/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050823.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 23, 2005, Vol. 9, No. 198 Headlines ABIGAIL ORUSA: Case Summary & 20 Largest Unsecured Creditors ACCOM INC: Case Summary & 20 Largest Unsecured Creditors ALDERWOODS GROUP: 16 Officers Granted Options to Buy $1MM Shares ALLIED HOLDINGS: AMEX Halts Common Stock Trading AMERICAN NATURAL: Issuing 2.17M Shares as Payment to MiddleMarch APCO LIQUIDATING: Files Prepackaged Plan & Disclosure Statement APCO LIQUIDATING: Wants Richards Layton as Bankruptcy Counsel ATA AIRLINES: John Denison to Replace J. George Mikelsons as CEO ATA AIRLINES: Wants to Hire Crowe Chizek as Auditor AURA SYSTEMS: Gets Interim Order to Continue Using Cash Collateral BALLY TOTAL: Noteholders Have Until Aug. 25 to Consent to Waivers BELL CANADA: Inks Settlement Resolving $250 Mil. Class Action Suit BEVERLY ENT: Formation Capital, et al., Offer $12.90 Per Share BRODER BROS: S&P Lowers Corporate Credit Rating to B from B+ BUEHLER FOODS: Proofs of Claim Must be Filed by September 26 CATHOLIC CHURCH: Paul Dufresne Wants Rule 2014 Statements Amended CENTURY/ML CABLE: Plan Ballots Should Be in by September 6 CERVANTES ORCHARDS: Case Summary & 13 Largest Unsecured Creditors CLAYTON HOMES: Fitch Affirms & Withdraws BB+ Rating on Senior Debt COMBUSTION ENG'G: Court Approves Modified Disclosure Statement COMDIAL CORP: Auctioning All Assets on August 25 CP SHIPS: Board Recommends TUI AG's $2.3 Billion Acquisition Bid CREST G-STAR: Fitch Lifts Rating on $21MM Class C Notes to BBB CREST G-STAR: Fitch Upgrades $15MM Class D Notes One Notch to B+ DEBORAH DOUGLAS: Case Summary & 20 Largest Unsecured Creditors DIAMOND TRIUMPH: Recapitalization Cues S&P to Affirm B- Ratings DIGITAL LIGHTWAVE: Borrows $375,000 from Optel Capital DIRECT INSITE: Balance Sheet Upside-Down by $3 Million at June 30 EMPIRE RESORTS: Shareholders Approve 2005 Equity Incentive Plan ENRON CORP: Gets Court Nod on Five Employee Settlement Agreements ENRON CORP: Inks Pact Resolving Liberty Mutual's Claim for $2.8MM ENRON CORP: Societe Generale Energie Holds $900,000 Allowed Claim ERIC CAMPMAN: Case Summary & 3 Largest Unsecured Creditors FALCON PRODUCTS: Selling 87.4% Stake in Czech Falcon Mimon Unit FALCON PRODUCTS: Has $4MM Offer for Sellers & Josephson's Assets FLEMING COS: Trust Wants Court to Reduce Core-Mark Stock Reserve FLEXTRONICS INT'L: Fitch Affirms Senior Subordinated Debt at BB+ FOOTSTAR INC: Has Until Nov. 10 to Solicit Acceptances of Plan FREESCALE SEMICONDUCTOR: Fitch Holds Sr. Unsec. Debt Rating at BB+ G-FORCE CDO: Fitch Lifts Rating on Two Low-B Rated Cert. Classes GLASS GROUP: Court Okays Auction & Bid Procedures for Asset Sale HAPPY KIDS: Committee Hires Olshan Grundman as Substitute Counsel HAPPY KIDS: Hires Berenson as Auditor and Tax Services Provider HAYES LEMMERZ: G. Haymaker Disposes of 2,424 Shares of Stock INTELSAT LTD: Plans to Buy New Skies for $1.3 Billion INTERSTATE BAKERIES: Court Lifts Stay to Permit Set-Off with IRS INTERSTATE BAKERIES: GE Commercial Wants Lease Obligations Paid INTERSTATE BAKERIES: Two Local Unions Ratify Long-Term Labor Pacts JABIL CIRCUIT: S&P Raises Sr. Unsecured Rating to BBB- from BB+ JACK GARDNER: Case Summary & 11 Largest Unsecured Creditors J. CREW GROUP: S&P Places B- Corporate Credit Rating on Watch JILL KELLY: Case Summary & 20 Largest Unsecured Creditors KAISER ALUMINUM: 6 Insurers Say Disclosure Statement Is Worthless KMART CORP: Conway Acquitted of Fraud & Mismanagement Charges KMART CORP: Creditors Committee Supports Kmart Master Agreement KNOLL INC: Board Approves Stock Repurchase Program L&D PETROLEUM: Case Summary & 11 Largest Unsecured Creditors MAC-GRAY CORP: S&P Rates $150 Million Sr. Unsec. Notes at BB- MAGRUDER COLOR: Court Okays Financing Pact with Cananwill Inc. MAGRUDER COLOR: Ravin Greenberg Approved as Committee's Counsel MAYTAG: Inks $1.7B Merger Deal with Whirlpool as Triton Backs Out MEDIACOM BROADBAND: Fitch Places B Rating on $200MM Senior Notes MEHMET ADIGUZELLI: Case Summary & 3 Largest Unsecured Creditors MINA'S FUEL: Case Summary & 40 Largest Unsecured Creditors MIRANT CORP: Battles PEPCO on Multi-Million Claims MURRAY INC: Has Until November 8 to Remove Civil Actions NEWS CORP: Chinese Unit Under Investigation by Beijing Authorities NORTHWESTERN CORP: Harbert, et al., May Sell 24% Stake to Montana NRG ENERGY: Stock Repurchase Prompts Moody's to Affirm Ratings NVF COMPANY: Hires Richards Layton as Bankruptcy Counsel NVF COMPANY: Taps Morris Anderson as Financial Advisors OPTICAL DATACOM: Trustee & Bank Group Wants Claim Disputes Settled O'SULLIVAN IND: GE Capital Waives Default Under $40 Mil. Revolver OTIS SPUNKMEYER: Moody's Rates Proposed $170 Million Loan at B1 OWENS-ILLINOIS: Names Albert Stroucken to Board of Directors PC LANDING: Wants Scope of Pachulski Stang's Services Expanded PHARMACEUTICAL FORMULATIONS: Bid Protocol for Asset Sale Approved PHILLIPS RESTAURANT: Case Summary & 20 Largest Unsecured Creditors PILLOWTEX: Committee Seeks to Recover Transfers from 120 Creditors RCN CORP: Has Until Sept. 16 to Answer ERISA Class Action Suit RELIANCE GROUP: Still Unable to File Financial Reports with SEC SAMSHER FLIGHT: Voluntary Chapter 11 Case Summary SPIEGEL INC: RATKL Demands $1.3 Mil. Administrative Claim Payment SR TELECOM: 99.3% of Noteholders Swap 8.15% Notes for 10% Bonds STANDARD AERO: Extends Sr. Sub. Debt Exchange Offer Until Friday S-TRAN HOLDINGS: Lease-Decision Period Stretched to Sept. 12 SUNCOM WIRELESS: Terminates $113 Million Purchase of Urban Comm TFS ELECTRONIC: Files for Chapter 11 Protection