/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050810.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 10, 2005, Vol. 9, No. 188 Headlines ACE AVIATION: Aeroplan Fund to Make Cash Distribution on Aug. 15 ALLIED HOLDINGS: Hires Mercer Human Resource As Consultant ALLIED HOLDINGS: Hires Ogletree Deakins as Labor Counsel ALLIED HOLDINGS: US Trustee Appoints Official Creditors' Committee AMERICAN BUSINESS: Ch. 7 Trustee Wants to Sell Whole Loan Assets AMERICAN BUSINESS: Chapter 7 Trustee Inks Clearwing Settlement AMERICAN BUSINESS: Trustee Submits Whole Loan Assets Bid Protocol AMERICAN WAGERING: Court Authorizes Issue of 250,000 New Shares AMERIGAS PROPANE: Elects Jerry Sheridan as Chief Financial Officer AOL LATIN AMERICA: Can Continue Hiring Ordinary Course Profs. AOL LATIN AMERICA: Has Until Nov. 23 to Decide on Unexpired Leases ARMSTRONG WORLD: Court Allows Interface to Consummate Merger Pact ATA AIRLINES: Gets Court Nod to Enter Into Boeing Aircraft Leases ATKINS NUTRITIONAL: Taps Jefferies & Company as Financial Advisors BALLY TOTAL: S&P Lowers Corporate Credit & Sr. Debt Ratings to CCC CADMUS COMMS: Earns $1.2 Million of Net Income in Fourth Quarter CAMCO INC: June 25 Balance Sheet Upside-Down by $13.9 Million CATHOLIC CHURCH: Spokane Exclusive Period Stretched to January 6 CATHOLIC CHURCH: Tucson Wants Catholic Foundation Deal Approved CENTRAL PARKING: S&P Affirms BB- Bank Loan Ratings CENTURY/ML CABLE: Files Chapter 11 Plan to Implement Interest Sale CHEMRITE INDUSTRIES: Case Summary & 28 Largest Unsecured Creditors CHEMTURA CORP: Will Redeem $110 Million 7.75% Debentures Due 2023 CIRTRAN CORP: Cornell Capital Returns 38.2 Mil. Escrowed Shares CMS ENERGY: Earns $27 Million of Net Income in Second Quarter COMM 2004-RS1: Fitch Affirms Low-B Ratings on Six Cert. Classes CONCENTRA OPERATING: June 30 Balance Sheet Upside-Down by $28 Mil. CREDIT SUISSE: Fitch Rates $7 Million Class B Certificates at BB+ CUMULUS MEDIA: Reports Second Quarter Financial Results DAVIS PIPELAYER: Case Summary & 31 Largest Unsecured Creditors DIVINE INC: Trustee Wants Until Sept. 19 to Object to Claims DOMTAR INC: S&P Rates US$400 Million Sr. Unsecured Notes at BB+ DPAC TECH: Development Capital Commits $500,000 Bridge Financing E*TRADE FINANCIAL: Moody's Affirms B1 Senior Unsecured Rating E*TRADE FINANCIAL: S&P Affirms B+ Counterparty Credit Rating FIDELITY NATIONAL: Fitch Holds Sr. Secured Credit Facility at BB- FLINTKOTE COMPANY: Court Okays Asbestos PI Settlement Fund FLINTKOTE COMPANY: Wants More Time to File Chapter 11 Plan FLINTKOTE COMPANY: Wants Removal Period Extended to February 27 GENESIS WORLDWIDE: Hires Forensic Accounting as Consultant GENESIS WORLDWIDE: Wants Plan Filing Period Stretched to Dec. 30 GENEVA STEEL: Utah Lake Advances $44.5MM Stalking-Horse Bid GEORGE COLEMAN: Case Summary & 20 Largest Unsecured Creditors GOODYEAR TIRE: Earns $69 Million of Net Income in Second Quarter GRAY TELEVISION: Moody's Lifts $258.5 Million Notes' Rating to Ba3 IMPAX LABORATORIES: Nasdaq Halts Common Stock Trading INTEGRATED SECURITY: Closes $3MM New Financing Pact with Laurus IPC ACQUISITION: 96.35% of Noteholders Tender $144.5 Million Notes IPC ACQUISITION: Completes $485 Million Debt Refinancing KASPER A.S.L.: Court Formally Closes Chapter 11 Proceedings KMART CORP: Court Approves Shelby County Tax Claims for $458,877 KMART CORP: Ct. OKs Stipulation Resolving Photo Equipment Dispute MARJORIE GREGORY: Case Summary & 9 Largest Unsecured Creditors MCI INC: Inks $70 Million Outsourcing Agreement With Danka METROMEDIA FIBER: Files Post-Confirmation Report MIRANT CORP: Court Okays Multi-Million Enron Settlement Agreement MIRANT CORP: Court Okays Settlement Agreement on Kendall Station MIRANT CORP: Judge Lynn Supplements June 30 Valuation Ruling NEXTEL COMMS: Completes Exchange Offer and Consent Solicitation NORTHWEST AIRLINES: Mechanics Return to NMB Negotiating Table PANTRY INC: Lenders Agree to Amend Loan Agreement PANTRY INC: S&P Raises Senior Sub. Debt Rating to B- from CCC PAUL MEYLIKER: Case Summary & 14 Largest Unsecured Creditors PORTRAIT CORP: Jan. 31 Balance Sheet Upside-Down by $171 Million PRICELINE.COM: Earns $16.8 Million of Net Income for 2nd Quarter PRIMEDIA INC: Moody's Reviews $212MM Series H Stock's Junk Rating QUALITY DISTRIBUTION: June 30 Balance Sheet Upside-Down by $28.2MM QWEST COMMS: Union Members Authorize CWA Leaders to Call Strike REAL MEX: Second Quarter Net Income Climbs to $5.1 Million RICKY STAFFORD: Case Summary & 20 Largest Unsecured Creditors ROGERS TELECOM: S&P Ups Ratings to BB & Lifts CreditWatch SAINT VINCENTS: Court Allows DASNY to Withdraw from Reserve Funds SAINT VINCENTS: RCG Wants Adequate Protection of Security Interest SALEM COMMS: Earns $3.6 Million of Net Income in Second Quarter SFOGHI CONSTRUCTION: Case Summary & 2 Largest Unsecured Creditors SHOPKO STORES: Extends Offer for 9-1/4% Senior Notes to Aug. 10 SOUTHERN RESORTS: Case Summary & 20 Largest Unsecured Creditors STRATOS GLOBAL: S&P Revises Outlook to Negative from Stable STRUCTURED ASSET: Moody's Rates $928,000 Class B4 Certs. at Ba2 SUITLAND EAST: List of Five Largest Unsecured Creditors TELIGENT INC: Claims Rep. Asks Court to Appoint a Mediator TERESA ELLIS: List of Six Largest Unsecured Creditors TEXAS STATE: Moody's Junks Subordinate Series 2001C Revenue Bonds THAMES INVESTMENT: Has No Unsecured Creditors Who Aren't Insiders TITAN CRUISE: Court Okays Dennis Shepard as Chief Restr. Officer TITAN CRUISE: Wants to Hire Cascade Capital as Financial Advisors TOM'S FOODS: Former Employees Want Special Committee TONY COURY: List of Six Largest Unsecured Creditors UAL CORP: Nears Aircraft Lease Restructuring Closing with PDG Pact US AIRWAYS: Court Approves Second Amended Disclosure Statement VALHI INC: Earns $34.1 Million of Net Income in Second Quarter VIKING METAL: Case Summary & 19 Largest Unsecured Creditors W.R. GRACE: Court to Appoint Mediator for PI Discovery Disputes WATTSHEALTH FOUNDATION: Court Denies Retention of Danning Gill WATTSHEALTH FOUNDATION: Court Denies Retention of FTI Consulting WATTSHEALTH FOUNDATION: Files Schedules of Assets and Liabilities WAYNE HARTKE: List of 20 Largest Unsecured Creditors WESTPOINT STEVENS: GSC Partners Wants Satellite Fund Sanctioned XOMA LTD: June 30 Equity Deficit Narrows to $2 Million * Alvarez & Marsal Acquires Initium LLC Professionals * Alvarez & Marsal Tax Advisory Services Adds New Professionals * Mark Miller Joins Alvarez & Marsal As Managing Director * Sheppard Mullin Welcomes Kevin Goering as New York Partner * Upcoming Meetings, Conferences and Seminars ********* ACE AVIATION: Aeroplan Fund to Make Cash Distribution on Aug. 15 ---------------------------------------------------------------- Aeroplan Income Fund relates that its cash distribution of $0.0622 per Fund unit covering the period from June 29 to July 31, 2005, will be paid on August 15, 2005, to unitholders of record at the close of business on July 29, 2005. This represents a monthly cash distribution of $0.0583 per Fund unit. In June 2005, ACE Aviation Holdings, Inc., and Aeroplan successfully completed the first-ever monetization of an airline frequent flyer loyalty program with an initial public offering of the Fund, which represented a $2 billion equity valuation for Aeroplan. The IPO constituted a 14.4% divesture of Aeroplan with ACE holding the balance 85.6% interest in Aeroplan LP. The aggregate gross proceeds from the IPO totaled $287.5 million. In connection with the offering, Aeroplan LP established $475 million in senior secured syndicated credit facilities, of which $318 million was drawn on June 29, 2005. About Aeroplan Income Fund The Fund is an unincorporated, open-ended trust established under the laws of the Province of Ontario, created to indirectly acquire an interest in the outstanding limited partnership units of Aeroplan LP. After completion of the Offering, ACE will continue to hold the remaining 87.5% (85.6 % assuming full exercise of the overallotment option) of the outstanding LP Units. About Aeroplan Aeroplan -- http://www.aeroplan.com/-- is Canada's premier loyalty marketing company, with approximately 5 million active members. Aeroplan benefits from its unique strategic relationship with Air Canada, in addition to its contractual arrangements with leading financial and commercial partners. Aeroplan provides its commercial partners with loyalty marketing services to attract and retain customers and stimulate demand for these partners' products and services. The Aeroplan Program offers its approximately 5 million active members the ability to accumulate Aeroplan Miles through a network of more than 60 commercial partners, representing more than 100 brands, in the financial, retail and travel sectors and redeem those miles for rewards, including airline seats to more than 700 destinations worldwide, other travel rewards such as hotel rooms and car rentals, selected electronics merchandise and a diversified selection of experiential and specialty rewards. Aeroplan was founded in 1984 by Air Canada, Canada's largest domestic and international full-service airline, to manage the airline's frequent flyer program. Together with its partners, Aeroplan develops and executes innovative and appealing member-targeted marketing programs designed to engage the loyalty of this affluent segment of Canadian consumers. About Ace Aviation Holdings ACE Aviation is the parent holding company of Air Canada and ACE's other subsidiaries. Air Canada is Canada's largest domestic and international full-service airline and the largest provider of scheduled passenger services in the domestic market, the transborder market and each of the Canada-Europe, Canada-Pacific, Canada-Caribbean/Central America and Canada-South America markets. Air Canada is a founding member of the Star Alliance network, the world's largest airline alliance group. In addition, the Corporation owns Jazz Air LP, Aeroplan LP and Destina.ca, which is an on-line travel site. The Corporation also provides Technical Services through ACTS LP, Cargo Services through AC Cargo LP and Air Canada, Groundhandling Services through ACGHS LP and Air Canada and tour operator services and leisure vacation packages through Touram LP. * * * As reported in the Troubled Company Reporter on Oct. 5, 2004, Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Montreal, Quebec-based ACE Aviation Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P says the outlook is stable. ALLIED HOLDINGS: Hires Mercer Human Resource As Consultant ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia approved Allied Holdings, Inc., and its debtor-affiliates' request to employ Mercer Human Resource Consulting, Inc., as their human resource consultant. Mercer Human Resource will review existing key employee retention programs as well as to provide assistance and support in the approval of related processes. Mercer focuses on assisting with the implementation of human resources policies to enhance financial and retirement security, health, productivity, and employment relationships in the global workplace. The Debtors selected Mercer as its human resource consultants because of the firm's diverse experience and extensive knowledge in the field of bankruptcy and human resource consulting. As human resource consultant, Mercer will: 1. advise and assist the Debtors' management in the review and preparation of key employee retention programs; and 2. provide services as a consulting or testifying expert at any bankruptcy court hearings seeking approval for the key employee retention program services. Before the Petition Date, Mercer received retainer payments totaling $50,000 from the Debtors. A portion of the retainer has been applied toward fees and expenses incurred by Mercer prepetition. John Dempsey, a member of the firm, informs the Court that Mercer is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code. In addition, Mr. Dempsey relates that Mercer, its members and associates: (a) are not creditors, equity holders, or insiders of the Debtors; (b) are not and were not investment bankers for any outstanding security of the Debtors; (c) have not been, within three years before the Petition Date, (i) investment bankers for a security of the Debtors, or (ii) an attorney for an investment banker in connection with the offer, sale, or issuance of a security of the Debtors; (d) are not and were not, within two years before the Petition Date, a director, officer, or employee of the Debtors or an investment banker; and (e) have not represented any party in connection with matters relating to the Debtors. Mercer's Fees and Expenses are: Level Hourly Rate ----- ----------- Principal $500 - $700 Associate $250 - $450 Consulting Analysts $150 - $300 Administrative Support fees will be included in the Consultants' Billing Rates. The parties agreed that the costs for the Services are not expected to exceed $50,000. Mercer will not exceed the fee without discussing the scope and fees in advance. 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 No. 05-12515). 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. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Hires Ogletree Deakins as Labor Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia approved, on an interim basis, Allied Holdings, Inc., and its debtor-affiliates' request to employ Ogletree, Deakins, Nash, Smoak & Stewart, P.C., as their Labor Counsel The Debtors want Ogletree Deakins to: (i) handle and maintain the administration of their current collective bargaining agreements and employee benefit and retirement plans; (ii) perform legal analysis and provide them counsel and advice with respect to any labor and employment or employee benefits matters arising in connection with their Chapter 11 cases; and (iii) advise and represent them in negotiations and litigation, if any, related to their collective bargaining agreements with its union employees or their employee benefits and retirement plans, effective as of the Petition Date. The Debtors assure the Court that the functions to be performed by Ogletree Deakins will not be duplicative of those performed by the Debtors' other counsel. The Debtors selected Ogletree Deakins to serve as their special labor counsel because it has significant experience in labor and employment matters, including administration and negotiation of collective bargaining agreements, and the design, establishment, and maintenance of retirement plans and health and welfare plans for employers. Ogletree Deakins has served as counsel to the Debtors with respect to labor and employment matters since 1989. The Debtors believe that as a consequence of the firm's representation, Ogletree Deakins is very familiar with their business and affairs and many of the potential legal issues that may arise in the context of their Chapter 11 cases. Specifically, the Debtors expect Ogletree Deakins to advise and represent them in: (a) labor and employment matters, including their current collective bargaining agreements and employee benefit and retirement plans; (b) labor and employment matters arising out of and relating to their bankruptcy cases; and (c) the performance of other legal services, including litigation, as may be requested and is appropriate and necessary. Ogletree Deakins' present fee rates, subject to an annual adjustment, are: Professional Hourly Rate ------------ ----------- Attorneys $160 - $525 Clerks & Legal Assistants $80 - $200 Lewis T. Smoak, a founding shareholder of Ogletree Deakins, informs the Court that the firm has no connection with the Debtors, their significant creditors, the United States Trustee, or other Interested Parties in their Chapter 11 cases, or their attorneys or accountants, except that: (a) Ogletree Deakins may have appeared from time to time in the past, and may appear in the future, in other cases or matters unrelated to the Debtors or their Chapter 11 cases where one or more of the parties may have been or may be involved; and (b) Ogletree Deakins may have been retained by certain creditors and other Interested Parties or their attorneys, accountants, or professionals in other cases or matters unrelated to the Debtors or their Chapter 11 cases. Notwithstanding, Ogletree Deakins is a "disinterested" person as the term is defined in Section 101(14) of the Bankruptcy Code. 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 No. 05-12515). 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. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: US Trustee Appoints Official Creditors' Committee ----------------------------------------------------------------- Pursuant to 11 U.S.C. Section 1102, Felicia S. Turner, the United States Trustee for Region 21, appointed seven creditors to serve on the Official Committee of Unsecured Creditors: A. Wells Fargo Bank, as Indenture Trustee Attn: Thomas M. Korsman, Vice President Sixth & Marquette Mac # N9303-120 Minneapolis, MN 55479 Phone: (612) 466-5890 Fax: (612) 667-9825 B. International Brotherhood of Teamsters Attn: Frederick Perillo, Counsel Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C. l555 North RiverCenter Drive Suite 202, P.O. Box 12993 Milwaukee, WI 53212 Phone: (414) 271-4500 Fax: (414) 271-6308 C. Cummins South, Inc. Attn: Susan Stephens, Controller 5125 Highway 85 Atlanta, Georgia 30349 Phone: (404) 765-5104 Fax: (404) 766-2132 D. Exotic Auto Transport, LLC Attn: Bradley M. Segebarth, President P.O. Box 72, 500 W. Elm Lebanon, MO 65536 Phone: (417) 532-9808 Fax: (417) 532-9815 E. D. E. Shaw Laminar Portfolios, LLC Attn: John Chiang 120 West 45th Street New York, NY l0036 Phone: (212) 487-0685 Fax: (212) 845-1685 F. Eton Park Capital Management, L.P., as representative and Manager of Eton Park Funds Attn: Joshua Astrof, Representative 825 Third Avenue, 8th Floor New York, New York 10022 Phone: (212) 756-5300 Fax: (212) 756-5361 G. Stanfield Capital Partners, LLC Attn: Robert Paine, Partner and Portfolio Manager 430 Park Avenue New York, New York 10022 Phone: (212) 891-9641 Fax: (212) 891-9625 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 No. 05-12515). 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. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN BUSINESS: Ch. 7 Trustee Wants to Sell Whole Loan Assets ---------------------------------------------------------------- American Business Financial Services Inc. and its debtor- affiliates' business strategy primarily involved the origination of loans and the subsequent sale of originated loans through securitizations and, to a lesser extent, through whole loan sales. Generally, after they originated a pool of loans, the Debtors would sell those loans to a special purpose entity created to facilitate a securitization. The Securitization SPE would then sell the pool of Loans to a mortgage loan trust not controlled by the Debtors. JPMorgan Chase Bank, N.A., and The Bank of New York serve as the trustees for the Securitizations. John T. Carroll, Esq., at Cozen O'Connor, in Wilmington, Delaware, relates that to raise the cash purchase price for the loans, the Securitization Trusts issued notes or trust certificates to various third-party investors entitling the holders to receive certain priority distributions. In most of the Securitizations, payments on some or all of the classes of notes and trust certificates are insured by a financial guaranty policy issued by MBIA Insurance Corporation, AMBAC Assurance Corporation, Radian Asset Assurance, Inc., or Financial Security Assurance, Inc. In addition to the cash consideration received for the Loans, the Debtors received one or more certificates evidencing beneficial residual interests in the Securitization Trusts. Those certificates, generally referred to as "IO Strips," entitled the holders to receive certain cash flows generated by the securitized Loans. In connection with a Securitization, the Debtors usually retained the right to service the pools of securitized Loans for a fee and other compensation. In contrast to Securitizations, servicing rights are transferred to the purchaser of the Loans, and IO Strips are not created in Whole Loan Sale transactions. Mr. Carroll informs the Court that the Debtors' determination as to whether to dispose of Loans through securitization transactions or Whole Loan Assets depended on a variety of factors, including market conditions, profitability and cash flow considerations. Before June 2003, the Debtors elected to utilize securitization transactions extensively due to favorable market conditions. The Debtors generally realized higher gain on the sale of Loans in the Securitizations. In Whole Loan Sales, the gain on sale for the Debtors is significantly lower than the gain received in Securitization transactions, but the Debtors immediately receive all of the gain in cash. Due to their inability to securitize loans in the fourth quarter of fiscal 2003, the Debtors were forced to adjust their business strategy to emphasize Whole Loan Sales. Mr. Carroll notes that of the $982.7 million of loans originated during 2004, only 10% originated during the period were securitized, and 60% were sold in Whole Loan Sales, with the balance remaining on the Debtors' consolidated balance sheet at June 30, 2004, as available for future sale. Furthermore, around 52% were sold in Whole Loan Sales out of the $629.7 million of loans originated during the three months ended September 30, 2004. The balance remained on the Debtors' consolidated balance sheet as available for future sale. Sale of Whole Loan Assets George L. Miller, the Chapter 7 Trustee overseeing the liquidation of the Debtors' estate, tells Judge Walrath that Whole Loan Sales are generally conducted via a bidding process wherein Loans are sold in the secondary mortgage market pursuant to various sale contracts usually at a selling price above the par value of the Loans. Whole Loan Sales may involve individual or pools of Loans and typically include the sale of all rights to service the Loans. Against this backdrop, the Trustee seeks the Court's authority to sell two groups of Loans still owned by the Debtors upon the conversion of their cases to one under Chapter 7. The Loans consist of: (i) 221 first and second lien residential mortgage Loans having an approximate aggregate unpaid principal balance of $30.2 million -- Tape No. 1; and (ii) eight first and second lien residential mortgage Loans having an approximate aggregate unpaid principal balance of $1.2 million -- Tape No. 2. The Trustee will sell the Tape No. 1 and Tape No. 2 Whole Loans separately through an auction to get the best value out of the Whole Loan Assets. The sale will be free and clear of all liens, claims, interests, and encumbrances. The Trustee also asks Judge Walrath to terminate the automatic stay to permit distribution of the Sale proceeds to Greenwich Capital at closing date. The Trustee believes that selling the Whole Loan Assets pursuant to Sections 363(b) and (f) of the Bankruptcy Code is the best way to ensure an orderly and equitable sale process and distribution of proceeds. Marketing Efforts Through a process of collaboration with Greenwich Capital, the Trustee notes that around 50 potential purchasers of the Whole Loan Assets were identified and provided with both the Tape No. 1 and Tape No. 2 Whole Loans containing description of the Whole Loan Assets. Eight have expressed interest in the Whole Loan Assets; They have been provided with confidentiality and letter agreements for execution in connection with obtaining access to additional files and information pertaining to the Whole Loan Assets as part of due diligence. Upon execution of the Confidentiality Agreements, the Potential Purchasers along with any other interested parties will be allowed to conduct due diligence until a bid deadline. Any and all parties interested in purchasing the Whole Loan Assets may seek to do so in accordance with certain sale procedures. The Trustee intends to sell the Whole Loan Assets to the bidder making the highest and best offer at the Auction in accordance with the terms of the Sale Procedures. However, before the Auction, the Trustee, in consultation with Greenwich Capital, reserves the right to amend or otherwise change the terms of any purchase agreement in a manner as the Trustee deems to be in the best interests of the Debtors' estates. The Trustee will further permit existing interested parties and any new prospective purchasers to perform reasonable due diligence with respect to the Whole Loan Assets, provided the prospective purchaser has entered into the Confidentiality Agreements, and will assist them with those efforts, including providing those potential purchasers with reasonable access to the Debtors' books and records relating to the Whole Loan Assets. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203), and the Bankruptcy Court converted the cases to a chapter 7 liquidation on May 17, 2005. Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN BUSINESS: Chapter 7 Trustee Inks Clearwing Settlement -------------------------------------------------------------- George L. Miller, the duly appointed Chapter 7 Trustee in American Business Financial Services Inc. and its debtor-affiliates' cases, seeks the U.S. Bankruptcy Court for the District of Delaware's authority to enter into a settlement with ABFS Warehouse Trust 2003-1, ABFS Warehouse Trust 2003-2, Chrysalis Warehouse Funding, LLC, and Clearwing Capital, LLC. John T. Carroll, Esq., at Cozen O'Connor, in Wilmington, Delaware, recounts that in October 2003, Chrysalis provided a $250,000,000 revolving credit facility to Warehouse Trust 2003-2. On March 9, 2005, the Bankruptcy Court authorized the Debtors to obtain credit and incur debt secured by senior liens on property of the Debtors' estates that is subject to a lien. Mr. Carroll relates that in connection with the DIP Facility, the Debtors entered into the DIP Loan and Security Agreement dated as of February 22, 2005, and held harmless from and indemnified Clearwing, Chrysalis and their lenders, on an after-tax basis, against all liabilities which may be imposed on, incurred by or asserted against each Clearwing Indemnified Party, relating to or arising out of the Clearwing Transaction Documents, or any of the transactions contemplated under the Clearwing Transaction Documents or the DIP Loan Agreement. In addition, in connection with the DIP Facility, the Debtors became obligated to pay the Clearwing Deferred Payoff Obligations, as defined in the DIP Loan Agreement. To ensure the Clearwing Indemnification Liabilities and the Clearwing Deferred Payoff Obligations, the Debtors agreed to include Clearwing under the DIP Priority Lien, giving Clearwing a senior security interest in and lien on the Collateral, as defined in the Final DIP Financing Order. On May 2, 2005, pursuant to the Court's Order dated April 27, 2005, the Official Committee of Unsecured Creditors filed a draft complaint where it sought authority to pursue claims on behalf of the Debtors' estates against Clearwing, Chrysalis and The Patriot Group, LLC. At a hearing held on May 11, 2005, the Court ruled that the Creditors Committee could pursue claims in connection with approximately $5.1 million of fees paid to Clearwing and Chrysalis and in connection with approximately $1.9 million of fees paid to Patriot Group. Subsequently, the ABFS Trustee, the ABFS Warehouse Trusts, Clearwing and Chrysalis have agreed that: (a) Clearwing and Chrysalis will assign the Clearwing Deferred Payoff Obligations and Clearwing Lien to the ABFS Trustee; (b) Clearwing and Chrysalis will release all prior claims against the Debtors' estates including the Clearwing indemnification Liabilities; (c) The Debtors' bankruptcy estates will pay Clearwing and Chrysalis a sum not to exceed $200,000, in full and complete satisfaction of attorney's fees and expenses; (d) Clearwing and Chrysalis will receive a release from the ABFS Warehouse Trusts; and (e) The ABFS Trustee will receive an accounting from Clearwing and Chrysalis for the attorney's fees and expenses they incurred in connection with the Chrysalis Facility. The ABFS Trustee believes that the Settlement Agreement is in the best interests of the estate and its creditors, and is fair and equitable because it will result in the Debtors' estates receiving an assignment from Clearwing and Chrysalis of the $750,000 Clearwing Deferred Obligation and the related Clearwing Lien which is pari passu with the DIP Priority Liens. Moreover, Mr. Carroll tells Judge Walrath that the Settlement will result in the release of all claims by Clearwing and Chrysalis against the Debtors' estates, including the Clearwing Indemnification Liabilities and any additional amounts which could accrue. The Settlement will further eliminate any legal fees and expenses which the ABFS Trustee would otherwise incur in litigating its claims against Clearwing and Chrysalis while eliminating the possibility that he would not be successful pursuing those claims and while eliminating the potential for a resulting increase in the Clearwing Indemnification Liabilities. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203), and the Bankruptcy Court converted the cases to a chapter 7 liquidation on May 17, 2005. Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN BUSINESS: Trustee Submits Whole Loan Assets Bid Protocol ----------------------------------------------------------------- To maximize the value of the Whole Loan Assets, George L. Miller, the duly appointed Chapter 7 Trustee in the Debtors' cases, will subject the Whole Loan Assets to competitive bidding through a public auction process pursuant to a Court-approved sale procedures: (1) The Trustee will send notice of the auction and sale hearing by first class mail to: * the Debtors' counsel; * the United States Trustee; * counsel to Greenwich Capital Financial Products, Inc.; * counsel to Wells Fargo Bank, N.A.; * counsel to U.S. Bank, Indenture Trustee; * counsel to Law Debenture Trust Company of New York; * counsel to Clearwing Capital LLC; * counsel to The Patriot Group; * the Debtors' 20 largest unsecured creditors; * all parties-in-interest having requested notice pursuant to Rule 2002; * creditors who appear as lien holders on the Whole Loan Assets on UCC financing statements filed against the Debtors in Pennsylvania, Delaware and New Jersey; and * the Potential Purchasers. (2) The Whole Loan Assets will be sold for cash at closing, free and clear of all liens, claims, interests and encumbrances. Bids will be taken separately on the Tape No. 1 Whole Loans and Tape No. 2 Whole Loans with the winning bidder being that party which makes the highest and best offer on each group. Any party wishing to bid on the Whole Loan Assets must deliver that bid in writing or via facsimile to the Trustee at: -- Miller Coffey Tate Attn: George L. Miller 1628 John F. Kennedy Boulevard Philadelphia, Pennsylvania 19103 Fax No. 215-561-0330 -- John T. Carroll, Esq. Cozen O'Connor 1201 N. Market Street, Suite 1400 Wilmington, Delaware 19801 Fax No. 302-295-2013 The bid should be actually received by the Trustee and his counsel no later than 4:00 p.m. on August 8, 2005. A qualified bidder must include with its bid specific evidence of its financial capacity, which at a minimum, will require that the bidder has sufficient cash on hand or a binding financial commitment from an established financial institution to meet its commitment pursuant to its bid and ability to perform immediately without any conditions precedent and must otherwise comply with all of the Sale Procedures. (3) A bid for the Whole Loan Assets will consist of: -- an executed version of the Purchase Agreement proposed by the Debtors with marked alterations, if desired, but containing conditions at least as favorable to the seller; and -- an earnest money deposit amount equal to 5% of the bid's proposed purchase price through wire transfer to the Trustee, as escrow agent. A bid must also: * provide sufficient indicia that the Qualified Bidder or representative is legally empowered and financially capable of bidding and completing and signing a binding and enforceable asset purchase agreement; and * not contain any contingencies to the validity, effectiveness, or binding nature of the offer, including, without imitation, contingencies for financing, due diligence, or inspection. Greenwich will have all rights to credit bid on the Whole Loan Assets. (4) An Auction will be conducted at the offices of the Trustee's counsel or at other location disclosed by the Trustee to the Qualified Bidders on August 9, 2005, at 10:00 a.m. The Auction will be conducted only if a timely bid is submitted by a Qualified Bidder on or before the Bid Deadline. Qualified Bidders who have complied with the Sale Procedures may improve their bids at the Auction. Any subsequent bids submitted at the Auction by a Qualified Bidder will be in minimum monetary increments of one basis point of unpaid principal of the Whole Loan Assets being sold that is: * a minimum monetary increment of $30,200 for Tape No. 1 Whole Loans; and * a minimum monetary increment of $1,200 for the Tape No. 2 Whole Loans. The Trustee, in consultation with Greenwich Capital, will select the highest and best bids at the conclusion of the Auction, subject to Court approval at the Sale Hearing, and the Successful Bidder will be required to enter into a definitive agreement within one day of the time the Auction is adjourned. (5) All objections must be in writing and filed so as to be actually received by the Trustee's counsel on August 10, 2005, at 4:00 p.m. (6) An evidentiary hearing to confirm the results of the Auction will be held before Judge Walrath on August 12, 2005, at 9:30 a.m. (7) The closing of the sale will occur promptly after satisfaction of all conditions precedent in the Agreement and in any event no later than August 19, 2005. (8) If a Successful Bid is approved by the Court, but that bid does not result in the closing of the sale of the Whole Loan Assets on the "Closing Date" specified in the Agreement other than because of a default by the Trustee, the Trustee may close on the second highest and best bid as determined by the Trustee, and that closing will require no further Court order. The Trustee will determine the second highest and best bid submitted at the Auction the based on the same criteria, which he may use in determining the Successful Bidder. The Back-up Bidder will have two business days to consummate the purchase of the Whole Loan Assets at closing after written notice of the Successful Bidders' failure to close is given by the Trustee to the Back-up Bidder. The Earnest Money Down Payment of the Back-up Bidder will be held by the Trustee until closing has occurred with the Successful Bidder. The Trustee will refund the Earnest Money Down Payment without interest within one day of closing with the Successful Bidder to consummate the sale of the Whole Loan Assets. In the event the Back-up Bidder also fails to close, then the Earnest Money Down Payment of the Back-up Bidder will also be forfeited to the Trustee once he specifically reserves the right to seek all available damages from the defaulting Back-up Bidder. The Trustee asserts that the Sale Procedures provide an appropriate framework for selling the Whole Loan Assets in a fashion that will enable him to review, analyze and compare all bids received to determine which bid is in the best interests of the Debtors' estates and creditors. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203), and the Bankruptcy Court converted the cases to a chapter 7 liquidation on May 17, 2005. Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN WAGERING: Court Authorizes Issue of 250,000 New Shares --------------------------------------------------------------- The United States Bankruptcy Court for the District of Nevada authorized American Wagering, Inc. (OTC Bulletin Board: BETM) and its subsidiary, Leroy's Horse & Sports Place, Inc., to issue 250,000 shares of the Company's common stock to Michael Racusin pursuant to a settlement agreement between the Debtors and Mr. Racusin. As reported in the Troubled Company Reporter on Apr. 19, 2005, the Bankruptcy Appellate Panel for the 9th Circuit Court of Appeals ruled in favor American Wagering regarding the Racusin subordination matter. On April 14, 2005, the Panel reversed a bankruptcy court order and ruled that the debt owed to Michael Racusin dba M. Racusin & Co. is subordinated pursuant to the provisions of Section 510(b) of the U.S. Bankruptcy Code. As a result, the debt to Racusin will be paid in the form of 250,000 shares of the Company's common stock rather than $2.8 million in cash. As a result of the issuance of these shares, the Company has reduced the Racusin judgment liability to $0 (zero), increased shareholders' equity by $1,343,625, and recognized other income of $328,624. These changes will be reflected in the Company's financial statements for the second quarter. Mr. Racusin, though, is appealing the ruling that authorized this resolution of the judgment liability. Headquartered in Reno, Nevada, American Wagering, Inc. -- http://www.americanwagering.com/main.html-- owns and operates a number of subsidiaries including, but not limited to, (1) Leroy's Horse and Sports Place, which operates 47 race and sports books licensed by the Nevada Gaming Commission, giving it the largest number of books in the state; (2) Computerized Bookmaking Systems, the dominant supplier of computerized sports wagering systems in the state of Nevada; and (3) AWI Manufacturing (formerly AWI Keno) is licensed by the Nevada Gaming Commission as a manufacturer and distributor, and has developed a self-service race and sports wagering kiosk. The Company filed for chapter 11 protection on July 25, 2003 (Bankr. D. Nev. Case No. 03-52529). Thomas H. Fell, Esq., at Gordon & Silver, Ltd., represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed $13,694,623 in total assets and $13,688,935 in total debts. The Company and its wholly owned subsidiary, Leroy's Horse & Sports Place, Inc., consummated the Restated Amended Joint Plan of Reorganization and have formally emerged from Chapter 11 in March 2005. AWI and Leroy's officially concluded the process after completing all required actions and satisfying all remaining conditions of the Plan, which was confirmed by the U.S. Bankruptcy Court for the District of Nevada on Feb. 28, 2005. AMERIGAS PROPANE: Elects Jerry Sheridan as Chief Financial Officer ------------------------------------------------------------------ AmeriGas Propane, Inc., general partner of AmeriGas Partners, L.P. (NYSE:APU) elected Jerry E. Sheridan to the position of vice president, finance and chief financial officer effective Aug. 15, 2005. Mr. Sheridan, 40, will replace acting chief financial officer Michael J. Cuzzolina, who will continue his role as vice president of accounting and financial control of parent company UGI Corporation (NYSE:UGI). In addition to the full range of responsibilities generally associated with the chief financial officer position, Mr. Sheridan will be responsible for AmeriGas Partners' corporate development program and for operation of its two West Coast customer service centers. Mr. Sheridan was most recently president and chief executive officer of Potters Industries, the engineered glass materials division of PQ Corporation. He joined PQ in 1996 as a manager of operations support, rising through various management positions, including four years as vice president and chief financial officer of PQ. Prior to joining PQ, Mr. Sheridan was a finance manager with Otsuka America Pharmaceutical of Rockville, Maryland, a biotechnology company headquartered in Japan. Earlier, he was a general practice manager with the accounting firm of PricewaterhouseCoopers in Philadelphia. Sheridan holds a bachelors degree in accounting from the University of Delaware and an MBA from the University of Maryland. He is a certified public accountant. Through its subsidiaries, AmeriGas Partners, L.P. (NYSE:APU) -- http://www.amerigas.com/-- is the largest retail propane distributor in the United States. The Partnership serves residential, commercial, industrial, agricultural and motor fuel customers from over 650 retail locations in 46 states. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, AmeriGas Partners, L.P.'s -- APU -- $400 million senior notes due 2015, issued jointly and severally with its special purpose financing subsidiary Amerigas Finance Corp., are rated 'BB+' by Fitch Ratings. The Rating Outlook is Stable. An indirect subsidiary of UGI Corp. is the general partner and 44% limited partner for APU, which, in turn, is a master limited partnership for AmeriGas Propane, L.P., an operating limited partnership. Proceeds from the new senior notes will be utilized to repurchase outstanding 8.875% APU senior notes pursuant to an ongoing tender offer. AOL LATIN AMERICA: Can Continue Hiring Ordinary Course Profs. ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave America Online Latin America, Inc., and its debtor-affiliates, permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their business without bringing formal employment applications to the Court. The Debtors explain that the continued employment of their Ordinary Course Professionals is necessary to avoid any disruption to their businesses and their ability to supervise the day-to-day operations of their Non-Debtor Foreign Subsidiaries. It will be burdensome on the part of the Debtors to submit separate employment and compensation applications to the Court for each of the Ordinary Course Professionals since the amount of fees will be relatively small and it will avoid the incurrence of additional fees related to preparing and prosecuting interim fee applications for those Professionals. The Debtors assure the Court that: 1) no Ordinary Course Professional will be paid in excess of $35,000 per month, and the aggregate monthly payments for all the Professionals will not exceed $250,000 per month; 2) they will file with the Court every 90 days while their chapter 11 cases are pending, a quarterly statement containing: a) the name of each Ordinary Course Professional and the amount paid as compensation for services rendered and reimbursement of expenses incurred for that Professional, b) the aggregate amount paid as compensation for services rendered and reimbursement of expenses for all the Ordinary Course Professionals, and c) a general description of the services rendered by each Ordinary Course Professional during the 90-day period. Although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, the Debtors do not believe that any of them have an interest materially adverse to the Debtors, their creditors and other parties-in-interest. Headquartered in Fort Lauderdale, Florida, America Online Latin America, Inc., -- http://www.aola.com/-- offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. Principal shareholders in AOLA are Cisneros Group, one of Latin America's largest media firms, Brazil's Banco Itau, and Time Warner, through America Online. The Company and its debtor- affiliates filed for chapter 11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778). Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at Shearman & Sterling LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $28,500,000 and total debts of $181,774,000. AOL LATIN AMERICA: Has Until Nov. 23 to Decide on Unexpired Leases ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware extended, until Nov. 23, 2005, the period within which America Online Latin America, Inc., and its debtor-affiliates can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors told the Court that they commenced their chapter 11 cases to implement the proposed wind down of their businesses. The Debtors relate that they are parties to a number of nonresidential real property lease agreements. Some of those lease agreements include their administration officers and various premises leased by AOL Puerto Rico in shopping areas in Puerto Rico in connection with its marketing services for the AOL branded services. The Debtors gave the Court four reasons in support of the extension: 1) since the Petition Date, their management and professionals have been preoccupied with: a) obtaining interim and final approval of the first day motions and responding to information requests and concerns of the U.S. Trustee, and b) preparing their Schedules and Statements and handling the typical business emergencies that immediately occur after the commencement of their chapter 11 cases; 2) they have not had sufficient time to formulate and prosecute a plan that they will use to implement the proposed wind down of their businesses; 3) the extension will give them more opportunity to analyze each location of the unexpired nonresidential real property lease and its purpose in the wind down process; and 4) the extension will not prejudice the landlords of the unexpired leases as the Debtors are current on all post- petition obligations to those landlords as required by Section 365(d)(3) of the Bankruptcy Code. Headquartered in Fort Lauderdale, Florida, America Online Latin America, Inc., -- http://www.aola.com/-- offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. Principal shareholders in AOLA are Cisneros Group, one of Latin America's largest media firms, Brazil's Banco Itau, and Time Warner, through America Online. The Company and its debtor- affiliates filed for chapter 11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778). Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at Shearman & Sterling LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $28,500,000 and total debts of $181,774,000. ARMSTRONG WORLD: Court Allows Interface to Consummate Merger Pact ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the stipulation inked between Armstrong World Industries, Inc., and its debtor-affiliates and Interface Solutions Holdings, Inc., modifying the automatic stay to effectuate a merger agreement. As reported in the Troubled Company Reporter on July 7, 2005, Interface Solutions was formed in July 1999, when Armstrong World sold a 65% interest in Armstrong Industrial Specialties, Inc. -- presently Interface Solutions, Inc. -- to senior management and a private equity fund in a transaction referred to as the "1999 Transaction." The Fund is not affiliated with AWI or any of its affiliated debtors. In the 1999 Transaction, AWI retained an approximately 35% minority equity interest in Interface, consisting of 34.7% of ISH's common stock -- both Series A and Series B common stock -- and 38.9% of ISI's non-voting preferred shares. ISH's remaining common stock and ISI's non-voting preferred shares are held by entities and persons that are not affiliated with AWI. ISI's voting common stock is wholly owned by ISH. To protect ISI's value, and to avoid the uncertainties, risks, costs and expenses that might be associated with possible asbestos-related personal injury claims being asserted against ISI or any of its affiliates, AWI proposed to treat ISI as a "PI Protected Party" under the terms of a plan of reorganization for AWI. Accordingly, ISI, ISH, and one of the entities associated with the 1999 Transaction -- AISI Acquisition Corporation -- agreed to, among other things, withdrew claims filed against AWI, including, but not limited to, Claim No. 3421, on the effective date of AWI's Plan. The Merger Agreement ISI and ISH as well as a strategic financial party identified by Interface as a "preferred merger candidate" and two merger subsidiaries of the Buyer are entering into an Agreement and Plan of Merger. The Buyer is a private equity fund that is not affiliated with AWI, the Fund or Interface. Under the Agreement, the Buyer's subsidiary will merge with ISH. ISI's common stockholders, including AWI, will have their stock cancelled, in which non-management stockholders will have the right to receive cash and notes. Management stockholders will have the right to receive the Buyer's cash and stock, as well as one of the notes. Pursuant to the terms of the Agreement, a second subsidiary of the Buyer will merge with ISI, and the holders of non-voting preferred shares in ISI, including AWI, will have that stock cancelled, wherein stockholders will have the right to receive cash. The mergers must close on or before September 30, 2005. If the mergers close, the Buyer will pay an aggregate purchase price equal to $82.5 million, which will consist of about $72.5 million in cash and $10 million in the form of two notes. Interface estimates that based on the $82.5 million purchase price, AWI will receive around $23.2 million, consisting of $16.6 million for its common stock in ISH and $6.6 million for its non-voting preferred shares in ISI. The $16.6 million portion of the AWI Payment will be paid through a combination of cash and a proportional share of the Seller Notes. Under Delaware law, after ISI and ISH execute the Agreement, they will solicit stockholder approval of it. While the Fund and its present or former employee investors hold a sufficient number of shares to vote to approve the Agreement irrespective of how AWI votes, Interface intends to send proxy materials to AWI related to the Agreement. AWI believes the transaction reflected in the Agreement is fair, but AWI does not intend to vote its shares. ISH and ISI Stocks Get Cancelled Upon Merger On the approval of the Agreement by stockholders holding a majority of Interface's common stock, every Interface stockholder, including AWI, will have its stock in ISH and ISI cancelled on the filing of a merger certificate with the Delaware Secretary of State. Each of the non-management stockholder will then be entitled to receive its portion of cash and its share of the Seller Notes provided under the Agreement on submission of its cancelled stock certificates to Interface, accompanied by a transmittal letter. AWI intends to transmit its cancelled stock certificates to Interface so that it can receive the AWI Payment under the Agreement. To transmit its cancelled stock certificates, AWI must execute transmittal letters, which will include ordinary and customary provisions typical to those transmittal letters. Under the transmittal letters, AWI will represent and warrant that immediately prior to the cancellation of its stock, it had title to that stock and that it has the authority to surrender the cancelled stock certificates of Interface and that stock is free of any liens or claims. AWI will also irrevocably waive any dissenters' rights, appraisal rights or similar rights that it may have arising out the Agreement. The Court modified the automatic stay to permit these conduct or actions: (1) ISH and ISI may each submit appropriate proxy materials to AWI related to the Agreement. (2) ISH and ISI may each file a certificate of merger and all other necessary documents with the Delaware Secretary of State, which will result in the cancellation of AWI's equity interests in ISH and ISI and the creation of AWI's corresponding right to receive the AWI Payment on tendering cancelled stock certificates accompanied by the appropriate transmittal letter. (3) ISH and ISI will have the right to submit a transmittal letter to AWI which, as a condition to payment, will require AWI to transmit its cancelled stock certificates and that will require AWI to represent and warrant title of that cancelled stock and release dissenters' and appraisal rights. (4) ISH, ISI and AWI ratify and reaffirm the PI Protected Party Stipulation. AWI will continue to use its reasonable "best efforts" to continue to provide Interface, its successors and assigns, with the same treatment AWI provides Interface in the Fourth Amended Plan and any subsequently filed plan, and as contemplated by the PI Protected Party Stipulation if AWI proposes a plan of reorganization that provides for an injunction under Section 524(g) of the Bankruptcy Code. 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: Gets Court Nod to Enter Into Boeing Aircraft Leases ----------------------------------------------------------------- Judge Lorch authorizes ATA Airlines, Inc. and its debtor- affiliates to enter into aircraft leases based on the Amended Letter of Intent. As previously reported in the Troubled Company Reporter on May 6, 2005, the Debtors negotiated the return of several leased Boeing 737-800 aircraft. The Debtors also held extensive discussions with various potential lessors to replace a portion of the Returned Aircraft with older Boeing 737 "classic," aircraft to meet ATA Airlines' postpetition fleet plan and operational needs. With the consent of the Official Committee of Unsecured Creditors, the Debtors and Q Aviation, LLC, executed a letter of intent pursuant to which Q Aviation will lease five to 12 Boeing 737 classic aircraft to ATA Airlines. The Letter of Intent contains the financial details of the Leases that are confidential in nature. The Letter of Intent has been filed under seal pursuant to Section 1110 of the Bankruptcy Code. 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) ATKINS NUTRITIONAL: Taps Jefferies & Company as Financial Advisors ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York gave Atkins Nutritionals, Inc., and its debtor-affiliates permission to retain and employ Jefferies & Company, Inc., as their financial advisors. The Debtors have employed Jefferies & Company since Jan. 3, 2005, assisting them in connection with their restructuring efforts and the Firm is therefore well acquainted with the Debtors' capital structure, financial affairs and related matters. Jefferies & Company will: 1) advise the Debtors on the current state of the restructuring market; 2) assist and advise the Debtors in their general strategy for accomplishing in restructuring their businesses and in structuring and implementing any sale transactions; 3) assist and advise the Debtors in structuring and implementing any proposed chapter 11 plan; 4) assist and advise the Debtors in connection with the confirmation process of a proposed chapter 11 plan, including the valuation of securities that may be issued under a restructuring plan or plans and provide any necessary testimony; and 5) render all other financial advisory services that maybe agreed from time to time by the Debtors and Jefferies. Thane W. Carlston, a Managing Director of Jefferies & Company, discloses that his Firm will be paid: 1) a Monthly Fee of $125,000; 2) a Success Fee of $1.8 million payable upon the consummation of a restructuring of the Debtors. If a pre-negotiated chapter 11 plan is confirmed and consummated, the Success Fee is deemed to have been earned in full upon receipt by the Debtors of pre-petition lock-up agreements or other commitments from holders of at least 66.67% of the Debtors' Senior Loans to vote in favor of an acceptable plan; and 3) with Reimbursement of Expenses for all substantiated disbursements and out-of-pocket expenses incurred by Jefferies in connection with its services rendered to the Debtors. Jefferies & Company assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in New York, New York, Atkins Nutritionals, Inc. -- http://atkins.com/-- sell nutritional supplements based on its founder, Dr. Robert C. Atkins' nutritional philosophy of controlled-carbohydrate lifestyle. The Debtors also sell more than 100 food products and nutritional supplements, as well as informational products such as diet books and cookbooks. Atkins' products are sold in more than 30,000 stores in North America under numerous trademarks. The Company along with Atkins Nutritionals Holdings, Inc., Atkins Nutritionals Holdings II, Inc., and Atkins Nutritionals (Canada) Limited, filed for chapter 11 protection on July 31, 2005 (Bankr. S.D.N.Y. Case No. 05-15913). Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represents the Debtors in the United States, while lawyers at Osler, Hoskin & Harcourt, LLP, represents the Debtors in Canada. As of May 28, 2005, they listed $265.6 million in total assets and $323.2 million in total debts. BALLY TOTAL: S&P Lowers Corporate Credit & Sr. Debt Ratings to CCC ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Bally Total Fitness Holding Corp. to 'CCC' from 'CCC+' and placed them on CreditWatch with negative implications. At the same time, Standard & Poor's also lowered its senior unsecured debt rating to 'CCC-' from 'CCC' and subordinated debt rating to 'CC' from 'CCC-' and placed them on CreditWatch with negative implications. "The action is based on the commencement of the 10-day period after which time an event of default occurs under Bally's $275 million secured credit agreement's cross-default provision and debt becomes immediately due and payable," said Standard & Poor's credit analyst Andy Liu. Chicago-based Bally is the largest fitness club operator in North America, with more than 400 clubs in the U.S. and Canada and about four million members. Total debt outstanding was about $757 million as of March 31, 2005. The rating action reflects a potential acceleration of Bally's total debt obligations. Bally received notices of default under the indentures governing its 9 7/8% senior subordinated notes due 2007 and its 10 1/2% senior notes due 2011 following the expiration of the waiver of the financial reporting covenant default on July 31, 2005. The notices commence a 30-day cure period during which Bally must either secure an extension to the waiver or remedy default. More important, the delivery of the notices could result in more than $700 million of debt obligations becoming immediately due and payable on or after Aug. 14, 2005. The company currently has received consent of 96.3% of the senior notes and 42.9% of senior subordinated notes outstanding. S&P will continue to monitor Bally's progress in obtaining the waiver extension. If the company is unable to secure the waiver extension, the ratings will likely be lowered to 'D'. CADMUS COMMS: Earns $1.2 Million of Net Income in Fourth Quarter ---------------------------------------------------------------- Cadmus Communications Corporation (Nasdaq: CDMS) reported net sales of $111.1 million for the fourth quarter of its fiscal year 2005, an increase of 1% from $109.6 million in last year's fourth quarter. Operating income was $4.4 million and net income was $1.2 million for the fourth quarter of fiscal 2005, compared to operating income of $8.9 million and a net loss of $2.1 million in the fourth quarter of fiscal 2004. For the full year, net sales were $436.4 million, down 2% from fiscal 2004 net sales of $445.4 million, operating income was $30.1 million compared to $33.9 million last year, and net income was $15.0 million, or $1.60 per share, compared to net income of $6.7 million, or $0.72 per share, last year. "I am pleased with our performance this quarter, as we again delivered solid year over year improvement," Bruce V. Thomas, president and chief executive officer, said. "From a revenue perspective, there were several positive signs. We reversed recent trends to post top line growth on a consolidated basis, we sustained exceptional growth in our Specialty Packaging segment, and we saw better trends in revenues in our core STM journal division. Those results are encouraging. From a margin perspective, we continue to do very well, with operating margins rising to 8.4% and EBITDA margins holding at a solid 12.8% for the quarter. Finally, as we have done all year, and despite continued investment to enter new markets and add to our resources and capabilities around the world, we continue to do a very good job of controlling our costs and managing SG&A expense. For the quarter, SG&A declined to 9.2% of net sales, a percentage that we believe to be among the strongest in the industry." Mr. Thomas continued, "While we posted steady and improving financial performance, we also accomplished many initiatives key to strengthening and positioning our business going forward. During the quarter, we: (i) expanded our Chennai operations and won new business from both new and existing educational customers; (ii) relocated and expanded our Dominican Republic operations and won new health care-related packaging business for that plant; (iii) won several new and prestigious customers for our Emerging Solutions products; and (iv) completed a comprehensive review of our paper programs, making several changes in our mill and merchant relationships to achieve cost reduction, improved service, and better opportunities for revenue growth. "In addition, and obviously most importantly, we completed our planning for our comprehensive equipment upgrade of both our Specialty Packaging and Publisher Services segments and we placed orders for packaging and publication presses and related equipment that is in every respect state of the art. This equipment will begin arriving in the Fall and should give us enormous improvements both in our competitiveness from a pure print perspective and in our overall cost structure and manufacturing efficiency. In short, we are proud of the solid financial performance we have delivered and excited about the opportunities we have created for our business going forward as a result of these key initiatives and achievements." Paul K. Suijk, senior vice president and chief financial officer, noted, "For the quarter, our overall debt increased by $1.5 million. During the quarter, we paid our semi-annual interest payment of $5.2 million on the senior subordinated notes. In addition, we also paid approximately $0.9 million in down payments on presses and other equipment related to our equipment upgrade plan and we paid a $1.0 million settlement related to discontinued operations. For the year, however, we reduced debt by $10.8 million, to bring our total debt to $157.0 million (excluding the fair market value of interest rate swap agreements) as of June 30, 2005. All in all, from a debt reduction and cash flow perspective, it was another solid quarter and another strong year." Fourth Quarter Operating Results Review Net sales for the fourth quarter totaled $111.1 million compared with $109.6 million last year, an increase of 1%. Specialty Packaging segment net sales were $19.8 million, an increase of 22% from $16.2 million last year. Publisher Services segment net sales were $91.4 million, a decrease of 2% from $93.3 million last year, as a result of lower freight and postage (which are pass through costs for the Company) and continued pricing pressures in certain markets. Operating income for the quarter was $9.3 million or 8.4% of net sales in the fourth quarter, compared to $9.1 million, or 8.3% of net sales last year, adjusted as described above.(4) Specialty Packaging operating income rose 26% to $1.6 million and operating income margins increased to 8.0% from 7.7% last year as the business continued to benefit from higher overall volume, improved business mix, and efficiencies derived from new and more efficient technology and work flows. Publisher Services operating income declined 14% to $8.9 million and operating income margins declined to 9.7% from 11.0% last year due to: (i) costs incurred to support our educational and Emerging Solutions initiatives; (ii) severance and related costs incurred in connection with content-related capacity rationalization; and (iii) continued pricing pressures in certain markets. Cash generated from operations, offset by the $5.2 million semi- annual interest payment on the senior subordinated notes, the $0.9 million down payments on presses and related equipment related to our equipment upgrade plan and the $1 million lease guaranty settlement resulted in an increase in total debt of $1.5 million for the quarter, excluding the fair market value of interest rate swap agreements. The Company repurchased approximately 45,000 shares of its common stock during the fourth quarter under our previously announced stock repurchase program, which resulted in a net cash outflow of approximately $0.2 million for the quarter. The additional minimum liability related to the Company's frozen defined benefit pension plan and other pension plans increased based on the latest valuation reports resulting in a decrease in shareholders' equity of $8.4 million, net of tax. Fiscal Year Operating Results Review Net sales for fiscal year 2005 totaled $436.4 million compared with $445.4 million last year, a decrease of 2%. Specialty Packaging segment net sales were $78.2 million, an increase of 20% from $65.2 million last year. Publisher Services segment net sales were $358.3 million, down 6% from $380.2 million last year. For fiscal year 2005, operating income was $35.3 million, or 8.1% of net sales, compared to $34.3 million, or 7.7% of net sales last year, adjusted as described above. For fiscal year 2005, Specialty Packaging operating income rose 71% to $7.4 million and operating income margins increased to 9.4% from 6.6% last year. Publisher Services operating income declined 8% to $35.8 million and operating margins declined to 10.0% from 10.2% last year. Cash generated from operations resulted in a decrease in total debt of $10.8 million for fiscal year 2005, excluding the fair market value of interest rate swap agreements. The Company has repurchased approximately 260,000 shares of its common stock during fiscal year 2005 under our previously announced stock repurchase program, which resulted in a net cash outflow of approximately $1.2 million for fiscal year 2005. Outlook Commenting on the Company's outlook for fiscal 2006 and fiscal 2007, Mr. Thomas stated, "Obviously, the equipment upgrade plan that we recently announced is the big news for both fiscal 2006 and fiscal 2007. This plan will help us in three key ways. First, it will provide the capacity we need to continue to grow our business in our target publishing markets, particularly the attractive STM and educational markets. Second, it will add a second in-line folding carton production system in our Charlotte facility, adding needed capacity there and also permitting us to relocate existing equipment to expand our highly successful Global Packaging Services capabilities with new facilities in the Dominican Republic and in Honduras. Finally, and most importantly, it will permit us to streamline our existing print operations -- eliminating older and less efficient equipment and significantly improving our manufacturing efficiencies. Capital spending will increase to just over $50 million in fiscal 2006 -- as we have accelerated the delivery and installation of all equipment in fiscal 2006 -- before returning to the more normal $13-15 million range in fiscal 2007. We continue to believe that the plan will add at least an additional $12-15 million in EBITDA annually, with the full benefit being obtained in fiscal 2007." Cadmus Communications Corporation -- http://www.cadmus.com/-- provides end-to-end, integrated graphic communications services to professional publishers, not-for-profit societies and corporations. Cadmus is the world's largest provider of content management and production services to scientific, technical and medical journal publishers, the fifth largest periodicals printer in North America, and a leading provider of specialty packaging and promotional printing services. * * * Moody's Rating Services and Standard & Poor's assigned its single-B rating to Cadmus Communications' 8-3/8% senior subordinated notes due 2014 last year. CAMCO INC: June 25 Balance Sheet Upside-Down by $13.9 Million ------------------------------------------------------------- Camco Inc. (TSX:COC) reported net income of $3.7 million for the second quarter ending June 25, 2005, compared to a $1.9 million net loss for the same period last year, due to significant provisions for Hamilton plant closure costs. Total sales for the second quarter amounted to $170 million, up 2% from sales of $167 million for the second quarter of 2004. Closure-related expenses of $200,000 million related to final dismantling associated with the Hamilton plant, were recorded in the second quarter of 2005 compared to closure costs of $6.5 million for the same period last year. Income from operations, before closure costs and write-downs, in the second quarter rose to $6.0 million, compared to $4.2 million in 2004. For the first half of 2005, the Company recorded net income of $9.0 million on sales of $302 million compared to a net loss of $5.6 million on sales of $290 million in 2004. Income from operations, before closure costs and write-downs, were $3.9 million, compared to $4.8 million in 2004 as a result of recent increases in commodity prices, especially steel and plastic. Mabe Agreement As reported on July 25, 2005, Controladora Mabe S.A. de C.V. of Mexico and the Company have entered into a Support Agreement pursuant to which 6295053 Canada Inc, a wholly owned subsidiary of Mabe, will make an offer to purchase all of the common shares of the Company at a price of $3.52 per share for an aggregate value of approximately $70.4 million. "The market for home appliances was quite robust during the first half of the year, and this was a major contributor to Camco's strong performance," James Fleck, President and CEO, said. "Material cost inflation continued to be a critical issue for the Company, and as a result price increases were implemented in Canada and the US. Most significantly, Camco reached an agreement with GE that effectively increases dryer prices retroactively for the first half of 2005. In the event that the Mabe transaction does not close in the third quarter, the dryer supply agreement with GE will need to be renegotiated". Camco Inc. -- http://www.geappliances.ca/-- is the largest Canadian manufacturer, marketer and service provider of home appliances. The Company's product line includes such popular names as GE, Profile, Monogram, Hotpoint, Moffat, and BeefEater. Camco manufactures clothes dryers and dishwashers at its Montreal Plant, and is the primary supplier of clothes dryers to GE in the US. At June 25, 2005, Camco Inc.'s balance sheet showed a $13,911,000 stockholders' deficit, compared to a $22,879,000 deficit at Dec. 31, 2004. CATHOLIC CHURCH: Spokane Exclusive Period Stretched to January 6 ---------------------------------------------------------------- Judge Williams extends the period within which the Diocese of Spokane has the exclusive right to file a plan until January 6, 2006, and the exclusive right to solicit acceptance of the plan until March 10, 2006. The exclusivity period will terminate 45 days after the entry of the U.S. Bankruptcy Court for the Eastern District of Washington's Memorandum Decision concerning the property of the estate issues. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Tucson Wants Catholic Foundation Deal Approved --------------------------------------------------------------- In 1993, the Catholic Foundation made a $1,500,000 unsecured loan to the Diocese of Tucson. Tucson assured the Catholic Foundation that the Diocese would pay the obligation from proceeds of the sale of lease of the Regina Cleri Center, or alternatively from the sale of other property owned by the Diocese or from any surplus funds. Over the succeeding decade, the Diocese paid interest regularly on the obligation, but it did not reduce the principal balance of the loan. Susan G. Boswell, Esq., at Quarles & Brady Streich Lang LLP, in Tucson, Arizona, relates that in 2002 Tucson encumbered the Regina Cleri Center with a trust deed in favor of those persons who settled their claims against the Diocese in 2002. The trust deed secured a promissory note for the principal sum of $3,000,000, and was recorded at Docket 11805, Page 519 on May 22, 2002, in the official records of Pima County, Arizona. After learning that the Diocese had encumbered the Regina Cleri Center, eliminating it as a possible source for the repayment of the loan, the Catholic Foundation asked the Diocese to provide it with a plan for repayment of the loan. The Diocese subsequently proposed to satisfy the debt in connection with the Catholic Foundation's purchase of real property from the Diocese. On June 26, 2003, the Catholic Foundation purchased a building now known as the Bishop Moreno Pastoral Center from the Diocese for $1,635,000, with the price based on a contemporaneous appraisal of the Pastoral Center. The Diocese conveyed the Pastoral Center to the Catholic Foundation by a special Warranty Deed, which was recorded in the office of the Recorder of Pima County on August 12, 2003. In connection with the sale, the Catholic Foundation executed a promissory note to the Diocese for the principal sum of $369,490. The Foundation's debt will bear interest until the obligation is paid in full. Subsequently, the Catholic Foundation agreed to lease the Pastoral Center back to the Diocese on a long-term basis, with the Catholic Foundation subleasing space back from the Diocese as long as space was available. The parties entered into a written lease, with a term of 50 years, through June 30, 2053. The Diocese is obligated to pay monthly rent to the Catholic Foundation. The Diocesan obligation to pay rent is reduced by credits based on the Diocese maintaining the Pastoral Center for the Catholic Foundation and based on the Foundation's obligation to pay rent under its sublease. In addition, the Diocesan obligation to pay rent to the Foundation is reduced by monthly credits, which represent the Foundation's payments on the $369,490 Debt. On August 19, 2004, certain Tort Claimants filed an action against the Diocese, the Catholic Foundation and certain other defendants, captioned as Case No. C2004-4539, in the Superior Court of Arizona in Pima County. The Action alleges that certain transfers of the Diocese's property, including the sale of the Pastoral Center, were fraudulent in nature. The Diocese's Chapter 11 petition has stayed the Action. Mr. Boswell informs the U.S. Bankruptcy Court for the District of Arizona that the Diocese and the Catholic Foundation dispute the allegations made in the Action concerning the transfer of the Pastoral Center. Ms. Boswell asserts that the Diocese has the right to avoid certain types of transfers, including fraudulent transfers, pursuant to Sections 544, 545, 547, 548, 549 and 550 of the Bankruptcy Code. The Diocese's Third Amended and Restated Plan of Reorganization further provides that upon confirmation, the Diocese, as the Reorganized Debtor, will retain Avoidance Actions for the benefit of its creditors. The Avoidance Actions held by the Diocese include any and all potential actions related to the transfer of the Pastoral Center. On June 16, 2005, the Diocese sought to assume the Lease with the Catholic Foundation. No party-in-interest has objected to the assumption request, and the Order allowing assumption of the Lease was entered on July 25, 2005. The Settlement The Diocese and the Catholic Foundation are well aware of the risks associated with litigating the potential avoidance action and indemnity claims although the parties are confident: -- that none of the elements of a fraudulent transfer are applicable to the Foundation's purchase of the Pastoral Center; and -- of the separate corporate identity of the Foundation. Accordingly, the Diocese and the Foundation entered into a settlement. By this motion, Tucson asks the Court to approve the Settlement. The salient terms of the Settlement are: (a) The Catholic Foundation will contribute $300,000 to the Diocese in annual installments of $100,000 over a three- year period beginning on the Plan Effective Date. The Foundation Contribution is restricted to use for resolving certain parishes' indebtedness to the Diocese for services and advances, which were provided before the Petition Date Case and that the Diocese believes is unlikely to be repaid in the foreseeable future; (b) The parties exchange mutual releases from any and all claims, including avoidance actions held by the Diocese and indemnity and contribution claims held by the Catholic Foundation in relation to Tort Claims. The the releases do not apply to any claims arising out of the Lease or to any current accounts payable owed by either party to the other; and (c) The Catholic Foundation will be deemed to be a Participating Third Party under the Plan, so that the Foundation will have the benefit of being a Released Party, as those terms are used in the Plan. A full-text copy of the Settlement is available for free at: http://bankrupt.com/misc/catholic_foundation_settlement.pdf The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 37 Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTRAL PARKING: S&P Affirms BB- Bank Loan Ratings -------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Nashville, Tennessee-based Central Parking Corp., including the company's 'B+' corporate credit and 'BB-' bank loan ratings. At the same time, the ratings were removed from CreditWatch with negative implications, where they were placed on March 16, 2005. The CreditWatch listing followed the company's announcement that it had engaged Morgan Stanley to assist in pursuing various strategic alternatives, including the possible sale or recapitalization of the company. The CreditWatch listing also reflected Standard & Poor's concern over management turnover following the resignation of the company's former Chief Financial Officer. The outlook is negative. Total debt outstanding as of June 30, 2005, was $245 million, excluding operating leases. "The rating actions follow recent announcements by Central Parking that the company is no longer for sale, will implement a strategic plan to streamline operations, and divest unprofitable facilities," said Standard & Poor's credit analyst Mark Salierno. In addition, Central Parking announced that the position of Chief Financial Officer has been filled internally by Jeff Heavrin. The company will also repurchase $70 million of the company's stock via a "Dutch auction" tender offer. The stock repurchase is expected to be funded through a combination of proceeds received from a recent sale of leased property (the company sold its leasehold interest on a parking garage in New York City net after- tax proceeds of which were $23 million, a $26.4 million note receivable due during the current quarter, and approximately $20 million drawn under the company's revolving credit facility). Standard & Poor's expects that the incremental debt on the revolver will be substantially repaid by the end of the calendar year through additional asset sales. Central Parking is a private owner, operator, and manager of surface lots and multilevel garages. CENTURY/ML CABLE: Files Chapter 11 Plan to Implement Interest Sale ------------------------------------------------------------------ Century/ML Cable Venture, a joint venture between Century Communications Corporation and ML Media Partners, L.P., filed its Plan of Reorganization and accompanying Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York, on Aug. 9, 2005. The Plan will implement the sale of the ownership of ML Media and Century Communications to San Juan Cable, LLC, for $520 million, pursuant to an Interest Acquisition Agreement dated June 3, 2005. MidOcean Partners LP, Crestview Capital Partners, LP, and other investors will be members as of the closing date of the transaction. Terms of the Plan The Plan provides that all allowed third-party claims will either be paid in full or assumed by the Purchaser under the terms set forth in the Interest Acquisition Agreement. Upon the effective date of the Plan, cash sufficient to pay all allowed claims in all Classes in full will be placed in the Plan Funding Reserve and then distributed to creditors in accordance with the terms of the Plan. The sole equity interest holders, ML Media and Century, are impaired under the Plan. These creditors will receive distributions after disputed claimholders will get paid. Each creditor will equally share in whatever's left of the Sellers Escrow Account and the Plan Funding Reserve of an amount not more than $70 million. The cash necessary to fund the Plan will come from: (i) cash on hand in the Debtor's accounts; (ii) cash to be generated from operations through the Effective Date of the Plan; and (iii) approximately $520 million of sales proceeds to be paid by the Buyer. At present, the Debtor estimates that the aggregate total of all allowed and disputed claims is approximately $415 million -- less than the sales proceeds to be received under the Acquisition Agreement. This amount is comprised of: * ML Media's $370 million claim; * Adelphia's $30 million claim; * Highland Holdings' $10 million claim; * Daniels' $1.7 million claim;; and * the balance of administrative and other claims. The Plan, if consummated, would not resolve the outstanding litigation between Century and ML Media concerning the Debtor's management, the buy-sell rights of ML Media and various other matters, but would permit the continued litigation of the dispute. Consummation of the plan is subject to the approval of the Bankruptcy Court and other conditions, including the concurrent sale of the Century/ML interests. Consummation of the sale is subject to bankruptcy court approval, the receipt of financing by the Purchaser and other customary conditions, many of which are outside the control of the sellers and the Debtor. The Court will convene a hearing to consider approval of the Debtor's Disclosure Statement on Aug. 18, 2005. A full-text copy of Century/ML Cable Venture's Plan of Reorganization is available at no charge at : http://ResearchArchives.com/t/s?b6 A full-text copy of Century/ML Cable Venture's Disclosure Statement is available at no charge at: http://ResearchArchives.com/t/s?b7 Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. 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. CHEMRITE INDUSTRIES: Case Summary & 28 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: ChemRite Industries, LLC 88 Inverness Circle East, Building A101 Englewood, Colorado 80112 Bankruptcy Case No.: 05-29922 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- ChemRite Holding Company, LLC 05-29924 Race Glaze, LLC 05-29925 19725 West Edgewood Drive, LLC 05-29926 7424 Circle Drive, LLC 05-29927 Type of Business: The Debtor is a private labeler, formulator, blender, tube and bottle filler. ChemRite specializes in liquids, creams and pastes and offers a full range of existing formulas in categories such as Personal Care, Topical Health Care, Household Cleaning, Auto Appearance, Institutional, Industrial, Laundry & Fabric Care. See http://www.chemriteindustries.com/ Chapter 11 Petition Date: August 9, 2005 Court: District of Colorado (Denver) Judge: A. Bruce Campbell Debtors' Counsel: Christian C. Onsager, Esq. 1873 South Bellaire Street, Suite 1401 Denver, Colorado 80222 Tel: (303) 512-1123 Estimated Assets Estimated Debts ---------------- --------------- ChemRite Industries, LLC $1 Million to $1 Million to $10 Million $10 Million ChemRite Holding Company, $1 Million to $1 Million to LLC $10 Million $10 Million Race Glaze, LLC $500,000 to $1 Million to $1 Million $10 Million 19725 West Edgewood Drive, $1 Million to $1 Million to LLC $10 Million $10 Million 7424 Circle Drive, LLC $1 Million to $1 Million to $10 Million $10 Million A. ChemRite Industries, LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Brownstein Hyatt & Farber $137,321 Twenty-Second Floor 410 Seventeenth Street Denver, CO 80224 Illinois Bottle Mfg. Co. $86,566 701 East Devon Avenue Elk Grove, IL 60007 Univar USA Inc. $66,831 1707 South 101st Street Milwaukee, WI 53214 Hydrite Chemical Co. $62,517 Rieke Corporation $57,600 Plastic Container Corp. $50,231 Continental Pkg. Solutions $49,094 Arrow Carton Company $48,790 KDV Label Co. Inc. $37,602 ChemCentral/Milwaukee $35,219 Brenntag Great Lakes, LLC $34,052 Hein + Associates LLP $22,450 Business Controls, Inc. $19,310 A.I. Credit Corp. $19,255 Kaufman Container $16,375 Archway Sales $15,592 Total Water Treat. Systems $15,392 Crompton (WITCO) $14,221 Bobolink Storage LLC $14,030 KOLB + Co. S.C. $13,113 B. Race Glaze, LLC's 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Brownstein Hyatt & Farber $137,321 Twenty-Second Floor 410 Seventeenth Street Denver, CO 80224 Cessna Aircraft Company $34,649 Milw. Citation Serv. Center 210 East CITA Milwaukee, WI 53207 ChemRite Industries LLC $5,264 19725 West Edgewood Drive Lannon, WI 53046 Lake Country Manufacturing Inc. $3,441 USF Holland $410 Pendergast Printing, Inc. $232 N & M Transfer Co., Inc. $67 C. Largest Unsecured Creditor of: --- ChemRite Holding Company, LLC --- 19725 West Edgewood Drive, LLC --- 7424 Circle Drive, LLC Entity Nature of Claim Claim Amount ------ --------------- ------------ Brownstein Hyatt & Farber Trade debt $137,321 Twenty-Second Floor 410 Seventeenth Street Denver, CO 80224 CHEMTURA CORP: Will Redeem $110 Million 7.75% Debentures Due 2023 ----------------------------------------------------------------- Chemtura Corporation (NYSE: CEM), which was formed on July 1, 2005, by the merger of Crompton Corporation and Great Lakes Chemical Corporation, called for redemption all of its outstanding $110 million aggregate principal amount of 7.75% Debentures due 2023. The Debentures will be redeemed at a redemption price of 103.021% of the principal amount thereof, plus accrued interest to the redemption date, which is Sept. 6, 2005. Chemtura will finance the redemption with available cash and borrowings under its revolving credit facility. "This action is in line with our plan to reduce debt beginning with the highest cost debt that we are contractually able to redeem," said Karen R. Osar, executive vice president and CFO. Chemtura Corporation -- http://www.chemtura.com/-- is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. Headquartered in Middlebury, Connecticut, the company has approximately 7,300 employees around the world. * * * As reported in the Troubled Company Reporter on July 7, 2005, Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BB+' from 'BB-', on Chemtura Corp. (fka Crompton Corp.). The ratings are removed from CreditWatch with positive implications, where they were placed on March 9, 2005. The outlook is stable. The rating actions follow Middlebury, Connecticut-based Chemtura's recently completed acquisition of Great Lakes Chemical Corp. for approximately $1.6 billion in common stock, plus the assumption of debt. The upgrades reflect an immediate strengthening of Chemtura's business mix and cash flow protection and debt leverage measures as a result of the equity-financed acquisition of a much higher-rated company. CIRTRAN CORP: Cornell Capital Returns 38.2 Mil. Escrowed Shares --------------------------------------------------------------- CirTran Corporation (OTCBB:CIRT) received back 38,280,000 shares previously held in escrow by Cornell Capital Partners LP. Iehab J. Hawatmeh, CirTran's founder and president, said the returned shares "significantly reduce the float of CirTran stock and marks the end of financial agreements with and obligations to Cornell," as announced two months ago. At that time, Mr. Hawatmeh said that CirTran had successfully negotiated and completed issuance of a $3.75 convertible debenture "at far more favorable rates" as the latest step in its strategic financial plan. "The shares received back from Cornell are being retired," he said. "Over the past year, CirTran has adhered to a plan to reduce and control obligations, including conversion of some debt to equity, while moving toward profitability. The termination of our relationship with Cornell and the return of these shares is an important step in the recovery and resurgence of CirTran, with business growing in the U.S. and through our CirTran-Asia subsidiary." Mr. Hawatmeh said CirTran is "on target" with its projection of reporting record sales for the second straight quarter when it files a 10-Q later this month, and that it will also report its first profitable quarter since becoming a public company in 2000. CirTran-Asia -- http://www.CirTran-Asia.com/-- was formed in 2004 as a high-volume manufacturing arm and wholly owned subsidiary of CirTran Corp. with its principal office in ShenZhen, China. CirTran-Asia operates in three primary business segments: high- volume electronics, fitness equipment and household products manufacturing, focusing on being a leading manufacturer for the multi-billion dollar Direct Response Industry, which sells through infomercials, print and Internet advertisements. Founded in 1993, CirTran Corp. -- http://www.CirTran.com/-- is a premier international full-service contract manufacturer of low to mid-size volume contracts for printed circuit board assemblies, cables and harnesses to the most exacting specifications. Headquartered in Salt Lake City, CirTran's modern 40,000-square- foot non-captive manufacturing facility -- the largest in the Intermountain Region -- provides "just-in-time" inventory management techniques designed to minimize an OEM's investment in component inventories, personnel and related facilities, while reducing costs and ensuring speedy time-to-market. * * * Going Concern Doubt Hansen, Barnett & Maxwell, CirTran's accountants, raised substantial doubts about the Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004, citing continuing losses and negative cash flows from operations, and pointing to the company's accumulated deficit, equity deficit and working capital deficit. CMS ENERGY: Earns $27 Million of Net Income in Second Quarter ------------------------------------------------------------- CMS Energy (NYSE: CMS) reported its second quarter net income of $27 million compared to net income of $16 million in the same quarter of 2004. The second quarter 2005 results include income tax benefits of $24 million available this year under the American Jobs Creation Act and higher electric deliveries at CMS Energy's principal subsidiary, Consumers Energy, because of warmer than normal summer temperatures. Those were offset partially by mark-to-market adjustments related to interest rate and gas price hedging derivative instruments. For the first half of 2005, CMS Energy reported net income of $177 million up from $7 million for the comparable period of 2004. Major differences in net income between the two periods are higher mark-to-market gains in 2005 of $43 million and impairment and other charges in 2004 of $85 million. CMS Energy is increasing both its reported and adjusted 2005 earnings guidance from about $0.90 per share to about $0.95 per share, based on results for the first two quarters and a stronger second-half forecast. "Our utility-plus strategy and focus on our core business, Consumers Energy, continue to show positive results, assisted by good performance from our CMS Enterprises businesses," said CMS Energy's Chief Executive Officer David Joos. The Company's recent highlights include: -- An International Centre for the Settlement of Investment Disputes tribunal found in favor of CMS Energy's subsidiary, CMS Gas Transmission, in its claim against Argentina. The tribunal, which operated under the auspices of the World Bank, awarded $133 million in compensation, plus interest, which could increase the total to $150 million. However, the government of Argentina is contesting the claim and award. -- The unions representing operations, maintenance, and construction employees and call center employees have ratified new five-year contracts with Consumers Energy. -- Settlement of a shareholder derivative lawsuit linked to round-trip energy trading. The settlement, which remains subject to court approval, eliminates a major legal uncertainty for the Company. -- The Jubail Cogeneration Plant, of which CMS Energy holds a 25 percent interest, began commercial operation on June 23. The plant - the first independent power plant in Saudi Arabia - can produce up to 250 megawatts of power and 510 tons of industrial steam per hour. The entire output of the plant is under a long-term contract. CMS Energy is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. As reported in the Troubled Company Reporter on April 4, 2005, Fitch Ratings affirmed the outstanding ratings of CMS Energy Corporation and primary subsidiary Consumers Energy Co. following the issuance of 20 million shares of common stock by CMS (total gross proceeds of $245 million). Proceeds of this latest stock sale will be downstreamed into Consumers and for general corporate purposes. The infusion of equity into Consumers fulfills a requirement for the utility to have $2.3 billion in equity by year-end 2005, as required by the Michigan Public Service Commission in Consumers' recent gas rate order. Fitch affirms these ratings with a Positive Outlook: CMS Energy Corporation -- Secured bank loan 'BB'; -- Senior unsecured 'B+'; -- Preferred stock 'B'. Fitch affirms these ratings with a Stable Outlook: Consumers Energy Co. -- Secured and first mortgage bonds 'BBB-'; -- Senior unsecured 'BB'; -- Preferred stock 'BB-'. As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service upgraded the ratings of CMS Energy Corporation, including its Senior Implied rating to Ba3 from B2, senior unsecured debt to B1 from B3, subordinated debt to B3 from Caa2, and preferred stock to Caa1 from Ca. Moody's also upgraded CMS' Speculative Grade Liquidity rating to SGL-2 