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/raid1/www/Hosts/bankrupt/TCR_Public/050815.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 15, 2005, Vol. 9, No. 192 Headlines AAIPHARMA INC: Wants More Time to Remove Civil Actions ADVANTAGE SEAL: Case Summary & 24 Largest Unsecured Creditors AIRNET COMMS: Reports Second Quarter 2005 Financial Results AMCAST INDUSTRIES: U.S. Trustee Says Plan's Releases are Improper AMERICAN BUSINESS: Wash. Mutual Wants to Foreclose on Collateral AMERICAN MEDIA: Posts $2.3 Mil. Net Loss in First Fiscal Quarter AMERICAN TOWER: S&P Upgrades Corporate Credit Rating to BB+ AMERICA WEST: Executives Offered Incentives in US Airways Merger ANCHOR GLASS: First Meeting of Creditors Set for Sept. 16 ANCHOR GLASS: Receives Delisting Notice from the Nasdaq ANCHOR GLASS: Look For Bankruptcy Schedules on Sept. 15 ASARCO LLC: Summary of Debt Structure & Liabilities ASARCO LLC: Can Use Mitsui Cash Collateral on an Interim Basis ASARCO LLC: Gets Court Nod to Use Existing Cash Management System ATHLETE'S FOOT: Files Liquidation Plan & Disclosure Statement BALLY TOTAL: Lenders Extend Cross Default Deadline to Aug. 31 BALLY TOTAL: Marilyn Seymann Steps Down as Director BANC OF AMERICA: Fitch Affirms Low-B Rating on Six Cert. Classes BANKAMERICA: Fitch Holds Rating on 13 Cert. Classes at Junk Level BIRCH TELECOM: Files Chapter 22 Petition in Delaware BIRCH TELECOM: Case Summary & 40 Largest Unsecured Creditors BIRCH TELECOM: Gregory Lawhon Replaces Mike Cassity as CEO BLACKBIRD CROSSING: Case Summary & 15 Largest Unsecured Creditors BLOCKBUSTER INC: Low Liquidity Prompts Fitch to Junk Ratings BLOCKBUSTER INC: Moody's Junks Senior Subordinated Notes BROCKWAY PRESSED: Committee Taps Guy Fustine as Counsel CALPINE CORP: Closes $84.5 Million Plant Sale to Mitsubishi Unit CARL YERKEL: Case Summary & 7 Known Creditors CCO HOLDINGS: Fitch Places CCC+ Rating on $300 Mil. Senior Notes CHARTER COMMUNICATIONS: Prices $300 Million 8.75% Senior Notes CHESAPEAKE ENERGY: Prices $500 Million 6.5% Private Debt Offering CHESAPEAKE ENERGY: S&P Rates $500 Million Sr. Unsec. Notes at BB- CHESAPEAKE ENERGY: Fitch Rates $500 Mil. Senior Note Offer at BB CINRAM INTERNATIONAL: S&P Revises Outlook to Negative from Stable COLLINS & AIKMAN: Receives Grand Jury Subpoena COLLINS & AIKMAN: GE Wants Receivables Agreement Enforced COLLINS & AIKMAN: Toyota Wants Admin. Expense Claims Paid Now COLLINS & AIKMAN: Mackay Shields Sues Former CEO in State Court CONSTAR INT'L: Incurs $7.7 Million Net Loss in Second Quarter COTT CORP: Moody's Affirms Ba2 Corporate Family Rating CREDIT SUISSE: Fitch Affirms Low-B Ratings on Five Cert. Classes DATALOGIC INT'L: June 30 Balance Sheet Upside-Down by $425,220 DELTA AIR: New York Times Reports DIP Financing Being Arranged DSL.NET INC: Posts $3.1 Million Net Loss in Second Quarter 2005 ENRON CORP: Court Allows Longacre's $4.8 Million Claims FEDDERS CORP: Anticipates $600,000 Net Loss in Second Quarter FOAMEX INTERNATIONAL: Partnership Sells AS Univa Stake for $1 Mil. FREEDOM MEDICAL: Wants Until Effective Date to Decide on Leases GARDEN STATE: Wants to Dip Into Lenders' Cash Collateral GENERAL BINDING: Amends Merger Pact with Fortune Brands & ACCO GENERAL FIRE: Fitch Assigns BB- Insurer Financial Strength Rating GENERAL MARITIME: Moody's Lowers Sr. Unsecured Debt Ratings to B2 GMAC COMMERCIAL: Fitch Holds Low-B Ratings on Six Cert. Classes GRUPPO ANTICO: Claims Objection Deadline Extended Until Dec. 24 GT BRANDS: Wants to Pay Foreign Vendors' Prepetition Claims HARRINGTON BREAST: Case Summary & 10 Largest Unsecured Creditors HIRSH INDUSTRIES: Wants More Time to Decide on Leases ILINC COMMS: Posts $885 Million Net Loss in First Quarter 2006 ILINC COMMS: Names James Dunn, Jr., as New Chief Financial Officer INTEGRATED HEALTH: Gets Court Nod to Reserve Amounts for 13 Claims INTERMET CORP: Court Approves Amended Disclosure Statement JACOBS MANUFACTURING: Case Summary & 20 Largest Creditors KEYSTONE CONSOLIDATED: Court Confirms Amended Reorganization Plan KMART CORP: Promotes Peter Whitsett to SVP & Merchandising Officer KRISTINA STALCUP: Case Summary & 12 Largest Unsecured Creditors LABRANCHE & CO: Moody's Lowers Surbordinated Debt Rating to Ba3 LEINER HEALTH: S&P Places Ratings on Negative Watch LIBERTY MEDIA: Posts $107 Million Net Loss in Second Quarter LNR CFL: Fitch Affirms Low-B Ratings on Seven Certificate Classes MCI INC: 11 Officers Disposes 40,589 Shares of Common Stock MEDICALCV INC: Hires Lurie Besikof as Independent Accountants MIRANT CORP: Files Second Quarter Financial & Operational Results MORGAN STANLEY: Fitch Holds BB+ Rating on $5.4MM Class H Certs. MORGAN STANLEY: Fitch Rates Six Classes of Certificates at Low-B MORLEY GROUP: Case Summary & 34 Largest Unsecured Creditors NATIONAL BEDDING: Moody's Rates Planned $410MM Facilities at B1 NEENAH FOUNDRY: Earns $3.4 Million of Net Income in Third Quarter NETEXIT INC: Court Conditionally Approves Disclosure Statement NVE INC: Taps Murnane Brandt as Special Litigation Counsel OFFSHORE LOGISTICS: Amends Senior Note Consent Solicitation ORMET CORP: Files Unfair Labor Practice Charge Against USWA PARAGON AUTO: Fitch Cuts Rating on Class B Notes to B PEACE ARCH: Discloses $2 Million Private Equity Placement PETER ROMANOFSKY: Case Summary & 20 Largest Unsecured Creditors PLASTECH ENGINEERED: Moody's Reviews Low-B Debt Ratings PLYMOUTH RUBBER: Committee Wants Deloitte Financial as Consultant PRD LP: Case Summary & 20 Largest Unsecured Creditors PRECISION TOOL: Case Summary & 6 Largest Unsecured Creditors PROCESS TUBE: Case Summary & 110 Largest Unsecured Creditors PROPEX FABRICS: Names Edmund Stanczak, Jr., as President & CEO REVLON INC: Equity Deficit Widens to $1.1 Bil. in Second Quarter RHODES INC: Great American Launches Going-Out-of-Business Sale RITE AID: S&P Revises Outlook to Negative from Stable RONNIE GREEN: Case Summary & 11 Largest Unsecured Creditors RUFUS INC: Wants to Hire Logan & Company as Claims Agent SAINT VINCENTS: Court Grants Interim OK on $6.7 Mil. DIP Facility SATELITES MEXICANOS: Judge Drain Dismisses Involuntary Petition SEDONA CORP: Borrows $250,000 More for Working Capital Needs SPECTRUM/GRANDVIEW: Case Summary & 5 Largest Unsecured Creditors STRUCTURED ASSET: Fitch Affirms BB+ Rating on $67.2MM Certificates TEAM HEALTH: Earns $12.1 Million of Net Income in Second Quarter TITAN CORP: Moody's Withdraws Senior Subordinated Notes' B3 Rating TOM'S FOODS: Gets Court OK on Extension to File Notices of Removal TOM'S FOODS: Aug. 22 is Reclamation Report Objection Deadline TRIMAS CORP: S&P Lowers Subordinated Debt Rating to CCC+ from B- TRUMP HOTELS: Court Halts Cash Payments to Shareholders TRUMP HOTELS: Can Litigate 280 Claimants Outside Bankruptcy Court TWINLAB CORP: District Court Denies Motions to Stay Confirmed Plan VESTA INSURANCE: Moody's Lowers Senior Debt Rating to B3 from B2 WESTERN WATER: Wants More Time to Decide on Two Leases WESTPOINT STEVENS: Gets Court Nod to Enter into Clemson Lease WESTPOINT STEVENS: Can Walk Away from Central Valley Lease WILLIAMS CONTROLS: Equity Deficit Narrows to $1.8MM in June 2005 WILSON PRODUCTS: Case Summary & 20 Largest Unsecured Creditors WORLDCOM INC: Judge Gonzalez Approves Time Warner Settlement WOLVERINE TUBE: S&P Junks $236 Million Senior Unsecured Notes YUKOS OIL: Judge Clark Approves Societe Generale Agreement * BOND PRICING: For the week of Aug. 8 - Aug. 12, 2005 ********* AAIPHARMA INC: Wants More Time to Remove Civil Actions ------------------------------------------------------ aaiPharma Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for an extension of their time to remove prepetition civil actions through and including November 7, 2005. The Debtors are parties to a number of prepetition civil actions pending in courts throughout the United States. Claims asserted in those civil actions include employment and contract claims. aaiPharma explains that it's spent a substantial amount of time attending to other pressing bankruptcy matters, like obtaining debtor-in-possession financing, restructuring their operations and discussing reorganization with customers, suppliers, their creditors and other parties-in-interest. The Debtors assert that an extension of the removal period will allow them, their management and their advisors sufficient time to determine which of the civil actions should be removed and transferred to the District of Delaware for further proceedings. Headquartered in Wilmington, North Carolina, aaiPharma Inc. -- http://aaipharma.com/-- provides product development services to the pharmaceutical industry and sells pharmaceutical products which primarily target pain management. AAI operates two divisions: AAI Development Services and Pharmaceuticals Division. The Company and eight of its debtor-affiliates filed for chapter 11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341). Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported consolidated assets amounting to $323,323,000 and consolidated debts totaling $446,693,000. ADVANTAGE SEAL: Case Summary & 24 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Advantage Seal, Inc. 694 Veterans Parkway, Unit A Bolingbrook, Illinois 60440-3562 Bankruptcy Case No.: 05-31927 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Kelly Duane Clark 05-31915 Type of Business: The Debtor manufactures hermetic seals. See http://www.advantageseal.com/ Chapter 11 Petition Date: August 12, 2005 Court: Northern District of Illinois (Chicago) Judge: Bruce W. Black Advantage Seal Inc.'s Counsel: Arthur G. Simon, Esq. Crane Heyman Simon Welch & Clar 135 South Lasalle Street, Suite 3705 Chicago, Illinois 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 Kelly Duane Clark's Counsel: Terence M. Fenelon, Esq. Law Offices of Terence M. Fenelon 445 West Jackson Avenue, Suite 107 Naperville, Illinois 60540 Tel: (630) 717-1255 Fax: (630) 983-0188 Estimated Assets Estimated Debts ---------------- --------------- Advantage Seal, Inc. $500,000 to $1 Mil. $1 Mil. to $10 Mil. Kelly Duane Clark $100,000 to $500,000 $500,000 to $1 Mil. Advantage Seal, Inc.'s 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ V.D. Driscoll $1,592,500 5501 North Ocean Boulevard, Unit 301 Myrtle Beach, SC 29577 Flowserve Corporation $429,554 211 Frontage Road Hinsdale, IL 60521 JAR Services $110,000 c/o Julie Rhein 8412 Dolfer Cove Hinsdale, IL 60521 Littler Mendelson, PC $52,576 200 North LaSalle Street, Suite 2900 Chicago, IL 60601 Morgan AMT $36,934 P.O. Box 75749 Charlotte, NC 28275-0749 Clerk of Will County Court $33,333 302 North Chicago Street Joliet, IL 60432 Ward Manufacturing $25,080 2230 Main Street Evanston, IL 60202 American Express $24,293 P.O. Box 650448 Dallas, TX 75265-0448 Injectec $23,499 451 North Dekora Woods Boulevard Saukville, WI 53080 B. & J.G. Hodge & Co., PTY. LTD $21,876 291 Doncaster Road, Suite 2 North Balwyn Victoria, Australia 3104 CoorsTek $17,357 Department #1515 Denver, CO 80291-1515 Timothy Gainous $15,000 1258 Gladys Avenue Lakewood, OH 44107 Jackson Spring $13,386 299 Bond Street Elk Grove Village, IL 60007 Chemir Analytical Services $4,349 P.O. Box 502832 Saint Louis, MO 63150-2832 REM Builders, Inc. $2,795 500 East Remington Road, Suite 101 Schaumburg, IL 60173 Sterling Sintered Technologies. $1,634 249 Rockwell Street Winsted, CT 06098 Allen Ginsberg Unknown 55 West Monroe Street, Suite 3950 Chicago, IL 60603 Kelly Duane Clark's 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Flowserve Corporation $429,554 c/o David J. Parsons, Esq. Littler Mendelson, a Professional Corp. 200 North LaSalle Street Suite 2900 Chicago, IL 60601-1014 David J. Parsons, Esq. $52,576 Littler Mendelson, A Professional Corp. 200 North LaSalle Street, Suite 2900 Chicago, IL 60601-1014 Clerk of the Circuit Court $33,333 Twelfth Judicial Circuit 505 North County Farm Road Wheaton, IL 60187 Timothy E. Gainous $16,500 1258 Gladys Avenue Lakewood, OH 44107 Direct Merchants Bank $2,831 P.O. Box 21550 Tulsa, OK 74121-1550 Capital One $1,596 P.O. Box 85147 Richmond, VA 23276-0001 Capital One $145 P.O. Box 85147 Richmond, VA 232767-0001 AIRNET COMMS: Reports Second Quarter 2005 Financial Results ----------------------------------------------------------- AirNet Communications Corporation (NASDAQ:ANCC) reported financial results for its second quarter ended June 30, 2005. The Company reported net revenue of $5.4 million in the second quarter, compared to $5.4 million in the second quarter of 2004. Gross margins for the second quarter were $1.7 million or 31.7% compared to year ago margins of $1.4 million or 25.0%. Equipment margins improved slightly from 20.8% in the second quarter of 2004 to 21.3% in 2005 due to increased direct sales. Services margins were 71.9% in second quarter of 2005 compared to 33.8% in 2004. Operating expenses for the second quarter were $6.3 million compared to $5.7 million in the second quarter of 2004 driven primarily by an increase in research and development expenses. R&D expenses were $3.2 million versus $2.6 million in 2004 attributable to increased development spending. The loss from operations was $4.6 million, compared to a loss of $4.3 million in the second quarter of 2004. The quarterly loss from operations for both 2005 and 2004 included $2.3 million of non-cash stock option charges that resulted from the granting of options to employees following the Company's August 2003 senior secured debt transaction. The second quarter 2005 net loss attributable to common stockholders was $4.9 million vs. $5.6 million loss in the second quarter of 2004. The 2004 net loss attributable to common stockholders reflects $1 million of amortized expenses associated with the Company's August 2003 senior secured debt transaction. Cash flow from operating activities for the second quarter was $4.1 million, compared to use of cash of $(1.9) million in the second quarter of 2004. This decrease in cash consumption was primarily impacted by unusually high customer cash collections which totaled $9.5 million in 2005. The Company does not expect to be cash flow positive in the third quarter of 2005. Per share amounts for the second quarter of 2005 results were based on 12.5 million weighted average shares and exclude shares issuable upon the conversion of the remaining unconverted Senior Secured Convertible debt and shares underlying outstanding options because the effect of including those shares would be anti- dilutive. The number of shares issued and outstanding and potentially dilutive totaled 25.1 million as of June 30, 2005. All share and per share amounts reflect the 1-for-10 reverse stock split effected Dec. 9, 2004. Outlook "The Company had a great second quarter in terms of new orders received and cash collections," said Glenn Ehley, president & CEO for AirNet Communications. "The Company continues to be well- positioned with its SuperCapacity, adaptive array base station and RapidCell base station. We continue to see strong interest in these product lines with a Tier 1 large operator and a leading OEM aerospace and defense contractor." During the second quarter, the Company received $9.3M in orders including $5M in GSM orders from a new customer in the Asia- Pacific region and $1.4M in GSM orders from Telsom Mobile for deployment in Somalia. Going Concern Doubt BDO Seidman, LLP, had expressed substantial doubt about AirNet Communications' ability to continue as a going concern after reviewing the company's financial statements for the year ending Dec. 31, 2004. Deloitte & Touche, LLP, expressed similar doubts when it reviewed the company's 2003 financials. BDO Seidman points to the Company's recurring losses from operations, negative cash flows, and accumulated deficit, as the problem areas. As of Aug. 5, 2005, the Company's cash balance was $6.5 million. The Company's current 2005 operating plan projects that cash available from planned revenue combined with the on hand at Aug. 5, 2005, may be adequate to defer the requirement for new funding at least until the fourth quarter of 2005. There can be no assurances that new financing can be secured at a reasonable cost, if at all. Financial Advisor On Board The Company disclosed in its report for the quarter ending March 31, 2005, that it has engaged a financial advisor to assist in identifying and evaluating strategic business options. "These options include, but are not limited to, i) seeking strategic partners and/or strategic investors and ii) a business combination or acquisition," AirNet said. The company did not respond to our request for the financial advisor's identity. AirNet Communications Corporation -- http://www.airnetcom.com/-- is a leader in wireless base stations and other telecommunications equipment that allow service operators to cost-effectively and simultaneously offer high-speed wireless data and voice services to mobile subscribers. AirNet's patented broadband, software- defined AdaptaCell(R) SuperCapacity(TM) adaptive array base station solution provides a high-capacity base station with a software upgrade path to high-speed data. The Company's AirSite(R) Backhaul Free(TM) base station carries wireless voice and data signals back to the wireline network, eliminating the need for a physical backhaul link, thus reducing operating costs. The Company's RapidCell(TM) base station provides government and military communications users with up to 96 voice and data channels in a compact, rapidly deployable design capable of processing multiple GSM protocols simultaneously. AirNet has 69 patents issued or filed and has received the coveted World Award for Best Technical Innovation from the GSM Association, representing over 400 operators around the world. AMCAST INDUSTRIES: U.S. Trustee Says Plan's Releases are Improper ----------------------------------------------------------------- Saul Eisen, U.S. Trustee for Region 9, asks the U.S. Bankruptcy Court for the Southern District of Ohio to deny confirmation of the Second Amended Joint Plan of Reorganization filed by Amcast Industrial Corporation and its debtor-affiliates. A summary of the Debtors' plan appeared in the Troubled Company Reporter on June 30, 2005. The U.S. Trustee objects to the plan to the extent that the Debtors attempt to release and pardon non-debtor parties, including the Debtors' officers and directors and professionals, from liability. The U.S. Trustee says the releases violate Section 524 of the Bankruptcy Code. The U.S. Trustee argues that the Debtors should not be allowed to use the Plan as a device to obtain a discharge of non-debtor third parties who may be independently liable to creditors or interest holders. Mr. Eisen reminds the Court that the U.S. Court of Appeals for the Sixth Circuit identified seven factors in Dow Corning's bankruptcy cases that might make non-consensual third-party releases appropriate in a chapter plan: 1) there is an identity of interests between the debtor and the third party; 2) the non-debtor has contributed substantial assets to the reorganization; 3) the injunction is essential to reorganization, namely, the reorganization hinges on the reorganization; 4) the impacted class has voted overwhelmingly to accept the plan; 5) the plan provides a mechanism to pay for all, or substantially all, of the claims of the class affected by the release; 6) the plan provides an opportunity for those claimants who choose not to settle to recover in full; and 7) the bankruptcy court made a record of specific factual findings that support its conclusions. The U.S. Trustee says that Amcast's proposed releases fails to meet these standards. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq., at Thompson Hine LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. AMERICAN BUSINESS: Wash. Mutual Wants to Foreclose on Collateral ---------------------------------------------------------------- Washington Mutual Home Loan, through Fidelity National Foreclosure & Bankruptcy Solutions, asks the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay so it may exercise foreclosure rights against mortgaged property. Neil F. Dignon, Esq., at Draper & Goldberg, P.L.L.C., in Georgetown, Delaware, recounts that on October 16, 2002, Donald F. Larizza and Bonnie M. Larizza executed and delivered to Washington Mutual Bank, FA, a note for $113,279, plus interest at the adjustable rate of 6.5% per annum, attorney's fees, costs and late charges to be paid over 30 years. To secure the repayment of the sums due under the Note, the Larizzas executed and delivered to Washington Mutual Bank a mortgage dated October 16, 2002, encumbering a real property at 1707 Gulf Road, in Elyria, Ohio. Mr. Dignon informs Judge Walrath that Washington Mutual Home Loan is the holder of the Mortgage and Note. Household Realty Corporation holds a lien subordinate to the lien created by the Washington Mutual Mortgage, by virtue of a Mortgage executed by the Larizzas, recorded on July 22, 2004, securing a note for $6,922. Having failed to pay the October 2003 through June 2005 monthly installments, the Larizzas are in default under the Washington Mutual Note, Mr. Dignon says. Mr. Dignon also contends that the lien created by the mortgage held by Household Realty is not necessary for American Business Financial Services, Inc.' reorganization, as the lien adds little or no value to its bankruptcy estate. Washington Mutual believes that it is not economically feasible to attempt to capture any value from the Household Realty lien for the bankruptcy estate as the underlying real property is located out of state. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN MEDIA: Posts $2.3 Mil. Net Loss in First Fiscal Quarter ---------------------------------------------------------------- American Media, Inc. (AMI) reported results for the first quarter ended June 30, 2005. Net loss was $2.3 million for the June 2005 fiscal quarter compared to net income of $700,000 in the prior year's comparable fiscal quarter. This decrease in net income resulted from the circumstances previously mentioned offset by reduced interest expense of $3.0 million. Additionally, the Company's provision for income taxes decreased for the current fiscal quarter by $1.9 million to a $1.3 million benefit compared to the prior year's comparable fiscal quarter, primarily due to the overall reduction in pre-tax income. Revenues for the fiscal quarter ended June 30, 2005 decreased 1.7% to $131.1 million, compared to $133.4 million for the prior year primarily as a result of one less issue of Fit Pregnancy in the current quarter. Operating income for the fiscal quarter ended June 30, 2005 decreased 38.7% to $15.2 million from $24.8 million for the prior year, as a result of the continued investment in quality subscription circulation of $4.4 million and $2.6 million of launch expenses associated with Celebrity Living and Looking Good Now. David J. Pecker, American Media's Chairman, President and CEO commented, "Our current fiscal 2006 quarter reflects our continued reinvestment plan for AMI which we began implementing last year. We continue to see our investment in Star pay dividends with overall circulation up 21%, advertising revenues up 68% and subscriptions up 108%. Additionally, 150 new advertisers have joined the magazine. Advertising Age and Ad Age.com cited Star as 'the leading magazine in the celebrity market with ad page gains of 26.3%' for the first six months of calendar 2005." "In response to the success of lower priced celebrity weeklies, we launched a new glossy title, Celebrity Living, at a $1.89 cover price, the lowest in the category. Celebrity Living contains 100 pages of fashion, beauty, news and lifestyle of celebrities, which differentiates it from all other magazines in the category. During our fiscal 2006 first quarter, we published nine issues of Celebrity Living. The early results are excellent and we plan to be nationally distributed by October." "Looking Good Now is also proving to be very successful through the first six issues of the launch. Current issues are selling at 200,000 copies each and is only being distributed in half the country. It will be fully distributed by October. Looking Good Now reinforces our leadership in the health and fitness market, joining our other publications, Shape, Men's Fitness, Fit Pregnancy, Natural Health, Muscle & Fitness and Flex." Regarding the National Enquirer, Mr. Pecker said, "While Star has not been impacted by the increased competition in the celebrity market, we continue to lose market share with our other weekly newspaper publications which are down 13.5% versus prior year. The primary driver of this decline in newsstand units is the National Enquirer. To address this issue, in April, we relocated the magazine from Florida to New York and hired an entire new editorial team from the U.K. We increased the editorial pages from sixty to seventy-two, changed the editorial content to focus more on celebrity news and crime with less concentration on human interest stories. The cover price was also increased to $2.99 from $2.69. We are happy to report that for the first six issues of our second quarter, the new National Enquirer's unit sales have rebounded and are up 8.4% versus the first quarter." Overall advertising revenues, including the issue of Fit Pregnancy previously mentioned, were $1.5 million or 3.4% better than the prior year's comparable fiscal quarter primarily due to Star which was up $2.2 million or 68%. Overall newsstand revenue was down $1.6 million or 2.3% primarily as a result of a 13.5% reduction in unit sales for our weekly newspaper publications partially offset by cover price increases. As previously mentioned, the primary driver of the decline in newsstand units relates to the National Enquirer. Newsstand sales for Star and our other weekly newspaper publications declined 3.6% and 6.7%, respectively, versus the prior year's comparable fiscal quarter. Other revenues are down approximately $1.2 million or 14.1% due to the inclusion in other revenues of a one-time custom magazine published in the prior year as well as the unfavorable timing of certain international licensing agreements. Operating expenses increased by $7.3 million, or 6.7% as compared to the prior year's comparable fiscal quarter. This increase relates to launch costs for Celebrity Living and Looking Good Now ($2.6 million) coupled with our continued subscription investment to maintain the highest quality subscriptions ($4.4 million) and an increase in depreciation and amortization ($0.9 million). Operating income for the fiscal quarter ended June 30, 2005 decreased 38.7% to $15.2 million from $24.8 million compared to the prior year's fiscal quarter. This decrease resulted from the circumstances previously mentioned. Other income (expense) increased for the current fiscal quarter by $1.7 million to $1.6 million as compared to the prior year's comparable fiscal quarter. The increase in other income (expense) relates to $1.6 million in cash received from a barter advertising agreement during the current fiscal quarter. The Company provided advertising to a third party during fiscal 2001 in exchange for equity in the respective company. There was no revenue recognized related to this transaction; only the cost to provide advertising space. This $1.6 million is not reflected in the Company's Debt Covenant EBITDA. Debt Covenant EBITDA The Company's bank credit agreement requires it to be in compliance with certain maintenance covenants, which include maintaining specified leverage ratios, a consolidated interest expense ratio and a consolidated fixed charge ratio. As of June 30, 2005, the Company was in compliance with all of its covenants. Calculations of the ratios utilize Debt Covenant EBITDA. American Media, Inc., publishes weekly celebrity journalism and health and fitness magazines which includes: Star, Shape, Men's Fitness, Muscle & Fitness, Flex, Fit Pregnancy, Natural Health, Shape en Espanol, National Enquirer, Globe, National Examiner, Weekly World News, Sun, Country Weekly and MIRA!, as well as other special topic magazines. In addition to print properties, AMI owns Distribution Services, Inc., the country's leading in-store magazine sales and marketing company. * * * As reported in the Troubled Company Reporter on June 16, 2005, Standard & Poor's Ratings Services lowered its ratings on American Media Operations Inc., including lowering the corporate credit rating to 'B' from 'B+'. The outlook is now stable. The Boca Raton, Florida-based publisher had total debt of slightly under $1 billion as of March 31, 2005. "The rating action reflects the decline in fiscal fourth-quarter operating performance, eroding tabloid circulation and profitability, increased competition in the celebrity magazine market niche, and rising debt leverage," said Standard & Poor's credit analyst Hal F. Diamond. AMERICAN TOWER: S&P Upgrades Corporate Credit Rating to BB+ ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Boston, Massachusetts-based wireless tower operator American Tower Corp., including the corporate credit rating, which was upgraded to 'BB+' from 'BB'. This follows the completion of the merger between American Tower and SpectraSite Inc. "At the same time, we removed the ratings from CreditWatch, where they were placed on Jan. 14, 2005, with positive implications because of improved operating performance," said Standard & Poor's credit analyst Catherine Cosentino. "The ratings were raised, but remained on CreditWatch when we subsequently placed the ratings of the other tower companies on CreditWatch with positive implications on April 21, 2005, based on our more favorable assessment of the tower sector," she continued. The ratings were last upgraded on July 27, 2005, and remained on CreditWatch positive, pending completion of the merger with SpectraSite. The outlook is stable. Standard & Poor's also withdrew the rating on SpectraSite Inc.'s $200 million senior notes, for which the company successfully tendered in late July. Pro forma debt for the combined company was about $3.8 billion as of June 30, 2005. American Tower has benefited from the growth experienced by the wireless carriers, both in terms of absolute subscribers and per- subscriber minutes of use. The latter in particular has been an ongoing driver of tower co-location growth. Competition led the carriers to offer plans with larger minute volumes for the same average revenues. Moreover, the major carriers have upgraded their networks to provide higher-speed wireless broadband capabilities, which in many cases has required additional tower equipment, especially for the GSM networks. The regional carriers also have increasingly added to their coverage areas to offer competitive plans to the national players, which in turn has elicited added tower leasing revenues. AMERICA WEST: Executives Offered Incentives in US Airways Merger ---------------------------------------------------------------- According to a regulatory filing with the Securities and Exchange Commission, the Compensation Committee of America West Holdings Corporation's Board of Directors approved an incentive plan for its senior executive team to remain on board to work for the success of the soon-to-be merged US Airways and America West -- the New US Airways Group. W. Douglas Parker, America West's Chairman and CEO, has been granted options to purchase an aggregate of 500,000 shares of the company's Class B common stock. The options have an exercise price of $8.65 per share and will start to vest on the second anniversary of the merger. These options will convert into New US Airways Group common stock at the effective time of merger, or will be cancelled if the merger is cancelled. He will also receive 196,000 stock appreciation rights and more than 60,000 units of restricted stock if the merger goes through. Executive vice presidents and senior vice presidents will also receive stock appreciation rights and restricted stock units subject to the terms of the merger. The $1.5 billion US Airways-America West merger is expected to close subsequent to confirmation of US Airways' plan of reorganization and emergence from chapter 11. * * * As previously reported in the Troubled Company Reporter, on May 23, 2005, Standard & Poor's Ratings Services ratings on America West Holdings Corp. and subsidiary America West Airlines Inc., including the 'B-' corporate credit ratings on both entities, remain on CreditWatch with negative implications, where they were placed on April 21, 2005. The CreditWatch update follows the announcement that America West has agreed to acquire US Airways Group Inc., parent of US Airways Inc., both currently operating under Chapter 11 bankruptcy protection and rated 'D.' Standard & Poor's will resolve the CreditWatch through an assessment of the combined companies' business and financial risk profiles. This assessment will focus on labor integration, cost and revenue synergies, and the company's its balance sheet and access to liquidity. Ratings could be affirmed if Standard & Poor's concludes that the combined entity's improved liquidity and expected synergies more than offset intermediate-term labor integration risks. Alternatively, ratings could be lowered modestly if America West is unable to reduce US Airways' losses, which would result in reduced liquidity. 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. America West -- http://www.americawest.com/-- operates more than 900 flights daily to 95 destinations in the U.S., Canada, Mexico and Costa Rica. The airline's 13,500 employees are proud to offer a range of services including more destinations than any other low-cost carrier, first-class cabins, assigned seating, airport clubs and an award-winning frequent flyer program. ANCHOR GLASS: First Meeting of Creditors Set for Sept. 16 --------------------------------------------------------- Felicia S. Turner, the U.S. Trustee for Region 21, will convene a meeting of Anchor Glass Container Corporation 's creditors on Sept. 16, 2005, at 1:30 p.m. at the Office of the U.S. Trustee, at 501 East Polk St. (Timberlake Annex), Room 100-B, in Tampa, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtor's case. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Receives Delisting Notice from the Nasdaq ------------------------------------------------------- On August 5, 2005, Anchor Glass Container Corporation received notice from the NASDAQ Stock Market that, for the last 30 consecutive trading days, Anchor's common stock has not maintained a minimum market value of publicly held shares of $15,000,000 as required for continued inclusion by Marketplace Rule 4450(b)(3). In accordance with Marketplace Rule 4450(e)(1), Anchor will be provided until November 3, 2005, to regain compliance. If, at anytime before November 3, 2005, the MVPHS of Anchor's common stock is $15,000,000 or more for 10 consecutive trading days, Nasdaq will provide written notification that Anchor has achieved compliance with the Rule. If compliance with the Rule cannot be demonstrated by November 3, 2005, Nasdaq will provide written notification that the Registrant's securities will be delisted. Subsequently, on August 8, 2005, Anchor received notice from Nasdaq that after reviewing Anchor's press release on August 8, 2005, announcing that the company filed for protection under Chapter 11 of the Bankruptcy Code, in accordance with Marketplace Rules 4300 and 4450(f), Nasdaq has determined that Anchor's securities will be delisted from The Nasdaq Stock Market at the opening of business on August 17, 2005, unless the company requests a hearing in accordance with the Marketplace Rule 4800 Series. As a result of the bankruptcy filing, the fifth character "Q" was be appended to Anchor's trading symbol. Accordingly, the trading symbol for Anchor's securities, common stock, $0.10 par value, changed from "AGCC" to "AGCCQ" at the opening of business on August 10, 2005. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Look For Bankruptcy Schedules on Sept. 15 ------------------------------------------------------- Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to extend the deadline for filing the Schedules and Statements until September 15, 2005. Pursuant to Rule 1007(b) and(c) of the Federal Rules of Bankruptcy Procedure, a Chapter 11 debtor must file its schedule of assets and liabilities, a schedule of current income and expenditure, a schedule of executory contracts and unexpired leases, and a statement of financial affairs within 15 days after the Petition Date so long as it files a list of its creditors with the bankruptcy petition. Robert A. Soriano, Esq., at Carlton Fields, P.A., in Tampa, Florida, tells Judge Paskay that it was impossible before the Petition Date -- and will be impossible within 15 days thereafter -- for the company to assemble the information necessary to complete and file its Schedules and Statements because of: (a) the substantial size and scope of the Debtor's business; (b) the complexity of its financial affairs; (c) the limited staffing available to perform the required internal review of its accounts and affairs; and (d) the press of business incident to the commencement of its chapter 11 case. "The Debtor is a large and complex enterprise with operations located throughout the United States," Mr. Soriano says. Moreover, the Debtor has hundreds of vendors and numerous other potential trade creditors and hundreds of full-time and part-time employees. The Debtor must ascertain the pertinent information for each of these parties, including addresses and claim amounts, to complete the Schedules and Statements. Mr. Soriano explains that completing the Schedules and Statements will require the collection, review and assembly of information from several locations throughout the United States. Given the urgency with which the Debtor sought Chapter 11 relief and the more critical and weighty matters that the Debtor's limited accounting and legal staff must address in the early days of the case, the Debtor will not be in the position to complete the Schedules and Statements in 15 days. The Debtor intends to complete the Schedules and Statements as quickly as possible under the circumstances. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Summary of Debt Structure & Liabilities ---------------------------------------- In papers filed with the U.S. Bankruptcy Court in Corpus Christi, Texas, ASARCO LLC provides a concise summary of its funded debt obligations and contingent liabilities: =================== Bond and Lease Debt =================== ASARCO has approximately $440 million in long-term bond debt, with maturities ranging from April 2013 to October 2033: Creditor Coupon Maturity Obligation -------- ------ -------- ---------- Lewis & Clark County Environmental Bond (IRB) 5.85% Oct. 2033 $34,800,000 Nueces River Environmental Bond (IRB) 5.60% Jan. 2027 $27,740,000 Lewis & Clark County Environmental Bond (IRB) 5.60% Jan. 2027 $33,160,000 Gila County -- Installment Bond 5.55% Jan. 2027 $71,900,000 CSFB Corporate Debentures 8.50% May 2025 $150,000,000 Nueces River Environmental Bond (IRB) Series 1998 A 5.60% Apr. 2018 $22,200,000 CSFB JP Morgan Secured Debentures 7.875% Apr. 2013 $100,000,000 ================= Other Funded Debt ================= Creditor Obligation -------- ---------- Mitsui & Company (U.S.A.), Inc. $21,000,000 Other Funded Debt $9,000,000 ========================= Environmental Obligations ========================= As a result of ASARCO's 105 years of operating history, ASARCO and certain of its non-operating subsidiaries are subject to actual and potential environmental remediation obligations at numerous sites around the country. There are approximately 94 sites spread over approximately 21 states, in which ASARCO or one of its subsidiaries is alleged to be responsible for environmental clean-up costs, in some cases at the state level (approximately 45 sites), in other cases at the federal level (approximately 38 sites), and in some cases both (approximately 10 joint federal/state sites). ASARCO is a party to numerous consent decrees and lawsuits brought by federal and state governments and private parties as a result of the company's lead, zinc, cadmium, arsenic, and copper mining, smelting, and refining operations. A three-year standstill agreement with the federal government ends in early 2006, and the company is feeling rising pressure from federal and state governments to meet increased remediation demands. ======================= Asbestos-Related Claims ======================= ASARCO's alleged asbestos liabilities relate primarily to historical operations of its CAPCO and LAQ subsidiaries. Although LAQ has not milled asbestos since the late 1980s and CAPCO has not produced asbestos-containing products for over a decade, by the late 1990s, both CAPCO and LAQ had been named in thousands of asbestos lawsuits around the country. As a result of the massive asbestos litigation, five of ASARCO's non- operating subsidiaries filed the Subsidiary Cases currently pending in the U.S. Bankruptcy Court for the Southern District of Texas. Having never mined, milled, manufactured or sold asbestos or asbestos-containing products, ASARCO has no direct liability for any materials or products mined, milled, manufactured or sold by CAPCO or LAQ. Nonetheless, ASARCO has been named as defendant in a large number of the asbestos actions against either CAPCO or LAQ. Although a limited number of the claims are based on direct theories of liability, the majority are derivative of claims against CAPCO or LAQ. To address the derivative actions in a consolidated manner, on June 15, 2005, ASARCO filed an Adversary Proceeding in the Bankruptcy Court seeking a declaration that it is not liable under any alter ego theory for asbestos claims asserted against LAQ or CAPCO. That proceeding is captioned ASARCO LLC v. Lac d'Amiante du Quebec Ltee, et al., Adv. Pro. No. 05-02048, and names the future claimants' representative appointed in the Subsidiaries' chapter 11 cases as a defendant. A copy of that 15-page Complaint, is available at no charge at http://bankrupt.com/misc/05-02048-001.pdf The parties to that lawsuit have agreed to extend the deadline for answering or otherwise defending the complaint to Sept. 13, 2005. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Can Use Mitsui Cash Collateral on an Interim Basis -------------------------------------------------------------- ASARCO LLC doesn't have enough unencumbered cash to fund its operations during the pendency of its Chapter 11 case. Thus, it needs immediate access to cash collateral securing repayment of its prepetition obligations to Mitsui & Co. (U.S.A.), Inc. Karen C. Paul, Senior Assistant General Counsel for ASARCO LLC, relates that in March 1999, Mitsui and ASARCO Inc., a predecessor of the Debtor, entered into a financing transaction whereby ASARCO sold Mitsui 1,000,000 troy ounces of 99.9% pure silver, which Mitsui then immediately leased back to ASARCO. Later that month, the amount of silver increased to 3,000,000 ounces. By 2002, ASARCO had consumed or sold all of the silver subject to the agreements. ASARCO owes Mitsui $21 million. To secure payment of this debt, Mitsui negotiated broader security agreements with ASARCO, and obtained a guaranty from ASARCO's parent company, Grupo Mexico, S.A. de C.V. Mitsui's Lien According to Ms. Paul, Mitsui asserts a lien against the Debtor's inventory of silver, including work in process inventory, like copper anodes and concentrates. "The lien does not expressly extend to accounts receivable, but does extend to proceeds of silver inventory." The Mitsui lien purports to secure a contractual obligation to pay the value of 3,000,000 ounces of silver to Mitsui. The lien is under-secured, Ms. Paul says. As of July 31, 2005, the Debtor's inventory report showed only 2,278,000 ounces of silver inventory, valued at approximately $16,510,000. The Debtor is in the process of updating its inventory report as of the Petition Date. In addition, the Debtor has determined that, as of the Petition Date, it has received approximately $1,280,000 on account of unidentifiable silver contained in sheets of copper anode that was sold and delivered in the ordinary course of business in the 20 days immediately preceding the Petition Date. The Debtor reserves the right to dispute the validity, enforceability and extent of Mitsui's lien. Other UCC Filings Ms. Paul relates that the Debtor ran several UCC-1 lien searches to confirm that no party other than Mitsui held or asserted a lien against any of the Debtor's personal property. These lien searches revealed two types of UCC filings: (1) there were old UCC-1s filed by former creditors that should be withdrawn or terminated because the debt has been paid in full; and (2) ASARCO accepts concentrates and other work-in-process materials from third parties under toll agreements. ASARCO smelts or refines the customer's product for a fee and returns the smelted or refined product, as the case may be, back to the Toll Party. ASARCO benefits from those toll agreements by: -- earning servicing revenue, and -- utilizing what would otherwise be under-capacity in its smelters and refinery, which in turn reduces ASARCO's per unit cost for smelting and refining ASARCO's own inventory. Many of these Toll Parties filed precautionary UCC filings notifying third parties of their interest in materials in ASARCO's possession. Ms. Paul tells Judge Schmidt that the Debtor does not in any way concede that any party holds a validly perfected and enforceable lien against its inventory, accounts receivable or prepetition cash, or that any cash received on account of alleged prepetition collateral would constitute cash collateral. Adequate Protection The Debtor will segregate -- and not spend -- proceeds allocated to the sale of silver inventory as those proceeds are received in the ordinary course pending a final hearing on its request. The Debtor will agree to segregate $1,280,000 upon entry of an interim order. "Segregating the proceeds prevents any potential diminution of value in Mitsui's collateral, and thus Mitsui is adequately protected until this Motion can be set for a final hearing," Ms. Paul says. At the final hearing, ASARCO proposes to grant adequate protection for the use of silver proceeds after that final hearing in this manner: a. The Debtor will continue to provide Mitsui with silver inventory reports on a monthly basis, as it did prior to bankruptcy; and b. To the extent Mitsui is determined to hold a validly perfected and unavoidable lien on silver inventory, and to the extent that Mitsui suffers a diminution in the value of its collateral after the Petition Date, the Debtor will grant Mitsui: (i) a replacement lien on silver inventory acquired after the Petition Date, and (ii) a super-priority claim that will have priority over, and be senior to, all other administrative claims, except with respect to any administrative claim of a postpetition DIP lender. Excluding Mitsui, the Debtor believes that all other parties with a UCC filing either: (i) have been paid in full prior to the Petition Date, and thus have no interest in the Debtor's cash, or (ii) have delivered their property to the Debtor for refining services in exchange for a fee, and thus have filed their UCC's in an abundance of caution. The Debtor intends to honor its contractual obligations under its toll contracts and will not sell the materials that are the subject of those contracts to a third party. Under those circumstances, the Debtor asserts that no adequate protection is required for those parties. Court's Ruling Judge Schmidt grants ASARCO LLC authority to use cash collateral on an interim basis. Pending a final hearing, the Court directs ASARCO to deposit by August 17, 2005, $1,280,000 of proceeds of Mitsui & Co. (U.S.A.), Inc.'s collateral in a newly established separate segregated bank account. As ASARCO sells its copper inventory, the Debtor is directed to continue allocating the proceeds to silver inventory in the same manner that it has done previously. As proceeds of Mitsui's collateral are received, the Debtor will promptly deposit into the Mitsui Cash Collateral Account that portion of the proceeds that the Debtor has allocated to silver inventory. In the event that the Debtor determines that it needs to use funds in the Mitsui Cash Collateral Account, the Debtor may request an emergency hearing, on at least three business days' notice to Mitsui and its counsel, before the Court, provided however, that Mitsui will be entitled to seek further protection, including adequate protection, at the hearing. The Court directs the Debtor to provide Mitsui with reports of the amount of silver inventory on a bi-weekly basis and of the amount of the Cash Collateral that is segregated in the Mitsui Cash Collateral Account on a weekly basis pending a final hearing. The Court will convene a final hearing on August 30, 2005, at 10:30 a.m. in Corpus Christi. Any objection to the Debtor's request must be filed by August 25. Stephen A. Goodwin, Esq., at Carrington, Coleman, Sloman & Blumenthal, LLP, in Dallas, Texas, represents Mitsui in ASARCO's Chapter 11 case. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Gets Court Nod to Use Existing Cash Management System ----------------------------------------------------------------- ASARCO LLC wants to minimize unnecessary costs as well as business disruption by continuing to use its existing cash management system. ASARCO has banking relations with two main depository institutions, JP Morgan Chase & Company and Wells Fargo. Chase Bank, the main depository institution, holds ASARCO's main accounts for receivables and payables. Wells Fargo is used as a secondary depository institution and holds ASARCO's primary investment accounts. Both banks transact business with ASARCO via an electronic banking system. In addition to the Chase Bank and Wells Fargo accounts, ASARCO maintains the various bank accounts, which serve specific purposes. All Bank Accounts are reconciled daily to ensure the accuracy of the information. Additionally, the accounting department reconciles all Bank Accounts once a month. The treasury department has no involvement in any corporate reconcilement process, in order to ensure the security and integrity of the cash management process. Treasury is audited at least twice annually by ASARCO's internal audit staff and annually by ASARCO's external auditors, Keegan, Linscott & Kenon, P.C. ASARCO seeks to continue using the current centralized cash management system and to pay certain debts and obligations. James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas, says that given the complexity of the Debtor's business, as well as the need to preserve and enhance its going concern value, a successful reorganization of the Debtor's business cannot be accomplished if there is substantial disruption in its cash management procedures. Mr. Prince also points out that the basic structure of the cash management system has been used by the Debtor for the last several years, and constitutes the Debtor's ordinary, usual, and essential business practices. The cash management system is similar to those commonly employed by corporate enterprises comparable to the Debtor in size and complexity. According to Mr. Prince, the widespread use of those systems is attributable to the numerous benefits they provide, including the ability to (i) tightly control corporate funds, (ii) ensure cash availability, and (iii) reduce administrative expenses by facilitating the movement of funds and the development of timely and accurate account balance and presentment information. "Motion is granted," Judge Schmidt ruled at the First Day Hearing Friday afternoon. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATHLETE'S FOOT: Files Liquidation Plan & Disclosure Statement ------------------------------------------------------------- The Athlete's Foot Store, LLC, Delta Pace, LLC, and their Official Committee of Unsecured Creditors delivered their Joint Plan of Liquidation and an accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of New York. Under the Plan, the Debtors' businesses will cease to exist after confirmation. A Liquidation Trust will be established as successor-in-interest to the Debtors. The Trust will hold all of the Debtors' assets for distribution to creditors. It will resolve claim disputes. A Litigation Trust will also be established to pursue and recover preferences and fraudulent conveyance claims for the Debtors' estates. Treatment of Claims Pursuant to the terms of the Plan, these creditors will be paid in full: * priority non-tax claims for $1,024,128; and * secured claims for $1,094,174. General unsecured creditors owed approximately $30,284,629 will receive: i) beneficial interests in the Liquidation Trust entitling the holders to recover pro rata shares of any cash from a Distribution Fund; or ii) less favorable treatment that the Debtors or the Liquidation Trustee, the Committee and an unsecured claim holder will agree upon. General unsecured creditors are expected to recover 7% to 10% of their claims. Intercompany claims and equity interests will be cancelled. Creditors' Committee Survives The Official Committee of Unsecured Creditors will not be disbanded upon confirmation of the Plan. The Committee will be given the power to prosecute all litigation causes of action and defenses. It will also continue the adversary proceeding commenced by the Debtors against GMAC Commercial Finance LLC seeking to recover $525,000. Plan Funding A summary of estimated proceeds that will be available for distribution to creditors: Source Estimated Proceeds ------ ------------------ Cash on Hand $2,300,000 to $2,700,000 Professional Fees Carve Out 525,000 525,000 ---------- ---------- Total Estimated Proceeds $2,825,000 $3,230,000 Application of Estimated Proceeds --------------------------------- Chapter 11 Professional Fees $750,000 to $600,000 Wind-down costs 100,000 75,000 -------- -------- Total Estimated Chapter 11 Costs $850,000 $675,000 Estimated Proceeds Available for Distribution $1,975,000 to $2,555,000 Headquartered in New York, New York, Athlete's Foot Stores, LLC, -- http://www.theathletesfoot.com/-- operates approximately 125 athletic footwear specialty retail stores in 25 states. The Company and its debtor-affiliate filed for chapter 11 protection on December 9, 2004 (Bankr. S.D.N.Y. Case No. 04-17779). Bonnie Lynn Pollack, Esq., and John Howard Drucker, Esq., at Angel & Frankel, P.C. represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $33,672,000 and total debts of $39,452,000. BALLY TOTAL: Lenders Extend Cross Default Deadline to Aug. 31 ------------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE: BFT) has received consent from the lenders under its $275 million secured credit agreement to extend to August 31, 2005 the cross default deadline relating to Bally's financial reporting covenant defaults under its public bond indentures. As reported in the Troubled Company Reporter on Aug. 9, 2005, the Company received notices of default under the senior note indentures following the expiration of the waiver of the financial reporting covenant default on July 31, 2005. As a result of the consent from the lenders under the credit agreement, the cross-default deadline has been extended until August 31, 2005. After that date, unless the indenture financial reporting covenant defaults are cured or waived, over $700 million of Bally's debt obligations under its credit agreement and indentures could become immediately due and payable. The Company continues to negotiate with noteholders to secure an extension of the financial reporting covenant default waiver, and has received consent from holders of 96.33% of the Senior Notes and 42.83% of the Senior Subordinated Notes. The Company also announced that it will extend the consent period until August 18, 2005. Except as set forth herein, the terms of the Consent Solicitations remain the same as set forth in the Consent Solicitation Statements previously distributed to noteholders. As previously announced, Bally has retained Deutsche Bank Securities Inc. to serve as its solicitation agent and MacKenzie Partners, Inc. to serve as the information agent and tabulation agent for the consent solicitation. Questions concerning the terms of the consent solicitation should be directed to Deutsche Bank Securities Inc., 60 Wall Street, 2nd Floor, New York, New York 10005, Attention: Christopher White. The solicitation agent may be reached by telephone at (212) 250-6008. Requests for documents may be directed to MacKenzie Partners, Inc., 105 Madison Avenue, New York, New York 10016, Attention: Jeanne Carr or Simon Coope. The information agent and tabulation agent may be reached by telephone at (212) 929-5500 (call collect) or (800) 322-2885 (toll-free). This announcement is not an offer to purchase or sell, a solicitation of an offer to purchase or sell or a solicitation of consents with respect to any securities. The solicitation is being made solely pursuant to Bally's Consent Solicitation Statements and the related Letters of Consent, as amended hereby. Other than as expressly set forth herein, this announcement is not a waiver of any of the terms and conditions set forth in Bally's Consent Solicitation Statements and the related Letters of Consent and is subject thereto in all respects. Notwithstanding Bally's solicitation of waivers, no assurance can be given that an event of default under the indentures will not occur in the future. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Aug. 11, 2005, Moody's Investors Service affirmed the Caa1 corporate family (formerly senior implied) rating and debt ratings of Bally Total Fitness Holding Corporation. The affirmation reflects continued high risk of default and Moody's estimate of recovery values of the various classes of debt in a default scenario. The ratings outlook remains negative. Moody's affirmed these ratings: * $175 million senior secured term loan B facility due 2009, rated B3 * $100 million senior secured revolving credit facility due 2008, rated B3 * $235 million 10.5% senior unsecured notes (guaranteed) due 2011, rated Caa1 * $300 million 9.875% senior subordinated notes due 2007, rated Ca * Corporate family rating, rated Caa1 BALLY TOTAL: Marilyn Seymann Steps Down as Director --------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE:BFT) discloses that Marilyn Seymann will step down from the Board of Directors, effective today. Dr. Seymann, who was appointed to the Board in May of this year, cited her new position as Associate Dean of Arizona State University Law School as the reason for her departure. "Bally Total Fitness and its shareholders deserve directors with more time than I can currently commit to support the turnaround plan in progress. When I accepted the position of director at Bally, I had not yet begun my new responsibilities as Associate Dean. I am concerned about my ability to devote the necessary time to Bally given this new job and my other responsibilities," said Dr. Seymann. "I accepted the position on the Board because I wanted to contribute to the turnaround at Bally, and while I regret the need to depart after a short period, I feel confident that the Company is on the right path and has a strong plan that Paul has developed and will be implemented under his leadership." "Although Marilyn's tenure on the Board was relatively short, we thank her for her contributions and her service to the Company," said Chairman and CEO Paul Toback. "We wish Marilyn well in her new position, and we know that Arizona State University Law School will benefit from her leadership." Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Aug. 11, 2005, Moody's Investors Service affirmed the Caa1 corporate family (formerly senior implied) rating and debt ratings of Bally Total Fitness Holding Corporation. The affirmation reflects continued high risk of default and Moody's estimate of recovery values of the various classes of debt in a default scenario. The ratings outlook remains negative. Moody's affirmed these ratings: * $175 million senior secured term loan B facility due 2009, rated B3 * $100 million senior secured revolving credit facility due 2008, rated B3 * $235 million 10.5% senior unsecured notes (guaranteed) due 2011, rated Caa1 * $300 million 9.875% senior subordinated notes due 2007, rated Ca * Corporate family rating, rated Caa1 BANC OF AMERICA: Fitch Affirms Low-B Rating on Six Cert. Classes ---------------------------------------------------------------- Fitch Ratings affirms Banc of America Commercial Mortgage Securities 2004-1: -- $73.3 million class A-1 at 'AAA'; -- $293.9 million class A-1A at 'AAA'; -- $128.0 million class A-2 at 'AAA'; -- $100.1 million class A-3 at 'AAA'; -- $521.9 million class A-4 at 'AAA'; -- Interest-only (IO) class X-C at 'AAA'; -- Interest-only (IO) class X-P at 'AAA'; -- $31.5 million class B at 'AA'; -- $13.3 million class C at 'AA-'; -- $29.9 million class D at 'A'; -- $13.3 million class E at 'A-'; -- $18.2 million class F at 'BBB+'; -- $11.6 million class G at 'BBB'; -- $19.9 million class H at 'BBB-'; -- $6.6 million class J at 'BB+'; -- $6.6 million class K at 'BB'; -- $8.3 million class L at 'BB-'; -- $8.3 million class M at 'B+'; -- $3.3 million class N at 'B'; -- $3.3 million class O at 'B-'; Fitch does not rate the $21.6 million P class. The affirmations are the result of stable performance and minimal collateral paydown since issuance. As of the July 2005 distribution date, the pool's aggregate principal balance has decreased 1.1% to $1.31 billion from $1.33 billion at issuance. Fitch maintains investment-grade credit assessments on two loans in the trust: the Leo Burnett Building (9.1%) and the Hines- Sumitomo Life Office Portfolio (8.0%) loans. The Leo Burnett Building is a 1.1 million square foot office property located in Chicago, IL. Occupancy was 98.2% as of year-end 2004, unchanged since issuance. Based on the year-end 2004 servicer reported financials, the Fitch stressed debt service coverage remains stable at 1.63 times (x) versus 1.66x at issuance. The Hines Sumitomo portfolio is secured by three office properties, with a total of 1.2 million square feet. Two of them are located in New York, NY and one in Washington, DC. The combined year-end 2004 DSCR was 2.08 times (x) compared with 1.84x at issuance. The average occupancy was 99% as of year-end 2004, unchanged since issuance. BANKAMERICA: Fitch Holds Rating on 13 Cert. Classes at Junk Level ----------------------------------------------------------------- Fitch Ratings has performed a review of the BankAmerica Manufactured Housing transactions. Based on the review, these rating actions have been taken: Series 1995-BA1: -- Class A-3 is affirmed at 'AAA'; -- Class A-4 is upgraded to 'AAA' from 'AA-'; -- Class B-1 remains at 'CCC'; -- Class B-2 remains at 'C'. Series 1996-1: -- Class A-6 is affirmed at 'AAA'; -- Class A-7 is upgraded to 'AAA from 'AA-'; -- Class B-1 is remains at 'C'; -- Class B-2 is remains at 'C'. Series 1997-1: -- Classes A-8 and A-9 are affirmed at 'AAA'; -- Class M remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'; Series 1997-2: -- Classes A-8 and A-9 are affirmed at 'AAA'; -- Class M remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'; Series 1998-1: -- Class A-1 is affirmed at 'AAA'; -- Class M is affirmed at 'BBB'; -- Class B-1 is affirmed at 'B'; -- Class B-2 remains at 'C'; Series 1998-2: -- Class A-7 is affirmed at 'AAA'; -- Class M is affirmed at 'B'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. BankAmerica Housing Services was purchased by Greenpoint Credit in 1998. Greenpoint exited the manufactured housing lending business in early 2002 but continued to act as servicer for its manufactured housing portfolio until the assets and servicing rights were acquired by GreenTree Servicing in the fourth quarter of 2004. GreenTree has implemented several changes since the servicing transfer was completed. Among the changes, GreenTree has reduced the number of loan modifications, reduced the number of non-repossession charge-offs and significantly increased the number of collectors working on accounts in the 1-29 day delinquency bucket. Despite the reduction in loan modifications, reported delinquency and repossession inventories have declined since the servicing transfer. The transactions reviewed pay interest and principal due to the senior outstanding bond prior to paying interest to subordinate bonds -- a structure commonly referred to as an IP-IP structure (Interest-Principal/ Interest-Principal). As opposed to a structure which pays interest to all bonds prior to paying any principal, an IP-IP structure generally reduces the credit risk to the senior class at the expense of the mezzanine and subordinate certificates. The BAMH senior classes remain well protected while the mezzanine and subordinate classes have accrued significant interest shortfall amounts. The payment priority distribution is not expected to change as all of the transactions will fail performance triggers for the remainder of each pool's life. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ BIRCH TELECOM: Files Chapter 22 Petition in Delaware ---------------------------------------------------- Birch Telecom, Inc., and its 28 subsidiaries filed for chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington after talks on a prepackaged chapter 11 plan failed. The Debtors intend to use the chapter 11 process to: -- promptly file a reorganization plan; -- preserve the value of their businesses; -- maximize recoveries to stakeholders to the extend possible; and -- restructure and reduce their indebtedness. "We evaluated several options for restructuring our debt and concluded that, in light of all circumstances facing the Company, filing for chapter 11 is the most effective course of action for Birch," Gregory C. Lawhon, the Company's new chief executive officer, said. "The chapter 11 process will allow us to substantially improve our balance sheet and capital structure while we continue to operate our business and focus on what we have always offered our customers, namely reliable service, easy conversion, better prices and a better way of doing business." Birch expects its operations to continue without interruption during the chapter 11 process and said that its customers will not experience changes in services or quality. Financial Downturn On July 29, 2002, Birch Telecom and 22 of its subsidiaries commenced a prepackaged chapter 11 case (Bankr. D. Del. Case No. 02-12218) to accomplish a financial restructuring that was then required to address then-existing competitive pricing pressures, adverse economic conditions and relatively limited capital resources. The joint prepackaged plan of reorganization filed in 2002 contemplated, among other things, the replacement of their then- existing senior credit facility with the Second Amended and Restated Credit Agreement in the principal amount of $100 million. On Sept. 18, 2002, the United States District Court for the District of Delaware confirmed the prepackaged plan. The plan took effect in October 2002. Following the prepackaged chapter 11 proceeding on July 29, 2002, and the Ionex Merger in 2004, the Debtors began to experience liquidity problems due to price competition, customer turnover and federally mandated limits on telecommunications pricing, which led to certain management changes. In September 2004, the Debtors defaulted under their Credit Agreement by failing to make a scheduled $5 million amortization payment due to its lenders. Following negotiations, the senior lenders agreed to forbear from exercising their remedies under the Credit Agreement. Restructuring Alternatives In the first quarter of 2005, the Debtors tried negotiating an out-of-court restructuring or a prepackaged chapter 11 plan with the senior lenders. Those talks weren't fruitful. In its effort to explore other restructuring alternatives, including the possible sale of its businesses (in whole or part), the Debtors and their advisors identified potential purchasers and solicited offers of interest from financial and strategic buyers. To date, the Debtors have not received binding, non-contingent third-party purchase offers or other proposals that represent a sufficient basis for the Company's needed financial restructuring. Liquidity Credit Agreement After the Company explored possible alternative sources of interim liquidity, Birch Group and Birch Telecom Finance, Inc., entered into a Liquidity Credit Agreement with a consortium of lenders led by Bank of America, N.A, on Apr. 29, 2005. The lenders extended needed additional liquidity secured by first priority liens on substantially all of the Debtors' assets. On Aug. 8, 2005, the Company repaid the outstanding amounts, and paid reimbursable fees and expenses incurred by the senior lenders under the credit agreement. As of Aug. 12, 2005, the Debtors' obligations under the Credit Agreement totaled approximately $108.7 million. Workforce Reduction Last week, Birch Telecom reduced its workforce by 330 employees, cutting its total headcount to 525. DIP Financing In conjunction with the chapter 11 filing, the Company's senior lenders have committed to provide debtor-in-possession financing to fund the Company's operations during the chapter 11 proceedings. The Company believes that, upon Court approval, the DIP financing, combined with the Company's operating revenue, will provide sufficient funding for operations during the bankruptcy process, including postpetition obligations to suppliers. Commercial Agreements Earlier this year, Birch signed a commercial agreement with BellSouth under which Birch provide will provide wholesale local phone services throughout the nine-state BellSouth region in the southeast United States. Since then, Birch has met and exceeded its sales goals in that region and continues to attract and retain new customers. Additionally, Birch recently signed a five-year commercial wholesale telecom agreement with SBC Communications. This agreement will allow the Company to continue to: -- provide wholesale local and long distance phone service to customers in Kansas, Missouri, Oklahoma, and Texas; -- accept orders for new services; and -- accommodate requests for moving, adding or changing lines. However, as part of the Company's revamped sales and marketing strategy, it has closed down its sales offices in those markets and will be selling new services through inside-sales channels instead. "We appreciate the ongoing loyalty and support of our employees during what has been a period of great uncertainty and transition for Birch," Lawhon said. "I thank them for their dedication and hard work, which is critical to our success. I also thank our customers and suppliers for their support during this restructuring process. The management team is committed to making this restructuring successful and leading Birch toward a brighter future." In 2004, the Company recognized over $292 million in revenue. Headquartered in Kansas City, Missouri, Birch Telecom, Inc. and its subsidiaries -- http://www.birch.com/-- owns and operates an integrated voice and data network, and offers a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long-distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. Birch Telecom and 28 affiliates filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del. Case Nos. 05-12237 through 05-12265). Marion M. Quirk, Esq., and Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. BIRCH TELECOM: Case Summary & 40 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Birch Telecom, Inc. 2300 Main Street, Suite 600 Kansas City, Missouri 64108 Bankruptcy Case No.: 05-12237 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Birch Telecom 1996, Inc. 05-12238 Ionex Communication, Inc. 05-12239 Ionex Communication North, Inc. 05-12240 Ionex Communication South, Inc. 05-12241 Ionex Telecommunications Leasing Inc. 05-12242 Telecom Resources, Inc. 05-12243 Birch Equipment, Inc. 05-12244 Birch Internet Services, Inc. 05-12245 Birch Kansas Holdings, Inc. 05-12246 Birch Management Corporation 05-12247 Birch Telecom Finance, Inc. 05-12248 Birch Telecom of Arkansas, Inc. 05-12249 Birch Telecom of Kansas, Inc. 05-12250 Birch Telecom of Missouri, Inc. 05-12251 Birch Telecom of Nebraska, Inc. 05-12252 Birch Telecom of Oklahoma, Inc. 05-12253 Birch Texas Holdings, Inc. 05-12254 Birch Telecom of the Great Lakes, Inc. 05-12255 Birch Telecom of the South, Inc. 05-12256 Birch Telecom of the West, Inc. 05-12257 Capital Communications Corporation 05-12258 Dunn & Associates, Inc. 05-12259 I.S. Advertising, Inc. 05-12260 Telesource Communications, Inc. 05-12261 American Local Telecommunications LLC 05-12262 Birch Telecom of Texas Ltd., LLP 05-12263 G.B.S. Communications, Inc. 05-12264 M.B.S. Leasing, Inc. 05-12265 Type of Business: Birch owns and operates an integrated voice and data network, and offers a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long- distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. The Debtors serve 130,000 customers in more than 50 metropolitan markets across 12 states. See http://www.birch.com/ Birch Telecom and 22 of its subsidiaries previously filed for chapter 11 protection on July 29, 2002 (Bankr. D. Del. Case No. 02-12218) and emerged from chapter 11 in October 2002. Details about the first chapter 11 proceeding have appeared in the Troubled Company Reporter since July 30, 2002. Chapter 11 Petition Date: August 12, 2005 Court: District of Delaware Judge: Peter J. Walsh Debtors' Counsel: Marion M. Quirk, Esq. Mark S. Chehi, Esq. Skadden Arps Slate Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 Tel: (302) 651-3000 Fax: (302) 651-3001 Debtors' Financial Advisor: Miller Buckfire & Co., LLC Debtors' Financial & Restructuring Manager: AEG Partners LLC Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Debtor's 40 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Southwestern Bell Telephone Trade Debt $19,772,513 Company 311 South Akard Street Four Bell Plaza, 9th Floor Dallas, TX 75202-5398 Attn: Glen Sirles Vice President Tel: (214) 858-0700 Fax: (214) 464-2705 BellSouth Trade Debt $7,362,361 Telecommunications, Inc. 600 North 19th Street, 9th Floor Birmingham, AL 35203 Attn: CLEC Account Team David E. Scott Other $1,088,561 73 Janssen Place Kansas City, MO 64109 Verizon Trade Debt $705,784 P.O. Box 920041 Dallas, TX 75392-0041 Attn: John Pricken Vice President Tel: (212) 395-2804 Fax: (212) 764-2450 AT&T Trade Debt $640,398 2800 Century Parkway, NE Atlanta, GA 30345-3111 Attn: Norm Collins Vice President Tel: (913) 393-4637 Fax: (404-329-7211 VeriSign, Inc. Trade Debt $616,941 4501 Intelco Loop SE Lacey, WA 98503 Attn: Contract Administrator Tel: (360) 493-6000 David Vranicar Other $612,971 12116 Westgate Overland Park, KS 66213 Ciena Corporation Trade Debt $469,648 1201 Winterson Road Linthicum, MD 21090 Attn: Tony Tappan Vice President for Sales Tel: (913) 402-4802 Fax: (913) 402-4801 Qwest Communications Trade Debt $450,654 Corporation 1801 California Street, Suite 2420 Denver, CO 80202 Attn: Roland Thomton Executive Vice President Tel: (888) 496-7447 Fax: (303) 965-2710 Dynavar Networking Corporation Trade Debt $399,572 800 Bellevue Way NE, Suite 400 Bellevue, WA 98004 Attn: Sean MacNeill, Sr. Vice President for Sales & General Manager Tel: (888) 664-7577 Fax: (425) 462-5638 Telcove Trade Debt $332,271 P.O. Box 931843 Atlanta, GA 31193-1843 Attn: Jim McMullin Senior Account Manager for Carrier Services Tel: (316) 658-6129 Fax: (316) 209-8815 Intec Billing America, Inc. Trade Debt $330,054 4445 Calgary Trail Southbound Seventh Floor Edmonton, AB T6H 5R7 CANADA Attn: Cheryl Yackimec Tel: (780) 430-2573 Fax: (780) 430-2111 David M. Hollingsworth Other $312,500 15316 Iron Horse Circle Leawood, KS 66224 Verilink Corporation Trade Debt $299,562 127 Jetplex Circle Madison, AL 35758 Attn: Wayne Shackelford Tel: (512) 715-8282 Fax: (256) 327-2715 Unipoint Holdings, Inc. Trade Debt $218,318 6500 River Place Boulevard Building 2, Suite Austin, TX 78730 Sean Pyle Other $204,327 13709 Granada Drive Leawood, KS 66224-3001 Sprint Communications Company Trade Debt $199,585 MCI Trade Debt $192,422 DST Realty Inc. Rent $169,348 Oracle Corporation Trade Debt $161,157 Grande Communications Trade Debt $160,427 Network, Inc. MC Lioness Realty Group LLC Rent $153,342 WilTel Communications, LLC Trade Debt $147,833 Steven Faulkner Other $135,417 Solarcom LLC Trade Debt $130,351 Lynne Sangimino Other $127,013 Syniverse Technologies, Inc. Trade Debt $118,705 Toshiba America Information Trade Debt $114,327 Systems, Inc. Cellular One Trade Debt $113,408 Consolidated Communications Trade Debt $101,435 Operator Services, Inc. Valor Telecommunications Trade Debt $99,240 Independent NECA Services Trade Debt $92,711 IOS Capital Other $88,748 South Dakota Network, LLC Trade Debt $84,269 Westin Mission Hills Resort Other $83,902 Mayer, Brown, Rowe & Maw, LLP Consulting Services $81,661 ADS MB Corporation Trade Debt $80,000 Fair Isaac & Co., Inc. Trade Debt $70,252 KMC Telecom III Trade Debt $67,767 Tellabs Operations, Inc. Trade Debt $66,968 BIRCH TELECOM: Gregory Lawhon Replaces Mike Cassity as CEO ---------------------------------------------------------- Birch Telecom, Inc., disclosed the resignation of Mike Cassity as its chief executive officer, effectively immediately. He has been replaced by Gregory C. Lawhon, who has served as Senior Vice President and General Counsel since Birch was founded in 1997. Lawhon was selected by the Board of Directors based on his extensive experience managing the Debtors' wholesale business and his uncompromising faith in Birch's refocused business strategy. "I am excited about the opportunity to make Birch a stronger Company as we focus on a strategy that maximizes profitability in the new regulatory environment," said Mr. Lawhon. "On behalf of the Board of Directors, I would like to thank Mike Cassity for his hard work and contributions to Birch. We wish him well in his future endeavors," Mr. Lawhon added. Headquartered in Kansas City, Missouri, Birch Telecom, Inc. and its subsidiaries -- http://www.birch.com/-- owns and operates an integrated voice and data network, and offers a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long-distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. Birch Telecom and 28 affiliates filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del. Case Nos. 05-12237 through 05-12265). Marion M. Quirk, Esq., and Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. Birch Telecom and 22 of its subsidiaries previously filed for chapter 11 protection on July 29, 2002 (Bankr. D. Del. Case No. 02-12218). Details about their previous chapter 11 filings have appeared in the Troubled Company Reporter since July 30, 2002. Birch Telecom and its debtor-affiliates have successfully emerged from bankruptcy just two months after filing for Chapter 11. BLACKBIRD CROSSING: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Blackbird Crossing, LLC, fdba Blackbird Fly Shop & Lodge P.O. Box 998 Victor, Montana 59875 Bankruptcy Case No.: 05-62660 Type of Business: The Debtor used to operate a fishing and hunting lodge. Chapter 11 Petition Date: August 12, 2005 Court: District of Montana (Butte) Judge: Ralph B. Kirscher Debtor's Counsel: Harold V. Dye, Esq. Dye & Moe, P.L.L.P. P.O. Box 9198 Missoula, Montana 59807-9198 Tel: (406) 542-5205 Total Assets: $1,216,835 Total Debts: $861,271 Debtor's 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mark Bachik $360,000 2385 East Windmill Lane, Suite 160 Las Vegas, NV 89123 US Bank $8,850 Client Services 3451 Harry S. Truman Boulevard Saint Charles, MO 63301 David Markette $7,220 P.O. Box 515 Hamilton, MT 59840 David Markette $6,500 Ravalli County Treasurer $3,539 Capital One Bank $3,350 First American Title $1,620 UMPQUA $1,331 Dell Financial Services $957 Ritz Carlton $825 G. Loomis $757 Peterson & Owings $655 Painted Rocks Water $400 Dell Financial Services $399 Farmers State Bank $217 BLOCKBUSTER INC: Low Liquidity Prompts Fitch to Junk Ratings ------------------------------------------------------------ Fitch has downgraded Blockbuster Inc. to: -- Issuer default rating (IDR) to 'CCC' from 'B+'; -- Senior secured credit facility to 'CCC' from 'B+' with an 'R4' recovery rating; -- Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating. The Rating Outlook remains Negative. Approximately $1.2 billion of debt is affected by the action. The downgrades and Negative Outlook are a result of Blockbuster's continued operating performance weakness, significantly lower liquidity position, and need for additional waivers from its bank lenders. The rating and Outlook reflect the company's ongoing necessity to request waivers and concerns about the successful reshaping of its business model introduce default as a real possibility. For a second time in as many quarters, the company has been forced to request waivers for its credit facility to provide relief for certain financial covenants for the third and fourth quarters of 2005 in addition to amending certain other aspects of the credit agreement. Without the waivers, the company would be in default of the leverage ratio covenant for the second quarter of 2005. Given Blockbuster's recent operating performance, the Negative Outlook reflects Fitch's belief that the company will have difficulty generating minimum required EBITDA targets that were recently added to the company's financial covenants, including minimum EBITDA threshold of $250 million cumulative for the third and fourth quarters of 2005. To avoid EBITDA covenant breaches, the company would have to achieve EBITDA levels that have not occurred since 2003. Importantly, the company's EBITDA levels were below this threshold in the second half of 2004 and included revenues from late fees. Given that the fourth quarter is a seasonal high point, it is not surprising that the waiver period or the minimum EBITDA covenant coincide for lenders to evaluate performance, progress with strategic alternatives, and their position after the company's traditionally strongest quarter. For the second quarter ended June 30, 2005, Fitch anticipated break-even free cash flow versus actual free cash flow of negative $123 million and also expected positive free cash flow in the third quarter. Given management's withdrawal of 2005 guidance and its belief that the third quarter will also be negatively affected by weak operating performance, Fitch expects it will be challenging for the company to return to positive free cash flow for the third quarter of 2005. As a result, Fitch believes the company's liquidity position could deteriorate further from the approximately $260 million of availability as of June 30, 2005 between cash and revolver, representing an even tighter safety margin of financial flexibility given recent negative free cash flow trends and the company's current negative working capital position. The company's credit metrics have continued to weaken, and Fitch believes that significant challenges exist for the company to return to operating performance levels that are consistent with a single-B IDR. For the last 12 months ended June 30, 2005, EBITDAR/(interest plus rent) is approximately 1.3 times (x) and adjusted leverage (using rent times 8) is approximately 7.3x during the same period. CFO/capital expenditures is approximately 0.5x, and Fitch does not anticipate it to increase above 1.0x in the intermediate term. Overall, Fitch remains concerned about Blockbuster's operational and financial policies, which have included major changes to its business model in response to weakening market conditions. These changes include the elimination of late rental fees, historically representing 50% of operating income. Fitch views the elimination of late fees, with margins over 60%, as particularly risky and challenging to replace over the longer term. The company is now required to offset this source of operating profit with substantial increases in rental and merchandise revenues, which may become increasingly difficult due to price discounting employed by Blockbuster's online division and continued strong competition in the home video/DVD market from mass merchants. While Fitch recognizes that the company's online initiative is a growing business, cash flow will be pressured by the increased investment required in its rental library to support both the online and in-store rental segments and an overall higher cost structure associated with new initiatives. BLOCKBUSTER INC: Moody's Junks Senior Subordinated Notes -------------------------------------------------------- Moody's Investors Service downgraded the long term debt ratings of Blockbuster Inc. (corporate family to B3 and subordinated notes to Caa3) and the Speculative Grade Liquidity Rating to SGL-4. The outlook is negative. The downgrade of both the long term and the speculative grade liquidity ratings is prompted by the erosion in Blockbuster's liquidity as a result of weak second quarter results which were significantly below Moody's expectations, as well as the risk that the company may violate its fourth quarter bank covenants. The downgrade of the subordinated notes to Caa3 reflects Moody's expectations of recovery value in a distressed scenario, if it were to occur, given the large amount of bank debt ahead of this class of bondholders. While top line revenue has deteriorated slightly, earnings and free cash flow have fallen very significantly as a result of additional expenses that were not adequately forecasted by the management team. The on-line subscription program accounted for half of the decline in gross margin due to higher than anticipated shipping costs, as well as the unforeseen additional rental inventory purchases that were necessary to support the program. Additionally, Blockbuster's decision to eliminate late fees continues to impact profitability and has also contributed to higher inventory purchases because customers retain rental DVD and videos longer than in the past. Adjusted EBITDA (which adjusts for rental amortization and purchases) for the second quarter of 2005 was $(3.2) million versus Moody's expectation of around $70 million. Free cash flow before dividends for the quarter was $(123.2) million versus Moody's expectations of $(13) million. The company's weak second quarter results would have resulted in a covenant violation if the bank group had not approved a waiver on August 8, 2005. The bank group agreed to waive the financial covenants for the second and third quarter in exchange for the amendment of certain provisions, including an increase in pricing, the pledging of collateral to encompass accounts receivable and inventory, and a reduction in the restricted payments basket to $100 million. The downgrade to SGL-4 (weak liquidity) from SGL-3 (adequate liquidity) reflects Moody's expectation that Blockbuster is at risk to violate its fourth quarter covenants without further relief provided by the bank group. Although Blockbuster received a waiver for its second and third quarter financial covenants, Moody's expects that the company will be challenged to meet the covenants that apply at the end of the fourth quarter. Moody's anticipates that Blockbuster will generate negative free cash flow for the fiscal year ended December 31, 2005. This shortfall will be financed with borrowings under the company's revolving credit facility. Blockbuster has a $500 million revolving credit agreement. After deducting out the Viacom letters of credit and outstanding borrowings, $120 million was available under the facility. The B3 corporate family rating reflects Blockbusters significantly reduced level of liquidity and a lower level of expected operating performance as a result of management's new initiatives. The rating category reflects Moody's expectation that operating income for fiscal year 2005 will not cover interest expense and that earnings over the next 12 to 18 months will continue to be constrained by the cost of management's new initiatives. As a result of its weak cash flow generation, leverage has risen significantly, with Debt/EBITDA (using Moody's standard analytical adjustments) at 7.3x on a LTM basis as of June 30. The new rating category also reflects the continued erosion of the rental industry, as well as management's aggressive strategy for dealing with this shift in its business environment. The ratings continue to be supported by Blockbuster's clear leadership and global presence in the area of video and game rentals and its high brand value. The negative outlook reflects Moody's concern that Blockbuster could violate its financial covenants in the fourth quarter should the company not be able to cut costs and grow revenues as it plans in the second half of the year. The company's ratings could be further downgraded if third quarter performance does not indicate that Blockbuster is on track to grow earnings and cash flow sufficiently to comply with its covenants over the balance of the year. To stabilize the rating outlook, Blockbuster needs to demonstrate that it can generate sufficient earnings and cash flow to meet the financial covenants in its bank credit facilities and that it has reasonable prospects of reducing leverage to a manageable level. These ratings are downgraded: * Corporate family rating to B3 from B1; * Senior secured bank credit facilities to B3 from B1; * Senior subordinated notes to Caa3 from B3. * Speculative grade liquidity rating to SGL-4 from SGL-3. Blockbuster Inc., headquartered in Dallas, Texas, is a leading global provider of in-home movie and game entertainment with approximately 9,100 stores throughout the: * Americas, * Europe, * Asia, and * Australia. Total revenues for fiscal year 2004 were $6.1 billion. BROCKWAY PRESSED: Committee Taps Guy Fustine as Counsel ------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania gave the Official Committee of Unsecured Creditors appointed in Brockway Pressed Metals, Inc.'s chapter 11 case permission to employ Guy C. Fustine, Esq., at Knox McLaughlin Gornall & Sennett, P.C., as its counsel, nunc pro tunc to June 24, 2005. Mr. Fustine will perform legal services necessary and appropriate for the seven-member Committee to exercise its statutory powers under Sec. 1103(c) of the U.S. Bankruptcy Code. Court records do not disclose Mr. Fustine's current billing rate. Mr. Fustine assures the Court that it does not represent any interest materially adverse to the general creditors or the Creditors' Committee. Headquartered in Brockway, Pennsylvania, Brockway Pressed Metals, Inc. -- http://www.brockwaypm.com/-- manufactures a wide range of highly engineered metal parts and sub-assemblies. The Company specializes in automotive applications, including engine and transmission components, electronic actuators, steering components, cruise control devices, assembled camshafts, and gas springs. The Company filed for chapter 11 protection on June 8, 2005 (Bankr. W.D. Pa. Case No. 05-11891). Robert S. Bernstein, Esq., at Bernstein Law Firm, P.C., and Daniel A. Zazove, Esq., at Perkins Coie LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. CALPINE CORP: Closes $84.5 Million Plant Sale to Mitsubishi Unit ---------------------------------------------------------------- Calpine Corporation [NYSE:CPN] completed the sale of its interest in the 156-megawatt Morris Power Plant to Diamond Generating Corporation, a wholly owned subsidiary of Mitsubishi Corporation, for approximately $84.5 million. The sale of Morris is part of Calpine's previously announced strategic initiative focused on reducing debt, increasing cash flow and optimizing its North American power plant portfolio. Calpine will use the net proceeds from this asset sale in accordance with its existing bond indentures. The company expects to record a loss on the sale of Morris totaling approximately $106.2 million in the quarter ended June 30, 2005. Located in Morris, Illinois, the Morris Power Plant is a 156-megawatt natural gas-fired power plant that entered into commercial operations in 1998. Morris delivers electricity and steam to Equistar Chemicals under a long-term energy services agreement. Calpine acquired its interest in Morris in 1999 as part of its acquisition of Cogeneration Corporation of America. Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in the Troubled Company Reporter on June 23, 2005, Standard & Poor's Ratings Services assigned its 'CCC' rating to Calpine Corp.'s (B-/Negative/--) planned $650 million contingent convertible notes due 2015. The proceeds from that convertible debt issue will be used to redeem in full its High Tides III preferred securities. The company will use the remaining net proceeds to repurchase a portion of the outstanding principal amount of its 8.5% senior unsecured notes due 2011. S&P said its rating outlook is negative on Calpine's $18 billion of total debt outstanding. As reported in the Troubled Company Reporter on May 16, 2005, Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). CARL YERKEL: Case Summary & 7 Known Creditors --------------------------------------------- Debtor: Carl Yerkel 3900 Marquette Dallas, Texas 75225 Bankruptcy Case No.: 05-39136 Chapter 11 Petition Date: August 12, 2005 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (972) 991-5591 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 7 Known Creditors: Entity Claim Amount ------ ------------ IRS Unknown 1100 Commerce Street Mail Code 5027 Dallas, TX 75242 Jan Soifer Unknown Delgado, Acosta, Braden, Jones & Hayes 701 Brazos, Suite 650 Austin, TX 78701 John W. Vinson Unknown Assistant Attorney General Charitable Trust Section-Cosumer Protect 300 West 15th Street, 9th Floor Austin, TX 78701 King Foundation Unknown 900 Pennsylviania Street Denver, CO 80203 Ronald J. Sommers Unknown Nathan Sommers Jacob + Gorman 2800 Post Oak Boulevard, 61st Floor Houston, TX 77056 Susan A. Kidwell Unknown Locke Liddel & Sapp, LLP 100 Congress Avenue, Suite 300 Austin, TX 78701-4042 Underwood, Perkins & Raision, P.C. Unknown 5420 LBJ Freeway, Suite 1900 Dallas, TX 75240 CCO HOLDINGS: Fitch Places CCC+ Rating on $300 Mil. Senior Notes ---------------------------------------------------------------- Fitch Ratings has assigned a 'CCC+' rating to a proposed offering of $300 million of 8.75% senior notes due 2013 issued by CCO Holdings, LLC and CCO Holdings Capital Corporation in a private transaction. Additionally, Fitch has assigned an 'R3' recovery rating to the notes. CCO Holdings, LLC is an indirect wholly owned subsidiary of Charter Communications, Inc. CHTR has an issuer default rating of 'CCC'. CHTR expects to use the proceeds from the offering to pay interest expenses and for general corporate purposes. The terms of the notes are expected to be identical to CCO Holdings, LLC's existing 8.75% notes due 2013. CHTR's ratings reflect its highly levered balance sheet and the absence of any meaningful prospects to delever its balance sheet over the near term. Consolidated debt to EBITDA as of the end of the second quarter was 9.84 times (x) and pro forma for the new issuance the leverage metric is 9.99x. Fitch's ratings incorporate its expectation that CHRT will continue to generate negative free cash flow given the company's operating profile, elevated capital expenditures, and the increasing cash interest requirements on debt that has converted to cash interest payment or is scheduled to convert to cash interest payment. Additionally, Fitch's ratings reflect Charter's weak operating performance relative to its peer group and the high business risks associated with Charter's competitive operating environment. Fitch's view is that Charter has not been as successful as other large MSOs in mitigating the effects of competition from Direct Broadcast Satellite providers and regional bell operating companies. Fitch believes that CHTR's capital structure will continue to hinder its ability to generate free cash flow. During the first half of 2005, cash requirements for interest expense increased approximately 18% relative to the first half of 2004. During 2005, Charter Communications Holdings, LLC 11.75% senior discount notes due 2010 converted to cash-pay interest, which added approximately $53 million to annual cash interest expense requirements. Free cash flow will be further pressured during 2006 as Holdings' 13.5% senior discount notes due 2011 and its 11.75% senior discount notes due 2011 are scheduled to convert to cash interest, adding approximately $200 million of incremental cash interest expense requirements. For the year-to-date period ended June 30, 2005, CHTR reported negative $361 million of free cash flow, reflecting an erosion of 63% relative to the first half of 2004. The negative free cash flow is primarily driven by increased cash interest expense and capital expenditures. From Fitch's perspective, the company's ability to generate free cash flow over the near term is constrained by limited EBITDA growth prospects and the conversion of discount notes issued by Holdings to cash pay interest. The company's liquidity position is supported by the $870 million available under the company's secured credit facility, all of which is available for borrowing under the covenant structure. The company's debt maturity schedule consists of $15.0 million for the remainder of 2005 and $55.0 million in 2006. The remaining 2005 maturities consist of two quarterly amortization payments of $7.5 million from the company's term loan B. The 2006 maturities consist of $30 million of amortization from term loan B and the maturity of the CHTR 4.75% convertible notes. The company addressed a sizable 2007 maturity by issuing $333 million of Charter Communications Operating notes with terms identical to Charter Communications Operating's 8.375% senior second lien notes due 2014 in exchange for approximately $346 million of Holdings 8.25% senior notes due 2007. In light of Fitch's expectation of limited near term EBITDA growth, Fitch does not expect any meaningful improvement of credit protection metrics. Reflective of CHTR's operating environment, during the LTM period ended June 30, 2005, the company lost approximately 190,000 basic subscribers including 41,700 subscribers in second quarter of 2005. Fitch acknowledges that the pace of subscriber losses has eased somewhat during the first half of 2005; however, the subscriber losses are among the highest in the industry and continue to demonstrate the negative impact of the competitive pressure from the direct broadcast satellite operators. CHARTER COMMUNICATIONS: Prices $300 Million 8.75% Senior Notes -------------------------------------------------------------- Charter Communications, Inc. (NASDAQ: CHTR) disclosed that its subsidiaries, CCO Holdings, LLC, and CCO Holdings Capital Corp. agreed to issue $300 million principal amount of 8.75% Senior Notes due 2013 in a private transaction. The purchase price of the Notes will be approximately 98.001% of the principal amount plus accrued interest from May 15, 2005, and have terms substantially identical to the terms of the issuers' existing 8.75% Senior Notes due 2013. The Notes will not be registered under the Securities Act of 1933, as amended (the Securities Act), and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. The Company said that, subject to market conditions, it anticipated that the sale would be completed within the next week. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes in any state in which such offer, solicitation or sale would be unlawful. Charter Communications, Inc. -- http://www.charter.com/-- a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM), Charter High-Speed(TM) Internet service and Charter Telephone(TM). Charter Business(TM) provides scalable, tailored and cost-effective broadband communications solutions to organizations of all sizes through business-to-business Internet, data networking, video and music services. Advertising sales and production services are sold under the Charter Media(R) brand. At June 30, 2005, Charter Communications' balance sheet showed a $5.1 billion stockholders' deficit, compared to a $4.4 billion deficit at Dec. 31, 2004. CHESAPEAKE ENERGY: Prices $500 Million 6.5% Private Debt Offering ----------------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) has priced a private placement offering to eligible purchasers of $500 million of senior notes due Aug. 15, 2017, which will carry an interest rate of 6.5%. The senior notes were priced at 98.977% of par to yield 6.625% to maturity. The notes are expected to be eligible for resale under Rule 144A. The Company commenced the private placement offering to eligible purchasers of $500 million of a new issue of senior notes due 2017 last week. The private offering, which is subject to market and other conditions, will be made within the United States only to qualified institutional buyers, and outside the United States only to non-U.S. investors under regulation S of the Securities Act of 1933. Chesapeake intends to use the net proceeds from the offering to repay debt under its revolving bank credit facility. The new notes have not been registered under the Securities Act of 1933 or applicable state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This announcement shall not constitute an offer to sell or a solicitation of an offer to buy the new notes. Chesapeake Energy Corporation -- http://www.chkenergy.com/-- is the third largest independent producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and Ark-La-Tex (including the Barnett Shale) regions of the United States. * * * As reported in the Troubled Company Reporter on June 10, 2005, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Chesapeake Energy Corp. At the same time, Standard & Poor's assigned its 'BB-' rating to Chesapeake's $600 million senior unsecured notes due 2018. The outlook is positive. Oklahoma City, Oklahoma-based Chesapeake will have about $3.7 billion of debt on a pro forma basis after this transaction. "Proceeds from the notes will be used to finance the announced tender for Chesapeake's senior unsecured notes due 2011 and 2012, roughly $454 million outstanding," said Standard & Poor's credit analyst Paul B. Harvey. "Any remaining proceeds will be used for general corporate purposes and to repay borrowings from its credit facility," he continued. CHESAPEAKE ENERGY: S&P Rates $500 Million Sr. Unsec. Notes at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to Chesapeake Energy Corp.'s $500 million senior unsecured notes due 2017. At the same time, Standard & Poor's affirmed the company's 'BB-' corporate credit rating. The outlook is positive. Proceeds from the notes will be used to repay outstanding borrowings on its bank credit facility. Oklahoma City, Oklahoma-based Chesapeake will have about $4.5 billion of debt on a pro forma basis after the transaction. Chesapeake's growth strategy is to consolidate Midcontinent properties, where the company has substantial operating knowledge, property ownership is highly fragmented, and assets can be added with little incremental general and administrative expense. The company plans to supplement its reserve mix through strategic acquisitions outside of its core areas. "The positive outlook on Chesapeake is supported in large part by the company's hedging program that has locked in high natural gas prices, which should provide solid cash flow generation in the near term," said Standard & Poor's credit analyst Paul B. Harvey. "Management must consistently demonstrate both the ability and willingness to apply excess cash flow to meaningfully reduce debt," he continued. Standard & Poor's further expects the company to continue to fund its acquisition program in a balanced manner. The outlook could be revised to stable in the event of a large debt-financed acquisition. CHESAPEAKE ENERGY: Fitch Rates $500 Mil. Senior Note Offer at BB ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Chesapeake Energy's proposed $500 million senior note offering due 2017. Additionally, Fitch affirms the ratings of Chesapeake's senior secured revolving credit facility and hedge facility at 'BBB-' and convertible preferred stock at 'B+'. The Rating Outlook remains Stable. Chesapeake announced it intends to use the net proceeds from the offering to repay debt under its bank credit facility. Chesapeake announced it had acquired or has agreed to acquire $410 million of natural gas assets in transactions with four private companies. Through these transactions, the company will acquire 33 million cubic feet equivalent per day of current production, 113 billion cubic feet equivalent of proved reserves, and 181 bcfe of probable and possible reserves. After allocating $15 million of the purchase prices to gas gathering and compression assets, the valuation of the proved reserves is a robust $3.50 per thousand cubic feet equivalent. Similar to recent Chesapeake acquisitions, these reserves are located outside of the Mid-Continent region. Subsequent to the completion of these transactions, 62% of Chesapeake's proved reserves will be located in the Mid-Continent region, 15% in the Barnett Shale region, 12% in the Permian Basin, and 10% in the Gulf Coast. While the transactions do not significantly change the overall risk profile of Chesapeake, the debt-to-reserve measures have weakened. The properties acquired have richer multiples and lower proved reserve components, which has resulted in pro forma debt to mcfe of $0.70 ($4.17/barrel of oil equivalent) and debt to proved developed mcfe of $1.10 ($6.62/boe). Notably, these measures do not give credit for Chesapeake's increasing land rig operations or investment in Pioneer Drilling. The ratings are supported by the size of Chesapeake's reserves, the company's strong operations, and its conservative funding strategy employed to finance the growth in recent years. Pro forma for the previously mentioned transactions, Chesapeake will have 6.0 trillion cubic feet equivalent of proved reserves with a reserve life exceeding 12 years. Both of these measures are strong for its rating. Approximately 63% of its reserves are proved developed producing (PDP). Chesapeake's reserve replacement success, credit profile and dividend payments were also considered in the rating. The company's reserve replacement over the last three years was more than 400% and its organic replacement during the same period exceeded 200%, demonstrating its ability to grow through the drill-bit. While the latest acquisitions are higher than Chesapeake's three-year average finding, development, and acquisition costs of $1.66 per mcfe, the low lifting costs associated with those properties partially offset Fitch's concern. Chesapeake's latest 12 months adjusted interest coverage exceeded 7.0 times (x) and adjusted debt to EBITDA was under 2.0x. The Stable Rating Outlook is based on several factors including a continued conservative funding strategy for future acquisitions, a relatively unchanged risk profile with regard to its reserves, and stable lifting and finding costs. Upside rating potential is limited by the previously mentioned debt to reserve measures and the fact that Chesapeake has been free cash flow negative (cash flow from operations less capital expenditures less dividends) since 2003 due to its aggressive capital expenditure program. CINRAM INTERNATIONAL: S&P Revises Outlook to Negative from Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Cinram International Inc. to negative from stable. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit and bank loan ratings on Cinram. "The negative outlook reflects Cinram's weak financial performance in first-half 2005 as evidenced by the 9.2% decline in reported EBITDA, despite a 1.8% increase in revenue in this period," said Standard & Poor's credit analyst Lori Harris. The EBITDA margin declined to 16.6% for first-half 2005 from 18.6% for the same period last year because of lower selling prices, higher oil-based raw material costs, and a change in product mix. "We believe that margin pressure will be ongoing given the media replication industry's commodity-like nature, which has resulted in a continued decline in selling prices." Ms. Harris added. Furthermore, the negative outlook is based on our belief that the industry will be undergoing significant change in the medium term due to the expected introduction of high definition DVDs in 2006. Although Cinram is positioning itself to continue to be a key player in this market, the new product could have a limited lifespan given the increasing availability of on-demand products. The ratings on Cinram are based on the commodity-like nature of the media replication industry, which is vulnerable to shifts in technology and availability of hit new releases. Although new hits are a significant revenue growth driver, the availability of previously released titles and television series in DVD format is also an important component of the company's revenue base. The ratings also reflect the risk of customer and product concentration, as well as seasonality. Partially offsetting these factors are: * Cinram's strong market position; * solid credit measures; * management's track record in adapting to changing technologies; and * reasonable industry growth prospects in the next couple of years. The negative outlook reflects S&P's concerns regarding the challenges faced by the company given the difficult industry fundamentals. The near-term effect of these challenges is the decline in margins; however, the longer-term effect could be weakness in the overall business model as consumers choose other media delivery methods. Downward pressure on the ratings could come from debt-financed acquisition activity or the deterioration in the company's operations stemming from the loss of a significant contract or the increased consumer acceptance of a competitive product or service. There is limited potential for a revision of the outlook back to stable in the medium term given the high technological risk associated with the industry. COLLINS & AIKMAN: Receives Grand Jury Subpoena ---------------------------------------------- Collins & Aikman Corporation (CKCRQ) said that it has received a grand jury subpoena from the United States Attorney's Office in the Southern District of New York, seeking documents and information relating to the Company's financial statements for the fiscal years 2000-2005, as well as documents and information pertaining to accounts receivable, customer and supplier rebates and other matters. The Company intends to fully cooperate in responding to this request, as it has for similar information requests from the Securities and Exchange Commission. As previously announced, an independent committee of its board of directors initiated and has been conducting an investigation of these issues. The Company cannot currently comment upon the timing for completion of the investigation or any subsequent restatements that may be necessary as a result. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. COLLINS & AIKMAN: GE Wants Receivables Agreement Enforced --------------------------------------------------------- General Electric Capital Corporation asks the U.S. Bankruptcy Court for the Eastern District of Michigan to compel Collins & Aikman Corporation and its debtor-affiliates to perform their contractual duties under a Receivables Transfer Agreement, including, without limitation, to immediately commence legal actions against all Customers that have not paid the Receivables when due. As previously reported, General Electric sought to lift the automatic stay to exercise its rights and remedies under a Receivables Transfer Agreement because the Debtors misapplied about $19 million payable to General Electric. The parties had entered into a stipulation resolving the Lift Stay Motion. However, General Electric points out that the Stipulation did not address the performance of duties of the Debtors under the Transfer Agreement. The Debtors have the duty to collect receivables on General Electric's behalf. According to David S. Heller, Esq., at Latham & Watkins LLP, in Chicago, Illinois, the Debtors failed to perform their duties as Collection Agent and it is being harmed by that. The Debtors' customers are required to pay receivables on terms not to exceed 45 days. As a result, all payments of the Debtors' accounts existing on the Petition Date should have been made by June 30, 2005. The Debtors have entered into at least two agreements with their Customers in their Chapter 11 cases. Mr. Heller notes that neither of these agreements addresses payment of the Receivables, which are now long overdue. In fact, the agreements appear to encourage payment or repayment of postpetition accounts receivable prior to the payment of the Receivables. General Electric believes that the Debtors' credit and collection policies may provide that all payments be applied to oldest invoices first. However, despite repeated request, the Debtors have not provided General Electric with copies of the policies. If the Debtors' credit and collection policies provide that all payments be applied to oldest invoices first, the Debtors postpetition agreements with their Customers may violate the Transfer Agreement. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Toyota Wants Admin. Expense Claims Paid Now ------------------------------------------------------------- Sections 363(e) and 365(d)(10) of the Bankruptcy Code require the Debtors to pay the obligations due to a creditor under a lease of personal property that is used postpetition. Collins & Aikman Corporation and its debtor-affiliates lease equipment from Toyota Motor Credit Corporation and are obligated to make monthly payments under them. However, since the Petition Date, Toyota has not received any payments on the Equipment, Leonora K. Baughman, Esq., at Kilpatrick & Associates, PC, in Auburn Hills, Michigan, tells the Court. Ms. Baughman argues that the Debtors' continued use of Toyota's property without rendering payment constitutes "cause" to lift the automatic stay. Accordingly, Toyota asks the Court to grant it administrative expense claims against the Debtors for their postpetition use of Toyota's Equipment: Equipment Rate per month --------- -------------- Forklifts $17,723 Forklifts 14,428 Forklifts 15,648 Forklifts and Walkie 10,011 Forklift 23,936 The Equipment continues to depreciate on a daily basis, Ms. Baughman says. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Mackay Shields Sues Former CEO in State Court --------------------------------------------------------------- MacKay Shields LLC, a New York investment firm, filed a lawsuit in the Michigan State Court against Collins & Aikman Corp.'s former CEO, David A. Stockman. The suit alleges that Mr. Stockman induced MacKay to buy debt by providing materially false and misleading information, the Wall Street Journal reports. MacKay Shields said Mr. Stockman manipulated Collins & Aikman's results by: -- improperly categorizing tens of millions of dollars of operating expenses as restructuring and impairment charges; -- inflating revenue by accelerating recognition of supplier rebates; -- creating false documentation to support phony receivables; and -- improperly inflating carrying values for goodwill. Journal reporter Mitchell Pacelle relates that Mr. Stockman denies concealing the firm's woes from investors. Mr. Stockman told the Journal in a written statement that, "During an extended period just before and continuing after the August 2004 bond sale to MacKay Shields, I personally bought material amounts of common stock based on my strong confidence in the company's prospects for success." Mr. Stockman attributes the investor losses to an industry meltdown, Mr. Pacelle says. Mr. Stockman abruptly resigned as CEO in May 2005, a few days before Collins & Aikman filed for bankruptcy. MacKay Shields is an affiliate of New York Life Investment Management Holdings LLC. Mackay Shields is represented in the suit by Morganroth & Morganroth in Southfield, Michigan. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSTAR INT'L: Incurs $7.7 Million Net Loss in Second Quarter ------------------------------------------------------------- Constar International Inc. (NASDAQ: CNST) reported its financial results for the second quarter and six months ended June 30, 2005. Second Quarter Results Second quarter net sales grew to $265.4 million, a 17.4% increase over the $226.1 million reported for the 2004 second quarter. The growth reflects the pass-through of increased resin prices, increased shipments of both conventional and custom products in the United States and favorable foreign currency translation. The increased net sales were partially offset by price reductions implemented to extend key long-term contracts and meet competitive pricing as well as reduced volumes in certain European markets. Gross profit in the second quarter was $10.4 million compared to $13.9 million in last year's second quarter. This decrease was primarily due to price concessions implemented to extend key contracts and meet competitive pricing, reduced volumes in Europe and increased transportation and utility costs. These items were partially offset by increased operating efficiencies in U.S. plants that resulted from improved manufacturing performance and higher production of domestic units driven by increased sales. Michael J. Hoffman, Constar's President and Chief Executive Officer, commented, "During the quarter, our domestic business experienced solid growth in unit sales in both conventional and custom containers. However, our custom growth was below our expectation due to delayed ramp-ups on certain projects. Offsetting the domestic improvements were contractual price concessions, increased freight and utility costs, and weaker than expected performance in two of our European operations. Our UK plant was challenged in the quarter with soft demand and operational difficulties, which further hampered sales. We are actively addressing this shortfall through a combination of manufacturing performance improvements, reduction of costs and price increases in certain product categories." Second quarter operating expenses (defined as selling and administrative expenses, research and technology expense, foreign exchange adjustments and other expense, net) were $8.3 million compared to $7.2 million for the same period last year. The increase reflects higher research and development expenses, foreign exchange adjustments and other expenses. These increases were partially offset by a reduction in litigation expenses. Interest expense in the second quarter was $9.4 million compared to $10.0 million in the prior year period. The decrease reflects a lower effective interest rate resulting from the February 2005 refinancing. The Company reported a second quarter net loss of $7.7 million, or $0.63 per diluted share, compared to a net loss of $3.9 million, or $0.32 per diluted share, in the 2004 second quarter. Adjusted EBITDA in the second quarter was $15.2 million compared to $20.2 million reported for the second quarter of last year. This decrease in adjusted EBITDA primarily reflects the reduced gross profit as noted above. Six-Month Results For the first six months of 2005 net sales rose to $486.6 million, a 16.5% increase over the $417.8 million reported for the same period last year. This growth resulted from the pass-through of increased resin prices, increased shipments of both conventional and custom products in the United States and favorable foreign currency translation. The increase was partially impacted by price reductions implemented to extend key long-term contracts and meet competitive pricing as well as reduced volumes in certain European markets. Gross profit in the first half of 2005 was $16.8 million compared to $23.3 million for the first six months of last year. Price concessions implemented to extend key contracts and meet competitive pricing, reduced volumes in Europe and increased costs related to transportation and utilities were the primary drivers to the reduced gross profit. These items were partially offset by increased operating efficiencies in U.S. plants that resulted from higher domestic unit sales. Operating expenses for the six-month period were $15.5 million compared to $15.7 million for the same period last year. This slight decrease resulted from the combination of several factors including a significant reduction in legal expenses. This reduction was offset by increased research and development expenses in the first six months of 2005 and an increased loss generated in the 2005 period related to changes in the foreign currency translation rates of intra-company balances. Also, the Company incurred a charge in the first quarter of 2004 for an insurance deductible related to a warehouse fire in the United Kingdom. Interest expense in the first half of 2005 decreased $1.0 million to $19.0 million as compared to the first six months of 2004. The decrease reflects a lower effective interest rate resulting from the February 2005 refinancing. The Company reported a net loss of $27.7 million, or $2.29 per diluted share, compared to a net loss of $12.8 million, or $1.07 per diluted share, in the first six months of last year. The current year's net loss includes the $10.0 million loss associated with the Company's February refinancing. Adjusted EBITDA for the first six months of 2005 was $26.5 million compared to $34.4 million in the first six months of 2004. This decrease in adjusted EBITDA primarily reflects the reduced gross profit. For the six months ending June 30, 2005, adjustments to EBITDA for certain non-cash accruals included add-backs of $12.6 million, primarily related to the $10.0 million loss associated with the Company's February refinancing. Philadelphia-based Constar International is a leading global producer of PET (polyethylene terephthalate) plastic containers for food, soft drinks and water. The Company provides full- service packaging solutions, from product design and engineering, to ongoing customer support. Its customers include many of the world's leading branded consumer products companies. * * * As reported in the Troubled Company Reporter on June 7, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Constar International Inc. to 'B' from 'B+'. The downgrade follows the company's disappointing operating performance in the first quarter of 2005, and lower than expected trend in earnings and cash generation for the remainder of 2005, which is likely to further weaken the company's very aggressive financial profile. Other ratings were also lowered. S&P says the outlook is negative. As reported in the Troubled Company Reporter on Feb. 4, 2005, Moody's Investors Service assigned a B2 rating to Constar International Inc.'s proposed $210 million floating rate first mortgage note, due 2012, and also affirmed existing debt ratings. Concurrently, Moody's revised the ratings outlook to stable from negative. The rating actions Moody's took are: * Assigned B2 rating to the proposed $210 million floating rate first mortgage note, due 2012 * Affirmed the existing Caa1 rating for the $173 million senior subordinated notes, due 2012 * Affirmed B2 senior implied rating * Revised to B3 from Caa1, senior unsecured issuer rating (non- guaranteed exposure) * Moody's will withdraw the B2 rating for the first lien revolver, maturing 2007, and the term B loan, maturing 2009 * Moody's will withdraw the B3 rating for the second lien term C loan, due 2010 COTT CORP: Moody's Affirms Ba2 Corporate Family Rating ------------------------------------------------------ Moody's Investors Service affirmed the ratings for Cott Corporation following the company's announcement that it has acquired 100% of the shares of Macaw (Holdings) Limited, the parent company of Macaw (Soft Drinks) Limited, the largest privately-owned manufacturer of retailer brand carbonated soft drinks in the U.K., for approximately US$135 million (GBP75.7 million) in cash. The affirmation reflects: * Moody's expectation that Cott will be able to restore its debt protection measures relatively quickly following the transaction; * its view that the acquisition makes good strategic sense; and * its expectation that margins will improve as additional manufacturing capacity comes on line. Moody's noted that the acquisition of Macaw will significantly increase Cott's scale and capacity in the growing U.K. retail- branded market, while also increasing the company's share of the market to over 60% from 40% and adding complementary products to its portfolio. Macaw assets include two manufacturing plants in Nelson, Lancashire, England, with six production lines, comprising four lines for carbonated soft drinks (CSD), one for dilute-to- taste and one for aseptic. Moody's also expects profitability to improve as a result of the added capacity from both the transaction and the second quarter 2005 opening of the new plant in Fort Worth, Texas. The acquisition will add about $100 million (GBP55 million) in annual sales, and is expected to be accretive in the first full year. The transaction will be financed with proceeds from Cott's global credit facility, which recently was increased to $225 million from $100 million. The Ba2 corporate family rating recognizes Cott's strong position in the retailer-brands market, which continues to grow as a result of retailer consolidation and improved quality of private-label products, as well as the company's strong and consistent financial and operating performance (recent margin pressure notwithstanding). The rating also reflects Moody's expectation for near-term profitability improvements as a result of added capacity. Cott's leverage remains low for the rating, at 2.3 times versus 2.9 times at the end of 2002, despite the company having made several acquisitions over the last twelve months while ramping up capital spending to bring the new plant online. Moody's noted, however, that Cott's ratings continue to be limited by ongoing capacity constraints caused by greater than anticipated volume and the related adverse effects on margins due to distribution and manufacturing costs from outsourcing to co- packers, as well as the continued intense competition in the CSD market from larger, better capitalized competitors. The rating also reflects some concern about integration risks associated with Cott's acquisition activity, as well as the normal business challenges of weather, increased raw materials, interest, and currency costs. In Moody's opinion, liquidity should continue to be very good in the near term, supported by solid cash generation which covers capital expenditures. Cott has limited near term debt maturities, and $75 million of availability under the amended $225 million credit facility. Moody's expects that Cott should be able to maintain an ample cushion in complying with the financial covenants in its bank credit facility. The stable outlook reflects Moody's expectation that profitability and cash flow will show improvement as additional new manufacturing capacity becomes available and that the new acquisition debt will be quickly reduced. Downward pressure on the rating would result from sustained erosion in margins and/or cash flow such that Debt/EBITDA (based on Moody's standard analytical adjustments) begins to approach 3.0x or Free Cash Flow/Debt falls below 10%. Conversely, upward rating momentum would result from a continued prudent approach to acquisitions, smooth execution of its capacity build-out, and maintenance of a conservative financial policy such that Debt/EBITDA nears 2.0x and Free Cash Flow/Debt approaches 20%. Moody's affirmed these ratings: Cott Corporation: -- Ba2 corporate family rating Cott Beverages, Inc.: -- Ba3 rating on the $275 million 8% senior subordinated notes, due 2011 The rating outlook is stable. Headquartered in Toronto, Ontario, Cott Corporation is the world's largest retailer-brand, soft drink supplier with a leading position in take-home carbonate soft drink markets in the U.S., Canada and the U.K. For the latest twelve months ended July 2005, revenue was approximately $1.7 billion, EBIT was approximately $119 million, and EBITDA was approximately $182 million. CREDIT SUISSE: Fitch Affirms Low-B Ratings on Five Cert. Classes ---------------------------------------------------------------- Fitch Ratings affirms Credit Suisse First Boston Mortgage Securities Corp. commercial mortgage pass-through series 2004-C2: -- $187 million class A-1 at 'AAA'; -- $392.8 million class A-2 at 'AAA'; -- $242.9 million class A-1-A at 'AAA'; -- Interest-only classes A-X and A-SP at 'AAA'; -- $26.6 million class B at 'AA'; -- $10.9 million class C at 'AA-'; -- $20.5 million class D at 'A'; -- $9.7 million class E at 'A-'; -- $9.7 million class F at 'BBB+'; -- $9.7 million class G at 'BBB'; -- $10.9 million class H at 'BBB-'; -- $6.0 million class J at 'BB+'; -- $3.6 million class K at 'BB'; -- $3.6 million class L at 'BB-'; -- $2.4 million class N at 'B'; -- $1.2 million class O at 'B-'. Fitch does not rate the $6 million class M and the $13.2 million class P. The rating affirmations reflect the stable pool performance and minimal reduction of the pool collateral balance since issuance. As of the July 2005 distribution date, the pool has paid down 1.2%, to $955.6 million from $966.8 million at issuance. There are no delinquent or specially serviced loans. Four loans maintain investment-grade credit assessments; Beverly Center (8.82%), 230 Park Avenue (8.47%), Valley Hills Mall (6.36%), and Energy Center (5.54%). The Beverly Center loan is secured by a 427,508 square foot regional mall in Los Angeles, CA. There are seven pari passu notes, A-1 through A-7, totaling $306.5 million; a $20 million B- note, and a $21 million C-note. The A-2 and A-3 notes totaling $84.5 million are included in the trust. For year-end 2004 the Fitch stressed debt service coverage ratio decreased to 1.28 times (x) compared to 1.38x at issuance. This was due to an increase in property taxes. Occupancy remained strong at 100%. The 230 Park Avenue loan is secured by a 341,125 sf office building in Manhattan, NY. The Fitch stressed DSCR for YE 2004 was stable at 1.46x compared to 1.48x at issuance. Occupancy remained strong at 100%. The Valley Hills Mall loan is secured by a 293,670 sf regional mall in Hickory, NC. The Fitch stressed DSCR for YE 2004 decreased to 1.31x from 1.38x at issuance due to increased general and administrative expenses. Occupancy slightly decreased to 91% from 92% at issuance. The Energy Centre Mall loan is secured by a 762,131 sf office building in New Orleans, LA. The Fitch stressed DSCR for YE 2004 increased to 1.53x from 1.39x at issuance due to an overall decrease in expenses. Occupancy decreased slightly to 90% from 92% at issuance. DATALOGIC INT'L: June 30 Balance Sheet Upside-Down by $425,220 -------------------------------------------------------------- DataLogic International, Inc. (OTC Bulletin Board: DLGI;) reported its financial results for the second quarter ended June 30, 2005. DataLogic International's net sales for the second quarter ended June 30, 2005, were $4.5 million, a 12% increase as compared to net sales of $4 million for the quarter ended June 30, 2004. This marked the highest quarterly revenues in the Company's history, a 33% sequential increase over first-quarter 2005 revenues of $3.4 million, and the fourth consecutive sequential revenue increase quarter over quarter. Gross profit for the quarter ended June 30, 2005 was $526,000, or 12% of net revenues, as compared to gross profit of $1.2 million, or 31% of net revenues, for the same period in the prior year. The decrease in the Company's gross profit margin was primarily due to decreased VoIP license sales. Operating expenses for the quarter ended June 30, 2005 were $697,000, virtually equaling operating expenses of $696,000 recorded in the same period of the prior year, despite financing fees, financing-related legal fees, general R & D investments, product development costs, and increases in operational, administrative and marketing costs. Interest and factoring expense for the quarter ended June 30, 2005 was $114,000, as compared to interest and factoring expenses of $46,000 in the prior-year quarter. The increase in interest expense was primarily attributable to the Company's notes, debt issuance, and beneficial conversion factor expenses related to the Laurus Master Fund financing facility established in June 2004. A one-time write-down of marketable securities of $196,000 in the 2005 second quarter was a major contributor to the increase in total non-operating expenses of 574% year over year, from $45,980 in the 2004 second quarter to $309,942 in the 2005 second quarter. As a result, the Company's net loss for the quarter ended June 30, 2005 was $481,000, compared to net income of $480,000 in the second quarter of fiscal 2004. At June 30, 2005 the Company's reported assets included cash and cash equivalents of $425,000, $1.6 million in net accounts receivable and $456,000 in inventory, as compared with $644,000 in cash and cash equivalents, $3.3 million in accounts receivable and $54,000 in inventory at June 30, 2004. In the first six months of 2005, DataLogic International has retired $475,000 in indebtedness. Management Analysis "In the first half of fiscal 2005, we have seen the benefits of our growth strategy gain some noteworthy traction. Net revenues for the 2005 second quarter represent a record for the Company. Even though the bottom-line results continue to reflect necessary investments in that strategy, we continue to pare our losses and move the Company to profitability," commented Keith Moore, DataLogic International's Chairman and CEO. "Benefits of our strategy have included ongoing revenue gains from our communications solutions, including our AEA-award-winning GPS tracking product, Panther Trak(TM), and new business wins for video communications and consulting services." "We continue to fulfill our $3 million order for Panther Trak and are beginning to see market acceptance of our EncrypTAC(TM) secured mobile communications technology," Mr. Moore continued. "We are pleased that despite our investments in growth, we have been able to pay down nearly half a million dollars in debt in the first six-months of 2005," Mr. Moore concluded. "Looking ahead, we continue to focus on increasing revenues from existing customers, expanding our communications solutions sales efforts and exploring acquisition opportunities that have potential to increase our market share in targeted business sectors and provide recurring revenues." DataLogic International, Inc. -- http://www.dlgi.com/-- is a technology and professional services company providing a wide range of consulting services and communication solutions such as GPS based mobile asset tracking, secured mobile communications and VoIP. The Company also provides Information Technology outsourcing and private label communication solutions. DataLogic's customers include U.S. and international governmental agencies as well as a variety of international commercial organizations. At June 30, 2005, DataLogic's total liabilities exceed its total assets by $425,220. * * * Going Concern Doubt Kabani & Company, Inc., expressed substantial doubt about DataLogic's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditors point to the Company's $1,403,837 net loss in 2004, and $911,582 in 2003, and a $3,328,978 accumulated deficit and $168,515 stockholders' deficit at Dec. 31, 2004. Change of Auditors As reported in the Troubled Company Reporter on June 17, 2005, the Company dismissed Kabani as the Company's independent accountants, effective June 8, 2005. Kabani reported on the Company's financial statements for the years ended December 31, 2004 and 2003. Their opinion did not contain an adverse opinion or a disclaimer of opinion, and was not qualified as to uncertainty, audit scope, or accounting principles but was modified as to a going concern. During the Company's most recent full fiscal years ended Dec. 31, 2004 and 2003, there were no disagreements with Kabani on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Kabani, would have caused them to make reference to the subject matter of such disagreements in connection with their reports; and there were no reportable events, as listed in Item 304 (a)(1)(v) of Regulation S-K. The Company has engaged Corbin & Company, LLP, to act as its independent auditors, effective June 9, 2005. DELTA AIR: New York Times Reports DIP Financing Being Arranged -------------------------------------------------------------- Micheline Maynard at The New York Times reported Saturday that Delta Air Lines, Inc., has started arranging debtor-in-possession financing. Ms. Maynard identifies GE Commercial Finance, a current lender to Delta, as a likely source of a DIP financing facility to fund the carrier's on-going working capital needs during a chapter 11 restructuring. In a regulatory filing with the Securities and Exchange Commission last week, Delta said negotiations with a new Visa and Mastercard credit card processor continue. The carrier's existing Visa and MasterCard processing contract expires on August 29, 2005. Because the results of these negotiations will impact the disclosures in the company's Form 10-Q for the quarter ended June 30, 2005, that quarterly filing is being delayed. Delta hopes to file the quarterly report today. Delta Air Lines -- http://delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 490 destinations in 85 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. At June 30, 2005, Delta Air's balance sheet showed a $6.9 billion stockholders' deficit, compared to a $5.8 billion deficit at Dec. 31, 2004. Delta reported a $382 million net loss for the June 2005 quarter, compared to a net loss of $2.0 billion in the prior year quarter. Delta's operating loss for the June 2005 quarter was $129 million. DSL.NET INC: Posts $3.1 Million Net Loss in Second Quarter 2005 --------------------------------------------------------------- DSL.net, Inc. (AMEX: BIZ) reported second-quarter and year-to-date 2005 financial results. Revenue for the second quarter of 2005 was $14.4 million, as compared to revenue of $17.7 million for the second quarter of 2004. Revenue for the six months ended June 30, 2005, was $29.8 million, as compared to revenue of $35.5 million for 2004. The Company generated gross margin (defined as revenue less network expense) of $5.3 million for the second quarter of 2005, compared to gross margin of $5.7 million for the second quarter of 2004. Gross margin for the six months ended June 30, 2005, was $10.6 million, compared to gross margin of $11.4 million for 2004. Earnings before interest, taxes, depreciation, amortization, other income and non-cash stock compensation for the second quarter of 2005 was positive $0.4 million, a 132% improvement compared to negative $1.4 million for the second quarter of 2004. Adjusted EBITDA for the six months ended June 30, 2005, was positive $900,000, a 122% improvement over Adjusted EBITDA of negative $4.2 million for 2004. "Our financial results clearly demonstrate our success in running our business in a cost-efficient manner that has preserved cash and allowed us to pursue strategic and financing opportunities," said Kirby G. "Buddy" Pickle, chief executive officer of DSL.net. "We continue to pursue those opportunities. Of course, there is no guarantee that we will consummate any given transaction on favorable terms for all of our stakeholders, if at all." Free cash flow (defined as Adjusted EBITDA minus capital expenditures) for the second quarter of 2005 was positive $300,000, a 116% improvement over free cash flow of negative $1.6 million for the second quarter of 2004. For the first six months of 2005, free cash flow was positive $700,000, a 114% improvement over free cash flow of negative $4.7 million for the 2004 period. Net loss for the second quarter of 2005 was $3.1 million, representing a 47% improvement over net loss of $5.8 million for the second quarter of 2004. For the six months ended June 30, 2005, net loss was $6.6 million, a 49% improvement over net loss of $12.9 million for the 2004 period. At June 30, 2005, the Company had total assets of $35.1 million, including $8.5 million in cash. Going Concern Doubt The Company continues to operate under a "going concern" qualification received from its independent registered public accounting firm in their audit report on the Company's 2004 year- end financial statements, which was filed by the Company with the Securities and Exchange Commission on March 23, 2005, as part of its Annual Report on Form 10-K for the year ended December 31, 2004. PricewaterhouseCoopers LLP said there's substantial doubt about the company's ability to continue as a going concern. The auditing firm had similar doubts a year ago. At Dec. 31, 2004, DSL.net's balance sheet showed $40.8 million in assets and $12.1 million in shareholder equity. DSL.net's accumulated deficit at Dec. 31, 2004, topped $342 million. The Company reported a $35.6 million net loss in 2004; a $53 million net loss in 2003; and a $49.7 million net loss in 2002. DSL.net, Inc. -- http://www.dsl.net/-- is a leading nationwide provider of broadband communications services to businesses. The Company combines its own facilities, nationwide network infrastructure and Internet Service Provider (ISP) capabilities to provide high-speed Internet access, private network solutions and value-added services directly to small- and medium-sized businesses or larger enterprises looking to connect multiple locations. DSL.net product offerings include T-1, DS-3 and business-class DSL services, virtual private networks (VPNs), frame relay, Web hosting, DNS management, enhanced e-mail, online data backup and recovery services, firewalls and nationwide dial- up services, as well as integrated voice and data offerings in select markets. ENRON CORP: Court Allows Longacre's $4.8 Million Claims ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement between Enron Corp. and its debtor-affiliates and Longacre Capital Partners (QP) L.P. Pursuant to the Settlement, Enron and Longacre Capital, transferee of the Guaranty Claims, agree to reduce and allow the Claims to 50% of the allowed ENA claims. Accordingly, Claim Nos. 6893 and 6895 will be allowed for $1,301,636 and $3,508,864 as Class 185 general unsecured claims against Enron. Frederick W. H. Carter, Esq., at Venable LLP, in Baltimore, Maryland, asserts that the Settlement will clearly benefit the Reorganized Debtors and their creditors. The Settlement will avoid future disputes and litigation concerning the Claims, including the attendant litigation costs. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 153; Bankruptcy Creditors' Service, Inc., 15/945-7000) FEDDERS CORP: Anticipates $600,000 Net Loss in Second Quarter ------------------------------------------------------------- Fedders Corporation (NYSE: FJC) reiterates that the company has not yet filed its Annual Report on Form 10-K for 2004 or its Quarterly Report on Form 10-Q for the first quarter of 2005. Until those two filings are completed, the company will not be able to file its report for the second quarter and six months of 2005. The Company anticipates that, as a result of increased inventory of room air conditioners in key North American markets carried over from 2004, which was caused by cooler than normal weather in 2004, net sales in the second quarter ended June 30, 2005, will decrease 29% to approximately $127 million from net sales of $178.1 million in the second quarter of 2004. It is anticipated that this inventory has also caused a reduction in net sales for the six months ended June 30, 2005, of 31% to approximately $205 million from net sales of $297.4 million in the six months ended June 30, 2004. The more favorable weather in key North American markets during 2005 is having the effect of clearing inventories through distribution channels and positioning the industry well going into 2006. During the second quarter and six months ended June 30, 2005, the company manufactured fewer room air conditioners than in the prior year in order to reduce inventories. Reduced production has the effect of increasing costs as a result of lower overhead absorption. The company anticipates that, despite increased costs related to lower overhead absorption and inflationary pressures on raw materials, its gross profit margin as a percentage of net sales has increased as a result of more favorable product mix and price increases initiated to offset material cost increases realized during 2004. It is anticipated that the gross margin for the 2005 second quarter increased to approximately 20% versus 16.2% in the prior year period and for the 2005 six-month period to approximately 20% versus 17.0% in the prior year period. The company anticipates a net loss of approximately $600,000 during the quarter ended June 30, 2005, compared to net income of $2.3 million in the quarter ended June 30, 2004. For the six- month period ended June 30, 2005, the company anticipates a loss of $5.4 million versus a loss of $2.9 in the six months ended June 30, 2004, which included a charge related to the extinguishment of debt of $8.1 million. Fedders Corporation manufactures and markets worldwide air treatment products, including air conditioners, air cleaners, gas furnaces, dehumidifiers and humidifiers and thermal technology products. * * * As reported in the Troubled Company Reporter on March 22, 2005, Standard & Poor's Ratings Services lowered its ratings on air treatment products manufacturer Fedders Corp., and Fedders North America, Inc., including its corporate credit ratings to 'CCC' from 'CCC+' following the company's announcement that it will delay filing its Form 10-K for the fiscal year ended Dec. 31, 2004. The delay was necessary because Fedders was unable to complete its financial statements, including preparing supporting documentation and providing this information to its auditors. As reported in the Troubled Company Reporter on July 5, 2005, the Company has outstanding $155 million in principal amount of 9-7/8% Senior Notes due 2014, which are governed by an indenture between the Company and U.S. Bank National Association, a national banking association, as trustee. The Company has not yet filed with the Securities and Exchange Commission, its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 or its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, the filing of which are required under the Indenture. On May 25, 2005, the Trustee issued a notice that the Company's failure to file the Form 10-K is a default under the Indenture and that the Company was required to file the Form 10-K as required under the Indenture no later than June 24, 2005, the thirtieth day following receipt of the Trustee's notice, in order to avoid an event of default on the Senior Notes. The Company was unable to file the Form 10-K on or prior to June 24, 2005, and therefore an event of default has occurred under the Indenture. Upon the occurrence of an event of default, the Trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes outstanding can declare all Senior Notes to be due and payable immediately. Such acceleration would require an additional notice to the Company. The Company is in contact with the Trustee on a periodic basis to advise the Trustee of the status of the filing of its Annual Report. The Company believes it is in compliance with all other terms of the Senior Notes. FOAMEX INTERNATIONAL: Partnership Sells AS Univa Stake for $1 Mil. ------------------------------------------------------------------ Foamex International Inc., Foamex L.P., and Foamex Capital Corporation disclosed to the Securities and Exchange Commission in an 8-K filing that Foamex L.P. sold its joint venture interest in AS Univa for approximately $1 million in cash, on August 2, 2005. The disclosure did not include the name of the buyer. Foamex International Inc. -- http://www.foamex.com/-- headquartered in Linwood, Pa., is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. At Apr. 3, 2005, Foamex International's balance sheet showed a $369.2 million stockholders' deficit, compared to a $358.3 million deficit at Jan. 2, 2005. FREEDOM MEDICAL: Wants Until Effective Date to Decide on Leases --------------------------------------------------------------- Freedom Medical, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Pennsylvania for an extension, until the effective date of a confirmed chapter 11 Plan, of the period within which it can elect to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor delivered its Plan of Reorganization and an accompanying Disclosure Statement to the Court on Aug. 5, 2005. The Debtor explains that it is a party to 11 unexpired nonresidential real property leases in various locations throughout the country. The Debtors' present lease decision extension deadline will expire on Aug. 23, 2005. Pursuant to the proposed Plan, the Debtor will assume substantially all of those leases. The Debtor gives the Court four reasons militating in favor of the extension: a) it does not want to forfeit its right to assume and assign the unexpired leases as a result of the deemed rejected provision of Section 365(d)(4) of the Bankruptcy Code; b) it does not want to be compelled to prematurely assume and assign the unexpired leases by the current deadline, which could result in potentially large administrative expense claims against the estate; c) it believes that all of its principal creditor constituencies will prefer that it assume the unexpired leases pursuant to a chapter 11 Plan rather than by motion, so that those creditors can better evaluate the impact of the leases being assumed; and d) the unexpired leases are integral to its reorganization process and may prove to be valuable assets to its estate. Headquartered in Exton, Pennsylvania, Freedom Medical, Inc., -- http://www.freedommedical.com/-- sells electronic medical equipment and related services to hospitals, alternate site healthcare providers, and EMS transport organizations. The Company filed for chapter 11 protection on December 29, 2004 (Bankr. E.D. Pa. Case No. 04-37092). Barry D. Kleban, Esq., at Adelman Lavin Gold and Levin represents the Debtor. When Freedom Medical filed for protection from its creditors, it listed estimated assets and debts of more than $50 million. GARDEN STATE: Wants to Dip Into Lenders' Cash Collateral -------------------------------------------------------- Garden State MRI Corporation asks the U.S. Bankruptcy Court for the District of New Jersey for authority to access cash collateral securing repayment of loans to its secured lenders. The Debtor explains it needs the cash collateral to continue its operations while in chapter 11. Without access to the encumbered funds, the Debtor says its estate will suffer irreparable harm. Moreover, Garden State's patients will be left without care and its assets will be liquidated. Prepetition Indebtedness Newfield's Claim Newfield National Bank filed financing statements to perfect a lien asserted against all of the Debtor's assets, including its accounts receivable, on April 28 and Dec. 8, 1998. However, the Bank has not timely filed an extension as required by N.J.S.A. 12A:9-515. Because of this, the Debtor contests the Bank's $186,000 claim. U.S. Bank N.A.'s Claim The Debtor owes $6,000,000 to U.S. Bank, as assignee of DVI F.S. The Bank asserts a first priority lien on all of the Debtor's equipment fixtures, contract rights and computer equipment. Garden State estimates that the market value of the Bank's collateral is $800,000, with a liquidation value of $400,000. Golenstaneh Entities The Debtor owes $6,400,000 to the Golestaneh Entities. These lenders have a first priority lien on Garden State's accounts receivable, negotiable instruments and all other assets not encumbered by U.S. Bank's liens, and a second priority lien on assets encumbered by the Bank's liens. The Debtor discloses that its accounts receivable total $2,820,000, of which only $850,000 is collectible because insurers refuse to pay the full amount of their insureds' bills. The Debtor has filed a complaint against the Golestaneh Entities alleging that the liens and guaranty were fraudulent transfers because Garden State didn't receive reasonably equivalent value in exchange for granting the security interests. Adequate Protection To provide the lenders with adequate protection required under 11 U.S.C. Sec. 363 for any diminution in the value of its collateral, the Debtor proposes to grant U.S. Bank and the Golestaneh Entities replacement liens to the same extent, validity and priority as their prepetition liens. Headquartered in Vineland, New Jersey, Garden State MRI Corporation, dba Eastlantic Diagnostic Institute -- http://www.eastlanticdiagnostic.com/-- operates an out-patient imaging and radiology facility. The Company filed for chapter 11 protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214). Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 and estimated debts between $10 Million to $50 Million. GENERAL BINDING: Amends Merger Pact with Fortune Brands & ACCO -------------------------------------------------------------- General Binding Corporation entered into an Amendment to Agreement and Plan of Merger with Fortune Brands, Inc., ACCO World Corporation and Gemini Acquisition Sub, Inc., a wholly owned subsidiary of ACCO, to amend the Agreement and Plan of Merger, dated as of March 15, 2005. The Amendment to Merger Agreement clarifies certain aspects of the agreed to merger of Acquisition Sub with and into GBC, with GBC as the surviving corporation, and modifies certain procedures related to the closing of the Merger. Among other things, the Amendment to Merger Agreement amends the Merger Agreement so that the delivery of physical certificates for shares of ACCO common stock is not required. GBC, its directors, and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Documents relating to the Merger are available for free at: http://ResearchArchives.com/t/s?ba About Fortune Brands Fortune Brands, Inc. is a $7 billion leading consumer brands company. Its operating companies have premier brands and leading market positions in home and hardware products, spirits and wine, golf equipment and office products. Home and hardware brands include Moen faucets, Aristokraft, Schrock, Diamond and Omega cabinets, Therma-Tru door systems, Master Lock padlocks and Waterloo tool storage sold by units of Fortune Brands Home & Hardware, Inc. Major spirits and wine brands sold by units of Jim Beam Brands Worldwide, Inc., include Jim Beam and Knob Creek bourbons, DeKuyper cordials, The Dalmore single malt Scotch, Vox vodka and Geyser Peak and Wild Horse wines. Acushnet Company's golf brands include Titleist, Cobra and FootJoy. Office brands include Swingline, Wilson Jones, Kensington and Day-Timer sold by units of ACCO World Corporation. Fortune Brands, headquartered in Lincolnshire, Illinois, is traded on the New York Stock Exchange under the ticker symbol FO and is included in S&P 500 Index and the MSCI World Index. About ACCO World Corporation The ACCO World Corporation unit of Fortune Brands is a world leader in branded office products. With leading brands including Swingline, Wilson Jones, Kensington, Day-Timer, Boone, Apollo and Rexel, the company's innovative products help people work more efficiently, more comfortably and more productively than ever before. ACCO's annual sales exceed $1.1 billion. The company is headquartered in Lincolnshire, Illinois. About General Binding Corporation General Binding Corporation (GBC) is a world leader in products that bind, laminate, and display information enabling people to accomplish more at work, school and home. GBC's products are marketed in over 100 countries under the GBC, Quartet, and Ibico brands. These products are designed to help people enhance printed materials and organize and communicate ideas. The company is headquartered in Northbrook, Illinois. GENERAL FIRE: Fitch Assigns BB- Insurer Financial Strength Rating ----------------------------------------------------------------- Fitch has affirmed and removed from Rating Watch Negative, General Fire and Casualty Company's (GenFire) 'BB-' insurer financial strength rating. The Rating Outlook is Negative. The rating was downgraded to 'BB-' from 'BB+', and placed on Rating Watch Negative in March 2005 following GenFire's notification that it would need to restate its 2003 annual financial statements. The restatement allowed for a change in accounting of a major reinsurance contract due to concerns regarding appropriate levels of risk transfer. This contract has been non-renewed and cut off effective Dec. 31, 2004. GenFire has completed the filing for its year-end 2004 statutory statement and the restructuring of its reinsurance program for 2005. Fitch believes the effect of the restatement on the company's policyholders' surplus is manageable, and has been substantially replenished by a contribution from the parent, GF&C Holding Company, in 2004. Although dividend capacity is limited due to 2004's net losses, required debt service at the holding company has also declined due to the repayment of debt. The Negative Outlook is due to Fitch's belief that the company has experienced a significant loss of business since it has been unable to write business in California (26% of direct earned premiums) as of March 2005 because the company did not meet all criteria required by the California Department of Insurance for licensure, including minimum capital requirements. Additionally, Fitch believes that GenFire and its parent have a smaller premium base and less equity than when Fitch initially assigned a rating in October 2004, have limited access to new capital, and are more susceptible to market risks and reserve issues due to reduced market presence and less pricing power. Factors that would cause Fitch to downgrade GenFire's rating include further accounting restatements, adverse legal developments, significant harm to its business profile, and a continued reduction of premium written and equity. Fitch anticipates a return to a Stable Outlook would be possible with the finality of legal issues, assuming no adverse unexpected outcomes, resumption of business written in California, and favorable operating performance. GenFire is a specialty property and casualty insurer, which since 1999, has operated under a new and unique business model centered on its patent-pending policy form and web-based technology. The company focuses on specialty niches in the commercial multi-peril business segment, such as integrated agribusiness and other targeted commercial classes. Idaho-based GenFire reported statutory policyholders' surplus and assets of $10.2 million and $50.8 million, respectively, at March 31, 2005. Fitch has affirmed the following with a Negative Outlook: General Fire & Casualty Company -- Insurer financial strength at 'BB-'. GENERAL MARITIME: Moody's Lowers Sr. Unsecured Debt Ratings to B2 ----------------------------------------------------------------- Moody's Investors Service has lowered the ratings of General Maritime Corporation, Corporate Family (previously called Senior Implied) Rating to B1 from Ba3 and its ratings of senior unsecured debt to B2 from B1. The rating outlook is stable. This concludes the ratings review commenced on January 28, 2005 following General Maritime's announcement of the implementation of a dividend policy that pays a substantial amount of free cash flow generated to shareholders quarterly. The lower ratings reflect Moody's assessment that the implementation of the new dividend policy will weaken General Maritime's credit profile, despite strong current credit metrics and otherwise modest levels of debt on the company's balance sheet. The ratings continue to reflect the volatile nature of the crude oil tanker sector in which the company operates, the risk from which is heightened by the predominantly spot-charter exposure that the company undertakes as well by the age of the General Maritime's fleet. Ratings are supported, however, by continued generation of strong operating cash flows even as tanker rates have moderated, and by General Maritime's robust liquidity position. The stable ratings outlook reflects Moody's expectations that the company will be able to meet all drydock and scheduled debt repayment obligations over the near term, as well as required payments (net of a modest amount of ship finance debt) for delivery of the scheduled newbuilding delivery in 2006, out of the cash flows residual from the distributions to shareholders. Ratings or their outlook could be subject to downgrade if General Maritimes total debt were to increase or if the company were to undertake a large, levered acquisition. Ratings could also be lowered if market conditions were to materially deteriorate such that retained cash flow falls below 15% of total debt, or if EBIT coverage of interest falls below 1.5 times for a prolonged period, while the current dividend policy remains in place. Rating or their outlook could be revised upward if the company were to rescind or significantly moderate the current dividend policy, allowing the company to resume a practice of more rapid debt reduction, or if free cash flow could be demonstrated to exceed 20% of debt for a prolonged period, particularly through an industry downturn. An upward ratings movement would be more likely if improvements in financial conditions and policy were augmented by a reduction in the company's operating risk, considered high by Moody's due to the company's relatively old fleet and exposure to spot charter markets. In January of 2005, General Maritime announced its plans to pay quarterly dividends based on the trailing EBITDA after adjustments for interest expense and reserves for fleet maintenance, renewal, and drydock expenses. In Moody's view, this has weakened the company's credit profile. The result of the changed policy is to reduce the company's ability to build cash reserves or reduce debt during the current strong, albeit waning, market cycle. Risk to debt holders has increased, in Moody's opinion, due to the expected reduction in financial cushion in anticipation of the next down-cycle. Observing the first two quarters of 2005, payments to shareholders have effectively been tantamount to the distribution all of the prior quarter's net income. General Maritime has historically grown through acquisitions. As such, the implementation of the new policy raises concerns that the company will rely on greater levels of incremental debt to fund future acquisitions leading to a substantial increase in the company's leverage. Prior to this rating action, Moody's ratings had anticipated that General Maritime would use free cash flow for debt repayments and increased liquidity to provide capacity to fund future growth. Over the last few years, General Maritime has continued to reap the benefits of historically strong tanker markets, augmented by increased exposure to the spot charter markets. For the past two years, driven by increases in spot charter rates, General Maritime's revenue grew 51%, from $454 million in FY 2003 on a fleet of 47 vessels to about $687 million in LTM June 2005 on 43 vessels, while EBITDA more than doubled over this time, to about $430 million. Through this period, the company was able to generate enough cash flow to reduce debt substantially, from a peak of $655 million as of December 2003 to $441 million as of June 2005. As a result, credit metrics were very strong: debt-to LTM June 2005 EBTIDA of 1.0 time, EBIT to interest of over 9 times, and free cash flow of $216 million, representing about 48% of total debt, despite a large dividend declared in the first quarter of 2005 ($68 million). Moody's estimates, however, that pro forma free cash flow over this period could have potentially been negative had the current dividend plan been in place. In addition, the company has ample liquidity: $74 million cash balance as of June 2005, with all of the company's $600 million senior secured revolving credit facility available. However, such metrics are expected for bulk shipping companies of this rating category through the high point in its industry cycle. Moody's anticipates that, considering the high current orderbook associated with the Suezmax and Aframax tanker sectors as well as the volatile market cycles for which the crude oil tanker sector is known, leverage could grow to many times the current levels, while EBIT coverage would deteriorate quickly and substantially in the event of a market downturn. General Maritime's operating profile is somewhat high risk in Moody's opinion. A market downturn could have a particularly severe affect on the company's earnings, since: a) most of its fleet operates on a spot charter basis, with no vessel on long term charter beyond July 2006; and b) the company's operations are concentrated in the relatively narrow mid-size tanker segment. Also, because of the age of the company's fleet (average about 12 years), there exists a potential risk that in a weakening charter environment rates earned by older vessels could decline faster than those of newer vessels, which will represent a larger proportion of the world fleet due to high anticipated delivery levels over the next two years. As such, it is important, in Moody's view, that companies operating in these sectors, particularly those with older fleets requiring refurbishment or replacement, be able to use the robust cash flows generated in strong markets to repay existing debt and increase liquidity reserves to not only withstand potential market downturns, but to also acquire newer tonnage at lower prices without increasing leverage. Moody's believes that General Maritime's current dividend policy substantially diminishes the company's ability to do so over the long run. These ratings have been downgraded: General Maritime Corporation: * Senior unsecured notes due 2013, to B2 from B1; * Corporate Family Rating to B1 from Ba3. General Maritime Corporation, a Marshall Island corporation headquartered in New York, New York, is one of the largest owner/operators of medium-size crude oil tankers in the shipping industry. The company has a fleet of 43 tankers consisting of 26 Aframax and 17 Suezmax tankers, including commitments on four vessels on order, totaling 5.2 million DWT. The company's vessels primarily transport crude oil to the United States from oil producing regions in the Atlantic basin (Caribbean, West Africa, North Sea, and South America). The company also operates in the Black Sea and other regions. GMAC COMMERCIAL: Fitch Holds Low-B Ratings on Six Cert. Classes --------------------------------------------------------------- Fitch Ratings affirms GMAC Commercial Mortgage Securities, Inc.'s commercial mortgage pass-through certificates, series 2004-C1: -- $39.9 million class A-1 at 'AAA'; -- $100.9 million class A-1A at 'AAA'; -- $55 million class A-2 at 'AAA'; -- $50 million class A-3 at 'AAA'; -- $343.8 million class A-4 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $20.7 million class B at 'AA'; -- $8.1 million class C at 'AA-'; -- $15.3 million class D at 'A'; -- $8.1 million class E at 'A-'; -- $12.6 million class F at 'BBB+'; -- $8.1 million class G at 'BBB'; -- $10.8 million class H at 'BBB-'; -- $4.5 million class J at 'BB+'; -- $4.5 million class K at 'BB'; -- $4.5 million class L at 'BB-'; -- $2.7 million class M at 'B+'; -- $2.7 million class N at 'B'; -- $2.7 million class O at 'B-'. Fitch does not rate the $12.6 million class P certificates. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the July 2005 distribution date, the pool has paid down 1.9% to $707.7 million from $721.4 million at issuance. Two loans have investment-grade credit assessments: AFR Office Portfolio (5.1%) and Tysons Corner Center (5%). The AFR Office Portfolio is secured by 152 properties located in 19 states. The total debt on the portfolio consists of six A notes and one B note. The A-4 note is included in this trust. The Fitch stressed debt service coverage ratio for year-end 2004 was 1.61 times (x) compared with 1.79x at issuance. Tysons Corner Center is secured by 1.5 million square feet of a regional mall located in McLean, VA. The total debt consists of four A notes. The A-2 note is included in this trust. For YE 2004, the Fitch stressed DSCR increased to 1.64x compared with 1.53x at issuance. To date, there have been no realized losses and no specially serviced loans. GRUPPO ANTICO: Claims Objection Deadline Extended Until Dec. 24 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Broadways Advisors, LLC, the Liquidating Trustee appointed under the confirmed Amended Plan of Liquidation of Gruppo Antico, Inc. f/k/a Trend Holdings, Inc. and its debtor-affiliates, a further extension, until Dec. 24, 2005, to object to proofs of claim and equity interests filed against the Debtors' estates. The Court confirmed the Debtors' Plan on March 10, 2004, and the Plan took effect on April 30, 2004. Pursuant to the confirmed Plan, Broadways Advisors was appointed as the Liquidating Trustee and is in charge with all causes of action and the administration of the Gruppo Antico Liquidating Trust. Pursuant to Article VI of the Plan, two governors were appointed to oversee the actions of the Trustee. Broadways Advisors gave the Court four reasons militating in favor of the extension: 1) it, the Debtors and the governors have been working diligently to resolve numerous post-confirmation issues, including devoting substantial time in prosecuting hundreds of preference actions; 2) the extension will give it more opportunity to review the Debtors' claims pending the resolution of substantially all of the preference actions litigations so as to determine the efficacy of objecting to claims in advance of a distribution to general unsecured creditors; 3) sustained objections to certain improper claims will increase the amount that the Liquidating Trust will distribute to the Debtors' unsecured creditors; and 4) the extension will save judicial resources and avoid liquidation of disputed claims and interests that can be resolved through negotiations. Gruppo Antico, Inc., f/k/a/ Trend Holdings, Inc., used to processed plastics, stamps metal and performs electromechanical assembly of electronic enclosures in facilities around the world. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 7, 2002 (Bankr. Del. Case No. 02-13283). Laura Davis Jones, Esq., Christopher James Lhulier, Esq., Brad R. Godshall, Esq., and Jeffrey Dulberg, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtor. When the Debtors filed for chapter 11 protection, they estimated assets and debts of more than $100 million. The Court confirmed the Debtors' chapter 11 Plan on March 10, 2004, and the Plan took effect on April 30, 2004. Broadways Advisors, LLC is the Liquidating Trustee under the confirmed Plan. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represents the Liquidating Trustee. GT BRANDS: Wants to Pay Foreign Vendors' Prepetition Claims ----------------------------------------------------------- GT Brands Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to pay their foreign vendors' prepetition claims. The Debtors are developer and multi-channel marketer of consumer products, focused primarily on the fitness and weight-loss, health and beauty, housewares, inspirational programming and family entertainment segments. As such, they rely significantly upon certain critical foreign manufacturers and vendors. Two of these vendors are Rich China aka RCI Winvast and Ningbo Hua Gan Machinery Manufacturer, both of which are Chinese-owned companies. Rich China produces DVD packaging materials for the Debtors in China. Currently, the Debtors owe the company approximately $78,972, for custom made DVD packages which remain undelivered. The Debtors tell the Court that the sale of the goods will generate about $700,000 in revenue. Ningbo produces vegetable choppers used in connection with the Debtors' Xpress 101 product. About 20,000 vegetable choppers, which the Debtors ordered, remain in Ningbo's possession. The materials, the Debtors say, will enable them to sell their Xpress 101 units currently in inventory. The sale of the Ningbo veggie choppers with the Xpress 101 units will generate more than $750,000 in revenue for GT Brands. In addition, the Debtors also have undelivered orders from other foreign vendors because of non-payment. They contend that without those goods, GT Brands will be severely affected financially. Headquartered in New York, New York, GT Brands Holdings LLC, supplies home video titles to mass retailers. The Debtors also develop and market branded consumer, lifestyle and entertainment products. The Company and its affiliates filed for chapter 11 protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167). Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they estimated between $50 million to $100 million in assets and more than $100 million in debts. HARRINGTON BREAST: Case Summary & 10 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Harrington Breast Care Center, Inc. 819 McKay Court, Suite B101 Youngstown, Ohio 44512 Bankruptcy Case No.: 05-44768 Chapter 11 Petition Date: August 12, 2005 Court: Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Andrew W. Suhar, Esq. Suhar & Macejko, LLC 1101 Metropolitan Tower P.O. Box 1497 Youngstown, Ohio 44501-1497 Tel: (330) 744-9007 Fax: (330) 744-5857 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Place Bank $748,474 724 Boardman Poland Road OH 44512 Lloyd E. Slusher $325,000 61 Midgewood Youngstown, OH 44512 First Place Bank $56,567 724 Boardman Poland Road Youngstown, OH 44512 Eaton Group, Inc. Back Rent on $21,384 888 Boardman Canfield Road Joseph Sylvester Remodeling $3,904 Construction Source One $1,150 Yurchyk & Davis CPA's, Inc. Accounting Services $730 Professional Engine $432 First Federal Credit Union Monies owed on monies $86 Collected Towne Crier Advertising $15 HIRSH INDUSTRIES: Wants More Time to Decide on Leases ----------------------------------------------------- Hirsh Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Indiana in Indianapolis to extend the period within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors ask the Court to extend the decision period to Dec. 3, 2005. The Debtors tell the Court that the extension will provide more time to enhance and to maintain the value of their estates. The Debtors add that the requested extension will provide sufficient time for them to confirm a plan of reorganization, pursuant to which they can make the final decision to assume or reject the unexpired leases. The Court will consider the Debtors' request during a hearing scheduled at 10:00 a.m. today, Aug. 15, 2005, at the U.S. Courthouse in Indianapolis. Headquartered in Des Moines, Iowa, Hirsh Industries, Inc., manufactures storage and organizational products. Hirsh Industries' products include metal filing cabinets, metal shelving, wooden ready-to-assemble organizers and workshop accessories and retail store fixtures. The Company and two affiliates filed for chapter 11 protection on July 6, 2005 (Bankr. S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V. Possinger, Esq., at Jenner & Block LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated between $1 million to $10 million in assets and between $50 million to $100 million in debts. ILINC COMMS: Posts $885 Million Net Loss in First Quarter 2006 -------------------------------------------------------------- iLinc Communications, Inc. (AMEX:ILC) reported results for the fiscal 2006 first quarter ended June 30, 2005. For the three months ended June 30, 2005, the Company reported an $885,000 net loss, compared to a $1,456,000 net loss for the same period in 2004. Revenues from continuing operations increased 36% to $2.7 million for the three months ended June 30, 2005, when compared with revenues of $2 million for the three months ended June 30, 2004. The Company reported a net loss from continuing operations of $892,000, as compared with a net loss from continuing operations of $1.5 million during the three months ended June 30, 2004. Commenting on the first quarter financial results, James M. Powers, Jr., president and chief executive officer of iLinc Communications, said, "We saw a reduction in revenue growth from the prior quarter primarily due to the delay of a few sales transactions that we had anticipated to close in the June quarter. However, we see continued growth in overall recurring revenues that include the combined use of our per-minute Web and audio conferencing products. New and old customers alike appreciate the flexibility in licensing, delivery, and access to complementary services that iLinc provides in our Web and audio conferencing products and services. Dr. Powers continued, "We are committed to continued bottom line improvement while sustaining our investment in our sales and marketing efforts and in product development. Toward our goal of balance sheet improvement and ultimate profitability, we have implemented a cost reduction program that includes head count and expense reduction in non-core areas. Also, we recently converted $400,000 of long-term debt into equity and plan additional debt conversions as appropriate to reduce our overall debt burden and lessen interest expense. Additionally, we plan to raise equity capital to further improve our overall capital structure. In closing, Dr. Powers added, "We remain uniquely positioned to take advantage of the rapid growth projected in the Web conferencing industry and especially in the software purchase model component of the industry which is projected to be the highest growth area. We are encouraged by our ability to win customers from larger competitors by leveraging our competitive advantages." iLinc Communications, Inc. -- http://www.iLinc.com/-- develops conferencing products and services for highly secure and cost- effective collaborative online meetings, presentations, and training sessions. The Company provides integrated Web and audio conferencing as a Web-based service, onsite installable software, or through hybrid ownership licensing in which customers pay a one-time fee for unlimited conferencing yet the software is hosted by iLinc. Our products and services include the iLinc suite of Web Conferencing software (MeetingLinc, LearnLinc, ConferenceLinc, and SupportLinc); Phone (Audio) Conferencing Services; On-Demand Conferencing; and EventPlus, a service for professionally managed online and audio conferencing events. iLinc's products and services are used by organizations worldwide in sales, HR and training, marketing, and customer support. * * * Going Concern Doubt Epstein, Weber & Conover, PLC, expressed substantial doubt about iLinc Communications' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended March 31, 2005. The auditors point to the Company's significant working capital deficiency, substantial recurring losses and negative cash flows from operations. For the three months ended June 30, 2005, the Company's balance sheet showed $2.1 million in current assets and $6.8 million in current liabilities. ILINC COMMS: Names James Dunn, Jr., as New Chief Financial Officer ------------------------------------------------------------------ iLinc Communications, Inc. (Amex: ILC) disclosed that James L. Dunn, Jr., the Company's current Senior Vice President has been appointed to the role of Chief Financial Officer. Mr. Dunn has been with the Company since its inception, and he previously acted as interim-CFO between February of 2004 until July of 2004. Mr. Dunn assumed the position upon the resignation of David J. Iannini, the Company's current CFO. Mr. Iannini is leaving the Company to focus on his private investment banking business and other business matters outside of the Company. Mr. Iannini may continue to provide support to the Company on an interim consulting basis. iLinc Communications, Inc. -- http://www.iLinc.com/-- develops conferencing products and services for highly secure and cost- effective collaborative online meetings, presentations, and training sessions. The Company provides integrated Web and audio conferencing as a Web-based service, onsite installable software, or through hybrid ownership licensing in which customers pay a one-time fee for unlimited conferencing yet the software is hosted by iLinc. Our products and services include the iLinc suite of Web Conferencing software (MeetingLinc, LearnLinc, ConferenceLinc, and SupportLinc); Phone (Audio) Conferencing Services; On-Demand Conferencing; and EventPlus, a service for professionally managed online and audio conferencing events. iLinc's products and services are used by organizations worldwide in sales, HR and training, marketing, and customer support. * * * Going Concern Doubt Epstein, Weber & Conover, PLC, expressed substantial doubt about iLinc Communications' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended March 31, 2005. The auditors point to the Company's significant working capital deficiency, substantial recurring losses and negative cash flows from operations. For the three months ended June 30, 2005, the Company's balance sheet showed $2.1 million in current assets and $6.8 million in current liabilities. INTEGRATED HEALTH: Gets Court Nod to Reserve Amounts for 13 Claims ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on July 25, 2005, IHS Liquidating LLC asked the U.S. Bankruptcy Court for the District of Delaware to establish reserve amounts for 13 disputed claims. Matthew Marcos, Executive Director of Eureka Management LLC, the Liquidating Manager of IHS Liquidating, relates that the IHS Debtors' Plan of Reorganization contemplates that the Court may either estimate disputed claims or establish appropriate reserves on account of those claims in the event resolution of the disputed claims would unduly delay distributions to other creditors. IICNA Responds Indemnity Insurance Company of North America does not object to the IHS Liquidating LLC's request provided that these reservations are included: (1) No funds that IHS Liquidating anticipates distributing to holders of General Unsecured Claims are paid from any escrow account established for 1999 Tort Claims; (2) The setting of the Reserve Amounts does not have the effect of establishing any liability or settlement values of any Tort Claim that maybe covered by any of the Debtors' insurance policies; and (3) The setting of the Reserve Amounts does not affect or prejudice IICNA's rights under the Policies and the Confirmation Order. IICNA explains that the setting of any Reserve Amount may: (i) affect its ability to defend, settle or otherwise resolve any present or future Tort Claims, including any 1999 Insured Tort Claims that may be covered under the Policies; or (ii) prejudice any of its rights under the Policies or the Confirmation Order. IICNA is an insurance company organized and existing under the laws of the state of Connecticut. The company issued certain insurance policies that may provide coverage for certain Tort Claims against the Debtors. * * * Judge Walrath grants IHS Liquidating's request in all respects. The Court rules that the setting of Reserve Amounts does not: (a) have the effect of establishing any liability or settlement values of, or in any way resolving, any Tort Claims that may be covered by any of the insurance policies issued by IICNA; and (b) affect, or in any manner prejudice, (i) IICNA's rights under the Policies or any of IICNA's rights that were reserved by the Confirmation Order, or (ii) any of the rights of the Debtors' estates or IHS Liquidating under the Policies, the Plan or the Confirmation Order. The Court directs IHS Liquidating to treat five Tort Claims as disputed general unsecured claims for purposes of calculating and implementing distributions to other creditors in the Debtors' Chapter 11 cases: Proposed Claim No. Claimant Reserve Amount --------- -------- -------------- 13410 Anthony, William $250,000 3432 Attaway, Georgia 250,000 12610 Bachman, Kenneth J. 500,000 8697 Hough, James 1,361,265 1009 Reed, Kareem $250,000 IHS Liquidating entered into stipulations with seven Tort Claimants, whereby the parties agreed on the reserve amount to be allotted for each Tort Claimant. The Court approves the stipulations: Stipulated Claim No. Claimant Reserve Amount --------- -------- -------------- 13304 Bennett, Gary $250,000 13692 Bray, Naomi 10,000,000 14004 Cooper, Charles Sr. 1,000,000 5359 Estate of Jose Maes 600,000 7435 Evans, Sarah 50,000 10852 Mazerole, Levina 500,000 3869 Pissanos, Mildred 1,000,000 Judge Walrath adjourns the hearing with respect to Claim No. 2316 filed by the Internal Revenue Service. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERMET CORP: Court Approves Amended Disclosure Statement ---------------------------------------------------------- The United States Bankruptcy Court for the Eastern District of Michigan approved Intermet Corporation and its debtor-affiliates' (INMTQ:PK) Disclosure Statement explaining their Amended Plan of Reorganization filed on Aug. 5, 2005. The Court determined that the Disclosure Statement contains adequate information -- the right amount of the right kind of information -- for creditors to make an informed decision about the Plan. The Debtors are now authorized to transmit the Disclosure Statement to creditors and to solicit acceptances of their Plan. The Bankruptcy Court scheduled a plan confirmation hearing for Sept. 26, 2005. Terms of the Plan The Plan contemplates that each of the Debtors will become reorganized entities after consummation of the Plan. The Plan is jointly proposed by all of the Debtors, but constitutes a separate plan for each Debtor. General Unsecured Claims The Debtors estimate that General Unsecured Claims against their estates total: Debtor Allowed Claim ------ ------------- Intermet Corp. $189,197,093 Alexander City Casting Company, Inc. 179,931,240 Cast-Matic Corporation 183,197,759 Columbus Foundry, L.P. 189,397,046 Diversified Diemakers, Inc. 183,291,005 Ganton Technologies, Inc. 187,016,248 Intermet Illinois, Inc. 181,331,240 Intermet International, Inc. 14,000 Intermet U.S. Holding, Inc. 185,889,247 Ironton Iron, Inc. 182,736,103 Northern Castings Corporation 181,482,233 Sudbury, Inc. 182,804,825 Tool Products, Inc. 186,138,827 Wagner Castings Company 184,580,140 Wagner Havana, Inc. $181,369,667 -------------- $2,578,376,673 The Plan promises general unsecured creditors: (a) a cash-out amount on account of their claims; (b) at the option of each holder: (i) a pro rata share of the applicable Debtor's New Common Stock; and (ii) a pro rata share of the rights allocated to the applicable Debtor as described in the Plan; or (c) at the option of each holder, an inducement cash amount. The unsecured portion of the Noteholders' claims will be satisfied by a cash payment from the sale proceeds of the respective Debtor's assets. If the Liquidating Plan condition is satisfied, the Indenture Trustee will receive the indenture trustee fee amount and a cash- out amount allocated to the applicable Debtor: Debtor Allowed Claim ------ ------------- SUDM, Inc. $179,931,240 Wagner Havana, Inc. $181,369,667 Unsecured convenience claimholders will be paid a fixed percentage of its allowed claim, after the effective date. Financing Commitment In connection with the Plan, the Court gave the Debtors permission to enter into an equity financing Commitment Letter under which, R2 Investments, LDC, and Stanfield Capital Partners LLC have agreed to underwrite a $75 million equity investment for INTERMET. "We are pleased with the court's approval, which means that INTERMET is moving closer to exiting bankruptcy," said Gary F. Ruff, Chairman and CEO. "We look forward to emerging from chapter 11 with a capital structure and strategy designed to strengthen our leadership position in the industry." In consideration for the commitment, the Debtors are obligated to pay the lenders $3 million on the effective date of the Amended Plan and reimburse them for certain fees and expenses incurred in connection with the Amended Commitment Letter and the Amended Plan. A full-text copy of the Debtor's Amended Plan of Reorganization is available at no charge at: http://ResearchArchives.com/t/s?c5 A full-text copy of the Disclosure Statement explaining the Amended Plan is available at no charge at: http://ResearchArchives.com/t/s?c6 Headquartered in Troy, Michigan, Intermet Corporation -- http://www.intermet.com/-- provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. Intermet, along with its debtor-affiliates, filed for chapter 11 protection on Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP represents the Debtors. When the Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. JACOBS MANUFACTURING: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Jacobs Manufacturing Company 311 Edmonds Avenue Bridgeport, Alabama 35740 Bankruptcy Case No.: 05-83995 Type of Business: The Debtor operates a steel foundry. Chapter 11 Petition Date: August 11, 2005 Court: Northern District of Alabama (Decatur) Debtor's Counsel: Kevin D. Heard, Esq. Heard & Associates, L.L.C. 307 Clinton Avenue West, Suite 200 Huntsville, Alabama 35801 Tel: (256) 535-0817 Total Assets: $1,073,568 Total Debts: $637,972 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Foundry Supply Group Open account $62,900 459 Main Street, Suite 101 Trussville, AL 35173 North Alabama Electric Co-Op Open account $55,013 41103 US Highway 72 P.O. Box 628 Stevenson, AL 35772 Bridgeport Utility Board Open account $53,228 P.O. Box 36 Bridgeport, AL 35740 Southern Fabricators Open account $20,000 Southeastern Freight Lines Open account $9,210 Ajax Tocco Open account $8,925 Gant Croft & Associates PC Open account $4,780 Porter Warner Open account $4,580 Airlube Inc. Open account $3,939 Internal Revenue Service 940 & 941 Taxes $3,632 (2nd quarter for 2005) Milwaukee Chaplets Inc. Open account $2,992 Specialty Fdy Products Open account $2,034 Applied Industrial Tech Open account $1,885 Samson Industrial Open account $1,838 Walter A Wood Supply Co. Open account $1,609 Modern Pattern Engineers Open account $1,497 Jack Livingston Open account $1,411 RSC Rental Equipment Open account $1,021 Alabama Dept. of Revenue 940 & 941 Taxes $1,000 (2nd quarter for 2005) BP Oil, Inc. Open account $845 KEYSTONE CONSOLIDATED: Court Confirms Amended Reorganization Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Wisconsin confirmed Keystone Consolidated Industries, Inc.'s Third Amended Joint Plan of Reorganization on Aug. 10, 2005. As a result of the plan confirmation, Keystone anticipates it will be able to emerge from its Chapter 11 proceedings before the end of this month. Keystone's Third Amended Joint Plan of Reorganization provides that, among other things: -- Keystone will assume the previously negotiated amendment to the collective bargaining agreement with the Independent Steel Workers Alliance, Keystone's largest labor union; -- Keystone will assume the previously negotiated agreements reached with certain retiree groups that will provide relief by permanently reducing healthcare related payments to these retiree groups from pre-petition levels; -- The Company's obligations due to pre-petition secured lenders other than its DIP lenders will be reinstated in full against reorganized Keystone; -- All shares of Keystone's common and preferred stock outstanding at the petition date (February 26, 2004) will be cancelled; -- Pre-petition unsecured creditors with allowed claims against Keystone will receive, on a pro rata basis, in the aggregate, $5.2 million in cash, a $4.8 million secured promissory note and 49% of the new common stock of reorganized Keystone (the aggregate amount of cash and principal amount of the promissory note may increase based on certain events); -- Certain operating assets and existing operations of Sherman Wire Company, one of Keystone's pre-petition wholly owned subsidiaries, will be sold at fair market value to Keystone, which will then be used to form and operate a newly created wholly owned subsidiary of reorganized Keystone named Keystone Wire Products Inc.; -- Sherman Wire will be reorganized and the proceeds of the operating asset sale to Keystone and other funds will be distributed, on a pro rata basis, to Sherman Wire's pre- petition unsecured creditors with allowed claims; -- Sherman Wire's pre-petition wholly-owned non-operating subsidiaries, J.L. Prescott Company, and DeSoto Environmental Management, Inc. as well as Sherman Wire of Caldwell, Inc., a wholly-owned subsidiary of Keystone, will ultimately be liquidated and the pre-petition unsecured creditors with allowed claims against these entities will receive their pro-rata share of the respective entity's net liquidation proceeds; -- Pre-petition unsecured creditors with allowed claims against FV Steel & Wire Company, another one of Keystone's wholly- owned subsidiaries, will receive cash in an amount equal to their allowed claims; -- One of Keystone's Debtor-In-Possession lenders, EWP Financial, LLC (an affiliate of Contran Corporation, Keystone's largest pre-petition shareholder) will convert $5 million of its DIP credit facility, certain of its pre- petition unsecured claims and all of its administrative claims against Keystone into 51% of the new common stock of reorganized Keystone; and -- The Board of Directors of reorganized Keystone will consist of seven individuals, two of which shall be designated by Contran, two of which shall be designated by the Official Committee of Unsecured Creditors, and the remaining three directors shall qualify as independent directors (two of the independent directors shall be appointed by Contran with the OCUC's consent and one shall be appointed by the OCUC with Contran's consent). Exit Financing Commitment Keystone has also obtained a commitment from an exit lender for an $80 million credit facility. This credit facility will be used to extinguish the portion of Keystone's existing debtor-in-possession credit facilities that will not be converted to equity and to provide working capital upon emergence from bankruptcy. Keystone believes the Bankruptcy Court's confirmation of the Third Amended Joint Plan of Reorganization represents the final major step in Keystone's efforts to complete a successful restructuring. Keystone and its advisors will continue to work diligently in an effort to achieve its goal of effecting the Joint Plan of Reorganization and emerging from bankruptcy prior to the end of this month. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company filed for chapter 11 protection on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22422). Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, it listed $196,953,000 in total assets and $365,312,000 in total debts. KMART CORP: Promotes Peter Whitsett to SVP & Merchandising Officer ------------------------------------------------------------------ Kmart, a wholly owned subsidiary of Sears Holdings Corporation (Nasdaq: SHLD), reported the promotion of Peter Whitsett, 39, to senior vice president and Kmart merchandising officer, effective immediately. In his new position, Mr. Whitsett oversees all merchandise categories for Kmart stores and reports directly to Aylwin Lewis, president of Sears Holdings and chief executive officer of Kmart and Sears Retail. Mr. Whitsett previously served as SVP/GMM, with responsibilities for Kmart's hardlines, food & consumables, drug store and pharmacy merchandise divisions. "Peter has a proven track record in several major product categories. In his new role he will take that experience and accelerate improvements already made to the depth and quality of Kmart's assortment," Lewis said. "Peter has built a strong team since joining the business and developed trusted relationships with our vendors. We are confident that he will be instrumental in helping to chart the course for Kmart's merchandising success." Mr. Whitsett joined Kmart in 1999 as Director, Merchandise Planning & Replenishment and has served in a variety of positions, including Vice President/General Merchandise Manager and Divisional Vice President Merchandising Planning. About Sears Holdings Corporation Sears Holdings Corporation is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. The company is the nation's largest provider of home services, with more than 14 million service calls made annually. For more information, visit Sears Holdings' Web site at http://www.searsholdings.com/ 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) KRISTINA STALCUP: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Kristina Dyann Stalcup 209 East Parkway Suite #6 Gatlinburg, Tennessee 37738 Bankruptcy Case No.: 05-34324 Type of Business: The Debtor has interests in Above the Smoke LLC, Anakeesta HOA, Anakeesta LLC, Anakeesta Village LLC, Chalet Rentals of the Smokies, and The Smokies Group HOA. Chapter 11 Petition Date: August 11, 2005 Court: Eastern District of Tennessee (Knoxville) Judge: Richard Stair Jr. Debtor's Counsel: John P. Newton, Jr., Esq. Law Office of John P. Newton, Jr. 9700 Westland Drive, Suite 101 Knoxville, Tennessee 37922 Tel: (865) 777-1106 Fax: (865) 777-1107 Total Assets: $6,223,640 Total Debts: $1,619,925 Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Linda Nelson, Tom Lassin, Rick Hill $55,000 Rick Lassin, Sandra Hollinger 921 Northwest 37th Terrace Gainsville, FL 32605 RBM HPR, Inc. $24,945 Betty Barker, President 511 Parkway Gatlinburg, TN 37738 Dorothy Stalcup $18,000 1404 Laurel Road Gatlinburg, TN 37738 Harry Fisher $12,000 Molly Brownlee $8,220 AmericanExpress $6,907 Citi Cards $6,547 Vick engineering &Surveying $5,965 Denise Scotti $3,000 Blalock Lumber Company $2,040 Jim Sheffer - City Storage $1,600 Clearwater Drilling Co. $600 LABRANCHE & CO: Moody's Lowers Surbordinated Debt Rating to Ba3 --------------------------------------------------------------- Moody's Investors Service lowered LaBranche & Co Inc.'s senior debt rating to Ba2 from Ba1 and lowered the subordinated debt rating to Ba3 from Ba2. The rating outlook was revised to stable from negative. The rating actions taken were based upon Moody's view that the company's leverage is high relative to its on-going core earnings generation, which will likely remain subdued for the intermediate term. This is due to the continuing structural evolution of U.S. equities markets and persistently low equity market volatility, both contributing to reduce profit-making opportunities for LaBranche and the other specialists. Moody's said that the rating action and outlook also reflect the high quality and ample liquidity imbedded in LaBranche's balance sheet, and the expectation that the company will use its excess liquidity to reduce its currently elevated leverage over the next two years. The rating actions also take into account the strength and longevity of LaBranche's specialist franchise on the New York Stock Exchange. As a major consolidator within the specialist business, LaBranche has built a market-leading franchise and solidified its position on the NYSE. The rating agency said that the transition of the NYSE to a hybrid market and new order routing rules may direct increasing order flow towards automated execution. This could pressure LaBranche's earnings as the number of situations that require a specialist's intervention to complete trades declines. LaBranche could also be affected by the degree to which other markets may be better positioned to cost-effectively execute trades and take away order flow. Nonetheless, the NYSE remains the largest and deepest equities exchange in the world and the earnings impact on LaBranche as a result of the evolving market structure could take a number of years to fully emerge, in Moody's opinion. Until 2003, LaBranche's operating results had held up quite well. However, low market volumes and reduced volatility have pressured earnings and cashflow. Core operating cashflow (EBITDA excluding one-off gains and charges) is currently running at about $100 million per year, less than half the levels generated from 2000 to 2003. The rating agency said that LaBranche's nominal leverage remains high relative to what is likely to be sustainable, modest cash and earnings generation of the firm. Total debt at June 30, 2005 was $494 million. After spiking up to 6.4x in Q1-05, leverage (debt/EBITDA) in Q2-05 came in at 4.8x, close to the 5x logged for FY-04. An offset to the leverage, LaBranche's liquidity is strong. The firm ended the quarter with a $122 million liquid-asset surplus above its regulatory net liquid asset requirements. This surplus could grow over the coming year in several increments by an additional $180 million under a proposal submitted by the NYSE to the SEC to modify the liquid net asset requirement for specialists to a risk-based methodology. The pending merger of the NYSE with Archipelago would also enable LaBranche to monetize its investment in NYSE seats, freeing up potential value of around $125 million. Over time, the additional liquidity freed up from LaBranche's specialist broker-dealer subsidiaries would be available for possible debt reduction at the parent company. Ratings affected: * Senior Unsecured to Ba2 from Ba1 * Senior Subordinate to Ba3 from Ba2 LaBranche & Co., Inc. is a holding company whose principal broker- dealer subsidiary is LaBranche & Co. LLC, one of the oldest (founded in 1924) and largest "specialist" firms on the New York Stock Exchange. The company ranks as the NYSE's #1 specialist by share volume traded (27%) and dollar volume traded (25%). As of June 30, 2005, LaBranche reported total assets and common equity of $2.9 billion and $706 million, respectively. LEINER HEALTH: S&P Places Ratings on Negative Watch --------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on vitamins, minerals, and supplements manufacturer, Leiner Health Products Inc., on CreditWatch with negative implications, including its 'B' corporate credit rating. Total debt outstanding at June 25, 2005, was about $394 million. The CreditWatch placement reflects the company's announcement that it is in the process of requesting an amendment to its credit facility to provide relief on its financial covenants. Although the Carson, Califonia-based company was in compliance with its debt covenants as of June 25, 2005, cushion on the leverage covenant was very limited, and this covenant steps down at the end of September 2005. "It is likely that Leiner will not meet its leverage covenant at the end of September if it is unable to secure an amendment," said Standard & Poor's credit analyst Alison Sullivan. In addition, first fiscal quarter financial results were weaker than expected, and currently challenging business trends are likely to continue to pressure the company's operating performance. Results were tempered by order softening due to retailer inventory adjustments, a soft retail market in Canada, and the effect of higher raw material costs. Leiner also reserved $5.6 million for returns and inventory write- downs associated with sales underperformance of a branded product. The impact of negative vitamin E publicity, a product mix shift towards lower-margin joint care products and the associated decreased plant volumes hurt fixed cost absorption. Pricing pressure in some product categories will suppress margin improvement in fiscal 2006. LIBERTY MEDIA: Posts $107 Million Net Loss in Second Quarter ------------------------------------------------------------ Liberty Media Corporation (NYSE: L, LMCB) reported its financial results for the second quarter period ended June 30, 2005. The Company reported a $107 million net loss for the three months ended June 30, 2005, compared to a $314 million net loss in the same period last year. For the six months ended June 30, 2005, the Company reported $147 million of net income, compared to a $324 million net loss for the same period in 2004. In 2004, Liberty had organized its businesses into three groups -- Interactive Group, Networks Group and Corporate and Other. On July 21, 2005, Liberty spun off its newly formed subsidiary, Discovery Holding Company. DHC's assets are comprised of Liberty's 100% ownership interest in Ascent Media Group, Inc., which was included in its Interactive Group, its 50% ownership interest in Discovery Communications, Inc., which was included in its Networks Group and $200 million in cash. After completion of this spin off, Liberty now operates and analyzes its businesses individually, rather than combining them with other businesses into groups. As a supplement to Liberty's consolidated statements of operations, the following is a presentation of financial information on a stand-alone basis for the following privately held assets owned by or in which Liberty held an interest at June 30, 2005: * QVC, Inc., a consolidated, 98.5% owned subsidiary; * Starz Entertainment Group LLC (SEG), a consolidated, wholly owned subsidiary; and * DCI, a privately held equity affiliate included among the assets spun off with DHC. Unless otherwise noted, the following discussion compares financial information for the three months ended June 30, 2005 to the same period in 2004. QVC QVC's revenue and operating cash flow increased 15% and 17%, respectively. QVC's domestic revenue and operating cash flow increased 11% and 12%, respectively. The domestic revenue increase was primarily attributed to increased sales to existing subscribers principally in the areas of apparel and accessories. The domestic operations shipped approximately 26.4 million units during the quarter, an increase of 9%. The average selling price increased 5% from $40.58 to $42.42. QVC.com sales as a percentage of domestic sales grew from 14.9% in the second quarter of 2004 to 17.5% in 2005. The domestic operating cash flow margins increased 20 basis points from the prior period due to a higher gross profit margin. The gross margin increased during the quarter primarily due to a shift in the product mix from home to higher margin apparel and accessories products and due to improvements in warehouse and distribution operations. QVC's international operations experienced positive results for the quarter due to a combination of greater sales to existing subscribers, new subscriber growth and favorable foreign currency exchange rates. Revenue from international operations increased 24% as a result of a strong performance from each of the international divisions. Excluding the effect of exchange rates, international revenue increased 20%. Primarily as a result of the sales increase, operating cash flow of the international operations increased from $57 million to $76 million, or 33%. While the gross profit margin declined by approximately 30 basis points, the international cash flow margin increased from 15.9% to 17.1% due to greater operating leverage of fixed expenses. The decrease in gross margins was due to changes in initial margins, product mix, and inventory obsolescence methodology. Excluding the effect of exchange rates, QVC's international operating cash flow increased 30%. Effective May 20, 2005, QVC entered into a $2 billion bank credit facility. The credit facility is comprised of an $800 million term loan that was drawn at closing, an $800 million term loan that can be drawn at any time before September 30, 2006, and a $400 million revolving loan. All loans are due and payable on May 20, 2010. QVC's outstanding debt balance was $800 million at June 30, 2005. SEG SEG's revenue increased 8% to $258 million while operating cash flow decreased 24% to $47 million. The increase in revenue was primarily due to an increase of 15.1 million subscription units, or 9%, from the second quarter of 2004. While SEG experienced a 10% increase in Thematic Multiplex subscription units, which have lower subscription rates than other SEG services, SEG also saw increases of 6% in both Starz and Encore units. The increases in subscription units were due in part to increased participation with distributors in national marketing campaigns in the second half of 2004, increased digital penetration and other marketing strategies. SEG's operating expenses increased 20%. The increases were due primarily to higher programming costs, which increased from $133 million for the three months ended June 30, 2004 to $167 million in 2005, and increases in S,G&A expenses. The programming increases were due to higher costs per title as a result of new rate cards for movie titles under certain of its license agreements that were effective for movies made available to SEG beginning in 2004. While the higher rate card took effect at the beginning of 2004, programming expense in the second quarter of 2004 also included the amortization of programming costs related to movies under the lower rate card in effect prior to 2004 as SEG's first run exhibition window typically runs 15 to 18 months. Amortization of programming costs under these lower rate cards was substantially complete at the end of March 2005. An increase in the percentage of first-run movie exhibitions utilized (which have a relatively higher cost per title) as compared to the number of library product exhibitions utilized in the second quarter of 2005 also contributed to higher programming costs. S,G&A expenses increased primarily due to an $8 million credit recorded by SEG in 2004 related to the recovery of certain accounts receivable from Adelphia Communications. These increases were partially offset by lower sales and marketing expenses as national marketing campaigns in the second quarter of 2005 were scaled back compared to those during the same period in 2004. In the second quarter of 2005, SEG and Comcast renegotiated their affiliation agreement. The new agreement eliminates Comcast's packaging commitment for the Encore and Thematic Multiplex channels (EMP) and provides for a fixed fee payment structure, with certain CPI adjustments, for EMP through 2009. The agreement also provides for a guaranteed payment structure for Comcast's carriage of Starz through 2012 with contractual increases for 2006 and 2007 and annual CPI adjustments for the remainder of the term. The foregoing payment structure for EMP and Starz may be adjusted in the event Comcast acquires or disposes of cable systems. Finally, Comcast has agreed to the elimination of certain future marketing support commitments from SEG. As a result of this new agreement, SEG's future revenue from Comcast for its EMP and Starz products will not be impacted by any increases or decreases in actual subscribers, except in the case of acquisitions or dispositions noted above. The terms of the EMP and Starz payment structures can be extended by Comcast, at its option, for a total of six years and five years, respectively. Discovery DCI's revenue of $660 million and operating cash flow of $184 million are 12% and less than 1% ahead of the same period a year ago, respectively. DCI's affiliated networks reach more than 1.3 billion cumulative worldwide subscribers. U.S. Networks revenue increased by 8% due to increases in affiliate revenue. U.S. Networks had a 12% increase in paying subscribers which, when combined with lower launch support amortization, led to a 23% increase in net affiliate revenue. Lower launch support amortization, a contra-revenue item, is the result of extensions to certain affiliation agreements. Net advertising revenue was flat as increases in CPM's were offset by lower ratings and audience delivery at certain networks. Operating expenses increased 8% due to increases in programming related expenses, partially offset by sales related expenses. Operating cash flow increased by 9% to $183 million. International Networks revenue increased 23% due to increases in both affiliate and advertising revenue and favorable exchange rates. Net advertising revenue increased 28% driven by audience impact growth in the UK combined with advertising revenue generated by new channels launched in Europe. Net affiliate revenue increased by 23% due to increases in paying subscription units in Europe and Asia and international joint venture channels combined with contractual rate increases in certain markets. Subscription units increased 42% due to increases in nearly all regions. Subscription units grew at a faster rate than revenue primarily due to a disproportionate increase in subscribers in China which have free carriage. Operating expenses increased 38% due to the previously announced investment in its Lifestyles category designed to highlight and strengthen that category. Operating cash flow decreased 32% due to the increased expenses. Excluding the effects of exchange rates, revenue increased 20% and operating cash flow decreased 42%. Revenue in the Commerce, Education and Other division increased by 27%, principally as a result of a 6% increase in same store sales and a $3 million, or 59%, increase in revenue at Discovery Education. Discovery Education revenue increased due to acquisitions that were made over the past year and an increase in the number of schools purchasing its products and services. Operating cash flow decreased 25% primarily due to additional expenses related to Discovery Education. DCI's outstanding debt balance was $2.5 billion at June 30, 2005. Outstanding Shares At June 30, 2005, there were approximately 2.802 billion outstanding shares of L and LMC.B and 74 million shares of L and LMC.B reserved for issuance pursuant to warrants and employee stock options. At June 30, 2005, there were 22 million options that had a strike price that was lower than the closing stock price. Exercise of these options would result in aggregate proceeds of approximately $126 million. Liberty Media Corporation (NYSE: L, LMC.B) is a holding company owning interests in a broad range of electronic retailing, media, communications and entertainment businesses classified in three groups; Interactive, Networks and Tech/Ventures. Our businesses include some of the world's most recognized and respected brands and companies, including QVC, Encore, Starz, Discovery, IAC/InterActiveCorp, and News Corporation. * * * As reported in the Troubled Company Reporter on March 17, 2005, Standard & Poor's Ratings Services lowered its rating on Liberty Media Corporation's senior unsecured debt to 'BB+' from 'BBB-', based on the company's plan to spin off to shareholders its 50% stake in Discovery Communications Inc. and its 100% ownership of Ascent Media Group Inc., without a commensurate reduction in debt. Ratings have been removed from CreditWatch, where they were placed with negative implications on Jan. 21, 2005. At the same time, Standard & Poor's lowered its other ratings on the company, including its corporate credit rating, to 'BB+' from 'BBB-'. The outlook is stable. Total principal value debt as of Dec. 31, 2004, was $10.9 billion. "With this transaction, Liberty and creditors lose a stable, high-quality, high-growth asset, on the heels of the spin-off in 2004 of the company's international cable TV and related assets, into which Liberty had transferred significant cash and other investments," said Standard & Poor's credit analyst Heather M. Goodchild. LNR CFL: Fitch Affirms Low-B Ratings on Seven Certificate Classes ----------------------------------------------------------------- LNR CFL 2004-1 LTD., series 2004-CFL, CMBS resecuritization notes are upgraded by Fitch as follows: -- $10,696,000 class I-1 to 'AAA' from 'A+'; -- $1,884,000 class I-2 to 'AAA' from 'A'; -- $3,518,000 class I-3 to 'AAA' from 'A'; -- $3,161,000 class I-4 to 'AA+' from 'A-'; -- $3,160,000 class I-5 to 'AA' from 'BBB+'; -- $3,161,000 class I-6 to 'BBB+' from 'BBB'. The following classes are affirmed by Fitch: -- $3,161,000 class I-7 'BBB-'; -- $3,673,000 class I-8 'BB+'; -- $7,827,000 class I-9 'BB+'; -- $4,698,000 class I-10 'BB+'; -- $2,611,000 class I-11 'BB+'; -- $2,610,000 class I-12 'BB+'; -- $242,972 class I-13 'BB+'. The rating upgrades are the result of 91.1% paydown in the underlying transaction. LNR CFL 2004-1 is collateralized by a portion of class I in SASCO 1996-CFL, which has been affirmed by Fitch. Classes G and H in SASCO 1996-CFL are rated 'AAA' and class I is rated 'BB+'. For more information, see the Fitch press release 'Fitch Affirms SASCO 1996-CFL,' dated Aug. 11, 2005, located at http://www.fitchratings.com/ MCI INC: 11 Officers Disposes 40,589 Shares of Common Stock ----------------------------------------------------------- In separate filings with the Securities and Exchange Commission on July 22, 2005, eleven officers of MCI, Inc., disclose that they recently sold or otherwise disposed of their shares of common stock in the Company: No. of Amount of Shares Securities Officer Designation Disposed Price Now Owned -------- ----------- -------- ----- ---------- Blakely, Exec. VP Robert T. and CFO 4,266 $25.53 267,805 Briggs, Pres. - Fred M. Op. & Tech. 1,882 25.53 167,696 Capellas, President and Michael D. CEO 22,581 25.53 1,077,014 Casaccia, Exec. VP, Daniel L. Human Resources 1,757 25.53 138,439 Crane, EVP of Strategy Jonathan C. Copr. & Dev. 1,882 25.53 168,401 Crawford, Pres. - Int'l. Daniel E. & Wholesale 351 25.53 83,364 Hackenson, Elizabeth EVP, CIO 377 25.53 81,975 Higgins, EVP of Ethics Nancy M. & Bus. Conduct 1,563 25.53 126,504 Huyard, Pres., US Sales Wayne and Service 2,510 25.53 243,925 Kelly, Exec. VP & Anastasi, D. General Counsel 2,039 25.53 196,101 Trent, SVP Comm. & Grace Chen Chief of Staff 1,381 25.53 105,773 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. MEDICALCV INC: Hires Lurie Besikof as Independent Accountants ------------------------------------------------------------- MedicalCV, Inc., engaged Lurie Besikof Lapidus & Company, LLP as its independent registered public accounting firm commencing with work to be performed in relation to its fiscal quarter ended July 31, 2005, and in connection with the audit of its financial statements for the fiscal year ending April 30, 2006. The report of the Company's independent registered public accounting firm for fiscal years 2004 and 2005 includes an explanatory paragraph expressing doubt about the Company's ability to continue as a going concern. If the Company is unable to obtain adequate financing on acceptable terms, it be unable to continue operations. MedicalCV, Inc., is a cardiothoracic surgery device manufacturer. Previously, its primary focus was on heart valve disease. It developed and marketed mechanical heart valves known as the Omnicarbon 3000 and 4000. In November 2004, after an exhaustive evaluation of the business, MedicalCV decided to explore options for exiting the mechanical valve business. The Company intends to direct its resources to the development and introduction of products targeting treatment of atrial fibrillation. MIRANT CORP: Files Second Quarter Financial & Operational Results ----------------------------------------------------------------- Mirant Corporation and its debtor-affiliates delivered their quarterly report for the period ending June 30, 2005, to the Securities and Exchange Commission on Aug. 8, 2005. The key financial performance factors that have influenced their results are: * continued narrow conversion spreads, * the expiration of the transition power agreements, and * changes in our accounting for certain coal contracts that have given rise to the recognition of the fair value of certain coal contracts historically accounted for on an accrual basis of accounting. The Debtors' cash flow from operations improved in the six months ended June 30, 2005 compared to the same period in 2004. Their cash flow provided by operations is $110 million in the six months ended June 30, 2005 compared to cash used in operations of $250 million for the same period in 2004. The primary reason for improved cash flow from operations is the expiration of the TPAs in June 2004 and January 2005. Cash flow from operations also reflects a decrease in working capital used in the six months ended June 30, 2005 compared to the same period in 2004. The Debtors' gross margin is $39 million lower for the three months ended June 30, 2005, compared to the same period in 2004. The absence of TPA amortization decreased our gross margin by $119 million, which is partially offset by TPA settlement losses in 2004 of $67 million. Excluding the impact of the TPAs, their gross margin is $13 million higher in 2005 compared to the same period in 2004; however, this increase includes $49 million of unrealized gains, primarily related to coal contracts recorded at fair value in the second quarter. Their $36 million decline in realized gross margin stems from lower generation volumes and narrower conversion spreads in our North American operations. This decrease in North America is partially offset by a $10 million increase in gross margin for our International operations, largely due to rate increases for our Jamaica operations and Philippine energy supply business. The Debtors' gross margin is $95 million lower for the six months ended June 30, 2005 compared to the same period in 2004 and is due to many of the same factors cited above. The absence of TPA amortization decreased our gross margin by $224 million, which is partially offset by TPA settlement losses in 2004 of $201 million. Excluding the impact from the TPAs, our gross margin is $72 million lower in 2005 compared to the same period in 2004. This decline in gross margin primarily relates to a $76 million decline in realized gross margin resulting from lower generation volumes and narrower conversion spreads in their North American operations offset by a $4 million increase in unrealized gross margin. This decrease in North America is partially offset by a $17 million increase in gross margin for our International operations, largely due to rate increases for our Jamaica operations and Philippine energy supply business. Financial Performance The Debtors reported operating income of $89 million and $179 million for the three and six months ended June 30, 2005, respectively, compared to operating income of $166 million and $306 million for the same periods in 2004. The $77 million and $127 million decreases in operating income, Six Months ended June 30, 2005, versus 2004 Gross Margin The Debtors' gross margin decreased by $112 million for the six months ended June 30, 2005 compared to the same period for 2004. -- Mid-Atlantic operations gross margin increased $31 million primarily due to: * A decrease of $48 million in realized gross margin primarily due to narrower conversion spreads and 16% lower generation volumes. Increased generation capacity in the PJM market and higher coal, oil and emissions allowance costs resulted in narrower conversion spreads. In addition, milder weather also contributed to lower generation volumes. * A decrease of $28 million due to lower generation volumes. * An increase of $62 million related to higher spot market prices for electricity. * A decrease of $66 million related to settlement of electricity contracts used to economically hedge our generation output. * A decrease of $13 million resulting from increased emissions prices for SO2 and NOx emissions allowances. * A decrease of $25 million related to higher unit prices for fuel. * An increase of $9 million due to higher prices for ancillary services. * An increase of $12 million due to a net settlement with a coal supplier related to rail car transportation schedule issues that resulted in lower fuel expense. * An increase of $6 million due to the 2005 sale of a power option for 2006. * A decrease of $6 million related to the settlement of fuel contracts used to economically hedge some of our fuel purchase requirements. * An increase of $79 million related to higher unrealized gains from derivative instruments of $9 million in 2005 compared to unrealized losses of $70 million in 2004. The $9 million gain in 2005 is net of a $6 million loss due to the sale of a power option for 2006. The 2005 gains are primarily due to the recognition of the fair value of certain coal contracts in the second quarter of 2005 and the settlement of unfavorable power hedges in the same period, offset by increases in forward electricity prices in both periods. Since the Debtors have fixed price coal contracts, they primarily use derivative instruments to economically hedge power prices. The 2004 losses primarily relate to power contracts for future periods, which economically hedged a portion of the energy price risk faced by the Mid-Atlantic operations. -- Northeast operations gross margin increased $20 million despite a decrease in generation volumes primarily due to: * An increase of $8 million in realized gross margin primarily due to narrower conversion spreads and 18% lower generation volumes being more than offset by gains on contracts that they used to economically hedge our generation output and fuel costs. * A decrease of $20 million due to lower generation volumes. * An increase of $40 million related to higher spot market prices for electricity. * An increase of $22 million related to settlement of electricity contracts used to economically hedge our generation output. * A decrease of $43 million related to higher unit prices for fuel. * An increase of $15 million due to settlements on contracts to economically hedge our fuel costs. * An increase of $5 million related to capacity income earned under a new RMR contract for our Kendall facility. * A decrease of $3 million due to lower capacity prices. * A decrease of $9 million due to lower net gains on gas sales in 2005 compared to 2004. * An increase of $3 million due to the sale of surplus emissions allowances. * An increase of $12 million related to net unrealized gains on derivative instruments. -- West operations gross margin decreased $23 million primarily due to one of the Debtors' generation facilities no longer running under an RMR contract beginning in 2005, as well as reduced capacity income at another facility that experienced an extended planned outage. Most of their generating units were under RMR contracts in both periods. Under these contracts, revenues are based on a fixed rate of return and the units' operating costs. Significant components of the $23 million decrease are: * A decrease of $14 million due to the expiration of an RMR contract for one of our California generation facilities partially offset by a new tolling agreement. * A decrease of $13 million due to reduced capacity income at one of our facilities as a result of an extended planned outage. * Non-cash revenue related to the amortization of the TPAs decreased by $224 million due to the expiration of one TPA in June 2004 and the remaining TPA in January 2005. -- Other gross margin increased by $86 million due to: * An increase of $201 million primarily relates to lower realized losses due to the expiration of the TPAs. Realized losses in 2005 were $8 million compared to $209 million in 2004; * A decrease of $109 million in unrealized gains relating to the PPAs with PEPCO. PPA unrealized gains were $38 million in 2005 compared to $147 million in 2004 primarily because the passage of time decreases the MWh remaining to be purchased under the PPA; and * A decrease of $6 million primarily due to the realized losses relating to the PPAs with PEPCO and realized and unrealized gains and losses on electricity contracts used to economically hedge the PPAs. Operating Expenses The Debtors' operating expenses increased by $26 million for the six months ended June 30, 2005 compared to the same period in 2004 primarily due to: -- A decrease of $23 million in operations and maintenance expense resulting from a decrease of $27 million in corporate costs allocated to the North America segment in 2005. Corporate expenses allocated were $69 million in 2005 compared to $96 million in 2004. This decrease is partially offset by increases in other operating expenses, including $6 million related to environmental remediation and maintenance costs. -- An increase of $7 million in impairment losses and restructuring charges due to an impairment charge of $7 million in 2005 relating to suspended construction project costs for Wyandotte that are not included in the expected sale of those assets. -- An increase of $42 million in loss on sale of assets, net primarily due to a $21 million loss on the sale of Wyandotte and a $7 million loss on the sale of Mint Farm, a suspended construction project that we expect to sell in late 2005. The gain on sale of assets, net of $15 million in 2004 resulted from the sale of our remaining Canadian natural gas transportation contracts and certain natural gas marketing contracts. Liquidity and Capital Resources The Company and its subsidiaries continue to participate in the intercompany cash management program for the Mirant Debtors approved by the Bankruptcy Court and to be parties to the two-year debtor-in-possession credit facility, dated November 5, 2003. The parties to the DIP Facility, including the Company, were in compliance with the DIP Facility covenants, or had received affirmative waivers of compliance where compliance was not attained, as of June 30, 2005. As of December 31, 2004, the borrowing base under the DIP Facility was $724 million. The borrowing base decreased $48 million in January 2005 due to the sale of Coyote Springs and will decrease another $37 million following the consummation of the pending Wrightsville sale. In addition, the DIP Facility matures on November 5, 2005. In the event that the Mirant Debtors have not emerged from bankruptcy and satisfied the obligations under the DIP Facility prior to such date, the Mirant Debtors will either seek an extension of the maturity date under the DIP Facility or terminate and satisfy the obligations thereunder. As of July 31, 2005, there were $40 million of letters of credit and no borrowings outstanding under the DIP Facility. A full text copy of the Quarterly Report is available for free at: http://ResearchArchives.com/t/s?bf 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. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Fitch Holds BB+ Rating on $5.4MM Class H Certs. --------------------------------------------------------------- Fitch Ratings affirms Morgan Stanley Capital I Trust's commercial mortgage pass-through certificates, series 2004-IQ7: -- $72.7 million class A-1 at 'AAA'; -- $70 million class A-2 at 'AAA'; -- $53 million class A-3 at 'AAA'; -- $550.5 million class A-4 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-Y at 'AAA'; -- $29.1 million class B at 'AA'; -- $22.7 million class C at 'A'; -- $6.8 million class D at 'A-'; -- $9.4 million class E at 'BBB+'; -- $5.4 million class F at 'BBB'; -- $4.3 million class G at 'BBB-'; -- $5.4 million class H at 'BB+'; -- $4.3 million class J at 'BB'; -- $2.2 million class K at 'BB-'; -- $2.2 million class L at 'B+'; -- $2.2 million class M at 'B'; -- $2.2 million class N at 'B-'. Fitch does not rate the $7.6 million class O certificates. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the July 2005 distribution date, the pool has paid down 1.5% to $849.7 million from $863 million at issuance. Fitch reviewed the credit assessments of the following three loans: Beverly Center (7.2%); 111 Eighth Avenue (7.1%); and 315 Hudson Street (2.5%). All three loans maintain investment-grade credit assessments. The Fitch-stressed debt service coverage ratios for Beverly Center, 111 Eighth Avenue, and 315 Hudson Street as of year-end 2004 were 1.30 times (x), 1.45x, and 2.20x, respectively, compared with 1.38x, 1.50x, and 1.75x at issuance. In addition, occupancy at the three properties has been relatively stable since issuance. To date, there have been no realized losses and no delinquent or specially serviced loans. MORGAN STANLEY: Fitch Rates Six Classes of Certificates at Low-B ---------------------------------------------------------------- Morgan Stanley Capital I Trust 2005-HQ6, commercial mortgage pass- through certificates are rated by Fitch Ratings: -- $121,200,000 class A-1 'AAA'; -- $318,834,000 class A-1A 'AAA'; -- $294,875,000 class A-2A 'AAA'; -- $42,125,000 class A-2B 'AAA'; -- $111,100,000 class A-AB 'AAA'; -- $103,000,000 class A-3 'AAA'; -- $1,060,595,000 class A-4A 'AAA'; -- $151,514,000 class A-4B 'AAA'; -- $2,754,054,199 class X-1 'AAA'; -- $2,672,241,000 class X-2 'AAA'; -- $175,571,000 class A-J 'AAA' -- $24,098,000 class B 'AA+'; -- $34,425,000 class C 'AA'; -- $27,541,000 class D 'AA-'; -- $24,098,000 class E 'A+'; -- $27,541,000 class F 'A'; -- $27,540,000 class G 'A-'; -- $34,426,000 class H 'BBB+'; -- $30,983,000 class J 'BBB'; -- $41,311,000 class K 'BBB-'; -- $10,327,000 class L 'BB+'; -- $10,328,000 class M 'BB'; -- $17,213,000 class N 'BB-'; -- $3,442,000 class O 'B+'; -- $10,328,000 class P 'B'; -- $10,328,000 class Q 'B-'. Classes A-1, A-1A, A-2A, A-2B, A-AB, A-3, A-4A, A-4B, X-2, A-J, B, C, D, E, and F are offered publicly, while classes X-1, G, H, J, K, L, M, N, O, P, and Q are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 177 fixed-rate loans having an aggregate principal balance of approximately $2,754,054,199, as of the cutoff date. For a detailed description of Fitch's rating analysis, see the report 'Morgan Stanley Capital I Trust 2005-HQ6,' dated July 21, 2005 and available on the Fitch web site at http://www.fitchratings.com/ MORLEY GROUP: Case Summary & 34 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: The Morley Group, Inc. 6201 Corporate Drive, Suite 200 Indianapolis, Indiana 46278 Bankruptcy Case No.: 05-15773 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- The Morley Group, LLC 05-15775 Type of Business: The Debtor is Indiana's largest privately held full-service human resource consulting firm. See http://www.themorleygroup.com/ Chapter 11 Petition Date: August 12, 2005 Court: Southern District of Indiana (Indianapolis) Debtor's Counsel: Edward B. Hopper, II, Esq. Stewart & Irwin PC 251 East Ohio Street, Suite 1100 Indianapolis, Indiana 46204 Tel: (317) 639-5454 Total Assets Total Debts ------------ ----------- The Morley Group, Inc. $148,603 $2,519,307 The Morley Group, LLC $192 $2,778,954 A. The Morley Group, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Unpaid taxes $779,684 P.O. Box 44985 Stop SB380 Indianapolis, IN 46244-0985 Michael Morley Personal loan $624,179 Sharon Morley 8585 Crownpoint Road Indianapolis, IN 46278 Indiana Dept. of Revenue Unpaid taxes $61,168 100 North Senate Avenue Room N203 Bankruptcy Indianapolis, IN 46204 Mark Matkovic Accountant services $27,164 Colony Printing and Business transaction $27,027 Labeling, Inc. Indiana Dept. Workforce Unpaid taxes $25,062 Northwestern Financial Various office $23,449 Corporation equipment and furniture Advanta Bank Corp. Business transaction $5,433 Central Reserve Business transaction $4,133 Globus Printing & Packaging Business transaction $3,865 Co., Inc. Unum Life Insurance Disability for $3,275 employee Bond International Software Business transaction $3,080 Liberty Mutual Workers Comp $2,959 North Vernon Plain Dealer Collections $2,705 AICCO, Inc. Business transaction $2,496 Suburban Printing, Inc. Business transaction $2,336 Benchmark Graphics, Inc. Business transaction $2,166 Custom Cartons, Inc. Business transaction $1,914 Lightyear Network Solutions Business transaction $1,864 LLC Western Reserve Health care $1,836 Administration Svcs, Inc. B. The Morley Group LLC's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Fifth Third Bank Location: 6201 $1,175,085 251 North Illinois Street Corporate Drive, Suite 1000 Indianapolis, IN Indianapolis, IN 46204 21,000 Square feet 2 Story building Purchase date: May 24, 1999 Fifth Third Bank Accounts receivable $767,888 251 North Illinois Street Suite 1000 Indianapolis, IN 46204 U.S. Small Business Admin. Mortgage $662,123 429 North Pennsylvania St. Suite 100 Indianapolis, IN 46204-1873 Fifth Third Bank Accounts receivable $99,605 Marion County Treasurer Unpaid property $37,480 taxes Mark Matkovic Accountant services $12,952 Colony Printing & Labeling, Business transaction $8,712 Globus Printing & Packaging Business transaction $7,750 Havel Brothers Business transaction $1,620 Citizens Gas Utility Bill $1,540 Indianapolis Power & Light Utility bill $1,412 Co. Muzak Business transaction $1,147 Indianapolis Power & Light Utility bill $1,121 Co. Dave West Yard work $520 NATIONAL BEDDING: Moody's Rates Planned $410MM Facilities at B1 --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to National Bedding Company, LLC's (d/b/a Serta Mattress Company) proposed $410 million first lien secured credit facilities (comprised of a $50 million revolver and a $360 million term loan ) and a B3 rating to its proposed $160 million second lien term loan. In addition, Moody's assigned a B1 to Serta's corporate family rating (formerly known as the senior implied rating). The rating action reflects the company's raised risk profile given a significant increase in leverage to support the $830 million buyout by affiliates of Ares Management LLC and Teachers' Private Capital. The ratings outlook is stable. The ratings assigned are subject to the receipt of final documentation with no material changes to the terms as originally reviewed by Moody's. Proceeds from the two credit facilities will fund the acquisition of Serta and the refinancing of its existing debt (plus related transaction fees). The $50 million revolver is expected to be substantially undrawn at closing. If the transaction is completed as proposed, Moody's will withdraw its ratings on Serta's existing senior secured credit facilities (Ba3). The ratings reflect the sizable increase in Serta's adjusted* financial leverage associated with the proposed transaction. Based on LTM June 2005 adjusted EBITDA of more than $90 million, Serta'a leverage will increase to 5.9x from 3.3x. Specifically, the higher debt burden will limit the company's ability to respond to unexpected negative business developments, including economic and competitive threats or costs related to the ongoing transformation of its legacy Sleepmaster plants. The legacy Sleepmaster plants have improved since National Bedding acquired them, but continue to underperform the legacy National Bedding plants, although the performance difference between the two is decreasing. The company's limited financial flexibility is a significant risk factor, given market share losses from its legacy