in Arizona TFS ELECTRONIC: Case Summary & 20 Largest Unsecured Creditors TOWER AUTOMOTIVE: Can't File Quarterly Report On Time TOWER AUTOMOTIVE: General Foods Balks at Corydon Leases Rejection TXU CORP: Energy & Delivery Units Ink $1 Billion Credit Agreement UAL CORP: Trade-Debt.Net Buys 7 Claims Totaling $33,413 UAL CORP: Mitsui & BofA Securities Buys $18.5 Million Claim US AIRWAYS: Republic Airlines Buys Planes & Slots for $100 Million WATERFORD GAMING: S&P Affirms B+ Issuer Credit Rating WESTERN OIL: Reports Second Quarter Financial & Operation Results WHEREHOUSE ENT: Wants Claims Objection Deadline Moved to Sept. 30 WINN-DIXIE: Wants Pride Capital Group as FF&E Liquidating Agent WINN-DIXIE: Wants Lease Decision Period Extended to Dec. 19 WINN-DIXIE: Wants Claims Resolution Procedures Established WISE METALS: Moody's Junks $150 Million Senior Secured Notes WYNDHAM INTERNATIONAL: S&P Withdraws B Corporate Credit Rating XEROX CORP: Core Debt Reduction Cues Fitch's Ratings Upgrade YUKOS OIL: Moscow Ct. Allows Yugansk to Raise Claim to $7.87 Bil. * Large Companies with Insolvent Balance Sheets ********* ABIGAIL ORUSA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Abigail Ohunene Orusa, M.D. 411 Rushton Lane Clarksville, Tennessee 37043 Bankruptcy Case No.: 05-09871 Type of Business: The Debtor is a medical practitioner. Chapter 11 Petition Date: August 19, 2005 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church Street, Suite 410 Nashville, Tennessee 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $1,917,450 Total Debts: $1,810,378 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service $278,531 MDP 146 801 Broadway Nashville, TN 37203 First Federal Savings Bank $216,426 200 North Second Street Clarksville, TN 37040 First Federal Savings Bank $68,300 200 North Second Street Clarksville, TN 37040 Tom Dundon, Esq. $50,000 GMAC 2002 Cadillac $25,887 DTS Sedan Value of security: $20,000 Rai Credit Corporation $12,360 Professional Fee Financing $11,565 Assoc. Montgomery County Trustee $9,817 Citicards Mastercard $8,670 MBNA America $8,499 Direct Merc BK Visa $6,337 Citicards Mastercard $6,000 City of Clarksville $5,444 Discover Card $3,933 Bank of America Visa $3,661 Shop NBC $3,217 Sears $2,973 Chase Mastercard $2,739 Capital One Bank $2,509 Sears Gold Mastercard $904 ACCOM INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Accom, Inc. 1490 O'Brien Drive Menlo Park, California 94025 Bankruptcy Case No.: 05-32680 Type of Business: The Debtor designs, manufactures, sells, and supports a complete line of digital video production, disk recording, and editing tools for use in the worldwide professional television marketplace. See http://www.accom.com/ Chapter 11 Petition Date: August 19, 2005 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: David S. Caplan, Esq. Brooks and Raub 721 Colorado Avenue #101 Palo Alto, California 94303-3913 Tel: (650) 321-1400 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Assurant Asset Management $2,953,788 One Chase Manhattan Plaza, 41st Floor New York, NY 10005 Menlo Business Park LLC $1,037,103 c/o Tarlton Properties Inc 955 Alma Street Palo Alto, CA 94301 ACT Electronics, Inc. $577,682 5500 Hellyer Avenue San Jose, CA 95138 Sonic Manufacturing Tech Inc. $376,943 44051 Nobel Drive Fremont, CA 94536 Infinity M M (Carol Wu, Trustee) $272,362 25A Crescent Drive #413 Pleasant Hill, CA 94523 Telemundo Network Group LLC $260,628 2290 West 8th Avenue Hialeah, FL 33010 Bell Microproducts, Inc. $168,745 Higbee, Paul $101,010 Howard Scott $101,010 Liebman, Alan $101,010 Matalene, Eugene M. Jr. $101,010 Papadopoulos, Stelios $101,010 Gibson, Dunn & Crutcher LLP $70,606 Hill Manufacturing $44,251 Avnet Electronics $44,003 Johnson, Cogert & Strauss $42,258 Mark J. Cleaner, D.C. $41,909 CTS Reeves $38,399 Insight Electronics (f/k/a Memec) $36,953 Medea $27,131 ALDERWOODS GROUP: 16 Officers Granted Options to Buy $1MM Shares ---------------------------------------------------------------- In separate regulatory filings with the Securities and Exchange Commission, 16 officers of Alderwoods Group, Inc., report that they were granted options to buy 1,000,000 shares of the Company's common stock: No. of Conversion Expiration Officer Position Shares Price Date ------- -------- ------ ---------- ---------- Campbell, Lloyd E. Director 35,000 $15.99 7/26/15 Caradonna, Ross S. Chief 100,000 $15.99 7/26/15 Information Officer Cooper, Cheryl R. Director 30,000 $15.99 7/26/15 Eames, Anthony Director 35,000 $15.99 7/26/15 Elson, Charles E. Director 35,000 $15.99 7/26/15 Hilty, David R. Director 35,000 $15.99 7/26/15 Houston, Paul A. President 130,000 $15.99 7/26/15 and CEO 100,000 $3.59 3/26/13 Kirtley, Olivia F. Director 35,000 $15.99 7/26/15 Lacey, John Stewart Director 75,000 $15.99 7/26/15 100,000 $3.65 3/26/13 Neeman, Ellen Senior VP 25,000 $15.99 7/26/15 Riedl, William Ralph Director 35,000 $15.99 7/26/15 Scully, Richard J. Senior VP 25,000 $15.99 7/26/15 Shipper, Aaron P. Senior VP 25,000 $15.99 7/26/15 Sloan, Kenneth A. CFO 120,000 $15.99 7/26/15 Snow, Wallace MacDonald, Jr. Director 35,000 $15.99 7/26/15 Wilson, Mark Senior VP 25,000 $15.99 7/26/15 The option vests in three annual installments with 25% of the optioned shares becoming exercisable on each of the first two anniversaries of the date of grant, and the remaining 50% of the optioned shares becoming exercisable on the third anniversary of the date of grant. In addition, three directors were granted restricted stock units: No. of Derivative Expiration Officer Position Securities Date ------- -------- ----------------- ---------- Neeman, Ellen Director 20,000 7/26/15 Scully, Richard J. Senior VP 20,000 7/26/15 Shipper, Aaron P. Senior VP 25,000 7/26/15 Each restricted stock unit represents a contingent right to receive one share of the Company's common stock if the vesting requirements relating to the restricted stock units are satisfied. All or a portion of the restricted stock units will vest on the third anniversary of the date of grant upon the satisfaction of certain performance criteria relating to the Company's stock price. 