TCR_Public/050805.mbx       T R O U B L E D   C O M P A N Y   R E P O R T E R

           Friday, August 5, 2005, Vol. 9, No. 184

                          Headlines

AAMES MORTGAGE: S&P Cuts Rating on Series 2001-1 Class B Certs.
ADELPHIA COMMS: Disclosure Statement Hearing Set on Sept. 20
ALLEGHENY ENERGY: AEP to Acquire Monongahela's Assets for $55 Mil.
ALLIANCE IMAGING: June 30 Balance Sheet Upside-Down by $51.6 Mil.
ALLIED HOLDINGS: Ct. Directs Joint Administration of Ch. 11 Cases

AMCAST INDUSTRIAL: Exits Chapter 11 With $20 Million New Financing
AMI SEMICONDUCTOR: Moody's Confirms Ba3 Rating on $320 Mil. Loan
ANDREWS PERFORMANCE: Voluntary Chapter 11 Case Summary
APPLICA INC: Weak Operating Performance Cues S&P to Junk Ratings
APPLIED IMAGING: Second Quarter Net Loss Narrows 58% to $436,000

ARGOSY GAMING: Reports Second Quarter 2005 Earnings
ARMSTRONG WORLD: Reports Second Quarter Financial Results
ATA AIRLINES: Wants Plan Filing Period Extended Until January 9
ATHLETE'S FOOT: Wants More Time to Decide on Two Sets of Leases
BANC OF AMERICA: Fitch Affirms Low-B Rating on 14 Cert. Classes

BLOCKBUSTER INC: Weak 2nd Qtr. Rentals Cue S&P's Negative Watch
BUILDING MATERIALS: Fitch Places BB+ Rating on $197MM Sr. Debt
CALPINE CORP: Canadian Court Dismisses Harbert Litigation
CALPINE CORP: Posts $298.5 Million Net Loss in Second Quarter
CALPINE CORP: Sells Saltend to Normantrail for GBP498.4 Million

CARDIAC SERVICES: Can Use GECC's Cash Collateral Until Sept. 30
CARRIER ACCESS: Delivers Restated 2003 & 2004 Financial Results
CATHOLIC CHURCH: Court Denies Portland's Cry to Continue Hearing
CELESTICA INC: Completes Repurchase of $612 Million LYONs
CENTENNIAL COMMS: Will Restate First Quarter Report Due to Error

CESAR CEDANO: Case Summary & 20 Largest Unsecured Creditors
CHARTER COMMS: June 30 Equity Deficit Widens to $5.1 Billion
COLLINS & AIKMAN: Ford & Labor Union Object to Contract Rejection
COLLINS & AIKMAN: J.R. Automation Wants to Get Paid for Equipment
COLLINS & AIKMAN: Wants to Extend Deadline to Remove Actions

CREST 2002-IG: Fitch Holds BB Rating on $14 Million Class D Notes
CUMMINS INC: S&P Lifts Rating on $28 Million Series 2001-4 Certs.
DEAN FOODS: Earns $81.2 Million of Net Income in Second Quarter
DEPARTMENT 56: S&P Rates Proposed $275 Million Senior Loan at BB-
DUANE READE: Posts $10.3 Million Net Loss in Second Quarter

DUANE READE: Moody's Junks $50 Mil. Sr. Second Lien Notes Add-On
DUANE READE: S&P Junks Proposed $50 Million Senior Notes
DUKE FUNDING: Fitch Rates $32 Million Subordinated Notes at BB+
DVI INC: Trust Wants Merrill Lynch to Produce Privileged Documents
DYNEGY INC: $2.35 Billion Asset Sale Prompts S&P to Watch Ratings

EASYLINK SERVICES: Taps Grant Thornton to Audit 2005 Financials
ENRON CORP: Inks Pact Allowing WestLB's Claim for $539 Million
ENRON CORP: Wants Court to Okay Amendments to Plan Schedule S
EPOCH INVESTMENTS: Pays $75,000 to Gabriel Del Virginia
FC CBO: S&P Removes BB-Rated Senior Notes from Creditwatch

FIRST MERCURY: S&P Rates $65 Million Senior Unsecured Notes at BB
FIRST UNION: Fitch Holds Low-B Rating on Six Certificate Classes
FIRST UNION: Fitch Holds Junk Rating on $8.7 Mil. Class M Certs.
FRONTLINE CAPITAL: Can Continue Transactions with Assisted Living
FRONTLINE CAPITAL: Gets OK to Revise Agreement with F. Adipietro

GE COMMERCIAL: S&P Puts Low-B Ratings on Six Certificate Classes
GRAY TELEVISION: Spins-Off Newspaper & Wireless Units
GRAY TELEVISION: Bull Run to Merge into Triple Crown Spin-Off
IFT CORP: Posts $887,189 Net Loss in Second Quarter
IMPAX LABS: Expects $800,000 Net Loss for 2004 with New Policy

IMPSAT FIBER: Subsidiaries Complete $125.6 Mil. Debt Restructuring
INSIGHT MIDWEST: Moody's Rates $1.125 Billion Term Loan C at Ba3
INTERLINE BRANDS: Prices 7,750,000 Common Shares at $19 Per Share
KB TOYS: Court Extends Solicitation Period to Sept. 1
KCS ENERGY: Earns $20.9 Million of Net Income in Second Quarter

KIRKER ENTERPRISES: Jones Day Represents Ad Hoc Noteholder Group
KMART CORP: Marion Stafford Wants Stay Lifted to Pursue Action
KMART CORP: Settling Employees' 401(k) Lawsuit for $11.5 Million
LA PALOMA: Moody's Rates Proposed $370 Million Facilities at Ba3
LB-UBS COMMERCIAL: Credit Enhancement Cues Fitch to Lift Ratings

MAC-GRAY CORP: Moody's Rates New $125 Million Unsec. Notes at B1
MAC-GRAY: S&P Rates Proposed $125 Million Senior Notes at B+
MALCOM BOHANON: Case Summary & 20 Largest Unsecured Creditors
MEDIA GENERAL: Improved Finances Prompt S&P's Positive Watch
MERIDIAN AUTOMOTIVE: Can Purchase Insurance from Liberty Mutual

MERIDIAN AUTOMOTIVE: Gets Court Nod to Employ PwC as Accountants
METROMEDIA FIBER: Dist. Ct. Agrees County Franchise Fee Improper
MCI INC: Will Release 2005 2nd Quarter Results on August 9
MILLENNIUM AMERICA: Moody's Rates $250 Million Facility at Ba2
MIRANT CORP: Asks Court for Summary Judgment on Pokalsky's Claims

MIRANT CORP: Court Approves Settlement Agreement with Citibank
MORGAN'S FOODS: Equity Deficit Narrows to $3.3 Million in May 2005
NATIONAL BEDDING: Moody's Reviews $300 Million Debts' Ba3 Rating
ON TOP: Wants to Hire Cox Stein as Lead Bankruptcy Counsel
ORGANIZED LIVING: Wants Plan Filing Period Stretched to Dec. 30

OWENS CORNING: Earns $67 Million of Net Income in Second Quarter
PC LANDING: Can Continue Using Cash Collateral Until September 30
PC LANDING: Creditors Must File Proofs of Claim by Aug. 15
PROXIM CORP: Asks Court to Allow Limited Liquidation of Collateral
QUIGLEY COMPANY: Sept. 15 Bar Date Includes Silica Claims

ROGERS COMMUNICATIONS: Completes $223 Million Debt-for-Equity Swap
SAFETY-KLEEN: Court Okays Stipulation in Dispute with M. Black
SATELITES MEXICANOS: S. Maza Files Sec. 304 Petition in S.D.N.Y.
SATELITES MEXICANOS: Section 304 Petition Summary
SHURGARD STORAGE: Moody's Reviews Ba1 Preferred Stock Rating

SIRIUS SATELLITE: Offering $400M Sr. Notes to Institutional Buyers
SIRIUS SATELLITE: Moody's Junks Proposed $500 Million Notes
SITHE INDEPENDENCE: S&P Places B-Rated $559.5 Mil. Bonds on Watch
SOLUTIA INC: Delivers Second Quarter Financial Report to SEC
SPANISH BROADCASTING: Styles Media Makes Additional $15MM Deposit

SUN HEALTHCARE: June 30 Balance Sheet Upside-Down by $117.4 Mil.
TOBACCO ROW: Judge Tice Confirms Chapter 11 Plan
TOWER AUTOMOTIVE: Wants Additional Time to Remove Civil Actions
TOWER AUTOMOTIVE: Reconciles Visteon's Prepetition Claims
TOYS "R" US: Moody's Downgrades Corporate Family Rating to B1

US AIRWAYS: Asks Court to Allow Worldspan's $5 Mil. Admin. Claim
US AIRWAYS: Bank of New York Wants Access to $600,000 Account
US DATAWORKS: Posts $968,000 Net Loss in First Quarter 2006
USG CORP: Revises Non-Employee Directors' Compensation Program
VARIG S.A.: Accounts for 3.5% of Boeing's Total Portfolio

VARIG S.A.: Taps Lufthansa Consulting as Restructuring Advisor
VERTIS INC: June 30 Balance Sheet Upside-Down by $508.6 Million
WESTERN WIRELESS: ALLTEL Deal Completion Cues S&P to Remove Watch
WINN-DIXIE: Objects to Heritage's Stand to Shorten Decision Period
WINN-DIXIE: Vera Volovecky Wants Stay Lifted to Pursue Claim

WINN-DIXIE: Wants to Deny Transamerica's Request for Payment
WORLDCOM INC: Wants Ebbers Litigation Stayed Pending Settlement
W.R. GRACE: Wants to Sell SP Business to Sancap for $4.6 Million
YOUR HOME: Case Summary & 19 Largest Unsecured Creditors
ZIFF DAVIS: Derek Irwin Leaves Post as Chief Financial Officer

ZIFF DAVIS: June 30 Balance Sheet Upside-Down by $1 Billion

* Former Austin Mayor Kirk Watson Joins Hughes & Luce as Partner

* BOOK REVIEW: Landmarks in Medicine - Laity Lectures of the
               New York Academy of Medicine

                          *********

AAMES MORTGAGE: S&P Cuts Rating on Series 2001-1 Class B Certs.
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on the class
M-1 certificates of Aames Mortgage Trust series 2002-1 and 2002-2
and lowered its rating on the class B certificate of Aames
Mortgage Trust series 2001-1.  At the same time, ratings are
affirmed on the remaining classes from the same three series, as
well as on the classes from seven other Aames Mortgage Trust and
Aames Mortgage Investment Trust transactions.

The upgrades reflect the following:

    -- Increased credit support percentages provided by
       subordination, excess interest, and overcollateralization;

    -- Good collateral pool performance; and

    -- At least three years of mortgage seasoning.

The increased credit support percentages are the result of
significant principal prepayments and the shifting interest
feature of the transactions, as well as low realized losses.  Both
actual and projected credit support percentages are at least 2x
the loss coverage levels associated with the new ratings, even
after step down.  Furthermore, both series have outstanding pool
balances of less than 27.3% of their original sizes.

Series 2002-1 and 2002-2 have delinquencies of 22.42% and 12.09%,
respectively, with at least half of these percentages severely
delinquent (90-day plus).  Cumulative realized losses for these
series were less than 2% of the original pool balances.

The downgrade reflects the following:

    -- Declining credit support;

    -- Poor collateral pool performance; and

    -- Losses that generally exceed the available monthly excess
       interest amount.

The decreased credit support amount is the result of losses
outpacing the available excess interest, which has reduced the
overcollateralization amount to near depletion.  At the current
trend, the overcollateralization amount is projected to reach zero
within 12 months.

Delinquency with regard to series 2002-1 is at 32.13%, with the
severely delinquent categories (90-day delinquent, foreclosed,
REO) totaling to 12.99%.  Cumulative realized losses are at 6.34%.

The rating affirmations reflect actual and projected credit
enhancement percentages that are sufficient to support the current
ratings.  The remaining mortgage pools backing the classes with
affirmed ratings had total delinquencies ranging from 11.93%
(series 2003-1) to 34.91% (series 2000-2).  Lastly, all series
with affirmed ratings have experienced low realized losses.

Credit support for the transactions is provided by subordination,
excess interest, and overcollateralization with a step down
feature.  In addition, Financial Security Assurance Inc. ('AAA'),
provides bond insurance for some of the 'AAA' rated classes.  The
collateral backing the certificates originally consisted of
subprime fixed-rate and adjustable-rate first lien mortgage loans
with terms of maturity of no greater than 30 years.

                           Ratings Raised

                    Aames Mortgage Trust 2002-1

                                   Rating
                                   ------
                       Class     To     From
                       -----     --     ----
                       M-1       AA+    AA

                    Aames Mortgage Trust 2002-2

                                   Rating
                                   ------
                       Class     To     From
                       -----     --     ----
                       M-1       AA+    AA

                           Rating Lowered

                    Aames Mortgage Trust 2001-1

                                   Rating
                                   ------
                       Class     To     From
                       -----     --     ----
                       B         BB     BBB

                         Ratings Affirmed

                       Aames Mortgage Trust

           Series       Class                       Rating
           ------       -----                       ------
           2000-1       A-5F, A-6F                  AAA
           2000-2       A-5F, A-6F                  AAA
           2001-1       A-1, A-2                    AAA
           2001-1       M-1                         AA+
           2001-1       M-2                         A
           2001-2       A-1, A-2                    AAA
           2001-2       M-1                         AA+
           2001-2       M-2                         A
           2001-3       A-1, A-IO                   AAA
           2001-3       M-1                         AA+
           2001-3       M-2                         A
           2001-3       B                           BBB
           2001-4       A-4                         AAA
           2001-4       M-1                         AA+
           2001-4       M-2                         A+
           2001-4       B                           BBB
           2002-1       A-3, A-4                    AAA
           2002-1       M-2                         A
           2002-1       B                           BBB
           2002-2       A-1, A-2                    AAA
           2002-2       M-2                         AA
           2002-2       M-3                         A
           2002-2       B                           BBB
           2003-1       1-A1, 1-A2, 2-A, A-IO       AAA
           2003-1       M-1                         AA
           2003-1       M-2                         A
           2003-1       M-3                         A-
           2003-1       M-4                         BBB+
           2003-1       M-5                         BBB
           2003-1       M-6                         BBB-
           2003-1       B                           BB+

                      Aames Mortgage Investment Trust

             Series       Class                       Rating
             ------       -----                       ------
             2004-1       1-A1, 1-A2, 2-A1, A-IO      AAA
             2004-1       M-1, M-2                    AA+
             2004-1       M-3, M-4                    AA
             2004-1       M-5                         AA-
             2004-1       M-6                         A+
             2004-1       M-7                         A
             2004-1       M-8                         A-
             2004-1       M-9, B-1A, B-1F             BBB+
             2004-1       B-2                         BBB
             2004-1       B-3                         BBB-


ADELPHIA COMMS: Disclosure Statement Hearing Set on Sept. 20
------------------------------------------------------------
Judge Gerber of the U.S. Bankruptcy Court for the Southern
District of New York schedules the hearing to consider the
approval of Adelphia Communications Corporation and its debtor-
affiliates' Second Amended Disclosure Statement on September 20,
2005, at 9:45 a.m. and, if necessary, September 21, 2005, at
9:45 a.m.

Responses, objections and proposed modifications to the
Disclosure Statement, if any, must:

    -- be in writing;

    -- state the name and address of the objecting or responding
       party and the nature of their claim or interest;

    -- state with particularity the basis and nature of any
       objection or response and include, where appropriate,
       proposed language to be inserted in the Disclosure
       Statement to resolve the objection or response; and

    -- be filed with the Bankruptcy Court, together with proof of
       service, and served on these parties so as to be actually
       received on or before 4:00 P.M. on September 9, 2005:

          * attorneys for the ACOM Debtors:

               Willkie Farr & Gallagher LLP
               787 Seventh Avenue
               New York, New York 10019
               Attn: Marc Abrams, Esq. and Paul V. Shalhoub, Esq.;

          * Adelphia Communications Corporation
            5619 DTC Parkway, 8th Floor
            Greenwood Village, CO 80111
            Attn: Brad Sonnenberg, Esq.;

          * counsel to Time Warner and Comcast:

               Paul, Weiss, Rifkind, Wharton & Garrison LLP
               1285 Avenue of the Americas
               New York, NY 10019-6064
               Attn: Alan W. Kornberg, Esq.
                     Jeffrey Saferstein, Esq.; and

               Ballard Spahr Andrews & Ingersoll, LLP
               1735 Market Street, 51st Floor
               Philadelphia, PA 19103-7599
               Attn: William Slaughter, Esq.
                     Richard S. Perelman, Esq.;

          * counsel to the Official Committee of Unsecured
            Creditors:

               Kasowitz Benson Torres & Friedman LLP
               1633 Broadway
               New York, New York 10019
               Attn: David M. Friedman, Esq.
                     Adam L. Schiff, Esq.;

          * counsel to the Official Committee of Equity Security
            Holders:

              Bragar Wexler Eagel & Morgenstern, P.C.,
              885 Third Avenue, Suite 3040
              New York, New York 10022
              Attn: Peter D. Morgenstern, Esq.
                    Gregory A. Blue, Esq.; and

          * the Office of the United States Trustee
              for the Southern District of New York
            33 Whitehall Street, 21st Floor
            New York, New York, 10004-2112
            Attn: Tracy Hope Davis, Esq.

Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country.  Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks.  The Company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002.  Those cases are jointly
administered under case number 02-41729.  Willkie Farr & Gallagher
represents the ACOM Debtors.  (Adelphia Bankruptcy News, Issue No.
100; Bankruptcy Creditors' Service, Inc., 215/945-7000)


ALLEGHENY ENERGY: AEP to Acquire Monongahela's Assets for $55 Mil.
------------------------------------------------------------------
American Electric Power (NYSE: AEP), through its Columbus Southern
Power utility subsidiary, has signed an agreement to purchase
Monongahela Power Company's Ohio transmission and distribution
operations for approximately $55 million, plus traditional working
capital adjustments.  Monongahela Power is a subsidiary of
Allegheny Energy (NYSE: AYE).

If the Public Utilities Commission of Ohio orders AEP to go
through with this transaction, the transaction will be contingent
on the receipt of required regulatory approvals from:

   -- the U.S. Securities and Exchange Commission,
   -- the Federal Energy Regulatory Commission, and
   -- Hart-Scott-Rodino clearance by the Department of Justice or
      the Federal Trade Commission.

If approved, the parties expect to complete the sale by the end of
2005.

The purchase agreement responds to an order issued by the PUCO on
June 14, 2005, that ordered CSP and Monongahela Power to discuss
potential terms and conditions of a transaction through which
Monongahela Power would transfer its Ohio service territory to
CSP.  The order was issued in an effort to resolve issues related
to Monongahela Power's planned transition to market-based rates in
Ohio.

"We are pleased that the negotiations with Allegheny were
productive and that we were able to comply with the Commission's
order," said Kevin E. Walker, president and chief operating
officer of AEP Ohio.  "We now will focus on working with these
communities and their leaders, as well as our new customers and
our new employees on transition and system integration issues
moving forward."

                   Terms of the Agreement

According to the terms of the purchase agreement, AEP will acquire
29,000 Monongahela Power customers in six counties located in
southeastern Ohio, and all transmission and distribution assets
located in Ohio serving those customers, including 1,167
distribution line miles, 59 transmission line miles and 19
substations.  The agreement also calls for the transfer of 24
Allegheny employees to AEP.  The sale will include a power
purchase agreement under which Allegheny will provide AEP 100
percent of its power requirements to serve the retail load in this
area through May 31, 2007.  AEP already is interconnected at
transmission voltages with this service territory. CSP intends to
take responsibility for providing service to the customers and
facilities on Jan. 1, 2006, subject to regulatory approvals.

AEP Ohio provides electricity to 1.4 million customers of major
AEP subsidiaries Columbus Southern Power Company and Ohio Power
Company in Ohio, and Wheeling Power Company in the northern
panhandle of West Virginia.  AEP Ohio is based in Gahanna, Ohio,
and is a unit of American Electric Power.

Headquartered in Greensburg, Pa., Allegheny Energy --
http://www.alleghenyenergy.com/-- is an investor-owned utility
consisting of two major businesses.  Allegheny Energy Supply owns
and operates electric generating facilities, and Allegheny Power
delivers low-cost, reliable electric service to customers in
Pennsylvania, West Virginia, Maryland, Virginia and Ohio.

                        *     *     *

As reported in the Troubled Company Reporter on June 15, 2005,
Moody's Investors Service assigned a Senior Implied rating of Ba1
to Allegheny Energy, Inc. and also assigned a Speculative Grade
Liquidity Rating of SGL-2.  This is the first time that Moody's
has assigned both such ratings to AYE.  The company's other
ratings, including the Ba2 senior unsecured rating, remain
unaffected.

The Ba1 Senior Implied rating reflects the credit profile of the
AYE corporate family of companies, which includes investment grade
utility operating subsidiaries as well as a holding company whose
Ba2 senior unsecured rating reflects its still high balance
leverage.  The Ba1 Senior Implied rating also reflects the
company's improved financial performance and the expectation that
AYE's credit profile will continue to improve over the next 2 to 3
years, with further debt reduction and substantial improvement in
cash flow, and that there will be a reasonably supportive
regulatory response to rate filings to recover increased costs and
outlays for environmental spending.


ALLIANCE IMAGING: June 30 Balance Sheet Upside-Down by $51.6 Mil.
-----------------------------------------------------------------
Alliance Imaging, Inc. (NYSE:AIQ) reported results for the second
quarter and first six months ended June 30, 2005.

Revenue was $108.4 million for the second quarter of 2005, in line
with the Company's guidance range, which was $106.5 million to
$109.5 million.  The second quarter 2005 revenue of $108.4 million
represents a decrease of $1.1 million, or 1.0%, compared to
$109.5 million reported in the second quarter of 2004.  For the
first six months of 2005, revenue was $214.4 million compared to
$215.1 million in the same period of 2004, a decrease of 0.3%.

Alliance's Adjusted EBITDA (earnings before interest expense, net
of interest income; income taxes; depreciation expense;
amortization expense; minority interest expense and non-cash
stock-based compensation) was $41.8 million in the second quarter
of 2005.  Adjusted EBITDA was in line with the Company's second
quarter guidance range of $41.5 million to $43.5 million.  The
second quarter 2005 Adjusted EBITDA of $41.8 million represents a
decrease of $1.6 million, or 3.6%, compared to $43.4 million
reported in the second quarter of 2004.  Of this decrease,
$1 million was due to the Company recording $1.0 million in the
provision for doubtful accounts in the second quarter of 2005, or
1.0% of revenue, compared to no amounts in the second quarter of
2004 due to the collection of higher than normal amounts of aged
accounts receivable in the second quarter of 2004.

For the first six months of 2005, Adjusted EBITDA totaled
$83 million compared to $84.2 million in the first six months of
2004, a decrease of $1.2 million, or 1.5%. As discussed above,
$1 million of this decrease was due to the Company recording
$1.5 million in the provision for doubtful accounts in the first
six months of 2005, or 0.7% of revenue, compared to $0.5 million,
or 0.2% of revenue, in the first six months of 2004 due to the
collection of higher than normal amounts of aged accounts
receivable in the first half of 2004.

As stated in the Company's first quarter 2005 earnings release,
the Company modified its definition of Adjusted EBITDA to conform
to a similar measure used in Alliance's amended credit agreement.
Adjusted EBITDA now includes minority interest expense and
excludes employment agreement costs and other income and expense,
net.

Cash flow provided by operating activities was $23.6 million in
the second quarter of 2005 compared to $25.1 million in the
corresponding quarter of 2004, and was $50.7 million and
$61 million for the first six months of 2005 and 2004,
respectively.  Alliance made $28.0 million of net payments on its
long-term debt in the first six months of 2005.  The Company's
cash and cash equivalents balance decreased by $700,000 to
$20 million at June 30, 2005 from $20.7 million at Dec. 31, 2004.

"Alliance continues to focus on implementing the Company's core
initiatives: stabilizing our core mobile MRI business, growing our
PET and PET/CT business, expanding Alliance's fixed-site business,
primarily in partnership with hospitals and health systems, and
developing a unified, performance-oriented culture," Paul S.
Viviano, Chairman of the Board and Chief Executive Officer, said.
"Healthcare providers are experiencing increased utilization
pressures from insurers, which impacts Alliance's business.
Despite these factors, diagnostic imaging plays a significant role
in healthcare, and we believe that Alliance is positioned for
long-term success."

The Company is reaffirming guidance for full year 2005.  Revenue
is expected to range from $427 million to $437 million; Adjusted
EBITDA is expected to range from $166 million to $172 million; and
earnings per share to range from $0.44 to $0.51 per share.  For
the third quarter of 2005, revenue is expected to range from $107
million to $110 million and Adjusted EBITDA is expected to range
from $41.5 million to $43.5 million.

Alliance Imaging -- http://www.allianceimaging.com/-- is a
leading national provider of shared-service and fixed-site
diagnostic imaging services, based upon annual revenue and number
of systems deployed. Alliance provides imaging services primarily
to hospitals and other healthcare providers on a shared and full-
time service basis, in addition to operating a growing number of
fixed-site imaging centers. The Company had 465 diagnostic imaging
systems, including 352 MRI systems and 57 PET or PET/CT systems,
and over 1,000 clients in 43 states at June 30, 2005.


ALLIED HOLDINGS: Ct. Directs Joint Administration of Ch. 11 Cases
-----------------------------------------------------------------
Allied Holdings, Inc., and its 23 debtor-affiliates sought and
obtained a Court order authorizing the joint administration of
their Chapter 11 cases for procedural purposes only.

All pleadings relating to any of the Debtors' cases will bear a
joint caption.  The Court clerk will file and maintain all of
those pleadings under the existing docket for Allied Holdings,
Inc.  The Court permits the Debtors to combine notices to
creditors.

The joint caption will read:

               IN THE UNITED STATES BANKRUPTCY COURT
                FOR THE NORTHERN DISTRICT OF GEORGIA
                            NEWNAN DIVISION
   _______________________________
                                  |
   In re:                         |   Chapter 11
   ALLIED HOLDINGS, INC., et al.  |   Case Nos. 05-12515
                                  |   through 05-12537
                 Debtors.         |   Jointly Administered
                                  |
                                  |   Judge Drake
   _______________________________|

Rule 1015(b) of the Federal Rules of Bankruptcy Procedure
provides that the Court may order the joint administration of the
estates of a debtor and one or more affiliates:

   (b) Cases Involving Two or More Related Debtors.
       If . . . two or more petitions are pending in
       the same court by or against . . . a debtor
       and an affiliate, the court may order a joint
       administration of the estates.

According to Thomas H. King, executive vice president and chief
financial officer of Allied Holdings, Inc., the Debtors are
"affiliates" as that term is defined in Section 101(2) of the
Bankruptcy Code.

"I anticipate significant activity during these cases and believe
that most hearings and contested matters will apply to all of the
Debtors' cases equally.  Consequently, joint administration of
these cases will promote the economical and efficient
administration of the Debtors' estates, unencumbered by the
procedural problems otherwise attendant to the administration of
separate, albeit related, cases.  Additionally, joint
administration will avoid the burdensome necessity of duplicating
notices to creditors," he says.

Mr. King adds that joint procedural administration of the
Debtors' cases will also benefit creditors because creditors who
respond to motions affecting multiple Debtors or who file their
own motions affecting multiple Debtors will not be forced to
prepare and file multiple sets of papers that may be identical
except for their captions.

"No creditor will be prejudiced by joint administration. Joint
administration is merely procedural; it has no impact on
creditors' substantive rights," Mr. King emphasizes.

Joint administration, Mr. King notes, will also relieve the Court
of making numerous duplicative orders and keeping numerous
duplicative files.  "Furthermore, supervision of the
administrative aspects of these Chapter 11 cases by the Office of
the United States Trustee will be simplified."

Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services.  The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537).  Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents 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. (Allied Holdings Bankruptcy News, Issue No. 1;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


AMCAST INDUSTRIAL: Exits Chapter 11 With $20 Million New Financing
------------------------------------------------------------------
Amcast Industrial Corporation and its debtor-affiliates disclosed
that they successfully emerged from chapter 11 protection.  The
U.S. Bankruptcy Court for the Southern District of Ohio, Western
Division, confirmed the Debtors' Third Amended Joint Plan of
Reorganization on July 29, 2005, following an overwhelming support
of the Debtors' secured and unsecured creditors.

                      Terms of the Plan

Under the terms of the plan, Amcast's pre-petition senior lenders
put in place a long-term capital structure by exchanging their
former holdings of Amcast senior secured debt for $13 million in
senior secured debt and $51 million in secured subordinated debt,
with the remainder in equity.  As a consequence, these
institutions now own all of the company's common stock and equity.

In addition, a group of the pre-petition lenders have committed to
lend the reorganized Amcast up to $20 million pursuant to a new
revolving credit agreement with customary terms and conditions.
The lender's legal and bankruptcy counsel in this restructuring
transaction is Haynes and Boone, LLP.  Barrier Advisors, LP serves
as financial and turnaround advisor to the lenders.

"We are pleased to have this type of strategic commitment to our
company from the lenders," said Byron Pond, Amcast's former
chairman and CEO.  "They have worked with us throughout the
reorganization and understand our business thoroughly; the entire
management team appreciates the support received from them and our
other constituents, including our suppliers, customers and
employees."  Amcast is very pleased that Mr. Pond's leadership and
contribution will continue in his ongoing role as a member of the
company's newly formed board of directors.

During the case, Amcast divested its remaining non-automotive
businesses and intends to focus on the continued successful
penetration of its global customer base from three plants in
Indiana: Fremont, Gas City and Franklin.  The reorganization also
provided the opportunity to downsize corporate overhead while
positioning the company to more efficiently and strategically
focus on its customers and the marketplace.  Amcast will maintain
its substantial marketing and engineering presence in the Detroit
area.

"We believe this is good news for us and for our customers," Mr.
Pond continued.  "We have addressed the balance sheet issues that
led to the decision to reorganize and can now make the necessary
investments to ensure our future success.  We have some exciting
new technologies under development and look forward to sharing
them with the market.  We are also increasing our marketing
presence among both North American and transplant manufacturers.
We envision substantial growth in the wheel and aluminum component
sectors, facilitated by a more appropriate capital structure and
ample liquidity."

Mr. Pond noted that during the restructuring process Amcast
fulfilled all of its supply obligations to its customers and
continued to be awarded new business.  Amcast's largest customer,
General Motors, also renewed its agreements with the company.  "We
will continue our commitment to provide the highest quality
product and service that our customers have come to expect, and
intensify our efforts to run a lean and responsive business," Mr.
Pond said.

Headquartered in Dayton, Ohio, Amcast Industrial Corporation
-- http://www.amcast.com/-- is a manufacturer and distributor of
technology-intensive metal products to end-users and supplier in
the automotive and plumbing industry.  The Company and its debtor-
affiliates filed for chapter 11 protection on Nov. 30, 2004
(Bankr. S.D. Ohio Case No. 04-40504).  Jennifer L. Maffett, Esq.,
at Thompson Hine LLP, represents the Debtors in their
restructuring efforts.  When the Debtors filed for protection from
their creditors, they listed total assets of $104,968,000 and
total debts of $165,221,000.


AMI SEMICONDUCTOR: Moody's Confirms Ba3 Rating on $320 Mil. Loan
----------------------------------------------------------------
Moody's Investors Service confirmed the ratings of AMI
Semiconductor Inc.  The ratings confirmation concludes a ratings
review for possible downgrade under effect since June 16, 2005.
The ratings outlook is stable.

The confirmation follows the finalization of the financing plan
for the company's proposed $135 million acquisition of the
semiconductor division of Flextronics International Ltd. announced
in June 2005.  Financing for the transaction will consist of a
$110 million tack-on to the existing term loan B.  The remaining
purchase amount will be funded through available cash balances.
The financing alleviates Moody's concerns over liquidity, as it
maintains AMI's availability under the $90 million revolver, along
with cash balances in excess of $50 million following the
acquisition.  The capital structure also the reduces the
likelihood that AMI expects to undertake an additional significant
debt financed acquisition in the near term.

The ratings confirmed include:

   * Corporate Family Rating (formerly known as Senior Implied
     Rating) at Ba3;

   * $90 million revolving credit facility maturing 2010 at Ba3;
     and

   * $210 million senior secured term loan B maturing 2012 at Ba3
     (to be increased by $110 million to $320 million - The $110
     million tack-on will also be assigned a Ba3 rating).

The current rating reflects:

   * the company's solid credit metrics including pro forma
     (including the Flextronics semiconductor acquisition)
     trailing twelve months ended April 2, 2005 leverage
     (debt/EBITDA) of 2.2x and pro forma EBITDA interest coverage
     exceeding 8x;

   * the relative stability of the business model due to long
     product lives and moderate price volatility in the integrated
     mixed signal operations;

   * long-standing customer relationships; and

   * the company's low capital intensity which contributes to
     moderate operating leverage.

Due to the similar nature of the business that AMI is acquiring,
Moody's expects that there will be minimal integration issues
associated with the transaction.

The acquisition appears to be highly priced at about a 10 times
mulitple of EBITDA.  However, Moody's believes that the acquired
businesses, which represented a peripheral operating segment to
the seller, is likely to provide greater value in the near term to
AMI than reflected in its historical results.  Moody's believes
that the acquisition, which operates in AMI's direct product areas
and includes no manufacturing operations, carries little
integration or execution risk.

The stable ratings outlook reflects:

   * expectations for continued growth albeit at a slower rate in
     revenues over the next 18 months;

   * maintenance of stable margins; and

   * continuation of strong customer relationships.

Nevertheless, near term organic revenue growth will be challenged
absent the incremental revenues from the Flextronics acquisition.
The financing structure for the acquisition preserves much of
AMI's liquidity.  Moody's expects the company will have more than
$50 million of cash on its balance sheet and no borrowings under
its revolving credit facility at the closing.  However, Moody's
notes that this level of liquidity is somewhat modest for a
company in the volatile semiconductor segment.

The ratings could face downward pressure if:

   * the company loses a significant number of customers;

   * the company further relevers the balance sheet through
     another major acquisition; or

   * if the company experiences integration issues with the
     Flextronics acquisition translating to revenue and/or cost
     synergies not being realized.

Conversely, the ratings could face upward pressure if:

   * the company is able to materially delever its balance sheet
     either through reductions in overall debt coupled with
     improvement in operating performance;

   * increases and sustains its current profitability margins
     through top-line growth or effective cost containment
     efforts; or

   * free cash flow meaningfully improves.

Headquartered in Pocatello, Idaho, AMI Semiconductor Inc. is a
leader in designing and manufacturing mixed-signal application-
specific integrated circuits and structured digital products.  For
the year ended December 2004, AMI recorded revenues of $517
million.


ANDREWS PERFORMANCE: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Andrews Performance Transportation, Inc.
        P.O. Box 4723
        Salinas, California 93912

Bankruptcy Case No.: 05-54729

Type of Business: The Debtor operates a trucking business.

Chapter 11 Petition Date: August 4, 2005

Court: Northern District of California (San Jose)

Judge: Marilyn Morgan

Debtor's Counsel: Mark W. Hafen, Esq.
                  Law Offices of Dozier and Hafen
                  325 Cayuga Street
                  Salinas, California 93901
                  Tel: (831) 758-1031

Total Assets: $0

Total Debts:  $1,207,102

The Debtor did not file a list of its 20 Largest Unsecured
Creditors.


APPLICA INC: Weak Operating Performance Cues S&P to Junk Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on small appliance manufacturer Applica Inc. to 'CCC+' from
'B-' and its subordinated debt rating on the company to 'CCC-'
from 'CCC'.

In addition, all ratings on the Miramar, Florida-based company
were removed from CreditWatch with negative implications, where
they were placed April 21, 2005.  The outlook is negative.
Applica had about $135 million of total debt outstanding June 30,
2005.

"The downgrades reflect our concerns regarding Applica's continued
weak operating performance and its tight liquidity position
entering the second half of the year when the company's seasonal
working capital needs typically reach their peak," said Standard &
Poor's credit analyst David Kang.

Net sales were down 19% and the company generated an operating
loss of $35.6 million for the second half of the year.  Operating
performance continues to be negatively affected by inventory
write-downs, higher product warranty returns, and losses in the
company's Mexican operations.  As such, credit protection measures
have weakened substantially.


APPLIED IMAGING: Second Quarter Net Loss Narrows 58% to $436,000
----------------------------------------------------------------
Applied Imaging Corp. (Nasdaq: AICX) reported financial and
operating results for the second quarter ended June 30, 2005.

Total revenues for the three months ended June 30, 2005 were
$4.9 million, up 15% from the $4.3 million generated in the second
quarter of 2004.  Total revenues for the six months ended June 30,
2005 were $9.8 million, up 7% from the $9.2 million produced in
the same period last year.

The Company narrowed its net loss by 58% to $436,000 for the
quarter, as compared to a loss of $1.0 million in the comparable
period last year.  The Company also decreased its net loss for the
six months ended June 30, 2005 by 43% to $947,000, versus a net
loss of $1.7 million for the same period last year.

"We are pleased to report progress in both our top- and bottom-
line performance for the first half of 2005," said Robin Stracey,
President and Chief Executive Officer of Applied Imaging Corp.
"Our Cytogenetics system revenues are on track with our 2005
financial targets, with significant contributions from the
business' overseas markets.  Moreover, our Ariol(R) system
revenues have been particularly strong in North America, with
several system sales to strategically important cancer research
and biopharmaceutical customers in Q2.  In addition, we have
continued to invest in enhancing the performance of our imaging
platforms: CytoVision 3.6 was released earlier this year and
Cytovision 3.7 and Ariol(R) 2.1 will be released in the second
half."

"In the last six months we have successfully resolved several
legacy corporate issues, including completion of the expanded
audit and subsequent restatement of our 2002, 2003 and interim
2004 financial statements and settling the patent infringement
litigation with Clarient, Inc. (formerly ChromaVision Medical
Systems).  With these matters behind us, we are now fully focused
on executing our long-term growth initiatives.  This includes
developing, obtaining necessary regulatory approvals for and
commercializing our proprietary circulating tumor cell system and
adapting our Ariol(R) platform to an ever broader range of
clinical, cancer research and biopharmaceutical applications,"
asserted Mr. Stracey.

Gross profit for the quarter was up by $316,000 to $2.9 million,
compared to $2.6 million in the second quarter of 2004.  The gross
margin of 59% for the second quarter of 2005 was down slightly
from the 60% in the same prior year period.  For the six-month
period ended June 30, 2005, gross profit for the quarter rose
modestly by $145,000 to $5.8 million, from $5.6 million in the
same period last year.  Gross margin for the six-month period
ended June 30, 2005 was 59%, compared to 61% in the same prior-
year period.

Operating expenses were $3.2 million for the quarter, as compared
to $3.6 million in the second quarter of 2004. Operating expenses
for the six-month period ended June 30, 2005 were $6.5 million,
versus $7.2 million for the comparable 2004 period.  The reduction
in expenses was primarily attributable to a January 2005
initiative to streamline and simplify the Company's management
structure, partially offset by expenses associated with the
settlement of patent infringement litigation, ongoing accounting
fees and incremental investments in the Company's Circulating
Tumor Cell, Inc. subsidiary.

"Our circulating tumor cell initiative is progressing well.  We
are actively working to standardize and optimize the reagents and
protocols used in the blood sample preparation process and intend
to establish our Ariol(R)-based system as the premier imaging and
image analysis tool for the evaluation of CTC's.  Unlike existing
circulating tumor cell imaging devices, our system is designed not
only to detect and count circulating tumor cells, but also to
allow pathologists and researchers to visualize and analyze them
morphologically, a key competitive differentiator", concluded Mr.
Stracey.

                      Financial Condition

As of June 30, 2005, the Company had cash and cash equivalents of
$3.0 million, compared to $2.8 million at March 31, 2005 and
$3.9 million at Dec. 31, 2004.

Applied Imaging Corp. -- http://www.aicorp.com/-- based in San
Jose, California, is the leading supplier of automated imaging and
image analysis systems for the detection and characterization of
chromosomes and molecular markers in genetics and cancer
applications.  The Company markets a wide range of imaging and
image analysis systems for fluorescence and brightfield
microscopy, including the Company's Ariol(R), SPOT(TM) and
CytoVision(R) product families.  Applied Imaging has installed
over 3,500 systems in over 1,000 laboratories in more than 60
countries.  The Company is also developing a system for the
detection, quantification and characterization of circulating
tumor cells from the blood of cancer patients.

                     Going Concern Doubt

PricewaterhouseCoopers LLP raised substantial doubt about Applied
Imaging Corp.'s ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended Dec. 31, 2004.  The auditors point to the Company's
recurring losses and negative cash flows from operations.

As of Dec. 31, 2004, the Company had cash and cash equivalents on
hand of $3.9 million, working capital of $603,000, and an
accumulated deficit of $49.3 million.  The Company intends to
finance its operations primarily through its cash and cash
equivalents, future financing and future revenues.


ARGOSY GAMING: Reports Second Quarter 2005 Earnings
---------------------------------------------------
Argosy Gaming Company (NYSE: AGY) reported results for the three
months ended June 30, 2005.

Net revenues for the second quarter of 2005 were $270.9 million,
up 6.4% from second quarter 2004 net revenues of $254.6 million.
EBITDA (earnings before interest, taxes, depreciation and
amortization) increased to $68.7 million for the second quarter
2005, as compared to $66.2 million for the second quarter 2004.

At Argosy Casino Baton Rouge, net revenues increased 21%, from
$21.5 million to $26.1 million, and EBITDA increased 35%, from
$5.0 million to $6.8 million, in the second quarters of 2004 and
2005 respectively, in part due to visitors to the city for a
bowling conference that concluded July 4.

In Sioux City, net revenues improved 24% and EBITDA increased 27%
from the second quarter of 2004 to the same period of 2005 due to
the addition of the renovated boat formally used at the Company's
Riverside property.  Net revenues for the property were
$13.7 million and EBITDA was $4.3 million in the second quarter of
2005, up from net revenues of $11.0 million and EBITDA of $3.4
million in the second quarter of 2004.  The Company's EBITDA
margin (EBITDA as a percent of net revenues) was 25.4% for the
second quarter of 2005, as compared to 26.0% for the same quarter
in 2004.

Interest expense for the second quarter of 2005 was $14.3 million
as compared to $16.6 million for the second quarter of 2004.  The
reduction in interest expense was predominantly the result of a
lower effective interest rate for the Company following a
refinancing of the Company's $675 million Revolving Credit
Facility and Term Loan B in September of 2004 and a lower
outstanding balance on the Term Loan B.

For the six months ended June 30, 2005, net income was $43 million
($1.44 EPS) on net revenues of $541.9 million, compared to net
income of $22.5 million ($0.76 EPS) on net revenues of $518.7
million for the same period in 2004.  For the six-month period
ended June 30, 2004, results were negatively impacted by $0.52 per
share in expenses related to the refinancing of the Company's
10-3/4% notes.  Included in the six-month period ended
June 30, 2005 were expenses related to the merger with Penn that
negatively impacted results for the six months by $0.07.

Argosy reported that debt decreased from $803.2 million as of
March 31, 2005 to $764.6 million as of June 30, 2005.  The Company
spent $9.4 million in maintenance capital in the second quarter of
2005, for a total of $17.7 million for the first six months of the
year.  Project capital for the second quarter of 2005 was $13.5
million, predominantly for the work on the replacement garage and
new hotel at the Company's Riverside property.

In the second quarter of 2004, Argosy and the City of Lawrenceburg
entered into an agreement whereby by making a substantial capital
investment at its Lawrenceburg property, Argosy would receive a
reduction in its payments to the city by five million dollars
annually for ten years.  In addition to reflecting the impact of
this credit for the relevant quarter, the second quarter of 2004
also includes a $1.25 million credit for the first quarter of
2004.  The results of the second quarter of 2004 also include
expenses of approximately $0.02 per share associated with the
refinancing of the Company's 10-3/4% notes due 2009.

                        Merger Agreement

On Nov. 3, 2004, Argosy entered into a definitive merger agreement
with Penn National Gaming, Inc., under which all outstanding
shares of Argosy are to be acquired for $47 per share.  Included
in the results of the second quarter of 2005 are $0.02 per share
of expenses associated with the proposed merger.

Pursuant to the merger agreement between Argosy and Penn, Argosy
has agreed not to provide any guidance concerning its expected
earnings or other performance.  The transaction is still subject
to certain regulatory approvals, and is expected to close in the
third quarter of 2005.

Argosy Gaming Company is a leading owner and operator of casinos
and related entertainment and hotel facilities in the Midwestern
and Southern United States.  Argosy owns and operates the Argosy
Casino-Alton in Illinois, serving the St. Louis metropolitan
market; the Argosy Casino-Riverside in Missouri, serving the
greater Kansas City metropolitan market; the Argosy Casino-Baton
Rouge in Louisiana; the Argosy Casino-Sioux City in Iowa; the
Argosy Casino-Lawrenceburg in Indiana, serving the Cincinnati and
Dayton metropolitan markets; and the Empress Casino Joliet in
Illinois serving the greater Chicagoland market.

                        *     *     *

As reported in the Troubled Company Reporter on June 6, 2005,
Standard & Poor's Ratings Services ratings on casino owner and
operator Argosy Gaming Co., including its 'BB' corporate credit
rating, remain on CreditWatch with negative implications where
they were placed on Nov. 3, 2004.  The CreditWatch listing
followed the company's announcement that it had agreed to be
acquired by Penn National Gaming Inc. (BB-/Positive/B-2) in a
transaction valued at $2.2 billion, including the assumption of
debt.  The transaction is expected to close during the second half
of 2005, subject to regulatory approvals.

Standard & Poor's expects that Argosy's existing bank facility
will be refinanced upon closing of the transaction, and that the
rating on this facility will be withdrawn.  Argosy's subordinated
note issues carry a change-of-control provision requiring Penn to
initiate a tender offer.  If any of the notes remain outstanding,
Standard & Poor's expects to equalize their rating with Penn's
existing subordinated debt rating, as Standard & Poor's is taking
a consolidated approach to the credits, given the economic and
strategic importance of the acquisition to Penn.  However, Penn
has publicly stated they intend to tender for these notes. Once
the tenders are complete, ratings on these notes would also be
withdrawn.


ARMSTRONG WORLD: Reports Second Quarter Financial Results
---------------------------------------------------------
Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ) reported
second quarter 2005 net sales of $919.0 million that were 1.7%
higher than second quarter net sales of $903.5 million in 2004.
Excluding the effects of favorable foreign exchange rates of
$14.8 million, consolidated net sales increased by 0.1%.
Operating income of $36.6 million was recorded for the second
quarter of 2005 compared to $2.0 million in the second quarter of
2004.  2004 results include a non-cash charge of $60.0 million to
reflect a goodwill impairment loss related to the European
resilient flooring reporting unit.  Excluding this non-cash
charge, operating income was $62.0 million in 2004.  The decline
in operating income was primarily due to higher raw material and
energy costs and increased charges for cost reduction initiatives.

                       Resilient Flooring

Resilient Flooring net sales were $317.6 million in the second
quarter of 2005 and $321.9 million in the second quarter of 2004.
Excluding the favorable impact of foreign exchange rates, net
sales declined 2.9%.  The decrease was primarily due to lower
sales in the Americas, primarily residential vinyl products and
laminate products.  An operating loss of $3.9 million was recorded
for the quarter compared to an operating loss in the second
quarter of 2004 of $39.1 million.  2004 results include a non-cash
charge of $60.0 million to reflect a goodwill impairment loss
related to the European resilient flooring reporting unit.
Excluding the $60.0 million charge, operating income declined
$24.8 million.  Operating results were negatively impacted by
lower net sales, sales of lower margin products in Europe,
increased costs to purchase PVC resins, increased charges for cost
reduction initiatives and higher advertising and promotional
expenses.  These items were only partially offset by selling price
gains and manufacturing efficiency improvements.

                          Wood Flooring

Wood Flooring net sales of $214.6 million in the second quarter of
2005 increased 0.2% from $214.1 million in the prior year.  Units
sold of pre- finished solid wood floors increased by approximately
2% in the second quarter primarily due to strong sales to home
center retailers.  Units sold of engineered hardwood floors
increased 13% in the second quarter primarily due to continued
strong overall demand.  Net sales in the second quarter were
negatively impacted by price declines, which were made in response
to declining lumber prices.  Operating income was $19.9 million in
the second quarter of 2005 compared to $21.1 million in the second
quarter of 2004.  The decline in operating income was primarily
attributable to selling price decreases and non-lumber
inflationary cost pressures greater than declines in lumber costs.

                  Textiles and Sports Flooring

Textiles and Sports Flooring net sales in the second quarter of
2005 increased to $68.8 million from $65.1 million in 2004.
Excluding the effects of favorable foreign exchange rates, sales
were down 0.3% due to lower net sales related to sports flooring
products, partially offset by increased sales of carpet flooring
products.  An operating loss of $0.5 million was recorded in 2005
compared to an operating loss in 2004 of $1.7 million.  The 2005
operating loss decreased from 2004 as the benefit of lower
selling, general and administrative expenses exceeded increased
raw material costs.

                        Building Products

Building Products net sales of $262.7 million in the second
quarter of 2005 increased from $247.3 million in the prior year.
Excluding the effects of favorable foreign exchange rates, sales
increased by 3.9%, primarily due to a 6% unit volume increase
combined with higher prices, partially offset by lower product
mix.  Operating income decreased to $37.6 million from operating
income of $38.4 million in the second quarter of 2004.  The
decline was due to inflationary cost pressures offsetting higher
sales prices, increased charges for cost reduction initiatives,
and a mix shift to lower margin sales in both the U.S. and Eastern
Europe.

                            Cabinets

Cabinets net sales in the second quarter of 2005 of $55.3 million
increased from $55.1 million in 2004.  Net sales were essentially
flat as price increases were mostly offset by volume declines.  An
operating loss of $3.3 million was recorded in 2005 compared to
operating income of $1.5 million in the prior year.  The decline
was due to the impact of higher SG&A expenses (primarily
consulting costs, as well as employee compensation and selling-
related expenses), costs incurred to shut down the Morristown,
Tennessee manufacturing plant and manufacturing inefficiencies in
other plants resulting from the transfer of production from
Morristown.

                      Year-to-Date Results

For the six-month period ending June 30, 2005, net sales were
$1,759.7 million, an increase of 0.6% from the $1,748.5 million
reported for the first six months of 2004.  Increases were
reported in the Textiles and Sports Flooring and Building Products
segments, while the Resilient Flooring, Wood Flooring, and
Cabinets segments reported decreases.  Excluding the favorable
impact of foreign exchange rates, consolidated net sales decreased
1.0%.

Operating income in the first half of 2005 was $44.3 million.
This compares to operating income of $42.8 million for the first
six months of 2004.  2004 results include a non-cash charge of
$60.0 million to reflect a goodwill impairment loss related to
the European resilient flooring reporting unit.  Excluding this
non-cash charge results in an adjusted operating income of
$102.8 million in 2004.  The decline in adjusted operating income
was primarily due to higher raw material and energy costs,
increased charges for cost reduction initiatives, and higher SG&A
expenses.

A full-text copy of Armstrong's 2nd Quarter 2005 Financial Results
on Form 10-Q is available for free at:

               http://ResearchArchives.com/t/s?ac

Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior finishings, most notably floor
coverings and ceiling systems, around the world.  The Company and
its debtor-affiliates filed for chapter 11 protection on
December 6, 2000 (Bankr. Del. Case No. 00-04469).  Stephen
Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C.
Silberglied, Esq., at Richards, Layton & Finger, P.A., represent
the Debtors in their restructuring efforts.  When the Debtors
filed for protection from their creditors, they listed
$4,032,200,000 in total assets and $3,296,900,000 in liabilities.
As of March 31, 2005, the Debtors' balance sheet reflected a
$1.42 billion stockholders' deficit. (Armstrong Bankruptcy
News, Issue No. 80; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


ATA AIRLINES: Wants Plan Filing Period Extended Until January 9
---------------------------------------------------------------
Pursuant to Section 1121(d) of the Bankruptcy Code, ATA Airlines,
Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for
the Southern District of Indiana to extend the period during which
they have the exclusive right to file a plan of reorganization to
and including January 9, 2006.

Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, explains that, in addition to managing their day-to-day
operations, the Debtors and their advisors have been evaluating
all facets of their businesses and operations to determine the
best method for returning value to their creditors, including,
analyzing leases of aircraft used in their operations and
executory contracts.

The Debtors undertook two auctions, one of which culminated in the
closing of a deal with Southwest Airlines, Inc., involving the
sale of certain assets at Midway Airport in Chicago, Illinois.

In addition, the Debtors have closed or are in the process of
negotiating transactions to sell substantially all of the assets
of Chicago Express Airlines, Inc., are reviewing and analyzing the
multitude of claims filed against the their estates in preparation
of drafting and filing claims objections, pursuing various
financing alternatives, and investigating the sale of certain of
their assets.