from SGL-3. In addition, Moody's assigned a Ba3 rating to CMS' $300 million secured bank credit facility. This action concludes the review of CMS' ratings for possible upgrade. Moody's says the rating outlook is stable. COMM 2004-RS1: Fitch Affirms Low-B Ratings on Six Cert. Classes --------------------------------------------------------------- Fitch Ratings affirms all classes of notes issued by COMM 2004- RS1. These affirmations are the result of Fitch's annual review process and are effective immediately: -- $220,587,345.78 class A at 'AAA'; -- $314,291,345.78 class XP at 'AAA'; -- $345,383,874.25 class IO-1 at 'AAA' (Interest Only); -- $39,020,000 class B1 at 'AA'; -- $41,298,000 class B2 at 'AA'; -- $13,386,000 class C at 'AA-'; -- $12,955,000 class D at 'A'; -- $4,318,000 class E at 'A-'; -- $3,023,000 class F at 'BBB+'; -- $2,056,000 class G at 'BBB-'; -- $2,176,000 class H at 'BB+'; -- $725,000 class J at 'BB'; -- $1,313,000 class K at 'BB-'; -- $1,520,000 class L at 'B+'; -- $622,000 class M at 'B'; -- $2,384,528.47 class N at 'B-'. COMM 2004-RS1 is a collateralized debt obligation which closed Nov. 4, 2004. The collateral of the deal was selected by Deutsche Bank. COMM 2004-RS1 is supported by a static pool of 75.3% Re- REMIC (Marquee 2004-1 Ltd.; see pre-sale report dated Oct. 13, 2004 for more information) and 24.7% CMBS assets. Since close, the collateral has continued to perform. The weighted average rating factor has stayed the same at 2.46 ('A- /BBB+'). The ratings of the classes A, B-1, and 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 stated balance of principal by the legal final maturity date. The ratings of the classes D, E, F, G, H, J, K, L, M, and N 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. The ratings of the classes XP and IO notes only address the likelihood of receiving interest payments while principal on the related certificates remains outstanding. Based on the stable performance of the underlying collateral, Fitch affirms all rated liabilities issued by COMM 2004-RS1. Fitch will continue to monitor and review this transaction 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/ CONCENTRA OPERATING: June 30 Balance Sheet Upside-Down by $28 Mil. ------------------------------------------------------------------ Concentra Operating Corporation reported results for the second quarter ended June 30, 2005. The Company reported consolidated Adjusted Earnings Before Interest Taxes Depreciation and Amortization of $44,825,000 for the quarter, which compared to $44,318,000 in EBITDA reported for the same period in 2004. Concentra computes Adjusted EBITDA in the manner prescribed by its bond indentures. Revenue for the second quarter of 2005 increased to $286,914,000 from $281,450,000 in the year-earlier period. Operating income grew 11% to $37,335,000 from $33,616,000 in the second quarter of last year. This increase in operating income primarily related to a gain on the sale of certain assets of $1,426,000 during the quarter and the fact that results for the prior year included $2,502,000 in general and administrative expenses incurred in connection with the Company's refinancing and dividend transactions. During the quarter, in connection with an audit of prior tax years, Concentra also received a tax benefit of $10,217,000 associated with the resolution with the Internal Revenue Services of an issue relating to the deductibility of previously incurred transaction costs. Including this benefit, net income for the quarter was $23,628,000. This compares with net income of $3,590,000 for the same period in 2004. The Company's prior-year results included a loss on the early retirement of debt of $11,815,000 related to the retirement of the majority of Concentra's 13% Senior Subordinated Notes during the second quarter of last year. Concentra's revenue on a year-to-date basis increased to $561,843,000 from $551,603,000 in the same period of 2004. Including the charges and gains described above, operating income increased 9% to $68,210,000 from $62,431,000 for the first six months of 2004. Net income for the first half of the year was $32,811,000 versus $11,763,000 in the first half of 2004. For the year-to-date period, Adjusted EBITDA was $84,335,000, which compares to $83,322,000 in the comparable period last year. "During the quarter, our Health Services segment continued to provide us with strong growth in revenue and earnings," said Daniel Thomas, Concentra's President and Chief Executive Officer. "Same-center visits increased 4.8% and, after considering increases in our average revenue per visit, we were pleased to achieve a same-center revenue growth rate of 6.6% during the quarter. These organic increases continue to be complemented by exceptional levels of growth in our ancillary services and the beneficial effects of our acquisitions. When considering the value that we believe our recently announced acquisition of Occupational Health + Rehabilitation Inc ("OH+R") will bring to this segment of our business, we are excited about our growth prospects during coming years. "Due primarily to the effects of the California Fee Schedule change put into effect in early 2004, the loss of a significant Network Services customer, which we reported last December, and the other factors that we have previously discussed, our positive Health Services results continue to be offset by a year-over-year decrease in the revenue and earnings from our Network Services segment. Despite these current year trends, we are increasingly optimistic about our long-term prospects in this portion of our business. In particular, we feel that our recently announced acquisition of Beech Street Corporation and its preferred provider organization offers us the opportunity to achieve significant new revenue growth in both the group health and workers' compensation portions of our Network Services segment," said Thomas. Concentra recently announced that it had entered into definitive agreements to acquire Beech Street and OH+R. Beech Street is one of the country's leading preferred provider organizations and has approximately 400,000 physicians, 52,000 ancillary healthcare providers and 3,800 acute-care hospitals within its provider network. OH+R is a publicly held corporation that provides occupational health care services through 35 health centers located predominately in the northeastern United States. The closings of both of these acquisitions, which are expected to occur later this year, are subject to further documentation, the satisfaction of pre-closing conditions, and the receipt of required approvals. Concentra currently anticipates that it will raise approximately $157,500,000 in additional senior indebtedness during the third quarter, will assume approximately $1,100,000 in capital leases, and will utilize an estimated $59,400,000 of available cash to finance its recently announced acquisitions of OH+R and Beech Street. On a combined basis, and excluding non-recurring items, these companies reported approximately $128,600,000 in revenue and $17,500,000 in EBITDA for the twelve-month period ending June 30, 2005. At June 30, 2005, Concentra had $58,819,000 in unrestricted cash and investments. At the conclusion of the second quarter, the Company had a Days Sales Outstanding of 57 days, which represented the lowest level achieved in the Company's history. For the trailing twelve-month period ending June 30, 2005, Concentra had net cash provided by operating activities of $115,122,000. Concentra Operating Corporation, a wholly owned subsidiary of Concentra Inc., is the comprehensive outsource solution for containing healthcare and disability costs. Serving the occupational, auto and group healthcare markets, Concentra provides employers, insurers and payors with a series of integrated services which include employment-related injury and occupational health care, in-network and out-of-network medical claims review and repricing, access to specialized preferred provider organizations, first notice of loss services, case management and other cost containment services. Concentra provides its services to approximately 136,000 employer locations and 3,700 insurance companies, group health plans, third-party administrators and other healthcare payors. T hrough its health centers, Concentra has approximately 680 affiliated primary-care physicians. The Company also operates the FOCUS network, a national workers' compensation provider network that includes 544,000 individual providers and over 4,400 acute-care hospitals nationwide. At June 30, 2005, Concentra Operating Corporation's balance sheet showed a $28,842,000 stockholders' deficit, compared to a $62,866,000 deficit at Dec. 31, 2004. CREDIT SUISSE: Fitch Rates $7 Million Class B Certificates at BB+ ----------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp. home equity mortgage trust 2005-3, is rated by Fitch Ratings: -- $300,120,300 class A-1, A-R, A-RL, and non-offered class P certificates 'AAA'; -- $21,730,000 class M-1 certificates 'AA+'; -- $10,870,000 class M-2 certificates 'AA'; -- $18,860,000 class M-3 certificates 'A+'; -- $9,840,000 class M-4 certificates 'A'; -- $10,050,000 class M-5 certificates 'A-'; -- $8,820,000 class M-6 certificates 'BBB+'; -- $9,020,000 class M-7 certificates 'BBB'; -- $6,760,000 class M-8 certificates 'BBB-'; -- $7,170,000 class B-1 non-offered certificates 'BB+'; -- $6,760,000 class B-1 non-offered certificates 'BB'. The 'AAA' rating on the senior certificates reflects the 31.70% total credit enhancement provided by the 5.30% class M-1, the 2.65% class M-2, the 4.60% class M-3, the 2.40% class M-4, the 2.45% class M-5, the 2.15% class M-6, the 2.20% class M-7, the 1.65% class M-8, the non-offered 1.75% class B-1, the non-offered 1.65% class B-2 and the 4.90% target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the primary servicing capabilities of Wilshire Credit Corporation and Ocwen Loan Servicing, LLC and JPMorgan Chase Bank, National Association as Trustee. The mortgage pool consists of second lien fixed-rate subprime mortgage loans with a cut-off date aggregate principal outstanding balance of $383,440,579. As of the cut-off date (July 1, 2005), the weighted average loan rate is approximately 9.905%. The weighted average original term to maturity is 224 months. The average cut-off date principal balance of the mortgage loans is approximately $51,663. The weighted average combined original loan-to-value ratio is 97.4% and the weighted average Fair, Isaac & Co. score was 683. The properties are primarily located in California (42.50%), Florida (6.97%) and Arizona (6.75%). On the closing date, the depositor will deposit approximately $26,559,721 into a pre-funding account. The amount in this account will be used to purchase subsequent mortgage loans after the closing date and on or prior to Oct. 24, 2005. All of the mortgage loans were purchased by an affiliate of the depositor from various sellers in secondary market transactions. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits. CUMULUS MEDIA: Reports Second Quarter Financial Results ------------------------------------------------------- Cumulus Media Inc. (NASDAQ:CMLS) reported financial results for the three and six months ended June 30, 2005. Results of Operations Net revenues for the second quarter of 2005 increased $1.1 million to $87.4 million, a 1.3% increase from the second quarter of 2004, primarily as a result of a 5.2% increase in local advertising revenue, offset by a 17.7% decrease in national advertising revenue. For the quarter, revenue grew in 33 of the Company's 61 markets. Station operating expenses increased $1.9 million to $54.5 million, an increase of 3.6% over the second quarter of 2004. During the second quarter of 2005, the Company launched its second station in Houston, Texas (acquired on March 31, 2005). The increased expenses associated with the new Houston station, coupled with promotional expenses associated with the first quarter launch of the Company's rock station in Houston, were significant drivers of the second quarter station operating expense increase. Excluding the effect of expenses attributable to the Houston, Texas market, station operating expenses would have increased by $1.1 million or 2.2% for the quarter. Station operating income (defined as operating income before depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits)) decreased $0.8 million to $32.9 million, a decrease of 2.3% from the second quarter of 2004. On a pro forma basis, which includes the results of all stations operated during the period under the terms of local marketing agreements and station acquisitions completed during the period as if each were consummated at the beginning of the periods presented and excludes the results of Broadcast Software International, net revenues for the second quarter of 2005 increased $1.0 million to $86.8 million, an increase of 1.1% from the second quarter of 2004. In terms of revenue composition, pro forma local advertising revenues increased approximately 5.2%, offset by a 17.7% decrease in pro forma national advertising revenues. Pro forma station operating expenses increased $1.7 million to $53.9 million, an increase of 3.2% over the second quarter of 2004. This increase was primarily due to: 1) expenses incurred associated with the second quarter launch of the Company's new station in Houston, Texas; 2) promotional expenses incurred in the second quarter associated with the first quarter launch of the Company's rock station in Houston; and 3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston, Texas market during the second quarter, pro forma station operating expenses would have increased by $0.9 million or 1.8% for the second quarter. Pro forma station operating income (defined as operating income (loss) before depreciation, amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits); and excluding the results of Broadcast Software International) decreased $0.7 million to $32.9 million, a decrease of 2.1% from the second quarter of 2004. Non-cash stock compensation expense increased to $1.7 million for the second quarter of 2005, as compared with a $0.1 million non- cash stock compensation credit in the prior year. Non-cash stock compensation recorded in the current period is primarily comprised of: 1) expense associated with 250,000 restricted shares of Class A Common Stock awarded to Lewis W. Dickey, Chairman and CEO, in April 2005, pursuant to his employment agreement dated October 14, 2004 ; 2) expense associated with the additional 250,000 restricted shares of Class A Common Stock to be awarded to Mr. Dickey in each of 2006 and 2007, again pursuant to his employment agreement dated October 14, 2004; and 3) expense associated with 145,000 restricted shares of Class A Common Stock issued to certain other officers of the Company during the second quarter of 2005. Interest expense increased by $2.0 million or 43.2% to $6.6 million for the three months ended June 30, 2005 as compared with $4.6 million in the prior period. This increase was primarily due to: 1) a $0.8 million loss recorded in the current quarter as an increase to interest expense related to the adjustment of the fair value of certain derivative instruments; and 2) a higher average cost of bank debt and increased levels of bank debt outstanding during the current quarter. The current quarter interest expense increase is also amplified by the effect of a $0.8 million gain recorded in the prior year as a reduction of interest expense related to the adjustment of the fair value of certain derivative instruments during that period. Income tax expense increased by $0.5 million or 6.9% to $7.0 million for the three months ended June 30, 2005 as compared with $6.6 million in the prior period. Tax expense in the current and prior year is comprised entirely of deferred tax expense and relates primarily to the establishment of valuation allowances against net operating loss carry-forwards generated during the periods. Excluding the effects of non-cash stock compensation expense, basic income per common share was $0.15 for the three months ended June 30, 2005. Diluted income per common share, excluding the effect of non-cash stock compensation, was also $0.15. As-reported basic income per common share was $0.13 for the three months ended June 30, 2005, as compared with basic income per common share of $0.19 during the prior year. As-reported diluted income per common share was $0.12 for the three months ended June 30, 2005 as compared with diluted income per common share of $0.18 in the prior year. Six Months Ended June 30, 2005 Net revenues for the six months ended June 30, 2005 increased $7.8 million to $159.6 million, a 5.1% increase from the same period in 2004, primarily as a result of revenues associated with station acquisitions completed in March 2004 (Rochester, Minnesota and Sioux Falls, South Dakota). Station operating expenses increased $6.1 million to $105.0 million, an increase of 6.2% over the same period in 2004, primarily as a result of expenses associated with station acquisitions completed in March 2004. Station operating expenses also increased due to: 1) expenses incurred associated with the second quarter launch of the Company's new station in Houston, Texas; 2) promotional expenses incurred in the second quarter associated with launch of the Company's rock station in Houston, Texas; and 3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston, Texas market, station operating expenses would have increased by $5.4 million or 5.6% for the six months ended June 30, 2005. Station operating income (defined as operating income before depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits)) increased $1.7 million to $54.5 million, an increase of 3.2% from the same period in 2004. On a pro forma basis, which includes the results of all stations operated during the period under the terms of local marketing agreements and station acquisitions completed during the six month period as if each were consummated at the beginning of the periods presented and excludes the results of Broadcast Software International, net revenues for the six months ended June 30, 2005 increased $3.2 million to $158.5 million, an increase of 2.1% from the same period in 2004. In terms of revenue composition, pro forma local advertising revenues increased approximately 5.4% for the period, offset by a 11.3% decrease in pro forma national advertising revenues. Pro forma station operating expenses increased $2.2 million to $104.1 million, an increase of 2.2% over the same period in 2004. This increase was primarily due to: 1) expenses incurred associated with the second quarter launch of the Company's new station in Houston, Texas; 2) promotional expenses incurred in the second quarter associated with the first quarter launch of the Company's rock station in Houston, Texas; and 3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston, Texas market, pro forma station operating expenses would have increased by $1.6 million or 1.6% for the six months ended June 30, 2005. Pro forma station operating income (defined as operating income (loss) before depreciation, amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits); and excluding Broadcast Software International) increased $1.0 million to $54.5 million, an increase of 1.8% from the same period in 2004. Non-cash stock compensation expense increased to $1.7 million for the six months ended June 30, 2005, as compared with a $0.2 million non-cash stock compensation credit in the prior year. Non-cash stock compensation recorded in the current period is primarily comprised of: 1) expense associated with 250,000 restricted shares of Class A Common Stock awarded to Lewis W. Dickey, Chairman and CEO, in April 2005, pursuant to his employment agreement dated October 14, 2004; 2) expense associated with the additional 250,000 restricted shares of Class A Common Stock to be awarded to Mr. Dickey in each of 2006 and 2007, again pursuant to his employment agreement dated October 14, 2004; and 3) expense associated with 145,000 restricted shares of Class A Common Stock issued to certain other officers of the Company during the second quarter of 2005. Interest expense increased by $1.7 million or 16.4% to $11.8 million for the six months ended June 30, 2005 as compared with $10.1 million in the prior period. This increase was primarily due to: 1) a higher average cost of bank debt and increased levels of bank debt outstanding during the current year; and 2) a $0.7 million loss recorded in the current year as an increase to interest expense related to the adjustment of the fair value of certain derivative instruments. The current year interest expense increase is also amplified by a $0.4 million gain recorded in the prior year as a reduction of interest expense related to the adjustment of the fair value of certain derivative instruments during the period. Income tax expense increased $0.7 million to $13.5 million during the six months ended June 30, 2005, as compared with $12.8 million during the prior year. Tax expense incurred in the current and prior year, comprised entirely of deferred tax expense, was recorded to establish valuation allowances against net operating loss carry-forwards generated during the periods. Excluding the effects of non-cash stock compensation expense, basic and diluted income per common share was $0.16 for the six months ended June 30, 2005. As-reported basic and diluted income per common share was $0.14 for the six months ended June 30, 2005 as compared with as-reported basic and diluted loss per common share of $0.16 during the prior year. Share Repurchase Program On September 28, 2004, the Company announced that its Board of Directors had authorized the purchase, from time to time, of up to $100 million of its Class A Common Stock. Since March 31, 2005, the Company completed the repurchase of 2,452,159 shares of Class A Common Stock for $30.0 million, at an average repurchase price per share of $12.21. Including repurchases completed in prior periods, the Company has cumulatively repurchased a total of 3,456,588 shares of Class A Common Stock for $44.6 million under the Board authorized program. New $800 Million Credit Facility On July 14, 2005, the Company completed the arrangement and syndication of a new $800.0 million credit facility with J.P. Morgan Securities Inc. and Bank of America Securities LLC as joint arrangers. The new credit facility provides for a revolving credit commitment of $400.0 million and a $400.0 million term loan. The proceeds of the term loan facility, fully funded on July 14, 2005, and drawings on that date of approximately $123.0 million on the revolving credit facility, were used primarily to refinance amounts outstanding under the Company's pre-existing credit facility. Leverage and Financial Position Capital expenditures for the three months ended June 30, 2005 totaled $1.9 million and were comprised entirely of maintenance related capital expenditures. For the full year of 2005, we continue to expect capital expenditures to total approximately $7.0 million. Leverage, defined under the terms of the Company's credit facility as total indebtedness divided by trailing 12-month Adjusted EBITDA as adjusted for certain non-recurring expenses, was 4.9x at June 30, 2005. Including borrowings to fund the share repurchases completed in July and August 2005, the ratio of net long-term debt to trailing 12-month pro forma Adjusted EBITDA as of June 30, 2005 is approximately 5.2x. Outlook Cumulus expects third quarter 2005 pro forma net revenue to grow 2% versus the prior year. The Company also expects third quarter 2005 pro forma station operating expenses to grow by 2%. Further, the following table summarizes selected projected financial results for the third quarter of 2005 (dollars in thousands): Estimated Q3 2005 ----------- Depreciation and amortization $5,600 LMA fees $150 Non-cash stock compensation $850 Interest expense $6,100 Interest income $(100) Loss on early extinguishments of debt $1,300 Income tax expense (non cash) $7,200 Cumulus Media Inc. is the second largest radio company in the United States based on station count. Giving effect to the completion of all announced pending acquisitions and divestitures, Cumulus Media Inc. will own and operate 310 radio stations in 61 mid-size and smaller U.S. media markets. The Company's headquarters are in Atlanta, Georgia, and its web site is http://www.cumulus.com/ Cumulus Media Inc. shares are traded on the NASDAQ National Market under the symbol CMLS. * * * As reported in the Troubled Company Reporter on Dec. 3, 2004, Moody's Investors Service assigned Ba3 ratings to Cumulus Media's $75 million senior secured term loan F and $75 million increase to its existing revolving credit facility. Moody's also assigned Ba3 ratings to $415 million in senior secured term loans. This rating assignment incorporates Cumulus' amendment to its bank credit facilities, which redistributed debt between existing term loans. Moody's affirmed all existing ratings, and changed the outlook to positive. As reported in the Troubled Company Reporter on Nov. 9, 2004, Standard & Poor's Ratings Services assigned a 'B+' rating to Cumulus Media Inc.'s $150 million increase to its bank credit facility, consisting of a $75 million addition to its existing revolving credit loan maturing March 2009 and a $75 million term loan F maturing March 2010. Borrowings under the loans will be used to fund the company's $100 million share buyback program. A recovery rating of '3' was also assigned to the company's proposed and existing credit facilities, indicating the likelihood of a meaningful recovery of principal (50%-80%) in the event of bankruptcy or default. At the same time, Standard & Poor's affirmed its 'B+' long-term corporate credit rating on Cumulus. S&P says the outlook is stable. DAVIS PIPELAYER: Case Summary & 31 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Davis Pipelayer, Inc. 5221 E. Harrison Harlingen, Texas 78550 Bankruptcy Case No.: 05-21192 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Daniel Edward Davis 05-21194 Type of Business: The Debtor designs and sells cranes. See http://www.davispipelayer.com/ Chapter 11 Petition Date: August 8, 2005 Court: Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtors' Counsel: Shelby A. Jordan, Esq. Jordan Hyden Womble and Culbreth, P.C. 500 North Shoreline, Suite 900 North Corpus Christi, Texas 78471 Tel: (361) 884-5678 Fax: (361) 888-5555 Total Assets Total Debts ------------ ----------- Davis Pipelayer, Inc. $12,884,960 $890,771 Estimated Assets Estimated Debts ---------------- --------------- Daniel Edward Davis $1 Million to $500,000 to $10 Million $1 Million A. Davis Pipelayer, Inc.'s 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Harlingen Steel, L.L.C. Goods and/or services $298,276 5201 E. Harrison Harlingen, TX 78550 Alamo Bank of Texas MDL# 3900 $45,000 2318 E. Harrison Manitowoc 60 Ton Harlingen, TX 78550 Crane S/N #3990 Value of security: $35,000 Robway Crane Safety, Inc. Goods and/or services $32,916 5221 E. Harrison Harlingen, TX 78550 MPC Studios Goods and/or services $16,616 Feroy Company Goods and/or services $1,265 American Coating Goods and/or services $1,182 McMasters-Carr Goods and/or services $612 UPS Supply Chain Solutions Goods and/or services $210 Amigo Bolt & Supply Company Goods and/or services $180 UPS Goods and/or services $107 Valley Payroll Services Payroll Services $66 B. Daniel Edward Davis's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Alamo Bank of Texas Personal guarantee $320,184 2318 E. Harrison on Note of Davis Harlingen, TX 78550 Pipelayer, Inc. D.E.R. Auctions, Ltd. Promissory Note $300,000 Attn: David E. Ritchie 6500 River Road Richmond, B.C, Canada V6X4G5 Oilfield Power & Supply Co. Unsecured Note to $237,717 P.O. Box 79241 Davcrane, Inc. and Houston, TX 77279 Daniel E. Davis Laney, J. Marcus Personal loan $230,000 2031 Humble Place Drive Humble, TX 77338 Texas State Bank Guarantee on Note $204,204 3900 North 10th, 3rd Floor of Davcrane, Inc. Mcallen, TX 78501 Alamo Bank of Texas Personal guarantee $121,500 on Note of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $71,447 on Note of Davis Pipelayer, Inc. Alamo Bank of Texas Personal guarantee $45,160 on Note of Davis Pipelayer, Inc. Sanchez, Dennis Personal Loan $40,000 Alamo Bank of Texas Personal guarantee $38,000 on Note of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $32,143 on Note of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $30,000 on Note of Harlingen Steel, L.L.C. Texas State Bank Guarantee on Note $24,791 of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $15,543 on Note of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $11,976 on Note of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $10,000 on Note of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $6,450 on Note of Davcrane, Inc. Texas State Bank Guarantee on Note $4,699 of Davcrane, Inc. Office Depot Credit Plan Guarantee on $1,646 account of Davcrane, Inc. Alamo Bank of Texas Personal guarantee $57 on Note of Davcrane, Inc. DIVINE INC: Trustee Wants Until Sept. 19 to Object to Claims ------------------------------------------------------------ James B. Boles, the Liquidation Trustee of Divine, Inc., n/k/a Enivid, Inc., and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Massachusetts to extend until September 19, 2005, his deadline to object to claims filed by creditors in the companies' chapter 11 proceedings. To date, the Trustee has filed eleven omnibus objections and several individual objections to claims. Mr. Boles is currently involved in on-going negotiations with several claimants, including taxing authorities, and resolving outstanding issues regarding their claims. The Trustee may need to file further claim objections if the negotiations prove unsuccessful. Divine, Inc., an affiliate of RoweCom Inc., is an extended enterprise company, serving to make the most of customer, employee, partner, and market interactions, and through a holistic blend of technology, services, and hosting solutions, to assist its clients in extending their enterprise. The Company filed for chapter 11 protection on February 25, 2003 (Bankr. Mass. Case No. 03-11472). Christopher J. Panos, Esq., at Craig and Macauley, P.C., represents the Official Committee of Unsecured Creditors. Richard E. Mikels, Esq., Kevin J. Walsh, Esq., Adrienne K. Walker, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo and J. Douglas Bacon, Esq., Stephen R. Tetro, Esq., and Adam R. Skilken, Esq., represent the Debtors. When the Debtors filed or protection from their creditors, they listed $271,372,593 in total assets and $191,957,065 in total debts. DOMTAR INC: S&P Rates US$400 Million Sr. Unsecured Notes at BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' debt rating to paper producer Domtar Inc.'s new US$400 million senior unsecured notes due in 2015. Proceeds from the new issue will be used to refinance existing debt and improve liquidity. The outlook on Domtar is stable. The ratings on Montreal, Quebec-based Domtar reflect the company's exposure to: * cyclical paper prices, * aggressive debt leverage, and * a declining cost position due to a stronger Canadian dollar. These risks are partially offset by good fiber and energy integration, and some revenue diversity. "Domtar's credit metrics are not recovering as much as we had originally expected, and demand for uncoated freesheet paper appears weak," said Standard & Poor's credit analyst Daniel Parker. "Domtar's earnings have been materially affected by the appreciation of the Canadian dollar, and other cost pressures such as fiber, freight, and energy. Softwood lumber duties have been an additional burden," Mr. Parker added. At June 30, 2005, trailing 12-month EBITDA to interest coverage was 3.3x, while funds from operations to total debt was about 14%. Total debt to capital is about 56% (adjusted for operating leases and off-balance-sheet receivables securitizations) and total adjusted debt to EBITDA is about 4.9x. Standard & Poor's expects these measures will improve in 2005, as pricing is expected to be better than full-year 2004. The company is also targeting C$100 million in cost improvements, and has already achieved C$60 million toward this goal. The company's profitability has been weak for several years (return on capital has averaged about 6% in the past five years). The company has focused on reducing costs and has limited capital spending to about C$225 million per year for the past three years, which is about 60% of depreciation. Despite the spending discipline, Domtar has struggled to generate free cash flow (negative C$63 million in the past 12 months). The company has some financial flexibility with assets that could be sold to reduce debt. S&P believes, however, that Domtar will not sell assets for the sole purpose of reducing debt. Standard & Poor's expects leverage to be modestly reduced in 2005, and the company's medium-term target is a debt-to-capital ratio of 45%. With 50% of its production located in Canada and 75% of its sales to the U.S., Domtar's cost position is materially affected by the foreign exchange rate of the Canadian dollar. The relatively high Canadian dollar (currently about 83 U.S. cents) represents about a 15% increase on the Canadian export margins; the Canadian dollar averaged 70 U.S. cents to 2005 from 2000. Domtar recently announced the temporary closure of 150,000 tonnes of pulp and 85,000 tonnes of paper capacity in Canada, and will eliminate about 790 jobs. These initiatives are intended to improve profitability by about C$100 million in 2005. Nevertheless, other cost pressures including fiber, freight, and energy continue to pressure operating margins. The outlook is stable. If uncoated freesheet prices slide in the second half of 2005 and the Canadian dollar appreciates, Domtar will be severely challenged to improve its earnings and cash flow. The current ratings can tolerate several quarters of weak earnings and cash flow generation, but any further deterioration in operating margins, or negative free cash generation would pressure the ratings or outlook, however. DPAC TECH: Development Capital Commits $500,000 Bridge Financing ---------------------------------------------------------------- Development Capital Ventures LP has provided DPAC Technologies Corp. (Pink Sheets:DPAC) with a $500,000 secured, convertible loan. DCV holds 100% of the preferred stock of QuaTech. Simultaneously, DPAC has made QuaTech, through a license with DCV, the exclusive worldwide licensee for Airborne(TM) wireless products and the parties have amended their previously announced definitive merger agreement to remove certain conditions to close the transaction and to fix the exchange ratio between the parties. Bridge Financing The DCV loan carries an annual interest rate of 12%, is secured by all the assets of DPAC and is due in full at the end of six months, or Feb. 3, 2006. The note is convertible at DCV's option into 3,289,473 shares of DPAC common stock. The note automatically converts into DPAC common stock upon the closure of the merger with QuaTech. An additional 1,644,736 shares of DPAC common stock are issuable upon the closure of the merger with QuaTech and the conversion of the note to common stock. Merger Update DPAC intends to move forward to complete the merger with QuaTech as soon as possible. To facilitate the closing of the merger, the amendment to the merger agreement provides for the removal of certain conditions to closing the merger, including provisions related to additional financing terms, minimum cash and working capital requirements and Nasdaq listing efforts. The amendment also fixes the final exchange ratio for the issuance of DPAC shares such that DPAC's current shareholders will own approximately 34% of the post merger company, while QuaTech shareholders, including DCV, will own approximately 66% of the combined company. DCV will own approximately 50% of the post merger company. The parties intend to file an S-4 registration statement with the SEC within the next several weeks. Upon the registration statement being declared effective by the SEC, the documents will be mailed to shareholders to seek shareholder approval of the merger, along with other related proposals related to the merger. License Agreement The license agreement is effective Aug. 5, 2005, and, pending the anticipated merger, provides QuaTech, as the sub-licensee of DCV, the exclusive worldwide right to sell, distribute and manufacture DPAC's Airborne(TM) wireless products, to create and develop additional wireless products using DPAC's technology and to use the DPAC and Airborne(TM) names in exchange for a royalty to DPAC on each unit sold. Also on Aug. 5, 2005, in conjunction with the license, QuaTech will hire certain existing DPAC sales and engineering and management employees. DPAC will retain three employees, including CEO Kim Early and CFO Steve Vukadinovich, who will oversee the process of seeking shareholder approval and completion of the merger. Kim Early, DPAC's Chief Executive Officer, commented, "DPAC has encountered a number of challenges over the past several months with respect to the sufficiency of our financial resources and our Nasdaq listing status, among others. This bridge loan, license agreement and accompanying amendment to the merger agreement demonstrates the commitment of DPAC, DCV and QuaTech to address those challenges and complete the merger. We believe these actions best serve all the constituencies of DPAC and enable us to move forward quickly and aggressively to focus on completing the merger and growing the combined business," concluded Mr. Early. QuaTech, Inc., -- http://www.quatech.com/-- a privately-held company, is an industry performance leader in device networking and connectivity solutions. Through design, manufacturing and support, QuaTech maintains the highest levels of reliability and performance. Satisfied customers include OEMs, VARs and System Integrators, as well as end-users in many industries, including banking, retail/POS, access control, building automation and security, and energy management. QuaTech is a leading supplier of data connectivity products to financial institutions, serving five of the top 10 U.S. banks. Founded in 1983 and headquartered in Hudson, Ohio, QuaTech sells and supports its solutions both directly and through a global network of resellers and distributors. Headquartered in Chantilly, Virginia, Development Capital Ventures is a Small Business Investment Company licensed and regulated by the Small Business Administration under the Small Business Act of 1958 as amended. Development Capital Ventures provides financing to manufacturing, distribution, and business-to-business service companies. Located in Garden Grove, California, DPAC Technologies -- http://www.dpactech.com/-- provides embedded wireless networking and connectivity products for machine-to-machine communication applications. DPAC's wireless products are used by major OEMs in the transportation, instrumentation and industrial control, homeland security, medical diagnostics and logistics markets to provide remote data collection and control. * * * Going Concern Doubt At Feb. 28, 2005, DPAC had total assets of $4.1 million, including cash and cash equivalents of $2.7 million and assets related to discontinued operations of $164,000. This compares to total assets of $13.1 million at February 29, 2004, with $4.5 million in cash and cash equivalents and $3.0 million of assets related to discontinued operations. Working capital at February 28, 2005 was $1.5 million compared to $4.3 million at February 29, 2004. As a result of the recurring operating losses and anticipated need for additional capital in the next twelve months, Moss Adams LLP, the Company's independent registered public accounting firm, has included a going-concern emphasis paragraph in its auditor's report on the Company's year end financial statements. E*TRADE FINANCIAL: Moody's Affirms B1 Senior Unsecured Rating ------------------------------------------------------------- Moody's Investors Service affirmed all outstanding ratings of E*Trade Financial Corporation ("E*Trade"; long-term senior debt at B1) and its lead bank subsidiary, E*Trade Bank (long-term deposits at Ba2; other senior obligations at Ba3). The rating outlooks remain stable. The rating actions were prompted by E*Trade's announcement that it had agreed to acquire for $700 million in cash the Harrisdirect on-line brokerage operation of the Bank of Montreal. The company is expected to fund the acquisition with $250 million of its current cash balances and $450 million of additional debt or hybrid securities. E*Trade will be targeting annualized pre-tax operating synergies of $186 million, including $114 million of cost saves. The rating agency believes that the acquisition is consistent with E*Trade's retail-oriented strategy and hybrid broker/bank business model. Before possible attrition, Harrisdirect will add 430,000 active accounts with attractive customer demographics and $32 billion in customer assets, including $5 billion of customer cash that E*Trade will look to profitably leverage within its retail bank. Moody's noted that although the acquisition will result in a material increase in debt, parent-company leverage and double leverage, E*Trade's overall credit metrics and debt-service capacity remain acceptable for the current ratings level. However, the rating agency cautioned that E*Trade's role as an industry consolidator could potentially result in degradation of the firm's credit metrics in the future. To mitigate downward rating pressure, future acquisitions must include a material component of equity within the funding structure. The rating agency also said that for the ratings to go up, E*Trade must demonstrate progress reducing its post-acquisition leverage, continue to reduce cross-cycle earnings volatility and effectively manage the inherent interest rate risk of its growing bank balance sheet. Ratings affirmed include: E*Trade Financial Corporation: * Senior Unsecured B1 * LT Issuer Rating B1 E*Trade Bank: * LT Bank Deposits Ba2 * LT OSO Ba3 * LT Issuer Rating Ba3 * Bank Financial Strength D * ST Bank Deposits NP * ST OSO NP E*TRADE Financial Corporation, a financial holding company headquartered in New York, New York reported $34.9 billion in assets at June 30, 2005. The company is one of the largest on- line securities brokerage firms in the U.S. and offers retail banking products to its on-line customers through its E*Trade Bank, a federal savings bank regulated by the Office of Thrift Supervision. E*TRADE FINANCIAL: S&P Affirms B+ Counterparty Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services changed its outlook on E*TRADE Financial Corp. (E*TRADE) to stable from positive. At the same time, Standard & Poor's affirmed its 'B+' long-term counterparty credit rating on E*TRADE Financial Corp and its 'BB/Stable/B' counterparty credit rating on E*TRADE Bank. "The outlook change reflects E*TRADE's increased financial leverage and decreased liquidity as a result of the company's announced acquisition of Harrisdirect for $700 million," said Standard & Poor's credit analyst Helene De Luca. The transaction funding includes the use of cash and debt, which greatly curtails financial flexibility at E*TRADE. Financial leverage (adjusted net assets-to-adjusted total equity) is expected to increase to approximately 28x on a pro forma basis from 20x at June 30, 2005, as E*TRADE takes on more assets and tangible equity declines due to acquired goodwill and intangibles. After funding the transaction and excluding cash at regulated entities, free cash at the holding company is expected to drop significantly relative to historic levels and as a result, contribute to the lowered liquidity. Additionally, S&P believes that E*TRADE will have limited capacity to issue debt for future acquisitions in this intensely competitive industry where competitors are seeking scale and strength through consolidation plays. These negative factors are partially offset by the positive aspects of the strategic gains provided by the Harrisdirect acquisition. Additional positive factors include E*TRADE's diversified revenue streams and improving consolidated operating margins, which hit a high during the quarter ended June 30, 2005, reflecting the benefits of E*TRADE's integrated model and leverage of technology. Further declines in capital adequacy or liquidity measures could put additional pressure on the company's ratings. Conversely, restoration of these measures with continuing improvement of operating margins would be viewed positively. FIDELITY NATIONAL: Fitch Holds Sr. Secured Credit Facility at BB- ----------------------------------------------------------------- Fitch Ratings affirmed the 'A-' insurer financial strength ratings of the title insurance underwriting subsidiaries of Fidelity National Financial, Inc. and the 'BBB-' long-term issuer rating of FNF, removing the ratings from Rating Watch Negative. In addition, Fitch affirmed the 'BB-' rating to the senior secured credit facility entered into by FNF's subsidiary, Fidelity National Information Services. All ratings have a Stable Rating Outlook. The rating action that placed FNF's ratings on Stable Outlook was based on the company's capitalization plans for the title insurance operation. During the third quarter of 2005, FNF will restructure its title operations by forming a downstream title holding company, Fidelity National Title Group. FNF will distribute a minority interest of 17.5% to existing FNF stockholders while maintaining the majority 82.5% interest in FNT. The capitalization plan for FNT includes $150 million of bank debt and $500 million in intercompany debt, effectively pushing down FNF's debt obligations to FNT. Pro forma debt-to-total capital as of June 30, 2005 is expected to be 22%, otherwise the title operations will be unchanged by the restructuring. The title insurance operations represent the largest business for FNF at approximately 70% of total revenue. FNF's title operations have national scope and industry leading market share at approximately 30% at year-end 2004. The company also has leading market share in the four states producing the greatest title insurance revenue, California, Florida, Texas, and New York. Fidelity Title has historically shown better than industry average profitability, which is both a product of strong market share and attention to expense control. The company's expenses as a percentage of premium are the best among national title insurers. After the FNT spin off, FNF will effectively have no debt and approximately $600 million in cash. Consequently, future rating actions could potentially be influenced by acquisitions at FNF and added leverage. In March 2005, FNF segregated its information services from its title operations in an effort to bring clarity and possibly improve the stock valuation. In the recapitalization, FIS borrowed $2.8 billion on a secured basis from a consortium of lenders and distributing nearly all the proceeds to FNF. Additionally, FNF sold a 25% interest in FIS to Thomas H. Lee Partners and Texas Pacific Group, allowing FNF to maintain controlling interest in FIS and establish a valuation of FIS. Currently, FIS has a debt-to-total capitalization in excess of 80%. FIS provides technology solutions, processing services, and information services to the financial services and real estate industries. Favorable considerations in the FIS rating included the company's leading market share in core processing systems to large banks, good retention over a diversified base of customers, and expectations for strong cash flow generation. The following are removed from Rating Watch Negative and have a Stable Rating Outlook by Fitch: Fidelity National Title Insurance Co. Ticor Title Insurance Co. of FL Alamo Title Insurance Co. of TX Nations Title Insurance of NY Chicago Title Insurance Co. Chicago Title Insurance Co. of OR Security Union Title Insurance Co. Ticor Title Insurance Co. National Title Insurance Co. of NY -- Insurer financial strength affirmed at 'A-'. Fidelity National Financial Inc. -- Long-term issuer affirmed at 'BBB-'. Fidelity National Information Services, Inc. -- Senior secured credit facility affirmed at 'BB-'. FLINTKOTE COMPANY: Court Okays Asbestos PI Settlement Fund ---------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware gave her stamp of approval to The Flintkote Company and Flintkote Mines Limited's request to establish a qualified settlement fund pursuant to Section 468B of the Internal Revenue Code and Treasury Regulation Section 1.468B-1-4. The fund will serve as a repository of certain funds which will ultimately be paid to holders of allowed asbestos claims. Fund Purpose and Need As previously reported, Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, told the Court that the establishment of the Fund may also facilitate insurance coverage settlement negotiations with Flintkote's insurers by providing a mechanism to assure that funds paid under certain settlement circumstances will be used for claims resolutions costs. The Debtors, the Asbestos PI Committee and the Futures Representative intend to file a chapter 11 plan that will provide for the amounts in the Fund to be assigned or contributed into a trust established pursuant to Sec. 524(g) of the Bankruptcy Code to resolve asbestos personal injury claims. Ms. Jones asserted that the Debtors need the Fund because certain funds received from insurers is considered income for federal and state tax purposes. In tax years prior to 2005, expenditures made to resolve claims were available as deductions from the taxable insurance recovery income. Having filed for bankruptcy protection, however, and absent a confirmed plan or reorganization, Flintkote cannot yet expend funds to resolve claims to get deductions from insurance proceeds income. As a general rule, a taxpayer is not permitted to take a deduction for amounts paid to defend or satisfy tort-based liabilities until the taxpayer actually pay those liabilities. Without the court's order, the Debtors would likely have to recognize the receipt of insurance funds as income and pay taxes on those funds. Asbestos Claims & Insurance Settlement Fund There are currently in excess of 155,000 asbestos personal injury claims asserted against the Debtors. The Debtors, the Asbestos PI Committee, and the Futures Representative, anticipate that the Debtors' aggregate liability for asbestos personal injury claims is likely to exceed their aggregate assets, including rights to insurance. In Nov. 2004, the Debtors received cash and marketable securities with a market value of approximately $90 million pursuant to a prepetition insurance coverage settlement. Fund Administration The Debtors will establish the Fund as a segregated account at Wachovia Bank Safekeeping. The Debtors will deposit the Insurance Settlement and other subsequently received Fund Assets into the Fund. The Debtors want Eric Bower, their Executive Vice President and Chief Financial Officer, and David Gordon, Flintkote's Chief Executive Officer and Mines' President and Secretary, to administer the Fund. The Administrators can invest the amounts deposited in the Fund Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliate filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. FLINTKOTE COMPANY: Wants More Time to File Chapter 11 Plan ---------------------------------------------------------- The Flintkote Company and Flintkote Mines Limited ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to file and solicit acceptances of a chapter 11 plan. The Debtors want until Dec. 29, 2005, to file a plan and until Feb. 27, 2006, to solicit acceptances of that plan. The Official Committee of Asbestos Personal Injury Claimants and James J. McMonagle, Esq., at Vorys, Sater, Seymour and Pease LLP, the legal representative for future asbestos personal injury claimants, support the Debtors' request. The Debtors relate that they are working closely with the Asbestos Committee and Mr. McMonagle to design and propose a joint plan of reorganization which will be beneficial to all parties-in- interest. On July 8, the Debtors presented a draft of a proposed chapter 11 plan to the Committee and the Futures Representative for review and input. The Debtors are currently waiting to receive comments from the two parties. The Flintkote entities say they are willing to negotiate and modify, if necessary, the content of the proposed plan. In addition, the Committee and Mr. McMonagle have agreed to prepare drafts of the Section 524(g) trust agreement and related trust distribution procedures to be incorporated in the proposed joint plan. Flintkote adds that it is working diligently to collect outstanding insurance receivables from solvent and insolvent insurers. The Debtors are also investigating the nature and extent of other potential estate assets that may be available for distribution to creditors. At the same time, the Debtors are also assessing the validity and amount of their non-asbestos liabilities. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliate, Flintkote Mines Limited, filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. FLINTKOTE COMPANY: Wants Removal Period Extended to February 27 --------------------------------------------------------------- The Flintkote Company and Flintkote Mines Limited, ask the U.S. Bankruptcy Court for the District of Delaware for authority to extend the time within which they can remove actions through and including February 27, 2006. This is Mine's third and Flintkote's fourth request for an extension. As previously reported in the Troubled Company Reporter on June 3, 2005, Judge Judith K. Fitzgerald extended the removal period to Aug. 30, 2005. The Debtors believe that the extension to remove pre-petition actions will preserve the estates' existing rights while the Debtors, the Official Committee of Asbestos Personal Injury Claimants and the Future Claimants Representative can work together to fashion the joint plan of organization, disclosure statement and related trust documents, that will determine the treatment accorded to all of the Debtors' creditors. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliate filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. GENESIS WORLDWIDE: Hires Forensic Accounting as Consultant ---------------------------------------------------------- Genesis Worldwide, Inc., its debtor-affiliates and the Official Committee of Unsecured Creditors in their chapter 11 cases, ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, for permission to employ Forensic Accounting Consultants, PC, as a consultant, nunc pro tunc to August 3, 2005. Forensic Accounting will assist the Debtors and the Committee in analyzing evidence regarding accounting and other issues related to the Debtor's acquisition of Precision Industrial Corporation. Genesis Worldwide purchased all of outstanding capital stock of Precision Industrial, a supplier of capital equipment for processing metal, on June 30, 1999, for: * $39,295,000 in cash; * 500,000 common shares of the Company; * a 12% Junior Subordinated Note in the principal amount of $15,000,000 due on December 31, 2007; and * an 8% Special Junior Subordinated Note in the principal amount of $840,000 due June 30, 2002. In June 2003, the Debtors and the Committee jointly filed an adversary proceeding against Three Cities Research, Inc., the representative of Precision Industrial's selling stockholders. The lawsuit seeks damages arising from a leveraged buy-out transaction. The adversary case remains pending with the Bankruptcy Court. The hourly rates for Forensic Accounting's professionals are: Designation Hourly Rate ----------- ----------- Principals $250 Senior Staff $150 Staff $100 Victor C. Moore, a principal at Forensic Accounting and the lead professional in this engagement, assures the court that his firm does not hold or represent any interest adverse to Debtors or their estates, and that his Firm is a "disinterested persons" as that term is defined in section 101(14) of the Bankruptcy Code. Forensic Accounting Consultants, PC, is a professional service company in the growing field of forensic accounting consulting and investigation. With a consulting team that has a combined experience of several hundred years, the Firm brings together the most comprehensive forensic accounting services in the industry. Mr. Moore has more than 25 years experience in professional services, finance and management. His professional services experience includes attest services, consulting and litigation support. His litigation consulting and expert witness work has included areas such as securities fraud, professional malpractice, business fraud, and calculation of and refuting of damage claims. Headquartered in Dayton, Ohio, Genesis Worldwide Inc., fka The Monarch Machine Tool Company, engineers and manufactures high quality metal coil processing and roll coating and electrostatic oiling equipment. Genesis Worldwide and its debtor-affiliates filed for chapter 11 protection on September 17, 2001 (Bankr. S.D. Ohio Case No. 01-36605). Nick V. Cavalieri, Esq., at Bailey Cavalieri LLC, represents the Debtors in their chapter 11 proceedings. GENESIS WORLDWIDE: Wants Plan Filing Period Stretched to Dec. 30 ---------------------------------------------------------------- Genesis Worldwide, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, to extend until December 30, 2005, the time within which they have the exclusive right to file a plan of reorganization and disclosure statement. The Debtors also wants the Court to extend their exclusive period to solicit plan acceptances through February 23, 2006. The Debtors report that they have achieved significant progress in their chapter 11 cases: 1) they have completed the sale of substantially all of their assets to Pegasus Partners II, L.P., and KPS Special Situations Fund, L.P. 2) they have settled more than 250 preference claims, resulting in payments due of approximately $2 million and claims waivers of $2.5 million. Twenty-six adversary proceedings remain pending on the Court's docket. The adversary proceeding against Three Cities Research, Inc. is the single largest single asset remaining in the Debtor's estate. The Debtors tell the Court that no reorganization plan can be formulated and confirmed until the Three Cities litigation is resolved. Any recovery for the creditors of the estate, the Debtors say, depends on the outcome of the litigation. The Debtors add that they presently cannot confirm a plan of reorganization because of cash constraints. As of June 30, 2005 the Debtors have cash on hand of approximately $540,000. Their administrative claims, however, total nearly $800,000. The Debtors are marshalling all remaining assets for the benefit of their creditors. The Debtors assure the Court the extensions are in the best interest of the Creditors. The extensions, they say, will conserve the Debtors' limited assets and enhance the possibility of recovery for the unsecured creditors. Headquartered in Dayton, Ohio, Genesis Worldwide Inc., fka The Monarch Machine Tool Company, engineers and manufactures high quality metal coil processing and roll coating and electrostatic oiling equipment. Genesis Worldwide and its debtor-affiliates filed for chapter 11 protection on September 17, 2001 (Bankr. S.D. Ohio Case No. 01-36605). Nick V. Cavalieri, Esq., at Bailey Cavalieri LLC, represents the Debtors in their chapter 11 proceedings. GENEVA STEEL: Utah Lake Advances $44.5MM Stalking-Horse Bid ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Utah, Central Division, approved uniform bidding and auction procedures related to the sale of substantially all of Geneva Steel LLC's remaining assets, including approximately 1,700 acres of real property in Vineyard, Utah and certain related personal property, contracts and leases. Utah Lake Development, LLC, has presented a $44.5 million stalking-horse bid to James T. Markus, the chapter 11 trustee of Geneva Steel LLC. The bid and auction procedures call for: - the Trustee to solicit competing bids for the assets before the Nov. 7, 2005, auction. Competing bids must be at least 105% higher than Utah Lake's $44.5 million bid and must be received by the trustee by Oct. 31, 2005. - bidders must make a $5 million good faith deposit in cash or in other forms of immediately available funds. - a $1.34 million break-up fee is payable to Utah Lake in the event that the assets are sold to another bidder or the Debtor withdraws the sale. The break-up fee will be funded from the winning bidder's good faith deposit. The break-up fee will be treated as an allowed super-priority administrative claim, senior to all other super-priority claims in the Bankruptcy Proceeding. The assets will be auctioned as a single lot. The successful bidder is entitled to purchase the assets even if another bidder may attempt to offer more for the Debtor's entire estate or any other combination of lots the includes the bid lot for the remaining assets. Headquartered in Provo, Utah, Geneva Steel LLC owns and operates an integrated steel mill. The Company filed for chapter 11 protection on January 25, 2002 (Bankr. Utah Case No. 02-21455). Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E. Garcia, Esq., at Kaye Scholer LLP, represent the Debtor in its chapter 11 proceedings. When the Company filed for protection from its creditors, it listed $262 million in total assets and $192 million in total debts. GEORGE COLEMAN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: George R. Coleman aka Randy Coleman 16 Cascades Drive Little Rock, Arkansas 72212 Bankruptcy Case No.: 05-20236 Chapter 11 Petition Date: August 9, 2005 Court: Eastern District of Arkansas (Little Rock) Debtor's Counsel: Kevin P. Keech, Esq. Keech Law Firm, PLLC 1429 Merrill Drive, Suite 3A Little Rock, Arkansas 72211 Tel: (501) 221-3200 Fax: (501) 221-3201 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Arkansas Insurance Dept. Bowman v. American $7,800,000 c/o Friday, Eldridge & Investors Life Clark Insurance Company, Attn: Guy Wade, Esq. et al, Pulaski 400 W. Capitol, Ste. 2000 County Circuit Court Little Rock, AR 72201 Case No. CV2000-5833 IRS 2002 Federal Income $46,139 700 West Capitol Taxes Little Rock, AR 72201 MBNA Consumer Goods $33,739 P.O. Box 15137 Various Wilmington, DE 19886-5137 MBNA Consumer Goods $26,864 Various IRS 2003 Federal Income $21,086 Taxes American Express Consumer Goods $20,770 Various American Express Consumer Goods $20,695 Various MBNA Consumer Goods $17,300 Various GMAC 2003 Buick Rendevous $13,447 Location: 16 Cascades Drive, Little Rock, AR Value of security: $13,000 MBNA Consumer Goods $8,991 Various DFA State Income tax 2003 State Income $7,954 Taxes Bank of America Consumer Goods $6,405 Dillards' Consumer Goods $4,723 Various Pulaski County Treasurer 2004 Real Property $4,405 Taxes MBNA Consumer Goods $3,977 Various Citi/Shell $1,171 Shell Consumer Goods $930 Various Pulaski County Treasurer 2004 Personal $491 Property Taxes Gemb/Exxonmobil Charge Account $401 Amex $381 GOODYEAR TIRE: Earns $69 Million of Net Income in Second Quarter ---------------------------------------------------------------- The Goodyear Tire & Rubber Company reported net income of $69 million for the second quarter of 2005, reflecting record sales and increased unit volume. In the second quarter of 2004, the company had net income of $30 million. Sales of $5 billion were a record for any quarter, and a 10 percent increase from $4.5 billion during the 2004 period. The increase reflects improved pricing, product mix and volume, as well as the favorable impact of currency translation. Tire unit volume in the second quarter of 2005 was 56.4 million units, up from 55.0 million units in the 2004 period. Volume increases were driven by gains in the European, Latin American and Asia/Pacific markets. ""Five of our businesses had record second quarter sales, and margins improved in our North American and European Union tire businesses," said Robert J. Keegan, Goodyear chairman and chief executive officer. "This success is further evidence that our strategies are working, and that our unwavering focus on key products, customers and markets is paying off. We continue to gain share in targeted markets," he said. "We have been successful in offsetting the impact of record high raw material costs through strategic pricing actions and by driving product mix enhancement. We will continue to concentrate on these areas to address the inevitable raw material cost increases that we expect in the second half of 2005," Mr. Keegan added. Raw material costs increased by approximately $133 million during the quarter, compared to a year ago. The company said it expects raw material costs to grow by approximately 10 percent for the full year of 2005 compared to 2004. The company estimates the effects of currency translation had a positive net impact on 2005 second quarter sales of approximately $108 million. The second quarter of 2005 includes net after-tax charges of $47 million related to financing fees, and $7 million primarily related to the settlement of prior-years tax liabilities. The quarter also included after-tax gains of $19 million from a previously disclosed environmental insurance settlement, $6 million related to fire loss recoveries, $5 million in net rationalization reversals, and $8 million related to general and product liability - discontinued products. The second quarter of 2005 also included $8 million in after-tax expense relating to prior periods. The 2004 second quarter included after-tax rationalization charges of $9 million and an after-tax charge of $9 million related to external professional fees associated with the previously disclosed accounting investigation, and $8 million related to general and product liability - discontinued products. The company anticipates continued year-over-year gains in operating performance during the second half of 2005, however the rate of those gains is expected to be less than they were in the first half. Business Segments Second quarter total segment operating income was $316 million, an increase of 24 percent compared to $254 million in the 2004 period. All of Goodyear's tire businesses reported higher segment operating income compared to the year-ago period. North American Tire sales reached a record for any quarter, increasing 6 percent compared to the 2004 period. The increase was driven by improved pricing and product mix, and higher volume in the consumer replacement and commercial original equipment markets. These increases were offset by an 8 percent decrease in shipments to consumer OE customers, reflecting a slowdown in the U.S. automotive industry and Goodyear's selective fitment strategy in this market. Second quarter segment operating income increased 34 percent compared to the 2004 period due to improved pricing and product mix, lower manufacturing costs and higher chemical and off-highway sales partially offset by higher raw material costs of approximately $75 million. European Union Tire sales were a second quarter record and increased 11 percent over the 2004 quarter as a result of strong price and product mix, volume increases driven by the consumer replacement and commercial OE markets, and a favorable impact from currency translation of approximately $26 million. Segment operating income increased 49 percent to a second quarter record primarily due to improved pricing and product mix, which offset higher raw material costs of approximately $11 million compared to the year-ago period. Eastern Europe, Middle East and Africa Tire's sales were up 14 percent and a second quarter record. The increase resulted from the favorable impact of currency translation, estimated at $12 million, improved volume, and price and product mix related to growth in replacement markets, price increases in emerging markets and continued growth in premium brands. Segment operating income improved 9 percent, reaching a second- quarter record due to improved pricing and product mix, foreign currency translation of approximately $7 million, and strong volume. Higher raw material costs of approximately $7 million had a negative impact on results. Latin American Tire sales increased 31 percent from the second quarter of 2004 due to higher volume, price increases and improved product mix, as well as the favorable impact of currency translation of approximately $37 million. Sales were the highest for any second quarter in the last seven years. Segment operating income was a second quarter record, and a 26 percent increase from 2004 due to improved pricing and product mix, volume and approximately $15 million in favorable currency translation, resulting from certain currency revaluations. Higher raw material costs of approximately $20 million had a negative impact on segment operating income. Asia/Pacific Tire sales were a record for any quarter and 12 percent higher than the 2004 quarter due primarily to favorable currency translation of approximately $21 million, and higher volume, particularly in OE markets. Segment operating income increased 18 percent in the 2005 quarter, reaching a record for any quarter due to improved pricing and product mix, which partially offset raw material cost increases of $13 million. Engineered Products' sales in the second quarter of 2005 were a record for any quarter and increased 16 percent compared to the 2004 period as a result of higher volume, mainly in the industrial channel, and the favorable effect of currency translation of approximately $11 million. Segment operating income decreased 9 percent due primarily to higher raw material costs of approximately $6 million, and higher administrative and manufacturing costs. Year-to-Date Results Sales for the first six months of 2005 were a record $9.8 billion, an increase of 11 percent from $8.8 billion in the 2004 period. Tire unit volume was 112.3 million units, up from 110.7 million units a year ago. Net income for the first six months of 2005 was $137 million, compared to a loss of $48 million during the year-ago period. Total segment operating income was $608 million in the first half of 2005, an increase of 40 percent from $435 million in the first six months of 2004. First-half 2005 raw material costs increased approximately $252 million compared to the year-ago period. In addition to the items listed for the second quarter, the first six months of 2005 includes net after-tax gains of $7 million from reversals of rationalization charges, and net after-tax charges of $12 million related to general and product liability - discontinued products. The first six months of that year also included these after-tax items: * a rationalization charge of $20 million; * a charge of $15 million related to external professional fees associated with the previously disclosed accounting investigation; * an expense of $12 million relating primarily to a fire at a European tire manufacturing facility and $4 million for accelerated depreciation primarily related to the closure of a Latin American tire manufacturing facility. The Goodyear Tire & Rubber Company (NYSE: GT) is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs more than 80,000 people worldwide. * * * As reported in the Troubled Company Reporter on June 23, 2005, Fitch Ratings has assigned an indicative rating of 'CCC+' to Goodyear Tire & Rubber Company's (GT) planned $400 million issue of senior unsecured notes. GT intends to issue $400 million of 10-year notes under Rule 144A. Proceeds will be used to repay $200 million outstanding under the company's first lien revolving credit facility and to replace $190 million of cash balances that were used to pay $516 million of 6.375% Euro notes that matured June 6, 2005. The Rating Outlook is Stable. The rating reflects the substantial amount of senior secured debt relative to the planned notes. It also incorporates Fitch's concerns about GT's high leverage, high-cost structure, and weak profitability and cash flow. In addition, GT's pension plans, which were underfunded by $3.1 billion at the end of 2004, are likely to require substantially higher contributions over the near term. GRAY TELEVISION: Moody's Lifts $258.5 Million Notes' Rating to Ba3 ------------------------------------------------------------------ Moody's Investors Service affirmed today Gray Television, Inc.'s Ba2 corporate family rating and the Ba1 rating on its senior secured credit facilities, following the company's announcement that it intends to spin-off its newspaper publishing and wireless segments and use the $40 million in proceeds to reduce debt. Additionally, Moody's upgraded its rating on the $258.5 million of senior subordinated notes to Ba3 from B1. The rating outlook is stable. The upgrade is based on Moody's research on high yield issuers rated Ba2 and better which reflects that senior subordinated notes do not perform markedly different when compared to higher ranking debt. As such, given the absence of any senior notes, the subordinated note rating is compressed to only one notch below the corporate family rating. The affirmation of the ratings and stable outlook reflect Gray's renewed focus on its core broadcast television operations and Moody's understanding that the lower margin, newspaper publishing and wireless segments were becoming a less significant part of the overall business. Additionally, the ratings incorporate Moody's expectation that the debt reduction from the proceeds of the spin- off will be offset to some extent by the loss of cash flow from these segments. Pro forma for the expected spin-off, Gray's leverage (measured as total debt plus preferred-to-EBITDA) remains high, in excess of 5 times in part due to the more challenging operating environment in 2005 given the off-year in political advertising spending. Moody's has upgraded these rating: -- $258.5 million of senior subordinated notes due 2011 to Ba3 from B1. Moody's has affirmed these ratings: -- Ba1 ratings on its $400 million of senior secured credit facilities, and -- the company's Ba2 corporate family rating. The rating outlook is stable. The ratings will remain constrained by the likelihood that the company will continue its acquisition strategy and Gray's willingness to return capital to shareholders ($32 million in form of dividends and share repurchases in 2004). The ratings also reflect the increasing business risk of the broadcast television industry with declining broadcast audiences and diversification of advertising spend over a growing number of mediums (e.g. Internet, satellite radio and outdoor). The ratings are supported by the meaningful asset value present in Gray's portfolio of mid-market television stations. The ratings also reflect the company's dominant position within its markets (23 of its 31 stations rank #1 in its news markets, and 21 of its 31 stations rank #1 in sign-on and sign-off) that continue to capture a larger share of revenues in their regions (averages approximately 40% in-market revenue), diversity of network affiliations, and cash flows and operating metrics that are at or above industry broadcasting peers. Mood's also notes that Gray benefits from operating in markets with less television broadcast competition (74% of its markets have three or less local television station competitors). The stable outlook incorporates our belief that absent additional broadcast acquisitions, the company has the ability to organically delever through free cash flow. Going forward, Moody's expects free cash generation to improve as the company has largely completed the digital upgrade of its facilities. Given the weaker expected operating environment in 2005, Moody's does not expect the ratings to move up in the near-term. Conversely, further significant distributions to shareholders or a sizeable debt- financed acquisition could cause downward ratings pressure. Gray Television, Inc. is a diversified media company with interests in: * TV broadcasting, * newspaper publishing, * paging, and * satellite uplink services. The company is headquartered in Atlanta, Georgia. IMPAX LABORATORIES: Nasdaq Halts Common Stock Trading ----------------------------------------------------- IMPAX Laboratories, Inc. (NASDAQ:IPXLE) received notification from The Nasdaq Stock Market, Inc., that the Nasdaq Listing Qualification Panel has determined to delist IMPAX's common stock from The Nasdaq National Market, effective with the opening of business on Monday, Aug. 8, 2005. As previously reported, IMPAX has been unable to file its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2004, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2005. IMPAX's failure to file these periodic reports violated Nasdaq Marketplace Rule 4310(c)(14), compliance with which is required for continued listing on Nasdaq. The notification of delisting included provision for relisting IMPAX's common stock provided the Company becomes current in its filings within 90 days and demonstrates compliance with the listing requirements. Assuming it is able to meet this schedule, IMPAX believes this provision will expedite the relisting process. IMPAX expects that quotations for its common stock will appear in the Pink Sheets(R), where subscribing dealers can submit bid and ask prices on a daily basis beginning Monday, August 8. The Company expects its trading symbol to revert to IPXL effective with the move to the Pink Sheets. IMPAX remains committed to regaining compliance with all filing requirements and obtaining relisting of its common stock as soon as possible and continues to work diligently toward completing and filing its delinquent reports. As previously reported, IMPAX has submitted a request for advice to 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 its Form 10-K and its Form 10-Q reports. As of August 5, 2005, however, IMPAX is unable to predict the date on which these reports will be filed. 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. INTEGRATED SECURITY: Closes $3MM New Financing Pact with Laurus --------------------------------------------------------------- Integrated Security Systems, Inc. (OTCBB Symbol: IZZI), reported a new financing arrangement with Laurus Master Fund, Ltd. This agreement provides for refinancing of the existing asset based line with higher availability coupled with a lower rate and certain equity provisions. The loan facility, initially with a $3 million cap, is convertible into ISSI common stock at an 8.7% premium to market as of close. There are also warrants representing a call on another approximately 1.7 million in ISSI common stock at higher prices. "This unique financing facility makes Laurus Funds an equity partner and gives them incentive to help us meet our growth objectives," said C. A. Rundell, Jr., Chairman and CEO of ISSI. "They seem not only willing, but anxious to provide additional financing to meet our acquisition and corporate development goals." About Laurus Laurus Master Fund, Ltd. Is a New York-based institutional fund that specializes in direct investments in small cap companies. About Integrated Security Headquartered in Irving, Texas, Integrated Security Systems, Inc., is a technology company that provides products and services for homeland security needs. ISSI also designs, develops and markets safety equipment and security software to the commercial, industrial and governmental marketplaces. ISSI's Intelli-Site(R) provides users with a software solution that integrates existing subsystems from multiple vendors without incurring the additional costs associated with upgrades or replacement. Intelli-Site(R) features a user-defined graphics interface that controls various security devices within one or multiple facilities. ISSI is a leading provider of anti-terrorist barriers, traffic control and safety systems within the road and bridge and perimeter security gate industries. ISSI designs, manufactures and distributes warning gates, lane changers, airport and navigational lighting and perimeter security gates and operators. ISSI conducts its design, development, manufacturing and distribution activities through three wholly owned subsidiaries: B&B ARMR, Intelli-Site, Inc., and DoorTek Corporation. For more information, visit http://www.integratedsecurity.com/, http://www.bb-armr.com/, http://www.intelli-site.com/, or http://www.doortek.com/ As of March 31, 2005, ISSI's balance sheet reflected a $1,627,002 stockholders' deficit compared to a $171,948 positive equity at June 30, 2004. IPC ACQUISITION: 96.35% of Noteholders Tender $144.5 Million Notes ------------------------------------------------------------------ IPC Acquisition Corp. completed its previously announced Offer and Consent Solicitation for its outstanding 11.50% Senior Subordinated Notes due 2009. The Offer expired last Aug. 5, 2005, as of 10:00 a.m., New York City time. IPC has accepted for purchase $144,525,00 in principal amount of Notes, representing 96.35% of the outstanding Notes. IPC has received the requisite consents to adopt its proposed amendments with respect to the Notes. As a result, the previously executed supplemental indenture containing such amendments has become operative. The Offer and Consent Solicitation were commenced pursuant to IPC's Offer to Purchase and Consent Solicitation Statement dated June 17, 2005. Goldman, Sachs & Co. acted as the exclusive dealer manager and solicitation agent for the Offer and Consent Solicitation. IPC Acquisition Corporation -- http://www.ipc.com/-- is a leading provider of mission-critical communications solutions to global enterprises. With more than 30 years of expertise, IPC provides its systems and services to the world's largest financial services firms, as well as to public safety; government; power, energy and utility; and transportation organizations. IPC offers its customers a suite of products and enhanced services that includes advanced Voice over IP technology, and integrated network and management services to 40 countries. Based in New York, IPC has over 800 employees throughout the Americas, Europe and the Asia Pacific regions. * * * As reported in the Troubled Company Reporter on July 6, 2005, Moody's Investors Service assigned a B2 rating to IPC Acquisition Corporation's proposed $50 million senior secured first lien revolving credit facility and $285 million senior secured first lien term loan and a B3 rating to its proposed $150 million senior secured second lien term loan. Proceeds from the credit facilities will be used repurchase approximately $210 million of shares outstanding, tender for existing 11.5% senior subordinated notes ($165 million), and refinance the existing credit facility ($48 million). Additionally, Moody's has downgraded IPC's corporate family rating (formerly known as the senior implied rating) to B2 from B1. The ratings broadly reflect IPC's decision to recapitalize the company by using its free cash flow generating ability to increase leverage and to repurchase equity. Pro forma for this recapitalization transaction, leverage will have more than doubled (from 2.8x to nearly 6.2x). IPC ACQUISITION: Completes $485 Million Debt Refinancing -------------------------------------------------------- IPC Acquisition Corp., disclosed that it has completed its debt refinancing. The Company has entered into new Senior Credit Facilities providing for an aggregate amount of $485 million, consisting of: * a $50 million first lien revolving facility, * a $310 million first lien term loan and * a $125 million second lien term loan. Goldman Sachs Credit Partners L.P. and Lehman Brothers Inc. acted as joint lead arrangers and joint bookrunners for the new Senior Credit Facilities. Goldman Sachs Credit Partners L.P. and Lehman Commercial Paper Inc. acted as co-syndication agents for the new Senior Credit Facilities. General Electric Capital Corporation acted as administrative agent and collateral agent and CIT Lending Services Corporation acted as documentation agent for the first lien facilities. Heritage Bank, SSB acted as administrative agent and collateral agent for the second lien term loan. The proceeds of the term loans under the new Senior Credit Facilities are being used: (a) to repay IPC's existing credit facility, (b) to purchase tendered Notes pursuant to the Offer, (c) to discharge the $5,475,000 in principal amount of the untendered Notes, (d) to make certain payments with respect to the equity securities, and (e) to pay related fees and expenses. The proceeds of the new revolving credit facility will be used for general corporate purposes. IPC Acquisition Corporation -- http://www.ipc.com/-- is a leading provider of mission-critical communications solutions to global enterprises. With more than 30 years of expertise, IPC provides its systems and services to the world's largest financial services firms, as well as to public safety; government; power, energy and utility; and transportation organizations. IPC offers its customers a suite of products and enhanced services that includes advanced Voice over IP technology, and integrated network and management services to 40 countries. Based in New York, IPC has over 800 employees throughout the Americas, Europe and the Asia Pacific regions. * * * As reported in the Troubled Company Reporter on July 6, 2005, Moody's Investors Service assigned a B2 rating to IPC Acquisition Corporation's proposed $50 million senior secured first lien revolving credit facility and $285 million senior secured first lien term loan and a B3 rating to its proposed $150 million senior secured second lien term loan. Proceeds from the credit facilities will be used repurchase approximately $210 million of shares outstanding, tender for existing 11.5% senior subordinated notes ($165 million), and refinance the existing credit facility ($48 million). Additionally, Moody's has downgraded IPC's corporate family rating (formerly known as the senior implied rating) to B2 from B1. The ratings broadly reflect IPC's decision to recapitalize the company by using its free cash flow generating ability to increase leverage and to repurchase equity. Pro forma for this recapitalization transaction, leverage will have more than doubled (from 2.8x to nearly 6.2x). KASPER A.S.L.: Court Formally Closes Chapter 11 Proceedings ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York issued a final decree formally closing Kasper A.S.L., Ltd., and its debtor-affiliates' chapter 11 cases in accordance with the requirements of Rule 3022-1 of the Local Bankruptcy Rules for the Southern District of New York. The Court confirmed the Debtors' Third Amended and Restated Joint Plan of Reorganization on Nov. 19, 2003. The Plan became effective on Dec. 1, 2003. Under the confirmed Plan, KCC Liquidation Company LLC became a successor-in-interest to the Debtors. Since then, KCC made distributions to creditors in accordance with the terms of the Plan. KCC has also resolved all disputed claims asserted against the Debtors' estates, filed a final report and paid all fees to the bankruptcy professionals as well as the U.S. Trustee. Kasper A.S.L., Ltd., was one of the leading women's branded apparel companies in the United States. The Company along with its affiliates filed for chapter 11 protection on February 5, 2002, (Bankr. S.D.N.Y. Case No. 02-10497). Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors. When the Company filed for protection from its creditors, it listed $308,761,000 in assets and $255,157,000 in debts. KMART CORP: Court Approves Shelby County Tax Claims for $458,877 ---------------------------------------------------------------- The Office of the Shelby County, Tennessee Trustee filed Claim Nos. 10041 and 10042 for $270,106 and $234,146 for real and business personal property taxes owed by Kmart Corporation for tax year 2001. Shelby County amended Claim Nos. 10041 and 10042 with Claim No. 48280 for $285,801 and Claim No. 48281 for $363,173 to include tax year 2002. Shelby County subsequently amended Claim No. 4281 with Claim No. 48500 for $363,173 to include Kmart's further tax obligations. Kmart objected to the claims. To settle the issues, the parties agree that Shelby County will be granted a secured claim for $458,877, which will be paid not later than August 31, 2005. Upon receipt of payment, Shelby County will promptly furnish Kmart with valid, fully executed paid receipts concerning the taxes for 2001 and 2002. The U.S. Bankruptcy Court for the Northern District of Illinois approves the stipulation. 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: Ct. OKs Stipulation Resolving Photo Equipment Dispute ----------------------------------------------------------------- On May 10, 2002, Noritsu America Corporation filed a complaint against Kmart Corporation asserting ownership of 102 mini-labs that it delivered to Kmart before the Petition Date. Noritsu sought recovery of the mini-labs. On April 30, 2003, Kmart rejected the lease for Kmart Store No. 3639 located in Inglewood, California. Upon vacating the Premises and returning its possession to Mirasa, LLC, Kmart left behind one of the Mini-Labs. On December 15, 2003, the U.S. Bankruptcy Court for the Northern District of Illinois warned Mirasa from taking any action against the Mini-Lab that will violate the Permanent Injunction under Kmart's Plan of Reorganization. On November 16, 2004, the Court approved Kmart and Noritsu's stipulation resolving the Complaint, and vesting Noritsu's rights and interest to the Mini-Labs to Kmart. Mirasa has been forced to possess and store the Mini-Lab since April 30, 2003, and the cost of storage due to Mirasa is in excess of the value of the equipment. In this regard, the parties agree that: (a) Kmart forever disavows and relinquishes any right, title, and interest in and to the Mini-Lab currently in Mirasa's possession; (b) Mirasa may dispose of the Mini-Lab as it deems necessary in its sole discretion, without any liability whatsoever to Kmart; and (c) Mirasa waives any claim against Kmart related to costs that it may have incurred with regard to storage of the the Mini-Lab. The Court approves the stipulation. 