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. ALLIED HOLDINGS: AMEX Halts Common Stock Trading ------------------------------------------------ Allied Holdings, Inc.'s application with the Securities and Exchange Commission to voluntarily delist its common stock from trading on the American Stock Exchange has been granted by the SEC. The Company's common stock was delisted from the Amex effective Aug. 18, 2005. The Amex previously halted trading the Company's common stock on Aug. 1, 2005, as a result of the Company and certain of its operating subsidiaries filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 31, 2005. Allied is seeking to have its common stock included in the over- the-counter bulletin board or quoted on Pink Sheets, which is a daily listing of bid and ask prices for over-the-counter stocks not included on the OTC bulletin board. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. AMERICAN NATURAL: Issuing 2.17M Shares as Payment to MiddleMarch ---------------------------------------------------------------- American Natural Energy Corporation (TSX Venture: ANR.U) agreed to issue to Middlemarch Partners Ltd. 2,170,000 shares of its common stock at a deemed price of US$0.115 per share in settlement of US$250,000 of consulting services provided relating to its debenture restructuring. The issuance of the shares is subject to the acceptance for filing of the regulatory authorities. American Natural Energy Corporation is engaged in the acquisition, development, exploitation and production of oil and natural gas. The company operates in St. Charles Parish, Louisiana. Since December 31, 2001, the Company has engaged in several transactions, which it believes will enhance its oil and natural gas development, exploitation and production activities and our ability to finance further activities. ANEC is publicly traded on the TSX Venture Exchange as ANR.U. At June 30, 2005, American Natural Energy Corporation's balance sheet showed a $13,687,504, stockholders' deficit, compared to a $9,596,356, deficit at Dec. 31, 2004. Going Concern Doubt PricewaterhouseCoopers, LLP, expressed substantial doubt about American Natural Energy Corporation's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's accumulated deficit and working capital deficiencies. The Company experienced a net loss of $1.5 million in the three month period ended March 31, 2005, and has a working capital deficiency and an accumulated deficit at March 31, 2005, all of which lead to questions concerning its ability to meet its obligations as they come due. The Company also has a need for substantial funds to develop oil and gas properties and repay borrowings. Historically the Company has financed its activities using private debt and equity financing. American Natural Energy has no line of credit or other financing agreement providing borrowing availability. As a result of the losses incurred and current negative working capital and other matters described, there is no assurance that the carrying amounts of its assets will be realized or that liabilities will be liquidated or settled for the amounts recorded. APCO LIQUIDATING: Files Prepackaged Plan & Disclosure Statement --------------------------------------------------------------- Apco Liquidating Trust and APCO Missing Stockholder Trust delivered their Liquidating Plan and accompanying Disclosure Statement to the U.S. Bankruptcy Court for the District of Delaware. Apco Oil Corporation Apco Oil Corporation was engaged in all sectors of the petroleum industry, directly or through its subsidiaries, including exploration, production, refining, transportation and marketing of petroleum products. At the height of its operations, Apco owned two oil refineries in two different states and operated approximately 1,600 retail service stations throughout the United States. On Oct. 27, 1977, Apco's common stockholders adopted a Plan of Complete Liquidation and Dissolution. Under the Plan, substantially all of Apco's assets were sold to Total Petroleum (North America) Ltd., Shenandoah Oil Corporation and Oklahoma Refining Company. Apco's dissolution became final on Sept. 29, 1978. Northwest Energy Company petitioned the Court of Chancery of the State of Delaware for the creation of the Trusts so that Apco could take advantage of certain tax benefits provided to a corporation that distributes its assets within one year of dissolution. John G. McMillian and Tomas W. diZerega were appointed as Trustees for the Trusts under the Chancery Court Order. Pursuant to an order of the Chancery Court on July 22, 2005, Mr. diZerega resigned from his position as trustee, leaving Mr. McMillian as the sole Trustee for the Trusts. The Trustee has been unable to terminate the Trusts as a result of potential liabilities related to Apco's prior ownership of allegedly environmentally contaminated property in Cyril, Oklahoma, for the Cyril Refinery and Wichita, Kansas, for the Wichita Property. The Trustee has been unable to identify and liquidate all of the claims asserted against the Trusts. The Debtors have filed the chapter 11 cases for