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/raid1/www/Hosts/bankrupt/TCR_Public/050822.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 22, 2005, Vol. 9, No. 197 Headlines ABITIBI-CONSOLIDATED: Moody's Affirms Ba3 Debt Rating ACE AVIATION: Appoints Richard McCoy to Board of Directors ACTIVANT SOLUTIONS: Buying Prophet 21 for $215 Million ACTIVANT SOLUTIONS: Moody's Reviews $177 Million Notes' B2 Ratings ADVANSTAR COMMS: Earns $15.5 Million of Net Income in 2nd Quarter ALASKA AIRLINES: Transport Workers Ratify Amended Labor Contract ALDERWOODS GROUP: Three More Class Actions Filed in Tenn. & Calif. ALLEGHENY ENERGY: Sells Wheatland Facility to PSI for $100 Mil. ALOHA AIRGROUP: Court Okays Assumption of Interline Agreements AMERISTAR CASINOS: S&P Rates Proposed $1.2 Billion Debt at BB+ APCO LIQUIDATING: Case Summary & Largest Creditors ARDENT HEALTH: Moody's Withdraws $675 Million Debts' Low-B Ratings ARTEMIS INT'L: Stockholders' Deficit Widens to $7.91M at June 30 ATA AIRLINES: Wants Mikelsons Severance Agreement Approved ATKINS NUTRITIONALS: Wants AFCO to Finance $685K Insurance Premium AVIA ENERGY: Wants Marvin Mohney as Bankruptcy Counsel AVIA ENERGY: Wants Scheef & Stone as Special Counsel BEAR STEARNS: Fitch Rates $1.5 Million Private Certificates at BB BEVERLY ENTERPRISES: Moody's Reviews $330 Million Notes' Ratings BLACK WARRIOR: Stockholders' Deficit Widens to $25.21 at June 30 BSI HOLDING: Trustee Inks Settlement Pact with Conn. General Life BUEHLER FOODS: Wants Until November 7 to Decide on Leases CABLE & WIRELESS: Fitch Affirms Long-Term BB+ Rating CATHOLIC CHURCH: Disclosure of Priests' Records Denied in Portland CATHOLIC CHURCH: Portland Wants Discovery Proceedings Protected CENTERPOINT ENERGY: 90.6% of Noteholders Tender $520MM Old Notes CITATION CORP: S&P Rates $180 Million Secured Term Loan at CCC+ CLEARWATER TIMBER: Voluntary Chapter 11 Case Summary CREST 2004-1: Fitch Affirms Low-B Ratings on Five Cert. Classes CROWN HOLDINGS: Selling Global Plastic to PAI Partners for $750MM CROWN MEDIA: Board Explores Strategic Alternatives & Possible Sale CROWN MEDIA: June 30 Balance Sheet Upside-Down by $33.9 Million DEL LABORATORIES: S&P Puts B Corporate Credit Rating on Watch DRUGMAX INC: July 2 Balance Sheet Upside-Down by $2.9 Million EL PASO: Issues Common Stock to Satisfy Purchase Contracts ENHANCED MORTGAGE: Fitch Places BB Rating on $30MM Class B Certs. FALCON PRODUCTS: Committee Says Disclosure Statement Is Deficient FALCON PRODUCTS: Says Ad Hoc Committee's Disrupting the Process FALCON PRODUCTS: Wants to Sell Property to RWMA Venture for $490K FEDERAL-MOGUL: Dist. Court Pegs Asbestos Liability at $9.4 Billion FEDERAL-MOGUL: Inks Settlement Pact with Verizon Wireless FIBERMARK: Court Unseals Examiner's Redacted Report FIREARMS TRAINING: Balance Sheet Upside Down by $28.9M at June 30 FLOWSERVE CORP: Completes $1 Billion Debt Refinancing GARDEN RIDGE: Wants Claims Objection Deadline Stretched to Jan. 7 GEO SPECIALTY: Closing of Chapter 11 Cases Moved to September 30 HAYES LEMMERZ: Four Directors Acquire 9,696 Shares of Common Stock HEARME: Board Approves $274,612 Final Cash Distribution INDYMAC ABS: Poor Collateral Performance Cues Fitch's Downgrade IT GROUP: Administrative Claims Objection Deadline is Oct. 31 JOHNSONDIVERSEY: S&P Revises Long-Term Rating Outlook to Negative KAISER ALUMINUM: Retirees Committee Balks at Disclosure Statement KB TOYS: Bankruptcy Court Confirms Amended Reorganization Plan KEYSTONE CONSOLIDATED: Hires Chilton Yambert as Special Counsel KRISPY KREME: Court Extends KremeKo's CCAA Protection to Sept. 2 KRISPY KREME: GE Canada Gets Okay to Repossess KremeKo Collateral LAND O'LAKES: Completes $315 Million Sale of CF Industries Stake LAND O'LAKES: Plans to Pay Ag Services Members $33 Million LIBERTY MEDIA: Moody's Lowers $12 Billion Notes' Ratings to Ba1 MASSACHUSETTS PORT: S&P Lowers Revenue Bonds' Rating to B MCI INC: Directors Invest 25% of Their Fees in Company Stock METRICOM INC: Has Until December 30 to Object to Claims MIDWAY AILINES: Ch. 7 Trustee Says $140MM In Claims Won't Get Paid MIRANT CORP: Wants Deutsche Bank to Produce Assignment Agreements MIRANT CORP: Wants Scope of Hiscock's Services Expanded MPOWER HOLDING: Can Object to Proofs of Claim Until Oct. 20 NBS TECHNOLOGIES: Balance Sheet Upside-Down by CDN$4.3M at June 30 NORTHWEST AIRLINES: Continues Operations Amid Mechanics' Strike OVERNITE TRANSPORTATION: Moody's Withdraws Corporate Family Rating PACIFIC MAGTRON: Micro Technology Objects to Disclosure Statement PEGASUS SATELLITE: Court Allows FTI Consulting's Final Fees PEGASUS SATELLITE: Miller Buckfire Gets $7.3-Mil. for Compensation POLAROID CORP.: Administrator's File Final Report Due by Nov. 15 POLAROID CORP.: Deadline for Objecting to Claims is Now Sept. 15 PONDEROSA PINE: Civil Action Removal Period Extended Until Oct. 5 PRECISION SPECIALTY: Admin. Claims Must Be Filed by Sept. 26 RITE AID: Expects to Raise $111.5MM from Preferred Stock Offering RITE AID: Picks Citigroup & J.P. Morgan to Underwrite Offer ROOMLINX INC: Issuing 21.4 Million Shares in SuiteSpeed Merger RUSSELL-STANLEY: Files Prepackaged Chapter 11 Petition in Delaware RUSSELL-STANLEY: Case Summary & 75 Largest Unsecured Creditors SECURECARE TECH: Equity Deficit Tops $1.24 Million at June 30 SHEFFIELD STEEL: S&P Withdraws B- Corporate Credit Rating STELCO INC: Inks Pact to Sell Stelpipe's Assets to Romspen S-TRAN HOLDINGS: Wants to Make Interim Payment to LaSalle Business S-TRAN HOLDINGS: Wants Removal Period Stretched to November 9 TELTRONICS INC: Reports $5.44 Million Equity Deficit at June 30 TOMMY HILFIGER: Filing 2004 & 2005 1st Quarter Results Next Month TOMMY HILFIGER: May Sell Business as U.S. Attorney Probe Ends TOMMY HILFIGER: Will Pay $18.1 Tax Bill at End of Government Probe TRANSTECHNOLOGY CORP: June 26 Balance Sheet Upside-Down by $6 Mil. TRINSIC INC: June 30 Balance Sheet Upside-Down by $21 Million US AIRWAYS: Court Okays Aircraft Sale to Mountain Capital WEX PHARMACEUTICALS: Substantial Losses Spur Going Concern Doubt WEX PHARMACEUTICALS: Unsecured Noteholders Demand Redemption WILLIAMS SCOTSMAN: Extending Consent Solicitation Until Aug. 31 WINN-DIXIE: Begins Store Closing Sales at 257 Locations WINN-DIXIE: U.S. Trustee Appoints 5-Member Equity Holders' Panel WINN-DIXIE: Wants to Extend Plan Filing Period to Dec. 19 WISE METALS: S&P Junks $150 Million Senior Secured Notes' Rating WORLDCOM INC: Two Officers Dispose of 8,337 Shares of Common Stock XYBERNAUT CORP: Taps Boardroom Specialist as Restructuring Advisor YUKOS OIL: Court Allows Fulbright & Jaworski's $3 Mil. Fees * Alec P. Ostrow Serves as Panelist at ABI Mid-Atlantic Conference * BOND PRICING: For the week of Aug. 15 - Aug. 19, 2005 ********* ABITIBI-CONSOLIDATED: Moody's Affirms Ba3 Debt Rating ----------------------------------------------------- Moody's Investors Service downgraded Abitibi-Consolidated Inc.'s Speculative-Grade Liquidity rating to SGL-4, indicating weak liquidity, from SGL-3, indicating adequate liquidity. Abitibi's debt is rated Ba3 and the outlook is negative. The rating action was prompted by the fact Abitibi's key credit facility matures inside of the next four quarters, in June of 2006. While it is expected that the facility's maturity date will be extended, when considered in combination with the fact the company's Accounts Receivable securitization program is not committed, and the company is not likely to generate sufficient cash flow over the next four quarters to replace the external funding were it required, Moody's SGL methodology characterizes the situation as evidencing weak liquidity. In addition, the SGL rating continues to reflect Abitibi's recent trend of weak-to-negative free cash flow together with uncertainties concerning the magnitude, sustainability and impact of the commodity price recovery. It should be noted that SGL ratings are inherently more volatile than long-term debt ratings. Whereas Moody's attempts to ensure that long-term debt ratings are valid on a "through-the-cycle" basis, SGL ratings are expected to change far more frequently. Given that Abitibi's revolving bank credit facility matures in June of 2006, and given Moody's SGL methodology and practice of reviewing SGL ratings on a quarterly basis, in the event the credit facility's maturity is extended, it is likely the SGL rating will be revised upwards. Rating Decreased: Abitibi-Consolidated Inc.: * Speculative Grade Liquidity Rating: to SGL-4 from SGL-3 Ratings affirmed: Abitibi-Consolidated Inc.: * Outlook: negative * Corporate Family: Ba3 * Senior Unsecured: Ba3 * Senior Unsecured Shelf Registration: (P)Ba3 Abitibi-Consolidated Company of Canada: * Bkd Senior Unsecured: Ba3 * Senior Unsecured Shelf Registration: (P)Ba3 Abitibi-Consolidated Finance L.P.: * Bkd Senior Unsecured: Ba3 * Senior Unsecured Shelf Registration: (P) Ba3 Donohue Forest Products Inc.: * Bkd Senior Unsecured: Ba3 Abitibi's liquidity arrangements are characterized as being weak according to Moody's SGL methodology, and accordingly, have been assigned an SGL-4 Speculative Grade Liquidity Rating. The company maintains a C$816 million revolver that is largely un-drawn and a US$500 million accounts receivable securitization vehicle that is generally more fully utilized. The bank facility matures in June 2006. While Moody's views it as adequate back-up for the approximately C$400-to-C$500 million in outstanding receivables' financing, the SGL-4 rating results from two key components of Moody's liquidity assessment methodology: 1) Since Abitibi's accounts receivable securitization facility is uncommitted (rather than committed for a term-to-maturity beyond the forward looking rolling four quarter SGL time horizon) and may be terminated (with prior notice) by the service provider, Moody's deems that an approximately equivalent portion of the company's bank credit facility is reserved for back-up purposes; and 2) Moody's SGL methodology would considers a scenario that assumes Abitibi's bank credit cannot be rolled over, and would therefore mature within 12 months (at June 30, 2006). In this circumstance, the company would likely not generate sufficient cash flow to off-set the loss of the external financing. As noted above, SGL ratings are inherently more volatile than long-term debt ratings. Whereas Moody's attempts to ensure that long-term debt ratings are valid on a "through-the-cycle" basis, SGL ratings are expected to change far more frequently. Given that Abitibi's revolving bank credit facility matures in June of 2006, and given Moody's SGL methodology and practice of reviewing SGL ratings on a quarterly basis, in the event the credit facility's maturity is extended prior to Moody's next review, there is the potential of the SGL rating being revised upwards at that time. Abitibi is in compliance with its key financial covenants (Maximum Debt-to-Capitalization (66.9% actual at June 30, 2005 versus 70% threshold), and Minimum Interest Coverage (2.2x actual at June 30th versus 1.50x threshold; threshold increases to 1.75x in 2006)). Moody's estimates that Abitibi could access the entire unused amount of the credit facility without violating its Debt- to-Capitalization covenant. While the company is expected to be modestly Free Cash Flow positive in 2005, it is not expected to turn a profit. Consequently, the cushion relative to this test may not be as great going forward. However, so long as Abitibi is not required to make material adjustments to the carrying value of idled assets that have not been written-off (beyond the C$75 million pre-tax charge related to the Kenora and Stephenville facilites that will be taken in the third quarter), and so long as additional price increases are realized during the course of the year, Abitibi should be able to manage this figure so that compliance is maintained. With Cash Flow from Operations expected to display modest improvement over the next several quarters, Moody's also expects the Interest Coverage test cushion to increase through 2005. The Ba3 ratings reflect Abitibi's very high financial leverage and the resulting very poor credit protection measures observed over the past three years. In addition, risks stemming from the ongoing evolution of communication and advertising patterns, and their consequent impact on the printing and writing papers market, including the persistent decline of the North American newsprint business, are an important influence. So too are risks related to the company's exposure to further Canadian dollar appreciation, and as well, pressure from other input costs such as wood, electricity, chemicals and labor. The company's results have been quite cyclical and are expected to remain so, with demand, price and cash flow varying widely over short periods of time. Lastly, Moody's anticipates that alternative uses of cash flow (pension funding, selected investments) are likely to adversely affect debt reduction. Despite the margin erosion caused by the above-noted exchange rate dynamic, Abitibi continues to have relatively low cash costs of production compared to its peer group. This is supported by good backwards integration into fiber supply and good energy self-sufficiency. The uncoated mechanical papers market appears to have modest positive momentum, with six price increases in past two years, and with capacity utilization in the commercial printing sector improving from a very low base. Despite its debt burden, the company has taken a leadership role in managing supply in order to balance the market, and recently announced an additional initiative that Moody's expects will assist in improving both market fundamentals and the company's position. Successive term debt maturities though 2011 provide an opportunity to de-lever if cash flow is available. While the company is not actively selling assets, it has significant flexibility to reduce debt from asset sale proceeds. The outlook is negative, and reflects Moody's assessment of the challenges facing the company in normalizing the relationship between its debt load and its cash flow at the Ba3 rating level. The North American newsprint market is characterized by declining demand, and is in the midst of a protracted restructuring with participants removing capacity in order to better balance supply with demand. With recent producer actions chasing a target that moved much more quickly than was anticipated, it is uncertain when they will catch-up, and when pricing will generate acceptable returns. In addition, the sustainability of the pricing impact of supply management initiatives is not yet proven. For a given level of demand, Moody's is skeptical that consumers have to accept pricing increases as a result of input price or exchange rate induced cost-push pressures. In the context of gradually declining demand, and with the potential of slowing economic growth, it is not certain that margins can be expanded on a sustainable basis, and consequently, margins may remain under significant pressure. Accordingly, Moody's is concerned that difficult North American market fundamentals may cause current commodity pricing to be representative of near peak levels. Therefore, while Moody's expects Abitibi's 2005 results to show improvement over the dismal results posted for the past three years, the magnitude and sustainability of the improvement are uncertain. There are also risks that decreases in North American demand may yet again accelerate, or that its relative cost position will be further eroded by appreciation of the Canadian dollar, both of which would augment the required debt-to-cash flow adjustments. Moody's expectations for a Ba3 rating include average through-the- cycle Retained Cash Flow to Total Adjusted Debt ("RCF/TD") in excess of 10%, with the related (RCF-CapEx)/TD measure in excess of 5%. Note that Moody's debt figures include adjustments to debt for off-Balance Sheet Accounts Receivable securitization vehicles, operating leases and unfunded pensions. These are made since the underlying obligations contribute incremental leverage that is debt-like. Either or both of the outlook and ratings could be upgraded if Abitibi takes specific proactive steps to permanently reduce indebtedness or increase profitability so as to ensure the above credit metrics can, on average through the commodity price cycle, be exceeded. In the absence of such proactive steps being implemented in the very near term, and in the event either or both of 2005 results and expectations for 2006 do not show dramatic improvement over the recent past, a ratings downgrade becomes more likely. A downgrade would also result from significant debt- financed acquisition activity or were liquidity arrangements to deteriorate significantly. Abitibi-Consolidated Inc., headquartered in Montreal, Quebec, is North America's leader in newsprint and uncoated mechanical paper and also has a significant lumber business. ACE AVIATION: Appoints Richard McCoy to Board of Directors ---------------------------------------------------------- ACE Aviation Holdings Inc. reported the appointment of Mr. Richard M. McCoy of Toronto to the ACE Board of Directors. Mr. McCoy replaces the Honourable Frank McKenna who left the Board in March 2005 upon his appointment as Canada's Ambassador to the United States. Prior to his retirement, Mr. McCoy was Vice Chairman, Investment Banking at TD Securities Inc. He was active in the securities industry for 35 years. Prior to joining TD Securities in 1997, Mr. McCoy was Deputy Chairman of CIBC Wood Gundy. Mr. McCoy is director of several Canadian companies and is a past Chairman of the Shaw Festival Foundation. "I want to welcome Dick McCoy to the ACE Board of Directors," said Mr. Milton. "Dick is a well known business leader and his contributions to our Board will be welcome as we continue to aggressively implement our strategy of maximizing the value of ACE's business units." ACE Aviation is the parent holding company of Air Canada and ACE's other subsidiaries. Air Canada is Canada's largest domestic and international full-service airline and the largest provider of scheduled passenger services in the domestic market, the transborder market and each of the Canada-Europe, Canada-Pacific, Canada-Caribbean/Central America and Canada-South America markets. Air Canada is a founding member of the Star Alliance network, the world's largest airline alliance group. In addition, the Corporation owns Jazz Air LP, Aeroplan LP and Destina.ca, which is an on-line travel site. The Corporation also provides Technical Services through ACTS LP, Cargo Services through AC Cargo LP and Air Canada, Groundhandling Services through ACGHS LP and Air Canada and tour operator services and leisure vacation packages through Touram LP. (Air Canada Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Oct. 5, 2004, Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Montreal, Quebec-based ACE Aviation Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P says the outlook is stable. ACTIVANT SOLUTIONS: Buying Prophet 21 for $215 Million ------------------------------------------------------ Activant Solutions Inc. has agreed to acquire Prophet 21(R), Inc. Under the terms of a definitive merger agreement entered on August 15, 2005, Prophet 21 will merge with a newly formed subsidiary of Activant. As a result, Activant will become the owner of all of the outstanding stock of Prophet 21. The aggregate purchase price is approximately $215 million, subject to certain adjustments. The transaction is expected to close in mid- September 2005, subject to the satisfaction of certain customary closing conditions. "This latest acquisition is part of Activant's ongoing growth strategy to become the premier provider of vertical business management solutions, serving small and medium-sized businesses," said Larry Jones, CEO of Activant Solutions. "Prophet 21's next-generation business management solution, CommerceCenter, and e-commerce offering, Trading Partner Connect, give Activant a more comprehensive solution set that deepens our market expertise and leadership in the wholesale distribution industry." Since 1967, Prophet 21 has worked with distributors in many wholesale distribution verticals, such as industrial, fasteners, electrical, fluid power, medical, HVAC, plumbing, tile, paper, packaging, janitorial and other vertical segments. CommerceCenter, Prophet 21's next-generation software solution, combines the power of SQL Server and the familiarity of the Windows(R) operating system in a product designed especially for distributors. Features include order and inventory management, purchasing, pricing, financial management, customer relationship management, business reporting and analysis, e-business, and warehouse management. In addition to CommerceCenter, Prophet 21 offers several solutions targeted to specific industries, including Acclaim, Array, D2K, IAS, Disc, Faspac(R), Prism(R), Turns, XL, and Stanpak(R). Activant will continue to support and enhance Prophet 21 products as well as Activant's current wholesale distribution offerings, including Activant Prelude and Activant Eagle for Distribution. Customer contact information will remain the same. "Both Activant and Prophet 21 are focused on helping distributors better run their businesses end-to-end," said Chuck Boyle, CEO of Prophet 21. "By leveraging the combined resources of both companies, we can continue to deliver quality customer service and leading-edge products that will help our customers grow their businesses to the next level." A full-text copy of the Merger Agreement is available for free at http://ResearchArchives.com/t/s?e6 About Prophet 21 Prophet 21, Inc. -- http://www.p21.com/-- develops technology solutions and services for the wholesale distribution vertical market that are designed to help distributors increase sales, improve customer service, and reduce operating costs. Founded in 1967, Prophet 21 continues to expand and enhance both its products and customer base. Prophet 21 CommerceCenter - the popular enterprise software solution for distributors - combines the power of SQL Server and the familiarity of the Windows(R) operating system in a solution designed especially for distributors. Trading Partner Connect, a leading Internet trading network for distributors, expedites sourcing, expands geographic reach, and streamlines transactions between distributors and manufacturers. Prophet 21 Professional Services include support, consulting, and educational programs designed to give distributors the maximum return on their technology investment. About Activant Solutions Activant Solutions Inc. -- http://www.activant.com/-- is a technology provider of vertical ERP solutions servicing the automotive aftermarket, hardware and home center, wholesale trade, and lumber and building materials industry segments. Over 20,000 wholesale, retail and manufacturing customer locations use Activant to help drive new levels of business performance. With proven experience and success, Activant is fast becoming an industry standard for companies seeking competitive advantage through stronger customer integration. * * * As reported in the Troubled Company Reporter on Mar. 2, 2005, Standard & Poor's Ratings Services assigned its 'B+' debt rating to Austin, Texas-based Activant Solutions Inc.'s proposed $120 million senior unsecured floating rate notes. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and senior unsecured debt ratings. The proposed floating rate notes are rated the same as the corporate credit rating, because of the minimal amount of secured debt, a $15 million revolving credit facility, in the capital structure. Proceeds from the proposed floating rate notes will primarily be used to fund the acquisition of Speedware Corporation, which was announced in January 2005. S&P says the outlook is stable. As reported in the Troubled Company Reporter on Mar. 1, 2005, Moody's Investors Service assigned a B2 rating to the proposed $120 million five-year senior unsecured floating rate notes issue of Activant Solutions Inc. Concurrently, Moody's affirmed its B2 rating on Activant's $157.0 million (face value) senior unsecured notes, due 2011. The net proceeds from this unregistered offering were earmarked to finance the company's acquisition of Speedware Corporation Inc., a publicly held company that provides ERP solutions to the hardware, lumber, building materials and wholesale trade markets. ACTIVANT SOLUTIONS: Moody's Reviews $177 Million Notes' B2 Ratings ------------------------------------------------------------------ Moody's Investors Service has placed the ratings of the Activant Solutions Inc. under review for possible downgrade. The review is prompted by the company's disclosure of its intention to acquire Prophet 21, a provider of vertical market focused enterprise software and services for the distribution industry, for approximately $215 million, which will materially elevate Activant's debt from current levels and could increase leverage measures. As stated in Moody's press release of February 25, 2005, "the ratings may encounter near term downward pressure from some combination of: 1) increased total leverage to greater than 4.75x; 2) tightened EBITDA; 3) less CapEx to interest expense to less than 1.75x; and 4) increased difficulty remaining in compliance with the revolver's financial covenant tests." This acquisition is expected to close by September 15, 2005. The review will assess Activant's integration plans for Prophet 21 and its other recent acquisitions for possible execution risks in combining operations as well as its financial position following the acquisition. Furthermore, the review will evaluate the overall risk arising from the competitive pressures in Activant's core small-to-medium enterprise resource planning marketplace and the continuing decline in Activant's traditional automotive parts aftermarket line of business, albeit giving due consideration to the company's newfound strength in servicing the lumber and building materials after market. These ratings are placed under review: * B2 rating on $120 million senior unsecured notes, due 2010 * B2 rating on $157 million (face value) senior unsecured notes due 2011; and * B1 Corporate Family Rating Activant Solutions Inc., based in Austin, Texas, provides business management solutions serving small and medium sized businesses in four primary vertical markets: * hardware and home center, * lumber and building materials, * the automotive parts aftermarket, and * wholesale distribution. For the latest quarter ending June 30 2005, the company generated $73 million in revenues and approximately $17 million in EBITDA. ADVANSTAR COMMS: Earns $15.5 Million of Net Income in 2nd Quarter ----------------------------------------------------------------- Advanstar Communications Inc., reported operating results for the second quarter and six months ended June 30, 2005. Revenue from continuing operations in the second quarter of 2005 declined 0.4% to $56.0 million from $56.2 million in the second quarter of 2004. The slight decrease in revenue was primarily due to softness in the Life Sciences publishing group. Revenue from continuing operations in the first half of 2005 increased to $146.6 million from $141.7 million in the same period of the prior year. Operating loss from continuing operations was $3.5 million in the second quarter of 2005, even with the same period of 2004. Operating loss in the second quarter of 2005 includes charges related to the Company's restructuring. Operating income from continuing operations in the first half of 2005 declined 6.8% to $18.2 million from $19.5 million in 2004. This decline is primarily due to the restructuring charges, along with planned investments in new initiatives in the Life Sciences and Powersports operating groups. Net income in the second quarter was $15.5 million compared to a net loss of $27.8 million in the second quarter of 2004. Net income in the second quarter of 2005 includes results of assets sold to Questex, which are reported separately as discontinued operations, as well as the $53.0 million gain the Company recorded on the sale of these assets. This gain was partially offset by the loss related to the extinguishment of a portion of the Company's debt. Net loss in the second quarter of 2004 includes the results of assets sold to Questex in May 2005 and those of joint ventures in French and German trade show businesses. These joint ventures were sold in 2004 and are also reported separately as discontinued operations. Net income in the first half of 2005 was $21.7 million compared to a net loss of $11.7 million in the first half of 2004. In addition to second quarter items already mentioned, net income in the first half of 2005 reflects the favorable impact of a cumulative effect of a $4.6 million accounting change related to the consolidation of Advanstar.com (adoption of FASB Interpretation No. 46R "Consolidation of Variable Interest Entities," which became effective for us on January 1, 2005). Net income in the first half of 2004 includes the results of the Company's Art trade show and publications, as well as the joint ventures in French and German trade show businesses, which were sold in 2004 and are reported separately as discontinued operations. Cash used in operating activities increased $9.9 million to $13.6 million in the first half of 2005 from $3.7 million in the same period last year, due primarily to the extinguishment of a portion of the Company's debt, severance payments associated with restructuring activities and the sale of assets to Questex. Advanstar's results for the second quarter of 2005 reflect the effects of the Company's sale of certain assets to Questex Media Group, a subsequent corporate restructuring and the repurchase of a portion of the Company's debt using the asset sale proceeds. Asset Sale On May 23, 2005, Advanstar completed the sale of its Information Technology & Communications, Travel & Hospitality, Beauty, Home Entertainment, Abilities and Portfolio groups to Questex and streamlined its business to focus on publishing, trade show and other operations within its Fashion, Life Sciences and Powersports groups. The sale resulted in the Company recording a $53 million gain in the second quarter on the sale of these assets. Corporate Restructuring Following the sale of assets to Questex, the Company began a corporate restructuring process, which included a workforce and leased office space reduction. The reduction of leased office space in: * New York; * Milford, Connecticut; and * Santa Ana, California, resulted in a charge of $800,000 in the second quarter for future facility rental payments, net of expected sublease income. Workforce reductions resulted in a second quarter charge of $1.2 million for severance costs. The Company expects the workforce reduction to be completed by the end of the year, with severance payments continuing into 2006. At the same time, the Company expects to record additional charges of approximately $700,000 related to the restructuring in future quarters of 2005. The estimated annualized cost savings of the Company's restructuring is approximately $9 million. Debt Extinguishment During the second quarter, $8.7 million of the Company's fixed rate notes and $117.8 million of floating rate notes were retired. As a result, $12.6 million in losses were incurred in relation to the extinguishment of a portion of our debt. Advanstar's debt at the end of the second quarter was reduced 25% compared to the same period of 2004. Joe Loggia, President and CEO of Advanstar, said: "The second quarter was a period of significant activity for Advanstar, as we implemented several strategic initiatives to strengthen our business. First, our successful disposition of certain non-core assets firmly focuses our business on markets where our product positions, teams and core competencies converge with market and industry dynamics to maximize our potential. Second, we began the process of restructuring our organization, which will enhance our operational effectiveness, generate significant cost savings and better position the Company for long-term growth. And third, we reduced our debt. "Advanstar's current portfolio in Fashion, Life Sciences and Powersports includes premier trade shows and conferences and leading publications. Our plan is to continue to grow and diversify our revenue streams by developing innovative products that fill gaps along the communications supply chain and improve the connection between our customers and theirs. We have already implemented several new initiatives aimed at growing categories within our existing products and markets and we have also launched several new products into adjacent markets." Mr. Loggia continued. Advanstar Communications Inc. -- http://www.advanstar.com/-- is a leading worldwide media company providing integrated marketing solutions for the Fashion, Life Sciences and Powerports industries. Advanstar serves business professionals and consumers in these industries with its portfolio of 55 expositions and conferences, 55 publications and directories, 75 electronic publications and Web sites, as well as educational and direct marketing products and services. Market leading brands and a commitment to delivering innovative, quality products and services enables Advanstar to "Connect Our Customers With Theirs." Advanstar has roughly 1,000 employees and currently operates from multiple offices in North America and Europe. * * * As reported in the Troubled Company Reporter on Apr. 8, 2005, Standard & Poor's Ratings Services revised its outlook on Advanstar Communications Inc. to negative from stable. At the same time, Standard & Poor's affirmed its existing ratings on the company, including its 'B' corporate credit rating. The Duluth, Minnesota-based business-to-business media firm, which is analyzed on a consolidated basis with its parent company, Advanstar Inc., had $753 million in consolidated debt on Dec. 31, 2004. ALASKA AIRLINES: Transport Workers Ratify Amended Labor Contract ---------------------------------------------------------------- Alaska Airlines and the Transport Workers Union jointly disclosed the ratification of an amended contract extending the current agreement covering the airline's 34 dispatchers to June 30, 2010. The five-year contract in effect since July 1, 2002, called for a reconsideration of wages in 2005. The extended contract includes a redistribution of planned wage increases through 2010 and other contract updates and clarifications resolving issues raised by the union and the airline. "This extended deal offers Alaska's dispatchers stability over the next five years in an uncertain environment," said Tom Lynch, TWU, Local 542 Alaska Airlines Section Chairman. "I appreciate the work and commitment of the union leadership to reaching a collaborative agreement," said Kevin Finan, Alaska's vice president of flight operations. Alaska's dispatchers are responsible for flight planning and tracking to ensure the safety and progress of each flight conducted by the airline from origin to destination. They are the carrier's primary command and control link with Alaska pilots, providing en route weather, airport facility and other flight safety information. TWU represents more than 120,000 workers in America's transportation industries in virtually all classes and crafts. It maintains contracts for its members working at 27 airlines. Alaska Airlines and its sister carrier, Horizon Air, together serve more than 80 cities in Alaska, the Lower 48, Canada and Mexico. Seattle-based Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. The company and its sister carrier, Horizon Air, together serve 80 cities in Alaska, the Lower 48, Canada and Mexico. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services lowered its ratings on Alaska Airlines Inc.'s 9.5% equipment trust certificates due April 12, 2012, to 'B+' from 'BB', as part of an industry wide review of aircraft-backed debt. All other ratings on Alaska Airlines and parent Alaska Air Group Inc., including the 'BB-' corporate credit ratings on both, are affirmed. The outlook remains negative. "The lower rating on the ETCs reflects Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of multiple, further bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Betsy Snyder. "Downgrades of aircraft-backed debt securities were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the analyst continued. ALDERWOODS GROUP: Three More Class Actions Filed in Tenn. & Calif. ------------------------------------------------------------------ In a filing with the Securities and Exchange Commission, Kenneth A. Sloan, executive vice president and chief financial officer of Alderwoods Group, Inc., reports that three more class action complaints have been filed against the company and certain funeral home service providers and casket makers: (A) In May 2005, Ralph Lee Fancher filed a complaint against Alderwoods and other defendants in the United States District Court for the Eastern District of Tennessee at Greenville, on behalf of himself and two proposed classes of consumers: (1) All others similarly situated in the States of Tennessee, Kansas and South Carolina; and (2) All others similarly situated in the States of Alabama, Arizona, Florida, Hawaii, Iowa, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, South Dakota, Vermont, West Virginia, Wisconsin and the District of Columbia. (B) Maria Magsarili and certain plaintiffs filed a purported class action complaint against the Alderwoods and other defendants in the United States District Court for the Northern District of California, in July 2005. (C) Richard Sanchez, on behalf of himself and similarly situated plaintiffs who purchased funeral goods and services from Alderwoods, filed a complaint in the Superior Court of the State of California for the County of Los Angeles, Central District, in February 2005. The Plaintiffs allege that the defendants, including Alderwoods, violated federal and state anti-trust laws by engaging in anti- competitive practices with respect to sales of caskets and overcharged for caskets. The Plaintiffs seek to recover an unspecified amount of monetary damages, attorneys' fees, costs and unspecified injunctive and declaratory relief. Mr. Sloan relates that since the Complaints are in their preliminary stages, no discovery has occurred. Thus, Alderwoods cannot quantify its ultimate liability, if any, for the payment of damages. Nevertheless, Alderwoods believes the Plaintiffs' claims are without merit and intends to vigorously defend itself in the Complaints. Alderwoods Group is the second largest operator of funeral homes and cemeteries in North America, based upon total revenue and number of locations. As of June 19, 2004, the Company operated 716 funeral homes, 130 cemeteries and 61 combination funeral home and cemetery locations throughout North America. Of the Company's total locations, 59 funeral homes, 53 cemeteries and four combination funeral home and cemetery locations were held for sales as of June 19, 2004. The Company provides funeral and cemetery services and products on both an at-need and pre-need basis. In support of the pre-need business, the Company operates insurance subsidiaries that provide customers with a funding mechanism for the pre-arrangement of funerals. * * * As previously reported in the Troubled Company Reporter on July 27, 2004, Standard & Poor's Ratings Services it affirmed its 'B+' corporate credit rating on the funeral home and cemetery operator Alderwoods Group, Inc., and assigned its 'B' debt rating to the company's proposed $200 million senior unsecured notes due in 2012. At the same time, Standard & Poor's also assigned its 'BB-' senior secured bank loan rating and its '1' recovery rating to Alderwoods' proposed $75 million revolving credit facility, which matures in 2008, and to its proposed term loan B, which matures in 2009. The existing term loan had $242 million outstanding at March 27, 2004, but will be increased in size. The bank loan ratings indicate that Standard & Poor's expects a full recovery of principal in the event of a default, based on an assessment of the loan collateral package and estimated asset values in a distressed default scenario. The company is expected to use the proceeds from the new financings to redeem $320 million of 12.25% senior unsecured notes, repay a $25 million subordinated loan, and fund transaction costs. As of March 27, 2004, the company had $614 million of debt outstanding. ALLEGHENY ENERGY: Sells Wheatland Facility to PSI for $100 Mil. --------------------------------------------------------------- Allegheny Energy, Inc.'s (NYSE: AYE) subsidiary, Allegheny Energy Supply Company, LLC, completed the sale of its Wheatland generating facility to Cinergy Corporation's affiliate, PSI Energy, Inc., for approximately $100 million. "This sale represents another in a series of strategic divestitures that have helped us reduce our debt and refocus on our core business," said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. Wheatland is a 512-megawatt, gas-fired peaking facility located in Knox County, Indiana. The transaction completes the sale agreement announced by Allegheny on May 10. Banc of America Securities Inc. advised Allegheny on the transaction. About PSI Energy PSI Energy, Inc., produces, transmits, distributes and sells electric energy in North Central, Central and Southern Indiana. The Company provides regulated transmission and distribution services to approximately 2.2 million customers. About Allegheny Energy Headquartered in Greensburg, Pa., Allegheny Energy -- http://www.alleghenyenergy.com/-- is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. * * * As reported in the Troubled Company Reporter on June 15, 2005, Moody's Investors Service assigned a Senior Implied rating of Ba1 to Allegheny Energy, Inc. and also assigned a Speculative Grade Liquidity Rating of SGL-2. This is the first time that Moody's has assigned both such ratings to AYE. The company's other ratings, including the Ba2 senior unsecured rating, remain unaffected. The Ba1 Senior Implied rating reflects the credit profile of the AYE corporate family of companies, which includes investment grade utility operating subsidiaries as well as a holding company whose Ba2 senior unsecured rating reflects its still high balance leverage. The Ba1 Senior Implied rating also reflects the company's improved financial performance and the expectation that AYE's credit profile will continue to improve over the next 2 to 3 years, with further debt reduction and substantial improvement in cash flow, and that there will be a reasonably supportive regulatory response to rate filings to recover increased costs and outlays for environmental spending. ALOHA AIRGROUP: Court Okays Assumption of Interline Agreements -------------------------------------------------------------- The Honorable Robert J. Faris of the U.S. Bankruptcy Court for the District of Hawaii allowed Aloha Airgroup, Inc., and Aloha Airlines, Inc., to assume Clearinghouse and Multilateral Agreements with Airlines Clearing House, Inc., and International Air Transport Association Clearing House, pursuant to Section 365 of the U.S. Bankruptcy Code. As previously reported in the Troubled Company reporter on July 5, 2005, all major air carriers participate in some form of interline agreement with other carriers to: (a) allow airlines to accept each other's tickets for transportation over the other carrier's system, and (b) enable passengers' luggage to be transferred between airlines. ACH conducts settlements for carriers based in the United States and some other countries in the Western Hemisphere. ICH conducts settlements for other carriers worldwide. These clearinghouses, in turn, are parties to an inter-clearance agreement, in which settlements are made between participants in ACH and participants in ICH. Aloha Airlines' business relies on its participation in ACH and ICH settlements. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERISTAR CASINOS: S&P Rates Proposed $1.2 Billion Debt at BB+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating and a recovery rating of '1' to Ameristar Casinos Inc.'s proposed $1.2 billion senior secured credit facility, indicating Standard & Poor's expectation that the lenders would realize a high expectation of full recovery of principal (100%) in the event of payment default. The bank loan is rated one notch above the corporate credit rating given this recovery expectation. Proceeds from the proposed bank facility will be used to refinance existing debt and for fees and expenses. At the same time, Standard & Poor's affirmed its ratings on the Las Vegas, Nevada-based casino owner and operator, including its 'BB' corporate credit rating. The rating on the company's existing bank facility will be withdrawn once the new facility closes. The outlook remains stable. Total debt outstanding at June 30, 2005, was about $734 million. "We expect Ameristar's casino portfolio to continue to generate a stable source of cash flow that supports current credit measures," said Standard & Poor's credit analyst Peggy Hwan. In addition, it is expected that the company has built adequate debt capacity to support management's growth objectives at the rating level. APCO LIQUIDATING: Case Summary & Largest Creditors -------------------------------------------------- Lead Debtor: APCO Liquidating Trust c/o Mr. A.W. Green 4913 Northwest 32nd Street Oklahoma City, OK 73122 Bankruptcy Case No.: 05-12355 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- APCO Missing Stockholder Trust 05-12356 Type of Business: The Debtors are created in behalf of the common stockholders of APCO Oil Corporation. Chapter 11 Petition Date: August 19, 2005 Court: District of Delaware Debtors' Counsel: John Henry Knight, Esq. Rebecca L. Booth, Esq. Richards, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 Tel: (302) 651-7700 Fax: (302) 651-7701 Debtors' Special Environmental Counsel: Bell, Boyd & Lloyd, L.L.C. Debtors' Claims & Noticing Agent: Delaware Claims Agency, LLC Estimated Assets Estimated Debts ---------------- --------------- APCO Liquidating $10 Million to $10 Million to Trust $50 Million $50 Million APCO Missing Less than $50,000 Less than $50,000 Stockholder Trust APCO Liquidating Trust's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Husch & Eppenberger, LLC Professional Fees $57,904 1200 Main Street, Suite 1700 Kansas City, MO 64105 Attn: Sandra Sterling City of Wichita, Kansas Judgment Unknown 455 North Main Street Wichita, KS 67202 Attn: Kay Johnson Director Gilbert & Mosley Project APCO Missing Stockholder Trust's Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Unknown/Various State Agencies Escheat Unknown ARDENT HEALTH: Moody's Withdraws $675 Million Debts' Low-B Ratings ------------------------------------------------------------------ Moody's Investors Service has withdrawn all ratings for Ardent Health Services, Inc. The company has repaid its bank facility and tendered its 10% senior subordinated notes with proceeds of the sale of its behavioral health segment to Psychiatric Solutions, Inc. The bank facility has been replaced with a new facility, which is unrated by Moody's. Ratings withdrawn: * Corporate family rating, B1 * $150 million senior secured revolving credit facility, rated B1 * $300 million senior secured term loan B, rated B1 * $225 million senior subordinated notes, rated B3 ARTEMIS INT'L: Stockholders' Deficit Widens to $7.91M at June 30 ---------------------------------------------------------------- Artemis International Solutions Corporation (OTCBB: AMSI) reported its financial results for the second quarter ended June 30, 2005. Artemis reported $12.4 million in total revenue for the second quarter ended June 30, 2005, with software license revenue of $3.3 million, at levels comparable to the second quarter of 2004. Software license and support revenue increased to 62.7% of total revenue, compared to 55.5% in the same quarter of 2004. The Company's strategic product platform, Artemis 7, grew by 63% and represented 70% of total software license revenue, compared to 42% for the second quarter of 2004. The Company reported a non-GAAP loss of $(0.2) million, for the second quarter of 2005, compared to a non-GAAP loss of $(0.6) million, in the second quarter of 2004. Non-GAAP loss for the second quarter of 2005 excludes $0.6 million in amortization expenses, while non-GAAP loss for the second quarter of 2004 excludes $1.0 million in amortization expenses and $0.1 million in restructuring charges. On a US GAAP basis, the Company's net loss for the second quarter of 2005 was $(0.9) million. This compares to a net loss of $(1.8) million, for the second quarter of 2004. "Sales generated by our flagship product, Artemis 7, continue to grow strongly," said Patrick Ternier, President and CEO of Artemis. "From a license perspective, we have now reached an inflection point where the growth in Artemis 7-based solutions coupled with our EVMS solution should outpace the decline in other areas, setting the stage for future software growth. That would be combined with the stabilization of our services revenue and some growth in our recurring support revenue," Mr. Ternier added. "These results have been achieved, although we have not yet capitalized on the measures we have taken over the last months to improve our sales performance in the US, including hiring an experienced executive to lead the region. Those steps should help rebalance our geographical revenue mix." Mr. Ternier further stated, "Whilst we have taken significant steps in restructuring the company, we are continuing to review our worldwide operations for additional efficiencies to further improve our bottom line and strengthen our balance sheet, without compromising our commitment to customer satisfaction." For the six months ended June 30, 2005, Artemis reported $24.3 million in revenue, a non-GAAP loss of $(0.9) million, and a US GAAP net loss of $(2.1) million. This compares to $27.0 million in revenue, a non-GAAP loss of $(2.2) million, and a US GAAP net loss of $(5.7) million or $(0.57) per common share for the same period in 2004. Non-GAAP loss for the six months ended June 30, 2005, excludes amortization expense of $1.3 million. Non-GAAP loss for the six months ended June 30, 2004 excludes amortization expense of $2.0 million and restructuring charges of $1.4 million. During the quarter, Artemis continued to add significant new software sales for its solutions in the Americas, Europe, Asia Pacific, and Japan, including: * New Product Development: LG Chem, Turbomeca, JATCO, Tanabe Seiyaku, Maruho, Cummins, Gambro * IT Management and Governance: France Telecom Transpac, Calyon, HSH Nordbank, SOGEI, SSB, Telecom Italia, Telef�nica Moviles Spain, Hitachi Construction Machinery * Strategic Asset Optimization: PSEG, Michels Kenny, Ergon Energy, Knolls Atomic Power Laboratory * Public Investment Management: Parliamentary & Health Service Ombudsman The Company also announced that, effective immediately, Steve Yager has resigned as the Chairman of the Company's Board of Directors and Board member Pekka Pere has accepted the position. Mr. Yager stated: "I have encountered intensifying time pressures in my role as Company chairman, finding it increasingly difficult to balance my Chairman's role with my other professional commitments. Mr. Pere is well positioned to help the Company move to its next level of performance." The Company thanks Mr. Yager for his years of service on the Board, and wishes him continued success in his professional endeavors. Artemis International Solutions Corporation, a Delaware Corporation, including its subsidiaries, is one of the world's leading providers of Investment Planning and Control TM software and services. As of June 30, 2005, Artemis International's equity deficit widened to $7,915,000 from a $5,805,000 deficit at Dec. 31, 2004. ATA AIRLINES: Wants Mikelsons Severance Agreement Approved ---------------------------------------------------------- ATA Airlines, Inc., its debtor-affiliates and J. George Mikelsons, along with the input of the Official Committee of Unsecured Creditors and Southwest Airlines, Inc., agreed that, as the Debtors are formulating their reorganization plan for their emergence from Chapter 11, the time is opportune for Mr. Mikelsons to retire from his post as ATA Holdings Corp.'s Chief Executive Officer. Mr. Mikelsons is 67 years old and is the founder of ATA. According to Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, the principal terms of the severance agreement between Mr. Mikelsons and the Debtors are: (i) Mr. Mikelsons will retire from his position as CEO of ATA Holdings and from any other officer positions with the Debtors no later than August 31, 2005. After the Retirement Date, he will continue to serve as non- executive Chairman of ATA Holdings until the earlier of the effective date of a confirmed plan of reorganization or December 31, 2005; (ii) As of the Retirement Date, Mr. Mikelsons' salary will be terminated, and he will receive $650,000 as severance pay, less the amount of applicable federal and state withholding and employment taxes. The severance pay will be payable on a fixed bi-weekly term over a period of one year beginning two weeks following the Retirement Date; (iii) The Severance Benefit will be deemed fully earned on the Retirement Date and will not be affected in the event of Mr. Mikelsons' death; (iv) Through the Severance Period, Mr. Mikelsons agrees to be subject to confidentiality and certain restrictive non- compete covenants. Mr. Mikelsons will execute an appropriate confidentiality and non-competition agreement for a two-year period to commence at the end of the Severance Period; (v) As consideration to Mr. Mikelsons for the Non-Compete Agreement, the Debtors will pay him the annual gross sum of $200,000, payable quarterly. All Non-Compete Payments will be paid to Mr. Mikelsons as a credit against certain obligations of Mr. Mikelsons to the Debtors aggregating approximately $625,000 as of August 1, 2005 -- the JGM Obligations; and (vi) The Non-Compete Payments will be deemed fully earned in the event of Mr. Mikelsons' death, with any Non-Compete Payments owed to him at that time applied as a credit to the JGM Obligations. The Debtors will also give Mr. Mikelsons and Mrs. Mikelsons lifetime positive space travel on ATA. Mr. Mikelsons and Mrs. Mikelsons may receive a distribution of their vested 401(k) plan benefits subject to terms of the Plan. The MetLife group term life insurance policy provided by ATA may be converted into a personal policy of Mr. Mikelsons at Mr. Mikelsons' expense in accordance with the terms of the policy. After the Retirement Date, the Debtors also agree to continue to include Mr. Mikelsons and Mrs. Mikelsons among the individuals covered in any health insurance plans offered by the Debtors. After the Retirement Date, Mr. Mikelsons may continue using through December 2007 the 2005 Jeep Grand Cherokee owned by the Debtors. The Debtors believe that the Severance Terms recognize Mr. Mikelsons' substantial and longstanding contributions to the Debtors, and are reasonable and fair either party. Ms. Hall adds that the implementation of the Severance Terms will facilitate a smooth, effective transition of the Debtors' senior leadership, which is essential to preserving the value of the Debtors' estates and ensuring the continued prosperity of Debtors' various ongoing businesses. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATKINS NUTRITIONALS: Wants AFCO to Finance $685K Insurance Premium ------------------------------------------------------------------ Atkins Nutritionals, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to incur secured post-petition financing from AFCO Premium Credit LLC. The Debtors will use the funds to finance their insurance premium obligations. The Debtors owe approximately $1,034,000 in outstanding insurance premium obligations to Nutmeg Insurance Company, Lexington Insurance Company, and York Insurance Company of Maine. The insurance premiums consist of: a) general liability insurance with an annual premium of $184,915; b) umbrella liability insurance with an annual premium of $435,810; c) excess umbrella liability insurance with an annual premium of $375,000; and d) taxes and broker fees totaling $37,838. The general liability insurance, purchased from Nutmeg Insurance, provides coverage for general products liability claims against the Debtors. The umbrella liability and excess umbrella liability insurance premiums, purchased from Lexington Insurance and York Insurance respectively, provide excess coverage for general products liability and health care professional liability claims in the event the primary coverage limits are exceeded. As a condition for financing the full amount of the insurance policies, the Debtors will grant AFCO Premium a security interest in the policies. The security interest will extend to all unearned insurance premiums that may become payable under the policies and loss payments that reduce the unearned insurance premiums subject to any mortgagee or loss payee interests. Pursuant to the terms of the Financing Agreement, the Debtors propose to pay AFCO: a) a cash down payment equal to 35% of the insurance premiums on August 25, 2005, totaling approximately $361,750; and b) seven equal installment payments of $97,840 per month, with an aggregate financed amount of $685,000. The monthly installment payments include finance charge equal to an annual percentage rate of interest of 5.809%. The Debtor will make the initial monthly payment on August 25, 2005. A copy of the Financing Agreement is available for free at: http://bankrupt.com/misc/AtkinsNutritionals_Financing.pdf Headquartered in New York, New York, Atkins Nutritionals, Inc. -- http://atkins.com/-- sell nutritional supplements based on its founder, Dr. Robert C. Atkins' nutritional philosophy of controlled-carbohydrate lifestyle. The Debtors also sell more than 100 food products and nutritional supplements, as well as informational products such as diet books and cookbooks. Atkins' products are sold in more than 30,000 stores in North America under numerous trademarks. The Company along with Atkins Nutritionals Holdings, Inc., Atkins Nutritionals Holdings II, Inc., and Atkins Nutritionals (Canada) Limited, filed for chapter 11 protection on July 31, 2005 (Bankr. S.D.N.Y. Case No. 05-15913). Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represents the Debtors in the United States, while lawyers at Osler, Hoskin & Harcourt, LLP, represents the Debtors in Canada. As of May 28, 2005, they listed $265.6 million in total assets and $323.2 million in total debts. AVIA ENERGY: Wants Marvin Mohney as Bankruptcy Counsel ------------------------------------------------------ Avia Energy Development, LLC, and Avia de Mexico S. de R.l. de CV ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Marvin R. Mohney, Esq., of Dallas, Texas, as their general bankruptcy counsel. Mr. Mohney is expected to: (a) furnish legal advice to the Debtor with regard to its powers, duties and responsibilities as a debtor-in- possession and the continued management of its affairs and assets under chapter 11; (b) prepare, for and on behalf of the Debtor, all necessary applications, motions, answers, orders, reports and other legal papers; (c) prepare a disclosure statement and plan of reorganization and other related services; (d) investigate and prosecute preference and fraudulent transfers actions arising under the avoidance powers of the Bankruptcy Code, including rendering assistance and advice to such other counsel as the Court may authorize the Debtor to engage for special purposes; and (e) perform all other legal services for the Debtor, which may be necessary. Mr. Mohney will bill the Debtors $225 per hour for his professional services. The Debtors believe that Mr. Mohney is a "disinterested person" as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Dallas, Texas, Avia Energy Development, LLC, and Avia de Mexico S. de R.l. de CV filed for chapter 11 protection on August 18, 2005 (Bankr. N.D. Tex. Case No. 05-39339). Kimberly A. Elkjer, Esq., Scheef & Stone, LLP, and Marvin R. Mohney, Esq., in Dallas, Texas, represent the Debtors. When the Debtors filed for protection from their creditors, they listed $2,298,509 in consolidated assets and $11,768,065 in consolidated debts. AVIA ENERGY: Wants Scheef & Stone as Special Counsel ---------------------------------------------------- Avia Energy Development, LLC, and Avia de Mexico S. de R.l. de CV ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Scheef & Stone, LLP, as their special bankruptcy counsel. Scheef & Stone will, inter alia: (a) represent the Debtors in connection with two consolidated litigation matters pending in the 192nd Judicial District Court of Dallas County, Texas; (b) represent the Debtors in connection with the Clay Tanks case pending in the 381st District Court of Starr County, Texas; (c) represent the Debtors in connection with a Travelers Casualty and Surety Company of America case pending in the 381st Judicial District Court of Starr County, Texas. Kimberly A. Elkjer, Esq., a partner at Scheef & Stone, LLP, discloses that the Firm received a $65,544 prepetition retainer. As of Aug. 17, 2005, the Debtor still owes $19,576 to the Firm. James C. Musselman, the Debtors' president, assures the Firm that it will be paid before the end of August 2005. The current hourly rates of the Firm's professionals are: Designation Hourly Rate ----------- ----------- Partners $250 - $300 Associates $170 - $250 Paralegals $90 - $120 The Debtors assure the Court that Scheef & Stone, LLP, is a "disinterested person" as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Dallas, Texas, Avia Energy Development, LLC, and Avia de Mexico S. de R.l. de CV filed for chapter 11 protection on August 18, 2005 (Bankr. N.D. Tex. Case No. 05-39339). Kimberly A. Elkjer, Esq., Scheef & Stone, LLP, and Marvin R. Mohney, Esq., in Dallas, Texas, represent the Debtors. When the Debtors filed for protection from their creditors, they listed $2,298,509 in assets and $11,768,065 in debts. BEAR STEARNS: Fitch Rates $1.5 Million Private Certificates at BB ----------------------------------------------------------------- Bear Stearns Asset Backed Securities Trust 2005-SD3, asset-backed certificates, series 2005-SD3 are rated by Fitch Ratings as follows: Group 1 Certificates: -- $209,036,000 class I-A-1 'AAA'; -- $12,878,000 class I-M-1 'AA'; -- $6,558,000 class I-M-2 'A'; -- $1,789,000 class I-M-3 'A-'; -- $1,431,000 class I-M-4 'BBB+'; -- $1,192,000 class I-M-5 'BBB'; and -- $1,193,000 class I-M-6 'BBB-'. Group 2 Certificates: -- $107,186,000 classes II-A-1 and II-A-2 'AAA'; -- $7,778,000 class II-M-1 'AA'; -- $3,668,000 class II-M-2 'A'; -- $2,466,000 class II-M-3 'BBB'; -- $ 632,000 class II-M-4 'BBB-'; and -- $1,454,000 privately offered class II-B 'BB'. The 'AAA' rating on the Group 1 certificates reflects the 13.25% credit enhancement provided by the 5.40% class I-M-1, 2.75% class I-M-2, 0.75% class I-M-3, 0.60% class I-M-4, 0.50% class I-M-5, and 0.50% class I-M-6, along with initial overcollateralization and monthly excess interest. The initial OC for the Group 1 certificates is 1.85% with a target OC of 2.75%. The 'AAA' rating on the Group 2 certificates reflects the 15.85% initial credit enhancement provided by the 6.15% class II-M-1, 2.90% class II-M- 2, 1.95% class II-M-3, 0.50% class II-M-4 and 1.15% class II-B, along with initial OC and monthly excess interest. The initial OC for the Group 2 certificates is 2.60% with a target OC of 3.20%. In addition, the ratings on the certificates reflect the quality of the underlying collateral, and Fitch's level of confidence in the integrity of the legal and financial structure of the transaction. The Group 1 mortgage pool consists of fixed rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $238,490,181. As of the cut-off date, July 1, 2005, the mortgage loans had a weighted average loan-to-value ratio of 82.25%, weighted average coupon of 6.427%, and an average principal balance of $137,856. Single-family properties account for 80.92% of the mortgage pool, two- to four-family properties 3.64%, and condos 4.27%. Approximately 89.74% of the properties are owner occupied. The three largest state concentrations are California (11.06%), Florida (9.45%) and Texas (8.65%). The Group 2 mortgage pool consists of adjustable rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $126,473,168. As of the cut-off date, July 1, 2005, the mortgage loans had a weighted average LTV of 79.45%, WAC of 6.099%, and an average principal balance of $194,275. Single-family properties account for 77.46% of the mortgage pool, two- to four-family properties 4.05%, and condos 11.78%. Approximately 87.18% of the properties are owner occupied. The three largest state concentrations are California (19.41%), Florida (12.40%), and New Jersey (5.88%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press releases issued May 1, 2003 entitled, 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation' and Feb. 23, 2005 entitled, 'Fitch Revises RMBS Guidelines for Antipredatory Lending Laws', available on the Fitch Ratings web site at http://www.fitchratings.com/ Bear Stearns Asset Backed Securities I LLC deposited the loans into the trust, which issued the certificates, representing beneficial ownership in the trust. JPMorgan Chase Bank, N.A. will act as trustee. Wells Fargo Bank N.A., rated 'RMS1' by Fitch, will act as master servicer for this transaction. BEVERLY ENTERPRISES: Moody's Reviews $330 Million Notes' Ratings ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Beverly Enterprises, Inc. under review for possible downgrade. This action follows the announcement by Beverly that the company has entered into a definitive agreement to be acquired by North American Senior Care for $12.80 per share, or $1.9 billion on a fully diluted basis, including the repayment of the company's debt. This transaction resulted from the March 2005 decision to pursue the sale of the company through an auction process. In March 2005, Moody's revised the outlook to developing reflecting the significant uncertainty related to whom the ultimate buyer would be or what type of capital structure the company would have going forward. While the recent announcement clarifies some of those uncertainties, the review reflects the fact that terms of the transaction are subject to changes that could affect the expected pro forma capital structure. Moody's notes that the transaction is subject to approval of the shareholders of the company, legal and regulatory approvals, and the completion of the intended financing. If the transaction closes in accordance with the terms announced, including the repayment of the company's debt, Moody's would confirm and withdraw the ratings of Beverly at that time. The transaction is expected to be financed through the contribution of $329 million in equity provided by an investor group, $1.325 billion in debt financing from Wachovia Bank, and $550 million in operating loans from CapitalSource Financing LLC. The transaction is expected to close in early 2006. These ratings were placed under review for possible downgrade: * Corporate family rating, Ba3 * $90 million senior secured revolving credit facility due 2007, Ba3 * $135 million senior secured term loan B due 2008, rated Ba3 * $200 million 9.625% senior unsecured notes due 2009, rated B1 (approximately $9 million outstanding at December 31, 2004) * $215 million 7.875% senior subordinated notes due 2014, rated B2 * $115 million 2.75% convertible subordinated notes due 2033, rated B2 Beverly Enterprises, Inc., headquartered in Fort Smith, Arkansas is a provider of post-acute, healthcare in the United States. As of December 31, 2004, the company operated 345 nursing facilities. The company also operated 18 assisted living centers, 64 hospice and home health locations, and provides rehabilitation therapy services through Aegis Therapies. For the twelve months ended June 30, 2005, Beverly recognized revenues of $2.2 billion. BLACK WARRIOR: Stockholders' Deficit Widens to $25.21 at June 30 ---------------------------------------------------------------- Black Warrior Wireline Corp. (OTCBB-BWWL) reported improved operating results for both the second fiscal quarter of 2005 and the six months ended June 30, 2005, as compared to the same periods of 2004. The Company is unable to reach a definitive merger agreement with Centre Partners Management LLC and Centre Southwest Partners LLC on terms acceptable to the Company and the letter of intent entered into with them dated April 28, 2005, and its exclusivity provisions have expired. Revenues for the three months ended June 30, 2005, of $19,709,482 increased by $6,539,134 over revenues for the three months ended June 30, 2004 of $13,170,348 or an increase of approximately 50%. Revenues for the six months ended June 30, 2005, of $34,157,254 increased by $10,447,586 over revenues for the six months ended June 30, 2004, of $23,709,668 or an increase of approximately 44%. Income before discontinued operations was $3,713,570 and $4,359,874 for the three and six months ended June 30, 2005 compared with a loss before discontinued operations of $(266,031) and $(1,941,653) for the three and six months ended June 30, 2004. For the three and six months ended June 30, 2005, Black Warrior had net income of $3,713,570 and $4,359,874, respectively, compared with net losses of $(420,742) and $(3,432,821), respectively, for the three and six months ended June 30, 2004. The net losses in 2004 included losses from operations of the discontinued directional drilling segment of $(154,711) and $(1,491,168), respectively, for the three and six month periods of 2004. Net income per share, basic and diluted, was $0.30 during the three months ended June 30, 2005, and $0.35 during the six months ended June 30, 2005. For the three and six months ended June 30, 2004, the net loss per share, basic and diluted was $(0.03) and $(0.28), respectively. Excluded from the computation of earnings per share are 136,820,709 shares at June 30, 2005 and 153,039,851 shares at June 30, 2004, issuable on exercise or conversion of outstanding options, warrants and convertible notes of which 136,815,709 shares and 153,034,851 shares, respectively are issuable at an exercise or conversion price of $0.75 per share, and the remaining shares are exercisable on exercise of options at higher exercise prices up to $2.63 per share. These shares were not included in the computation in either 2005 or 2004 because the effect would have been anti-dilutive. EBITDA for the three months ended June 30, 2005 of $6,243,218 increased by $3,782,739 over EBITDA for the three months ended June 30, 2004 of $2,460,479 or an increase of approximately 65%. EBITDA for the six months ended June 30, 2005 of $9,124,209 increased by $5,850,643 over EBITDA for the six months ended June 30, 2004, of $3,273,566 or an increase of approximately 179%. Management attributed the improved performance to an increase in demand in the oilfield service sector. Bill Jenkins, President and CEO, commented, "Our operating results for the first two quarters of 2005 have shown significant improvements and we expect continued improved performance through the balance of 2005 as compared to 2004." Black Warrior Wireline Corp. is an oil and gas service company providing services to oil and gas well operators primarily in the United States and in the Gulf of Mexico. It is headquartered in Columbus, Mississippi. At June 30, 2005, Black Warrior's balance sheet reflected a $25,209,000, equity deficit compared to a $20,849,000, deficit at Dec. 31, 2004. BSI HOLDING: Trustee Inks Settlement Pact with Conn. General Life ----------------------------------------------------------------- Joseph E. Myers, the Liquidating Trustee of the BSI Holdings Liquidation Trust, and the Connecticut General Life Insurance Company entered into a settlement agreement to resolve the insurers $574,638 unsecured claim and $609,653 administrative claim against the estates of BSI Holding Co. Inc. (fka Bob's Stores Inc) and its debtor-affiliates. The claims arose from a Group Healthcare Insurance Contract, and all riders, amendments and supplemental premium letters the parties entered into prior to the Debtors' bankruptcy filing. To resolve the disputes, the parties agree to allow and reduce Connecticut General's administrative claim to $475,000. The insurers unsecured claim is disallowed. Accordingly, Mr. Myers asks the U.S. Bankruptcy Court for the District of Delaware to approve the settlement. Connecticut General Life Insurance Company is represented by: Jeffrey C. Wisler, Esq. Christina M. Thompson, Esq. Connolly Bove Lodge & Hutz LLP The Nemours Building 1007 N. Orange Street P.O. Box 2207 Wilmington, Delaware 19899 Tel: 302-658-9141 The Liquidating Trustee is represented by: David M. Fournier, Esq. Adam Hiller, Esq. Pepper Hamilton LLP Hercules Plaza, Suite 5100 1313 North Market Street Wilmington, Delaware Tel: 302-777-6500, Fax: 302-421-8390 Headquartered in Meriden, Connecticut, BSI Holding Co. Inc. fka Bob's Stores Inc., was a retail clothing chain. The Company, along with its affiliates, filed for chapter 11 protection on Oct. 22, 2003 (Bankr. D. Del. Case Nos. 03-13254 through 03-13258). When the Debtor filed for protection from its creditors, it listed more than $100 million in assets and debts. On Aug. 17, 2004, the Court confirmed the Debtors' Modified Consolidated Joint Plan of Liquidation. The Plan became effective on Sept. 15, 2004. BUEHLER FOODS: Wants Until November 7 to Decide on Leases --------------------------------------------------------- Buehler Foods, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Indiana to extend, until November 7, 2005, the time within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors tell the Court that they and their real estate consultant will be unable to complete their valuation and possible renegotiation or disposition of their unexpired leases before the September 6 deadline. As previously reported in the Troubled Company Reporter, the Debtors are parties to approximately 60 nonresidential real property leases with various landlords. The Debtors ask for the extension because: 1) they are still operating their businesses out of the majority of the unexpired leases, making those leases an important part of their immediate and long term reorganization efforts; 2) it will not be in the best interests of the their estates and their creditors to prematurely assume the unexpired leases and incur substantial administrative expenses as well as significant cure obligations for those leases which may be over market or unnecessary for their reorganization; and 3) the extension will not prejudice the landlords of the unexpired because the Debtors are current on all post- petition obligations to those landlords as required under Section 365(d)(3) of the Bankruptcy Code. The Court will conduct a hearing on the requested extension at 1:30 p.m. on Sept. 6, 2005. Objections to the proposed extension must be filed, via the Court's electronic filing procedures, with the U.S. Bankruptcy Clerk by Sept. 5, 2005. Headquartered in Jasper, Indiana, Buehler Foods, Inc., owns and operates grocery stores under the BUY LOW and Save-A-Lot banners in Illinois, Indiana, and Kentucky, North Carolina, and Virginia. The company also sells gas at about a dozen locations. In 2004 Buehler Foods acquired 16 Winn-Dixie stores in Louisville, Kentucky, and renamed them Buehler's Markets. Founded in 1940, the company is still run by the Buehler family. The Company, along with its three affiliates, filed for chapter 11 protection on May 5, 2005 (Bankr. S.D. Ind. Case No. 05-70961). Jerald I. Ancel, Esq., at Sommer Barnard Attorneys, PC, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of $10 million to $50 million and debts of $50 million to $100 million. CABLE & WIRELESS: Fitch Affirms Long-Term BB+ Rating ---------------------------------------------------- Fitch Ratings, the international rating agency, affirmed Cable & Wireless Plc's ratings at Long-term 'BB+' with Stable Outlook and Short-term 'B'. This rating action follows C&W's recent announcement of its intention to acquire Chelys Limited for an initial cash consideration of GBP594 million on a debt-and-cash free basis, subject to Office of Fair Trading's approval. C&W intends to inject GBP35m in cash into Energis and assume finance lease obligations totalling approximately GBP37m. Further consideration of up to GBP80m may be payable in shares or cash at C&W's option subject to movements in the C&W share price. Management has also indicated that it is unlikely to undertake any further share repurchases beyond the already completed GBP75m of the GBP250m repurchase programme in the short term. Fitch believes that C&W's acquisition of Energis is a significant consolidation step amongst the UK's alternative network operators seeking to compete with BT Group Plc ("BT", rated A-/Outlook Negative) in the broadband and data markets, at a time when operators are beginning to roll-out internet protocol (IP)-based next generation networks. The acquisition offers C&W increased scale and the opportunity to benefit from the combined businesses in terms of market position, service offerings, revenues, operating efficiencies and capital expenditure savings. Fitch will monitor C&W's performance in managing the integration process. Nevertheless, the UK telecommunications market remains one of Europe's most competitive and C&W will continue to face significant competitive pressure in the time to the launch of its NGN and beyond. While Fitch considers the acquisition price to be high, management's decision to suspend its share buyback programme to support the acquisition and to maintain financial flexibility is viewed positively. Fitch also takes a favorable view of the current management's track record in rationalizing the group and in stabilizing C&W's business situation, particularly in the UK. Management's commitment to managing the business with a strong liquid position (GBP1.3 billion in cash as at 31 March 2005) is also an important factor in Fitch's rating for C&W. CATHOLIC CHURCH: Disclosure of Priests' Records Denied in Portland ------------------------------------------------------------------ "The estate of the [Archdiocese of Portland in Oregon] is in peril because of potential lawsuits for injuries suffered by parties after the July 6, 2004 filing for bankruptcy," Paul E. DuFresne tells the U.S. Bankruptcy Court for the District of Oregon. Mr. DuFresne says the injuries could arise because individuals were denied the opportunity to make adjustments in their lives based on knowledge of the identity and history of priests who abused minors. To reduce the risk, Mr. DuFresne asked the Court to compel the Archdiocese to disclose the identity and history of erring priests to those who might suffer further harm. Although the impact of the abuse cannot be eliminated, Mr. DuFresne asserts that individuals can learn to cope with the effects. Victims need to understand the role that childhood sexual abuse has played in their lives to learn these coping skills, Mr. DuFresne explains. By denying victims the opportunity to link their troubles in life to their childhood sexual abuse, Portland is assuming a liability risk "for every bad thing that happens in a victim's life" after July 6, 2004, that could possibly be related to the abuse, Mr. DuFresne says. Mr. DuFresne notes that Catholics view priests as spiritual leaders who possess divine wisdom. It is, therefore, common for Catholics to turn to priests for advice and guidance in times of uncertainty, loss, or stress. A large number of people undoubtedly did this with the erring priests, Mr. DuFresne continues. Portland's failure to disclose the identity and history of erring priests denies the Advisees the opportunity to re-assess the advice given to them by those priests. Any harm or hardship suffered by an Advisee after July 6, 2004, which results from following the advice or council of an erring priest could, therefore, be construed as Portland's fault, and be grounds for filing suit against the Archdiocese. The potential population of these people could be hundreds of thousands. According to Mr. DuFresne, three groups may have tort claims in the future based on Portland's failure to disclose the identity and history of erring priests: (l) Past victims of childhood sex abuse by priests; (2) Associates of victims of childhood sex abuse by priests like spouses, children, business partners or professional colleagues, employers; and (3) The Advisees or those who have received advice or council from erring priests, and continued to rely on the advice or council. Portland has represented to the Court that the bankruptcy litigation could take 18 years or more to resolve. Even if the bankruptcy litigation lasts only a fraction of this estimate, Mr. DuFresne believes there is a good chance for "sums of nine figures" to be awarded to the aggregate of suits arising from Potential Claimants. "Such huge awards would certainly imperil my ability to collect on my own tort claim," Mr. DuFresne asserts. By disclosing the identity and complete work history of erring priests to the population of Potential Claimants, the Debtor substantially reduces the risk of successful claims for events subsequent to the disclosure. Mr. DuFresne further asserts that the disclosure should include the 37 priests identified by Portland. Any other priests that have worked at any time for the Archdiocese, who have also been the subject of a lawsuit, which was settled, or have been indicted or charged or convicted of criminal activity of any kind, would also be included. The Class of parishioners, contributors to the Archdiocese of Portland, and other interested parties must receive a written disclosure of erring priests. The Tort Claimants committee could manage the notification effort. * * * The U.S. Bankruptcy Court for the District of Oregon denies Mr. DuFresne's request. Judge Perris says Mr. DuFresne misapprehends the scope of the Court's authority. Only those debts that arose before the date of confirmation are subject to discharge in a Chapter 11 case. Judge Perris explains that a federal court lacks jurisdiction to resolve issues concerning "contingent future events that may not occur as anticipated, or indeed may not occur at all." Mr. DuFresne also lacks standing to bring the request, to the extent he is seeking action on behalf of claimants defined as Future Claimants under the December 20, 2004 Order Appointing Future Claimants Representative. Judge Perris points out that David A. Foraker is the legal representative of the claimants and is solely responsible for advocating on their behalf. To the extent Mr. DuFresne is attempting to protect the interests of other creditors, he lacks standing to do so. To have standing, a party must assert his own legal rights, not the rights or interests of third parties. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Portland Wants Discovery Proceedings Protected --------------------------------------------------------------- The Archdiocese of Portland in Oregon asks the U.S. Bankruptcy Court for the District of Oregon for a protective order establishing the timing and sequence of discovery in the main Chapter 11 case and in each adversary proceeding and contested matter. Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, reminds the Court that Portland's Chapter 11 case is one of the most complex Chapter 11 cases ever filed in the Oregon District. The Case directly or indirectly affects nearly 400,000 people. Moreover, the case is comprised of at least four separate, but interrelated and all highly litigious and contested components. Property Adversary Proceeding The Property Litigation was commenced by the Tort Claimants Committee against Portland as Adversary Proceeding No. 04-3292, and seeks declaratory relief as to the assets of the estate. The Court has certified the Adversary Proceeding as a Class Action. The Tort Committee has served Portland with three sets of Requests for Admissions totaling 107 requests, and a First Request for Production of Documents seeking production of 86 separate categories of documents. In connection with these discovery requests, Portland has located and produced tens of thousands of documents for review by the Tort Committee and has copied, bate stamped, and delivered to the Tort Committee more than 8,000 pages. The Tort Committee has filed a second restated request for partial summary judgment. Portland's response is due on September 19, 2005. Portland anticipates filing a cross motion for summary judgment. Claims Reviews, Analysis, and Mediation A total of 856 proofs of claim have been filed in the Chapter 11 case. Of these claims, approximately 248 were filed as confidential and in some way relate to tort claims alleging child sex abuse. On February 28, 2005, the Court entered an Order approving a Plan of Accelerated Claims Resolution Process regarding the child sex abuse claims. Phase 1 of those mediations began on August 8, 2005. The mediations are expected to continue through September 19, 2005. Since July 18, 2005, Portland and various Plaintiffs' attorneys have been engaged in extensive negotiations in formulating a formal Mediation Settlement Agreement template. Those negotiations have been ongoing, including a 10-hour judicially assisted mediation session on July 29, 2005, solely in an effort to agree to a settlement agreement template for the mediations. As of August 3, 2005, the parties have yet to agree on the form of a settlement agreement template. The mediations are expected to continue five days per week through September 19, 2005, and will consume almost all available working hours for Paulette Furness, Portland's Director of Business Affairs, and Portland's claims counsel at Schwabe, Williamson & Wyatt, PC. Portland and Schwabe intend to devote all necessary resources to the mediations, which Portland believes will be the lynchpin of a confirmable Chapter 11 reorganization plan and which may provide the starting point for a resolution of the entire Chapter 11 case. To prepare for and to meaningfully participate in the mediations, Portland must collect and analyze discovery and investigation data for evaluation of claims -- which has been ongoing and will continue through the first round of mediations. Portland must also meet with the Plaintiffs' lawyers prior to mediations to discuss the relative merits of claims and with cooperating insurers for the same purposes. Portland must also begin to review and investigate the second set of Proofs of Claim -- in excess of 100 new claims which had not been asserted prior to January 1, 2005 -- which were filed from January 1, 2005, through the April 29, 2005 claims bar date. This is a separate but important part of the claims resolution process. Insurance Litigation Portland has commenced adversary proceedings against various insurers, seeking to recover claims totaling in excess of $20 million. Based on hearings already conducted in the Court, the Court is aware that the insurance litigation is litigious, contentious, and demanding on Portland and its counsel. Portland and its counsel must, among other things, provide insurers with updated information regarding Phase I ACRP claims, and work together to respond to insurers' requests for admissions and ongoing discovery requests. This includes production of approximately 100,000 pages. Attorneys at Miller Nash LLP and Schwabe have been and will continue to work together with the staff at the Archdiocese to locate and assemble documents ordered by the Court to be produced to the insurers. Responses and briefs in support of significant motions for summary judgment in the Insurance Litigation are due, and hearings will be held on August 22, 2005, and October 11, 2005. Overall Chapter 11 Aspects Portland and its counsel are also involved in the process of operating in Chapter 11 and attempting to file and confirm a Chapter 11 reorganization plan. The current deadline for plan filing is November 15, 2005. Portland intends to file a Plan and Disclosure Statement in advance of that deadline. Multiple Discovery Mr. Stilley informs Judge Perris that the Archdiocese has limited staff to handle many aspects of the various pieces of litigation and related discovery. The limited resources are fully taxed. The amount of discovery and other obligations which the Chapter 11 and the litigation related to it have imposed on Portland are compromising the Archdiocese's ability to operate in Chapter 11 and to formulate a plan and develop a means and mechanism to pay allowed claims. Furthermore, only certain attorneys at the various law firms representing Portland are familiar enough and involved with the issues and state of proceedings in the case to be of any real value in responding to discovery requests and working on anything other than discreet tasks in the case. One of the major difficulties Portland is encountering, Mr. Stilley says, is that each of the adversary proceedings and contested matters generates its own flurry of activity, discovery, and obligations. None of these are coordinated within the framework of the Chapter 11 case itself. The result is a bombardment of discovery obligations from multiple parties to which Portland is obligated to respond, but because of competing demands for time and personnel, has been constrained and is being prejudiced by its efforts to respond to all requests in a timely manner. Prioritization in Discovery Mr. Stilley notes that the Federal Rules of Civil Procedure, which apply to both contested matters and adversary proceedings, give the Court broad discretion and authority to manage discovery and fashion relief to permit the efficient prosecution and defense of litigation. Specifically, Rule 26 creates many options by which a judge can manage the discovery process to facilitate prompt and efficient resolution of a lawsuit. Portland, hence, asks the Court to enter an order prioritizing discovery and major activities in the case in this order: (1) Discovery limited to that necessary to resolve Stage 1 Claims at mediation beginning August 8, 2005. (2) Discovery only as necessary for parties to respond to pending motions for summary judgment in property and insurance adversary proceedings and Portland's anticipated cross-motion for summary judgment in property adversary proceeding. No further discovery will be allowed in the adversary proceedings pending the Court's ruling on the motions for summary judgment. (3) Gather data requested by Hamilton, Rabinovitz, & Alschuler, Inc., for estimation of future claims. (4) File plan and disclosure statement and proceed with resolution of known confirmation issues. (5) Process, evaluate, conduct discovery, file actions, and mediate as necessary to resolve claims -- Stage 2 Claims. "Adopting this overall case management recommendation, which is within the Court's inherent power in its oversight role under the Federal Rules of Civil Procedure, will protect the rights of adverse parties and permit the Debtor to redirect energies towards filing a reorganization plan and disclosure statement," Mr. Stilley asserts. Managed and coordinated discovery and procedures will allow Portland to efficiently respond where necessary to discovery requests and move forward in litigation, while at the same time preserve resources, both legal and staff, to devote time to formulation and negotiation of a Chapter 11 plan with its creditors. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTERPOINT ENERGY: 90.6% of Noteholders Tender $520MM Old Notes ---------------------------------------------------------------- CenterPoint Energy, Inc. (NYSE: CNP) reported preliminary results of its offer to exchange $575 million principal amount of its 3.75% Convertible Senior Notes due 2023 for an equal amount of its new 3.75% Convertible Senior Notes, Series B, due 2023 and an exchange fee of $1.50 for each $1,000 principal amount of Old Notes accepted for exchange. The exchange offer expired on August 17, 2005 at 5 p.m. Eastern time. Based on information provided by JPMorgan Chase Bank, the exchange agent for the exchange offer, at the expiration of the exchange offer, $520,905,000 aggregate principal amount of the Old Notes, representing 90.6% of the outstanding principal amount of the Old Notes, were tendered for exchange, excluding Old Notes tendered by guaranteed delivery. All of the Old Notes that were properly tendered and not withdrawn have been accepted for exchange. The final results of the exchange offer will be announced on the settlement date. The Company expects the exchange to be settled on August 22, 2005. Security holders are urged to read: * the exchange offer materials, including the prospectus dated July 19, 2005, * the Registration Statement on Form S-4, as amended (No. 333- 123182), * the Schedule TO, as amended, and * the other materials related to the exchange offer, because they contain important information. Banc of America Securities LLC is acting as dealer manager and MacKenzie Partners, Inc. is the information agent for the exchange offer. Copies of the prospectus and the related exchange offer materials may be obtained free of charge at the Securities and Exchange Commission's website -- http://www.sec.gov-- or from MacKenzie Partners, Inc., 105 Madison Avenue, New York, New York 10016, (212) 929-5500 or (800) 322-2885. Headquartered in Houston, Texas, CenterPoint Energy, Inc. -- http://www.CenterPointEnergy.com/-- is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and sales, and interstate pipeline and gathering operations. The company serves nearly five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total approximately $16 billion. With more than 9,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. * * * As reported in the Troubled Company Reporter on July 26, 2005, Moody's Investors Service upgraded the ratings of CenterPoint Energy, Inc., including its senior unsecured debt to Ba1 from Ba2. In addition, Moody's assigned a Not-Prime rating to CenterPoint's $1.0 billion commercial paper program. Moody's also upgraded the ratings of CenterPoint Energy Resources Corp., including its senior unsecured debt to Baa3 from Bal. These rating actions conclude the review for possible upgrade that was initiated on March 24, 2005. The ratings for CenterPoint Energy Houston Electric are affirmed. Moody's said the rating outlook is stable for CenterPoint, CERC and CEHE. CITATION CORP: S&P Rates $180 Million Secured Term Loan at CCC+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Citation Corp., reflecting the company's vulnerable business profile as a manufacturer of cast parts for the challenging automotive and industrial equipment industries, and its highly leveraged capital structure. At the same time, Citation's $80 million secured revolving credit facility was rated 'B+' with a recovery rating of '1', indicating a strong likelihood of full recovery of principal in the event of payment default, and its $180 million secured term loan was rated 'CCC+' with a recovery rating of '4', indicating the likelihood of marginal recovery of principal (25%-50%) in the event of payment default. Birmingham, Alabama-based Citation has total debt of about $215 million. The rating outlook is stable. Citation filed for bankruptcy in September 2004 because of the dramatic rise in the cost of scrap steel and the company's inability to get price increases from its customers. Scrap steel accounts for about 30% of the cost of manufacturing ductile iron products, about 50% of Citation's sales. Prices for scrap steel had averaged about $150 per ton in prior years, but rose to more than $400 per ton in 2004. The company emerged from bankruptcy in May 2005. During bankruptcy, the company was able to negotiate improved pricing on its customer contracts, allowing most to become profitable. In addition, most of Citation's customers agreed to reimburse the company for raw materials surcharges, insulating Citation from future commodity price fluctuations. The company was able to secure these arrangements because of its importance in its customers supply chain and their inability to quickly replace Citation with another supplier. "These measures improved the company's profitability and lowered operating risks," said Standard & Poor's credit analyst Martin King. "Nevertheless, the company continues to have a vulnerable business profile because of the challenges of its end markets." Citation's products are sold to automotive, medium- and heavy-duty truck, agriculture, construction, and oil field end markets, all of which are very cyclical, intensely competitive, and have a fairly concentrated customer base with strong buying power. Citation will be challenged to maintain profitability throughout the economic cycle because its operations are volume sensitive and capital intensive. Additional concerns arise from Citation's uncertain ability to retain existing customers, replace expiring contracts, and win new business, given its recent exit from bankruptcy. While the company maintained its delivery commitments and did not disrupt the operations of its customers while in bankruptcy, negotiations with customers to achieve better pricing and greater cost recovery were difficult. The concessions the company achieved were a financial burden to its customers. Citation has lost some business as a result, but so far has more than made up for the losses with new business wins. One of the reasons the company has been able to win new business is the financial difficulty facing many of its competitors in the industry, several of which have shuttered operations or declared bankruptcy. CLEARWATER TIMBER: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Clearwater Timber Resources, LLC P.O. Box 115 Green Bank, West Virginia 24944 Bankruptcy Case No.: 05-03563 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Deer Creek Management, LLC 05-03562 Type of Business: The Debtor sells seasoned firewood in various sizes and packaged in several ways to meet customers' needs. See http://www.frontierfirewood.com/ Chapter 11 Petition Date: August 18, 2005 Court: Northern District of West Virginia (Elkins) Debtor's Counsel: Judy L. Shanholtz, Esq. McNeer, Highland, McMunn & Varner, L.C. P.O. Box 2040 Clarksburg, West Virginia 26302-2040 Tel: (304) 626-1116 Fax: (304) 623-3035 Estimated Assets Estimated Debts ---------------- --------------- Clearwater Timber $1 Million to $1 Million to Resources, LLC $10 Million $10 Million Deer Creek Management, LLC $500,000 to $100,000 to $1 Million $500,000 The Debtor did not file a list of its 20 Largest Unsecured Creditors. CREST 2004-1: Fitch Affirms Low-B Ratings on Five Cert. Classes --------------------------------------------------------------- Fitch Ratings affirms all of the rated notes issued by Crest 2004-1, Ltd. The affirmation of these notes is a result of Fitch's annual rating review process. These rating actions are effective immediately: -- $182,298,184 class A senior secured floating-rate term notes at 'AAA'; -- $44,000,000 class B-1 second-priority floating-rate term notes at 'AA'; -- $8,491,250 class B-2 second-priority fixed-rate term notes at 'AA'; -- $2,710,000 class C-1 third-priority floating-rate term notes at 'A+'; -- $23,000,000 class C-2 third-priority fixed-rate term notes at 'A+'; -- $17,140,000 class D fourth-priority fixed-rate term notes at 'A'; -- $13,000,000 class E-1 fifth-priority floating-rate term notes at 'BBB+'; -- $12,710,000 class E-2 fifth-priority fixed-rate term notes at 'BBB+'; -- $6,427,500 class F sixth-priority floating-rate term notes at 'BBB'; -- $2,000,000 class G-1 seventh-priority floating-rate term notes at 'BB+'; -- $9,783,750 class G-2 seventh-priority fixed-rate term notes at 'BB+'; -- $7,520,000 class H-1 eighth-priority floating-rate term notes at 'BB'; -- $1,050,000 class H-2 eighth-priority fixed-rate term notes at 'BB'; -- $96,412,500 preferred shares at 'B'. Crest 2004-1 is a collateralized debt obligation, which closed Nov. 18, 2004, supported by a static pool of commercial mortgage- backed securities (94.7%), collateralized debt obligations (2.2%), real estate investment trust securities (1.5%), and other commercial real estate securities, including a participating interest in a junior A-note and a senior certificate issued by a real estate mortgage investment conduit; 1.5%. Since closing in November 2004, the collateral credit quality has remained stable, with the weighted average rating factor showing marginal deterioration. According to the July 29, 2005 trustee report, the WARF has increased to 14.04 (rated 'BB/BB-' by Fitch) from 13.98 (rated 'BB/BB-' by Fitch) as reported in the January 2005 trustee report. The interest coverage tests for each class decreased slightly since closing but still retain a margin of safety above the minimum required thresholds. Over the same time period, the class A/B IC ratio decreased to 197.39% from 218.83%, with a minimum of 161%. The overcollateralization tests have remained stable at passing levels for all classes. As of this rating action, there has been very little deleveraging of the transaction's capital structure. There have been approximately $2 million in principal distributions to the class A noteholders, representing approximately 1.1% of the original note balance. In addition, approximately $3 million in interest distributions have been allocated to the preferred shares, reducing the rated balance by 3.1% to $93.4 million. The rating on the class A and B notes addresses the timely payment of interest and ultimate repayment of principal. The ratings on the class C, D, E, F, G, and H notes address the likelihood of investors receiving ultimate payment of interest and ultimate repayment of principal. The rating of the preferred shares addresses the likelihood that investors will receive the ultimate return of the aggregate outstanding amount of principal only by the stated maturity date. The collateral is administered by Structured Credit Partners, LLC, a wholly owned subsidiary of Wachovia Corporation. Fitch has discussed Crest 2004-1 with Structured Credit Partners, LLC and will continue to monitor this transaction. A.C. Corporation serves as disposition consultant to this deal. Based on the stable performance of the underlying collateral and the overcollateralization tests, Fitch affirms all of the rated liabilities issued by Crest 2004-1. Deal information and historical data on Crest 2004-1 is available on Fitch Ratings' web site at http://www.fitchratings.com/ CROWN HOLDINGS: Selling Global Plastic to PAI Partners for $750MM ----------------------------------------------------------------- Crown Holdings, Inc. (NYSE: CCK) entered into an agreement to sell its Global Plastic Closures business to funds managed or advised by PAI partners for an aggregate purchase price of approximately $750 million, which includes the assumption of certain liabilities. The purchase price is subject to adjustment for, among other items, net debt and working capital at closing. Net cash proceeds from the sale are expected to be approximately $650 million and will be used for general corporate purposes including the repayment of debt. Approximately 75% of the proceeds will be paid in Euros. Crown's Global Plastic Closures business designs, manufactures and sells plastic closures for consumer packaging worldwide primarily for the personal care, food, beverage, pharmaceutical and industrial end markets. The business has 29 facilities located in 15 countries across Europe, the United States and Asia with approximately 3,500 employees. For the twelve months ended December 31, 2004, total revenues for the business were $676 million with approximately 76% derived from sales in Europe. The transaction is subject to certain closing conditions, including the receipt of regulatory approvals and other customary conditions, and is expected to close later this year. Crown was advised by Citigroup Global Markets Inc. Crown Holdings, Inc., through its affiliated companies, is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania. * * * As reported in the Troubled Company Reporter on June 9, 2005, Moody's Investors Service changed the ratings outlook for Crown Holdings and its rated operating subsidiaries to positive from stable reflecting the consistency of cumulative improvements in financial and operating performance as the company has been benefiting from realized working capital and efficiency gains, effective price increases mitigating higher input costs, and strategic leveraging of its global operations. The ratings for Crown and its subsidiaries are: -- Ba3 rating for the $500 million first lien credit facility consisting of a $400 million revolver and a $100 million US letter of credit facility -- Ba3 rating for approximately Euro 460 million ($565 million equivalent) 6.25% first lien notes, due 2011, issued by Crown European Holdings, S.A. -- B1 rating for the $1.4 billion second lien notes, due 2011, issued by European Holdings -- B2 rating for the $725 million third lien notes, due 2013, issued by European Holdings -- B3 rating for the $700 million senior unsecured notes, due 2023 - 2096, issued by Crown Cork & Seal Company, Inc. -- B3 rating for the $200 million (net of buybacks) senior unsecured notes, due 2006 issued by Finance PLC -- B2 senior implied rating at Crown Cork & Seal Company, Inc. -- SGL-1 Speculative Grade Liquidity Rating at Crown -- Caa1 senior unsecured issuer rating (non-guaranteed exposure) at Crown Cork & Seal Company, Inc. CROWN MEDIA: Board Explores Strategic Alternatives & Possible Sale ------------------------------------------------------------------ The Board of Directors for Crown Media Holdings, Inc. (NASDAQ: CRWN) authorized the Company to explore strategic alternatives, including a potential sale of the Company to a third party. In support of this initiative, a Special Committee of independent directors of the Board of Directors has been formed to oversee the process. Hallmark Cards, Incorporated has advised the Company's Board of Directors that it fully supports the Board's determination. Hallmark also advised the Board that it would consider entering into a license agreement with respect to the Hallmark Channel name in connection with a sale of the Company if requested by a potential purchaser. "After considering various factors, including the strong performance of the Hallmark Channel and the prevailing current economic realities of being a one channel business in our industry, the Board unanimously determined that now is the time to look at all alternatives," David Evans, President and CEO of Crown Media, said. "Since its launch just four years ago, Hallmark Channel has experienced tremendous growth in all of its key business areas, including distribution, ratings and revenues. Today, Hallmark Channel is one of the top ten rated cable channels in both total day and prime time with nearly 70 million subscribers, and is well-positioned for continued success." There can be no assurance that the Company will enter into or consummate any transaction, or as to the terms or timing thereof. Crown Media Holdings, Inc. (NASDAQ: CRWN) owns and operates cable television channels dedicated to high quality, broad appeal, entertainment programming. The Company currently operates and distributes Hallmark Channel in the U.S. to nearly 70 million subscribers. In 2004, Crown launched its second 24-hour linear channel, Hallmark Movie Channel. Through its subsidiary, Crown Media Distribution, LLC, Crown also distributes titles in the U.S. from its award-winning collection of movies, mini-series and films for exhibition in a variety of television media including broadcast, cable, video-on-demand and high definition television. Significant investors in Crown Media Holdings include: Hallmark Entertainment Holdings, Inc., a subsidiary of Hallmark Cards, Incorporated, Liberty Media Corp., and J.P. Morgan Partners (BHCA), LP, each through their investments in Hallmark Entertainment Investments Co.; VISN Management Corp., a for-profit subsidiary of the National Interfaith Cable Coalition; and Hughes Electronics Corporation. At June 30, 2005, Crown Media Holdings, Inc.'s balance sheet showed a $33,905,000, stockholders' deficit, compared to a $54,636,000, positive equity at Dec. 31, 2004. CROWN MEDIA: June 30 Balance Sheet Upside-Down by $33.9 Million --------------------------------------------------------------- Crown Media Holdings, Inc., reported results for the second quarter ended June 30, 2005. The Company reported a net loss of $56,255,000, for the second quarter and a $107,162,000, net loss for the six-month period ended June 30, 2005. The company also disclosed that it incurred losses in 2004. As of June 30, 2005, the Company had $5.6 million in cash and cash equivalents on hand and $41 million available under its bank credit facility. Forty million of the availability is subject to the approval of Hallmark Cards prior to the Company being able to draw such funds. As of June 30, 2005, the Company had borrowed $179 million under its bank credit facility, which matures May 31, 2006. The Company's principal sources of funds are: * currently available cash on hand, * periodic tax sharing payments, and * amounts available for borrowing under its bank credit facility. However, the Company expects that cash payments under the tax sharing agreement with Hallmark Cards during the remainder of 2005 will be less than prior periods as a result of the taxable gain anticipated on the sale of the international business. In connection with the Company's business strategy, the Company expects to continue making investments in programming and distribution during the next twelve months ending June 30, 2006. However, because of the near-term liquidity issues, absent financial assistance from Hallmark Cards, in order to preserve cash and stay in operation, the Company will need to reduce some of this anticipated spending in the near term. The Company's principal uses of funds for the remainder of 2005 are expected to include the payment of operating expenses, licensing of programming, subscriber acquisition fees and interest under its bank credit facility. The Company currently believes that cash on hand and the remaining availability under its bank credit facility (assuming that Hallmark Cards approves additional borrowings), both of which are currently its principal sources of funds, and periodic payments under the tax sharing agreement, will be sufficient to fund the current level of operations and meet its liquidity needs through the maturity date of its bank credit facility. Hallmark Cards is required to approve borrowings under the Company's $220 million bank credit facility in excess of $180 million. To date, Crown Media Holdings has not requested Hallmark Cards to approve the drawing of funds; however, the Company anticipates that it will require such additional liquidity and will request approval of Hallmark Cards during the final six months of 2005. There can be no assurance that Hallmark Cards will approve such additional drawings and, if such drawings are not approved, the Company will need alternative sources of funding or will need to significantly curtail expenses or programming acquisitions and payments. Due to the Company's liquidity needs, the Company anticipates that prior to Aug. 31, 2006, it will be necessary to either extend or refinance: (i) the bank credit facility and (ii) the license fees ($138.3 million at June 30, 2005) and other amounts ($100.0 million at June 30, 2005) payable to affiliates of Hallmark Cards. In the alternative or as part of a combination of actions, the Company may seek, among other things, to issue additional equity or debt securities to raise capital for the repayment of those obligations and for other future cash needs. Hallmark Obligations If the Company is not able to arrange for the extension, refinancing or replacement of the bank credit facility prior to its maturity and the bank draws down on the irrevocable letter of credit, Hallmark Cards would acquire all obligations and the rights of the lending banks under the bank credit facility. In that event, Hallmark Cards could demand payment of outstanding amounts at any time. By a letter dated Aug. 1, 2005, which supplemented a previous letter dated Feb. 28, 2005, Hallmark Cards confirmed to the Company that neither Hallmark Cards nor any of its wholly owned subsidiaries would demand payment from the Company until Aug. 31, 2006, at the earliest, on: (1) license fees and inter-company payables outstanding as of December 31, 2004, and June 30, 2005, and (2) any reimbursements on the letter of credit supporting the bank line of credit if drawn to pay the bank credit facility which matures on May 31, 2006. As consideration for extending the demand period for the possible reimbursement of amounts drawn on the letter of credit supporting the credit facility and the payment of license fees up to $150 million and other amounts up to $100 million payable to Hallmark affiliates, the Company agreed, if so requested by Hallmark Cards, to convert its license fees payable to Hallmark affiliates, which was approximately $138.3 million at June 30, 2005, to a promissory note bearing interest at LIBOR plus 3% per annum (or another market appropriate rate for the Company). The term of the promissory note would begin on August 1, 2005, or other date acceptable to Hallmark Cards and the Company's banks, and would be payable in full on Aug. 31, 2006. The conversion of the non-interest bearing license fees payable to an interest bearing promissory note would be subject to the approval of the lenders in the bank syndicate to the credit facility. Credit Facility The Company has a credit agreement with a syndicate of banks, led by JP Morgan Chase Bank, under which the banks have extended to the Company a secured revolving credit facility of up to $220 million. The Company and the lending banks originally entered into the facility in 2001 and have subsequently amended the terms of this facility, with the most recent amendment on March 1, 2005. The facility is guaranteed by the Company's subsidiaries and is secured by all tangible and intangible property of Crown Media Holdings and its subsidiaries. As of March 1, 2005, the Company entered into an eighth amendment to the agreement for the Company's bank credit facility. This amendment extended the maturity date to May 31, 2006. Upon the maturity of the credit facility on May 31, the lending group led by JP Morgan Chase has the right to elect to forego the receipt of cash to pay the principal amount of the credit facility in full, which is provided for under the terms of an irrevocable letter of credit provided by Hallmark Cards, but instead to initiate a process to foreclose on the Company's assets. Such foreclosure proceedings could affect the Company's ability to continue its operations. The amendment waived the Company's non-compliance with the seven financial covenants: (1) capital expenditures in 2004; (2) cash program acquisition guarantees in 2004; (3) trailing 12-month EBITDA for the quarter ended December 31, 2004; (4) cash payments to television distributors for subscribers in 2004; (5) net worth at December 31, 2004; (6) leverage ratio for the quarter ended December 31, 2004; and (7) interest coverage ratio for the 2004 year. The amended facility also: * deleted the net worth covenant; * amended the limit on the Company's cash program guarantees in 2005; * amended the quarterly EBITDA requirements for the remainder of the loan term; and * amended the limit of cash payments to television distributors for subscribers, the minimum number of subscribers and the minimum gross subscriber revenue. Further, pursuant to the credit amendment, the limitation on Restricted Payments was amended to allow the Company to make certain payments to Hallmark Cards or its affiliates. At December 31, 2004, and June 30, 2005, Crown Media Holdings had outstanding borrowings of $310 million and $179 million, respectively, under the credit facility and there were no letters of credit outstanding. At June 30, 2005, the entire outstanding balance bore interest at the Eurodollar rate (4.33% at June 30, 2005). Interest expense on borrowings under the credit facility for the three months ended June 30, 2004 and 2005, was $3.3 million, and $2 million, respectively, and for the six months ended June 30, 2004 and 2005, interest expense was $6.4 million, and $5.9 million, respectively. Hallmark Letter of Credit Pursuant to Amendment No. 8 to the bank credit facility, Hallmark Cards provided an irrevocable letter of credit issued to JP Morgan Chase Bank by Citibank, N.A., in the amount of $320 million, as credit support for the Company's obligations under the credit facility. The letter of credit was reduced to $220 million upon the consummation of the sale of the Company's international business and the reduction of the aggregate outstanding credit exposure of its lenders to $220 million. Drawdowns under the letter of credit may be made for amounts due and payable under the credit facility. Amounts in excess of $180 million require the concurrence of Hallmark Cards. Any proceeds received by JP Morgan Chase Bank from drawing under this support letter of credit will not be applied to repay the Company's obligations, but will be used to purchase on the part of Hallmark Cards from the bank lenders subordinated participations in our obligations under its bank credit facility, junior in payment to the bank lenders under the bank credit facility. The support letter of credit automatically expires on May 31, 2006. The Company pays to Hallmark Cards, as compensation for the support letter of credit, the amounts resulting from the 2% reduction in the interest rate and the 0.3% reduction in the commitment fee payable by the Company under the bank credit facility as provided in Amendment No. 8. Senior Unsecured Note In August 2003, the Company issued a senior unsecured note to HC Crown for $400 million. A portion of the proceeds was used to repurchase the Company's outstanding trust preferred securities, and the balance of the proceeds, after expenses, was used to reduce amounts outstanding under its bank credit facility. The senior unsecured note payable to HC Crown does not require cash payments until August 2007. Instead, the principal amount of the senior unsecured note accretes at 10.25% per annum, compounding semi-annually, to $596.6 million at August 5, 2007. The note matures on August 5, 2011, and is pre-payable by Crown Media Holdings at any time after August 5, 2004, without penalty. The note purchase agreement for the senior unsecured note contains certain covenants that restrict on the part of the Company, among other matters, from the incurrence of any additional indebtedness, the repurchase or other acquisitions of the Company's stock, investments in other parties and the incurrence of liens on the Company's assets. As a fee for the issuance of the notes, the Company paid $3 million to HC Crown, which was initially capitalized and is being amortized as additional interest expense over the term of the note payable. Promissory Note On December 14, 2001, the Company executed a $75 million promissory note with HC Crown maturing on the earlier of six months from the termination of the credit facility or December 21, 2007. This line of credit is subordinate to the bank credit facility. The rate of interest under this line of credit is equal to LIBOR plus three percent, payable quarterly. At both December 31, 2004, and June 30, 2005, borrowings under the note were $75.0 million. Accrued interest on the note of $6.1 million and $8.4 million are included in line of credit and interest payable to HC Crown as of December 31, 2004, and June 30, 2005, respectively, on the accompanying condensed consolidated balance sheets. Crown Media Holdings, Inc. (NASDAQ: CRWN) owns and operates cable television channels dedicated to high quality, broad appeal, entertainment programming. The Company currently operates and distributes Hallmark Channel in the U.S. to nearly 70 million subscribers. In 2004, Crown launched its second 24-hour linear channel, Hallmark Movie Channel. Through its subsidiary, Crown Media Distribution, LLC, Crown also distributes titles in the U.S. from its award-winning collection of movies, mini-series and films for exhibition in a variety of television media including broadcast, cable, video-on-demand and high definition television. Significant investors in Crown Media Holdings include: Hallmark Entertainment Holdings, Inc., a subsidiary of Hallmark Cards, Incorporated, Liberty Media Corp., and J.P. Morgan Partners (BHCA), LP, each through their investments in Hallmark Entertainment Investments Co.; VISN Management Corp., a for-profit subsidiary of the National Interfaith Cable Coalition; and Hughes Electronics Corporation. At June 30, 2005, Crown Media Holdings, Inc.'s balance sheet showed a $33,905,000, stockholders' deficit, compared to a $54,636,000, positive equity at Dec. 31, 2004. DEL LABORATORIES: S&P Puts B Corporate Credit Rating on Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Uniondale, New York-based Del Laboratories Inc., including its 'B' corporate credit rating, on CreditWatch with negative implications. About $380 million of debt was outstanding as of June 30, 2005. The CreditWatch listing is based on the recently announced resignation of William McMenemy, Del's CEO, effective Aug. 19, 2005, and the planned retirement of Enzo Vialardi, Del's CFO, in January 2006. Charles Hinkaty the company's current Chief Operating Officer will fill Del's CEO position, and the CFO position will be filled by Joseph Sinicropi. "We will meet with the company's new management team to assess Del's ability to stabilize its operations. The ratings could be lowered and remain on CreditWatch in the near term if the company's operating performance or liquidity further deteriorates," said Standard & Poor's credit analyst Patrick Jeffrey. DRUGMAX INC: July 2 Balance Sheet Upside-Down by $2.9 Million ------------------------------------------------------------- DrugMax Inc., incurred a net loss of $7.2 million for the three months ended July 2, 2005, versus a net loss of $900,000, for the three months ended June 26, 2004, and incurred a net loss of $12.2 million for the six months ended July 2, 2005, versus a net loss of $1.7 million for the six months ended June 26, 2004. The Company believes that, with the purchasing synergies from the merger with Familymeds Group, Inc., and the effect of the reduction in costs associated with the elimination of certain redundant positions as a result of the merger, as well as the recently approved plan to exit the low margin component of its distribution business and to reduce personnel and other selling and administrative costs, the Company will continue as a going concern. Also, the Company expects to refinance the Senior Credit Facility with a major lender other than the current lender during the third quarter of 2005. However, there is no assurance that it will be able to obtain alternative financing and the lender could demand repayment of the $42.7 million outstanding as of July 2, 2005, and could foreclose upon all or substantially all Company assets and the assets of its subsidiaries. Distribution Exit Subsequent to July 2, 2005, and consistent with its post-merger drug distribution strategy, the Company determined as part of its ongoing merger integration plan that it would exit the legacy drug distribution business primarily providing wholesale branded pharmaceuticals to independent pharmacies and regional chain stores. The business to be exited consists principally of non- core, low margin branded drug distribution wholesale operations, which contributed operating losses of approximately $1.3 million for the three-month period, ended July 2, 2005, and $2 million during the six-month period ended July 2, 2005. The Company believes that by exiting this lower gross margin component of its distribution business, it will improve overall operating Company results, while maintaining its core strategy of specialty pharmaceutical distribution. The Company expects to exit this business component during the second half of 2005 and has engaged a nationally known advisor to conduct a sale of this business. The Company expects to reduce its debt through the sale of this business and realize additional proceeds, which would improve working capital. As the Company is in the early stages of this process, it is unable to estimate the gain or loss, which may be recorded upon the disposition. The new drug distribution strategy is to focus on distributing higher gross margin specialty pharmaceutical and generic drugs across the Company's existing physician relationships through direct marketing. In addition, the revised strategy emphasizes acquiring new customers - physicians, pharmacies and more specialty healthcare providers - through implementing an inside telephonic sales and marketing method. Historically, DrugMax had limited experience using these sales and marketing strategies; therefore, management cannot determine its potential success in acquiring and deriving revenue and profits until the new strategy is fully operational and a new Customer Relationship Management System is deployed later in the second half of 2005. Workforce Reduction Also subsequent to July 2, 2005, a plan was approved to reduce the Company's workforce and implement tighter controls over other selling and administrative costs substantially by the end of the third quarter of 2005. The expected annual savings from these reductions is estimated at $1.9 million with approximately $0.6 million realizable in the second half of 2005. The Company expects to record a charge of approximately $220,000, in the third quarter of 2005 principally for severance costs. Revolving Credit Facility On December 9, 2004, the Company entered into a Second Amended and Restated Credit Agreement with General Electric Capital Corporation, which increased the facility from $31 million to $65 million. The $65 million of maximum availability was reduced by $5.5 million of permanent availability, until the March 2005 Amendment, which increased the permanent availability reduction to $7.5 million. The Senior Credit Facility matures on December 9, 2007. The Senior Credit Facility includes a prepayment penalty of $1,300,000 if paid in full before December 9, 2005, $975,000 if paid in full after December 9, 2005 but before December 9, 2006 and $650,000 if paid after December 9, 2006. The Senior Credit Facility is secured by substantially all assets of the Company. As of July 2, 2005, $42.7 million was outstanding under the Senior Credit Facility and $0.4 million was available for additional borrowings, based on eligible receivables and inventory. The Senior Credit Facility requires monthly compliance with certain restrictive covenants including, but not limited to: * minimum EBITDA, * maximum capital expenditures, * maximum fixed charge coverage ratio, * minimum net worth, * minimum inventory turnover, * maximum trade receivable days sales outstanding, * maximum accounts payable days outstanding, and * maximum ratio of non-pharmaceutical inventory to total inventory. Covenant Violations The Company violated certain of these covenants as of January 1, 2005 and each subsequent month thereafter through July 31, 2005, including the EBITDA and net worth financial covenants, and other covenants, and as of such dates was in default on this obligation. The Company is currently exploring alternative financing and expect to refinance the Senior Credit Facility with a major lender other than the current lender during the third quarter of 2005. However, there is no assurance that the Company will be able to obtain alternative financing and the lender could demand repayment of the $42.7 million outstanding as of July 2, 2005, and could foreclose upon all or substantially all of our assets and the assets of our subsidiaries. Credit Facility Amendment On March 22, 2005, the Company entered into a First Amendment to the Senior Credit Facility. The March 2005 Amendment provided for an increase in the reduction of permanent availability from $5.5 million to $7.5 million and allowed the Company to convert the $23 million of accounts payable after consideration of a $6 million payment in March 2005 to AmerisourceBergen Drug Corporation into a subordinated convertible debenture in the original principal amount of $11,500,000 and a subordinated promissory note in the original principal amount of $11,500,000. The Subordinated Note is due and payable in quarterly installments of $575,000 beginning on December 1, 2005 through September 1, 2010, on which date all outstanding amounts are due. The Subordinated Convertible Debenture is due and payable in quarterly installments of $605,263 commencing on March 1, 2006 through August 15, 2010, on which date all outstanding amounts are due. Quarterly interest payments are to be paid in common stock through February 28, 2006. Commencing March 1, 2006, quarterly interest payments may be paid in cash or common stock in an amount equal to the interest then due and owing divided by the Issue Price, or a combination thereof. If common stock is used to make principal or interest payments on the Subordinated Convertible Debenture, and the proceeds AmerisourceBergen receives upon any sale of the Company's common stock (or the proceeds AmerisourceBergen would have received upon a sale in the event no shares are sold by AmerisourceBergen) are less than the principal and interest due, the Company is required to pay such difference to AmerisourceBergen in cash on the date of maturity of the Subordinated Convertible Debenture. Through December 31, 2005, AmerisourceBergen may not sell any shares of the Company's common stock received that, in the aggregate, exceed 25% of the average trading volume of the Company's common stock for the preceding 10 trading days. In connection with the Subordinated Convertible Debenture, DrugMax entered into a registration rights agreement dated March 21, 2005, with ABDC pursuant to which the Company agreed to file a registration statement with the SEC to register the resale of all common stock issuable to AmerisourceBergen in connection with the Subordinated Debenture no later than May 30, 2005. Further on May 26, 2005, AmerisourceBergen granted the Company a 45 day extension to file the registration statement. On July 7, 2005, the company filed a registration statement on Form S-1. The SEC declared the Form S-1 effective on August 10, 2005. The Subordinated Debenture and Subordinated Note are guaranteed by DrugMax and certain of DrugMax subsidiaries, including Valley Drug Company, Valley Drug Company South, Familymeds, and Familymeds Holdings, Inc., pursuant to Continuing Guaranty Agreements dated as of March 21, 2005. DrugMax, Inc. -- http://www.drugmax.com/-- is a specialty pharmacy and drug distribution provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. DrugMax works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. The Company is focused on building an integrated specialty drug distribution platform through its drug distribution and specialty pharmacy operations. DrugMax operates two drug distribution facilities, under the Valley Drug Company and Valley Drug South names, and 77 specialty pharmacies in 13 states under the Arrow Pharmacy & Nutrition Center and Familymeds Pharmacy brand names. The DrugMax platform is designed to provide services for the treatment of acute and complex health diseases including chronic medical conditions such as cancer, diabetes and pain management. The Company often serves defined population groups on an exclusive, closed panel basis to maintain costs and improve patient outcomes. DrugMax offers a comprehensive selection of brand name and generic pharmaceuticals, non-prescription healthcare-related products, and diagnostic supplies to our patients, independent pharmacies, physicians, clinics, long- term care and assisted living centers. The Company's online product offering can be found at http://www.familymeds.com/ At July 2, 2005, DrugMax, Inc.'s balance sheet showed a $2,930,262, stockholders' deficit, compared to a $5,855,288, positive equity at Jan. 1, 2005. Bank Loan Default As of January 1, 2005, the Company was not in compliance with certain covenants under the Senior Credit Facility backed by GENERAL ELECTRIC CAPITAL CORPORATION and BANK OF AMERICA, N,A. As a result, the lender can demand repayment of the $32.9 million outstanding as of Jan. 1, and could foreclose upon all or substantially all of the Company's assets and the assets of its subsidiaries. The Company expects to receive an amendment waiving covenant violations during the second quarter of 2005. Going Concern Doubt As a result of the Company's non-compliance, Deloitte & Touche LLP, the Company's independent registered certified public accounting firm, issued an unqualified audit report with an explanatory paragraph raising doubt about the Company's ability to continue as a going concern. EL PASO: Issues Common Stock to Satisfy Purchase Contracts ---------------------------------------------------------- El Paso Corporation (NYSE: EP) settled the purchase contracts forming a portion of El Paso's outstanding 9.00% equity security units, which were issued in June 2002. Each purchase contract was settled in exchange for 2.5063 shares of El Paso common stock, resulting in El Paso's issuance of an aggregate of approximately 13.6 million shares to the holders of equity security units. The issuance of the shares of common stock related to the settlement has been registered with the Securities and Exchange Commission pursuant to a registration statement. El Paso received an aggregate cash purchase price of approximately $272.1 million in consideration for the issuance, which El Paso intends to use for general corporate purposes. As a result of the settlement of the purchase contracts, the equity security units (formerly NYSE: EP PrA) will cease to exist and will no longer be traded on the New York Stock Exchange. El Paso Corporation -- http://www.elpaso.com/-- provides natural gas and related energy products in a safe, efficient, and dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers. * * * As reported in the Troubled Company Reporter on March 4, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to El Paso Corp.'s subsidiary Colorado Interstate Gas Co.'s planned $200 million senior unsecured notes. At the same time, Standard & Poor's affirmed its 'B-' corporate credit ratings on El Paso and its subsidiaries and revised the outlook on the companies to stable from negative. The outlook revision reflects El Paso's progress on restructuring its business and the company's improved liquidity ahead of large debt maturities in the next three years. "The stable outlook reflects the expectation that El Paso will continue to address adequately the company's operational and financial issues," said Standard & Poor's credit analyst Ben Tsocanos. "Although liquidity is not an immediate concern, El Paso will struggle to produce enough cash flow to barely cover its debt service as it tackles the challenges in its plan," said Mr. Tsocanos. ENHANCED MORTGAGE: Fitch Places BB Rating on $30MM Class B Certs. ----------------------------------------------------------------- Enhanced Mortgage-Backed Securities Fund V Limited is rated by Fitch: -- $130.0 million class A-1 senior notes 'AAA'; -- $14.0 million class A-2 senior subordinated notes 'A+'; -- $20.0 million class A-3 subordinated notes 'BBB+'; -- $6.0 million class A-4 junior subordinated notes 'BBB'; -- $30.0 million class B junior subordinated income notes 'BB'. The ratings of the class A notes reflect the likelihood that investors will receive quarterly interest payments through the redemption date as well as their respective stated principal balances. The ratings of the class B income notes only reflect the likelihood that investors will receive their stated principal balances upon the legal final maturity date. The proceeds of the class A notes and class B income notes will be used to purchase a diversified portfolio of investment-grade assets, consisting primarily of U.S. dollar-denominated, fixed, adjustable- or floating-rate, mortgage-related, and asset-backed securities. Also, the investment portfolio will maintain an average credit quality of 'AA', with a majority of assets invested in securities rated 'AAA' or issued or guaranteed by the U.S. government and its agencies and private sector CMOs backed by such investments. Aggregate combined exposure to CMO derivatives, companions, and support bonds combined will be limited to no more than 10% of the maximum allowable portfolio size. In addition, the portfolio duration will be targeted at 0.1 years but will be limited to a range about the target duration from a minimum of negative 0.25 years to a maximum of 0.25 years based on a fully levered portfolio. The investment manager, Babson Capital Management (a part of the MassMutual Financial Group), will purchase and sell all investments for the portfolio on behalf of the issuer, EMBS V, a special purpose company incorporated under the laws of the Cayman Islands. Babson Capital Management will manage the portfolio in accordance with specific investment policies, restrictions, and guidelines reviewed by Fitch. To ensure accurate value of the portfolio, the issuer will perform daily valuations. FALCON PRODUCTS: Committee Says Disclosure Statement Is Deficient ----------------------------------------------------------------- An Ad Hoc Committee of Unsecured Creditors of Falcon Products, Inc., and its debtor-affiliates, tells the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, it doesn't like the Debtors' Disclosure Statement. As previously reported, an Ad Hoc Committee asked the Court for authority to examine, under Rule 2004 of the Bankruptcy Procedures, the proponents of the Debtors' Joint Plan of Reorganization. The Plan is co-proposed by Oaktree Capital Management, LLC, and Whippoorwill Associates, Inc. The Ad Hoc Committee argues that the Disclosure Statement raises more questions than delivering answers. And the Questions Are? When Oaktree and Whippoorwill were unsecured creditors, as co- proponents of the first Plan, they firmly believed that the estates' value is at $264 million. But soon after purchasing the Term B Secured Loan, Oaktree and Whippoorwill drafted a second Plan providing nothing for unsecured creditors and lowering the value of the estates to $85.4 million. This simply baffles the members of the Ad Hoc Committee. The Ad Hoc Committee is concerned how much control does Oaktree and Whippoorwill have over the Debtors, their management, their professionals and over the course and terms of the restructuring? In addition, the Ad Hoc Committee questions the Debtors' motives for pressing to exit chapter 11 when: a) they have virtually no long-term senior management in place, only "turn around" managers; b) have not yet stabilized operations and, as suggested by their most recent operating report, continue to run on a cash flow negative basis; c) only just received their "comprehensive, company-wide" business plan that outlines the Debtors' operational restructuring, most of which is supposed to be implemented post-consummation; d) they remain under investigation by the United States Attorney, Securities & Exchange Commission, and the Missouri Department of Securities for pre-petition "accounting errors and irregularities" pertaining to financial disclosures concerning the Debtors' inventory levels; e) they still do not have in place internal controls and an integrated inventory system; and f) they purportedly have not yet investigated the value of estate causes of action to be retained by the Debtors or waived under the Plan, including claims arising from the "accounting errors and irregularities" or sounding in preferences or fraudulent conveyance? The Ad Hoc Committee asserts that the Debtors should explain why they abandoned the original Plan outlined on the petition date and why the estates lost so much in five months. Bad Faith Filing The Ad Hoc Committee contends that serious legal implications arise if it can be proven that the Term B creditors are controlling the company and effected the change in the plan treatment of unsecured creditors. The Plan may disqualify the good faith test owing to the fact that Oaktree and Whipporwill can be classified as insiders, the Committee says. Moreover, the Ad Hoc Committee believes that the facts it presented will support a classic "papercraft" problem, where an insider with influence over the terms of the restructuring purchases claims in an effort to wrest ownership of the company. The Ad Hoc Committee urges the Court to grant it rights under Bankruptcy Rule 9014 to probe deeper and get the answers it needs. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FALCON PRODUCTS: Says Ad Hoc Committee's Disrupting the Process --------------------------------------------------------------- Falcon Products, Inc., and its debtor-affiliates tell the Honorable Barry S. Schermer that a formal probe under Rule 2004 of the Bankruptcy Procedures is unnecessary. As previously reported, an Ad Hoc Committee of Unsecured Creditors asked the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, to compel the Debtors and their co- proponents of the Joint Plan of Reorganization to produce documents for examination under Rule 2004. Dissatisfied with the efforts of the Official Committee of Unsecured Creditors in the Debtors' cases -- creditors holding 3% of the total general unsecured claims -- requested 60 categories of documents. The Debtors say that these creditors grossly mischaracterize facts and ignore the record in these cases. The Debtors question their integrity too. The Debtors tell the Court that their professionals have made all efforts to be cooperative with these creditors. Unfortunately, the Ad Hoc Committee demanded to see more documents in an impossible time frame, the Debtors say. In addition, the Ad Hoc Committee has refused to divulge required information to the Debtors, and has timed its actions so as to achieve maximum disruption. The hearing to consider approval of the Disclosure Statement is set on Wednesday, August 24, 2005. The Debtors assert that in order for their restructuring to be successful, they need to have their Plan confirmed on a hearing on Oct. 6, 2005. Their employees, key customers and vendors are anxiously waiting signs that the Debtors are making progress toward emerging from chapter 11. Not keeping with the schedule puts the Debtors in danger of losing the support of these people. Unless the Ad Hoc Committee can guarantee funding of the chapter 11 proceedings, the Debtors say they must emerge soon. As a matter of law, the Debtors contend, the Ad Hoc Committee can't be heard on these cases. The Ad Hoc Committee is a minority among the general unsecured creditors. The Official Committee of Unsecured Creditors is already representing this class. Term B Loan As for the Term B secured loan, the Debtors explain that Oaktree and Whippoorwill became successors to Levine Leichtman Capital Partners, III, L.P., along with three other lenders, based on a transfer agreement. Under that agreement, Oaktree, Whippoorwill and Dalton Investments, LLC, purchased the outstanding obligations from the original lenders. The transaction was properly filed, heard and approved by the Court, the Debtors say. Asset Valuation Contrary to the Ad Hoc Committee's assertion that the estates lost $178.6 million in five weeks, the Debtors expound that the assets reflected on the petition date was based on Falcon's July 31, 2004, Form 10-Q. What's reflected on the Summary of Schedules was less the amount of the estates good will of approximately $117 million, a write down of inventory for $20 million and a $24 million non-debtor subsidiaries' assets. Term Sheet Confusion As for the Committee's question on discarding the original plan, the Debtors say that what was released to the press was merely a non-binding Term Sheet -- a blueprint of a potential plan of reorganization. In addition, the Debtors included in the press release a disclaimer that the terms contemplated in the Term Sheet were not necessarily the terms that will come out in their chapter 11 plan. The Debtors throw back the blame on the Ad Hoc Committee for their inattention and oversights. Plan Funding The Debtors emphasize that their emergence from chapter 11 needs at least $50 million. That amount can be realized through the Rights Offering contemplated in the Plan and the $20 million exit funding that the Term B Secured Lenders will provide. There Is No Conspiracy Pursuant to the terms of the Plan, the proceeds from the Rights Offering will be used to repay the Term A Loan and the DIP facility rather than the Term B Lenders. Furthermore, under the Plan, Term B lenders will receive approximately 54% of the common stock with the 46% balance going to the participants of the Rights Offering. Assuming that there will be no unsecured creditors who will participate in the Rights Offering, the plan proponents will get 100% of the equity at exit. The Debtors say its preposterous for Oaktree and Whippoorwill to make an investment of $50 million to increase a 93% stake (as contemplated in the Term Sheet) to a 100% stake in the Plan of Reorganization. The Debtors assert that there is no conspiracy, just insufficient value to provide a return to general unsecured creditors and equity holders. Replacement of Turnaround Professionals According to Falcon, the employment of Alvarez & Marsal LLC was in accordance with the original Term B Lenders' will. After Oaktree and Whippoorwill assumed the Term B loan, they recommended John S. Sumner at TRG Turnaround Crisis Management as Chief Restructuring Officer primarily because of his extensive turnaround experience. The Debtors and the DIP lenders interviewed Mr. Sumner and found him adequate for the position. The retention was duly approved by the Court. What's At Stake for the Ad Hoc Committee The Debtors found out that two of the members of the Ad Hoc Committee own Notes while another purchased at least 25 unsecured claims totaling $1,029,090, between March 18, 2005, and June 3, 2005. Also, these creditors filed a 2019 Statements were they failed to disclose: * the nature and amount of their claims; * the date when each member of the Ad Hoc Committee acquired its claim; and * the amount paid for the claims. Repeated requests to comply with Rule 2019(a) by supplying the missing data were to no avail. The Ad Hoc Committee has yet to file a verified statement in compliance with the bankruptcy rule. The Debtors appeal to the Court that the Ad Hoc Committee's demands should be rejected because they duplicate the Official Committee's work, adding burden and expense to the estates, and delaying their emergence from bankruptcy. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FALCON PRODUCTS: Wants to Sell Property to RWMA Venture for $490K ----------------------------------------------------------------- Falcon Products, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Missouri for permission to: a) sell Shelby Williams' Canton property free and clear of any liens, claims and encumbrances; b) pay the real property taxes due on the Canton property; and c) pay the commission of its real estate broker, NAI Mark S. Bounds Realty Partners. Shelby Williams, Inc., a debtor-affiliate, owns the property located at 2075 Highway 43, in Canton, Mississippi, on the east side of Highway 43. The Debtor no longer uses the Canton property for operations and does not need the property for storage purposes. Shelby Williams is negotiating a final purchase agreement with RWMA Venturje Company, LLC, the only purchaser Shelby Williams has received for the property after marketing it since December 2003. The terms of the agreement include: -- The Debtor will sell the Canton Property to RWMA Venture for $490,000; -- The Debtor will pay a 7% commission from the sale proceeds to be shared equally between MSB Realty and RWMA Venture's broker Phillip Carpenter, of Carpenter Properties, Inc.; and -- The Debtor will pay all real property taxes and governmental assessments levied or assessed against the Canton property which are attributable to periods prior to the closing. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FEDERAL-MOGUL: Dist. Court Pegs Asbestos Liability at $9.4 Billion ------------------------------------------------------------------ In a Memorandum Opinion and Order released Friday, August 19, 2005, Judge Rodriguez estimated the total amount of contingent and unliquidated claims against Turner and Newall Limited for personal injury or death caused by exposure to asbestos at $9 billion in the United States and GBP229 million (about $411 million) in the United Kingdom, including pending and future claims. A full-text copy of Judge Rodriguez's 64-page Memorandum Opinion and two-page Order is available free of charge at: http://bankrupt.com/misc/fmoasbestosopinion.pdf As previously reported, the Official Committee of Asbestos Claimants and the Legal Representative For Future Asbestos Claimants' expert, Dr. Mark Peterson, estimated T&N's United States liability at $11.1 billion and T&N's liability for present and future claims in the United Kingdom at GBP226 million or about $405.6 million. In contrast, Dr. Robin Cantor, the Asbestos Property Damage Committee's expert, placed the net present value of all pending and future United States claims at $2.5 billion. Neither the PD Committee nor Dr. Cantor estimated the aggregate liability in the United Kingdom because the claims "are only a small fraction of the United States claims, and will not significantly affect recoveries for property damage claimants." English Law Considerations Judge Rodriguez notes that in an attempt to efficiently and thoroughly resolve the liability concerns in the United States, the PI Committee and the Futures Representative submitted evidence that they hope will provide some persuasive reference to the concurrent administration (bankruptcy) proceedings in the United Kingdom. Recently, the English solicitors for the Administrators of the English companies in the Federal-Mogul Group applied to Justice David Richards of the English High Court of Justice for directions that concerned various issues of conflicts of law pursuant to section 14(3) of the Insolvency Act 1986. After a hearing, the High Court indicted that it could be assisted on the issues after the U.S. District Court renders its estimation judgment. To that end, Judge Rodriguez believes that Barbara Dohmann, Q.C., a barrister at the Bar of England and Wales and a member of the Blackstone Chambers, provided credible and well-reasoned expert testimony as to the choice of law for liability and damages that would apply if T&N's personal liability claims, based on events in the United States, were considered by an English court. Ms. Dohmann opined that a Court in the United Kingdom would apply the law of the relevant United States jurisdiction to determine T&N's liability for asbestos claims asserted against it based on exposure and injury occurring in the United States. Judge Rodriguez accepts her testimony as credible and persuasive. According to Judge Rodriguez, the PD Committee correctly established during cross-examination that as of this moment the laws of the United Kingdom would control the quantification of damages issue. "Nevertheless, the Court accepts the testimony of Ms. Dohmann, and concurs with her opinion that the House of Lords will ultimately decide that United States claims against T&N would be assessed and quantified, in an English administration, under the applicable law of a United States jurisdiction, regardless of whether the claims are considered under [Private International Law (Miscellaneous Provisions) Act 1995] or common law." Estimation Process Judge Rodriguez notes that the Bankruptcy Codes does not establish the manner in which contingent or unliquidated claims are to be estimated. "Courts in the Third Circuit have recently grappled with the manner in which an estimation should be conducted in the asbestos-bankruptcy context." Judge Rodriguez points out that in the In re Armstrong World Industry estimation, it was stated that "estimating future claims is more an imprecise art than a science, and the best way anyone can do is try to find an estimate that is not unreasonable." In re Armstrong World Indus., Case No. 00-04471, slip. op. 45, Docket No. 6256 (Bankr. D. Del. December 19, 2003) The In re Owens Corning estimation provides a useful analog to the estimation in Federal-Mogul's case, Judge Rodriguez notes. The court pegged Owens Corning's liability as "somewhere in between," and consequently, assessed its liability at $7 billion. In re Owens Corning, 322 B.R. at 725. Judge Rodriguez observes that this was in-line with other major asbestos bankruptcy estimations -- the estimate in the Babcox & Wilcox case was $7.1 billion to $9.0 billion, in Armstrong World Industry it was $4.7 billion to $6.5 billion, in Raytech it was $7 billion, and in Eagle-Pitcher it was $2.5 billion. However, Judge Rodriguez relates, the Memorandum and Order in Owens Corning's case does not give a roadmap to its $7 billion dollar figure; this, despite the enormous variations in the four estimates provided, $2-$11 billion dollars. Judge Rodriguez clarifies that this is not a criticism of the Owens Corning court, but rather, a recognition that each expert used a different set of assumptions and methods for determining historic levels of compensation, the values of that compensation, and how the universe of claims was evaluated. Similarly, Judge Rodriguez notes, he is confronted with two estimates that are submitted by two well-respected experts, but are based upon radically different assumptions. According to Judge Rodriguez, the task, therefore, cannot be to simply determine which expert makes a more compelling argument as to a particular variable in their formula, insert the most credible figure, and then continue with the calculus. "The task is made more difficult because the parties have spent considerable time criticizing the other expert's assumptions and the methodology used to compute each variable. After consideration of the expert reports in this matter, it is evident that the Court must make reasonable adjustments based on the record created at trial and embrace the methodology it finds more reliable, while remaining vigilant to the potential bias that a party's expert may have on his or her estimation figures." Judge Rodriguez believes that a workable framework was developed in In re Eagle Pitcher, 189 B.R. 681 (Bankr. S.D. Ohio 1995). The Eagle Pitcher court set out what an estimating court should consider in the asbestos estimation process. In considering prepetition, unpaid claims, Judge Rodriguez asserts that the only sound approach is to begin with what is known -- the data in the T&N Database. Judge Rodriguez found the Eagle Pitcher court's seven considerations for estimating future claims persuasive: 1. The estimate should be primarily based on the company's history. This consideration does not, however, rule out the desirability of considering trends general to the industry, particularly regarding the rate of filing of claims. 2. The total number of claims to be expected should be estimated. 3. The estimation of claims should categorize them by disease and occupation, as well as other factors. 4. Valuation of claims should be based on settlement values for claims close to the filing date of the bankruptcy case. 5. A reasonable rate for indemnity increase with time must be determined so that a future value of filing date indemnity values can be comparable. 6. A lag time gleaned from the tort system must be determined in order that there be accuracy in projecting future values. 7. A discount rate must then be applied in order to bring the future nominal value of claims back to the filing date. Despite the significant difference in estimates, Judge Rodriguez observes that there are some areas where Dr. Peterson and Dr. Cantor agree. Both generally agree on the number of historical claims filed, and an approximate value of unpaid, unresolved pending claims. Also, each expert "transitions" the data for those claims that were unspecified in the T&N Database. In addition, the experts both derive a "nonmalignant multiplier" for projecting the number of future nonmalignant claims as a multiple of cancer claims; namely, Dr. Peterson uses 10.2 for his Increasing model and Dr. Cantor uses 12.9. They both generally agree on the historical dismissal rates, which they both use to determine the number of pending and future claims that will be compensated. After considering the evidence and the testimony of the experts, Judge Rodriguez has determined that Dr. Peterson's estimate comes closest to the criteria enumerated in In re Eagle-Pitcher. Judge Rodriguez says he places more reliance on the methodology and testimony of Dr. Peterson. "However, the reliance is tempered by the Court's consideration of the criticisms levied by the PD Committee of Dr. Peterson's Increasing model. In addition, the Court cannot ignore the lack of funding that has befallen numerous asbestos personal injury trusts, and was persuaded by the testimony that indicated that the asbestos containing products manufactured, distributed, marketed, and mined by T&N reached countless United States' job sites and affected hundreds of thousands of persons. It is for these reasons that a figure between Dr. Peterson's No Increasing estimate -- $8.2 billion -- and his Increasing estimate -- $11.1 billion -- is reasonable and in keeping with the purposes of [Section 502(c) of the Bankruptcy Code]." Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Inks Settlement Pact with Verizon Wireless --------------------------------------------------------- As previously reported, Cellco Partnership, doing business as Verizon Wireless, asked the U.S. Bankruptcy Court for the District of Delaware to compel Federal-Mogul Global, Inc., to turn over certain funds as a result of a mistake in banking transactions by Mellon Bank and Bank of America. Specifically, Verizon Wireless sought: a. injunctive relief and turnover by Federal-Mogul, based on constructive trust and unjust enrichment theories, of the proceeds of a $1,120,320 check issued by Verizon Wireless on a Mellon account and payable to Kyocera Wireless Corp., which was erroneously deposited into a Federal-Mogul account with Bank of America prior to the Petition Date; b. recovery of the Funds from Mellon on strict liability and negligence theories; and c. recovery of the Funds from Bank of America on the grounds of negligence. Michael Seidl, Esq., at Pachulski, Stang Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, relates that the Complaint was amended twice, adding Bank of America, N.A., as a defendant and adding a breach of warranty claim against Bank of America under Section 4-205 of the Uniform Commercial Code. Bank of America and Verizon Wireless filed claims in the Debtors' Chapter 11 cases with respect to the Funds: Claimant Claim No. Claim Amount -------- --------- ------------ Bank of America 5918 $1,120,320 Verizon Wireless 10779 1,120,320 After limited discovery among the parties, Verizon Wireless withdrew its request for injunctive relief with respect to Federal-Mogul. Mellon, Verizon Wireless and Bank of America also filed motions for summary judgment. Accordingly, the Court issued an order on January 14, 2005, whereby: -- Mellon's motion for summary judgment as to Verizon Wireless was granted while Verizon's summary judgment as against Mellon was denied; -- Mellon's motion for summary judgment on its cross claims against Bank of America was deemed moot as a result of a summary judgment granted in Mellon's favor with respect to Verizon; -- Verizon Wireless's motion for summary judgment as to Bank of America was denied; and -- Bank of America's motion for summary judgment as to Verizon Wireless was denied. As a result, the Adversary Proceeding was resolved with respect to Mellon, leaving the remaining dispute between Verizon Wireless and Bank of America. Verizon Wireless and Bank of America submitted their dispute to mediation, which was conducted on May 25, 2005. Verizon Settlement Agreement Federal-Mogul, Bank of America, Verizon Wireless and Mellon entered into a settlement with respect to the Bank of America Claim, the Verizon Wireless Claim, and the issues asserted in the Complaint and the various cross claims and counterclaims. The salient terms of the Settlement Agreement are: a. The Verizon Wireless Claim is deemed withdrawn; b. The Bank of America Claim is deemed allowed as a general unsecured claim in the Debtors' cases for $1,120,320 in full satisfaction of all claims asserted against the Debtors in the Verizon Adversary Proceeding; and c. The Complaint, as amended, and all counterclaims and cross claims are dismissed with prejudice, with each party to bear its own costs and expenses. The Debtors ask the Court to approve the Settlement Agreement. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 90; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIBERMARK: Court Unseals Examiner's Redacted Report --------------------------------------------------- As previously reported, the U.S. Bankruptcy Court for the District of Vermont has determined that the report of the independent examiner appointed in FiberMark, Inc.'s chapter 11 case should be unsealed, subject to certain minimal redaction. The redacted report was unsealed on Friday, August 19, 2005, absent any motion to stay the unsealing. A full-text copy of the redacted 344-page report is available for free at: http://bankrupt.com/misc/FMKIQExaminerReport.pdf Harvey R. Miller, the chapter 11 examiner appointed in the Debtors' chapter 11 cases, looked into disputes among Committee members and the Debtors concerning corporate governance issues and fiduciary duties. Mr. Miller is represented by Weil, Gotshal & Manges LLP. The U.S. trustee disbanded the creditors committee effective July 13, 2005, after Mr. Miller conducted the investigation and made his recommendation that the dysfunctional committee be dissolved. As reported in the Troubled Company Reporter on Apr. 16, 2004, the United States Trustee for Region 2 appointed five creditors to serve on an Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases: 1. AIG Global Investment Group, Inc. 2. Wilmington Trust Company As Indenture Trustee for the 10.75% Senior Notes Due 2011 and 9.375% Senior Notes Due 2006 3. Solution Dispersions, Inc. 4. Post Advisory Group, LLC 5. E.I. DuPont de Nemours & Company E.I. DuPont resigned and was replaced by Silver Point Capital. Everybody Mr. Miller takes a swipe at in his report disputes the facts, Mr. Miller's conclusion, or that they did anything wrong. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wall coverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J. Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. At June 30, 2005, FiberMark, Inc.'s balance sheet showed a $108,891,000 stockholders' deficit, compared to a $101,876,000 deficit at Dec. 31, 2004. FIREARMS TRAINING: Balance Sheet Upside Down by $28.9M at June 30 ----------------------------------------------------------------- Firearms Training Systems, Inc. (OTC: FATS), reported first quarter results for fiscal year 2006 ended June 30, 2005. Revenue for the first quarter was $16.5 million versus $18.4 million for the same period of the previous year. The Company achieved first quarter net income applicable to common stockholders of $9,000, or $0.00 per diluted share, compared to a net loss of ($0.3 million) for the same period of the previous year. The improvement in net income was primarily driven by the elimination of mandatory preferred stock dividends and lower debt cost as a result of the Company's successful debt refinancing on September 30, 2004. Ronavan R. Mohling, the Company's Chairman and Chief Executive Officer stated, "While we are disappointed in this quarter's revenue result, the Company has grown revenues in the prior six periods. The Company's strategic direction and focus is fundamentally sound. Our dedication to research and development, quality, strategic relationships and major operational improvements is building a solid foundation for long-term success. Our core strength is evolving into a new role: being a cutting- edge developer of integrated virtual training systems for complex combat environments. The Company's solutions exemplify the advanced tools and technology necessary to meet the new demands of the modern military and law enforcement organizations around the world." The Company continues to evaluate various strategic alternatives with its financial advisor, Mr. Mohling noted. He expects that the Company will complete its review and take any actions arising from this review during the next several months. However, there can be no assurance that this process will result in a transaction, any proposal or agreement for a transaction, or any other action by the Company. Firearms Training Systems, Inc., through its subsidiary FATS, Inc. -- http://www.fatsinc.com/-- designs and sells virtual training systems that improve the skills of the world's military, law enforcement and security forces. FATS training provides judgmental, tactical and combined arms experiences, utilizing quality engineered weapon simulators. The Company serves U.S. and international customers from headquarters in Suwanee, Georgia, with branch offices in Australia, Canada, Netherlands and United Kingdom. FATS, an ISO 9001:2000 certified company, celebrated its 20th anniversary in 2004. As of June 30, 2005, Firearms Training equity deficit widened to $28,975,000, from a $28,504,000, deficit at March 31, 2005. FLOWSERVE CORP: Completes $1 Billion Debt Refinancing ----------------------------------------------------- Flowserve Corp. (NYSE:FLS) completed a $1 billion refinancing of its high yield notes, Term A and Term C loans, and consolidation of its revolving credit and backup liquidity facilities on Aug. 12, 2005. The company will redeem all of its 12.25% Senior Subordinated Notes with face amounts of $188.5 million and EUR65 million. The company currently expects to save more than $20 million of interest expense annually through these actions. Separately, the company said it will incur about $10 million of expenses in 2005, including about $6.5 million in non-cash stock compensation expense, related to the chief executive officer transition and certain stock compensation actions. "We are extremely pleased to complete this refinancing and take the next step in significantly strengthening our capital structure," said Chief Financial Officer Mark A. Blinn. "By refinancing at more favorable rates, including replacing the 12.25 percent coupon rate under the senior subordinated notes, we expect to substantially reduce our cash interest expense and other bank- related fees. In addition, the less restrictive lending covenants provide us with considerably more flexibility in our capital structure, including the ability to better utilize our cash flow. As we have in the past, we will continue to manage interest rate risk in connection with this new financing. Bottom line, we currently expect to save more than $20 million of interest expense annually over the current interest rate structure." New Credit Facilities A new $600 million 7-year Term B loan, with an initial interest rate equal to the London Interbank Offered Rate (LIBOR) plus 175 basis points, replaces the $322 million of outstanding Term A and Term C loans, which had an effective interest rate equal to LIBOR plus 248 basis points as of June 30. A portion of the proceeds also will be used to redeem both tranches of the company's outstanding 12.25% Senior Subordinated Notes with face values of $188.5 million and EUR65 million, respectively. Also, a new $400 million 5-year revolving credit facility, having an initial interest rate of LIBOR plus 175 basis points, replaces a $300 million revolving credit facility with the same interest rate as of June 30, as well as $89.3 million of backup liquidity facilities. The refinancing transaction was led by Bank of America and Merrill Lynch & Co. A full-text copy of the CREDIT AGREEMENT dated as of August 12, 2005, among FLOWSERVE CORPORATION, one or more unidentified LENDERS, BANK OF AMERICA, N.A., as Administrative Agent, Swingline Lender and Collateral Agent, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Book Manager, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Lead Arranger and Joint Book Manager and Syndication Agent, and CALYON NEW YORK BRANCH, MIZUHO CORPORATE BANK, and PNC BANK, NATIONAL ASSOCIATION, as Co-Documentation Agents, is available at no charge at http://ResearchArchives.com/t/s?ed Redemption of Senior Subordinated Notes On Sept. 12, 2005, the company will redeem its 12.25% Senior Subordinated Notes due Aug. 15, 2010. Noteholders will receive $1,061.25 per $1,000 principal amount held, plus accrued interest to the redemption date. Notice of redemption was delivered on Aug. 12, 2005, as required under the respective indentures. The company expects to incur a loss on the redemption of the notes and the refinancing, which will take into consideration cash payments of $16 million for the redemption premium and approximately $10 million for financing-related fees, as well as non-cash amounts totaling approximately $8 million currently on its balance sheet reflecting original issue discounts and capitalized costs related to the debt facilities that were refinanced and notes that will be redeemed. The ultimate amount of the loss depends on the amount of financing fees and expenses that may be capitalized as debt issue costs rather than expensed, and depends upon the final syndication of the banks. CEO-Transition Related Expenses Separately, the company says it expects to record CEO transition-related and certain stock compensation expenses in 2005 totaling about $10 million, primarily related to severance, executive search, previously reported management retention bonuses under the company's Transition Security Plan, and stock compensation resulting from the modification of certain existing restricted stock and stock option grants. Until the company becomes current with all of its financial statement filings with the Securities and Exchange Commission and formally registers shares under option programs, the company, as provided under its stock compensation plans, has precluded stock option holders from exercising any options. With respect to existing employees and certain retirees, the company extended through Dec. 31, 2006, all options previously scheduled to expire during 2005. Under accounting rules, the modification of an existing stock option triggers a re-measurement of the original grant to recognize as additional non-cash compensation expense the difference between the option strike price and the fair value of the underlying stock at modification date for all modified options. Approximately $6.5 million of the approximately $10 million charge attributable to the CEO transition and certain stock compensation noted above reflects a non-cash charge related to this additional non-cash compensation expense, including about $5.5 million arising from the departure of the former CEO. The company may find it appropriate or necessary to further modify options during this suspension period to provide similar extended exercise periods to affected option holders, resulting in additional non- cash compensation expense that could be material to the company's results of operations. Flowserve Corp. is one of the world's leading providers of fluid motion and control products and services. Operating in 56 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. * * * As reported in the Troubled Company Reporter on Aug. 9, 2005, Standard & Poor's Ratings Services assigned its 'BB-' senior secured bank loan rating to Irving, Texas-based Flowserve Corp.'s $1 billion credit facility. A recovery rating of '3' was also assigned, indicating meaningful recovery of lender principal in the event of a default. At the same time, S&P affirmed its ratings on Flowserve Corp., including the 'BB-' corporate credit rating and 'B-3' short-term credit rating. The proposed $1 billion senior secured credit facilities consist of a $400 million revolving credit facility due in five years and a $600 million term loan facility due in seven years. Flowserve plans to use the proceeds from the new $1 billion borrowing to refinance: * its existing terms A and C debt, * its existing revolving credit facility, and * its outstanding 12.25% senior subordinated notes. Standard & Poor's would withdraw ratings on those issues once repaid. The company will have about $1 billion of rated debt outstanding after the bank loan has closed in mid-August and the bonds have been called within the 30-day period. S&P said the outlook is stable. GARDEN RIDGE: Wants Claims Objection Deadline Stretched to Jan. 7 ----------------------------------------------------------------- The Post-Confirmation Committee of Garden Ridge Corporation and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware to extend, until January 7, 2006, the period within which it can object to General Unsecured Claims, Convenience Claims and Eligible Reclamation Claims. The Committee tells the Court that the extension will provide it with more time to effectively evaluate the claims, prepare and file objections to the claims and, where possible, consensually resolve them. The Committee says that the claims review process has been delayed because the budget for the review was only agreed in June 2005. Also, the Committee's counsel has only recently received documents necessary to review, object and finalize the claims. The Current claims objection deadline ends on September 9, 2005. Headquartered in Houston, Texas, Garden Ridge Corporation -- http://www.gardenridge.com/-- is a megastore home decor retailer that offers decorating accessories like baskets, candles, crafts, home accents, housewares, party supplies, pictures and frames, pottery, seasonal items, and silk and dried flowers. The Company and its debtor-affiliates filed for chapter 11 protection on February 2, 2004 (Bankr. D. Del. Case No. 04-10324). Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated debts and assets of over $100 million. GEO SPECIALTY: Closing of Chapter 11 Cases Moved to September 30 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey approved the request of GEO Specialty Chemicals, Inc., and its debtor- affiliates to delay the closing of their chapter 11 cases to September 30, 2005. As previously reported in the Troubled Company Reporter on July 28, 2005, Brian L. Baker, Esq., at Ravin Greenberg PC, in Roseland New Jersey, informed the Court that the Debtors have various unresolved claim objections, which require additional time to fully investigate, analyze and negotiate a resolution. Additionally, a matter between the Debtors and Hercules Incorporated is presently pending before the Court. Currently, the Debtors and Hercules are in the discovery phase of litigation. Headquartered in Harrison, New Jersey, GEO Specialty Chemicals, Inc. -- http://www.geosc.com/-- develops, manufactures and markets a wide variety of specialty chemicals, including over 300 products sold to major industrial customers for various end-use applications including water treatment, wire and cable, industrial rubber, oil and gas production, coatings, construction, and electronics. The Company filed for chapter 11 protection on March 18, 2004 (Bankr. N.J. Case No. 04-19148). Alan Lepene, Esq., Robert Folland, Esq., and Sean A. Gordon, Esq., at Thompson Hine, LLP, and Brian L. Baker, Esq., Howard S. Greenberg, Esq., and Stephen Ravin, Esq., at Ravin Greenberg, PC, represent the Debtors in their restructuring efforts. On September 30, 2003, the Debtors listed $264,142,000 in total assets and $215,447,000 in total debts. On Dec. 20, 2004, the Court confirmed the Debtors' Third Amended Plan of Reorganization. The Plan took effect on Dec. 31, 2004. HAYES LEMMERZ: Four Directors Acquire 9,696 Shares of Common Stock ------------------------------------------------------------------ In separate Form 4 reports filed with the Securities and Exchange Commission, four directors of Hayes Lemmerz International, Inc., disclose that they each acquired 2,424 shares of the Company's common stock: Date Securities Owned Name Acquired After Transaction ------- ---------- ----------------- Laurence M. Berg 07/28/2005 7,273 William H. Cunningham 07/28/2005 27,273 Henry D. G. Wallace 07/28/2005 14,773 Richard F. Wallman 07/28/2005 7,273 According to Patrick C. Cauley, Hayes Lemmerz Attorney-in-Fact, the 2,424 shares of stock were Restricted Stock Units converted into an equal number of shares of common stock on July 28, 2005. "Each Restricted Stock Unit is convertible into one share of common stock or cash in an amount equal to the fair marker value of a share of common stock, as determined by the Compensation Committee of the Board of Directors." The Restricted Stock Units were previously granted to each of the Directors pursuant to the Hayes Lemmerz International, Inc. Long Term Incentive Plan, Mr. Cauley relates. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on April 11, 2005, Moody's Investors Service assigned a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien term loan facility. HLI Opco is an indirect subsidiary of Hayes Lemmerz International, Inc. The rating outlook remains stable. While the company has reaffirmed its earning guidance and the senior implied and guaranteed senior secured first-lien facility ratings remain unchanged at B1, Moody's determined that widening of the downward notching of HLI Opco's guaranteed senior unsecured notes was necessary to reflect additional layering of the company's debt. The senior unsecured notes are effectively subordinated to the proposed new senior secured second-lien term facility, and approximately $75 million of higher-priority debt will be added to the capital structure. These specific rating actions were taken by Moody's: * Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien credit term loan C due June 2010; * Downgrade to B3, from B2, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); * Affirmation of the B1 ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured first-lien credit facilities, consisting of: * $100 million revolving credit facility due June 2008; * $450 million ($427.3 million remaining) bank term loan B facility due June 2009 (which term loan is still expected to be partially prepaid through application of about half of the net proceeds of the proposed incremental debt issuance); * Affirmation of the B1 senior implied rating; * Downgrade to Caa1, from B3, of the senior unsecured issuer rating (which rating does not presume the existence of subsidiary guarantees). HEARME: Board Approves $274,612 Final Cash Distribution ------------------------------------------------------- The Board of Directors for HearMe (Pink Sheets:HEARZ) approved a final cash distribution to be paid out of net available assets of $.009977 per share to stockholders of record as of the Company's final record date of Nov. 26, 2001. It is currently anticipated that the Distribution will be made by Aug. 30, 2005. The aggregate amount of the distribution is $274,612. This distribution will be the Company's final liquidating distribution. An initial cash distribution of $0.18 per share totaling approximately $5,113,000, was made in March 2002 and a second cash distribution in the amount of $0.0467 per share totaling approximately $1,325,000, was made in December 2004, in each case to stockholders of record as of the final record date. The number of outstanding shares of the Company's common stock outstanding on November 26, 2001, the date on which the Company closed its stock transfer books and discontinued recording transfers, was 28,402,908. The number of shares subject to the Company's final distribution does not include 877,849 shares associated with certain stockholders with outstanding promissory notes. In the case of certain stockholders with outstanding promissory notes payable to the Company, the proceeds of the Distribution will be offset against the outstanding principal and interest under such notes. In other cases, settlement agreements with certain former noteholders included provisions whereby such noteholders assigned the proceeds of any further distributions to stockholders back to the Company. In addition, pursuant to the management retention arrangements entered into in 2001 with certain individuals, in connection with the Distribution HearMe will pay the aggregate amount of $20,670 to such individuals. The Company will retain approximately $50,000 for final expenses including, but not limited to, preparation and filing of final tax returns, state withdrawal filings, accounting and legal related to the final distribution, storage costs and a small reserve to cover any other costs that may be incurred in connection with the Company's final wind-down. The Company has determined that following the Distribution its shares of Common Stock will have no value. New York Litigation On November 19, 2001, the Company was served with a complaint filed by Michael Ring and Frank Ring against the Company and GameSpy Industries, Inc. in the New York Supreme Court, County of New York, alleging breach of a written lease relating to a facility in New York, New York which had been assigned to GameSpy, and seeking damages of approximately $197,000 plus attorneys' fees. In January 2004, the New York Supreme Court ruled in favor of HearMe, and in May 2005 the U.S. Court of Appeals for the Second Circuit affirmed this decision. The final, and favorable, resolution of this litigation has enabled the Company to make the Distribution. HearMe (formerly Mpath Interactive) was a specialist in real-time voice technology for the Web. HearMe licensed its Voice over Internet Protocol (VoIP) technology to companies such as Raindance Communications and eshare communications. The company offered PC- to-PC and PC-to-phone applications focusing on voice conferencing, calling, and voice interaction for e-commerce sites. As part of a restructuring initiative to concentrate on its voice technology, HearMe sold its Web communities (including entertainment and games Web site Mplayer.com) to online game firm GameSpy Industries in early 2001. It later decided to totally shut down operations. Investment firm Accel Partners owns about 10% of the company. INDYMAC ABS: Poor Collateral Performance Cues Fitch's Downgrade --------------------------------------------------------------- Fitch Ratings has taken rating actions on these IndyMac ABS, Inc. Home Equity issues: Series SPMD 2000-A group 1: -- Class AF-3 affirmed at 'AAA'; -- Class MF-1 affirmed at 'AA'; -- Class MF-2 affirmed at 'A'; -- Class BF downgraded to 'C' from 'CCC'. Series SPMD 2000-A group 2: -- Class AV-1 affirmed at 'AAA'; -- Class MV-1 affirmed at 'AA'; -- Class MV-2 affirmed at 'A'; -- Class BV affirmed at 'BBB'. Series SPMD 2000-B group 1 -- Class AF-1 affirmed at 'AAA'; -- Class MF-1 affirmed at 'AA'; -- Class MF-2 downgraded to 'CCC' from 'B'; -- Class BF remains at 'C'. Series SPMD 2000-B group 2 -- Class AV-1 affirmed at 'AAA'; -- Class MV-1 affirmed at 'AA'; -- Class MV-2 affirmed at 'A'; -- Class BV remains at 'CCC'. Series SPMD 2000-C group 1 -- Classes AF-5, AF-6 affirmed at 'AAA'; -- Class MF-1 affirmed at 'A'; -- Class MF-2 downgraded to 'C' from 'CCC'. Series SPMD 2000-C group 2 -- Class AV affirmed at 'AAA'; -- Class MV-1 affirmed at 'AA'; -- Class MV-2 downgraded to 'BB' from 'BBB'. Series SPMD 2001-A group 1 -- Classes AF-5, AF-6 affirmed at 'AAA'; -- Class MF-1 downgraded to 'BB-' from 'BBB-'; -- Class MF-2 downgraded to 'C' from 'CCC'. Series SPMD 2001-A group 2 -- Class AV affirmed at 'AAA'; -- Class MV-1 affirmed at 'A-'; -- Class MV-2 affirmed at 'BBB-'; -- Class BV affirmed at 'BB'. Series SPMD 2001-B groups 1 and 2 -- Class AV affirmed at 'AAA'; -- Class MF-1 affirmed at 'AA'; -- Class MF-2 downgraded to 'BBB-' from 'A'; -- Class BF downgraded to 'C' from 'CCC'. Series SPMD 2001-C groups 1 and 2 -- Classes AF-B4, AF-A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. The affirmations on approximately $215 million of the above classes reflect credit enhancement consistent with future loss expectations. The negative rating actions on approximately $45 million of the above classes are due to poor collateral performance and the deterioration of asset quality beyond original expectations. Series SPMD 2000-A group 1, with 11.70% of the original collateral remaining, contained 9.38% manufactured housing collateral at closing, and as of July 2005, the percentage of MH has increased to 30.23. The remainder of the collateral consists of subprime fixed-rate mortgages secured by first or second liens. As of July 2005, the overcollateralization was $65,888 versus a target of $600,970. Class BF has already taken some write-downs and has currently $2,872,397 of principal remaining. The 12-month average gross losses are $66,098, and excess spread before losses for the same period is $20,907. Series SPMD 2000-B group 1, with 13.19% of the original collateral remaining, contained 12.73% manufactured housing collateral at closing, and as of July 2005, the percentage of MH has increased to 42.07. The remainder of the collateral consists of subprime fixed-rate mortgages secured by first or second liens. As of July 2005, the OC was zero versus a target of $1,567,999. Class BF has already taken some write-downs and has currently $733,592 of principal remaining. The 12-month average gross losses are $156,827, and excess spread before losses for the same period is $30,700. Series SPMD 2000-C group 1, with 11.99% of the original collateral remaining, contained 12.08% MH collateral at closing, and as of July 2005, the percentage of MH has increased to 40.64. The remainder of the collateral consists of subprime fixed-rate mortgages secured by first or second liens. As of July 2005, the OC was zero versus a target of $900,001. Class MF-2 has already taken some write-downs and has currently $5,716,007of principal remaining. The 12-month average gross losses are $270,709 and excess spread before losses for the same period is $53,072. Series SPMD 2000-C group 2, with 12.03% of the original collateral remaining, contained 9.65% MH collateral at closing, and as of July 2005, the percentage of MH has increased to 27.33. The remainder of the collateral consists of subprime adjustable-rate mortgages secured by first liens. As of July 2005, the OC was $797,516 versus a target of $1,350,000. The 12-month average gross losses are $224,062, and excess spread before losses for the same period is $147,018. Series SPMD 2001-A group 1, with 14.43% of the original collateral remaining, contained 9.59% MH collateral at closing, and as of July 2005, the percentage of MH has increased to 27.58. The remainder of the collateral consists of subprime fixed-rate mortgages secured by first or second liens. As of July 2005, the OC was $56,770 versus a target of $815,000. Class MF-2 has already taken some write-downs and has currently $2,085,203 of principal remaining. The 12-month average gross losses are $183,657, and excess spread before losses for the same period is $84,543. Series SPMD 2001-B, with 10.55% of the original collateral remaining, contained 2.75% MH collateral at closing, and as of July 2005, the percentage of MH has increased to 12.19. The remainder of the collateral consists of subprime fixed- and adjustable-rate mortgages. As of July 2005, the OC was $62,774 versus a target of $1,750,000. Class MF-2 has already taken some write-downs and has currently $3,615,574 of principal remaining. The 12-month average gross losses are $256,266, and excess spread before losses for the same period is $109,377. IT GROUP: Administrative Claims Objection Deadline is Oct. 31 ------------------------------------------------------------- The U.S. Bankruptcy Court District of Delaware gave Alix Partners LLC, the Trustee of the IT Litigation Trust formed under the confirmed First Amended Joint Plan of Reorganization of The IT Group, Inc., and its debtor-affiliates, a further extension, until Oct. 31, 2005, to object to Administrative Claims filed against the Debtors' estates. Pursuant to the confirmed Plan, Alix Partners also acts as Disbursing Agent to liquidate and distribute the Debtors' remaining assets to their creditors and perform the claims resolution process. Alix Partners explains that the aggregate amount of Administrative Claims asserted against the Debtors exceeded $26.9 million. The claims reconciliation process has resulted in the disallowance, reduction or satisfaction of approximately $22.7 million in Administrative Claims to date. Therefore, there is approximately $4.2 million of remaining Administrative Claims in the claims pool. Alix Partners gave the Court three reasons in support of the extension: 1) Alix and its professionals are continuing to engage in settlement negotiations with certain holders of Administrative Claims, including relatively complex claims filed by taxing authorities; 2) the extension will give it more opportunity to review and analyze the remaining $4.2 million Administrative Claims pool and if necessary, file additional objection to those claims; 3) the extension will not prejudice the Debtors' creditors and other parties-in-interest and it is in the best interest of the Litigation Trust, the Debtors and their estates. Headquartered in Monroeville, Pennsylvania, The IT Group, Inc. -- http://www.theitgroup.com-- together with its 92 direct and indirect subsidiaries, is a leading provider of diversified, value-added services in the areas of consulting, engineering and construction, remediation, and facilities management. The Company filed for chapter 11 protection on Jan. 16, 2002 (Bankr. Del. Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate Meagher & Flom LLP, represents the Debtors. On Sept. 30, 2001, the Debtors listed $1,344,800,000 in assets and 1,086,500,000 in debts. The Court confirmed the Debtors' chapter 11 Plan on April 5, 2004, and the Plan took effect on April 30, 2004. Alix Partners LLC is the IT Litigation Trust Trustee appointed under the confirmed Plan. John K. Cunningham, Esq., and Ileana Cruz, Esq., at White Case LLP represents the Trustee. JOHNSONDIVERSEY: S&P Revises Long-Term Rating Outlook to Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its short-term corporate credit rating on JohnsonDiversey Holdings Inc. to 'B-2' from 'B-1' and revised its outlook on the long-term rating to negative from stable. All other ratings on JohnsonDiversey Holdings and its subsidiary, JohnsonDiversey Inc., including the 'BB-' long-term corporate credit ratings were affirmed. "Today's rating actions reflect our concerns that high raw- material costs and soft economic and market conditions in key Western European markets could delay expected improvement in the company's financial profile," said Standard & Poor's credit analyst Cynthia Werneth. She added that "because of weak recent performance, continued compliance with financial covenants in the company's primary bank credit agreement is not assured." The ratings on Sturtevant, Wisconsin-based JohnsonDiversey Holdings reflect an aggressive financial profile, which more than offsets the company's satisfactory business position and historically relatively stable profitability. Although JohnsonDiversey's operating margins do not fluctuate as much as those of most other chemicals companies, they have come under pressure during the past year primarily as a result of high petroleum-based raw-material and transportation costs, and difficulty in passing through increased costs to customers in some highly competitive and consolidating markets. To a lesser extent, profitability has been negatively affected by customers' moves to lower margin products and the company's strategic shift to lower- margin solutions selling. As a result, operation margins before depreciation and amortization have declined to the mid-12% area from the mid-13% area, although they improved sequentially during the most recent quarter, helped by price increases and cost-cutting measures. This compares with previous expectations that operating margins would trend toward the mid-teens percentage area and would support gradual improvement to the financial profile. JohnsonDiversey, with revenues of more than $3 billion, is a leading global manufacturer and marketer of cleaning and hygiene products and related services for the institutional and industrial cleaning market. The company is the second-largest player in a still-fragmented, almost $19 billion market, trailing only the industry leader, Ecolab Inc. KAISER ALUMINUM: Retirees Committee Balks at Disclosure Statement ----------------------------------------------------------------- The Official Committee of Retired Salaried Employees asserts that the proposed Disclosure Statement supporting the Remaining Kaiser Aluminum Corporation and its debtor-affiliates' Plan of Reorganization is not adequate. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman LLP, in Wilmington, Delaware, tells Judge Fitzgerald that the Disclosure Statement does not reveal the identity or relevant affiliations of the proposed directors for Reorganized Kaiser Aluminum Corporation. The creditors may not get the necessary information until after they have already voted on the Plan. Section 1129(a) of the Bankruptcy Code requires disclosure, by the time of the confirmation hearing, of the identity and affiliations of all proposed directors, Mr. Rosner notes. Moreover, the disclosure will also have to be sufficient to enable the U.S. Bankruptcy Court for the District of Delaware to make its public policy determination under Section 1129(a)(5)(A)(ii). The Retirees Committee contends that it is essential for creditors to know all of the relevant allegiances of the proposed directors before voting because if confirmed, the Plan will make a number of changes to the articles of incorporation currently in effect for KAC. Most of those changes will assure that the initially elected board of directors will likely remain in office, despite KAC's financial performance or some person's desire to purchase KAC. Mr. Rosner clarifies that the retirees will not be voting claims based on the termination of their "retiree benefits," as defined and protected by Section 1114 of the Bankruptcy Code. The Debtors' settlements with the Retirees Committee, the United Steelworkers and the other unions provide for specified benefits to be contributed to two retiree trusts, in lieu of distribution on individual claims. However, as the director disclosures must be made before Plan confirmation, Mr. Rosner believes it would be efficient and helpful to all general unsecured creditors, who are to receive only stock on their claims, to know who will control their corporation and to be assured that a majority of those persons will not have divided loyalties, before creditors vote. Mr. Rosner recounts that under the Plan, all of the existing stock is to be cancelled and new stock will be issued to creditors. The Retired Salaried Employee VEBA Trust is to hold just under 10% of the stock of Reorganized KAC -- the third largest block to be issued under the Plan -- and be entitled to a share of Reorganized KAC's profits. Therefore, Mr. Rosner maintains, the VEBA Trust will be heavily dependent on Reorganized KAC's performance in generating profits. Similarly, general unsecured creditors will be receiving only KAC stock, so the value of what they are to receive under the Plan will be highly dependent on how the market perceives the likelihood of Reorganized KAC to generate profits over the next few years. Mr. Rosner explains that part of the market's valuation of the new stock will be based on the perceived likelihood that the new board of directors will be focused on profits, and not on maintaining other relationships. The Debtors have emphasized that most of the directors will be "independent" from Reorganized KAC. Creditors need to know how many of the six non-union directors will also be independent of major interests that are adverse to Reorganized KAC, Mr. Rosner insists. Moreover, the Union VEBA Trust is to receive, on the Effective Date of the Plan, about 57% of the stock of Reorganized KAC. With the holders of existing equity in the Debtors showing no further interest in their case, the Remaining Debtors' management has already shown an unusual willingness to accommodate to USW's desires, Mr. Rosner states. Accordingly, the Retirees' Committee asks the Court to direct the Debtors to reveal, as part of the Disclosure Statement, the identity of all persons proposed to be directors of Reorganized KAC, together with all direct or indirect connections of those persons who will be a holder of more than 20% of the Reorganized Company's common stock, or a party to any known major contract with any of the Debtors. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) KB TOYS: Bankruptcy Court Confirms Amended Reorganization Plan -------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware has confirmed KB Toys, Inc.'s First Amended Plan of Reorganization. Confirmation of the Plan paves the way for KB Toys and its subsidiaries to emerge from Chapter 11 in time for the beginning of the upcoming holiday shopping season. The Plan provides for PKBT Funding LLC, an affiliate of Prentice Capital Management, LP, to invest $20 million in the reorganized KB Toys and provide the Company and its subsidiaries with a seasonal over-advance credit facility of up to $25 million. In exchange, PKBT will receive 100% of the preferred stock and, together with Roger V. Goddu, Gregory R. Staley and certain members of the KB Toys management team, 90% of the common stock of the reorganized Company. The remaining common stock will be held in a trust for the benefit of the unsecured creditors of KB Toys and certain of its subsidiaries. Upon the Company's emergence from Chapter 11, currently expected to occur on or about Aug. 29, 2005, Gregory R. Staley, former President of Toys 'R' Us' USA and International divisions, is expected to become KB Toys' new President and Chief Executive Officer. "We plan to create a fun and customer-friendly shopping experience, full of new products at great prices," Mr. Staley said. "KB Toys has a rich history -- we expect the new KB Toys will be even better." In addition to Mr. Staley's role, Roger V. Goddu, formerly Chairman and Chief Executive Officer of Montgomery Ward, and also a former President of Toys 'R' Us USA, will serve as a director of, and consultant to, KB Toys. Both Mr. Goddu and Mr. Staley are well-known toy industry executives and bring a wealth of knowledge and experience to KB Toys. Jonathan Duskin, a managing director of Prentice Capital stated: "KB Toys has an exciting opportunity and a dedicated group of employees. In addition to providing capital, we intend to fortify the Company with strategic expertise. Greg Staley is an experienced toy retailer who will provide the new KB Toys with great vision and leadership." "KB is now well positioned to return to success," Michael L. Glazer, KB Toys' outgoing chief executive officer, said. "We appreciate the tremendous effort and loyalty displayed by our employees, vendors, landlords and business partners as we moved through the Chapter 11 process." One of the largest toy retailers in the United States, KB Toys, Inc. -- http://www.kbtoys.com/-- (which once boasted 1,200 stores) operates about 650 stores under four formats: * KB Toys mall stores, * KB Toy Works neighborhood stores, * KB Toy Outlets and KB Toy Liquidator, and * KB Toy Express (in malls during the holiday season). The company along with its affiliates filed for chapter 11 protection on January 14, 2004 (Bankr. Del. Case No. 04-10120). The chapter 11 filing resulted in nearly 600 store closures and 4,000 layoffs. In March 2004, KB Toys sold its KBToys.com Internet business to an affiliate of D. E. Shaw, which renamed the company eToys Direct. Joel A. Waite, Esq., at Young, Conaway, Stargatt, & Taylor, represents the toy retailer. When the Debtors filed for protection from its creditors, they listed consolidated assets of $507 million and consolidated debts of $461 million. KEYSTONE CONSOLIDATED: Hires Chilton Yambert as Special Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Wisconsin gave Keystone Consolidated Industries, Inc., and its debtor- affiliates permission to hire Chilton Yambert, Porter & Young LLP as special litigation counsel, nunc pro tunc to Feb. 26, 2004. Chilton Yambert will assist the Debtors in the Peoria and Madison County, Illinois, litigation matters. Chilton Yambert's fees are capped at $250,000 to $350,000. These Chilton Yambert's professionals bill: Professionals Designation Hourly Rate ------------- ----------- ----------- Larry J. Chilton Partner $175 Fred Vano Partner 175 Joseph Vallort Associate 135 Ernest Wagner Associate 135 Ron Chilton Paralegal 100 Jon Yambert, a partner at Chilton Yambert, assured the Court that Chilton Yambert does not represent or hold any interest adverse to the Debtors and is "disinterested" within the meaning of Sec. 101(14) of the United States Bankruptcy Code. 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 and its debtor-affiliates filed for chapter 11 protection on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22422). The case is jointly administered under E.D. Wisc. Case No. 04-22421. 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 Debtors filed for protection from their creditors, they listed $196,953,000 in total assets and $365,312,000 in total debts. KRISPY KREME: Court Extends KremeKo's CCAA Protection to Sept. 2 ---------------------------------------------------------------- The Ontario Superior Court of Justice extended KremeKo, Inc.'s protection under the Companies' Creditors Arrangement Act through Sept. 2, 2005. The extension will permit the Company to continue its discussions and negotiations with its secured lenders regarding other restructuring alternatives without disruption. The CCAA stay expired on May 13, 2005, and was subsequently extended until Aug. 5, 2005, to, among other things, pursue a sale process for the disposition of all or part of the Company's assets. KremeKo, the Canadian franchisee of Krispy Kreme Doughnuts, Inc., initiated the Court-approved sale process on June 16, 2005, and received three offers from interested purchasers. None of the offers, KremeKo noted, were acceptable to the Company. Although the sale process had been undertaken, KremeKo continued to negotiate with the Bank of Nova Scotia and GE Canada with respect to the secured lenders' interests in KremeKo's property. As a result, the Company is in a position to pursue other restructuring options (including a stand-alone plan or a negotiated sale) despite the unsuccessful outcome of the sale process. DIP Loan On Aug. 2, 2005, KremeKo amended a term sheet with Krispy Kreme allowing the Company to borrow a maximum of $1.5 million in three tranches of $500,000 each. The availability of the tranches under the Amended Term Sheet is as follows: Tranche 1 - Available and committed from the beginning of the CCAA proceedings until Aug. 5, 2005, or any later date as may be agreed to from time to time between Krispy Kreme and KremeKo; Tranche 2 - Available and committed from the Tranche 1 Termination Date to the Maturity Date; and Tranche 3 - Available on the same basis as Tranche 2, although not as a committed facility but rather at Krispy Kreme's sole option. KremeKo projects negative cash flows for the six-week period ending Sept. 4, 2005: KREMEKO, INC. Revised Cash Flow Forecast For the Six-Week Period Ending Sept. 4, 2005 Receipts $2,215,000 Disbursements 2,491,000 ---------- Net Cash Flow ($277,000) Opening Cash Balance 124,000 ---------- Closing Cash Balance ($97,000) The Revised Cash Flow Forecast indicate that KremeKo expects to have negative cash flow of approximately $300,000 through Sept. 4, 2005, and, consequently, will require additional DIP funds. Krispy Kreme has confirmed that it will continue to fund KremeKo's operations through the end of the stay period and committed the remainder of the second tranche as well as $250,000 of the third tranche to KremeKo. Advances under the DIP facility are repayable on the date which is the earliest of: * Sept. 2, 2005; * the completion of the sale of all or substantially all of KremeKo's assets; * the occurrence of an event of default; and * other date as Krispy Kreme may agree to. Prior to the amendment, two events of default had occurred under the Term Sheet: (a) KremeKo reported on June 28, 2005, and in the weeks subsequent that the Company's cumulative cash receipts varied negatively by more than 10% from the Extended Initial Projection; and (b) on July 27, 2005, Krispy Kreme advised that none of the offers or expressions of interest received by the Company as a result of the sale process were satisfactory. Krispy Kreme waived the previous events of default at the time that they occurred, and the Amended Term Sheet provides a further blanket waiver of all events of default occurring on or before Aug. 1, 2005. The previous events of default are not defined as events of default under the Amended Term Sheet. As of Aug. 3, 2005, KremeKo has drawn $700,000 in DIP advances which comprised of $500,000 from the first tranche and $200,000 from the second tranche. KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. franchisee, filed an application with the Ontario Superior Court of Justice to restructure under the Companies' Creditors Arrangement Act, on Apr. 15, 2005. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 400 stores in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Krispy Kreme can be found on the World Wide Web at http://www.krispykreme.com/ KRISPY KREME: GE Canada Gets Okay to Repossess KremeKo Collateral ----------------------------------------------------------------- The Ontario Superior Court of Justice partially lifted an order that had stayed KremeKo Inc.'s CCAA proceedings to allow GE Canada to take possession of the collateral pledged by the Company with respect to the Hillcrest store. KremeKo and Krispy Kreme are not opposing GE Canada's request provided the doughnut making equipment, over which Krispy Kreme asserts a proprietary interest, shall not be sold by GE Canada without the consent of Krispy Kreme or further order from the Court. The net proceeds of the sale realized by GE Canada from the Hillcrest collateral will continue to be subject to the Administration Charge and the Borrowing Charge under the Initial Order. KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. franchisee, filed an application with the Ontario Superior Court of Justice to restructure under the Companies' Creditors Arrangement Act, on Apr. 15, 2005. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 400 stores in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Krispy Kreme can be found on the World Wide Web at http://www.krispykreme.com/ LAND O'LAKES: Completes $315 Million Sale of CF Industries Stake ---------------------------------------------------------------- Land O'Lakes, Inc., completed the sale of their 38-percent equity interest in CF Industries, a domestic fertilizer manufacturing company. The CF Industries board (representing CF's eight cooperative owners), with a focus on optimizing value for member-owners, came to the decision to make an initial public offering of stock in the company after considerable evaluation of strategic alternatives for the positioning of this business. The IPO was priced on August 10 at $16.00 per share, at which time Land O'Lakes was slated to reduce its ownership position from 38% to approximately 8% in exchange for $252 million in cash. Since that time, the underwriters have exercised their option to purchase Land O'Lakes remaining interest in CF Industries, increasing the total proceeds to Land O'Lakes to $315 million. "This sale will further strengthen our balance sheet, position us for additional debt reduction and simplify our business portfolio," said Land O'Lakes President and Chief Executive Officer Jack Gherty. Land O'Lakes, Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. * * * As reported in the Troubled Company Reporter yesterday, Standard & Poor's Ratings Services placed its 'B' corporate credit and other ratings on Land O'Lakes Inc. and Land O'Lakes Capital Trust I on CreditWatch with positive implications. At June 30, 2005, the Arden Hills, Minnesota-based dairy and agricultural cooperative had total debt (adjusted for operating leases and the accounts receivable securitization) outstanding of $1.1 billion. The CreditWatch placement follows the completion of CF Industries Inc.'s IPO, which will result in Land O'Lakes receiving more than $300 million in proceeds that will likely be used to repay outstanding debt. In addition, the company repaid the $118.4 million term loan B during the first six months of fiscal 2005. Also, operating performance has stabilized and there has been a related stabilization in credit protection measures. As reported in the Troubled Company Reporter on Dec. 15, 2004, Moody's Investors Service upgraded Land O'Lakes' speculative grade liquidity rating to SGL-3 from SGL-4 and affirmed the company's B2 senior implied rating with a negative outlook. LAND O'LAKES: Plans to Pay Ag Services Members $33 Million ---------------------------------------------------------- Land O'Lakes, Inc., plans to make a full year of equity revolvement payments to its Ag Services members. The Company's Board voted to revolve approximately $33 million to such members in December 2005, based on the Company's improved liquidity, financial position and performance. The Company has not made equity revolvement payments to its Ag Services members since 2000. Based on this action, the Company is revising its full year guidance of cash payments to members in 2005 from $35 million to $68 million. Land O'Lakes, Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. * * * As reported in the Troubled Company Reporter yesterday, Standard & Poor's Ratings Services placed its 'B' corporate credit and other ratings on Land O'Lakes Inc. and Land O'Lakes Capital Trust I on CreditWatch with positive implications. At June 30, 2005, the Arden Hills, Minnesota-based dairy and agricultural cooperative had total debt (adjusted for operating leases and the accounts receivable securitization) outstanding of $1.1 billion. The CreditWatch placement follows the completion of CF Industries Inc.'s IPO, which will result in Land O'Lakes receiving more than $300 million in proceeds that will likely be used to repay outstanding debt. In addition, the company repaid the $118.4 million term loan B during the first six months of fiscal 2005. Also, operating performance has stabilized and there has been a related stabilization in credit protection measures. As reported in the Troubled Company Reporter on Dec. 15, 2004, Moody's Investors Service upgraded Land O'Lakes' speculative grade liquidity rating to SGL-3 from SGL-4 and affirmed the company's B2 senior implied rating with a negative outlook. LIBERTY MEDIA: Moody's Lowers $12 Billion Notes' Ratings to Ba1 --------------------------------------------------------------- Moody's Investors Service has downgraded the long-term debt ratings for Liberty Media Corporation to Ba1 from Baa3, concluding the review for downgrade initiated on May 13, 2005. Moody's has downgraded these ratings: * $500 million of Senior notes due 2029 to Ba1 from Baa3; * $750 million of Senior bonds due 2009 to Ba1 from Baa3; * $869 million of Convertible global debentures due 2029 to Ba1 from Baa3; * $1.0 billion of Global notes due 2030 to Ba1 from Baa3; * $810 million of Convertible debentures due 2030 to Ba1 from Baa3; * $600 million of Convertible bonds due 2031 to Ba1 from Baa3; * $818 million of Convertible senior notes due 2031 to Ba1 from Baa3; * $238 million of Senior notes due 2009 to Ba1 from Baa3; * $1.75 billion of Convertible debentures due 2023 to Ba1 from Baa3; * $1.0 billion of Senior Global notes due 2013 to Ba1 from Baa3; * $1.35 billion of Senior notes due 2006 to Ba1 from Baa3; * $2.5 billion of Senior Floating rate global notes due 2006 to Ba1 from Baa3. Moody's has assigned these ratings: * Ba1 Corporate Family Rating * SGL-1 Speculative Grade Liquidity Rating The outlook is negative for all ratings. The downgrade of Liberty's ratings reflects Moody's concerns surrounding management's intent to aggressively increase leverage in pursuit of strategic acquisitions. Pursuant to this strategy shift, management revoked their commitment to maintain approximately 3x adjusted debt coverage by high quality assets, which had been an important underpinning of the investment grade rating. The downgrade further reflects Moody's growing concern that Liberty's business profile will change, characterized by changes to its asset mix into less liquid or developing stage investments and potential diversification into businesses outside its core media expertise. Moody's remains concerned about the effect of Liberty's opaque deferred tax liability and derivatives disclosures on the cost of its access to capital. The negative outlook reflects Moody's anticipation that Liberty's asset mix will shift as the company pursues a strategy of using debt to acquire higher risk, developing stage companies. The negative outlook contemplates the growing potential for increased structural subordination if the bank facilities at QVC become fully drawn, or debt is placed at future operating subsidiaries. Downward pressure could result from a sizeable, highly leveraged transaction, large shareholder distributions, or deteriorating performance or value at one of its large holdings. The rating could stabilize if management evidenced both the ability and willingness to maintain or improve the asset coverage that represents the primary source of credit protection levels at present. Continued organic growth of existing majority-owned businesses, sustained and unlimited access to the cash flow of such businesses, and pursuit of strategic and opportunistic monetization of less liquid assets in an effort to improve overall asset quality would also support a stabilized rating. Liberty Media's Ba1 corporate family rating reflects credit protection provided by Liberty's diverse and liquid public and private portfolio, and expected organic growth at some of its privately held companies. Liberty currently covers total adjusted debt of approximately $9.4 billion by approximately 3x with its high quality assets. These assets include Liberty's liquid, readily marketable assets, as well as its private, wholly-owned cash flowing mature media programming businesses. Moody's conservatively includes in adjusted debt 75% of the face value of the company's hybrid exchangeable securities, or $3.4 billion (with market value on the balance sheet of $2.3 billion), adds accreting deferred tax liability of $863 million (tax impact related to exchangeable interest), as well as lease adjustments in its adjusted debt computations. The Ba1 rating is further supported by Liberty's majority ownership in QVC, which continues to perform well with free cash flow of approximately $1.3 billion for the last twelve months ending Q2'05. However, Moody's notes that the bank facility at QVC stands structurally senior to the unsecured creditors of Liberty Media, and that QVC represents close to one-third the value of the total firm. Liberty discloses some information on its investments in public companies, including fair market value by security, however, information for derivatives and deferred taxes is only disclosed in the aggregate precluding assessment of the net value of each position. Accordingly, investors would benefit if, for each major investment, (i.e. Motorola, Time Warner, etc.) the company disclosed, in tabular format, the derivative security used to hedge the investment, the fair value and intrinsic value of the associated hedge, and the tax liability associated with it. Moody's believes such disclosure would reduce investor uncertainty over firm valuation. Continued opacity seems likely to inhibit equity appreciation, increasing the likelihood of further management efforts to return capital to shareholders, in Moody's opinion. The SGL-1 rating reflects Moody's belief that the cash and marketable securities portfolio provide the strongest support for Liberty's near term and fixed charge obligations over the next twelve months. The company's wholly-owned subsidiaries, particularly QVC and to a lesser extent Starz Encore, provide sufficient internally generated free cash flow and cash on hand to cover working capital and capital expenditures required by those operating companies. Liberty's liquid asset portfolio drive the SGL-1 liquidity rating. The SGL-1 rating is also supported by Liberty's limited near term financial obligations. The company completed its debt reduction program, alleviating what was once a significant debt maturity spike in 2006 with a $1.0 billion tender offer in early 2005. Extension of remaining 2006 maturities are available under QVC's new bank facility. The remaining approximate $9 billion of debt matures through 2031. Despite the uncertainty surrounding the company's new strategy and the lack of guidance from management as to the timing of a strategic event, Moody's considers the approximate $1.5 billion cash balance and approximate $1.3 billion of recurring QVC cash flow as ample over the next 12 months. Liberty Media Corporation (NYSE: L, LMC.B) is a holding company owning interests in a broad range of: * electronic retailing, * media, communication, and * entertainment businesses. MASSACHUSETTS PORT: S&P Lowers Revenue Bonds' Rating to B --------------------------------------------------------- Standard & Poor's Ratings Services lowered its underlying rating (SPUR) on Massachusetts Port Authority's outstanding special facility revenue bonds (Delta Air Lines Inc. project) five notches, to 'B' from 'BBB-', based on the diminishing credit quality of Delta (CC/Watch Neg/--). The SPUR remains on CreditWatch with negative implications, where it had been placed July 28. "There is a near-term risk that Delta, the lone tenant of Massport's new 25-gate Terminal A facility at Logan Airport, will seek Chapter 11 bankruptcy protection, placing increasing uncertainty on the airline's operational and business decisions supporting service at Logan," said Standard & Poor's credit analyst Laura A. Macdonald. "Also significantly increasing Delta's risk profile are the current uncertainties regarding its special facility leases and how the possible bankruptcy would affect its obligations at Terminal A." The solid underpinnings of the Logan air service market, with its large origin and destination base and high passenger revenue generation, are positive factors, and, combined with the airport's gate capacity constraints, lower the likelihood of Delta immediately discontinuing services in Boston. Massport has historically been successful in replacing carriers that have withdrawn from its market, normally in a one- to three-year period. However, in the event that Delta exits the Boston market, the ability of other carriers to timely absorb Delta's services is questionable, and would likely exhaust the debt service reserve fund. While Delta remains current on its special facility bonds payments and other required rental payments to Massport, its current financial condition creates increasing uncertainty regarding its long-term ability to serve the Boston market, and is inconsistent with an investment-grade rating. Standard & Poor's would not change its rating on the special facility revenue bonds in the event Delta declared bankruptcy. However, if Delta indicated that the lease would be rejected, the rating would likely be lowered to the 'CCC' category. If Delta's rating was to significantly improve, or there was a successful re- leasing of the facility to other carriers at rates that would be sufficient to cover debt service on the terminal, the rating could be raised. MCI INC: Directors Invest 25% of Their Fees in Company Stock ------------------------------------------------------------ Members of MCI, Inc.'s (NASDAQ: MCIP) Board of Directors will again invest 25 percent of their directors' fees in MCI Common Stock. Under a process disclosed on Aug. 12, 2004, MCI has withheld 25 percent of all directors' fees earned in the current quarter for investment in MCI Common Stock. With the opening of the window period to engage in transactions involving MCI stock, these funds will be transferred to a broker, who purchases the shares on behalf of each director. Shares are held in individual accounts in each director's name. 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. * * * As reported in the Troubled Company Reporter on May 5, 2005, Fitch Ratings has maintained the Rating Watch Negative status of Verizon Global Funding's outstanding long-term debt securities, which are rated 'A+', and has maintained the senior unsecured debt rating of MCI, Inc., which is rated 'B', on Rating Watch Positive. The securities of both companies were placed on Rating Watch on Feb. 14, 2005, following the announcement that Verizon Communications, Inc., planned to acquire MCI. Verizon and MCI have entered into an amended agreement and plan of merger dated May 1, 2005, following a protracted bidding process in which Qwest Communications International, Inc., also pursued MCI. 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. METRICOM INC: Has Until December 30 to Object to Claims ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, San Jose Division, gave Reorganized Metrico, Inc., and its debtor- affiliates until Dec. 30, 2005, to object to claims filed against their bankruptcy estates. The Reorganized Debtors, having resolved substantially all of the disputed claims and other adversary proceedings, asked for this extension out of an abundance of caution. Metricom, Inc. is a high-speed wireless data Company. With its high-speed Ricochet mobile access, Metricom is making "information anytime" possible-at home, at the office, on the road, and on many devices. The company filed for chapter 11 protection July 1, 2001 (Bankr. N.D. Calif. Case No. 01-53291). Joshua M. Fried, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, represents the Debtor. When the Company filed for protection from its creditors, it listed $1,047,859,000 in assets and $967,561,000 in debts. The Debtor's chapter 11 Plan became effective on Sept. 14, 2002. MIDWAY AILINES: Ch. 7 Trustee Says $140MM In Claims Won't Get Paid ------------------------------------------------------------------ Joseph N. Callaway, the chapter 7 Trustee overseeing the liquidation proceeding of Midway Airlines Corp., and its debtor- affiliate, Midway Airlines Parts, LLC, says that a majority of the $140 million in creditors' claims asserted against the Debtors' estates might never be paid. The U.S. Bankruptcy Court for the Eastern District of North Carolina converted the Debtors' chapter 11 case to a chapter 7 liquidation proceeding on Oct. 30, 2003, after a failed attempt at a chapter 11 reorganization. Mr. Callaway says that the Debtors' remaining assets have been sold for $13 million, but that amount won't be enough to pay the remaining creditors' claims, amounting to approximately $140 million. In an interim report submitted to the Court on July 25, 2005, Mr. Callaway reports that proceeds from asset sales, funds on hand and fees recovered raised approximately $20,590,000. But he says that more than $25 million in administrative claims and more than 1,000 other creditors with estimated claims of $115 million are still unpaid. Mr. Callaway disclosed that the Debtors' bankruptcy case may not be settled until July 2006, and unless other sources of funding are obtained, all remaining administrative claims and other creditors' claims will never be paid. Headquartered in Morrisville, North Carolina, Midway Airlines Corp., is in the commercial passenger airline business and also provides cargo and charter transportation on a limited bases. The Company and its debtor-affiliate, Midway Airlines Parts, LLC, filed for chapter 11 protection on Aug. 13, 2001 (Bankr. E.D.N.C. Case No. 01-02319-5-ATS). The Court converted the case to a Chapter 7 liquidation proceeding on Oct. 30, 2003. Gerald A. Jeutter, Jr., Esq., at Kilpatrick Stockton LLP, represents the Debtors. Joseph N. Callaway is the chapter 7 Trustee for the Debtors' estates. A. Scott McKellar, Esq., at Battle, Winslow, Scott & Wiley, PA and Benjamin A. Kahn, Esq., at Nexsen, Pruet, Adams, Kleemeier, represents the chapter 7 Trustee. When the Debtors filed for chapter 11 protection, they listed total assets of $318,291,000 and total debts of $231,952,000. MIRANT CORP: Wants Deutsche Bank to Produce Assignment Agreements ----------------------------------------------------------------- Deutsche Bank Securities, Inc., filed a formal objection to Mirant Corporation and its debtor-affiliates' Disclosure Statement, claiming that it is the transferee of claims previously belonging to El Paso North America's affiliates. The claims allegedly arose out of the Debtors' purchase of certain power generating facilities. DBSI also alleged, among other things, that the Debtors have: (i) inadequately disclosed the prejudice to Mirant Americas, Inc.'s creditors and creditors holding guarantees from Mirant Corp. under the Debtors' proposed substantive consolidation; and (ii) failed to disclose any "substantial identity" of the Debtor entities. DBSI also contended that "creditors that dealt with MAI specifically knew that MAI was structurally senior to Mirant Corp., and that MAI's primary asset was the equity interest in [Mirant Americas Generation, LLC] and its operating subsidiaries." On May 6, 2005, the Debtors asked DBSI to produce all documents relating to its purchase of claims, including, but not limited to, claims purchased from or transferred by Shady Hills Holding Company, L.L.C., Mesquite Investors, LLC, or their affiliates under assignment agreements, dated as of March 5, 2004. DBSI has argued that the information requested by the Debtors is commercially sensitive and irrelevant. DBSI also contended that the request for information is "egregious in light of the executed confidentiality agreement governing the disclosure of information produced by DBSI and the Debtors' representation that they would accept an elevated level of confidentiality for the documents withheld by DBSI." To address DBSI's concern, the parties executed a confidentiality agreement to govern the discovery provided by DBSI. DBSI represented that it would "produce non-privileged documents within its possession, custody, and control, if any, that are responsive to [the Disputed Request]." Michelle C. Campbell, Esq., at White & Case LLP tells the Court that DBSI has so far refused to produce the DBSI Claim Documents. Accordingly, the Debtors ask the Court to compel DBSI to produce complete, unredacted copies of its Assignment Agreements with Shady Hills or Mesquite, including other related documents. Ms. Campbell asserts that the information requested by the Debtors is within the scope of discovery permitted by Rules 26 and 34 of the Federal Rules of Civil Procedure. The requested documents are relevant to establish: 1. the terms of the assignment of El Paso North America's claims to DBSI; 2. the credit relied upon by DBSI when it purchased the claims. Ms. Campbell explains that DBSI cannot seek broad-based discovery from the Debtors while, at the same time, refusing to produce basic documents relating to its standing to assert a claim and the credit that it relied on. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Wants Scope of Hiscock's Services Expanded ------------------------------------------------------- Mirant Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Northern District of Texas' permission to expand the scope of Hiscock & Barclay LLP's duties to include assisting them in certain environmental and regulatory work in the State of New York. On April 26, 2004, the Court authorized the employment of Hiscock & Barclay as special counsel for the Debtors as of March 3, 2004, to provide legal services, including providing advice with respect to real property tax issues involving some of the Debtors' generating plants. Specifically, the Debtors want Hiscock & Barclay to represent them in an enforcement action by the New York State Department of Environmental Conservation relating to: (1) the cleanup of a petroleum spill at the Hillburn facility; (2) all outstanding issues involving the Lovett Coal Ash Management facility in Stony Point, New York; (3) any issues associated with the Swinging Bridge dam collapse; and (4) any additional environmental or regulatory work, including any associated litigation, in New York for which the Debtors may require legal counsel. The Debtors will pay and reimburse Hiscock & Barclay for any fees and expenses incurred in providing the Additional Services. Lawrence A. Zimmerman, Esq., a partner at Hiscock & Barclay, reassures the Court that the firm continues to: -- represent no interest adverse to the Debtors or their estates; and -- be a "disinterested person" under Section 101(14) of the Bankruptcy Code. 