Due to the complexity of the auctions and sale processes, the
overall complexity of these Chapter 11 cases, and despite diligent
efforts working towards a fair and equitable plan formulation, the
Debtors require more time to continue to work diligently towards
the filing of the Plan.

According to Mr. Nelson, the Debtors will continue to keep the
Official Committee of Unsecured Creditors, the Air Transportation
Stabilization Board, and Southwest Airlines apprised of their
business plans.

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. 30; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


ATHLETE'S FOOT: Wants More Time to Decide on Two Sets of Leases
---------------------------------------------------------------
Athlete's Foot, LLC, and its debtor-affiliate ask the U.S.
Bankruptcy Court for the Southern District of New York to further
extend the period within which they can elect to assume, assume
and assign, or reject their remaining unexpired nonresidential
real property leases.

For their first group of unexpired leases, the Debtors are parties
to five unexpired leases and they want until Sept. 7, 2005, to
decide whether to assume or reject those leases.

For the second group of unexpired leases, the Debtors are party to
an unexpired lease consisting of their corporate office and they
want until the date of the confirmation of a proposed chapter 11
liquidating plan to decide whether to assume or reject that lease.

The Debtors explain that as part of their Orderly Liquidation
Program, they are in the process of pursuing an orderly
liquidation of their assets as expeditiously and efficiently as
possible.

The Debtors, as a sublessor to the five remaining leases of the
first group, subleased those leases to various subtenants.  All of
those leases are the subject of pending motions with the Court to
either assume and assign, or reject those leases.

For their corporate office lease, the Debtors still need that
office space in order to continue the administration of their
Liquidation Program and until a proposed chapter 11 plan is
confirmed.

The Debtors relate that their request to further extend the lease
decision period is out of an abundance of caution in the event
that they will require additional time for any reason to conclude
an assumption and assignment or a rejection.

The Debtors assure the Court that the landlords of their remaining
leases will not be prejudiced by the requested extension, as they
are current on all post-petition obligations to those landlords.

Headquartered in New York, New York, Athlete's Foot Stores, LLC,
-- http://www.theathletesfoot.com/--operates approximately
125 athletic footwear specialty retail stores in 25 states.  The
Company and its debtor-affiliate filed for chapter 11 protection
on December 9, 2004 (Bankr. S.D.N.Y. Case No. 04-17779).  Bonnie
Lynn Pollack, Esq., and John Howard Drucker, Esq., at Angel &
Frankel, P.C. represents the Debtors in their restructuring
efforts.  When the Company filed for protection from its
creditors, it listed total assets of $33,672,000 and total debts
of $39,452,000.


BANC OF AMERICA: Fitch Affirms Low-B Rating on 14 Cert. Classes
---------------------------------------------------------------
Fitch Ratings affirms Banc of America Commercial Mortgage Inc.,
series 2003-2, commercial mortgage pass-through certificates:

     --$116.7 million class A-1 'AAA';
     --$480.7 million class A-1A 'AAA';
     --$106.3 million class A-2 'AAA';
     --$168.1 million class A-3 'AAA';
     --$482.3 million class A-4 'AAA';
     --Interest-only class XC 'AAA';
     --Interest-only class XP 'AAA';
     --$56.7 million class B 'AA';
     --$21 million class C 'AA-';
     --$44.1 million class D 'A';
     --$23.1 million class E 'A-';
     --$21 million class F 'BBB+';
     --$23.1 million class G 'BBB';
     --$21 million class H 'BBB-';
     --$18.9 million class J 'BB+';
     --$10.5 million class K 'BB';
     --$10.5 million class L 'BB-';
     --$8.4 million class M 'B+';
     --$8.4 million class N 'B';
     --$4.2 million class O 'B-';
     --$2.7 million class BW-A 'BBB';
     --$1.2 million class BW-B 'BBB';
     --$8.7 million class BW-C 'BBB-';
     --$2.6 million class BW-D 'BB+';
     --$3.6 million class BW-E 'BB';
     --$3.2 million class BW-F 'BB';
     --$3.1 million class BW-G 'BB-';
     --$2.6 million class BW-H 'B+';
     --$2.6 million class BW-J 'B';
     --$2.1 million class BW-K 'B';
     --$3.5 million class BW-L 'B-'.

Fitch does not rate the $27.3 million class P or classes HS-A, HS-
B, HS-C, HS-D, or HS-E.

The rating affirmations reflect the stable pool performance and
minimal paydown since issuance.  As of the July 2005 distribution
date, the pool's aggregate certificate balance has decreased 1.5%
to $1.75 billion from $1.77 billion at issuance.  To date, there
have been no delinquent or specially serviced loans.  No loans
have paid off since issuance.

Fitch has reviewed credit assessments of the Hines-Sumitomo
Portfolio (9.2%), 1328 Broadway (7.7%), and Newgate Mall (2.5%)
loans.  Based on their stable performance, the loans maintain
investment grade credit assessments.

The Hines Sumitomo portfolio, the largest loan in the pool, is
secured by three office properties, with a total of 1.2 million
square feet.  Two of them are located in New York, NY, and one in
Washington, DC.  The combined year-end 2004 debt service coverage
ratio was 2.08 times (x) compared to 1.84x at issuance.  The
average occupancy was 99% as of YE 2004, unchanged since issuance.

1328 Broadway is secured by a 351,750 sf office property in New
York, NY.  The YE 2004 DSCR was 1.61x, up from 1.50x at issuance.
The occupancy was 96% as of YE 2004, down from 99% at issuance.

Newgate Mall is a 724,619 sf anchored retail center in Ogden, UT.
The YE 2004 DSCR was 1.42x, up from 1.30x at issuance.  The
average occupancy was 95% as of YE 2004, unchanged since issuance.


BLOCKBUSTER INC: Weak 2nd Qtr. Rentals Cue S&P's Negative Watch
---------------------------------------------------------------
NEW YORK (Standard & Poor's) Aug. 3, 2005

Standard & Poor's Ratings Services placed its ratings for Dallas,
Texas-based Blockbuster Inc., including the 'BB-' corporate credit
rating, on CreditWatch with negative implications.

"This action follows the company's announcement that its second-
quarter movie rental business was hurt by weak DVD releases and
that there is concern about the remainder of the year," said
Standard & Poor's credit analyst Diane Shand.

Industry fundamentals for the video rental market are weak, and
Blockbuster's profitability is heavily dependent on that market.
The company generated 65% of its total sales from its movie rental
business in 2004, and its domestic rental same-store sales have
been weak since 2001.  Retail sales of videos have been growing
faster than the rental market since at least 1993.  Moreover, the
rental market has declined slightly over the past three years, and
is expected to decline annually at a low single-digit percentage
rate over the next three years.

In response to weak rental industry dynamics, Blockbuster is
trying to increase customer traffic by eliminating late fees.
This affects revenues by an estimated $400 million to $450 million
and operating income by $250 million to $300 million.  In
addition, the company is attempting to transform itself into a
home entertainment store: It has launched a national in-store
rental subscription program and is expanding its store-in-store
game concept.  Blockbuster also is rolling out an online
subscription plan and a movie trading business.


BUILDING MATERIALS: Fitch Places BB+ Rating on $197MM Sr. Debt
--------------------------------------------------------------
Fitch Ratings has initiated coverage on Building Materials Holding
Corporation.  Fitch assigns a 'BB+' rating to BMHC's senior
secured debt.  This rating applies to approximately $197 million
in outstanding senior secured term notes as well as the company's
secured revolving credit agreement.  The Rating Outlook is Stable.

The rating and Outlook reflect BMHC's improving operating
performance, its focus on the large production homebuilders, and
its diverse range of product and service offerings.  Risk factors
include the company's exposure to the cyclicality of the
homebuilding industry, possible integration/financing issues
related to its ongoing acquisition program, and the continued
consolidation of BMHC's customer base.

The rating and Outlook incorporate the expectation that BMHC will
be able to maintain (or improve) its credit profile.  Fitch also
expects BMHC to employ the same disciplined growth strategy as in
the past (wherein the company entered a market by purchasing a
majority interest in an existing operation and retaining current
management/owners).

BMHC has a strong balance sheet and maintains healthy coverage
ratios.  The company's debt to EBITDA ratio has improved from 1.6
times (x) for fiscal 2004 to 1.4x for the latest 12 months from
March 31, 2005.  Debt to capitalization was 38.4% at the end of
March 31, 2005 compared with 38.6% at year-end 2004 (and 40.8% at
the end of 2003).  This is beneath the company's target leverage
ratio of 40%.  BMHC's interest coverage ratio rose from 6.4x in
fiscal 2003 to 9.5x in fiscal 2004 and further improved to 11.3x
for the LTM from March 31, 2005.

The company conducts business with 17 of the 25 largest production
homebuilders in more than half of the top 40 residential markets
in the U.S.  BMHC's focus on the large homebuilders should benefit
the company going forward.  The large public builders have the
opportunity to leverage their scale and capital in the period
ahead.  These companies (large builders) should be able to
continue to gain market penetration and grow their businesses.
Fitch believes that the large production builders are better
prepared for a housing downturn (relative to their smaller
competitors), which should provide some stability for BMHC.

BMHC has realigned its business from its roots as solely a
distributor of commodity wood products to its current position as
one of the largest residential building products and construction
services companies in the U.S.  Building on key acquisitions in
recent years, the company now delivers a growing range of
residential construction services in key growth markets in the
U.S.

BMHC has additional opportunities to capture more value from the
homebuilding supply chain through increased product and service
offerings.  As an example, the company, in the past two years,
vertically integrated its Northern California construction
services operation by adding materials distribution and truss
manufacturing operations and strengthened its infrastructure to
further enhance its construction services capabilities in the
region.  In Las Vegas, the company augmented its framing
capabilities with concrete foundation services and captured an
increased share of business in this market. The company has
incremental revenue opportunities through further integration of
its operating units.

BMHC has grown significantly over the past five years, almost
doubling its 2001 revenues of $1.1 billion to $2.1 billion in
2004.  The company's growth strategy focuses on improving market
share by increasing construction services primarily through
acquisitions, as well as expanding its product and service
offerings at existing operations.

The company has purchased majority interest in three companies
thus far in 2005, expanding its construction services in existing
markets as well as entry into a new market. Fitch believes that
acquisitions will continue to be a primary strategy for the
company as it grows its business.  The risk is that BMHC takes on
a large acquisition or acquisitions at an inopportune time
relative to the cycle, overpays and has trouble integrating the
operations.  This is somewhat tempered by the company's strategy
to enter a market by purchasing a majority interest in an existing
operation (with option to purchase the remaining interest) and
retaining current management/owners, giving the company access to
local labor markets and local decision makers.

The past decade has seen consolidation in the distribution
channels of the building products industry.  New home sales from
the top 10 U.S. homebuilders increased from approximately 10% of
industry sales in 1993 to over 20% in 2004.  The large builders
are typically significant players in many of the largest, often
high-growth metropolitan housing markets.

Fitch expects more consolidation in the industry, with the large
builders continuing to buy private, midsize companies and taking
share from smaller builders.  The top 10 U.S. homebuilders
accounted for approximately 20% of BMHC's sales in 2004.  The
continued growth of the large homebuilders (and their efforts to
look for cost savings) may eventually limit the pricing power of
building products and construction services providers like BMHC.

Homebuilding is a cyclical business affected by demographics, job
creation, interest rates, and consumer confidence.  Building
products and construction services providers have benefited from a
strong multiyear housing expansion during which most of these
macro-economic drivers have been at historically favorable levels.
Total housing starts grew 6.3% in 2002, 8.3% in 2003, and 5.8% in
2004, with improvements in all regions (except the Midwest in
2004).  In the January to June 2005 period, housing starts
improved 5.1%. In 2005, Fitch expects housing starts to be
relatively flat compared with 2004 levels, which, to this point,
have set a record for the current, extended up-cycle.

Founded in 1987, BMHC is one of the largest residential building
products and construction services companies in the U.S. with
annual sales in excess of $2 billion.  The company services
homebuilders in Washington, Oregon, Montana, Idaho, California,
Nevada, Colorado, Utah, Arizona, Texas, Illinois, Florida,
Maryland, Virginia, Delaware, and the District of Columbia.

BMHC competes in the homebuilding industry through two business
segments: BMC West and BMC Construction. With locations in the
western and southern states, BMC West distributes building
products and manufactures building components for professional
builders and contractors.  BMC Construction provides construction
services to high-volume production homebuilders through operations
in key growth markets across the U.S.


CALPINE CORP: Canadian Court Dismisses Harbert Litigation
---------------------------------------------------------
Calpine Corporation (NYSE: CPN) disclosed that the Supreme Court
of Nova Scotia dismissed Harbert Distressed Investment Master
Fund, Ltd.'s application for relief and denied all relief to
Harbert and all other bondholders that purchased Finance II bonds
on or after Sept. 1, 2004.  This litigation relates to the
outstanding Calpine-guaranteed bonds of Calpine's subsidiary
Calpine Canada Energy Finance II ULC.

The Court, however, stated that a remedy should be granted to any
bondholder, other than the Calpine respondent companies, that
purchased Finance II bonds prior to Sept. 1, 2004 and that
continues to hold those bonds on Aug. 2, 2005.

The Court directed Wilmington Trust Company, Trustee for the
Finance II bonds, to provide the face amount of qualifying bonds
and the identity of the holders of such bonds by Aug. 31, 2005.
The Court stated that, upon receipt of the information from the
Trustee, it will then issue a final order requiring Calpine to
maintain in the control of its subsidiary Calpine Canada Resources
Company sufficient proceeds from the sale of the Saltend Energy
Centre to cover the face amount of such bonds.  If there are
insufficient proceeds for this purpose, Calpine will be required
to place in the control of CCRC an additional amount which, when
added to the net Saltend sale proceeds, will cover the face value
of all such bonds.  The final order will further provide that CCRC
shall diligently conduct its business in a proper and efficient
manner so as to preserve and protect its business and assets.
Pending the final order, the Court issued an interim order under
which Calpine must maintain the net Saltend sale proceeds in the
control of CCRC.

Any party to the proceeding has the right to appeal the final
order to the Nova Scotia Court of Appeal.

Calpine Corporation -- http://www.calpine.com/-- supplies
customers and communities with electricity from clean, efficient,
natural gas-fired and geothermal power plants.  Calpine owns,
leases and operates integrated systems of plants in 21 U.S.
states, three Canadian provinces and the United Kingdom.  Its
customized products and services include wholesale and retail
electricity, natural gas, gas turbine components and services,
energy management, and a wide range of power plant engineering,
construction and operations services.  Calpine was founded in
1984.  It is included in the S&P 500 Index and is publicly traded
on the New York Stock Exchange under the symbol CPN.

                         *     *     *

As reported in the Troubled Company Reporter on June 23, 2005,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Calpine Corp.'s (B-/Negative/--) planned $650 million contingent
convertible notes due 2015.  The proceeds from that convertible
debt issue will be used to redeem in full its High Tides III
preferred securities.  The company will use the remaining net
proceeds to repurchase a portion of the outstanding principal
amount of its 8.5% senior unsecured notes due 2011.  S&P said its
rating outlook is negative on Calpine's $18 billion of total debt
outstanding.

As reported in the Troubled Company Reporter on May 16, 2005,
Moody's Investors Service downgraded the debt ratings of Calpine
Corporation (Calpine: Senior Implied to B3 from B2) and its
subsidiaries, including Calpine Generating Company (CalGen: first
priority credit facilities to B2 from B1).


CALPINE CORP: Posts $298.5 Million Net Loss in Second Quarter
-------------------------------------------------------------
Calpine Corporation (NYSE: CPN) reported financial and operating
results for the three and six months ended June 30, 2005.

"During the second quarter, spark spreads were mixed, and Calpine
experienced several unplanned equipment outages in key power
markets," Peter Cartwright, Calpine president and CEO, said.
"Financial results were further impacted by power plant and
development project asset impairments and service agreement
cancellations, totaling just over $200 million.  These were
partially mitigated by approximately $129 million of income from
repurchase of debt.

"While results for the quarter were disappointing, Calpine
continues to make significant progress in advancing our strategic
initiative to de-lever our balance sheet and reduce interest
expense and operating costs.  In just over two months since our
May rollout, Calpine has completed or announced over $2 billion of
transactions toward attaining these goals, and since the beginning
of the third quarter, we have lowered total debt by approximately
$1.3 billion to $17.4 billion.

"Although demand in the second quarter was dampened by mild
weather, especially in April and May, since June we have seen
strong demand for electricity and improving spark spreads in our
major power markets," continued Mr. Cartwright.  "Our recently
restructured long-term service arrangements with our major
equipment manufacturers will advance Calpine's program to lower
operating costs, improve plant performance and enhance our major
maintenance capabilities."

            2005 Second Quarter Financial Results

For the three months ended June 30, 2005, Calpine reported revenue
of $2.2 billion, representing an increase of 0.5% over the same
period in the prior year.  Including the discontinued operations
discussed below, Calpine recorded a net loss per share of $0.66,
or a net loss of $298.5 million, compared to a net loss per share
of $0.07, or a net loss of $28.7 million, for the same quarter in
the prior year.

Gross profit decreased by $58.8 million to a loss of $31.5 million
in the three months ended June 30, 2005, compared to the same
period in the prior year. This change is due primarily to a
$106.2 million impairment charge related to the sale of the Morris
Power Plant, which sale was pending at the end of the quarter.
Although total spark spread margin increased by $38.6 million
period-to-period, it did not increase in line with the increases
in transmission purchase expense, depreciation and interest
expense associated with new power plants coming on line.

During the three months ended June 30, 2005, financial results
were positively impacted by $129.2 million of income recorded from
repurchase of various issuances of debt and negatively impacted by
$33.9 million in long-term service agreement cancellation charges.
In addition, Calpine recorded $45.5 million in project development
expense due to the write-off of three projects in suspended
development. Interest expense increased $63.2 million between
periods primarily due to an increase in the average interest rate
and lower capitalization of interest expense as fewer plants were
in active construction.

                  2005 Six-Months Results

For the six months ended June 30, 2005, Calpine reported revenue
of $4.3 billion, representing an increase of 4.2% over the same
period in the prior year. Including the discontinued operations
discussed below, Calpine recorded a net loss per share of $1.04,
or a net loss of $467.2 million, compared to a net loss per share
of $0.24, or a net loss of $99.9 million, for the same period in
the prior year.

Gross profit decreased by $24.8 million, or 34%, to $48.3 million
in the six months ended June 30, 2005, compared to the same period
in the prior year. This change is due primarily to a $106.2
million impairment charge related to the sale of the Morris Power
Plant. Despite improvements in market fundamentals, total spark
spread -- which increased by $144.8 million, or 19%, in the six
months ended June 30, 2005, compared to the same period in 2004 --
did not increase in line with the increases in plant operating
expense, transmission purchase expense, depreciation, and interest
expense associated with new power plants coming on line.

During the six months ended June 30, 2005, financial results were
positively impacted by $150.9 million of income recorded from
repurchase of various issuances of debt and negatively impacted by
$33.9 million in long-term service agreement cancellation charges.
In addition, Calpine recorded $45.5 million in project development
expense due to the write-off of three projects in suspended
development. Interest expense increased $142.3 million between
periods primarily due to an increase in the average interest rate
and lower capitalization of interest expense as fewer plants were
in active construction.

                  Strategic Initiative Update

On May 25, 2005, Calpine launched a strategic initiative aimed at
reducing debt and enhancing the company's financial strength.  The
program is targeting debt reduction of approximately $3 billion by
the end of 2005, $275 million of annual interest savings and
approximately $200 million in annual operating cost reductions.
During the second quarter, Calpine entered into negotiations for
the proposed sale of two gas-fired power plants, representing
approximately 600 megawatts of capacity.

Subsequent to June 30, 2005, Calpine:

   -- sold all of its remaining domestic oil and gas exploration
      and production properties and assets for $1.05 billion, less
      adjustments, transaction fees and expenses, and less
      approximately $75 million to reflect the value of certain
      oil and gas properties for which the company was unable to
      obtain consents to assignment prior to closing.

      The company expects to receive the remaining consents in the
      near future.  With the completion of this transaction,
      Calpine expects to record, subsequent to June 30, 2005, a
      pre-tax gain on the sale of assets of approximately
      $350 million;

   -- completed the sale of the 1,200-megawatt Saltend Energy
      Centre in Hull, England, generating total gross proceeds of
      $862.5 million, for an estimated pre-tax gain of $6 million.
      The two existing series of Redeemable Preferred Shares
      relating to the Saltend Energy Centre were redeemed in
      connection with the sale;

   -- reached an agreement with Siemens Westinghouse to
      restructure Calpine's long-term relationship and service
      agreements.  The restructuring provides greater operating
      and turbine maintenance flexibility for Calpine, resolves
      outstanding issues between the companies and provides an
      option to purchase extended warranties for Calpine turbines
      in construction and in storage;

   -- announced a 15-year Master Products and Services Agreement
      with General Electric International, Inc., which replaces
      the nine remaining long-term service agreements related to
      Calpine's GE 7FA turbine fleet.

      Calpine will benefit from the ability to strengthen its
      major maintenance capabilities, improve power plant
      performance and lower operating costs;

   -- sold its 50% interest in the 175-megawatt Grays Ferry
      Cogeneration Facility for $37.4 million;

   -- completed the sale of the company's 156-megawatt Morris
      Power Plant for approximately $84.5 million; and

   -- purchased approximately $138.9 million of its 9-5/8% First
      Priority Senior Secured Notes due 2014 under the terms of a
      tender offer.

                Other Financing Transactions

During the second quarter, Calpine completed these financing
transactions:

   -- issued $650 million of 7-3/4% Contingent Convertible Notes
      due 2015 in June 2005.  The company, in July 2005, used a
      portion of the net proceeds to redeem the remaining
      $517.5 million outstanding of 5% HIGH TIDES III preferred
      securities, of which $115.0 million was held by Calpine.
      The company used the remaining net proceeds to repurchase a
      portion of the outstanding principal amount of its 8-1/2%
      Senior Unsecured Notes due 2011;

   -- received funding for Metcalf Energy Center, LLC's
      $155 million offering of 5.5-Year Redeemable Preferred
      Shares and five-year, $100 million Senior Term Loan.  A
      portion of the net proceeds was used to repay $50.0 million
      outstanding on the original Metcalf project financing, with
      the remaining net proceeds to be used as permitted by the
      company's existing indentures.

   -- received funding for its $123.1 million, non-recourse
      project finance facility to complete the construction of the
      79.9-megawatt Bethpage Energy Center 3.  Approximately
      $55 million of the funding was used to reimburse Calpine for
      costs spent to date on the Bethpage 3 project.

      An additional amount of approximately $11.2 million will be
      released upon satisfying certain conditions.  The balance of
      funds will be used for transaction expenses, the final
      completion of the project and to fund certain reserve
      accounts.

Calpine ended the quarter with cash and cash equivalents on hand
of approximately $636.2 million.  In addition to this amount, the
company's current portion of restricted cash totaled approximately
$993.9 million, including $402.5 million used in July 2005 to
redeem the remaining HIGH TIDES III preferred securities held by
third parties.

During the three months ended June 30, 2005, Calpine repurchased
Senior Notes in open market transactions totaling $479.8 million
in principal.  The company repurchased the Senior Notes for cash
totaling $337.9 million plus accrued interest as follows (in
thousands):

    Senior Notes                       Principal   Cash Payment
    ------------                       ---------   ------------
    10-1/2% due 2006                    $3,485.0       $2,753.2
    7-5/8% due 2006                      1,335.0        1,041.3
    8-3/4% due 2007                      3,000.0        1,665.0
    8-1/2% due 2008                     25,500.0       18,297.5
    7-3/4% due 2009                     35,000.0       20,865.0
    8-5/8% due 2010                     37,468.0       24,077.4
    8-1/2% due 2011                    374,000.0      269,154.8
                                      ----------     ----------
    Total repurchases                 $479,788.0     $337,854.2

Also, in June 2005, Calpine repurchased $94.3 million in aggregate
outstanding principal amount of 6% Contingent Convertible Notes
due 2014 in exchange for 27,539,826 shares of Calpine common
stock.  The company recorded a pre-tax loss of $7.9 million on the
exchange, which includes the write-off of the associated
unamortized deferred financing costs and unamortized original
issue discount.

For the three months ended June 30, 2005, the company recorded an
aggregate pre-tax gain of $129.2 million on the above debt
repurchases after the write-off of unamortized deferred financing
costs and unamortized discounts.

A major power company, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with
electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and three Canadian
provinces. Its customized products and services include wholesale
and retail electricity, natural gas, gas turbine components and
services, energy management, and a wide range of power plant
engineering, construction and operations services. Calpine was
founded in 1984. It is included in the S&P 500 Index and is
publicly traded on the New York Stock Exchange under the symbol
CPN.

                        *     *     *

As reported in the Troubled Company Reporter on June 23, 2005,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Calpine Corp.'s (B-/Negative/--) planned $650 million contingent
convertible notes due 2015.  The proceeds from that convertible
debt issue will be used to redeem in full its High Tides III
preferred securities.  The company will use the remaining net
proceeds to repurchase a portion of the outstanding principal
amount of its 8.5% senior unsecured notes due 2011.  S&P said its
rating outlook is negative on Calpine's $18 billion of total debt
outstanding.

As reported in the Troubled Company Reporter on May 16, 2005,
Moody's Investors Service downgraded the debt ratings of Calpine
Corporation (Calpine: Senior Implied to B3 from B2) and its
subsidiaries, including Calpine Generating Company (CalGen: first
priority credit facilities to B2 from B1).


CALPINE CORP: Sells Saltend to Normantrail for GBP498.4 Million
---------------------------------------------------------------
On July 28, 2005, Calpine Corporation and its indirect, wholly
owned subsidiaries Calpine UK Holdings Limited, and Quintana
Canada Holdings, LLC, sold the entire issued share capital of
Saltend Cogeneration Company Limited and Calpine UK Operations
Limited to Normantrail (UK CO 3) Limited, a partnership  formed by
International Power PLC, Mitsui & Co., Ltd., pursuant to the terms
of a share sale and purchase  agreement among the Seller Parties,
the Purchaser, IPR and Mitsui.  SCCL is the owner of, and UK OpCo
is the operator of, the Saltend Energy Centre, a 1200 MW
(nominal) natural gas-fired cogeneration facility located in Hull,
England.  Pursuant to the Agreement, Calpine and the Seller have
provided certain customary warranties and indemnities, and the
Seller Guarantor has guaranteed the payment by the Seller of
liabilities in respect of all claims under the Agreement other
than claims for breach of a warranty.  The obligations of the
Purchaser are guaranteed as to 70% by IPR and 30% by Mitsui.

The total amount payable by the Purchaser under the Agreement is
GBP498.4 million comprising an amount payable for the Sale Group
shares and an amount to repay intercompany loans made to SCCL by
certain of its affiliates.  The purchase price is subject to a GBP
for GBP post-closing net working capital adjustment, subject to an
upwards cap determinable on the basis of completion accounts
prepared in accordance with the procedures set out in the
Agreement.  GBP 20 million of the purchase price has been placed
in escrow and will be retained for one year following closing of
the sale, provided that the Seller will be entitled to receive
GBP5 million from the escrow every three months, subject to the
Purchaser making any claims under the Agreement in such period,
which claims may be satisfied from amounts in escrow.  The net
proceeds, after the redemption of two of our existing series of
Redeemable Preferred Shares, and the reasonable transaction costs
and adjustments associated with this sale, are being held under
the control of Calpine's subsidiary Calpine Canada Resources
Company pursuant to an Interim Order issued by the Supreme Court
of Nova Scotia, pending a Final Order, in the litigation commenced
in May 2005 by Harbert Distressed  Investment Master Fund, Ltd.
Pursuant to an August 2, 2005, decision by the Court in the case,
the Court stated its intention to issue a Final Order which would,
in effect, adjust the amount required to be so held so that it
will be  sufficient  to cover the face amount of certain
qualifying Calpine-guaranteed bonds of our subsidiary, Calpine
Canada Energy Finance II ULC.  The qualifying bonds will be those
purchased by a bondholder (other than certain Calpine entities)
prior to September 1, 2004, that continues to hold those bonds on
August 2, 2005.

The sale closed on July 28, 2005.

Calpine Corporation -- http://www.calpine.com/-- supplies
customers and communities with electricity from clean, efficient,
natural gas-fired and geothermal power plants.  Calpine owns,
leases and operates integrated systems of plants in 21 U.S.
states, three Canadian provinces and the United Kingdom.  Its
customized products and services include wholesale and retail
electricity, natural gas, gas turbine components and services,
energy management, and a wide range of power plant engineering,
construction and operations services.  Calpine was founded in
1984.  It is included in the S&P 500 Index and is publicly traded
on the New York Stock Exchange under the symbol CPN.

                         *     *     *

As reported in the Troubled Company Reporter on June 23, 2005,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Calpine Corp.'s (B-/Negative/--) planned $650 million contingent
convertible notes due 2015.  The proceeds from that convertible
debt issue will be used to redeem in full its High Tides III
preferred securities.  The company will use the remaining net
proceeds to repurchase a portion of the outstanding principal
amount of its 8.5% senior unsecured notes due 2011.  S&P said its
rating outlook is negative on Calpine's $18 billion of total debt
outstanding.

As reported in the Troubled Company Reporter on May 16, 2005,
Moody's Investors Service downgraded the debt ratings of Calpine
Corporation (Calpine: Senior Implied to B3 from B2) and its
subsidiaries, including Calpine Generating Company (CalGen: first
priority credit facilities to B2 from B1).


CARDIAC SERVICES: Can Use GECC's Cash Collateral Until Sept. 30
---------------------------------------------------------------
The Honorable Judge Keith M. Lundin of the U.S. Bankruptcy Court
for the Middle District of Tennessee, Nashville Division, gave
Cardiac Services, Inc., continued access to General Electric
Capital Corporation's cash collateral until Sept. 30, 2005.

The Debtor's indebtedness to GECC stems from a Master Installment
Sale Agreement totaling $16,641,658.51.  GECC holds liens on
substantially all the Debtor's assets, including 15 Mobile Cath
Labs, equipment, fixtures, inventory, accounts receivable, general
intangibles, and contract rights.

To provide GECC with adequate protection required under Sections
361(2) and 363(e) under the U.S. Bankruptcy Code for any
diminution in the value of its collateral, the Debtor will grant
GECC replacement liens to the same extent, validity and priority
as the prepetition liens.

The Debtor will use the cash collateral to fund its operations,
payroll, and other operating expenses that are necessary to
maintain the value of the estate.

The Debtor is authorized to use the cash collateral so long as the
total disbursements don't exceed:

                                     July     August   September
                                     ----     ------   ---------
   Total Authorized Disbursements  $297,476  $353,434   $298,076

A full-text copy of the interim order authorizing the Debtor to
use GECC's cash collateral is available for free at
http://ResearchArchives.com/t/s?ae

The Court will convene a Final Cash Collateral Hearing on Sept.
20, 2005, at 9:00 a.m. in Courtroom Two, Customs House, Second
Floor, 701 Broadway, in Nashville, Tennessee.

Elliot Warner Jones, Esq., Bridgette M. Stahlman, Esq., and
Jeffrey S. Norwood, Esq., at Husch & Eppenberger, LLC, represent
General Electric Capital Corporation.

Headquartered in Nashville, Tennessee, Cardiac Services, Inc.,
provides surgical services, mobile catherization and peripheral
vascular labs, and associated equipment.  The Company filed for
chapter 11 protection on March 8, 2005 (Bankr. M.D. Tenn. Case No.
05-02813).  Paul E. Jennings, Esq., at Paul E. Jennings Law
Offices, P.C., represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts of $10 million to $50 million.


CARRIER ACCESS: Delivers Restated 2003 & 2004 Financial Results
---------------------------------------------------------------
Carrier Access Corporation (NASDAQ: CACSE), a manufacturer of
broadband communications equipment, reported restated financial
results for the fiscal years ended December 31, 2003 and 2004.
Carrier Access has restated its consolidated financial results for
the fiscal years 2003 and 2004 and all the interim periods for
these years in its amended annual report on Form 10-K/A filed with
the Securities and Exchange Commission on Aug. 2, 2005.

Carrier Access is in the process of diligently completing its
quarterly reports on Form 10-Q for the first and second quarters
of 2005.  Carrier Access expects to file its quarterly reports on
Form 10-Q for the first and second quarters of 2005 with the SEC
on or before Sept. 2, 2005.  Accordingly, the Company sought an
exception from the NASDAQ Listing Qualifications Panel for
additional time to regain compliance with the NASDAQ listing
requirements and was recently notified that it was granted an
exception provided that it files its amended annual report on Form
10-K/A on or before Aug. 2, 2005, and its quarterly reports on
Form 10-Q for the first and second quarters of 2005 by Sept. 2,
2005.  There can be no assurance that the Panel will grant any
additional exception or that we will be able to file the quarterly
reports on Form 10-Q by Sept. 2, 2005.

"Today we reported our restated financial results for fiscal years
2003 and 2004 and related interim periods.  The completion of this
restatement is a key step in the update of current financial
filings," said Roger Koenig, chief executive officer and chairman.
"Despite the significant energy devoted to our recent financial
review, our overall business and customer commitments have not
been affected.  We have announced new customers, and extended our
industry-leading solutions further into radio access networks and
converged IP access markets.  We have also taken actions to
strengthen our internal controls, processes and infrastructure.
We are excited about the market opportunities for radio access
networks and converged IP access and are confident in our ability
to play a leadership role."

Restated revenues for fiscal year 2003 were $62.5 million compared
with $50.2 million for fiscal year 2002.  Restated revenues for
fiscal year 2004 were $95.5 million compared with $62.5 million
(restated) for fiscal year 2003.  Restated net income for fiscal
year 2003 was $1.5 million, compared with a net loss for fiscal
year 2002 of $52.7 million.  Restated net loss for fiscal year
2004 was $1.8 million, compared with net income (restated) for
fiscal 2003 of $1.5 million.

                     Material Weakness

The Company has identified certain material weaknesses in its
internal control over financial reporting as of Dec. 31, 2004.
Management concluded that the Company did not maintain effective
controls over certain aspects of its review of financial
statements for the fiscal years ended Dec. 31, 2003, and 2004, and
for each of the following quarters because of four material
weaknesses:

   -- Management did not comply with the Company's established
      policies and procedures requiring a review of its
      consolidated statement of cash flows.  This failure to
      comply with established policies and procedures resulted in
      material misstatements in its Dec. 31, 2004 consolidated
      statement of cash flows.  Specifically, there were material
      misstatements in cash flows from operating activities and
      cash flows from investing activities.  These misstatements
      were corrected prior to the original filing of its 2004
      Annual Report on Form 10-K.

   -- The Company did not have effective policies and procedures
      to evaluate customer arrangements for the appropriate
      application of revenue recognition criteria as contemplated
      by generally accepted accounting principles in the U.S.
      This deficiency resulted in material misstatements to its
      financial statements, specifically the:

         * overstatement of revenue, costs of sales, and accounts
           receivable; and

         * understatement of inventory in its previously filed
           consolidated financial statements as of and for the
           years ended December 31, 2003 and 2004, and for the
           interim periods contained therein.

   -- the Company did not have effective policies and procedures
      over accounting for its inventory reserves to prevent the
      write up of inventory once it had been written down in a
      previous fiscal accounting period.  This deficiency resulted
      in material misstatements of inventory and cost of sales in
      its previously filed consolidated financial statements as of
      and for the years ended December 31, 2003 and 2004, and for
      the interim periods contained therein.

   -- the Company lacked the depth of personnel with sufficient
      technical accounting expertise to identify and account for
      complex transactions in accordance with generally accepted
      accounting principles in the U.S.  This deficiency
      contributed to the aforementioned misstatements and resulted
      in there being more than a remote likelihood that a material
      misstatement of the annual or interim financial statements
      would not be prevented or detected.

Accordingly, the Company restated these consolidated financial
statements to correct of these errors.

A material weakness is a control deficiency, or a combination of
control deficiencies, that results in a more than a remote
likelihood that a material misstatement of the annual or interim
financial statements would not be prevented or detected in a
timely manner by management or by employees in the normal course
of performing their assigned functions.

         Restatement of Consolidated Financial Statements

As a result of the financial review, Carrier Access has restated
its consolidated financial results for fiscal years 2003 and 2004
and all the interim periods in 2003 and 2004 as embodied in its
amended annual report on Form 10-K/A.  The restatements include a
number of adjustments, the largest of which relate to revenue,
cost of sales, accounts receivable, and inventory reserves.  The
restatement is primarily related to revenue recognition issues,
specifically title transfer, continuous assessment of probability
of collection on certain transactions, and inventory valuation.
Adjustments that result in a reduction of revenue in 2003 and 2004
have been or are expected to be recognized in subsequent periods
in 2004 and 2005.  Adjustments to inventory are primarily to
increase reserve levels previously reported.  The restatement had
no effect on the Company's cash flows from operations.

An overview of adjustments by period include:

   * 2004

      -- Restated revenues were $95.5 million compared with
         $101.4 million as originally reported. Restated net
         inventory as of Dec. 31, 2004 was $32.0 million compared
         with $29.7 million as originally reported.

      -- Restated net loss was $1.8 million, compared with net
         income of $0.9 million, or $0.03 per share, as originally
         reported.

   * 2003

      -- Restated revenues for fiscal 2003 were $62.5 million
         compared with $62.6 million as originally reported.
         Restated net income was $1.5 million, compared with
         $2.5 million as originally reported.

Carrier Access' restated 2003 and 2004 annual financial statements
are included in its amended annual report on Form 10-K/A filed
with the SEC.  Investors are encouraged to read this filing for a
more complete description of the financial restatement.

            Fiscal 2005 First and Second Quarter Results

Carrier Access expects its fiscal 2005 second quarter revenues to
be in the range of $18.5 million to $19.5 million.  Preliminary
second quarter revenues include approximately $1.5 million in
revenue that was previously reported in the fourth quarter of
2004.  The Company anticipates a net loss for the second quarter
in the range of $0.04 to $0.06 per share.  In addition the Company
expects that previously announced revenue for the first quarter of
2005 will increase by approximately $3 million to include revenue
that was previously reported in fourth quarter of 2004, resulting
in reported revenue of between $14 to 15 million, and net loss of
between $0.12 to $0.14 per share.

These preliminary first and second quarter 2005 results are based
on management's initial analysis of first and second quarter 2005
operating results.  These preliminary results are unaudited and
are subject to modification. The Company will provide additional
financial and operating details for the first and second quarters
of 2005 in a conference call to be scheduled on or before
Sept. 2, 2005.

Carrier Access (NASDAQ: CACSE) -- http://www.carrieraccess.com/--  
provides consolidated access technology designed to streamline the
communication network operations of service providers, enterprises
and government agencies.  Carrier Access products enable customers
to consolidate and upgrade access capacity, and implement
converged IP services while lowering costs and accelerating
service revenue. Carrier Access' technologies help our customers
do more with less.


CATHOLIC CHURCH: Court Denies Spokane's Cry to Continue Hearing
---------------------------------------------------------------
As previously reported, the Diocese of Spokane asked Judge
Williams to continue the hearing on exclusivity until after the
Court decides on the Property of the Estate issues and the Bar
Date Motion is heard.

The Diocese has requested that objecting parties voluntarily
continue the August 1 hearing date, but counsel for the Tort
Litigants Committee refused to continue the hearing unless the
Diocese agreed to the Tort Litigants' demands for a mid-October
2005 termination of exclusivity.

                    Tort Litigants Respond

On behalf of the Committee of Tort Litigants, John W. Campbell,
Esq., at Esposito, George & Campbell, PLLC, in Spokane,
Washington, argues that the Diocese of Spokane does not state how
the pendency of the issues on "property of the estate" and the
"bar date" are causes for continuing the hearing on the request to
extend the exclusive periods.

Mr. Campbell warns the U.S. Bankruptcy Court for the Eastern
District of Washington that the Diocese is simply attempting to
defer liability for its lack of leadership in the effort to
confirm a plan and to continue exclusivity little by little.

If the Diocese wants an extension, the Diocese should explain its
inaction in dealing with the Bar Date Motion, Mr. Campbell
asserts.  The Diocese must also be held to dates certain for
filing a plan in the Chapter 11 case.

"The case needs to move forward," Mr. Campbell reminds the Court.
The Court should not allow the Diocese to connive a default
exclusivity extension.

However, Mr. Campbell explains that the Tort Litigants understand
that the Court is extremely busy at this time.  If a hearing on
exclusivity imposes undue burdens on the Court and its resources,
the Tort Litigants consent to an appropriate continuance of the
hearing.

                          *     *     *

Judge Williams denies Spokane's request for a continued hearing on
the Diocese's request to extend the exclusive periods.  The Court
will convene a hearing today as scheduled.

The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts.  In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities.  (Catholic
Church Bankruptcy News, Issue No. 36; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


CELESTICA INC: Completes Repurchase of $612 Million LYONs
---------------------------------------------------------
Celestica Inc. (NYSE:CLS, TSX: CLS/SV) completed its previously
announced cash tender offer for the repurchase of any or all of
its US$614,435,000 aggregate principal amount of Liquid Yield
Option(TM) Notes due 2020 (Zero Coupon-Subordinated) (CUSIP No.
15101QAA6).  The Offer expired on August 2, 2005 at 5 pm EDT.  As
of the Expiration Date, Celestica has accepted for purchase LYONs
having a total principal amount of US$ 612,286,000 at maturity.

The purchase price for tendered LYONs was equal to US$572.82 per
US$1,000 principal amount at maturity.  Celestica has accepted for
payment all of the LYONs validly tendered on or prior to the
Expiration Date, representing 99.65% of the aggregate principal
amount of the LYONs.  The aggregate cash purchase price was
US$350,729,666.52 million.  US$ 2,149,000 principal amount at
maturity of LYONs remains outstanding after the completion of the
Offer.  JPMorgan Chase Bank acted as Depositary in the Offer.

Celestica, Inc. -- http://www.celestica.com/-- is a world leader
in the delivery of innovative electronics manufacturing services
-- EMS.  Celestica operates a highly sophisticated global
manufacturing network with operations in Asia, Europe and the
Americas, providing a broad range of integrated services and
solutions to leading OEMs (original equipment manufacturers).
Celestica's expertise in quality, technology and supply chain
management, enables the company to provide competitive advantage
to its customers by improving time-to-market, scalability and
manufacturing efficiency.

                         *     *     *

Celestica's 7-5/8% senior subordinated notes due 2013 and 7-7/8%
senior subordinated notes due 2011 carry Moody's Investors
Service's and Standard & Poor's single-B ratings.


CENTENNIAL COMMS: Will Restate First Quarter Report Due to Error
----------------------------------------------------------------
Centennial Communications Corp. (NASDAQ: CYCL) will restate its
financial statements for the three and nine months ended February
28, 2005, to correct an error in the amount of deferred income
taxes included in the calculation of the gain on disposition of
the Company's previously owned cable television subsidiary,
Centennial Puerto Rico Cable TV Corp.  Centennial Cable was sold
on December 28, 2004 and the disposition was accounted for as a
discontinued operation.

The correction of this error will result in non-cash adjustments
to the Company's gain on disposition of discontinued operations,
net income from discontinued operations, consolidated net income
and total stockholders' deficit.  The restatement will not affect
previously reported revenue, adjusted operating income, cash flow
or income from continuing operations.

The net effect of the restatement as of and for the three and nine
months ended February 28, 2005 is:

   * increase gain on disposition of discontinued operations by
     $24,272,000;

   * increase net income from discontinued operations by
     $15,579,000;

   * increase consolidated net income by $15,579,000; and

   * decrease total stockholders' deficit by $15,579,000.

The Company's management believes that the accounting error
inadvertent.  The Company identified the error through application
of certain internal controls that were implemented during the
fiscal fourth quarter of 2005.  Accordingly, the Company believes
that, prior to year-end, it remediated the control weakness
associated with these adjustments.  The Company intends to present
additional detail regarding the restatement in its Annual Report
on Form 10-K for the year ended May 31, 2005.

Centennial Communications (NASDAQ: CYCL), based in Wall, New
Jersey, is a leading provider of regional wireless and integrated
communications services in the United States and the Caribbean
with over 1 million wireless subscribers.  The U.S. business owns
and operates wireless networks in the Midwest and Southeast
covering parts of six states.  Centennial's Caribbean business
owns and operates wireless networks in Puerto Rico, the Dominican
Republic and the U.S. Virgin Islands and provides facilities-based
integrated voice, data, video and Internet solutions.  Welsh,
Carson Anderson & Stowe and an affiliate of the Blackstone Group
are controlling shareholders of Centennial.  For more information
regarding Centennial, visit http://www.centennialwireless.com/
http://www.centennialpr.com/and http://www.centennialrd.com/

As of Feb. 28, 2005, Centennial Communications' stockholders'
deficit narrowed to $487,810,000 compared to a $548,641,000
deficit at May 31, 2004.


CESAR CEDANO: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Cesar Cedano Herrera
        dba Mi Sala
        1623 Avenue Jesus T. Pi¤eiro
        San Juan, Puerto Rico 00920

Bankruptcy Case No.: 05-07055

Chapter 11 Petition Date: August 3, 2005

Court: District of Puerto Rico (Old San Juan)

Debtor's Counsel: Carmen D. Conde Torres, Esq.
                  C. Conde & Assoc.
                  254 Calle de San Jose, Suite 5
                  San Juan, Puerto Rico 00901-1523
                  Tel: (789) 729-2900

Estimated Assets: $1 Million to $10 Million

Estimated Debts:  $1 Million to $10 Million

Debtor's 20 Largest Unsecured Creditors:

   Entity                                   Claim Amount
   ------                                   ------------
AAA                                              Unknown
P.O. Box 70101
San Juan, PR 00936-8101

Banco Popular de Puerto Rico                     Unknown
P.O. Box 362708
San Juan, PR 00936-2708

Banco Popular de Puerto Rico                     Unknown
AMEX
P.O. Box 70100
San Juan, PR 00936

BPPR                                             Unknown
Flexicuenta
P.O. Box 70354
San Juan, PR 00936-8354

BPPR                                             Unknown
Multicuenta
P.O. Box 70354
San Juan, PR 00936-8354

BPPR                                             Unknown
P.O. Box 70354
San Juan, PR 00936-8354

BPPR                                             Unknown
P.O. Box 70354
San Juan, PR 00936-8354

CRIM                                             Unknown
P.O. Box 195387
San Juan, PR 00918-5387

Department of Labor                              Unknown
P.O. Box 1020
San Juan, PR

Department of Treasury of Puerto Rico            Unknown
P.O. Box 902410
San Juan, PR 00902-4140

Doral Bank                                       Unknown
P.O. Box 308
Cata¤o, PR 00963-0308

Doral Bank                                       Unknown
P.O. Box 71529
San Juan, PR 00936-8629

First Data Merchant Service                      Unknown
P.O. Box 173845
Denver, CO 80217-3845

IRS                                              Unknown
Philadelphia, PA 19255

IRS                                              Unknown
Philadelphia, PA 19255

MBNA                                             Unknown
P.O. Box 15137
Wilmington, DE 19886-5137

State Insurance Fund                             Unknown
P.O. Box 42006
San Juan, PR 00940-2006

Telecheck                                        Unknown
P.O. Box 60028
City of Industry, CA 91716-0028

VISA of PR                                       Unknown
P.O. Box 70100
San Juan, PR 00936

Wells Fargo Bank                                 Unknown
P.O. Box 29746
MAC # S4101-050
Phoenix, AZ 85038-9746


CHARTER COMMS: June 30 Equity Deficit Widens to $5.1 Billion
------------------------------------------------------------
Charter Communications, Inc. (Nasdaq: CHTR) reported financial and
operating results for the three and six months ended June 30,
2005.  The Company also provided its year to date results compared
to pro forma results for the same 2004 period reflecting the sales
of certain cable systems in March and April 2004 as if these sales
occurred on Jan. 1, 2004.

"Our focus on disciplined operational improvement is gaining
traction, and beginning to show positive results," said Charter
Interim President and CEO Robert May.  "While customer additions
were impacted by competition in certain markets and seasonality
characteristic of the second quarter, we are gaining ground in
terms of customer retention and additions, a result of our
targeted approach to customer growth.  We are encouraged by these
mid-year results, but realize there is more to be done."

During the second quarter of 2005 Charter:

   -- expanded its segmented approach to selling its products,
      tailoring marketing messages to various consumer categories;

   -- increased average monthly total revenue per analog video
      customer 10% and increased high-speed Internet (HSI) revenue
      per HSI customer 5% compared to the second quarter of 2004;

   -- added a net 5,600 revenue generating units (RGUs), driven by
      the addition of 43,800 HSI customers and 12,500 telephone
      customers, offset by the loss of 9,000 digital video
      customers and 41,700 analog video customers;

   -- continued to invest in new product opportunities including
      telephone and advanced set-top terminals; and

   -- grew revenues 7% and adjusted EBITDA 4% compared to the
      second quarter of 2004.

"In the near term, we are focused on improving the value
proposition for our customers; developing more sophisticated
customer care capabilities; executing growth strategies for new
services; managing our operating costs; and identifying
opportunities to continue to improve our balance sheet and
liquidity," said Mr. May.  "And I'm confident we have the
personnel, the infrastructure, the products and the services
necessary to achieve our goals and objectives."

                  Second Quarter Results

Second quarter 2005 revenues were $1.323 billion, an increase of
$84 million, or 7%, over second quarter 2004 revenues of
$1.239 billion.  The increase in revenues was primarily driven by
growth in HSI revenues and average revenue per customer.

For the three months ended June 30, 2005, HSI revenues increased
$45 million, or 25%, reflecting 310,800 net additional HSI
customers since June 30, 2004, as well as a 5% increase in average
revenue per HSI customer in the second quarter of 2005 compared to
the same 2004 period.  Video revenues increased $15 million, or
2%, compared to the second quarter of 2004, primarily due to a 5%
increase in average monthly video revenue per analog video
customer and an increase in digital customers served, partially
offset by the loss of analog video customers during the period.
Commercial revenues increased $11 million, or 19%, and advertising
sales revenues increased $3 million, or 4%, compared to the year
ago quarter.  Other revenue increased $10 million, or 12%, for the
second quarter of 2005 compared to the second quarter of 2004,
primarily due to increased telephone and franchise fee revenue.

Second quarter 2005 operating costs and expenses were
$825 million, an increase of $66 million, or 9%, compared to the
year ago quarter.  The rise in second quarter 2005 operating costs
and expenses over 2004 primarily resulted from a $32 million, or
20%, increase in service costs, a $22 million, or 7%, increase in
programming costs, and a $17 million, or 8%, increase in general
and administrative costs.  Increased labor and maintenance costs
to support our infrastructure, increased equipment maintenance, an
increase in franchise fees as a result of increased revenues and
higher fuel prices drove the rise in service costs.  Programming
costs grew as a result of price increases, particularly in sports
programming, partially offset by a decrease in analog video
customers and a reduction related to changes in estimates of
programming related liabilities resulting from the renewal of
programming contracts during the quarter.  General and
administrative costs increased due to increases in salaries and
benefits, property taxes and professional fees, partially offset
by a decrease in bad debt expense.  These increases were partially
offset by a $5 million, or 14%, decrease in marketing costs, as
the Company exercised discipline in spending while continuing to
develop its segmented marketing approach.

Charter reported income from operations of $110 million for the
second quarter of 2005 compared to $15 million for the second
quarter of 2004. The increase in income from operations was driven
by variances discussed above, as well as a decrease of $89 million
in special charges due to litigation costs recorded in the second
quarter of 2004 related to the settlement of the securities class
action lawsuits.

Net loss applicable to common stock and loss per common share for
the second quarter of 2005 were $356 million and $1.18,
respectively.  For the second quarter of 2004, Charter reported
net loss applicable to common stock and loss per common share of
$416 million and $1.39, respectively.  The $60 million decrease in
net loss applicable to common stock for the second quarter of 2005
compared to the same year ago period is primarily the result of
changes in revenues and expenses discussed above, as well as gains
on equity investments and extinguishment of debt.  These increases
were partially offset by increased interest expense and a small
net loss on derivative instruments and hedging activities,
compared to the net gain recorded for the second quarter of 2004.

                     Year to Date Results

Revenues for the six months ended June 30, 2005 were
$2.594 billion, an increase of $170 million, or 7%, over pro forma
revenues for the same 2004 period of $2.424 billion. For the six
months ended June 30, 2005 operating costs and expenses were
$1.621 billion, an increase of $127 million, or 9%, compared to
the same pro forma year ago period.  Service costs increased
$56 million, or 18%, programming costs increased $55 million, or
8%, and general and administrative costs increased $15 million, or
4%, compared to the pro forma year ago period.