the purpose of identifying, liquidating and satisfying all outstanding claims against the Trusts so that the Trusts' assets may be distributed to their creditors and beneficiaries. A full-text copy of the Debtors' 74-page List of Creditors is available for a fee at: http://www.researcharchives.com/bin/download?id=050822031133 The Plan These classes will be paid in full: -- Administrative Claims; -- Tax Claims; -- Allowed Class 1 Non-Tax Priority claims; and -- Allowed Class 2 Secured Claims. These classes are impaired: -- Allowed Class 3 Unsecured Claims; and -- Allowed Class 4 Interests. The holders of Allowed Class 3 Unsecured Claims will receive their Pro Rata share of Distributions from the Trust Assets after payment of or reservation for the unimpaired classes. The holders of Allowed Class 4 Interests will receive their Pro Rata share in the event that the Trust Assets are sufficient to satisfy the Allowed Class 3 Unsecured Claims in full. All Trust Assets will be transferred to the Liquidation Trust for the benefit of the creditors and stockholders. The Liquidation Trustee will: -- make a good faith determination of the fair market value of the Trust Assets transferred to the Liquidation Trust. -- apprise, in writing, the holders of Allowed Claims of the results of the valuation. All parties will use the valuation consistently for all federal income tax purposes. The Liquidation Trust will be terminated on the earlier of: -- 5 years after the Effective Date; and -- the date on which all distributions required under the Plan have been completed. A full-text copy of the Debtors' Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050822030403 A full-text copy of the Debtors' Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=050822030553 Headquartered in Oklahoma City, Oklahoma, Apco Liquidating Trust and APCO Missing Stockholder Trust were created on behalf of the common stockholders of APCO Oil Corporation. The trusts filed for chapter 11 protection on August 19, 2005 (Bankr. D. Del. Case No. 05-12355). John Henry Knight, Esq., and Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtor filed for protection, they estimated assets and debts between $10 million to $50 million. APCO LIQUIDATING: Wants Richards Layton as Bankruptcy Counsel ------------------------------------------------------------- Apco Liquidating Trust and APCO Missing Stockholder Trust ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Richards, Layton & Finger, P.A., as their bankruptcy counsel. The Debtors have selected Richards Layton because of the Firm's expertise, experience, and knowledge. Also, the Firm has rendered legal services and advice to the Trustees since 1978. Richards Layton is expected to: (a) advise the Debtors of their rights, powers and duties as debtors and debtor-in-possession; (b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; (c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; and (d) perform all other necessary legal services in connection with the Debtors' cases. John H. Knight, Esq., a director at Richards, Layton & Finger, P.A., discloses that the Firm received a $100,000 prepetition retainer. The current hour rates of professionals who will work in the engagement: Professionals Hourly Rate ------------- ----------- Gregory P. Williams, Esq. $510 John H. Knight, Esq. $445 Rebecca L. Booth, Esq. $305 Amy L. Rude $155 Mr. Knight assures the Debtors and the Court that Richards, Layton & Finger, P.A., is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Oklahoma City, Oklahoma, Apco Liquidating Trust and APCO Missing Stockholder Trust were created on behalf of the common stockholders of APCO Oil Corporation. The Debtors filed for chapter 11 protection on August 19, 2005 (Bankr. D. Del. Case No. 05-12355). John Henry Knight, Esq., and Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtor filed for protection, they estimated assets and debts between $10 million to $50 million. ATA AIRLINES: John Denison to Replace J. George Mikelsons as CEO ---------------------------------------------------------------- J. George Mikelsons, President and Chief Executive Officer of ATA Holdings Corp., intends to retire from these positions effective August 31, 2005. Mr. Mikelsons will continue to serve as the Company's non-executive Chairman of the Board until the earlier of the confirmation of the Company's plan of reorganization or December 31, 2005. According to the terms of the proposed severance package, Mr. Mikelsons will receive severance pay of $650,000, payable over a one-year period and will have $400,000, of the $625,000, he owes to the Company forgiven if he signs a three-year non-compete agreement. The Severance Agreement is subject to the U.S. Bankruptcy Court for the Southern District of Indiana's approval. Upon his retirement, Mr. Mikelsons will be succeeded as President and Chief Executive Officer of the Company by John G. Denison. Mr. Denison was named President and Chief Executive Officer of ATA Airlines, Inc., on February 21, 2005, and will continue to serve in these positions as well. Prior to joining ATA, Mr. Denison served in senior management positions with Southwest Airlines from 1986 to 2001, including Executive Vice President of Corporate Services and Chief Financial Officer. Prior to joining Southwest Airlines, Mr. Denison held various positions with LTV Corporation and Chrysler Corporation. Effective August 15, 2005, James W. Hlavacek resigned from the Board of Directors of the Company. Mr. Hlavacek retired from his position as Vice Chairman of the Company in May, 2005. The vacancy created by Mr. Hlavacek's resignation from the Board has been filled by Mr. Denison who was appointed to the Board on August 18, 2005. 