ Castor Consulting $1,372 B. RWH Holdings, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Big O Tires, Inc. $123,673 Attn: Robert Smith 12650 East Briarwood Ave, Suite 2D Centennial, CO 80112-6792 Big O tires $10,381 Dept. 235 Denver, Co 80271-0235 NAPA Evergreen Auto Parts $9,245 27896 Highway 74 P.O. Box 1926 Evergreen, CO 80437-1926 TJ3 Advertising & Design $8,666 Xcel Energy $8,326 American Family Insurance $6,490 Mobil 1 $5,610 Tire Centers, LLC $2,926 Dan Byrd Enterprises, Inc. $2,098 Delta Coaching Group $2,084 Safety Kleen $1,917 Easy Chair Media $1,858 Wyn Taylor, Esq. $1,743 Aramark Uniform Services $1,436 Gordon Hughes & Banks, LLP $1,420 Payroll Ink, LLC $1,302 Johnson & Freidel, P.C. $1,280 Master Cleaning Janitorial $1,158 Sopus Products $966 Tire Distributors, Inc. $904 C. Bowles Tire Store, LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Big O Tires, Inc. $98,236 Attn: Robert Smith 12650 East Briarwood Ave., Suite 2D Centennial, CO 80112-6792 Towne Industrial Park $34,928 Attn: Jeffrey Yellen 11021 Winners Circle, Suite 200 Los Alamitos, CA 90720-2879 Ingersoll-Rand Financial Services $5,775 Div. of Citicapital Comm Corp P.O. Box 6229 Carol Stream, IL 60197-6229 TJ3 Advertising & Design $5,234 Sopus Products $4,894 Xcel Energy $2,664 Aramark Uniform Services $2,611 Tire Distributors, Inc. $1,852 Young Electric Sign Company $1,376 Carquest Auto Parts $1,196 Big O Tires C470 $1,093 Payroll Ink, LLC $944 Lord & Reynolds Electrical Services $912 American Racing Custom Wheels $901 Kaiser Permanente $832 Easy Chair Media $760 Gordon Hughes & Banks, LLP $708 Allen Black Enterprises, Inc. $600 Wheel Pros $560 PrimeTime $510 SOUTH SIDE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: South Side Restaurant Inc. 144 East Main Street New Albany, Indiana 47150 Bankruptcy Case No.: 05-92408 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: June 21, 2005 Court: Southern District of Indiana (New Albany) Debtor's Counsel: Neil C. Brody, Esq. Seiller & Handmaker 462 South, 4th Avenue, Suite 2200 Louisville, Kentucky 40202-3459 Tel: (502) 584-7400 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Indiana Dept. of Revenue $454,320 P.O. Box 7218 Indianapolis, IN 46207-7218 Wachovia Equipment $444,122 c/o Jim Williams 401 South 4th St., Ste 2500 Louisville, KY 40202 Internal Revenue Service $266,634 Special Procedures Branch P.O. Box 44985 Indianapolis, IN 46244-0985 South Side Inn Inc. $200,000 Betty Bertrand $50,000 Gloria K. Burchfield $36,246 US Foodservice $21,750 Indiana Dept. of Workforce $14,796 Dev. McFarling Foods $13,000 Sysco/Louisville $11,800 American Express $10,000 American Express $9,650 Gordon Food Service $6,000 Cinergy $5,815 Home Depot $5,491 Sams Club $5,376 Courier Journal $4,986 Lowes $3,700 Earl Troub $3,500 Indiana-American Water $3,200 SPIEGEL INC: Eddie Bauer Emerges from Bankruptcy Protection ----------------------------------------------------------- Eddie Bauer Inc. emerged from the Spiegel, Inc. Chapter 11 reorganization process under its newly formed parent company, Eddie Bauer Holdings, Inc. After nearly 35 years, the company is once again fully independent. The company was previously a wholly owned subsidiary of Spiegel, Inc., which filed for bankruptcy on March 17, 2003. "We are extremely excited about our new status as a stand-alone company. The entire Eddie Bauer team worked hard during the Spiegel bankruptcy to build a strong platform for the future," said President and Chief Executive Officer Fabian Mansson. "We streamlined operations, recruited new talent to strengthen the team, and renewed our commitment to providing quality apparel and accessories that reflect a modern outdoor lifestyle." As reported in the Troubled Company Reporter on May 25, 2005, the Eddie Bauer Holdings, Inc., board of directors includes: -- John C. Brouillard, 57, chief administrative and chief financial officer, H.E. Butt Grocery Company, one of Texas' largest private companies and a major food retailer in South and Central Texas. He is also a director of H.E. Butt Grocery Company and Advance Auto Parts, Inc (NYSE: AAP). -- William Thomas End (chairman), 57, former chairman and chief executive officer, Cornerstone Brands, Inc., a privately held company for catalog operators selling home and leisure goods and casual apparel. He was also president and chief executive officer of Land's End, Inc. and is a director of IDEXX Laboratories (Nasdaq: IDXX). -- Howard Gross, 62, former chief executive officer, Hub Distributing, Millers Outposts, Levi's Outlet Stores, divisions of American Retail Group, Inc. He was also president and chief executive officer of Limited Stores and Victoria's Secrets Stores and is a director of Glimcher Realty Trust. -- Paul E. Kirincic, 54, executive vice president, human resources, communications and corporate marketing, McKesson Corporation (NYSE: MCK), the largest pharmaceuticals distributor in the United States. -- Fabian Mansson, 40, president and chief executive officer, Eddie Bauer. Former chief executive officer of H&M (Hennes & Mauritz AB), one of Europe's largest and most successful fashion retail chains with more than 1000 stores worldwide. -- Kenneth M. Reiss, 62, former managing partner of the New York Office, assurance and advisory practice, of Ernst & Young, LLP, one of the world's largest accounting firms. He was the coordinating partner in charge of Staples and Toys "R" Us engagements. He is also a director of Guitar Center, Inc (Nasdaq: GTRC) and Wet Seal, Inc. (Nasdaq: WTSLA). -- Laurie M. Shahon, 53, president and founder, Wilton Capital Group, a company she founded to make private direct investments in venture capital companies and medium sized buyouts, which focuses on retailing and consumer products, among other industries. She is also a director of The Bombay Company, Inc. (NYSE: BBA) and Kitty Hawk, Inc. (Amex: KHK). -- Edward M. Straw, 66, vice admiral, US Navy (retired) and former president, global operations, Estee Lauder Companies (NYSE: EL), the manufacturer and marketer of skin care, makeup, fragrance and hair care products. -- Stephen E. Watson, 60, former president and chief executive officer, Gander Mountain LLC, (Nasdaq: GMTN) an outdoor retailer specializing in hunting, fishing and camping gear. He also spent 24 years at the Target Corporation, retiring in 1996 as president and director of the board. He is a director of Retek, Inc., ShopKo Inc. (NYSE: SKO) and Smart & Final, Inc. Affiliates of GE Commercial Finance, J.P. Morgan and Credit Suisse First Boston provided a $300 loan to help Eddie Bauer emerge from Chapter 11. Eddie Bauer also won access to $150 million of additional financing. 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 on May 23, 2005. Impaired creditors overwhelmingly voted to accept the Plan. STERLING FINANCIAL: Fitch Revises Outlook to Positive from Stable ----------------------------------------------------------------- Fitch Ratings has revised the Rating Outlook for Sterling Financial Corporation and Sterling Savings Bank to Positive from Stable. The Outlook change reflects the continued progress that STSA has made improving both its franchise as well as its balance sheet structure. Through acquisitions, as well as organic growth, STSA has created a Pacific Northwest franchise with approximately $7.0 billion in assets and 138 branches in four states. Additionally, the company has been transforming itself from a thrift to a more community banking oriented entity and, highlighting this transformation, has recently applied to change to a Washington state-chartered commercial bank charter. An improving level of earnings, strong asset quality, and stable levels of capitalization are the drivers of Fitch's Outlook revision. The successful continuation of these trends and the additional accumulation of capital, specifically tangible common equity, remains an opportunity for a change in ratings. These ratings are affirmed by Fitch: Sterling Financial Corporation -- Long-term issuer 'BB+'; -- Short-term issuer 'B'; -- Individual rating 'C'; -- Support '5'; -- Outlook to Positive. Sterling Savings Bank -- Long-term deposit 'BBB-'; -- Short-term deposit 'F3'; -- Long-term issuer 'BB+'; -- Short-term issuer 'B'; -- Individual 'C'; -- Support '5'; -- Outlook to Positive. SUGAR CREEK: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Sugar Creek Camper Sales, Inc. 360 Goede Road Edgerton, Wisconsin 53534 Bankruptcy Case No.: 05-14884 Type of Business: The Debtor sells customized recreational vehicles. See http://www.sugarcreekcampers.com/ Chapter 11 Petition Date: June 20, 2005 Court: Western District of Wisconsin (Madison) Judge: Robert D. Martin Debtor's Counsel: Guy K. Fish, Esq. Fish Law Offices 533 Vernal Avenue Milton, Wisconsin 53563 Tel: (608) 868-3200 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Albert C. Brohmer $100,000 P.O. Box 328 Edgerton, WI 53534 M&I Bank $100,000 P.O. Box 5000 Janesville, WI 53547-5000 Wells Fargo $100,000 P.O. Box 348750 Sacramento, CA 95834 Manufactured Housing Products $9,000 Connors Supply, Inc. $8,000 Bell Ind. $6,000 Northern Wholesale $4,000 Home Depot $3,000 Sams Club $2,000 Silver Top $1,600 Kwik Trip $1,500 Staples $500 Shell Credit $400 TEKNI-PLEX: S&P Holds Junk Ratings Following Refinancing -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Tekni-Plex Inc. and removed the rating from CreditWatch with negative implications where it was placed on Feb. 17, 2005. All other ratings were also affirmed and removed from CreditWatch. The outlook is stable. Coppell, Texas-based Tekni-Plex had approximately $760 million of total debt outstanding at April 1, 2005. The ratings affirmation follows the recent completion of the company's financing plan including the sale of 10 7/8% $150 million first-lien senior secured notes due 2012, a new $65 million asset based revolving credit facility due 2009, and the remaining $12 million of the required $30 million equity financing. "These developments will alleviate liquidity pressures in the immediate term. However, the company's ability to improve weak earnings to a level sufficient to meet its heavy interest burden in the next 12 months is critical at the current ratings level," said Standard & Poor's credit analyst Liley Mehta. In addition, seasonal working capital needs and higher capital spending could pressure liquidity in the near term if business results fail to improve. Proceeds from the transaction were used to repay the previous senior secured credit facilities. Consequently, Standard & Poor's has withdrawn its ratings on the previous credit facilities. Ratings on Tekni-Plex reflect its vulnerable business position and highly leveraged financial profile with subpar credit measures and limited financial flexibility. With annual revenues of about $684 million, Tekni-Plex produces a variety of packaging, products, and materials for the consumer products, health care, and food packaging industries. The company has a leadership position in the U.S. garden hose market, and other products include medical products (pharmaceutical blister packaging and closure liners, medical tubing, and device materials) and food packaging (foam polystyrene cartons and trays for poultry and meat). Tekni-Plex's recent operating performance has been hurt by significantly higher raw-material costs, particularly polyvinyl chloride resins for garden hose products (where selling prices are set annually) and polystyrene for its food packaging segment, and elevated raw-material costs could pressure earnings for the remainder of the year. The company's garden hose product volumes are highly seasonal and vulnerable to weather conditions; unfavorable weather conditions have resulted in disappointing operating results for the past two years. THERMOVIEW IND: Auditors Express Doubts & GE Stretches Loan Terms ----------------------------------------------------------------- Crowe Chizek and Company, LLC, expressed substantial doubt about ThermoView Industries, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's significant losses that could bring about defaults in its debt agreements. "Revenues have declined and the Company has reported net losses in each of the last three years," the auditors said. "This has resulted in the need for the primary lender to continually modify performance requirements in the debt agreements to avoid default. If the Company's future performance is not sufficient to meet the requirements of its debt agreements, the primary lender may not be willing to make additional modifications or waivers, and may demand payment." Loan