Charter reported income from operations of $161 million for the
six months ended June 30, 2005 compared to $78 million for the
same pro forma 2004 period.  The increase in income from
operations was driven by variances discussed above, as well as a
decrease of $95 million in special charges primarily due to
litigation costs recorded in the second quarter of 2004 related to
the settlement of the securities class action lawsuits, partially
offset by $39 million of impairment charges recorded during the
first six months of 2005 and the $104 million gain on sale of
assets primarily related to assets sales occurring in March and
April 2004.

                        Liquidity

Adjusted EBITDA totaled $498 million for the three months ended
June 30, 2005, an increase of $18 million, or 4%, compared to the
year ago period.  Adjusted EBITDA for the six months ended
June 30, 2005 was $973 million, an increase of 5% compared to pro
forma adjusted EBITDA of $930 million for the six months ended
June 30, 2004.

Net cash flows from operating activities for the six months ended
June 30, 2005 were $181 million, compared to $168 million for the
year ago period.

Expenditures for property, plant and equipment for the second
quarter of 2005 were $331 million, compared to second quarter 2004
expenditures of $200 million. For the six months ended June 30,
2005 expenditures for property, plant and equipment were $542
million, while expenditures for the same 2004 period totaled $390
million. The increases were primarily driven by spending on
scalable infrastructure related to telephone, video on demand and
digital simulcast; support capital related to our investment in
infrastructure and service improvements; and customer premise
equipment primarily related to the continued demand for advanced
digital set-tops.

Un-levered free cash flow for the second quarter of 2005 was
$167 million compared to second quarter 2004 un-levered free cash
flow of $280 million.  For the six months ended June 30, 2005, un-
levered free cash flow was $431 million, compared to $553 million
for the year ago period.  The increases in 2005 capital
expenditures more than offset adjusted EBITDA growth, resulting in
lower un-levered free cash flow during the 2005 periods.

Charter reported negative free cash flow of $219 million for the
second quarter of 2005 compared to $60 million for the second
quarter of 2004.  Negative free cash flow for the six months ended
June 30, 2005 was $326 million, compared to $87 million for the
same 2004 period. Higher capital expenditures and interest on
cash-pay obligations contributed to the increase in negative free
cash flow.

As of June 30, 2005, Charter had $19.2 billion of outstanding
indebtedness and $40 million of cash on hand.  Net availability of
funds under the Charter Communications Operating, LLC credit
facility was approximately $870 million.  The Company believes
cash on hand at June 30, 2005, cash flows from operating
activities and the amounts available under its credit facilities
will be sufficient to meet cash needs throughout 2005.

                           Financing

As part of the Company's previously announced ongoing efforts to
improve liquidity and extend maturities, in June 2005, Charter
Operating issued, in a private placement, approximately
$62 million principal amount of new notes with terms identical to
Charter Operating's 8.375% Senior Second Lien Notes due 2014, in
exchange for $62 million of Charter Communications Holdings, LLC
8.25% Senior Notes due 2007.  During second quarter 2005, Charter
also purchased, in private transactions, from a small number of
institutional holders, a total of $97 million principal amount of
the 4.75% convertible senior notes due 2006, leaving $25 million
principal amount outstanding.

In July 2005, the Securities Exchange Commission declared
effective the registration on Form S-1 covering both the
convertible senior notes due 2009 and the related share lending
agreement.  On July 29, 2005, Charter completed the first issuance
of Class A common stock under the share lending agreement.  The
Company issued 27.2 million shares of stock at $1.25 per share.
Charter may offer up to an additional 122.8 million more in future
offerings.  Charter will not receive any of the proceeds from the
sale of Class A common stock under the share lending agreement.

Charter Communications, Inc. -- http://www.charter.com/-- a
broadband communications company, provides a full range of
advanced broadband services to the home, including cable
television on an advanced digital video programming platform via
Charter Digital(TM), Charter High-Speed(TM) Internet service and
Charter Telephone(TM).  Charter Business(TM) provides scalable,
tailored and cost-effective broadband communications solutions to
organizations of all sizes through business-to-business Internet,
data networking, video and music services.  Advertising sales and
production services are sold under the Charter Media(R) brand.

At June 30, 2005, Charter Communications' balance sheet showed a
$5.1 billion in stockholders' deficit, compared to a $4.4 billion
at Dec. 31, 2004.


COLLINS & AIKMAN: Ford & Labor Union Object to Contract Rejection
-----------------------------------------------------------------
The motion of the Official Committee of Unsecured Creditors in
Collins & Aikman Corporation and its debtor-affiliates' chapter 11
cases to reject all unprofitable, burdensome contracts and close
or moth ball all unprofitable plants drew objection from United
Steelworkers and Ford Motor Company.

United Steelworkers

The United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service Workers International Union
has been the bargaining agent of about 2,800 production and
maintenance employees of the Debtors and its non-debtor affiliate
Collins & Aikman Canada, Incorporated.  The United Steelworkers
represents employees at:

   -- the Debtors' facilities at Canton, in Ohio; and Athens,
      Nashville, and Springfield, in Tennessee; and

   -- non-debtor Collins & Aikman Canada's facilities at
      Gananoque, Kitchener, Mississauga, Port Hope, and
      Stratford, in Ontario, Canada.

In addition, the United Steelworkers recently received a majority
of votes in a National Labor Relations Board representation
election concerning the Debtors' facility at Americus, in
Georgia.  The Debtors filed administrative objections to the
results of that election.

Bruce A. Miller, Esq., at Miller Cohen, PLC, in Detroit,
Michigan, relates that by virtue of the obligations owing under
many collective bargaining agreements with the Debtors, the
United Steelworkers is one of the largest creditors of the
Debtors' estates, and serves as a member of the Official
Committee of Unsecured Creditors.  The United Steelworkers shares
the Committee's strong concerns about the "cash burn" and
correlation of these losses to the structure and pricing of the
Debtors' contract with its customers.  The United Steelworkers
likewise share the Committee's desire that the Debtors promptly
engage all key stakeholder in the near term to negotiate the
reorganization of the Debtors' businesses.

However, the United Steelworkers parts way with the Committee in
respect to its request to immediately shut down all unprofitable
plants.  The Committee cites no authority supporting this
extraordinary remedy.  The United Steelworkers want to protect
the jobs of its members in the United States and Canada from the
Committee's blunderbuss approach.

The United Steelworkers recently received a copy of a brief and
inconclusive listing of the Debtors' "underperforming" plants.
Mr. Miller notes that the brief listing does not contend that the
so-called "underperforming" plants are failing to meet fixed
costs.  Thus, the Committee's desire to take these plants out of
operation will deprive the estate of the revenue generated
through continue operation, Mr. Miller argues.

According to Mr. Miller, the United Steelworkers is not aware of
any analysis addressing of alternative ways in which the Debtors
could improve the productivity and reduce costs at each of their
plants so at to improve profitability.  The United Steelworkers
is also not aware of any analysis of future market trends that
would reflect whether a facility that is presently unprofitable
may someday become profitable because of changing conditions.  In
addition, the United Steelworkers is not aware of any analysis of
the environmental remediation costs that would be associated with
the shutdown of any of the Debtors' facilities.  Without this
necessary data, the Court could never determine that the closure
of any of the Debtors' facilities comports with sound business
judgment.

"In short, the Committee asks the Court to authorize the Debtors
to shutdown its facilities blind to the effect that the closure
of any particular facility could have on the overall
reorganization," Mr. Miller asserts.

The United Steelworkers encourages all parties-in-interest to
engage immediately in good faith negotiations directed at
preserving these businesses.  The United Steelworkers recognizes
that it and other unions representing the Debtors' employees may
have substantial role to play in this process.

Ford

"The Committee's Motion to Compel is without purpose, and the
relief requested is without basis in law.  To grant the motion
would be to permit the Committee to usurp the Debtors' rights in
this case without justification," Stephen S. LaPlante, Esq., at
Miller, Canfield, Paddock & Stone, PLC, in Detroit, Michigan,
argues.

Ford Motor Company points out that the Debtors are just beginning
to review their contracts and do not know which ones are
unprofitable or whether unprofitable contracts are their primary
problem.  However, without any factual basis, the Committee is
completely convinced that the contracts are the problem, Mr.
LaPlante notes.

While the Committee claims to want to promote a fair and
equitable renegotiation of the unprofitable contracts, the Motion
seeks to force a solution that can only harm the Debtors by
poisoning their long-term customer relationships, Mr. LaPlante
says.

The Committee's proposed solution is in stark contrast to the
framework already worked out among the Debtors and their six
largest customers, including Ford, according to Mr. LaPlante.

Even as the Committee was drafting its request, the Debtors and
their customers were hard at work setting up financial relief to
afford the Debtors the time needed to begin the process of
reviewing their contracts and renegotiating any identified as
being unprofitable.  Mr. LaPlante reminds the Court that the
customers, including Ford, accepted, for purposes of moving the
Debtors' cases forward, the Debtors' assumption that some of the
contracts must be unprofitable and put together a financing
package containing $82.5 million of price increases to tide the
Debtors over while the contracts could be reviewed.

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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)


COLLINS & AIKMAN: J.R. Automation Wants to Get Paid for Equipment
-----------------------------------------------------------------
On August 31, 2004, Collins & Aikman Corporation issued a purchase
order for the purchase of a square disc processing system with
bowl feeder for discs and foam to be manufactured by J.R.
Automation Technologies, LLC, successor by merger to J.R.
Automation Technologies, Inc.

As of February 3, 2005, the Equipment was substantially complete.
However, J.R. Automation refused to deliver the Equipment unless
it is paid for in cash or adequate assurance of payment is
provided.  J.R. Automation believed that the Debtors were
insolvent at that time.

Timothy Hillegonds, Esq., at Warner Norcross & Judd LLP, in Grand
Rapids, Michigan, relates that J.R. Automation has not delivered
the Equipment and has not transferred title to the Debtors.
Therefore, the Equipment is not property of the estate.  As a
precaution, J.R. Automation filed a financing statement with the
states of Delaware and Michigan pursuant to the Michigan Special
Tools Lien Act to obtain a statutory lien on the Equipment.

J.R. Automation asked the Debtors to determine whether they will
take delivery of and title to the Equipment upon payment.
However, the Debtors have not responded.  Moreover, no payment
has been received.  The Debtors owe J.R. Automation $1,652 for
the Equipment.

J.R. Automation asks the Court to lift the automatic stay to
allow it to take all steps necessary to either:

   a. treat the nonpayment of the purchase price for the
      Equipment as a default of the Purchase Order and resell the
      Equipment;

   b. cancel the Purchase order under Section 440.2703 of the
      Michigan Compiled Laws Annotated; or

   c. exercise any other rights that it may have under the
      provisions of state law.

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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)


COLLINS & AIKMAN: Wants to Extend Deadline to Remove Actions
------------------------------------------------------------
Collins & Aikman Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Eastern District of Michigan to
extend the time within which they may file notices of removal of
the actions until the date an order is entered confirming a plan
or reorganization in their Chapter 11 cases.

Joseph M. Fischer, Esq., at Carson Fischer, P.L.C., in Birmingham,
Michigan, tells the Court that the Debtors are involved in a
variety of cases, including employment-related litigation and
administrative proceedings, environmental cases, asbestos-related
cases, contract disputes, personal injury cases, securities
litigation and a number of collection matters.  At this stage of
their Chapter 11 cases, the Debtors have not had an opportunity
to determine which Actions they will seek to remove.

Since the Petition Date, the Debtors and their advisors have been
focused on activities that are critically important to their
reorganization, including stabilizing and maintaining day-to-day
operations, developing and implementing an overall business plan
to serve as the basis for a plan or reorganization, analyzing and
negotiating contracts and relationships with customers and
suppliers, and preparing the schedules of assets and liabilities
and statements of financial affairs -- in addition to responding
to numerous pleading filed by the Official Committee of Unsecured
Creditors and other third parties.

Thus, Mr. Fischer notes, the Debtors have not had sufficient time
to analyze the Actions and make the appropriate determinations
concerning their removal before the deadline.

As of the Petition Date, the Debtors were parties to about 100
civil actions pending in various forums.  Most, if not all, of
the Actions are subject to removal pursuant to Section 1452 of
the Judiciary Code, which applies to claims relating to
bankruptcy cases.

Mr. Fischer relates that the Debtors' decision whether to seek
removal of any particular Action will depend on a number of
factors, including:

   a) the importance of the Action to the expeditious resolution
      of the Debtors' Chapter 11 cases;

   b) the time it would take to complete the Action in its
      current venue;

   c) the presence of federal questions in the proceeding that
      increase the likelihood that one or more aspects thereof
      will be heard by a federal court;

   d) the relationship between the Action and matters to be
      considered in connection with the Debtors' plan of
      reorganization, the claims allowance process and the
      assumption or rejection of executory contracts; and

   e) the progress made to date in the Action.

The Debtors believe that the extension will provide their
management and advisors sufficient time to consider and make
fully informed decisions and will ensure that the Debtors'
valuable rights can be exercised in an appropriate manner.

Mr. Fischer explains that the rights of the parties to the
Actions will not be prejudiced by the extension since the Actions
will not be proceeding in their courts due to the automatic stay.

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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)


CREST 2002-IG: Fitch Holds BB Rating on $14 Million Class D Notes
-----------------------------------------------------------------
Fitch Ratings upgrades one class and affirms three classes of
notes issued by CREST 2002-IG, Ltd.  These rating actions are
effective immediately:

The rating on these classes has been upgraded:

     -- $78,000,000 class B notes to 'AA' from 'A+';

The ratings on these classes have been affirmed:

     -- $512,211,034 class A notes at 'AAA';
     -- $40,000,000 class C notes at 'BBB+';
     -- $14,000,000 class D notes at 'BB'.

CREST 2002-IG is a collateralized debt obligation that closed on
May 16, 2002.  CREST 2002-IG is composed of 34% senior unsecured
real estate investment trust securities and 66% commercial
mortgage-backed securities, and was selected by the collateral
administrator, Structured Credit Partners, LLC, a subsidiary of
Wachovia Corporation, prior to closing.

The collateral administrator is limited to sales of credit
impaired, credit risk, and defaulted securities.  Fitch has
reviewed the credit quality of the individual assets comprising
the portfolio.  In addition, Fitch conducted cash flow modeling
utilizing various default timing and interest rate scenarios.

Since the last rating action in September 2004, 18.9% of the
portfolio collateral has been upgraded, 14.3% by more than one
rating notch.  The rating upgrade reflects the positive rating
migration and increased seasoning of the portfolio.

According to the trustee report dated July 30, 2005, all the
coverage and portfolio quality tests are passing their trigger
levels.  Additionally, no collateral has defaulted since closing.

The rating of the class A notes addresses the likelihood that
investors will receive full and timely payments of interest, as
per the governing documents, as well as the stated balance of
principal by the legal final maturity date.  The ratings of the
class B notes, class C notes and class D notes address the
likelihood that investors will receive ultimate and compensating
interest payments, as per the governing documents, as well as the
stated balance of principal by the legal final maturity date.

Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates going forward relative to the minimum cumulative
default rates required for the rated liabilities.  As a result of
this analysis, Fitch has determined that the original ratings
assigned to the class A, class C and class D notes still reflect
the current risk to noteholders, however the current ratings
assigned to the class B notes no longer reflect the current risk
to noteholders and has subsequently improved since closing.

Fitch will continue to monitor and review these transactions for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/ For more information on the Fitch
VECTOR Model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, also available at
http://www.fitchratings.com/


CUMMINS INC: S&P Lifts Rating on $28 Million Series 2001-4 Certs.
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on the
$28,000,000 Structured Asset Trust Unit Repackagings Cummins
Engine Co. Debenture-Backed Series 2001-4 certificates to 'BBB-'
from 'BB+'.

The rating action reflects the raising of the corporate credit and
senior unsecured ratings on Cummins Inc. on July 28, 2005.

Structured Asset Trust Unit Repackagings Cummins Engine Co.
Debenture-Backed Series 2001-4 certificates is a swap-independent
synthetic transaction that is weak-linked to the underlying
collateral, Cummins Inc.'s 5.65% debentures due March 1, 2098.


DEAN FOODS: Earns $81.2 Million of Net Income in Second Quarter
---------------------------------------------------------------
Dean Foods Company (NYSE: DF) earned $0.52 per diluted share from
continuing operations for the quarter ended June 30, 2005, as
compared to $0.39 per diluted share from continuing operations in
the second quarter of 2004.  Net income from continuing operations
for the second quarter of 2005 totaled $81.2 million, compared
with $63.3 million in the prior year second quarter.

On an adjusted basis, diluted earnings from continuing operations
increased 36% to $0.53 per share, compared to $0.39 in last year's
second quarter.  Adjusted net income from continuing operations
for the second quarter was $82.7 million compared to $63.3 million
in the second quarter of 2004.

"Our second quarter results demonstrate further progress toward
meeting our operational and strategic goals," said Gregg Engles,
chairman and chief executive officer.  "Our Dairy Group turned in
another strong quarter, and WhiteWave Foods posted significantly
increased profitability.  Additionally, we successfully completed
the spin-off of TreeHouse Foods, signed a definitive agreement to
divest our Marie's dressings and Dean's dips businesses, and
lowered our future interest expense through an amendment of our
bank credit facility."

Net sales for the second quarter totaled $2.6 billion, on par with
the second quarter of 2004, primarily due to higher fluid dairy
volumes and increased sales at WhiteWave Foods, which were offset
by the pass-through of lower raw milk and butterfat costs in the
Dairy Group.

Consolidated operating income from continuing operations in the
second quarter totaled $173.5 million versus $147.2 million in the
second quarter of 2004.  Adjusted second quarter operating
income totaled $175.9 million, a 19.5% increase compared to
$147.2 million in the second quarter of 2004.  The company's
adjusted second quarter 2005 operating margin was 6.71%, up 110
basis points versus the second quarter of the prior year.

The increase in the consolidated operating margin was primarily
due to the positive impact of lower raw milk and butterfat costs
and increased profitability at WhiteWave Foods.  Included in
operating income for the second quarter of 2005 is a $3.9 million
charge, which represents one half of the total expense related to
the accelerated vesting of stock units issued to key employees in
January 2003.  The balance of this expense, or approximately $0.02
per share net of tax, will be recognized in the third quarter of
2005.  The acceleration of these stock units occurred because the
price of the company's common stock achieved a price appreciation
target that represents an increase of more than 50% from the stock
price on the date of the grant.  Offsetting second quarter
expenses is a gain of $4.5 million recorded in the second quarter
due to the favorable settlement of class action litigation related
to high-fructose corn syrup purchases made by the company in prior
years.

The company repaid $117.4 million of debt during the second
quarter, bringing total debt repayments for the year to
$269.1 million.  Long-term debt as of June 30, 2005 was
approximately $3.0 billion, including $56 million due within one
year that is reported as part of current liabilities.  At the end
of the quarter, approximately $1 billion of the company's senior
credit facility was available for future borrowings.

                         Segment Results

Dairy Group net sales for the second quarter were $2.2 billion, 2%
lower than the second quarter of 2004.  The sales decrease was
primarily due to the pass-through of lower raw milk and butterfat
costs, partially offset by a 4.1% increase in fluid milk volumes.
The Class I mover, which is an indicator of the company's raw milk
costs, averaged $14.18 per hundredweight in the second quarter of
2005, 22% lower than the same period in 2004.

Dairy Group operating income in the second quarter was
$175.1 million, an increase of 11% over last year.  Operating
margins increased 90 basis points to 7.8% of sales due primarily
to the positive impact of lower raw milk and butterfat costs, and
the receipt of the $4.5 million settlement from class action
litigation related to prior period high-fructose corn syrup
purchases.

WhiteWave Foods reported second quarter net sales of
$284.1 million, a 12% increase compared to the second quarter of
2004.  The increase was driven by sales growth in the company's
core brands.

Operating income for WhiteWave Foods in the second quarter was
$28.7 million, an increase of 160% over the $11.0 million reported
in the second quarter of 2004.  Operating margin for the second
quarter of 2005 was 10.1%, an increase of 574 basis points
compared to the prior year second quarter.  The improvement in
operating margin was the result of sales growth, increased
manufacturing and distribution efficiency and lower year over year
marketing spending during the quarter.

                       Recent Developments

   * On June 27, the company completed the previously announced
     spin-off of its Specialty Foods division, now known as
     TreeHouse Foods.  The newly created firm is headquartered in
     the Chicago, Illinois area and trades on the NYSE under the
     ticker symbol "THS".


   * As part of management's strategy to further focus the company
     on its core dairy and branded businesses, Dean Foods recently
     entered into an agreement to sell its Marie's dressings and
     Dean's dips businesses to Ventura Foods.  Pending customary
     governmental antitrust review, the company expects the
     transaction to close in the third quarter.  The sale is
     expected to be approximately $0.02 dilutive to the balance of
     the year.

   * During the quarter the company successfully amended its bank
     credit facility to reduce borrowing costs.

   * Subsequent to the end of the second quarter, the Company has
     made open market purchases of its common stock totaling
     1.9 million shares for a total cost of $68.8 million.  The
     Company has $49.2 million remaining under its current
     repurchase authorization.

                Outlook for the Remainder of 2005

"Our business outlook for the remainder of the year has improved.
Based on second quarter results that exceeded our expectations and
continuing strong business trends, we believe that operating
performance for the year will be better than our previous
expectations," said Mr. Engles.  "We expect this improvement in
our business outlook to increase earnings per share by
approximately three cents.  This increase is offset by
approximately four cents due to the dilution from the divestiture
of Marie's dressings and Dean's dips businesses and the
acceleration of employee stock unit vesting.  Our expectations are
now for earnings to range between $1.97 and $2.02 per share in
2005. For the third quarter, we anticipate adjusted earnings from
continuing operations of between $0.49 and $0.51 per share."
The company's earnings guidance excludes the impact of facility
closing and reorganization costs and any non-recurring or one-time
gains or losses.

           Results for Six Months ended June 30, 2005

The company's net sales from continuing operations increased 6% to
$5.2 billion for the six months ended June 30, 2005, compared with
$4.9 billion during the first six months of 2004.  The increase
was due to sales growth at WhiteWave Foods and volume growth in
the Dairy Group, which was partially offset by the pass-through of
lower raw dairy commodity costs.  Net income from continuing
operations for the first half of the year totaled $137.0 million,
compared with $119.4 million in the first six months of 2004.
Diluted earnings per share from continuing operations for the six
months ended June 30, 2005 totaled $0.88, compared with $0.73 in
the first six months of 2004.

On an adjusted basis, net income from continuing operations for
the six months totaled $144.3 million, an increase of 16% over
$124.1 million in the same period of 2004.  Adjusted diluted
earnings per share from continuing operations for the first six
months of 2005 totaled $0.92 compared with $0.76 in the first six
months of 2004.

The company reported operating income for the six-month period
ended June 30, 2005 of $306.9 million versus $278.9 million in the
same period of 2004.  Adjusted operating income for the first six
months of 2005 totaled $318.8 million, an increase of 11% versus
$286.5 million in the same period of last year.  Adjusted
operating income margins for the six months were 6.13%, an
increase of 29 basis points versus the prior year's first six
months.

For the quarter ended June 30, 2005, the adjusted results reported
above differ from the company's results under GAAP by excluding a
$2.4 million charge ($1.5 million net of tax) primarily related to
previously announced reorganizations and facility closings,
including consolidation of WhiteWave Foods Company.

For the six months ended June 30, 2005, the adjusted results
reported above differ from the company's results under GAAP by
excluding:

   a) an $8.8 million charge ($5.4 million net of tax) related to
      consolidation activities at WhiteWave Foods and previously
      announced reorganizations and facility closings in the Dairy
      Group, and

   b) a $3.1 million charge ($1.9 million net of tax) related to
      severance payments made to the former president of WhiteWave
      Foods.

For the six months ended June 30, 2004, the adjusted results
reported above differ from the company's results under GAAP by
excluding a net $7.6 million charge ($4.6 million net of income
tax) related to Dairy Group plant closings in Madison Wis., South
Gate Calif., San Leandro Calif., and Wilkesboro N.C., which was
partly offset by a gain on the sale of a Dairy Group plant closed
in Hawaii in 2003.

Dean Foods Company is one of the leading food and beverage
companies in the United States.  Its Dairy Group division is the
largest processor and distributor of milk and other dairy
products in the country, with an extensive refrigerated direct-
store-delivery network.  Through its WhiteWave and Horizon
Organic brands, Dean Foods Company also owns the nation's leading
soymilk and organic milk brands.  The company's Specialty Foods
Group is a leading manufacturer of private label pickles and non-
dairy powdered coffee creamers.  Dean Foods Company and its
subsidiaries operate approximately 120 plants in 36 U.S. states,
Spain, Portugal and the United Kingdom, and employ approximately
29,000 people.

                         *     *     *

As reported in the Troubled Company Reporter on Feb. 1, 2005,
Fitch Ratings has affirmed the ratings for Dean Foods Company
following the announcement that Dean will pursue a tax-free
spin-off of its Specialty Foods Group to Dean shareholders.  Fitch
rates Dean's:

     -- Senior secured credit facility 'BBB-';
     -- Senior unsecured notes 'BB'.
     -- Rating Outlook Positive.

As of Sept. 30, 2004, Dean had approximately $3.3 billion of debt.
For the latest 12 months ended Sept. 30, 2004, Dean's total debt-
to-earnings before interest taxes depreciation and amortization
(EBITDA) was 3.8 times, its EBITDA-to-interest incurred was 5.0x,
and its net cash from operating activities-to-total debt was
13.6%.


DEPARTMENT 56: S&P Rates Proposed $275 Million Senior Loan at BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to giftware and tabletop wholesaler Department 56
Inc.

At the same time, Standard & Poor's assigned its 'BB-' rating and
its '1' recovery rating to the company's proposed $275 million
senior secured credit facilities.  The credit facilities are rated
one notch higher than the corporate credit rating; this and the
'1' recovery rating indicate that lenders can expect full recovery
of principal in the event of a default or bankruptcy.  All ratings
are based on preliminary offering statements and are subject to
review upon final documentation.

Proceeds from the new credit facilities will be used to finance
Department 56's announced $190 million acquisition of tabletop
products manufacturer and distributor Lenox Inc. from Brown-Forman
Corp. (A/Stable/A-1).

The outlook is negative.  Standard & Poor's estimates that
Department 56 will have about $203.5 million of total debt
outstanding upon the closing of the transaction.

The ratings on Department 56 reflect its:

    * narrow business focus,
    * limited size,
    * customer concentration, and
    * leveraged financial profile.

Somewhat mitigating these factors are Lenox's portfolio of well-
recognized brands and leading market positions within select
categories of the highly competitive, fragmented giftware and
tabletop industries. "Although the acquisition will significantly
increase Department 56's scale and breadth of product offering, we
are concerned with the company's ability to integrate this sizable
acquisition," said Standard & Poor's credit analyst David Kang.


DUANE READE: Posts $10.3 Million Net Loss in Second Quarter
-----------------------------------------------------------
Duane Reade Holdings, Inc., reported financial results for the
second quarter and first half ended June 25, 2005.

                   Second Quarter Results

Net sales were $399.5 million compared to $402.1 million in the
previous year.  The decline was entirely due to reduced levels of
pharmacy resale activity.  Total store sales were $374.6 million,
up 2.6% over the previous year.  Total same-store sales increased
0.5%, with a pharmacy same-store sales increase of 0.2% and a
front-end same-store sales increase of 0.7%.  The percentage of
more profitable but lower-priced generic prescriptions to total
prescriptions increased by 4.7% over the previous year resulting
in a negative impact on pharmacy same-store sales of 2.8%.
Pharmacy same-store sales were also adversely impacted by 1.9% due
to the negative publicity and reduced consumer demand for
arthritis medications and certain other high volume drugs and
approximately 1.4% due to increased mail order penetration
resulting from conversion of certain third party plans to
mandatory mail order requirements. The front-end same-store sales
increase reflects the favorable impact of the improved Dollar
Rewards customer loyalty card program implemented in March 2005 as
well as a generally improved level of consumer demand observed
since the end of last year. The front-end same-store sales
increase was adversely impacted by approximately 0.5% due to the
shift of Easter holiday sales into the first quarter this year
from last year's second quarter.

Net loss was $10.3 million, compared to net income of $2.5 million
in the previous year.  The loss reflects:

     (i) increased non-cash depreciation and amortization expenses
         of $8.6 million resulting from the application of
         purchase accounting related to the July 30, 2004
         acquisition of the Company;

    (ii) increased interest expenses of $8.2 million, primarily
         related to higher debt levels resulting from refinancing
         the Company's debt as part of the same acquisition;

   (iii) higher consulting and litigation-related legal expenses
         of $1.9 million;

    (iv) non-cash acquisition-related lease accounting expenses
         of $1.4 million;

     (v) reduced real estate related income of $1.1 million;

    (vi) higher acquisition transaction and related costs of
         $700,000; and

   (vii) increased store labor costs.

These items were partially offset by a tax benefit of $8.3 million
compared to a tax provision of $1.6 million last year.

Cash flow provided by operating activities was $8.0 million or
2.0% of sales, compared to $7.8 million or 2.0% of sales in the
previous year.

"During the second quarter we continued to roll out several major
projects to improve customer service throughout our stores and
strengthen operations," Anthony J. Cuti, Chairman of the Board and
Chief Executive Officer, said.  "Specifically, with respect to the
front-end we have introduced new merchandising and promotional
programs that include stronger incentives for the Dollar Rewards
frequent shopper program and this contributed to increases in both
customer traffic and the frequency of customer visits. As a
result, we posted the second consecutive quarter of positive
front-end same-store sales increases and the trend has continued
into the early part of the third quarter.  With respect to
pharmacy sales, while this portion of our business continues to be
challenged, our direct purchasing programs and increased
utilization of generic alternatives have continued to result in
improved pharmacy margins. We expect these specific programs, as
well as an ongoing focus on inventory management and shrink
reduction, to further strengthen our sales and earnings
performance in the second half."

                      First Half Results

Net sales for the first half increased to $794.3 million from
$785.4 million in the previous year. Total store sales were $741.3
million reflecting an increase of 3.7% over the prior year. Total
same-store sales increased 1.2%, with pharmacy and front-end same-
store increases of 1.1% and 1.3%, respectively. The aforementioned
factors impacting second quarter store sales were largely
operative for the first half as well.

Net loss for the six month period was $23.1 million, compared to
net income of $4.3 million in the previous year. The decline is
attributable to:

     (i) an increase in non-cash depreciation and amortization
         expenses of $17.2 million resulting from the application
         of acquisition-related purchase accounting;

    (ii) an interest expense increase of $16.0 million primarily
         attributable to debt-related financing associated with
         the July 30, 2004 acquisition of the Company;

   (iii) increased consulting and litigation-related legal costs
         of $3.9 million;

    (iv) higher non-cash store occupancy expenses of $3.1 million
         associated with acquisition-related lease accounting;

     (v) reduced real estate related income of $1.9 million; and

    (vi) higher labor costs.

These costs were partially offset by a tax benefit of $18.8
million, compared to a tax provision of $2.9 million in the
previous year.

During the first half, the Company opened three new stores and
closed eight stores, compared with seven new stores opened and one
store closed in the prior year period. Pre-opening expenses were
$0.2 million, compared to $0.4 million in the previous year.

                   Accounting Restatements

The Company filed a Form 10-K/A on May 16, 2005 summarizing the
impact of certain restatements resulting from changes in
accounting practices.

Founded in 1960, Duane Reade is the largest drug store chain in
the metropolitan New York City area, offering a wide variety of
prescription and over-the-counter drugs, health and beauty care
items, cosmetics, greeting cards, photo supplies and
photofinishing.  As of June 25, 2005, the Company operated 250
stores.

                        *     *     *

As reported in the Troubled Company Reporter on May 27, 2005,
Moody's Investors Service downgraded all ratings of Duane Reade
Inc., including the second-lien senior secured notes (2010) to B3
and the 9.75% senior subordinated notes (2011) to Caa2, and
assigned a negative rating outlook.

The rating downgrade was prompted by weak operating performance
even as the New York metro economy has recovered over the previous
year and Moody's belief that the high fixed charge burden will
challenge Duane Reade's ability to soon become free cash flow
positive.  The negative rating outlook considers that ratings
could again be lowered within the next 12 to 18 months if working
capital uses cash or liquidity becomes a concern.

Ratings downgraded are:

   -- $160 million second-lien senior secured notes (2010) to B3
      from B2;

   -- $195 million 9.75% senior subordinated notes (2011) to Caa2
      from Caa1;

   -- Senior implied rating to B3 from B2; and the

   -- Long-term issuer rating to Caa3.

Moody's does not rate the $250 million revolving credit facility
that is collateralized by a first-lien on accounts receivable,
inventory, and pharmacy prescription files.


DUANE READE: Moody's Junks $50 Mil. Sr. Second Lien Notes Add-On
----------------------------------------------------------------
Moody's Investor's Service assigned a Caa1 rating to the proposed
$50 million face value add-on to the existing issue of $160
million floating rate 2nd-Lien notes (2010) of Duane Reade, Inc,
downgraded to Caa1 the existing floating rate notes (2010), and
downgraded to Caa3 the 9.75% senior subordinated notes (2011).

Net proceeds from the incremental debt will be used to pay down
the unrated 1st-Lien secured revolving credit facility.  As part
of the transaction, the revolving credit facility commitment will
be reduced to $225 million from $250 million.  The downgrade
reflects Moody's concern that cash flow may not materially exceed
cash interest expense over the next four quarters and the
uncertain prospects of management's plans to reduce leverage and
improve the company's cash flow profile by enhancing operations
and inventory efficiency.  The rating outlook is stable.

These rating is assigned:

   -- $50 million add-on to the floating rate senior second-lien
      notes (2010) at Caa1.

The other ratings are lowered as:

   -- $160 million floating rate senior second-lien notes (2010)
      to Caa1 from B3,

   -- $195 million 9.75% senior subordinated notes (2011) to Caa3
      from Caa2, and the

   -- Corporate Family Rating (previously called the Senior
      Implied Rating) to Caa1 from B3.

Moody's does not rate the revolving credit facility that is
collateralized by a first-lien on accounts receivable, inventory,
and pharmacy prescription files.

Negatively impacting the ratings are:

   * the company's highly leveraged financial condition;

   * the exposure to the economic fortunes of a restricted
     geographic region (Manhattan and surrounding areas); and

   * Moody's opinion that free cash flow will remain negative even
     with a scaled-back store development program.

Also limiting the ratings are:

   * recent pressures on merchandise margins partially due to high
     shrink and reduced vendor incentives;

   * Moody's belief that further profitable expansion within
     Manhattan will prove challenging given the existing density
     of Duane Reade locations; and

   * the high level of competition from large drugstore chains in
     the outer boroughs and suburbs.

The ratings also incorporate the risk that business partners could
become concerned about operating and liquidity trends.

However, the ratings recognize:

   * the company's leading market share in New York City generally
     (and Manhattan specifically);

   * Moody's expectation that revolving credit facility
     availability will cover free cash flow deficits beyond the
     end of 2006; and

   * the relatively small maintenance capital expenditure
     requirement given the modern condition of the company's store
     base.

The expectation that prescription drug sales will strengthen and
Moody's opinion that the company has significant asset value in
the form of accounts receivable, inventory, prescription drug
files, and below-market leases also benefit the ratings.

The stable rating outlook at the new outlook acknowledges Moody's
opinion regarding recovery value in a distressed scenario.  A
further downgrade is currently unlikely, but would occur if asset
coverage were to materially decline.  Over the medium-term,
ratings could migrate upward if average unit volume and operating
profit trends reverse such that cash flow (as measured by EBITDA)
covers capital investment and cash interest expense and the
company has reasonable prospects for improving leverage and fixed
charge coverage.

The Caa1 rating on the senior secured notes considers that, in
addition to guarantees from the operating subsidiaries, this class
of debt has a second priority lien relative to the unrated
revolving credit facility with respect to the most easily
monetizable assets of accounts receivable, inventory, and pharmacy
files.  The secured notes have a first-lien on all other tangible
and intangible assets.  Moody's believes that recovery on this
class of debt would be high in a hypothetical default scenario.

The Caa3 rating on the 9.75% senior subordinated (2011) note issue
considers the guarantees of the company's operating subsidiaries.
However, this subordinated class of debt is contractually junior
to significant amounts of more senior obligations.  The more
senior claims principally are comprised of the revolving credit
facility, the secured notes, and $88 million of trade accounts
payable.  In a hypothetical default scenario with the revolving
credit facility fully utilized, Moody's does not expect that
residual enterprise value after liquidation of tangible assets and
repayment of the secured debt would cover this class of debt.

Recent marketing initiatives and efforts to limit shrink on the
front-end have not been successful, and pharmacy sales have been
notably impacted following the introduction of mandatory mail-
order by several local third-party payers.  EBITDA margin
(excludes one-time charges) declined to 3.0% in the first half of
2005 from 4.9% and 5.4% in the same periods of 2004 and 2003,
respectively.  Relative to earlier expectations, Moody's now
believes that delays in revenue and operating profit growth will
postpone substantial improvements in financial flexibility.  Even
assuming the success of initiatives to improve sales and reduce
shrink over the second half of 2005, Moody's expects that the
company will experience free cash flow deficits in 2005 and 2006.
For at least the next twelve months, Moody's anticipates that
excess availability on the revolving credit facility will remain
greater than the maintenance level so the sole financial covenant
(fixed charge coverage) will not become a constraint.

Duane Reade Inc, headquartered in New York City, operates 250 drug
stores principally in Manhattan and the outer boroughs of New York
City.  Revenue for the twelve months ending June 2005 equaled $1.6
billion.


DUANE READE: S&P Junks Proposed $50 Million Senior Notes
--------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' rating to
Duane Reade Inc.'s proposed $50 million senior floating-rate notes
due 2010, which are being issued under Rule 144A with registration
rights.  Proceeds from the notes will be used to repay a portion
of the company's existing $250 million asset-based revolving
credit facility.  Upon completion of the transaction, the
revolving credit facility will be reduced to $225 million.

Existing ratings on Duane Reade, including the 'CCC+' corporate
credit rating, were affirmed.  The outlook is negative.

"Ratings reflect Duane Reade's leveraged capital structure, thin
cash flow protection measures, weak financial flexibility, and
narrow geographic focus," explained Standard & Poor's credit
analyst Diane Shand.

The company is one of the largest drug chains in the New York
metropolitan area; more than half of its 250 stores are in
Manhattan.  Duane Reade's operating performance has been declining
since the fourth quarter of 2001.  The company's operating margin
fell to 11.8% in 2004, from 12.5% the previous year and a high of
16.4% in 2000. The margin dropped to 11.2% in the first half of
2005 from 12.6% in the prior-year period.

The erosion is attributable to:

    * weak sales of high-margin front-end merchandise,

    * increased labor expense,

    * an increased portion of low-margin pharmacy sales, and

    * greater competition from national drugstore chains and the
      mail-order divisions of pharmacy benefit managers.

Margins are expected to remain under pressure in the near term, as
Duane Reade's front-end merchandising strategy appears to be
struggling and PBMs' mail order businesses are taking share from
its pharmacy business.

Cash flow protection measures are very thin, with EBITDA coverage
of interest at 1.1x for the 12 months ended June 25, 2005. Because
of the sharp drops in EBITDA, leverage has increased dramatically.
Total debt to EBITDA was 10.8x for the 12 months ended June 25,
2005.


DUKE FUNDING: Fitch Rates $32 Million Subordinated Notes at BB+
---------------------------------------------------------------
Fitch Ratings assigns these ratings to Duke Funding High Grade
III, Ltd. and Duke Funding High Grade III, Inc.:

     -- $443,500,000 class A-1A senior secured floating-rate notes
        due 2049 'AAA';

     -- $1,306,500,000 class A-1B1 senior secured floating-rate
        notes due 2049 'AAA';

     -- $1,306,500,000 class A-1B2 senior secured fixed-rate
        interest-only notes due 2049 'AAA';

     -- $102,000,000 class A-2 senior secured floating-rate notes
        due 2049 'AAA';

     -- $8,000,000 class B-1 senior secured floating-rate notes
        due 2049 'AA+';

     -- $8,000,000 class B-2 senior secured floating-rate notes
        due 2049 'AA-';

     -- $44,000,000 class C-1 junior secured floating-rate
        deferrable interest notes due 2049 'A+';

     -- $44,000,000 class C-2 junior secured floating-rate
        deferrable interest notes due 2049 'A-';

     -- $12,000,000 class D mezzanine secured floating-rate
        deferrable interest notes due 2049 'BBB';

     -- $32,000,000 subordinated notes due 2049 'BB+'.

Duke High Grade III is an arbitrage cash flow collateralized debt
obligation managed by Duke Funding Management, LLC.

The ratings of the class A-1A, class A-1B1, class A-2, class B-1
and class B-2 notes address the likelihood that investors will
receive full and timely payments of interest, as per the governing
documents, as well as the aggregate outstanding amount of
principal by the stated maturity date.

The ratings of the class C-1, class C-2 and class D notes address
the likelihood that investors will receive ultimate interest
payments, as per the governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date. The
rating of the class A-1B2 notes addresses the likelihood that
investors will receive only full and timely payments of interest
as per the governing documents.

The rating of the subordinated notes addresses the likelihood that
investors will receive only the ultimate payment of principal by
the stated maturity date.

The ratings are based upon the credit quality of the underlying
assets, 100% of which will be purchased by the transaction's
close, in addition to credit enhancement provided by support from
subordination, excess spread, and protections incorporated in the
structure.

Proceeds from the issuance will be invested primarily in a
portfolio of residential mortgage-backed securities, commercial
mortgage-backed securities and asset-backed securities. The
collateral supporting the capital structure will have a maximum
Fitch weighted average rating factor of 1.60 ('AA-/A+').

Duke High Grade III will have a four-year reinvestment period
during which collateral principal payments will be reinvested
according to the criteria outlined in the governing documents.

The collateral manager has the ability to sell 15% of the
collateral per year on a discretionary basis during the
reinvestment period.  Defaulted securities may be sold at any time
and credit improved securities may be sold at any time during the
reinvestment period.

Duke Funding High Grade III, Ltd. is a Cayman Islands exempted
company. Duke Funding High Grade III, Inc. is a Delaware
corporation.

For more information, please see the presale report titled 'Duke
Funding High Grade III, Ltd.', available on the Fitch Ratings web
site at http://www.fitchratings.com/ Additional information about
the collateral manager is also available at
http://www.fitchratings.com/


DVI INC: Trust Wants Merrill Lynch to Produce Privileged Documents
------------------------------------------------------------------
Dennis J. Buckley, the Liquidating Trustee of the DVI Liquidating
Trust, asks the U.S. Bankruptcy Court for the District of Delaware
to compel Merrill Lynch & Co., Inc., Merrill Lynch Mortgage
Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated to produce some non-privileged documents found on the
Merrill entities' privileged log.  The Trustee also wants the
lenders' witnesses to testify before Aug. 22, 2005.

On October 21, 2003, the Court approved the appointment of R. Todd
Neilson as the examiner of in DVI Inc. and its debtor-affiliates'
chapter 11 cases.  The examiner filed his report on April 7, 2004.
Among the issues flagged by the examiner for further review and
investigation in connection with the Debtors' improper accounting
practices, was whether any of the Debtors' lenders were parties to
DVI's improper practices.

                    Merrill Lynch's Involvement

Merrill Lynch, a multi-national financial management and advisory
company, played various roles in the Debtors' finances and
operations.

Among other things, Merrill Lynch:

   * provided a $150 million warehouse credit facility to DVI,
     portions of which were secured by collateral that had
     previously been pledged to other lenders;

   * provided $500 million annually to DVI in off-balance sheet
     loans;

   * benefited from DVI's success in inducing Fleet Bank to
     release a collateral with a face value of $315 million;

   * financed senior secured notes which were secured by equipment
     leases that DVI had transferred to one or more entities
     including DVI Receivables Corp. XIV and DVI Receivables
     Corp. XV;

   * underwrote a series of securitization based on repackaged
     loans owned by the Debtors;

   * as the underwriters of the securities to be sold as part of
     DVI's quarterly securitization, the lenders selected the
     financed contracts to be pooled (transferred to a non-debtor
     entity) for contribution to a securitization; and

   * owned or held interests in one or more securitizations
     sponsored by the Debtors.

                        Rule 2004 Probe

On December 21, 2004, at the behest of the Liquidating Trustee,
the Court ordered Merrill Lynch to submit to a formal examination
under Rule 2004 of the Federal Rules of Bankruptcy Procedure.
Merrill Lynch was asked to produce all documents related to its
transactions with the Debtors.

                        Privilege Log

On May 22, 2005, Merrill Lynch informed the Liquidating Trustee
that they were ready to present their documents for examination.
However, the lenders withheld some documents on the basis of
privilege.

The Liquidating Trustee argued that most of the documents
identified on the Privilege Log were not protected by any
privilege.  In response, Merrill Lynch produced fifteen of the
withheld documents to prove that they were indeed privileged,
including documents exchanged between:

     * Merrill Lynch and the firm of Thacher Proffitt & Wood,
       LLP, which represented the lenders in the DVI
       securitizations;

     * Merrill Lynch and the accounting firm of Plant & Moran;
       and

     * employees reflecting counsel's advice.

                       Deposition of Witnesses

On May 27, 2005, Marshall Gilinsky, Esq., at Anderson Kill &
Olick, P.C., counsel for the liquidating trustee, asked Merrill
Lynch's counsel, Gregory Ballard, Esq., at Cadwalader, Wickersham
& Taft LLP, to provide the names of the witnesses that the lenders
intend to present for deposition as well as the topics and dates
on which each witness would testify.

Mr. Ballard, the Liquidating Trustee says, responded that there
was no urgency in proposing dates since Merrill Lynch isn't
required to present witnesses until August 22, 2005.

To date, Merrill Lynch has yet to provide the dates of the
depositions.

The Liquidating Trustee explains that he still needs to depose
approximately 23 witnesses.  Based on their testimony, the
Liquidating Trustee will decide whether or not he will sue Merrill
Lynch.  The Trustee has until Aug. 25, 2005, to initiate causes of
action.

Accordingly, Mr. Buckley urges the Court to compel Merrill Lynch
to produce the withheld documents and compel the witnesses to
appear for their depositions before the August 22 deadline.

DVI, Inc., the parent company of DVI Financial Services, Inc., and
DVI Business Credit Corporation, provide lease or loan financing
to healthcare providers for the acquisition or lease of
sophisticated medical equipment.  The Company, along with its
affiliates, filed for chapter 11 protection (Bankr. Del. Case
No. 03-12656) on Aug. 25, 2003.  Bradford J. Sandler, Esq., at
Adelman Lavine Gold and Levin PC, represents the Debtors in their
restructuring efforts.  When the Company filed for protection from
its creditors, it listed $1,866,116,300 in total assets and
$1,618,751,400 in total debts.  On Nov. 24, 2004, Judge Walrath
confirmed the Amended Joint Plan of Liquidation filed by DVI,
Inc., and its debtor-affiliates.


DYNEGY INC: $2.35 Billion Asset Sale Prompts S&P to Watch Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B/B-2' corporate
credit rating on Dynegy Inc. on CreditWatch with developing
implications as a result of the announced sale of the firm's
midstream business to Targa Resources Inc. for $2.35 billion.

As of March 31, 2005, the Houston, Texas-based energy company had
$5.326 billion of debt outstanding.

The developing CreditWatch listing indicates that the ratings
could be raised, lowered, or affirmed.

"The rating action reflects the uncertainty regarding the use of
the proceeds from the midstream sale as well as the sustainability
of Dynegy's remaining business lines," said Standard & Poor's
credit analyst John Kennedy.

Notably, a substantial amount of sale proceeds could be used to
significantly lower debt levels and improve the company's
financial profile, which would be conducive for credit quality.
Conversely, Dynegy has stated that some proceeds could be used to
fund strategic growth opportunities.

Standard & Poor's cannot determine at this time the level of debt
reduction (above the required $783 million stipulated in its bank
agreements) or the amount, nature, and credit risks of any
potential investments.

Standard & Poor's expects to resolve the CreditWatch listing in
advance of the transaction's close (targeted for the fourth
quarter of 2005) after reviewing Dynegy's reconstituted business
profile and financial policy.


EASYLINK SERVICES: Taps Grant Thornton to Audit 2005 Financials
---------------------------------------------------------------
EasyLink Services Corporation, (NASDAQ: EASY) engaged Grant
Thornton LLP as its independent registered public accounting firm
for the year ending Dec. 31, 2005.  Grant Thornton is the
industry's 5th largest firm with 2004 revenues of $2.1 billion and
offices in 110 countries.  The decision to engage Grant Thornton
was made by EasyLink's Audit Committee.

"Grant Thornton LLP ranks highest among audit firms serving
clients with revenues up to $1 billion in the J.D. Power and
Associates 2004 Audit and Tax Firm Performance Study," Michael
Doyle, VP and CFO of EasyLink, said.  "They are well suited to the
audit and tax needs of EasyLink."

                      Going Concern Doubt

KPMG LLP expressed substantial doubt about EasyLink's ability to
continue as a going concern after it audited the Company's
financial statements for the fiscal year ended Dec. 31, 2004.
The Company said it again received that going concern
qualification notwithstanding the significant improvements in its
financial condition and results of operations over the past three
years.  The auditors point to the Company's working capital
deficiency and an accumulated deficit.  The Company also received
qualified opinions from its auditors in 2000, 2001, 2002 and 2003.

                  Second Quarter 2005 Filing

The Company intends to release its second quarter 2005 results
after the market closes on Monday, August 15, and hold a
conference call to discuss those results the following day.  This
release is slightly delayed from EasyLink's standard schedule in
order to give Grant Thornton adequate time to initiate its
engagement with EasyLink and to complete its review of EasyLink's
second quarter results.  Due to the timing of the engagement of
Grant Thornton, however, it may be necessary to further delay the
release for a short period of time after Aug. 15, 2005, to allow
Grant Thornton to complete their review.

EasyLink had previously issued second quarter guidance to include
$20-21 million in total revenues with break-even to a net loss of
$0.02 per share in net results.  EasyLink is now projecting
revenue and earnings within that guidance with revenues just over
$20 million and slightly positive net income.  EasyLink will
provide further details when it announces its 2005 second quarter
results.

EasyLink Services Corporation (NASDAQ: EASY) --
http://www.EasyLink.com/-- headquartered in Piscataway, New
Jersey, is a leading global provider of services that power the
exchange of information between enterprises, their trading
communities, and their customers.  EasyLink's global network
handles over 1 million transactions every business day on behalf
of over 60 of the Fortune 100 and thousands of other companies
worldwide.  The Company facilitate transactions that are integral
to the movement of money, materials, products, and people in the
global economy, such as insurance claims, trade and travel
confirmations, purchase orders, invoices, shipping notices and
funds transfers, among many others.  EasyLink helps companies
become more competitive by providing the most secure, efficient,
reliable, and flexible means of conducting business
electronically.


ENRON CORP: Inks Pact Allowing WestLB's Claim for $539 Million
--------------------------------------------------------------
Prior to the Petition Date, EPC Estate Services, Inc., formerly
known as National Energy Production Company, and NEPCO Power
Procurement Company, entered into various contracts for the
procurement and construction for the "Quachita Project" and the
"McAdams Project."  Enron Corp. guaranteed NEPCO's and NEPCO
Power's performance under the Contracts.

To pay for its subsidiaries obligations' under the Contracts,
Enron entered into a Master Letter of Credit and Reimbursement
Agreement, dated as of July 13, 2000, with WestLB A.G, formerly
known as Westdeutsche Landesbank Girozentrale.

Pursuant to the Agreement, WestLB issued and, subsequently paid
for, letters of credit for the account of Enron in favor of the
developers to the Projects -- TPS McAdams and Ouachita Power,
LLC:

    Date Issued       Amount       Beneficiary
    -----------       ------       -----------
     8/04/2000      $16,146,750    Ouachita
     8/14/2001      $23,332,908    McAdams

WestLB filed Claims against the Debtors concerning the L/Cs:

     Claim No.    Debtor         Letter of Credit
     ---------    ------         ----------------
       9217        Enron           McAdams L/C
       22168       NEPCO Power     McAdams L/C
       22169       NEPCO           McAdams L/C
       9218        Enron           Ouachita L/C
       22170       NEPCO           Ouachita L/C

The Claims allege that:

    (i) the Debtors are liable to reimburse WestLB for the amounts
        paid under the L/Cs, plus fees and interest under the
        Reimbursement Agreement;

   (ii) NEPCO and NEPCO Power failed to use payments made to them
        by McAdams and Ouachita to pay subcontractors and
        suppliers to the Projects -- instead, they transferred all
        amounts received to Enron, which was not paying NEPCO and
        NEPCO Power's debts when due;

  (iii) The amounts paid under the L/Cs were not used to replace
        funds that should have been paid to the subcontractors and
        suppliers under the Projects; and

   (iv) WestLB is subrogated to the rights of McAdams, Ouachita,
        NEPCO and NEPCO Power, and the corresponding
        subcontractors and suppliers to the Projects.