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: Wants to Hire Crowe Chizek as Auditor --------------------------------------------------- Pursuant to Section 327(a) of the Bankruptcy Code, ATA Airlines, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Indiana to authorize Crowe Chizek and Company LLC to perform auditing services to the Debtors effective April 19, 2005. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that the Debtors have selected Crowe Chizek because of its diverse experience and extensive knowledge in the fields of plan administration, record keeping, compliance testing, Form 5500 preparation, benefit plan auditing and general consulting. The Firm has considerable experience in collecting and analyzing information with respect to benefit plans in numerous Chapter 11 cases. Pursuant to the April 19, 2005 Engagement Letter between the parties, Crowe Chizek will: (i) Audit of the financial statements of the: -- ATA Crewmember Money Purchase Plan, -- ATA 401(k) Retirement Plan, and -- ATA Crewmember 401(k) Plan. (ii) Examine evidence supporting the amounts and disclosures in the financial statements and evaluate the accounting principles used and the overall financial statement presentation of the Plans. John A. Czarnecki, an executive at Crowe Chizek, and Anita L. Bishop will perform a substantial portion of the services. As permitted by Regulation 3520.103-8 of the U.S. Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, the Debtors have instructed the Firm not to perform any auditing procedures on information certified by a trustee or custodian, except for comparing the information to the financial statements and supplemental schedules. Crowe Chizek will invoice the Debtors for its services on a periodic basis as the services are rendered and for out-of-pocket expenses as they are incurred. The Firm's fees will not exceed $46,900, unless specifically agreed in advance by the parties. Bills not paid within 30 days of receipt of the invoice will be charge to a monthly interest of 1% per month or the highest interest allowed by law, which ever is less, which the Firm may elect to waive at its sole discretion, plus costs of collection including reasonable attorney's fees. With respect to the engagement, the liability of Crowe Chizek and its personnel will not exceed the fees the Firm receives for the portion of the work, giving rise to liability. Any liability of the Firm to the Debtors will not include any special, consequential, incidental, punitive, or exemplary damages or loss nor any lost profits, savings, or business opportunity. In the event of a legal proceeding or claim brought against the Firm, the Debtors will indemnify and hold harmless Crowe Chizek and its personnel against all costs and liabilities, arising under their services rendered to the Debtors. Mr. Czarnecki tells the Court that, because the Firm and its affiliates serve clients on a national basis in numerous cases, they may have rendered services or business associations with other entities, which had, or have, relationships with the Debtors, including their creditors. However, they will not perform services for, or have business connections with, any company specifically with respect to their adverse interests against ATA. Accordingly, Crowe Chizek is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) AURA SYSTEMS: Gets Interim Order to Continue Using Cash Collateral ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, entered a second interim order permitting Aura Systems, Inc., to continue using Cash Collateral securing repayment of pre-petition obligations and grant replacement liens to the Debtor's creditors holding a pre-petition security interest in its Cash Collateral. The Court authorizes the Debtor to use approximately $113,652, of funds, known as the Levied Fund, which were levied pre-petition on the Debtor by the Huyan Group in connection with the litigation entitled Noy Hayun v. Aura Systems, Inc., Case No. BC 326182 (L.A. Sup. Court). The Debtor will use the proceeds of the levied funds to make monthly mortgage payments of approximately $41,122, to the lender of Aura Realty, Inc., a non-debtor affiliate of Aura Systems. The Court orders that: 1) in the event that Aura Realty files for bankruptcy, the amount of any monthly payment to be paid by the Debtor for rent or mortgage payments will be in the amount ordered by the Court; 2) in the event or to the extent that City National Bank has not yet turned over the Levied Funds to the Debtor, City National is authorized to turn over the Levied Funds to the Debtor or to transfer the Levied Funds into the Debtor's general operating account; and 3) creditors holding a pre-petition security interest in the Debtor's Cash Collateral are granted a replacement lien in the Debtor's assets in the same priority, scope and validity as the pre-petition interest. The Debtor's interim authority to continue using the Cash Collateral is in compliance with the expenses pursuant to the Court-approved Budget for a six-month period, from June 2005 up to December 2005. A full-text copy of the Budget is available at no charge at: http://bankrupt.com/misc/AuraSystemsCashCollateralBudget.pdf The Court will convene a hearing at 2:00 p.m., on Aug. 30, 2005, to consider the Debtor's motion to use the Cash Collateral on a final basis. Headquartered in El Segundo, California, Aura Systems, Inc., -- http://www.aurasystems.com/-- develops and sells AuraGen(R) mobile induction power systems to the