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) MARJORIE GREGORY: Case Summary & 9 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Marjorie Parrish Gregory 617 Queens Highway Carlsbad, New Mexico 88220 Bankruptcy Case No.: 05-16255 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Deborah Lyn Gregory 05-16261 Type of Business: The Debtors are affiliated with Gregory Ranch. Gregory Ranch filed for chapter 11 protection on July 1, 2005, and the case is pending before Hon. Mark B. McFeeley (Bankr. D. N.M. Case No. 05-15405). Gregory Ranch's assets and debts are under $1 million. A copy of Gregory Ranch's petition is available for a fee at http://researcharchives.com/t/s?b3 Chapter 11 Petition Date: August 5, 2005 Court: District of New Mexico Judge: James S. Starzynski Debtors' Counsel: Louis Puccini, Jr., Esq. Puccini & Meagle, P.A. P.O. Box 30707 Albuquerque, New Mexico 87190-0707 Estimated Assets Estimated Debts ---------------- --------------- Marjorie Parrish Gregory $1 Million to $100,000 to $10 Million $500,000 Deborah Lyn Gregory $1 Million to $100,000 to $10 Million $500,000 A. Marjorie Parrish Gregory's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ MasterCard $9,531 P.O. Box 60069 City Of Industry, CA 91716-0069 VISA $5,574 P.O. Box 44167 Jacksonville, FL 32231-4167 Sears $5,235 P.O. Box 6563 The Lakes, NV 88901-6563 B. Deborah Lyn Gregory's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carlsbad National Bank 2003 Ford Expedition $22,469 P.O. Box 1359 Location: 1707 Carlsbad, NM 88221-1359 Watson Court, Carlsbad, NM 88220 Value of security: $20,000 CitiMastercard Credit card $7,663 Box 630919 Irving, TX 750630919 Carlsbad National Bank Signature loan $3,777 P.O. Box 1359 Carlsbad, NM 88221-1359 Access One Medical bills $2,487 P.O. Box 6437 Carol Stream, IL 60197-6437 Internal Revenue Service Federal income Unknown 210 East Earll Drive taxes Phoenix, AZ 85012 NM Taxation & Revenue Dept. State income taxes Unknown P.O. Box 8575 Albuquerque, NM 87198-8575 MCI INC: Inks $70 Million Outsourcing Agreement With Danka ---------------------------------------------------------- MCI, Inc. (Nasdaq: MCIP) reported a five-year agreement with Danka Business Systems PLC (Nasdaq: DANKY) in which Danka Business Systems will outsource the balance of its U.S. information technology (IT) operations to MCI. As Danka's primary technology provider, MCI will manage all of Danka's core network services, including its IT operations and applications support, Wide Area Network, Local Area Network, IP services, servers, desktops and phone systems, as well as oversee Danka's network of ancillary technology vendors and partners. As part of this $70 million agreement, Danka will transition more than 60 employees to MCI and its application support provider, Titan Technology Partners. Danka expects to generate substantial yearly savings once the agreement is fully implemented, enabling Danka to drive productivity and enable further growth of its business. "This agreement with MCI is another step forward in our Vision 21 program to reduce our costs and improve our business practices. MCI is providing a fully managed, integrated IP-based IT infrastructure, scalable to our current and future needs which will enable us to elevate our IT environment," said Todd Mavis, Danka's chief executive officer. "At the same time, we are able to substantially reduce our IT costs. We view MCI as a world- class technology company, and this new agreement builds on an existing relationship under which we provide services to them." "Providing MCI's Managed Services expertise to meet Danka's advanced IP requirements, we were able to showcase our complete portfolio of services, from the desktop to the network," said Wayne Huyard, president of MCI U.S. Sales and Service. "As Danka's network and systems integrator, we will deliver best-in- class IT processes and resources to create an operating model where MCI manages a continuum of technology service across multiple technology vendors." About Danka Danka delivers value to clients worldwide by using its expert technical and professional services to implement effective document information solutions. As one of the largest independent providers of enterprise imaging systems and services, the company enables choice, convenience, and continuity. Danka's vision is to empower customers to benefit fully from the convergence of image and document technologies in a connected environment. This approach will strengthen the company's client relationships and expand its strategic value. For more information, visit Danka at http://www.danka.com/ 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. METROMEDIA FIBER: Files Post-Confirmation Report ------------------------------------------------ Lawrence C. Gottlieb, Esq., and Richard S. Kanowitz, Esq., at Kronish Lieb Weiner & Hellman LLP, delivered Reorganized Metromedia Fiber Network, Inc., and its debtor-affiliates post-confirmation report to the U.S. Bankruptcy Court for the Southern District of New York. Metromedia is now known as AboveNet Inc. The report describes the actions taken and the progress made toward consummation of the Reorganized Debtors' Second Amended Plan of Reorganization. The Plan became effective on Sept. 8, 2003. AboveNet's report discloses that: -- the Kluge Equitization (as defined in the Plan) took place on the Effective Date; -- the New Senior Secured Note (as defined in the Plan) has been issued to the Class 1(a) creditors in full satisfaction of the Class 1(a) Claims; and -- a trustee has been agreed upon by the Reorganized Debtors, the Committee (as defined in the Plan) and the prospective trustee for the Litigation Trust. The Litigation Trust was formed on or before Oct. 15, 2003. The Reorganized Debtors completed its Initial Distribution and a second Interim Distribution pursuant to the terms of the Plan. They were able to distribute: -- 7,899,238 shares of common stock; -- 621,730 Five Year Warrants; and -- 731,435 Seven Year Warrants. 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. MIRANT CORP: Court Okays Multi-Million Enron Settlement Agreement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved a settlement agreement between Enron Corp. and Enron Asset Holdings, LLC, on one hand, and Mirant Corp., Mirant EcoElectrica Investments I, Ltd., and Puerto Rico Power Investments, Ltd., on the other hand. As reported in the Troubled Company Reporter on June 28, 2005, Mirant sought to obtain the controlling interest, in 2001, in EcoElectrica L.P., a special purpose limited partnership, whose principal asset was a 540-megawatt electric generation facility in Puerto Rico. The acquisition was to take place pursuant to two separate, but cross-contingent, stock purchase agreements with: (a) Enron Asset, pursuant to which Enron Asset agreed to sell to Mirant a 47.5% indirect ownership interest in EcoElectrica; and (b) Edison Mission Energy and EME del Caribe, pursuant to which Enron agreed to sell to Mirant a 50% indirect ownership interest in EcoElectrica. In December 2001, Enron Corp. and certain of its affiliates sought bankruptcy relief. Neither the Enron SPA nor the Edison SPA were required to be consummated unless all conditions precedent to each stock purchase agreements were met or waived prior to December 31, 2001, the Termination Date. On the Termination Date, Mirant terminated the SPAs asserting that certain conditions to the closing of the acquisition had not been satisfied or waived as of the Termination Date. The Enron entities disputed that the closing conditions were not satisfied, waived or excused as of the Termination Date, and contended that Mirant was not entitled to terminate the Enron SPA. In October 2002, Mirant filed Claim Nos. 13016, 13086 and 13098 in Enron's bankruptcy proceeding and asserted damages arising from the failed Enron SPA. Enron objected to Mirant's Claims. Enron filed Claim Nos. 6862, 6863, 6864, 6865, 6866, and 6867 in Mirant's Chapter 11 case seeking damages arising from the failed Enron SPA and sought declaratory relief with respect to the Mirant SPA Claims. Mirant objected to Enron's Claims. In November 2004, the Mirant Bankruptcy Court transferred the venue for the Enron Claims and the Mirant Objections to the Enron Bankruptcy Court subject, however, to the Mirant Bankruptcy Court's retention of jurisdiction to estimate the Enron Claims pursuant to Section 502(c) of the Bankruptcy Code. A month later, the Enron Bankruptcy Court set a trial date for resolution of the Enron Claims, the Mirant SPA Claims, the Mirant Objections, the Enron's Omnibus Objection, and the Request for Declaratory Relief, and established interim deadlines with respect to discovery and pre-trial submissions. On January 3, 2005, Mirant filed an application with the Mirant Bankruptcy Court to estimate, among other things, the Enron Claims. Before January 2005 ended, Mirant and Enron reached an agreement in principle to settle the Pending Litigation and agreed, among other things, to immediately suspend all discovery and other pretrial activities and deadlines relating to their pending actions in both bankruptcy cases. The substantial terms of the Settlement Agreement provides that the Enron Claims and the Mirant SPA Claims will be resolved. The parties agree that: (a) Claim No. 6862 will be allowed as a general unsecured claim against Mirant Corp. in its Chapter 11 case, for $12,250,000; (b) Claim Nos. 6863, 6864, 6865, 6866 and 6867 will be disallowed and expunged in its entirety; and (c) The Mirant SPA Claims, Claims Nos. 13016, 13086 and 13098 filed against Enron will be disallowed and expunged. Stipulation Resolving More Claims Enron Corp., Enron North America Corp., Enron Capital & Trade Resources International Corp., Enron Energy Marketing Corp., Enron Energy Services Operations, Inc., Enron Power Marketing, Inc., Enron Upstream Company LLC and Enron Energy Services, Inc., and certain of their affiliates entered into a stipulation settling claims with: -- Mirant Corporation, -- Mirant Americas Energy Marketing, LP, -- Mirant Americas Inc., -- Mirant California, LLC, -- Mirant Americas Energy Capital, LP, -- Mirant Europe B.V., and -- Mirant Canada Energy Marketing, Ltd. The stipulation is filed with the U.S. Bankruptcy Court for the Southern District of New York, where Enron's bankruptcy cases are pending. The Reorganized Enron Debtors and the Mirant Entities have been parties to financial and physical trading contracts relating to the purchase or sale of energy products and services. Enron Corp. issued guaranties for the Contracts in favor of the Mirant Entities. In connection with the Enron Debtors' Chapter 11 cases, the Mirant Entities filed numerous claims including: Mirant Entity Enron Entity Claim No. Claim Amount ------------- ------------ --------- ------------ MAEM Enron 13001 $72,441,204 MAEM ENA 13003 63,290,996 Mirant Europe ECTRIC 13015 7,709,672 Mirant Europe Enron 13038 7,709,672 MAEM EES 13002 undetermined Mirant Corp. EPMI 13017 unliquidated Mirant Corp. ENA 13018 unliquidated MAEM EPMI 13037 9,138,180 Mirant Corp. ECTRIC 13039 undetermined Mirant Canada ENA 13087 1,170,707 Mirant Canada Enron 13099 1,840,000 Mirant Americas EPMI 13101 undetermined Mirant California EPMI 13102 undetermined Mirant Corp. EES 13121 undetermined MAEC against ENA 13122 undetermined MAEM EEMC 13123 undetermined MAEM EESO 15097 undetermined As previously reported, ENA objected to Claim No. 13003 and sought its disallowance. The Reorganized Enron Debtors also filed various claims in the Mirant Entities' Chapter 11 cases in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. Among these are: Enron Entity Mirant Entity Claim No. Claim Amount ------------ ------------- --------- ------------ ENA Upstream MAEM 6289 $5,786,198 EPMI MAEM 6292 undetermined EES MAEM 6288 undetermined ENA MAEM 6290 undetermined ENA Mirant Corp. 6291 undetermined After engaging in extensive, arm's-length and good faith negotiations, the Parties reached an agreement on the Mirant Claims and Enron Claims. The Parties stipulated and agreed that: 1. Four of the Mirant Claims will be allowed: -- Claim No. 13001 will be allowed as a class 185 general unsecured guaranty claim against Enron for $50,000,000; -- Claim No. 13003 will be allowed as a class 5 general unsecured claim against ENA for $53,401,574; -- Claim No. 13015 will be allowed as a class 42 general unsecured claim against ECTRIC for $7,709,762; and -- Claim No. 13038 will be allowed as a class 185 general unsecured guaranty claim against Enron for $3,854,881. 2. Two Enron Claims will be allowed: -- Claim No. 6289 will be allowed as a general unsecured claim against MAEM for $5,786,198; and -- Claim No. 6292 will be allowed as general unsecured claim against MAEM for $10,111,687. 3. Except for the Allowed Mirant Claims, all Mirant Claims, including scheduled claims, will be disallowed and expunged; provided that the portion of Claim No. 13037 related to certain actions pending before the Federal Energy Regulatory Commission will not be deemed withdrawn and expunged. 4. Except for the Allowed Enron Claims, all remaining Enron Claims, including scheduled claims, will be disallowed and expunged. 5. Within 30 days from the approval of the settlement, EPMI will be entitled to file a proof of claim with the Mirant Bankruptcy Court against MAEM for refunds that MAEM may be determined to owe to EPMI by the FERC arising out of sales made by MAEM in the markets administered by the California Independent System Operator and the California Power Exchange from October 2, 2000, to June 20, 2001. 6. The Parties will mutually release one another with respect to obligations under the Mirant Contracts, Guarantees, Mirant Claims and Enron Claims. 7. The settlement will be binding on the Parties, subject to the entry of an order approving the terms of the Settlement Agreement by the Enron Bankruptcy Court and the Mirant Bankruptcy Court. 8. ENA's Objection will be deemed resolved and withdrawn. 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 Okays Settlement Agreement on Kendall Station ---------------------------------------------------------------- Cambridge Electric Light Company, Boston Edison Company, NSTAR Gas Company, NSTAR Steam Corporation and Mirant Kendall LLC are parties to multiple agreements associated with the re-powering and operation of the Kendall Station in Cambridge, Massachusetts, as well as multiple gas, electric and steam utility service provider agreements and arrangements. Commonwealth Electric Company and Mirant Canal LLC are parties to agreements associated with the re-powering of the Canal Station in Sandwich, Massachusetts, as well as multiple electric utility service provider agreements and arrangements. On September 12, 2003, NSTAR filed Claim Nos. 2173 and 2174 for $71,658 and $6,563, asserting claims for unpaid invoices to Mirant Kendall and Mirant Canal for electricity provided by Cambridge Electric Light Company and Commonwealth Electric Company. On December 15, 2003, NSTAR filed an amended proof of claim, Claim No. 6259 for $6,368,411, asserting seven independent claims: (1) Claims under the Kendall Interconnection Agreement; (2) Claims under the Oak Bluffs and West Tisbury Interconnection Agreements; (3) Claims under the Edison Related Facilities Agreement; (4) Claims under the Gas Transportation Agreements; (5) Claims for Electric Utility Services; (6) Claim for Steam Service to Kendall Station; and (7) Canal Unit 3 Impact Study. The Debtors objected to the Claims. NSTAR subsequently withdrew the claims Claims under the Kendall Interconnection Agreement and the claim for Steam Service to Kendall Station. The parties reached a resolution on all of the outstanding issues presented by the Prepetition Claims. The Court approved their settlement agreement, which provides that: (a) Claim No. 2173 filed by Cambridge Electric Light Company against Mirant Kendall for $71,685 is disallowed. (b) Claim No. 2174 filed by Commonwealth Electric Company against Mirant Canal is allowed for $6,563. (c) The claims asserted in Claim No. 6259 are disallowed or allowed, as the case may be, as: -- NSTAR withdrew its assertion of any claim under the Kendall Interconnection Agreement; -- The prepetition claims asserted by Commonwealth Electric against Mirant Canal for $340,284 on account of the Oak Bluffs and West Tisbury Interconnection Agreements are disallowed; -- Boston Edison Company filed a claim against Mirant Kendall for $521,498. It is impacted by an amendment to the NEPOOL Agreement. The amendment includes certain costs incurred by the Debtors at the Kendall site that will be entitled to 50% cost support in regard to Pool Transmission Facilities interconnection costs. The amendment is awaiting approval from the Federal Energy Regulatory Commission. Upon receipt of formal FERC approval, the parties anticipate that Mirant Kendall will be entitled to a refund from Boston Edison Company, currently estimated to be $1.28 million. The parties agree to setoff the claim amount owed by Mirant Kendall under the Related Facilities against that refund amount due under the NEPOOL Agreement. Boston Edison will pay the net balance without further delay. Absent FERC approval, Boston Edison will be granted an allowed, unsecured, non- priority claim in an amount to be determined after Mirant Kendall exercises its audit rights. But if Mirant Kendall does not timely commence its audit, Boston Edison will be granted an allowed, unsecured, non-priority claim for $744,968; -- NSTAR asserted claims against Mirant Kendall for $143,011 in connection with the Gas Transportation Agreements. In the event the Transportation Agreements are rejected, NSTAR will be granted an allowed, prepetition, general unsecured claim against Mirant Kendall for $171,146. If the contracts are assumed by the Debtors, the claim will be paid in full as the cure amount due. -- Commonwealth Electric's claim against Mirant Canal for $210,410 will be allowed as a general unsecured claim. Cambridge Electric Light Company against Mirant Kendall for $136,740 will be allowed as a general unsecured claim for $100,000. -- NSTAR withdrew its assertion of a claim against Mirant Kendall on account of steam service to Kendall Station for $45,960; -- Commonwealth Electric's claim for $48,883 against Mirant Canal on account of a System Impact Study done by Commonwealth Electric Company for Mirant Canal will be an allowed prepetition, general unsecured claim for $48,274. Commonwealth Electric and Cambridge Electric will jointly pay Mirant Canal $17,500 as a result of interest owed on unpaid amounts under the Wholesale Transition Service Agreement dated May 15, 1988, that payment will be in full and complete satisfaction of all interest or late claims by Mirant Canal. 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: Judge Lynn Supplements June 30 Valuation Ruling ------------------------------------------------------------ As reported in the Troubled Company Reporter on July 7, 2005, Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas appointed Curtis Morgan and Tim Coleman to supervise the modifications to be effected in Mirant Corporation and its debtor- affiliates 2005 Business Plan and The Blackstone Group's report. Judge Lynn concluded after a 23-day hearing in Fort Worth, Texas that "use of the Business Plan is more sensible than adoption of cash flow information produced by other parties" in determining the enterprise value of Mirant. Judge Lynn noted in a four-page letter dated June 30, 2005, to the parties participating in the enterprise valuation process that "as the Blackstone Report is based on the Business Plan, it is more sensible to key valuation to it." In a four-page letter to Messrs. Morgan, Coleman, and Chapter 11 Examiner William K. Snyder, Judge Lynn supplements and corrects his letter ruling of June 30, 2005, with respect to the valuation of Mirant Corp. and its subsidiaries. Judge Lynn explains in general statements that if alteration of a variable, pursuant to his ruling, results in changes to other variables through operation of the computer model, all of those changes are proper. "If a change in one variable requires (outside of the model) a corresponding mathematically calculable change to another variable, both changes should be made." "If a change in one variable obviously requires a change to another variable, and each of the three of you considers the required change clear, the change should be made," Judge Lynn instructs Messrs. Coleman, Morgan and Snyder. "In other cases where a change in one variable results in disagreement over the need for change or the amount of change in another variable, you should present the change to me. In each case in the latter two categories the Examiner should advise the Valuation Parties of the changes in his next report to them." The Court tells Messrs. Morgan, Coleman and Snyder to utilize facts currently known. "The limitations on the use of data that is not disputable but was not available during the valuation hearing is that, if use of that data requires making new assumptions that do not automatically flow from the data, the new data should not be used." "Put another way, if for example, the California Settlements, which have been approved by the court, can be included in the revised Business Plan without the need for new judgments concerning, other assumptions, they should be included. If their inclusion, however, requires new estimates concerning which facilities will be operated and when they will be operated, then those settlements should be excluded," Judge Lynn continues. In particular, Judge Lynn rules that his June 30, 2005, ruling is amended to provide for the use of June 30 results, and for the December 31, 2005 emergence. Judge Lynn also notes that his ruling regarding PEPCO's obligations and NOL usage is premised on: (1) U.S. District Court Judge John McBryde's rulings regarding the Debtors' obligations to PEPCO being affirmed on appeal; (2) the Debtors assuming executory agreements with PEPCO; and (3) the Debtors curing monetary defaults (if any) in those agreements upon emergence. Respecting taxes, Judge Lynn authorizes Deloitte & Touche, LLP, to recalculate taxes under the Debtors' business plan. The Court maintains that the VIC's proposed handling of commodities is consistent with its ruling. "Unless PIRA issues a new long-term coal forecast by July 31, its forecasts for all commodities will be excluded, and my ruling is amended accordingly," Judge Lynn rules. Judge Lynn also adopts the VIC's recommendation regarding hedging. Judge Lynn further rules that: 1. Changes to other variables (e.g., O&M, capital expenditures, etc.) should be dealt with by the VIC. If the changes are not mathematically derived, similarly ascertainable or clearly appropriate, they must be submitted to the Court; 2. LTM values will be calculated and weighted as suggested by the VIC; 3. NRG notes receivable and interest or payments on them should be considered in current amounts, as reported. Thus, the ruling should be amended accordingly; 4. In the absence of guidance, I.B.E.S. estimates may be used in calculating comparable company multiples; 5. In the event that the VIC's proposed treatment of DCF exit multiples is approved, and, to the extent necessary, the ruling should be amended; 6. The VIC's proposed calculation of a WACC is appropriate, except the same debt or equity proportions as used in Blackstone's May 2 report will be used in calculating the WACC; and 7. To resolve a number of issues respecting the Philippine operations, the ruling is amended to provide that the Philippines will be included in total enterprise value at the high end of the valuation spectrum ascertained by The Blackstone Group. With respect to the break down of the $450 million of additional value, Judge Lynn explains that the bulk of it is $357 million of International Restricted Funds. "The $357 million may be accounted for either in that line item or as a reduction of working capital. Six million [dollars] is from payment of international debt. [Sixty] million [dollars] is from excess cash, and $15 million is value attributable to the Lovett facility. The balance of the $450 million, [which is $12 million] is rounding [or] miscellaneous." Judge Lynn wrote that he is dismayed at the amount of time necessary to complete recalculation of value. "The [Mirant] Committee is quite correct: I had expected a result long before mid-September. However, I see no alternative to proceeding as the VIC proposes." "Prior to issuing my June 30 ruling," Judge Lynn continues, "I attempted to calculate a value using 'benchmarks' as suggested by Debtors' counsel in closing during the valuation hearing. The result, [which is $10.5 - 11.5 billion] was unsatisfactory in my view because: (1) the value would not withstand any sort of careful review (e.g., it accounted for changes in gas prices but not other commodities); and (2) the approximation did not, in my judgment, clearly show that equity was, or was not, in the money." "Of course, if the Debtors and the committees can agree to this approximate range of value, there would be no need for recalculation of value. I doubt such agreement could be reached," Judge Lynn notes. "On the other hand, the VIC may see a way to approximate value sufficient to allow the confirmation process to go forward. Failing that, I hope the VIC will do its utmost to beat its schedule, and the Debtors and other principal parties will at least be able to build around a value-to-be-filled-in in the disclosure statement so that a hearing on disclosure may be held." 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. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEXTEL COMMS: Completes Exchange Offer and Consent Solicitation --------------------------------------------------------------- Nextel Communications Inc. (NASDAQ:NXTL) said that as of 12:00 midnight, New York City Time, on Aug. 5, 2005, holders of approximately 99% of the outstanding principal amount of Nextel's: (i) 7.375% Senior Serial Redeemable Notes due 2015, Series A, (ii) 6.875% Senior Serial Redeemable Notes due 2013, Series B, and (iii) 5.95% Senior Serial Redeemable Notes due 2014, Series C, in the aggregate tendered Original Notes. The noteholders also delivered consents in connection with Nextel's Offer to Exchange and Consent Solicitation announced on July 11, 2005. At the Expiration Date, $2,102,267,000 of the Series A Notes, $1,458,404,000 of the Series B Notes and $1,157,164,500 of the Series C Notes had been tendered for exchange and consents relating to the proposed amendments described below had been delivered in respect of such Original Notes. In accordance with the terms and conditions of the Offer to Exchange and Consent Solicitation, Nextel and the trustee under the indenture relating to the Original Notes have executed and delivered a first supplemental indenture containing the proposed amendments described in the Offer to Exchange and Consent Solicitation Statement, dated July 11, 2005. The amendments to the indenture include: (a) eliminating the covenant to provide financial information with respect to the Original Notes; (b) providing that certain of the restrictive covenants relating to the Original Notes will terminate upon the earlier of: (i) the consummation of the proposed merger between a subsidiary of Sprint Corporation and Nextel or (ii) the Original Notes achieving a rating of investment grade; and (c) amending the provision relating to supplemental indentures to allow Nextel to amend the indenture and any notes issued thereunder without the consent of holders to provide additional rights or benefits to the holders or to effect other changes that do not adversely affect the legal rights of any holder under the indenture. The modified provisions regarding the termination of covenants described above apply only to the remaining outstanding Original Notes and not to the notes issued in exchange for the Original Notes. Pursuant to the Statement, Nextel also accepted for exchange: (i) $2,102,267,000 of the Series A Notes for an equal aggregate principal amount of newly issued 7.375% Senior Serial Redeemable Notes due 2015, Series D, (ii) $1,458,404,000 of the Series B Notes for an equal aggregate principal amount of newly issued 6.875% Notes dues 2013, Series E, and (iii) $1,157,164,500 of the Series C Notes for an equal aggregate principal amount of newly issued 5.95% Notes due 2014, Series F. The terms of the Exchange Notes are substantially identical to the Original Notes with two exceptions: (a) the Exchange Notes will have the benefit of a new covenant under which Nextel will undertake to seek from Sprint, which will be renamed "Sprint Nextel" following consummation of the proposed merger between Nextel and Sprint, a guarantee of all Nextel's payment obligations with respect to the Exchange Notes; and (b) the Exchange Notes have the benefit of a new covenant with respect to the provision of financial information and reports similar to the existing covenant relating to the provision of financial information and reports, with the exception that if the Exchange Notes are subsequently guaranteed by a parent guarantor, the financial statements and reports required to be provided by such covenant may instead be provided by the parent guarantor. The provisions applicable only to the Exchange Notes are set forth in a second supplemental indenture entered into by Nextel and the trustee. Nextel Communications, a FORTUNE 200 company based in Reston, Virginia, is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all- digital wireless network in the country covering thousands of communities across the United States. Today 95% of FORTUNE 500(R) companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 297 of the top 300 U.S. markets where approximately 264 million people live or work. * * * As reported in the Troubled Company Reporter on August 8, 2005, Standard & Poor's Ratings Services ratings on Sprint Corp. and Nextel Communications Inc. remain on CreditWatch with positive implications based on operating and financial improvement. At the same time, Standard & Poor's expects to raise its corporate credit rating on Nextel to 'A-' from 'BB+', and raise the rating on Nextel's senior unsecured debt to 'A-' from 'BB'. The outlook on the merged "Sprint-Nextel" will be stable. The ratings on both companies were independently placed on CreditWatch with positive implications -- Sprint On Oct. 8, 2004, and Nextel on Oct. 27, 2004 -- based on operating and financial improvement, and remained on CreditWatch following the Dec. 15, 2004, announcement of the merger agreement. NORTHWEST AIRLINES: Mechanics Return to NMB Negotiating Table ------------------------------------------------------------- The Aircraft Mechanics Fraternal Association has agreed to continue National Mediation Board-hosted negotiations with Northwest Airlines (Nasdaq: NWAC) in Washington, D.C., next week. Northwest wants to reach a consensual agreement, in advance of the Aug. 20 deadline, that provides wage and benefit levels that are fair to its AMFA employees while allowing Northwest to stem its record operating losses. The company continues to believe that it is in the best interest of employees for the two parties to meet in order to reach an agreement. The union left the negotiating table on Aug. 3, disclosing that the Company is only repeating its previous demand that would require AMFA members to approve a contract in which 53 percent of them would lose their jobs. "Common sense should tell Northwest that's a non-starter," AMFA National Director O.V. Delle-Femine said. Other demands already deemed non-acceptable by AMFA include pay cuts for remaining employees of 25-26 percent, along with other major concessions. Union members have already authorized an Aug. 20 strike if no agreement is reached by that time. Northwest must realize at least $1.1 billion in annual labor cost savings in order to restructure successfully. In addition to negotiations with AMFA, Northwest is in federal mediation with The International Association of Machinists and Aerospace Workers and The Professional Flight Attendants Association. Also, the airline is in discussions with representatives of its other unions. Bankruptcy Warning The Company warned that it may be forced to consider filing a chapter 11 petition if: -- it is unsuccessful in achieving the necessary labor cost savings; -- it suffers significant operational disruptions as a result of a strike or other workforce actions; -- it does not secure a freeze of the defined benefit plans for the contract workforce; -- it fails to obtain legislative relief of its pension funding obligations in the near future; or -- it is unable to access the capital markets to meet current and future obligations. Aircraft Mechanics Fraternal Association -- http://www.amfanatl.org/-- represents more aircraft technicians than any other union. AMFA's craft union represents aircraft maintenance technicians and related support personnel at Alaska Airlines, ATA, Horizon Air, Independence Airlines, Mesaba Airlines, Northwest Airlines, Southwest Airlines and United Airlines. AMFA's credo is "Safety in the air begins with quality maintenance on the ground." Northwest Airlines Corp. is the world's fifth largest airline with hubs in Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,600 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. At June 30, 2005, Northwest Airlines' balance sheet showed a $3,752,000,000 stockholders' deficit, compared to a $3,087,000,000 deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on June 23, 2005, Moody's Investors Service downgraded the debt ratings of Northwest Airlines Corporation and its primary operating subsidiary, Northwest Airlines, Inc. The Corporate Family Rating (previously called the Senior Implied rating) was lowered to Caa1 from B2, and the Senior Unsecured rating was downgraded to Caa3 from Caa1. Ratings assigned to Enhanced Equipment Trust Certificates were downgraded. In addition, the company's Speculative Grade Liquidity Rating was downgraded to SGL-3 from SGL-2. The rating actions complete a review of Northwest's ratings initiated April 8, 2005. Moody's said the outlook is negative. PANTRY INC: Lenders Agree to Amend Loan Agreement ------------------------------------------------- The Pantry, Inc. (NASDAQ: PTRY) entered into an amendment with its lenders to the loan agreement under its senior credit facility, effective Aug. 5, 2005. The amendment has the effect of bringing the Company into compliance with the loan agreement after giving effect to the previously announced restatement of financial statements. The terms of the amendment include: -- The limitation on additional indebtedness and capital lease obligations in the loan agreement has been eliminated as long as borrowings are incurred to finance acquisitions, certain capital expenditures and related fees and expenses; -- Leverage ratio requirements, as defined in the loan agreement, have been increased by 50 basis points -- approximately the same amount by which the restatement increases the Company's leverage ratio as of June 30, 2005; and -- The limitation on net capital expenditures has been increased from 30 percent to 35 percent of EBITDA, as defined in the loan agreement. In connection with the amendment, the Company also received from its lenders a waiver of the default in the loan agreement caused by the restatement. The full text of the waiver and amendment are being included in a Current Report on Form 8-K to be filed by the Company with the Securities and Exchange Commission. Peter J. Sodini, President and Chief Executive Officer of The Pantry, said, "We are very pleased to have resolved this matter, and would like to thank our lenders for moving so quickly to approve this amendment. Their prompt action is consistent with our previous statement that this restatement will have no impact on The Pantry's cash flow dynamics or any other fundamental characteristic of our business, including our ability to continue growing through acquisitions." Financial Restatements As reported in the Troubled Company Reporter on Aug. 1, 2005, the Company said it intends to restate certain of its prior period financial statements to correct its accounting for transactions that it characterized as sale-leaseback transactions. This change is the result of the determination by the Company in consultation with its independent registered public accountants that such transactions must be accounted for as financing transactions rather than sale-leaseback transactions. The change will not affect the Company's cash flow and will have a minimal impact on earnings per share and retained earnings. The restatement recharacterizes the transactions as financing transactions, with the assets and related financing obligation carried on the balance sheet. As a result, approximately $177 million in additional debt will be recorded as of June 30, 2005, with a similar increase in assets. Default While the Company is in compliance with all of the financial ratio covenants of the loan agreement under its credit facilities, the increase in debt will put it in default because of provisions that limit the Company's ability to incur additional indebtedness. The Company currently is in the process of obtaining an amendment to the loan agreement. The Company expects the restatement to reduce fiscal 2004 net income by approximately $1.7 million. For the first nine months of fiscal 2005, the impact is partially offset by reversing certain straight-line rent charges recorded earlier in the year, resulting in a decrease in net income of approximately $400,000. Audit Review During the third fiscal quarter, the Company's independent registered public accountants advised management that they were reviewing the accounting the Company had previously applied to sale-leaseback transactions - which the registered public accountants had previously considered in their periodic audits and reviews. Certain technical issues were identified that had the potential to cause certain of these transactions to not qualify for sale-leaseback accounting treatment. One of these issues impacts almost all of the Company's previously reported sale- leaseback transactions - whether the retention by the Company of ownership of underground fuel storage tanks represents a continuing involvement in the leased property that precludes treating these leases as operating leases pursuant to sale- leaseback accounting rules. Although generally accepted accounting principles on this topic are not clear, the Company has concluded at this time that a restatement is appropriate. The Company had previously believed that its sale-leaseback accounting treatment was appropriate under Generally Accepted Accounting Principles. The Company is unaware of any evidence that these restatements are due to any intentional noncompliance with GAAP by the Company. However, after further review of various interpretations of these technical accounting matters and discussions with its independent registered public accountants, the Company has concluded that the restatements were appropriate. The preliminary results announced in this release utilize the accounting treatment, which will be reflected in the restatement of our historical financial statements. Because the restatement is not yet completed, the expected impact of the restatement contained herein is preliminary and subject to a final review by management and the audit committee and the audit or review by the Company's independent registered public accountants. Headquartered in Sanford, North Carolina, The Pantry, Inc. -- http://www.thepantry.com/-- is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country, with net sales for fiscal 2004 of approximately $3.5 billion. As of June 30, 2005, the Company operated 1,386 stores in 11 states under a number of banners including Kangaroo Express(SM), The Pantry(R), Golden Gallon(R), Cowboys and Lil Champ Food Store(R). The Pantry's stores offer a broad selection of merchandise, as well as gasoline and other ancillary services designed to appeal to the convenience needs of its customers. PANTRY INC: S&P Raises Senior Sub. Debt Rating to B- from CCC ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Sanford, North Carolina-based The Pantry Inc. and removed them from CreditWatch where they had been placed with developing implications on July 28. Both the corporate credit rating and the senior secured bank loan ratings were raised to 'B+' from 'B-', while the senior subordinated debt rating was raised to 'B-' from 'CCC'. The outlook is stable. "This action follows the company's disclosure that it had entered into an amendment with its lenders under its senior credit facility that had the effect of bringing the company back into compliance with certain covenants," said Standard & Poor's credit analyst Gerald Hirschberg. These covenants had been previously breached as a result of a restatement of sale-leaseback transactions to financing transactions. As a result, approximately $177 million in additional debt was recorded as of June 30, 2005. This increase in debt put the company in default since provisions of the loan agreement limited the incurrence of additional debt. The Pantry also said that its lenders had granted a waiver of that default. The Pantry is a leading independently operated convenience store chain in the Southeast with about 1,386 stores in 11 states. PAUL MEYLIKER: Case Summary & 14 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Paul Meyliker 1775 14th Avenue San Francisco, California 94122 Bankruptcy Case No.: 05-32522 Chapter 11 Petition Date: August 9, 2005 Court: Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: Matthew J. Shier, Esq. Pinnacle Law Group 425 California Street, #1800 San Francisco, California 94104 Tel: (415) 394-5700 Total Assets: $1,041,365 Total Debts: $3,312,993 Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ribas Management Corporation $464,298 c/o David Russo Sterling & Clack 101 Howard Street, Suite 400 San Francisco, California 94105 Nelly Merzheritsky $235,460 c/o David Russo Sterling & Clack 101 Howard Street, Suite 400 San Francisco, CA 94105 Greenpoint Mortgage Funding, Inc. $200,000 P.O. Box 84013 Columbus, GA 31908-4013 The Mechanics Bank Value of security: $48,372 $48,000 Vladimir Meyliker $35,000 Citi Platinum Select $18,469 Key Bank $12,215 United Mileage Plus $10,270 PG&E $255 SFPUC/Water Dept. $83 World-Link Solutions $81 SBC $75 Sunset Scavenger $47 Dish Network $42 PORTRAIT CORP: Jan. 31 Balance Sheet Upside-Down by $171 Million ---------------------------------------------------------------- Portrait Corporation of America Inc., reported financial results for the year ended January 31, 2005. The Company experienced a net loss of $29,740,000 for the year ended January 31, 2005, compared to a $1,322,000 net income for the year ended Feb. 1, 2004. For the year ended January 31, 2005, the Company's current liabilities exceeded its current assets by $39.4 million. Total liabilities exceeded its total assets by $156.0 million for the year ended January 31, 2005. Its principal sources of liquidity are cash flow from operations and borrowings under its new $10.0 million senior secured revolving credit facility and supported by its new $20.0 million letters of credit facility. The Company's principal uses of cash are interest payments on debt, capital expenditures and seasonal working capital. During fiscal 2004, the Company used $21.4 million in cash on purchases of property and equipment compared to $21.1 million used during fiscal 2003. During fiscal 2004, it also used $1.1 million on the acquisition of certain assets and liabilities of Hometown Threads(R). Portrait Corp.'s working capital deficit increased to $39.4 million as of January 30, 2005 from $39.6 million as of February 1, 2004. At July 15, 2005, the Company had no borrowings under its new senior secured revolving credit facility. As of July 15, 2005, there was $10.0 million borrowing availability under the new senior secured revolving credit facility. Covenant Waivers At Oct. 31, 2004, the Company was not in compliance with certain financial covenants contained in the agreement for its prior senior secured credit facility. The Company subsequently amended this agreement with the lenders on Dec. 14, 2004, and obtained waivers of these covenants from Oct. 31, 2004, through Jan. 31, 2005. On Feb. 4, 2005, the Company and the lenders executed another amendment effective as of Jan. 31, 2005, that reset certain financial covenants through January 29, 2006. AgfaPhoto Payables During fiscal 2004, the Company was also unable to meet the payment terms of AgfaPhoto USA Corporation, its key supplier of photographic film, paper, and processing chemistry. Portrait Corp. has negotiated payment terms with AgfaPhoto USA Corporation that extend the payment date for its outstanding payables (including interest which had been accrued at an annualized rate of 6%) as of June 15, 2005, until June 15, 2006, and has agreed to pay for products purchased from AgfaPhoto USA Corporation on, or after, June 15, 2005 at, or prior to, their delivery. The Company is seeking to enter into a revised supply contract with AgfaPhoto USA Corporation within the next few months. However, there is no assurance that it will be able to do so. German Insolvency Proceedings Additionally, on May 27, 2005, AgfaPhoto USA Corporation's German parent company, AgfaPhoto GmbH, filed a petition for insolvency. While Portrait Corp. has been informed that AgfaPhoto USA Corporation has sufficient funding to continue its normal operations in the foreseeable future, if AgfaPhoto USA Corporation becomes unable to continue to provide supplies to Portrait Corp. under its current contract, Portrait Corp. will need to obtain an alternative source of supplies. If it enters into an agreement with an alternative supplier at less desirable terms than the terms of its agreement with AgfaPhoto USA Corporation, Portrait Corp. may be required to raise additional equity and/or debt financing. New Senior Notes On July 15, 2005, the Company issued $50 million aggregate principal amount of senior secured notes due 2009 and simultaneously entered into a new four-year $10 million senior secured revolving credit facility and a new four-year $20 million letters of credit facility. The new letters of credit facility and the new senior secured revolving credit facility are contained in the new credit agreement. The Company used: * $32.5 million of the net proceeds of its senior secured notes offering to fully repay its prior senior secured credit facility, * $9.8 million was placed in escrow to satisfy the interest payment due on August 1, 2005 relating to obligations under the senior notes, * $3.9 million was used to pay fees and expenses related to the issuance of the senior secured notes, and * the remaining $3.8 million will be used for working capital. Management anticipates, based on the currently proposed plans and assumptions, that the net proceeds from the issuance of the senior secured notes together with the additional liquidity provided under its new senior secured revolving credit facility and new letters of credit facility and obtaining waivers of existing defaults under its debt agreements will be sufficient to satisfy the Company's cash requirements in fiscal 2005. Business Initiatives Portrait Corp.'s funding needs for fiscal 2005 depend on many factors, including the Company's ability to successfully implement measures to improve its performance. In order to proactively address the negative same studio sales in its Wal-Mart permanent studios, the management team has implemented several initiatives since the beginning of fiscal 2005 designed to increase same studio sales. These initiatives are focused on increasing average transaction size per customer as well as customer traffic. Examples of these initiatives include: * increased external recruiting of field operations management, * instituting a new bonus program for field associates, * launching new marketing initiatives, * re-implementing the successful "Portrait Smiles" customer continuity program which was previously eliminated in fiscal 2003, * re-introducing a mid-tier price point in package offers to improve the customer experience and to encourage customer trade ups, and * increasing the opening price point. Nonetheless, there is no assurance these measures will be successful and the Company may require additional capital to meet its operating needs. Management estimates of fiscal 2005 funding needs assume a continuation of its studio openings in Wal-Mart, further evaluation of other specialty retail concepts in Wal-Mart retail locations and the return of positive same store sales to its business. Management will continue to monitor sales, financial results and the Company's liquidity position and, if necessary, will execute further actions to mitigate its concerns with regard to its liquidity position including, but not limited to, further reductions in general and administrative expenses and capital expenditures. In the event that its business plans change, or the assumptions used to predict funding needs change or prove inaccurate, the Company may be required to seek additional financing. In particular, during fiscal 2006 it will be required to pay $20.7 million of interest bearing extended vendor payables, which obligation has not been included in its funding need estimates for fiscal 2005. The Company has