The parties disagree as to the allowability and amounts of the
Claims.

On January 2002, WestLB commenced adversary proceedings against
Enron in connection with the Projects.  Under the consolidated
adversary proceedings, WestLB alleged that in excess of
$36,000,000 paid to NEPCO and NEPCO Power that was "swept" into
Enron's centralized cash management system should be impressed
with a constructive trust in their favor.

The Debtors dispute that they have any liability to WestLB.

On February 21, 2003, WestLB commenced an action in the United
States District Court for the Southern District of New York for
claims of approximately $39 million on charges that the former
NEPCO officers conspired with Ouachita Power and TPS McAdams to
cause wrongful draws on the L/Cs.  WestLB also asserts that,
because SNC-Lavalin Constructors, Inc., purchased substantially
all of NEPCO's assets, SNC is the "successor" to NEPCO and liable
to WestLB for the draws under the L/Cs.

To resolve their disputes, the Reorganized Debtors and WestLB
agree that:

    (1) The McAdams Enron Claim will be reduced and allowed as a
        Class 4 general unsecured claim for $523,332,908;

    (2) The Ouachita Enron Claim will be reduced and allowed as a
        Class 4 general unsecured claim for $16,146,750;

    (3) WestLB will be entitled to a single satisfaction of
        the Allowed Claims;

    (4) WestLB waives and withdraws with prejudice the WestLB
        McAdams NEPCO Claim, the McAdams NEPCO Power Claim and the
        Ouachita NEPCO Claim;

    (5) Neither party admits fault or liability of any sort;

    (6) The District Court Litigation and the Swept Funds
        Litigation will be dismissed with prejudice and without
        the assessment of costs against any party to those
        proceedings; and

    (7) The parties release each other from claims in connection
        the Allowed Claims, the Withdrawn Claims, the Swept Funds
        Litigation, the District Court Litigation, the Agreements,
        the Guarantees, the Projects and the L/Cs.

Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations.  Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.

Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033).  Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed.  The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
153; Bankruptcy Creditors' Service, Inc., 15/945-7000)


ENRON CORP: Wants Court to Okay Amendments to Plan Schedule S
-------------------------------------------------------------
Reorganized Enron Corporation and its debtor-affiliates circulated
to their creditors and filed with the Court an amended Schedule S
to their Plan Supplement filed in March 2004.

The Schedule lists the instruments and types of claims that are
entitled to the benefits of subordination according to the
provisions of the Enron Subordinated Debentures, the Enron TOPrS
Debentures or the Loan Agreement executed in connection with:

      * the Enron Capital Resources, L.P. 9% Cumulative
        Preferred Securities, Series A; or

      * the Enron Capital LLC 8% Cumulative Preferred Securities.

The Reorganized Debtors ask the Court to approve the amended
Schedule.

The Reorganized Debtors note that inclusion of an instrument or
type of claim in the list will not, nor will it be construed to,
be an admission as to the ultimate allowance of the claim, nor
will it preclude the Reorganized Debtors from objecting to a
claim on any grounds available to them.

Similarly, nothing contained in the Schedule will preclude the
Reorganized Debtors from seeking equitable subordination of any
claims.

The Reorganized Debtors inform the Court that distributions with
respect to the Schedule will begin no sooner than October 2005
and may not begin until April 2006 or thereafter.  They explain
that the ability to distribute to senior indebtedness is
contingent on a number of factors, including, but not limited to:

    (i) entry of a final order by the Bankruptcy Court approving
        the amended Schedule S; and

   (ii) liquidation of senior claims.

The Reorganized Debtors advise affected creditors to consult with
their counsel as to their entitlement to the benefits of the
subordination provisions.

A full-text copy of the amended Schedule S is available at no
extra charge at:

        http://bankrupt.com/misc/Enron_amendedscheduleS.pdf

Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations.  Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.

Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033).  Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed.  The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
154; Bankruptcy Creditors' Service, Inc., 15/945-7000)


EPOCH INVESTMENTS: Pays $75,000 to Gabriel Del Virginia
-------------------------------------------------------
The Honorable Judge Allan L. Gropper of the U.S. Bankruptcy Court
for the Southern District of New York authorized Epoch
Investments, L.P., fka Empyrean Investment, L.P., to pay $75,000
to Gabriel Del Virginia, Esq.

The payment is for legal services rendered in connection to Mr.
Del Virginia's representation of Mr. Omar Amanat and Epoch.

The payment will come from:

   -- an account maintained at Sanford Bernstein and
      identified as the Epoch Account for $37,500; and

   -- an account maintained in the custody of Citicorp Trust,
      South Dakota as trustee for the Amanat Family Support Trust
      for $37,500.

The Court also directed Citigroup and Sanford Bernstein to freeze
all funds remaining in the Epoch Account and the Amanat Family
Account until further Court order.

The Court also ordered Epoch, Epique, Osman Amanat, Omar Amanat,
Sabiya Amanat, Irfan Amanat, Sharif Amanat, Jamal Mahmood or any
person or entity that they control, or are related to, including,
but not limited to, the Amanat Family Support Trust, not to
transfer any funds held in the Epoch Account and the Amanat Family
Account without the Court's authority.

Headquartered in New York, Epoch Investments, L.P., fka Empyrean
Investment, L.P.'s creditor, MarketXT Holdings, Inc., filed an
involuntary chapter 11 petition against the company on May 12,
2005 (Bankr. S.D.N.Y. Case No. 05-13470).  Alan Nisselson, Esq.,
at Brauner Baron Rosenzweig & Klein, LLP, is the chapter 11
Trustee of MarketXT Holdings.  Gabriel Del Virginia, Esq., of New
York, represents Epoch.  Leslie S. Barr, Esq., at Brauner Baron
Rosenzweig & Klein, LLP, represents Mr. Nisselson.  MarketXT
Holdings asserts a $2.5 million claim against Epoch.


FC CBO: S&P Removes BB-Rated Senior Notes from Creditwatch
----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its rating on the
senior notes issued by FC CBO Ltd./FC CBO Corp., an arbitrage CBO
transaction, and removed it from CreditWatch with positive
implications, where it was placed June 16, 2005.

Standard & Poor's noted that the senior notes have benefited from
de-levering since the previous upgrade, which has increased the
senior priority notes par value test to 125.7%, compared with a
ratio of 114.3% at the time of the last upgrade.  However, the
second priority notes, which are subordinate to the senior
priority notes, are currently carrying approximately $36.2 million
in capitalized interest.  Under a number of cash flow run
scenarios, this accrued interest can be paid out of principal cash
even as the senior priority notes remain outstanding.  As a
result, the cash flow analysis generated by Standard & Poor's for
the transaction does not support an upgrade to the senior priority
notes at this time.


        Rating Affirmed And Removed From Creditwatch Positive

                             FC CBO Ltd.

                                      Rating
                                      ------
                  Class            To       From
                  -----            --       ----
                  Senior notes     BB       BB/Watch Pos


                        Other Outstanding Rating

                             FC CBO Ltd.

                     Class                     Rating
                     -----                     ------
                     Second priority notes     CC


FIRST MERCURY: S&P Rates $65 Million Senior Unsecured Notes at BB
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' counterparty
credit rating to First Mercury Holdings Inc. and its 'BB' senior
debt rating to FMHI's $65 million floating-rate seven-year senior
unsecured notes, which are due in 2012.

Standard & Poor's also said that the outlook on FMHI is stable.

About $60 million of the proceeds from the notes are expected to
be used to buy out the remaining shares from current long-term
minority shareholders to increase Glencoe Capital's share from the
current 32% minority ownership to a 55% majority ownership status.
Jerome Shaw, the company's co-founder and CEO, is expected to
reduce his equity participation to 29% from the current 33%, with
the remaining 16% interest residing with company management.  The
remaining $5 million is expected to be used to bolster surplus at
the wholly owned main insurance operating entity, First Mercury
Insurance Co.

The rating is based on FMHI's strong GAAP interest coverage from
the consolidated earnings of its wholly owned subsidiary, First
Mercury Financial Corp., which in turn derives its earnings from
its wholly owned insurance and noninsurance operations.

Standard & Poor's believes that a softening rate environment could
lead to lower premium volumes and higher combined ratios, which
would affect 90% of FMFC's operating segments.  If such pressures
led to GAAP interest coverage falling to less than 4x, this could
lead to downward pressure on the rating given that the company's
strong interest coverage acts as an offset to the high initial pro
forma debt to capital.


FIRST UNION: Fitch Holds Low-B Rating on Six Certificate Classes
----------------------------------------------------------------
Fitch Ratings upgrades First Union National Bank Commercial
Mortgage Trust's commercial mortgage pass-through certificates,
series 2001-C3:

     --$33.8 million class B to 'AAA' from 'AA';
     --$12.3 million class C to 'AA+' from 'AA-';
     --$23.5 million class D to 'AA-' from 'A';
     --$11.3 million class E to 'A+' from 'A-';
     --$12.3 million class F to 'A-' from 'BBB+';
     --$12.3 million class G to 'BBB+' from 'BBB';
     --$12.3 million class H to 'BBB' from 'BBB-'.

In addition, Fitch affirms the following classes:

     --$138 million class A-2 at 'AAA';
     --$435.5 million class A-3 at 'AAA';
     --Interest-only class IO-I at 'AAA';
     --Interest-only class IO-II at 'AAA';
     --$18.4 million class J at 'BB+';
     --$14.3 million class K at 'BB';
     --$6.1 million class L at 'BB-';
     -- $4.1 million class M at 'B+';
     --$6.1 million class N at 'B';
     --$4.1 million class O at 'B-'.

Fitch does not rate the $22.5 million class P certificates.  The
class A-1 certificates have been paid in full.

The rating upgrades are the result of scheduled amortization and
defeasance since issuance.  As of the July 2005 distribution date,
the pool's aggregate certificate balance has decreased 6.42% to
$766.3 million from $818.8 million at issuance.

Currently, seven assets (7.5%) are in special servicing, including
the third-largest asset in the transaction (4.2%).  The loan is
collateralized by a multifamily property in Malvern, PA, and is
current.  The loan transferred to the special servicer due to
imminent default.  The special servicer is negotiating with the
borrower for a full payoff and partial prepayment premium.

The second-largest specially serviced asset is real estate owned.
The special servicer is in the process of marketing the property
for sale and has received some potential offers.  A small loss to
the trust is possible once the asset is liquidated.


FIRST UNION: Fitch Holds Junk Rating on $8.7 Mil. Class M Certs.
----------------------------------------------------------------
First Union National Bank Commercial Mortgage Trust's commercial
mortgage pass-through certificates, series 2000-C1 are upgraded by
Fitch Ratings:

     --$38.8 million class B to 'AAA' from 'AA';
     --$34.9 million class C to 'A+' from 'A';
     --$11.6 million class D to 'A' from 'A-';
     --$25.2 million class E to 'BBB+' from 'BBB';
     --$11.6 million class F to 'BBB' from 'BBB-'.

In addition, Fitch affirms these classes:

     --$24.8 million class A-1 at 'AAA';
     --$480.9 million class A-2 at 'AAA';
     --Interest-only class, IO at 'AAA';
     --$29.1 million class G at 'BB+';
     --$7.8 million class H at 'BB';
     --$3.9 million class J at 'BB-';
     --$7.8 million class K at 'B+';
     --$5.8 million class L at 'B';
     --$8.7 million class M remains 'CCC'.

The $8.8 million class N is not rated by Fitch.

The rating upgrades are a result of paydown, scheduled
amortization and defeasance resulting in increased credit
enhancement levels. 11 loans (8%) have been fully defeased.

As of the July 2005 distribution date, the transaction's aggregate
principal balance has decreased 9.6% to $699.9 million from $776.3
million at issuance.  To date, the transaction has realized losses
in the amount of $5.7 million.  Currently, there are no delinquent
or specially serviced loans, although Fitch identified 19 loans of
concern suffering from declines in occupancy.

134 of the original 143 loans remain outstanding with an average
loan size of $5.2 million.  The transaction is geographically
diversified with the largest concentrations in Florida (13.3%) and
California (9.6%).


FRONTLINE CAPITAL: Can Continue Transactions with Assisted Living
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized FrontLine Capital Group to continue performing its
duties as a debtor-in-possession in connection with its wholly
owned subsidiary, RSI Fund Management, LLC, and its other
affiliates, by negotiating and executing documents and taking
other actions necessary to consummate the transactions described
in its request involving the Assisted Living Investments, LLC
platform.

The Court approved the Debtor's request on July 25, 2005.

The Debtor's wholly owned subsidiary, RSI Fund Management, LLC, is
the managing member of RSVP Holdings, LLC.  RSVP Holdings is the
managing member of Reckson Strategic Venture Partners, LLC, which
in turn has invested in operating companies in real estate and
real estate related market sectors.  New World Realty Management,
LLC, an entity owned by two individuals, has been retained by RSVP
Holdings and acts as asset manager of the assets and investments
of Reckson Strategic.

                  The Assisted Living Platform

A Reckson Strategic subsidiary owns a controlling interest of
$7 million in mezzanine notes and $4 million of other pari passu
mezzanine notes that are secured by a portfolio of eight assisted
living facilities.  The Mezzanine Notes are in third position,
junior to a first mortgage on the borrower's properties in the
aggregate amount of approximately $50.5 million, and a second lien
on the borrower's properties with an accrued balance of
approximately $19 million.

                The Assisted Living Inc. Transaction

An agreement was recently negotiated with the second lienholder
pursuant to which the holders of the Mezzanine Notes, which
includes Reckson Strategic's subsidiary, will be able to purchase
the second lien position, with an accrued balance of approximately
$19 million, for the discounted sum of $7.1 million.

To finance the proposed purchase, the Mezzanine Noteholders are
currently negotiating a separate non-recourse loan with typical
non-recourse carve-outs for certain specific prohibited acts, for
the $7.1 million purchase price and related closing costs.

Once the proposed purchase is consummated, the Mezzanine
Noteholders, including Reckson Strategic's subsidiary, will have
substantially reduced the amount of liens presently senior to
their position against the borrower's properties and will provide
the Mezzanine Noteholders with both the second and third lien
positions.  The transaction significantly enhances their overall
position, particularly since the Mezzanine Noteholders are
proposing to finance 100% of the funds needed to acquire the
second lienholder's position on a non-recourse basis.

Simply put, Reckson Strategic's subsidiary and the other Mezzanine
Noteholers will be acquiring an approximately $19 million senior
lien position at a steep discount of only approximately
$7.1 million, with very minimal risk.

The Debtor explained that the Assisted Living transaction will
maximize the anticipated return to the Reckson Strategic
subsidiary participating in the transaction, which in turn will
maximize the value of the Debtor's assets and benefit its estate
and creditors.

Headquartered in New York City, FrontLine Capital Group is a
holding company that manages its interests in a group of companies
that provide a range of office related services.  The Company
filed for chapter 11 protection on June 12, 2002 (Bankr. S.D.N.Y.
Case No. 02-12909).  Mickee M. Hennessy, Esq., at Westerman Ball
Ederer & Miller LLP, represents the Debtor in its restructuring
efforts.  When the Company filed for protection from its
creditors, it listed $264,374,000 in assets and $781,374,000 in
debts.


FRONTLINE CAPITAL: Gets OK to Revise Agreement with F. Adipietro
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized FrontLine Capital Group to continue performing its
duties as a debtor-in-possession in connection with its wholly-
owned subsidiary, RSI Fund Management, LLC, and its other
affiliates, with respect to supplementing an Incentive and
Retention Agreement dated March 30, 2004, entered into with Frank
Adipietro.

On April 28, 2004, the Court authorized the Debtor to perform its
duties as a debtor-in-possession with respect to its wholly owned
subsidiary, RSI Fund Management, LLC and other entities, in
connection with an Incentive and Retention Income Agreement dated
March 30, 2004, with Mr. Adipietro.  The Agreement was entered
into by RSI Fund, Reckson Strategic Venture Partners, LLC and Mr.
Adipietro.

The Agreement stated that Mr. Adipietro would continue to be
involved in the sale by Reckson Strategic and Reckson Asset
Partners, LLC of their jointly-owned student housing businesses
through an initial public offering of stock by a newly-formed real
estate investment trust.  That IPO transaction was completed last
year.

Since April 2004, Mr. Adipietro has also continued to deal with
unexpected residual matters relating to the oversight, management
and disposition of Reckson Strategic's remaining Student Housing
platform assets that were not included in the IPO, and he has also
provided additional services with respect to various other
platforms.

The additional services performed by Mr. Adipietro that were not
contemplated under the original Incentive and Retention Agreement
merited supplemental compensation and prompted the Debtor to file
a request with the Court to expand the retention of Mr. Adipietro.

The Debtor explains that Mr. Adipietro's services is important for
the continued success, development and completion of transactions
relating to Reckson Strategic's platforms, and will significantly
enhance recoveries that will flow upstream to the Debtor's estate.

The terms of the Court-approved Supplement to the Incentive and
Retention Agreement are:

   a) Mr. Adipietro will receive an additional incentive payment
      of $225,000, provided, that if he receives distributions
      from his ownership interest in an entity called RSVP
      Management Partners, LLC in excess of $1 million, then Mr.
      Adipietro agrees to split all amounts above $1 million
      50-50 with RSI Fund, until RSI Fund has received $121,500;

   b) the date in which Mr. Adipietro may voluntarily terminate
      his services under paragraph 3(E) of the Incentive and
      Retention Agreement is extended from July 15, 2005, up to
      Sept. 15, 2005; and

   c) the Incentive and Retention Agreement otherwise remains the
      same and in full force and effect, and will be collectively
      known as the Supplemental Incentive and Retention Agreement.

Headquartered in New York City, FrontLine Capital Group is a
holding company that manages its interests in a group of companies
that provide a range of office related services.  The Company
filed for chapter 11 protection on June 12, 2002 (Bankr. S.D.N.Y.
Case No. 02-12909).  Mickee M. Hennessy, Esq., at Westerman Ball
Ederer & Miller LLP, represents the Debtor in its restructuring
efforts.  When the Company filed for protection from its
creditors, it listed $264,374,000 in assets and $781,374,000 in
debts.


GE COMMERCIAL: S&P Puts Low-B Ratings on Six Certificate Classes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to GE Commercial Mortgage Corp. Series 2005-C3's $2.116
billion commercial mortgage pass-through certificates series 2005-
C3.

The preliminary ratings are based on information as of Aug. 3,
2005.  Subsequent information may result in the assignment of
final ratings that differ from the preliminary ratings.

The preliminary ratings reflect:

    * the credit support provided by the subordinate classes of
      certificates, the liquidity provided by the trustee,

    * the economics of the underlying loans, and

    * the geographic and property type diversity of the loans.

Classes A-1, A-2, A-3, A-AB, A-4, A-1A, A-J, B, C, D, E, and X-P
are currently being offered publicly.  The remaining classes will
be offered privately.  Standard & Poor's analysis determined that,
on a weighted average basis, the pool has a debt service coverage
of 1.60x, a beginning LTV of 97.7%, and an ending LTV of 89.2%.

A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/

The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/


                     Preliminary Ratings Assigned

              GE Commercial Mortgage Corp. Series 2005-C3

      Class         Rating     Preliminary       Recommended
                                 amount        credit support(%)
      -----         -------    -----------     -----------------
      A-1           AAA        $71,000,000                20.000
      A-2           AAA       $247,755,000                20.000
      A-3           AAA       $220,000,000                20.000
      A-4           AAA       $118,168,000                20.000
      A-5           AAA        $75,000,000                20.000
      A-AB          AAA        $74,053,000                20.000
      A-6A          AAA       $386,682,000                30.000
      A-6B          AAA        $55,241,000                20.000
      A-1A          AAA       $444,990,000                20.000
      A-J           AAA       $161,353,000                12.375
      B             AA+        $13,226,000                11.750
      C             AA         $29,096,000                10.375
      D             AA-        $21,161,000                 9.375
      E             A          $34,387,000                 7.750
      F             A-         $18,516,000                 6.875
      G             BBB+       $23,806,000                 5.750
      H             BBB        $21,161,000                 4.750
      J             BBB-       $31,742,000                 3.250
      K             BB+         $7,936,000                 2.875
      L             BB          $7,935,000                 2.500
      M             BB-        $10,581,000                 2.000
      N             B+          $2,645,000                 1.875
      O             B           $7,935,000                 1.500
      P             B-          $7,936,000                 1.125
      Q             N.R.       $23,806,258                 0.000
      X-C*          AAA                TBD                   N/A
      X-P*          AAA                TBD                   N/A

                 * Interest only class with a notional amount.
                             N.R. - Not rated.
                          TBD - To be determined.
                           N/A - Not applicable.


GRAY TELEVISION: Spins-Off Newspaper & Wireless Units
-----------------------------------------------------
Gray Television, Inc.'s (NYSE: GTN; GTN.A) Board of Directors has
approved a plan to spin-off its Newspaper Publishing and Graylink
Wireless businesses to its shareholders, which will result in a
newly created and separately traded public company named Triple
Crown Media, Inc.

Gray expects that as a result of the spin-off, both Gray and
Triple Crown Media will be better able to focus their separate
financial and operational resources on their own businesses and
executing their own strategic plans.  In addition, Gray believes
that both Gray and Triple Crown Media will have greater strategic
and financial flexibility to support future growth opportunities.

Gray Television, Inc., owns 31 television stations serving 27
television markets.  The combined station group has 23 stations
ranked #1 in local news audience and 22 stations ranked #1 in
overall audience within their respective markets and reaches
approximately 5.5% of total U.S. TV households.  In addition, with
16 CBS-affiliated stations, Gray is the largest independent owner
of CBS affiliates in the country.

                         *     *     *

As reported in the Troubled Company Reporter on June 8, 2005,
Standard & Poor's Ratings Services assigned a 'BB-' rating and a
recovery rating of '1' to Gray Television Inc.'s proposed $400
million senior secured bank facility, indicating high expectation
of a full recovery of principal in a default scenario.  The new
ratings are based on preliminary terms and conditions.  At the
same time, Standard & Poor's affirmed its 'B+' long-term corporate
credit rating on Gray.  The outlook remains positive.

As reported in the Troubled Company Reporter on June 6, 2005,
Moody's Investors Service upgraded today all of the long term
ratings of Gray Television, Inc., by one notch.  Additionally,
Moody's assigned Ba1 ratings to Gray's $400 million in new senior
secured credit facilities ($100 million Revolving Credit Facility,
$100 million term loan A facility, $200 million term loan B
facility).  The rating outlook is stable.  Proceeds from the new
senior secured transaction plus cash on hand will be used to repay
the company's $374 million in existing senior secured credit
facilities.


GRAY TELEVISION: Bull Run to Merge into Triple Crown Spin-Off
-------------------------------------------------------------
Gray Television, Inc.'s (NYSE: GTN; GTN.A) and Bull Run
Corporation (OTC: BULL) inked a definitive agreement to merge Bull
Run into Triple Crown Media immediately following the spin-off of
Triple Crown from Gray.  This agreement is subject to certain
closing conditions, including an affirmative vote of Bull Run's
shareholders.

Gray's Newspaper Publishing business consists of five daily
newspapers with total daily circulation of approximately 120,000
and Sunday circulation of approximately 160,000.  Gray's GrayLink
Wireless business is a leading provider of primarily paging and
other wireless services in non-major metropolitan areas in
Alabama, Florida and Georgia, where it also operates 14 retail
locations.  Upon completion of the spin-off, each common
shareholder of Gray will receive as a dividend one share of common
stock of Triple Crown Media for every 10 shares of Gray common
stock and for every 10 shares of Gray class A common stock. No
Gray shareholder vote will be required to effect the spin-off, and
no consideration will be required to be paid by Gray's
shareholders to receive the common stock of Triple Crown Media.
On the date of the spin-off, Triple Crown Media will distribute
$40 million to Gray, which Gray intends to use to reduce its
outstanding indebtedness.

Immediately following the spin-off, it is planned that Bull Run
will be merged with and into a wholly owned subsidiary of Triple
Crown Media.  In the merger, Bull Run common shareholders will
receive 0.0289 shares of Triple Crown Media for each share of Bull
Run common stock held.  In the merger, Bull Run preferred stock
held by non-affiliated holders will be redeemed for its current
redemption value.  Holders of preferred stock and other loans to
Bull Run who are affiliates of Bull Run, including J. Mack
Robinson, the current Chairman and Chief Executive Officer of Gray
and Chairman of the Board of Bull Run, will receive:

   -- shares of Triple Crown Media common stock in exchange for
      shares of Bull Run series F preferred stock and accrued and
      unpaid dividends thereon;

   -- shares of Triple Crown Media series A preferred stock in
      exchange for shares of Bull Run series D and series E
      preferred stocks and accrued and unpaid dividends thereon;
      and

   -- shares of Triple Crown Media series B preferred stock in
      exchange for cash previously advanced to Bull Run.

On a combined basis, after the merger, current shareholders of
Gray will own approximately 95% of the outstanding common stock of
Triple Crown Media and certain holders of Bull Run preferred stock
and current holders of Bull Run common stock will hold the
remaining 5%.  Triple Crown Media has received a long-term
financing commitment from bank lenders that will accommodate the
payment of the distribution to Gray and the refinancing of all of
Bull Run's bank and subordinated indebtedness.

Triple Crown Media will combine Gray's Newspaper Publishing and
Graylink Wireless businesses with Bull Run's sole operating
business, Host Communications, Inc., under the leadership of
Thomas J. Stultz, current Chief Executive Officer of Host, and the
former President of Gray's Newspaper Publishing business.  Over
the past twelve months, on a combined basis, Triple Crown Media
would have had net revenue of approximately $115 million.

"We believe the spin-off is a very intelligent way to separate our
businesses in a tax-efficient manner that allows our broadcasting
and Newspaper Publishing businesses to maximize their strategic
objectives, and by combining with Bull Run, Triple Crown Media
will benefit from the proven leadership of Tom Stultz, and combine
complementary businesses.  In addition, the transactions avoid the
incurrence of significant standalone costs that Triple Crown Media
would need to incur were it spun off in a standalone transaction."
commented Robert S. Prather, Jr., President of Gray Television.
Thomas J. Stultz, President and CEO of Host Communications and
former President of Gray's Newspaper Publishing business, stated,
"I am very excited about the prospects of combining the revenue
from the Newspaper Publishing and Graylink Wireless businesses
with the growth potential we have with Host.  This will be a great
combination of businesses that complement one another and will
serve to accelerate the growth in each of these businesses beyond
what they could achieve independently."

Following the transaction, Thomas J. Stultz will serve as Chief
Executive, President and a director of Triple Crown Media.  During
Mr. Stultz's prior tenure as President of Gray's Newspaper
Publishing business, the business grew from three newspapers with
revenues of approximately $21.9 million in 1995 to five newspapers
with revenues of approximately $44.8 million in 2004.  In his
short tenure at Bull Run, the turnaround of the business has
produced significant growth in net revenues and operating income.
Frederick J. Erickson, current Bull Run Chief Financial Officer,
will serve as CFO of Triple Crown Media.   With respect to the
transactions described:

   -- Banc of America Securities LLC has acted as a financial
      advisor to Gray;

   -- Houlihan Lokey Howard & Zukin Financial Advisors, Inc., has
      acted as a financial advisor to the special committee of the
      Board of Directors of Triple Crown Media, Inc.; and

   -- SunTrust Robinson Humphrey has acted as a financial advisor
      to Bull Run.

                         About Bull Run

Bull Run Corporation, through its sole operating subsidiary, Host
Communications, Inc., is engaged in the Collegiate Marketing and
Production Services business and Association Management Services
business.  The Collegiate Management and Production Services
business provides sports marketing and production services to a
number of collegiate conferences and universities and, through a
contract with CBS Sports, on behalf of the National Collegiate
Athletic Association.  The Association Management Services
business provides various associations with services such as
member communication, recruitment and retention, conference
planning, Internet web site management, marketing and
administration.

                      About Gray Television

Gray Television, Inc., owns 31 television stations serving 27
television markets.  The combined station group has 23 stations
ranked #1 in local news audience and 22 stations ranked #1 in
overall audience within their respective markets and reaches
approximately 5.5% of total U.S. TV households.  In addition, with
16 CBS-affiliated stations, Gray is the largest independent owner
of CBS affiliates in the country.

                         *     *     *

As reported in the Troubled Company Reporter on June 8, 2005,
Standard & Poor's Ratings Services assigned a 'BB-' rating and a
recovery rating of '1' to Gray Television Inc.'s proposed $400
million senior secured bank facility, indicating high expectation
of a full recovery of principal in a default scenario.  The new
ratings are based on preliminary terms and conditions.  At the
same time, Standard & Poor's affirmed its 'B+' long-term corporate
credit rating on Gray.  The outlook remains positive.

As reported in the Troubled Company Reporter on June 6, 2005,
Moody's Investors Service upgraded today all of the long term
ratings of Gray Television, Inc., by one notch.  Additionally,
Moody's assigned Ba1 ratings to Gray's $400 million in new senior
secured credit facilities ($100 million Revolving Credit Facility,
$100 million term loan A facility, $200 million term loan B
facility).  The rating outlook is stable.  Proceeds from the new
senior secured transaction plus cash on hand will be used to repay
the company's $374 million in existing senior secured credit
facilities.


IFT CORP: Posts $887,189 Net Loss in Second Quarter
---------------------------------------------------
IFT Corporation (Amex: IFT) reported operating results for the
second quarter surpassed its expectations and plans to open a
manufacturing facility in Texas.

For the quarter ended June 30, 2005:

   -- IFT's revenue was $5,206,176 as compared to revenue of
      $586,629 in the second quarter of 2004, a 787% increase.

   -- IFT's net loss was $887,189 as compared to a net loss of
      $1,555,501 in the second quarter of 2004, a 43% decrease.

"Our revenue increased considerably in the second quarter as
compared to the same period in 2004, while our gross profit margin
increased from 14% for the first quarter of 2005 to 19% for the
six months ended June 30, 2005," stated Michael T. Adams, CEO of
IFT.  "The net loss for the second quarter was due to $368,364 in
non-cash compensation expense, a portion of which relates
to our early implementation of SFAS No. 123R for Share-Based
Payments and an increase in SG&A resulting from selling and
marketing expenses supporting our significant revenue growth,
opening new sales offices and arranging new distribution channels
for a broader reach of customers," concluded Mr. Adams.

During the second quarter of 2005:

   -- Effective April 1, 2005, Infiniti Products, Inc., a Florida
      corporation, merged with and into LaPolla Industries, Inc.,
      an Arizona corporation, whereupon the separate existence of
      Infiniti Products, Inc. ceased and LaPolla Industries, Inc.
      continued as the surviving corporation.

   -- On June 2, 2005, the Company and the Chairman of the Board
      signed a Promissory Note with a national institution
      granting access to funds in the amount of $2,000,000, which
      may be drawn against from time to time for the operations of
      the Company.  The Note bears interest at a rate equal to 1-
      month LIBOR plus two and one-quarter percent (2.25) per
      annum, and has a maturity date of June 1, 2006.

"After the first full quarter of results with our LaPolla
Industries, Inc. subsidiary, the trends in both market opportunity
and market penetration have met our expectations," commented
Douglas J. Kramer, President and COO of IFT.  "There are many
positive sales and marketing developments underway as a result
of the strong professional team that now makes up LaPolla.  Both
the Commercial and Retail Divisions continue to establish the
LaPolla brands within their respective market place.  Groundwork
is well underway in establishing LaPolla Coatings(TM), Infiniti
Paints and Coatings(TM) and HardScape(TM) as potentially major
product lines in both roofing products and retail market segments
of our business," continued Mr. Kramer.  "The remainder of the
2005 fiscal year will remain strong and the growth will come as
our latest efforts begin to come to fruition. New relationships
are being established from a vendor and customer standpoint, both
of which are critical to our ultimate success.  The internal
infrastructure at LaPolla continues to follow a structured and
definitive path to assure that our growth is well managed and
supported.  Our customers and vendors are continuing to see that
LaPolla's first priority is quality.  Our corporate commitment is
to quality for both products and service.  In keeping with our
growth plans, we are scheduled to open a manufacturing facility in
Texas at the end of the third quarter of this year," concluded Mr.
Kramer.

                     Third-Quarter Outlook

IFT expects third quarter sales to exceed $5.2 Million and gross
profit margin to exceed 19%.

                      Going Concern Doubt

The Company's unaudited condensed consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and liquidation of
liabilities during the normal course of operations, certain
adverse conditions and events cast substantial doubt upon the
validity of this assumption.  Factors contributing to this
substantial doubt include recurring losses from operations and net
working capital deficiencies.  As mentioned in the Financial
Condition, Liquidity and Capital Resources section in the
Company's Form 10-Q for the Quarterly Period Ended June 30, 2005,
the Company assess its liquidity by the ability to generate cash
to fund our operations.  Historically, the Company relied
principally on related party funding from its Chairman over the
past six years and outside investors to meet its working capital
and other corporate needs.

"We are beginning to see substantial improvement in our ability to
generate enough cash from our operations to meet our working
capital requirements," the Company said this week.  "Although our
dependence is decreasing based on our increase in revenues and
profit margins, we still currently depend on support from the
Chairman, the discontinuance of which and the unavailability of
support otherwise, could result in the Company ceasing
operations."

IFT Corporation is a publicly traded holding company focused on
acquiring and developing companies that operate in the coatings,
paints, foams, sealants, and adhesives markets.

LaPolla Industries, Inc., acquired by IFT Corp. for approximately
$2 million in Feb. 2005 using cash borrowed from its chairman,
markets, sells, manufactures and distributes acrylic roof
coatings, roof paints, sealers, roofing adhesives, and
polyurethane foam and wall systems to the home improvement retail
and commercial/industrial construction industries.  LaPolla
generates approximately $8 million in annual revenues.


IMPAX LABS: Expects $800,000 Net Loss for 2004 with New Policy
--------------------------------------------------------------
IMPAX Laboratories, Inc. (NASDAQ:IPXLE) provided additional
information concerning its progress in filing its annual report on
Form 10-K for the year ended December 31, 2004 and its quarterly
reports on Form 10-Q for the three months ended March 31, 2005 and
the three and six months ended June 30, 2005 and estimated results
for these periods.  IMPAX previously disclosed that the
uncertainty with respect to its financial statements for these
periods relates exclusively to the determination of the
appropriate periods in which to recognize revenues from sales of
products covered by its strategic alliance agreement with a
subsidiary of Teva Pharmaceutical Industries Ltd.  The Company
said it has sought the advice of the Office of the Chief
Accountant of the Securities and Exchange Commission in the
expectation that OCA's response will enable the Company to
complete its financial statements and file the two delayed reports
and its second quarter report for 2005.

In March 2005, IMPAX and Teva agreed upon the net sales and margin
amounts allocable to IMPAX from Teva's 2004 sales under the
agreement and further agreed not to make any adjustments to those
amounts.  The Company's request to OCA includes discussion of a
proposed new revenue-recognition policy with respect to these
revenues and several alternatives that the Company has considered.
The Company's independent auditors have advised the Company that
they have not yet concluded whether they agree with the proposed
policy, and it is possible that advice received from OCA or the
Company's auditors will result in adoption of a revenue-
recognition policy different from those the Company has considered
to date.  Whatever policy is ultimately adopted, however, will
have no effect upon the Company's liquidity or cash position.

If the Company were to make no change in its revenue-recognition
policy it would expect to report:

    * revenues of approximately $124.7 million and net income of
      approximately $800,000, for the year ended December 31,
      2004;

    * revenues of approximately $39.6 million and net income of
      approximately $6.1 million, for the three months ended March
      31, 2005;

    * revenues of $38.5 million and net income of $3.9 million,
      for the three months ended June 30, 2005; and

    * revenues of $76.8 million and net income of $10 million, for
      the six months ended June 30, 2005.

Net income for the three- and six-month periods ended June 30,
2005 includes the write-off of approximately $3.8 million of
previously deferred financing costs associated with the Company's
$95 million 1.25% Convertible Senior Subordinated Debentures due
2024, which were repaid on June 27, 2005.

If the Company changes to the revenue-recognition policy proposed
in its request to OCA:

    * the expected year-end results will change to revenues of
      approximately $138.6 million and net income of approximately
      $800,000;

    * the expected first-quarter results will change to revenues
      of approximately $35.6 million and net income of
      approximately $6.1 million;  and

    * the expected second-quarter results will change to revenues
      of approximately $35.6 million and net income of
      approximately $3.9 million.

One of the alternative policies the Company considered and
rejected would defer recognition of all 2004 revenues relating to
products subject to the Teva agreement to the first quarter of
2005.

If the Company were to adopt this alternative it would expect to
report revenues of approximately $83.2 million and net loss of
$23.3 million, for the year ended December 31, 2004 and revenues
of approximately $81.1 million and net income of approximately
$30.3 million, for the three months ended March 31, 2005.

Through the first half of 2005 R & D expenses were approximately
$3 million for the Company's branded products and $9 million for
its generic products.  The Company expects to continue to invest
in research and development and expects to spend an additional $7-
$8 million for branded products and $15-$16 million for its
generic products in the second half of 2005.

Additionally, through the first half of 2005, the Company invested
$7.1 million in capital projects and expects to spend an
additional $12-$14 million during the second half of 2005,
primarily on plant capacity and research laboratory expansion.

The Company also reported that its available cash and investments
at June 30, 2005 was approximately $50 million after repayment of
the $95 million of debentures described above and approximately $7
million in borrowings under its senior bank facilities.

Common shares outstanding totaled 58,959,328 at June 30, 2005 and
there were approximately 62.2 million average shares outstanding
on a fully diluted basis for the three months ended June 30, 2005.

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
generic products through its Global Pharmaceuticals division and
intends to market its 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, California, 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.


IMPSAT FIBER: Subsidiaries Complete $125.6 Mil. Debt Restructuring
------------------------------------------------------------------
IMPSAT, the Argentine subsidiary of IMPSAT Fiber Networks, Inc.
(OTC BB:IMFN), IMPSAT, S.A., and its Brazilian subsidiary, IMPSAT
Comunicacoes Ltda., executed definitive amended and restated
financing agreements to restructure $125.6 million in aggregate
principal outstanding indebtedness of IMPSAT Argentina and IMPSAT
Brazil pursuant to separate credit agreements that are each
guaranteed by IMPSAT.  A special committee of IMPSAT's board of
directors approved the transaction on July 28, 2005.

The special committee is composed solely of independent directors,
and had its own special counsel.  The committee was formed to
evaluate and negotiate the restructuring following the acquisition
of the Indebtedness by Morgan Stanley Senior Funding, Inc., and,
through participation, accounts of WRH Partners Global Securities,
L.P. and/or certain of its affiliates.  The special committee
retained Lehman Brothers Inc. as its exclusive financial advisor,
and received an opinion from Lehman Brothers that the
restructuring transaction is fair to IMPSAT, IMPSAT Argentina and
IMPSAT Brazil.

Under the terms of the agreements, following the restructuring:

   -- an initial paydown of principal on the Indebtedness of
      $18.3 million will be made upon the closing of the
      transaction;

   -- the remaining principal amount of the Indebtedness
      ($38.9 million owed by IMPSAT Argentina and $68.4 million
      owed by IMPSAT Brazil) is scheduled to be repaid in the
      aggregate amounts of $5 million in 2006, $20 million in
      2007, $25 million in 2008 and $57.3 million in 2009;

   -- the outstanding restructured Indebtedness will bear interest
      at an annual rate of 12.0%, payable semi-annually in arrears
      in cash, and the parties have agreed upon amendments to the
      financial covenants to reflect current financial and
      operating conditions;

   -- the outstanding restructured Indebtedness will be callable
      by the Borrowers at a cost of 101% during the first year and
      at par thereafter.  In addition, the Indebtedness is
      refinanceable at par during the first 90 days if IMPSAT and
      the Borrowers are able to obtain financing at better terms.

      The restructured debt will continue to be unconditionally
      guaranteed by IMPSAT and to be secured by security interests
      in the collateral to the same extent as the Indebtedness was
      secured before the restructuring; and,

   -- subject to certain terms and conditions, the Holders and the
      Borrowers each have an option to further amend and restate
      the agreements to provide that IMPSAT will be the primary
      obligor, and each of IMPSAT Argentina and IMPSAT Brazil will
      guarantee the agreement under which it is currently the
      primary obligor with such guarantees to be secured by the
      same collateral as is securing the existing agreements.

"We are pleased to have concluded after 6 months of intensive work
and negotiations this financial restructuring," Ricardo Verdaguer,
President and Chief Executive Officer of IMPSAT, said.  "With this
new capital structure, IMPSAT achieves debt reduction, extension
of amortizations at attractive interest rates, greater flexibility
in its covenants.  We believe the Company is now positioned to
take advantage of opportunities to grow and generate additional
value."

IMPSAT Fiber Networks, Inc. -- http://www.impsat.com/-- is a
leading provider of private telecommunications network and
Internet services in Latin America.  The Company offers integrated
data, voice, data center and Internet solutions, with an emphasis
on broadband transmission, including IP/ATM switching, DWDM, and
non-zero dispersion fiber optics.  It also provides
telecommunications, data center and Internet services through our
networks, which consist of owned fiber optic and wireless links,
teleports, earth stations and leased satellite links.  IMPSAT owns
and operates 15 metropolitan area networks in some of the largest
cities in Latin America, including Buenos Aires, Bogota, Caracas,
Quito, Guayaquil, Rio de Janeiro and Sao Paulo.

                       Going Concern Doubt

Based on its current liquidity position and its history of losses,
the Company has received a going concern qualification in the
report of its independent registered public accounting firm
included in the Annual Report on Form 10-K for the year ended
Dec. 31, 2004.  As previously announced, the Company has
formed a Special Committee of its Board, with Lehman Brothers Inc.
as its exclusive financial advisor, to explore recapitalization
alternatives.  These alternatives may take the form of a
repurchase, refinancing or rescheduling of payment terms of
indebtedness of the Company and/or its operating subsidiaries, a
potential capital infusion, or other types of transactions.  There
can be no assurance, however, that any such transaction will be
successfully negotiated or consummated.


INSIGHT MIDWEST: Moody's Rates $1.125 Billion Term Loan C at Ba3
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to the $1.125
billion term loan C of Insight Midwest Holdings, LLC (Midwest
Holdings).  This term loan replaces Midwest Holding's existing
term loan B of identical size, maturity, and amortization profile,
and Moody's withdrew the Ba3 rating on that security.  The
refinancing reduced pricing on the term loan by 75 basis points
and enhanced flexibility under the bank leverage covenant.

Midwest Holdings is a wholly owned subsidiary of Insight Midwest
LP, which is 50% owned by Insight Communications Company, Inc.
Moody's also upgraded the Insight holding company notes to Caa1
from Caa2 reflecting increased liquidity and the resultant
improved ability to service the notes, which convert to cash pay
in 2006.  The upgrade also incorporates the diminished likelihood
of impairment given the attractive valuation of incumbent cable
assets relative to Insight's debt burden.  Notwithstanding the
improvement, these notes remain the most vulnerable within the
company's capital structure.

Moody's also affirmed Insight's B1 corporate family rating, which
reflects:

   * the company's high leverage (approximately 6.2 times);

   * modest interest coverage (low 2 times range);

   * heightened business risk from increasing competition; and

   * concerns over the likely dissolution of its partnership with
     Comcast Corporation.

Insight's technologically advanced cable plant and well-clustered
assets, expected benefits from continued growth of high speed data
subscribers and from the roll out of new services, and its good
liquidity profile support the ratings.

A summary of today's ratings actions:

Insight Midwest Holdings, LLC:

   * $1.125B Senior Secured Term Loan C due Dec. 2009 -- Ba3
     assigned

   * $1.125B Senior Secured Term Loan B due Dec. 2009 -- Ba3
     withdrawn

   * $425mm Senior Secured Reducing Revolver due June 2009 -- Ba3
     affirmed

   * $425mm Senior Secured Term Loan A due June 2009 -- Ba3
     affirmed

Insight Communications Co., Inc.:

   * Corporate Family Rating -- B1 affirmed

   * 12 1/4% Senior Unsecured Discount Notes due 2011 -- upgrade
     to Caa1 from Caa2

   * Speculative Grade Liquidity -- SGL-2 affirmed

Outlook -- Stable

Insight Midwest, L.P.:

   * 10 1/2% Senior Unsecured Notes due 2010 -- B2 affirmed

   * 9 3/4% Senior Unsecured Notes due 2009 -- B2 affirmed

Insight's ratings continue to reflect significant financial risk,
including high financial leverage of 6.2 times debt-to-EBITDA and
modest EBITDA coverage of total interest in the low 2 times range.
The company also faces intensifying business risk as the direct
broadcast satellite operators and regional Bell operating
companies accelerate their encroachment into Insight's traditional
and ancillary business lines, as well as execution risk related to
the roll-out of telephony.

Furthermore, Comcast has announced its intention to dissolve its
strategic partnership with Insight, which Moody's believes likely
to increase both financial and business risk.  Pro forma for the
separation, Moody's estimates Insight's leverage would climb by
slightly less than one turn.  The separation would also eliminate
the advantages of scale associated with purchasing programming in
conjunction with Comcast, causing Insight's margins to erode.

Insight's ratings benefit, however, from its upgraded network and
well clustered assets, which in Moody's view position it well to
respond to competition from RBOCs and DBS providers.
Notwithstanding some competition-induced loss of pricing power and
margin erosion, Moody's believes the anticipated increased
penetration of new services has the potential to drive incremental
revenue and cash flow growth and improve asset returns over the
long term.  Insight's strong liquidity profile, improved through a
July 2005 amendment that reduced pricing and loosened the leverage
covenant, also supports the ratings.

On July 28, Insight's Board of Directors unanimously approved an
acquisition offer from The Carlyle Group, in conjunction with
Insight co-founders Sidney R. Knafel and Michael S. Willner.  The
transaction does not represent a change in control, does not
trigger refinancing of the debt and would not increase Insight's
leverage.  As such, if consummated, Moody's does not anticipate
any immediate effect on Insight's ratings but will consider the
likely behavior of management under new ownership.

Given Moody's observations of sponsor propensity to increase
leverage, the transaction creates some additional event risk.
Private ownership, however, also eliminates the need to cater to
the equity markets' shorter term view, and Moody's deems Insight's
resultant flexibility to invest in advanced services and manage
its business for the long term a credit positive that somewhat
offsets the higher event risk.

The stable outlook reflects increased comfort with the company's
liquidity profile and ability to remain in compliance with the
leverage covenants in its credit facility and Moody's expects
continued EBITDA growth as Insight drives penetration of advanced
services.  Although Moody's notes the additional cash interest on
the discount notes (which convert to cash pay in the third quarter
of 2006) and still high capital expenditures will consume much of
this EBITDA growth.  Given uncertainty over the timing and
ultimate outcome of the Comcast separation as well as Insight's
strategic direction should the Carlyle transaction occur as
proposed, an upgrade over the next 12 to 18 months is unlikely.
Conversely, a negative trend in operations, the inability to
execute a telephony strategy, or a return to leverage about 7
times debt/EBITDA, could pressure the ratings down.

Moody's considers Insight's debt of over 6 times trailing twelve
months EBITDA to be high, and EBITDA coverage of interest of 2.1
times total interest expense and 2.5 times cash interest expense
remains weak.  Notably, the coverage ratios will begin to converge
when the Insight discount notes convert to cash pay in the third
quarter of 2006.  Insight transitioned to positive free cash flow
from operations in 2004, but free cash flow remains modest at less
than 5% of debt, and this ratio will likely remain low throughout
2005 and into 2006 given high projected capital expenditures to
support Insight's telephony initiative and further penetration of
advanced services (including spending on advanced set top boxes
and preparation for digital simulcast).

Insight benefits, however, from good external liquidity, which
somewhat mitigates the expected increase in financial and business
risk should Comcast sever its partnership with Insight at the end
of 2005 (the dissolution could take 1 to 2 years from the date of
notification).

Moody's notches the Ba3 senior secured ratings on the Midwest
Holdings bank credit facility up from the B1 corporate family
rating because of its senior-most claim in the consolidated
capital structure.  The B2 senior unsecured ratings for the
Midwest senior notes reflect the effective subordination of these
claims to all secured debt, as well as structural subordination
given the absence of upstream guarantees from the operating
subsidiaries (as provided to the bank group).

The Caa1 rating for the Insight Communications, Inc. senior
discount holding company notes reflects the incremental structural
subordination of this debt to all subsidiary obligations and
expectation for it to absorb the majority of losses in a default
scenario.  Furthermore, these lenders can only look to 50% of any
residual equity value coming from Midwest.

Insight Communications is a domestic cable television operator
with ownership interests in entities serving approximately 1.3
million subscribers located in:

   * Ohio,
   * Indiana,
   * Kentucky, and
   * Illinois.

The company maintains its headquarters in New York.


INTERLINE BRANDS: Prices 7,750,000 Common Shares at $19 Per Share
-----------------------------------------------------------------
Interline Brands, Inc. (NYSE: IBI), a national distributor and
direct marketer of maintenance, repair and operations products,
priced the secondary offering of 7,750,000 shares of its common
stock.  The offering price was $19.00 per share, and the
transaction is expected to close on Tuesday, Aug. 9, 2005.  All of
the 7,750,000 shares are being sold by selling stockholders.  The
selling stockholders have also granted the underwriters a 30-day
over-allotment option to purchase an additional 1,162,500 shares.

Neither the company nor management is selling any shares of common
stock.  Accordingly, the company and management will not receive
any proceeds from the secondary offering.

Credit Suisse First Boston LLC and Lehman Brothers Inc. are joint
bookrunning managers, J.P. Morgan Securities Inc. is lead managing
underwriter and Robert W. Baird & Co. Incorporated, William Blair
& Company, L.L.C. and SunTrust Capital Markets, Inc. are co-
managing underwriters for the secondary offering.

A prospectus relating to the secondary offering can be obtained
from Credit Suisse First Boston LLC at 11 Madison Avenue, New
York, New York 10010 or Lehman Brothers Inc. c/o ADP Financial
Services, Integrated Distribution Services, 1155 Long Island
Avenue, Edgewood, NY 11717, Tel: 631-254-7118.

Interline Brands, Inc., is a leading national distributor and
direct marketer with headquarters in Jacksonville, Florida.
Interline provides maintenance, repair and operations products to
approximately 150,000 professional contractors, facilities
maintenance professionals, specialty distributors, and other
customers across North America and Central America.

                         *     *     *

As reported in the Troubled Company Reporter on July 13, 2005,
Standard & Poor's Ratings Services assigned its 'BB' bank loan
rating and '1' recovery rating to Jacksonville, Florida-based
Interline Brands Inc.'s $150 million term loan due 2010, which
replaces Interline's previous $100 million term loan due 2009.

At the same time, Standard & Poor's raised its bank loan rating to
'BB' from 'BB-' and assigned its '1' recovery rating to
Interline's $100 million revolving credit facility due 2008.
Standard & Poor's also affirmed its 'BB-' corporate credit rating
and 'B' senior subordinated debt rating on Interline.  The outlook
is stable.


KB TOYS: Court Extends Solicitation Period to Sept. 1
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
the period during which KB Toys, Inc., and its debtor-affiliates,
have the exclusive right to solicit acceptances of their proposed
Joint Plan of Reorganization.  The Debtors' exclusive solicitation
period now runs through Sept. 1, 2005.

On July 15, 2005, the Court approved the adequacy of the
Disclosure Statement explaining the Joint Plan of Reorganization
proposed by the Debtors and the Official Committee of Unsecured
Creditors.

One of the largest toy retailers in the United States, KB Toys,
Inc. -- http://www.kbtoys.com/-- (which once boasted 1,200
stores) operates about 650 stores under four formats:

            * KB Toys mall stores,
            * KB Toy Works neighborhood stores,
            * KB Toy Outlets and KB Toy Liquidator, and
            * KB Toy Express (in malls during the holiday season).

The company along with its affiliates filed for chapter 11
protection on January 14, 2004 (Bankr. Del. Case No. 04-10120).
The chapter 11 filing resulted in nearly 600 store closures and
4,000 layoffs.  In March 2004, KB Toys sold its KBToys.com
Internet business to an affiliate of D. E. Shaw, which renamed the
company eToys Direct.  Joel A. Waite, Esq., at Young, Conaway,
Stargatt, & Taylor, represents the toy retailer.  When the Debtors
filed for protection from its creditors, they listed consolidated
assets of $507 million and consolidated debts of $461 million.


KCS ENERGY: Earns $20.9 Million of Net Income in Second Quarter
---------------------------------------------------------------
KCS Energy, Inc. (NYSE: KCS) reported financial and operating
results for the three and six months ended June 30, 2005.