industrial, commercial and defense mobile power generation markets. The Company filed for chapter 11 protection on June 24, 2005 (Bankr. C.D. Calif. Case No. 05-24550). Ron Bender, Esq., Levene Neale Bender Rankin & Brill LLP represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported $18,036,502 in assets and $28,919,987 in debts. BALLY TOTAL: Noteholders Have Until Aug. 25 to Consent to Waivers ----------------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE: BFT) extended the consent period relating to waivers of financial reporting covenant defaults under its public bond indentures to 5:00 p.m., New York City time, on Thursday, Aug. 25, 2005. The Company continues to negotiate with noteholders to secure a waiver extension and has received consent from holders of 42.83% of the Senior Notes and 96.33% of the Senior Subordinated Notes. The Company said it has paid the previously announced judgment confirming an arbitration award against the Company of approximately $14.3 million, relating to a contractual dispute arising from a program of transferring membership receivables balances into a credit card program. As previously announced, the Company recently received consent from the lenders under its $275 million secured credit agreement to extend the cross default deadline relating to Bally's financial reporting covenant defaults under its public bond indentures to Aug. 31, 2005. After Aug. 31, 2005, unless the indenture financial reporting covenant defaults are cured or waived, over $700 million of Bally's debt obligations under its credit agreement and indentures could become immediately due and payable. Except as set forth herein, the terms of the Consent Solicitations remain the same as set forth in the Consent Solicitation Statements previously distributed to noteholders. As previously announced, Bally has retained Deutsche Bank Securities Inc. to serve as its solicitation agent and MacKenzie Partners, Inc., to serve as the information agent and tabulation agent for the consent solicitation. Questions concerning the terms of the consent solicitation should be directed to: Deutsche Bank Securities Inc. Attention: Christopher White 60 Wall Street, 2nd Floor New York, New York 10005 Tel: (212) 250-6008. Requests for documents may be directed to: MacKenzie Partners, Inc. Attention: Jeanne Carr or Simon Coope 105 Madison Avenue New York, New York 10016 Telephone: (212) 929-5500 (call collect) or (800) 322-2885 (toll-free) Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Aug. 11, 2005, Moody's Investors Service affirmed the Caa1 corporate family (formerly senior implied) rating and debt ratings of Bally Total Fitness Holding Corporation. The affirmation reflects continued high risk of default and Moody's estimate of recovery values of the various classes of debt in a default scenario. The ratings outlook remains negative. Moody's affirmed these ratings: * $175 million senior secured term loan B facility due 2009, rated B3 * $100 million senior secured revolving credit facility due 2008, rated B3 * $235 million 10.5% senior unsecured notes (guaranteed) due 2011, rated Caa1 * $300 million 9.875% senior subordinated notes due 2007, rated Ca * Corporate family rating, rated Caa1 BELL CANADA: Inks Settlement Resolving $250 Mil. Class Action Suit ------------------------------------------------------------------ Bell Canada International Inc. and BCE Inc. inked an agreement for the dismissal of a class action seeking damages of $250 million commenced by former holders of BCI's $250 million 6.75% convertible unsecured subordinated debentures against BCI, BCE and certain current and former Directors of BCI. The agreement, which is subject to approval of the Ontario Superior Court of Justice, provides for the dismissal of the action as against all defendants and will completely dispose of the litigation without any payment by any such Defendants in respect of damages. A similar action commenced by the Caisse de depot et placement du Quebec with respect to the Caisse's holdings of BCI's $150 million 6.5% convertible unsecured subordinated debentures will be disposed of on the same basis, pursuant to an agreement previously reached with the Caisse. The agreement also provides that BCI, which is operating under a court supervised Plan of Arrangement, will consent to a motion by the class for Court approval of payment by BCI, under section 192(4) of the Canada Business Corporations Act, of an amount of $3 million, representing a portion of class counsel's fees and disbursements for the representation of the class. A substantial portion of that sum will be funded by BCI's insurer. About BCE BCE Inc. is Canada's largest communications company. Through its 27 million customer connections, BCE provides the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Under the Bell brand, the company's services include local, long distance and wireless phone services, high-speed and wireless Internet access, IP-broadband services, value-added business solutions and direct- to-home satellite and VDSL television services. Other BCE businesses include Canada's premier media company, Bell Globemedia, and Telesat Canada, a pioneer and world leader in satellite operations and systems management. BCE shares are listed in Canada, the United States and Europe. About BCI Bell Canada International Inc. -- http://www.bci.ca/-- is operating under a court supervised Plan of Arrangement, pursuant to which BCI intends to monetize its assets in an orderly fashion and resolve outstanding claims against it in an expeditious manner with the ultimate objective of distributing