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) MPOWER HOLDING: Can Object to Proofs of Claim Until Oct. 20 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended until Oct. 20, 2005, the deadline by which MPower Holding Corporation and its debtor-affiliates can object to proofs of claim filed against their estates. The Debtors' First Amended Joint Plan of Reorganization became effective on June 30, 2002. The Debtors gave the Court three reasons why the extension is warranted: a) although they have filed four omnibus objections to claims along with other individual objections, the Debtors are still continuing to evaluate all remaining claims to determine if filing objections are necessary for those claims; b) negotiations for the consensual resolution or withdrawal of a number of additional claims are still ongoing, including the claims filed by One Source Teleservices; and c) the requested extension will give the Debtors more opportunity to evaluate all remaining claims, prepare and file any additional objections to claims if necessary and consensually resolve disputed claims. Headquartered in Pittsford, New York, Mpower Holding Corporation -- http://www.mpowercom.com/-- is the parent company of Mpower Communications Corp., a leading facilities-based broadband communications provider offering a full range of data, telephony, Internet access and Web hosting services for small and medium-size business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 8, 2002 (Bankr. D. Del. Case No. 02-11046). Pauline K. Morgan, Esq., and M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP represents the Debtors. When the Company filed for protection from its creditors, it listed total assets of $490,000,000 and total debts of $627,000,000. NBS TECHNOLOGIES: Balance Sheet Upside-Down by CDN$4.3M at June 30 ------------------------------------------------------------------ NBS Technologies Inc. (TSX:NBS) reported its unaudited financial results for the third quarter ended June 30, 2005. For the third quarter ended June 30, 2005, revenue totaled $17 million, an increase over the prior year of 32%, reflecting the incremental revenue from the acquisitions of UbiQ Inc. and Cybernetix Microelectronique S.A.S. Revenue for the nine months ended June 30, 2005 totaled $51.2 million, a 26% improvement over the revenues recognized in the first nine months of 2004 when excluding revenue associated with a major contract. The Company's Smart Solutions business unit generated $41.1 million in revenue, representing 80% of the Company's total revenue base. The Company recorded a net loss of $5.1 million compared with a net loss of $1.8 million, in the third quarter of fiscal 2004. This quarter's loss includes $1.9 million of expenses related to the Company's ongoing restructuring program, an inventory write down of $0.9 million due to product line restructuring, as well as a $1 million charge for amortization and interest related to its recent acquisitions. During the nine months ended June 30, 2005, the Company recorded a loss of $12.2 million compared with a loss of $0.4 million in the same period last year. In the prior year, strong results were partly a result of the successful completion of a major contract in the second quarter of that year. "We have made good progress in the nine months of fiscal 2005 in integrating the acquired businesses, completing corporate restructuring initiatives, and solidifying our foundation for growth in the card issuance and acquiring marketplaces. Key activities include a continued program of operating expense reductions in all business functions including the elimination of several management positions", stated David W. Nyland, President & CEO of NBS Technologies Inc. "Although we are focused on restructuring for profitability, we are nevertheless very focused on servicing our existing customers and dealers globally and continuing to invest in product development and customer services to provide a basis for long-term performance, competitive positioning and growth. Our product development investments are focused on ensuring that our semiconductor, smart card manufacturing, micromodule testing, card printer, embossing, terminal and gateway product families meet the current and future needs of our major accounts and customers globally in our target Financial/EMV, Government/ID, GSM and Semiconductor markets. Our customer service investments are targeted at modernizing our customer relationship management and call center capabilities to enable more responsive 24x7 multi-lingual operations in support of the Company's substantial business operations in North America, Latin America, Europe, Middle East and Africa, and Asia Pacific", continued Mr. Nyland. Current Developments and Third Quarter 2005 Operating Highlights Continued Corporate Re-Structuring & Key Acquisition Integrations After the successful purchase of UbiQ Inc. in the fourth quarter of fiscal 2004 and Cybernetix Microelectronique S.A.S. in the first quarter of fiscal 2005, the Company has continued to integrate organizations, infrastructure and processes to achieve synergies and efficiencies. Year to date, the Company has eliminated over 100 employee positions associated with synergies achieved from its recent acquisitions and re-structuring of operations with declining sales of legacy product lines. The Company's re-structuring activities are primarily focused on achieving gross margin and operating expense improvements in subsequent quarters whilst continuing to invest in product development and sales and marketing to ensure a strong sustainable long-term competitive advantage, growth and sustainable financial performance. The Company's primary goal is a return to overall consolidated profitability in fiscal 2006. Smart Solutions The Company was successful in achieving qualification of its Horizon product by a major global financial card manufacturer, which resulted in an order to deliver seven production Horizons to bolster the production capacity of one of its North American personalization centers. Each Horizon machine provides embossing of financial cards at speeds in excess of 1500 cards per hour per machine validating the market-leading cost-per-card benefits of recent hardware and software improvements to the core Horizon product platform. All seven machines were successfully qualified, shipped and accepted within the quarter and are now in production operations. This contract award and reference solution positions the Company for additional future business with this customer and other large volume card manufacturers globally. Strong Performance in Existing Smart Card Manufacturing Customer Base During the quarter, two solutions for the quality control of both encapsulation and contact sides of micro-modules on film were sold to a major smart card manufacturer in France taking this customer's install base to 10 production lines. In addition, a test handler solution was sold in China to a major Chinese micro- modules manufacturer taking this customer's install base to three production lines. Again in China, a high-capacity personalization machine dedicated to GSM personalization was sold to a major China-based international card manufacturer taking this customer's installed base to three production lines, all three lines now incorporating the Company's latest vision control systems. These installations demonstrate strong continued demand for smart card manufacturing and personalization equipment with existing major card manufacturing and personalization customers in Europe and Asia. Continued Progress with Globalization of Wafer Packaging & Handling Business During the third quarter, the Company was successful in delivering and qualifying its first 300mm wafer packaging and handling system in Singapore and continued its 200mm system deliveries in China to a large North American card manufacturer with operations in this region. These reference sites in Asia, after strong initial success in Europe and US, now establish NBS as the global market leader in this equipment category and provide a strong foundation for further sales and marketing investment by NBS in future quarters. Major Release of EMV Software Suite Development Kits During the quarter the Company completed a project to launch several new PersoMaster development kits that are aimed at assisting customers to more rapidly, autonomously and cost- effectively deploy EMV and value-added applications. These kits included a Contactless Development Kit which provides the ability to build contactless smart card personalization applications for the Horizon product line, a Cross-Platform Development Kit that enables customers to develop personalization applications for both NBS equipment and other brands of personalization equipment, and an Accelerator Development Kit that allow customers to create their own customized scripts. This Accelerator Development Kit leverages the power of our robust data preparation, key management and personalization products including support for GlobalPlatform, MULTOS and Native card operating systems. In addition, the tools simplify the ability to incorporate advanced functions like EMV- CPS, EMV specific cryptographic functions, EMV certificate support for Visa, MasterCard and JCB. Finally, the Company joined the MAOSCO Consortium in support of the MULTOS operating environment, which is widely recognized as one of the most secure and flexible smart card environments. As a member of the MAOSCO Consortium, NBS gains access to and will participate in new leading edge developments in the MULTOS environment. Since joining the consortium, NBS has already completed development to support MULTOS Step/One cards, which is the entry-level MULTOS platform for financial institutions migrating to EMV. Continued Secure ID Successes in Card Printer Business The Company achieved the filing of a new patent for its IMX2 thermal printer which combines encoding and flipping functionality. During the third quarter, Javelin unit sales for the first three quarters are running more than 30% higher than the same period in the prior year with a primary growth factor being the success in supplying Javelin printers into Secure ID projects including a large-scale driver's licence program in a number of states in India. Outlook "I remain confident that NBS is on the path to achieve increased market share and profitability by integrating and re-structuring our operations, creating innovative solutions for major accounts in focused market segments, and revitalizing our distribution network. This effort, combined with our dedication and commitment to a program of sustained R&D and customer service, will allow us to realize our goal of achieving long-term growth and shareholder value. I am particularly excited about our recent momentum and success in international smart card and semiconductor markets", concluded David Nyland. NBS Technologies (TSX: NBS) -- http://www.nbstech.com/-- is a leading provider of smart card manufacturing and personalization equipment, secure identity solutions, and point of sale transaction services for financial institutions, governments, and corporations worldwide. NBS Technologies is a global company with locations in Canada, China, France, U.S. and the UK, along with a worldwide dealer network. As of June 30, 2005, NBS Technologies' balance sheet reflected a CDN$4,282,000, equity deficit compared to a $7,590,000, positive equity at Sept. 30, 2004. NORTHWEST AIRLINES: Continues Operations Amid Mechanics' Strike --------------------------------------------------------------- Northwest Airlines (NASDAQ: NWAC) said it continues to operate its normal schedule despite the failure to reach a consensual agreement with the 4,400-member Aircraft Mechanics Fraternal Association. O. V. Delle-Femine, AMFA national director, authorized a nationwide strike against Northwest Airlines which commenced at 12:01 a.m. on Saturday, Aug. 20, 2005. The decision came after the carrier's last-best-and-final offer, presented on Thursday afternoon in last-ditch negotiations, contained even harsher terms than Northwest's prior offer. "The eight-month negotiating period has been an arrogant farce with a predetermined ending," said Mr. Delle-Femine. "The fact that Northwest began making strike preparations 18 months ago, a full year before our negotiation process started, proves that the talks were a farce. This regressive final offer simply confirms that Northwest's plan all along has been to force a strike and enter bankruptcy, in the hope that a judge would impose the economically devastating terms Northwest knew it couldn't get through the normal give-and-take of negotiations. Their goal is to bust our union and all their other unions, one at a time." "Northwest wanted a strike, and now they have one," Delle-Femine added. "We apologize in advance to the flying public for the inconvenience and disruption the strike will cause. This will be difficult for our members and their families too, but Northwest left us no choice." Before the regressive final offer, Northwest had clung to its initial demand that would have required a majority of AMFA members to approve a contract in which 53% of them would lose their jobs. Northwest had also demanded pay cuts for remaining employees of 25-26 percent, with no job security for the positions. Northwest dismissed AMFA's recent proposal that would have saved the airline the $176 million annually it said it was seeking, while preserving more jobs. Regarding the impact of a strike, Mr. Delle-Femine said, "To keep ticket sales moving, Northwest has painted an improbable picture in which nothing goes wrong during a strike; but in its August 9 financial report to regulators, the company stated 'there can be no assurances it will be able to continue operating a full schedule in the event of a strike'. "We expect flight schedules to be disrupted with delays and cancellations, because 4,500 AMFA technicians who average 20 years of live experience on Northwest's fleet are being replaced by 1,500 people who in many cases have little or no live experience on the type of aircraft Northwest flies and are relying on a few months of hurried classroom training and hands-on practice on non- live aircraft. With this woefully inadequate training, the replacement workers are expected to know how to work on live DC- 9's, A-319's, A-320's, A-330's, DC-10's, B-757's, B-747's and the B-747 freighters." "Northwest has one of the airline industry's oldest fleets, including DC-9s and DC-10s from as long ago as the 1960s," Delle- Femine added. "Our mechanics grew up with these vintage planes and know all of their idiosyncrasies and how to keep them flying reliably," he said. "In addition, we expect substantial support to build from members of other unions who realize that Northwest is coming after them next," Delle-Femine said. UPS pilots announced earlier this week that they will not fly any Northwest cargo during an AMFA strike, and AMFA leaders at all airlines represented by the union unanimously passed a resolution to implement whatever form of action necessary to support Northwest Airlines members in the event of a strike. He said part of Northwest's grand plan for bankruptcy includes eliminating current pension plans for all Northwest employees with no penalty, dumping the plans on the Pension Benefit Guarantee Corporation and potentially forcing taxpayers to pick up the tab. "Naturally, this will not include the pension plans of upper management, which will remain protected." Northwest Statement "During the past 18 months, Northwest developed a comprehensive contingency plan that includes expanded vendor relationships to ensure that the airline continues to operate normally," Doug Steenland, Northwest's president and chief executive officer, said. "Northwest has experienced, licensed and trained mechanics in place to service all NWA aircraft. The airline remains in full compliance with all Federal Aviation Administration regulations." "The Northwest final offer was fair to our employees while recognizing the need for equitable labor costs savings from all labor groups so that Northwest could restructure successfully," Mr. Steenland continued. The carrier said it can field 1,900 temporary workers to replace the strikers, Susan Carey & Kris Maher of The Wall Street Journal reports. The contracted mechanics are being paid $26.53 an hour, a little less than Northwest's final offer of $27.28 an hour to AMFA. Bankruptcy Warning The Company warned that it may be forced to consider filing a chapter 11 petition if: -- it is unsuccessful in achieving the necessary labor cost savings; -- it suffers significant operational disruptions as a result of a strike or other workforce actions; -- it does not secure a freeze of the defined benefit plans for the contract workforce; -- it fails to obtain legislative relief of its pension funding obligations in the near future; or -- it is unable to access the capital markets to meet current and future obligations. AMFA's craft union represents aircraft maintenance technicians and related support personnel at Alaska Airlines, ATA, Horizon Air, Independence Airlines, Mesaba Airlines, Northwest Airlines, Southwest Airlines and United Airlines. AMFA's credo is "Safety in the air begins with quality maintenance on the ground." AMFA is available on the World Wide Web at http://www.amfanatl.org/ Aircraft Mechanics Fraternal Association -- http://www.amfanatl.org/-- represents more aircraft technicians than any other union. AMFA's craft union represents aircraft maintenance technicians and related support personnel at Alaska Airlines, ATA, Horizon Air, Independence Airlines, Mesaba Airlines, Northwest Airlines, Southwest Airlines and United Airlines. AMFA's credo is "Safety in the air begins with quality maintenance on the ground." Northwest Airlines Corp. is the world's fifth largest airline with hubs in Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,600 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. At June 30, 2005, Northwest Airlines' balance sheet showed a $3,752,000,000 stockholders' deficit, compared to a $3,087,000,000 deficit at Dec. 31, 2004. OVERNITE TRANSPORTATION: Moody's Withdraws Corporate Family Rating ------------------------------------------------------------------ Moody's Investors Service withdrew all ratings for Overnite Transportation Co. The withdrawal follows the closing of the sale of the company to United Parcel Service, Inc. on August 5, 2005. Overnite's outstandings under its Amended and Restated Revolving Credit Agreement have been repaid and the facility has been cancelled. These ratings have been withdrawn * Overnite Transportation Co Ba1 Corporate Family Rating; and * Gtd Senior Secured Revolving Credit Facility rating. Overnite based in Richmond, Virginia, operates a nation-wide less than truckload trucking company. PACIFIC MAGTRON: Micro Technology Objects to Disclosure Statement ----------------------------------------------------------------- Micro Technology Concepts, Inc., raises several objections to the Disclosure Statement explaining the Joint Liquidating Plan of Reorganization filed by Pacific Magtron International Corp. and its debtor-affiliates. Micro Technology is a secured creditor holding approximately $679,846, in pre-petition claims and $209,710, in secured post-petition debts against Pacific Magtron. Adam P. Bowler, Esq., and Stuart I. Koenig, Esq., tells the U.S. Bankruptcy Court for the District of Nevada that Micro Technology objects to the Disclosure Statement because it fails to provide adequate information as required by section 1125(a) of the Bankruptcy Code. Messrs. Bowler and Koenig also say that the Debtors' plan cannot be confirmed in its present form. Disclosure Lacks Adequate Information Micro Technology claims that the Disclosure Statement explaining the Debtors' Plan lacks vital information concerning intercompany debts and transfers that occurred between Pacific Magtron International Corp., Pacific Magtron, Inc., and Pacific Magtron (GA), Inc., prior to the petition date. Micro Technology says two of its transactions with the Debtors need to be explained in the Disclosure Statement: a) over $4.1 million in payments made by PMI either directly to or on behalf of PMIC that have not been repaid. Micro Technology says that these intercompany account are loans extended by PMI to PMIC when PMIC went public. Micro Technology believes, based on its own investigation, that PMIC did not have the financial resources required to complete the process of going public and relied on PMI to fund this effort. b) over $1.7 million in product shipments made by PMI to PM(GA) that have not been repaid. Micro Technology says that the payments made by PMI to PMIC and PM(GA) make it a creditor of these affiliates. Micro Technology adds that this creditor relationship will impact the distributions available for PMI's creditors. Other significant items that Micro Technology says the Debtors failed to incorporate in the Disclosure statement are: a) an explanation of the possible impact that the litigation between Advanced Communications Technologies, Inc., and the former principals of PMIC could have on the Plan; b) supporting figures for the alleged value of the Debtor's assets; c) details of the loan, to be provided by Advanced Communications, which will be used to launch a breach of contract lawsuit against Micro Technology; d) estimates of recoveries from avoidance actions and how these actions will be funded. e) the fair market value of the public shell of PMIC that Micro Technology says has significant value. Micro Technology intends to provide further proof of its claims prior to the hearing on the Disclosure Statement. Plan Not Confirmable Micro Technology also says that the Debtors' Plan cannot be confirmed because: a) the classification of unsecured claims unfairly discriminates against Micro Technology; b) the Plan allows PMIC's shareholders to retain their 100% interest without contributing one dollar of new value. Headquartered in Milpitas, California, Pacific Magtron International Corp. -- http://www.pacificmagtron.com/-- distributes some 1,800 computer hardware, software, peripheral, and accessory items that it buys directly from 30 manufacturers like Creative Labs, Logitech, and Yamaha. The Company, along with its subsidiaries, filed for chapter 11 protection on May 11, 2005 (Bankr. D. Nev. Case No. 05-14326). As of Dec. 31, 2004, the Company reported $11,740,700 in total assets and $11,105,200 in total debts. PEGASUS SATELLITE: Court Allows FTI Consulting's Final Fees ----------------------------------------------------------- FTI Consulting, Inc., as financial advisors to Pegasus Satellite Communications, Inc. and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Maine to allow the payment of $768,212 in fees and $28,673 in expenses from June 2, 2004, through May 5, 2005. A $150,000 retainer has been paid to FTI. Randall S. Eisenberg, senior managing director at FTI, says any portion of the retainer not used to compensate FTI for the prepetition services and expenses will be applied to FTI's final approved fees and expenses. FTI has incurred 1,918 hours of service to the Debtors: Task Description Hours Fees ---------------- ----- ----- Case Administration 53.4 $24,575 Fee Application 116.6 41,388 Statements and Schedules 499.2 222,400 1st Day Order Support 92.5 42,340 Cash Flow/Management - - Contract Analysis 276.6 113,909 Work Plan Support 4.8 1,992 Claims Analysis/Support 586.5 189,677 Plan of Reorganization 170.3 77,910 Accounting Systems 82.1 36,955 Analysis Assistance 21.0 9,670 Meetings & Correspondence 9.3 4,197 Court & Trial Preparations 5.4 3,200 * * * The Court allows, on a final basis, FTI's fees aggregating $768,212 and expenses for $28,673 incurred from June 2, 2004, through May 5, 2005. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS SATELLITE: Miller Buckfire Gets $7.3-Mil. for Compensation ------------------------------------------------------------------ Miller Buckfire is allowed $7,325,000 as compensation for services rendered and $37,918 as reimbursement of expenses incurred from June 2, 2004, through and including the Effective Date of the Pegasus Satellite Communications, Inc. and its debtor-affiliates' Plan. The U.S. Bankruptcy Court for the District of Maine directs the Reorganized Debtor and the Liquidating Trustee to pay all unpaid amounts, aggregating $787,918, without further delay. * * * As previously reported in the Troubled Company Reporter on July 11, 2005, Miller Buckfire asked the Court to: -- grant final allowance of $7,325,000 as compensation for services rendered and reimbursement of $48,429 in expenses; and -- direct the Liquidating Trust to pay to Miller Buckfire $787,918, which represents 100% of the Sale Transaction Fee and expenses incurred during from June 2, 2004, to May 5, 2005, less amounts paid by the Debtors to Miller Buckfire upon closing and consummation of the DBS Sale and applicable credits. The Debtors employed Miller Buckfire & Co., LLC, on June 2, 2004, as their investment banker and financial advisor. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) POLAROID CORP.: Administrator's File Final Report Due by Nov. 15 ---------------------------------------------------------------- The U.S. Bankruptcy Court District of Delaware gave Wind Down Associates LLC, the Plan Administrator appointed under the confirmed Third Amended Joint Plan of Reorganization of Primary PDC, Inc. (f/k/a Polaroid Corporation) and its debtor affiliates, a further extension, until Nov. 15, 2005, to file a Final Report and Accounting pursuant to Rule 5009-1(c) of the Local Rules of Bankruptcy Practice and Procedure. The Court also further delayed until Dec. 15, 2005, the entry of a final decree closing the Debtors' chapter 11 cases pursuant to Rule 5009 of the Bankruptcy Court. The Court confirmed the Debtors and the Official Committee of Unsecured Creditors' Joint Plan on Nov. 18, 2003, and the Plan took effect on Dec. 17, 2003. Wind Down gave the Court three reasons in support of the extension: a) the extension is needed so it can complete the claims reconciliation process and the jurisdiction of the Court is necessary while the claims administration process if ongoing; b) the further delay of the entry of a final decree will help ensure that distributions under the Plan are made only to actual creditors and in appropriate amounts; and c) a Final Report and Accounting will not be accurate until the claims administration process and the distribution to unsecured creditors are brought to a conclusion. Headquartered in Cambridge, Massachusetts, Primary PDC, Inc., (f/k/a Polaroid Corporation), -- http://www.primarypdc.com-- is responsible for settling claims and for administering business matters related to the former Polaroid Corporation. Substantially all of the assets of Polaroid Corporation were sold to OEP Imaging Operating Corporation on July 31, 2002. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 12, 2001 (Bankr. D. Del. Case No. 01-10864). The Court confirmed the Debtors' chapter 11 Plan on Nov. 18, 2003, and the Plan took effect on Dec. 17, 2003. Wind Down Associates LLC is the Plan Administrator under the confirmed Plan. Joseph A. Malfitano, Esq., at Young, Conaway, Stargatt & Taylor and Phil Dublin, Esq., at Akin, Gump, Strauss, Hauer & Feld, L.L.P., represents the Plan Administrator. POLAROID CORP.: Deadline for Objecting to Claims is Now Sept. 15 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Wind Down Associates LLC, the Plan Administrator appointed under the confirmed Third Amended Joint Plan of Reorganization of Primary PDC, Inc., (f/k/a Polaroid Corporation) and its debtor affiliates, a further extension, through and including Sept. 15, 2005, to object to Disputed Claims filed against the Debtors' estates. Pursuant to the confirmed Plan, Wind Down was appointed as the Plan Administrator and is responsible for the claims administration process with respect to the allowance and payment of unsecured, administrative and priority claims and the winding down of the Debtors' estates. Wind Down gave the Court two reasons in support of the extension: a) because more than 9,000 proofs of claim were filed against the Debtors' estates, the extension will ensure that all claims not yet objected to will be the subject of an objection if appropriate; and b) it is continuing to negotiate and consensually resolve various Disputed Claims and is wishes to avoid filing more objections to unresolved claims if the negotiations for those Disputed Claims become successful; Headquartered in Cambridge, Massachusetts, Primary PDC, Inc., (f/k/a Polaroid Corporation), -- http://www.primarypdc.com-- is responsible for settling claims and for administering business matters related to the former Polaroid Corporation. Substantially all of the assets of Polaroid Corporation were sold to OEP Imaging Operating Corporation on July 31, 2002. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 12, 2001 (Bankr. D. Del. Case No. 01-10864). The Court confirmed the Debtors' chapter 11 Plan on Nov. 18, 2003, and the Plan took effect on Dec. 17, 2003. Wind Down Associates LLC is the Plan Administrator under the confirmed Plan. Joseph A. Malfitano, Esq., at Young, Conaway, Stargatt & Taylor and Phil Dublin, Esq., at Akin, Gump, Strauss, Hauer & Feld, L.L.P., represents the Plan Administrator. PONDEROSA PINE: Civil Action Removal Period Extended Until Oct. 5 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extended until Oct. 5, 2005, Ponderosa Pine Energy, LLC, and its debtor- affiliates' period to file notices of removal with respect to pre- petition civil actions pursuant to 28 U.S.C. Section 1452 and Rules 9006 and 9007 of the Federal Rules of Bankruptcy Procedures. The Debtors will use the extension to properly review complex legal and factual issues and the effect of contingent liabilities on their ability to successfully rehabilitate and restructure their businesses. In addition, the Debtors say the extension will afford them the opportunity to make informed decisions concerning the removal of civil actions pending in several federal and civil courts. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D.N.J. Case No. 05-22068). The case is jointly administered under (Bankr. D. N.J. Case No. 05-21444). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PRECISION SPECIALTY: Admin. Claims Must Be Filed by Sept. 26 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware set September 26, 2005, as the deadline for all creditors owed money on account of administrative claims arising on or before February 6, 2003, against Precision Specialty Metals, Inc., to file proofs of claim. Administrative claimants must file written proofs of claim on or before the September 26 Administrative Claims Bar Date and those forms must be sent either by first class mail, overnight delivery or personal service to: U.S. Bankruptcy Court for the District of Delaware 824 Market Street, 3rd Floor Wilmington, Delaware 19801 Precision Specialty Metals is a specialty steel conversion mill engaged in re-rolling, slitting, cutting and polishing stainless steel and high-performance alloy hot band into standard or customized finished thin-gauge strip and sheet product. The Company filed for Chapter 11 protection on June 16, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Laura Davis Jones, Esq., at Pachulski, Stang, Ziebl, Young & Jones P.C., represents the Debtor on its restructuring efforts. RITE AID: Expects to Raise $111.5MM from Preferred Stock Offering ----------------------------------------------------------------- Rite Aid Corporation expects to fetch $111.55 million from the sale of 4.6 million of its Series I mandatory convertible preferred stock after deducting underwriting discounts and commissions. At a $25 share price, Rite Aid expects to get $115 million. From those gross proceeds, it will grant $3.45 million of underwriting discount commissions to Citigroup and JP Morgan. Rite Aid further disclosed in its supplement prospectus filed with the Securities and Exchange Commission that it would pay annual dividends on each share in the amount of $1.3752 per share. Dividends will be cumulative from the date of issuance and payable to the extent that assets are legally available to pay dividends and our board of directors or an authorized committee of our board declares a dividend payable. Rite Aid may pay dividends in cash, shares of our common stock, or any combination of cash and common stock, in our sole discretion, after every quarter. The first dividend payment, if declared, will be made on November 1, 2005. On November 17, 2008, each share of will automatically convert, subject to certain adjustments, into no fewer than 4.7134 shares of common stock and no more than 5.6561 shares of common stock, depending on the then-prevailing market share price. At any time prior to November 17, 2008, holders may elect to convert each share of their mandatory convertible preferred stock, subject to certain adjustments, into 4.7134 shares of our common stock. If the closing price per share of our common stock exceeds $9.55 for at least 20 trading days within a period of 40 consecutive trading days, Rite Aid may elect to cause the conversion but not less than all, of the shares of mandatory convertible preferred stock into 4.7134 shares of our common stock, plus an amount equal to all accumulated and unpaid dividends and a "make-whole" payment. A full-text copy of the Supplemented Prospectus is available for free at http://ResearchArchives.com/t/s?e9 Rite Aid Corporation -- http://www.riteaid.com/-- is one of the nation's leading drugstore chains with annual revenues of $16.8 billion and approximately 3,400 stores in 28 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Aug. 15, 2005, 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. As reported in the Troubled Company Reporter on Jan. 7, 2005, Fitch Ratings assigned a 'B' rating to Rite Aid Corporation's 7.5% $200 million senior secured notes due 2015. The proceeds from the issue will be used to repay the $170.5 million 7.625% senior unsecured notes due April 2005 and the $38.1 million 6% senior notes due December 2005. These notes rank pari passu with the company's outstanding secured notes. Fitch rates Rite Aid: -- $1.7 billion senior unsecured notes 'B-'; -- $800 million senior secured notes 'B'; -- $1.4 billion bank facility 'B+.' Fitch said the rating outlook is stable. RITE AID: Picks Citigroup & J.P. Morgan to Underwrite Offer ----------------------------------------------------------- Rite Aid Corporation entered into an underwriting agreement with Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., providing for the sale of 4.6 million shares of Rite Aid's 5.50% Series I Mandatory Convertible Preferred Stock, par value $1.00 per share and with a liquidation preference of $25 per share, to the Underwriters at a price of $24.25 per share. Rite Aid has granted the Underwriters the right, exercisable for thirty days after the date of the Underwriting Agreement, to purchase up to 600,000 additional shares of Series I Preferred Stock to cover over-allotments, if any, at a price of $24.25 per share. A full-text copy of the Underwriting Agreement is available for free at http://ResearchArchives.com/t/s?eb Rite Aid Corporation -- http://www.riteaid.com/-- is one of the nation's leading drugstore chains with annual revenues of $16.8 billion and approximately 3,400 stores in 28 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Aug. 15, 2005, 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. As reported in the Troubled Company Reporter on Jan. 7, 2005, Fitch Ratings assigned a 'B' rating to Rite Aid Corporation's 7.5% $200 million senior secured notes due 2015. The proceeds from the issue will be used to repay the $170.5 million 7.625% senior unsecured notes due April 2005 and the $38.1 million 6% senior notes due December 2005. These notes rank pari passu with the company's outstanding secured notes. Fitch rates Rite Aid: -- $1.7 billion senior unsecured notes 'B-'; -- $800 million senior secured notes 'B'; -- $1.4 billion bank facility 'B+.' Fitch said the rating outlook is stable. ROOMLINX INC: Issuing 21.4 Million Shares in SuiteSpeed Merger -------------------------------------------------------------- RoomLinX, Inc. (RMLX) completed the acquisition of SuiteSpeed, Inc., a leading provider of wireless solutions for hotels. Customers will experience no disruption in service, and their company contact points will remain unchanged. Pursuant to the merger agreement, RoomLinX will issue 21,450,000 shares of its common stock to acquire the outstanding stock of SuiteSpeed and an additional 6,183,870 shares of its common stock to cancel certain indebtedness owed by SuiteSpeed. The 21,450,000 shares have piggy-back registration rights under certain circumstances. "Since we first announced our intention to acquire SuiteSpeed in the spring, we have had the pleasure of getting to know the company, its management and its customers," said Aaron Dobrinsky, CEO of RoomLinX. "It was extremely encouraging to emerge from the due diligence period with the belief that the planned acquisition promised even greater synergies and potential than initially thought. As we have indicated, the addition of SuiteSpeed should enhance our leadership position in the industry with more rooms under management, increased recurring revenue, economies of scale, increased offerings and a superior executive in Mike Wasik, formerly CEO of SuiteSpeed." SuiteSpeed, a provider of high-speed wireless Internet access solutions, has delivered WiFi services to hotels since 2000. The company serves brand-name properties such as the Renaissance, Courtyard by Marriott, Holiday Inn, Radisson, Hampton Inn and Best Western. "We have been looking forward to the closing of this acquisition and I personally am very pleased to be joining RoomLinX as Executive Vice President," said Mike Wasik, founder of SuiteSpeed. "Plans for the acquisition have been well received by interested parties on both sides of the transaction and we believe the benefits to customers will be immediately apparent." RoomLinX, Inc., is a pioneer in Broadband High Speed Wireless Internet connectivity, specializing in providing advanced WI-FI Wireless and Wired networking solutions for High Speed Internet access to Hotel Guests, Convention Center Exhibitors, Corporate Apartments, and Special Event participants. Designing, deploying and servicing site-specific wireless networks for the hospitality industry is RoomLinX's core competency. At March 31, 2005, RoomLinX's balance sheet showed total liabilities exceeding total assets by $434,926. RUSSELL-STANLEY: Files Prepackaged Chapter 11 Petition in Delaware ------------------------------------------------------------------ Russell-Stanley Holdings, Inc., entered into a definitive asset purchase agreement with an affiliate of Mauser-Werke GmbH & Co. KG and One Equity Partners. Pursuant to that agreement, Russell- Stanley and certain of its subsidiaries will sell substantially all of their assets to Mauser. To effectuate the asset sale under the Purchase Agreement, Russell-Stanley and certain of its subsidiaries filed for reorganization under Chapter 11 of the Bankruptcy Code with a prepackaged Plan of Reorganization. The filings were made in the U.S. Bankruptcy Court for the District of Delaware. Prior to the filings, Russell-Stanley obtained 100% acceptance of the Plan from voting creditors. This unanimous support is expected to minimize the duration of the Chapter 11 cases. The Chapter 11 filing is a condition of the asset sale and was not due to operational concerns. The Company believes that its underlying business is sound and that it will be strengthened by a combination with the financially strong Mauser organization. Russell-Stanley's senior management is expected to continue in their current capacity both during the Chapter 11 cases and with Mauser after the sale is completed. "This combination with Mauser will provide the Russell-Stanley business with the additional resources necessary to continue to meet and exceed the expectations of our customers by partnering with a truly global leader in industrial packaging," stated Ronald M. Litchkowski, President and Chief Executive Officer of Russell- Stanley. "During our Chapter 11 reorganization, we will continue to operate as usual and will fulfill all of our customer obligations during this process. Our commitment to our customers and vendors remains steadfast." Under the proposed plan, Russell-Stanley's existing subordinated debt and equity will be cancelled, and bondholders will receive their pro rata share of the sale proceeds that remain after secured claims, unsecured claims other than bond claims, and Chapter 11 expenses have been paid or reserved. Russell-Stanley's relationships with its vendors should not be adversely affected by this transaction or the Chapter 11 cases. The Company will pay vendors for post-petition goods and services provided on or after the filing date in the normal course of business, which obligations are entitled to priority in payment in the Chapter 11 cases. All outstanding purchase orders for delivery of goods and services should be processed and shipped as usual. The proposed plan of reorganization contemplates the payment in full of any allowed pre-petition vendor claims that remain unpaid upon consummation of the Plan. Moreover, as part of the transaction, Mauser has agreed, upon the closing, to assume and pay valid and accrued trade payables that are not otherwise paid when due as a result of the filing and that are reflected on the Company's books. Russell-Stanley expects to emerge from Chapter 11 and close the transaction with Mauser within the next few months subject to customary closing conditions contained in the asset purchase agreement, including receipt of all necessary bankruptcy court and other approvals. Mauser-Werke GmbH Co. KG -- http://www.mauser-werke.com/-- is a global leader in industrial packaging, with its headquarters in Bruehl, Germany. Headquartered in Bridgewater, New Jersey, Russell-Stanley Holdings, Inc. -- http://www.russell-stanley.com/-- is North America's largest plastic drum manufacturer, second largest steel drum manufacturer, and a leading industrial container supply chain management company. The Company and its affiliates filed for chapter 11 protection on Aug. 19, 2005 (Bankr. D. Del. Case No. 05-12339). Mark S. Chehi, Esq., and Sarah E. Pierce, Esq., Kayalyn A. Marafioti, Esq., Frederick D. Morris, Esq., and Bennett S. Silverberg, 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. RUSSELL-STANLEY: Case Summary & 75 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Russell-Stanley Holdings, Inc. 685 Route 202/206 Bridgewater, New Jersey 08807 Bankruptcy Case No.: 05-12339 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Russell-Stanley Corporation 05-12340 Container Management Services, Inc. 05-12341 Russell-Stanley, Inc. 05-12343 RSLPCO, Inc. 05-12345 Russell-Stanley, L.P. 05-12347 Type of Business: Russell-Stanley is North America's largest plastic drum manufacturer, second largest steel drum manufacturer, and a leading industrial container supply chain management company. See http://www.russell-stanley.com/ Chapter 11 Petition Date: August 19, 2005 Court: District of Delaware Judge: Mary F. Walrath Debtors' Counsel: Mark S. Chehi, Esq. Sarah E. Pierce, Esq. Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899-0636 Tel: (302) 651-3000 Fax: (302) 651-3160 -- and -- Kayalyn A. Marafioti, Esq. Frederick D. Morris, Esq. Bennett S. Silverberg, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Tel: (212) 735-3000 Debtors' Special Corporate Counsel: Greenbaum, Rowe, Smith & Davis LLP Debtors' Noticing & Claims Agent: The Trumbull Group Debtors' Special Noticing Agent: Financial Balloting Group LLC Debtors' Financial Advisors: The Blackstone Group, LP Debtors' Accountants & Tax Advisors: Deloitte & Touche LLP Estimated Assets Estimated Debts ---------------- --------------- Russell-Stanley $50 Million to More than Holdings, Inc. $100 Million $100 Million Russell-Stanley Corp. $10 Million to More than $50 Million $100 Million Container Management Less than $50,000 More than Services, Inc. $100 Million Russell-Stanley, Inc. More than More than $100 Million $100 Million RSLPCO, Inc. Less than $50,000 More than $100 Million Russell-Stanley, L.P. $50 Million to More than $100 Million $100 Million Russell-Stanley Holdings, Inc.'s 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Indentured Trustee $27,938,956 5 Penn Plaza, 13th Floor for the 9% Senior New York, NY 10001 Sub. Notes Due Attn: Robert Massimillo 2008 Greenville Land, Inc. Litigation $0 P.O. Box 2567 Greenville, SC 29602 Henkel Corporation Litigation $0 The Tyrio, Suite 200 2200 Renaissance Boulevard Gulph Mills, PA 19406 Weil, Dorothy & Ralph Litigation - $0 c/o Slifkin & Axe Personal Injury Regency Towers, Suite 105 1003 Easton Road P.O. Box 150 Willow Grove, PA 19090-0150 Castro, Donald Litigation - $0 c/o Best, Vanderlaan & Employee Harrington 2100 Manchester Road, Suite 1420 Wheaton, IL 60187 Luthe, Frank Litigation - $0 c/o Martin Melody Employee Revmont Park 3 Revmont Drive, Suite 316 Shrewsbury, NJ 07702 Archem Superfund Site Litigation $0 Subhash Pal., P.E. P.O. Box 13087 Austin, TX 78711-3087 State of Delaware Litigation $0 Department of Natural Resources & Environmental Control 391 Lukens Drive New Castle, DE 19720-2774 Perth Amboy Litigation $0 c/o Lite, Depalma, Greenberg & Rivas, LLC Two Gateway Center Newark, NJ 07102 Simpsonville Litigation $0 P.O. Box 2567 Greenville, SC 29602 Temple, Denise Litigation - $0 c/o J. Courtney Wilson Employee 1510 Veterans Boulevard Metairie, LA 70005 Russell-Stanley Corporation's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Indenture Trustee $27,938,956 5 Penn Plaza, 13th Floor for the 9% Senior New York, NY 10001 Sub. Notes Due Attn: Robert Massimillo 2008 Mittal Steel USA Accounts Payable $1,475,943 Sparrows Point Plant Sparrows Point, MD 21229 Con-Tech International Inc. Accounts Payable $594,571 2387 Paysphere Circle Chicago, IL 63674 Chevron Phillips Chemical Co. Accounts Payable $357,210 Plastics Division 4258 Collections Center Drive Chicago, IL 60693 Liberty Property Limited Accounts Payable $239,425 Partnership 1510 Valley Center Parkway Suite 240 Bethlehem, PA 18017 Exxonmobil Chemical Company Accounts Payable $180,995 Herman Leasing Company Accounts Payable $176,972 Hunter Drums Limited Accounts Payable $132,397 Contract Leasing Corporation Accounts Payable $117,729 Barry L. Moyer Real Property $116,951 Taxes Self Industries of Accounts Payable $92,866 Pennsylvania Inc. Dow Chemical Company Accounts Payable $88,920 Container Accessories, Inc. Accounts Payable $83,826 Deloitte & Touche Accounts Payable $83,750 Kautex Machines, Inc. Accounts Payable $72,454 Tryon Trucking, Inc. Accounts Payable $66,780 Techmer FM, LLC Accounts Payable $63,373 Wolverine Plastics Accounts Payable $60,965 Finnaren & Haley Inc. Accounts Payable $59,068 Tracterbel Energy Service Inc. Accounts Payable $56,859 Container Management Services, Inc.'s 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Indenture Trustee $27,938,956 5 Penn Plaza, 13th Floor for the 9% Senior New York, NY 10001 Sub. Notes Due Attn: Robert Massimillo 2008 Greenville Land, Inc. Litigation $0 P.O. Box 2567 Greenville, SC 29602 Simpsonville Litigation $0 P.O. Box 2567 Greenville, SC 29602 Russell-Stanley, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Indenture Trustee $27,938,956 5 Penn Plaza, 13th Floor for the 9% Senior New York, NY 10001 Sub. Notes Due Attn: Robert Massimillo 2008 Exxonmobil Chemical Company Accounts Payable $422,656 P.O. Box 371127M Pittsburgh, PA 15251-7127 Chevron Phillips Chemical Co. Accounts Payable $371,323 Plastics Division 4258 Collections Center Drive Chicago, IL 60693 Nova Chemicals, Inc. Accounts Payable $281,254 P.O. Box 2399 Carol Stream, IL 60132-2399 IDC Corporation Accounts Payable $85,133 Techmer FM, LLC Accounts Payable $84,687 Thorton Drum Rings Accounts Payable $79,798 Wolverine Plastics Accounts Payable $77,329 Hunter Drums Limited Accounts Payable $67,899 Kingsway Logistics Inc. Accounts Payable $57,978 DU Page County Collector Real Property Taxes $51,854 Techmer FM LLC Accounts Payable $41,975 ADMO, Inc. Accounts Payable $40,041 J.B. Hunt Transport, Inc. Accounts Payable $34,346 J & S Transportation Accounts Payable $28,370 B.J. Plastic Molding Co., Inc. Accounts Payable $18,013 White Eagle Golf Club Accounts Payable $14,384 Broderick Packaging, Inc. Accounts Payable $13,777 Kart Brokerage Services Accounts Payable $13,640 Amino Transport Inc. Accounts Payable $11,518 RSLPCO, Inc.'s Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Indentured Trustee $27,938,956 5 Penn Plaza, 13th Floor for the 9% Senior New York, NY 10001 Sub. Notes Due Attn: Robert Massimillo 2008 Russell-Stanley, L.P. 's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Indentured Trustee $27,938,956 5 Penn Plaza, 13th Floor for the 9% Senior New York, NY 10001 Sub. Notes Due Attn: Robert Massimillo 2008 Metalwest, LLC Accounts Payable $1,635,573 Department 157 Denube, CO 80271-0357 Con-Tech International, Inc. Accounts Payable $957,334 2387 Paysphere Circle Chicago, IL 60674 Exxonmobil Chemical Company Accounts Payable $208,078 P.O. Box 371127M Pittsburgh, PA 15251-7127 American Coatings Inc. Accounts Payable $183,070 Chevron Phillips Chemical Co. Accounts Payable $178,119 General Steel Drum Corporation Accounts Payable $129,096 Sonoco Products Company Accounts Payable $117,907 Rieke Corporation Accounts Payable $84,859 J.B. Hunt Transport, Inc. Accounts Payable $82,692 IPC Corporation Accounts Payable $71,669 Thornton Drum Ring Accounts Payable $58,395 Entergy Accounts Payable $53,556 Coilplus Texas Inc. Accounts Payable $42,404 C.A.P.S. Inc. Accounts Payable $41,531 Ryder Transportation Services Accounts Payable $40,455 The Valspar Corporation Accounts Payable $36,503 Techmer FM, LLC Accounts Payable $34,681 Contract Leasing Corporation Accounts Payable $33,764 McGriff Accounts Payable $28,328 SECURECARE TECH: Equity Deficit Tops $1.24 Million at June 30 ------------------------------------------------------------- SecureCARE Technologies, Inc. (OTC Bulletin Board: SCUI), closed its Series B Convertible Preferred Stock Private Placement offering, raising $1.57 million dollars in an over-subscribed round of financing. Neil Burley, Chief Financial Officer, stated "We are extremely pleased to announce that SecureCARE has raised a total of $1.57 million over the past few months. In fact, the offering, initially capped at $1.0 million, was over-subscribed by 57 percent. This round of financing has allowed us to make both strategic and tactical investments in our sales and marketing programs, and we believe the return on these investments is being demonstrated now in our performance. In the first six months of the year, our total revenue grew 73% over the prior year. Also, in conjunction with other strategic initiatives and investments we have made, we believe the Company is well positioned for continued and rapid long-term growth." The investors in the Financing received, for each $100,000 invested, a Unit comprised of 90,909 shares of the Registrant's Series B Convertible Preferred Stock convertible into common stock on a share-for-share basis and 18,182 five-year Common Stock Purchase Warrants with an exercise price of $1.25. The Financing was conducted pursuant to the exemption provided pursuant to Regulation D under the Securities Act of 1933, as amended, and analogous state laws. SecureCARE Technologies, Inc. -- http://www.securecaretech.com/ -- is a leading provider of Internet-based document exchange and e-signature solutions for the healthcare industry. Built with state-of-the art development tools from the Microsoft dotNET development solutions, SecureCARE.net is tailored to the needs of physicians, clinics and home healthcare, hospice and durable medical equipment providers. This end-to-end solution offers a revolutionary approach to accessing information and managing time- consuming forms and authorizations. SecureCARE's easy-to-use technology eliminates paper, while enhancing the ability of physicians to capture fees for otherwise unbilled time and services, uniquely and directly impacting the physician's revenue. SecureCARE.net is a highly secure, HIPAA-ready tracking and reporting tool that streamlines operations while providing physicians with additional revenue opportunities. As of June 30, 2005, SecureCARE Technologies' equity deficit widened to $1,245,788 from a $907,080 deficit at Dec. 31, 2004. SHEFFIELD STEEL: S&P Withdraws B- Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services said that it withdrew its 'B-' corporate credit rating on Sand Springs, Oklahoma-based Sheffield Steel Corp. at the company's request. STELCO INC: Inks Pact to Sell Stelpipe's Assets to Romspen ---------------------------------------------------------- Stelco Inc. (TSX:STE) entered into a definitive agreement for the sale of the assets of Stelpipe Ltd. to Romspen Investment Corporation, an independent non-bank lender and financier based in Toronto. The purchase price was not disclosed. As in past asset sale transactions during its restructuring process, Stelco will ask the Court to seal such information until the sale has closed. The transaction is subject to certain conditions, including Court and lender approval. It is anticipated that such approval will be sought by early September and that the matter will close at or about the end of October. Romspen has advised that it will assign the agreement to a new, wholly owned subsidiary, Lakeside Steel Corporation Limited. Romspen has also stated that it will continue Stelpipe's current operations in the current facilities through Lakeside and will retain almost all of Stelpipe's approximately 470 workers, about 420 of whom are hourly employees represented by the Canadian Auto Workers. As part of the transaction, Stelco will be assuming all of the pension and benefit obligations respecting Stelpipe's retirees. Stelpipe employees and retirees will be provided with additional information in the near future about the transaction and how it affects them. Courtney Pratt, Stelco President and Chief Executive Officer, said, "This transaction is good news for Stelpipe, for its employees and retirees, and for Stelco. It provides Stelpipe with ownership that views its business as a strategic asset. It provides Stelpipe employees and retirees with increased certainty going forward. And it assists Stelco in focusing on the integrated steel business at the heart of the strategic plan announced in July 2004. On behalf of everyone in the Stelco community I want to thank Stelpipe and its employees for their important and ongoing contribution to the Company." Stelco had announced on August 3, 2004, that it would pursue the sale of Stelpipe as part of the Company's asset sale process. Stelco informed Stelpipe employees on June 3, 2005 that a letter of intent had been signed with Romspen. The 32nd Monitor's Report also provided information in this matter. Since then, the parties have addressed outstanding matters and negotiated the terms of the definitive agreement inked with Romspen. Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on Jan. 29, 2004, Stelco and certain related entities filed for protection under the Companies' Creditors Arrangement Act. The Superior Court of Justice (Ontario) extended the stay period of Stelco's Court-supervised restructuring to Sept. 9, 2005. S-TRAN HOLDINGS: Wants to Make Interim Payment to LaSalle Business ------------------------------------------------------------------ S-Tran Holdings, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to pay LaSalle Business Credit, LLC, the proceeds of the recent sale of its personal property. The Court approved the sale on June 9, 2005. The Debtors estimate the net proceeds from the sale at $8,780,000. The Debtors' current indebtedness to LaSalle is approximately $9 million. The Debtors borrowed money from LaSalle under a senior secured credit facility. LaSalle asserts a security interest under the prepetition credit facility in substantially all of each of the Debtors' assets. The Debtors believe that its interim payment to LaSalle is necessary and appropriate to reduce or eliminate the amount of interest charges and other fees. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second-day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05- 11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. S-TRAN HOLDINGS: Wants Removal Period Stretched to November 9 ------------------------------------------------------------- S-Tran Holdings, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend the period within which they can remove civil actions through and including November 9, 2005. Since the chapter 11 filing, the Debtors have devoted substantial amounts of time completing the shutdown of their operations, selling their assets, conducting the auction pursuant to the sale order, preparing and filing their schedules and statements and other bankruptcy matters. The Debtors believe that the extension of the removal period will afford them the opportunity necessary to make fully informed decisions concerning the removal of each action and will assure that they do not forfeit valuable rights under section 1452 of the Bankruptcy Code. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second-day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05- 11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. TELTRONICS INC: Reports $5.44 Million Equity Deficit at June 30 --------------------------------------------------------------- Teltronics Inc. (OTCBB: TELT) reported its financial results for the three months and six months ended June 30, 2005. Sales for the three months ended June 30, 2005, were $13.01 million as compared to $12.14 million reported for the same period in 2004. Sales for the six months ended June 30, 2005, were $22.80 million, as compared to $23.45 million, reported for the same period in 2004. Gross profit margin for the three months ended June 30, 2005, was 42.7%, as compared to 37.1% for the same period in 2004. Gross profit margin for the six months ended June 30, 2005 was 42.8%, as compared to 40.8% for the same period in 2004. Operating expenses for the three months ended June 30, 2005, were $4.02 million, as compared to $4.30 million for the same period in 2004. Operating expenses for the six months ended June 30, 2005, were $8.62 million, as compared to $9.00 million for the same period in 2004. The net income for the three months ended June 30, 2005 was $1.19 million, as compared to a net loss of $302,000, for the same period in 2004. The net income for the six months ended June 30, 2005 was $955,000, as compared to a net loss of $369,000 or for the same period in 2004. The net income available to common shareholders for the three months ended June 30, 2005 was $1.03 million, as compared to a net loss of $460,000 for the same period in 2004. The net income available to common shareholders for the six months ended June 30, 2005 was $633,000, as compared to a net loss of $680,000 for the same period in 2004. "The second quarter was an excellent one for Teltronics this year," stated Ewen Cameron, President and CEO. "Revenues increased over the first quarter and exceeded the comparable quarter in 2004. In addition to the increased sales volume we continue to benefit from our cost reductions and as a result the Company generated a net income both on a quarterly and year-to- date basis," explained Mr. Cameron. Teltronics, Inc. -- http://www.teltronics.com/-- is a leading global provider of communications solutions and services that help businesses excel. The Company manufactures telephone switching systems and software for small-to-large size businesses, government, and 911 public safety communications centers. Teltronics offers a full suite of Contact Center solutions -- software, services and support -- to help their clients satisfy customer interactions. Teltronics also provides remote maintenance hardware and software solutions to help large organizations and regional telephone companies effectively monitor and maintain their voice and data networks. The Company serves as an electronic contract-manufacturing partner to customers in the U.S. and overseas. As of June 30, 2005, Teltronics' equity deficit narrowed to $5,440,000 compared to a $6,044,000 deficit at Dec. 31, 2004. TOMMY HILFIGER: Filing 2004 & 2005 1st Quarter Results Next Month ----------------------------------------------------------------- Tommy Hilfiger Corporation (NYSE: TOM) reported preliminary first quarter results for its fiscal year ended March 31, 2006. Net revenue for the first quarter of fiscal 2006 was approximately $319 million compared to approximately $329 million for the first quarter of fiscal 2005. The Company's preliminary net loss for the quarter was smaller than the loss of the first fiscal quarter of the prior year. The Company normally incurs a loss in the first fiscal quarter due to seasonal shipping and sales patterns in Europe. As previously disclosed, the Company continues to analyze whether a restatement or other adjustments will be required in connection with the tax matters, lease accounting and other out of period adjustments. More detailed comparative earnings information for the quarter is not available at this time. The Company expects to file its quarterly report on Form 10-Q for the first quarter ended June 30, 2005, together with its delayed Form 10-K for the fiscal year ended March 31, 2005 and Form 10-Qs for the second and third quarters of fiscal 2005, in September 2005. David F. Dyer, President and Chief Executive Officer, stated, "Our preliminary results for the first fiscal quarter of fiscal 2006 were slightly better than our expectations. The quarter's results reflected continued strength in Europe, with double digit revenue gains in both the wholesale and retail components. We are also pleased with the performance of our U.S. Company stores, where key item programs and improved inventory management resulted in positive comparable sales and solid margin gains for the third consecutive quarter. Overall, business in the U.S. wholesale segment remains challenged and we continue to strive for improved profitability through product initiatives and cost reductions." U.S. wholesale revenue for the quarter was approximately $115 million for the quarter ended June 30, 2005, compared to approximately $163 million for the quarter ended June 30, 2004. Approximately $12 million of this reduction is attributed to the Company's exit of the Young Men's Jeans and H Hilfiger wholesale businesses during fiscal 2005. Additionally, lower volume in menswear, womenswear and childrenswear resulted from decreased orders from the Company's major customers and a reduction in the number of department store doors through which the Company's products are distributed. International wholesale revenue, consisting of the Company's European and Canadian wholesale businesses, for the first quarter of fiscal 2006 totaled approximately $64 million versus approximately $47 million a year earlier. The increase was driven by higher volume and higher exchange rates used to translate the Euro and Canadian dollar. Differences in exchange rates accounted for approximately $3 million of the increase. Retail revenue for the first quarter of fiscal 2006 was approximately $122 million compared to approximately $103 million a year earlier. The Company's store count increased by 30 since July 1, 2004, including 12 stores opened in the first quarter of fiscal 2006. Comparable sales at U.S. Company stores, the largest retail division, increased by low single digit percentage for the quarter. As of June 30, 2005, the Company's worldwide store count was 211, including 165 Company stores and 46 specialty stores, compared to 181 stores a year earlier, consisting of 146 Company stores and 35 specialty stores. Licensing revenue for the first quarter of fiscal 2006 was approximately $17 million compared to approximately $15 million for the first quarter of fiscal 2005. Licensing revenue benefited primarily from continued growth in the international arena. Balance Sheet Highlights The Company had cash, cash equivalents, restricted cash and short-term investments totaling approximately $570 million at June 30, 2005 compared to $468 million at June 30, 2004. Restricted cash is comprised of $150 million that was pledged as collateral under a new letter of credit facility entered into by THUSA in April 2005. Long-term debt was approximately $343 million at June 30, 2005 compared to $350 million at June 30, 2004. Inventories totaled approximately $246 million at June 30, 2005, compared to $240 million at June 30, 2004. Within this total, wholesale inventories were approximately $159 million at June 30, 2005, compared to $153 million at June 30, 2004. Retail inventories were approximately $86 million at June 30, 2005, versus $87 million at June 30, 2004. Outlook for Fiscal Year 2006 The Company expects pretax earnings for fiscal 2006 to be approximately 30% to 35% above preliminary pretax earnings of approximately $92 million for fiscal 2005. The Company continues to believe that this estimate is reasonable and has no other changes to the estimated revenue it provided at that time. The Company will defer making a comparison of expected net income for fiscal 2006 with that of fiscal 2005 until it finalizes 2005 results including reaching a conclusion about any possible restatement of previous financial statements. However, the Company expects its effective tax rate for fiscal 2005 to be lower than historical levels because it expects to be able to utilize foreign tax credits and to recognize certain state net operating loss carry forwards that were previously subject to valuation allowances. The Company expects its effective tax rate for fiscal 2006 to be above recent historical rates, principally because of the elimination of approximately $12 million of annualized tax benefits realized by the Company as a tax resident of Barbados, under an income tax treaty between Barbados and the United States. The treaty's benefits were eliminated effective February 1, 2005. The United States and Barbados had signed a protocol to the treaty in July 2004 that would eliminate the Company's tax benefits, as well as the estimated impact on the Company's future net income. The Company continues to expect capital expenditures for fiscal 2006 to be approximately $90 million for fiscal 2006. Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and childrenswear under the Tommy Hilfiger trademarks. Through a range of strategic licensing agreements, the Company also offers a broad array of related apparel, accessories, footwear, fragrance and home furnishings. The Company's products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, Australia and other countries in the Far East, as well as the Company's own network of outlet and specialty stores in the United States, Canada and Europe. * * * As reported in the Troubled Company Reporter on June 20, 2005, Standard & Poor's Ratings Services ratings on Tommy Hilfiger including its 'BB-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Nov. 3, 2004. The ratings remain on CreditWatch and reflect Standard & Poor's concern regarding the company's negative operating trends, including the continued decline in revenues and the significant contraction in pre-tax earnings for the fiscal year ended March 2005. (The company currently does not report after-tax earnings and has not filed 10Qs for the past three fiscal quarters, due to a previously disclosed government investigation. The U.S. Attorney's office for the Southern District of New York is conducting an investigation regarding commission payments to a foreign subsidiary.) Tommy Hilfiger reported weaker-than-expected results for fiscal 2005, primarily in its U.S. wholesale segment, which continued to experience significant revenue declines as a result of reduced orders from major customers. Tommy Hilfiger's U.S. wholesale revenues declined by about 29% for the year. In addition, the company also revised its fiscal 2006 forecast downwards, reflecting the negative effect of lower revenues and higher expenses as the company expects to make incremental investments in its H Hilfiger and Karl Lagerfeld brands, and its ecommerce initiative. While the company currently has sufficient liquidity resources, Standard & Poor's remains concerned with potential constraints that could affect the company's financial resources due to the additional legal costs arising from the government investigation and the class action lawsuits against the company. TOMMY HILFIGER: May Sell Business as U.S. Attorney Probe Ends ------------------------------------------------------------- Tommy Hilfiger is planning to sell its business as it struggles to turn-around its operations to profitability, The Deal reports. Talks about the sale have circulated for months brought about by pressures from large shareholders. The sale has become more probable last week after the U.S. Attorney's Office ended its year-long investigation over alleged improper commission payments and related tax matters at the company without criminal charges. The company is asked to pay $18.1 million in back taxes and interest in connection with the case. No fines were imposed. Tommy Hilfiger's share price has continued to climb since the start of the month reaching $17.87 per share on Aug. 18 from $13.08 at Aug. 1. With 92 million shares outstanding, that pegs the Company's market capitalization around $1.6 billion. Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and childrenswear under the Tommy Hilfiger trademarks. Through a range of strategic licensing agreements, the Company also offers a broad array of related apparel, accessories, footwear, fragrance and home furnishings. The Company's products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, Australia and other countries in the Far East, as well as the Company's own network of outlet and specialty stores in the United States, Canada and Europe. * * * As reported in the Troubled Company Reporter on June 20, 2005, Standard & Poor's Ratings Services ratings on Tommy Hilfiger including its 'BB-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Nov. 3, 2004. The ratings remain on CreditWatch and reflect Standard & Poor's concern regarding the company's negative operating trends, including the continued decline in revenues and the significant contraction in pre-tax earnings for the fiscal year ended March 2005. (The company currently does not report after-tax earnings and has not filed 10Qs for the past three fiscal quarters, due to a previously disclosed government investigation. The U.S. Attorney's office for the Southern District of New York is conducting an investigation regarding commission payments to a foreign subsidiary.) Tommy Hilfiger reported weaker-than-expected results for fiscal 2005, primarily in its U.S. wholesale segment, which continued to experience significant revenue declines as a result of reduced orders from major customers. Tommy Hilfiger's U.S. wholesale revenues declined by about 29% for the year. In addition, the company also revised its fiscal 2006 forecast downwards, reflecting the negative effect of lower revenues and higher expenses as the company expects to make incremental investments in its H Hilfiger and Karl Lagerfeld brands, and its ecommerce initiative. While the company currently has sufficient liquidity resources, Standard & Poor's remains concerned with potential constraints that could affect the company's financial resources due to the additional legal costs arising from the government investigation and the class action lawsuits against the company. TOMMY HILFIGER: Will Pay $18.1 Tax Bill at End of Government Probe ------------------------------------------------------------------ Tommy Hilfiger Corporation (NYSE: TOM) has resolved the investigation by the U.S. Attorney's Office for the Southern District of New York by executing a non-prosecution agreement with the U.S. Attorney's Office. The USAO has concluded that criminal tax charges are not warranted in connection with the buying office commission rate paid by the Company's U.S. subsidiaries for the fiscal years 1990-2004, and will close its investigation. In addition, the USAO has agreed that it will not criminally prosecute Tommy Hilfiger U.S.A., Inc., or its parent or affiliates for any offenses relating to underpayment of Hong Kong taxes as a result of activities attributed to Tommy Hilfiger (Eastern Hemisphere) Limited. The non-prosecution agreement with the USAO is subject to certain understandings, including that THUSA will file amended U.S. federal income tax returns for the fiscal years ending March 31, 2001 through 2004 reflecting a reduced buying office commission rate for those four years, adopt and implement the recommendations of the Special Committee of the Company's Board of Directors, adopt and implement an effective ethics and compliance program, and provide information to the Hong Kong Inland Revenue Department for it to evaluate whether THEH or its Hong Kong subsidiary owe any Hong Kong taxes to the IRD. THUSA also agreed for a period of three years to provide the USAO, upon request, with information so that the USAO can monitor THUSA's compliance with the agreement. David Dyer, President and Chief Executive Officer of the Company stated, "We have worked hard for nearly a year to cooperate fully with the United States Attorney's Office, and are pleased that it has determined to close its investigation." As a result of the reduction in the buying office commission rate and other unrelated adjustments that are also to be reflected in the amended tax returns, THUSA expects to pay approximately $15.4 million in additional federal income taxes and $2.7 million in interest for these four years, taking into account the effect of changes in other tax attributes, including net operating loss carry forwards. The effect of adjusting the buying office commission rate for the four fiscal years results in a tax provision in fiscal 2005 of approximately $12 million, after taking into account previously established reserves for this matter. Background of the Investigation and Hong Kong Tax Matters As previously disclosed on September 24, 2004, THUSA had received a grand jury subpoena issued by the USAO seeking documents generally related to domestic and/or international buying office commissions since 1990 and that certain of THUSA's current and former employees had received subpoenas. Several domestic and international subsidiaries of the Company pay buying office commissions to THEH, a British Virgin Islands corporation which is a wholly-owned and consolidated subsidiary of the Company, pursuant to contracts to provide or otherwise secure through sub-agents certain services, including product development, sourcing, production scheduling and quality control functions. The Company disclosed that the USAO investigation was focused on the appropriateness of the commission rate paid by the Company's subsidiaries to THEH, as well as other related tax matters. In October 2004, the Board of Directors of the Company formed a Special Committee of independent directors to conduct an independent investigation into matters arising out of the governmental investigation. The Special Committee retained Debevoise & Plimpton LLP as legal counsel, with a team headed by Mary Jo White, former U.S. Attorney for the Southern District of New York. The Special Committee reported on its investigation to the Board in March 2005 and to the USAO in April 2005. As previously disclosed, the Special Committee found that the Company had a good faith basis for adopting the buying office commission rate paid by the Company's subsidiaries to THEH. Also as previously disclosed, the Special Committee did identify certain questions about Hong Kong tax matters and supported the Company's determination to engage the IRD in discussions regarding whether THEH was subject to profits tax in Hong Kong, and the Special Committee made recommendations to the Company to enhance procedures for tax matters, including transfer pricing, and to review its buying office structure. The Company's management has adopted all of the Special Committee's recommendations. As previously disclosed, the Company initiated discussions in May 2005 with the IRD with respect to the potential Hong Kong profits tax liability of THEH. In the course of these discussions, the Company made a settlement offer to the IRD to resolve this issue, which offer had been reflected in the expected tax provisions that the Company previously announced. The IRD has not accepted the Company's settlement offer, and discussions are ongoing. Accordingly, the Company cannot predict the timing or outcome of its settlement discussions with the IRD, and there can be no assurance that the resolution of these discussions will not have a material effect on the Company. On June 15, 2005, the Company disclosed that it expects to record net provisions in the range of $30 million to $40 million (taking into account $15 million of pre-existing tax reserves for these matters) with respect to the USAO investigation, the Hong Kong IRD matter, the Tommy Hilfiger Licensing, Inc. (a Delaware intangible holding company) matter, and the New Jersey Alternative Minimum Assessment refunds. Update on Shareholder Class Action Litigation On August 1, 2005, pursuant to a revised scheduling order, the Company filed a motion to dismiss the consolidated amended complaint in the previously disclosed shareholder class action litigation that was filed following the Company's September 24, 2004 announcement of the USAO investigation. The Company currently expects that a hearing on its motion to dismiss will be held in October 2005. Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and childrenswear under the Tommy Hilfiger trademarks. Through a range of strategic licensing agreements, the Company also offers a broad array of related apparel, accessories, footwear, fragrance and home furnishings. The Company's products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, Australia and other countries in the Far East, as well as the Company's own network of outlet and specialty stores in the United States, Canada and Europe. * * * As reported in the Troubled Company Reporter on June 20, 2005, Standard & Poor's Ratings Services ratings on Tommy Hilfiger including its 'BB-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Nov. 3, 2004. The ratings remain on CreditWatch and reflect Standard & Poor's concern regarding the company's negative operating trends, including the continued decline in revenues and the significant contraction in pre-tax earnings for the fiscal year ended March 2005. (The company currently does not report after-tax earnings and has not filed 10Qs for the past three fiscal quarters, due to a previously disclosed government investigation. The U.S. Attorney's office for the Southern District of New York is conducting an investigation regarding commission payments to a foreign subsidiary.) Tommy Hilfiger reported weaker-than-expected results for fiscal 2005, primarily in its U.S. wholesale segment, which continued to experience significant revenue declines as a result of reduced orders from major customers. Tommy Hilfiger's U.S. wholesale revenues declined by about 29% for the year. In addition, the company also revised its fiscal 2006 forecast downwards, reflecting the negative effect of lower revenues and higher expenses as the company expects to make incremental investments in its H Hilfiger and Karl Lagerfeld brands, and its ecommerce initiative. While the company currently has sufficient liquidity resources, Standard & Poor's remains concerned with potential constraints that could affect the company's financial resources due to the additional legal costs arising from the government investigation and the class action lawsuits against the company. TRANSTECHNOLOGY CORP: June 26 Balance Sheet Upside-Down by $6 Mil. ------------------------------------------------------------------ TransTechnology Corporation (OTC:TTLG) reported that fiscal first- quarter 2006 operating income increased 37% to $2.5 million from $1.8 million in the prior-year period. Net income for the first quarter of fiscal 2006 was $200,000 compared to a net loss for the first quarter of fiscal 2005 of $600,000. Sales of $13.0 million were down 11% from $14.5 million in the first quarter a year ago. New orders received during the first quarter were $13.8 million compared with $9.2 million in the prior fiscal year's first quarter. The Company's book-to-bill ratio for the first quarter was 1.06, compared with .63 in last year's first quarter and .91 for the full fiscal year 2005. The Company's backlog increased during the first three months of fiscal 2006 to $35.9 million from $35.1 million at the end of fiscal 2005 and $35.6 million one year ago. Robert L. G. White, Chief Executive Officer of the Company, said, "During the first quarter, we realized the benefits of our major initiatives from last year. Gross margin for the first quarter was 43.4% compared to 40.1% in last year's same quarter. This is the fourth consecutive quarter where our overhaul and repair gross profit has shown improvement and confirms our belief that the new operating procedures we began to implement during last year's first quarter in our overhaul and repair operation are bearing fruit. Selling, General and Administrative expenses were down $0.9 million, or 22%, from last year's first quarter, all of which was at the operating unit level. The agreement in principle to resolve the Newark office of the United States Attorney's investigation into our overhaul and repair operation lowered our legal and investigative costs to $0.1 million in the current quarter versus $0.4 million last year and our product liability insurance premiums were $0.1 million lower during the quarter. During last year's third and fourth quarter we completed a review of our engineering activities, and during the first quarter of fiscal 2006 we realized engineering costs that were $0.3 million lower than last year. The benefit of our third quarter refinancing is also evident in our lower interest costs which fell 22% to $2.2 million this quarter from $2.8 million last year." Mr. White said, "Sales for the first quarter of fiscal 2006 were lower than those reported in last year's first quarter. All of the first quarter sales decline was in the weapons handling product line influencing a decrease in new product sales of 46% for the quarter. Overhaul and repair sales were up 99% for the first quarter of fiscal 2006 compared with last year's first quarter, as those operations returned to normalcy following the implementation of the new operating procedures in last year's first quarter." Mr. White continued, "We believe that we are entering the new fiscal year with a sense of momentum in every part of our organization. Our bookings rate is up, and we have several large new programs on the horizon. Our overhaul and repair operation is operating well, and our overall gross margin is now comfortably within our target range of 42-45%. Our SG&A costs should continue to be lower than last year, not only due to the finalization of the United States Attorney's investigation and its attendant costs, but also due to a focused effort to reduce non-product costs throughout the organization. Our interest costs should also continue to run well below those of last year, although future rate hikes by the Federal Reserve may mitigate their impact. Based upon customer requested delivery dates, we expect sales for the second quarter to be below those of last year, however, we expect sales for the third and fourth quarters to be above last year's levels and we remain committed to our target sales of $64.5 million for fiscal 2006, a 3% increase over fiscal 2005." Mr. White concluded, "Based upon the continued improvement in our gross profit, a forecasted favorable product mix, and the lower than originally expected levels of SG&A expenses in fiscal 2006, we are now raising our EBITDA target to $13.5 million from the $13.2 million we had previously established as our goal. Our primary focus for the remainder of fiscal 2006, includes the continued pursuit of new hoist, winch, and weapons handling systems on a global basis, as well as the further lowering of our debt costs and improving our balance sheet to provide for a solid base upon which to build value for our shareholders." The Company also noted that it filed its Annual Report on Form 10- K for fiscal year 2005 on August 15, 2005. This report was delayed while the Company and its auditors completed a review of a technical accounting issue with respect to the sale of a business that had been completed by the Company in fiscal 2002. TransTechnology Corporation -- http://www.transtechnology.com/-- operating as Breeze-Eastern -- http://www.breeze-eastern.com/-- designs and manufactures sophisticated lifting devices for military and civilian aircraft, including rescue hoists, cargo hooks, and weapons-lifting systems. The company, which employs approximately 180 people at its facility in Union, New Jersey, reported sales from continuing operations of $64.6 million in the fiscal year ended March 31, 2004. At June 26, 2005, TransTechnology Corporation's balance sheet showed a $6,089,000 stockholders' deficit, compared to a $6,359,000 deficit at March 31, 2005. TRINSIC INC: June 30 Balance Sheet Upside-Down by $21 Million ------------------------------------------------------------- Trinsic Inc., reported results for the second quarter ended June 30, 2005. The company posted a net loss of $3,257,000, for the second quarter and a $2,818,000, net loss for the six-month period ended June 30, 2005. The company also reports that it incurred losses in 2004. As of June 30, 2005, Trinsic had an accumulated deficit of approximately $412.7 million and $500,000 in cash and cash equivalents. It has funded its expenditures primarily through: * operating revenues, * private securities offerings, * various working capital facilities, * its standby credit facility, and * an initial public offering. For the six months ended June 30, 2005, net cash provided by operating activities was $500,000 million as compared with $9.2 million used in operating activities in the prior year period. Textron Financial Loan In April 2004, the Company secured an asset based loan facility with Textron Financial Corporation, which provided up to $25 million to fund operations. Effective January 27, 2005, Trinsic entered into a Modification and Termination Agreement with Textron. Among other things the Modification and Termination Agreement provided that Textron would forbear from exercising default rights and remedies until May 31, 2005, would waive the early termination fee and modify the annual facility fee. Trinsic agreed to pay a modification fee of $150,000. Thermo Credit Agreement On April 4, 2005, Trinsic entered into an accounts receivable financing agreement with Thermo Credit, LLC. The agreement provides for the sale of up to $22 million of Trinsic accounts receivable on a continuous basis to Thermo, subject to selection criteria as defined in the contract. On May 6, 2005, Trinsic used proceeds from this accounts receivable financing facility to pay off its loan balance with Textron. Delisting Update By letter dated May 6, 2005, the Nasdaq Stock Market notified Trinsic that the market value of its common stock remained below the minimum of $35 million required by Marketplace Rule 4310(c)(2)(B)(ii) and accordingly its shares would be delisted from the Nasdaq SmallCap Market at the opening of business on May 17, 2005. The Company appealed the decision and presented a definitive plan for regaining compliance to a hearing panel. A Nasdaq Listing Qualifications Hearing Panel granted the Company a temporary exception from these requirements subject to conditions. If the Company meets the conditions, its shares will continue to be listed on The Nasdaq SmallCap Market. At July 28, 2005 and for the duration of the exception, the trading symbol for Trinsic shares became "TRINC." The "C" will be removed from the symbol upon confirmation of the Company's compliance with the conditions and all other criteria for continued listing. Trinsic, Inc. -- http://www.trinsic.com/-- offers consumers and businesses enhanced wire line and IP telephony services. All Trinsic products include proprietary services, such as Web- accessible, voice-activated calling and messaging features that are designed to meet customers' communications needs intelligently and intuitively. Trinsic is a member of the Cisco Powered Network Program and makes its services available on a wholesale basis to other communications and utility companies, including Sprint. Trinsic changed its name from Z-Tel Technologies, Inc. on January 3, 2005. At June 30, 2005, Trinsic, Inc.'s balance sheet showed a $20,991,000, stockholders' deficit, compared to a $21,082,000, deficit at Dec. 31, 2004. * * * Going Concern Doubt PricewaterhouseCoopers expressed substantial doubt about Trinsic, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. "The Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern," PwC stated in its audit report. In general, a "going concern" qualification relates to an entity's ability over the coming year to meet its obligations as they become due without substantial disposition of assets outside the normal course of business, restructuring of debt, externally forced revisions of its operations, or similar actions. US AIRWAYS: Court Okays Aircraft Sale to Mountain Capital --------------------------------------------------------- Judge Stephen S. Mitchell of the U.S. Bankruptcy Court of the Eastern District of Virginia cleared the way for US Airways Group, Inc. to sell four of its Boeing 767 aircraft and one spare engine to Mountain Capital Partners LLC, an affiliate of Goldman Sachs Group, Inc., as part of a new sale-leaseback agreement with Mountain Capital. The sale-leaseback agreement will provide US Airways with $30.8 million initially upon completion of the sale, and another $10 million after recurrent maintenance checks through 2009. US Airways has been operating under a month-to-month agreement with Mountain Capital, enabling the company to return planes and the spare engine as it takes delivery of new aircraft. ATSB Cash Collateral Extension Judge Mitchell also approved an agreement between US Airways and the Air Transportation Stabilization Board (ATSB) that extends through Oct. 25, 2005, the company's authorization to use the cash collateral that secures the ATSB's federally guaranteed loans. The agreement also will allow US Airways to retain approximately 40 percent of the proceeds from the sale of certain assets on which the ATSB holds liens. "Both of these transactions are key steps in our plans to provide additional liquidity and move us closer to emergence from Chapter 11 and completion of our merger with America West Airlines," said Ron Stanley, US Airways executive vice president finance and chief financial officer. 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. WEX PHARMACEUTICALS: Substantial Losses Spur Going Concern Doubt ---------------------------------------------------------------- WEX Pharmaceuticals Inc. (TSX:WXI) reported highlights and financial results for the first quarter ended June 30, 2005. For the three months ended June 30, 2005, the Company recorded a loss of CDN$3.6 million compared to a loss of CDN$3.3 million in the three months ended June 30, 2004. The increase in loss for the three months ended June 30, 2005, when compared to the preceding year, is mainly attributable to increased clinical trial expense recorded in the period. Management expects losses to continue during the coming quarters as it continues to focus resources on clinical trials in an effort to further the commercialization of Tectin(TM). The Company had cash, cash equivalents and short-term investments of $20.7 million as at June 30, 2005 as compared to $20.8 million as at March 31, 2005. The Company's subsidiary in China, Nanning Maple Leaf Pharmaceuticals Co. Ltd., and Wex Medical Limited in Hong Kong, recorded product revenues of $130,986 for the three months ended June 30, 2005, as compared to $136,199 in the same period in the previous year, or a decrease of $5,213. All results of operations were in line with management expectations. Corporate Developments Financial On April 7, 2005 the Company announced that it received a payment of EUR 2,000,000 (approximately CDN$3,100,000) from its co- development partner Laboratorios del Dr. Esteve S.A. for research and development work done for the recently completed Tectin(TM) Phase IIa trial in Canada. The Company ended the first quarter with cash resources of $20.7 million. Team On April 12, 2005 Dr. Kim Fisher joined the Company's Clinical Department as Sr. Research Scientist. Dr. Fisher is a Postdoctoral Fellow funded by the Canadian Institutes of Health Research (CIHR) and has 16 years of experience in neuroscience/neuropharmacology research. On April 18, 2005 the Company announced the appointment Michael (Guang) Luan as Director and Chairman of the Board. On May 5, 2005 WEX announced the departure of John Olthoff, General Manager, as a result of corporate restructuring of the Company. Mr. Olthoff will remain as a Director of WEX for the balance of the 2004/2005 term. On May 26, 2005 WEX announced the hiring of Dr. Euan Taylor for the position of Director of Intellectual Property with the Company. Dr. Taylor has a B.A. in Natural Sciences from the University of Cambridge, a Ph.D. in Developmental Molecular Biology from the University of London and a law degree from the University of British Columbia. He is also a registered Canadian Patent Agent and a Registered Canadian Trademark Agent. Clinical In accordance to the Company's plan to develop and commercialize TTX (Tectin(TM)) as a medication intended to provide relief for various persistent and chronic pain conditions, on June 2, 2005 WEX announced that it had received a No Objection Letter from Health Canada to amend the Phase IIb/III clinical trial protocol for Tectin(TM) in moderate to severe inadequately controlled cancer-related pain. The patients' recruitment rate was lower than anticipated with about 35% of the required patients enrolled and dosed; therefore, Dr. Jean Bourgouin, the Company's Chief Medical Officer, determined the amendments necessary in order to complete the study in a timely manner without compromising objectives and patient safety. The amended protocol will simplify the study, increase patient eligibility, lessen the burden on patients and as a result, reduce the workload required by the physicians and their clinical teams. This is expected to help accelerate patient recruitment. The data from the patients who have completed the study will still be evaluable and the total target enrollment will remain at up to 150 patients. With the amendments to the protocol, the enrollment and dosing of patients in this study is projected to be completed by the end of June 2006. Tetrodin(TM), for the management of pain symptoms associated with addiction and withdrawal from abused substances is currently in Phase IIa clinical trails for methadone maintenance patients in Canada. Results for Phase IIa are expected in the second quarter of the 2005/2006 fiscal year. In China, the Company has postponed development and testing of its opiate addiction withdrawal drug until ownership of a Chinese patent is resolved. In addition, due to limited resources and the Company's primary focus on the commercialization of Tectin(TM) for moderate to severe cancer-related pain, the Company will not pursue the development of the Tetrodin(TM) drug in Canada until further resources are available or a partnership or collaboration is entered into to proceed beyond the Phase IIa clinical trial stage. Tocudin(TM), a local anaesthetic is currently in the pre-clinical stage and further development and commercialization plans are pending allocation of additional resources. Intellectual Property On June 28, 2005 the Company had been notified that based on a court ruling the Chinese Patent Office had changed registered ownership of the drug withdrawal Patent No. ZL95190556.2 "Use of Amino Quinazoline Hydride Compound and its Derivative for Abstaining from Drug Dependence" in China from the Company's subsidiary, Nanning Maple Leaf Pharmaceuticals to one of the two inventors and a third party who alleges to have been an employer of the other inventor. WEX filed an appeal of the Ruling earlier this year and the Court subsequently dismissed the appeal. The Company disagrees with the Ruling and considers that the prior assignment of interest to NMLP in the invention was valid and therefore that WEX has at least part ownership rights to the patent. Even though the Company is currently investigating other legal and business options, until the ownership of the patent is resolved and as a result of financial and other considerations, the Company has decided to temporarily postpone development and testing of its opiate addiction withdrawal drug in Canada and China. The ultimate outcome of this matter is uncertain at this time. There can be no assurance that this matter will be resolved on a timely matter or that the outcome will be resolved on a favourable basis for the Company. This does not affect any of the Tectin(TM) clinical trials conducted by the Company to date or the Company's ability to use the results of the trials for regulatory approval purposes. The two individuals noted as inventors on the patent in question are not associated with any of the Company's other patents filed or registered in China. The Company's core business has not been affected and we will continue to focus our financial and operational resources on the development of Tectin(TM) for the treatment of moderate to severe cancer-related pain through clinical development in North America, China and Europe. Liquidity and Capital Resources Since its incorporation, the Company has financed administration, research and development activities and capital expenditures through the private sales of its common shares, the exercise of warrants or options and the use of licensing revenue from its corporate partner and the collection of government tax credits. During the three months ended June 30, 2005, cash used by operations decreased to $442,151 from $2.1 million in the comparable quarter. This was due mainly to the reduction in clinical trial activity for the first quarter. With the recently amended protocol for WEX-014 Clinical Trial, management expects that increased cash resources will be used in the coming quarters related to this and other corporate development initiatives. In June 2004, the Company received net proceeds of $6.8 million (US$5.1 million) upon the issuance of convertible debentures. At June 30, 2005 the Company had working capital of approximately $14.6 million including cash resources, comprising cash and cash equivalents and short-term investments in the amount of $20.7 million. As at June 30, 2005 cash resources included $1,760,043 denominated in Euros (March 31, 2005 - $Nil), $6,072,560 denominated in U.S. dollars (March 31, 2005 - $6,203,659), $3,009,944 denominated in Chinese Renminbis (March 31, 2005 - $2,704,551), $155,915 denominated in Hong Kong dollars (March 31, 2005 - $652,145) and $9,714,367 denominated in Canadian dollars (March 31, 2005 - $11,254,109). In aggregate, the Company's cash resources decreased by $101,635 from $20.8 million as at March 31, 2005. Managements' expectations are that cash resources will decrease at a higher rate over the coming quarters as clinical trial activity increases. The Renminbi is not fully convertible into foreign currencies and is subject to local governmental restrictions. All foreign currency exchange transactions involving Renminbi must take place either through the People's Bank of China or other institutions authorized to buy and sell foreign exchange or at a swap centre. Going Concern Doubt Management believes that with the existing cash resources there are sufficient resources for the Company's current programs to fund operations until early Q1 in fiscal 2007. At June 30, 2005, the Company had incurred significant losses and had an accumulated deficit of $49 million. The Company's ability to continue as a going concern is uncertain and dependent upon its ability to achieve profitable operations, obtain additional capital and dependent on the continued support of its shareholders. Management is planning to raise additional capital to finance expected growth. The outcome of these matters cannot be predicted at this time. If the Company is unable to obtain adequate additional financing, management will be required to curtail the Company's operations. The Company's contractual commitments are related to the lease of the Company's office space and operating leases for office equipment, plus clinical and non-clinical research. Payments required under these agreements and leases are: -- pursuant to the license agreement referred to in note 12 to the consolidated