"2005 is shaping up to be the best year in the Company's history,"
James W. Christmas, Chairman and Chief Executive Officer, said.
"The outstanding drilling results seen in the first quarter
continued in the second quarter, with a total of 111 wells drilled
in the first six months.  As a result of the continued high
success rates in drilling a record number of wells, production has
increased significantly.  For the quarter, gross production was up
29%, and production, net of delivery obligations under the
production payment sold in 2001, was up 37% compared to last
year's quarter.  This significant increase in production, coupled
with a 19% increase in oil and gas prices, led to record cash flow
before net changes in assets and liabilities of $52.8 million, an
80% increase over last year's quarter.  For the six months ended
June 30, 2005, cash flow before net changes in assets and
liabilities was $99.1 million, a 68% increase over the six months
ended June 30, 2004.  Based on this, the Board of Directors has
approved an 18% increase in our capital budget, exclusive of
acquisitions, to $225 million, which we anticipate can be funded
through internally generated cash flow.  We are also further
increasing our production guidance to an estimated 49-52 BCFE
gross and 45-48 BCFE net, compared to 35 BCFE net last year."

Increased production, coupled with increased commodity prices,
resulted in a 125% increase in income before income taxes for the
three months ended June 30, 2005.  Income tax expense for the
three months ended June 30, 2005 was $13.6 million, compared to
$0.9 million for the three months ended June 30, 2004, when the
Company was recording income taxes at significantly less than the
full statutory rates.  Net income for the three months ended
June 30, 2005 increased 44% to $20.9 million, compared to
$14.5 million, or $0.30 per basic share for the three months ended
June 30, 2004.

Income before income taxes for the six months ended June 30, 2005
increased 75% to $64.4 million. Income tax expense for the six
months ended June 30, 2005 was $24.1 million, compared to $2.9
million for the six months ended June 30, 2005, when the Company
was recording income taxes at significantly less than the full
statutory rates.  Net income for the six months ended June 30,
2005 increased 19% to $40.4 million, or $0.81 per basic share and
$0.80 per diluted share, compared to $33.9 million, or $0.70 per
basic share and $0.69 per diluted share, for the six months ended
June 30, 2004.

                       Hedging Program

The Company's hedging program consists of a series of transactions
designed to limit exposure to downside price movements while
continuing to allow significant participation in increasing
prices.

The Company's current hedge positions are summarized as:


                                                   Average           Average
                              Type Hedge           Amount             Price

    3RD Qtr. 2005             Gas - Swap      53,533 MMBTU/day         $6.94
                              Gas - Collar     5,000 MMBTU/day   $5.50/$7.61
                              Oil - Swap       1,130 BOPD             $43.18

    4TH Qtr. 2005             Gas - Swap      45,217 MMBTU/day         $7.51
                              Gas - Collar     5,000 MMBTU/day   $5.50/$7.61
                              Oil - Swap         996 BOPD             $44.22

    2006                      Gas - Swap      31,726 MMBTU/day         $7.28
                              Gas - Collar     1,233 MMBTU/day   $6.75/$8.25
                              Oil - Swap         332 BOPD             $51.35

    1ST & 2nd Qtrs. 2007      Gas - Swap      12,459 MMBTU/day         $7.78


The Company has also sold "call options" giving the purchaser of
the options the right to buy 10,000 MMBTU per day for each month
during November 2005 through March 2006 at a price of $8.00 per
MMBTU.  The Company received $1.2 million ($.805 per MMBTU) in
consideration of conveying this option.

In addition, the Company will deliver 9.4 MMCFEPD in the remainder
of 2005 and 8.7 MMCFEPD in January 2006 under the production
payment sold in 2001, and amortize the associated deferred revenue
at the weighted average discounted price received in 2001 of
approximately $4.05 per MCFE.

The Company also has agreed to sell 2,000 MMBTU per day of
Michigan natural gas production through March 31, 2006 at a
realized price of $7.24 per MMBTU.

                        *     *     *

As reported in the Troubled Company Reporter on Apr. 7, 2005,
Moody's Investors Service assigned a B3 rating to KCS Energy,
Inc.'s proposed $75 million senior unsecured notes add-on offering
to the company's existing $175 million 7.125% notes due 2012.
Moody's also affirmed the company's B2 senior implied rating and
the speculative grade liquidity rating at SGL-2.
The rating outlook remains stable.

The add-on notes offering will be used to partially fund the
previously announced acquisition of approximately 48 Bcfe of
proved reserves primarily located in the company's North
Louisiana-East Texas core areas for $94.7 million.  The purchase
price on a daily unit of production basis is a record high
$125,826 and $11.84/boe ($1.97/mcfe) on total proved reserves
fully loaded for the roughly $50 million of engineered development
capex on the existing proved undeveloped reserves being acquired.


KIRKER ENTERPRISES: Jones Day Represents Ad Hoc Noteholder Group
----------------------------------------------------------------
Paul D. Leake, Esq., at Jones Day represents an Ad Hoc Group of
Noteholders of Kirker Enterprises.  American International Group,
Inc., and General Electric Co., Inc., are members of that ad hoc
group.  No concrete details are available about the engagement,
any talks between the company and the ad hoc group, or the
company's outstanding debt securities.  The disclosure appeared in
a pleading filed by the law firm this week in another company's
chapter 11 proceeding.

Privately held Kirker Enterprises -- http://www.kirkerent.com/--  
develops and manufactures bulk nail enamel.  Kirker is the largest
manufacturer of nail polish in the United States, producing over
1,000 colors and using more than 25 different formulas to supply
nail enamel to the world's leading cosmetic companies.  Kirker
also reportedly produces after-market automobile coatings.  The
company is based in Patterson, New Jersey.  Kirker has more than
300 employees working at two manufacturing locations in the U.S.
and one in Europe.

A number of professionals at Fidelco Advisory Services, Inc., in
Millburn, N.J., serve as Kirker officers and directors, and
Fidelco was involved in the company's "acquisition . . . and its
subsequent roll ups,"  according to a brochure posted at
http://www.fidelco.com/FidelcoOverview.pdf

Allied Capital Corp. disclosed in its 1995 Annual Report that it
provided buyout financing to Kirker Enterprises, Inc., in May
1995.  "One of the factors that attracted Allied Capital to this
particular small business is the industry's barriers to entry,
which keep competition low," Allied told its investors.  "Over the
past 45 years, Kirker has developed the technological capabilities
required to handle the complexities of the manufacturing process,
and their product innovations have made many of the formulas and
the related manufacturing processes proprietary," Allied Capital
continued.  In that May 1995 transaction, Allied Capital provided
$2.3 million in subordinated debentures, and received warrants to
acquire, at a nominal exercise price, an equity interest in the
company.  Allied Capital valued its equity interest in Kirker at
$2.9 million in its 2003 Annual Report.  Allied Capital reported
the value of that equity interest at $1.1 million at June 30,
2004.  That equity interest does not appear in Allied Capital's
Annual Report for the year ending Dec. 31, 2004.


KMART CORP: Marion Stafford Wants Stay Lifted to Pursue Action
--------------------------------------------------------------
Marion Stafford asks the U.S. Bankruptcy Court for the Northern
District of Illinois to terminate the Plan Injunction or modify
the automatic stay to allow her to pursue a personal injury claim
against Kmart Corporation in the Wayne County Circuit Court, State
of Michigan.

Before the Petition Date, Ms. Stafford sustained injuries caused
by an employee in a Kmart store in Detroit, Michigan.

Ms. Stafford filed a claim in Kmart's Chapter 11 case.

Carl L. Collins, III, Esq., in Detroit, Michigan, relates that, on
June 30, 2004, Ms. Stafford received a letter from Kmart's claim
examiner summarily reducing her claim to less than $50,000.
Ms. Stafford's counsel attempted to negotiate the claim, but was
advised that the offer was not negotiable.  Kmart has unilaterally
attempted to reclassify the claim to a 6.25% payout of an offer of
$19,500 to $1,219.

Mr. Collins asserts that Ms. Stafford should be allowed to pursue
her lawsuit because:

   (i) there is a substantial difference of opinion obviously
       between the parties as to the value of the claim; and

  (ii) Ms. Stafford is willing to agree with the provisions on
       ultimate liquidation of claims but believes that by going
       forward in State Court, there can be an equitable result
       as opposed to one that is being forced on her by Kmart.

Mr. Collins contends that any limitation or restriction on any
award that Ms. Stafford receives in the Circuit Court by virtue of
previous bankruptcy orders are inapplicable as Kmart has, in bad
faith, refused to comply with previous bankruptcy orders mandating
mediation in the event that she makes a request to pursue the
mediated resolution.

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. 99; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


KMART CORP: Settling Employees' 401(k) Lawsuit for $11.5 Million
----------------------------------------------------------------
Kmart Corporation has agreed to pay $11.5 million to settle a
class action lawsuit filed by employees who lost their retirement
savings under the company's 401(k) plans, The Detroit News
reported.

Former officers and directors who were named defendants in the
lawsuit will reimburse workers about $11.5 million, Detroit News
said.  The losses will be covered by a $25 million insurance
policy Kmart maintained for its executives.

More than 50,000 employees lost over $100 million in the aggregate
when Kmart filed for bankruptcy in 2002.

Judge Avern Cohn of the United States District Court for the
Eastern District of Michigan will hold a "fairness" hearing to
consider approval of the settlement.

The employees are expected to recover 5% of their retirement
savings.

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. 99; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


LA PALOMA: Moody's Rates Proposed $370 Million Facilities at Ba3
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to La Paloma
Generating Company, LLC's proposed $370 million First Lien credit
facilities, including its $305 million First Lien term loan due
2012 and its $65 million senior secured working capital facility
due 2010.  Moody's also assigned a B2 rating to La Paloma's
proposed $170 million Second Lien term loan facility due 2013.
La Paloma's rating outlook is stable.

Proceeds from the offering, along with $180 million being
contributed as equity, will be used to finance Complete Energy
Holdings, LLC's acquisition of La Paloma, a four-unit natural gas-
fired generating plant, for $561 million, and to fund various
reserve accounts, ongoing working capital requirements, possible
purchase adjustments, and closing costs associated with the
financing.

The ratings reflect the degree of contracted cash flow from two
separate tolling agreements with Southern California Edison
Company (SCE: Baa1 senior unsecured debt; stable outlook) and
Morgan Stanley Capital Group, Inc. which should provide on average
more than 68% of the expected operating margin through 2012.

MSCG's obligations under the tolling agreement are guaranteed by
Morgan Stanley (Aa3: senior unsecured debt; negative outlook).
The SCE tolling agreement covers La Paloma's units 1 and 2 (470
megawatts (MWs) of capacity) through December 31, 2007.  Under the
MSCG tolling agreement, MSCG is required to pay capacity payments
(regardless of plant availability) for the right to capacity at
one of the four La Paloma units (240 MWs) from September 1, 2005
through December 31, 2012 and the right to capacity at two of the
four LaPaloma units (480 MWs) from January 1, 2008 through
December 31, 2012.

La Paloma is obligated to deliver energy to MSCG on a firm basis,
whether from the tolled units, the uncontracted unit, or third
party purchases.  Both tolling agreements require each toller to
deliver natural gas to the La Paloma units for conversion into
electric energy at a predetermined energy margin.  Operating cash
flows generated from these tolling agreements with SCE and MSCG
are expected to cover required annual interest and principal on La
Paloma's First Lien and Second Lien debt each year over the term
of the financing.

The ratings also consider the attractive market position of the La
Paloma units as a newly built, highly efficient natural gas plant
whose approximately 7,000 Btu/kWh heat rate and access to both
Northern and Southern California grids position the plant well
relative to existing in-state natural gas fired generation.  This
attractive position is particularly true given the relatively
tight regional supply that persists in California, the state's
reliance on imported power, and the ongoing challenges to build
energy infrastructure in the state.  Management intends to leave
one of the four La Paloma units uncontracted in order to help
satisfy its obligations under the three contracted units should
any of these three units be out of service for maintenance, and to
earn incremental merchant margin for La Paloma.  Margins from
merchant energy sales are expected to be a principal source of
cash flow used to retire outstanding indebtedness under the First
Lien term loan through the cash sweep mechanism in the financing
documents.

While cash margins from merchant energy sales are expected to be a
principal driver for debt reduction, Moody's expects the project's
year over year credit metrics to be reasonably predictable.  La
Paloma's adjusted funds from operations to total operating company
funded debt is expected to range from 10% to 12% in most years
under the company's base case, while adjusted FFO to total
operating company funded debt is expected to be around 6% to 7% in
most years based solely on cash flows derived from contracted
capacity and energy sales.

The ratings further reflect the operational improvements that have
been made at La Paloma and at other similar units by Alstom, the
turbine manufacturer.  While the entire Alstom turbine fleet
initially suffered design problems, the fleet's performance,
including the performance at La Paloma, has improved due to a
retrofit program implemented by Alstom to address these
shortfalls.  Performance test results on three of the four La
Paloma units indicate net output consistent with the guarantee
under the EPC contract and heat rate levels close to guaranteed
levels.  While the performance test results of the fourth unit is
not yet available, the results from the other three La Paloma
units, as well as the results from the majority of the Alstom
fleet, which now have a meaningful operating history, suggest that
the historical design problems have been adequately addressed.

The ratings consider the amount of consolidated leverage that will
exist at La Paloma and at its intermediate holding company, CEH/La
Paloma Holding Company, LLC, at closing.  Of the $180 million of
equity being contributed to La Paloma, $100 million of the
proceeds will come from a loan at LPHC.  At closing, including the
LPHC debt of $100 million, the project will have consolidated
funded debt per kw of $538/kw and consolidated debt to total
consolidated capital of 87%.  With required amortization and
mandatory cash sweeps applied to the principal outstanding, the
project's consolidated debt per kw could decline to the $315/ kw
range by 2012 under the company's base case.

Moody's notes that there are several features of the holding
company debt which limits the rights of the holding company
creditors relative to the rights of the First and Second Lien debt
holders.  For one, the holding company debt does not have any
acceleration rights against La Paloma should there be a payment
default at LPHC.  Further, lenders to the holding company will
acknowledge the separateness of LPHC from La Paloma at closing,
and there will be other separateness provisions in place within
the La Paloma/LPHC legal structure, including the appointment of
independent directors at LPHC and La Paloma Acquisition Co, LLC,
the entity which will hold 100% of the La Paloma membership
interests following the closing of the acquisition.  Lastly,
LPAC's Limited Liability Company Agreement will provide the
minority owners, whose investment at closing will be $80 million,
with certain approval and consent rights concerning matters at La
Paloma, including a voluntary bankruptcy filing of La Paloma.

The ratings acknowledge the limited track record and financial
resources of Complete as the indirect controlling owner of La
Paloma.  As a relatively new company, Complete's only other
holding is its minority ownership interest in LSP Energy Limited
Partnership, a 837 MW natural gas-fired project in Batesville,
Mississippi.  Similar to the current arrangement at LSP Energy,
management at Complete intends to provide the full scope of La
Paloma's operation and maintenance, commercial and financial
services through its wholly owned CEP La Paloma Operating Company,
LLC.  CEP Opco intends to subcontract certain aspects of the
commercial operations of La Paloma to Fulcrum Power Services.
While this arrangement should adequately address the day-to-day
operational management of La Paloma, Moody's views the limited
track record and financial resources of Complete as a credit
weakness particularly if an extended operating problem occurred at
any of the four La Paloma units.

The B2 rating on the Second Lien term loan incorporates the
relatively weak collateral position of creditors, given the amount
of First Lien debt that will be encumbered at closing.  In
addition to the $370 million of First Lien credit facilities
established at La Paloma, there will be a $250 million Special
Letter of Credit issued for the benefit of MSCG.  Drawings under
the Special LOC can only occur if there is an event of default by
La Paloma and a termination event under the tolling arrangement
between MSCG and La Paloma, and any drawings under the Special LOC
reimbursement agreement will be secured by a First Lien on the La
Paloma assets pari-passu with the debt under the First Lien credit
facilities.

In light of the amount of total First Lien debt that will be
pledged to creditors at closing relative to an expected collateral
value of around $650 million (as determined by the independent
consultant), little residual value could be available to the
Second Lien holders under a worst case scenario in which the MSCG
toll is terminated and the cost of replacement power has increased
substantially such that the entire amount of the Special LOC is
drawn.

Moody's notes that the likelihood of this scenario is remote and
acknowledges that the amount of the potential First Lien claim
under the Special LOC declines over time as MSCG's payment
obligations under the toll reduce.  Moody's also notes that the
amount of First Lien debt should decline over time as excess cash,
principally generated from merchant energy sales, is applied to
reduce First Lien debt through the cash sweep mechanism in the
financing documents, all of which will help increase the residual
value available to Second Lien holders.  Notwithstanding these
factors, Moody's has widened the notching between the First Lien
debt and the Second Lien debt to reflect the weakened collateral
position of the Second Lien debt.

Under the $305 million First Lien term loan agreement, $265
million will be available for term loans, of which $244 million
will be drawn at closing to fund the La Paloma acquisition with
the remaining $21 million drawn at any time within the first year
from closing to make payments to the lenders for improvements made
by Alstom.  The remaining $40 million consists of a synthetic
letter of credit facility, $30 million of which may only be used
to secure obligations to MSCG under the MSCG toll and the
remaining $10 million of which may be used for working capital
requirements.  Working capital needs will be further satisfied
under the $65 million secured working capital facility.

Both the First Lien and Second Lien debt will benefit from a
fairly tight project finance waterfall structure and both term
loans will have dedicated cash funded debt service reserves equal
to six months of required principal and interest.  Additionally,
50% of any excess cash flow generated, after funding all required
reserve accounts, will be swept for mandatory repayment of First
Lien term loan debt.  The cash sweep can increase to 75% during
periods when the outstanding amount under the First Lien term loan
is in excess of the targeted First Lien term loan amount at each
payment period.  There will be a restricted payments test, which
includes the payment of distributions to its owner, that requires
the debt service coverage ratio of 1.25x for restricted payments
to be made, and a financial covenant requiring the debt service
coverage ratio to be at least 1.20x.  Substantially all of the
assets and equity interests of La Paloma, including all project
agreements and contracts, will be pledged to the creditors as part
of the collateral pool.

La Paloma's rating outlook is stable reflecting the expected
predictability of cash flows generated at La Paloma over the life
of the financing principally from the tolling agreements with SCE
and MSCG.  The stable outlook also incorporates the expectation of
sound operating performance at the four-unit La Paloma plant and
the likelihood of a reasonably healthy merchant energy marketplace
in California.  Limited near-term prospects for a rating upgrade
exist given the amount of leverage at La Paloma, the limited track
record and financial resources of Complete as an owner and
operator, and the project's reliance on a sustainable merchant
energy market for substantial debt retirement.  Conversely, the
rating could be downgraded should there be prolonged operating
problems at the plant, which negatively impacts the receipt of
capacity payments from the tollers and reduces the ability of the
project to generate meaningful additional merchant revenues
causing leverage to remain high.

Located in Kern County, California, La Paloma owns an
approximately 1,000 MW natural gas-fired, combined cycle
generating facility.  Upon satisfaction of all conditions in the
Purchase and Sale Agreement dated as of May 10, 2005, La Paloma
will become a wholly-owned subsidiary of LPAC and an indirect
55.6% subsidiary of LPHC, with the other 44.4% owned by 6 parties
whose contributions range from approximately $2.2 million to $27.1
million.  LPHC will be wholly-owned by Complete, a privately held
operator of electric generation.  Complete is headquartered in
Houston, Texas and is approximately 80% owned by individuals and
approximately 20% owned by Engage Investments, LP.


LB-UBS COMMERCIAL: Credit Enhancement Cues Fitch to Lift Ratings
----------------------------------------------------------------
Fitch Ratings upgrades LB-UBS Commercial Mortgage, series 2000-C3,
commercial mortgage pass-through certificates:

     --$71.8 million class B to 'AAA' from 'AA+';
     --$48.9 million class C to 'AA+' from 'A+';
     --$19.5 million class D to 'AA' from 'A';
     --$13 million class E to 'AA-' from 'A-';
     --$13 million class F to 'A+' from 'BBB';
     --$11.7 million class G to 'A-' from 'BBB-';
     --$20.9 million class H to 'BBB' from 'BB+';
     --$16.3 million class J to 'BBB-' from 'BB';
     --$9.7 million class K to 'BB' from 'BB-'.

In addition, Fitch affirms these classes:

     --$247.4 million class A-1 at 'AAA';
     --$641.2 million class A-2 at 'AAA';
     --Interest-only class X at 'AAA'.

The $10.4 million class L, $11.7 million class M, $3.9 million
class N, and $9.6 million class P certificates are not rated by
Fitch.

Fitch's upgrades are the result increased credit enhancement
levels due to paydown and defeasance since Fitch's last rating
action.

There are currently four loans in special servicing representing
1.82% of the transaction.  The largest loan, Foshay Tower (.83%),
is located in Minneapolis, MN.  The loan transferred to the
special servicer due to a technical default when the borrower
cancelled a letter of credit which secured its obligation to
perform required repairs at the property.  The special servicer is
working with the borrower to correct the technical default.  The
loan remains current and losses are not expected at this time.

Two of the four specially serviced assets are real estate owned.
The special servicer has listed for sale an industrial property in
Troy, MI and received some interest from potential purchasers.
The second REO is a multifamily property located in Newton, NC.
Sale of the property has been suspended to allow occupancy to
stabilize.  Fitch expects losses on both REO properties at
liquidation; however the unrated class P will absorb the losses.

Fitch reviewed the performance of the Cherry Creek (12.74%),
Annapolis Mall (9.35%), Westfield Portfolio (7.19%), and
Sangertown Square Mall (4.25%) loans which have investment grade
credit assessments.  Servicer reported debt service coverage ratio
as of year-end 2004 was 2.49 times(x), 2.11x, 1.84x, and 1.67x
respectively and all loans reported occupancy greater than 95%.


MAC-GRAY CORP: Moody's Rates New $125 Million Unsec. Notes at B1
----------------------------------------------------------------
Moody's Investors Service has assigned a B1 rating to Mac-Gray
Corporation's $125 million of proposed senior unsecured notes and
a B1 corporate family rating.  This is the first time Moody's has
rated the company.  The rating outlook is stable.

The B1 ratings are supported by:

   * the company's fairly stable and recurring cash flow due to
     its strong market position;

   * significant installed laundry equipment base;

   * moderate financial leverage;

   * experienced management team;

   * geographic diversity;

   * long-term contracts with little customer concentration; and

   * high customer retention.

The ratings also reflect the business risks associated with
integrating and improving the profitability of the operations of
the company's $110 million January 2005 acquisition to a level
commensurate with Mac-Gray's legacy operations and the company's
exposure to potentially adverse fluctuations in multi-unit housing
vacancy rates as evidenced by modest revenue and EBITDA declines
during the period from 2000-2003 when vacancy rates increased.  In
addition, the ratings incorporate the company's competitive
pressures and relatively high capital costs, which include
advanced contract payments.

Given the company's fairly stable and recurring cash flow, with
90% of the installed equipment base subject to long-term leases,
the stable outlook assumes the company will maintain a ratio of
debt to EBITDA-less incentive payments at, or below, 4.0x, free
cash flow-to-debt in the mid to high single digits, operating
margins in the high single digits, and minimum EBIT interest
coverage of at least 1.3x.  Failure to maintain these levels due
to weaker than anticipated operating results and/or a significant
cash-financed acquisition, of a similar magnitude to the January
2005 asset acquisitions, could put some negative pressure on the
rating.  Conversely, Moody's would consider a ratings upgrade if
following an improvement in the profitability of the company, debt
to EBITDA-less incentive payments dropped to under 3.5x, free cash
flow-to-debt was 10%, and EBIT interest coverage was 2.0x.

Moody's assigned the B1 rating on the $125 million senior
unsecured notes at the corporate family rating level given that
the notes account for almost 75% of total debt and assumes that
the company will not borrow additional funds from the secured
revolver.  However, should the company draw additional funds from
the secured revolver, Moody's could notch the senior unsecured
notes down one rating level even if the corporate family rating
did not change.  The senior notes will be guaranteed by all but
one of Mac-Gray's subsidiaries, which is not wholly owned, whose
liabilities and assets as well as total revenue and income
contributed are not material.

Moody's believes that, with nearly $165 million in senior secured
and unsecured debt (the company will maintain nearly $40 million
outstanding on it senior secured revolver), tangible asset
coverage of debt is a fairly weak 0.75x, even assuming no haircut
on the value of current assets and PP&E, which will not likely be
the case in a distress scenario.  While asset coverage improves to
approximately 1.3x if you add back the $115 million in intangible
value of contracts from the January 2005 acquisition, Moody's
believes the value of those contracts will be significantly
impaired in an adverse operating environment.  In addition, in a
distress situation, were the company to draw on the senior secured
to the full extent available ($120 million), asset coverage of
debt deteriorates significantly.

Mac-Gray is the second largest supplier of outsourced laundry
services to multi-unit housing and the largest provider to the
college and university market in North America.  In addition to
this core business, which accounts for 83% of total revenues, the
company also engages in leasing and distributing laundry
equipment.  The outsourced laundry services market is highly
fragmented, with Mac-Gray, Coinmach Corporation (B2 corporate
family rating), and Web Service having the second, first, and
third largest market shares, respectively.  The rest of the market
comprises small, private and family-owned operations.  Although
competition is intense, Mac-Gray's size and scale, particularly
following the January 2005 acquisition, together with its well-
established reputation with an experienced management and
geographical diversity give it considerable competitive advantages
and economies of scale.

Moody's believes that Mac-Gray's laundry service fulfills a basic
human need insulating it somewhat from general economic cycles.
About 90% of the company's installed equipment base is located on
premises subject to long-term leases for which the company
experienced renewal rates approximating 97%, in terms of existing
machines retained, over the past 5 calendar years.  Revenues are
thus highly predictable and stable, even in a difficult economic
environment.  Although declines in occupancy rates may result in
lower revenues, Moody's believes Mac-Gray's broad geographic
diversity and low customer concentration can mitigate weakness in
any given geographic region.

Over the next several years, given the need to maintain the
existing machine base and to acquire new locations, Mac-Gray's
capital reinvestment needs are high, and it is assumed they will
not exceed $30-40 million per year.  About $25-35 million of capex
is for machine maintenance, replacement and growth, and roughly
$4-6 million is capitalized for advance location payments, which
Moody's views as an operating expense and subtracts from EBITDA.
The company, however, has considerable flexibility with regards to
the level and timing of its capital spending.  For several years,
Mac-Gray's maintenance capital expenditure has been consistently
at or above equipment depreciation.  Working capital needs are
minimal since a significant portion of operating expense is paid
after cash is collected from machines.

Following the January 2005 asset acquisition, Moody's expects Mac-
Gray's business strategy will focus on the continued integration
of those assets in order to improve their profitability given high
G&A and corporate overhead expenses that reduced those operation's
EBIT margins to under 2% in 2004.  In addition, Moody's believes
that given the mature nature of the low-growth laundry service
market, the company will increase revenue and cash flow through
adding new customers in existing regions and improving the net
contribution per machine through operating efficiencies and
selective price increases.  The rating assumes that potential
acquisitions are likely to be small and selective.

Moody's has also assigned a speculative grade liquidity rating of
SGL-2 to Mac-Gray.  The SGL-2 rating reflects the company's "good"
liquidity position based on expectations of positive free cash
flow in FY2005, the company's reasonable cash balance, moderate
working capital requirements, approximately $37 million
outstanding on its $120 million revolver, whose total availability
is expected to be limited by a maximum senior leverage ratio of
4.25 times (the leverage ratio will be 3.54x immediately following
the senior unsecured notes transaction), and reasonable
flexibility afforded under its financial covenants.  The rating is
hampered by limited alternative liquidity sources and the
reduction in financial flexibility associated with the January
2005 acquisition.

The proceeds from the senior unsecured notes will be used to
refinance $121 million of the existing senior credit facilities
and pay fees and expenses.

Mac-Gray, headquartered in Cambridge, Massachusetts, is a national
provider of laundry management services to multi-unit housing and
US college and university markets.  The company also sells a
patented line of appliances for the limited-space living
environment and operates a laundry equipment distribution
business.  LTM 2Q 2005, the company reported revenues of $254.2
million pro forma as if the January 2005 acquisition occurred on
January 1, 2004.


MAC-GRAY: S&P Rates Proposed $125 Million Senior Notes at B+
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' corporate
credit rating to laundry equipment services provider Mac-Gray
Corp.

At the same time, Standard & Poor's assigned its 'B+' rating to
the company's proposed $125 million senior unsecured notes due
2015, reflecting its junior position within the company's capital
structure.  The outlook is stable. Pro forma for the transaction,
the Cambridge, Massachusetts-based company will have approximately
$170 million of debt outstanding.

Net proceeds from the note offering will be used to repay the
company's existing $76 million term loan and about half of its
borrowings under its (unrated) revolving credit facility, as well
as pay related fees and expenses.

"The ratings on Mac-Gray reflect its moderately high leverage,
relatively narrow business focus, and its small sales and earnings
base," said Standard & Poor's credit analyst Jean Stout.  "These
factors are partly offset by its position as a leading supplier of
debit card and coin-operated laundry equipment services in the
highly fragmented and regional U.S. laundry market, and its
relatively stable and predictable cash flow stream," added Ms.
Stout.


MALCOM BOHANON: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Malcom S. Bohanon
        aka Stan Bohanon
        228 Woburn
        Williamsburg, Virginia 23188

Bankruptcy Case No.: 05-52012

Type of Business: The Debtor has interests in Eagle Holdings LLC;
                  MPX, Inc., and Express Postal & Printing Inc.

Chapter 11 Petition Date: August 2, 2005

Court: Eastern District of Virginia (Newport News)

Debtor's Counsel: Barry W. Spear, Esq.
                  Law Office of Barry W. Spear
                  729 Thimble Shoals Boulevard, Suite 3-C
                  McCale Professional Park
                  Newport News, Virginia 23606
                  Tel: (757) 591-2742

Total Assets: $928,394

Total Debts:  $1,097,280

Debtor's 20 Largest Unsecured Creditors:

   Entity                     Nature of Claim       Claim Amount
   ------                     ---------------       ------------
Old Point National Bank       Guaranty for Eagle        $100,000
1 West Mellen Street          Holding, LLC Note
Hampton, VA 23663

Crystal Tinsley                                          $45,000
428 Fleming Street
Wylie, TX 75098

Wells Fargo Financial         Trade Debt for             $40,000
Leasing                       Eagle Holdings LLC
P.O. Box 6434
Carol Stream, IL 60197

SunTrust                      2004 Toyota 4 Runner       $37,000
                              Value of security:
                              $30,000

McLaws Properties             Lease Guaranty             $30,000

GMAC Finance                  2004 GMC Envoy             $28,000
                              Value of security:
                              $23,000

Old Point National Bank       Trade debt for             $25,000
                              Express Postal &
                              Printing

Capital One Auto Finance      2003 Chevrolet             $14,800
                              Astro Van
                              Value of security:
                              $10,000

Citizens & Farmers Bank       Guaranty                    $8,900

Providian                     Credit Card                 $5,806

Direct Merchants Bank         Credit Card                 $4,146

Dell                          Credit Card                 $2,905

First National Bank Omaha     Credit Card                 $2,510

Capital One                   Credit Card                 $2,218

Capital One                   Credit Card                 $1,653

Lowes                         Credit Card                 $1,545

Capital One                   Credit Card                 $1,284

Sentara HealthCare            Medical Bill                $1,188

Capital One                   Credit Card                 $1,016

Household Bank                Credit Card                   $910


MEDIA GENERAL: Improved Finances Prompt S&P's Positive Watch
------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit and senior unsecured debt ratings on newspaper and
television broadcasting company Media General Inc. on CreditWatch
with positive implications.

"The CreditWatch listing reflects the company's improving
financial profile as it has focused on using its cash flow after
capital expenditures and dividends for debt reduction over the
past several years," said Standard & Poor's credit analyst Donald
Wong.  The Richmond, Virginia-headquartered company is expected to
seek acquisitions in its core Southeast region.  However, the
timing and magnitude of such transactions are uncertain.

Standard & Poor's will review its ratings on Media General after
evaluating whether the company will be able to maintain a
financial profile consistent for a higher rating despite the
prospects for debt-financed acquisitions.  If Standard & Poor's
raises the ratings, it would be to 'BBB-'.


MERIDIAN AUTOMOTIVE: Can Purchase Insurance from Liberty Mutual
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
Meridian Automotive Systems, Inc., and its debtor-affiliates
authority to purchase some of their workers compensation and
employers liability, automobile liability and general liability
insurance pursuant to insurance programs provided by Liberty
Mutual Group and its subsidiaries effective, nunc pro tunc, to
July 1, 2005.

The Debtors require insurance coverage to be able to continue
operating substantial portions of their business and avoid
potential violation of their credit agreements.

Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Delaware, relates that Liberty Mutual has
been providing certain insurance coverage to the Debtors for the
past four years under certain insurance programs.  Mr. Kosmowski
informs the Court that Liberty Mutual currently provides
insurance coverage to the Debtors for certain workers
compensation and employers liability, automobile liability and
general liability pursuant to an insurance program that is set to
expire on July 1, 2005.

With respect to the Current Issue Program, the Debtors and
Liberty Mutual have agreed on a short term renewal to and
including July 19, 2005, pursuant to which the Debtors will make
payments of premiums, assessments and surcharges of approximately
$160,000 to Liberty Mutual on or before July 1, 2005.

The parties also have reached an agreement regarding the terms
and conditions with respect to the purchase of workers
compensation and employers liability, automobile liability and
general liability insurance coverage, which would begin July 19,
2005, and continue through and including July 1, 2006.

Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers.  Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers.  The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176).  James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts.  When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 215/945-7000).


MERIDIAN AUTOMOTIVE: Gets Court Nod to Employ PwC as Accountants
----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on May 18,
2005, Meridian Automotive Systems, Inc., and its debtor-affiliates
seek authority from the U.S. Bankruptcy Court for the District of
Delaware to employ PwC, nunc pro tunc, to April 26, 2005, to
provide accounting and auditing services.

PwC will perform audit services for the Debtors including the
audit of the Debtors' consolidated financial statements at
December 31, 2004, and for the years then ending.  If requested,
PwC will also:

   (a) perform audits of the Debtors' Employee Benefits Plans for
       the years ending 2002 and 2003; and

   (b) provide other accounting, auditing, tax and other services
       as needed.

                            *   *   *

Judge Walrath approves Debtors' application on these conditions:

   (1) PricewaterhouseCoopers LLC's services to the Debtors will
       be limited to:

       (a) auditing the Debtors' consolidated financial
           statements at December 31, 2004, and for the years
           then ending;

       (b) auditing the Debtors' Employee Benefit Plans for years
           ending 2002 and 2003;

       (c) preparing expatriate tax returns for the Debtors'
           employees;

       (d) reviewing the Debtors' corporate tax returns;

       (e) tax structuring consultation, which will not involve
           the preparation of forms and software that are related
           to the Debtors' discrete vendor supply arrangements;
           and

       (f) other Court-approved services;

   (2) PwC will credit $31,576 to the Debtors, provided that the
       firm will no longer receive any payments from the Debtors
       on account of its allowed postpetition fees and expenses
       until the time as the Credit is exhausted;

   (3) at the earlier of (x) the conclusion of the firm's
       engagement or (y) the closing of the Debtors' cases to the
       extent that the firm's allowed fees and expenses do not
       equal or exceed the Credit, the firm will pay the Credit,
       less its allowed fees and expenses, to the Debtors; and

   (4) PwC waives all of its claims against the Debtors.

Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers.  Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers.  The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176).  James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts.  When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 215/945-7000).


METROMEDIA FIBER: Dist. Ct. Agrees County Franchise Fee Improper
----------------------------------------------------------------
The Honorable Colleen McMahon of the U.S. District Court for the
Southern District of New York agrees with a U.S. Bankruptcy Court
for the Southern District of New York's decision to disallow a
claim filed by Montgomery County, Maryland.  The Honorable Adlai
S. Hardin ruled that the County's unpaid franchise fee imposed on
Metromedia Fiber Network, Inc., violated the Federal
Telecommunications Act of 1996.

           Nature of the Montgomery County Dispute

Montgomery County is a home-rule county with a charter form of
government.  County Commissioners have "power to make all such
rules and regulations with reference to the use of the roads,
street, avenues, lanes, alleys and bridges of the county by
telephone . . . companies."

On June 22, 1999, through a franchise agreement, Metromedia gained
access to the public right-of-way in Montgomery County to
construct, install, operate and maintain fiber optic network
facilities.  Under the agreement, Metromedia was required to make
twice a year payments equivalent to 5% of its gross revenue to
Montgomery County.

The Franchise Agreement expired on June 28, 2001.  Since then,
Metromedia ceased to make any fees but continued to locate its
facilities in the County's right-of-way.  As a result, the County
prevented the Debtor from carrying out normal system operations
and business.  Also, the County refused to issue permits needed to
relocate part of Metromedia's network.  Montgomery also denied
Metromedia's application for a permit to construct additional
facilities in order to expand its customer base.

                     Franchise Fee Dispute

Metromedia argued that the statutes' local franchise requirements,
including the franchise fee, impeded the Company's ability to
provide telecommunication services.  As a whole, Metromedia didn't
challenge the County ordinance but rather claimed that the
ordinance must be interpreted in a way consistent with the Federal
Telecommunications Act to the extent that it is applied to
telecommunication services providers.

Metromedia pointed out that the incumbent local exchange provider,
Verizon-Maryland Inc., is exempted from any franchise application
process including the 5% franchise fee imposed by the County on
all providers of telecommunications services.

                  The Bankruptcy Court's Decision

                     2nd or 4th Circuit Law?

Montgomery County argued to the District Court that the Bankruptcy
Court's interpretation of the dispute should have been based on
the Fourth Circuit Court of Appeals' opinion rather than the
Second Circuit's because Montgomery County is located in the
Fourth Circuit.

The Second Circuit's opinion states that "whether the fees are
competitively neutral should be determined based on future costs
of providing services, not sunk costs incurred in the past,
because that is the playing field on which the competition will
take place."

Judge McMahon said that the County's argument was wrong as a
matter of law.  The Southern District of New York is in the Second
Circuit.  This means that the Second Circuit decision become the
law of the circuit and are binding upon all inferior courts.  She
emphasized that other circuits' opinions are not binding on the
Second Circuit.

                   FTA Section 253 Violation

The Bankruptcy Court reminded Montgomery County that the FTA was
enacted by Congress to end the longstanding regime of state-
sanctioned monopolies.  The FTA fundamentally restructured the
local telephone markets.  Under Section 253, all state and local
regulations that prohibit or have the effect of prohibiting any
company's ability to provide telecommunications services are
preempted.

Judge Adlai ruled that the County violated Section 253 by refusing
to allow Metromedia access and use of its telecommunications
facilities in Montgomery County.  Also, the Court viewed the
exemption given to Verizon-Maryland from paying the required
franchise fee as an unfair practice.

Judge McMahon says that Judge Adlai's interpretation of Section
253 and its applicability to the 5% Franchise Fee based on the
Second Circuit's opinion is correct and proper.

Metromedia Fiber Network, Inc., and most of its domestic
subsidiaries commenced voluntary Chapter 11 cases (Bankr. S.D.N.Y.
Case No. 02-22736) on May 20, 2002.  When Metrodmedia filed for
protection form its creditors, it listed $7,024,208,000 in total
assets and $4,262,000,000 in total debts.  Metromedia Fiber
emerged from chapter 11 on Sept. 8, 2003, and changed its name to
AboveNet Inc.


MCI INC: Will Release 2005 2nd Quarter Results on August 9
----------------------------------------------------------
MCI, Inc. (NASDAQ: MCIP) will announce its second quarter 2005
financial results before market open on Tuesday, August 9, 2005.
The Company will host a conference call that day at 8:30 a.m. EDT
to discuss its results.  A live webcast of the conference call
will be available at http://www.mci.com/investor

An archive of the presentation will be available for replay for 30
days.

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. 96; 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.


MILLENNIUM AMERICA: Moody's Rates $250 Million Facility at Ba2
--------------------------------------------------------------
Moody's Investors Service assigned Ba2 ratings to the $250 million
guaranteed secured bank facility of Millennium America Inc.
Millennium Inorganic Chemicals Ltd. will be a co-borrower under
the facility.  Both Millennium America Inc. and MICL are wholly
owned subsidiaries of Millennium Chemicals Inc.  Millennium is a
wholly owned subsidiary of Lyondell Chemical Company.

Additionally, Moody's affirmed all existing ratings for
Millennium, Lyondell and Equistar Chemicals, LP and noted that the
outlook for Lyondell and Equistar remains positive.  The rating
actions are summarized below:

Ratings assigned:

   -- Millennium America Inc. and Millennium Inorganic
      Chemicals Ltd.

   -- US$125 million guaranteed secured revolving credit facility
      (US Tranche) - Ba2

   -- US$25 million guaranteed secured revolving credit facility
      (Australian Tranche) - Ba2

   -- US$100 million guaranteed secured term loan (Australian Term
      Facility) - Ba2

Ratings affirmed:

Lyondell Chemical Company:

   -- Corporate family rating - B1
   -- Senior secured notes and debentures - B1
   -- Senior subordinated notes due 2009 - B3
   -- Liquidity rating - SGL-1

Millennium Chemicals Inc.:

   -- Senior unsecured convertible debt - B1.

Millennium Americas Inc.:

   -- Guaranteed senior secured credit facility - Ba2*
   -- Guaranteed senior unsecured notes and debenture - B1.

Equistar Chemicals, LP:

   -- Senior unsecured notes and debentures - B2

* rating will be withdrawn upon closing of the new credit
  facility

The Ba2 ratings on the credit facility of Millennium America Inc.
are two notches above Lyondell's B1 corporate family rating
reflecting:

   * strong collateral coverage;

   * elevated cash balances at Millennium;

   * the anticipation of improving financial performance from
     Millennium's wholly owned operations and a continuing stream
     of cash dividends from Equistar over the next 12-18 months;
     and

   * the benefit of a restrictive payments clauses in both this
     facility and Millennium America Inc.'s notes due in 2008.

The $125 million US Tranche is secured by a lien on domestic
accounts receivable and inventory, which should provide more than
adequate coverage, even on a distressed basis.  In addition, this
facility has a lien on 65% of the capital stock of Millennium's
international subsidiaries and a first priority lien on dividends
from Equistar.  Furthermore, this tranche is guaranteed by
Millennium, and Millennium US Op Co. LLC, the primary operating
subsidiary of Millennium America.

The US$25 million Australian Tranche and US$100 million Australian
Term Facility are secured by substantially all of Millennium's
tangible and intangible assets in Australia.  While the book value
of the operating assets is not sufficient to fully cover the
facility, Moody's believes that these operating assets have
significant value due to their relatively stable (on a US dollar
basis) earnings stream ($50-60 million EBITDA per year).

Moreover, the Australian Tranche and Term Facility will be
guaranteed by all material Australian subsidiaries, the Australian
parent of MICL, Millennium, Millennium America and Millennium US
OP Co, LLC.  Additionally, in the event of a default or
bankruptcy, there are reciprocal agreements among the lenders that
will cause each lender to hold a ratable interest in each tranche
of the facility.

The new credit facility does allow up to $150 million of dividends
to Lyondell providing Millennium meets certain financial tests,
including but not limited to, the US tranche remaining undrawn at
the time the dividend is paid.  While these tests do not ensure
that Millennium will continue to maintain an elevated cash
balance, the restricted payments clause in the 2008 notes ($475
million 9.25% guaranteed senior unsecured notes due 2008) should
prevent cash balances from falling precipitously prior to
repayment of the notes maturing in 2006.  Moody's also noted that
as a result of this new facility, combined with additional
dividends from Equistar, Millennium could have over $500 million
of cash by the end of the third quarter (assuming modest
repurchases of existing debt).

The stable outlook reflects Moody's belief that Millennium's
credit profile will continue to improve due to the cyclical
recovery in its commodity chemical operations and a continuing
stream of dividends from Equistar over the next 12-18 months.
Additionally, the repayment of roughly $500 million of debt by the
fourth quarter of 2006 will significantly improve the company's
credit profile.  However, Millennium also has another $475 million
debt maturity in 2008 that will require refinancing unless there
is an extended peak in the current commodity chemicals cycle.  The
2008 notes are important because they are the only public notes to
contain a restricted payments clause.  Once these notes are
repaid, Moody's will no longer be able to maintain a higher rating
for Millennium.

As of June 30, 2005, Millennium's credit metrics have improved
significantly with its total debt to EBITDA ratio, including
dividends from Equistar, at 2.9 times (4.7 times excluding the
Equistar dividend) and an EBITDA to interest coverage ratio of
4.75 times (2.8 times excluding Equistar dividends).  These ratios
are modestly different from the bank covenant calculations, since
they are based on report financials and do not exclude certain
non-cash expenses.  When applying Moody's Standard Financial
Adjustments, which include the capitalization of pension
liabilities and operating leases, Millennium's debt rises to $1.8
billion, total debt to EBITDA is slightly higher at 3.0 times and
EBITDA to interest is slightly lower at 4.2 times.

The affirmation of Lyondell's and Equistar's ratings reflects
their improving financial profile and continuing repayment of
debt.  By the end of August, Lyondell's consolidated debt will
have declined by over $1 billion in the past 12 months.  The
positive outlook reflects Moody's anticipation that Lyondell's
(propylene oxide and related products) and Millennium businesses
will continue to expand operating margins (excluding extraordinary
items) and that Equistar's EBITDA will not decline from the second
quarter levels until the later half of 2006.

If Equistar's margins improve significantly in the third and into
the fourth quarter, Moody's would likely place Lyondell's ratings
under review for upgrade due to the potential for additional debt
reduction.  If Equistar's EBITDA falls significantly below $250
million and margins in Lyondell's other businesses decline,
Moody's could return to a stable outlook.  Lyondell's ability to
generate free cash flow over the next several years is crucial to
its ratings, as the consolidated company (including Equistar and
Millennium) has roughly $4.5 billion of debt maturing over the
next 4 years.  Given Moody's conservative projections for the
current ethylene cycle, Lyondell could be required to refinance a
majority of this debt prior to the next downturn.  Hence, it would
be difficult for Moody's to raise the company's ratings more than
one notch without a clear resolution to this issue.

Lyondell's liquidity rating at SGL-1 reflects its elevated cash
balance, dividend streams from Equistar and LCR, and the improving
financial performance in its inorganic chemicals and propylene
oxide and related products segments, which should cover all fixed
costs and allow for $700-800 million of debt reduction in 2005.
The SGL-1 also reflects the significant amount of availability
under Lyondell's $475 million credit agreement, which is undrawn,
and roughly $400 million of availability, as of June 30, 2005,
roughly $425 million of availability under Equistar's $700 million
asset-backed credit facilities and roughly $100 million under
Millennium's new facilities.

Additionally, the SGL-1 reflects the substantial room under the
covenants in Lyondell's and Millennium's facilities and the
absence of covenants in Equistar's credit facilities.  The SGL-1
rating also reflects Lyondell's access to an upsized $150 million
accounts receivable program with roughly $75 million of
availability.

Headquartered in Houston, Texas, Lyondell Chemical Company
manufactures:

   * propylene oxide,
   * MTBE and toluene di-isocyanate, and
   * co-product styrene.

Both Equistar Chemicals LP and Millennium Chemicals Inc. are
wholly owned subsidiaries of Lyondell.  Lyondell also participated
in a refinery joint venture with CITGO Petroleum Corporation -
Lyondell-CITGO Refining Company Ltd.  Equistar is a leading North
American producer of commodity petrochemicals and plastics.
Millennium Chemicals is among the largest global producers of
titanium dioxide pigments and acetyls.  Lyondell-CITGO Refining
Company (58.75% owned by Lyondell) is a refiner that has the
unique ability to process 100% heavy sour crude oil from
Venezuela.  These combined entities reported revenues of nearly
$24 billion for the LTM dated June 30, 2005.


MIRANT CORP: Asks Court for Summary Judgment on Pokalsky's Claims
-----------------------------------------------------------------
Mirant Corporation, Mirant Services, LLC, and Mirant Americas
Energy Marketing, LP, asked the Court for a summary judgment on
Joseph T. Pokalsky's claims.

On May 3, 1996, Mr. Pokalsky entered into an Employment Agreement
with Southern Electric International, Inc.  Pursuant to the
Employment Agreement, Mr. Pokalsky was to be employed for three
years and was to receive:

    (i) a $200,000 annual base salary,

   (ii) guaranteed bonus payments of $200,000 per year on May 1 of
        1997, 1998 and 1999, and

  (iii) other bonus payments governed by the Southern Energy
        Marketing Executive Incentive Pay Plan.

Among the bonuses provided to Mr. Pokalsky by the Incentive Plan
was a Phantom Equity Grant.  This PE Grant was tied to certain
percentage increases in the Fair Market Value of Southern Energy
Trading and Marketing and vested as to Mr. Pokalsky:

    (i) 25% at the end of 1997,
   (ii) 25% at the end of 1998,
  (iii) 25% at the end of 1999, and
   (iv) 25% at the end of 2000.

                    Resignation or Termination?

In February 1998, Mr. Pokalsky was informed by two Mirant
executives that he was being removed from his current position.
The possibility of Mr. Pokalsky assuming a new position within
Mirant to develop an international energy trading business was
discussed.

The parties dispute whether the result of this meeting was a
resignation by Mr. Pokalsky or a termination (without cause) by
Mirant.  Mr. Pokalsky alleges that he was terminated because no
formal offer was ever made.  On the other hand, Mirant alleges
that Mr. Pokalsky simply refused to consider a reassignment and
thus made a unilateral decision to resign.

On April 20, 1998, Mirant forwarded a letter to Mr. Pokalsky
indicating that it accepted his resignation and would provide Mr.
Pokalsky with $545,000 as severance pay.

According to Mirant, Mr. Pokalsky was paid greater than $545,000:

    (i) the $200,000 payments guaranteed for both May 1, 1998, and
        May 1, 1999,

   (ii) a $160,000 bonus for 1997,

  (iii) $66,000 in prorated salary, and

   (iv) $10,000 in unused vacation pay.

Mr. Pokalsky claims that right after he was informed of his
removal, he was escorted off Mirant's premises by security
personnel without being given an opportunity to retrieve certain
personal belongings from his office.  Mr. Pokalsky later asked
Mirant to return his belongings, but Mirant said it could not
locate certain of the materials Mr. Pokalsky requested.  Mirant
offered to compensate Mr. Pokalsky for the lost items.  Mr.
Pokalsky did not respond to this proposal.

                   Employment at Energy Imperium

While Mr. Pokalsky was employed by Mirant, Mirant retained Energy
Imperium to produce a customized energy trading software system
for use in Mirant's business.  Mr. Pokalsky executed the
agreement on Mirant's behalf.  Donald Jefferis served as a
consultant to Mirant and was then hired, inter alia, to implement
the software system constructed by EI.  Shortly after Mr.
Pokalsky's employment with Mirant concluded, he was employed by
EI.

Mr. Pokalsky alleges that he was promised ownership of a
percentage of the equity in EI upon becoming an employee.  On
July 17, 1998, representatives of Mirant and EI held a meeting to
discuss the working relationship between the companies.  Among
the representatives present were Mr. Jefferis, Mr. Pokalsky and
Ricardo Medina, President of EI.  At the meeting, Mirant informed
EI that it would require a representative of EI to work full-time
on site at Mirant for EI to fulfill its obligations under their
agreement.  EI disagreed that this was necessary, and, shortly
after the meeting began, the EI representatives terminated
discussions and left the premises.

Mr. Jefferis later sent a letter to Mr. Medina informing him of
Mirant's position that EI had materially breached the agreement
between the parties and further directed Mr. Medina to vacate
Mirant's premises and return all keys and electronic access
cards.

In the letter, Mr. Jefferis stated that "Joe Pokalsky stated [at
the meeting] that you would not provide the services during the
hours and at the location set forth in the Memorandum" and that
Mr. Pokalsky's assertions at the meeting concerning the intent of
the parties at the time of execution of the agreement, being at
that time employed by Mirant, "raises some issues regarding his
interest in and duties to you and us at the time that he executed
the referenced agreement."

At the time Mr. Pokalsky became employed by EI, EI was in
negotiations with Altra Energy Technologies, Inc., for Altra's
acquisition of EI.  Following termination of the contractual
relationship between Mirant and EI, Altra acquired EI, but at a
purchase price of approximately half of what it had proposed
prior to the dispute between Mirant and EI.  The number of Altra
shares distributed to the owners of EI was also significantly
reduced from the number originally proposed.

                          Georgia Action

Mr. Pokalsky filed a complaint in Georgia state court on
April 14, 2000, seeking recovery for, inter alia:

    (i) breach of contract based on Mirant's failure to make
        payments to Mr. Pokalsky on account of his PE Grant,

   (ii) injuries suffered as a result of defamatory statements
        made by Mr. Jefferis, and

  (iii) conversion of the personal belongings not returned by
        Mirant to Mr. Pokalsky following his departure from the
        company.

Mirant answered the Complaint and subsequently moved for summary
judgment, which was granted in part and denied in part by order
of the state court dated March 21, 2003.