the net proceeds to its shareholders and dissolving the company. BCI is listed on the NEX Exchange under the symbol BI.H. BEVERLY ENT: Formation Capital, et al., Offer $12.90 Per Share -------------------------------------------------------------- Beverly Enterprises, Inc. (NYSE: BEV) said that it received an offer on Aug. 18, 2005, from Formation Capital, LLC, Franklin Mutual Advisers, LLC, Appaloosa Management, L.P. and Northbrook NBV LLC to acquire Beverly Enterprises at a higher price than in the Company's previously announced agreement with North American Senior Care, Inc. Under the new offer, the consortium would pay $12.90 per share in cash on terms and conditions that are substantially equivalent to, and in certain respects more favorable than, those contained in the NASC merger agreement. Under these circumstances, and consistent with its fiduciary obligations to shareholders, the Company's Board of Directors has concluded that the terms of the Formation Capital Consortium's proposal are superior to those in the NASC merger agreement and has notified NASC to that effect. However, the agreement with NASC remains in effect and has not been terminated. The Company may not terminate its existing agreement until noon New York City time on August 23, 2005. The Company's Board, together with its outside legal and financial advisors, will work promptly and diligently towards arriving at a definitive agreement with the Formation Capital Consortium. The Company said that there is no assurance that the proposal from the Formation Capital Consortium will result in an agreement or in a consummated transaction. The Company also noted that it is not uncommon in auction situations for new proposals to be received, even after a bid has been accepted and merger agreement signed. William R. Floyd, BEI Chairman and Chief Executive Officer said, "We have stated from the beginning that our Board of Directors is committed to select the bidder that offers stockholders the best combination of price, terms and conditions. Our Board's receipt of the Formation Capital proposal does not preclude North American Senior Care from submitting a counter-proposal, should it wish to do so, by Tuesday, August 23, 2005. If NASC were to submit a counter-proposal, our Board -- under terms of the NASC merger agreement -- would be required to take the NASC counterproposal into account in deciding whether to pursue the merger agreement with NASC or terminate it in order to enter into a new merger agreement with the Formation Capital Consortium." North American Offer As reported in the Troubled Company Reporter on Aug. 19, 2005, the Company and North American Senior Care, Inc., entered into a definitive merger agreement under which North American Senior Care will acquire Beverly Enterprises for $12.80 per share in cash. On a fully diluted basis, the transaction is valued at approximately $1.9 billion, including the repayment of Beverly Enterprises' net debt. Beverly Enterprises, Inc., and its operating subsidiaries are leading providers of healthcare services to the elderly in the United States. At July 31, 2005, BEI operated 345 skilled nursing facilities, as well as 18 assisted living centers, and 64 hospice/home care centers. Through Aegis Therapies, the company offers rehabilitative services on a contract basis to nursing facilities operated by other care providers. * * * As reported in the Troubled Company Reporter on Mar. 28, 2005, Standard & Poor's Ratings Services placed its ratings on Beverly Enterprises Inc. on CreditWatch with negative implications. The CreditWatch listing reflects the announcement that Beverly's board of directors has voted to sell the company through an auction process. This is in response to the possibility that an investor group, the Whitman/Appaloosa group, may take control of the company if it is successful at the upcoming board elections at the company's shareholder meeting in April. The CreditWatch listing reflects the apparent likelihood that a sale of the company will take place. Regardless of who acquires Beverly, it is likely that the company's credit profile will weaken. As reported in the Troubled Company Reporter, on June 16, 2004, Standard & Poor's Ratings Services assigned its 'B' rating to Beverly's the $225 million senior subordinated notes due 2014. The existing ratings on the company were affirmed. The company's bank facility, which is rated 'BB', or one notch above the 'BB-' corporate credit rating, has been assigned a recovery rating of '1'. As reported in the Troubled Company Reporter on Mar. 28, 2005, Moody's Investors Service affirmed the ratings of Beverly Enterprises, Inc., and changed the outlook to developing. This action follows the announcement by Beverly that its Board of Directors voted unanimously to pursue the sale of the company through an auction process. This announcement follows the expression of interest from and ensuing proxy battle with the Whitman/Appaloosa investor group. These ratings were affirmed: * Senior implied rating, Ba3 * Senior unsecured issuer rating, B1 * $90 million senior secured revolving credit facility due 2007, Ba3 * $135 million senior secured term loan B due 2008, rated Ba3 * $215 million 7.875% senior subordinated notes due 2014, rated B2 * $115 million 2.75% convertible subordinated notes, rated B2 As reported in the Troubled Company Reporter on Mar. 24, 2005, Fitch Ratings has placed Beverly Enterprises, Inc., on Rating Watch Evolving. Beverly's Board of Directors announced they were putting the company up for sale. Beverly is currently in the midst of a Proxy contest with