Amendment The Company entered into negotiations with its principal creditor, GE Capital, to restructure the debt repayment schedules and covenant requirements. During the fourth quarter of 2004 and into the first quarter of 2005, it was determined that the Company would not be able to meet its cash obligations of its long-term debt payments or comply with the terms of its debt agreements at Dec. 31, 2004 and into 2005 and 2006. In March 2005, GE agreed to modify its agreements. The new agreements removed the requirement to make principal payments from February 2005 through January 2006 in the amount of $1,750,000 and deferred the first quarter 2005 payment of interest of $81,199 on its subordinated debt until the second and third quarter of 2005. GE also waived their right to declare the debt in default due to the Company's loan covenant violation at December 31, 2004. GE further agreed to revise the loan covenants to enable the Company to comply with less restrictive covenants. The revised covenants for 2005 and 2006 should enable the Company to comply in future quarters, assuming achievement of operating results which exclude the $10 million, non-cash impairment charge, equal to or better than calendar year 2004. Under the revised covenants, the Company does not have any compliance requirements for the first quarter of 2005. For the remaining quarters of 2005 and 2006, covenants are less restrictive than in prior agreements. Management believes the Company will meet covenant requirements in future periods. As a result of the waiver and restructuring, interest payments during 2005, on the Company's long-term debt will be approximately $1.25 million and principal payments will be $100,000. "While management believes operating results have stabilized and will improve in 2005, the Company cannot support its current debt level," the Company said in its Form 10-Q for the quarterly period ended March 31, 2005, filed with the Securities and Exchange Commission. "We have not been able to make meaningful cash payments toward interest or principal in recent years, and would need significant improvement in cash flow from operations to pay interest on a current basis and make any principal payments." The Company continued, "Our debt matures in June, 2006. Because of our operating results, we will not be able to pay off the debt when due nor can it be reasonably expected another lender will refinance the total debt. Accordingly, we are dependent on our current lender agreeing to extend the maturity of the debt, or attracting equity investors to provide the funding needed to meet our obligations." THERMOVIEW INDUSTRIES, INC., is party to a Securities Purchase Agreement, dated as of July 8, 1999, with GE CAPITAL EQUITY INVESTMENTS, INC., DART INVESTORS, L.P., and EMERGING BUSINESS SOLUTIONS, LLC, as Lenders. ThermoView Industries, Inc., designs, manufactures, sells and installs custom vinyl replacement windows for residential and retail commercial customers. The Company also sells and installs replacement doors, home textured exterior coatings, vinyl siding, patio decks, patio enclosures, cabinet refacings and kitchen and bathroom remodeling products, as well as residential roofing. At Mar. 31, 2005, ThermoView Industries Inc.'s balance sheet showed a $4,962,806 stockholders' deficit, compared to a $3,629,228 deficit at Dec. 31, 2004. TOWER AUTOMOTIVE: Creditors Transfer $4,580,832 of Trade Claims --------------------------------------------------------------- The Clerk of the U.S. Bankruptcy Court for the Southern District of New York recorded 124 claim transfers aggregating $4,580,832, from April 5 to June 14, 2005. (a) ASM Capital, L.P. Creditor Claim Amount -------- ------------ Alaark Robotics $7,896 Alaark Tooling & Automation 16,357 All Seals & Hose Inc. 9,817 Amanda Bolt Co. 60,494 Amanda Bent Bolt Co. 27,845 Go Promotions 5,532 Great Lakes Roofing 20,000 Hydro-Chem Systems 4,446 Midwest Occupational Medicine 6,807 Optima USA Inc. 5,576 Premier Scales & Systems 6,674 Reinhart Industries Inc. 24,794 Stevens Janitorial 5,698 Torque Inc. 14,771 ------------ Total $216,707 ------------ (b) ASM Capital II, L.P. Creditor Claim Amount -------- ------------ Ken-Mac Metals Inc. $340,211 ------------ (c) Debt Acquisition Company of America V, LLC Creditor Claim Amount -------- ------------ American Quality Door $449 Ameri-Care of Tifin 500 Applied Imaging 1,078 Auto-San Inc. 1,186 Baptist Occupational Medical 845 Bisbee Infrared Services 1,000 Bluff City Electronics 1,657 Business Service Company 258 Cold Jet LLC 645 Crown Lift Trucks 751 Crystal Filtration 735 Cumberland Die Supply Co., Inc. 574 Dallas Industries Inc. 557 David Allison 4,123 Faro Technology 3,068 G & L Corporation 1,155 Gezon Tool Service Inc. 271 Gordon N. Stowe & Assoc. 335 Gudel Inc. 5,017 Hinckley Springs Water Co. 2,147 Holiday Inn Express 1,639 Hub City Blue Print & Supply Co., Inc. 473 Industrial Design & Supply 285 Jones Industrial Service 490 Kentucky Air Tool 1,562 Koolant Koolers 328 Koolant Koolers Inc. 647 Kopplin Controls 1,593 Lakeland Electrical Svcs. 3,509 Linear Measurement Instruments Corp. 1,537 Main Street Connections LLC 428 Mitchell Sales & Service 1,200 MTM Inc. 375 Nelson Sales Corp. 458 Pacific Press Co. 406 Pete Miller Incorporated 2,814 Power Components 290 Power Components Corp. 787 Prestige Stamping 5,560 Quality Mill Supply 1,329 Salvatore Accetta 443 Schwaab Inc. 900 Sherry Lab 2,478 Sherry Labs 274 Smith Industrial Equipment 501 Standard Die Supply Inc. 1,587 St. Louis Business Forms 723 TCR Filtration & Services 565 Traceability Systems 401 Truax Printing Inc. 432 Vulcan Systems Inc. 2,783 Wagner Electric 3,633 WSI 3,772 ------------ Total $70,553 ------------ (d) Liquidity Solutions Inc., d/b/a Revenue Management Creditor Claim Amount -------- ------------ Argus Supply Company $1,632 B & F Fabricating Inc. 30,600 Bulldog Factory Service, Inc. 69,018 Calumet Pallet 2,246 Echo Engineering & Products 392 Electromatic Company 2,227 Fasse Paint Company 700 F.B. Tool & Die, Ltd. 1,525 Laser Mechanics, Inc. 1,526 Magnetic Products Inc. 1,853 Mark Tool & Die Co., Inc. 3,715 Media Genesis 5,500 Media Resources Corporation 596 Melmor Johnson 8,085 Metalworking Machinery 4,088 Michigan Rod Products 2,090 Mid-South Marketing Systems 2,490 Morris Sheet Metal 1,143 MRM Incorporated 1,309 Myco Enterprises, Inc. 38,182 North Huron Assembly Inc. 27,787 Ohte Corp. 1,795 Orbis Corporation 8,534 Otto's Inc. 1,075 Overhead Door Co. of Lansing 910 Paul's Shoe Store 952 PDM Industries Inc. 25,655 PGS, Inc. 92,056 Potter's Fine Pastries 919 Premier Electronics 1,454 Presort Services Inc. 16,118 Press Automation 1,842 Productive Stamping 826 Renishaw Inc. 4,437 Royal Industries 53,512 Rotor Clip 13,769 Scale People Inc. 2,691 Solutions Inc. 826 TDS Automation 16,985 Thumb Fire Extinguisher 860 Total Vending & Coffee Service 2,248 Unionville Printing 1,711 Vamp Company 1,847 Wayne Trail 3,901 ------------ Total $461,627 ------------ (e) Schroder Credit Renaissance Fund, Ltd. Creditor Claim Amount -------- ------------ Piston Modules, LLC $3,479,815 ------------ (f) Trade-Debt.net Creditor Claim Amount -------- ------------ Arbitrator Sol M. Elkin $200 Dekalb Engineering Corp. 530 Hein Electric Supply Co. 238 Mcdaniel Machinery Inc. 611 O.E.Meyer 5,153 Patterson Fan Co. 125 Shred it Detriot 679 Tab Products 143 Tipaloy Inc. 117 Tuffaloy Products Inc. 688 Unifirst Corporation 2,887 Wauseon Machine & Manu Inc. 344 Zee Medical Service 204 ------------ Total $11,919 ------------ Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000). TOWER AUTOMOTIVE: Wins Major Contracts from Two U.S. Automakers --------------------------------------------------------------- Tower Automotive, Inc., has been awarded new major vehicle structure programs by two different U.S. automakers. "We appreciate our customers' confidence in our ability to support these two new programs," said Kathleen Ligocki, president and chief executive officer. "We are dedicated to exceeding their expectations and continuing to service them with the highest level of quality and technical expertise." Tower Automotive, already the world's largest independent supplier of body structures, will continue to grow its business with the first award, a body structures program for Ford Motor Co. Tower Automotive will require a new facility in the southern United States to accommodate the new contract. The new business will result in a significant amount of incremental revenue that will help fill capacity at several current Tower plants, in addition to the new plant that will open in 2007. The second award being announced today is to supply a large assembly for a different automaker. This assembly will be produced at the company's existing facility in Plymouth, Mich. "We are proud to be part of this major vehicle program and pleased that by sharing best practices our colleagues have found innovative ways to reduce costs and improve processes," said Bill Pumphrey, president of North American Operations. "That discipline was key to winning this new business." Capital expenditures were reduced by reusing equipment from another assembly line and producing the new assembly at a plant experienced in building similar parts. Best practices included strict adherence to program management, using a centralized process engineering group, and involving Tower Automotive's assembly plants in the entire development process. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Utility Companies Want Adequate Assurance ----------------------------------------------------------- American Electric Power and DTE Energy Company provide electric services for Tower Automotive Inc. and its debtor-affilaites' operations. However, Thomas R. Slome, Esq., at Scarcella Rosen & Slome LLP, in Uniondale, New York, tells the U.S. Bankruptcy Court for the Southern District of New York that American Electric and DTE need adequate assurances of future payment to continue their services to the Debtors on a postpetition basis. Without these payments, American Electric and DTE will be subjected to an unreasonable risk of non-payment from the Debtors for postpetition services provided on an arrearage basis. In February and early March 2005, DTE and American Electric Power made their initial requests for adequate assurance of payment in the form of cash deposits or letters of credit. The Debtors refused to provide the deposits or any other form of adequate assurance of payment for that matter. To avoid a Court dispute, the parties agreed to consider alternative forms of adequate assurance of payment. Thus, in a letter dated May 12, 2005, American Electric and DTE offered the Debtors, as an alternative to deposits, an advance payment arrangement that would allow them to grant adequate assurance payment by providing a semi-monthly payment of: -- $50,000 to American Electric, and -- $41,000 to DTE. The Debtors rejected the offer on May 26, 2005. "[I]t is clear that the Debtors never had any intention of good faith negotiations and utilized the procedures in the Utility Order to significantly delay an initial determination of adequate assurance of payment," Mr. Slome infers. By this motion, American Electric and DTE ask the Court to compel the Debtors to provide the Semi-Monthly Advance Payments as adequate assurance of future payment. Mr. Slome explains that the Debtors must provide adequate assurance of future payment because: (a) the Debtors have lost over $105 million since the Petition Date, which is in addition to the losses incurred prior to the Petition Date; (b) the Debtors' March and April 2005 disbursements greatly exceeded revenues for the same months; (c) the Debtors' monthly disbursements, without consideration of revenues, nearly equal the amount of actual availability under the DIP Facility; (d) all of the Debtors' assets and proceeds are secured by first and super-priority security interests and liens; (e) during the postpetition period, the Debtors have shown a preference to favor certain "critical vendors," certain high-level employees and professionals, including their counsel, to the detriment of other postpetition creditors; (f) Tower Automotive is one of many auto suppliers experiencing pressure from auto manufacturers, who are demanding lower prices to offset incentives and other costs in a highly competitive market; (g) automotive suppliers are expecting no relief in 2005 from the high price of steel and other raw materials; (h) the recent downgrade of Ford Motor Company and General Motors' debt to junk represents a negative factor for the Debtors; (i) the higher prices for materials like steel coupled with a drop in automaker production volumes is hurting Tower Automotive and other suppliers who have no way to pass their costs to customers; and (j) the universe of auto suppliers is predicted to contract significantly in the next decade, resulting in an industry in which domestic automakers rely less on U.S.