                       Mr. Pokalsky's Claims

On November 24, 2003, Mr. Pokalsky filed three separate proofs of
claim seeking $10,000,000 to $15,000,000 in damages based on the
causes of action asserted in the Complaint.  The Debtors objected
to the claims.

                          Court's Opinion

The Court must determine whether summary judgment may be granted
to dispose of Mr. Pokalsky's claims.

According to Judge Lynn, summary judgment is proper when no
genuine issue of material fact exists and the moving party is
entitled to judgment as a matter of law.

A. Breach of Contract

Judge Lynn notes that Mirant and Mr. Pokalsky differ as to the
nature of Mr. Pokalsky's termination.  "The record contains
sufficient evidence to support either view and a genuine issue of
material fact thus exists, the resolution of which is necessary
before the court can reach the initial conclusion as to which
section of the Employment Agreement Mirant may or may not have
breached."

Even if the court were able to determine conclusively which
section of the Employment Agreement applies to this dispute,
Judge Lynn says, summary judgment would still not be appropriate.

"In viewing the record in a light most favorable to Mr. Pokalsky,
the court concludes that Mr. Pokalsky has succeeded in putting
forth evidence demonstrating that a genuine issue of material
fact exists as to whether his PE Grant had a positive value at
the time of his separation from Mirant.  Accordingly, the Motion,
as to Mr. Pokalsky's breach of contract claim, must be denied."

B. Defamation

Because Mr. Pokalsky was domiciled in Georgia at the time of the
alleged defamation and because the alleged defamation occurred in
Georgia, Judge Lynn applies Georgia law to Mr. Pokalsky's claim.
Mr. Pokalsky's defamation claim is based on two categories of
communication from Mr. Jefferis:

    -- statements made by Mr. Jefferis in his July 17, 1998 letter
       to Mr. Medina; and

    -- oral statements allegedly made by Mr. Jefferis to
       individuals in the business community.

Mr. Pokalsky's claim that Mr. Jefferis' July 17, 1998 letter to
Medina was defamatory is based on two passages in that letter:

      "At our meeting this morning, Friday, July 17, 1998, we
      perceived that each party fully understood the parameters,
      requirements and timing of the activities under the work
      plan for the last six (6) months of calendar 1998. However,
      Joe Pokalsky stated that you would not provide the services
      during the hours and at the location set forth in the
      Memorandum accompanying Scott Hobby's June 29, 1998
      letter to John Fry.

      "In response to our assertion that such refusal was a breach
      of the referenced agreement . . . Joe Pokalsky responded
      that regardless of the wording of the referenced agreement,
      the intent of that agreement was that we did not have the
      right to direct you as to where and when your services
      would be performed under that agreement. He bolstered
      his argument by asserting that he was the officer of
      Southern Energy Trading and Marketing, Inc. that executed
      the referenced agreement on behalf of that company. . . .
      Some minutes earlier to that assertion [sic], Joe Pokalsky
      also indicated that he is principal [sic] in Energy Imperium
      and accordingly, his later assertion raises some issues
      regarding his interest in and duties to you and us at the
      time that he executed the referenced agreement."

Judge Lynn contends that the first passage is no more than a
statement reflecting Mr. Jefferis' interpretation of Mr.
Pokalsky's comments at the July 17, 1998 meeting.  The second
passage contains no direct attack on Mr. Pokalsky's honesty or
morality and does not assert that he is guilty of any crime.  The
Court concludes that the use of innuendo would be necessary to
find such a meaning in Mr. Jefferis' words.  The Court also
concludes that Mr. Jefferis' statement that "some issues"
regarding Mr. Pokalsky's interests and duties were raised by Mr.
Pokalsky advocating an interpretation of an agreement (which he
executed on behalf of Mirant) inconsistent with Mirant's reading
of the agreement at the time of the meeting is not, on its face,
a statement which would tend to damage Mr. Pokalsky in his
business.

Therefore, because Mr. Pokalsky has failed to present any
evidence which would allow the Court to conclude, without resort
to strained construction or the use of innuendo, that Mr.
Jefferis' statements fit the definition of libel per se under
Georgia law, summary judgment in favor of Mirant is warranted on
this theory of defamation.

Mr. Pokalsky claims that he suffered monetary injury from Mr.
Jefferis' statements in connection with Altra's purchase of EI.
Mr. Pokalsky alleges that he was granted a percentage of the
equity interest in EI when he began employment with EI and that
he was to be compensated for this at the time Altra purchased EI.
Mr. Pokalsky also alleges that he was entitled to receive a cash
payment, in addition to compensation for his equity interest in
EI, upon Altra's purchase of EI.  Mr. Pokalsky contends that Mr.
Jefferis' statements:

    (i) delayed the closing of Altra's purchase of EI,

   (ii) resulted in Altra purchasing EI at a significantly reduced
        price than it had previously offered,

  (iii) strained Mr. Pokalsky's business relationship with EI, and

   (iv) ultimately caused Mr. Pokalsky to receive a number of
        shares in Altra that was one third less than what he was
        entitled to receive based on his equity interest in EI and
        caused the cancellation of the cash payment due to him at
        the Altra closing.

The Court does not believe Mr. Jefferis' statements caused these
things to happen.

"Rather, the record demonstrates that the delay and reduction in
purchase price were due to Mirant's termination of the agreement
with EI.  [Mr.] Jefferis' statements were simply an explanation
of Mirant's position that EI had materially breached the
agreement and why Mirant believed it was entitled to pursue the
course of action it chose."

The Court finds it implausible to assume that if Mirant and EI
had been able to resolve their differences and continue their
working relationship following Mr. Jefferis' letter, that the
purchase price paid by Altra for EI would have dropped in the
manner it did.  Rather, any delay in the Altra closing and the
reduced purchase price were a direct result of EI losing, in Mr.
Pokalsky's words in his deposition, Mirant as a "primary
customer".

Judge Lynn likewise concludes that Mr. Pokalsky has shown no
evidence indicating that any strain between Mr. Pokalsky and EI
following Mr. Jefferis' letter and any decision by EI to reduce
Mr. Pokalsky's compensation at the Altra closing could be
attributed to Mr. Jefferis' statements.

"Again, [Mr.] Jefferis' statements reflect his interpretation of
[Mr.] Pokalsky's statements at the meeting, as a representative
of EI, and why those statements justified Mirant's termination of
its relationship with EI.  If, as Mr. Pokalsky stated in his
deposition, Mr. Medina informed Mr. Pokalsky that Mr. Pokalsky
should bear responsibility for the collapse of the relationship
between Mirant and EI and thus reduced the compensation Mr.
Pokalsky should have received at the Altra closing, and Mr.
Pokalsky believes this was unjust and violated some agreement
between Mr. Pokalsky and EI, then any fault that exists lies with
EI, not Mirant."

In the absence of evidence of special damages, Judge Lynn finds
that no genuine issue of material fact exists on Mr. Pokalsky's
defamation claim on a theory of libel per quod, and summary
judgment in favor of Mirant is appropriate.

The Court further concludes that summary judgment in favor of
Mirant on Mr. Pokalsky's defamation claim is appropriate because
Jefferis' written statements are exempt from prosecution under
Georgia law.  The Georgia Code provides that communications
privileged and immune from attack as libel include "[s]tatements
made with a good faith intent on the part of the speaker to
protect his or her interest in a matter in which it is
concerned."  According to Judge Lynn, Mr. Pokalsky has failed to
present evidence demonstrating that Mr. Jefferis' statements in
the July 17, 1998 letter do not fall squarely within this
privilege.  "Even viewing the record in a light most favorable to
Mr. Pokalsky, the court can only conclude that the statements
were made to protect Mirant's interests in its dealings with EI
by explaining Mirant's reasons for declaring EI in default and
terminating the agreement."

C. Conversion

In order to make out a prima facie case for conversion under
Georgia law, Mr. Pokalsky must show that:

    (i) he has title or a right of possession to the property at
        issue,

   (ii) Mirant has actual possession of the property,

  (iii) he demanded that Mirant return the property to him, and

   (iv) Mirant has refused to return the property.

Judge Lynn notes that Mr. Pokalsky has failed to present the
Court with any evidence to support the second and fourth elements
of his conversion claim.

"The evidence demonstrates that Mirant did not refuse to return
any materials to Mr. Pokalsky, but rather returned what it could
locate and made a reasonable effort to compensate Mr. Pokalsky
for that which it could not.  Thus, no genuine issue of material
fact exists as to Mr. Pokalsky's claim for conversion and the
Motion must be granted."

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. 71; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


MIRANT CORP: Court Approves Settlement Agreement with Citibank
--------------------------------------------------------------
On October 22, 2001, a participation agreement was entered into
among a group of lenders, consisting of:

    1. MC Equipment Revolver Statutory Trust;

    2. Mirant Americas Development Capital, LLC;

    3. State Street Bank and Trust Company of Connecticut, N.A.,
       as Trustee; and

    4. certain Note Holders and Certificate Holders, and their
       agent, Citibank, N.A.

Pursuant to the Participation Agreement, MADC arranged for a
financing for the acquisition of certain electric power
generation equipment.  Mirant Corporation guaranteed MADC's
obligation.

On February 15, 2002, Alstom Power Inc. and MC Equipment entered
into two agreements for the purchase and installation of steam
turbine generation equipment for Mirant's facilities located in
North Carolina and Georgia.

Notwithstanding the entry into the Equipment Agreements, on
October 16, 2003, MADC notified Alstom that it did not intend to
accept delivery of the equipment.

MC Equipment asserted:

    * Claim No. 6471 against MADC for claims arising under the
      Participation Agreement for $214,221,482; and

    * Claim No. 6473 against Mirant for claims arising under the
      Guaranty for $214,221,482.

As previously reported, Alstom asked the Court for relief from
the automatic stay to terminate the Equipment Agreements and to
dispose of the Equipment.

Mirant, MADC, and Alstom subsequently entered into a stipulation
modifying the automatic stay.  The parties agreed to allow the
members of the Lender Group to enter into a termination and
settlement agreement that terminates the Equipment Agreements and
provides for mutual releases of the parties.

But MC Equipment and its Trustee, U.S. Bank, N.A., were unwilling
to enter into the Termination and Settlement Agreement with
Alstom.  MC Equipment and U.S. Bank want MADC and Mirant to waive
certain defenses relating to whether MC Equipment and U.S. Bank
took commercially reasonable steps to mitigate any claims against
MADC and Mirant in connection with the financing transaction.

                  Alstom's Arbitration Proceeding

In April 2005, Alstom commenced an arbitration proceeding against
MC Equipment seeking a determination that:

    (1) the Equipment Agreements were repudiated and abandoned by
        MC Equipment;

    (2) Alstom may dispose of the Equipment for its own account;
        and

    (3) Alstom is entitled to recover certain costs.

Michelle C. Campbell, Esq., at White & Case LLP, in Miami,
Florida, recounts that subsequent to the commencement of the
arbitration proceeding, Citibank approached MADC indicating that
MC Equipment and U.S. Bank could not enter into the Termination
and Settlement Agreement because MADC had preserved its rights to
assert the mitigation defenses against MC Equipment and U.S.
Bank.  Citibank argues that entry by MC Equipment and U.S. Bank
into the Termination and Settlement Agreement would waive any
defenses that they had to assert against the mitigation defenses.

MC Equipment and U.S. Bank maintain that they could assert claims
against MADC and Mirant pursuant to the Participation Agreement
for any damages that they may incur resulting from the
arbitration proceeding, Ms. Campbell notes.

While they dispute the validity of the claims, MADC and Mirant
have determined that:

    * the mitigation defenses offer little to no value; and

    * any of the value is outweighed by the potential
      indemnification claims for costs and damages that may be
      asserted by MC Equipment and U.S. Bank against MADC
      and Mirant arising from the arbitration proceeding.

Citibank contends that it took steps to mitigate the claims of MC
Equipment and U.S. Bank against MADC and Mirant.  These steps,
Citibank alleges, included utilizing PA Consulting to approach
various power brokers, power companies and other potential
purchasers regarding the acquisition of the Equipment.  PA
Consulting also approached various members of the Lender Group,
utilizing their internal and external contacts to determine
whether any other parties had any interest in acquiring the
Equipment.

Based on Citibank's representations and to avoid the incurrence
of any claims arising from the arbitration proceeding, MADC and
Mirant agree to enter into a Settlement Agreement with:

    a. MC Equipment and U.S. Bank, as the successor-in-
       interest to State Street Bank and Trust Company; and

    b. Citibank, N.A., as agent for certain Note Holders and
       Certificate Holders under the Participation Agreement.

The pertinent provisions of the Settlement Agreement are:

    a. Citibank's representations are expressly incorporated into
       the Settlement Agreement;

    b. MC Equipment and U.S. Bank will enter into the Termination
       and Settlement Agreement provided that it is on terms
       acceptable to the parties, including Alstom's agreement to
       withdraw the arbitration proceeding with prejudice;

    c. MADC and Mirant will be deemed to have waived the
       mitigation defenses immediately on the execution of the
       Termination and Settlement Agreement by MC Equipment and
       U.S. Bank; and

    d. In exchange for the waiver of the mitigation defenses, MC
       Equipment and U.S. Bank will be deemed to have waived any
       claims that each may possess against MADC and Mirant
       resulting from costs or damages incurred by MC Equipment
       and U.S. Bank, arising from the arbitration proceeding.

Judge Lynn approves the parties' 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. 71; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


MORGAN'S FOODS: Equity Deficit Narrows to $3.3 Million in May 2005
------------------------------------------------------------------
Morgan's Foods, Inc., reported its financial results for the
quarterly period ended May 22, 2005.

Revenues for the quarter ended May 22, 2005, were $20,760,000
compared to $18,343,000 for the quarter ended May 23, 2004.  This
increase of $2,417,000 was primarily due to a 15.6% increase in
comparable restaurant revenues, which was partially offset by
$285,000 in revenues lost due to the closing of three restaurants.
The increase in comparable restaurant revenues was primarily the
result of effective product promotions by the franchisors during
the quarter including the $.99 KFC snacker sandwich.

Food, paper and beverage costs for the first quarter increased as
a percentage of revenue from 30.4% in fiscal 2005 to 30.9% in
fiscal 2006.  This increase was primarily the result of the
$.99 KFC snacker sandwich having relatively high food costs which
was partially offset by efficiencies generated from higher average
restaurant volumes.

Labor and benefits decreased as a percentage of revenue for the
quarter ended May 22, 2005 to 25.7% compared to 29.9% for the year
earlier quarter.  The decrease was primarily due to efficiencies
resulting from higher average restaurant volumes and decreased
health care costs of $296,000.

Restaurant operating expenses decreased as a percentage of revenue
to 24.6% in the first quarter of fiscal 2006 compared to 26.1% in
the first quarter of fiscal 2005.  This decrease was primarily due
to efficiencies resulting from higher average restaurant volumes
as well as reduced general insurance costs of $73,000 which were
partially offset by increased bonus expense of $201,000 resulting
from the Company's substantially improved performance.

Depreciation and amortization was relatively unchanged at $750,000
and $783,000 for the first quarters of 2006 and 2005,
respectively.

                General and Administrative Expenses

General and administrative expenses decreased from $1,273,000 in
the first quarter of fiscal 2005 to $1,151,000 for the first
quarter of fiscal 2006 primarily as a result of three senior
officers of the Company reducing their salaries and other benefits
to near zero while the remainder of the Company's executive team
and some of its management took pay cuts during the fourth quarter
of fiscal 2005 which continued into the first quarter of fiscal
2006.

                    Gain on Restaurant Assets

The Company experienced a gain on restaurant assets of $255,000
for the first quarter of fiscal 2006 compared to a loss of
$270,000 for the first quarter of fiscal 2005.  The 2006 amount is
primarily due to the receipt of $261,000 of property damage and
business interruption insurance proceeds.  These insurance
proceeds relate to three restaurants damaged from the Hurricane
Ivan storm system.  Insurance proceeds which will result in a gain
are recognized in the financial statements only when such gains
are realized, which is generally upon receipt of the proceeds.
The 2005 amount includes impairment losses of $266,000 on three
restaurants to reduce their carrying values to their estimated
fair values.

                        Operating Income

Operating income in the first quarter of fiscal 2006 increased to
$2,234,000 or 10.8% of revenues compared to $183,000 or 1.0% of
revenues for the first quarter of fiscal 2005. Operating income
increased primarily due to efficiencies resulting from higher
average restaurant volumes, decreased health care costs and the
receipt of $261,000 in property insurance proceeds.

Interest expense on bank debt decreased to $995,000 in the first
quarter of fiscal 2006 from $1,036,000 in the first quarter of
fiscal 2005 due to lower debt balances during the fiscal 2006
quarter.  Interest expense on capitalized leases was substantially
unchanged from the prior year first quarter.

Other income was substantially unchanged at $29,000 in the first
quarter of fiscal 2006 and $17,000 in the first quarter of fiscal
2005.

The provision for income taxes for the first quarter of fiscal
2006 and 2005 was zero due to the Company's net loss in the first
quarter of fiscal 2005 and its operating loss carryforwards which
will be used to offset the Company's fiscal 2006 net income, if
achieved.

                Liquidity and Capital Resources

Cash flow activity for the first quarters of fiscal 2006 and
fiscal 2005 is presented in the Consolidated Statements of Cash
Flows.  Cash provided by operating activities was $2,530,000 for
the quarter ended May 22, 2005 and $67,000 for the quarter ended
May 23, 2004.  The increase in cash provided by operating
activities was primarily due the Company's increased profitability
during the first quarter of fiscal 2006.  The Company paid bank
and capitalized lease debt of $433,000 in the first quarter of
fiscal 2006 and had Capital expenditures of $465,000 primarily as
a result of expenditures required to repair one fire-damaged
restaurant the majority of which either has or will be recovered
through property insurance.

The Company's debt arrangements require the maintenance of a
consolidated fixed charge coverage ratio of 1.2 to 1 regarding all
of the Company's mortgage loans and the maintenance of individual
restaurant fixed charge coverage ratios of between 1.2 and 1.5 to
1 on certain of the Company's mortgage loans.

The consolidated and individual coverage ratios are computed
quarterly, based upon financial results for the preceding twelve
months.  At the end of fiscal 2005 and the first quarter of fiscal
2006, the Company was not in compliance with the consolidated
ratio or with individual restaurant ratios relating to a
substantial portion of its debt.  As of the year ended Feb. 27,
2005, and the first quarter of fiscal 2006, waivers of the fixed
charge coverage ratio violations were not obtained from the
lenders.  Due to noncompliance with the fixed charge coverage
ratios and as required by Emerging Issues Task Force No. 86-30,
the Company has classified all of its debt as current as of
Feb. 27, 2005 and May 22, 2005.  The Company has initiated an
operational and financial restructuring process which management
believes, but cannot assure, will allow the Company to satisfy the
lenders without a forced repayment of the debt prior to its
scheduled maturities.

A full text copy of the Quarterly Report is available for free at:

               http://ResearchArchives.com/t/s?9f

Morgan's Foods, Inc., operates, through wholly owned subsidiaries,
KFC restaurants under franchises from KFC Corporation and Taco
Bell restaurants under franchises from Taco Bell Corporation.  As
of June 24, 2005, the Company operates 73 KFC restaurants, 7 Taco
Bell restaurants, 14 KFC/Taco Bell "2n1's" under franchises from
KFC Corporation and franchises or licenses from Taco Bell
Corporation, 3 Taco Bell/Pizza Hut Express "2n1's" operated under
franchisees from Taco Bell Corporation and licenses from Pizza Hut
Corporation, 1 KFC/Pizza Hut Express "2n1" operated under a
franchise from KFC Corporation and a license from Pizza Hut
Corporation and 1 KFC/A&W "2n1" operated under a franchise from
KFC Corporation and a license from A&W Restaurants, Inc.  The
Company's fiscal year is a 52 & 53-week year ending on the Sunday
nearest the last day of February.

At May 22, 2005, Morgan's Foods' equity deficit narrowed to
$3,317,000 from a $4,574,000 deficit at Feb. 27, 2005.

                      Going Concern Doubt

Deloitte & Touche, LLP, expressed substantial doubt about Morgan's
Foods, Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the year ended
Feb. 27, 2005.  The auditing firm points to the Company's
recurring losses, shareholders' capital deficiency and non-
compliance with its debt agreements.

Morgan's Foods' reduced debt payment schedule and covenant
violations could result in the exercise of certain remedies
available to the lender which may include calling of the debt,
acceleration of payments or foreclosure on the Company's assets
which secure the debt.  The Company's other lenders have similar
remedies available to them based on covenant violations and the
cross default provisions of those debt agreements.  The lenders
have not initiated any of these remedies and management believes,
but cannot assure, that these actions will not be taken prior to
the Company completing the financial restructuring described
above.  However, the recurring losses from operations and
shareholders' deficiency that the Company has sustained result in
significant uncertainty as to the Company's ability to complete
the financial restructuring if the lenders initiate these
remedies.  Consequently, there is substantial doubt that the
Company will be able to continue as a going concern and therefore,
if applicable, the Company may be unable to realize its assets and
discharge its liabilities in the normal course of business.


NATIONAL BEDDING: Moody's Reviews $300 Million Debts' Ba3 Rating
----------------------------------------------------------------
Moody's Investors Service placed the debt ratings of National
Bedding Company (d/b/a Serta Mattress Company) under review for
possible downgrade following the announcement that a definitive
agreement for the sale of the company has been signed.

Ratings under review for possible downgrade include:

   * $75 million secured revolving credit facility at Ba3;

   * $75 million secured term loan A at Ba3;

   * $150 million secured term loan B at Ba3; and

   * corporate family rating (formerly known as the senior implied
     rating) at Ba3.

On August 2, 2005, Ares Management LLC and Teachers' Private
Capital announced that they had signed a definitive agreement to
buy National Bedding.  Terms of the transaction were not
disclosed.

The review reflects the risk of a material increase in the
financial leverage of the company following the acquisition by two
private equity firms.  As of December 31, 2004, National Bedding's
adjusted leverage was 4x.  Leverage is adjusted for the
capitalization of operating leases as described in Moody's Global
Standard Adjustments.

Moody's review will evaluate the strategic and financial plans of
the new owners, including the standing of the existing debt in the
new capital structure, and the company's recent operating
performance.  Moody's will withdraw its ratings on National
Bedding's existing debt if the company's financing plans result in
repayment.

National Bedding Company, based in Hoffman Estates, Illinois, is a
major manufacturer of mattresses under the Serta brand name.  Net
sales in 2004 approximated $600 million.


ON TOP: Wants to Hire Cox Stein as Lead Bankruptcy Counsel
----------------------------------------------------------
On Top Communications, LLC and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Maryland for permission to
employ Cox, Stein & Pettigrew Co., L.P.A., as their general
bankruptcy counsel.

The Debtors remind the Court that they have a pending request to
employ Thomas S. Lackey, Esq., as their local counsel.  Cox Stein
says it will exert every effort to avoid duplication of services
with Mr. Lackey.

Cox Stein will:

   a) advise the Debtors with respect to their powers and duties
      as debtors and debtor-in-possessions in the continued
      operation of their businesses and management of their
      properties;

   b) assist the Debtors in formulating a plan of reorganization
      and an accompanying disclosure statement and obtaining
      approval of that disclosure statement and confirmation of
      that plan;

   c) prepare and file on behalf of the Debtors of all necessary
      applications, motions, orders, reports, adversary
      proceedings and other pleadings and documents required in
      their chapter 11 cases;

   d) appear in Bankruptcy Court and protect the interests of the
      Debtors before that Court; and

   e) perform all other legal services for the Debtors that are
      necessary in their chapter 11 cases.

Grady L. Pettigrew, Jr., Esq., a Member of Cox Stein, is one of
the lead attorneys for the Debtors.  Mr. Pettigrew disclosed that
his Firm received a $5,000 retainer.  Mr. Pettigrew charges $275
per hour for his services.

Mr. Pettigrew reports Cox Stein professionals bill:

      Designation           Hourly Rate
      -----------           -----------
      Counsel               $120 - $275
      Paraprofessionals      $80 - $110

Cox Stein assures the Court that it does not represent any
interest materially adverse to the Debtors or their estates.

Headquartered in Lanham, Maryland, On Top Communications, LLC, and
its affiliates acquire, own and operate FM radio stations located
in the Southeastern United States.  The Company and its debtor-
affiliates filed for chapter 11 protection on July 29, 2005
(Bankr. D. Md. Case No. 05-27037).  When the Debtors filed for
protection from their creditors, they estimated assets and debts
of $10 million to $50 million.


ORGANIZED LIVING: Wants Plan Filing Period Stretched to Dec. 30
---------------------------------------------------------------
Organized Living, Inc., asks the U.S. Bankruptcy Court for the
Southern District of Ohio to extend until December 30, 2005, the
time within which it has the exclusive right to file a plan of
reorganization and disclosure statement.  The Debtor also wants
the Court to extend its exclusive period to solicit plan
acceptances through February 28, 2006.

The Debtor says that it has been unable to develop a
reorganization plan because it has spent substantial time
preparing for and conducting an orderly liquidation of its assets.
The Debtor began chain-wide store closing sales on June 18, 2005.

The Debtor explains that, with a reduced workforce, it can't
prepare and file a cohesive, organized plan of liquidation before
the current exclusivity period expires on September 1, 2005.  The
Debtor believes that it will make significant progress in the
administration of the estate and submit a liquidating plan of
reorganization by December 30, 2005.

Headquartered in Westerville, Ohio, Organized Living, Inc., --
http://www.organizedliving.com/-- is an innovative retailer of
storage and organization products for the home and office with
stores throughout the U.S.  The Company filed for chapter 11
protection on May 4, 2005 (Bankr. S.D. Ohio Case No. 05-57620).
Tim Robinson, Esq., at Squire Sanders & Dempsey represents the
Debtor in its restructuring efforts.  When the Debtor filed for
protection from its creditors, it estimated assets and debts of
$10 million to $50 million.


OWENS CORNING: Earns $67 Million of Net Income in Second Quarter
----------------------------------------------------------------
Owens Corning (OTC: OWENQ) reported financial results for the
second quarter ending June 30, 2005.

For the second quarter, the company posted net sales of
$1.590 billion, an increase of 10.3%, compared to net sales of
$1.441 billion for the same period last year.  For the first six
months of 2005, sales totaled $2.992 billion, a 12.9% increase
from the year prior.

During the first half of the year, strong demand for many of the
company's products continued, particularly in insulation and
roofing markets.  The increase in sales reflects a favorable
pricing environment for many products, and higher sales volumes
in both its building materials and composite solutions business
segments. Increased volumes resulted from continued strength in
the United States housing and remodeling markets, an improving
global economy, and strong demand for the company's residential
roofing products in the Southeastern United States, created in
part by the Florida hurricanes of 2004.

"Second quarter sales were the highest of any quarter in our
company's history," said Dave Brown, president and chief
executive officer.  "Strong sales and improved pricing helped to
offset energy, material and product delivery-related cost
pressures. Our continued focus on operational improvement and
domestic and global expansion positions us well for the remainder
of the year."

"Our commitment to safety also continued to yield measurable
results in the second quarter with a reduced number of recordable
injuries to our employees," said Mr. Brown.

During the second quarter, the company reported income from
operations of $169 million and net income of $67 million, or
$1.13 per diluted share, compared to income from operations of
$93 million and net income of $33 million, or $0.55 per diluted
share, for the second quarter the year prior.

The company's cash position continues to be strong, ending the
second quarter with a cash balance of $1.048 billion, compared to
$874 million for the same period in 2004.

In connection with the company's Chapter 11 process, on
March 31, 2005, a federal district court issued a ruling
estimating the total liability against Owens Corning for personal
injury or death caused by exposure to asbestos to be $7 billion.
As a result of the court's estimation, the company increased its
recorded reserves for asbestos-related liability in the first
quarter of 2005 by an aggregate $4.342 billion.  The non-cash
charge of $4.342 billion in the first quarter resulted in a year-
to-date loss from operations of $4.112 billion.  During the same
period in 2004, the company recorded income from operations of
$128 million.

When communicating to its Board of Directors and employees
regarding the operating performance of the company, management
excludes certain items, including items related to the company's
Chapter 11 proceedings, asbestos liabilities and restructuring
activities.  In the second quarter of 2005, such items were a net
credit of $17 million, compared to $28 million in charges during
the same period in 2004.  For the first six months of 2005, such
items were $4.342 billion for the non-cash asbestos charge from
the first quarter and additional net charges of $19 million,
compared to a net charge of $33 million for the same period in
2004.  Excluding these items, the company's income from
operations for the second quarter 2005 increased 25% over the
same period last year, and 55% for the for the first half of 2005
compared to 2004.

The company recognizes that excluding these items is not
necessarily a more meaningful measure of performance than is
operating income (loss) reported on a GAAP basis.  In addition,
such presentation is not necessarily indicative of the results
that the company would have achieved if the company was not
subject to Chapter 11 proceedings.

A full-text copy of Owens Corning's Form 10-Q report is available
for free at the Securities and Exchange Commission at:

               http://ResearchArchives.com/t/s?ad

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. 113;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


PC LANDING: Can Continue Using Cash Collateral Until September 30
-----------------------------------------------------------------
The U.S. Bankruptcy for the District of Delaware gave PC Landing
Corp. and its debtor-affiliates, permission to:

   a) continue using Cash Collateral securing repayment of pre-
      petition obligations to Deutsche Bank AG, New York Branch,
      CIBC Inc., and Goldman Sachs Credit Partners L.P.; and

   b) grant adequate protection to the Bank Group for continued
      use of the Cash Collateral.

Under a Credit Agreement dated July 30, 1998, the Debtors' owe
approximately $716 million to the Bank Group.

The Debtors need access to Cash Collateral securing repayment of
that loan to fund the continued operation and uninterrupted
service of their PC-1 fiber optic cable systems -- their main
business operations -- and to administer their chapter 11 cases.

The Debtors' use of the Cash Collateral will be governed by the
terms of a consensual Court-approved Third Amended and Restated
Cash Collateral Stipulation with the Bank Group.

The Court granted the Debtors permission to use the Cash
Collateral for a two-month period, from July 31, 2005, through
September 30, 2005 in strict compliance with this Budget:

                                         Aug.  2005   Sept. 2005
                                         ----------   ----------
     Total Cash OA&M Expense             $1,725,434     $905,334
     Total G&A Expense - Cash            $1,000,348     $914,348
     Total Restructuring Expenses           $70,000      $90,000
     Contingency Expenses                  $139,789      $95,484
     Expenses for Bank Professionals &
        U.S. Trustee Fees                      -            -
                                         ----------   ----------
     Total Expenses                      $2,935,571   $2,005,166

To adequately protect their interests, the Bank Group is granted
Post-Petition Liens and an Administrative Priority Claim in
substantially all of the Debtors' assets coming into existence
after the bankruptcy Petition Date, to the extent of any Cash
Collateral diminution.

Headquartered in Dallas, Texas, PC Landing Corporation and its
debtor-affiliates, own and operate one of only two major trans-
Pacific fiber optic cable systems with available capacity linking
Japan and the United States.  The Debtor filed for chapter 11
protection on July 19, 2002 (Bankr. Del. Case No. 02-12086).
Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones &
Weintraub, P.C., represents the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they estimated assets of over $10 million and estimated
debts of more than $100 million.


PC LANDING: Creditors Must File Proofs of Claim by Aug. 15
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware set Aug.
15, 2005, as the deadline for all creditors owed money by PC
Landing Corporation and its debtor-affiliates, on account of
claims arising prior to July 19, 2002, to file formal written
proofs of claim.

Creditors must deliver their claim forms to:

         Clerk of the Court
         U.S. Bankruptcy Court for the District of Delaware
         824 North Market Street, 3rd Floor
         Wilmington, Delaware 19801

Headquartered in Dallas, Texas, PC Landing Corporation and its
debtor-affiliates, own and operate one of only two major trans-
Pacific fiber optic cable systems with available capacity linking
Japan and the United States.  The Debtor filed for chapter 11
protection on July 19, 2002 (Bankr. Del. Case No. 02-12086).
Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones &
Weintraub, P.C., represents the Debtors in their restructuring
efforts.  When the Debtors filed for protection from their
creditors, they estimated assets of more than $100 million.


PROXIM CORP: Asks Court to Allow Limited Liquidation of Collateral
------------------------------------------------------------------
Proxim Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to lift the
automatic stay so that Silicon Valley Bank can liquidate two
certificates of deposit and withdraw funds from a deposit account.
The Debtors want SVB to liquidate the collateral to repay or
reduce its obligations to the bank.

The Debtors' obligation arises from standby letters of credit SVB
extended to Winthrop Resources Corporation and ACP 2800 Corporate
Park Drive LLC in 2003 and an Accounts Receivable Financing
Agreement with Proxim Corporation.  These obligations are secured
by first priority security interests on two certificates of
deposit and funds deposited in a blocked account.

Under the credit agreements, the Debtors consented to repay SVB
for all obligations arising from the letters of credit including
all amounts drawn by Winthrop Resources and ACP 2800 plus accrued
interests, drawing fees, commissions and attorney's fees incurred
by the bank in connection with the agreement.  As of June 21,
2005, the amount payable to SVB in connection with the letters of
credit is approximately $1,455,427.  Interest continues to accrue
in the amount of $443 per day.

Under the Accounts Receivable Financing Agreement, the Debtor is
obliged to repay SVB for all attorney's fees and costs incurred in
protecting or enforcing its rights in the collection of the
Debtors' outstanding obligations.  These fees total approximately
$9,000 to date.

Objections to a Stipulation between Proxim and SVB must be filed
with the Court by 4:00 p.m. on August 17, 2005.  The Honorable
Peter J. Walsh will receive any objections at a hearing at
10:00 a.m. on August 22, 2005.

Headquartered in San Jose, California, Proxim Corporation --
http://www.proxim.com/-- designs and sells wireless networking
equipment for Wi-Fi and broadband wireless networks. The Debtors
provide wireless solutions for the mobile enterprise, security
and surveillance, last mile access, voice and data backhaul,
public hot spots, and metropolitan area networks.  The Debtor
along with its affiliates filed for chapter 11 protection on June
11, 2005 (Bankr. D. Del. Case No. 05-11639).  When the Debtor
filed for protection from its creditors, it listed $55,361,000 in
assets and $101,807,000 in debts.


QUIGLEY COMPANY: Sept. 15 Bar Date Includes Silica Claims
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
set Sept. 15, 2005, as the deadline for all Quigley Company,
Inc.'s creditors owed money on account of claims arising
prior to Sept. 3, 2004, to file written proofs of claim.

The Debtor estimates that there are approximately 162,700 personal
injury claims, including 4,600 Silica-Related PI Claims.

The Official Committee of Unsecured Creditors have requested that
Silica-related PI claims be subject to the Sept. 15 Claims Bar
Date in order to facilitate the progress of the Debtor's case and
avoid unnecessary disputes.  As a result, the Debtor has agreed to
amend the motion to include Silica-related PI claims among the
claims subject to the General Claims bar date and omit it from the
Excluded claims.

Headquartered in Manhattan, Quigley Company is a subsidiary of
Pfizer, Inc., which used to produce and market a broad range of
refractories and related products to customers in the iron, steel,
glass and other industries.  The Company filed for chapter 11
protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to
resolve legacy asbestos-related liability.  When the Debtor filed
for protection from its creditors, it listed $155,187,000 in total
assets and $141,933,000 in total debts.  Michael L. Cook, Esq., at
Schulte Roth & Zabel LLP, represents the Company in its
restructuring efforts.  Albert Togut, Esq., at Togut Segal & Segal
serves as the Futures Representative.


ROGERS COMMUNICATIONS: Completes $223 Million Debt-for-Equity Swap
------------------------------------------------------------------
On June 30, 2005, Rogers Communications Inc. issued a notice of
redemption for all of its $224.78 million face amount of 5.75%
convertible debentures due Nov. 26, 2005, for an aggregate
redemption amount of approximately $223 million.

Prior to expiration of the redemption period on Aug. 2, 2005,
debenture holders converted an aggregate $224.5 million face
amount of debentures 7,715,417 into Class B Non-Voting shares of
RCI.  The remaining aggregate $285,000 face amount of debentures
has been redeemed in cash for an aggregate redemption amount of
$282,800.

Rogers Communications Inc. (TSX: RCI; NYSE: RG) --
http://www.rogers.com/-- is a diversified Canadian communications
and media company engaged in three primary lines of business.
Rogers Wireless Inc. is Canada's largest wireless voice and data
communications services provider and the country's only carrier
operating on the world standard GSM/GPRS technology platform;
Rogers Cable Inc. is Canada's largest cable television provider
offering cable television, high-speed Internet access, voice-over-
cable telephony services and video retailing; and Rogers Media
Inc. is Canada's premier collection of category leading media
assets with businesses in radio and television broadcasting,
televised shopping, publishing and sports entertainment.  On July
1, 2005, Rogers completed the acquisition of Call-Net Enterprises
Inc. (now Rogers Telecom Holdings Inc.), a national provider of
voice and data communications services.

                       *     *     *

As reported in the Troubled Company Reporter on June 14, 2005,
Fitch Ratings has initiated coverage of Call-Net Enterprises Inc.
and assigned a 'B-' rating to its senior secured notes.  Fitch
also places the ratings of Call-Net on Rating Watch Positive due
to the CDN$330 million all-stock acquisition of Call-Net by Rogers
Communications Inc. (rated 'BB-' by Fitch).  Approximately
US$223 million of debt securities are affected by these actions.

As reported in the Troubled Company Reporter on May 31, 2005,
Standard & Poor's Rating Services affirmed its 'BB' long-term
corporate credit ratings and 'B-2' short-term credit ratings on
Rogers Communications Inc., Rogers Wireless Inc., and Rogers Cable
Inc.  S&P said the outlook is stable.


SAFETY-KLEEN: Court Okays Stipulation in Dispute with M. Black
--------------------------------------------------------------
Maureen Black asks the U.S. Bankruptcy Court for the District of
Delaware to lift the permanent injunction provided by the Debtors'
Plan of Reorganization and the Confirmation Order to allow her to
pursue her personal injury action against Safety-Kleen.

Benjamin Snyder, Esq., at Prickett, Jones & Elliott, P.A., in
Dover, Delaware, contends that a Section 524 permanent injunction
does not prevent a tort claimant from pursuing a debtor's
insurance company because the discharge does not affect the
liability of the debtor's insurer and the debtor is not exposed to
liability.

Mr. Snyder asserts that Safety-Kleen will not suffer any
significant prejudice by being joined in the lawsuit for the
limited purpose of determining liability because any judgment
obtained will be enforced only against proceeds available under
the applicable insurance policy.  Mr. Snyder clarifies that Ms.
Black is simply seeking to prosecute her personal injury action to
recover insurance proceeds that will not burden or be inconsistent
with the Debtors' reorganization.

                          Parties Stipulate

To resolve their dispute, the Reorganized Debtors and Maureen
Black stipulate and agree that:

   (a) The discharge injunction set forth in the Confirmation
       Order and the Debtors' Joint Plan of Reorganization will
       be modified for the sole purpose of permitting Ms. Black
       to prosecute the State Court Action to settlement or a
       final and non-appealable judgment, provided however:

          (1) Ms. Black may enforce any final and non-appealable
              judgment, entered by a court of competent
              jurisdiction, settlement, or other disposition of
              the State Court Action against the Reorganized
              Debtors without further Court order only to the
              extent that any settlement or final judgment is
              satisfied by the Reorganized Debtors' available
              liability insurance policies, and subject to the
              Reorganized Debtors' collection of all or a
              portion of that judgment from the Available
              Coverage;

          (2) The Available Coverage does not include
              "self-insurance," "fronted" insurance or under
              "self-insurance," "matching deductible" coverage
              or any other policies that do not require actual
              and ultimate payment by an insurer of the
              settlement or judgment;

          (3) Under no circumstances will the Reorganized Debtors
              seek, or be required to seek, to satisfy any
              judgment under self-insured retentions or policies
              constituting "fronted" insurance or under "self-
              insurance" or under policies providing for "
              matching deductible" or under other policies that
              do not require actual and ultimate payment by an
              insurer, of the judgment;

          (4) The Available Coverage is comprised solely of the
              automotive personal injury coverage in existence
              as of October 1, 1999, the date of the alleged
              automobile accident, that is responsive to Ms.
              Black's claims, and which requires actual and
              ultimate payment by the insurers of any settlement
              or final and non-appealable judgment obtained by
              Ms. Black;

          (5) Nothing will be deemed to grant Ms. Ratke any
              rights against the Available Coverage that are
              greater that those provided by applicable law; and

          (6) If Ms. Black obtains a settlement with, or final
              and non-appealable judgment against, the
              Reorganized Debtors, the Reorganized Debtors will
              make all reasonable efforts to collect the
              settlement or judgment from the Available
              Coverage, subject to the provisions contained;

   (b) Ms. Black will fully release the Reorganized Debtors from
       any claims for punitive damages, breach of contract,
       battery, intentional infliction of emotional distress,
       intentional misrepresentation, fraud, concealment or any
       other claims; and

   (c) Nothing will affect the parties' rights to prosecute or
       defend against the merits of the allegations asserted in
       the State Court Action.

Judge Walsh approves the parties' Stipulation.

Headquartered in Delaware, Safety-Kleen Corporation --
http://www.safety-kleen.com/-- provides specialty services such
as parts cleaning, site remediation, soil decontamination, and
wastewater services.  The Company, along with its affiliates,
filed for chapter 11 protection (Bankr. D. Del. Case No. 00-02303)
on June 9, 2000.  Gregg M. Galardi, Esq., at Skadden, Arps, Slate,
Meagher, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,031,304,000 in assets and $3,333,745,000 in liabilities.
(Safety-Kleen Bankruptcy News, Issue No. 88; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


SATELITES MEXICANOS: S. Maza Files Sec. 304 Petition in S.D.N.Y.
----------------------------------------------------------------
Sergio Autrey Maza, the foreign representative appointed in
Satelites Mexicanos, S.A. de C.V.'s Mexican bankruptcy
proceedings, filed a Section 304 petition in the U.S. Bankruptcy
Court for the Southern District of New York on Aug. 4, 2005.
Mr. Maza filed the petition to enjoin U.S. creditors from
commencing, continuing or enforcing any action against the
Debtor's estates, or otherwise disrupting Satmex's concurso
mercantil proceeding in Mexico.

Mr. Maza is also the Debtor's acting Chief Executive Officer and
Chairman of the Board of Directors.

The Debtor is the subject of an involuntary chapter 11 petition
filed by a group of secured and unsecured noteholders with the
U.S. Bankruptcy Court for the Southern District of New York on
May 25, 2005.

The petitioning creditors are members of an ad hoc committee of
holders of Satmex's Senior Secured Floating Rate Notes due 2004
and 10-1/8% Senior Notes due 2004.  The Ad Hoc Noteholders
Committee and the Ad Hoc Bondholders Committee collectively hold
more than $385 million of Satmex's outstanding debt.

                     Settlement Agreement

The Sec. 304 petition is part of the settlement agreement reached
between the Debtor and the group of petitioning secured and
unsecured noteholders regarding the noteholders' involuntary
petition and Satmex's motion to dismiss the petition on
jurisdictional grounds.

Under the terms of the agreement, the noteholders will withdraw
their involuntary chapter 11 petition upon the commencement of the
Sec. 304 proceeding.

Section 304 of the Bankruptcy Code allows a foreign debtor (such
as Satmex) to commence a proceeding that is ancillary (or related)
to a foreign proceeding (such as Satmex's Concurso Mercantil).
Section 304 also allows a U.S. Bankruptcy Court to protect assets
or property of a debtor that are in the U.S. by issuing an
injunction preventing any action against that property.

Under the terms of the agreement in principle, the creditors have
reserved the right to make a motion to the U.S. Bankruptcy Court
seeking the dismissal of the 304 petition or the termination of
any injunction ordered by the Court upon the occurrence of certain
conditions.  These conditions include:

   -- any attempt to revoke or terminate Satmex's concessions; and

   -- any failure of Satmex to present a restructuring proposal to
      the Creditors by Oct. 31, 2005.

The creditors also have the right to come back to the U.S.
Bankruptcy Court seeking relief if Satmex 6 is not launched by
June 30, 2006.

                     Principal Indebtedness

Satmex's principal indebtedness includes:

     (i) $320 million in principal amount of high yield bonds due
         November 2004, issued on Feb. 2, 1998, between Satmex and
         The Bank of New York as Indenture Trustee; and

    (ii) $203.4 million in principal amount of senior secured
         floating rate notes due June 2004, issued on March 4,
         1998, between Satmex and Citibank, N.A., as Indenture
         Trustee.

As of May 25, 2005, the full principal amount and certain accrued
and unpaid interest remained outstanding on the high yield bonds
and the floating rate notes.

                       Menoscabo Default

In 1997, Firmamento Mexicano, S. de R.L. de C.V., a joint venture
between Loral Space & Communication, Ltd., and Principia, S.A. de
C.V., consummated an acquisition of 75% of the then-issued
outstanding capital stock of Satmex from the Mexican government.
As a result, Satmex became a wholly owned direct subsidiary of
Servicios Corporativos Satelitales, S.A. de C.V., which is in turn
a wholly owned subsidiary of Firmamento.  The remaining 25% of
Satmex's outstanding capital stock, at the time, was retained by
the Mexican government.

In connection with the purchase, Servicios agreed to pay the
Mexican government $125.1 million plus interest, which is
reflected in a promissory note referred to as a Menoscabo.
Payment of the Menoscabo is secured by Loral's and Principia's
interests in Firmamento.  The Mexican government, which currently
owns 23.57% of Satmex's outstanding common stock, indirectly holds
a security interest in another 70.71% equity interest in Satmex as
collateral securing the Menoscabo.

On Sept. 30, 2003, Servicios defaulted on the Menoscabo debt.  As
a result of the default, the Mexican government could initiate
proceedings against Servicios, which may include foreclosure on
the Firmamento equity and possibly transfer of that equity.  The
Menoscabo default also constituted a default under the indentures.

                  Mexican Bankruptcy Proceedings

The Debtor filed a voluntary concurso mercantil in the Second
Federal District Court for Civil Matters for hte Feeral District
of Mexico City on June 29, 2005.  Following the petition, the
Mexican Bankruptcy Court entered an order:

     (i) staying any foreclosure proceeding against the rights and
         assets of Satmex and prohibiting Satmex from transferring
         its valuables or funds to third parties; and

    (ii) prohibiting Satmex from disposing or encumbering its main
         properties or assets.

Headquartered in Mexico, Satelites Mexicanos, S.A. de C.V.,
derives over 50% of its revenues from United States business, and
all of the Company's over US$500 million in debt was issued in the
United States and is governed by New York law.  The Company's
largest shareholder, Loral Space & Communications Ltd., is a
United States public company also undergoing a Chapter 11
reorganization in the U.S. Bankruptcy Court for the Southern
District of New York.

The Company is forced into chapter 11 by a group of secured and
unsecured noteholders on May 25, 2005 (Bankr. S.D.N.Y. Case No.
05-13862).  The noteholders are represented by Wilmer Cutler
Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer & Feld
LLP.  Evercore Partners is the financial advisor to the Senior
Secured Floating Rate Noteholders.  Chanin Capital Partners is the
financial advisor to the 10-1/8% Senior Noteholders.

On June 29, 2005, the Debtor filed a voluntary concurso mercantil
to restructure under Mexican laws, and later moved to dismiss the
involuntary Chapter 11 petition in the U.S.

Sergio Autrey Maza, in his capacity as the foreign representative
appointed in Satmex's Mexican proceeding, filed a Sec. 304
petition on Aug. 4, 2005 (Bankr. S.D.N.Y. Case No. 05-16103).
Matthew Scott Barr, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
represents Mr. Maza.  As of May 31, 2005, the Debtor reports $900
million in total assets and $688 million in total debts.


SATELITES MEXICANOS: Section 304 Petition Summary
-------------------------------------------------
Petitioner: Sergio Autrey Maza
            Foreign Representative
            Chief Executive Officer and
            Chairman of the Board of Directors of Satmex

Debtor: Satelites Mexicanos, S.A. de C.V.
        Boulevard Manuel Avila Camacho No. 40
        Colonia Lomas de Chapultepec
        11000, Mexico, D.F., Mexico

Case No.: 05-16103

Type of Business: Sat,lites Mexicanos, S.A. de C.V. is the leading
                  provider of fixed satellite services in Mexico
                  and is expanding its services to become a
                  leading provider of fixed satellite services
                  throughout Latin America.  Satmex provides
                  transponder capacity to customers for
                  distribution of network and cable television
                  programming and on-site transmission of live
                  news reports, sporting events and other video
                  feeds.  Satmex also provides satellite
                  transmission capacity to telecommunications
                  service providers for public telephone networks
                  in Mexico and elsewhere and to corporate
                  customers for their private business networks
                  with data, voice and video applications, as well
                  as satellite internet services.
                  See http://www.satmex.com/

                  The Debtor is an affiliate of Loral Space &
                  Communications Ltd. which filed for chapter 11
                  protection on July 15, 2003 (Bankr. S.D.N.Y.
                  Case No. 03-41710).

                  Some holders of prepetition debt securities
                  filed an involuntary chapter 11 petition against
                  the Debtor on May 25, 2005 (Bankr. S.D.N.Y.
                  Case No. 05-13862).

Section 304 Petition Date: August 4, 2005

U.S. Bankruptcy Court: Southern District of New York (Manhattan)

U.S. Bankruptcy Judge: Robert D. Drain

Mexican Bankruptcy Court: Second Federal District Court for
                          Civil Matters for the
                          Federal District of Mexico City

Petitioner's Counsel: Matthew Scott Barr, Esq.
                      Milbank, Tweed, Hadley & McCloy LLP
                      1 Chase Manhattan Plaza
                      New York, New York 10005
                      Tel: (212) 530-5000
                      Fax: (212) 530-5219

Financial Condition as of May 31, 2005:

      Total Assets: $900,000,000

      Total Debts:  $688,000,000


SHURGARD STORAGE: Moody's Reviews Ba1 Preferred Stock Rating
------------------------------------------------------------
Moody's Investors Service placed Shurgard Storage Centers, Inc.'s
senior unsecured debt rating of Baa3 and preferred stock rating of
Ba1 (previously on negative outlook) under review with direction
uncertain.  According to Moody's, these rating actions reflect
Public Storage's announcement today that it had made a proposal
for the combination of Public Storage and Shurgard through a
merger.

Moody's noted that the proposed transaction possesses both risks
and positive factors for Shurgard's creditors.  On the risk side,
Shurgard could be sold to another buyer in a leveraged
transaction, or restructure its finances itself in an effort to
unlock value.  Such actions would likely result in a downgrade for
Shurgard.

In addition, a takeover or other restructuring could distract
senior management from its core business.  On the other hand, the
acquisition of Shurgard by Public Storage would result in
Shurgard's creditors being creditors of a much larger, industry-
leading self-storage REIT with a history of conservative financial
management.

A ratings upgrade for Shurgard would reflect consummation of a
merger with Public Storage.  A rating downgrade would reflect a
leveraged sale or recapitalization.  Such rating changes -- up or
down -- could be more than one notch. Other factors that could
affect a downgrade of Shurgard include further weakness in its
European operations, or any disclosure of additional material
accounting or control weaknesses.

Moody's last rating action for Shurgard took place in February
2005 at which time its ratings were downgraded to Baa3 with a
negative outlook.

These ratings were placed under review direction uncertain:

Shurgard Storage Centers, Inc.:

   * Senior unsecured debt at Baa3;
   * senior unsecured debt shelf at (P)Baa3;
   * preferred stock at Ba1; and
   * preferred stock shelf at (P)Ba1.

Shurgard Storage Centers, Inc. [NYSE: SHU] is a self-storage real
estate investment trust (REIT) headquartered in Seattle,
Washington, USA.  At March 31, 2005, Shurgard had interests in
over 634 properties in the USA and Europe totaling 40 million net
rentable square feet, assets of $2.9 billion and equity of $879
million.


SIRIUS SATELLITE: Offering $400M Sr. Notes to Institutional Buyers
------------------------------------------------------------------
SIRIUS Satellite Radio (NASDAQ:SIRI) reported the offering of
$400 million in aggregate principal amount of Senior Notes due
2013 to qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended, and outside the United
States in compliance with Regulation S under the Securities Act.
The notes will be senior obligations of SIRIUS.

SIRIUS intends to use the net proceeds from the offering to redeem
all of its outstanding 15% Senior Secured Discount Notes due 2007
and 14«% Senior Secured Notes due 2009.  The balance of the net
proceeds will be used for general corporate purposes.

SIRIUS Satellite Radio delivers more than 120 channels of the best
commercial-free music, compelling talk shows, news and
information, and the most exciting sports programming to listeners
across the country in digital quality sound.  SIRIUS offers 65
channels of 100% commercial-free music, and features over 55
channels of sports, news, talk, entertainment, traffic and weather
for a monthly subscription fee of only $12.95.  SIRIUS also
broadcasts live play-by-play games of the NFL and NBA, and is the
Official Satellite Radio partner of the NFL.