Sleepmaster plants and increasing fuel costs. Further, Moody's is concerned that Serta's large debt levels could constrain its ability to enter new product categories or distribution channels that may offer higher growth and profit opportunities in addition to restraining the company's ability to shift its product mix to higher end mattresses. Despite these risks, Moody's recognizes the benefits that flow from the transaction, which include the significant equity contribution by Ares and Teachers, retention of the existing management team, and the after tax cash flow benefits. In addition, the ratings are supported by management's achievements in repositioning the business to focus on product development and operating efficiencies. Serta's strong operating momentum with the launch of its Fire Blocker product in all mattresses, as well as its new International Touch and Kool Foam products, both of which sell at high price points, are a direct result of these strategies. Ongoing support for the ratings is maintained by: * Serta's strong brand recognition through its counting sheep campaign; * strong distribution channels (Serta has exclusive arrangements with approximately 400 retailers); * leading market share; and * by the fundamental long-term stability of the bedding industry. Serta and two other major bedding manufacturers, Simmons (B2, stable) and Sealy (B1, stable), comprise nearly two-thirds of all wholesale sales. While consumers can defer mattress purchases in the short term, replacement bedding accounts for about two-thirds of industry sales. Additional volume can come from an aging population with increased disposable income and more second homes, greater awareness of quality and brand by mattress consumers, and a growing general population. Additional ratings support comes from Serta's national presence and somewhat variable cost structure. The stable ratings outlook reflects Moody's expectation that Serta will maintain its recent operating gains in coming periods with the continued support of its Fire Blocker product launch and new higher end mattresses, but that substantial debt reduction could be impeded by the under performance of legacy Sleepmaster plants, although such performance is improving, and other efficiency initiatives. Notwithstanding the strong performance suggested by first two quarter sales and profit increases, the ratings are weakly positioned at the current rating categories based on the company's significant increase in leverage. However, continued operating momentum and concurrent working capital discipline that allows for rapid deleveraging (below 4.5x) in addition to maintaining double digit EBIT margins and increasing interest coverage to around 2.5x could result in positive rating actions in the coming periods. The current rating levels allow for only a small cushion for significant one-time costs associated with the company's product initiatives and business efficiency plans. Ratings could be lowered if the company's performance does not continue to improve, experiences weakened credit metrics such as leverage increasing beyond 6.0x, EBIT margins falling below 10% due to longer-term competitive, or operating issues or changing strategic priorities could result in unfavorable rating actions. Negative rating actions could also be possible if Serta made an unexpected debt financed acquisition of the remaining Serta franchisees. The B1 rating on Serta's first lien senior secured credit facilities reflects their priority in the capital structure as supported by parent holding company and domestic subsidiary guarantees and collateral pledges comprising substantially all of the assets of the borrower and guarantors (including capital stock) and 65% of the capital stock of foreign subsidiaries. Because of these benefits, in addition to the strong asset coverage provided by tangible assets and the enterprise value benefits associated with Serta's strong brand name and the first lien representing the preponderance of funded debt, the ratings on the first lien facilities are rated at the same level as the corporate family rating. The final credit agreement is anticipated to contain customary limitations, a 75% excess cash flow sweep (subject to financial performance measures), and financial covenants governing maximum leverage, minimum interest coverage, and maximum capital expenditures. The B3 rating on Serta's proposed second lien senior secured credit facility reflects its junior position in the capital structure, its contractual and effective subordination to a material amount of first lien senior secured indebtedness, and Moody's expectations that the facilities would have a low recovery rate in a distressed scenario. The subsidiaries guaranteeing the first lien bank credit facility will also guarantee the second lien credit facility. The second lien credit facility is secured by the same security as the first lien credit facility but on a second priority security interest basis. The final credit agreement is expected to restrict: * additional indebtedness; * dividends; * investments; * liens; * asset sales; * affiliate transactions; * mergers and acquisitions; and * financial covenants governing maximum leverage. The intercreditor agreement provides for a 180 day standstill arrangement. These ratings have been assigned: * $50 million first lien senior secured revolving credit facility, due 2010, rated at B1; * $360 million first lien senior secured term loan, due 2011, rated at B1; * $160 million second lien senior secured term loan, due 2012, rated at B3; * Corporate Family Rating, rated at B1. Outlook is stable. National Bedding Company, based in Hoffman Estates, Illinois, is a major manufacturer of mattresses under the Serta brand name. Net sales for the LTM ended June 2005 approximated $642 million. *In accordance with Moody's Global Standard Adjustments, Serta's results were adjusted to capitalize operating leases. In addition, Serta'a historical results were adjusted to reflect the discontinuance of certain operating expenses. NEENAH FOUNDRY: Earns $3.4 Million of Net Income in Third Quarter ----------------------------------------------------------------- Neenah Foundry Company filed its Quarterly Report on Form 10-Q for the three-month period ended June 30, 2005, with the Securities and Exchange Commission on Aug. 11, 2005. For the three months ended June 30, 2005, Neenah Foundry reports a $3,451,000 net income on $145,685,000 of net sales. At June 30, 2005, Neenah Foundry's balance sheet showed: Total Current Assets $163,074,000 Total Assets 418,146,000 Total Current Liabilities 107,902,000 Total Liabilities 404,124,000 Total stockholders' equity 14,022,000 Lawsuit Settlement The Company was involved in a litigation matter related to a proposed sale of one of its subsidiaries. The Company agreed to pay $6,500 in cash within seven business days in order to settle the dispute. This amount has been accrued in the June 30, 2005 financial statements. Credit Facility On July 28, 2005, the Company amended its bank Loan and Security Agreement. Six principal changes were made to the Credit Facility: (i) the revolving loan commitment under the Credit Facility was increased from $70,000 to $92,085 (provided, however, that the outstanding aggregate amount of revolving loans, letters of credit and term loans provided under the Credit Facility may not exceed the revolving loan commitment at any time); (ii) the interest rates applicable to revolving loans and term loans were reduced; (iii) the maturity of the Credit Facility was extended by one year, to Oct. 8, 2009; (iv) the Company was provided additional flexibility to pay deferrable interest on its outstanding 13 % Senior Subordinated Notes due 2013 and to make repayments, prepayments, redemptions and repurchases of the Subordinated Notes; (v) the Company was authorized to sell Mercer Forge Corporation and/or Gregg Industries, Inc., subject to certain conditions; and (vi) the principal financial covenant in the Credit Facility was revised in a manner that is more favorable to the Company than before. The Credit Facility bears interest at rates based on the lenders' Base Rate, as defined in the Credit Facility, or an adjusted rate based on LIBOR. Availability under the Credit Facility is based on various advance rates against the Company's accounts receivable and inventory. Amounts under the revolving credit facility may be borrowed, repaid and reborrowed subject to the terms of the facility. At June 30, 2005, the Company had approximately $40,200 outstanding under the revolving credit facility, which includes $13,800 borrowed on June 30, 2005, for an interest payment due July 1, 2005, and approximately $17,400 outstanding under the term loan facility. No portion of the term loan, once repaid, may be reborrowed. Substantially all of the Company's wholly owned subsidiaries are co-borrowers with the Company under the Credit Facility and are jointly and severally liable with the Company for all obligations under the Credit Facility, subject to customary exceptions for transactions of this type. In addition, NFC Castings, Inc., the Company's immediate parent, and the remaining wholly owned subsidiaries of the Company jointly and severally guarantee the Company's obligations under the Credit Facility, subject to customary exceptions for transactions of this type. The borrowers' and guarantors' obligations under the Credit Facility are secured by a first priority perfected security interest, subject to customary restrictions, in substantially all of the tangible and intangible assets of the Company and its subsidiaries. The senior secured notes, and the guarantees in respect thereof, are equal in right of payment to the Credit Facility, and the guarantees in respect thereof. The liens in respect of the senior secured notes are junior to the liens securing the Credit Facility and guarantees thereof. Voluntary prepayments may be made at any time on the term loan borrowings or the revolving borrowings upon customary prior notice. Prepayments on the term loan borrowings may be made at any time without premium or penalty unless a simultaneous reduction of the revolving loan commitment amount is being made or if any such reduction of the revolving loan commitment amount has been made previously. Reductions of the revolving loan commitment are subject to certain premiums specified in the Credit Facility. Mandatory repayments are required under certain circumstances, including a sale of assets or the issuance of debt or equity. The Credit Facility requires the Company to observe certain customary conditions, affirmative covenants and negative covenants including financial covenants. The Credit Facility also contains events of default customary for these types of facilities, including, without limitation, payment defaults, material misrepresentations, covenant defaults, bankruptcy and a change of ownership of the Company, NFC or ACP Holding Company, NFC's immediate parent. At June 30, 2005, the Company is in compliance with existing bank covenants. Exploration of Potential Sale Transaction On July 29, 2005, the Company and its indirect parent company, ACP Holding Company, disclosed that it has engaged Citigroup Global Markets Inc. to assist it in exploring the potential sale or merger of the Company or a significant portion of its assets or capital stock. Although there have been preliminary contacts with a number of potential purchasers, the process is in its early stages, no sale agreement has been reached and there can be no assurance as to whether, and if so when or at what price, structure and other terms and conditions, a transaction may occur. The Company undertakes no obligation to make any further announcement with respect to this process unless and until its Board of Directors has approved a definitive transaction. Neenah Foundry Company -- http://www.nfco.com/-- manufactures and markets a wide range of iron castings and steel forgings for the heavy municipal market and selected segments of the industrial markets. Neenah is one of the larger independent foundry companies in the country, with substantial market share in the municipal and various industrial markets for gray and ductile iron castings and forged steel products. * * * Standard & Poor's Ratings Services affirmed its B/Stable/-- corporate credit rating on Neenah Foundry Co. Standard & Poor's also affirmed its 'CCC+' senior secured and subordinated ratings on the company. NETEXIT INC: Court Conditionally Approves Disclosure Statement -------------------------------------------------------------- The Honorable Randolph Baxter of the U.S. Bankruptcy Court for the District of Delaware conditionally approved the adequacy of the First Amended and Restated Disclosure Statement explaining the First Amended and Restated Liquidating Plan of Reorganization filed by Netexit, Inc., and its debtor-affiliates. Judge Baxter conditionally approved the Disclosure Statement on Aug. 8, 2005. The Debtors are now authorized to send copies of the Amended Disclosure Statement and Amended Plan to creditors and solicit their votes in favor of the Plan. Judge Baxter will convene a final approval hearing for the Debtors' Disclosure Statement at 10:00 a.m., on Sept. 13, 2005. As reported in the Troubled Company Reporter on Aug. 3, 2005, The Amended Plan provides for the liquidation and distribution of all of the Debtors' assets to all holders of Allowed Claims. Except as otherwise agreed, Allowed Administrative Claims, other than Professional Fee Claims, and Allowed Priority Claims will be paid in full on or after the Effective Date. On the Effective Date of the Plan, a reserve of $22.9 million will be set aside from the Debtors' Estate for payment of Allowed Unsecured Claims, other than the NorthWestern Claims. Distribution to Allowed Unsecured Claims will be made only upon resolution and allowance of all Unsecured Claims. While NorthWestern has agreed to accept a recovery on account of the NorthWestern Claims, the agreement reached in the June 2005 Mediation and embodied in the Plan provides for a sliding scale recovery to creditors holding Allowed Unsecured Claims, other than NorthWestern, which depends upon the total aggregate of Unsecured Claims that are ultimately Allowed, exclusive of the NorthWestern Claims. If total Allowed Unsecured Claims are less than or equal to $12 million in the aggregate, then those Claims will receive 100% recovery. If Allowed Unsecured Claims exceed $12 million in the aggregate, then those Claims will be paid in accordance with a schedule agreed to by the parties, and incorporated into the Plan, with the provision that maximum amount of dollars to be paid to all Allowed Unsecured Claims in the aggregate as a class will be $22.9 million. Full-text copies of a blacklined version of the Amended Disclosure Statement and Amended Plan are available at no charge at http://www.kccllc.net/netexit Objections to the final approval of the Amended Disclosure Statement, if any, must be filed and served by Sept. 6, 2005. Objections to the Amended Plan, if any must be filed and served by Sept. 6, 2005. Judge Baxter will convene a confirmation hearing to consider the merits of the Plan at 10:00 a.m., on Sept. 13, 2005. Headquartered in Sioux Falls, South Dakota, Netexit, Inc., fka Expanets, Inc., and its debtor-affiliates filed for chapter 11 protection on May 4, 2004 (Bankr. D. Del. Case No. 04-11321). Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker LLP, and Scott D. Cousins, Esq. Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, represent the Debtors. When the company filed for chapter 11 protection, it estimated $50 million in assets and more than $100 million in liabilities. NVE INC: Taps Murnane Brandt as Special Litigation Counsel ---------------------------------------------------------- NVE Inc. asks the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Murnane Brandt as its special litigation counsel. The Debtor is a defendant in more than 114 wrongful death and personal injury actions pending throughout the country. The Debtor wants to hire Murnane Brandt because its experience in handling wrongful death and personal injury actions and because the Firm is familiar with the litigation pending against the Debtor. Steven J. Kirsch, Esq., Murnane Brandt partner, discloses the Firm's hourly bill rates: Professional/Designation Hourly Rate ------------------------ ----------- Steven Kirsch $220 Andrew T. Shern $175 Thomas J. Norby $175 Debra Filteau $175 Timothy M. Peters $175 Susan Docherty $175 Robert W. Murnane $175 Paralegals $100 To the best of the Debtor's knowledge, Murnane Brandt is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Andover, New Jersey, NVE Inc. dba NVE Pharmaceuticals, NVE Pharmaceuticals, Inc., NVE Enterprises, NVE Enterprises, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, ephedra. The Debtor filed for chapter 7 liquidation proceeding on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). When the Debtor filed for chapter 7, it listed $10,966,522 in total assets and $14,745,605 in total debts. OFFSHORE LOGISTICS: Amends Senior Note Consent Solicitation ----------------------------------------------------------- Offshore Logistics, Inc. (NYSE: OLG) amended the terms of its solicitation of consents from the holders of its 6-1/8% Senior Notes due 2013) to waivers under and amendments to the indenture under which the Notes were issued. After discussions with holders of a majority in principal amount of the outstanding Notes, who have indicated that they intend to deliver their consent, the Company has amended the terms of the consent solicitation as follows: -- The Expiration Date (as defined in the Consent Solicitation Statement dated July 26, 2005, has been extended to 5:00 p.m., New York City time, today, Aug. 15, 2005. -- The consent fee payable to holders of Notes as of 5:00 p.m., New York City time, on July 25, 2005 that have delivered (and not revoked) valid consents on or prior to the Expiration Date has been increased to $6.25 per $1,000 principal amount of Notes. -- In the event that the Company does not comply with the financial reporting covenants and related compliance certificate and auditors' statement covenants on or before Nov. 15, 2005, and elects to pay on or before the third business day following such date an additional fee to consenting holders in an amount equal to $2.50 per $1,000 principal amount of Notes in respect of which consents have been delivered (and not revoked), the Company would have until Dec. 15, 2005, to comply with the financial reporting covenants and the compliance certificate and auditors' statement covenants in the indenture. In addition, if the Company does not comply with the financial reporting covenants and related compliance certificate and auditors' statement covenants on or before Dec. 15, 2005, and elects to pay on or before the third business day following such date a further additional fee to consenting holders in an amount equal to $2.50 per $1,000 principal amount of Notes in respect of which consents have been delivered (and not revoked), the Company would have until Jan. 16, 2006, to comply with the financial reporting covenants and the compliance certificate and auditors' statement covenants in the indenture. In the event that the Company does not comply with the financial reporting covenants and related compliance certificate and auditors' statement covenants on or before Nov. 15, 2005 (or, at the election of Offshore Logistics and upon the payment of an additional fee described above, until December 15, 2005 or January 16, 2006, as applicable), the Trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare all of the Notes due and payable immediately. All other material terms of the consent solicitation remain unchanged. Waiver The Company intends to seek a waiver of its revolving credit facility and a term loan under which an affiliate of Offshore Logistics is borrower and Offshore Logistics is a partial guarantor to provide Offshore Logistics until Nov. 15, 2005, (or, at the election of Offshore Logistics and upon the payment of a fee, until December 15, 2005 or January 16, 2006, as applicable) to comply with the covenants in those instruments requiring the delivery of financial information. As previously announced, until the Company complies with the financial reporting covenants in the indenture, it intends to publicly disclose selected financial information periodically. The consent solicitation is conditioned upon the satisfaction of certain conditions, including the consent of the holders of at least a majority in principal amount of the outstanding Notes and the execution of a supplemental indenture. A more comprehensive description of the consent solicitation and its terms and conditions can be found in the Consent Solicitation Statement, as supplemented by the Supplement to Consent Solicitation Statement dated Aug. 9, 2005, and the Second Supplement to Consent Solicitation Statement dated Aug. 11, 2005. The Company has retained Goldman, Sachs & Co., to serve as the Solicitation Agent and Global Bondholder Services Corporation to serve as Information Agent for the consent solicitation. Requests for documents may be directed to Global Bondholder Services Corporation by telephone at (866) 873-7700 (toll-free) or (212) 430-3774 or in writing at 65 Broadway, Suite 704, New York, NY 10006, Attention: Corporate Actions. Questions regarding the solicitation of consents may be directed to Goldman, Sachs & Co., at (800) 828-3182 (toll free) or (212) 357-7867 (collect), Attention: Credit Liability Management Group. Offshore Logistics, Inc., is a major provider of helicopter transportation services to the oil and gas industry worldwide. Through its subsidiaries, affiliates and joint ventures, the Company provides transportation services in most oil and gas producing regions including the United States Gulf of Mexico and Alaska, the North Sea, Africa, Mexico, South America, Australia, Russia, Egypt and the Far East. The Company's Common Stock is traded on the New York Stock Exchange under the symbol OLG. * * * As reported in the Troubled Company Reporter on June 21, 2005, Moody's placed the ratings for Offshore Logistics, Inc., under review for possible downgrade following the company's inability to file its March 31, 2005, Form 10-K by the June 15, 2005, requirement and as a result it's in violation of the financial reporting covenant under the senior notes indenture. Though the underlying business appears to be largely unaffected by this event, the filing delay is the result of the company's previously disclosed Board of Directors' and SEC investigation into payments made in a foreign country. The Audit Committee of the Board of Directors has retained outside counsel to fully investigate this matter as well as to expand the investigation to other foreign offices of OLG. The initial impact to the company has been the termination of the former president of its Air Logistics affiliate and the resignation of the CFO, both of whom have been replaced. While the company has previously disclosed it findings thus far had not had a material impact on reported financial statements, the investigation is still ongoing, and therefore prevents the company from filing its 10-K. ORMET CORP: Files Unfair Labor Practice Charge Against USWA ----------------------------------------------------------- Ormet Corp. filed an unfair labor practice charge with the National Labor Relations Board against the United Steelworkers of America's International Union, reports Carole Vaporean at Reuters. Ms. Vaporean relates that the company complains against the union's refusal to provide information pertaining to financial analysis and ways the union has implemented work restructuring, contracting out, workplace training, temporary employee and health care changes at other companies. Union representative Denny Longwell told Reuters that the charge is "another attempt by Ormet to distort the truth." He said that the company's request is quite extensive. Ormet and the Union has only met once in July to discuss labor agreement which falls way below the U.S. Bankruptcy Court for the Southern District of Ohio's twice a week requirement. As previously reported in the Troubled Company Reporter on Aug 11, 2005, the United Steelworkers said that the union is outraged at Ormet Corporation's decision to withhold property taxes owed to Monroe County for the second half of 2005. The union expressed that the company's failure to meet its tax obligation will cause further harm in a community already reeling from the effects of an eight-month unfair labor practice strike at Ormet's two facilities in Hannibal. "Ormet walked on its debts and obligations to our members when the company sprinted to bankruptcy court, and now the company is trying to steal from the loyal taxpayers of Monroe County," said USW District 1 Director David McCall. "Our Union is unequivocally dedicated to making sure Ormet pays for mistreating our members, our families and our communities." Union Questions MatlinPatterson Role The USW also revealed that investment fund MatlinPatterson, currently Ormet's largest shareholder, has been linked to several companies that have, like Ormet, disputed tax assessments. Duke Energy challenged the assessed value of three power plants in Mississippi in 2004 at the same time it was finalizing the sale of the plants to KGen Partners, a subsidiary of MatlinPatterson. Huntsman Chemical Corp. negotiated a $105 million reduction in the appraised value of four chemical plants in Jefferson County, Texas in July 2004. MatlinPatterson held two seats on the board of directors and a 49.9 percent equity stake in Huntsman at the time. NRG Energy sued the town of Milford, Connecticut in May 2004, claiming the town's appraisal of the Devon Power Station facility was too high. MatlinPatterson was the largest shareholder in NRG. "MatlinPatterson and Ormet are attempting to turn a profit by turning their backs on the communities that built those mills," McCall said. "Ormet's workers and retirees deserve better, and so do their children and grandchildren, who will bear the brunt of the county's lost revenue." In March, Ormet asked the Monroe County Board of Revisions to reduce the appraised value of its property by more than $30 million. The matter is scheduled to be taken up at an Aug. 16 hearing. About 1,300 members of USW Locals 5724 and 5760 have been on strike against Ormet for unfair labor practices at Ormet's aluminum reduction and rolling facilities in Hannibal since Nov. 22, 2004, when the company unilaterally implemented wage and benefit reductions. Headquartered in Wheeling, West Virginia, Ormet Corporation -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. The Company and its debtor-affiliates filed for chapter 11 protection on January 30, 2004 (Bankr. S.D. Ohio Case No. 04-51255). Adam C. Harris, Esq., in New York, represents the Debtors in their restructuring efforts. When the Company filed for bankruptcy protection, it listed $50 million to $100 million in estimated assets and more than $100 million in total debts. The Company's chapter 11 plan was confirmed by the Court in April 2005. Under the confirmed Plan, Ormet was authorized to break labor contracts, which resulted in conflicts with the United Steeworkers of America. PARAGON AUTO: Fitch Cuts Rating on Class B Notes to B ----------------------------------------------------- Fitch Ratings downgrades the Paragon Auto Receivables Owner Trust 2000-A transaction: Paragon Auto Receivables Owner Trust 2000-A -- Class B notes to 'B' from 'BBB-'. The rating downgrade is due to weak asset performance and credit enhancement that is insufficient to cover ongoing expenses and additional losses. PEACE ARCH: Discloses $2 Million Private Equity Placement --------------------------------------------------------- Peace Arch Entertainment Group Inc. disclosed to the Securities and Exchange Commission the arm's length private placement of 4,347,825 units of its Preference Shares for $2 million at a subscription price of $0.46 per Unit, each Unit consisting of one convertible preference share and one preferred share purchase warrant. The Units will separate at Closing. Each preference share will carry a 10% cumulative annual dividend and will be convertible at any time into one common share of the Company on a one for one basis, subject to customary adjustments, for no additional consideration. Each warrant will be exercisable into one preference share of the Company at an exercise price of $0.50 per share for a period of 48 months from Closing, which preference share will carry a 10% cumulative annual dividend and will be convertible at any time into one common share of the Company on a one for one basis, subject to customary adjustments, for no additional consideration. As the transaction on a non-diluted basis under TSX rules represents the issuance of approximately 41.5%, which is more than 25% of the outstanding shares of the Company on a non-diluted basis, the Company obtained shareholder approval of the transaction. The Company has called a Special Meeting of Shareholders to be held August 24, 2005 to amend the Company's articles to provide voting rights to the holders of the Company's preference shares. In the interim, Mr. Gary Howsam, CEO of the Company, has agreed to enter into a voting trust agreement with the placees whereby the placees will have the right to vote all common shares beneficially owned by Mr. Howsam until articles of amendment are filed attaching voting rights to the preference shares. The net proceeds of the Offering will be used by the Company to fund working capital requirements and for general corporate purposes. Based in Toronto, Vancouver, Los Angeles and London, England, Peace Arch Entertainment Group Inc. -- http://www.peacearch.com-- together with its subsidiaries, is an integrated company that creates, develops, produces and distributes film, television and video programming for worldwide markets. Going Concern Doubt The company has undergone substantial financial restructuring and requires additional financing until it can generate positive cash flows from operations. While the company continues to maintain its day-to-day activities and produce films and television programming, its working capital situation is severely constrained. Furthermore, the company operates in an industry that has long operating cycles, which require cash injections into new projects significantly ahead of the delivery and exploitation of the final production. These conditions cast substantial doubt on the company's ability to continue as a going concern. Equity has been reduced by 30% from a CDN$2,802,000 equity as of Feb. 28, 2005, from a CDN$3,416,000 equity at Feb. 29, 2004. PETER ROMANOFSKY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Peter Romanofsky, Inc. dba Dunkin' Donuts dba Baskin Robbins 53 Howard Street P.O. Box 3140 Newark, New Jeresy 07103-0314 Bankruptcy Case No.: 05-36081 Type of Business: The Debtor is a Dunkin' Donuts franchisee. Chapter 11 Petition Date: August 12, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Daniel J. Yablonsky, Esq. Yablonsky & Associates LLC 1430 Route 23 North Wayne, New Jersey 07470 Tel: (973) 686-3800 Fax: (973) 686-3801 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CIT Small Business Lending Business loan $1,100,000 Corporation 1 CIT Drive Livingston, NJ 07039 Peter Romanofsky $269,934 53 Howard Street Newark, NJ 07103 Constantine Romanofsky $100,000 85 Ocean Avenue Staten Island, NY 10305 Wells Fargo $100,000 Wells Fargo Card Services P.O. Box 6426 Carol Stream, IL 60197-6426 RKC Management Realty, Inc. $60,000 100 West 57th Street #7-0 New York, NY 10010 PNC Bank $42,500 P.O. Box 747032 Pittsburgh, PA 15274-7032 Philrock Company, LLC $40,000 524 North Avenue New Rochelle, NY 10801 Ironbound Bank Div RCSB $31,550 36 Pacific Street Newark, NJ 07105 MBNA America $31,320 P.O. Box 15019 Wilmington, DE 19886-5019 Capital One FSB $26,480 P.O. Box 85184 Richmond, VA 23285-5184 Dunkin Brands $25,000 130 Royall Street Canton, MA 02021 Mid Atlantic Distribution $20,000 Center, Inc. P.O. Box 788 Westhampton, NJ 08060 Hitachi Capital America Corp. $18,000 21925 Network Place Chicago, IL 60673-1229 American Express $16,871 P.O. Box 360002 Fort Lauderdale, FL 33336-0002 American Express $14,849 P.O. Box 360002 Fort Lauderdale, FL 33336-0002 LIPA $14,429 P.O. Box 9083 Melville, NY 11747 Sears National Bank $13,910 P.O. Box 182156 Columbus, OH 43218-2149 Citibank $10,190 P.O. Box 6062 Sioux Falls, SD 57117 Home Depot Commercial $10,000 P.O. Box 105981 Department 51 Atlanta, GA 30353-5981 Citibank $7,806 P.O. Box 6062 Sioux Falls, SD 57117 PLASTECH ENGINEERED: Moody's Reviews Low-B Debt Ratings ------------------------------------------------------- Moody's Investors Service is reviewing the debt ratings of Plastech Engineered Products, Inc. for possible downgrade. The review is prompted by indications that Plastech has offered to acquire Collins & Aikman Corp., which is currently operating under bankruptcy court protection, in a transaction valued at $1.0 billion. Though it is uncertain at this point whether the offer will result in an actual transaction, Moody's will consider Plastech's interest in pursuing such an offer in light of the continued difficult operating environment for automotive suppliers. The ratings under review for possible downgrade are: Plastech Engineered Products, Inc.: * Corporate Family rating at B1 * First-lien Senior Secured bank credit facility rating at B1 * Second-lien, Senior Secured term loan facility rating at B2 Moody's has maintained a Negative outlook on Plastech's B1 corporate family rating in consideration of the company's high level of financial leverage and the continued operating pressures that the company faces as a producer of automotive components. With the prolonged weakness in the North American automotive industry and Plastech's heavy concentration of revenues with Big-3 OEM's, the company's top line growth could come under pressure. At the same time, Plastech faces margin pressures as a result of sustained high resin costs. In the current challenging environment, the incremental financial and operating risks associated with any additional acquisition activity could adversely affect the company's ratings. These risks are accentuated in relation to any acquisition of Collins & Aikman's businesses, given the likely need for significant restructuring which could prolong weak financial metrics at Plastech even if market conditions were to strengthen. While an acquisition of the Collins & Aikman businesses would add significant scale to Plastech and could be strategically beneficial over time, the incremental risks associated with the company's pursuit of such an acquisition require a review of the current ratings. Moody's review will consider Plastech's business and financial outlook with and without the proposed Collins & Aikman acquisition. The effects of the current adverse business environment in the auto components sector on Plastech's earnings and cash flow will be considered in relation to the company's continued high debt load. The rating review will also consider the company's ongoing progress in containing costs and generating cash flow to reduce the debt incurred to fund the February 2004 acquisition of LDM Technologies (the company has repaid approximately $50 million of debt during 2005). To the extent that the company's offer to acquire Collins & Aikman's businesses moves forward, the review will consider the structure and financing of the proposed transaction and the implications for Plastech's ongoing financial metrics. Plastech, headquartered in Dearborn, Michigan, is a leading designer and manufacturer of primary plastic automotive components and systems for OEM and Tier I customers. These components and systems incorporate injection-molded plastic parts, blow-molded plastic parts, and a small percentage of metal components. These are used for interior, exterior and under-the-hood applications. Annual revenue exceeds $1 billion. PLYMOUTH RUBBER: Committee Wants Deloitte Financial as Consultant ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Plymouth Rubber Company, Inc., and Brite-Line Technologies, Inc., asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for authority to employ Deloitte Financial Advisory Services, LLP, as its consultants and advisors, nunc pro tunc to July 10, 2005. Deloitte Financial will: (a) assist the Committee in connection with its assessment of the Debtors' cash and liquidity requirements, as well as Debtors' financing requirement; (b) assist the Committee in connection with its monitoring of the Debtors' financial and operating performance, including its current operations, monthly operating reports, and other financial and operating analyses or periodic reports as provided by management or Debtors' financial advisors; (c) assist the Committee in connection with its evaluation of the Debtors' key employee retention plans, compensation and benefit plans or other incentive plans; (d) assist the Committee in connection with its evaluation of the Debtors' business, operational, and financial plan, both short-term and long-term including with respect to actual results versus forecast, capital expenditure requirements, and cost reduction opportunities; (e) assist the Committee in connection with its evaluation of the Debtors' statements of financial affairs and supporting schedules, executory contracts and claims; (f) assist the Committee in connection with its evaluation of the Debtors' operating structure, business configuration and strategic alternatives; (g) assist the Committee in connection with its evaluation of restructuring-related alternatives; (h) assist the Committee in connection with the Committee's restructuring or reorganization-related negotiations including analysis, preparation or evaluation of any plan of reorganization proposed by the Debtors, the Committee or a third party; (i) assist the Committee in connection with its analysis of, issues related to claims filed against the Debtors including reclamation issues, administrative, priority or unsecured claims, case litigation, contract rejection damages; (j) assist the Committee in its evaluation of auction procedures or sale transactions that may take place, including with respect to the Committee's evaluation of bids, establishment of bid procedures, identification of additional potentially interest parties for the Debtors' assets, negotiation of Asset Purchase Agreement provisions including working capital adjustments, valuation issues and other related matters; (k) attend and participate in hearings before the Court; (l) assist the Committee, where appropriate, in its analysis of the books and records of the Debtors in connection with potential for recovery of funds to the estate from voidable transaction including related party transactions, preference, payments and unenforceable claims; and (m) provide such other related services as may be requested in writing by the Committee and as agreed to by Deloitte Financial. Sheila T. Smith, a principal at Deloitte Financial, discloses that the Firm will bill the Debtors' at the lesser of: (1) 65% of the professionals' current standard hourly rates; or (2) an aggregate $295 per hour for all professionals and support staff. The Firms professionals bill: Designation Hourly Rate ----------- ----------- Partner/Principal/Director $390 - $488 Senior Manager $377 Manager $325 Senior Associate $244 Associate $195 Staff $146 Paraprofessional $100 Mrs. Smith assures the Court that the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc., manufactures and distributes plastic and rubber products, including automotive tapes, insulating tapes, and other industrial tapes, mastics and films. Through its Brite-Line Technologies subsidiary, Plymouth manufactures and supplies highway marking products. The Company and its subsidiary filed for chapter 11 protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088 through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated $1 million to $50 million in assets and debts. PRD LP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------- Debtor: PRD, L.P. 8833 Gross Point Road, Suite 209 Skokie, Illinois 60077 Bankruptcy Case No.: 05-31862 Chapter 11 Petition Date: August 12, 2005 Court: Northern District of Illinois (Chicago) Judge: Bruce W. Black Debtor's Counsel: Scott R. Clar, Esq. Crane Heyman Simon Welch & Clar 135 South Lasalle, Suite 3705 Chicago, Illinois 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Gobierno Municipio de San Lorenzo $237,318 Apartado 1289 San Lorenzo, PR 00754 Mesirow Financial Inc. $234,312 Customer FBO Clifford Lee Gunter A/C 88712691 1628 Kenyer Drive Naperville, IL 60565 Mesirow Financial Inc. $227,384 Customer FBO Steven R. Russo IRA 887657 4534 West Irving Park Road Chicago, IL 60641 Valcarcel Construction, Inc. $210,000 RR#2 Buzon 1716 San Juan, PR 00928 Estate of Reuben Feinberg $208,866 c/o Mr. Paul Goldberg 1 South Wacker Drive, #800 Chicago, IL 60606 Jacob Kiferbaum $184,537 Kiferbaum Construction Corp. 790 Estates Drive Deerfield, IL 60015 Joel and Roslyn Linderman $174,740 847 West Beverly Boulevard, #101 Los Angeles, CA 90048 Bernard and Gwen Golan $147,830 250 South Ocean Boulevard, #LPHH Boca Raton, FL 33432 Arthur Clamage $120,630 9515 Hamlin Evanston, IL 60203 Arnold Horwitz $105,214 6400 North Cicero #507 Lincolnwood, IL 60712 Ilene Horwitz $105,214 6400 North Cicero #507 Lincolnwood, IL 60712 Wayne and Tiffany Andrea III $104,712 145 Century Oaks Drive Barrington, IL 60010 Gregory and Cathy Goldman $104,433 3 Dexter Row Charlestown, MA 02129 David and Marla Russo $103,816 11 Wood Creek Road Barrington, IL 60010 Lionel and Joyce Axelrod $103,447 1521 Sumter Court Lake Zurich, IL 60047 Scott, Gordon, Horewitch & Pidgeon $89,806 601 Skokie Boulevard, Suite 1A Northbrook, IL 60062 Diane Tesler $86,890 161 East Chicago Chicago, IL 60611 Super Asphalt Corp. $77,082 P.O. Box 1849 Guaynabo, PR 00970 Gail Rothstein $58,225 6007 North Sheridan Road, #21D Chicago, IL 60660 Sheri Bulwa $52,607 6400 North Cicero, #507 Lincolnwood, IL 60712 PRECISION TOOL: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Precision Tool, Inc. 50 East 200 North Hyrum, Utah 84319 Bankruptcy Case No.: 05-32391 Chapter 11 Petition Date: August 11, 2005 Court: District of Utah (Salt Lake City) Judge: William T. Thurman Debtor's Counsel: Joseph M. Chambers, Esq. Harris, Preston & Chambers 31 Federal Avenue Logan, Utah 84321 Tel: (435) 752-3551 Fax: (435) 752-3556 Total Assets: $425,501 Total Debts: $2,270,344 Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ LCA $397,259 P.O. Box 70297 Chicago, IL 60673-0297 Banc One Leasing $324,651 fka NBD Equipment Finance Department 771102 Detroit, MI 48277-1102 General Electric Capital $309,093 P.O. Box 3083 Cedar Rapids, IA 52406-3083 Cache Valley Bank $248,000 Attn: N. Georges Daines 101 North Main Logan, UT 84321 US Bankcorp Leasing $99,106 Cache Valley Bank $50,000 PROCESS TUBE: Case Summary & 110 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Process Tube Systems, Inc. aka E.M. Micro Plumbing aka Gas Tech 9025 Southwest Hillman Court #3132 Wilsonville, Oregon 97070 Bankruptcy Case No.: 05-39325 Type of Business: The Debtor provides custom equipment, solutions, and fixed analytical systems for the delivery of process gas and chemicals. See http://www.process-tube.com/ Chapter 11 Petition Date: August 9, 2005 Court: District of Oregon (Portland) Judge: Trish M. Brown Debtor's Counsel: Vincent A. Deguc, Esq. Law Office of Vincent A. Deguc Hall Street Station, 4550 Southwest Hall Boulevard Beaverton, Oregon 97005 Total Assets: $3,165,831 Total Debts: $3,960,837 A full-text copy of the Debtor's List of 110 Largest Unsecured Creditors is available for a fee at: http://www.researcharchives.com/bin/download?id=050812010558 PROPEX FABRICS: Names Edmund Stanczak, Jr., as President & CEO -------------------------------------------------------------- Propex Fabrics Inc. has named Edmund A. Stanczak, Jr., as the Company's President and Chief Executive Officer, effective tomorrow, Aug. 16, 2005. Mr. Stanczak was also elected to fill a vacancy as director of Propex Fabrics Inc. effective as of the same date. Propex Board Chairman George W. Henderson III said that Stanczak's broad- based executive career with extensive experience in manufacturing and international operations were key factors in the board's unanimous decision. "Ed has an outstanding 34 year track record of creating value in a number of larger corporations as well as smaller entrepreneurial ventures," he said. "He is the ideal person to address the challenges and opportunities we face in the future, and we have a great deal of confidence in him." Prior to joining Propex Fabrics, Mr. Stanczak was the Group Vice President and General Manager of the Environmental Technologies division of Engelhard Corporation, the world's largest provider of catalytic emissions coatings to the stationary and motor vehicles market, with group revenues of over $800 million. A native of Fort Wayne, Indiana, Mr. Stanczak earned a BS degree in engineering from Princeton University and has an MBA from Wright State University. Prior to Engelhard, he was the President and Chief Operating Officer at Vaungarde Incorporated, and also has held senior level executive positions at Armada Tube Group and HBI Automotive Glass L.P. Earlier in his career, Mr. Stanczak served as the Director of Fabrication Technology and as a Plant Manager with Libbey Owens Ford Company, and as a Plant Manager with Phelps Dodge Magnet Wire Corporation. Propex is the world's largest producer of primary and secondary carpet backing, and a leading manufacturer and marketer of polypropylene synthetic fabrics used in a variety of other industrial applications. * * * As reported in the Troubled Company Reporter on May 3, 2005, Moody's Investors Service assigned a Speculative Grade Liquidity Rating of SGL-3 to Propex Fabrics Inc. The SGL-3 rating reflects Moody's expectation that operating cash flow, combined with cash balances, and availability under its secured revolving credit facility should be adequate to cover capital needs over the coming year. Moody's believes the company will maintain a modest cushion under its financial covenant tests for the next twelve months. In addition, the company does not enjoy any meaningful sources of alternate liquidity. The senior implied of Propex Fabrics is B3. Moody's said the rating outlook is stable. REVLON INC: Equity Deficit Widens to $1.1 Bil. in Second Quarter ---------------------------------------------------------------- Revlon, Inc., (NYSE: REV) reported results for the second quarter and six months ended June 30, 2005. For the quarter, net sales advanced approximately 1% versus year-ago to $318 million, and Adjusted EBITDA advanced approximately 2% to $24 million. Net loss in the quarter narrowed slightly to $36 million compared with a net loss of $39 million in the second quarter of 2004. The Company also disclosed two strategic growth initiatives, designed to significantly accelerate top-line growth and further build the Company's position in the mass-market color cosmetics category. Commenting on the results of the quarter, Revlon President and Chief Executive Officer Jack Stahl stated, "We are very pleased with our results in the second quarter and the progress we continue to make to strengthen our brands, our relationships with our retail partners, and our organization." The Company indicated that one of the initiatives, focused on the Almay brand, is designed to capitalize