-based parts suppliers and more on overseas companies that will be able to deliver products more cheaply. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) TRICELL INC: Accumulated Deficit Triggers Going Concern Doubt ------------------------------------------------------------ Berenfeld, Spritzer, Shechter and Sheer, expressed substantial doubt about Tricell Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's recurring losses and accumulated deficit. Tricell experienced a significant decline in revenues in 2003 and 2004 due almost entirely to a change in the regulatory regime involving VAT refunds. Because of this regime change, the Company conducted operations via its subsidiary, Tricell Distribution during 2004 and anticipates that it will do so during 2005 as well. Specifically, the regime changed when British Commissioners of Customs and Excise authorities decided to avail any participant in the purchase and sale of certain products to liability for any wrongdoing by any upstream and downstream purchaser. Tricell believes that the sharp decline in its revenues and in its trading of mobile telephones and related accessories that began at the very end of 2002 ended during the late stages of 2004. The Company's revenues for 2004 continued to decrease as a result of the new VAT regime. The VAT regime severely hampered Company operations as it was forced to halt operations since it would not be able to recover the VAT seizure of 17.5%. In February of 2005, the Advocate General temporarily overruled this VAT refund regime. Under the Advocate General's ruling, VAT transactions are to be viewed as separate transactions, not one transaction encompassing numerous smaller transactions. This February 2005 ruling will allow Tricell to confidently seek a VAT refund, even if there has been wrongdoing, without the Company's knowledge, by an upstream or downstream purchaser. With more confidence that a favorable VAT regime will soon be in place once the European Court of Justice decides whether or not to back the Advocate General, Tricell is encouraged that it will be able to return to its 2003 revenue levels, and hopefully 2002 levels in 2005. In the meantime it is worthy of note that, as of December 31, 2004, the Company's cash and cash equivalents were $6, as compared to $183,421 as of December 31, 2003. The management of Tricell believes that the Company has sufficient cash to satisfy its operating requirements for twelve months. Management anticipates that re-entry into the intra-European market as a result of the Customs & Excise ruling will increase expenses and, if operations are successful, revenues. If the cash reserves are not enough to satisfy its operating needs and Tricell is unable to generate revenues, it will seek bank loans on favorable terms and sell additional shares of its equity securities to secure the cash required to conduct its business operations for the next twelve months. Loan Agreement On February 14, 2005, Tricell Distribution entered a loan agreement with Telco Invest Limited establishing a line of credit worth two million pounds to be accessible by Tricell. Andre Salt, Tricell's Chief Executive Officer, owns 50% of Telco. This line of credit is essential to Tricell as it allows it to trade its products in the various markets the Company conducts its operations in. This line of credit is essential to Tricell and the Company would be unable to operate as a going concern without access to the funds made available by this line of credit. As consideration for the line of credit, Tricell agreed to pay Telco a funding charge equal to 50% of gross profit together with any penalties for late payments. Because of the prohibitive cost of funding capital acquisitions via the Telco line of credit, the Company hopes to be able to fully finance its capital using revenues generated by the fourth quarter of 2005. Tricell UK Ltd. and Tricell Ltd. were founded in 1999 to participate in, and continues to participate in today, the distribution and sale of mobile telephone handsets to the global wholesale market. The Company has built a management team with considerable expertise and success in product acquisition, wholesale distribution and service provision in this highly competitive market place. Current customers include wireless network operators, resellers, retailers and wireless equipment manufacturers. Tricell handles wireless products manufactured by industry-leading technology companies such as Nokia, Motorola, Sony Ericsson, Kyocera, Samsung, Siemens, Panasonic, NEC and Toshiba. At Dec. 31, 2004, Tricell Inc.'s balance sheet showed a $4,253,892 stockholders' deficit, compared to a $3,216,155 of positive equity at Dec. 31, 2003. TRUMP HOTEL: Court Okays Employment of Cushman & Wakefield ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave permission to THCP/LP Corporation and the Official Committee of Equity Security Holders to jointly 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. As previously reported in the Troubled Company Reporter on June 14, 2005, 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. 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. TWIN LAKES: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Twin Lakes Real Estate, LLC c/o Larry Meyers P.O. Box 1146 St. George, Utah 84771-1146 Bankruptcy Case No.: 05-29651 Chapter 11 Petition Date: June 20, 2005 Court: District of Utah (Salt Lake City) Debtor's Counsel: Weston J. White, Esq. Farris & Utley, P.C. 189 North Main Street P.O. Box 2408 St. George, Utah 84771-2408 Tel: (435) 634-1600 Fax: (435) 628-9323 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. UNITED AIRLINES: Reports Say Texas Pacific May Launch Takeover Bid ------------------------------------------------------------------ The Dallas Business Journal reports that Texas Pacific Group is considering a takeover of financially-troubled United Airlines. United announced potential outside buyers after it sought to extend until September 1, 2005, its exclusive right to file a plan of reorganization. Another possible buyer for United is a consortium of investors led by its former CEO Gerald Greenwald and former Continental Airlines chief Gordon Bethune, the Journal reports. About Texas Pacific Texas Pacific was founded in 1993 by David Bonderman and James Coulter, former advisers to Fort Worth billionaire Robert Bass, and former Bain &. Co. partner William S. Price III. The private equity firm has made significant investments in companies like Continental and America West airlines, Del Monte, Petco, J. Crew and most recently Burger King. Last month, in a deal with New York-based equity firm Warburg Pincus L.L.C. , TPC agreed to buy Dallas-based Neiman Marcus Group (NYSE:NMG) for $5.1 billion. 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. USG CORP: Equity Committee Wants to Retain Houlihan Lokey --------------------------------------------------------- The Statutory Committee of Equity Security Holders tells the Court that since May 18, 2005, Houlihan Lokey Howard & Zukin Capital has been providing critical services to the Equity Committee, including: -- the review of operating and financial information and the conduct of general due diligence on the Debtors' business and case matters; -- meeting with the Debtors' management, advisors and other professionals involved in the cases; -- participating in meetings with the Equity Committee; and -- responding to multiple inquiries from equity holders. Thus, given the firm's broad experience, the Equity Committee seeks the Court's authority to retain Houlihan Lokey as its financial advisor, nunc pro tunc to May 18, 2005. Under an Engagement Letter executed between the parties, Houlihan Lokey will, among others: (1) evaluate the Debtors on a current and ongoing basis; (2) assess the Debtors' value and debt capacity; (3) evaluate any capital market transactions, including financing or merger and acquisition transactions; (4) assist in the development and negotiation of potential plan of reorganization structures and securities; (5) assist the Equity Committee in its evaluation of various asbestos issues in the Debtors' cases; (6) attend meetings and provide periodic updates and reports and respond to inquiries from the Equity Committee members and other equity holders, as appropriate; and (7) confer with the Debtors' financial and other professionals, and those representing other statutory committees. Houlihan Lokey will be paid a $100,000 fixed monthly fee, and an additional transaction fee equal to: * $250,000 plus the Transaction Fee in the case of a consensual transaction; * the lesser of $4.5 million and the sum of 0.15% times "Equity Holder Recoveries", minus 50% times the first nine installments of monthly fees plus 100% times all monthly fees in the case of a Litigation Result Transaction; * $1 million, if a Legislative Result Transaction occurs within one year of the Agreement's effective date; * $1.5 million, if the transaction date occurs one year but within 18 months of the Agreement's effectivity; * $2 million, if the transaction date occurs beyond 18 months but within two years of the Agreement's effective date; and * a Transaction Fee payable on a Litigation Result Transaction, if the transaction date occurs beyond two years of the Agreement's effectivity. A "Litigation Result Transaction" means a transaction that is consummated subsequent to a final ruling and determination of the amount of asbestos liability to be funded under the Debtors' Plan. In contrast, a "Legislative Result Transaction" means a transaction that is consummated subsequent to the enactment of federal asbestos reform legislation that fully and finally quantifies the amount of asbestos liability to be funded by the Debtors. A "Consensual Transaction" is nether a Litigation Result Transaction nor a Legislative Result Transaction. In addition, Houlihan will be reimbursed for all out-of-pocket expenses that are reasonably incurred in connection with its engagement. Matthew Niemann, Houlihan Lokey's managing director, attests that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Moreover, Mr. Niemann assures the Court that the firm holds no interest materially adverse to the Debtors, their creditors, and shareholders for the matters for which Houlihan is to be employed. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARELA ENTERPRISES: Creditors Must File Proofs of Claim by July 29 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona, set August 10, 2005, as the deadline for all creditors owed money by Varela Enterprises, Inc., on account of claims arising prior to May 21, 2004, to file formal written proofs of claim. Creditors must deliver their claim forms to the: Clerk of Court U.S. Bankruptcy Court for the District of Arizona Yuma Division 325 W 19th Street, Suite D Yuma, AZ 85364 Headquartered in Moorpark, California, Varela Enterprises Inc., a subcontractor for Varela Manufacturing Company, LLC, holds a license to use the patented "E systems" construction process for producing prefabricated buildings. The Debtor filed for Chapter 11 protection on May 21, 2004 (Bankr. D. Ariz. Case No. 04-00725). Robert M. Cook, Esq. at the Law Offices of Robert M. Cook, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported between $10 million to $50 million and debts between $1 million to $10 million. VARELA ENTERPRISES: Submits Plan and Disclosure Statement --------------------------------------------------------- Varela Enterprises, Inc., delivered its Amended Plan of Reorganization and a Disclosure Statement explaining that plan to the U.S. Bankruptcy Court for the District of Arizona on May 28, 2005. The Plan proposes to pay all creditors in full from the Debtor's contract with Grupo Constructor Industrial e Inmobiliario, S.A., and an on-going bid for a government project in Mexico. The Debtor further expects to receive payment for more than $81,000 in account receivables from completed construction work. The Plan will also be funded from the proceeds of a lawsuit to be filed against the Debtor's former landlord for breach of contract and damages. The Debtor says it defaulted on existing commitments and consequently filed for bankruptcy protection after its landlord locked it out of its leased building and shut down operations. Treatment of Claims Allowed priority deposit claims of up to $2,225, of individuals for the purchase, lease, or rental of property or service will be paid in full, without interest, within three months from the effective date of the Plan. GMAC's claims, secured by a 2003 Cadillac Escalade and a 2002 Cadillac Escalade, will be paid according to the lease contract. GMAC will retain its security interest in the vehicles. All general unsecured residential construction and vendor claims against the Debtor will be paid in full within three years from the effective date of the Plan. J. P. Sandoval, M.P. Sandoval, and Henry Varela 11's unsecured claims against the Debtor, totaling $967,695, will be paid in full after all other unsecured claims have been satisfied. Headquartered in Moorpark, California, Varela Enterprises Inc., a subcontractor for Varela Manufacturing Company, LLC, holds a license to use the patented "E systems" construction process for producing prefabricated buildings. The Debtor filed for Chapter 11 protection on May 21, 2004 (Bankr. D. Ariz. Case No. 04-00725). Robert M. Cook, Esq. at the Law Offices of Robert M. Cook, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported between $10 million to $50 million and debts between $1 million to $10 million. VERESTAR INC: Panel Hires Kasowitz Benson as Litigation Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Verestar Inc. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Kasowitz, Benson, Torres & Friedman LLP as its special litigation counsel, nunc pro tunc to May 10, 2005. Kasowitz Benson will: a. assist and advise the Committee in connection with the Committee's investigation of claims of the Debtors against American Tower Corporation and certain others; b. commence, if necessary, and to prosecute adversary proceedings against the Debtors' parent company, its board members, the Debtors' former officers, directors and other third parties, which shall include all aspects of discovery; c. attend meetings and negotiate with the representatives of the Debtors and any party that is the subject of investigation by the Committee or against which the Committee may commence an adversary proceeding; d. take all necessary action to protect and to preserve the interests of the Committee and the estates, including, (i) the prosecution of actions on their behalf, and (ii) negotiations concerning all litigation in which the Debtors are involved; e. prepare generally on behalf of the Committee all necessary adversary complaints and related motions, applications, answers, orders, reports and other papers in support of positions taken by the Committee in any adversary proceeding; f. appear, as appropriate, before this Court, the Appellate Courts, State Courts and the United States Trustee and to protect the interests of the Committee before said Courts and the United States Trustee; and g. perform all other necessary legal services in these cases as is appropriate given the purpose and scope of Kasowitz Benson's retention. David S. Rosner, Esq., a partner of Kasowitz, Benson, Torres & Friedman LLP, disclosed that Kasowitz Benson's professionals' bill: Designation Hourly Rate ----------- ----------- Partner $475 - $795 Counsel $400 - $575 Associate $195 - $500 Staff Attorney $170 - $355 Paraprofessional $125 - $190 The Official Committee of Unsecured Creditors believes that Kasowitz Benson is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Fairfax, Virginia, Verestar, Inc., -- http://www.verestar.com/-- was a provider of satellite and terrestrial-based network communication services prior to the sale of substantially all of its assets. Verestar is a wholly-owned subsidiary of American Tower Corporation, a non-debtor. The Company and two of its affiliates filed for chapter 11 protection on December 22, 2003 (Bankr. S.D.N.Y. Case No. 03-18077). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher LLP represents the Debtors. When the Company filed for protection from its creditors, it listed $114 million in assets and more than $635 million in debts. WALTER INDUSTRIES: Acquiring Mueller Water for $1.91 Billion ------------------------------------------------------------ Walter Industries, Inc. (NYSE:WLT) entered into a definitive agreement to purchase Mueller Water Products, Inc., a privately held, leading supplier of flow control products, for an aggregate value of approximately $1.91 billion. The consideration will consist of approximately $860 million in cash and the assumption of approximately $1.05 billion in Mueller debt, based on Mueller's balance sheet as of April 2, 2005, subject to adjustments as provided in the agreement. The acquisition complements the Company's U.S. Pipe subsidiary, creating a major water infrastructure and piping systems company with leading business positions, significant scale, and excellent prospects for growth. The transaction is expected to be accretive by $0.20 to $0.24 per fully diluted share in the first full year after closing; further, the estimated earnings accretion excludes approximately $25 to $35 million of ongoing annual operating synergies that are expected to be achieved within 24 months of the businesses being combined. Upon closing, U.S. Pipe will, as a legal matter, become part of Mueller, creating a separate wholly owned public reporting subsidiary that will have approximately $1.6 billion in revenues. By establishing a separate reporting entity, the Company is creating a subsidiary with meaningful scale, increasing the Company's flexibility to pursue potential alternatives related to value creation at its other existing businesses. These include Jim Walter Resources, the Company's strong performing coal and natural gas unit. The Company recognizes the importance of capitalizing on opportunities to take advantage of robust coal market conditions at the best time and in the best manner to serve the interests of its shareholders. As announced in February of this year, Don DeFosset, Chairman and CEO of Walter Industries plans to retire. He has agreed to remain as Chairman and CEO until his successor has joined the Company. DeFosset will lead the integration process and assist in a smooth transition of leadership. "[Sun]day's announcement is another important milestone in our shareholder value creation program and a defining event in the development of our water systems business," Mr. DeFosset said. "We have been tracking Mueller's growth and compatibility with U.S. Pipe for some time, and we are excited to have the opportunity to bring these businesses together. The complementary fit of Mueller's water infrastructure and U.S. Pipe's water transmission business makes us ideal partners, well positioned to benefit from increased water infrastructure spending in North America." Dale B. Smith, Chief Executive Officer of Mueller, and Ray Torok, President of U.S. Pipe, will continue to be responsible for their respective businesses and will work together to achieve synergies under the leadership of Mr. DeFosset and his successor. Thompson Dean, Chairman of Mueller and Managing Partner of DLJ Merchant Banking said, "We are extremely pleased at this outcome for the DLJ Merchant Banking funds as well as the opportunities that this transaction creates for Walter Industries and Mueller going forward." Transaction Conditions and Financing The acquisition is expected to be completed in the third quarter of 2005, subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart- Scott-Rodino Antitrust Improvements Act, and the funding of the Company's committed financing. The requisite stockholders of Mueller, DLJ Merchant Banking Partners II, L.P. and its affiliated investment funds and Mueller's senior management have agreed to approve the merger. The purchase price will be financed by new bank credit facilities arranged by affiliates of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, both of whom are advising Walter Industries in connection with the acquisition. Simpson Thacher & Bartlett LLP is acting as the Company's outside legal counsel in connection with the acquisition. Review of Additional Opportunities The Company also said it has been working with Banc of America Securities LLC and Morgan Stanley & Co. Incorporated to advise it regarding additional strategies to further maximize shareholder value. The Company said the timing and structure of any strategic action would be based upon the financial performance of its respective operating segments, market conditions, tax consequences and other considerations, all of which will be fully analyzed in order to determine the most appropriate time and means to deliver value to shareholders. Mueller Water Products, Inc., based in Decatur, Illinois, is a leading North American full line supplier of water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution systems and piping systems. Its principal products are fire hydrants, water and gas valves, and a complete range of pipefittings, coupling hangers and related products. Mueller has earned a solid reputation for high quality products, with respected brand names such as Mueller, James Jones, Hersey Meters, Henry Pratt and Anvil. Walter Industries, Inc. -- http://www.walterind.com/-- is a diversified company with revenues of $1.5 billion, excluding Mueller. The Company is a leader in affordable homebuilding, related financing, and water transmission products, and is a significant producer of high-quality metallurgical coal for worldwide markets. Based in Tampa, Florida, the Company employs approximately 5,100 people. * * * As reported in the Troubled Company Reporter on March 22, 2005, Moody's affirmed the debt ratings for Walter Industries, Inc., and maintained the company's stable rating outlook. Continued maintenance of the stable outlook is subject to an improvement in the company's homebuilding business. Moody's notes that the ratings benefit from extremely high metallurgical coal prices, which have helped bolster the company's operating income and cash flow. The affirmed ratings are: * Senior Implied, rated Ba2; * $245 million senior secured revolving credit facility, due 2008, rated Ba2; * $175 million senior subordinated notes, due 2024, rated B1; and * Issuer Rating, rated Ba3. Moody's said the rating outlook is stable. WALTER INDUSTRIES: Mueller Water Deal Cues S&P to Lower Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Walter Industries Inc. to 'BB-' from 'BB'. At the same time the ratings on Walter, Mueller Water Products Inc. (Mueller; 'B+'), and Mueller Group Inc. are placed on CreditWatch with negative implications. These actions follow the announcement that Walter has agreed to purchase Mueller for approximately $1.9 billion. The highly leveraged transaction will materially weaken Walter's pro forma financial profile. At March 31, 2005, Walter had approximately $182 million of recourse debt outstanding and Mueller had approximately $1.1 billion in total debt outstanding. Standard & Poor's initial pro forma leverage calculations at March 31, 2005, indicate that consolidated total debt to EBITDA for Walter will be about 5.5x, with debt leverage at its water business around 6.0x. Both figures exclude Standard & Poor's operating lease, pension, and capital finance company adjustments used for Walter's financing unit, which will likely increase these amounts. Both of these leverage amounts are significantly higher than Standard & Poor's previous expectations. Before taking further rating actions, Standard & Poor's intends to meet with management to discuss: * its near- and intermediate-term financing plans, including the company's pro forma capitalization and liquidity profile, * the business opportunities and integration risks that the transaction present, * the company's strategic objectives, and * the water group's legal structure as a wholly-owned public reporting subsidiary under Walter. Potential outcomes include the likelihood that existing ratings will be lowered. Tampa, Florida-based Walter is a diversified industrial conglomerate with strategic investments in the water transmission, natural resources, and affordable homebuilding and finance industries. In its fiscal year ended Dec. 31, 2005, the company generated a 7.7% operating margin on $1.2 billion of revenues. Decatur, Illinois-based Mueller manufactures a variety of products serving the water and gas industries, with trailing 12-month revenues of approximately $1.1 billion (at March 31, 2005) and an adjusted EBITDA margin of approximately 20%. Ratings Lowered