no current arrangements with respect to sources of additional financing and its failure to improve its results of operations will likely make it more difficult and expensive for it to raise additional capital that may be necessary to continue its operations. The covenants in the new senior secured revolving credit facility and instruments governing other debt, including the indenture governing the senior secured notes, limit Portrait Corp.'s ability to incur more debt. The Company's ability to borrow under the new senior secured revolving credit facility and to use its new letters of credit facility depends on the Company's ability to meet the lenders' borrowing conditions at the relevant times. The new senior secured revolving credit facility provides for limitations on borrowings based on 125% of PCA LLC's consolidated trailing twelve months earnings before interest, taxes, depreciation and amortization as defined in the agreement, less any letters of credit outstanding under the new letters of credit facility. Revolving loans under the new senior secured revolving credit facility, at the Company's option, bear interest payable on a monthly basis at either: * a rate equal to the prime rate announced by Wells Fargo Foothill, Inc., from time to time plus a margin to be determined within a range between 1.75% and 3.00% (which is fixed at 5.00% until July 30, 2006), based on Portrait Corp.'s consolidated trailing twelve months EBITDA; or * a rate equal to LIBOR (the London Interbank Offered Rate) plus a margin to be determined within a range between 3.75% and 5.00% (which is fixed at 5.00% until July 30, 2006), based on Portrait Corp.'s consolidated trailing twelve months EBITDA; provided that at no time will any portion of indebtedness owing under the new senior secured revolving credit facility bear interest at a per annum rate of less than 6.00%. The new senior secured revolving credit facility contains customary negative covenants that limit or restrict, among other things, subject to certain exceptions, the incurrence of indebtedness, the creation of liens, mergers, consolidations, transactions with affiliates, amendments to material agreements, investments, dividends and asset sales by PCA LLC and its subsidiaries. The Company experienced a significant downturn in operations in 2004 which resulted in a net loss in 2004 and lower gross profit as compared to 2003. This resulted in the Company's non- compliance with certain financial covenants concerning its debt and its inability to meet certain commitments at existing levels of cash flow from operations. Portrait Corporation of America, Inc., is the largest operator of retail portrait studios in North America and one of the largest providers of professional portrait photography products and services in North America based on sales and number of customers. Operating under the trade name Wal-Mart Portrait Studios, the Company is the sole portrait photography provider for Wal-Mart Stores, Inc. As of January 30, 2005, the Company operated 2,401 permanent portrait studios in Wal-Mart discount stores and supercenters in the United States, Canada, Mexico, Germany and the United Kingdom and provided traveling services to approximately 1,000 additional Wal-Mart store locations in the United States. The Company also serves other retailers and sales channels with professional portrait photography services. At Jan. 31, 2005, Portrait Corporation of America Inc.'s balance sheet showed a $171,041,000 stockholders' deficit, compared to a $141,144,000 deficit at Feb. 1, 2004. PRICELINE.COM: Earns $16.8 Million of Net Income for 2nd Quarter ---------------------------------------------------------------- Priceline.com Incorporated (Nasdaq: PCLN) reported its financial results for the second quarter 2005. Gross travel bookings for the quarter were $569.5 million, a 20.3% increase over the same period a year ago. Gross travel bookings refer to the total dollar value, inclusive of all taxes and fees, of all travel services purchased by consumers. Revenues in the 2nd quarter were $266.6 million, a 2.8% increase over the same period a year ago. Second quarter 2005 results include the operating results of Active Hotels, acquired in September 2004, and Travelweb, acquired in May 2004. Priceline.com's GAAP gross profit for the 2nd quarter 2005 was $65.2 million, up 21.3% over the same period in the previous year, while GAAP net income for the 2nd quarter 2005 was $12.4 million. Pro forma gross profit for the 2nd quarter 2005 was $65.6 million, a 20.1% increase over the same period a year ago. Pro forma net income for the 2nd quarter 2005 was $16.8 million, an increase of 28.1% over the same period in the prior year. "Priceline posted strong bottom line results in the second quarter aided by our diverse service offerings and expense controls," said priceline.com President and Chief Executive Officer, Jeffery H. Boyd. "Solid growth in priceline.com's European operations and the launch of our new U.S. retail hotel service helped drive solid growth in gross travel bookings." Mr. Boyd continued, "In an increasingly competitive online travel market, priceline.com continues to focus on developing new services and markets, offering differentiated products under a distinctive brand, and operating one of the market's most efficient cost structures. The recent acquisitions of U.K. based Active Hotels and Netherlands based Bookings B.V. make Priceline Europe one of Europe's largest and fastest growing online hotel reservation services with a unique combined inventory of approximately 18,000 hotels. With the launch of our new U.S. retail hotel service last quarter, priceline.com's customers now have more ways to enjoy unique savings for all their travel needs. Finally, we have established what we believe to be an important new source of customers next year for our opaque services through the marketing partnership with Orbitz, which we announced last quarter. We believe these initiatives will make significant contributions to our results in the coming quarters." Looking forward, Mr. Boyd said, "We believe that priceline.com has a unique complement of travel services in the U.S. market, and a leading position among European online hotel reservation services. Going forward, we plan to build on our strengths in those markets with further service enhancements and advertising support where appropriate. Also, we intend over time to continue to integrate our global service offerings to make them available to all priceline.com customers, regardless of where they live. We believe priceline.com is well-positioned to continue building its business through the balance of 2005 and beyond." Priceline.com is a travel service that offers leisure airline tickets, hotel rooms, rental cars, vacation packages and cruises. Priceline.com recently expanded its services so customers now have a choice: they can pick from a broad selection of published flights, hotels, rental cars and packages at published prices or, for deeper savings, they can use priceline.com's Name Your Own Price(R) service for their travel needs. Priceline.com also has a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee. * * * Priceline.com's 1% convertible senior notes due 2010 carry Standard & Poor's single-B rating. PRIMEDIA INC: Moody's Reviews $212MM Series H Stock's Junk Rating ----------------------------------------------------------------- Moody's Investors Service has placed all ratings of PRIMEDIA Inc. on review for possible upgrade. This action follows the company's announcement that it has agreed to sell its business information segment to PBI Media Holdings in a cash transaction valued at approximately $385 million or 10.5 times EBITDA LTM June 30, 2005. The rating review will consider the likelihood that proceeds will be used to reduce PRIMEDIA's outstanding debt and preferred obligations and the consequent impact that this will have on PRIMEDIA's credit ratings. The proposed purchase price is modestly higher than the value previously anticipated by Moody's and provides PRIMEDIA with an opportunity to reduce its debt burden, preferred obligations and leverage. The ratings placed on review include: * Corporate Family Rating (formerly Senior Implied Rating) -- B2 * $175 million in senior secured floating rate notes, due 2010 -- B2 * $300 million of 8.0% senior notes, due 2013 -- B2 * $475 million of 8.875% senior notes, due 2011 -- B2 * $145 million of 7.625% senior notes, due 2008 -- B2 * $212 million of Series H 8.625% exchangeable preferred stock, due 2010 -- Caa2 New York City-based PRIMEDIA Inc. is a specialty magazine publisher as well as publisher and distributor of free consumer guides. The company recorded $1.1 billion in revenues for the last twelve months ended June 30, 2005 pro forma for the sale. QUALITY DISTRIBUTION: June 30 Balance Sheet Upside-Down by $28.2MM ---------------------------------------------------------------- Quality Distribution, Inc. (Nasdaq: QLTY) reported record revenues for the quarter ended June 30, 2005 of $171 million, an 8.6% increase over second quarter revenues of $157.4 million last year. This represents the tenth consecutive quarterly year-over-year increase in revenues. Revenue for the six months ended June 30, 2005 increased 7.6% to $332.2 million from $308.6 million last year. Transportation revenue increased 5.2% from the prior year quarter and by 4.7% from the prior six-month period, driven primarily by rate increases. "The underlying trends in our business continue to be favorable and the pricing environment remains robust," President and Chief Executive Officer Jerry Detter said. "I've been very encouraged by what I've found during my first weeks as CEO of Quality Distribution. We have a company that has the ability to generate strong operating income from its core trucking operations and a capable senior management team. Our entire team is committed to improving our results and enhancing shareholder value," Mr. Detter added. Net income for the quarter was $2.7 million as compared with a net loss of $7.9 million in the second quarter of last year. During the second quarter of this year, the Company incurred charges of approximately $1.6 million for costs related to the recruitment and relocation of its new Chief Executive Officer and severance costs. The Company also incurred approximately $400,000 for class action litigation and related expenses associated with our non-core insurance subsidiary, Power Purchasing, Inc. Adjusting for these events, which are not related to the Company's ongoing core trucking operations, and tax affecting the loss before taxes at a 35% tax rate would have yielded an adjusted net income for the current quarter of $3.2 million, and $2.7 million, as adjusted for the items in the last section of this release, in the same period last year. Tim Page, Chief Financial Officer, stated, "Excluding higher than expected insurance expense in the second quarter of this year, our margins were generally in line with our expectations." Net income for the six month period was $5.6 million, as compared with a net loss of $6.9 million, for the same period last year. After adjusting for the items noted in the last section of this release, and tax effecting income (loss) before taxes at a 35% tax rate would have yielded an adjusted net income for the first six months of $6.4 million, and $5.5 million, for the same period last year. Headquartered in Tampa, Florida, Quality Distribution, Inc. through its subsidiary, Quality Carriers, Inc. and TransPlastics, a division of Quality Carriers, Inc. and through its affiliates and owner-operators, manages approximately 3,500 tractors and 7,300 trailers. The Company provides bulk transportation and related services. The Company also provides tank cleaning services to the bulk transportation industry through its QualaWash(R) facilities. Quality Distribution is an American Chemistry Council Responsible Care(R) Partner and is a core carrier for many of the Fortune 500 companies that are engaged in chemical production and processing. At June 30, 2005, Quality Distribution, Inc.'s balance sheet showed a $28,248,000 stockholders' deficit, compared to a $34,100,000 deficit at Dec. 31, 2004. QWEST COMMS: Union Members Authorize CWA Leaders to Call Strike --------------------------------------------------------------- Members of the Communications Workers of America working at Qwest Communications (NYSE: Q) voted overwhelmingly to give CWA leaders authorization to call a strike if a fair contract cannot be reached. Contract negotiations currently are underway on behalf of 25,000 CWA-represented workers at Qwest, with the contract expiring effective 12:01 a.m. on Aug. 14. CWA reported that 91% of Qwest members voted in favor of strike authorization in balloting conducted by CWA local unions. For a strike to take place, the next step would be for CWA's executive board to authorize President Morton Bahr to set a strike date. "CWA wants to reach a fair agreement with Qwest, but management must recognize that our members have made substantial sacrifices to help keep Qwest in business over a very rocky period," said Annie Hill, CWA District 7 Vice President. "Our members want Qwest to succeed, but we also expect management to come to the bargaining table with fair proposals, not excessive demands for shifting health care costs to workers and retirees, and demands for increased mandatory overtime work that force workers to spend even more time away from their families," she said. On Aug. 5, 2005, at the bargaining table, the CWA bargaining team delivered petitions from more than 10,000 active and retired workers calling on the company to maintain health care benefits. Ms. Hill noted that this is the first full contract bargaining session since 1998. Two contract extensions were approved by CWA members in 2001 and 2003 as an investment in the company's future in the wake of Qwest's serious financial difficulties caused by the previous management team headed by Joseph Nacchio. Mr. Nacchio and other executives have been charged with fraud and illegal business practices by the Securities and Exchange Commission; the current management team took over in July 2002. In mobilization actions throughout the district, CWA members are reminding management that "we are the front line, not the bottom line, and that quality service is key to helping Qwest succeed. The talks cover workers at Qwest operations in 13 states: Arizona, Colorado, Iowa, Idaho, Minnesota, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/-- is a leading provider of high-speed Internet, data, video and voice services. With approximately 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At June 30, 2005, Qwest Communications' balance sheet showed a $2,663,000 stockholders' deficit, compared to a $2,612,000 deficit at Dec. 31, 2004. REAL MEX: Second Quarter Net Income Climbs to $5.1 Million ---------------------------------------------------------- Real Mex Restaurants, Inc., filed its Form 10-Q for the quarterly period ended June 26, 2005, with the Securities and Exchange Commission on Monday, Aug. 8, 2005. The results indicate that total revenues increased to $144.7 million, an increase of $57.2 million, or 65.5%, in the second quarter of 2005 from the second quarter of 2004 due to the inclusion of Chevys restaurant sales of $52.4 million combined with comparable store sales increases of 3.2% in the second quarter of 2005. Net income also increased to $5.1 million in the second quarter of 2005, an increase of $4.6 million from the second quarter of 2004. Real Mex Restaurants -- http://www.eltorito.com/ http://www.chevys.com/or http://www.acapulcorestaurants.com/-- is the largest full-service, casual dining Mexican restaurant chain operator in the United States, with 163 restaurants in California and an additional 35 company-owned restaurants in twelve other states. These include 70 El Torito Restaurants, 69 company-owned Chevys Fresh Mex Restaurants, 37 Acapulco Mexican Restaurants, six El Torito Grill Restaurants, five company-owned Fuzio Universal Pasta Restaurants, the Las Brisas Restaurant in Laguna Beach, and several regional restaurant concepts such as Who-Song & Larry's, Casa Gallardo, El Paso Cantina, Keystone Grill and GuadalaHARRY'S. Real Mex Restaurants is committed to the highest standards and is dedicated to serving the freshest Mexican food with excellent service in a clean, comfortable, and friendly environment. * * * Real Mex's 10% senior notes due 2010 carry Moody's Investors Service's and Standard & Poor's single-B ratings. RICKY STAFFORD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Ricky Gene Stafford dba Stafford Auto Sales P.O. Box 206 Clarksville, Tennessee 37040 Bankruptcy Case No.: 05-09343 Type of Business: The Debtor sells cars. Chapter 11 Petition Date: August 8, 2005 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church Street, Suite 410 Nashville, Tennessee 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $1,709,925 Total Debts: $833,716 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Farmers & Merchants Wholesale Lot $461,431 P.O. Box 1135 Location: 722 Clarksville, TN 37041 Providence Blvd. Clarksville, TN 37042 Value of security: $250,000 American Express $25,521 P.O. Box 650448 Dallas, TX 75265 Wells Fargo $23,377 P.O. Box 98784 Las Vegas, NV 891938784 Internal Revenue Service $15,000 Bank of America Visa $4,000 Bank of America Visa $3,600 James Corlew Chevrolet $2,346 American Express $2,076 Gary Matthews Motors $858 The Wheel Shop & Tire Repair $845 Carcraft Solutions $845 B & B 66 Service, Inc. $634 Joe Heitz Toyota $398 Lee's Automotive $370 Texaco $326 Cinergy Communications $260 Don's Radiator $225 Liberty Auto Salvage $200 Dent Magic $200 Jenkins & Wynne Ford $161 ROGERS TELECOM: S&P Ups Ratings to BB & Lifts CreditWatch --------------------------------------------------------- Standard & Poor's Rating Services raised its ratings on Rogers Telecom Holdings Inc. (Rogers Telecom; formerly Call-Net Enterprises Inc.) to 'BB' from 'B-', reflecting an equalization of the ratings with its parent, Rogers Communications Inc. (RCI; BB/Stable/B-2). Furthermore, the ratings on Rogers Telecom were removed from CreditWatch, where they were placed May 11, 2005, when RCI announced that it had entered into a definitive agreement to acquire Call-Net. The acquisition closed as expected July 1, 2005, and RCI changed the name of the company on July 7. At the same time, Standard & Poor's affirmed the 'BB' long-term corporate credit ratings on RCI, Rogers Wireless Inc. (RWI), and Rogers Cable Inc. The outlook for RCI and its subsidiaries is stable. The rating revision follows a review of the parent-subsidiary relationship between RCI and Rogers Telecom. "We expect that the subsidiary will become an integral part of RCI's communications- related operations, and that RCI will provide the necessary financial and operational support to the subsidiary," said Standard & Poor's credit analyst Joe Morin. The acquisition of Call-Net is strategically important to RCI as it will accelerate the company's expansion into residential telephony, and will provide the combined entity with a nationwide fiber optic network and a presence in the business telecommunications segment. In addition, acquired balance-sheet debt is modest at US$223 million in senior secured notes, representing about 2% of RCI's total lease-adjusted debt. Pro forma, credit measures should improve marginally. The ratings on RCI reflect the consolidation of the company with its four main operating subsidiaries, which are all 100% owned: * Rogers Cable, * Rogers Media Inc., * RWI, and * now Rogers Telecom. The company's rating reflects its high debt leverage and negative free operating cash flow, which are partially mitigated by the company's investment-grade business profile, underpinned by the strength of its national wireless business and regional cable operations. The stable outlook reflects S&P's expectations for improved credit metrics in the medium term, and for maintenance of pro forma RCI consolidated leverage (debt to EBITDA) of less than 5.5x in the near term. The outlook also reflects expectations for the successful integration of both Microcell and Rogers Telecom, with no deterioration in operating or financial performance at RWI and Rogers Cable in the medium term. If RCI does not perform as expected and credit measures deteriorate, the ratings or outlook could be negatively affected. In particular, areas of risk include the integration of Microcell at RWI and the roll-out of telephony at Rogers Cable, as well as greater-than-expected pricing competition at RWI or Rogers Cable. Conversely, if RCI were to reduce debt in the medium term resulting in an improved financial risk profile, the outlook could be revised to positive. SAINT VINCENTS: Court Allows DASNY to Withdraw from Reserve Funds ----------------------------------------------------------------- At the behest of the Dormitory Authority of the State of New York, the U.S Bankruptcy Court for the Southern District of New York lifts the automatic stay under Section 362 of the Bankruptcy Code to allow DASNY to withdraw amounts from various reserve funds to effect the timely payments on various bonds on August 1 and 15, 2005. Geoffrey T. Raicht, Esq., at Sidley Austin Brown & Wood LLP, in New York, relates that, before the Petition Date, Saint Vincent Catholic Medical Centers of New York became indebted to DASNY and to the New York State Medical Care Facilities Finance Agency for the financing and refinancing its health care facilities, including indebtedness secured by mortgages and liens on SVCMC's accounts and evidenced by the "DASNY Mortgage Notes" and the "MCFFA Mortgage Notes." The DASNY Mortgage Notes were funded with proceeds derived from three series of Federal Housing Administration-Insured Hospital Mortgage Revenue Bonds issued by DASNY. The MCFFA Mortgage Notes were funded with proceeds derived from two series of Hospital and Nursing Home FHA-Insured Mortgage Revenue Bonds issued by the MCFFA. On September 1, 1995, DASNY succeeded to all of the powers, duties and functions of the MCFFA. The details of the Mortgage Notes are available for free at: http://bankrupt.com/misc/SVCMClist_mortgage_notes.pdf The Bond Trustees for each Bond Issue established funds and accounts for the benefit of the owners of the Bonds, including a debt service fund and a debt service reserve fund. SVCMC's Payments SVCMC is required to make monthly payments on the principal and interest with respect to each Mortgage Note. Amounts on deposit in the Debt Service Fund with respect to each Bond Issue are applied semi-annually to pay interest and the principal of the Bond Issue, when due, and to redeem term bonds through sinking fund installments. The Debt Service Reserve Fund with respect to each Bond Issue is funded with proceeds derived from the sale of the Bond Issue. In the event amounts in the Debt Service Fund for a Bond Issue are not sufficient to pay the interest on, and maturing principal of, the Bond Issue when due, the Bond Trustee is to apply amounts in the Debt Service Reserve Fund to make the payments. Interest earnings on deposited amounts in the Debt Service Reserve Fund with respect to each Bond Issue are to be deposited into the Debt Service Fund with respect to the Bond Issue. Each Mortgage Note is secured by, among other things, a corresponding FHA-Insured Mortgage and other mortgages on SVCMC's real property. The Federal Housing Commissioner of the United States Department of Housing and Urban Development under the applicable provisions of the National Housing Act insures SVCMC's payment obligations on the Mortgage Notes. As of March 31, 2005, DASNY had $8 billion of tax-exempt bonds outstanding for not-for-profit hospital facilities in New York State. FHA-insured mortgages secured 46% of the bonds. Also, as of February 2005, New York State hospitals represented 65% of FHA's $4.9 billion national hospital insurance portfolio. Commercial bond insurers insure the timely payment of principal and interest on certain of the Bond Issues. Mr. Raicht notes that, before the Petition Date, SVCMC paid its monthly payment of principal and interest on the Mortgage Notes, including the payment that were due on July 1, 2005. However, on August 1, 2005, $3,401,083 of interest and $3,410,000 of principal were due on the Bonds. On August 15, 2005, $2,634,912 of interest and $4,905,000 of principal will be due on the Bonds. Absent the payments, the Bonds could go into default, even though the mortgage payments have already been paid by the Debtor and are now held by the Trustees in trust for the benefit of the holders of the related Bonds. Mr. Raicht says a default on the Bonds would impair DASNY's ability to work cooperatively with the Debtors as they seek to reorganize. In addition, an assignment of the Mortgages to the HUD -- which DASNY could be obligated to do -- will affect the HUD's ability provide insurance on mortgages and loans to other not-for-profit hospitals and nursing homes in New York State. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: RCG Wants Adequate Protection of Security Interest ------------------------------------------------------------------ As reported in the Troubled Company Reporter on July 8, 2005, The Honorable Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York gave Saint Vincent Catholic Medical Centers of New York and its debtor-affiliates authority, on an emergency basis, to use cash collateral securing repayment of prepetition obligations to their Secured Creditors. Parties Object A. RCG Longview RCG Longview II, L.P., as mortgagee, holds an interest to various properties of the Debtors. RCG's interests in the properties are subordinate to Sun Life Assurance Company of Canada's. Fred B. Ringel, Esq., at Robinson Brog Leinwand Greene Genovese & Gluck P.C., in New York, relates that, while RCG and Sun Life agree that their interest appear, at this point in time, to be oversecured, the equity cushion alleged by the Debtors is substantially overstated and is not guaranteed to remain at the levels indicated by the Debtors throughout the case. In particular, since the Debtors have indicated to RCG that they do not intend to make adequate protection payments to any of the mortgagees, the debt against the properties will increase substantially during the case, thus eroding any equity cushion, which may exist at this time. Mr. Ringel tells the Court that, prior to obtaining the first loan, the Debtors had not disclosed the $60 million overstatement of assets discovered by their auditors after the turnaround plan presented to RCG, dated as of July 2004, was issued. The second loan was obtained by the Debtors only four business days before the Petition Date. The Debtors did not disclose to RCG at or before the time they borrowed RCG's funds that they were contemplating a Chapter 11 filing or that certain of their credit facilities, including their account receivable funding facility, were then in default and about to be terminated. Under these circumstances, RCG asks the Court to condition the approval of the Motion on adequate protection being given to RCG in the form of monthly payments pursuant to the terms and conditions of the loan documents executed by the Debtors in favor of RCG. In the alternative, RCG seek the Court's authority to participate in the valuation hearing requested by Sun Life for the Properties. B. Department of Housing and Urban Development The Debtors owe the Dormitory Authority of the State of New York more than $180 million in respect of a series of mortgage revenue bonds, secured by first mortgages and security interest on St. Vincent's Hospital Manhattan, Mary Immaculate Hospital, St. John's Hospital, Bayley Seton Hospital, St. Vincent's Hospital Staten Island, and St. Mary's Hospital of Brooklyn. The mortgage revenue bonds were issued by DASNY as financing related to the Debtors' hospital facilities and were secured by a pledge on the part of the Debtors to make mortgage payments that fund debt service payments on the outstanding bonds. The HUD insures these mortgage payments pursuant to its Federal Housing Administration Mortgage Insurance Programs. Wendy H. Waszmer, Esq., explains the HUD does not presently have sufficient information to reliably evaluate the Debtors' assertion that the value of their real estate holdings substantially exceeds the amount of the outstanding indebtedness to DASNY, as insured by the HUD. The Debtors have not established the validity of any valuation. Accordingly, the HUD seeks greater assurance that its interest as mortgage insurer in the Debtors' property holding is, and will remain, adequately protected. DASNY, the HUD, and the Debtors are currently in discussion regarding a consensual resolution that would ensure the continuous payments of mortgage obligations to DASNY. Nonetheless, the HUD is concerned that the Debtors will continue to sustain significant operating losses, which will inevitably lessen the net cash collateral to secure the HUD'S interest in the estate. Therefore, the HUD conditions its approval on the proposed DIP Financing on: (a) the continuation of timely scheduled mortgage payments to DASNY on the mortgages insured by the HUD; and (b) the Debtors' provision of an additional monthly adequate protection payment of an amount greater than $1 million on the 10th day of every month, commencing as soon as possible, and in any event, no later than February 2006. C. DASNY The Dormitory Authority of the State of New York recognizes that an amicable resolution provides the best opportunity to give the Debtors the time necessary to focus on the reorganization process. Geoffrey T. Raicht, Esq., at Sidley Austin Brown & Wood LLP, in New York, relates that the Debtors and DASNY are currently engaged in discussions to resolve its concerns over the proposed priming of its liens on the Debtors' receivables and the continuous payments of SVCMC's mortgage obligations to DASNY. To the extent that an agreement with the Debtors cannot be reached, DASNY is fully cognizant of its paramount obligation to the holders of the Bonds it issued, and will not hesitate to take any and all actions necessary to discharge that obligation -- which could include opposing the Debtors' attempt to prime DASNY's first priority liens. Mr. Raicht asserts that any priming litigation would have severe consequences to the Debtors' precarious cash resources. It would also result in a default by the Debtors on their current mortgage payments, which would leave DASNY no choice, but to assign the Mortgages to the HUD. The assignment could jeopardize the HUD's willingness and ability to provide insurance on mortgages and loans to other non-profit hospitals and nursing homes in New York State. HFG Responds to BNY Objection HFG HealthCo-4 LLC asks the Court to overrule The Bank of New York's objection. Benjamin Mintz, Esq., at Kaye Scholer LLP, in New York, explains that the Bank of New York's "interest" in the Debtors' receivables arises solely by virtue of a conditional pledge made by DASNY to BNY, pursuant to which DASNY expressly retained its rights as mortgagee until there was an event of default by DASNY under the Sisters of Charity Health Care System Corporation FHA- Insured Mortgage Hospital Revenue Bonds, Series 1999. Since an event of default under the Bonds has not yet occurred, DASNY retains its rights as holder of the security interests in the Debtors' receivables, and BNY has no interest in this respect. Accordingly, BNY does not have standing to be heard in its capacity as indenture trustee for the Bonds as it is not a secured creditor nor a party-in-interest in the Debtors' cases, including with respect to the proposed DIP Financing. In addition, BNY's request to elevate its derivative lien status is unsustainable and fundamentally at odds with the unambiguous text of the May 21, 2004 Intercreditor Agreement. While the DASNY Intercreditor Agreement does not specifically list the DASNY Loan Agreement, its subordination language is sufficiently broad to encompass all of the receivables in which DASNY was granted a security interest. Mr. Mintz explains that the Intercreditor Agreement provides for the subordination of DASNY's and BNY's liens in the prepetition receivables to HFG HealthCo-4 LLC's liens, without any meaningful exception. The contemplated subordination is not limited to DASNY's liens as granted pursuant to specified security agreements. Rather, it operates to subordinate all of DASNY's liens in a specified pool of receivables. Debtors Address Objections James M. Sullivan, Esq., at McDermott Will & Emery LLP, New York, advises the Court that the Debtors have consensually resolved all disputes with DASNY and the HUD with respect to the DIP Financing and the priming of liens to HFG. In addition, GE Capital Public Finance, Inc.'s objection has also been resolved. The Debtors ask the Court to overrule the pending objections and grant interim approval to the DIP Financing Motion: (1) Bank of New York In the light of their settlements with DASNY and the HUD, the Debtors believe that the objections of The Bank of New York and Manufacturers and Traders Trust Company should be withdrawn or mooted because the Debtors will be making the monthly mortgage payment of $2.4 million. In the event that they are not withdrawn, the Debtors ask the Court to overrule the objections on these grounds: (a) BNY is not a secured creditor and is, therefore, not entitled to adequate protection; and (b) BNY appears to be a third party beneficiary under a loan agreement dated as of January 27, 1999, between DASNY and SVCMC, as successor-in-interest to Sisters of Charity Health Care System Corporation, and not the holder of a perfected security interest. DASNY is the only party with a perfected security interest in connection with the Loan Agreement. Therefore, BNY has no standing to demand adequate protection of its claims against SVCMC. To the extent BNY has claims independent of DASNY, the claims appear to be unsecured claims. Even if BNY is considered a secured creditor: -- its rights would be no greater than DASNY's rights because BNY's rights are, at best, wholly derivative of DASNY's; and -- the value of the receivables would adequately protect BNY from any diminution in the value of its cash collateral; SVCMC estimates the net value of its receivables to be $231 million. Mr. Sullivan says the amount reflects the receivables that will be actually collected and does not include receivables that are unlikely to be collected. "Because BNY, or more accurately DASNY, is owed only $19 million with respect to the 1999 Bonds, DASNY is adequately protected from any diminution in value of its interest in its cash collateral," Mr. Sullivan points out. (2) Sun Life and RCG Mr. Sullivan assures the Court that the interest in the collateral of Sun Life Assurance Company of Canada and Sun Life Assurance Company of Canada (U.S.) is and will stay adequately protected by a substantial equity cushion. Even if SVCMC does not pay Sun Life any debt service with respect to the Sun Life Notes -- approximately $3.6 million a year -- Sun Life 's equity cushion protects it from any diminution in value of its interest in its collateral. One year into these cases, assuming no change in the value of the real estate, Sun Life's equity cushion will still amount to approximately $71.3 million or approximately 58%; after two years, Sun Life's equity cushion will still amount to approximately $67.7 million or approximately 55%, which are still substantial equity cushions. With respect to the Westchester Notes, even if SVCMC does not pay Sun Life its debt service of approximately $2.3 million a year, Sun Life's substantial equity cushion protects it from any diminution in value of its interest in its collateral. One year into these cases, the equity cushion that Sun Life will enjoy with respect to the Westchester Notes will amount to approximately $39.9 million or approximately 55%; two years into these cases, Sun Life's equity cushion with respect to the Westchester Notes will amount to approximately $37.6 million or approximately 52%, which are still significant equity cushions. Similarly, as of the Petition Date, the Debtors owe RCG Longview II, L.P., $16 million with respect to the Notes. Based on appraisals dated as of September 2004, the mortgaged properties relating to the Notes were valued at $123.6 million. Hence, on the Petition Date, the Notes were oversecured by $58.9 million, an equity cushion of 48%. Mr. Sullivan warns Judge Beatty that Sun Life and RCG's request for extensive discovery will divert precious estate resources at a time when the Debtors cannot afford to do so. Nonetheless, if the Court deems it necessary, SVCMC is prepared to negotiate with Sun Life and RCG the terms of a scheduling order providing for limited discovery and establishing dates for an evidentiary hearing prior to or concurrently with the final hearing on the DIP Financing Motion. (3) Primary Care The Debtors are engaging in negotiations with Primary Care Development Corporation to resolve its objection. To the extent that the parties cannot reach a consensual resolution, SVCMC reserves all its rights with respect to the objection. SVCMC believes that Primary Care is adequately protected in view of the Replacement Lien granted on the St. Dominic's Receivables and the Superpriority Administrative Expense Claim to the extent of any diminution in the value of Primary Care's interest in the St. Dominic's Receivables. Debtors Propose to Use CCC Collateral According to the Comprehensive Cancer Corporation, and contrary to SVCMC's initial understanding, the receivables that the CCC generates are property of SVCMC's estate. In that light, the Debtors seek the Court's permission to use the cash collateral generated by the prepetition CCC Receivables. Mr. Sullivan explains that requiring SVCMC to escrow all cash proceeds of the prepetition CCC Receivables in a segregated account is not an acceptable solution for SVCMC and is unduly punitive as a matter of fact and not supported as a matter of law. The prepetition CCC Receivables amount to $18 million to $22 million. Based on its most recent cash flow projections, SVCMC needs to use the proceeds of the prepetition CCC Receivables as a source of funding of its operations. In exchange, SVCMC is willing to grant the CCC: (i) a Replacement Lien; and (ii) a Superpriority Administrative Expense Claim to the extent of any diminution in the value of the CCC's interest in the prepetition CCC Receivables. In addition, SVCMC proposes to continue paying the CCC all amounts due for the CCC postpetition services under its agreement with SVCMC. In the event that the Replacement Lien and the Superpriority Administrative Expense Claim granted to CCC prove to be insufficient, the CCC will maintain the ability to seek additional adequate protection in the future from SVCMC and ultimately from the Court. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) SALEM COMMS: Earns $3.6 Million of Net Income in Second Quarter --------------------------------------------------------------- Salem Communications Corporation (Nasdaq: SALM) reported results for the second quarter ended June 30, 2005. "Despite a challenging quarter of flat revenue growth for the overall radio industry, Salem achieved 6.2% same station revenue growth and 10.6% same station operating income growth," Edward G. Atsinger III, President and CEO, said. "Salem's performance was a result of strong same station growth at our News Talk stations, which grew revenue by 23.7% and at our contemporary Christian music station in Atlanta, which grew revenue by 20.0% in the quarter. Our Christian Teaching and Talk stations continued their history of steady and consistent performance growing same station revenue by 5.7% in the quarter." Mr. Atsinger continued, "We remain confident about our future growth prospects. Our CCM format stations in Atlanta, Cleveland, Portland and Honolulu each achieved their highest audience share to date in their female 25-54 target demographic in Arbitron's spring 2005 book. Also in the spring book, KLTY's female 25-54 audience share was tied for #1 in the Dallas market. This is a significant accomplishment since it is the first time a CCM station has been ranked #1 in the female 24-54 demographic in any major market. These audience trends position us favorably for future revenue and profit growth. Looking at our business as a whole, our most significant growth opportunity is to develop to maturity our start-up and early development stage radio stations. Approximately half of our stations, including all of our News Talk and many of our CCM stations, are in one of these development stages. We intend to fully exploit this potential." For the quarter ended June 30, 2005 compared to the quarter ended June 30, 2004: * Net broadcasting revenue increased 7.8% to $51.5 million from $47.8 million; * Operating income decreased 6.0% to $11.2 million from $11.9 million; * Net income increased to $3.6 million, from a net loss of $200,000; * Station operating income increased 5.6% to $20.0 million from $18.9 million; For the six months ended June 30, 2005 compared to the six months ended June 30, 2004: * Net broadcasting revenue increased 9.2% to $99.3 million from $91.0 million; * Operating income increased 2.5% to $20.1 million from $19.6 million; * Net income increased to $5.9 million, from $1.1 million; As of June 30, 2005, the company had net debt of $299.1 million and was in compliance with all of its covenants under its credit facilities and bond indentures. Salem's bank leverage ratio was 4.98 as of June 30, 2005 versus a compliance covenant of 6.75. Salem's bond leverage ratio was 5.43 as of June 30, 2005 versus a compliance covenant of 7.0. Acquisitions Since March 31, 2005, Salem had five acquisition transactions: * KCRO (660 AM) in Omaha, Nebraska (Omaha-Council Bluffs market), for $3.1 million (now operated by Salem under a local marketing agreement); * WGUL (860 AM) in Dunedin, Florida (Tampa-St. Petersburg- Clearwater market), and WLSS (930 AM) in Sarasota, Florida (Sarasota-Bradenton market), for a total of $9.5 million; * KHLP (1420 AM) in Omaha, Nebraska (Omaha-Council Bluffs market), for $900,000; and * KVMG (103.9 FM) in Yuba City, California (Sacramento market) via an exchange with Bustos Media (now operated by Salem under a local marketing agreement). Since March 31, 2005, Salem has completed the acquisition, via an exchange with Univision, of KSFS (94.3 FM) in Jackson, California, (Sacramento market). Divestitures Since March 31, 2005, Salem had five divestiture transactions: * WCCD (1000 AM) in Parma, Ohio (Cleveland market) for $2.1 million (now operated by the acquirer under a local marketing agreement); and * KSFS (94.3 FM) in Jackson, California (Sacramento market) and KCEE (103.3 FM) in Grass Valley, California, via an exchange with Bustos Media, which included $500,000 of additional consideration paid to Salem (Salem is to retain call letters KSFS and KCEE and both stations are now operated by the acquirer under local marketing agreements). Since March 31, 2005, Salem has completed the divestiture, via an exchange with Univision, of KSFB (100.7 FM) in San Rafael, California, (San Francisco market). Stock Repurchases On November 4, 2004, the company reported that its board of directors authorized a stock repurchase program for up to $25 million of stock. During the quarter ended June 30, 2005, the company repurchased 210,319 shares of its Class A common stock for $3.8 million. Salem Communications Corporation (NASDAQ:SALM) -- http://www.salem.cc/-- headquartered in Camarillo, CA, is the leading U.S. radio broadcaster focused on Christian and family- themed programming. Upon the close of all announced transactions, the company will own 105 radio stations, including 67 stations in 24 of the top 25 markets. In addition to its radio properties, Salem owns Salem Radio Network(R), which syndicates talk, news and music programming to approximately 1,900 affiliates; Salem Radio Representatives(TM), a national radio advertising sales force; Salem Web Network(TM), a leading Internet provider of Christian content and online streaming; and Salem Publishing(TM), a leading publisher of Christian-themed magazines. * * * Salem Communications' 7-3/4% senior subordinated notes due 2010 carry Moody's Investors Service's and Standard & Poor's single-B ratings. SFOGHI CONSTRUCTION: Case Summary & 2 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Sfoghi Construction Consultants, LLC 20 River Road Apartment # 11K New York, New York 10044 Bankruptcy Case No.: 05-16267 Type of Business: The Debtor is a real estate holding and construction company. Chapter 11 Petition Date: August 9, 2005 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Debtor's Counsel: Bruce H. Kaplan, Esq. 20 River Road New York, New York 10044 Tel: (212) 754-9164 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Robert Murray Executory Contract Unknown 21 Oceanview Avenue Valley Stream, NY 11581 Richard Gilmer, CPA Executory Contract Unknown 836 Hempstead Avenue West Hempstead, NY 11552 SHOPKO STORES: Extends Offer for 9-1/4% Senior Notes to Aug. 10 --------------------------------------------------------------- ShopKo Stores, Inc. (NYSE: SKO) extended its offer to purchase any and all of its outstanding $100 million principal amount of 9-1/4% Senior Notes due 2022 in connection with the previously announced definitive merger agreement that provides for the acquisition of ShopKo by Badger Retail Holding, Inc. and Badger Acquisition Corp., which are affiliates of Minneapolis-based private equity firm Goldner Hawn Johnson & Morrison Incorporated. The Offer, scheduled to expire on Friday, Aug. 5, 2005 at 5:00 p.m., New York City time, will now expire at 5:00 p.m., New York City time, on Wednesday, Aug. 10, 2005, unless further extended or earlier terminated by ShopKo. All other terms, provisions and conditions of the Offer will remain in full force and effect. The terms of the Offer and Solicitation, including the proposed amendments to the indenture governing the Notes, are described in the Offer to Purchase and Consent Solicitation Statement dated June 30, 2005, copies of which may be obtained from Global Bondholder Services Corporation, the information agent for the Offer, at (866) 736-2200 (US toll free) or (212) 430-3774 (collect). ShopKo said it has been informed by the information agent that, as of 5:00 p.m., New York City time, on August 5, 2005, approximately $9.3 million in aggregate principal amount of Notes had been tendered in the Offer. This amount represents approximately 9.3% of the outstanding principal amount of the Notes. Banc of America Securities LLC and Morgan Stanley & Co. Incorporated are acting as the dealer managers for the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, the lead dealer manager, at (212) 847-5834 or (888) 292-0070. This announcement is not an offer to purchase, a solicitation of an offer to purchase or sell or a solicitation of consents with respect to any securities. The offer and consent solicitation are being made solely by the offer to purchase and consent solicitation statement dated June 30, 2005. ShopKo Stores, Inc. -- http://www.shopko.com/-- is a retailer of quality goods and services headquartered in Green Bay, Wis., with stores located throughout the Midwest, Mountain and Pacific Northwest regions. Retail formats include 140 ShopKo stores, providing quality name-brand merchandise, great values, pharmacy and optical services in mid-sized to larger cities; 223 Pamida stores, 116 of which contain pharmacies, bringing value and convenience close to home in small, rural communities; and three ShopKo Express Rx stores, a new and convenient neighborhood drugstore concept. With more than $3 billion in annual sales, ShopKo Stores, Inc., is listed on the New York Stock Exchange under the symbol SKO. * * * As reported in the Troubled Company Reporter on Apr. 18, 2005, Moody's Investors Service placed the long-term debt ratings of Shopko Stores, Inc., on review for possible downgrade following the company's announcement that it had signed a definitive merger agreement to be acquired by an affiliate of Goldner Hawn Johnson & Morrison. The downgrade reflects the anticipated significant increase in leverage as a result of the proposed transaction. The transaction is valued at slightly more than $1 billion and is expected to be funded predominantly from debt with only $30 million of the purchase price to be funded by equity. The company has received a commitment from Bank of America to provide $700 million in real estate financing and additional commitments from Bank of America and Back Bay Capital Funding LLC to provide $415 million in senior debt financing. The proceeds from these financings along with the $30 million of equity will be used to pay the merger consideration, refinance the borrowings under the existing revolving credit facility, fund the amounts due under the expected tender offer for the $100 million senior unsecured notes due 2022, plus all fees and expenses. In addition, the financing will be used to cover all future working capital needs. If substantially all of the senior notes are tendered the rating on those notes will be withdrawn. The review will focus on the debt protection measures of Shopko post acquisition as well as the company's business strategy going forward. These ratings are placed on review for possible downgrade: * Senior implied of B1; * Issuer rating of B2; and * Senior unsecured notes due 2022 of B2. SOUTHERN RESORTS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Southern Resorts, LLC dba Wonderland Lodge 3889 Wonderland Way Sevierville, Tennessee 37862 Bankruptcy Case No.: 05- 34249 Type of Business: The Debtor operates a lodge and a restaurant located in Sevierville, Tennessee. See http://www.wonderlandlodge.com/ Chapter 11 Petition Date: August 8, 2005 Court: Eastern District of Tennessee (Knoxville) Judge: Richard Stair Jr. Debtor's Counsel: John P. Newton, Jr., Esq. Law Office John P. Newton, Jr. 9700 Westland Drive, Suite 101 Knoxville, Tennessee 37922 Tel: (865) 777-1106 Fax: (865) 777-1107 Total Assets: $1,529,285 Total Debts: $993,792 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ed Harmon - Harmon Properties $20,134 2140 Parkway Pigeon Forge, TN 37863 William Powell $20,000 425 Trenthan Lane Apt 2 Gatlinburg, TN 37738 Greg Tello $14,000 2807 Jacaranda Avenue Carisbad, CA 92009 J.W. Wallace $12,000 Dan Setiaran $11,567 Advanta Business Cards $5,133 Andy Latham Excuvating $4,500 Tony Diehl $4,000 Ed Floyd/Joseph Floyd $2,500 Travelers Property Casualty $1,427 American Hotel Register Company $1,361 Berkshire Hathaway $1,286 Lacy & Moseley, PC $897 Northern Tools & Equipment $722 Roy Patty $600 Kahn & Company $480 Valley Electric & Mechanical Inc. $447 The Cristian Guide $295 Lamar Copy & Printing $283 The Daily Times $128 STRATOS GLOBAL: S&P Revises Outlook to Negative from Stable ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on remote communications provider Stratos Global Corp. to negative from stable on weak operating performance during the first half of 2005 year ended June 30. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit and bank loan ratings on Stratos. "Stratos' results were below our expectations for the past two quarters, due to competitive pressures in its mobile satellite services segment (MSS), and in particular due to strong pricing pressures in one of its key products," said Standard & Poor's credit analyst Joe Morin. Revenues in the MSS segment were down 7% for the six months ended June 30, 2005, as compared with the same period in 2004. In addition, excluding the effect of the Plenexis acquisition in January 2005, revenues for the broadband segment were down 12% over the same period. Reported segment earnings for the MSS and broadband divisions were down 19% and 26%, respectively, in first- half 2005 as compared with first-half 2004, due to competitive pressures and costs associated with the integration of Plenexis. Stratos' strategy is to be a consolidator within the industry and management has indicated its willingness to undertake a debt- financed transaction in the near term, which could result in further pressure on the ratings. The current ratings and outlook do not factor in any specific acquisition by Stratos, the effect of which will be addressed should a potential acquisition materialize. The ratings on Stratos further reflect the below-average industry profile of the remote communications sector, which is a highly competitive niche segment within the broader telecommunications sector. Stratos generates more than 70% of its revenues and segment earnings from the MSS industry as a distributor of mobile satellite capacity, primarily through Inmarsat Ltd. Although Stratos has the leading market share of five major competitors in the MSS division, the market is highly competitive and is subject to revenue and earnings volatility. The industry is fragmented and highly competitive as the vast majority of MSS are provided through a network of wholesale distributors. Similarly, Stratos' other major business segment, broadband services, which involves the provision of data services to remote locations via satellite or microwave solutions, is also highly fragmented and competitive. Stratos is expected to remain an industry leader within this niche segment of the telecommunications industry. The negative outlook reflects Standard & Poor's concerns regarding the company's recent operating performance, including the decline in revenues and reported segment earnings. The ratings on Stratos factor in our expectation that the company will maintain lease- adjusted debt to EBITDA at or below 3.5x. Should competitive pressures result in Stratos not being able to improve operating performance in second half, and credit measures deteriorate materially, the ratings could be lowered. Should the company announce an acquisition, the effect on ratings will be addressed when sufficient information becomes available. Should any potential transaction result in a material degradation of key credit measures, however, a lowering of the ratings would be more likely. Should the company be able to improve operating performance and maintain credit ratios at current levels, the outlook could be revised to stable. STRUCTURED ASSET: Moody's Rates $928,000 Class B4 Certs. at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned Aaa to B2 ratings to the senior and subordinate classes of the Structured Asset Securities Corporation Mortgage Pass-Through Certificates Series 2005-RF3. The transaction consists of the securitization of FHA insured, and VA or RHS guaranteed reperforming loans virtually all of which were repurchased from GNMA pools. The credit quality of the mortgage loans underlying this securitization is comparable to that of mortgage loans underlying subprime securitizations. However after the FHA, VA and RHS insurance is applied to the loans, the credit enhancement levels are comparable to the credit enhancement levels for prime-quality residential mortgage loan securitizations. The insurance covers a large percent of any losses incurred as a result of borrower defaults. Moody's expects collateral losses to range from 0.40% to 0.50%. The Federal Housing Administration (FHA) is a federal agency within the Department of Housing and Urban Development (HUD) whose mission is to expand opportunities for affordable home ownership, rental housing, and healthcare facilities. The Department of Veterans Affairs (VA), formerly known as the Veterans Administration, is a cabinet-level agency of the federal government. The Rural Housing Service (RHS) is a part of the U.S. Department of Agriculture. The rating of this pool is based on the credit quality of the underlying loans and the insurance provided by FHA and the guarantee provided by the VA and RHS. Specifically, about 84% of the loans have insurance provided by FHA, 15% from the VA, and 1% from the RHS. The rating is also based on the structural and legal integrity of the transaction. The complete rating action is as: Issuer: Structured Asset Securities Corporation Series 2005-RF3 Class Amount($) Rate Rating ----- ---------- ---- ------ 1-A $204,853,000 Variable Aaa 1-AIO Notional Amount Variable Aaa R 100 None Aaa 2-A $53,425,000 Variable Aaa B1 $1,459,000 Variable Aa2 B2 $1,326,000 Variable A2 B3 $1,061,000 Variable Baa2 B4 $928,000 Variable Ba2 B5 $663,000 Variable B2 The notes are being offered in privately negotiated transactions without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. SUITLAND EAST: List of Five Largest Unsecured Creditors ------------------------------------------------------- Suitland East 2002 Tenants Association, Inc., delivered a list of its five largest unsecured creditors to the U.S. Bankruptcy Court for the District of Columbia: Entity Nature of Claim Claim Amount ------ --------------- ------------ Elite Funding Group Development Costs $4,723,490 c/o Whiteford, Taylor & Preston 1025 Connecticut Avenue NW Washington, DC 20036 Washington Gas Light Company Utilities $175,000 6801 Industrial Road Springfield, VA 22151 District of Columbia Government Taxes $10,406 Office of Tax and Revenue 941 North Capitol Street NE First Floor Washington, DC 20002 District of Columbia Government Utilities Unknown WASA 5000 Overlook Avenue SW Washington, DC 20032 PEPCO Utilities Unknown 701 Ninth Street NW Washington, DC Headquartered in Washington, D.C., Suitland East 2002 Tenants Association, Inc., filed for chapter 11 protection on May 23, 2005 (Bankr. D.C. Case No. 05-00808). John J Brennan, III, Esq., at Jackson & Campbell, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million to $10 million. TELIGENT INC: Claims Rep. Asks Court to Appoint a Mediator ---------------------------------------------------------- Savage & Associates, P.C., the Unsecured Claims Estate Representative appointed in Teligent, Inc. and its debtor- affiliates' chapter 11 cases, asks the U.S. Bankruptcy Court for the Southern District of New York to appoint a mediator to resolve a dispute with First Union National Bank as Indenture Trustee n/k/a Wachovia Bank. The Representative recommends the appointment of any of the following panel mediators: * Erwin I. Katz * Tina Brozman * Francis Conrad * Michael Crames * Myron Trepper * Jay Gottlieb * Mario Cuomo The Representative proposes that the parties attempt to settle, compromise or resolve the contested matter in accordance with the mediation procedures set forth in the Court's rules. Teligent, Inc., a provider of broadband communication services offering business customers local, long distance, high-speed data and dedicated Internet services over its digital SmartWave local networks in major markets throughout the United States, filed for chapter 11 protection on May 21, 2001. James H.M. Sprayregen, Esq., Matthew N. Kleiman, Esq., and Lena Mandel, Esq., at Kirkland & Ellis represent the Debtors in their restructuring effort. When the Company filed for protection from its creditors, it listed $1,209,476,000 in assets and $1,649,403,000 debts. The Debtors' Third Amended Plan of Reorganization was confirmed on Sept. 6, 2002. TERESA ELLIS: List of Six Largest Unsecured Creditors ----------------------------------------------------- Teresa A. Ellis delivered a list of her six largest unsecured creditors to the U.S. Bankruptcy Court for the Western District of Washington, Seattle Division: Entity Claim Amount ------ ------------ Bank of America $10,205 25638 104th Avenue Southeast Kent, WA 98031 Triple AAA $7,907 AAA Financial Services P.O. Box 15026 Wilmington, DE 19850-5026 U.S. Bank CreditLine 44,951 P.O. Box 790409 Saint Louis, MO 63179-0409 Texaco/Shell $508 P.O. Box 9151 Des Moines, IA 50368 Sears $192 P.O. Box 6563 The Lakes, NV 88901-6563 JC Penny's $87 P.O. Box 960001 Orlando, FL 32896 Residing in Kent, Washington, Teresa A. Ellis, filed for chapter 11 protection on May 10, 2005 (Bankr. W.D. Wash. Case No. 05-16097). Aimee S. Willig, Esq., at Bush Strout & Kornfeld represents the Debtor in her restructuring efforts. When the Debtor filed for protection from her creditors, she listed $1,509,800 in assets and $175,355 in debts. TEXAS STATE: Moody's Junks Subordinate Series 2001C Revenue Bonds ----------------------------------------------------------------- Moody's Investors Service has downgraded the rating of Texas State Affordable Housing Corporation Multifamily Housing Revenue Bonds (Housing Initiatives Corporation - Arborstone/Baybrook/Crescent Oaks Development) Senior Series 2001A&B to B2 from Ba3 and Subordinate Series 2001C to Caa1 from B3. The outlook on the ratings remain negative. The underlying rating downgrades reflects a lower then anticipated rental revenue stream, as evidenced by a current debt service coverage ratio continuing below 1x coverage on the senior and subordinate bonds as determined from a combination of monthly unaudited financial statements as well as annualized projections on the properties. This marks a rapid and significant decline from projected senior and subordinate coverage levels of 1.40x and 1.25x respectively. The ratings have been downgraded due to the continued weakened financial performance of the properties compared with projected debt service coverage levels. The bonds are secured by the revenues from three cross collateralized properties, Arborstone Apartments, Baybrook Apartments and Crescent Oaks Apartments, as well as by funds and investments pledged to the trustee under the indenture as security for the bonds. Vacancy and dwelling adjustments reflecting concessions, loss to lease, non-revenue units, delinquencies and past due collections have increased significantly with the Arborstone and Baybrook properties. While property management changes have resulted in increased occupancy (90%-92%-94%) for the Arborstone/Baybrook and Crescent Oaks projects, respectivley, stabilization has not yet been achieved and continued volatility in occupancy rates are anticipated. The submarkets do not allow for rent increases as competitive apartment projects also struggle to fully absorb units. HIC Arborstone/Baybrook and Crescent Oaks as their competitors have been plagued by necessary deep concessions. Previously, Arborstone had suffered damage attributable to a fire. The damage had left one building of eight units uninhabitable. Insurance proceeds and borrower infusions have since restored the building where tenants are now renting. These events as well as high vacancies contribute to the volatility in occupancy. Arborstone together with Baybrook account for 76% of the apartment pool (1,312 units). Occupancy levels for Arbostone has hovered around the low 80 percentiles for the past year (now improving at a current 90%), while Baybrook has declined to a current 93% up from 84% at last credir review. Crescent Oaks (429 units) continues to exhibit strong and stabilized occupancy but has declined slightly to 94% from 96% as of August 1, 2005. In an effort to reach higher occupancy and underwriittn rent levels, HIC proactively implemented changes in property managers. Asset Plus who is property manager for Crescent Oaks is now also managing Baybrook. Myan management has been contracted to manage Arborstone. The erosion of debt service coverage levels is a direct result of a decline in rental revenues as exhibited by deep concessions and unstable occupancy. While the Arborstone/Baybrook/Crescent Oaks Apartment Pool has generated rental revenues suffice to pay debt service, they have been experiencing some softness in the market. It was necessary for the trustee to transfer funds from both senior and subordinate debt service fund in order to make May debt service. The reserve funds currently remain underfunded and unreplenished. As previously reported, the Baybrook property in Webster, Texas and the Arborstone property in Dallas have been most affected. Webster has experienced some softness in the market as reflected in the performance of the Baybrook property. Baybrook accounts for 776 units of the 1741 unit apartment pool (approximately 44%). Webster has recently suffered job loss due to closures of large retail establishments such as Walmart and Best Buy. The affect of these closures has trickled down to the rental market of Webster, as evidenced by the fluctuating occupancy of the Baybrook Apartments project. The unemployment rate of Webster and Dallas continue to have a negative impact on stabilized occupancy and collected rents. Strong marketing and concessions are in place and occupancy has already incrementally increased. Utility expenses and insurance premiums in particular, continue to rise, exerting downward pressure on the net operating income on all three properties. While high insurance premiums continue to be the norm, Asset Plus, Myan and KPE Development management companies continue to shop for competitive rates in this market. Credit Strenghts: * Overall occupancy is slowly rising. As stabilization nears, rental revenues should increase net operating income. * The project has assumed new property managers and a trustee, both specializing in distressed securities Credit Challenges: * Senior and Subordinate Debt Service Reserve Funds are underfunded and unreplenished. * Deep concesions required to maintain occupancy continues to eat into revenues. * Property needs to increase occupancy and reach stabilization * Low rates continue to convert renters to homeowners, reducing the supply of prospective tenants * Dallas and Webster continue to suffer job loss translating to higher vacancy rates of their respective submarkets Recent Developments/Results: Occupancy has increased at the expense of greater concessions. The fire damage suffered by Arborstone Apartments in October of 2004 has been fully restored and is now being rented, slowly increasing occupancy. In connection with increased occupancy, new property managers have been in place. Asset Plus and Myan management have expertise in distressed projects and are focusing efforts on marketing the properties. US Bank has assumed the role of trustee. The borrower has contributed funds to the marketing and renovation of the properties to further attract tenants. Outlook The current outlook is negative for the Senior and Subordinate Bonds. This reflects the soft market environment of the properties, debt service coverage levels continuing to trend negatively and prolonged vacancies in the pooled apartment units. THAMES INVESTMENT: Has No Unsecured Creditors Who Aren't Insiders ----------------------------------------------------------------- Thames Investment, Inc., delivered a list of its 20 largest unsecured creditors to the U.S. Bankruptcy Court for the Southern District of Mississippi as required by Rule 1007 of the Federal Rules of Bankruptcy Procedure. The Debtor reports that it has no unsecured creditors who are not also insiders. Headquartered in Vicksburg, Mississippi, Thames Investment, Inc., filed for chapter 11 protection on June 14, 2005 (Bankr. S.D. Miss. Case No. 05-03088). Craig M. Geno, Esq., Jeffrey K. Tyree, Esq., and Melanie T. Vardaman, Esq., at Harris & Geno, PLLC, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million to $10 million. TITAN CRUISE: Court Okays Dennis Shepard as Chief Restr. Officer ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave Titan Cruise Lines and its debtor-affiliate, permission to employ Dennis Shepard as their acting Chief Restructuring Officer. The Debtors hired Mr. Shepard because of his significant operational experience in working with distressed companies and has served as chief restructuring officer and chief operating officer of several privately held companies. The Debtors explain that Mr. Shepard is a Principal of Cascade Capital Group, in which the Debtors have a pending application with the Court to employ the Firm as their financial advisors. Despite remaining affiliated with Cascade Capital, Mr. Shepard will be under the control and direct management of the Debtors' Board of Directors. Additionally, due to pre-petition management restructuring approved by the Board of Directors, Mr. Shepard has also been acting as the Debtors' Chief Operating Officer and is currently performing the tasks previously assigned to six corporate officers, at a combined annual salary of approximately $1.3 million. As approved by the Court, Mr. Shepard as acting chief restructuring officer of the Debtors will receive a monthly salary of $25,000. Mr. Shepard assures the Court that he does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and its subsidiary owns and operates an offshore casino gaming operation. The Company and its subsidiary filed for chapter 11 protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154 and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen & Fogarty, P.A., represents the Debtors' in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TITAN CRUISE: Wants to Hire Cascade Capital as Financial Advisors ----------------------------------------------------------------- Titan Cruise Lines and its debtor-affiliate ask the U.S. Bankruptcy Court for the Middle District of Florida for permission to employ Cascade Capital Group as their financial advisors and investment bankers. Cascade Capital will assist the Debtors in evaluating their business operations and in considering asset dispositions, and in negotiating and proposing a plan of reorganization. If a sale of the Debtors' assets is necessary, Cascade Capital will assist them with the due diligence process and participate in negotiations for that proposed sale. Cascade Capital will also provide all other financial advisory and investment banking services to the Debtors that are appropriate and necessary in their chapter 11 cases. Mark Calvert, C.P.A., a Managing Director of Cascade Capital, disclosed that his Firm received a $60,000 retainer. Mr. Calvert reports that Cascade Capital will be paid with: 1) a Monthly Fee of $10,000 per month; 2) a Success Fee equal to: a) 1% of Enterprise Value, which is the projected EBITDA over a 5-year period with a terminal value based upon a growth rate the same as the first five years, and to be paid only if the Debtors become operationally successful or they sustain break even for a period of not less than three consecutive months; b) 3% of the Enterprise Value if the Debtors are successfully reorganized through a chapter 11 plan; and 3) 2% of the Purchase Price if the Debtors are sold or merged. Cascade Capital assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. The Court will convene a hearing at 1:30 p.m., on Aug. 24, 2005, to consider the Debtors' request. Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and its subsidiary owns and operates an offshore casino gaming operation. The Company and its subsidiary filed for chapter 11 protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154 and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen & Fogarty, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TOM'S FOODS: Former Employees Want Special Committee ---------------------------------------------------- Lyn D. Anderson, a representative of Tom's Foods Inc.'s former employees, asks the U.S. Bankruptcy Court for the Middle District of Georgia, Columbus Division, to approve the establishment of a Special Committee to represent the interests of former employees pursuant to 11 U.S.C. Section 1102(a)(2) and 11 U.S.C. Section 1114(b). When Tom's Foods filed for chapter 11 protection, it had approximately 1,500 current employees and at least 750 former employees receiving retirement benefits including disability insurance. The Debtor maintained a number of different qualified and non- qualified retirement benefit programs, including: -- a "G Benefit Plan" which is a non-qualified plan providing for payments to certain former management level employees who were associated with the company during the period of time that it was owned by General Mills; -- a "V Benefit Plan" which provided equivalent benefits to certain management level employees who were employed after the time General Mills was the owner of the company or its assets; -- a number of independently and individually negotiated severance pay agreements which amount to non-qualified retirement plan; and -- a single ERISA qualified, PBGC guaranteed, defined benefit retirement plan which is a consolidation of separate plans previously existing in favor of salaried and waged employees. Tom's Foods has continued to make payments under the G Plan, V Plan, and various Severance Plans, but those plans exists as general obligations of the company. Those payments are not expected to continue and will be classified as general unsecured claims against the estate. Ms. Anderson contends that employees who are beneficiaries of these plans are at equal risk of denial of loss of benefits as other general unsecured creditors in the Debtor's case. The former employees' interests are antagonistic to the rights of other general unsecured creditors because they are entitled to certain priority rights which other general unsecured creditors are not. Ron Diven, Tom's Foods' CEO, told creditors during the 341(a) meeting that the Defined Benefit Plan is underfunded although he was unable or unwilling to say by how much. Although all former employees of Debtor are to some degree at risk in pension or related benefits, because of the decided risk of a plan termination and reduction in benefits, some former employees have not been notified. Ms. Anderson argues that the under-funded status of the Defined Benefit Plan, together with the indeterminate nature of the under- funding, makes former employees who are beneficiaries of that plan potentially more significant unsecured creditors in the case than general unsecured creditors. Since there is at least a distinct and real possibility of a liquidation of all or part of the company assets, Ms. Anderson says, the class of former employees may well increase by as many as two thousand. Their interests are likewise, Ms. Anderson stresses, won't be adequately protected or represented. Former employee claimant representation is appropriate if for no reason but to prevent this, Ms. Anderson states. Ms. Anderson is represented by: Fife M. Whiteside, Esq. P.O. Box 5383 Columbus, GA 31906 Tel: 706-320-1215 Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TONY COURY: List of Six Largest Unsecured Creditors --------------------------------------------------- Tony M. Coury, Jr., & Marie C. Coury delivered a list of their six largest unsecured creditors to the U.S. Bankruptcy Court for the District of Arizona, Phoenix Division: Entity Nature of Claim Claim Amount ------ --------------- ------------ Albert M. Coury Trust Old Republic $7,000,000 c/o Beus Gilbert PLLC National Tile 4800 North Scottsdale Road Company Judgment Suite 6000 Scottsdale, AZ 85257 Tel: (480) 429-3000 Albert M. Coury Trust Citibank (Arizona) $829,000 c/o Beus Gilbert PLLC Judgment 4800 North Scottsdale Road Suite 6000 Scottsdale, AZ 85257 Tel: (480) 429-3000 Bank of America $19,238 1935 North Stapely Drive Mesa, AZ 85203 American Express $5,682 P.O. Box 0001 Los Angeles, CA 90096 Bank One $880 P.O. Box 9001074 Louisville, KY 40290 Discover $333 P.O. Box 30943 Salt Lake City, UT 84130 Residing in Mesa, Arizona, Tony M. Coury Jr. & Marie C. Coury filed for chapter 11 protection on June 23, 2005 (Bankr. D. Ariz. Case No. 05-11458). Robert J. Berens, Esq., at Mann, Berens & Wisner, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $500,000 to $1 million and debts between $1 million to $10 million. UAL CORP: Nears Aircraft Lease Restructuring Closing with PDG Pact ------------------------------------------------------------------ UAL Corporation (OTC Bulletin Board: UALAQ) and its debtor- affiliates largely completed its aircraft restructuring effort, saving United approximately $300 million annually, with a new agreement-in-principle reached with the Public Debt Group. These contractual savings, when coupled with previous restructurings, will result in the company reducing its fleet costs by approximately $850 million in average annual savings through contractual changes and strategic fleet reductions since entering Chapter 11. The agreement, which is subject to approval from the U.S. Bankruptcy Court for the Northern District of Illinois, leaves only one transaction left to be restructured, covering 14 aircraft, which is also in process. "This agreement, if approved by the Bankruptcy Court, overcomes one of the last remaining hurdles in United's restructuring and upcoming emergence from Chapter 11," said Jake Brace, Chief Financial Officer. "Coupled with the pending restructuring of the 14 aircraft whose junior notes we have purchased and whose senior notes we intend to purchase, this agreement would resolve all outstanding aircraft lease issues and provide substantial savings in aircraft fleet costs needed to support United's business plan. By significantly lowering our aircraft costs while preserving our global network, we can continue to provide our customers with superior service and reliability." The agreement with the PDG enables the restructuring of financings covering 105 aircraft remaining in United's fleet, and resolves all potential claims associated with these aircraft. In addition to significantly reducing aircraft fleet costs for United, the agreement would secure United's long-term use of those aircraft previously under negotiation with the PDG. Those PDG transactions that no longer have aircraft in United's fleet have also agreed, subject to Bankruptcy Court approval, to a resolution of their administrative claims against the Company. The Company intends to file a motion requesting approval of the PDG agreement with the Bankruptcy Court in the next couple of weeks, to be scheduled for a hearing in early to mid-September. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. US AIRWAYS: Court Approves Second Amended Disclosure Statement -------------------------------------------------------------- The U.S. Bankruptcy Court of the Eastern District of Virginia approved the Second Amended Disclosure Statement filed by US Airways, Inc., and its debtor-affiliates. The Debtors are now authorized to solicit votes from its creditors in favor of its Plan of Reorganization, one of the final steps necessary for the company to emerge from Chapter 11 and complete its merger with America West Airlines in late September/early October. Judge Stephen S. Mitchell scheduled a hearing on confirmation of the Plan for Sept. 15, 2005. Judge Mitchell approved the company's Disclosure Statement as having sufficient information to begin creditor solicitation, and authorized US Airways to distribute both the Plan and Disclosure Statement to its creditors for a confirmation vote. The company promptly will mail notices of the September plan confirmation hearing for the final approval of its POR to all creditors and parties in interest. The mailing will initiate a process in which qualified claim holders will be allowed to vote on the company's plan. Votes must be received by Sept. 12, 2005. "Today's decision by the court approving our business plan was critical to our efforts to emerge from Chapter 11 and complete our merger with America West Airlines," said Bruce R. Lakefield, US Airways president and chief executive officer. "This is one of many important steps we have taken to create the financial stability we need to become a stronger competitor in the marketplace." The disclosure statement and Plan stipulate that creditors having allowed claims of $50,000 or less will receive a cash payment of 10 percent of the allowed amount of their claim. Other creditors holding allowed unsecured claims will receive stock in the reorganized company. The value of their recoveries will depend on the value of the shares of stock at emergence, as well as the total amount of allowed claims, including disputed claims that have not yet been determined. US Airways has received commitments on $565 million in new equity investment and participation by suppliers and business partners that, together with the new equity, are expected to provide the company with approximately $1.5 billion in liquidity. The new investors are: * ACE Aviation Holdings; * Eastshore Aviation; * Par Investment Partners; * Peninsula Investment Partners; * a group of investors for which Wellington Management Company serves as an investment advisor; and * a group of investors for which Tudor Investment Corp., serves as an investment advisor. "I am particularly appreciative of the sacrifices and cooperation of our employees and their commitment to get us to this stage in our restructuring," said Mr. Lakefield. "Without their cooperation, we would not have been in a position to attract new equity and merge with America West Airlines." Mr. Lakefield also praised the Air Transportation Stabilization Board and General Electric for working closely with the company throughout this restructuring. Judge Mitchell laid out a timeline that includes: * Aug. 1, 2005 Record date set so that holders of claims as of this date will receive plan solicitation materials or notices. * Aug. 16, 2005 Proposed date for US Airways to mail solicitation packages and publish notice of confirmation hearing and confirm objections deadline. * Aug. 29, 2005 Deadline for US Airways to file plan exhibits relating to assumption or rejection of contracts and leases. * Sept. 1, 2005 Deadline for creditors to file motions to seek temporary allowance of claims for voting purposes. * Sept. 12, 2005 Deadline for receipt of ballots on the POR and filing objections in the bankruptcy court for confirmation of the Plan. * Sept. 15, 2005 Plan confirmation hearing. US Airways and America West will merge to create the first full- service, low-cost nationwide airline, with a pricing structure offering a network of low-fare service to over 200 cities across the U.S., Canada, Mexico, Latin America, the Caribbean and Europe, and amenities that include an extensive frequent flyer program, airport clubs, assigned seating and First Class cabin service. The airlines will operate under the US Airways brand and will be headquartered in Tempe, Arizona. America West Holdings Corporation is an aviation and travel services company. Wholly owned subsidiary America West Airlines is the nation's second largest low-fare carrier with 14,000 employees serving approximately 60,000 customers a day in more than 90 destinations in the U.S., Canada, Mexico and Costa Rica. 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) VALHI INC: Earns $34.1 Million of Net Income in Second Quarter -------------------------------------------------------------- Valhi, Inc. (NYSE: VHI) reported income from continuing operations of $34.1 million, in the second quarter of 2005 compared to income of $278.6 million, in the second quarter of 2004. For the first six months of 2005, Valhi reported income from continuing operations of $64.4 million, compared to income of $282.2 million, in the first six months of 2004. Kronos Chemicals sales increased $16.0 million in the second quarter of 2005 compared to the second quarter of 2004, and increased $44.6 million in the first six months of 2005, due to net effects of higher average TiO2 selling prices, lower TiO2 sales volumes as well as the favorable effect of fluctuations in foreign currency exchange rates, which increased chemicals sales by approximately $10 million and $21 million in the second quarter and first six month periods, respectively. Excluding the effect of fluctuations in the value of the U.S. dollar relative to other currencies, Kronos' average TiO2 selling prices in billing currencies in the second quarter of 2005 were 11% higher as compared to the second quarter of 2004, and were 10% higher for the first six months of the year. When translated from billing currencies to U.S. dollars using actual foreign currency exchange rates prevailing during the respective periods, Kronos' average TiO2 selling prices in the second quarter of 2005 increased 15% and increased 14% for the first six months of 2005, compared to the same periods of 2004. Reflecting the continued implementation of price increase announcements, Kronos' average selling prices in billing currencies in the second quarter of 2005 were 2% higher compared to the first quarter of 2005. Kronos' TiO2 sales volumes in the second quarter of 2005 decreased 10% compared to the second quarter of 2004, with volumes lower in all regions of the world, and decreased 7% in the first six months of 2005 as compared to the same period of 2004. Kronos' operating income comparisons were favorably impacted by higher production levels, which increased 4% in each of the second quarter and first six months of 2005 as compared to the same periods in 2004. Kronos' operating rates were near full capacity in all periods, and Kronos' production volumes in the first six months of 2005 were a new record for Kronos for a first six-month period. Fluctuations in foreign currency exchange rates favorably impacted chemicals operating income comparisons by approximately $2 million and $3 million for the quarter and year-to-date periods, respectively. Chemicals operating income in the second quarter of 2004 includes $6.3 million of income ($3.5 million, or $.03 per diluted share, net of income taxes and minority interest) related to Kronos' settlement of a contract dispute with a customer. Component product sales and operating income were lower in the second quarter of 2005 as compared to the second quarter of 2004 due primarily to the net effect of lower sales volumes partially offset by higher selling prices for certain products. Component product sales and operating income were higher in the first six months of 2005 as compared to the same period in 2004 as the effect of higher selling prices for certain products more than offset the impact of lower sales volumes for certain products. Waste management sales increased, and its operating loss declined, in the second quarter and first six months of 2005 as compared to the same periods of 2004 due to higher utilization of waste management services, offset in part by higher operating costs. Titanium Metals TIMET's sales increased from $124.1 million in the second quarter of 2004 to $183.7 million in the second quarter of 2005, and TIMET's operating income increased from $8.5 million to $36.9 million. The improvement in TIMET's operating results in 2005 was due in part to a 30% increase in average selling prices for melted products (ingot and slab), a 27% increase in mill product average selling prices, a 15% increase in mill product sales volumes and a 1% increase in melted product sales volumes. TIMET's operating results comparisons were also favorably impacted by improved plant operating rates, which increased from 72% in the second quarter of 2004 to 80% in the second quarter of 2005. In addition, TIMET's operating results comparisons were negatively impacted by higher costs for raw materials and accruals for certain performance-based employee incentive compensation payments. TIMET's results in the first six months of 2005 include a second quarter pre-tax gain of $13.9 million ($2.6 million, or $.02 per diluted share, net of income taxes and minority interest to Valhi) related to the sale of certain real property adjacent to TIMET's facility in Nevada. TIMET's results in the first six months of 2005 also include a $35.6 million income tax benefit ($9.5 million, or $.08 per diluted share, net of minority interest to Valhi) related to reversal of the valuation allowances attributable to TIMET's deferred income tax assets in the U.S. and U.K. General corporate interest and dividend income was higher in the second quarter and first six months of 2005 as compared to the same periods of 2004 due primarily to a higher level of funds available for investment. Net securities transactions gains in 2005 relate principally to: (i) NL's sale of shares of Kronos common stock in market transactions of $14.7 million in the first six months of 2005 ($6.6 million, net of income taxes and minority interest); and (ii) a second quarter $5.4 million gain ($3.1 million, net of income taxes and minority interest) related to Kronos' sale of its passive interest in a Norwegian smelting operation. Insurance recoveries in the second quarter of 2005 relate primarily to NL's recovery from certain insolvent former insurance carriers relating to settlement of excess insurance coverage claims. Interest expense was higher due primarily to higher outstanding levels of debt at Kronos. As previously reported, the Company's income tax benefit in the second quarter of 2004 includes: (i) a $268.6 million income tax benefit ($230.2 million, net of minority interest) related to the reversal of a deferred income tax asset valuation allowance attributable to Kronos' income tax attributes in Germany (principally net operating loss carryforwards); and (ii) a $43.7 million income tax benefit ($36.4 million, net of minority interest) related to income tax attributes of a subsidiary of NL. CompX As previously reported, in January 2005 CompX completed the sale of its Thomas Regout operations in The Netherlands, and accordingly the results of operations of Thomas Regout (which reported a nominal amount of net income in the second quarter and first six months of 2004) are classified as discontinued operations for all periods presented. Discontinued operations in 2005 relate primarily to additional expenses associated with the disposal of the Thomas Regout operations. Valhi, Inc., through its majority owned subsidiaries and affiliates, operates in the chemicals, component products, waste management, and titanium metals industries. The company produces titanium dioxide pigments for imparting whiteness, brightness, and opacity to a range of products, including paints, plastics, paper, fibers, foods, ceramics, cosmetics, and other products; and manufactures precision ball bearing slides, security products, and ergonomic computer support systems for office furniture, computer- related applications, and other industries. It owns and operates a facility in west Texas for the processing, treatment, storage, and disposal of hazardous, toxic, and certain types of low-level radioactive wastes. The company also produces titanium sponge melted products (ingot and slab) and mill products for commercial and military aerospace, industrial, and other markets. Valhi operates in the United States, Canada, Germany, Belgium, Norway, the Netherlands, and Taiwan. The company is based in Dallas, Texas. Valhi, Inc. operates as a subsidiary of Contran Corporation. * * * As reported in the Troubled Company Reporter on July 26, 2005, Standard & Poor's Ratings Services revised its outlook on Valhi Inc. to stable from negative. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on Valhi and the ratings on Kronos International Inc. The outlook revision reflects the trend of improving operating performance over the past year, primarily because of the recovery in the titanium dioxide (TiO2) markets. VIKING METAL: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Viking Metal Cabinet Co., Inc. 5321 West 65th Street Chicago, Illinois 60638 Bankruptcy Case No.: 05-31261 Type of Business: The Debtor designs and fabricates metal products like custom-designed office furniture and top-of-the-line museum cabinets. See http://www.vikingmetal.com Chapter 11 Petition Date: August 9, 2005 Court: Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtor's Counsel: Richard G. Larsen, Esq. Myler, Ruddy & McTavish 111 West Downer Place, Suite 400 Aurora, Illinois 60506 Tel: (630) 897-8475 Fax: (630) 897-8076 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Choice Bank Equipment $869,064 1900 West State Street Value of Security: Geneva, IL 60134 $550,000 Mark and Nancy, Inc. $473,400 c/o Edward Schussler, Reg. Agent 9631 W. 153rd Street, Suite 3590 Orland Park, IL 60462 Cragin Metal Inc. Business Debt $237,637 P.O. Box 1661 Rockford, IL 61110 Central Steel & Wire Business Debt $42,789 P.O. Box 5100 Chicago, IL 60680 Trimite Powders Business Debt $33,139 P.O. Box 2785 Spartanburg, SC 29304 Miller Metals Business Debt $21,037 135 South LaSalle Street Department 4676 Chicago, IL 60674 Olympic Steel Inc. Business Debt $20,206 5246 Paysphere Circle Chicago, IL 60674 Berger Tranportation Business Debt $12,925 Northwest 7215 P.O. Box 1450 Minneapolis, MN 55485 Halberg Commercial Insurors Business Debt $12,608 122 West 22nd Street, Suite 360 Oak Brook, IL 60523 Skol Manufacturing Company Business Debt $11,312 4444 North Ravenswood Avenue Chicago, IL 60640 L R International Business Debt $11,133 P.O. Box 1714 Elk Grove Village, IL 60007 American Industrial Painting Business Debt $8,847 P.O. Box 6131 Vernon Hills, IL 60061 Protech Chemicals Ltd. Business Debt $7,634 P.O. Box 33212 Detroit, MI 48232 CGI Automated Manufacturing Business Debt $7,499 Department 4504 Carol Stream, IL 60122 Jackson Moving Services Inc. Business Debt $7,331 740 Frontenac Road Naperville, IL 60563 James Dolan Business Debt $6,875 5321 West 65th Street Chicago, IL 60638 Thomas Companies, LLC Business Debt $6,253 P.O. Box 7069 Kansas City, MO 64113 Midwest Steel Blanking Business Debt $6,178 57 Eisenhower Lane South Lombard, IL 60148 Eberhard Manufacturing Business Debt $6,147 21944 Drake Road P.O. Box 368012 Cleveland, OH 44149 W.R. GRACE: Court to Appoint Mediator for PI Discovery Disputes --------------------------------------------------------------- Judge Fitzgerald determined that a mediator should be appointed to facilitate the settlement of any discovery disputes that may arise in the asbestos personal injury estimation and objection to claims process in USG Corporation and its debtor-affiliates' chapter 11 cases. Judge Fitzgerald directs counsel for the Debtors and the Official Committee of Asbestos Personal Injury Claimants to jointly contact five lawyers to determine their engagement terms, disinterestedness, availability and willingness to serve as mediator for the PI Discovery Disputes: (1) Francis G. Conrad Business Strategy Advisors 116 Franklin Boulevard, South Suite Long Beach, New York 516-835-2287 fconrad@vermontel.net (2) Michael D. McDowell Arbitrator and Mediator P.O. Box 15054 Pittsburgh, Pennsylvania 412-260-5151 (3) Arthur Spector Berger Singerman, P.A. 350 E. Las Olas Blvd., Suite 1000 Ft. Lauderdale, Florida 954-525-9900 (4) Edward C. Toole, Jr. Pepper Hamilton LLP 3000 Two Logan Square Eighteenth and Arch Streets Philadelphia, Pennsylvania 215-981-4594 (5) Roger M. Whelan 17908 Ednor View Terrace Ashton, Maryland 301-260-7707 Counsel may jointly nominate one of these lawyers to serve as mediator. The nomination must be submitted to the Court no later than August 26, 2005. The Court will then appoint that individual as mediator. But if they are unable to agree on a joint nominee, Counsel are required to advise the Court of the terms of engagement, disinterestedness, availability and willingness to serve of the Listed Individuals and the Court will choose one of those qualified and willing to serve as mediator. 