on unmet consumer needs for simplicity and healthy beauty and builds on the inherent strengths of the Almay brand and the dramatic success achieved this year with the Almay Intense i-Color Collection. "We have listened to our consumers and have developed a completely new experience for the Almay consumer that addresses her busy lifestyle, need for simplicity, and desire for personalization," stated Stephanie Peponis, Executive Vice President and Chief Marketing Officer at Revlon. The second initiative is focused on the more mature cosmetics consumer segment, which is a large and growing demographic group currently underserved by existing cosmetics offerings. "We have developed a full range of products specifically for this important group of women, who have told us that their current products no longer work for them. To address this, we are introducing the ideal cosmetics system, products and shades for her changing skin," continued Ms. Peponis. Mr. Stahl continued, "I am delighted with the strong indications of support we are receiving on these initiatives from our retail partners, and I believe the announcements today underscore our focus on growth. At the same time, we are also very focused on reducing our costs and executing against our previously disclosed operating margin objective. We believe that our strong top-line outlook, coupled with our operating margin potential, positions us well to achieve our objective of long-term profitable growth and value creation." Commenting specifically on the Company's outlook for 2005 and beyond, Mr. Stahl stated, "For 2005, we expect that these initiatives will have a very positive impact on our revenues, while not having a meaningful positive or negative impact on Adjusted EBITDA. As it relates to 2006, we expect strong top-line performance and related significant investment spending behind the new initiatives, resulting in our expecting solid Adjusted EBITDA growth for the year. Based on the progress we have made over the past several years and our plans going forward, we expect our earnings momentum to accelerate beyond 2006, fueled by both our growing top line and our operating margin improvement opportunities." Second Quarter Results Net sales in the second quarter of 2005 advanced approximately 1% to $318.3 million, compared with net sales of $316.1 million in the second quarter of 2004. Excluding the impact of favorable foreign currency translation, net sales in the quarter were down approximately 1%. In North America, net sales declined 4% to $198.3 million, versus $206.8 million in the second quarter of 2004. This performance primarily reflected lower licensing revenues stemming from a $5 million prepayment of minimum royalties from a licensee that benefited the second quarter of 2004. Also impacting the comparison were lower shipments of base products, partially offset by strength of new products and a reduction in returns and allowances. In International, net sales grew 10% to $120.0 million, versus $109.3 million in the second quarter of 2004. This performance reflected growth in each of the Company's international regions, as well as the benefit of favorable foreign currency translation. Excluding the favorable impact of foreign currency translation, International net sales advanced approximately 5% versus year-ago. The Company narrowed its operating loss in the quarter to $0.3 million, versus an operating loss of $1.8 million in the second quarter of 2004. This improvement largely reflected the growth in net sales and lower brand support, partially offset by the impact of the aforementioned licensing benefit in the year-ago period and higher general and administrative expenses, including upfront development costs associated with the initiatives. Adjusted EBITDA in the second quarter advanced 2% to $24.2 million, compared with Adjusted EBITDA of $23.7 million in the second quarter of 2004. This performance was driven by largely the same factors as those that impacted the operating income comparison. Net loss in the second quarter was $35.8 million compared with a net loss of $38.9 million in the second quarter of 2004. Cash flow used for operating activities in the second quarter of 2005 was $39.2 million, compared with cash flow used for operating activities of $64.5 million in the second quarter of 2004. In terms of U.S. marketplace performance, according to ACNielsen, the color cosmetics category for the quarter advanced 2.8% versus the same period last year. For the first six months of 2005, the category advanced 2.2% versus year-ago. Combined share for the Revlon and Almay brands advanced 0.5 share points versus year-ago to 22.3% in the second quarter. The Revlon brand registered a share of 15.7% for the quarter, compared with 16.0% in the second quarter of 2004, while the Almay brand advanced to 6.6% for the quarter, compared with 5.7% in the year-ago period. For the first six months, combined market share advanced 0.2 share points versus year-ago to 22.2%. Revlon brand share for the six months was 15.7%, versus 16.1% in the first six months of 2004, while Almay share was 6.5%, versus 5.8% in the year-ago period. In other categories, the Company gained market share in the quarter and six months in hair color and beauty tools, while market share was essentially even for anti-perspirants/deodorants. Six-Month Results For the first six months of 2005, net sales declined approximately 1% to $619.2 million, compared with net sales of $624.5 million in the same period last year. In North America, net sales of $392.5 million for the first six months were down approximately 5% versus net sales of $412.7 million in the same period last year. In International, net sales of $226.7 million advanced 7% in the first six months of 2005, versus net sales of $211.8 million in the year-ago period. Excluding the favorable impact of foreign currency translation, International net sales for the six-month period grew 3% versus year-ago. For the first six months of 2005, the Company generated an operating loss of $2.4 million, versus operating income of $18.3 million in the first six months of 2004. Adjusted EBITDA in the first six months of 2005 was $45.9 million, compared with Adjusted EBITDA of $68.2 million in the first six months of 2004. Net loss was $82.6 million, or $0.22 per diluted share, in the first six months of 2005, compared with a net loss of $97.1 million, or $0.42 per diluted share, in the first six months of 2004. Cash flow used for operating activities in the first six months of 2005 was $46.8 million, compared with cash flow used for operating activities of $100.1 million in the first six months of 2004. More Detailed Outlook The Company indicated that the positive net sales impact anticipated from the initiatives in 2005 is approximately $50 million, which includes an estimated $40 million to $50 million of incremental returns provisions associated with the launch. The Company expects that the combined incremental net sales potential of the two initiatives for the full year of 2006 could be well in excess of double the benefit that it expects to realize in 2005. For 2005, the positive net sales impact of the initiatives is expected to be essentially offset by accelerated amortization, currently estimated to be approximately $10 million to $15 million, associated with certain retail display fixtures, as well as various upfront expenses related to the launch, including development and marketing-related expenses. As previously indicated, the Company expects that the initiatives will not have a meaningful positive or negative impact to Adjusted EBITDA for the year. The Company expects its performance in the third quarter of 2005 to include the impact of much of the anticipated incremental provision for returns, while performance in the fourth quarter would benefit from the incremental shipments associated with the launch. Given the magnitude of the initiatives, the Company also expects the first quarter of 2006 to benefit from incremental initial shipments associated with the launch. From a cash flow perspective and assuming the initiatives begin shipping in the fourth quarter of 2005 as planned, working capital is expected to increase during the second half of the year and return to more normalized levels in relation to sales during the second quarter of 2006. In addition, the Company expects to increase its investment in permanent displays in 2005 and 2006, in order to execute the initiatives. In connection with the initiatives, the Company indicated that it intends to increase to $185 million its previously announced commitment to issue $110 million of equity by March 31, 2006. The Company reiterated its commitment to use the proceeds of $110 million of the equity offering to reduce debt, with the balance available for general corporate purposes. The Company also announced that it intends to conduct a proposed debt financing to raise approximately $75 million in the third quarter of 2005, to help fund investments in the initiatives. To the extent that the equity issuance is less than $185 million, MacAndrews & Forbes, the Company's principal shareholder, has agreed to back-stop the issuance by purchasing such additional equity as necessary to ensure that the Company raises the full $185 million. MacAndrews & Forbes has also agreed to extend the term of the Company's existing line of credit, which has current availability of $87 million, through the planned equity issuance to be consummated by March 31, 2006. Revlon Inc. is a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. Websites featuring current product and promotional information can be reached at http://www.revlon.com/and http://www.almay.com/ Corporate and investor relations information can be accessed at http://www.revloninc.com/ The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). As of June 30, 2005, Revlon's equity deficit widened to $1.1 billion from a $1.02 billion deficit at Dec. 31, 2004. RHODES INC: Great American Launches Going-Out-of-Business Sale -------------------------------------------------------------- Great American Group, one of the nation's premier asset management firms, will commence store-closing sales for Atlanta-based Rhodes, Inc. Rhodes operates home furnishing showrooms under the names John M. Smyth's Homemakers and Rhodes Furniture. A total of 14 stores (John M. Smyth's Homemakers, 6 stores; Rhodes Furniture, 8 stores) will be closed in Louisville, Kentucky; St. Louis, Missouri; and surrounding Chicago, Illinois locations. Separately, the remaining Rhodes locations will be purchased by Great American Group and Rhodes Acquisition, LLC. "Great American Group and our joint-venture partners (Zimmer- Hester and Professional Sales & Consulting) are pleased to be selected to manage this process. We look forward to providing customers with great values on high-quality furniture for every room in their home," stated Jeff Yellen, President of Great American Group, Furniture Division. Customers will be able to take advantage of great discounts off home furnishings for the entire home, including: entertainment centers, home office systems, bedroom furniture, living and dining room sets, sectional furniture, and much more. Sales will begin immediately at some locations and in the coming weeks at the remaining locations. Great American Group -- http://www.greatamerican.com/-- provides asset management services to North America's most successful retailers, distributors, manufacturers, and healthcare facilities. Their well-established services center on turning excess assets into immediate cash through strategic store closings and wholesale, industrial, and healthcare liquidations and auctions. With over 30 years of liquidation experience, Great American Group has successfully completed over 1,000 transactions. Headquartered in Los Angeles, Great American Group also has offices in Chicago, Boston, New York, and Atlanta. Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and midwestern states (after disposing 14 stores). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in assets and more than $10 million in total debts. RITE AID: S&P Revises Outlook to Negative from Stable ----------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Rite Aid Corp. to negative from stable. Ratings on the Harrisburg, Pennsylvania-based drug retailer, including the 'B+' corporate credit rating, were affirmed. "The outlook revision is based on concerns over continued poor sales trends in Rite Aid's pharmacy business and that credit protection measures are likely to deteriorate if the company is unable to reverse the negative sales trend," said Standard & Poor's credit analyst Diane Shand. The company's same-store sales have been well below its major competitors since June 2004. The ratings reflect the challenges Rite Aid faces in improving operations at its drugstores amid intense competition. They also reflect the company's significant debt burden and thin cash flow protection. Although Rite Aid is a dominant player in the drugstore chain industry, ranking third in terms of units, credit protection and profitability measures are weak because of previous management's poor execution of a rapid growth strategy and increased competition. After stabilizing operations from fiscal 2000 through the first half of fiscal 2005, the company's operating results have declined for the past three quarters. It is likely that the operating margin will be flat to down slightly for all of fiscal 2006, given its current poor sales performance. Rite Aid's same-store sales have been weak since June 2004. In part, the soft sales are attributed to a growing number of uninsured consumers, the United Auto Workers' mandatory mail program, and decreases in some states' Medicaid reimbursement rates. All of these factors could slow growth rates. However, it is likely that the company is facing competitive incursions, as CVS Corp. and Walgreen Co. are generating solid increases in pharmacy same-store sales. Rite Aid's sales trends are expected to improve in the near term due to easier comparisons, and it has completed the integration of its new pharmacy systems that will improve customer service. Rite Aid needs to continue taking aggressive steps to improve store execution and operating efficiencies, as its profitability measures are significantly below those of its chief rivals, Walgreen and CVS. Rite Aid's operating margin was 6% in the 12 months ended May 31, 2005, compared with Walgreen's operating margin of 10.1% in the 12 months ended May 31, 2005, and CVS' margin of 9.5% in the 12 months ended June 28, 2005. RONNIE GREEN: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------- Debtors: Ronnie Jackie Green & Amie Adams Green 1650 Springfield Road Roswell, New Mexico 88201 Bankruptcy Case No.: 05-16399 Chapter 11 Petition Date: August 11, 2005 Court: District of New Mexico Judge: James S. Starzynski Debtor's Counsel: Arin E. Berkson, Esq. Moore & Berkson, P.C. P.O. Box 216 Albuquerque, New Mexico 87103 Tel: (505) 242-1218 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million Debtors' 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jennie Behles, Esq. $250,000 P.O. Box 7070 Albuquerque, NM 87194 Internal Revenue Service $190,000 Special Procedures-MS 5012 PX P.O. Box 21126 Philadelphia, PA 19114 The Bell Group $170,000 7500 Bluewater Road Northwest Albuquerque, NM 87121 Bonito Land and Livestock $170,000 Countrywide Home Loans $150,000 Seaton Consulting $55,000 Glenn Reuffer Value of security: $40,000 $35,000 J. Robert Beauvais, Esq. $27,000 Dick Taylor, CPA $6,500 William L. Lutz, Esq. $5,500 Americredit Value of security: $2,500 $5,000 RUFUS INC: Wants to Hire Logan & Company as Claims Agent -------------------------------------------------------- Rufus, Inc., asks the Honorable Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware for permission to employ Logan and Company, Inc., as its claims and noticing agent. Logan and Company is a data processing firm that specializes in noticing, claims processing and other administrative tasks in chapter 11 cases. The Debtor believes that Logan and Company will expedite service of notices, streamline the claims administration process and permit the Debtor to focus more effectively on its reorganization efforts. Logan and Company is expected to: (a) prepare and serve required notices in the Debtor's chapter 11 case, including: 1) a notice of commencement of the Debtor's chapter 11 case and the initial meeting of creditors under Section 341(a) of the U.S. Bankruptcy Code; 2) a notice of the claims bar date; 3) notices of objections to claims; 4) notices of any hearings on a disclosure statement and confirmation of a plan of reorganization; and 5) other miscellaneous notices as the Debtor or the Court may deem necessary or appropriate for an orderly administration of the Debtor's chapter 11 case; (b) file with the Clerk's Office an affidavit of service, within 10 business days after the service of a particular notice, that includes: 1) a copy of the notice served; 2) an alphabetical list of persons on whom the notice was served, along with their addresses; and 3) the date and manner of service; (c) maintain copies of all proofs of claim and proofs of interest filed in the Debtor's case; (d) maintain official claims registers in the Debtor's case by docketing all proofs of claim and proofs of interest in a claims database that includes the following information for each claim or interest asserted: 1) the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; 2) the date the proof of claim or proof of interest was received by Logan and the Court; 3) the claim number assigned to the proof of claim or proof of interest; and 4) the asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers as requested by the Clerk's Office; (g) maintain a current mailing list for all entities that have filed proofs of claim or proofs of interest and make those list available upon request to the Clerk's Office or any party-in-interest; (h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in the Debtor's case without charge during regular business hours; (i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e); (j) comply with the applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; (k) provide temporary employees to process claims, as necessary; (l) promptly comply with any further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and (m) provide other claims processing, noticing, balloting and related administrative services as may be requested from time to time by the Debtor. Kathleen M. Logan, the President of Logan and Company, Inc., discloses the current hourly rates of professionals who will work in the engagement: Designation/Work Hourly Rate ---------------- ----------- Principal $270 Court Testimony $300 Statement & Schedule Preparation $200 Account Executive Support $185 Public Website Design & Maintenance $185 Programming Support $150 Project Coordinator $125 Data Preparation Analysis $100 The Debtor believes that Logan and Company, Inc., is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs, dog food, supplies and accessories. The Debtor also operates a chain of six retail stores in the Northeastern United States. The Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr. D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its bankruptcy proceeding. When the Debtor filed for protection from its creditors, it listed $1.8 million in total assets and $12.7 million in total debts. SAINT VINCENTS: Court Grants Interim OK on $6.7 Mil. DIP Facility ----------------------------------------------------------------- The Honorable Prudence Carter Beatty of the U.S Bankruptcy Court for the Southern District of New York approved, on an interim basis, the terms of Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates DIP Loan Agreement with the Dormitory Authority of the State of New York. As reported in the Troubled Company Reporter on August 8, 2005, DASNY and the HUD offered a $14 million bail out to the Debtors. DASNY and the HUD will advance, on behalf of SVCMC, amounts sufficient to pay the debt service payments on the Mortgage Notes due on the first day of each month from August 2005 until January 2006: $6,765,721 will be advanced in the form of a term loan from DASNY; and $7,620,364 will be advanced by the HUD through releases from a Depreciation Reserve Fund that will not take the form of loan. ------------ $14,386,088 Total funds to be received by SVCMC The interim approval allows DASNY to release to the Debtors the first two installments under the Loan, totaling $2,287,022. All of the borrowings under the DASNY DIP Loan Agreement will have the status of a superpriority administrative expense claim in the Debtors' Chapter 11 Cases, having priority over any and all administrative expenses, junior only to Healthco-4 LLC's superpriority administrative expense claim under the HFG DIP Loan Agreement and the $300,000 carve-out. The Debtors irrevocably appoint DASNY during the term of the DASNY DIP Facility as their lawful attorney-in-fact to execute and file, on their behalf, financing statements or continuation statements as to the security interests granted to DASNY in the Collateral in any appropriate public office. The Court will convene a hearing to consider approval of the DASNY Final Financing Order on September 7, 2005 at 2:30 p.m. 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. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) SATELITES MEXICANOS: Judge Drain Dismisses Involuntary Petition --------------------------------------------------------------- The Honorable Judge Robert D. Drain of the U.S Bankruptcy Court for the Southern District of New York, Manhattan Division, entered an order: -- dismissing the involuntary chapter 11 case filed against Satelites Mexicanos, S.A. de C.V. aka Satmex; -- granting the preliminary injunction against Satmex's creditors. Involuntary Chapter 11 Case As previously reported in the Troubled Company Reporter on Aug. 5, 2005, the Debtor is the subject of an involuntary chapter 11 petition filed by a group of secured and unsecured noteholders with the U.S. Bankruptcy Court for the Southern District of New York on May 25, 2005. The petitioning creditors are members of an Ad Hoc Committee of holders of Satmex's Senior Secured Floating Rate Notes due 2004 and 10-1/8% Senior Notes due 2004. The Ad Hoc Noteholders Committee and the Ad Hoc Bondholders Committee collectively hold more than $385 million of Satmex's outstanding debt. The Debtor and the group of petitioning secured and unsecured noteholders agreed that the noteholders will withdraw their involuntary chapter 11 petition upon the commencement of the Sec. 304 proceeding. The Bank of New York is the indenture trustee under the indenture governing Satmex's 10-1/8% Senior Notes due 2004, and Citibank, N.A., is indenture trustee under the indenture governing Satmex's Senior Secured Floating Rate Notes due 2004. Wilmer Cutler Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer & Feld LLP represent the noteholders. Evercore Partners is the financial advisor to the Senior Secured Floating Rate Noteholders. Chanin Capital Partners is the financial advisor to the 10-1/8% Senior Noteholders. Preliminary Injunction The Court has enjoined all parties, including creditors and all governmental units, from initiating and continuing any action or proceeding against Satmex or its assets. The Court has also restricted the Petitioning Creditors -- whether part of the Ad Hoc Committees or individually with other creditors of Satmex -- to file a new involuntary petition against Satmex under Section 303 of the Bankruptcy Code from the Effective Date until Jan. 31, 2006. Satmex will provide a written restructuring proposal to the counsel of the Ad Hoc Committees and Citibank: (a) on or before Oct. 31, 2005, if Satmex obtained concurrence from the Conciliator appointed in the Concurso Proceeding; or (b) on or before Nov. 30, 2005, whether or not Satmex obtained concurrence from the Conciliator. Satmex will also provide detailed written financial reports, including income statements, balance sheets, and cash flow statements, to the counsel of the Ad Hoc Committees and Citibank. The first financial report for the month of August 2005 is due on Sept. 16, 2005. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP in New York, tells the Court that, under the Settlement Agreement, Satmex will pay: (a) $125,000 each to the advisors for the Ad Hoc Committees for the period from May 25, 2005, to Aug. 8., 2005, for the reasonable and documented fees and expenses; and (b) $75,000 each to the advisors for the Ad Hoc Committees as advance payment for the reasonable and documented fees and expenses that may be incurred for the month of August 2005. The preliminary injunction relief will expire at 5:00 p.m. on Oct. 19, 2005. A hearing to consider the continuation of the injunction will be held at 10:00 a.m. on Oct. 19, 2005, in Room 610, U.S. Bankruptcy Court for the Southern District of New York, One Bowling Green, located in New York. Headquartered in Mexico, Satelites Mexicanos, S.A. de C.V. -- http://www.satmex.com/-- is the leading provider of fixed satellite services in Mexico and is expanding its services to become a leading provider of fixed satellite services throughout Latin America. Satmex provides transponder capacity to customers for distribution of network and cable television programming and on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications, as well as satellite internet services. The Debtor is an affiliate of Loral Space & Communications Ltd., which filed for chapter 11 protection on July 15, 2003 (Bankr. S.D.N.Y. Case No. 03-41710). Some holders of prepetition debt securities filed an involuntary chapter 11 petition against the Debtor on May 25, 2005 (Bankr. S.D.N.Y. Case No. 05-13862). The Debtor, through Sergio Autrey Maza, the Foreign Representative, Chief Executive Officer and Chairman of the Board of Directors of Satmex filed an ancillary proceeding on Aug. 4, 2005 (S.D.N.Y. Case No. 05-16103). Matthew Scott Barr, Esq., Luc A. Despins, Esq., Paul D. Malek, Esq., and Jeffrey K. Milton, Esq., at Milbank, Tweed, Hadley & McCloy LLP represent the Debtor. When the Debtor filed an ancillary proceeding, it listed $900,000,000 in assets and $688,000,000 in debts. SEDONA CORP: Borrows $250,000 More for Working Capital Needs ------------------------------------------------------------ Sedona Corporation and William Rucks, executed a binding Term Sheet whereby Mr. Rucks agreed to provide the Company with $1 million of working capital financing. The executed Term Sheet provides for the Investor to lend the Company $1 million in two tranches of $250,000 each and one Tranche of $500,000. On July 1, 2005, the Investor lent the Company the initial $250,000. On August 2, 2005, the Investor lent the Company the second tranche of $250,000. The Term Sheet provides that the Investor will lend the Company the third Tranche of $500,000 on or before September 29, 2005, subject to the Company meeting certain conditions. As evidence of the Loan, the Company is obligated to issue to the Investor a convertible note. The Convertible Notes will mature and are payable 24 months after the date of each Loan, unless converted. The Company is required to use the proceeds from each tranche to pay the Company's existing obligations in this order of priority: (1) the Internal Revenue Service for any payroll, withholding and other employee taxes; (2) any state revenue department for which payroll, withholding or other employee taxes are due; (3) any state revenue department for any sales or use taxes owed by the Company; (4) proper parties to satisfy any ERISA, pension or benefit obligations; (5) proper parties and employees to satisfy any wage, current severance obligations, WARN Act or other employee related expenses; (6) proper parties to satisfy any outstanding environmental claims, demands, enforcement actions or judgments; (7) federal and state authorities for taxed based on income and for franchise taxes' and eighth, payment to accounts payables and expenses incurred in business operations. The Convertible Notes will bear interest on the principal outstanding at a rate of 8% per year due annually in arrears from the date of the Convertible Notes until the earlier of maturity or the date upon which the unpaid balance is paid in full or is converted into shares of common stock. The Investor may, at his option, at any time after each Loan, elect in writing to convert all or a designated part of the unpaid principal balance, together with the accrued and unpaid interest, of each Convertible Note into Shares. The number of Shares into which the principal may be converted is equal to $0.18 per share. The number of Shares issuable upon conversion of the $1 million principal balance of the Convertible Notes is 5,555,555. Accrued and unpaid interest may be paid in cash or, at the election of the Investor, in Shares at a conversion price of $0.18 per share. The conversion price for principal will be protected by full-ratchet anti-dilution, with the exemption of stock options issued to the Company's employees and directors only. In the event the Company's cash position increases to a significant level due to increased business activity, a legal settlement, or additional equity investment, the Company, after 30 days written notice, may elect to prepay the principal amount of the Convertible Notes, plus interest, in cash, at any time, without penalty, in the event the Investor does not elect in writing to convert all or a designated part of the principal amount of the Note to equity during the 30 day notice period. As additional consideration, the Investor will be granted one four-year warrant for every two converted Shares. The exercise price of the warrant will be $0.30 per share. Under the provisions of the Term Sheet, the Investor also has the right to assign all or any part of the Convertible Notes to related entities controlled by the Investor or to Independent Third Parties. The Investor is strictly prohibited from selling any Shares until all funding obligations due under the Term Sheet are fulfilled. The expiration date of 525,266 stock purchase warrants issued to Investor from prior financings with the Company shall be extended for a period of 12 months. SEDONA(R) Corporation (OTCBB: SDNA) is the leading technology and services provider that delivers verticalized Customer Relationship Management solutions specifically tailored for the small to mid- sized business market. Utilizing SEDONA's CRM solutions, community and regional banks, and insurance companies can effectively identify, acquire, foster, and retain loyal, profitable customers. As of March 31, 2005, Sedona Corporation's stockholders' deficit widened to $5,053,000 compared to a $4,258,000 deficit at Dec. 31, 2004. SPECTRUM/GRANDVIEW: Case Summary & 5 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Spectrum/Grandview Pines LLC P.O. Box 11045 Montgomery, Alabama 36111 Bankruptcy Case No.: 05-32347 Chapter 11 Petition Date: August 12, 2005 Court: Middle District of Alabama (Montgomery) Judge: William R. Sawyer Debtor's Counsel: Derek F. Meek, Esq. Burr & Forman LLP P.O. Box 830719 Birmingham, Alabama 35283-0719 Tel: (202) 251-3000 Total Assets: $920,909 Total Debts: $2,031,781 Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ General Electric Capital Grandview Pines $1,989,155 BAF Corporation Shopping Center 10900 Northeast 4th Street 3700 Block of Suite 500 Alabama Highway 14 Bellevue, WA 98004 Millbrook, Elmore County, Alabama Value of security: $895,000 Azar, Parker & Gill 2004 Accounting $950 4228 Lomac Street fees Montgomery, AL 36106 ATC Air Conditioning Repairs $765 P.O. Box 70368 Montgomery, AL 36107 Grassbusters Landscaping $500 P.O. Box 397 Wetumpka, AL 36092 D. Coleman Yarbrough Legal fees $412 2860 Zelda Road Montgomery, AL 36106 STRUCTURED ASSET: Fitch Affirms BB+ Rating on $67.2MM Certificates ------------------------------------------------------------------ Fitch Ratings affirms Structured Asset Securities Corp.'s multiclass pass-through certificates, series 1996-CFL: -- $39.4 million class G at 'AAA'; -- $48.0 million class H at 'AAA'; -- Interest-only classes X-1 and X-2 at 'AAA'; -- $67.2 million class I at 'BB+'. Classes J and P are not rated by Fitch, and classes A through F have paid in full. The affirmations reflect the increased subordination from issuance, offsetting the increasing concentrations of the pool. The transaction has paid down 91.1% since issuance to $169.2 million from $1.9 billion at issuance. The largest loan represents 12.4% of the pool, and the top five loans represent 34.5%. In addition, 19.3% of the pool is considered a Fitch Loan of Concern. These include the specially serviced loans, and loans with low debt service coverage ratios and occupancies. Currently, there are two loans being specially serviced (14.4%). The larger specially serviced loan is collateralized by the largest loan in the pool, the Kmart Distribution Center (12.4%) located in Ocala, FL. The loan is expected to return to the master servicer. The second specially serviced loan is a real estate owned property located in Moses Lake, WA (2.0%). The property was formerly occupied by Kmart, who rejected the lease and vacated. The property remains vacant and is being listed for sale. Losses are expected; however, they are anticipated to be absorbed by the NR class. TEAM HEALTH: Earns $12.1 Million of Net Income in Second Quarter ---------------------------------------------------------------- Team Health, Inc., reported results for its second quarter ended June 30, 2005. The Company reported net earnings of $12.1 million in the second quarter of 2005 versus a net loss of $55.9 million in the second quarter of 2004. The 2004 results included an impairment loss provision of $65.8 million to reduce the carrying value of goodwill associated with the Company's military staffing business. Net revenue less provision for uncollectibles excluding military staffing revenues increased 12.9% or $25.1 million. Military staffing revenue declined $23.3 million between periods as a result of the military re-contracting its healthcare staffing contracts beginning in the second quarter of 2004. Same contract revenue less provision increased 14.5% or $26.1 million, to $205.7 million in the second quarter of 2005 from $179.7 million for the same period of 2004. Overall, total revenue less provision in the second quarter of 2005 increased 0.7% to $257.7 million from $256.0 million in the same period in 2004. Net earnings for the six months ended June 30, 2005 were $30.1 million compared to a loss of $56.0 million for the six months ended June 30, 2004. Included in the financial results for the six months ended June 30, 2005, is a reduction in professional liability reserves related to prior years of $7.6 million. The financial results for the six months ended June 30, 2004 include approximately $16.0 million of pretax refinancing costs and compensatory bonus expenses associated with a refinancing of the Company's capital structure as well as the impairment loss provision in the amount of $65.8 million. For the first six months of 2005, same contract revenue less provision increased 13.2% or $46.4 million, to $397.4 million in 2005 from $351.1 million in the same period of 2004. Net revenue less provision for the six months ended June 30, 2005 decreased 1.8% to $508.3 million from $517.4 million in the prior year period. The decrease between periods includes a reduction of military staffing revenue of $49.2 million. As of June 30, 2005, Team Health had cash of $15.2 million and $74.9 million of available capacity under its revolving credit facility. As previously announced and effective April 6, 2005, the Company amended the terms of its senior credit agreement. As a result of the amendment, the Company made a partial prepayment of its term debt in the amount of $30 million, converted its existing term loan B into a new term loan C in the amount of $203.1 million, and reduced the pricing on the new term loan by 50 basis points to LIBOR plus 275 basis points. Also, the amendment granted the Company the ability to purchase up to $35 million of its outstanding 9% Senior Subordinated Notes. Total debt reduction during the second quarter of 2005 was $65.2 million, including $34.3 million of the Company's 9% Senior Subordinated Notes. In the six months ended June 30, 2005, the Company repaid $80.1 million of outstanding debt. Total outstanding indebtedness as of June 30, 2005 was $348 million. Cash flow provided by operations (after interest, taxes and changes in working capital) for the first six months ended June 30, 2005 was $28.0 million compared to $26.2 million in 2004. "During the second quarter of 2005 our core Emergency Department (ED) business continued its strong financial performance," Lynn Massingale, M.D., President and CEO of Team Health said. "As in the first quarter of 2005, both volumes and pricing once again increased on a year over year basis. Steady state ED volume increased 5.6% and net estimated revenue per patient visit increased 10.2% in the second quarter of 2005 compared to the second quarter of 2004. In the first six months of 2005, steady state ED volume increased 6.2% and net estimated revenue per patient visit increased 9.7%. The increase in overall ED volume in both the three and six months periods of 2005 reflected a nominal increase in self-pay patient visits, but a decrease in self-pay visits as a percentage of our total visits as other payer types increased at a higher rate. "Performance in our military staffing unit continued to meet our expectations despite lower revenue and profitability following the military's 2004 re-contracting process and our restructuring of this business line. During the next several months we will face contract renewal bidding on approximately $65 million of our annual revenue relating to this business originally obtained under one-year contracts, while an additional $79 million of our annual revenue is subject to the military's option to exercise its right to extend such multi-year contracts for an additional year. We will have the opportunity to bid on an estimated $100 million of annual staffing revenue now held by others. However, we expect to be ineligible to bid on a substantial portion of the business held by others due to the government's practice of reserving a substantial portion of its contracts for award to small businesses. "While we are highly focused on our core ED business and have a significant presence in military staffing, we have over the past several years invested in developing other healthcare staffing and service business lines. Our investment in the field of radiology has been spread over several different types of radiology services. We recently re-evaluated our strategy with respect to these various radiology services. This evaluation led us to the conclusion to divest our two imaging centers over the balance of 2005. We concluded that operating capital intensive imaging centers in a very competitive market with ever changing technology did not fit with our strategic direction. In the second quarter we recorded an estimated $1.6 million impairment loss related to the assets of these centers. Additionally, in evaluating the overall profitability of our radiology operations, we concluded that certain hospital staffing contracts did not meet our profitability goals and we have decided to terminate such contracts over the balance of 2005. We will work with the administrations of the hospitals impacted by this decision to ensure a smooth and orderly transition of such services. As a result, we anticipate incurring severance related costs currently estimated at approximately $1 million in the third and fourth quarters of 2005. Overall, the aforementioned operations contributed less than 2.0% of our net revenues on an annual basis. "Subsequent to the end of the second quarter, a jury in Florida rendered a verdict that awarded $15.0 million to a plaintiff in connection with a professional liability lawsuit involving the death of a patient. Team Health, Inc. was named as a co-defendant in the verdict. The jury award of $15.0 million was in excess of combined insurance coverage of $2.0 million at the time of the incident. We are currently awaiting the trial judge's final judgment. While our sincere sympathies go to this patient's family, we believe that neither the facts, circumstances nor the law in this matter justify the jury's conclusions nor the excessive award. We intend to pursue a request for relief from the unwarranted award through a full exercise of our legal rights. "On a final note, the proposed Medicare physician fee schedule for 2006 currently includes a 4.3% reduction in physician payment rates under the present statutory formula. We continue to monitor and support several bills currently being considered by Congress to reduce or eliminate this formulaic reduction in the fee schedule." Founded in 1979, Team Health Inc. -- http://www.teamhealth.com/-- is headquartered in Knoxville, Tennessee. Team Health is affiliated with over 7,000 healthcare professionals who provide emergency medicine, radiology, anesthesia, hospitalist, urgent care and pediatric staffing and management services to over 450 civilian and military hospitals, surgical centers, imaging centers and clinics in 44 states. * * * As reported in the Troubled Company Reporter on June 16, 2005, Standard & Poor's Ratings Services revised its outlook on Knoxville, Tennessee-based physician staffing company Team Health Inc. to stable from negative. Ratings on the company, including the 'B+' corporate credit rating, were affirmed. The outlook revision reflects the $68 million reduction of Team Health's outstanding debt, to $370 million at March 31, 2005 (pro forma for the post quarter end debt reduction). Total outstanding debt was $438 million at March 31, 2004, when the company had just completed a recapitalization. The outlook revision also reflects the reduction in Team Health's professional liability costs in 2005 and the company's better- than-anticipated operating performance in the first quarter of 2005 due to strong patient volumes, as well as pricing and insurance cost improvements. Standard & Poor's also expects that Team Health will continue to improve or maintain its financial profile through further debt reduction and EBITDA growth. "The ratings on privately held Team Health continue to reflect the risks associated with the large physician staffing company's narrow operating focus, as well as its susceptibility to cost pressures, including fluctuations in professional liability costs," said Standard & Poor's credit analyst Jesse Juliano. TITAN CORP: Moody's Withdraws Senior Subordinated Notes' B3 Rating ------------------------------------------------------------------ Moody's Investors Service withdrew the B3 rating on Titan Corporation's senior subordinated notes due 2011. Over 99% of the notes have been tendered and accepted for purchase. All ratings on Titan Corporation have now been withdrawn. Headquartered in San Diego, California, Titan is a leading technology developer, systems integrator, and services provider for the: * Department of Defense; * the Department of Homeland Security and Intelligence; and * other key government agencies. Titan Corporation was acquired by L-3 Communications on July 29, 2005 and renamed L-3 Communications Titan Corporation. Titan had LTM March 2005 revenues of $2.1 billion. TOM'S FOODS: Gets Court OK on Extension to File Notices of Removal ------------------------------------------------------------------ Tom's Foods Inc., sought and obtained an order from the U.S. Bankruptcy Court for the Middle District of Georgia extending, through and including Sept. 5, 2005, or 30 days after the entry of an order terminating the automatic stay with respect to the particular civil action sought to be removed, to file notices of removal with respect to pre-petition civil actions pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure. The Debtor is a party to several civil actions currently pending in various state and federal courts. The Debtor gave the Court four reasons in support of the extension: 1) since the Petition Date, it has been preoccupied with: a) the operation of its business, obtaining debtor-in- possession financing and addressing creditor issues and concerns with respect to the bankruptcy filing, and b) the preparation and finalization of its Schedules and Statement and the consideration of business decisions in the commencement of its chapter 11 case; 2) it has spent considerable working through issues and procedures relating to reclamation claims, PACA claims, demands for adequate assurance from utilities, cash management procedures and retention of certain professionals; 3) it will give the Debtor more opportunity to make fully informed decisions concerning the removal of each pre- petition civil action and assure it does not forfeit valuable rights under 28 U.S.C. Section 1452; and 4) the extension will not prejudice the rights of its adversaries because any party to a civil action that is removed may seek to have that action remanded to the originating court pursuant to 28 U.S.C. Section 1452(b). 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. TOM'S FOODS: Aug. 22 is Reclamation Report Objection Deadline ------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia approved a Stipulation between Tom's Foods Inc. and the Official Committee of Unsecured Creditors extending the deadline by which any reclamation claimant or other party-in-interest can file a written objection to the Debtor's Reclamation Report. Reclamation claimants or other parties-in-interest have until Aug. 22, 2005, to file written objections to the Reclamation Report. On the Petition Date, the Debtor filed a request for an entry of an order, pursuant to Sections 105(a), 503(b) and 546(c)(2) of the Bankruptcy Code, to: 1) confirm the grant of administrative expense priority status under Section 503(b) of the Bankruptcy Code for undisputed obligations arising from the post-petition delivery of supplies or goods by the Debtor's vendors or suppliers; 2) confirm the Debtor's authority to pay the expenses for the undisputed obligations in the ordinary course of business; and 3) provide for administrative expense treatment for certain holders of valid reclamation claims and prohibit third parties from interfering with the delivery of goods to the Debtor. The Court approved that request, called the Reclamation Motion, on the same day. Pursuant to the Court's Reclamation Procedures Order, on July 6, 2005, the Debtor filed its Combined Reclamation and PACA Report and Motion to Determine Validity of Reclamation and PACA Claims. The Reclamation Report identified proposed allowed reclamation claims against the Debtor's estate in the amount of $638,578.47, subject to the right of any party-in-interest to object to any reclamation claim on any ground pursuant to the Court's Reclamation Procedures Order. The Court orders that any amendment to the Stipulation and its Order must be in writing, signed by the Debtor and the Committee, and approved by the Court. 