And Placed On Creditwatch Negative Walter Industries Inc. To From -- ---- Corporate credit rating BB-/Watch Neg/-- BB/Stable/-- Sr Secd rev credit agreement BB-/Watch Neg BB Conv senior sub notes B/Watch Neg B+ Ratings Placed On Creditwatch Negative Mueller Water Products Inc. To From -- ---- Corporate credit rating B+/Watch Neg/-- B+/Stable/-- Senior unsecured debt rating B-/Watch Neg B- Mueller Group Inc. To From -- ---- Corporate credit rating B+/Watch Neg/-- B+/Stable/-- Senior secured debt rating B+/Watch Neg B+ Senior unsecured debt rating B-/Watch Neg B- WEIGHT INTERVENTION: Asset Sale Hearing Slated for June 23 ---------------------------------------------------------- Weight Intervention and Surgical Healthcare Holding, LLC, and its debtor-affiliates are soliciting offers for the purchase of all of their assets. Wish Acquisition, LLC, made an initial offer to buy the Debtors' assets for $6,750,000. The Debtors will conduct a Court-approved auction at a later date. A Court hearing to approve the assets sale to the highest bidder will be held on June 23, 2005, at 11:00 a.m. in the courtroom of: Honorable Pamela S. Hollis U.S. Bankruptcy Court Courtroom 644, 6th Floor 219 S. Dearborn Chicago, Illinois 60604 Headquartered in Downers Grove, Illinois, Weight Intervention and Surgical Healthcare Holding, LLC -- http://www.wishcenter.org/-- is a nationally recognized and proven weight loss program which specializes in advanced surgical treatment and long-term management of patients with morbid obesity. The Debtor and its afilliates filed for chapter 11 protection on April 22, 2005 (Bankr. N.D. Ill. Case No. 05-16002). Geoffrey S. Goodman, Esq., Edward J. Green, Esq., at Foley & Lardner LLP, represents the Debtor. The Company estimated assets and liabilities between $1 million and $10 million in its bankruptcy petition. WESTPOINT STEVENS: Steering Committee Wants Right to Credit Bid --------------------------------------------------------------- As previously reported, WestPoint Stevens, Inc. and its debtor- affiliates have commenced an auction process to sell substantially all of their assets free and clear of liens, either pursuant to a plan of reorganization or pursuant to Section 363 of the Bankruptcy Code. Prior to the implementation of the Court- approved bidding procedures, the Debtors received at least two proposals. One came from New Textile, jointly sponsored by W.L. Ross and the Steering Committee under the First Lien Credit Agreement. The Steering Committee comprise of Contrarian Funds, LLC, Satellite Senior Income Fund, LLC, CP Capital Investments, LLC, Wayland Distressed Opportunities Fund I-B, LLC, and Wayland Distressed Opportunities Fund I-C, LLC. Under the New Textile proposal, the Steering Committee, which holds more than 51% of the First Lien Indebtedness, agreed to direct Beal Bank, S.S.B. the administrative agent and collateral trustee, to credit bid for the Assets and to direct the First Lien Collateral Trustee to transfer the Assets to New Textile in exchange for equity interest in and rights to acquire additional equity interests in New Textile. The securities received by the Collateral Trustee would be distributed to the First Lien Lenders. The other proposal came from two affiliates of Aretex LLP -- WS Textile Co., Inc., and Textile Co., Inc. Aretex alleges to be a holder of 52% of the Second Lien Indebtedness and about 40% of the First Lien Indebtedness. Under the Aretex proposal, WS Textile offered to purchase the Assets in exchange for securities issued by the indirect parent of a newly formed entity. Bruce Bennett, Esq., at Hennigan, Bennett & Dorman LLP, in New York, argues that the securities under the Aretex proposal would have been distributed to First Lien Lenders and Second Lien Lenders based on a judicial determination of the value of those securities. As a consequence, the First Lien Lenders would not receive payment in full in cash on account of the First Lien Indebtedness, and would instead receive, in exchange for their Assets, only equity securities representing a fraction of an entity several times removed from Aretex comprising the collateral. Mr. Bennett asserts that Aretex's bid cannot be accepted by the Debtors or the U.S. Bankruptcy Court for the Southern District of New York. The prior bids of New Textile and Aretex illustrate a number of disputed legal issues that must be determined before a purchaser can be selected at the hearing scheduled for June 24, 2005. The Steering Committee intends to exercise its right, as the holders of more than 51% of the First Lien Indebtedness, to direct the First Lien Collateral Trustee to credit bid for the Collateral. The "unconditional" right to credit bid under Section 363(k) of the Bankruptcy Code is one of the fundamental protections afforded to secured creditors, Mr. Bennett says. Mr. Bennett relates that the purpose of credit bidding is to allow a secured creditor to substitute a market-based valuation, as determined after competitive bidding in an actual sale, for what is arguably an inferior judicial determination of value under Section 506(a) of the Bankruptcy Code. Thus, at the very least, to preserve the secured creditor's "unconditional" right to credit bid, any other bid cannot require a judicial determination of the value of property constituting the purchase price. The Aretex bid does not meet that minimum threshold because it requires the Court to apportion, and thus to adjudicate the value of, the securities to be offered to First Lien Lenders and Second Lien Lenders. The Court must also conclude that the sale of the Assets to any competing bidder will provide the First Lien Lenders with adequate protection as required by Section 363(e). Mr. Bennett points out that Aretex's bid violated provisions of a certain Intercreditor Agreement by proposing to distribute securities to Aretex and the Second Lien Lenders, even though the First Lien Lenders did not consent to the transaction and were not receiving payment in full in cash, thus leaving them impaired within the meaning of Section 1126. The Intercreditor Agreement evidences the agreement of the First Lien Lenders and Second Lien Lenders with respect to the relative priorities of each their security interests in and liens on the Assets. Mr. Bennett also points out that, pursuant to the Intercreditor Agreement, the Second Lien Lenders agreed not to object to the sale of any part of the Asset if the First Lien Collateral Trustee consented to the sale. The interests of the First Lien Lenders and the Second Lien Lenders attached to the proceeds with any surplus to be delivered to the Second Lien Lenders after full payment of the First Lien Indebtedness. Mr. Bennett notes that Beal Bank will, at the direction of the Steering Committee, consent to a sale to New Textile that provides for a credit bid. If that bid prevails, there will be no surplus available for the Second Lien Lenders. Rather than objecting to the sale, Mr. Bennett tells the Court that the recourse of the Second Lien Lenders, if they truly believe the value of the Assets exceeds the credit bid, is to make a cash bid that enables full repayment of the First Lien Indebtedness. Accordingly, the Steering Committee asks the Court to find that: (a) the First Lien Collateral Trustee has the right to credit bid the full amount of the First Lien indebtedness, and that at least a dollar-for-dollar value be attributed to the credit bid; (b) any competing bid must be in the form of cash in an amount sufficient to repay the First Lien Indebtedness in full in cash; (c) Wilmington Trust Company, as Second Lien Agent, and Aretex are prohibited under the Intercreditor Agreement from proposing to purchase the Debtors' assets without paying the First Lien Lenders in full in cash; and (d) the Second Lien Agent and the Second Lien Lenders do not have standing to object to any sale to which the First Lien Collateral Trustee has consented. Objections (1) Aretex In April 2005, Aretex pointed out that the First Lien Collateral Trustee lacked the authority to credit bid, and detailed the contractual provisions and case law controlling this conclusion. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal LLP, in New York, notes that apparently unable to respond to Aretex's argument, the Steering Committee offered only platitudes on the general utility of credit bidding. Aretex does not dispute credit bidding's utility in other cases or in general. However, the Steering Committee is seeking to credit bid all the First Lien Lenders' claims without authority in the pertinent documents and over the objection of a significant group of the relevant creditor constituency. Mr. Wolfson points out that the Steering Committee cannot cite a single case or relevant contractual provision that comes close to supporting that unprecedented action, which consequently should be rejected by the Court. The Steering Committee, Mr. Wolfson maintains, also cannot cite any support for two of its additional key contentions that: * bidding must be on an "all cash" basis for all participants other than itself; and * the Second Lien Lenders are barred both from obtaining a recovery and from objecting to the Steering Committee's bid. (2) Wilmington Trust In its brief, the Steering Committee reiterates its position that the Intercreditor Agreement deprives the Second Lien Lenders of their rights if the First Lien Lenders are not paid in full. Wilmington Trust Company presented exceptions to that provision pursuant to Section 2.13 of the Intercreditor Agreement. However, the Steering Committee mentions in its brief that, "None of the limited exceptions described in that provision are applicable to this dispute." Gary M. Becker, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, contends that the Steering Committee makes no effort to support its statement that none of the exceptions apply. There is no citation to the actual provisions of Section 2.13 and no argument as to why the provision should not apply. Mr. Becker tells Judge Drain that the Second Lien Agent is simply acting to protect the Second Lien Lenders' right, which exists under the Intercreditor Agreement and the Bankruptcy Code, to receive any surplus sale proceeds and adequate protection payments -- an action that is expressly permitted in the Intercreditor Agreement. Steering Committee Responds to Objections Mr. Bennett argues that Aretex has offered no authority to contradict the absolute and unconditional right of the Collateral Trustee, acting at the direction of the required banks, to credit bid the full amount of the First Lien Indebtedness, with that credit bid to be accorded a cash value equal to the allowed claim. Mr. Bennett adds that, contrary to the positions of Aretex and the Second Lien Agent, none of the exceptions apply to the requirement under Section 2.13 of the Intercreditor Agreement that the First Lien Lenders receive payment in full and in cash prior to any distribution to the Second Lien Lenders. The exception for permitted mandatory prepayments under the Intercreditor Agreement simply would not apply to a bid which does not provide for the First Lien Lenders to receive any cash, let alone payment in full in cash, Mr. Bennett says. Furthermore, Mr. Bennett explains that the adequate protection payment exception does not apply to a sale of substantially all of the Assets. At the very most, that provision would entitle the Second Lien Lenders to receive the amounts being held in escrow, which current total about $20 million. 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. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAM CARTER: S&P Rates Proposed $625 Mil. Secured Loan at BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating and '2' recovery rating to The William Carter Co.'s proposed $625 million secured bank facilities, indicating that lenders can expect substantial recovery of principal (80%-100%) in the event of a payment default or bankruptcy. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on the Atlanta, Georgia-based children's wear manufacturer. The outlook is stable. Carter's had total debt outstanding of about $164 million at April 2, 2005. Proceeds from the new bank loan will be used primarily to finance the company's previously announced acquisition of Osh Kosh B'Gosh, and to redeem its 10.875% notes due 2011. The above ratings are based on preliminary offering statements and are subject to review upon final documentation. Upon completion of this transaction, Standard & Poor's will withdraw its rating on the 10.875% notes due 2011, the $80 million revolving credit facility due 2006 and the term loan due 2008. "We expect Carter's to maintain its solid market positions and credit protection measures commensurate with its ratings, despite the incremental debt related to the Osh Kosh acquisition," said Standard & Poor's credit analyst Susan H. Ding. Standard & Poor's expects to company to focus on integrating the Osh Kosh operations and reducing debt from cash flow. WILLIAM SUMMERS: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: William Isaac & Connie Lucile Summers 4857 South 50 East Kokomo, Indiana 46902 Bankruptcy Case No.: 05-11845 Chapter 11 Petition Date: July 21, 2005 Court: Southern District of Indiana (Indianapolis) Debtors' Counsel: Steven P. Taylor, Esq. Law Office of Steven P. Taylor 6100 North Keystone Avenue, Suite 503 Indianapolis, Indiana 46220 Tel: (317) 475-1570 Fax: (317) 475-1697 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtors' 7 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MBNA America Revolving credit $32,800 P.O. Box 15026 Wilmington, DE 19850-5026 MBNA America Revolving credit $25,000 P.O. Box 15026 Wilmington, DE 19850-5026 Chase Revolving credit $19,000 Customer Service P.O. Box 15919 Wilmington, DE 19850-5919 MBNA America Revolving credit $10,000 P.O. Box 15026 Wilmington, DE 19850-5026 Citi Cards Revolving credit $8,000 Card Service Center P.O. Box 6077 Sioux Falls, SD 57117-6077 Chase Revolving credit $5,000 Customer Service P.O. Box 15919 Wilmington, DE 19850-5919 WILSON & ELLIS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Wilson & Ellis, Inc. dba Ameer Commons Rest Home 1003 McArthur Avenue Charlotte, North Carolina 28206 Bankruptcy Case No.: 05-32516 Type of Business: The Debtor operates a retirement home. See http://ResearchArchives.com/t/s?31 Chapter 11 Petition Date: June 20, 2005 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: James H. Henderson, Esq. James H. Henderson, P.C. 1201 Harding Place Charlotte, North Carolina 28204-2248 Tel: (704) 333-3444 Fax: (704) 333-5003 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Reema Owens Loans to corporation $146,000 3332 Bonneville Drive Charlotte, NC 28205 Chase Credit card $30,000 P.O. Box 78116 Phoenix, AZ 85062 Mecklenburg County Overpayment $23,199 Department of Social Services 301 Billingsley Road Charlotte, NC 28211 Terri Norris $16,000 7329 McBane Mill Road Graham, NC 27253 Employment Security Employment taxes $14,076 Commission of NC P.O. Box 26504 Raleigh, NC 27611 Samuel Young $3,500 3341 Barringer Drive Charlotte, NC 28213 Betty Davis Wages $3,200 P.O. Box 668543 Charlotte, NC 28266 Sysco Foodservice Food supplies $2,600 4500 Corporate Drive Northwest Concord, NC 28027 Piedmont Natural Gas Utility service $2,159 P.O. Box 33068 Charlotte, NC 282333068 City of Charlotte Utility service $1,820 Billing Center P.O. Box 33831 Charlotte, NC 282333831 National Linen Supplies $1,742 P.O. Box 34666 Charlotte, NC 28234 George Smith Wages $1,689 6464 Mallard View Lane Charlotte, NC 28269 GMAC $1,388 P.O. Box 830070 Baltimore, MD 21283 Advantage Paper Supplies $826 306-Q West Tremont Avenue Charlotte, NC 28203 ADT Security Security monitoring $400 P.O. Box 371967 Pittsburgh, PA 152507969 Waste Management $377 P.O. Box 9001054 Louisville, KY 40290 BellSouth Telephone service $365 P.O. Box 70529 Charlotte, NC 282720529 Allstate Insurance $343 P.O. Box 3576 Akron, OH 44309 Betty Sinclair Wages $333 1417 Waddell Street Charlotte, NC 28216 The Charlotte Observer Subscription $314 P.O. Box 70111 Charlotte, NC 282700111 WINN-DIXIE: Plans to Reduce Stores by 326 & Cut Workforce by 28% ---------------------------------------------------------------- Winn-Dixie Stores, Inc. (OTC Pink Sheets: WNDXQ) disclosed a series of actions intended to enhance the Company's financial performance and position it for profitability in the long term. The cornerstone of the Company's plan consists of focusing on its strongest markets, where it typically has a significant market share position, and reducing its store "footprint" from 913 stores in the U.S. and the Bahamas to 587 stores. Peter Lynch, President and Chief Executive Officer of Winn-Dixie, said: "Creating a smaller, but more profitable store base will best position Winn- Dixie for long-term financial health and a successful future. We will be focusing our resources on markets where Winn-Dixie has a strong presence and there are compelling opportunities. This will allow us to build on our strengths and take advantage of the considerable potential we see to improve the shopping experience for our customers. Already, we have made significant strides. The steps will help us to continue our progress as we strive to make Winn-Dixie a stronger company, better able to compete in the marketplace with a strong foundation for the future." From 901 to 587 Stores Winn-Dixie currently operates 901 stores in nine states and 12 in the Bahamas. These stores are located in 37 Designated Market Areas -- DMAs. Once the footprint plan is implemented, Winn-Dixie will operate approximately 587 stores in 23 DMAs in Florida, Alabama, Louisiana, Georgia, Mississippi, and the Bahamas. Of the 326 stores that the Company will sell or close, 233 stores are in DMAs the Company is leaving entirely. The other 93 stores are located in DMAs in which Winn-Dixie will remain, but these particular stores do not meet the Company's financial requirements going forward. Winn-Dixie's anticipated annual revenue following these store dispositions will be approximately $7.5 billion, compared to approximately $10 billion today. Exiting Three Distribution Centers In connection with the new store footprint, Winn-Dixie is also making changes in its distribution and manufacturing plant operations. Specifically, the Company will be exiting 3 of its 10 distribution centers. These facilities are located in: * Atlanta, Georgia; * Charlotte, North Carolina; and * Greenville, South Carolina. The Company will also close the portion of the Montgomery, Alabama distribution center that handles dry grocery. The "perishables" portion of the Montgomery distribution center will remain open, and the Company will be expanding the use of the Hammond, Louisiana dry grocery facility to accommodate the dry grocery items now handled in the Montgomery facility. In addition, Winn-Dixie is marketing for sale its manufacturing plants, including its six dairy and culture plants, its pizza plant in Montgomery, Alabama, and its Chek Beverage/Deep South Products plant in Fitzgerald, Georgia, which produces Chek soda, shelf-stable juices and condiments. If buyers are not found, the Company will continue to operate the Chek Beverage plant and the Hammond, Louisiana and Plant City, Florida dairies. The Company is also working to find a third party to produce elsewhere the items made at its Astor Products plant in Jacksonville, Florida and the condiments at the Deep South plant. Once third parties are secured, those plants will be closed. The Company, together with its outside advisors, is conducting an active marketing effort to identify potential buyers for the stores, distribution centers and manufacturing plants that it will no longer operate. Stores that cannot be sold will be closed. The Company expects to announce the results of this marketing effort within several weeks. "Our hope is to sell as many of our affected stores, plants and DCs as possible to new owners who will continue to operate them," stated Mr. Lynch. "We are asking potential new owners to offer employment opportunities to our Associates." Winn-Dixie will provide severance and other assistance to each Associate who is not offered employment. DMAs/Stores to be Exited In determining its future store footprint, Winn-Dixie conducted a thorough analysis of its store base, including stores' market share, cash flow, profitability, real estate quality, and financial outlook. In the 14 DMAs it is exiting, the Company has either had a difficult market position, unsatisfactory financial performance, and limited opportunities for profitable sales growth, or it has determined that the stores in a particular DMA are too distant from its continuing distribution facilities to be operated on a cost- effective basis. The DMAs that Winn-Dixie is exiting are the marketing areas of: * Alexandria, Louisiana; * Atlanta, Georgia; * Augusta, Georgia; * Charleston, South Carolina; * Charlotte, North Carolina; * Chattanooga, Tennessee; * Columbia, South Carolina; * Columbus-Tupelo, Mississippi; * Greensboro-High Point, North Carolina; * Greenville-Spartanburg, South Carolina; * Huntsville, Alabama; * Jackson, Mississippi; * Raleigh-Durham, North Carolina; and * Savannah, Georgia. A list of each store location with affected stores highlighted, along with a map showing the DMA boundaries for Winn- Dixie's current and future operating areas, is available on the Winn-Dixie Web site at the following link: http://www.winn-dixie.com/ 28% Workforce Reduction As a result of the actions announced today, Winn-Dixie expects that its workforce will be reduced by approximately 28%, or 22,000 positions. Where practicable, the Company will seek to offer affected Associates positions at other Winn-Dixie operations. In addition, the Company is reviewing its corporate organization and plans to make reductions in headquarters and support personnel reflecting the smaller store footprint that the Company will operate. An announcement regarding a corporate restructuring is expected to be made later this summer. Mr. Lynch said, "We regret the impact these tough decisions will have on many of our Associates, customers and local communities. We do not take these decisions lightly and would not be proceeding if these steps were not essential to restore Winn-Dixie's financial health. We are committed to doing what we can to help minimize the impact, including, wherever possible, attempting to find new owners who will continue to operate the stores, distribution centers and plants that we are exiting. In addition, we will offer assistance to affected Associates to help them through a transition period." Jay Skelton, Chairman of Winn-Dixie, stated, "The actions represent a very important step in Winn-Dixie's reorganization. By taking these difficult but necessary actions, we intend to put Winn-Dixie in the strongest position for a successful future and to remain a vital, valued partner in the communities we serve." Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. WORLDCOM INC: Dist. Court Sets Settlement Hearing for September 9 ----------------------------------------------------------------- New York Comptroller Alan G. Hevesi, the sole trustee of the New York State Common Retirement Systems and Court-appointed Lead Plaintiff in the WorldCom securities class action, entered into settlements with some class action defendants during the period March 3, 2005, to April 22, 2005: Defendant Date Settlement --------- ---- ---------- Bank of America Securities LLC and Fleet Securities, Inc. 03/03/05 $460,500,000 Lehman Brothers Inc. 03/04/05 62,713,582 Credit Suisse First Boston LLC 03/04/05 12,542,716 Goldman, Sachs & Co. 03/04/05 12,542,716 UBS Warburg LLC 03/04/05 12,542,716 ABN AMRO Inc. 03/09/05 278,365,600 Mitsubishi Securities Int'l. plc 03/09/05 75,000,000 BNP Paribas Securities Corp. 03/09/05 37,500,000 Mizuho International 03/09/05 37,500,000 Deutsche Bank 03/10/05 325,000,000 WestLB AG 03/10/05 75,000,000 Caboto Holding SIM S.p.A. 03/10/05 37,500,000 JP Morgan Chase 03/16/05 2,000,000,000 Utendahl Capital 03/16/05 234,000 Blaylock Partners 03/16/05 572,840 Former WorldCom Director Defendants 03/21/05 60,750,000 Allen, Areen, Aycock, Bobbitt, Alexander, Jr., Galesi, Kellett, Jr., Macklin, Porter, Roberts, Sidgmore, Tucker Arthur Andersen LLP 04/22/05 65,000,000 Judge Denise Cote of the U.S. District Court for the Southern District of New York granted preliminarily approval of the Settlements. Judge Cote now directs the Lead Plaintiff to cause notice of: -- the proposed Settlements; -- the hearing on the proposed Settlements; -- the request for approval of the Plans of Allocation contained within the stipulations of Settlement; and -- the Lead Counsel's application for award of attorneys' fees and payments of expenses to be provided to Class Members. The Lead Counsel may draw up to $14,325,000 from the Settlement Funds to pay the costs of notice and settlement administration. The District Court sets a hearing on September 9, 2005, at 2:30 p.m., to address the fairness and adequacy of the Settlements, the Plans of Allocation, the proposed Coverage Claim Bar Order in