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) WATTSHEALTH FOUNDATION: Court Denies Retention of Danning Gill -------------------------------------------------------------- The Honorable Judge Thomas B. Donovan of the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, denied the request of the Official Committee of Unsecured Creditors of WATTSHealth Foundation, Inc., to employ Danning, Gill, Diamond & Kollitz, LLP, as its counsel. As reported in the Troubled Company Reporter on July 26, 2005, the Committee asked the Court for permission to hire the Firm. Judge Donovan denied the Official Committee's request on the grounds that the application did not contain a description of arrangement for compensation as required in Rule 2014 of the Bankruptcy Code. Headquartered in Inglewood, California, WATTSHealth Foundation, Inc., dba UHP Healthcare, provides comprehensive medical and dental services for Commercial, Medi-Cal and Medicare members in the Greater Southern California area. The Company filed for chapter 11 protection on May 31, 2005 (Bankr. C.D. Calif. Case No. 05-22627). Gary E. Klausner, Esq., at Stutman Treister & Glatt represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. WATTSHEALTH FOUNDATION: Court Denies Retention of FTI Consulting ---------------------------------------------------------------- The Honorable Judge Thomas B. Donovan of the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, denied the request of the Official Committee of Unsecured Creditors of WATTSHealth Foundation, Inc., request to employ FTI Consulting, Inc., as its financial advisors. As reported in the Troubled Company Reporter on July 26, 2005, the Official Committee asked the Court for permission to employ the Firm. Judge Donovan denied the Official Committee's request on the grounds that the application did not contain a description of arrangement for compensation as required in Rule 2014 of the Bankruptcy Code. Headquartered in Inglewood, California, WATTSHealth Foundation, Inc., dba UHP Healthcare, provides comprehensive medical and dental services for Commercial, Medi-Cal and Medicare members in the Greater Southern California area. The Company filed for chapter 11 protection on May 31, 2005 (Bankr. C.D. Calif. Case No. 05-22627). Gary E. Klausner, Esq., at Stutman Treister & Glatt represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. WATTSHEALTH FOUNDATION: Files Schedules of Assets and Liabilities ----------------------------------------------------------------- WATTSHealth Foundation, Inc., dba UHP Healthcare delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $7,490,000 B. Personal Property $47,320,127 C. Property Claimed as Exempt D. Creditors Holding $117,771 Secured Claims E. Creditors Holding Unsecured Priority Claims Unknown F. Creditors Holding Unsecured Nonpriority Claims $44,548,609 ------------ ------------ Total $54,810,127 $44,666,380 Headquartered in Inglewood, California, WATTSHealth Foundation, Inc., dba UHP Healthcare, provides comprehensive medical and dental services for Commercial, Medi-Cal and Medicare members in the Greater Southern California area. The Company filed for chapter 11 protection on May 31, 2005 (Bankr. C.D. Calif. Case No. 05-22627). Gary E. Klausner, Esq., at Stutman Treister & Glatt represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. WAYNE HARTKE: List of 20 Largest Unsecured Creditors ---------------------------------------------------- Wayne Hartke delivered a list of his 20 largest unsecured creditors to the U.S. Bankruptcy Court for the Eastern District of Virginia, Alexandria Division: Entity Claim Amount ------ ------------ Anthony Libatore & Elizabeth Libatore $1,370,000 Mark Libatore & Michael Libatore c/o Michael C. Whitticar 10363 A Democracy Lane Fairfax, VA 22030 Noreen Wilson $100,000 4360 Stillwaters Drive Merritt Island, FL 32952-6320 MBNA America $21,169 P.O. Box 15137 Wilmington, DE 19886-5137 L.R.S. Special Procedures (Virginia) $10,510 AAA Financial Services $9,774 State of Virginia $6,000 Internal Revenue System $4,666 Anita Hartke $4,600 Dr. Rodney Klima, DDS $3,500 Fairfax County Property Taxes $3,400 Veritex Reporting Services $2,094 MBNA America $1,899 AT&T $1,043 Verizon $583 Best Practices Inc. $376 Inova Farifax Hospital Discover $300 Inova Health Systems $250 Dr. Shahid Malik $214 The Hartford $197 The State Bar of California $63 Headquartered in Falls Church, Virginia, Wayne Hartke filed for chapter 11 on May 19, 2005 (Bankr. E.D. Va. Case No. 05-11961). Lawrence J. Anderson, Esq., at Pels, Anderson & Lee, LLC, represents the Debtor in his restructuring efforts. When the Debtor filed for protection from his creditors, he estimated assets and debts between $1 million to $10 million. WESTPOINT STEVENS: GSC Partners Wants Satellite Fund Sanctioned --------------------------------------------------------------- On May 10, 2005, Wilmington Trust Company as agent for the Second Lien Lenders filed a "Motion for an Order Dissolving the Adequate Protection Escrow, Releasing Escrowed Adequate Protection Payments and Reinstating Direct Payment to the 2nd Lien Agent." Among the issues tendered by the Escrow Motion is the value of the Second Lien Lenders' interest in WestPoint Stevens, Inc. and its debtor-affiliates' interest in the Collateral at one or more points in time. The Second Lien Obligations have been traded before and during these Chapter 11 cases, and those trades provide evidence of the value at issue. On April 19, 2005, GSC Partners, Pequot Capital Management, Inc., and Perry Principals LLC served a subpoena on the Second Lien Agent seeking records concerning transfers of the Second Lien Obligations. The Second Lien Agent produced documents responsive to the Funds' subpoena, showing, among other things, that on June 3, 2003, there was a transfer by Satellite Senior Income Fund, LLC, to Satellite Senior Income Fund II, LLC, of about $63,500,000 of debt under the Second Lien Credit Agreement. On May 23, 2005, the Funds served a subpoena on Satellite seeking production of any documents relating to the price at which the debt was transferred, any valuations, appraisals, or fairness opinions that relate to the second lien debt held by Satellite, and any documents relating to the value recorded in Satellite's financial records with respect to that debt. Satellite and the Funds engaged in several discussions related to compliance with the subpoena and, while counsel for the Funds agreed not to make public disclosure of the information produced in response to the subpoena, no other agreement was reached. According to Mark Thompson, Esq., at Simpson Thacher & Bartlett LLP, in New York, Satellite delivered in response to the subpoena a single document containing just three bits of information -- a date, an amount and a price -- but nothing else responsive to the subpoena. Mr. Thompson notes that the purchase price paid in an arm's- length transaction is "evidence of the highest rank" in determining the value of an intangible asset. The Second Lien Obligations are clearly an intangible asset and the transaction between the Satellite Senior Income Funds is clearly contemporaneous with the Debtors' bankruptcy filing. Thus, the information sought by the subpoena is highly relevant. Whether the price in the transaction was the result of an arm's-length process is a matter that can only be answered by examination of the documents requested in the subpoena, Mr. Thompson says. Therefore, he asserts, Satellite must be compelled to produce the documents requested. Because Satellite's failure to comply with the subpoena has caused a substantial reduction of the Funds' time to prepare for the hearing on the Escrow Motion, a sanction against Satellite is appropriate, Mr. Thompson contends. Accordingly, the Funds ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) preclude Satellite from contesting the amount and arm's-length nature of the transaction between the two Satellite Income Funds; and (b) award the Funds attorney's fees not to exceed $5,000. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) XOMA LTD: June 30 Equity Deficit Narrows to $2 Million ------------------------------------------------------ XOMA Ltd. (Nasdaq:XOMA) reported financial results for the quarter and half-year ended June 30, 2005. For the second quarter of 2005, the Company reported a net loss of $8.6 million compared with a net loss of $21 million in the second quarter of 2004. These results reflect higher revenues, reduced research and development expenses and elimination of losses from the RAPTIVA(R) collaboration agreement with Genentech, Inc. (NYSE: DNA) that was restructured in January of 2005. For the first half of 2005, XOMA recorded net income of $21.5 million, a figure that includes a non-recurring gain of $40.9 million, recognizing the extinguishment of a long-term loan due to Genentech as part of the restructuring. As of June 30, 2005, XOMA held $55.8 million in cash and cash equivalents, compared with $23.8 million at December 31, 2004, primarily as a result of a financing completed in February of 2005. "We are pleased with our progress in the second quarter," said David Boyle, XOMA's chief financial officer. "Increased revenues, reduced spending levels and a decreasing burn rate reflect continued execution of our business strategy." "A cornerstone of our business strategy is leveraging XOMA's antibody development platform to attract partners with complementary target discovery capabilities," said John L. Castello, president, chairman and CEO of XOMA. "This gives us a bigger pool of potential products and enables us to be more selective about those we bring forward. The new collaboration with Lexicon is the latest agreement under this strategy, a multiple-antibody partnership that focuses XOMA's antibody generation platform initially at a large and rapidly growing medical target, metabolic disease." Revenues for the three months ended June 30, 2005 were $5.2 million, compared with $0.78 million for the three months ended June 30, 2004. Revenues for the first half of 2005 increased to $8.2 million from $950,000 in the first half of 2004. License and collaborative fee revenues increased to $2.7 million in the second quarter, compared with $760,000 for the same period of 2004. These include upfront and milestone payments related to the outlicensing of the Company's products and technologies and other collaborative arrangements. The increase resulted primarily from a license agreement with Merck. Contract revenues increased to $0.93 million for the 2005 quarter, compared with zero in the first quarter of 2004, primarily due to clinical trial services performed on behalf of Genentech and recognition of revenues for contract manufacturing services performed under the NIAID contract that began in March of 2005. Royalties recorded for the three months ended June 30, 2005, increased to $1.6 million, compared with $21,000 for the 2004 quarter, primarily reflecting RAPTIVA(R) royalties earned under the restructured arrangement with Genentech. Beginning on January 1, 2005, XOMA earns a mid-single digit royalty on sales of RAPTIVA(R) worldwide. Revenues for the next several years will be largely determined by the timing and extent of royalties generated by worldwide sales of RAPTIVA(R) and by the establishment and nature of future manufacturing, outlicense and collaboration arrangements. Research and development expenses for the three months ended June 30, 2005 decreased to $9.5 million from $12.9 million for the second quarter of 2004. This reflects reduced spending on MLN2222, XMP.629, RAPTIVA(R), TPO-mimetic and new product research partially offset by increased spending on the Chiron oncology and Aphton anti-gastrin antibody collaborations and the NIAID contract. General and administrative expenses remained essentially flat for the second quarter and first half of 2005 as compared with the same periods in 2004. Collaborative arrangement expenses, which related exclusively to RAPTIVA(R), were zero and $5.2 million for the three months ended June 30, 2005 and 2004, respectively. The 2004 amount represents XOMA's 25% share of commercialization costs for RAPTIVA(R) in excess of Genentech's revenues less cost of goods sold and research and development cost sharing arrangements. Under the restructured arrangement with Genentech, effective January 1, 2005, XOMA is no longer responsible for a share of operating costs or R&D expenses, but receives royalties on worldwide sales. Genentech is responsible for all development costs and will compensate XOMA for any development support for RAPTIVA(R). Long-term Debt At Dec. 31, 2004, XOMA's balance sheet reflected a $40.9 million long-term note due to Genentech, which was extinguished under the restructuring of the Genentech agreement announced in January 2005. In February of 2005, XOMA issued $60 million of 6.5% convertible senior notes due in 2012, which is shown on the June 30, 2005 balance sheet as convertible long-term debt. Under its collaborative arrangement with XOMA, Chiron has made available a $50.0 million credit facility under which XOMA can receive financing for up to 75% of its share of development expenses. In June of 2005, XOMA drew an initial $8.8 million down under this facility. Liquidity and Capital Resources Cash, cash equivalents and short-term investments at June 30, 2005 were $55.8 million, compared with $24.3 million at December 31, 2004. The $31.5 million increase primarily reflects cash proceeds of $56.6 million from the February 2005 financing and a June 2005 drawdown of $8.8 million under the Chiron loan, partially offset by cash used in operations of $32.3 million. Cash used in operations for the six months ending June 30, 2005 include a $13.7 million decrease in accrued liabilities and a $3.8 million increase in accounts receivables. Management Trading Plans XOMA said that up to four of its outside directors and five members of its senior management, including its chief executive officer, may adopt prearranged trading plans in accordance with guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934 and the company's policies with respect to insider sales. Rule 10b5-1 allows individuals, at a time when they are not aware of material nonpublic information, to adopt or amend predetermined plans for selling shares. Under these plans, each individual will be limited to the sale of the number of common shares represented by share options held by the individual that would otherwise expire in the following 12 months. Initially, a total of up to 166,000 common shares may be sold under these plans. The plans will allow individuals to add additional shares as the number of options expiring in the following 12 months increases. Each individual's plan will be unrelated to the others. The previously announced Rule 10b5-1 plans for XOMA executives, which could have included up to 675,000 shares, were not utilized. XOMA Ltd., -- http://www.xoma.com/-- develops for commercialization antibody and other protein-based biopharmaceuticals, with a therapeutic focus on cancer, immune disorders and infectious diseases. XOMA has a royalty interest in RAPTIVA(R), a product marketed worldwide that was developed in collaboration with Genentech. The company's pipeline includes proprietary products along with collaborative product development programs. At June 30, 2005, XOMA Ltd.'s balance sheet showed a $1,992,000 stockholders' deficit, compared to a $24,610,000 deficit at Dec. 31, 2004. * Alvarez & Marsal Acquires Initium LLC Professionals ----------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that it has acquired professionals of Initium LLC, a Miami-based boutique business improvement firm serving mid-cap and mature companies throughout the U.S. and Latin America. As part of the acquisition, Michelle M. Miller has joined A&M as a managing director. Along with A&M managing director Bill Runge, Ms. Miller also will serve as co-head of the firm's Southeast Region Restructuring Group, which spans locations in Atlanta and Charlotte in addition to Miami, where she will continue to be based. Other former Initium principals and consultants are expected to join A&M over the next few months. With more than 15 years of leadership, management and consulting experience, Ms. Miller has served as an executive, in interim management roles and as an advisor to numerous companies and investors tackling strategic, operational and financial issues. She began her career with Apple Computer and has worked in a variety of industry sectors in the U.S. and Latin America, including technology, industrial products and consumer products. A graduate of Pennsylvania State University, Ms. Miller received an MBA from Harvard University. "Miami is not only a key location in our Southeast region strategy, but also a gateway to Latin America, where we have a growing presence," said A&M co-founder Bryan Marsal. "We are pleased that senior professionals like Michelle and her colleagues from Initium are joining A&M, adding even more depth to our business performance improvement capabilities." Alvarez & Marsal Alvarez & Marsal -- http://www.alvarezandmarsal.com/-- is a leading global professional services firm with expertise in guiding companies and public sector entities through complex financial, operational and organizational challenges. Employing a unique hands-on approach, the firm works closely with clients to improve performance, identify and resolve problems and unlock value for stakeholders. Founded in 1983, Alvarez & Marsal draws on a strong operational heritage in providing services including turnaround management consulting, crisis and interim management, performance improvement, creditor advisory, financial advisory, dispute analysis and forensics, tax advisory, real estate advisory and business consulting. A network of experienced professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. * Alvarez & Marsal Tax Advisory Services Adds New Professionals --------------------------------------------------------------- Alvarez & Marsal Tax Advisory Services, LLC, announced it has added five new managing directors to its growing team of senior tax professionals, further enhancing its already formidable international, state and local tax advisory capabilities. Joining the firm are: international tax advisers William Hassell, Darren Mills and Ernesto Perez, who will be based in Washington, D.C., New York, and Miami, respectively, and state and local tax advisers Mark McCormick and Jose Lamela, who will be based in Atlanta and Miami, respectively. "These five talented professionals add even greater depth to our international, state and local capabilities and further strengthen our ability to advise national and multinational clients on the tax matters that impact their businesses," said Robert N. Lowe, Jr. CEO of Alvarez & Marsal Tax Advisory Services, LLC. Since launching in 2004, A&M Tax Advisory Services has grown to more than 80 professionals based in New York, Atlanta, Miami, San Francisco, Seattle, Charlotte, Houston and Washington, DC. "As the Big 4 audit firms continue to restrict their tax professionals from providing tax services to audit clients or potential future audit clients, many of the Big 4 tax consultants are concerned about their ability to have successful careers as tax advisers with the Big 4 audit firms. Our tax professionals are able to serve as advocates for our clients free from actual and potential conflicts of interest encountered within the Big 4 audit firms," Mr. Lowe added. "As a result, Alvarez & Marsal Tax Advisory Services is able to hire the best tax professionals in the industry." With nearly 30 years of experience, Mr. Hassell has advised clients on all aspects of international taxation, and he has spent portions of his career in London and Brussels. Immediately prior to joining A&M, Mr. Hassell was the international tax director for T. Rowe Price, a global investment management company. Previously, he was a tax partner with Big 5 audit firms in Washington, D.C. and London. Mr. Hassell was the partner in charge of international tax services for Arthur Andersen's Mid- Atlantic region. He was also the partner in charge of the U.S. corporate tax practice in the United Kingdom and parts of continental Europe, for Price Waterhouse and PricewaterhouseCoopers. Mr. Hassell received a bachelor's degree in accounting and a master's degree in business administration from the University of Arkansas. Mr. Mills brings 14 years of experience advising large multinational clients on domestic and international tax matters, including tax aspects of mergers and acquisitions, consolidated return issues, IPOs, spin-offs, joint ventures, bankruptcy and cross border transactions. Prior to joining A&M, Mr. Mills was with KPMG. Previously, he was with the international tax practices of Arthur Andersen in both the Roseland, New Jersey and New York offices. Mr. Mills earned a law degree and bachelor's degree in accounting from Seton Hall University and a master's degree in taxation from Fairleigh Dickinson University. Mr. Perez has 13 years of experience advising clients on inbound and outbound international taxation, including acquisition and disposition planning, initial structuring for new country investments, tax efficient financing structures, foreign tax credit planning including expense apportionment and overall foreign loss planning, earnings and profits computation, transfer pricing and repatriation strategies. Immediately prior to joining A&M, Mr. Perez was director-in-charge of international tax services for Berkowitz, Dick, Pollack & Brant Certified Public Accountants & Consultants, LLP in Miami, Florida. Previously, he was a tax partner with Arthur Andersen and Deloitte & Touche. Mr. Perez holds a law degree from the Georgia State University College of Law and a bachelor's degree of business administration in economics, cum laude, from the University of Georgia. Mr. Perez is fluent in Spanish and English. Mr. McCormick advises clients on multi-state income and franchise tax as well as transaction tax matters. With over 20 years of experience, Mr. McCormick has advised clients in many industries, including financial services, transportation, utilities and manufacturing. He has extensive experience advising clients on the state tax implications of mergers, acquisitions and other significant transactions. Prior to joining A&M, Mr. McCormick was the partner in charge of the Southeast state and local tax practice at KPMG and Arthur Andersen. He earned a bachelor's degree in economics from Occidental College and an MBA from Emory University. Mr. Lamela has more than 17 years of experience advising clients on state and local income and franchise tax, sales and use tax, and gross receipts taxes. He also consults with clients on state and local tax matters related to acquisitions and dispositions, audit defense, tax compliance, and tax technology. Prior to joining A&M, Mr. Lamela was a tax partner with Arthur Andersen and Deloitte Tax. During his careers with Andersen and Deloitte Tax, Mr. Lamela held roles as practice leader for each firm's state and local tax practice in Florida. Mr. Lamela holds a bachelor of business administration degree, summa cum laude, double majoring in accounting and finance, from the University of Miami and a master's degree in taxation from Florida International University. Mr. Lamela is fluent in Spanish and English, and conversational in French. A&M Tax Advisory professionals advise clients on federal, international, and state and local tax matters, including tax aspects of mergers, acquisitions and dispositions, research credits and incentives, tax risk management, and tax controversies. About Alvarez & Marsal Tax Advisory Services, LLC Alvarez & Marsal Tax Advisory Services, LLC, an affiliate of Alvarez & Marsal, a leading global professional services firm, is an independent tax group comprised of experienced tax professionals dedicated to providing customized tax advice to clients in a broad range of industries. Its professionals extend Alvarez & Marsal's commitment to offering clients a choice in tax advisors free from audit-based conflicts of interest. Alvarez & Marsal Tax Advisory Services serve clients with knowledge, experience and a commitment to excellence in client service. Its professionals advocate our clients' interests with the highest integrity. Alvarez & Marsal Tax Advisory Services, LLC, is a founding member of the Taxand global alliance which is comprised of independent tax firms in countries around the world that provide our multinational clients with international tax advice. * Mark Miller Joins Alvarez & Marsal As Managing Director --------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Mark T. Miller, a seasoned consulting professional with significant hands-on operational experience, has joined the Atlanta office of Alvarez & Marsal Business Consulting as a managing director and head of the firm's finance solutions practice in the Southeast. Mr. Miller is the latest veteran professional to join A&M's Atlanta office, which has experienced substantial growth in both professionals and service offerings since being established in 2002 by restructuring specialists William Runge and Lawrence Hirsh. With more than 15 years of experience in the management consulting field, Mr. Miller brings a deep background in working with large and mid-market clients in numerous industries to enhance efficiencies in financial processes and develop plan-to-measure frameworks that drive performance improvement. He specializes in helping organizations to streamline transaction processing activities, institute shared services and other cost reduction programs, and implement management reporting processes that align business strategy with key measures and incentives. Before joining A&M, Mr. Miller was a senior operations executive for Velocity Express, the largest nationwide network of time- critical delivery solutions. While at Velocity he was in charge of several successful programs aimed at improving profitability by deploying more efficient routing and increasing revenue density in all markets. Prior to that, Mr. Miller founded First Atlanta Consulting LLC, a regional consultancy focused on assisting CFOs of mid-market companies with managing growth. Earlier in his career he was a partner in the business consulting practice of Arthur Andersen, where he served for more than a decade. "Mark brings an extensive background in finance solutions to Alvarez & Marsal Business Consulting and is an excellent addition to our team," said Tom Elsenbrook, head of Alvarez & Marsal Business Consulting. "As our business consulting group and the firm generally continue to grow in Atlanta and beyond, his experience in developing finance and accounting processes and implementing corporate performance measurement systems on behalf of a range of organizations will be invaluable." "Over the past three years, the Atlanta office of Alvarez & Marsal has continued to attract top-tier talent, enabling us to strategically expand our service offerings to include real estate advisory, business consulting, tax advisory and dispute analysis and forensics, in addition to our core turnaround management and restructuring services," said Mr. Runge, co-head of A&M's Southeast region, which includes Miami and Charlotte. "Mark is illustrative of the type of outstanding professionals who have joined the firm and are setting the stage for additional future growth." Mr. Miller earned a bachelor's degree in industrial and systems engineering from The Georgia Institute of Technology. Alvarez & Marsal Business Consulting LLC Alvarez & Marsal Business Consulting LLC is comprised of a dedicated team of senior consulting specialists who deliver functional, process and technology skills to corporate management. Building on Alvarez & Marsal's core operational and problem- solving heritage, the team helps to improve the business processes and performance of companies in good market and financial positions. Alvarez & Marsal Business Consulting services include: strategy and corporate solutions, finance and accounting solutions, human resource solutions, information technology solutions and supply chain solutions. Alvarez & Marsal Business Consulting is part of Alvarez & Marsal -- http://www.alvarezandmarsal.com/a leading global professional services firm with expertise in guiding companies and public sector entities through complex financial, operational and organizational challenges. Founded in 1983, Alvarez & Marsal draws on a strong operational heritage in providing services including turnaround management consulting, crisis and interim management, performance improvement, creditor advisory, financial advisory, dispute analysis and forensics, tax advisory, real estate advisory and business consulting. A network of experienced professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. * Sheppard Mullin Welcomes Kevin Goering as New York Partner ------------------------------------------------------------ Kevin Goering has joined the New York office of Sheppard, Mullin, Richter & Hampton LLP as a partner in the Business Trial Practice Group. Mr. Goering, most recently head of Coudert Brothers Litigation Group in New York, specializes in First Amendment, intellectual property, and general commercial litigation. "We are very pleased to welcome Kevin, who brings decades of litigation experience to the New York office's strong, general litigation practice," James J. McGuire, partner-in-charge of the firm's New York office, said. "His substantial background in media and publishing law allows us to offer clients First Amendment expertise on both coasts." "Sheppard Mullin has a dynamic media and entertainment group. I am excited about practicing with a top-notch firm and look forward to serving clients in the growing New York office," commented Mr. Goering. "I have known Gary Bostwick for many years and am very pleased to be teaming up with him and other attorneys in the firm's nationwide media law practice." Mr. Goering has practiced media and publishing law extensively for over 20 years. He advises publishers, authors, television and radio broadcasters, Internet service providers and journalists with respect to intellectual property issues, including defamation, privacy, copyright, trademark, rights of publicity, anti-dilution and licensing issues. Mr. Goering has also handled a variety of litigation matters in state and federal court relating to trademarks, copyrights, franchising, licensing and trade secrets. In addition to his media law practice, Mr. Goering has had extensive commercial litigation experience, including pretrial, trial and appellate work in state and federal courts. He has expertise in the defense of securities fraud cases, including class actions. Mr. Goering also has significant recent experience representing governments, government instrumentalities and international organizations in litigation and arbitration involving sovereign and diplomatic immunity issues. Mr. Goering received his law degree, cum laude, from Cornell Law School in 1981 and a B.A. from the University of Kansas in 1977. He served as a law clerk to the Honorable Richard J. Cardamone of the Second Circuit Court of Appeals. Mr. Goering is a former chair of the New York State Bar Association's Committee on Media Law. Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm with 430 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment and Media; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax/Employee Benefits/Trusts & Estates; and White Collar Defense. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- August 11, 2005 TURNAROUND MANAGEMENT ASSOCIATION Women in Business Networking Solera Restaurant, Denver, Colorado Contact: 303-457-2119 or http://www.turnaround.org/ August 11-12, 2005 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 San Francisco, California Contact: 1-800-CLE-NEWS; http://www.ali-aba.org August 12-13, 2005 CENTER FOR ENTREPRENEURSHIP Insolvencies in Transition Economies S"dert"rns H"gskola University College, Stockholm, Sweden Contact: http://www.sh.se/enterforum/ August 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue TBA Contact: http://www.turnaround.org/ August 17-21, 2005 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES NABT Convention Marriott Marquis Times Square New York, New York Contact: 803-252-5646 or info@nabt.com August 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION Third Annual TMA Alberta Golf Tournament The Links of Gleneagles, Cochrane, AB Contact: 403-294-4937 or http://www.turnaround.org/ August 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION CTP Luncheon McDermott Will & Emery, Chicago, Illinois Contact: 815-469-2935 or http://www.turnaround.org/ August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Accounting Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ August 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Meeting Carolinas Contact: 704-926-0359 or http://www.turnaround.org/ August 30, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon - Legal Roundtable (Regional Attorneys) Centre Club, Tampa, Florida Contact: http://www.turnaround.org/ September 1-30, 2005 TURNAROUND MANAGEMENT ASSOCIATION Education Program Venue - TBA, Toronto, ON Contact: http://www.turnaround.org/ September 8-9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Golf Tournament and TMA Regional Conference Gideon Putnam Hotel, Saratoga Springs, New York Contact: 716-667-3160 or http://www.turnaround.org/ September 8-9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Northeast Regional Conference Sponsorship Opportunities Gideon Putnam Hotel, Saratoga Springs, New York Contact: 716-440-6615 / 516-465-2356 or http://www.turnaround.org/ September 8-11, 2005 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference (Including Financial Advisors/Investment Bankers Program) The Four Seasons Hotel Las Vegas, Nevada Contact: 1-703-739-0800 or http://www.abiworld.org/ September 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Motorcycle Ride Lake Shore Harley Davidson, Libertyville, IL Contact: 815-469-2935 or http://www.turnaround.org/ September 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION ALS Walk 4 Life Montrose Harbor, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ September 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA-LI Chapter Board Meeting Venue - TBA Contact: 516-465-2356 or http://www.turnaround.org/ September 14, 2005 FINANCIAL RESEARCH ASSOCIATES LLC Understanding the New Bankruptcy Legislation & its Implications New York, New York Contact: http://www.frallc.com/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Lender's Forum: Surviving Bank Mergers Milleridge Cottage, Long Island, New York Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, Colorado Contact: 303-457-2119 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA Quarterly Meeting: The Bankruptcy Act Nashville, Tennessee Contact: http://www.turnaround.org/ September 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Management Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ September 17, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice Los Angeles and Beverly Hills, California Contact: http://www.ceb.com/;1-800-232-3444 September 17, 2005 CONTINUING EDUCATION OF THE BAR Selected Issues in Bankruptcy Practice Los Angeles and Beverly Hills, California Contact: http://www.ceb.com/;1-800-232-3444 September 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Lenders' Panel: Deal Structures in 2005 TBD, Pittsbugh, Pennsylvania Contact: bmanne@tuckerlaw.com or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Workout Lenders Panel Luncheon Union League Club, NYC Contact: 646-932-5532 or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION Third Annual Workout Lenders Panel Union League Club New York, New York Contact: 908-575-7333 or http://www.turnaround.org/ September 22-25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Cross-Border Conference Grand Hyatt Seattle, Seattle, Washington Contact: 503-223-6222; http://www.turnaround.org/ September 23, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop London, UK Contact: 1-703-739-0800 or http://www.abiworld.org/ September 23, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice San Francisco, California Contact: http://www.ceb.com/;1-800-232-3444 September 23, 2005 CONTINUING EDUCATION OF THE BAR Selected Issues in Bankruptcy Practice San Francisco, California Contact: http://www.ceb.com/;1-800-232-3444 September 24, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice Costa Mesa, California Contact: http://www.ceb.com/;1-800-232-3444 September 24, 2005 CONTINUING EDUCATION OF THE BAR Selected Issues in Bankruptcy Practice Costa Mesa, California Contact: http://www.ceb.com/;1-800-232-3444 September 26, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop Site to Be Determined London, England Contact: 1-703-739-0800 or http://www.abiworld.org/ September 26, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Golf Outing Pittsburgh, Pennsylvania Contact: 412-577-2995 or http://www.turnaround.org/ September 26, 2005 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Meeting Greensboro, North Carolina Contact: 704-926-0359 or http://www.turnaround.org/ September 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Networking at the Yard Camden Yards, Baltimore, Maryland Contact: 410-560-0077 or http://www.turnaround.org/ September 28, 2005 NEW YORK STATE SOCIETY OF CPAs Half- Day Bankruptcy Conference 19th Floor, FAE Conference Center 3 Park Avenue, at 34th Street New York Contact: 1-800-537-3635 or http://www.nysscpa.org/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Joint CFA/RMA/TMA Networking Reception Woodbridge Hilton, Iselin, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ September 28-30, 2005 PRACTISING LAW INSTITUTE Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings New York, New York Contact: http://www.pli.edu/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION The 2005 Bankruptcy Amendments Seminar: The Law of Intended and Unintended Consequences Woodbridge Hilton, Iselin, New Jersey Contact: http://www.turnaround.org/ September 28, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice San Diego, California Contact: http://www.ceb.com/;1-800-232-3444 September 29, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS West Coast Corporate Restructuring Conference Grand Hyatt on Union Square, San Francisco, California Contact: http://www.airacira.org/ October 1, 2005 CONTINUING EDUCATION OF THE BAR Bankruptcy Reform: Changing the Ground Rules for Personal & Small Business Bankruptcy Practice Sacramento, California Contact: http://www.ceb.com/;1-800-232-3444 October 1, 2005 CONTINUING EDUCATION OF THE BAR Selected Issues in Bankruptcy Practice Sacramento, California Contact: http://www.ceb.com/;1-800-232-3444 October 6, 2005 FINANCIAL RESEARCH ASSOCIATES LLC Distressed Debt Summit New York, New York Contact: http://www.frallc.com/ October 7, 2005 AMERICAN BANKRUPTCY INSTITUTE Views from the Bench Georgetown University Law Center Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ October 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ October 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, New York Contact: 716-440-6615 or http://www.turnaround.org/ October 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Venue to be announced Contact: http://www.turnaround.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/ October 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, Colorado Contact: 303-457-2119 or http://www.turnaround.org/ October 25, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon Centre Club, Tampa, Florida Contact: http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, New York Contact: 516-465-2356 or http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, Texas Contact: http://www.iwirc.com/ November 2, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS AIRA/NCBJ Dessert Reception Marriott Riverwalk Hotel, San Antonio, Texas Contact: 541-858-1665 or http://www.airacira.org/ November 2-4, 2005 PRACTISING LAW INSTITUTE Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings Beverly Hills, Clifornia Contact: http://www.pli.edu/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 7-8, 2005 STRATEGIC RESEARCH INSTITUTE Seventh Annual Distressed Debt Investing Forum West Venetian Resort Hotel Casino, Las Vegas, Nevada Contact: http://www.srinstitute.com/ November 9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting The Center Club, Baltimore, Maryland Contact: 703-912-3309 or http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sebel Pier One, Sydney, Australia Contact: http://www.turnaround.org/ November 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Second Annual Australian TMA Conference Sydney, Australia Contact: 9299-8477 or http://www.turnaround.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ November 11-13, 2005 AMERICAN BANKRUPTCY INSTITUTE Corporate Restructuring Competition Kellogg School of Management, NWU, Evanston, Illinois Contact: 1-703-739-0800; http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, New York Contact: 312-578-6900 or http://www.turnaround.org/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Speaker/Dinner Event Fairmont Royal York Hotel, Toronto, ON Contact: http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, New York Contact: 716-440-6615 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, Colorado Contact: 303-457-2119 or http://www.turnaround.org/ November 17, 2005 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Networking Cocktail Reception New York, NY Contact: 541-858-1665 or http://www.airacira.org/ November 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, Florida Contact: http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CaliforniaA Contact: 1-703-739-0800; http://www.abiworld.org/ December 5-6, 2005 MEALEYS PUBLICATIONS Asbestos Bankruptcy Conference Ritz-Carlton, Battery Park, New York, New York Contact: http://www.mealeys.com/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, New York Contact: 516-465-2356 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, New York Contact: 716-440-6615 or http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, New York Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Viginia Contact: 703-912-3309 or http://www.turnaround.org/ January 26-28, 2006 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ February 9-10, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Eden Roc, Miami, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ March 2-3, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Legal and Financial Perspectives on Business Valuations & Restructuring (VALCON) Four Seasons Hotel, Las Vegas, Nevada Contact: http://www.airacira.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel Phoenix, Arizona Contact: http://www.pli.edu/ March 9, 2006 AMERICAN BANKRUPTCY INSTITUTE Nuts & Bolts for Young Practitioners Century Plaza, Los Angeles, Califnornia Contact: 1-703-739-0800; www.abiworld.org March 10, 2006 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 22-25, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Desert Ridge, Phoenix, Arizona Contact: http://www.turnaround.org/ March 30 - April 1, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, Arizona Contact: 1-800-CLE-NEWS or http://www.ali-aba.org April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ May 4-6, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Fundamentals of Bankruptcy Law Chicago, IL Contact: 1-800-CLE-NEWS; or http://www.ali-aba.org/; May 8, 2006 AMERICAN BANKRUPTCY INSTITUTE NYC Bankruptcy Conference Millennium Broadway, New York, New York Contact: 1-703-739-0800; http://www.ali-aba.og/ June 7-10, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 22nd Annual Bankruptcy & Restructuring Conference Grand Hyatt, Seattle, Wasington Contact: http://www.airacira.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott Newport, Rhode Island Contact: 1-703-739-0800 or http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island Amelia Island, Florida Contact: 1-703-739-0800 or http://www.abiworld.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage Long Island, New York Contact: 312-578-6900 or http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, IL Contact: http://www.airacira.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.com/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***