                         *     *     *

As reported in the Troubled Company Reporter on Aug. 4, 2005,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Sirius Satellite Radio Inc.'s proposed $500 million Rule 144A
senior unsecured notes maturing in 2013.   At the same time,
Standard & Poor's affirmed its existing ratings on the New York,
New York-based satellite radio broadcasting company, including its
'CCC' corporate credit rating.  The new proposed notes will
replace the company's previously proposed $250 million senior
unsecured note offering, which was postponed in the second quarter
of 2005.  Standard & Poor's 'CCC' rating on the $250 million
senior note issue was withdrawn.  The outlook remains stable.

Proceeds will be used to repay $57.4 million in debt and to boost
liquidity. On a June 30, 2005, pro forma basis, Sirius had nearly
$1.1 billion in debt.


SIRIUS SATELLITE: Moody's Junks Proposed $500 Million Notes
-----------------------------------------------------------
Moody's Investors Service assigned a Caa1 corporate family rating
and a SGL-2 speculative grade liquidity rating for SIRIUS
Satellite Radio, Inc., as well as a Caa1 rating for the proposed
$500 million senior unsecured notes due 2013.  Proceeds from the
transaction will be used to retire $63 million of the remaining
senior secured notes (15% senior secured discount notes due 2007
and 14.5% senior secured notes due 2009) as well as to fund
operations and improve liquidity.

The ratings reflect Moody's expectation that SIRIUS will continue
to burn cash in the near- to intermediate term to support its
growth, funding sizeable subscriber acquisition costs and
marketing expenditures and other fixed costs (i.e. programming &
content, satellite infrastructure, technology, headcount).  These
risks are offset by the progress that SIRIUS has made to date in
expanding its subscriber base, and Moody's expectation that the
company's sizeable investments in programming and content, as well
as its relationships with auto manufacturers, will serve to
support further growth.  The rating outlook is stable.

Moody's has assigned these ratings:

   -- a Caa1 corporate family rating;

   -- a Caa1 rating to the proposed $500 million senior unsecured
      notes due 2013; and

   -- a SGL-2 speculative grade liquidity rating.

The rating outlook is stable.

The Caa1 corporate family rating reflects the substantial business
risk of the company's business model and the likelihood that
SIRIUS will continue to fund its operations with cash on the
balance sheet over the ratings horizon.

The ratings remain constrained by:

   * management's short track record;

   * the company's inability to predict its costs structure;  and

   * the challenge of prudently managing subscriber acquisition
     costs.

The ratings also reflect the increasing competition from XM
Satellite, currently the satellite radio industry leader with
twice as many subscribers, for programming, auto manufacturer
distribution agreements, and technology.

The ratings are supported by:

   * the success the company has had to date in growing its
     subscriber base (1.8 million subscribers at 2Q'05);

   * the relationships and distribution agreements with auto
     manufacturers (exclusive arrangements with Ford, Daimler
     Chrysler and BMW), distribution deals with retailers (25,000
     retail points);

   * investments in programming and content that differentiates
     SIRIUS from its competitor, XM Satellite (Cousin Brucie,
     Martha Stewart, Howard Stern, NBA, NFL, NASCAR);

   * the stable revenue stream associated with the company's
     subscription-based satellite radio service;  and

   * access to the debt capital markets.

Moody's also notes that SIRIUS' recent factory-installed agreement
with Ford further strengthens its OEM distribution channels (Ford
and Lincoln Mercury expect to generate up to one million
subscribers over 2006 and 2007 model years).

The stable outlook incorporates Moody's expectation that SIRIUS
will continue to grow its subscriber base, balanced by Moody's
belief it will burn cash until 2007 as the company attempts to
attain a critical mass of subscribers.  Additionally, while SIRIUS
has made significant upfront investment in programming and
content, Moody's does not believe that this will translate into
subscriber growth until the intermediate term, given the long-
dated nature of these contracts (i.e. Howard Stern in 2006, NASCAR
in 2007).  The outlook may be revised to positive if the company's
progress in achieving free cash flow breakeven occurs sooner than
Moody's expects.  The ratings may face negative pressure if SIRIUS
makes any additional sizeable cash investment in programming,
satellite infrastructure, or spectrum.

SIRIUS' SGL-2 rating reflects the good liquidity profile as
projected over the next twelve months.  Pro forma for the proposed
debt issuance, SIRIUS will have about $960 million in cash on the
balance sheet.  Despite the lack of a bank credit facility,
Moody's believes the company's significant cash balances will be
adequate to fund operations, debt service, and all capital
expenditure requirements over the liquidity rating time horizon.

Given SIRIUS' rapid rate of growth and the cash consumptive nature
of this business, Moody'ss expect the company to continue to burn
cash over the SGL twelve-month time horizon.  In the event that
cash burn exceeds Moody's expectations or the company makes
sizeable investment that substantially reduces its cash balances,
a downward revision to the SGL rating may be warranted.

The SGL-2 rating is also supported by absence of any near-term
maturities and a debt capitalization profile composed primarily of
low interest-bearing convertible debt securities.  Additionally,
Moody's believes that the company's assets, both satellites and
technical infrastructure, would be of little value in a distressed
scenario given their highly specialized purpose.

The Caa1 rating for the senior unsecured notes reflects their
contractual subordination to any future senior secured debt
issuances and the lack of subsidiary guarantees.

SIRIUS Satellite Radio, Inc., headquartered in New York, New York,
provides subscription-based satellite radio services in the US.


SITHE INDEPENDENCE: S&P Places B-Rated $559.5 Mil. Bonds on Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' rating on Sithe
Independence Funding Corp.'s $559.5 million senior secured bonds
(currently $482.7 million outstanding) on CreditWatch with
developing implications.

The rating action follows Standard & Poor's placement of the
corporate credit rating on Dynegy Inc. (B/Watch Dev/B-2) on
CreditWatch with developing implications as a result of the
company's announced sale of its midstream business.

Sithe Independence is a 1,000 MW combined-cycle, gas-turbine plant
located in Scriba, N.Y.

"The rating on Sithe Independence Funding's bonds reflects
Dynegy's credit risk due to its 100% ownership of the project and
the tolling agreements it has for almost the entire output of the
project," said Standard & Poor's credit analyst Elif Acar.

The developing CreditWatch listing (indicating that the ratings
could be raised, lowered, or affirmed) for Dynegy reflects the
uncertainty regarding the use of the proceeds from the midstream
sale as well as the sustainability of the company's remaining
business lines.

Standard & Poor's expects to resolve the CreditWatch listing on
Sithe Independence bonds as soon as the CreditWatch on Dyengy's
rating is resolved.


SOLUTIA INC: Delivers Second Quarter Financial Report to SEC
------------------------------------------------------------
Solutia Inc. disclosed to the Securities and Exchange Commission
its financial performance for the second quarter ending June 30,
2005 in the 10-Q filing.

        Summary of Significant Second Quarter 2005 Events

Reorganization Strategy

Solutia continued to take positive actions in the second quarter
2005 to achieve its reorganization strategy, which involves the
principal objectives of

     (i) managing the businesses to enhance Solutia's performance;

    (ii) making changes to Solutia's asset portfolio to maximize
         the value of the estate;

   (iii) achieving reallocation of "legacy liabilities"; and

    (iv) negotiating an appropriate capital structure.

Recent actions regarding achievement of these principle objectives
are explained further below.  In addition, Solutia continues to
pursue a consensual agreement on the plan of reorganization
through negotiations with the other constituents in the bankruptcy
case.  However, as a result of the numerous uncertainties and
complexities inherent in Solutia's bankruptcy proceedings, its
ability to emerge and timing of emergence from bankruptcy are
subject to significant uncertainty.

Performance Enhancement

Solutia benefited in the second quarter 2005 from several actions
implemented during 2004 designed to enhance its performance.
These included:

     (i) implementing significant general and administrative
         expense reductions;

    (ii) using more performance-based compensation and benefits
         programs;

   (iii) enacting key senior management changes, initiating a cost
         reduction program at Solutia's operating sites focused on
         actions such as lean manufacturing techniques, yield
         improvement, maintenance savings and utilities
         optimization; and

    (iv) implementing an enterprise-wide procurement effort.

These actions have continued to help drive strong revenue growth
and expansion of operating margins.  In addition, Solutia
continued to use the tools of bankruptcy to renegotiate and/or
reject various contracts in the second quarter 2005 which will
provide future savings to Solutia.

Solutia amended its DIP financing agreement on June 1, 2005 and
received bankruptcy court approval on July 25, 2005.  The
amendment reduces the interest rate on the term loan component of
the DIP facility to LIBOR plus 4.25 percent from the previous
interest rate of the greater of the prime rate plus 4.0 percent or
8.0 percent, extends the maturity date of the current facility to
June 19, 2006 from the previous December 19, 2005, maturity date,
and makes other minor modifications.  No changes were made to the
financial covenants contained in the DIP agreement aside from
extending the financial covenant requirements to be commensurate
with the new maturity date of the DIP agreement.  Overall, these
changes are expected to reduce Solutia's interest expense on the
term loan component of the DIP facility up to $7 million based
upon the new maturity date.

Portfolio Evaluation

Solutia's stated strategy is to build a portfolio of high-
potential businesses that can consistently deliver returns in
excess of Solutia's cost of capital.  Solutia made several changes
to re-shape its asset portfolio in 2004 as part of this strategy
and continued these efforts in 2005 by exiting the acrylic fibers
operations in the second quarter 2005 due to continued losses
resulting primarily from significant foreign competition.  Solutia
also announced that its Greenwood, South Carolina plant will be
the primary production facility for nylon industrial fibers. As a
result of this decision, Solutia shut down its nylon industrial
fiber manufacturing unit at its plant in Pensacola, Florida in the
second quarter 2005.  In addition, Solutia has initiated a sales
process with respect to Astaris LLC, its 50/50 joint venture with
FMC Corporation, and has received bankruptcy court approval for
certain standard buyer protections involved in this sales process.

Reallocation of Legacy Liabilities

On June 7, 2005, Solutia reached an agreement-in-principle with
Monsanto Company and the Official Committee of Unsecured Creditors
in Solutia's Chapter 11 case that will serve as a framework for
Solutia's plan of reorganization.  The agreement-in-principle is
subject to the negotiation of definitive documents, approval by
Solutia's board of directors and various other conditions and
contingencies, some of which are not within the control of
Solutia, Monsanto or the Unsecured Creditors' Committee.  Until a
plan or reorganization consistent with the terms of the agreement-
in-principle is confirmed by the bankruptcy court, the terms of
the agreement-in-principle are not binding upon any party.

Under the agreement-in-principle, Solutia would emerge from
bankruptcy as an independent, publicly held company.  The
agreement-in-principle provides for $250 million of new investment
in a reorganized Solutia which would be used to pay retiree
benefits to those who retired prior to the spinoff, certain
environmental remediation obligations of Solutia and other legacy
liabilities.  The $250 million would be raised in a rights
offering to Solutia's unsecured creditors.  Monsanto would be
obligated to backstop the rights offering, exercising any rights
not exercised by the unsecured creditors.

The agreement-in-principle also provides that Monsanto would pay
environmental remediation costs at sites including non-owned
property adjacent to plant sites and certain owned, offsite
disposal locations, provides a mechanism for sharing between
Monsanto and Solutia responsibility for environmental liabilities
at certain sites adjacent to the Anniston, Alabama and Sauget,
Illinois plant locations, and provides that Monsanto would
contribute $107 million, less certain expenses incurred, and
litigation settlement costs paid, by Monsanto during the course of
Solutia's Chapter 11 case, to make distributions to the holders of
certain unsecured claims, including current tort and other legacy
litigation claims.  Furthermore, while Solutia filed for Chapter
11 in part to gain relief from the legacy liabilities it was
required to assume when it was spun off from Pharmacia, the
agreement-in-principle provides that Solutia will retain a portion
of these legacy liabilities and the extent to which such relief
will be achieved continues to be uncertain.

                  Summary Results Of Operations

The $47 million, or 7 percent, increase in net sales as compared
to the second quarter 2004 was primarily a result of higher
average selling prices of approximately 12 percent and favorable
currency exchange rate fluctuations of approximately 1 percent,
partially offset by lower sales volumes of approximately
6 percent.  The $79 million improvement in operating income as
compared to the second quarter 2004 resulted primarily from higher
net sales, and lower charges, which are described in greater
detail in the Results of Operations section below, partially
offset by higher raw material and energy costs.

The $136 million, or 10 percent, increase in net sales as compared
to the six months ended June 30, 2004 was primarily a result of
higher average selling prices of approximately 13 percent and
favorable currency exchange rate fluctuations of approximately
1 percent, partially offset by lower sales volumes of
approximately 4 percent.  The $116 million improvement in
operating income as compared to the six months ended June 30,
2004, resulted primarily from higher net sales and lower charges,
partially offset by higher raw material and energy costs.

The $28 million, or 10 percent, increase in net sales as compared
to the second quarter 2004 resulted primarily from higher sales
volumes of approximately 5 percent, an increase in average selling
prices of approximately 3 percent and favorable currency exchange
rate fluctuations of approximately 2 percent.  Higher volumes were
experienced in SAFLEX(R) and VANCEVA(R) plastic interlayer
products and THERMINOL(R) heat transfer fluids, partially offset
by lower volumes due to the shut-down of Solutia's chlorobenzenes
operations in the second quarter 2004.  Higher average selling
prices were experienced across several product lines, including
SAFLEX(R) and VANCEVA(R) plastic interlayer products, branded
professional and retail film products, THERMINOL(R) heat transfer
fluids and DEQUEST(R) water treatment chemicals, generally as a
result of favorable market conditions and in response to the
escalating cost of raw materials.  The favorable exchange rate
fluctuations occurred primarily as a result of the stronger euro
in relation to the U.S. dollar in comparison to the second quarter
2004.

                       Financial Analysis

Solutia utilized its existing cash on-hand to finance operating
needs and capital expenditures during the first six months of
2005.  Cash used in operations was $26 million in the first six
months of 2005, a change of $22 million from $4 million used in
operations for the comparable period of 2004.  This change in cash
used in operations was primarily attributable to the build-up of
post-petition accounts payable balances in the first six months of
2004 due to the timing of Solutia's Chapter 11 filing in late 2003
and subsequent improvements in vendor terms, resulting in a
$99 million swing in the change in accounts payable in comparing
the six months ended June 30, 2005 to the same period in 2004.

Capital spending increased $7 million to $29 million in the first
six months of 2005, compared to $22 million in the comparable
period of 2004.  The expenditures during the first six months of
2005 were used primarily to fund certain growth initiatives, as
well as various capital improvements and certain cost reduction
projects.

Total debt of $1,219 million as of June 30, 2005, including
$668 million subject to compromise and $551 million not subject to
compromise, decreased by $34 million as compared to $1,253 million
at December 31, 2004, including $668 million subject to compromise
and $585 million not subject to compromise.  This decrease in
total debt resulted primarily from a decrease in the recorded
amount of Solutia's Euronotes due to foreign currency translation
changes in the first six months of 2005.  As a result of the
Chapter 11 filing, Solutia was in default on all its debt
agreements as of June 30, 2005, with the exception of its DIP
credit facility and Euronotes.

Solutia's working capital increased by $16 million to $13 million
at June 30, 2005, compared to $(3) million at December 31, 2004.
The change was a result of the seasonal increase in working
capital, partially offset by lower cash on-hand as of June 30,
2005.

Solutia had a shareholders' deficit of $1,416 million at
June 30, 2005 compared to a deficit of $1,444 million at December
31, 2004.  The $28 million decrease in shareholders' deficit
principally resulted from the $35 million of net income for the
six months ended June 30, 2005, partially offset by the $7 million
increase in accumulated other comprehensive losses due to currency
translation adjustments.

The weighted average interest rate on Solutia's total debt
outstanding was approximately 8.5 percent at June 30, 2005, as
compared to 9.0 percent at December 31, 2004. This decrease is
primarily a result of the change in interest rates on the term
loan component of Solutia's DIP facility in the second quarter
2005, as further explained below.  While operating as a
debtor-in-possession during the Chapter 11 proceedings, Solutia
has ceased paying interest on its 6.72% debentures due 2037 and
its 7.375% debentures due 2027. The amount of contractual interest
expense not recorded during the first six months of 2005 and 2004,
was approximately $16 million.

At June 30, 2005, Solutia's total liquidity was $212 million in
the form of $133 million of availability under the final DIP
credit facility and approximately $79 million of cash on-hand, of
which $67 million was cash of Solutia's subsidiaries that are not
parties to the Chapter 11 proceedings.  At December 31, 2004,
Solutia's total liquidity was $246 million in the form of
$131 million of availability under the final DIP credit
facility and approximately $115 million of cash on-hand, of
which $65 million was cash of Solutia's subsidiaries that are not
parties to the Chapter 11 bankruptcy proceedings.

A full-text copy of Solutia, Inc.'s Form 10-Q Report is available
for free at http://ResearchArchives.com/t/s?af

Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications.  The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949).  When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts.  Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy
News, Issue No. 44; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


SPANISH BROADCASTING: Styles Media Makes Additional $15MM Deposit
-----------------------------------------------------------------
Spanish Broadcasting System, Inc., amended an asset purchase
agreement with Styles Media Group, LLC, and Spanish Broadcasting
System Southwest, Inc.  Under the terms of the amended agreement,
Styles Media Group made an additional $15 million non-refundable
deposit on the $120 million purchase price.  The parties agreed to
extend the closing date from July 31, 2005, to the date that is
designated by Styles Media Group, but no later than Jan. 31, 2006.
In addition, Styles Media Group will make an additional $20
million non-refundable deposit on the purchase price two days
following the grant of the FCC license renewals.

On Aug. 17, 2004, the Company entered into an asset purchase
agreement with Styles Media Group, LLC, to sell the assets of
radio stations KZAB-FM and KZBA-FM, serving the Los Angeles,
California market.  In connection with this agreement, Styles
Media Group made a non-refundable $6 million deposit on the
purchase price.  On Feb. 18, 2005, Styles Media Group exercised
its right under the agreement to extend the closing date until
March 31, 2005, by releasing the deposit from escrow to the
Company.

On March 30, 2005, the Company entered into an amendment to the
asset purchase agreement with Styles Media Group.  In connection
with this amendment, Styles Media Group made an additional
$14 million non-refundable deposit on the purchase price and the
Company agreed to extend the closing date from March 31, 2005, to
the later date of July 31, 2005, or five days following the grant
of the FCC Final Order.

                  Time Brokerage Agreement

On Aug. 17, 2004, the Company, through its wholly owned
subsidiary, Spanish Broadcasting System SouthWest, Inc., entered
into a time brokerage agreement with Styles Media Group pursuant
to which Styles Media Group was permitted to begin broadcasting
its programming on radio stations KZAB-FM and KZBA-FM beginning on
Sept. 20, 2004.  The time brokerage agreement will terminate upon
the closing under, or termination of, the LA Asset Sale.

The Company determined that, since it was not eliminating all
significant revenues and expenses generated in this market, the
pending LA Asset Sale did not meet the criteria to classify the
stations' operations as discontinued operations.  However, the
Company reclassified the stations' assets as held for sale.  On
June 30, 2005, it had assets held for sale consisting of
$63 million of intangible assets and $1.2 million of property and
equipment for radio stations KZAB-FM and KZBA-FM.

The Company said it intends to use the net cash proceeds received
from the LA Asset Sale to repay certain amounts under the new
senior secured credit facilities due 2013.  Therefore, it has
reclassified the senior secured credit facilities due 2013 balance
from long-term debt to current debt.  If the proposed LA Asset
Sale does not close, it will be unable to use the anticipated
proceeds from such sale to reduce our debt.

                     New Credit Facilities
           Pay-down of Debt and Interest Rate Swap

On June 10, 2005, the Company entered into new senior secured
credit facilities with affiliates of Lehman Brothers, Merrill
Lynch, and Wachovia Bank.  The new credit facilities provided for
an aggregate of $425 million in funded term loans (consisting of a
$325 million first lien credit facility and a $100 million second
lien credit facility), plus a $25 million revolving loan facility.

On June 10, 2005, a portion of the proceeds from the new credit
facilities ($123.7 million) was used to repay the Company's
$135 million senior secured credit facilities due 2009 and accrued
interest.  Due to this repayment, the Company incurred a loss on
early extinguishment of debt, totaling approximately $3.2 million,
related to write-offs of deferred financing costs.  The remaining
proceeds, together with cash on hand, totaling approximately
$357.5 million, were placed in escrow with the trustee to redeem
all of our $335.0 million aggregate principal amount of 9-5/8%
senior subordinated notes due 2009, including the redemption
premium and accrued interest through redemption.  On July 12,
2005, the 9-5/8% senior subordinated notes due 2009 were redeemed
and we incurred a loss on extinguishment of debt, totaling
approximately $29.4 million related to call premiums, the write-
offs of discount and deferred financing costs.

On June 29, 2005, the Company entered into a five-year interest
rate swap to hedge against the potential impact of increases in
interest rates on our first lien credit facility.  The interest
rate swap fixed our LIBOR interest rate for five years at 4.23%,
plus the applicable margin (2.00% as of June 30, 2005).

Spanish Broadcasting System, Inc. -- http://www.spanishbroadcasting.com/
-- is the largest Hispanic-controlled radio broadcasting company
in the United States.  After giving effect to a pending
divestiture, the Company will own and operate 20 radio stations in
the top Hispanic markets of New York, Los Angeles, Miami, Chicago,
San Francisco and Puerto Rico, including the #1 Spanish-language
radio station in the United States of America, WSKQ-FM in New York
City.  The Company also operates LaMusica.com, a bilingual
Spanish-English online site providing content related to Latin
music, entertainment, news and culture.

                        *     *     *

As reported in the Troubled Company Reporter on June 8, 2005,
Moody's Investors Service upgraded the long term ratings of
Spanish Broadcasting System, Inc., and concluded the review for
possible upgrade initiated on Aug. 31, 2004.  Additionally,
Moody's assigned B1 ratings to Spanish Broadcasting System, Inc.'s
first lien senior secured credit facilities ($25 million first
lien revolving credit facility and $300 million first lien term
loan) and a B2 rating to the $100 million second lien term loan.
Moody's said the rating outlook is stable.

The upgrade reflects the expectation of meaningful deleveraging
and improvement in operating opportunities going forward, balanced
by a still high debt burden and aggressive acquisition strategy.

Moody's has assigned these ratings:

   i) B1 rating to the $25 million first lien revolving credit
      facility

  ii) B1 rating to the $300 million first lien term loan

iii)  B2 rating to the $100 million second lien term loan

Moody's has upgraded these ratings:

   i) the $75 million of Cumulative Exchangeable Redeemable
      Preferred Stock to Caa1 from Caa2

  ii) the senior implied rating to B1 from B2, and

iii) the senior unsecured issuer rating to B2 from B3.

Moody's says the outlook is stable.


SUN HEALTHCARE: June 30 Balance Sheet Upside-Down by $117.4 Mil.
----------------------------------------------------------------
Sun Healthcare Group, Inc. (NASDAQ: SUNH) reported results for the
second quarter ended June 30, 2005.

For the quarter ended June 30, 2005, Sun reported total net
revenues of $214.5 million and net income of $6.9 million, which
included net income of $5.7 million on discontinued operations,
compared with total net revenues of $204.8 million and net income
of $7.3 million for the quarter ended June 30, 2004, which
included a $4 million net loss on discontinued operations.

The 2005 second quarter net income included a reduction of
$12 million of excess reserves for general and professional
liability insurance, offset by a $5.1 million increase in reserves
for workers' compensation insurance related to incidents in prior
periods.  The 2004 second quarter net income included a reduction
of $3 million of excess reserves for general and professional
liability and workers' compensation insurance related to incidents
in prior periods.  The 2004 second quarter net income also
included the forgiveness of $3.7 million of debt, a retroactive
Medicaid rate increase of $1.0 million and $500,000 of
restructuring-related vendor discounts.

During its year-end 2004 earnings call, the Company's chief
executive officer, Richard K. Matros disclosed Sun Healthcare's
four-point agenda to continue focusing on:

     (i) improvements in same store operations;

    (ii) identifying the potential for further infrastructure
         realignment;

   (iii) the continued progress in resolving our general and
         professional liability legacy claims; and

    (iv) growing via acquisition.

"We are seeing good progress in all of the initiatives for 2005.
Since December 2003, our balance sheet liabilities related to
general and professional liability exposures have improved by
$30.8 million, which has positively impacted our equity," Mr.
Matros said.  "Substantially all of our operating units have shown
sequential quarter over quarter improvement that has resulted in
consolidated improvement in revenues, EBITDAR, EBITDA, net segment
income and G&A in 2005. Additionally, on a year over year basis,
we are seeing top- and bottom-line improvement in our inpatient,
staffing and home health operations and have stabilized and
improved revenues in our rehabilitation operations," he continued.

For the quarter ended June 30, 2005, Sun reported income from
continuing operations of $1.3 million, as compared to income from
continuing operations of $11.3 million for the same period in
2004.  The 2005 second quarter EBITDAR from continuing operations
was $17.1 million in comparison with $24.6 million from continuing
operations for the same period in 2004.

For the six months ended June 30, 2005, Sun reported total net
revenues of $421.7 million and net income of $5.8 million, which
included net income of $6.0 million on discontinued operations,
compared with total net revenues of $409.4 million and a net loss
of $3.1 million for the six months ended June 30, 2004, which
included a net loss of $10.8 million on discontinued operations.
For the six months ended June 30, 2005, Sun reported a net loss on
continuing operations of $0.3 million as compared to net income on
continuing operations of $7.7 million for the same period in 2004.
EBITDAR from continuing operations for the six months ended
June 30, 2005, was $30.0 million as compared to $34.9 million for
the same period in 2004.

                     In-Patient Business

Net revenues from inpatient services operations, which comprised
71 percent of Sun's second quarter total net revenue, increased
4.1 percent to $152.2 million from $146.2 million for the same
period in 2004.  The revenue gain was primarily attributable to:

     (i) a 110 basis point improvement in Medicare patient mix to
         14.2 percent from 13.1 percent of total occupancy, and

    (ii) higher per diem rates in all payor categories, partially
         offset by a decline in overall occupancy of 30 basis
         points to 89.9 percent from 90.2 percent.

The segment EBITDAR decreased 18.3 percent to $22.8 million for
the quarter ended June 30, 2005, from $27.9 million for the same
period in 2004.  Significant factors contributing to this decrease
were the previously mentioned $3.7 million gain on extinguishment
of debt, a revenue increase attributable to 2003 of $1 million
resulting from implementation of North Carolina's provider tax
that was included in revenues for the second quarter of 2004 and a
$1.1 million increase in employee health insurance expenses that
occurred in 2005.

"This marks the sixth consecutive quarter of year over year
Medicare growth as a percent of revenues for SunBridge," said
William Mathies, president of SunBridge Healthcare Corporation.
"Our nursing facility teams have continued to make strides in
developing their clinical competencies and converting those
improved skills into new business."

                      Ancillary Business

Net revenues from Sun's ancillary business operations, comprised
of SunDance Rehabilitation Corporation, CareerStaff Unlimited,
Inc., SunPlus Home Health Services, Inc., and SunAlliance
Healthcare Services, Inc., net of affiliated revenue, increased
$3.9 million, or 6.7 percent, to $62.3 million for the quarter
ended June 30, 2005, from $58.4 million for the same period in
2004. Segment EBITDAR for the ancillary operations for the quarter
ended June 30, 2005, decreased $1.9 million, or 26.8 percent, over
the same period in 2004, to $5.2 million from $7.1 million.

"The majority of the increase in revenue is attributable to our
three primary ancillary services operations of rehabilitation,
medical staffing and home health services, and was due primarily
to increased volume in existing contracts and new sales."  Mr.
Matros reported, "The EBITDAR decrease was primarily due to
increases in wages and health insurance costs in our
rehabilitation therapy services operations and strategic issues in
our laboratory and radiology services operations."

             Acquisition of Peak Medical Corporation

Mr. Matros disclosed that the previously announced acquisition of
Peak Medical Corporation is on track for closing in the fourth
quarter.

"We are looking forward to completing this significant
acquisition, as it is a critical component of the four-point
agenda outlined to our shareholders earlier this year," said
Matros. "We expect to mail our proxy statement to stockholders for
this transaction in September, after our Board has determined a
meeting date and we have finalized the pro forma financial
information for the second quarter.  The closing of the
transaction will occur after our stockholders have approved it, we
have received all necessary state regulatory approvals and other
closing conditions have been met."

                         2005 Guidance

Mr. Matros affirmed the previously provided 2005 guidance,
stating, "We continue to be pleased with the improved performance
in our operations and note that these results are consistent with
the 2005 guidance that we provided in our March 2, 2005 earnings
release."

Sun Healthcare Group, Inc., with executive offices located in
Irvine, California, owns SunBridge Healthcare Corporation and
other affiliated companies that operate long-term and postacute
care facilities in many states.  In addition, the Sun Healthcare
Group family of companies provides therapy through SunDance
Rehabilitation Corporation, medical staffing through CareerStaff
Unlimited, Inc., home care through SunPlus Home Health Services,
Inc., and medical laboratory and mobile radiology services through
SunAlliance Healthcare Services, Inc.

At June 30,2005, Sun Healthcare's balance sheet showed a
$117,463,000 stockholders' deficit, compared to a $123,380,000
deficit at Dec. 31, 2004.


TOBACCO ROW: Judge Tice Confirms Chapter 11 Plan
------------------------------------------------
The Honorable Douglas O. Tice Jr. of the U.S Bankruptcy Court for
the Eastern District of Virginia confirmed the Plan of
Reorganization filed by Tobacco Row Phase 1a Development, L.P.
Judge Tice confirmed the Plan on June 27, 2005.

Judge Tice concludes that:

   1) the Plan complies with the applicable provisions of Sections
      1129(a)(1) through (13) of the Bankruptcy Code;

   2) confirmation of the Plan is not likely to be followed by any
      further liquidation or the need for further financial
      reorganization of the Debtor, thereby satisfying Section
      1129(a)(11) of the Bankruptcy Code; and

   3) the Plan does not discriminate unfairly and is fair and
      equitable with respect to each class of claims and interests
      described in the Plan, satisfying Section 1129(b) of the
      Bankruptcy Code.

            Treatment of Claims and Interests
                      Under the Plan

The Plan groups claims and interest into eight classes.

Impaired Claims consist of Allowed Unsecured Claims, totaling
approximately $123,047.48.  Holders of Allowed Unsecured Claims
will retain their respective Claims against the Debtor after the
Effective Date and will be paid in full within 30 days of the
Plan's Effective Date.

The Plan contains seven classes of Unimpaired Claims:

   1) GNMA Claims will retain their legal, equitable, and
      contractual rights to which holders of those Claims are
      entitled pursuant to Section 1124(1) of the Bankruptcy
      Code;

   2) Beal Bank Claims will be paid on or before the Effective
      Date, a total amount of $608,798.37 to satisfy its claim;

   3) Community Claims will retain their legal, equitable, and
      contractual rights to which holders of those Claims are
      entitled pursuant to Section 1124(1) of the Bankruptcy Code;

   4) SunAmerica Inc. Claims will retain their legal, equitable,
      and contractual rights to which holders of those Claims are
      entitled pursuant to Section 1124(1) of the Bankruptcy Code;

   5) Richmond Claims will retain their legal, equitable,
      and contractual rights to which holders of those Claims are
      entitled pursuant to Section 1124(1) of the Bankruptcy Code;

   6) Other Priority Claims will retain their legal, equitable,
      and contractual rights to which holders of those Claims are
      entitled pursuant to Section 1124(1) of the Bankruptcy Code;
      and

   7) Interests consisting of SunAmerica Virginia Properties,
      Inc., TR-GP, Inc., and Richmond Development, L.L.C. will
      retain their respective Interests without modification.

A full-text copy of the Plan is available for a fee at:

   http://www.ResearchArchives.com/_______________________________

Judge Tice further orders that the Debtor is directed:

   1) to pay to CWCapital the amount of $65,000 by the Effective
      Date, which represents all monies necessary to satisfy the
      requirements of 11 U.S.C. Section 1124(2); and

   2) to pay to the Bank of New York as Trustee the amount of
      $29,448.86 by the Effective Date, which represents all
      monies necessary to satisfy the requirements of 11 U.S.C.
      Section 1124(2).

Headquartered in Richmond, Virginia, Tobacco Row Phase 1a
Development, L.P., owns the Tobacco Row apartment buildings, which
are in three former tobacco warehouse buildings, called the
Cameron, Cameron Annex and Kinney buildings.  The Company filed
for chapter 11 protection on October 22, 2003 (Bankr. E.D. Va.
Case No. 03-40033). Bruce H. Matson, Esq., and Christopher A.
Jones, Esq., at LeClair Ryan, A Professional Corporation
represents the Debtor.  When the Company filed for protection from
its creditors, it listed estimated assets and debts of
$10 million to $50 million.


TOWER AUTOMOTIVE: Wants Additional Time to Remove Civil Actions
---------------------------------------------------------------
Tower Automotive Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to further
extend the period within which they may file notices of removal
with respect to civil actions pending on the Petition Date, to and
including the later
to occur of:

   (x) December 31, 2005, or

   (y) 30 days after the entry of a Court order terminating the
       automatic stay with respect to the particular action that
       is sought to be removed.

Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois,
relates that since April 20, 2005, the Debtors' management
personnel and professionals have been actively involved in
supervising and implementing several key steps in the Debtors'
reorganization, including, but not limited to:

   (a) amending the Debtors' schedules of assets and liabilities
       and statements of financial affairs;

   (b) identifying and terminating unprofitable business
       ventures;

   (c) continuing the process of reconciling reclamation claims;

   (d) stabilizing the Debtors' cash management system;

   (e) maintaining the Debtors' sensitive supply chain with their
       customers and vendors;

   (f) negotiating amendments and waivers with the Debtors'
       secured lenders;

   (g) marketing and selling certain non-core assets;

   (h) preparing and filing the Debtors' monthly operating
       reports;

   (i) reviewing various revenue enhancing alternatives;

   (j) developing a business plan; and

   (k) negotiating and settling claim and set-off issues among
       the Debtors' vendors and customers.

"The Debtors believe the proposed time extension will provide
sufficient additional time to allow them to consider, and make
decisions concerning, the removal of the Civil Actions," Mr.
Sathy says.  "Unless such enlargement is granted, the Debtors
believe they will not have sufficient time to consider the
removal of the Civil Actions."

The Court will hold a hearing to consider the Debtors' request at
11:00 a.m. (prevailing Eastern Time) on August 10, 2005.

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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000)


TOWER AUTOMOTIVE: Reconciles Visteon's Prepetition Claims
---------------------------------------------------------
As previously reported in the Troubled Company Reporter on May 17,
2005, Visteon Corp. asked the U.S. Bankruptcy Court for the
Southern District of New York to lift the automatic stay to effect
a set-off on its prepetition debt with Tower Automotive Inc.

Tower, in turn, asked the Bankruptcy Court not to allow the set-
off unless:

   (1) the amounts of the Visteon Prepetition Debt and Debtors'
       Prepetition Debt, including any amounts that Visteon has
       deducted from the Checks that it had previously asserted
       in the Reclamation Claim, are reconciled and fixed by
       agreement between the parties or by Court Order; and

   (2) Visteon remits a $714,639 payment to the Debtors.

Pursuant to a Court order directing Visteon Corporation and the
Debtors to fix their mutual prepetition claims, the parties
stipulate that:

   (1) the Debtors owe Visteon $4,547,264 for component parts
       they purchased before the Petition Date;

   (2) Visteon owes the Debtors $582,736 for component parts
       purchased before the Petition Date;

   (3) the Debtors' Prepetition Debt will be set off against
       Visteon's Prepetition Debt, leaving Visteon with two
       allowed general unsecured non-priority claims in the
       aggregate amount of $3,964,527 in the Debtors' Chapter 11
       cases:

          (i) a $2,509,403 general unsecured non-priority claim
              in Tower Automotive Lansing, LLC's Chapter 11 case;
              and

         (ii) a $1,455,124 general unsecured non-priority claim
              in Tower Automotive Products Company's Chapter 11
              case; and

   (4) the automatic stay applicable to Visteon in the Debtors'
       cases is modified to the extent necessary to permit the
       effectuation of the set-off.

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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000)


TOYS "R" US: Moody's Downgrades Corporate Family Rating to B1
-------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of Toys "R" Us, Inc. to B1, the senior unsecured notes rating to
B3, and the Speculative Grade Liquidity Rating to SGL-2, and left
all ratings on review for possible further downgrade.  These
actions result from the significant increase in leverage as a
result of the July 21, 2005 closing of the acquisition of Toys "R"
Us, Inc. by a consortium consisting of Kohlberg Kravis Roberts &
Co., Bain Capital Partners LLC, and Vornado Realty Trust for $6.6
billion plus the assumption of debt.

Ratings downgraded and left on review for possible further
downgrade:

   * corporate family rating downgraded to B1 from Ba1;
   * senior unsecured notes rating downgraded to B3 from Ba2; and
   * speculative grade liquidity rating to SGL-2 from SGL-1.

The downgrades reflect the very significant increase in funded
debt following closing of the acquisition.  Of the $6.6 billion
purchase price, the acquirers have contributed $1.2 billion in
cash, leaving $5.4 billion to be financed via a combination of
existing cash balances and committed debt facilities, in addition
to the assumption of debt.

The new owners have obtained $6.2 billion in secured commitments
in various tranches, with borrowings under the secured revolving
credit facility initially limited to $700 million to finance the
acquisition.  With LTM April 30, 2005 EBITDA of roughly $1
billion, leverage on both a funded and lease-adjusted basis will
increase significantly.  In addition, the structure of the new
financing significantly impairs existing bondholders as a result
of the pledging of assets, both domestically and internationally.
It should also be noted that the structure of the financing
permits significant real estate divestitures, and principally all
of real estate sale proceeds are contractually required to repay
bridge indebtedness.

Moody's continuing review of Toys' long term ratings will focus
on:

   1) the final, funded capital structure for the company based on
      the new ownership;

   2) the company's strategic plan, including the timing of the
      likely real estate rationalization plan and its impact on
      revenues and cash flows;

   3) the level and timing of potential debt reductions as a
      result of likely real estate divestitures; and

   4) likely future financial policy.

The downgrade to SGL-2 of Toys' speculative grade liquidity rating
reflects:

   * the reduced financial flexibility as a result of the increase
     in leverage which will impact free cash flow and the tighter
     covenants in the bridge facilities;

   * the very limited alternative sources of liquidity available
     as a result of the pledging of all operating assets;

   * the pledging of real estate necessary to secure the $800
     million in CMBS financing; and

   * the negative pledge on all real estate.

Moody's noted that significant asset sales will be required for
Toys to meet the bridge loan covenant tests of 2.0x interest
coverage and 6.5x leverage that become operable January 28, 2006.
Moody's review will assess the internal and external sources of
cash that are likely to be available to the company, as well as
the likelihood that Toys will be able to comply with the covenants
in its bridge loan facilities.

Toys "R" Us, headquartered in Wayne, New Jersey, is the largest
specialty retailer of toys, with FYE January 2005 revenues of
$11.1 billion.  It operates stores both in the U.S. and
internationally, as well as the Babies "R" Us format.  In
addition, it sells online via the toysrus.com website which is
operated in partnership with Amazon.com.


US AIRWAYS: Asks Court to Allow Worldspan's $5 Mil. Admin. Claim
----------------------------------------------------------------
US Airways, Inc., and its debtor-affiliates want the U.S.
Bankruptcy Court for the Eastern District of Virginia to allow an
administrative priority claim in favor of Worldspan, L.P., as
compensation for certain prepetition services rendered under the
Worldspan Participating Carrier Agreement, effective February 1,
1991.

The Debtors participate in the Worldspan Global Distribution
(Reservations) System through the Worldspan PCA.  Under the
Worldspan PCA, the Debtors provide schedules, inventory, fares,
fare rules and seat availability to the Worldspan GDS.
Worldspan's subscribers use this information to sell seats on the
Debtors' flights.  In exchange for the distribution of its
information, the Debtors pay Worldspan a fee through the Airline
Clearing House system, explains Brian P. Leitch, Esq., at Arnold
& Porter, in Denver, Colorado.  The Debtors owe money to
Worldspan for prepetition services.

On September 14, 2004, the Court entered the Interline Order,
providing for the assumption of certain multilateral contracts,
including the Debtors' contract with the ACH for settlement of
interline accounts though the ACH system.

After the Petition Date, the Debtors decided not to pay the
prepetition obligations under the GDS agreements, including the
obligations owed under the Worldspan PCA.  Worldspan disputed the
Debtors' decision and claimed it was entitled to immediate
payment of the prepetition obligations, plus interest and
attorneys' fees.  Worldspan filed a request for mediation under
the ACH rules with the Secretary-Treasurer of the ACH.

To avoid the costs of mediation and the associated uncertainties,
the Debtors and Worldspan negotiated a settlement of the billing
dispute.  Under the Settlement, the Debtors will allow an
administrative priority claim in favor of Worldspan for
$5,114,172.  The settlement amount excludes interest and
attorneys' fees.  The Debtors will pay the Worldspan
administrative claim on the effective date of a plan of
reorganization.

Mr. Leitch tells Judge Mitchell that the Settlement is fair and
reasonable as it would allow the Debtors to avoid the costs,
expenses and uncertainty associated with mediation under the ACH
rules and procedures.  The Settlement also allows the Debtors to
avoid payment of the prepetition obligations until the effective
date of a plan of reorganization.  If the Debtors assume the
Worldspan PCA, the Debtors would have to make a cure payment for
the same amount anyways.  Accordingly, the Settlement is in the
Debtors' best interests and should be approved by the Court.


Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:

            * US Airways, Inc.,
            * Allegheny Airlines, Inc.,
            * Piedmont Airlines, Inc.,
            * PSA Airlines, Inc.,
            * MidAtlantic Airways, Inc.,
            * US Airways Leasing and Sales, Inc.,
            * Material Services Company, Inc., and
            * Airways Assurance Limited, LLC.

Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.

US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820).  Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts.  In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.  (US Airways Bankruptcy News, Issue
No. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000)


US AIRWAYS: Bank of New York Wants Access to $600,000 Account
-------------------------------------------------------------
The Special Project Bonds, Series 2, Continental Airlines, Inc.,
and Eastern Airlines, Inc., Project (LaGuardia East End Terminal
Special Project Bonds) were issued by the Port Authority of New
York and New Jersey to finance the construction of the US Air
East End Terminal at LaGuardia Airport.  The Bonds carry CUSIP
Nos. 73358EAA2, 7335AB0 and 7335AC8.

Originally, the Port Authority leased the East End Terminal to
Eastern Airlines, Inc., and Continental Airlines, Inc., pursuant
to a Facility Lease.  To secure its obligations on the Bonds,
Continental and Eastern, acting jointly and severally as
mortgagor, executed a Leasehold Mortgage dated June 1, 1990, in
favor of The Bank of New York, the Indenture Trustee for the
Bonds.

According to Leo T. Crowley, Esq., at Pillsbury, Winthrop, Shaw &
Pittman, in New York City, upon issuance of the Bonds, a $600,000
Account was created for the limited purpose of allowing the
Trustee to cure certain defaults under the Facility Lease.

The Trustee asks Judge Mitchell of the U.S. Bankruptcy Court for
the Eastern District of Virginia to lift the automatic stay to
exercise its remedies and access the Account to procure
reimbursement for unpaid fees and expenses on the Bonds.

After Eastern ceased operations in 1991, Continental obtained
exclusive possession of the East End Terminal and assumed sole
responsibility for Eastern's obligations under the Facility
Lease, the Leasehold Mortgage and related documents.  On
January 17, 1992, pursuant to an Assignment Agreement,
Continental assigned the Facility Lease to the Debtors.  The
Debtors also assumed Continental's liability under the Leasehold
Mortgage.  As a result, the Debtors became the lessee under the
Facility Lease and the mortgagor on the Leasehold Mortgage.

Upon the Debtors' first bankruptcy petition, the Trustee retained
GRA Inc., as consultants, to evaluate the Debtors' collateral
under the Facility Lease and the Leasehold Mortgage and to
provide advice on alternatives.  Also, the Trustee appointed GBR
Information Services as Bondholder communications agent.

To date, the Debtors have neither assumed nor rejected the
Facility Lease.  The Debtors have paid postpetition rent, but
have not paid related obligations.  Specifically, the Debtors owe
the Trustee $249,093 for fees and expenses.

The prepetition fees total $158,431, consisting of:

   (a) $21,217 for the Bank of New York's fees;

   (b) $30,000 for GRA's slot appraisal;

   (c) $29,595 for GBR's other services; and

   (d) $77,619 for attorney's fees.

For postpetition fees, the Trustee wants reimbursement of:

   -- $13,828 for Trustee's fees; and
   -- $76,834 for attorney's fees.

The $249,093 in accrued fees and expenses, absent the bankruptcy
filing, could be cured by the application of the $616,119 in the
Account, Mr. Crowley tells Judge Mitchell.

The Court must lift the automatic stay and allow the Trustee to
access the Account, Mr. Crowley asserts.  The Debtors' estate is
not deprived of any value if the funds in the Account are
released to the Trustee, as the Debtors only have a conditional
right to the Account.

"Since the Debtors have a significant presence at LaGuardia,
which is considered one of the Debtors' focus cities, the
Facility Lease will likely be assumed in a plan of
reorganization," Mr. Crowley explains.

Accordingly, the Debtors will be obligated to cure the default
and pay the Trustee.

If the Debtors reject the Facility Lease, the Trustee has a
perfected security interest in the Account.  Therefore, the
Trustee, as a secured creditor, will be entitled to recover the
$249,093.

"In either case, it is inevitable that the Trustee will collect
the amount owed." Mr. Crowley says.

Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:

            * US Airways, Inc.,
            * Allegheny Airlines, Inc.,
            * Piedmont Airlines, Inc.,
            * PSA Airlines, Inc.,
            * MidAtlantic Airways, Inc.,
            * US Airways Leasing and Sales, Inc.,
            * Material Services Company, Inc., and
            * Airways Assurance Limited, LLC.

Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.

US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820).  Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts.  In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.  (US Airways Bankruptcy News, Issue
No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000)


US DATAWORKS: Posts $968,000 Net Loss in First Quarter 2006
-----------------------------------------------------------
US Dataworks (Amex: UDW) reported financial results for the first
quarter of fiscal 2006.

Revenues for the fiscal 2006 first quarter were $1.1 million
compared to revenues of $903,132 for the same period a year ago.
Operating loss for the first quarter was $939,962 compared to an
operating loss of $957,035 for the first quarter of fiscal 2004.
Net loss for the first quarter was $968,800, compared to a net
loss of $1.4 million for the corresponding period in the prior
year.

"We are pleased to report year over year growth in revenues and,
in particular, marked improvement in revenues over our recent
fourth quarter of 2005 results," stated Charles E. Ramey, CEO of
US Dataworks.  "We are also pleased to have recently announced
that we have exceeded the one billion (1,000,000,000) transaction
threshold using our Clearingworks(TM) payment platform and remain
confident about our growth opportunities over the next several
years as the electronification(SM) of payment processing
increases.

"Additionally, we have added several new brand name accounts and
believe our Clearingworks product suite is being embraced,
embedded and standardized into the fabric of some of the world's
name brand financial institutions."

US Dataworks is a developer of payment processing solutions,
focused on the Financial Services market, Federal, State and local
governments, billers and retailers.  Software developed by US
Dataworks is designed to enable organizations to transition from
traditional paper-based payment and billing processes to
electronic solutions that automate end-to-end processes for
accepting and clearing checks.

                        Going Concern Doubt

Ham, Langston & Brezina, LLP, expressed substantial doubt about US
Dataworks Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the year ended
Mar. 31, 2005.  The auditing firm points to the Company's losses
and negative cash flow from operations.

Revenues for the fiscal 2005 fourth quarter were $656,000 compared
with revenues of $1,580,000 for the same period a year ago.  Last
year, the company closed a significant license upgrade transaction
in the fourth quarter that resulted in approximately $900,000 of
revenue and did not record a similar large licensing transaction
in the current year.  Operating loss for the quarter was
$1,444,000 compared to an operating loss of $123,000 for the
quarter ended March 31, 2004.  Net loss for the fourth quarter was
$1,447,000, or $0.05 per share, compared to a net loss of $344,000
or $0.01 per share, for the corresponding period in the prior
year.


USG CORP: Revises Non-Employee Directors' Compensation Program
--------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Stanley L. Ferguson, USG Corporation's Executive Vice
President and General Counsel, reports that on July 20, 2005, the
company approved revisions in its compensation program for non-
employee directors.

Mr. Ferguson discloses that effective July 1, 2005, each
director's annual retainer increased from $48,000 to $60,000 --
payable quarterly at the rate of $15,000 -- and the quarterly
retainer for committee chair persons increased from $1,600 to
$2,000.  There is no change in the $1,600 fee payable for each
Board or committee meeting attended and for involvement in
planning or preparing for Board or committee meetings and other
Board related projects, including director education.

In addition, in place of the 500 shares of common stock granted
annually each July 1, Mr. Ferguson says that non-employee
directors may elect to receive either $30,000 in cash or the
equivalent paid in common stock, beginning on July 1, 2006.

Mr. Ferguson notes that the terms of the common stock election
will be finally determined later because any election to defer
payment in stock is subject to new deferred compensation
legislation for which USG is awaiting final guidance from the
Internal Revenue Service.

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. 92; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


VARIG S.A.: Accounts for 3.5% of Boeing's Total Portfolio
---------------------------------------------------------
The Boeing Company discloses in a Form 10-Q filing with the U.S.
Securities and Exchange Commission that at June 30, 2005, Viacao
Aerea Rio-Grandense accounted for $327,000,000 or 3.5% of
Boeing's total portfolio.

On June 17, 2005, VARIG filed a request for reorganization which
was granted on June 22, 2005 by Brazilian courts.  Under the laws
of Brazil, VARIG has 60 days from July 13, 2005, the date the
court order was published in the official gazette, to present a
reorganization plan.

As of June 18, 2005, Boeing says VARIG has resumed making rent
and maintenance reserve payments, except past due obligation
payments.

Boeing exercised early lease termination rights and took
possession of two MD-11 aircraft from VARIG in April 2005 in the
amount of $73,000,000.  The aircraft were subsequently sold to
another customer.

At June 30, 2005, the VARIG portfolio consisted of two 737
aircraft and seven MD-11 aircraft.

In recent years, VARIG has repeatedly defaulted on its
obligations under leases with Boeing, which has resulted in
deferrals and restructurings, some of which are ongoing.  Boeing
does not expect the VARIG transactions, including the impact of
any future restructurings, to have a material adverse effect on
its earnings, cash flows or financial position.

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia.  VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.

The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage.  The Debtors may be the first case under the new law,
which took effect on June 9, 2005.  Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization.  Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil

Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative.  In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-
14400 and 05-14402).  Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States.  As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts.  (VARIG Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


VARIG S.A.: Taps Lufthansa Consulting as Restructuring Advisor
--------------------------------------------------------------
Brazil's leading airline VARIG commissions the experts of
Lufthansa Consulting with the reorganization and restructuring of
the company.  The consultancy contract with a term of six months
was signed on 13 July 2005 in Rio de Janeiro.  A LCG project team
immediately started work on site.

VARIG filed an application for the protection of creditors at the
Bankruptcy Court analogous the U.S. legislation in Chapter 11.  In
accordance with Brazilian law the carrier must develop an
appropriate restructuring plan within 60 days as well as the
related business plan and submit these to the Bankruptcy Court.

If the Court accepts the proposed plans, the implementation phase
must be completed within a maximum period of 120 days thereafter.
The project agreement with Lufthansa Consulting provides for the
support of the airline during this procedure, which will be
applied for the first time ever in Brazil.

"We were looking for a consultant with an in-depth understanding
of the industry, an interdisciplinary approach and strong
implementation skills in order to generate short-term
profitability gains, and long-term competitive advantages for
VARIG.  We have assigned the project to Lufthansa Consulting
because we believe they meet these criteria", stated Omar Carneiro
da Cunha, President of VARIG, during the contract signing
ceremony.

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia.  VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.

The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage.  The Debtors may be the first case under the new law,
which took effect on June 9, 2005.  Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization.  Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil

Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative.  In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-
14400 and 05-14402).  Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States.  As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts.  (VARIG Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 215/945-7000)


VERTIS INC: June 30 Balance Sheet Upside-Down by $508.6 Million
---------------------------------------------------------------
Vertis, Inc., reported results for the three and six months ended
June 30, 2005.