the settlement with the Director Defendants and the applications for attorneys' fees and expenses. In order to be entitled to participate in the Settlement, a Class Member must timely submit a valid Proof of Claim to: WorldCom, Inc. Securities Litigation Administrator The Garden City Group, Inc. P.O. Box 9000 #6247 Merrick, New York 11566-9000 Judge Cote extends the deadline for submitting a proof of claim to August 26, 2005. District Court Enjoins Arbitration In separate orders, Judge Cote enjoins class members Paul G. Rochmis, Paul G. Rochmis M.D. Ltd. Employees Profit Sharing Plan, Robert Reindel, Judith Reindel, Shan C. Sun, and Collette C. Sun from arbitrating any claims relating to investments in securities issued by WorldCom. Judge Cote permanently barred and enjoined the Claimants from instituting, commencing or prosecuting, either directly or in any other capacity, all claims arising out of or relating to investments in securities issued by WorldCom, and options or derivative instruments based in whole or in part on the value of securities issued by WorldCom (including Targeted Growth Enhanced Terms Securities with respect to MCI WorldCom Inc. and GOALs issued by UBS AG), including without limitation all claims arising out of or relating to any analyst research reports or other statements made or issued by the Citigroup Defendants concerning WorldCom. The Citigroup Defendants include Citigroup Inc., Citigroup Global Markets Inc. fka Salomon Smith Barney Inc., Citigroup Global Markets Limited fka Salomon Brothers International Limited, and Jack B. Grubman. As previously reported, the District Court issued a judgment approving settlement and dismissing the class action against the Citigroup Defendants. The Citigroup Defendants applied for enforcement of the release and injunction contained in the Judgment as against the claims asserted by the Claimants in an arbitration. The Suns had argued that they should not be enjoined from pursuing their claims relating to investments in WorldCom against Salomon Smith Barney Inc. in an NASD arbitration proceeding. The Suns contend that: -- by participating in the arbitration, Salomon Smith consented to it and waived its right to object to the proceeding; -- the Notice of Class Action and the Notice of Class Settlement did not provide them adequate time to opt out and did not clearly and sufficiently spell out what effect, if any, the class action would have on arbitrations already filed and pending; and -- they should be permitted to opt out late pursuant to Rule 60(b)(2) of the Federal Rules of Civil Procedure and the doctrine of excusable neglect. Judge Cote finds that Salomon Smith could not have voiced its objection early in the proceeding and is not using its objection to escape an adverse outcome. Moreover, Judge Cote notes, the Suns have provided nothing but conclusory assertions in support of their argument that they were not provided clear and timely notice of the fact that they needed to opt out of the class action to pursue their arbitration claims. "In reality, they were given extraordinarily clear and timely notice." "Although there is no reason to believe that the Suns did not act in good faith, the equities here do not support a finding of excusable neglect [for their failure to opt out]," Judge Cote adds. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Court Enters Order Governing Asbestos Estimation Docs ----------------------------------------------------------------- Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware enters a protective order governing all confidential documents produced by any party to the estimation of W.R. Grace & Co. and its debtor-affiliates' asbestos-related property damage claims as well as all confidential interrogatory answers, responses to requests to admit, and other discovery materials and testimonies. The Court's Protective Order determines that confidential materials are those documents, discovery requests, or testimony submitted by a party pertaining to attorney-client communication or attorney work product produced voluntarily or over objection pursuant to Court Order, those that are commercially sensitive or trade secret information and maintained or preserved by a party in a manner reasonably calculated to preserve confidentiality. The Court directs a person who objects to the designation of an item as confidential to notify the counsel of the designating party in writing, setting forth the reasons supporting the objection. The designating party will respond in writing to any notification by either modifying or withdrawing all or part of the designation as a confidential material, or declining to redesignate any portion. The designating party will provide response no later than seven business days after it receives notice of the objection. If no response is timely provided by the designating party, the designation will be assumed to have been withdrawn. Confidential materials may be shown or disclosed to: (a) Bilzin Sumberg Dunn Baena Price & Axelrod LLP, counsel to the Official Committee of Asbestos Property Damage Claimants; (b) Kirkland & Ellis LLP, counsel to the Debtors; (c) Kramer Levin Naftalis & Frankel LLP, counsel to the Official Equity Security Committee; (d) Stroock & Stroock & Lavan LLP, counsel to the Official Committee of Unsecured Creditors; (e) Caplin & Drysdale, counsel to the Official Committee of Asbestos Personal Injury Claimants; (f) Swidler Berlin, counsel for David Austern, the Futures Claimants Representative; (g) members of the PD Committee who serve as counsel to property damage claimants that are subject of the PD Estimation; (h) experts retained by the parties' counsel for purposes of the PD Estimation; (i) the author or any recipient of the documents as reflected on the face of the document; (j) the Court; and (k) any other person the designating party agrees may be shown the confidential material. The Court further directs that no later than 30 days after the conclusion of the PD Estimation, all persons in possession of any confidential materials will either return all confidential materials to the counsel for the producing party or destroy all materials and certify that fact in writing to the producing party. 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) YUKOS OIL: Founder Mikhail Khodorkovsky Gets Nine-Year Jail Term ---------------------------------------------------------------- The Meshchansky district court of Moscow on Tuesday sentenced ex- CEO of YUKOS oil giant Mikhail Khodorkovsky and head of the MENATEP Group Platon Lebedev to nine years in prison finding them guilty of six charges. The court has obligated Mikhail Khodorkovsky and Platon Lebedev to pay over 17 billion rubles to tax bodies on civil suits. The court passed a judgment to terminate criminal proceedings against YUKOS ex-CEO in connection with the embezzlement of a 20% block of stock of the Apatit company by the YUKOS head. The public prosecutor earlier asked the court to recognize x-CEO of YUKOS Mikhail Khodorkovsky guilty of embezzling the Apatit stock, but free him of punishment, as the case falls within the statute of limitations. Yukos' Statement The employees of YUKOS Oil Company are deeply disappointed at the verdict announced today by the Moscow Meshchansky Court relating to their visionary mentor, Company founder and former CEO Mikhail Khodorkovsky. Those who worked with him over the years to build Russian's most esteemed and internationally recognized company remain proud of his and their achievements. Together they brought to Russia progressive business, social and corporate cultures, which made working within YUKOS and for Mr. Khodorkovsky very special. For the vast majority this verdict is a tragic example of the authorities turning a law-enforcement and judicial system against an individual for political ends. We regret that the true value of his achievements have been sullied by those who refuse to appreciate the good he brought Russia. YUKOS employees view the verdict as a gross travesty of justice produced by judicial system that has not only been content to be maneuvered to destroy Mikhail Khodorkovsky, but also apparently is intent on bringing down YUKOS. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Jonathan Hersey Joins Sheppard Mullin as O.C. Litigation Partner ------------------------------------------------------------------ Jonathan Hersey has rejoined Sheppard, Mullin, Richter & Hampton LLP as a partner in the Business Trial practice group, based in the firm's Orange County office. Mr. Hersey, most recently with Bingham McCutchen in Orange County, has significant experience representing computer industry, e-commerce and financial institution companies in complex commercial and intellectual property litigation matters. "We're pleased to welcome Jon back to the firm," said Guy Halgren, firm chair. "With a practice focused on the tech and financial services sectors, Jon's experience is very complementary firmwide and an excellent addition to the litigation depth of the Orange County office." Commented Mr. Hersey, "Sheppard Mullin is a top-notch firm and I'm happy to return. I am excited about developing my practice in Orange County and working with my colleagues throughout the firm." Robert Beall, chair of the Business Trial practice group, said, "Jon is a talented attorney with a great deal of experience in complex commercial and IP matters. We are thrilled to have such an accomplished litigator join our busy practice group." Mr. Hersey has extensive experience litigating and resolving disputes involving claims for breach of contract and warranty, including software development and licensing agreements, distribution and royalty contracts, joint ventures, leases and asset purchase agreements. He has handled numerous business tort cases involving claims of fraud, unfair competition, misappropriation of trade secrets, trade libel and interference with contract; as well as represented government defense and transportation contractors in bidding and claims disputes with federal and local authorities. Mr. Hersey also has considerable experience negotiating insurance coverage issues and bad faith denials of coverage, particularly with regard to business interruption and property damage. His intellectual property litigation practice has involved several trademark opposition and infringement actions venued in federal district courts, California state courts and the Trademark Trial and Appeal Board. He has also helped litigate and resolve claims for software copyright indemnity and patent infringement. Mr. Hersey has substantial experience obtaining and opposing demands for prejudgment remedies, including writs of attachment, temporary protective orders and preliminary injunctions. He has conducted numerous arbitrations and mediations, and has successfully briefed and argued appeals before both the Ninth Circuit Court of Appeals and the California Court of Appeal. Mr. Hersey earned his law degree from University of California at Los Angeles (UCLA) School of Law in 1996 and graduated, with High Honors and Distinction in General Scholarship, from University of California, Berkeley, with a BA in 1993. About Sheppard, Mullin, Richter & Hampton LLP Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm with 430 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment and Media; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax, Employee Benefits, Trusts and Estate Planning; and White Collar Defense. The firm was founded in 1927. * Robert Dremluk Joins Seyfarth Shaw as New York Partner -------------------------------------------------------- Seyfarth Shaw LLP, a leading national full-service law firm, disclosed that Robert W. Dremluk has joined the firm's New York office as partner in the Litigation Practice Group. Mr. Dremluk was previously Counsel at Curtis, Mallet-Prevost, Colt & Mosle LLP. "We are delighted that Bob has joined our firm," said John Napoli, Co-Managing Partner of the New York office and New York Business Services Group Chair. "Bob's vast bankruptcy experience enhances our capabilities as our firm continues to grow rapidly in the New York market, as well as on a national level." Mr. Dremluk concentrates his practice on bankruptcy and corporate reorganization. His client representations include Chapter 11 debtors, secured lenders, trade creditors, bondholders, shopping center developers, limited partners, indenture trustees, equipment lessors, asset purchasers, plan proponents, trustees, and other interested parties in all aspects of bankruptcy cases, both domestically