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. TRIMAS CORP: S&P Lowers Subordinated Debt Rating to CCC+ from B- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on engineered products manufacturer TriMas Corp. to 'B' from 'B+'. At the same time, Standard & Poor's lowered its senior secured debt ratings on the company to 'B' from 'B+' and its subordinated debt rating to 'CCC+' from 'B-'. The outlook is negative. "The downgrade reflects the company's weaker-than-expected operating performance and its high debt leverage," said Standard & Poor's credit analyst Natalia Bruslanova. "We also believe that the company will take longer than originally expected to make necessary improvements to its financial profile. Operating income has decreased after being hurt by reduced company sales volumes, pricing competition, and increasing material costs, mainly in the Cequent business unit." The ratings on Bloomfield Hills, Mich.-based TriMas Corp. reflect: * its presence in highly competitive and cyclical markets; * its thin cash flow protection; and * high debt leverage. The company's products (transportation towing systems, packaging systems, fastening systems, and industrial specialty products), serve niche markets with diverse commercial, industrial, and consumer applications. About 70% of its sales are from products that have No. 1 or No. 2 positions, in markets where TriMas is one of only two or three manufacturers. While its end markets are diverse, its direct markets are highly competitive. Although TriMas continues to experience top-line growth year over year in other business segments, its large Cequent unit suffered poor operating performance, as the high levels of inventory congestion in its business channels hurt demand. The company also faces significant price competition in its retail market, and it has not been able to recover enough of the increased costs for steel and other materials or for excessive overhead. Continued pricing pressure is expected, as market demand for towing products remains flat and competition from the Southeast Asia is increasing. TRUMP HOTELS: Court Halts Cash Payments to Shareholders ------------------------------------------------------- As previously reported in the Troubled Company Reporter on July 18, 2005, 19 former owners of shares in Trump Hotels & Casino Resorts, Inc.'s common stock asked the U.S. Bankruptcy Court for the District of New Jersey to compel Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment Resorts, Inc., and its debtor-affiliate to comply with the terms of the Second Amended Plan of Reorganization and the Confirmation Order. Michael J. Viscount, Jr., Esq., at Fox Rothschild LLP, in Atlantic City, New Jersey, relates that these parties were record owners of the THCR common stock as of March 28, 2005. Under the Plan, the warrants, the cash and the proceeds from the sale of the World's Fair Site are to be distributed to the owners of the Old Equity Shares as of March 28, 2005, the Record Date, Mr. Viscount notes. Court Prohibits Further Distributions The Court, having determined that there is a need to maintain the status quo pending final disposition of the Motion, orders that: 1. There will be no further distribution of the Class 11 Cash Payment or the New Class 11 Class A Warrants to beneficial owners of Trump Entertainment Resorts, Inc.'s common stock by the Debtors, Continental Bank and Trust Company as the Disbursing Agent under the Plan, or by The Depository Trust Clearing Corp. until further Court order; 2. Until further Court order, there will be no distribution of any of the proceeds of the sale of the World's Fair Site under the Plan; and 3. If the Debtors have actual knowledge that any of Continental or DTC is making distributions, the Debtors will bring the violation to the attention of the Court and the counsel for the Former Shareowners. Briefing & Conference At the July 18, 2005, hearing, Judge Wizmur requested further briefing from the Reorganized Debtors regarding NASD's and DTC's involvement in the distribution under the Debtors' Plan of Reorganization. Pursuant to a stipulation, the parties agree that: (a) the Briefing Deadline should be Sept. 8, 2005; (b) the deadline for any response by the Stockholders should be Sept. 19, 2005; and (c) a telephonic status conference should be set at the Court's convenience for a date after Sept. 26, 2005. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. (Trump Hotels Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000). TRUMP HOTELS: Can Litigate 280 Claimants Outside Bankruptcy Court ----------------------------------------------------------------- The Honorable Judge Wizmur of the U.S. Bankruptcy Court for the District of New Jersey granted the request of Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc., to lift the automatic stay under Section 362 of the Bankruptcy Code. The Debtors can now defend themselves against more than 280 persons or entities that: -- had commenced litigation against the Debtors before the Petition Date; or -- assert personal injury or wrongful death claims against the Debtors, including workers' compensation claims. A full-text list of the Claimants is available for free at: http://bankrupt.com/misc/SpecifiedClaimants.pdf As previously reported in the Troubled Company Reporter on July 27, 2005, the Debtors want the automatic stay lifted so that the Claimants can pursue their claims against the Debtors in the appropriate non-bankruptcy court or forum having jurisdiction over the disputes and the parties, Charles A. Stanziale, Jr., Esq., at Schwartz Tobia Stanziale Sedita & Campisano, in Montclair, New Jersey, explains. Any final judgment entered in favor of the Claimant or any settlement between the Claimant and the Debtors will be satisfied in accordance with the terms of the Plan under these limitations: -- The amount any Claimant is entitled to receive under the Plan on account of a final judgment or settlement of its claim will be capped at the amount set forth in its claim; and -- Under no circumstances will the Debtors be required to pay more than the amount set forth in the claim. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. (Trump Hotels Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000). TWINLAB CORP: District Court Denies Motions to Stay Confirmed Plan ------------------------------------------------------------------ The Honorable Jed S. Rakoff of the U.S. District Court for the Southern District of New York denied the emergency motion filed by three class claimants in Twin Laboratories Inc., n/k/a TL Administration Inc., and its debtor-affiliates chapter 11 case, for a stay of orders from the Bankruptcy Court: a) disallowing their class claims against the Debtors; and b) confirming the Debtors' First Amended Joint Plan of Liquidation. The Cirak, Lackowski, and Barr class claimants asked for a stay of the orders pending the disposition of their appeals. Judge Rakoff denied a stay pending appeal because the claimants failed to show that they have a substantial likelihood of success on their appeals. The claimants didn't show Judge Rakoff the public interest would be harmed if the stays weren't granted either. Judge Rakoff says that the public interest is, in fact, served by rejecting the claimants stay motion because creditors expect to receive initial distributions from the Debtors within days after Plan Confirmation. The District Court also disputed the claimants' assertion that the Courts failed to make findings warranting the release of certain third-party defendants from their liabilities in exchange for funds contributed to the Debtors' Plan. Judge Rakoff stressed that the Courts made specific factual findings that the third- party, non-debtor release is vital to the Debtors' Plan. As reported in the Troubled Company Reporter, the U.S. Bankruptcy Court for the Southern District of New York confirmed the Debtors' First Amended Joint Plan of Liquidation on July 26, 2005. The American International Specialty Lines Insurance Company and certain third party defendants will fund a significant portion of the distributions provided in the Plan. American International and the third party defendants, mostly distributors of the Debtors' Ephedra-containing products, will contribute approximately $16.7 million to the Ephedra Personal Injury Trust created pursuant to the confirmed Plan. The third party contributions brings the recovery of uninsured and under- insured personal-injury and wrongful-death claimants up to an estimated range of 49%-65% of the value of their claims. As part of the deal, the settling third parties will be released from all claims relating to the 2002-2004 Ephedra PI Claims and other claims in connection with the Debtors' ephedra-containing products. July 20 Order Expunging Claims The District Court removed the Cirak, Lackowski, and Barr class claims from the allowed claims in the Debtors' Plan because the three claimants had neglected to diligently move their claims forward prior to the confirmation of the Debtors' Plan and because they had failed to meet the requirements of Rule 23 for class certification. The Debtor's liquidating plan had already been submitted for a vote of creditors before the claimants asked the Bankruptcy Court to exercise its judgment under Rule 9014 for class certification. Judge Rakoff explains that the granting of the three class action claims at a late juncture would disrupt the prompt execution of the Debtor's Plan and delay the distribution to its creditors. Even if the claimants had filed their class claims, the District Court contends that their claims will still be disallowed because they had failed to meet the requirements of Rule 23 for class certification. To satisfy Rule 23, the claimants need to show, among other things, that a class action is superior to other available methods for the fair and efficient adjudication of their claims. Judge Rakoff stated that bankruptcy is superior to a class action because it consolidates all claims in one forum and allows claimants to file proofs of claim without counsel and at virtually no cost. Since superiority of the class action is lost in bankruptcy, only compelling reasons for allowing a particular opt- out class claim can justify applying Rule 23. The Court did not find any compelling reason to apply the rule. The Class Claimants The Cirak Class The Cirak claimants assert a $27 million general unsecured claim against the Debtors in connection with a Class Action Complaint commenced in March 2004. In the adversary proceeding, the Cirak claimants alleged that the Debtors falsely advertised that Steroid Hormones are effective for promoting muscle growth. The claimants asserted causes of action for: a) unjust enrichment; b) violation of the Little FTC acts due to the Debtor's deceptive acts and practices; and c) violations of the federal Racketeer Influenced and Corrupt Organization Act. The Debtors First Amended Joint Plan of Liquidation classified the Cirak class claim as a General Unsecured Claim. The claimants objected to the provisions of the Plan because it allegedly: a) lacks adequate information regarding their claims; b) caps disbursement on their $27 million claim at $350,000; c) discriminates among the 2002-2004 Ephedra PI Claims in Class 4 and their claim, which is treated as a Class 5 General Unsecured Claim; d) includes releases and injunctions in favor of third parties; and e) provides a distribution to equity holders. The Barr Class The Barr class claimants commenced a class action suit against the Debtors on August 23, 2002. The suit, filed with the California Superior Court of Orange County, alleges that the Debtors violated State consumer fraud, false advertising and unfair competition laws in connection with its marketing of dietary supplements and weight loss products containing ephedra. The products were marketed to consumers as safe, natural and part of a healthy lifestyle. The claimants say that the Debtors' advertising concealed significant health risks from these products. The Barr class claimants object to the provisions of the Plan on substantially the same reason presented by the Cirak class, namely: the lack of adequate information, payment caps, discrimination among the 2002-2004 Ephedra PI Claims and Class 5 General Unsecured Claim and the releases and injunctions in favor of third parties. On Sept. 4, 2003, Twinlab Corporation, Twin Laboratories Inc. and Twin Laboratories (UK) Ltd., commenced voluntary cases under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York. These chapter 11 cases are being jointly administered under chapter 11 case number 03-15564 and are pending before the Honorable Cornelius Blackshear. Also, on Sept. 4, 2003, the Companies entered into certain asset purchase agreement with IdeaSphere, Inc. of Grand Rapids, Michigan, pursuant to which the Companies sold substantially all of their assets. The sale closed on Dec. 9, 2003. In connection with the sale, the Debtors obtained an order from the Court authorizing them to change their names. Twinlab Corporation changed its name to TL Administration Corporation, Twin Laboratories Inc., changed its name to TL Administration Inc., and Twin Laboratories (UK) Ltd., changed its name to TL Administration (UK) Ltd. As of June 30, 2005, TL Administration Corporation's balance sheet reflected a $53,703,000 equity deficit. At the end of the same period, TL Administration, Inc., stockholders' deficit amounted to $20,722,000. TL Administration (UK) Ltd. reported a $1,277,000 equity deficit as of the end of the second quarter. VESTA INSURANCE: Moody's Lowers Senior Debt Rating to B3 from B2 ---------------------------------------------------------------- Moody's Investors Service lowered the rating of Vesta Insurance Group's senior debt to B3 from B2, following continued delays in the filing of the company's GAAP financial statements and unfavorable developments regarding the status of ongoing internal accounting control assessments. Moody's confirmed the rating of the trust preferred securities of Vesta Capital Trust I at Caa2. The outlook for the ratings is negative. Moody's said that the rating downgrade reflects: * the company's uncertain future business prospects; * its substantial exposure to catastrophes; and * its strained financial flexibility in terms of both weak cash flows and high financial leverage. In June 2005, the company's main operating subsidiary -- Vesta Fire Insurance Corporation -- reported $11.2 million of net adverse reserve development related largely to the four hurricanes that struck the southeastern U.S. in third quarter of 2004. This charge represented nearly 8% of Vesta Fire's statutory surplus as of December 31, 2004 and highlights the significant volatility associated with the company's ongoing business strategy. Moody's added that the company has entered into definitive agreements to sell assets in order to enhance its financial flexibility, reduce bank borrowings and improve the capitalization of its insurance companies. These transactions include the cash sale of its life operations expected to close in 3Q05 as well as the disposition of its remaining Affirmative stake. Moody's views these transactions as a favorable development and believes that the parent company has adequate liquidity to meet its obligations through 2005. As of March 31, 2005, Vesta Fire continued to report negative unassigned surplus, which prevents the payment of statutory dividends to its parent without regulatory approval. Nevertheless, the holding company is able to receive dividends from the group's J. Gordon Gaines subsidiary -- an administrative services provider. The negative outlook reflects the considerable uncertainly that exists around the scope and final outcome of the company's internal accounting review including the potential for significant negative adjustments to the company's financial statements. Moody's confirmation of the Caa2 rating on the trust preferred securities reflects Moody's assessment of the potential loss severity and expected loss on the security given the company's mix of senior and subordinated debt in its capital structure. Vesta Insurance Group writes homeowners primarily in Florida, Texas, the Northeast, and Hawaii, and automobile insurance primarily in West Virginia and Pennsylvania. For the year ended December 31, 2004, Vesta Fire Insurance Corporation reported on a combined statutory basis net premiums earned of $242.6 million and a pre-tax operating loss of $104.7 million, which was offset in part by realized gains of $36.0 million. As of December 31, 2004, statutory surplus for the group was $150.2 million. WESTERN WATER: Wants More Time to Decide on Two Leases ------------------------------------------------------ Western Water Company asks the U.S. Bankruptcy Court for the Northern District of California in Oakland to extend, until November 21, 2005, the period within which it can elect to assume, assume and assign, or reject its unexpired leases for two office spaces located in Port Richmond, California and Franktown, Colorado. Michael Patrick George, the Debtor's chief executive and chief financial officer, says relocating its offices at this critical stage in the reorganization case would be disruptive and costly. The Debtor will need the Port Richmond offices at least through its reorganization while the Franktown offices will be needed through the sale of the Cherry Creek Project. The Debtor spends approximately $6,032 per month to maintain these leases. The Cherry Creek Project is the Debtor's main asset. The project consist of the water rights associated with an aggregate of 4,559 acres of land and certain other water rights in the Cherry Creek basin in Colorado. The Cherry Creek assets were acquired in 1992 primarily for the purpose of developing, selling or leasing water in the Cherry Creek basin. The Debtor has sold most of the land in the property but it has retained almost all water rights from the land that was sold. The sale of the Cherry Creek Project is expected to generate sufficient funds to pay all creditors. The Cherry Creek assets are carried on the Debtor's books at approximately $12.5 million but the Debtor believes it is worth substantially more than book value. The Honorable Leslie Tchaikovsky will consider the Debtor's request at a hearing scheduled at 2:00 p.m. on Sept. 7, 2005. Headquartered in Point Richmond, California, Western Water Company manages, develops, sells and leases water and water rights in the western United States. The Company filed for chapter 11 protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839). Adam A. Lewis, Esq., at the Law Offices of Morrison and Foerster, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $10 Million and $50 Million. WESTPOINT STEVENS: Gets Court Nod to Enter into Clemson Lease ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave WestPoint Stevens, Inc. and its debtor-affiliates authority to enter into the Clemson Lease. As reported in the Troubled Company Reporter on June 17, 2005, the Debtors operated an integrated sheet manufacturing complex in Clemson, South Carolina. In accordance with the rationalization of their businesses, the Debtors announced their intention to close the Clemson Complex. The Debtors are in the process of winding down the operations and marketing the property. Pursuant to the Clemson Lease, the Debtors will pay $31,583 per month for a term of two years commencing on July 1, 2005. The Debtors will have the option to renew the lease for an additional three-year period. Taxes and costs to operate and maintain the property are included in the lease and will be borne by the Landlord. In addition, the Clemson Lease contains a cap on the Landlord's damages, if any, which would arise from a breach of the Debtors' obligations under the lease. The Clemson Lease also permits the Debtors to assign the lease to a purchaser of substantially all of their assets pursuant to Section 363(b) of the Bankruptcy Code or a Chapter 11 plan. 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) WESTPOINT STEVENS: Can Walk Away from Central Valley Lease ---------------------------------------------------------- As previously reported in the Troubled Company Reporter on June 21, 2005, WestPoint Stevens, Inc. and its debtor-affiliates sought the U.S. Bankruptcy Court for the Southern District of New York's authority to: -- reject the Central Valley Lease, effective December 31, 2005; and -- enter into the Edinburgh Lease. The Debtors operated an outlet store at 660 Bluebird Court in Central Valley, New York, pursuant to a Lease, dated September 23, 1993, with Woodbury Common Partners, as predecessor-in-interest to Chelsea Property Group. The Debtors leased 8,840 square-feet in the outlet center known as "Woodbury Commons" at an annual cost of $25 per square foot plus certain promotional fees and other charges. The Central Valley Lease is not due to expire until November 30, 2011. John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that the Debtors were recently approached by the Landlord with an extremely lucrative offer to relocate the Central Valley Store to one of the Landlord's other premium outlet centers known as "Edinburgh Premium Outlets" in Edinburgh, Indiana. Edinburgh Premium Outlets is located within driving distance of four major metropolitan areas, and maintains an impressive tenant list and considerable foot traffic. After extensive, arm's-length negotiations, the Debtors reached an agreement in principle with the Landlord to relocate the Central Valley Store to the Edinburgh Premium Outlets, effective January 1, 2006, in exchange for a package worth over $470,000. Pursuant to the agreement, the Landlord will pay the Debtors: (i) $100,000 in cash to terminate the Central Valley Lease; (ii) $30,000 in cash for store closing expenses; and (iii) $20,000 for severance payments. Pursuant to the Edinburgh Lease, the Debtors will also pay a percentage rent equal to 4% of their gross sales in excess of $2,500,000 per year. This provision provides incentive for the Landlord to attract more customers to the shopping center and, in turn, boost the Debtors' sales. The Court approved the motion. 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) WILLIAMS CONTROLS: Equity Deficit Narrows to $1.8MM in June 2005 ---------------------------------------------------------------- Williams Controls, Inc., (OTC: WMCO) reported results for its 2005 third quarter ended June 30, 2005. Net sales of $17,192,000 were up 13.7% from the $15,127,000 reported in the third quarter last year. Net sales for the nine months ended June 30, 2005 increased $7,786,000, or 18.5%, to $49,928,000 from $42,142,000 for the comparable period last year. Net income for the third quarter was $1,610,000, or $.03 per diluted share, compared to $1,472,000, for the corresponding quarter in 2004. Net income for the nine months ended June 30, 2005 was $5,099,000, compared to $3,724,000, for the nine months ended June 30, 2004. The lower earnings per share in the fiscal 2005 third quarter as compared to the fiscal 2004 third quarter and the unchanged nine months earnings per share despite the higher earnings in both fiscal 2005 periods is primarily due to the increase in the number of basic and diluted shares outstanding in fiscal 2005 from converting Series B preferred shares into common shares as part of the 2004 recapitalization which occurred on September 30, 2004. The increase in 2005 sales for both the third quarter and nine months was primarily due to higher unit volumes related to our heavy truck, bus and off-road customers in North America, Europe and Asia. The higher sales volume in fiscal 2005 was the primary contributor to gross profits improving for both the current quarter and nine months. Gross profit improved to $5,844,000 in the current quarter, a 16.2% increase from the $5,029,000 in the 2004 third fiscal quarter. For the first nine months of fiscal 2005 gross profit improved to $17,027,000 from $13,332,000, a 27.7% increase from the comparable period in the prior year. Investments in our strategic growth plans, which include the establishment of sales and manufacturing operations in China earlier this year, the opening in February of a sales and technical office in Europe, and the licensing and development of non-contacting sensors for use in our electronic product lines resulted in higher operating expenses for both the quarter and the nine months ended June 30, 2005. Selling and administrative costs contributed to higher operating expenses for the quarter and nine months ended June 30, 2005. Operating expenses increased $413,000 in the third quarter of 2005 compared to the third quarter of 2004 and increased $1,317,000 for the nine months ended June 30, 2005. Interest expense on debt for both the third quarter and nine months of fiscal 2005 of $312,000 and $1,134,000, respectively, is related to the new bank debt drawn on September 30, 2004 in conjunction with the 2004 recapitalization. The Company had minimal bank debt in fiscal 2004. In the third quarter and first nine months of fiscal 2004, the Company recorded $822,000 and $2,382,000, respectively, of interest expense related to dividends and accretion on the Series B Preferred Stock. The 2004 recapitalization transaction included the elimination of all outstanding Series B Preferred Stock and the associated dividends. The other (income) expense reported in both the third quarter and nine months of fiscal 2005 is due in large part to the revaluation of the Put and Call Option agreement between the Company and American Industrial Partners, which was entered into as part of the 2004 recapitalization on September 30, 2004. Tax expense of $1,079,000 was recorded during the third quarter of fiscal 2005 at an effective rate of 40.1%. For the nine months ended June 30, 2005, the Company recorded tax expense of $3,357,000 at an effective tax rate of 39.7%. Prior to the beginning of fiscal 2005, the Company had provided for a full valuation allowance on its deferred tax assets, resulting in a minimal tax provision related to the income in the third quarter and first nine months of fiscal 2004. The Company reduced the valuation allowance during the fourth quarter of fiscal 2004. Williams Controls' President and Chief Executive Officer, Patrick W. Cavanagh stated, "Continuing strong demand for our products at our major OEM customers combined with strengthening aftermarket sales worldwide were the primary drivers for the higher sales and earnings levels for the quarter. He concluded, "We have made significant progress in positioning the company closer to our customers to take advantage of future growth opportunities around the world." Williams Controls -- http://www.wmco.com/-- is a leading designer and manufacturer of Electronic Throttle Control Systems for the heavy truck and off-road markets. As of June 30, 2005, Williams Controls' equity deficit narrowed to $1,817,000 from a $7,035,000 deficit at Sept. 30, 2004. WILSON PRODUCTS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Wilson Products, Inc. 4132 B Place Northwest Auburn, Washington 98001 Tel: (253) 458-1040 Bankruptcy Case No.: 05-20338 Type of Business: The Debtor specializes in precision machining, fabrication, assembly, and design of highly engineered components for the aerospace and defense industries. See http://www.wilsonproductsinc.com/ Chapter 11 Petition Date: August 12, 2005 Court: Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: John R. Knapp, Jr. Cairncross & Hempelmann, P.S. 524 2nd Avenue, Suite 500 Seattle, Washington 98104-2323 Tel: (206) 587-0700 Fax: (206) 587-2308 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Transtar Metals Corp. $83,037 20826 68th Avenue South Kent, WA 98032 Fatigue Technology Inc. $66,374 401 Andover Park West Seattle, WA 98188 King County Treasury $63,102 500 4th Avenue #600 Seattle, WA 98104 Sierra Alloys Company Inc. $43,940 Quality Material Inspection Inc. $35,811 Kamatics Corporation $34,305 Wilson Properties LLC $33,049 Magnetic & Penetrant Service $31,657 Westwood Mfg. Inc. $30,759 OPTI Staffing Group $28,721 The Scotland Group $28,634 Protective Coatings Inc. $27,386 University Swaging Corp. $21,950 UAC/ALU Menziken Aerospace $18,569 Swift Tool Co. Inc. $17,941 Lenape Forge $17,289 Sunshine Metals Inc. $16,191 Quality Stamping & Machining $15,919 Selway Machine Tool Co. $15,614 Hytek Finishers Company Inc. $15,350 WORLDCOM INC: Judge Gonzalez Approves Time Warner Settlement ------------------------------------------------------------ John Freomming, Esq., at Howrey Simon Arnold & White, LLP, in San Francisco, California, relates that WorldCom, Inc., its debtor- affiliates and Time Warner, Inc., are parties to the AOLTW Promotional Agreement dated June 2, 2002, pursuant to which the Debtors purchased certain media inventory from Time Warner for the promotion of their products and services. The Debtors rejected the Promotional Agreement effective as of October 8, 2002. On January 21, 2003, Time Warner filed Claim No. 16115, asserting $193.8 million in damages resulting from the Debtors' rejection of the Promotional Agreement. The Time Warner Claim also asserted: -- a secured claim based on a right of setoff; and -- an unsecured priority claim based on Section 503(b) of the Bankruptcy Code. The Debtors dispute owing the Time Warner Claim, as well as the secured and priority classification of the Time Warner Claim. To resolve their dispute, the Debtors and Time Warner agree that the Time Warner Claim will be allowed as a Class 6 WorldCom General Unsecured Claim for $40,000,000. The parties will further exchange mutual releases of all actions and claims arising out of the Time Warner Claim. Judge Gonzalez approves the parties' agreement. 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. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) WOLVERINE TUBE: S&P Junks $236 Million Senior Unsecured Notes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Huntsville, Alaska-based Wolverine Tube Inc. to 'B-' from 'B'. The outlook is negative. In addition, Standard & Poor's lowered the ratings on the $236 million of senior unsecured notes to 'CCC+' from 'B'. "The downgrade reflects a significant deterioration in financial performance owing to reduced demand for Wolverine's commercial and wholesale products and an inability to pass through higher copper prices for its wholesale products," said Standard & Poor's credit analyst Lisa Wright. "The lowering of the senior unsecured notes rating to one notch below the corporate credit rating reflects our expectations that poor market conditions will increase the likelihood that Wolverine could borrow additional amounts under its secured revolving credit and accounts receivable facilities, thereby increasing the amount of priority liabilities in the capital structure." Standard & Poor's expects Wolverine's credit metrics to remain very poor over the near term as the company continues to face high copper prices and as demand from residential air conditioning original equipment manufacturers fails to pick up as initially anticipated. Earnings in the fourth quarter of 2005 may begin to benefit from improved demand as Wolverine's original equipment manufacturer customers prepare to meet energy efficiency regulations. New residential and light commercial air conditioning units will need to comply with these stricter federally mandated requirements by the beginning of 2006. Over the next few years, until different designs are established, air conditioning units are expected to require more copper tubing to produce the required efficiency. Ratings could be lowered if liquidity declines or if EBITDA does not improve to a level that would meet increasing minimum EBITDA covenants in 2006. The outlook could be revised to stable if copper prices fall and demand for Wolverine's commercial and wholesale products improve, bringing EBITDA back to recent historical levels. YUKOS OIL: Judge Clark Approves Societe Generale Agreement --------------------------------------------------------- As reported in the Troubled Company Reporter on July 14, 2005, Yukos Oil Company asked the U.S. Bankruptcy Court for the Southern District of Texas, upon the entry of orders allowing the Fee Applications, to: (a) allow the disbursement of the Allowed Amounts from the Court Registry to Fulbright and Alvarez; and (b) return any remaining Registry Funds after the disbursements to Yukos USA. Zack A. Clement, Esq., at Fulbright & Jaworski, L.L.P., in Houston, Texas, relates that Yukos USA, Inc., deposited $21 million into the Court Registry for the benefit of Yukos Oil Company. Interest accrues on the balance of the Registry Funds, and certain expenses of Yukos' expert witnesses have been paid out of the Registry Funds pursuant to a Court Order. As of July 6, 2005, there is $20,790,230 in the Registry Funds. Societe Generale, et al. Object "The funds in the [Court] Registry that will remain after payment of Court-allowed Aggregate Fees and Costs should remain in the Registry and under no circumstances be paid to Yukos USA, [Inc.]," Societe Generale, S.A., individually and on behalf of 13 other creditors, asserts. The 13 other creditors are: (1) BNP Paribas S.A., (2) Citibank N.A., (3) Commerzbank Aktiencesellschaft, (4) Calyon S.A., (5) Deutsche Bank A.G., (6) Ing Bank, N.V., (7) KBC Bank N.V., (8) UFJ Bank Nederland N.V., (9) Hillside Apex Fund Limited, (10) Thames River Traditional Funds PLC (High Income Fund), (11) VR Global Partners LP, (12) Shepherd Investments International Limited, and (13) Stark Trading. Societe Generale serves as Coordinating Bank, Facility Agent and Security Agent under a $1,000,000,000 Loan Agreement dated September 24, 2003, between certain lenders and Yukos, as borrower. Joseph G. Epstein, Esq., at Winstead, Sechrest & Minick, PC, in Houston, Texas, relates that Yukos defaulted under the Loan Agreement. After the automatic stay in Yukos' bankruptcy case was terminated, Societe Generale commenced an action against Yukos in England to collect the obligations owing under the Loan Agreement. Mr. Epstein tells the Court that Societe Generale obtained two related foreign country money judgments in June 2005 against Yukos: (i) On June 17, 2005, the High Court of Justice, Chancery Division, in England entered a judgment against Yukos and in Societe Generale's favor totaling $472,787,663, plus $5,060,770 interest as of April 29, 2005. (ii) On June 24, 2005, the High Court entered a second judgment against Yukos and in Societe Generale's favor totaling $4,398,373, as additional interest for the period from April 29 to June 17, 2005. The English Judgments awarded Societe Generale more than $480,000,000. Mr. Epstein maintains that the English Judgments are final, conclusive and enforceable and the time for filing an appeal with regard to both English Judgments has lapsed. On July 25, 2005, Societe Generale filed in the 165th Judicial District Court of Harris County, Texas: (i) an original petition to enforce foreign country money judgment; (ii) application for temporary restraining order and preliminary and permanent injunctions; (iii) application for turn-over order against Yukos and Yukos USA; and (iv) application for pre-judgment writs of garnishment against garnishees Amegy Bank, formerly known as Southwest Bank of Texas and Yukos USA. The Texas State Court conducted a hearing on July 25, 2005, on Societe Generale's TRO application. After a fully contested hearing, the Texas State Court issued a TRO in Societe Generale's favor, which restrains Yukos and Yukos USA from taking any action to obtain the funds from the Court Registry or any action to transfer the right to obtain the funds in the Court Registry pending further orders and proceedings. Mr. Epstein contends the TRO and the requested preliminary injunction will essentially maintain the status quo until the time as hearings may be held as to the English Judgments and Societe Generale's right to enforce the English Judgments through judgment remedies under the Texas Rules of Civil Procedure, the Texas Civil Practice and Remedies Code and other applicable law. Societe General has posted a $850,000 bond in connection with the TRO. Accordingly, Societe Generale asks the Court to deny Yukos' request and maintain the status quo pending a resolution of the TRO and the matters in the Enforcement Proceedings. In a February 24, 2005 Order, the Bankruptcy Court retained jurisdiction of Yukos' bankruptcy case for the purposes of considering fee applications and determining disposition of the funds paid into the Court Registry. Mr. Epstein assures the Bankruptcy Court that the actions taken in the Enforcement Proceedings do not attempt to interfere with the Bankruptcy Court's jurisdiction over the funds or the Bankruptcy Court's prior determination that the funds belong to Yukos and not Yukos USA. Mr. Epstein further clarifies that Societe Generale does not object to the payment of the Aggregate Fees and Costs provided that the amounts do not exceed $3,410,468, and payment of the fees was specifically excluded from the TRO. On July 26, 2005, Yukos and Yukos USA filed a Notice of Removal of the Texas Enforcement Action with the United States District Court for the Southern District of Texas, Houston Division. The Texas Enforcement Action has been transferred to Judge Ewing Werlein, Jr. Yukos Responds Zack A. Clement, Esq. at Fulbright & Jaworski, LLP, in Houston, Texas, tells Judge Clark that Yukos respects the Court's jurisdiction for purposes of considering fee applications and intends to resolve issues relating to the disposition of its funds in the Court Registry. Mr. Clement notes that Yukos has hired separate litigation counsel to respond to Societe Generale's lawsuit that seeks domestication of its English court orders, restraining orders and garnishment. Yukos' litigation counsel decided to remove the Lawsuit to federal court because it bears on the February 2005 Court Order, providing that the "[Bankruptcy] Court will retain jurisdiction for the purposes of considering fee applications and determining disposition of funds paid into the Court's Registry." Yukos has also entered into negotiations with Societe Generale concerning the terms of payment of the Remaining Funds, Mr. Clement tells the Court. Mr. Clement relates that on August 3, 2005, Yukos and Societe Generale reached an agreement, where Yukos promises to consent to: (a) immediately pay Societe Generale $17.5 million of its funds that will be remaining in the Court Registry, after payment of the requested administrative expenses; and (b) the entry of a Bankruptcy Court order: -- releasing the Remaining Funds from the Court Registry; and -- ruling that the Remaining Funds be paid immediately to Societe Generale. The Court has allowed fees and expenses aggregating $3,410,468 to Fulbright & Jaworski, L.L.P., and Alvarez and Marsal, and ordered that the fees be paid out of Yukos' funds in the Court Registry. Court Decision At Yukos' behest, Judge Clark approves Yukos' agreement with Societe Generale. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOND PRICING: For the week of Aug. 8 - Aug. 12, 2005 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 Adelphia Comm. 3.250% 05/01/21 4 Adelphia Comm. 6.000% 02/15/06 2 AHI-DFLT 07/05 8.625% 10/01/07 58 Allegiance Tel. 11.750% 02/15/08 30 Allegiance Tel. 12.875% 05/15/08 28 Amer. Plumbing 11.625% 10/15/08 16 Amer. Restaurant 11.500% 11/01/06 66 American Airline 7.377% 05/23/19 75 American Airline 7.379% 05/23/16 72 American Airline 10.180% 01/02/13 72 American Airline 10.680% 03/04/13 65 American Airline 11.000% 05/06/15 69 Ameritruck Distr 12.250% 11/15/05 1 AMR Corp. 9.750% 08/15/21 73 AMR Corp. 9.800% 10/01/21 72 AMR Corp. 9.820% 10/25/11 73 AMR Corp. 9.880% 06/15/20 60 AMR Corp. 10.000% 04/15/21 67 AMR Corp. 10.200% 03/15/20 73 AMR Corp. 10.450% 03/10/11 63 AMR Corp. 10.550% 03/12/21 72 Amtran Inc. 9.625% 12/15/05 16 Anchor Glass 11.000% 02/15/13 64 Antigenics 5.250% 02/01/25 60 Anvil Knitwear 10.875% 03/15/07 55 AP Holdings Inc. 11.250% 03/15/08 15 Apple South Inc. 9.750% 06/01/06 5 Asarco Inc. 7.875% 04/15/13 70 Asarco Inc. 8.500% 05/01/25 66 AT Home Corp. 0.525% 12/28/18 7 AT Home Corp. 4.750% 12/15/06 32 ATA Holdings 12.125% 06/15/10 20 ATA Holdings 13.000% 02/01/09 20 Atlantic Coast 6.000% 02/15/34 14 Atlas Air Inc. 8.770% 01/02/11 57 Atlas Air Inc. 9.702% 01/02/08 58 Autocam Corp. 10.875% 06/15/14 67 B&G Foods Hldg. 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 9 Big V Supermarkets 11.000% 02/15/04 0 Budget Group Inc. 9.125% 04/01/06 0 Burlington North 3.200% 01/01/45 60 Calpine Corp. 4.750% 11/15/23 66 Calpine Corp. 7.750% 04/15/09 64 Calpine Corp. 7.875% 04/01/08 64 Calpine Corp. 8.500% 07/15/10 74 Calpine Corp. 8.500% 02/15/11 67 Calpine Corp. 8.625% 08/15/10 67 Calpine Corp. 8.750% 07/15/13 71 Calpine Corp. 9.875% 12/01/11 73 Cell Therapeutic 5.750% 06/15/08 71 Cellstar Corp. 12.000% 01/15/07 72 Cendant Corp. 4.890% 08/17/06 50 Charter Comm Inc. 5.875% 11/16/09 72 Charter Comm Inc. 5.875% 11/16/09 67 Charter Comm Hld 10.000% 05/15/11 74 Ciphergen 4.500% 09/01/08 72 Collins & Aikman 10.750% 12/31/11 31 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 43 Comprehens Care 7.500% 04/15/10 23 Conseco Inc. 9.000% 10/15/06 0 Covad Communication 3.000% 03/15/24 70 Covant-Call 07/05 7.500% 03/15/12 69 Cray Inc. 3.000% 12/01/24 53 Cray Research 6.125% 02/01/11 40 Delco Remy Intl 9.375% 04/15/12 68 Delta Air Lines 2.875% 02/18/24 18 Delta Air Lines 7.299% 09/18/06 45 Delta Air Lines 7.700% 12/15/05 25 Delta Air Lines 7.711% 09/18/11 60 Delta Air Lines 7.779% 11/18/05 30 Delta Air Lines 7.779% 01/02/12 42 Delta Air Lines 7.900% 12/15/09 18 Delta Air Lines 7.920% 11/18/10 58 Delta Air Lines 8.000% 06/03/23 20 Delta Air Lines 8.270% 09/23/07 47 Delta Air Lines 8.300% 12/15/29 18 Delta Air Lines 8.540% 01/02/07 60 Delta Air Lines 8.540% 01/02/07 44 Delta Air Lines 8.540% 01/02/07 36 Delta Air Lines 8.540% 01/02/07 63 Delta Air Lines 9.000% 05/15/16 17 Delta Air Lines 9.200% 09/23/14 29 Delta Air Lines 9.250% 03/15/22 17 Delta Air Lines 9.375% 09/11/07 56 Delta Air Lines 9.750% 05/15/21 16 Delta Air Lines 9.875% 04/30/08 69 Delta Air Lines 10.000% 08/15/08 18 Delta Air Lines 10.000% 05/17/09 26 Delta Air Lines 10.000% 06/01/10 36 Delta Air Lines 10.000% 06/01/11 43 Delta Air Lines 10.080% 06/16/07 44 Delta Air Lines 10.125% 06/16/09 50 Delta Air Lines 10.125% 05/15/10 15 Delta Air Lines 10.140% 08/26/12 46 Delta Air Lines 10.375% 02/01/11 15 Delta Air Lines 10.375% 12/15/22 19 Delta Air Lines 10.430% 01/02/11 50 Delta Air Lines 10.430% 01/02/11 20 Delta Air Lines 10.500% 04/30/16 47 Delta Air Lines 10.790% 03/26/14 16 Delphi Auto System 7.125% 05/01/29 73 Delphi Trust II 6.197% 11/15/33 56 Dura Operating 9.000% 05/01/09 70 Eagle-Picher Inc. 9.750% 09/01/13 75 Edison Brothers 11.000% 09/26/07 0 Empire Gas Corp. 9.000% 12/31/07 3 Exide Tech. 10.500% 03/15/13 74 Exodus Comm. Inc. 5.250% 02/15/08 0 Family Golf Ctrs 5.750% 10/15/04 0 Fedders North Am. 9.875% 03/01/14 72 Federal-Mogul Co. 7.375% 01/15/06 30 Federal-Mogul Co. 7.500% 01/15/09 25 Federal-Mogul Co. 8.160% 03/06/03 24 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.800% 04/15/07 27 Fibermark Inc. 10.750% 04/15/11 64 Finova Group 7.500% 11/15/09 47 Firstworld Comm 13.000% 04/15/08 0 Foamex L.P. 9.875% 06/15/07 30 Foamex L.P. 13.500% 08/15/05 41 Fruit of the Loom 8.875% 04/15/06 0 GMAC 6.000% 02/15/19 75 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 71 GMAC 6.250% 12/15/18 74 Golden Books Pub 10.750% 12/31/04 0 Graftech Int'l 1.625% 01/15/24 72 Gulf States STL 13.500% 04/15/03 0 HNG Internorth 9.625% 03/15/06 37 Holt Group 9.750% 01/15/06 0 Impsat Fiber 6.000% 03/15/11 75 Inland Fiber 9.625% 11/15/07 42 Integrated Elec. Sv 9.375% 02/01/09 74 Intermet Corp. 9.750% 06/15/09 46 Iridium LLC/CAP 10.875% 07/15/05 20 Iridium LLC/CAP 11.250% 07/15/05 21 Iridium LLC/CAP 13.000% 07/15/05 20 Iridium LLC/CAP 14.000% 07/15/05 20 Kaiser Aluminum & Chem. 12.750% 02/01/03 8 Kellstorm Inds 5.750% 10/15/02 0 Kmart Corp. 8.990% 07/05/10 72 Kmart Corp. 8.990% 01/05/20 64 Kmart Funding 8.800% 07/01/10 35 Kmart Funding 9.440% 07/01/18 70 Lehman Bros. Hldg 7.500% 09/03/05 57 Level 3 Comm. Inc. 2.875% 07/15/10 55 Level 3 Comm. Inc. 5.250% 12/15/11 69 Level 3 Comm. Inc. 6.000% 09/15/09 55 Level 3 Comm. Inc. 6.000% 03/15/10 57 Liberty Media 3.250% 03/15/31 74 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 62 Macsaver Financl 7.875% 08/01/03 2 Mississippi Chem 7.250% 11/15/17 4 Muzak LLC 9.875% 03/15/09 55 MSX Intl. Inc. 11.375% 01/15/08 64 Natl Steel Corp. 8.375% 08/01/06 2 Natl Steel Corp. 9.875% 03/01/09 1 New World Pasta 9.250% 02/15/09 8 Nexprise Inc. 6.000% 04/01/07 0 North Atl Trading 9.250% 03/01/12 73 Northern Pacific Railway 3.000% 01/01/47 59 Northwest Airlines 7.068% 01/02/16 68 Northwest Airlines 7.248% 01/02/12 51 Northwest Airlines 7.360% 02/01/20 42 Northwest Airlines 7.626% 04/01/10 54 Northwest Airlines 7.691% 04/01/17 68 Northwest Airlines 7.875% 03/15/08 33 Northwest Airlines 7.950% 03/01/15 68 Northwest Airlines 8.070% 01/02/15 41 Northwest Airlines 8.130% 02/01/14 37 Northwest Airlines 8.700% 03/15/07 40 Northwest Airlines 8.875% 06/01/06 58 Northwest Airlines 9.875% 03/15/07 45 Northwest Airlines 10.000% 02/01/09 40 Northwest Airlines 10.500% 04/01/09 37 Northwest Stl & Wir 9.500% 06/15/01 0 NTK Holdings Inc. 10.750% 03/01/14 54 Nutritional Src. 10.125% 08/01/09 74 Oakwood Homes 7.875% 03/01/04 16 Oakwood Homes 8.125% 03/01/09 20 O'Sullivan Ind. 13.375% 10/15/09 8 Orion Network 11.250% 01/15/07 54 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 9.125% 04/15/17 0 Owens-Crng Fiber 8.875% 06/01/02 71 Pegasus Satellite 9.750% 12/01/06 54 Pegasus Satellite 12.375% 08/01/06 54 Pegasus Satellite 12.500% 08/01/07 54 Pen Holdings Inc. 9.875% 06/15/08 63 Pixelworks Inc. 1.750% 05/15/24 69 Polaroid Corp. 11.500% 02/15/06 0 Primedex Health 11.500% 06/30/08 50 Primus Telecom 3.750% 09/15/10 20 Primus Telecom 5.750% 02/15/07 33 Primus Telecom 8.000% 01/15/14 51 Primus Telecom 12.750% 10/15/09 38 Radnor Holdings 11.000% 03/15/10 69 Raintree Resorts 13.000% 12/01/04 13 RDM Sports Group 8.000% 08/15/03 0 Read-Rite Corp. 6.500% 09/01/04 52 Realco Inc. 9.500% 12/15/07 45 Reliance Group Holdings 9.000% 11/15/00 26 Reliance Group Holdings 9.750% 11/15/03 0 Salton Inc. 12.250% 04/15/08 51 Solectron Corp. 0.500% 02/15/34 75 Specialty Paperb. 9.375% 10/15/06 66 Sun World Int'l. 11.250% 04/15/04 11 Tekni-Plex Inc. 12.750% 06/15/10 74 Tom's Foods Inc. 10.500% 11/01/04 71 Tower Automotive 5.750% 05/15/24 32 Trans Mfg Oper 11.250% 05/01/09 58 TransTexas Gas 15.000% 03/15/05 1 Tropical SportsW 11.000% 06/15/08 40 United Air Lines 6.831% 09/01/08 64 United Air Lines 7.270% 01/30/13 43 United Air Lines 7.371% 09/01/06 25 United Air Lines 7.762% 10/01/05 49 United Air Lines 7.811% 10/01/09 74 United Air Lines 8.030% 07/01/11 66 United Air Lines 8.700% 10/07/08 50 United Air Lines 9.000% 12/15/03 16 United Air Lines 9.020% 04/19/12 42 United Air Lines 9.125% 01/15/12 16 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.300% 03/22/08 35 United Air Lines 9.560% 10/19/18 41 United Air Lines 9.750% 08/15/21 16 United Air Lines 10.125% 03/22/15 47 United Air Lines 10.250% 07/15/21 16 United Air Lines 10.670% 05/01/04 16 United Air Lines 11.210% 05/01/14 17 Univ. Health Services 0.426% 06/23/20 59 US Air Inc. 10.250% 01/15/07 4 US Air Inc. 10.250% 01/15/07 2 US Air Inc. 10.250% 01/15/07 5 US Air Inc. 10.300% 01/15/08 15 US Air Inc. 10.300% 07/15/08 15 US Air Inc. 10.610% 06/27/07 5 US Air Inc. 10.610% 06/27/07 2 US Air Inc. 10.900% 01/01/08 2 US Airways Inc. 7.960% 01/20/18 69 US Airways Pass- 6.820% 01/30/14 60 Venture Hldgs 9.500% 07/01/05 0 Venture Hldgs 11.000% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 60 Werner Holdings 10.000% 11/15/07 68 WestPoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St. 5.000% 08/01/11 65 Wheeling-Pitt St. 6.000% 08/01/10 65 Winn-Dixie Store 8.875% 04/01/08 71 World Access Inc. 13.250% 01/15/08 6 Xerox Corp. 0.570% 04/21/18 30 ********* 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 ***