Second quarter 2005 net sales of $393.9 million were on par with
2004 net sales of $394.1 million.  For the six months ended June
30, 2005 net sales amounted to $779.7 million, a decline of $5.0
million, or 0.6%, versus 2004.  Excluding the change in the pass-
through cost of paper totaling $7.9 million in the second quarter
and $17.5 million through June, net sales would have declined by
2% and 3% in the three- and six-month periods ended June 30, 2005,
respectively.

The second quarter net loss was $29.0 million while net loss for
the first half was $159.0 million.  The increase in net loss of
$136.1 million through June 30 includes $112.4 million of non-cash
asset impairment charges and an increase in restructuring charges
of $15.3 million.

"We completed a number of actions in the first half of 2005 that
have streamlined our operations and reduced costs across the
entire company.  We reduced staffing levels by over 470 positions.
The activities to date will provide over $32 million in annualized
cost savings, over $7 million of which is included in our first
half results," stated Dean D. Durbin, President and Chief
Operating Officer.

"Our trailing twelve-month EBITDA for covenant purposes improved
to $176.5 million versus the $160 million minimum requirement.
From a liquidity perspective, we ended the quarter with $99
million available on our revolving credit facility," stated
Stephen E. Tremblay, chief financial officer.  EBITDA for covenant
purposes is not equivalent to the EBITDA amount included elsewhere
in this earnings release, but rather is net of adjustments to
exclude certain items as defined under the credit agreement.  Mr.
Tremblay also noted, "In the second quarter we resolved the
contingency related to certain critical vendor payments which we
first disclosed in 2003.  The settlement resulted in a charge of
$200,000 which is included in selling, general, and administrative
expenses."

Regarding the short-term outlook, Mr. Durbin stated, "Building on
the second quarter momentum, we continue to expect year-over-year
EBITDA growth for the full-year 2005. We are focusing on top-line
growth, operational excellence, and reducing our overall cost
base."

                      North America Segment

Net sales amounted to $363.4 million in the second quarter of 2005
versus $358.0 million in the second quarter of 2004, an increase
of $5.4 million, or 1.5%.  Through June 30, 2005 net sales
amounted to $717.3 million compared to $711.8 million in 2004, a
$5.5 million, or 0.8%, year-over-year increase.  Excluding the
increase in the pass-through cost of paper totaling $8.4 million
in the second quarter and $18.4 million through June 30, net sales
would have been on par with the second quarter of 2004 and 2% less
than the first half of 2004.

Commenting on the second quarter, Mr. Durbin, stated, "The double-
digit growth in North America EBITDA is a significant achievement
and represents a turnaround from what we experienced in the first
quarter.  Although volume, especially for retail inserts, has been
less than expected, we are pleased with the improvement in
pricing, including the impact of more favorable mix.  We continue
to manage our cost base and improve our operational effectiveness
while pursuing top-line growth initiatives," noted Mr. Durbin.

                        Europe Segment

Net sales amounted to $30.5 million in the three months ended June
30, 2005 and  $62.4 million in the six months ended June 30, 2005.

"As we reported at the start of the second quarter, we are
continuing to pursue strategic alternatives with respect to our UK
direct mail business," said Mr. Durbin.  "To date, however,
difficult conditions in our European business have negatively
impacted Vertis' overall financial performance."

Vertis is the premier provider of targeted advertising, media, and
marketing services.  Its products and services include consumer
research, audience targeting, media planning and placement,
creative services and workflow management, targeted advertising
inserts, direct mail, interactive marketing, packaging solutions,
and digital one-to-one marketing and fulfillment.  Headquartered
in Baltimore, with facilities throughout the US and the UK, Vertis
combines technology, creative resources, and innovative production
to serve the targeted marketing needs of companies worldwide.

At June 30, 2005, Vertis Inc.'s balance sheet showed a
$508,603,000 stockholders' deficit, compared to a $348,560,000
deficit at Dec. 31, 2004.


WESTERN WIRELESS: ALLTEL Deal Completion Cues S&P to Remove Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services upgraded its ratings of
Bellevue, Washington-based regional wireless carrier Western
Wireless LLC, the successor by merger to Western Wireless Corp.,
including the long-term corporate credit rating, which was raised
to 'A' from 'B-'.  The ratings simultaneously were removed from
CreditWatch, where they were placed with positive implications on
Jan. 10, 2005, following the announced merger agreement between
Little Rock, Arkansas-based diversified telecommunications carrier
ALLTEL Corp. and Western Wireless.

"We withdrew the rating on Western Wireless' $1.5 billion of
secured bank facilities, because borrowings under this facility
have been repaid by ALLTEL," said Standard & Poor's credit analyst
Catherine Cosentino.  "At the same time, we affirmed the existing
ratings on ALLTEL, including the 'A' corporate credit rating, and
assigned our 'A' rating to ALLTEL's $700 million unsecured
revolving credit maturing in 2006," she continued.  The outlook is
negative. These actions follow the recent completion of the merger
between ALLTEL and Western Wireless.  Pro forma debt for the
combined company as of March 31, 2005, was about $5.6 billion.

The ratings on ALLTEL benefit from a well-managed regional
wireless business, which has experienced good subscriber growth
and postpaid churn in line with industry averages.  The company's
credit profile also is largely bolstered by the strength and
stability of its incumbent local exchange carrier business, albeit
in an increasingly competitive environment.  The wireline business
constitutes about one-third of the company's overall revenue base.
With the Western Wireless merger, ALLTEL's domestic wireless
business is expected to be about 67% of its total revenues.
Ratings on ALLTEL also reflect the company's significant financial
strength (as demonstrated by its generation of about $840 million
in net free operating cash flow after capital expenditures and
common and preferred dividends in 2004).  The company continues to
benefit from very good liquidity and a solid balance sheet.


WINN-DIXIE: Objects to Heritage's Stand to Shorten Decision Period
------------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
July 1, 2005, on June 3, 2004, Winn-Dixie Stores, Inc., and its
debtor-affiliates executed a contract for the purchase of goods
from Heritage Mint, Ltd.  Heritage began shipping goods on
Feb. 15, 2005.

The Contract contains recoupment and reconciliation provisions
that allow Heritage to credit the Debtors' account upon their
return of goods in "original factory seals unopened master
cartons."

Heritage asks the U.S. Bankruptcy Court for the Middle District of
Florida to compel the Debtors to assume or reject the Contract.

Heritage believes that the nature of its interests with respect
to the deliveries, the returns and the Contract make immediate
assumption or rejection necessary.  If the Contract is rejected,
the Debtors' estate and postpetition lenders may have claims to
the goods to the extent of the valued of the postpetition
deliveries, and thus, Heritage cannot receive the returns without
Court approval.  If the Contract is assumed, Heritage is
obligated to accept the returns and enforce its recoupment
rights.

                          Debtors Object

The Debtors ask the Court to deny Heritage Mint, Ltd.'s Motion
because, among other things, Heritage has not established a
compelling reason why the time for the Debtors to decide whether
to assume or reject the Contract should be shortened.

Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in
Jacksonville, Florida, relates that the issue between the parties
is that the Debtors want to return $400,000 in unsold goods but
Heritage does not want to accept their return.  Heritage believes
that third parties may have claims against the Goods and is
dissatisfied with the ramifications of the potential third party
interests.  This is not a compelling reason to require the
Debtors to prematurely assume or reject the Contract, Ms. Jackson
says.

At this early stage of their complex Chapter 11 cases, the
Debtors should not have to determine whether to assume or reject
the Contract and provide one vendor better treatment than the
other vendors.  Moreover, Heritage will not be harmed by allowing
the Debtors to return the Goods because the Debtors now
understand that Heritage already has a purchaser for the Goods.

The Debtors have thousands of contracts with their many vendors,
are currently in the process of evaluating and analyzing their
businesses, and are making progress in deciding which contracts
to keep and which to reject.  If the Motion is granted, numerous
other vendors may bring similar motions seeking to shorten the
time for the Debtors to assume or reject their contracts before
the Debtors are ready to make that determination.

Furthermore, Ms. Jackson points out that the Motion seeks to
circumvent the reclamation reconciliation process by requiring
the Debtors to assume or reject the Contract.  The reclamation
procedures and other provisions of the Final Reclamation Order
are the sole and exclusive Court-approved method for the
resolution of reclamation claims.  The Debtors have served
Heritage with a Statement of Reclamation pursuant to the terms of
the Final Reclamation Order.  If Heritage disagrees with its
Statement of Reclamation, it should disagree in accordance with
the terms of the Final Reclamation Order.

Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers.  The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people.  The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063).  The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville.  On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840).  D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000).


WINN-DIXIE: Vera Volovecky Wants Stay Lifted to Pursue Claim
------------------------------------------------------------
In April 2003, while purchasing groceries at a Winn-Dixie store
in Baldwin County, Alabama, Vera Volovecky slipped and fell on a
wet floor, which was being maintained without adequate notice to
her.

Brian P. Britt, Esq., at Kopesky & Britt, LLC, in Fairhope,
Alabama, asserts that due to Winn-Dixie Stores, Inc., and its
debtor-affiliates' negligence, Ms. Volovecky sustained injuries
and damages.  The impact on the floor has caused persistent pain
in Ms. Volovecky's left hip and leg area.  The injury disabled Ms.
Volovecky to the extent that she could not work resulting in a
loss of income.  She continues to suffer pain in her lower back
and hip area and continues to incur medical expenses.

Ms. Volovecky filed a complaint in the Circuit Court of Baldwin
County, Alabama, demanding judgment against the Debtors for
$500,000 and costs.

Accordingly, Ms. Volovecky asks the U.S. Bankruptcy Court for the
Middle District of Florida to lift the automatic stay so that she
may pursue her claims against the Debtors.

Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers.  The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people.  The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063).  The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville.  On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840).  D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000).


WINN-DIXIE: Wants to Deny Transamerica's Request for Payment
------------------------------------------------------------
Transamerica Life Insurance Company owned the property where the
Debtors operate Winn-Dixie Store No. 1908 at The Village on
Whitesburg, in Huntsville, Alabama.

Winn-Dixie Atlanta, Inc., now Winn-Dixie Montgomery, Inc., is the
tenant under a lease dated September 4, 1986.  Transamerica is
the landlord under that Lease pursuant to an assignment from the
original landlord.  Winn-Dixie Stores, Inc., is the guarantor of
the obligations of the tenant under the Lease pursuant to the
terms of a guaranty dated September 25, 1986.

C. Timothy Corcoran, III, Esq., in Tampa, Florida, notes that
Winn-Dixie Stores, Inc., and its debtor-affiliates have not sought
to assume or reject the Lease.  By an order issued on May 6, 2005,
the Court extended the time for the Debtors' lease decision period
to September 19, 2005.  In that order, the Court also directed the
Debtors to honor all postpetition rental obligations arising under
the Lease.

Transamerica believes the Debtors owe it $76,222 in postpetition
rental obligations:

       Common Area Maintenance                $36,777
       Insurance                                2,533
       Property Tax                            36,912
                                              -------
       Total                                  $76,222

Pursuant to the Lease, Mr. Corcoran says, these amounts are
required to be paid to Transamerica and have become due and
payable after the filing of the Debtors' bankruptcy cases.

Mr. Corcoran tells the U.S. Bankruptcy Court for the Middle
District of Florida that Winn-Dixie failed to pay the amount on
the due date.  On May 19, 2005, Transamerica notified the counsel
for the Debtors and the Official Committee of Unsecured Creditors
regarding the default.  Despite the warning, the Debtors still did
not pay.

By this application, Transamerica asks the Court to allow it an
administrative expense claim for $76,222.

The rental obligations are administrative expense obligations
because, under the terms of the Lease, they became due and
payable postpetition, Mr. Corcoran explains.

Mr. Corcoran informs the Court that Transamerica sold the
property and assigned the lease to VOW, LLC, an Alabama limited
liability company.  The terms of the sale give the Landlord the
right to collect former delinquencies.  If VOW receives payment
for the delinquent lease, the payment should be forwarded to
Transamerica Life Insurance Company, Mr. Corcoran says.

                          Debtors Respond

The Debtors point out that the Prepetition Invoice was sent to
them on February 16, 2005 -- five days prior to the Petition
Date.  Thus, the Prepetition Invoice does not only accrue
prepetition but was invoiced prepetition.  Apparently,
Transamerica contends that this debt is postpetition because the
Prepetition Invoice was not received by the Debtors until
March 3, 2005, Cynthia C. Jackson, Esq., at Smith Hulsey & Busey,
in Jacksonville, Florida, notes.

But regardless of whether the Prepetition Invoice was received
prepetition or postpetition, Ms. Jackson argues that where the
lease obligations at issue accrued prepetition and relate to
prepetition use of the property, the clear majority of courts
considering the issue have adopted the "accrual" approach and
held that those obligations are prepetition obligations,
notwithstanding that they may have "become due" postpetition.

"The Prepetition Invoice relates entirely to amounts that accrued
during the prepetition period and are, thus, not obligations that
should be paid under section 365(d)(3) of the Bankruptcy Code,"
Ms. Jackson argues.

Accordingly, the Debtors ask the Court to deny Transamerica's
request.

Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers.  The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people.  The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063).  The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville.  On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840).  D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts.  When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000).


WORLDCOM INC: Wants Ebbers Litigation Stayed Pending Settlement
---------------------------------------------------------------
Reorganized WorldCom, Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to approve
their settlement agreement with former WorldCom Chief Executive
Officer Bernard J. Ebbers and the New York State Common Retirement
Fund.

The New York Fund is the lead plaintiff and class representative
for the certified class in the case styled In re WorldCom
Securities Litigation, 02 Civ. 3288 (DLC)(S.D.N.Y.) and certain
related intercreditor arrangements with the Class.

Mr. Ebbers is a defendant in the WorldCom Securities Litigation.

                       Separation Agreement

Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US, LLP, in
New York, relates that Mr. Ebbers owed the Debtors a $408.2
million loan, which was restructured and consolidated into a
promissory note with a five-year maturity.

Simultaneous with the restructuring of the Ebbers Loans, Mr.
Ebbers agreed to resign as WorldCom's chief executive officer and
director and the Debtors agreed to:

    -- pay Mr. Ebbers a lifetime pension of $1.5 million annually
       and upon his death, a lifetime pension of $750,000 annually
       to his spouse;

    -- provide Mr. Ebbers with lifetime medical and life insurance
       benefits;

    -- allow Mr. Ebbers to use WorldCom's aircraft on a limited
       basis;

    -- provide Mr. Ebbers a computer;

    -- lease Mr. Ebbers office space;

    -- accelerate the vesting of Mr. Ebbers' stock options and
       allow him up to five years to exercise them;

    -- continue in effect WorldCom's indemnification of Mr.
       Ebbers; and

    -- enter into a mutual release with Mr. Ebbers that would
       generally release WorldCom's claims against Mr. Ebbers
       except in connection with fraud, willful misconduct, gross
       negligence or criminal acts.

                          Ebbers' Claims

On January 22, 2003, Mr. Ebbers filed Claim No. 20659, asserting
administrative expense claims and general unsecured claims for:

    -- amounts allegedly due or that become due under the
       Separation Agreement;

    -- WorldCom's indemnification and related expense
       reimbursement obligations under the Restated Bylaws of
       WorldCom, Inc.; and

    -- WorldCom's obligations under a guaranty and letter
       agreements executed thereunder.

Mr. Ebbers also asserted a setoff claim relating to the assets and
interests he pledged to the Debtors and sold during the Debtors'
Chapter 11 cases.  The Setoff Claim does not specify any amount
but asserts claims to the extent of any liability of the Debtors.

In October 2003, Mr. Ebbers filed Claim No. 36383, asserting a
$12,166,752 unsecured non-priority claim on account of rejected
stock options.

                  The Ebbers Adversary Proceeding

On July 9, 2004, the Debtors filed an adversary proceeding against
Mr. Ebbers:

    (i) seeking avoidance as fraudulent transfers certain
        transactions between the Debtors and Mr. Ebbers that were
        executed within one year before the Petition Date;

   (ii) demanding immediate turn over of amounts Mr. Ebbers owed
        the Debtors under the Term Note; and

  (iii) objecting to Mr. Ebbers' claims.

The Court stayed the Adversary Proceeding on November 29, 2004,
except with respect to the Debtors' ability to file a summary
judgment motion in connection with the Term Note.

                           NY Fund Claims

On January 21, 2003, the New York Fund filed Claim Nos. 18172 to
18176, as an individual creditor and as representative of the
Class.  Subsequently, the Debtors objected to certain claims
related to securities fraud, including Claim Nos. 18172 to 18176.

The Court expunged the vast majority of the Securities Fraud
Claims in July 2003, and adjourned the hearing with respect to
certain claimants that filed responses to the Debtors' Objection.

The Debtors subsequently filed a summary judgment motion as to the
Securities Fraud Claims, arguing that the claims are subordinated
under Section 510(b) of the Bankruptcy Code and therefore are not
entitled to any distributions under the Plan.  The Summary
Judgment Motion has been briefed and argued before Judge Adlai S.
Hardin, Jr., and is currently under advisement.

                       The Ebbers Settlement

The United States Attorney for the Southern District of New York
facilitated a three-way settlement discussion among the Debtors,
the Class and Mr. Ebbers to negotiate a settlement, providing for
the disposition of Mr. Ebbers' assets.

Mr. Walsh relates that the Debtors, the Class and Mr. Ebbers have
agreed to a proposed settlement to resolve the Adversary
Proceeding, the Ebbers Claims and the NY Fund Claims.

On July 22, 2005, the Debtors asked the United States District
Court for the Southern District of New York to approve the
Stipulation of Settlement with Mr. Ebbers.  The District Court
approved the Settlement on July 25, 2005.

The principal terms of the Settlement with Mr. Ebbers are:

    (a) Mr. Ebbers will transfer all of his assets, excluding
        certain retained cash; certain oil and gas mineral
        interests; the residence in Jackson, Massachusetts, owned
        by Kristie Ebbers; certain IRA assets; and all personalty
        other than farm vehicles, to:

           * as to the Assets identified in the Term Sheet as the
             Certain Cash Assets, an escrow account under the
             control of the Class and for the exclusive benefit of
             the Class; and

           * as to all other Assets, a liquidating trust to be
             established for the purpose of liquidating assets and
             distributing proceeds to the Class and the Debtors;

    (b) Mr. Ebbers was obligated to satisfy the ERISA Note for
        $450,000, from the Excluded Assets before July 13, 2005.
        This requirement has been satisfied;

    (c) Mr. Ebbers will be required to pay certain attorneys' fees
        incurred from the Excluded Assets.  Mr. Ebbers will be
        required to transfer from the Excluded Assets into an
        escrow account certain funds for the payment of future
        legal fees, with the unused amount payable to the Trust;

    (d) The Trust is to be established for the purposes of
        liquidating the Trust Assets and distributing the proceeds
        to the Debtors and the Class.  The Debtors will contribute
        the Joshua Holdings promissory note, payable to Mr. Ebbers
        by Joshua Holdings, LLC, and endorsed to the Debtors as
        collateral security for payment of the Term Note, subject
        to its lien interest, to the Trust.  The Debtors and the
        Class will be the beneficiaries of the Trust.  Mr. Ebbers
        will cooperate fully with the Debtors, the Class and the
        individual or firm engaged as the liquidating agent of the
        Trust, as well as their professionals;

    (e) Mr. Ebbers will acknowledge unconditionally that:

           * The indebtedness under the Term Note is fixed and
             liquidated for $400,000,000;

           * The Indebtedness is presently due and payable; and

           * There are no defenses to the enforcement of the Term
             Note and the collection of the Indebtedness is not
             subject to any offsets, credits or deductions; and

    (f) Mr. Ebbers will withdraw, with prejudice, all claims and
        counterclaims asserted against the Debtors.

The principal terms of the Settlement and Intercreditor Term Sheet
are:

    (a) The net proceeds realized from the Trust Assets will be
        distributed in this manner:

           (1) The Debtors will be entitled to the first $300,000
               of net proceeds realized from the Trust Assets.

           (2) Subject to the provision for the first $300,000,
               the Class will receive 100% of the net proceeds
               realized in the sale of the Tupelo Hospitality
               Company, LLC, assets.

           (3) Cash of BJE Properties, LLC, aggregating $173,000,
               will fund the initial costs of administration of
               the Trust.

           (4) Subject to the provisions regarding the allocation
               of net proceeds realized from the Trust Assets and
               except in connection with the prospective
               liquidation of the Note, the Class will receive 75%
               of the net proceeds of the Trust Assets.  The
               Debtors will receive 25% of the net proceeds of the
               Trust Assets.

    (b) The Debtors agree that the MCI Recovery will be held in
        escrow by the Trust until the earlier of

           (1) the sale of the Note; or

           (2) the termination of the Trust.

        In the event the Note is not liquidated as of the date of
        the termination of the Trust, the Class will be entitled
        to the MCI Recovery, up to the capped amount of $8.5
        million.  The Note will be transferred from the Trust to
        the Debtors and the Debtors will be entitled to liquidate
        the Note for its own account.

        If the Note is liquidated prior to the termination of the
        Trust, the net proceeds of the Note and any additional net
        proceeds from the sale of Joshua Timberlands will be
        distributed two thirds to the Class and one third to the
        Debtors, and the Debtors will be entitled to receive the
        MCI Recovery in full.

    (c) Five percent of the net proceeds of the Trust will be set
        aside in escrow and available to fund appropriately
        documented settlements of claims of litigants against Mr.
        Ebbers arising during the period 1998 to 2002.  The Third
        Party Claims Fund will expire 12 months from the date of
        the Trust Agreement.  The unused balance of the Third
        Party Claims Fund, if any, will be distributed to the
        Class and the Debtors.

    (d) Subject to the satisfaction of certain conditions in the
        Term Sheet, the Trustee will establish an escrow account
        to fund Mr. Ebbers' legal fees and expenses in the event
        of a retrial of the criminal proceeding.  In the event Mr.
        Ebbers' appeal to the Second Circuit Court of Appeals is
        denied or at the 15th month anniversary of the effective
        date of the Trust, whichever is earlier, the Retrial
        Reserve will be available for distribution to the Class
        and the Debtors.  However, if a retrial is granted before
        the Anniversary Date but has not commenced by that date,
        the Retrial Reserve will be available to Mr. Ebbers after
        the Anniversary Date to pay legal fees and expenses of a
        retrial.

    (e) The New York Fund will withdraw, with prejudice, any and
        all claims it filed, individually and on behalf of the
        Class, in the Debtors' bankruptcy cases.

Mr. Walsh states that these conditions must be satisfied prior to
the effectiveness of the Settlement:

    (a) The Bankruptcy Court's approval of the Settlement;

    (b) Final approval of the Stipulation of Settlement;

    (c) The District Court's approval of the Settlement in the
        case styled Securities and Exchange Commission v.
        WorldCom, Inc., Civ.No. 02-CV-4963.  This condition has
        been satisfied; and

    (d) The Bankruptcy Court's approval of the Reorganized
        Debtors' Motion for an order (i) authorizing and approving
        the compromise and settlement of Securities Class Action
        Proofs of Claim; and (ii) disallowing and expunging
        certain claims as duplicative.

In the event the Settlement is not approved or fails to become
effective for any reason, the balance of the MCI Recovery will be
refunded to Mr. Ebbers, including interest accrued.  All Trust
Assets then held in the Trust will be returned to Mr. Ebbers.
The Acknowledgement will be rescinded.

Mr. Walsh relates that on July 11, 2005, Judge Cote granted
preliminary approval of the Stipulation of Settlement, with the
final approval hearing scheduled for September 9, 2005.

Mr. Walsh asserts that under the terms of the Settlement, a
mechanism will be established to ensure that the Debtors will
participate meaningfully as a creditor with respect to
substantially all of the remaining assets owned by Mr. Ebbers.

Furthermore, by resolving all existing and potential disputes with
Mr. Ebbers, the Debtors will be able to avoid the expense and
delay of engaging in complex litigation that would require a
significant amount of time and resources.  Instead, the Debtors
will receive a potentially significant distribution upon
liquidation of the Trust Assets.

The Reorganized Debtors further ask the Court to stay the
Adversary Proceeding pending the effectiveness of the Settlement,
upon final approval of the Stipulation of Settlement in the Class
Litigation.

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. 96; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


W.R. GRACE: Wants to Sell SP Business to Sancap for $4.6 Million
----------------------------------------------------------------
Situated in Owensboro, Kentucky, W.R. Grace, Inc., and its debtor-
affiliates run a Specialty Polymers business that manufactures and
sells specialty polymers, including polyvinylidene chloride and
other emulsion latex polymers used in packaging and other barrier
applications.

David W. Carickhoff, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub P.C., in Wilmington, Delaware, relates that the
SP Business was originally part of a business divested by W.R.
Grace, Inc., in 1991.

In July 2000, W.R Grace & Co.-Conn. reacquired the business for
nominal consideration.  Mr. Carickhoff tells Judge Fitzgerald
that the business expectations underlying the acquisition were
not realized.

Mr. Carickhoff discloses that the SP Business' revenue and net
income in 2004 -- assuming a 36% tax rate -- was $19,259,000 and
($282,000).  The Debtors concluded that it had no strategic
potential, and that its growth prospects fell below Grace's
standards for return on investments.

In February 2004, the Debtors began to actively pursue the sale
of the SP Business.  Mr. Carickhoff recounts that the Debtors
prepared a list of possible buyers; but because of the age and
specialized applicability of the assets, the Debtors determined
to limit their contacts to seven prospective buyers in whose
business the assets appeared to have strategic value.

Subsequently, expressions of interest were received from Scott
Bader PLC, Solvay America, Inc., ELCAT, and Yule Catto PLC.

Mr. Carickhoff informs the U.S. Bankruptcy Court for the District
of Delaware that all the interested parties were significant
manufacturers, and Scott Bader and Solvay were producers of PVdC
latex.  Scott Bader, Solvay and ELCAT undertook due diligence and
only Solvay completed the process.  Those efforts, however, did
not produce any final offers, and in March 2005, Grace decided to
terminate the SP Business and liquidate its assets.

Mr. Carickhoff explains that in examining the cost of terminating
the SP Business, the Debtors obtained estimates for the
liquidation of the assets indicating that the production assets
would have minimal liquidation value.  Because of the age of the
buildings and environmental issues, the Debtors' real estate
specialists believe that the land and buildings used in the
business have minimal value.

The announcement of the proposed closing of the SP Business
elicited three expressions of interest from additional
prospective buyers -- SANCAP Liner Technology, Inc., Grace
Matthews, and Specialty Polymers Incorporated.

Mr. Carickhoff states that SANCAP and Grace Matthews conducted
due diligence, but only SANCAP made a final offer.

Accordingly, pursuant to an order establishing procedures for the
sale or abandonment of de minimis assets, the Debtors propose to
sell their SP Business to SANCAP for $4,600,000 payable in cash
on the closing date.

The purchase price is subject to a post-closing adjustment dollar
for dollar by any amount by which the current assets of the
business as of the closing date are greater or lesser than the
amount paid at the closing.

The Sale of substantially all of the assets includes:

    (1) manufacturing facility buildings and fixtures, but not the
        land on which they are located;

    (2) machinery, equipment, and other tangible personal
        property;

    (3) inventories;

    (4) patents and patent applications, trademark registrations
        and applications, and other intellectual property;

    (5) accounts receivable;

    (6) contract rights;

    (7) transferable licenses and permits; and

    (8) document, records and files.

As part of that transaction, the Debtors intend to lease land for
nominal rent under a ground lease with an initial term of 40
years, plus three options to renew for successive periods of 20,
20 and 19 years.

The Debtors will retain and indemnify SANCAP against all pre-
closing liabilities, including environmental liabilities on the
leased land.

The Debtors advise that any party wishing to file an alternative
bid for the SP Business must serve its bid in writing on the co-
counsel for the Debtors, and counsel to:

    -- the Official Committee of Unsecured Creditors;
    -- the Official Committee of Property Damage Claimants;
    -- the Official Committee of Personal Injury Claimants;
    -- the Official Committee of Equity Holders; and
    -- the Futures Claimants' Representative.

It must also be served to the Office of the United States
Trustee.

Any alternative bid must exceed the original offer and must
contain terms that are otherwise equivalent or superior to the
terms of the original offer.

In the event that the Debtors do not receive any written
objections to the Sale on or before August 5, 2005, the Debtors
are authorized to proceed with the Sale without further Court
approval.

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. 92; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


YOUR HOME: Case Summary & 19 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Your Home Oxygen, Inc.
        2393 West 27th Street, Suite 519
        Greeley, Colorado 80634

Bankruptcy Case No.: 05-29289

Type of Business: The Debtor sells medical supplies and
                  equipment.  See http://www.yourhomeoxygen.com/

Chapter 11 Petition Date: August 3, 2005

Court: District of Colorado (Denver)

Judge: A. Bruce Campbell

Debtor's Counsel: David Wadsworth, Esq.
                  Sender & Wasserman, P.C.
                  1999 Broadway, Suite 2305
                  Denver, Colorado 80202
                  Tel: (303) 296-1999

Estimated Assets: $100,000 to $500,000

Estimated Debts:  $1 Million to $10 Million

Debtor's 19 Largest Unsecured Creditors:

   Entity                     Nature of Claim       Claim Amount
   ------                     ---------------       ------------
Don Paul Respiratory          Trade debt                $900,000
Services, Inc.
A Subdivision of Rotech
Healthcare, Inc.
2533 11th Avenue
Greeley, CO80631

VGM Financial Services        Trade debt                 $71,370
P.O. Box 1620                 Value of security:
Waterloo, IA 52704            $64,000

Union Colony Bank             Trade debt                 $64,850
1701 23rd Avenue              Value of security:
Greeley, CO 80634             $64,000

Union Colony Insurance        Trade debt                 $12,000

Buckeye Welding Supply        Trade debt                  $2,888

Rocky Mountain Health Plans   Trade debt                  $2,631

Resource Property Management  Trade debt                  $1,303

Respironics                   Trade debt                    $849

Valero Marketing & Supply     Trade debt                    $496

DeBey's Service               Trade debt                    $350

Care Medical and Rehab        Trade debt                    $150
Equipment

Aflac                         Wages                         $141

Coren Printing, Inc.          Trade debt                    $122

Aflac                         Trade debt                     $95

Medline Industries            Trade debt                     $82

Mallinckrodt, Inc.            Trade debt                     $75

Respiratory Homeware          Trade debt                     $58
Services

Bratton's Office Equipment    Trade debt                     $35

Valley Fire Extinguisher      Trade debt                     $15


ZIFF DAVIS: Derek Irwin Leaves Post as Chief Financial Officer
--------------------------------------------------------------
Ziff Davis Holdings Inc., the ultimate parent company of Ziff
Davis Media Inc., disclosed that Derek Irwin will resign from his
post as the Company's Chief Financial Officer, to assume a similar
position at VNU Business Media (USA), a division of VNU, a leading
global information and media company.

The Company has begun the process of conducting an executive
search for the Chief Financial Officer position.  The Company
intends to appoint Bart Catalane, its current President & Chief
Operating Officer (and former Chief Financial Officer, before Mr.
Irwin's promotion in December 2003) as Interim Chief Financial
Officer, once Mr. Irwin's employment with the Company has
officially ended and that Mr. Catalane will serve in that capacity
until the Chief Financial Officer position is filled.

In addition, the Company has recently promoted:

    * Martha Schwartz to Senior Vice President of Custom Solutions
      Group;

    * Angelo Mandarano to Senior Vice President of Ziff Davis
      Internet, Sales;,

    * Jim Louderback to Senior Vice President of Ziff Davis
      Internet, Edit; and

    * Elda Vale to Senior Vice President of Research and Corporate
      Marketing.

"We thank Derek for his hard work over the last two and a half
years and wish him success in his new position," said Bart
Catalane.  "At the same time we are also very excited about
Martha's, Angelo's, Jim's and Elda's new roles at the Company and
look forward to them bringing their outstanding content, customer
and marketing instincts to these key positions.  Ziff Davis has
developed an extensive portfolio of new products and capabilities
over the last several years and transformed its business to
provide fully integrated marketing solutions.  We know these
talented professionals will do a fantastic job positioning and
showcasing these capabilities to an enthusiastic and active
marketplace."

Ziff Davis Holdings Inc. -- http://www.ziffdavis.com/-- is the
ultimate parent company of Ziff Davis Media Inc. Ziff Davis Media
is a leading integrated media company serving the technology and
videogame markets.  The Company is an information services and
marketing solutions provider of technology media including
publications, websites, conferences, events, eSeminars,
eNewsletters, custom publishing, list rentals, research and market
intelligence.  In the United States, the Company publishes 10
magazines including PC Magazine, Sync, ExtremeTech, DigitalLife,
eWEEK, CIO Insight, Baseline, Electronic Gaming Monthly, Computer
Gaming World and Official U.S. PlayStation Magazine.  The Company
exports the power of its brands internationally, with publications
in 40 countries and 20 languages.  Ziff Davis leverages its
content on the Internet with 16 highly-targeted technology and
gaming sites including pcmag.com, eweek.com, extremetech.com and
1UP.com.  The Company also produces highly-targeted b-to-b events
through its Custom Solutions Group and large-scale consumer
technology events including DigitalLife.  With its main
headquarters and PC Magazine Labs based in New York, Ziff Davis
Media also has offices and lab facilities in the San Francisco and
Boston markets.

At June 30, 2005, Ziff Davis Holdings Inc.'s balance sheet showed
a $1,004,367,000 stockholders' deficit, compared to a $948,537,000
deficit at Dec. 31, 2004.


ZIFF DAVIS: June 30 Balance Sheet Upside-Down by $1 Billion
-----------------------------------------------------------
Ziff Davis Holdings Inc., the ultimate parent company of Ziff
Davis Media Inc., reported operating results for its second
quarter ended June 30, 2005.  The Company's consolidated revenues
totaled $45.3 million, representing a 12% decrease compared to
revenues of $51.3 million for the second quarter ended June 30,
2004.  The major portion of this decrease in revenues is related
to declines in print advertising.  The percentage decline in print
advertising experienced by the Company is consistent with the
technology publishing market as a whole, which decreased 9% or 901
pages in the second quarter of 2005 compared to 2004.

"Our second quarter performance is reflective of a trend we have
seen several times over the last few years, where print
advertising and certain other discretionary promotional spending
is trimmed by our customers in the face of uncertainty in their
markets," said Robert F. Callahan, Chairman & CEO, Ziff Davis
Holdings Inc.  "Fortunately, many new areas of our business,
particularly our online and event products, are recipients of
increased spending activity, which is rapidly changing and
diversifying our business model.  As a result, we continue to
invest and expand aggressively in these areas, which expenditures
negatively impact earnings in the short-term.  However, we are
confident that Ziff Davis is building solid asset and enterprise
value for its customers, investors and employees and is positioned
to deliver strong results and earnings."

At June 30, 2005, the Company had $45.5 million of cash and cash
equivalents, representing an increase of $24.4 million versus the
$21.1 million cash balance as of March 31, 2005.  The increased
cash balance primarily reflects the net increase of $27.0 million
derived from the offering of $205.0 million of Senior Secured
Floating Rate Notes completed on April 22, 2005, less payment of
approximately $178.0 million to retire all outstanding
indebtedness, including accrued interest, under the Company's
former Amended and Restated Credit Agreement dated August 12, 2002
and payment of related fees and expenses, partially offset by $1.5
million of capital expenditures and $2.1 million of cash
restructuring payments made during the second quarter of 2005.
The Company also continued to maintain and improve its solid
record of accounts receivable collection as Day Sales Outstanding
for advertising receivables at June 30, 2005 were 38 DSO compared
to 42 DSO at March 31, 2005.

                    Consumer Tech Group

The Consumer Tech Group is principally comprised of four
magazines, PC Magazine, Sync, ExtremeTech and our newest launch,
DigitalLife; a number of consumer-focused websites, including
pcmag.com and extremetech.com; and the Company's consumer
electronics event, DigitalLife.

Revenue for the Consumer Tech Group for the second quarter ended
June 30, 2005 was $16.6 million, down $4.5 million or 21% compared
to $21.1 million in the same period last year.  This decrease was
primarily related to lower print advertising, subscription, event
and list rental revenues for PC Magazine, which were partially
offset by higher Sync magazine, ExtremeTech magazine and online
revenues.

Cost of production for the Consumer Tech Group for the second
quarter ended June 30, 2005 was $4.0 million, reflecting a
decrease of $1.0 million or 20% compared to $5.0 million in the
prior year period.  The decrease in production costs was primarily
related to the PC Magazine circulation rate base reduction which
resulted in a 33% decrease in its manufacturing, paper and
distribution costs for the second quarter of 2005 versus 2004.
This decrease was partially offset by incremental costs for the
added issues of Sync and ExtremeTech magazines.

Selling, general and administrative expenses for the Consumer Tech
Group were $10.2 million for the second quarter ended June 30,
2005, reflecting an increase of $600,000 or 6% from $9.6 million
in the same prior year period.  The increase was primarily due to
incremental costs to expand the Group's online content, sales and
marketing areas, plus the addition of editorial costs for the
extra issues of Sync and ExtremeTech magazines.  These incremental
expenditures were partially offset by over $1.8 million of PC
Magazine cost savings for circulation, headcount and other expense
reductions undertaken in connection with its circulation rate base
reduction.

                     Enterprise Group

The Enterprise Group is comprised of several businesses in the
magazine, Internet, event, research and marketing tools areas.
The three magazines in this segment are eWEEK, CIO Insight and
Baseline.  The Internet properties in this segment are primarily
affiliated with the Enterprise Group's brands, including
eweek.com, cioinsight.com and baselinemag.com, but also include
over 30 weekly eNewsletters and the eSeminars(TM) business, which
produces sponsored interactive webcasts.  This segment also
includes the Company's Custom Solutions Group (CSG), which creates
and manages several hundred sponsored events per year; Business
Information Services (BIS), a research and marketing tools unit;
and Contract Publishing, which produces custom magazines, white
papers, case studies and other sales and marketing collateral for
customers.

Revenue for the Enterprise Group for the second quarter ended June
30, 2005 was $19.7 million compared to $19.3 million in the same
period last year, reflecting a $400,000 or 2% improvement.  The
increase was primarily related to higher online revenues for
advertising, eSeminars and virtual trade shows, which, including
results for the two Internet companies acquired during the fourth
quarter of 2004, grew by 84% during the second quarter of 2005
versus 2004.  In addition, CSG event and BIS project revenues
increased by over 60% for the second quarter of 2005, due to the
increase in the number of events and BIS projects for the quarter.

Cost of production for the Enterprise Group for the second quarter
ended June 30, 2005 was $3.4 million, reflecting a decrease of
$0.4 million or 11% compared to $3.8 million in the prior year
period.  The decrease in production costs was primarily related to
the 2004 Business 4Site event not repeated in 2005 and was
partially offset by higher online production costs due to an
increase in the number of eSeminars and virtual trade shows.

Selling, general and administrative expenses for the Enterprise
Group were $14.4 million for the second quarter ended June 30,
2005, reflecting an increase of $2.9 million or 25% from $11.5
million in the same prior year period.  The increase was primarily
due to incremental costs to expand the Group's online content,
sales and marketing areas; added CSG events and BIS projects costs
resulting from higher sales in those areas; new business
development expenditures in the Company's online paid content and
tools area for IT professionals; and increased circulation mailing
costs for eWEEK to acquire more new names for its reader database.
These increases in expense were partially offset by the
elimination of marketing costs incurred in 2004 for the Business
4Site event that was not repeated in 2005.

                        Game Group

The Game Group is focused on the videogame market and is
principally comprised of three magazines (Electronic Gaming
Monthly, Computer Gaming World and Official U.S. PlayStation
Magazine) and 1UP.com, the Company's online destination for gaming
enthusiasts.

Revenue for the Game Group for the second quarter ended June 30,
2005 was $9.0 million, down $1.9 million or 17% compared to $10.9
million in the same period last year.  A major portion of the
decrease, $800,000, related to the discontinuation of GMR magazine
and a reduction in the frequency of Xbox Nation magazine which
occurred in the fourth quarter of 2004, due to anticipated
softness in videogame advertising in the quarters preceding the
launch of the new game consoles (Xbox 360, PlayStation 3 and
Nintendo Revolution) starting in late 2005.  The balance of the
Game Group's revenue decrease in the second quarter of 2005
reflects a decline in newsstand and other single copy sales,
primarily for Official U.S. PlayStation Magazine, that related to
slower consumer demand in advance of the new game console cycle.

Cost of production for the Game Group for the second quarter ended
June 30, 2005 was $5.3 million, reflecting a decrease of $300,000
or 5% compared to $5.6 million in the prior year period.  The
second quarter 2005 savings realized by discontinuing GMR magazine
and reducing the frequency of Xbox Nation magazine were partially
offset by additional costs incurred for retail partner fees,
videogame DVDs and premiums (e.g. posters, CDs, etc.) used to try
to stimulate newsstand and subscriber sales.

Selling, general and administrative expenses for the Game Group
were $4.9 million for the second quarter ended June 30, 2005,
reflecting a decrease of $1.4 million or 22% from $6.3 million in
the same prior year period.  The decrease was primarily due to
savings in editorial, circulation and other costs realized as a
result of discontinuing the publication of GMR magazine, reducing
the frequency of Xbox Nation magazine and decreasing other general
expenses.

Ziff Davis Holdings Inc. -- http://www.ziffdavis.com/-- is the
ultimate parent company of Ziff Davis Media Inc. Ziff Davis Media
is a leading integrated media company serving the technology and
videogame markets.  The Company is an information services and
marketing solutions provider of technology media including
publications, websites, conferences, events, eSeminars,
eNewsletters, custom publishing, list rentals, research and market
intelligence.  In the United States, the Company publishes 10
magazines including PC Magazine, Sync, ExtremeTech, DigitalLife,
eWEEK, CIO Insight, Baseline, Electronic Gaming Monthly, Computer
Gaming World and Official U.S. PlayStation Magazine.  The Company
exports the power of its brands internationally, with publications
in 40 countries and 20 languages.  Ziff Davis leverages its
content on the Internet with 16 highly-targeted technology and
gaming sites including pcmag.com, eweek.com, extremetech.com and
1UP.com.  The Company also produces highly-targeted b-to-b events
through its Custom Solutions Group and large-scale consumer
technology events including DigitalLife.  With its main
headquarters and PC Magazine Labs based in New York, Ziff Davis
Media also has offices and lab facilities in the San Francisco and
Boston markets.

At June 30, 2005, Ziff Davis Holdings Inc.'s balance sheet showed
a $1,004,367,000 stockholders' deficit, compared to a $948,537,000
deficit at Dec. 31, 2004.


* Former Austin Mayor Kirk Watson Joins Hughes & Luce as Partner
----------------------------------------------------------------
Hughes & Luce disclosed that former Austin mayor and respected
litigator Kirk P. Watson is joining the Austin office as a
partner, adding his decades of experience to the solid group of
litigation attorneys at the firm.  Watson joins Hughes & Luce from
the firm he founded, Watson Bishop London Brophy, P.C.

"Kirk's experience as a litigator and leader make him an excellent
fit for Hughes & Luce," Bob Mow, Hughes & Luce managing partner,
said.  "His knowledge and skills add to the services we provide
our clients, and we are delighted to have him as a part of our
team."

"Hughes & Luce holds great appeal as a place to serve clients,"
said Mr. Watson, who was mayor of Austin from 1997 to 2001.  "The
breadth of know-how at the firm means there are a variety of areas
in which I can contribute beyond the courtroom.  While I will
continue to do trial work, Hughes & Luce offers the opportunity to
expand beyond litigation and explore opportunities that can
benefit from my years of civic and community service."

Mr. Watson, currently chair of the Greater Austin Chamber of
Commerce, is joining Hughes & Luce as a litigator and will add to
the firm's capabilities in the areas of urban planning and
economic development, along with overall business counsel to
corporate clients.

Mr. Watson's experience matches Hughes & Luce's established
history of creating and managing leading-edge land-use projects
such as the Alliance Airport in Fort Worth and the
Victory/American Airlines Center project in Dallas.

"Kirk's knowledge of municipal government and the issues
surrounding the tremendous growth Texas is experiencing will
greatly enhance our capabilities," Sabrina Streusand, managing
partner of the firm's Austin office, said.  "We believe there are
innumerable areas where Kirk's unique business experience and
skills will assist our clients."

The Hughes & Luce Austin office was founded in 1979 and today
features 20 attorneys and two consultants practicing in the areas
of litigation, trusts and estates, real estate, outsourcing,
corporate and securities, healthcare, bankruptcy, and government
contracting.

"The lawyers I've worked with at Watson Bishop London Brophy have
been my friends for more than 25 years.  They have a very
successful trial practice representing parties ranging from
Fortune 500 companies to Texas families," Mr. Watson added.
"Their success will continue because of their depth of experience,
focused attention to client needs, and exceptional talent."  The
firm's name will change to Bishop London Brophy Dodds.  Because
these lawyers have such confidence in each other, enjoy their
longstanding relationship and to assure client needs are
seamlessly met, Mr. Watson and members of Bishop London Brophy
Dodds will continue to handle some matters jointly.

Mr. Watson's devotion to the business community, has earned
numerous endorsements, awards, and recognitions through the years,
including:

      *  The International Downtown Association - "Individual
         Achievement Award"

      *  The Downtown Austin Alliance - "Impact Award"

      *  Texas Chapter of the American Institute of Architects -
         "Honorary Member of the Texas Society of Architects"

      *  Greater Austin Chamber of Commerce in 2000 - "Austinite
         of the Year"

      *  Texas Nature Conservancy - Leadership Award

      *  Greater Austin Chamber of Commerce - "Building Bridges
         Award"

      *  Austin Family magazine - "Favorite Local Hero"

While Mr. Watson was Austin mayor, Forbes and Fortune magazines
named Austin the country's best city and best place for business
and Texas Monthly Biz magazine named him best mayor in Texas for
business.  Governing Magazine recognized Austin as one of the top
two cities in America for the way it was governed.

Mr. Watson also has an impressive legal background.  He graduated
first in his law school class at Baylor University Law School in
1981 and served as editor-in-chief of the Baylor Law Review.  He
clerked for the U.S. Court of Appeals for the Fifth Circuit.

Mr. Watson was elected President of the Texas Young Lawyers
Association and he served on the State Bar of Texas Executive
Committee from 1989 to 1992.  In 1994, he was named the
Outstanding Young Lawyer of Texas.  He was named Young Baylor
Lawyer of the Year in 1996 and has been selected by his peers to
be listed in the publication Best Lawyers in America since 1997.
He has enjoyed a broad law practice in which he has represented
families, doctors, business interests, and major Texas
universities.  He is certified in civil trial law by the Texas
Board of Legal Specialization.

In 1991, Mr. Watson served as chair of the Texas Air Control
Board.  For his state agency work, Mr. Watson received the Sierra
Club, Lone Star Chapter, Special Service Award in 1994, and the
American Lung Association of Texas Advocacy Award in 1993.  He was
vice-chair of the committee that oversaw the consolidation of the
Texas Air Control Board with the Texas Water Commission creating
the Texas Natural Resources Conservation Commission (now the Texas
Commission on Environmental Quality).

Mr. Watson is a highly recognized speaker on a range of legal
topics and has been a featured speaker at numerous public policy
programs throughout the country, including addressing the John F.
Kennedy School of Government at Harvard University.  He has also
been a key speaker at international economic development programs
in Canada, Spain, Brazil, and Japan.

In the early 1990s, Mr. Watson overcame cancer.  He served on the
original board of directors for the Lance Armstrong Foundation and
is a former member of the board of directors for the American
Cancer Society's local chapter.  The father of a juvenile
diabetic, he is active with the Juvenile Diabetes Research
Foundation.  He has been involved on several boards, including
KLRU, Ballet Austin, Community Partnership for the Homeless, and
Leadership Austin.


* BOOK REVIEW: Landmarks in Medicine - Laity Lectures of the
               New York Academy of Medicine
------------------------------------------------------------
Author:     James Alexander Miller
Publisher:  Beard Books
Softcover:  360 pages
List Price: $34.95

Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587980770/internetbankrupt

As the subtitle points out, the seven lectures reproduced in this
collection are meant especially for general readers with an
interest in medicine, including its history and the cultural
context it works within.  James Miller, president of the New York
Academy of Medicine which sponsored the lectures, states in his
brief "Introduction" that this leading medical organization "has
long recognized as an obligation the interpretation of the
progress of medical knowledge to the public." The lectures
collected here succeed admirably in fulfilling this obligation.

The authors are all doctors, most specialists in different areas
of medicine.  Lewis Gregory Cole, whose lecture is "X-ray Within
the Memory of Man," is a consulting roentgenologist at New York's
Fifth Avenue Hospital.  Harrison Stanford Martland is a professor
of forensic medicine at New York University College of Medicine.
Many readers will undoubtedly find his lecture titled "Dr. Watson
and Mr. Sherlock Holmes" the most engrossing one.  Other doctor-
authors are more involved in academic areas of medicine and
teaching.  Reginald Burbank is the chairman of the Section of
Historical and Cultural Medicine at the New York Academy of
Medicine.  He lectured on "Medicine and the Progress of
Civilization." Raymond Pearl, whose selection is "The Search for
Longevity," is a professor of biology at Johns Hopkins University.

The authors' high professional standing and involvement in
specialized areas do not get in the way of their aim to speak to a
general audience.  They are all skilled writers and effective
communicators.  As the titles of some of the lectures noted in the
previous paragraph indicate, the seven selections of "Landmarks in
Medicine" focus on the human-interest side of medicine rather than
the scientific or technological.  Even the two with titles which
seem to suggest concern with technical aspects of medicine show
when read to take up the human-interest nature of these topics.
"The Meaning of Medical Research", by Dr. Alfred E. Cohn of the
Rockefeller Institute for Medical Research, is not so much about
methods, techniques, and equipment of medical research, but is
mostly about the interinvolvement of medical research, the
perennial concern of individuals with keeping and recovering good
health, and social concerns and pressures of the day.  "The
meaning of medical research must regard these various social and
personal aspects," Cohn writes.  In this essay, the doctor does
answer the questions of what is studied in medical research and
how it is studied. And he answers the related question of who does
the research. But his discussion of these questions leads to the
final and most significant question "for what reason does the
study take place?" His answer is "to understand the mechanisms at
play and to be concerned with their alleviation and cure."  By
"mechanisms," Cohn means the natural -- i.e., biological -- causes
of disease and illness.  The lay person may take it for granted
that medical research is always principally concerned with finding
cures for medical problems.  But as
Cohn goes into in part of his lecture, competition for government
grants or professional or public notoriety, the lure of novel
experimentation, or research mainly to justify a university or
government agency can, and often do, distract medical researchers
and their associates from what Cohn specifies should be the
constant purpose of medical research.  Such purpose gives medicine
meaning to humankind.

The second lecture with a title sounding as if it might be about a
technical feature of medicine, "X-ray Within the Memory of Man,"
is a historical perspective on the beginnings of the use of x-ray
in medicine.  Its author Lewis Cole was a pioneer in the
development of x-rays in the late 1800s and early 1900s.  He
mostly talks about the development of x-ray within his memory.  In
doing so, he also covers the work of other pioneers, notably
William Konrad Roentgen and Thomas Edison.  Roentgen was a "pure
scientist" who discovered x-rays almost by accident and at first
resented the application of his discovery to practical uses such
as medical diagnosis.  Edison, the prodigious inventor who was
interested only in the practical application of scientific
discoveries, and his co-worker Clarence Dally enthusiastically
investigated the practical possibilities of the discoveries in the
new field of radiation.  Dally became so committed to his work in
this field that he shortly developed an illness and died.  At the
time, no on knew about the dangers of prolonged exposure to x-
rays.  But sensing some connection between his co-worker's
untimely death and his work with x-rays, Edison stopped his own
investigations.

Cole himself became involved in work with x-rays during his
internship at Roosevelt Hospital in New York City in 1898 and
1899.  His contribution to this important field was in the area of
interpretation of what were at the time primitive x-rays and
diagnosis of ailments such as tuberculosis and kidney stones.
Cole writes in such a way that the reader feels she or he is right
with him in the steps he makes in improving the use of x-rays.  He
adds drama and human interest to the origins of this important
medical technology.  The lecture "Dr. Watson and Mr. Sherlock
Holmes" uses the popular mystery stories of Arthur Conan Doyle to
explore the role of medicine in solving crimes, particularly
murder.  In some cases, medical tests are required to figure out
if a crime was even committed.  This lecture in particular
demonstrates the fundamental role played by medicine in nearly all
major areas of society throughout history.

The seven collected lectures have broad appeal.  All of them are
informative and educational in an engaging way.  Each is on an
always interesting topic taken up by a professional in the field
of medicine obviously skilled in communicating to the general
reader.  The authors seem almost mind readers in picking out the
most fascinating aspects of their subjects which will appeal to
the lay readers who are their intended audience.  While meant
mainly for lay persons, the lectures will appeal as well to
doctors, nurses, and other professionals in the field of medicine
for putting their work in a broader social context and bringing
more clearly to mind the interests, as well as the stake, of the
public in medicine.

                          *********

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.