and internationally. He currently serves as Chair for the Multinational Reorganization and Insolvencies Committee, International Law Section, New York State Bar Association and as Co-chair of the Intellectual Property Working Subcommittee, Committee on Bankruptcy and Corporate Reorganization, Association of the Bar of the City of New York. He has written and spoken extensively in his field. Mr. Dremluk, age 53, obtained his J.D. from the New England School of Law in 1978 and his A.B. from Cornell University in 1974. He is a member of the Mediation Panels for the U.S. Bankruptcy Court for the Southern and Eastern Districts of New York and a member of the Mediation and Neutral Evaluation Panel for the U.S. District Court, Eastern District of New York. Founded in 1945, Seyfarth Shaw has more than 600 attorneys located in nine offices throughout the United States, including New York, Boston, Chicago, Washington DC, Atlanta, Houston, Los Angeles, San Francisco and Sacramento as well as Brussels, Belgium. True to its roots, Seyfarth Shaw has one of the largest labor & employment practices in the nation, and also provides a broad range of legal services including corporate; real estate; construction; trusts & estates; intellectual property; litigation; employee benefits; environmental, safety & toxic torts; government, commercial & international contracts; bankruptcy, workouts & business reorganization; business immigration; tax; and international. Today, the firm's practice reflects virtually every industry and segment of the country's business and social fabric. Clients include many of the Fortune 500 companies, financial institutions, newspapers and other media, hotels, healthcare organizations, companies in telecommunication, manufacturing, retail and insurance industries, airlines and railroads. The firm also represents a number of federal, state, and local governmental and educational entities. * Alex Ostrow Participated in ABI's Bankruptcy Webinar Series ------------------------------------------------------------ Alec P. Ostrow, Esq., a Shareholder at Stevens & Lee, participated in the first conference of its kind on the new bankruptcy amendments. He joined other key bankruptcy professionals to discuss the law and its implications in an American Bankruptcy Institute Webinar Series. The first program was held June 15. The series addresses all aspects of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a bill signed by President Bush that will purportedly enact sweeping changes impacting both consumer and business bankruptcies. Mr. Ostrow served as a faculty member for a Business Bankruptcy session and discussed topics such as new small business rules, expansion of reclamation claims, broadened preference defenses, trade creditor strategies, new grounds for the appointment of a trustee, single- asset cases and limits on exclusivity. Mr. Ostrow concentrates his practice in bankruptcy, corporate reorganization, creditors' rights and commercial litigation. He is an adjunct professor for St. John's University School of Law LL.M. Bankruptcy Program. Mr. Ostrow recently was named a Fellow by the American College of Bankruptcy. He is a member of the Panel of Mediators for the United States Bankruptcy Court for the Southern District of New York and is Co-Chair of the Real Estate Committee for the American Bankruptcy Institute. He also is a member of The Association of the Bar of the City of New York, the New York State Bar Association and the New York County Lawyers Association. Mr. Ostrow is fluent in Spanish and French. He lectures and writes articles on various bankruptcy law issues. He received a J.D. from the New York University School of Law (1980) and an A.B., magna cum laude, from Dartmouth College (1977). About Stevens & Lee Stevens & Lee is a professional services firm of approximately 180 lawyers and over 40 business and consulting professionals. The firm represents clients throughout the Mid-Atlantic region and across the country from 13 offices in the following locations: Reading, Harrisburg, Lancaster, Philadelphia, Valley Forge, the Lehigh Valley, Scranton and Wilkes-Barre, Pennsylvania; Princeton and Cherry Hill, New Jersey; Wilmington, Delaware; and New York City. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- June 23, 2005 TURNAROUND MANAGEMENT ASSOCIATION AND COMMERCIAL LAW ASSOCIATION Insolvency and Turnaround Management Seminar NSW State Library Sydney, Australia Contact: http://www.turnaround.org/ June 23, 2005 TURNAROUND MANAGEMENT ASSOCIATION Third Annual Pacific Northwest Golf Tournament Washington National Golf Club, Auburn, WA Contact: acgseattle@acg.org or http://www.turnaround.org/ June 23-24, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Eighth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-595-3800 or dhenderson@renaissanceamerican.com June 24, 2005 TURNAROUND MANAGEMENT ASSOCIATION Golf Tournament RattleSnake Point Golf Club, Toronto Contact: http://www.turnaround.org/ June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon The Centre Club Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Family Night - Somerset Patriots Baseball Commerce Bank Ballpark, Bridgewater, NJ Contact: 908-575-7333 or http://www.turnaround.org/ June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION "Hands On" Turnarounds The Centre Club, Tampa, FL Contact: 703-912-3309 or http://www.turnaround.org/ July 1, 2005 TURNAROUND MANAGEMENT ASSOCIATION Long Island Chapter Manhattan Cruise (In Planning - Watch for Announcement) Departing from Manhattan Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ July 6, 2005 TURNAROUND MANAGEMENT ASSOCIATION SummerFest 2005 Milwaukee, WI Contact: 815-469-2935 or http://www.turnaround.org/ July 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Law Review (in preparation for the CTP exam) [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ July 13, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ July 14-17, 2005 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800 or http://www.abiworld.org/ July 21, 2005 NEW YORK SOCIETY OF SECURITY ANALYSTS Investing in Distressed and Defaulted Debt New York, NY Contact: http://www.NYSSA.org/ July 21-22, 2005 ALI-ABA Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 Boston, MA Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 26, 2005 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Organizational Assessment and Intervention Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ July 27-30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, S.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ August 1, 2005 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Annual Golf Outing Raritan Valley Country Club, Bridgewater, NJ Contact: 908-575-7333 or http://www.turnaround.org/ August 4, 2005 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Cambridge, Maryland Contact: 1-703-739-0800 or http://www.abiworld.org/ August 11-12, 2005 ALI-ABA Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 San Francisco, CA Contact: 1-800-CLE-NEWS; http://www.ali-aba.org August 12-13, 2005 CENTER FOR ENTREPRENEURSHIP Insolvencies in Transition Economies S"dert"rns H"gskola University College, Stockholm, Sweden Contact: http://www.sh.se/enterforum/ August 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue TBA Contact: http://www.turnaround.org/ August 17-21, 2005 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES NABT Convention Marriott Marquis Times Square New York, NY Contact: 803-252-5646 or info@nabt.com August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, NJ Contact: 908-575-7333 or http://www.turnaround.org/ August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Accounting Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ August 30, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon - Legal Roundtable (Regional Attorneys) Centre Club, Tampa, FL Contact: http://www.turnaround.org/ September 1-30, 2005 TURNAROUND MANAGEMENT ASSOCIATION Education Program Venue - TBA, Toronto, ON Contact: http://www.turnaround.org/ September 8-9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Golf Tournament and TMA Regional Conference Gideon Putnam Hotel, Saratoga Springs, NY Contact: 716-667-3160 or http://www.turnaround.org/ September 8-11, 2005 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference (Including Financial Advisors/Investment Bankers Program) The Four Seasons Hotel Las Vegas, Nevada Contact: 1-703-739-0800 or http://www.abiworld.org/ September 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA-LI Chapter Board Meeting Venue - TBA Contact: 516-465-2356 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Lender's Forum: Surviving Bank Mergers Milleridge Cottage, Long Island, NY Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ September 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Management Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Workout Lenders Panel Luncheon Union League Club, NYC Contact: 646-932-5532 or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION Third Annual Workout Lenders Panel Union League Club New York, NY Contact: 908-575-7333 or http://www.turnaround.org/ September 23, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop London, UK Contact: 1-703-739-0800 or http://www.abiworld.org/ September 22-25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Cross-Border Conference Grand Hyatt Seattle, Seattle, WA Contact: 503-223-6222 or http://www.turnaround.org/ September 26, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop Site to Be Determined London, England Contact: 1-703-739-0800 or http://www.abiworld.org/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Joint CFA/RMA/TMA Networking Reception Woodbridge Hilton, Iselin, NJ Contact: 908-575-7333 or http://www.turnaround.org/ October 7, 2005 AMERICAN BANKRUPTCY INSTITUTE Views from the Bench Georgetown University Law Center Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ October 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ October 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ October 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue to be announced Contact: http://www.turnaround.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/ October 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ October 25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon Centre Club, Tampa, FL Contact: http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, NY Contact: 516-465-2356 or http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, Texas Contact: http://www.iwirc.com/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Center Club, Baltimore, MD Contact: 703-912-3309 or http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sydney, Australia Contact: 9299-8477 or http://www.turnaround.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, MI Contact: 1-703-739-0800 or http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Speaker/Dinner Event Fairmont Royal York Hotel, Toronto, ON Contact: http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, NY Contact: 716-440-6615 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (West) Hyatt Grand Champions Resort Indian Wells, California Contact: 1-703-739-0800 or http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/ December 5-6, 2005 MEALEYS PUBLICATIONS Asbestos Bankruptcy Conference Ritz-Carlton, Battery Park, New York, NY Contact: http://www.mealeys.com/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, NY Contact: 516-465-2356 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, NY Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, VA Contact: 703-912-3309 or http://www.turnaround.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel Phoenix, AZ Contact: http://www.pli.edu/ March 22-25, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Desert Ridge, Phoenix, AZ Contact: http://www.turnaround.org/ March 30 - April 1, 2006 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, AZ Contact: 1-800-CLE-NEWS or http://www.ali-aba.org April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott Newport, Rhode Island Contact: 1-703-739-0800 or http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island Amelia Island, Florida Contact: 1-703-739-0800 or http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, FL Contact: http://www.ncbj.com/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, AZ Contact: http://www.ncbj.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, NV Contact: http://www.ncbj.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***