financial statements, the Company is jointly responsible for development costs in excess of $40 million (EUR 25 million), if any. -- pursuant to certain People's Republic of China regulations, the Company's subsidiary is likely required to transfer certain percentages of its profit, as determined under the PRC accounting regulations, to certain statutory funds. To date, the subsidiary has not recognized any statutory reserves as it has not been profitable. Should the subsidiary become profitable in the future, it will be required to recognize these statutory accounts and accordingly, a portion of the subsidiary's future earnings will be restricted in use and not available for distribution. Contingencies The Company was notified in April 2005 that its appeal with the Chinese Patent Office concerning ownership of a patent relating to addiction withdrawal in the territory of China was not successful. The Company is currently considering legal options and other possible business arrangements. WEX Pharmaceuticals Inc. is dedicated to the discovery, development, manufacture and commercialization of innovative drug products to treat moderate to severe acute and chronic pain, symptom pain relief associated with addiction withdrawal from opioid abuse and medicines designed for local anaesthesia. The Company's principal business strategy is to derive drugs from naturally occurring toxins and develop proprietary products for the Global market. The Company's Chinese subsidiary sells generic products manufactured at its facility in China. WEX PHARMACEUTICALS: Unsecured Noteholders Demand Redemption ------------------------------------------------------------ WEX Pharmaceuticals Inc. (TSX:WXI) was issued early this month a request for early redemption of its unsecured convertible debentures in the aggregate principal amount of US$5.1 million that were issued in June 2004 by the Company's wholly owned subsidiary, Wex Medical Ltd., to 3 investment funds managed by a major Asian financial institution. The Company is currently in discussions regarding this matter as the Institution has indicated that it is prepared to consider other options to satisfy its request. The Institution alleges that the Company breached certain representations and warranties contained in the agreements in regards to the registered ownership of the drug withdrawal patent "Use of Amino Quinazoline Hydride Compound and its Derivative for Abstaining from Drug Dependence". As the debentures may now be due on demand, in accordance with Canadian generally accepted accounting principles, for financial statement purposes they have been reclassified as current liabilities as at June 30, 2005. Resolution of these matters is pending the outcome of current discussions with the Institution. WEX Pharmaceuticals Inc. is dedicated to the discovery, development, manufacture and commercialization of innovative drug products to treat moderate to severe acute and chronic pain, symptom pain relief associated with addiction withdrawal from opioid abuse and medicines designed for local anaesthesia. The Company's principal business strategy is to derive drugs from naturally occurring toxins and develop proprietary products for the Global market. The Company's Chinese subsidiary sells generic products manufactured at its facility in China. WILLIAMS SCOTSMAN: Extending Consent Solicitation Until Aug. 31 --------------------------------------------------------------- Williams Scotsman, Inc., is amending its previously announced tender offer and consent solicitation for any and all of its outstanding 9-7/8% Senior Notes due 2007 and for any and all of its outstanding 10% Senior Secured Notes due 2008 by: (i) extending the Consent Date to 5:00 P.M., New York City time, on Aug. 31, 2005, unless further extended or terminated; (ii) extending the Expiration Date to 5:00 P.M., New York City time, on Sept. 29, 2005, unless further extended or terminated; and (iii) revising the tender offer consideration from $1,081.68 to $1,075.22 for each $1,000 principal amount of 10% Notes tendered and accepted for payment pursuant to the tender offer. In addition, Williams Scotsman has amended the tender offer and consent solicitation to grant the holders of the Notes the right: (i) to withdraw the validly tendered Notes effective on Aug. 19, 2005, which right will expire on the new Consent Date; and (ii) to withdraw the validly tendered Notes effective after Oct. 3, 2005, if the company extends the expiration date of the tender offer and consent solicitation beyond Oct. 3, 2005. The total consideration for each $1,000 principal amount of 10% Notes tendered on or prior to the Consent Date, unless extended or earlier terminated, and accepted for payment pursuant to the tender offer will be $1,095.22, plus accrued and unpaid interest to, but not including, the applicable payment date. The total consideration will be the sum of the tender offer consideration of $1,075.22 for each $1,000 principal amount of 10% Notes tendered and accepted for payment pursuant to the tender offer and the consent payment of $20.00 for each $1,000 principal amount of 10% Notes validly tendered prior to the Consent Date and accepted for payment, plus accrued and unpaid interest to, but not including, the applicable payment date. The total consideration for the 10% Notes was determined by assuming that the 10% Notes were repurchased at 100% of their principal amount plus a make-whole premium based on the yield of a U.S. treasury security maturing on or near the first redemption date for such notes (which is Aug. 15, 2006) plus 50 basis points. The total consideration and the tender offer consideration for the 9-7/8% Notes will not be affected. The total consideration for each $1,000 principal amount of 9-7/8% Notes tendered on or prior to the Consent Date, unless extended or earlier terminated, and accepted for payment pursuant to the tender offer will be $1005.00, plus accrued and unpaid interest to, but not including, the applicable payment date. The total consideration will be the sum of the tender offer consideration of $985.00 for each $1,000 principal amount of 9-7/8% Notes tendered and accepted for payment pursuant to the tender offer and the consent payment of $20.00 for each $1,000 principal amount of 10% Notes validly tendered prior to the Consent Date and accepted for payment, plus accrued and unpaid interest to, but not including, the applicable payment date. As of 5:00 P.M., New York City time, on Aug. 17, 2005, a total of $520,035,000 in aggregate outstanding principal amount of 9-7/8% Notes (representing approximately 94.55% of the $550,000,000 of aggregate outstanding principal amount of 9-7/8% Notes as of 5:00 P.M., New York City time, on Aug. 17, 2005) and a total of $148,200,000 in aggregate outstanding principal amount of 10% Notes (representing approximately 98.80% of the $150,000,000 of aggregate outstanding principal amount of 10% Notes as of 5:00 P.M., New York City time, on Aug. 17, 2005) had been validly tendered and not withdrawn. The Notes are being tendered pursuant to Williams Scotsman's Offer to Purchase and Consent Solicitation Statement dated June 23, 2005, as amended on July 5, 2005, which more fully sets forth the terms and conditions of the cash tender offer to purchase any and all of the outstanding principal amount of the Notes as well as the consent solicitation to eliminate substantially all of the restrictive covenants and certain events of default contained in the indentures governing the Notes. This press release supersedes the terms of The Williams Scotsman's Offer to Purchase and Consent Solicitation Statement to the extent the terms contained herein are inconsistent with the terms contained therein. Williams Scotsman's obligation to accept for purchase any Notes validly tendered pursuant to the tender offer and its obligation to make consent payments for consents validly delivered on or prior to the Consent Date are subject to: (i) the company having available funds sufficient to pay the total consideration with respect to all Notes tendered from the proceeds of the initial public offering of the common stock of Williams Scotsman International, Inc., the parent of the company, a new notes offering of the company and/or the borrowings under its credit facility; (ii) the tender of a majority in principal amount of each class of Notes by the holders; and (iii) certain other customary conditions. Deutsche Bank Securities Inc. is the Dealer Manager and Solicitation Agent for the tender offers and consent solicitation. Questions concerning the tender offers or consent solicitation may be directed to Alexandra Barth, Deutsche Bank Securities Inc. collect, at (212) 250-5655. The Information Agent is MacKenzie Partners, Inc. Copies of documents may be obtained from MacKenzie Partners, Inc., at (212) 929-5500 (collect) or toll-free at (800) 322-2885. Williams Scotsman, Inc., headquartered in Baltimore, Maryland, is a provider of modular space solutions for the construction, education, commercial and industrial, and government markets. The company serves over 25,000 customers, operating a fleet of approximately 97,000 modular space and portable storage units that are leased through a network of 85 branches. Williams Scotsman provides delivery, installation, and other services to its leasing customers, and sells new and used modular space products and services. * * * As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and a recovery rating of '1' to Williams Scotsman Inc.'s proposed five-year, $650 million secured bank facility, based on preliminary terms and conditions. This senior secured rating is also placed on CreditWatch with positive implications. When the terms of the bank facility are finalized and the existing facility is redeemed, Standard & Poor's will withdraw its ratings on the company's existing credit facility. Standard & Poor's ratings on the Baltimore, Maryland-based mobile storage and modular building lessor, including the 'B' corporate credit rating, remain on CreditWatch with positive implications, where they were placed on May 2, 2005. The CreditWatch placement followed the S-1 filing by parent company Scotsman Holdings Inc. for an IPO of up to $250 million. The proceeds from the IPO, along with a new unsecured debt offering and $650 million bank facility, is expected to be used to redeem the company's outstanding notes and borrowings under its existing bank agreement. At March 31, 2005, the company had approximately $1.0 billion in lease-adjusted debt outstanding. "Ratings on Williams Scotsman Inc. reflect its weak financial profile, substantial debt burden, and concerns regarding potential covenant violations on the existing credit facility," said Standard & Poor's credit analyst Kenneth L. Farer. Positive credit factors include the company's large (approximately 25%) market share of the modular space leasing market and fairly stable cash flow despite weak earnings. WINN-DIXIE: Begins Store Closing Sales at 257 Locations ------------------------------------------------------- Store closing sales have just begun at 257 selected Winn-Dixie and SaveRite supermarkets located in Georgia, North Carolina, South Carolina, Florida, Alabama, Virginia, Mississippi, Tennessee and Louisiana. Very deep discounts of 30 to 50 percent are being offered on over $200 million worth of famous brand food and beverages, household products and general merchandise. All stores are well stocked. The discounts being offered are expected to create tremendous customer response and the sale will end very quickly. Store fixtures and equipment are also being offered for sale at attractive prices in most closing locations. In June 2005, Winn-Dixie Stores, Inc. ("WNDXQ") said it would be reducing its footprint from 37 Designated Market Areas (DMAs) in the U.S. and the Bahamas to 23 DMAs. This action is part of an overall plan to focus on its strongest markets to enhance the company's financial performance and position it for profitability in the long term. Speaking for the two companies which are conducting the sales, Michael Keefe, Chief Executive Officer of Hilco Merchant Resources, stated, "The selection of Hilco and Gordon Brothers to conduct these important store closings is an affirmation of the unparalleled expertise that our combined team has in the supermarket sector." Hilco Merchant Resources -- http://www.hilcomerchantresources.com/ -- provides high-yield strategic retail inventory disposition and store closing services. Over the years, Hilco principals have disposed of assets valued in excess of $35 billion. Hilco Merchant Resources is part of the Hilco Organization, a provider of asset valuation, acquisition, disposition and financing services to an international marketplace through 10 specialized business units, 400 employees and nearly 200 qualified field consultants. Founded in 1903, Gordon Brothers Group -- http://www.gordonbrothers.com/-- provides global advisory, operating and financial services to companies at times of growth or restructuring. Gordon Brothers appraises, acquires and sells a wide range of assets, including inventory, real estate, industrial assets, accounts receivable and intellectual property. Gordon Brothers purchases and/or sells in excess of $10 billion in assets at original value annually and appraises over $30 billion. The firm also provides debt financing and equity capital to consumer products companies, and facilitates mergers and acquisitions with strategic partners. Gordon Brothers is headquartered in Boston and maintains 20 offices and satellites worldwide. Closing Winn-Dixie and SaveRite Store Locations Store No. Name Address City State ZIP ---- ---- ------- ---- ----- --- 593 Winn-Dixie 5711 Veterans Pkwy Adamsville AL 35005 529 Winn-Dixie 124 Market Center Drive Alabaster AL 35007 594 Winn-Dixie 710 Academy Drive Bessemer AL 35022 414 Winn-Dixie 9120 Parkway East Birmingham AL 35206 417 Winn-Dixie 5201 Highway 280 South Birmingham AL 35242 421 Winn-Dixie 312 Palisades Boulevard Birmingham AL 35209 597 Winn-Dixie 275 Columbiana Square Columbiana AL 35051 403 Winn-Dixie 1734 Second Ave SW Cullman AL 35055 1909 Winn-Dixie 1000 Beltline Rd SW Decatur AL 35601 523 Winn-Dixie 6523 Aaron Arnovo Drive Fairfield AL 35064 519 Winn-Dixie 145 Interstate Dr. Greenville AL 36037 1903 Winn-Dixie 2900-B Triana Blvd Huntsville AL 35805 1904 Winn-Dixie 200 Oakwood Ave Huntsville AL 35801 1908 Winn-Dixie 4800 Whitesburg Dr Huntsville AL 35802 1912 Winn-Dixie 1338 Winchester Rd Huntsville AL 35811 1917 Winn-Dixie 1161 Highway 72 Killen AL 35645 449 Winn-Dixie 2272 South Boulevard Montgomery AL 36116 575 Winn-Dixie 2200 Village Drive Moody AL 35004 450 Winn-Dixie 511 East Cummings Ave. Opp AL 36467 432 Winn-Dixie 1206 South Highway 231 Ozark AL 36360 547 Winn-Dixie 2244 Hwy 31 South Pelham AL 35124 404 Winn-Dixie 2010 U.S. Hwy 280 Phoenix City AL 36867 415 Winn-Dixie 6730 Deerfoot Pkwy Pinson AL 35126 1907 Winn-Dixie 114 Bonners Point Roanoke AL 36274 423 Winn-Dixie 1225 Franklin Troy AL 36081 530 Winn-Dixie 1500 Skyland Blvd E. Tuscaloosa AL 35405 532 Winn-Dixie 1300 Montgomery Hwy Vestavia AL 35216 2384 Winn-Dixie 1074 Montgomery Road Altamonte Springs FL 32714 216 Winn-Dixie 19595 State Rd 7 Boca Raton FL 33498 360 Winn-Dixie 23072 Sandalfoot Plaza Boca Raton FL 33433 615 Winn-Dixie 1945 West Lumsden Brandon FL 33511 603 Winn-Dixie 2514 McMullen Booth Clearwater FL 33761 338 Winn-Dixie 4301 Hillsboro Blvd Coconut Creek FL 33063 206 Winn-Dixie 10635 W Atlantic Blvd. Coral Springs FL 33071 229 Winn-Dixie 4650 University Drive Coral Springs FL 33067 2312 Winn-Dixie 1415 South Nova Road Daytona Beach FL 32114 700 Winn-Dixie 425 South Indiana Ave Englewood FL 34223 740 Winn-Dixie 18011 S. Tamiami Trail Ft. Myers FL 33912 20 Winn-Dixie 3503 Archer Road Gainesville FL 32608 170 Winn-Dixie 7303 N.W. 4Th Blvd. Gainesville FL 36607 2202 Winn-Dixie 2675 E Gulf To Lake Hwy Inverness FL 34453 73 Winn-Dixie 934 Dunn Avenue Jacksonville FL 32218 2295 Winn-Dixie 4195 Lake Mary Blvd West Lake Mary FL 32746 2382 Winn-Dixie 155 South Orlando Avenue Maitland FL 32751 2663 SaveRite 1270-39 Wickham Road Melbourne FL 32935 2262 Winn-Dixie 18840 New U.S. Hwy 441 Mt. Dora FL 32757 731 Winn-Dixie 4929 Rattlesnake Hammock Rd. Naples FL 34113 739 Winn-Dixie 5010 Airport Road North Naples FL 34105 752 Winn-Dixie 8615 Little Road New Port Richey FL 34654 320 Winn-Dixie 11241 U.S. Hwy 1 North Palm Beach FL 33408 703 Winn-Dixie 3705 Tampa Rd. Oldsmar FL 34677 2282 Winn-Dixie 12351 S Orange Blossom Orlando FL 32837 2391 Winn-Dixie 4161 Town Center Blvd Orlando FL 32837 2294 Winn-Dixie 3053 Aloma Avenue Oviedo FL 32765 2375 Winn-Dixie 1680 E. McCuloch Oviedo FL 32765 604 Winn-Dixie 1800 U.S. 301 N Palmetto FL 34221 227 Winn-Dixie 18455 Pines Blvd Pembroke Pines FL 33029 2361 Winn-Dixie 10330 South Federal Hwy. Port St. Lucie FL 34952 2316 Winn-Dixie 624 Barnes Blvd. Rockledge FL 32955 2240 Winn-Dixie 4058 13Th St St. Cloud FL 34769 620 Winn-Dixie 850 3Rd Ave S. St. Petersburg FL 33701 634 Winn-Dixie 5715 Gunn Hwy Tampa FL 33625 636 Winn-Dixie 8702 Hunter Lake Drive Tampa FL 33647 2661 SaveRite 1601 W Kennedy Blvd. Tampa FL 33606 716 Winn-Dixie 1971 State Road 60 Valrico FL 33594 734 Winn-Dixie 3236 Lithia Pinecrest Rd Valrico FL 33594 748 Winn-Dixie 5351 Village Market Wesley Chapel FL 33543 223 Winn-Dixie 6901 W. Okeechobee Blvd. West Palm Beach FL 33411 2200 Winn-Dixie 4008 Winter Garden Vineland Winter Garden FL34787 2293 Winn-Dixie 5465 Lake Howell Road Winter Park FL 32792 181 Winn-Dixie 714 4Th Street Adel GA 31620 1827 Winn-Dixie 2415 Jefferson Road Athens GA 30605 1834 Winn-Dixie 4066 Lexington Highway Athens GA 30531 2703 SaveRite 3050H Martin Luther King Jr. Dr Atlanta GA 30013 2726 SaveRite 2020 Howell Mill Rd Atlanta GA 30318 1007 Winn-Dixie 1763 Gordon Hwy Augusta GA 30904 1020 Winn-Dixie 207 Robert C Daniel Pkwy Augusta GA 30901 133 Winn-Dixie 106 East Parker St. Baxley GA 31513 2732 SaveRite 929 Joe Frank Harris Parkway Cartersville GA 30120 2704 SaveRite 4489 Ga. Hwy 20 South Conyers GA 30236 2724 SaveRite 1591 Ga. Hwy 20 North Conyers GA 30012 1851 Winn-Dixie 1145 Highway 441 North Cornelia GA 30721 2719 SaveRite 2985 Villa Rica Hwy Dallas GA 30188 1860 Winn-Dixie 2518 Cleveland Hwy Dalton GA 30655 178 Winn-Dixie 1312 S. Madison Ave. Douglas GA 31533 2714 SaveRite 6625 Hiram-Douglasville Hwy Douglasville GA 30043 2737 SaveRite 2116 Fairburn Rd Douglasville GA 30135 1023 Winn-Dixie 1000 East Franklin St. Hartwell GA 30643 158 Winn-Dixie 147 W. Hendry Street Hinesville GA 31313 14 Winn-Dixie 440 W. Cherry St. Jesup GA 31545 2705 SaveRite 8777 Tara Blvd. Jonesboro GA 30127 2722 SaveRite 1200 Barrett Parkway Kennesaw GA 30087 1807 Winn-Dixie 1750 Vernon St. Lagrange GA 31061 1998 Winn-Dixie 908 Hoganville Rd Lagrange GA 30281 2715 SaveRite 1404 Lawrenceville Suwanee Rd Lawrenceville GA 30180 2734 SaveRite 1575 Lawrenceville Hwy Lawrenceville GA 30044 2735 SaveRite 850 Dogwood Rd Lawrenceville GA 30044 2713 SaveRite 4801 Lawrenceville Hwy. Lilburn GA 30134 2738 SaveRite 3590 Panola Road Lithonia GA 30058 2742 SaveRite 8000 Rockbridge Rd Lithonia GA 30058 2729 SaveRite 3101 Roswell Rd Marietta GA 30062 1284 Winn-Dixie 4487 Columbia Rd Martinez GA 30907 1289 Winn-Dixie 366 Fury's Ferry Rd Martinez GA 30240 2707 SaveRite 110 South Cedar Street McDonough GA 30263 42 Winn-Dixie 830 E. Oak Street McRae GA 31055 1826 Winn-Dixie 1850 North Columbia St. Milledgeville GA 30607 1872 Winn-Dixie 150 Hwy 138 Monroe GA 30240 2709 SaveRite 3121 Highway 34 East Newman GA 30274 2706 SaveRite 4331 Brownsville Road Powder Springs GA 30253 2711 SaveRite 6335 Hwy 85 Riverdale GA 30047 408 Winn-Dixie 648-S Harris St. Sandersville GA 31082 2708 SaveRite 2350 Spring Road Smyrna GA 30080 147 Winn-Dixie 602 Brannen Street Statesboro GA 30458 2701 SaveRite 3701 Walt Stephens Rd Stockbridge GA 30281 2728 SaveRite 2600 Ga. Hwy 138 Stockbridge GA 30281 2702 SaveRite 4100 Redan Road Stone Mountain GA 30311 2723 SaveRite 5755 Rockbridge Rd Stone Mountain GA 30087 57 Winn-Dixie 2830 East Pinetree Blvd Thomasville GA 31792 1243 Winn-Dixie 1014 Augusta Road Se Thomson GA 30824 55 Winn-Dixie 312 E. 1 St Street Vidalia GA 30474 2716 SaveRite 64 W. Bankhead Hwy Villa Rica GA 30132 188 Winn-Dixie 1912 Memorial Dr. Waycross GA 31501 2721 SaveRite 9105 Hickory Flat Hwy. Woodstock GA 30144 1466 Winn-Dixie 280 Main Street Baker LA 70714 1458 Winn-Dixie 5963 Plank Road Baton Rouge LA 70805 1578 Winn-Dixie 12250 Plank Road Baton Rouge LA 70811 1585 Winn-Dixie 5355 Government Street Baton Rouge LA 70806 1544 Winn-Dixie 805 Shirley Road Bunkie LA 71322 1589 Winn-Dixie 402 S. Range Ave. Denham Springs LA 70726 1442 Winn-Dixie 3439 Hwy. 1 South Donaldsonville LA 70346 1587 Winn-Dixie 209 S. Airline Hwy. Gonzales LA 70737 1468 Winn-Dixie 1218 St. Charles Houma LA 70360 1469 Winn-Dixie 1815 Prospect Street Houma LA 70364 1551 Winn-Dixie 2723 West Pinhook Lafayette LA 70506 1541 Winn-Dixie 241 Tunica Village Sc Marksville LA 71351 1455 Winn-Dixie 1150 West St. Peter St. New Iberia LA 70560 1566 Winn-Dixie 4617 Shreveport Hwy. Pineville LA 71360 1556 Winn-Dixie 375 Canal Blvd. Thibodaux LA 70301 1306 Winn-Dixie 5653 Hwy 25 Brandon MS 39042 1413 Winn-Dixie 1070 Spillway Circle Brandon MS 39047 1402 Winn-Dixie 107 Hwy 80 East Clinton MS 39056 1346 Winn-Dixie 476 W. 3rd Street Forest MS 39074 1305 Winn-Dixie 2526 Robinson Rd. Jackson MS 39209 1350 Winn-Dixie 6240 Old Canton Road. Jackson MS 39211 2620 SaveRite 1770 Ellis Ave Jackson MS 39204 2627 SaveRite 3188 W. Northside Dr. Jackson MS 39213 2629 SaveRite 5320 I-55 North Jackson MS 39211 1331 Winn-Dixie 2339 Hwy 15 North Laurel MS 39440 1372 Winn-Dixie 1022 Hwy 51 North Madison MS 39110 1360 Winn-Dixie 705 Hwy 49 Bypass Magee MS 39111 1337 Winn-Dixie 1209 Delaware Ave Mc Comb MS 39648 583 Winn-Dixie 915 Hwy 19 North Meridian MS 39301 573 Winn-Dixie 3501 Denny Ave Pascagoula MS 39581 1358 Winn-Dixie 420 West Beach Blvd. Pass Christian MS 39571 2624 SaveRite 2080 South Frontage Rd. Vicksburg MS 39180 809 Winn-Dixie 1210 Laura Village Drive Apex NC 27502 2055 Winn-Dixie 6404 Wilkinson Blvd. Belmont NC 28012 1034 Winn-Dixie 245 Rosman Hwy Brevard NC 28712 803 Winn-Dixie 1393 Kildaire Farm Road Cary NC 27511 2001 Winn-Dixie 5300 Sunset Road Charlotte NC 28269 2002 Winn-Dixie 3122 Eastway Drive Charlotte NC 28205 2006 Winn-Dixie 1526 Alleghany Road Charlotte NC 28208 2024 Winn-Dixie 10215 University City Blvd. Charlotte NC 28213 2101 Winn-Dixie 11108 S Tryon St Charlotte NC 28273 2106 Winn-Dixie 8322 Pineville Mathews Rd. Charlotte NC 28226 923 Winn-Dixie 11407 U.S. 70 West Clayton NC 27520 2056 Winn-Dixie 3146 Dallas Highway Dallas NC 28034 915 Winn-Dixie 2000 Avondale Dr Durham NC 27704 2103 Winn-Dixie 7720 NC HWY 770 Eden NC 27288 882 Winn-Dixie 690 Reily Road Fayetteville NC 28304 883 Winn-Dixie 5701 Yadkin Rd. Fayetteville NC 28303 884 Winn-Dixie 600 Cedar Creek Road Fayetteville NC 28301 1290 Winn-Dixie 273 Franklin Plaza Dr Franklin NC 28734 908 Winn-Dixie 1352 N Main Street Fuquay-Varina NC 27526 2084 Winn-Dixie 2970 S. New Hope Road Gastonia NC 28056 912 Winn-Dixie 2441 U.S. 117 S. Goldsboro NC 27530 918 Winn-Dixie 211 N. Berkeley Blvd. Goldsboro NC 27534 2049 Winn-Dixie 1421 E. Cone Blvd. Greensboro NC 27405 2066 Winn-Dixie 1003 West Main Street Haw River NC 27258 804 Winn-Dixie 1520 Dabney Drive Henderson NC 27536 2070 Winn-Dixie 2449 North Center Street Hickory NC 28601 2031 Winn-Dixie 2620 South Main Street High Point NC 27263 2048 Winn-Dixie 950 South Cannon Blvd. Kannapolis NC 28083 2081 Winn-Dixie U.S. 74/ Spring Street Kings Mountain NC 28086 890 Winn-Dixie 7132 U.S. Highway 64, E. Knightdale NC 27545 2180 Winn-Dixie 2025 Morganton Blvd Lenoir NC 28645 2015 Winn-Dixie U.S. Hwy 64 W. Lexington Lexington NC 27292 2099 Winn-Dixie 2620 East Main Street Lincolnton NC 28092 807 Winn-Dixie 115 S. Bickett Blvd Louisburg NC 27549 2096 Winn-Dixie 124 New Market Madison Madison NC 27025 2082 Winn-Dixie 315 N. Main Street Marion NC 28752 2062 Winn-Dixie 1020 Mebane Oak Rd Mebane NC 27302 2095 Winn-Dixie 111 Independence Blvd Morganton NC 28655 2196 Winn-Dixie 421-A Bypass N. Wilkesboro NC 28659 2079 Winn-Dixie 425 West A. Street Newton NC 28658 903 Winn- Dixie 1514 Garner Station Blvd Raleigh NC 27603 888 Winn-Dixie 1120 E. Tenth Street Roanoke Rapids NC 27870 2045 Winn-Dixie 1206 Rockingham Road Rockingham NC 28379 2032 Winn-Dixie 710 Jake Alexander Blvd. Salisbury NC 28145 2036 Winn-Dixie 908 N. Salisbury G.Q Ave Salisbury NC 28146 827 Winn-Dixie 2412 S Horner Blvd Sanford NC 27330 847 Winn-Dixie 1133 Spring Lane Sanford NC 27330 2052 Winn-Dixie 301 Earl Road Shelby NC 28150 2108 Winn-Dixie 4400 Potter Road Stallings NC 28104 2087 Winn-Dixie 109 E Dallas Rd Stanley NC 28164 2029 Winn-Dixie 1650 East Broad Street Statesville NC 28677 2019 Winn-Dixie 1033 Randolph Street Thomasville NC 27360 811 Winn-Dixie 931 Durham Road Wake Forest NC 27587 2112 Winn-Dixie 3008 Old Hollow Road Walkertown NC 27051 1249 Winn-Dixie 99 Waynesville Plaza Waynesville NC 28786 2025 Winn-Dixie 189 Hickory Tree Road Winston Salem NC 27107 808 Winn-Dixie 506 W Gannon Ave Zebulon NC 27597 1232 Winn-Dixie 1407 North Main St Abbeville SC 29620 1008 Winn-Dixie 1048 York Street N Aiken SC 29801 1015 Winn-Dixie 1475 Pearman Dairy Road Anderson SC 29621 1203 Winn-Dixie 1520 East Greenville St Anderson SC 29621 1086 Winn-Dixie 320 Robert Smalls Parkway Beaufort SC 29901 1095 Winn-Dixie 136 Sea Island Parkway Beaufort SC 29902 1016 Winn-Dixie 605 S. Main Street Unit 6 Belton SC 29627 1092 Winn-Dixie 3655 Rivers Ave Charleston SC 29405 2177 Winn-Dixie 599 Lancaster Road Chester SC 29706 1242 Winn-Dixie 500-1 Old Greenville Hwy Clemson SC 29631 1238 Winn-Dixie 2768 Decker Blvd Columbia SC 29206 1225 Winn-Dixie 700 Main Street Duncan SC 29334 1223 Winn-Dixie 6101 Calhoun Memorial Hwy Easley SC 29640 1269 Winn-Dixie 110 Wilkinsville Hwy Gaffney SC 29340 1084 Winn-Dixie 951 Grove Road Greenville SC 29605 1297 Winn-Dixie 642 Sulphur Springs Rd Greenville SC 29617 1258 Winn-Dixie 315 Bypass 72 Greenwood SC 29646 1259 Winn-Dixie 2551 U.S. 25 South Greenwood SC 29646 1055 Winn-Dixie 805 W.Wade Hampton Blvd. Greer SC 29651 1036 Winn-Dixie 507 N Caroline St Laurens SC 29360 1003 Winn-Dixie 401 W Martintown Rd N. Augusta SC 29841 1005 Winn-Dixie 135 Market Plaza Drive N. Augusta SC 29841 1077 Winn-Dixie 1820 Wilson Road Newberry SC 29108 1076 Winn-Dixie 1481 Chestnut Drive Orangeburg SC 29115 1244 Winn-Dixie 529 Hampton Avenue Pickens SC 29671 2151 Winn-Dixie 1401 E Main Street Rock Hill SC 29730 2155 Winn-Dixie 1787 Cherry Road Rock Hill SC 29730 2157 Winn-Dixie 933 Heckle Blvd Rock Hill SC 29730 2159 Winn-Dixie 4124 Celanese Road Rock Hill SC 29730 1049 Winn-Dixie 1561 W Hwy 123 Seneca SC 29678 1256 Winn-Dixie 895 Springfield Road Spartanburg SC 29303 1264 Winn-Dixie 1529 Reidville Road Spartanburg SC 29301 2165 Winn-Dixie 325 W. Wesmark Blvd. Sumter SC 29153 1057 Winn-Dixie 21 Roe Road Travelers Rest SC 29690 1255 Winn-Dixie 441 N Duncan Bypass Union SC 29379 1004 Winn-Dixie 512 Robertson Blvd Walterboro SC 29488 1235 Winn-Dixie 675 Main Street West Columbia SC 29170 1098 Winn-Dixie 134 Foothills Drive West Union SC 29696 1220 Winn-Dixie 1049 East Main Street Westminster SC 29693 1018 Winn-Dixie 21 Pelzer Ave Williamston SC 29697 1936 Winn-Dixie 8644 East Brainerd Chattanooga TN 37403 1935 Winn-Dixie 9408 Apison Pike Collegedale TN 37315 1942 Winn-Dixie 8530 Hixson Pike Hixson TN 37343 1933 Winn-Dixie 11150 Dayton Pike Soddy Daisy TN 37379 956 Winn-Dixie 50 South Airport Dr Highland Springs VA 23075 Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: U.S. Trustee Appoints 5-Member Equity Holders' Panel ---------------------------------------------------------------- Felicia S. Turner, the United States Trustee for Region 21, appoints five parties willing to serve on the Official Committee of Equity Security Holders in Winn-Dixie Stores, Inc., and its debtor-affiliates' chapter 11 cases: 1. Brandes Investment Partners, L.P. Profit Sharing Plan c/o Mr. Greg Rippel 11988 El Camino Real, Ste. 500 San Diego, CA 92130 Telephone No.: (858) 523-3433 Facsimile No.: (858) 755-0916 E-Mail: greg.rippel@brandes.com 2. Houston N. Maddox 2910 Park Avenue Wilmington, NC 28403 Telephone No.: (910) 762-5151 Facsimile No.: (910) 452-0246 (office depot) E-Mail: None 3. Poul Madsen 16108 6th St E. Reddington Beach, FL 33708 Telephone No.: (727) 391-7396 Facsimile No.: None E-mail: Jews2222@verizon.net 4. Michael Nakonechny 114 S. Pine St. Elverson, PA 19520 Telephone No.: (610) 286-0889 Facsimile No.: (610) 286-5996 E-mail: None 5. Kenneth M. Thomas 1017 Topsail Dr. Vallejo, CA 94591 Telephone No.: (707) 553-9817 Facsimile No.: (707) 553-9817 E-mail: Thomasrltr@sbcglobal.net Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Extend Plan Filing Period to Dec. 19 --------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to further extend their exclusive periods to: -- file a plan of reorganization to Dec. 19, 2005; and -- solicit acceptances of that plan to Feb. 20, 2006. According to D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, the Exclusive Periods are intended to afford the Debtors a full and fair opportunity to rehabilitate their businesses and to negotiate and propose one or more reorganization plans without the disruption and deterioration of their businesses that might be caused by the filing of competing plans of reorganization by non-debtor parties. Mr. Baker relates that the Debtors have made significant progress towards rehabilitation since the Petition Date. The Debtors are seeking to further extend their Exclusive Periods to afford them the time necessary to commence the process of negotiating a plan of reorganization. Since the Petition Date, the Debtors have made significant progress in their Chapter 11 cases, including: (a) Early on, the Debtors' management focused on stabilizing the Debtors' businesses and responding to the many time-consuming demands that inevitably accompany the commencement of a Chapter 11 case; (b) The Debtors obtained approval of the various first-day motions filed and have taken necessary steps to implement the authorizations granted by those orders; (c) The Debtors obtained final approval and implemented the closing of an $800 million debtor-in-possession financing facility; (d) The Debtors received over 485 reclamation demands asserting aggregate claims of approximately $125 million. The Debtors reached a consensual resolution of reclamation procedures to be applied in their Chapter 11 cases; (e) The Debtors resolved the vast majority of the about 140 "PACA" claims totaling approximately $30 million, with less than eight claims to be reconciled with the vendors; (f) The Debtors have complied with the various reporting requirements imposed by the United States Trustee, including the submission of initial and monthly reports; (g) The Debtors have prepared and filed statements of financial affairs and schedules of assets, liabilities and contracts consistent with the Bankruptcy Code and Bankruptcy Rules; (h) The Debtors have complied with due diligence requests from the Official Committee of Unsecured Creditors, turning over documents for review by advisors to the Committee; (i) The Debtors obtained Court approval to extend the time period to September 19, 2005, for assuming or rejecting unexpired leases of non-residential real property. The Debtors have continued reviewing their hundreds of remaining unexpired non-residential real property leases; (j) The Debtors have sought authority to reject approximately 82 unexpired executory contracts and unexpired leases relating to personal property and services. The Debtors are continuing to analyze their hundreds of remaining executory contracts and unexpired leases; (k) The Debtors have obtained a Court order establishing an August 1, 2005, bar date for filing proofs of claim. As of August 1, 2005, the Debtors' claims agent had received approximately 10,500 proofs of claim; (l) The Debtors are preparing to commence the process of reconciling claims and, as part of that process, will be asking the Court to approve settlement procedures for personal injury and other litigation claims; (m) The Debtors have obtained approval to sell several assets including: (1) two company airplanes for a total of $32 million; (2) the pharmaceutical prescriptions and related inventory at approximately 140 stores that were targeted for closure; and (3) leases, equipment and inventory from three previously closed stores to Food Lion, LLC. Additionally, the Debtors have sought authority to sell certain de minimis assets, like vehicles, equipment, store displays and machinery; and (n) The Debtors, who depend on about 800 utility companies, have negotiated resolutions with certain utility companies that made adequate assurance requests or made demands on bonds which secured the payment of prepetition utility services to the Debtors. The Debtors are continuing to negotiate or litigate with other utility companies as to adequate assurance issues. Perhaps most significantly, Mr. Baker notes, the Debtors have also focused substantial attention on the formulation and implementation of a market area reduction program that is expected to result in the sale or closure of 326 stores. This Footprint Process is now well underway. However, because of the size and complexity of their Chapter 11 cases, the Debtors believe that, even if they continue to make substantial progress in their proceedings, it is likely that they will need to request a further extension of their Exclusive Periods. Mr. Baker asserts that terminating the Exclusive Periods at this time would encourage the development of competing multiple plans that could lead to unwarranted confrontations, litigation and increased administrative costs. "The Debtors deserve and should be afforded a full and fair opportunity to commence the process of negotiating a chapter 11 plan that builds on the significant reorganization progress made to date and benefit from the undertakings planned for the next several months," Mr. Baker says. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000). WISE METALS: S&P Junks $150 Million Senior Secured Notes' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Wise Metals Group LLC to 'B-' from 'B' and lowered its rating on the company's $150 million senior secured notes due 2012 to 'CCC+' from 'B-'. The outlook on the company is negative. The Linthicum, Maryland-based manufacturer of aluminum can sheet had $270 million in total debt at June 30, 2005. "The downgrade reflects the company's weak financial performance, higher-than-expected debt levels, very thin liquidity, and poor credit metrics," said Standard & Poor's credit analyst Paul Vastola. "Wise has experienced continued cost pressures from rising natural gas prices and coatings costs and could face further cost as it has some exposure to spiking power and natural gas costs." Wise Metals is expected to take actions soon to improve its availability under its revolving credit facility through working capital reductions and obtaining an increase in its revolving credit facility from its banks. Wise Metals' business risk is heightened by its concentration of operations at a single facility, the 1.1 billion-pound capacity Listerhill plant in Muscle Shoals, Alabama. The facility accounts for about 15% of U.S. aluminum-can rolling mill capacity. Wise Metals also competes with substantially larger and financially stronger rivals. "Ratings on Wise Metals could be lowered again if the company is unsuccessful in its efforts to improve its liquidity or is unable to offset the impact of persistent challenging market conditions that result in further deterioration in its already poor financial performance," Mr. Vastola said. WORLDCOM INC: Two Officers Dispose of 8,337 Shares of Common Stock ------------------------------------------------------------------ In separate filings with the Securities and Exchange Commission on August 5, 2005, two 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 1,324 $25.53 266,481 Capellas, President and Michael D. CEO 7,013 25.53 1,070,001 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) XYBERNAUT CORP: Taps Boardroom Specialist as Restructuring Advisor ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Virginia gave Xybernaut Corporation and its debtor-affiliate permission to employ Boardroom Specialist, LLC, as their restructuring advisor and consultant. Boardroom Specialist will: 1) review the Debtors' operations, capital structure, business plan, customer relations and sales and marketing; 2) advise the Debtors with regards to communalizations, negotiations and presentations to creditors, shareholders, vendors and other parties-in-interest; 3) assist and advise the Debtors in evaluating their strategic alternatives and business plan, including the level of execution of the business plan and its integration into their restructuring efforts; and 4) provide all other financial and restructuring advisory and consulting services to the Debtors that are necessary in their chapter 11 cases. Alfred F. Fasola, a Principal of Boardroom Specialist, disclosed that his Firm received a $146,800.53 retainer. Mr. Fasola reports that Boardroom Specialist will charge the Debtors $2,500 per day for its services. Boardroom Specialist assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. YUKOS OIL: Court Allows Fulbright & Jaworski's $3 Mil. Fees ----------------------------------------------------------- Fulbright & Jaworski L.L.P. sought and obtained the U.S. Bankruptcy Court for the Southern District of Texas' approval to allow its fees and expenses, totaling $3,045,925: * professional fees for $2,611,845 for professional services rendered for the period December 14, 2004, through February 28, 2005; and * reasonable and necessary expenses for $434,080. As previously reported in the Troubled Company Reporter on May 10, 2005, Zack A. Clement, Esq., at Fulbright & Jaworski, L.L.P., in Houston, Texas, reminds the Court that the firm quickly developed a primary strategy to deal with the Yukos Oil Company's case. Fulbright & Jaworski tried to: (a) enforce the automatic stay to stop the tax sale and possible future similar tax sales of other assets; (b) refer the Russian Government Tax Claim dispute to an international arbitration; and (c) confirm a Plan of Reorganization that hopes for the best -- reorganization as a going concern -- and prepares simultaneously for the worst -- continued dismemberment by the Russian Government -- necessitating a Litigation Trust to continue pursuing causes of action to recover recompense for the dismemberment. 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) * Alec P. Ostrow Serves as Panelist at ABI Mid-Atlantic Conference ------------------------------------------------------------------ Alec P. Ostrow, a shareholder at Stevens & Lee, participated as a panelist at the American Bankruptcy Institute's Mid-Atlantic Conference held August 5-6 in Cambridge, MD. Mr. Ostrow addressed the topic of professional retention, including issues of eligibility for general and special retention, professional responsibility, redundancy of representation and bankruptcy court jurisdiction for professional malpractice. Fellow panelists included Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court for the Western District of Pennsylvania and Region 3 U.S. Trustee Kelly Stapleton. Mr. Ostrow concentrates his practice in bankruptcy, corporate reorganization, creditors' rights and commercial litigation. He is an adjunct professor for St. John's University School of Law LL.M. Bankruptcy Program. Mr. Ostrow recently was named a Fellow by the American College of Bankruptcy. He is a member of the Panel of Mediators for the United States Bankruptcy Court for the Southern District of New York and is Co-Chair of the Real Estate Committee for the American Bankruptcy Institute. He also is a member of The Association of the Bar of the City of New York, the New York State Bar Association and the New York County Lawyers Association. Mr. Ostrow is fluent in Spanish and French. He lectures and writes articles on various bankruptcy law issues. He received a J.D. from the New York University School of Law (1980) and an A.B., magna cum laude, from Dartmouth College (1977). About Stevens & Lee Stevens & Lee is a professional services firm of approximately 180 lawyers and over 40 business and consulting professionals. The firm represents clients throughout the Mid-Atlantic region and across the country from offices in the following locations: Reading, Harrisburg, Lancaster, Philadelphia, Valley Forge, the Lehigh Valley, Scranton and Wilkes-Barre, Pennsylvania; Princeton and Cherry Hill, New Jersey; Wilmington, Delaware; and New York City. * BOND PRICING: For the week of Aug. 15 - Aug. 19, 2005 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 Adelphia Comm. 3.250% 05/01/21 6 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 28 Allegiance Tel. 12.875% 05/15/08 28 Amer & Foregn Pwr 5.000% 03/01/30 73 Amer. Plumbing 11.625% 10/15/08 16 Amer. Restaurant 11.500% 11/01/06 66 American Airline 7.379% 05/23/16 72 American Airline 8.390% 01/02/17 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 69 AMR Corp. 9.820% 10/25/11 73 AMR Corp. 9.880% 06/15/20 61 AMR Corp. 10.000% 04/15/21 71 AMR Corp. 10.200% 03/15/20 72 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 65 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 57 Asarco Inc. 8.500% 05/01/25 54 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 70 B&G Foods Hldg. 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 9 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 62 Calpine Corp. 4.750% 11/15/23 66 Calpine Corp. 7.750% 04/15/09 63 Calpine Corp. 7.875% 04/01/08 68 Calpine Corp. 8.500% 07/15/10 74 Calpine Corp. 8.500% 02/15/11 64 Calpine Corp. 8.625% 08/15/10 63 Calpine Corp. 8.750% 07/15/13 72 Calpine Corp. 9.875% 12/01/11 75 CapitalSource 3.500% 07/15/34 75 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 68 Charter Comm Inc. 5.875% 11/16/09 66 Charter Comm Hld 9.625% 11/15/09 75 Charter Comm Hld 10.000% 05/15/11 73 Charter Comm Hld 10.250% 01/15/10 74 Ciphergen 4.500% 09/01/08 72 Collins & Aikman 10.750% 12/31/11 36 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 69 Cray Inc. 3.000% 12/01/24 59 Cray Research 6.125% 02/01/11 41 Curagen Corp. 4.000% 02/15/11 74 Curagen Corp. 4.000% 02/15/11 74 Delco Remy Intl 9.375% 04/15/12 67 Delco Remy Intl 11.000% 05/01/09 70 Delta Air Lines 2.875% 02/18/24 18 Delta Air Lines 7.299% 09/18/06 58 Delta Air Lines 7.700% 12/15/05 26 Delta Air Lines 7.711% 09/18/11 59 Delta Air Lines 7.779% 11/18/05 41 Delta Air Lines 7.779% 01/02/12 43 Delta Air Lines 7.900% 12/15/09 16 Delta Air Lines 7.920% 11/18/10 58 Delta Air Lines 8.000% 06/03/23 16 Delta Air Lines 8.270% 09/23/07 51 Delta Air Lines 8.300% 12/15/29 14 Delta Air Lines 8.540% 01/02/07 63 Delta Air Lines 8.540% 01/02/07 36 Delta Air Lines 8.540% 01/02/07 32 Delta Air Lines 8.540% 01/02/07 60 Delta Air Lines 8.540% 01/02/07 32 Delta Air Lines 9.000% 05/15/16 14 Delta Air Lines 9.200% 09/23/14 29 Delta Air Lines 9.250% 03/15/22 14 Delta Air Lines 9.320% 01/02/09 50 Delta Air Lines 9.375% 09/11/07 56 Delta Air Lines 9.750% 05/15/21 15 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 10.000% 12/05/14 17 Delta Air Lines 10.060% 01/02/16 49 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 19 Delta Air Lines 10.125% 06/16/10 44 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 16 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 41 Delta Air Lines 10.790% 03/26/14 17 Delphi Auto System 7.125% 05/01/29 74 Delphi Trust II 6.197% 11/15/33 60 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 Emergent Group 10.750% 09/15/04 0 Empire Gas Corp. 9.000% 12/31/07 3 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 73 Federal-Mogul Co. 7.375% 01/15/06 28 Federal-Mogul Co. 7.500% 01/15/09 28 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 68 Finisar Corp. 5.250% 10/15/08 74 Finova Group 7.500% 11/15/09 42 Firstworld Comm 13.000% 04/15/08 0 Foamex L.P. 9.875% 06/15/07 24 Foamex L.P. 13.500% 08/15/05 25 Ford Motor Co. 6.625% 02/15/28 75 Fruit of the Loom 8.875% 04/15/06 0 Gateway Inc. 1.500% 12/31/09 74 Gateway Inc. 2.000% 12/31/11 72 GMAC 5.900% 01/15/19 72 GMAC 5.900% 01/15/19 75 GMAC 6.000% 03/15/19 73 GMAC 6.050% 10/15/19 74 Golden Books Pub 10.750% 12/31/04 0 Graftech Int'l 1.625% 01/15/24 70 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 Intermet Corp. 9.750% 06/15/09 44 Iridium LLC/CAP 10.875% 07/15/05 20 Iridium LLC/CAP 11.250% 07/15/05 20 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 7 Kellstorm Inds 5.750% 10/15/02 0 Kmart Corp. 8.990% 07/05/10 72 Kmart Corp. 9.780% 01/05/20 64 Kmart Funding 8.800% 07/01/10 35 Kmart Funding 9.440% 07/01/18 68 Lehman Bros. Hldg 7.500% 09/03/05 55 Level 3 Comm. Inc. 2.875% 07/15/10 55 Level 3 Comm. Inc. 5.250% 12/15/11 68 Level 3 Comm. Inc. 6.000% 09/15/09 53 Level 3 Comm. Inc. 6.000% 03/15/10 56 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 50 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 61 Northwest Airlines 7.068% 01/02/16 68 Northwest Airlines 7.248% 01/02/12 51 Northwest Airlines 7.360% 02/01/20 44 Northwest Airlines 7.626% 04/01/10 54 Northwest Airlines 7.670% 01/02/15 70 Northwest Airlines 7.691% 04/01/17 70 Northwest Airlines 7.875% 03/15/08 40 Northwest Airlines 7.950% 03/01/15 64 Northwest Airlines 8.070% 01/02/15 40 Northwest Airlines 8.130% 02/01/14 43 Northwest Airlines 8.700% 03/15/07 44 Northwest Airlines 8.875% 06/01/06 61 Northwest Airlines 9.875% 03/15/07 45 Northwest Airlines 10.000% 02/01/09 40 Northwest Airlines 10.500% 04/01/09 35 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 28 Oakwood Homes 8.125% 03/01/09 20 O'Sullivan Ind. 10.630% 10/01/08 69 O'Sullivan Ind. 13.375% 10/15/09 21 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 12.375% 08/01/06 37 Pegasus Satellite 12.500% 08/01/07 37 Pen Holdings Inc. 9.875% 06/15/08 62 Pixelworks Inc. 1.750% 05/15/24 60 Pliant Corp. 13.000% 06/01/10 70 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 11.500% 02/15/06 0 Primedex Health 11.500% 06/30/08 49 Primus Telecom 3.750% 09/15/10 27 Primus Telecom 5.750% 02/15/07 40 Primus Telecom 8.000% 01/15/14 60 Primus Telecom 12.750% 10/15/09 49 Radnor Holdings 11.000% 03/15/10 64 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 47 Realco Inc. 9.500% 12/15/07 45 Reliance Group Holdings 9.000% 11/15/00 28 Reliance Group Holdings 9.750% 11/15/03 2 Salton Inc. 10.750% 12/15/05 75 Salton Inc. 12.250% 04/15/08 54 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 72 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 64 United Air Lines 9.000% 12/15/03 15 United Air Lines 9.020% 04/19/12 38 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 15 United Air Lines 10.670% 05/01/04 15 United Air Lines 11.210% 05/01/14 17 Univ. Health Services 0.426% 06/23/20 63 US Air Inc. 10.250% 01/15/07 2 US Air Inc. 10.250% 01/15/07 5 US Air Inc. 10.250% 01/15/07 4 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 UTStarcom 0.875% 03/01/08 75 Venture Hldgs 11.000% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 60 Werner Holdings 10.000% 11/15/07 73 Wheeling-Pitt St. 5.000% 08/01/11 65 Wheeling-Pitt St. 6.000% 08/01/10 65 Windsor Woodmont 13.000% 03/15/05 1 Winn-Dixie Store 8.875% 04/01/08 72 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 ***