a group led by Formation Capital, LLC, which includes a host of investors that have collectively acquired 8.1% of BEV common shares. Formation has provided an indication of interest of $11.50 per share of BEV common stock, or approximately $1.8 billion. Fitch's ratings on Beverly affected by this action include: -- Secured bank facility 'BB'; -- Senior unsecured debt (indicative) 'BB-'; -- Senior secured subordinated notes 'B+'; -- Senior subordinated convertible notes 'B+'. BRODER BROS: S&P Lowers Corporate Credit Rating to B from B+ ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on apparel distributor Broder Bros Co., including its corporate credit rating to 'B' from 'B+'. The outlook is stable. Total debt outstanding at Trevose, Pennsylvania-based Broder was about $336 million on June 30, 2005. "The downgrade follows our review of Broder and reflects the company's weaker-than-expected operating results and credit protection measures for the 12 months ended June 30, 2005. Credit measures have deteriorated as a result of higher debt levels and lower margins," said Standard & Poor's credit analyst Susan Ding. The company made additional inventory investments to support its private label initiative. While this required higher working capital levels in the near term, Standard & Poor's does expects this situation to be rectified by year-end. Furthermore, Broder faced capacity constraints from its suppliers during the first half of fiscal 2005 that also negatively affected operating results. BUEHLER FOODS: Proofs of Claim Must be Filed by September 26 ------------------------------------------------------------ The Honorable Basil H. Lorch III of the U.S. Bankruptcy Court for the Southern District of Indiana, set Sept. 26, 2005, as the deadline for all creditors owed money on account of claims arising prior to May 5, 2005, against Buehler Foods, Inc., and its debtor- affiliates to file proofs of claim. Creditors must file written proofs of claim that comply with Official Form No. 10. Blank claim forms are available at no charge at http://www.uscourts.gov/bkforms/ All proofs of claim must be filed with: John A. O'Neal U.S. Bankruptcy Clerk for the Southern District of Indiana 352 Federal Bldg. 101 Northwest Martin L. King Boulevard Evansville, IN 47708 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. CATHOLIC CHURCH: Paul Dufresne Wants Rule 2014 Statements Amended ----------------------------------------------------------------- Paul E. DuFresne maintains that creditors have a right to know if the professionals and organizations hired to provide services, which the U.S. Bankruptcy Court for the District of Oregon approved, are defendants in the Bankruptcy litigation. The recent creation of two defendant classes means that the professionals and organizations may have become defendants by virtue of being part of one or both of the defendant classes. By this motion, Mr. DuFresne asks the Court to order all entities which have previously filed statements pursuant to Rule 2014 of the Federal Rules of Bankruptcy Procedure to file revised statements that explicitly disclose whether or not the filing entity is a member of either or both of the Defendant classes. 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) CENTURY/ML CABLE: Plan Ballots Should Be in by September 6 ---------------------------------------------------------- At the request of Century ML Cable Venture, Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York establishes procedures for the solicitation and tabulation of votes to accept or reject the Debtor's Plan of Reorganization. The Court directs Century/ML to send a solicitation package to: 1. all persons or entities listed in Century/ML's Schedules, all prepetition creditors, and parties having filed a notice of appearance; 2. the United States Trustee; 3. counsel to the ACOM Committees; 4. the United States Attorneys Office; 5. San Juan Cable, LLC; 6. ML Media Partners, L.P.; and 7. ACOM. Record Date The Court establishes August 18, 2005, as the record date for purposes of determining creditors and interest holders entitled to receive the Solicitation Package, and, in the case of interest holders, to vote on the Plan. Balloting Agent and Voting Deadline Morgan Lewis & Bockius LLP will inspect, monitor and supervise the solicitation process, serve as the tabulator of the ballots, and certify to the Court the results of the balloting. All ballots must be returned to Morgan Lewis by 4:00 p.m. Eastern Time on September 6, 2005. Century/ML is can extend the Voting Deadline as facts and circumstances require, provided that it will file notices with the Court within 24 hours. Contract Rejection Claims Any party to an executory contract or unexpired lease that is rejected pursuant to the Plan must file a proof of claim alleging damages from the rejection of the contract or lease no later than 30 calendar days after the later of the Confirmation Date. Any party to an executory contract or unexpired lease that is rejected after August 18, 2005, other than pursuant to the Plan, must file a claim alleging damages from the rejection no later than 30 calendar days after the entry of an order of rejection. Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) CERVANTES ORCHARDS: Case Summary & 13 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Cervantes Orchards and Vineyards LLC 5881 Bethany Road Sunnyside, Washington 98944 Tel: (509) 837-6084 Bankruptcy Case No.: 05-06600 Chapter 11 Petition Date: August 19, 2005 Court: Eastern District of Washington (Spokane/Yakima) Judge: John A. Rossmeissl Debtor's Counsel: R. Bruce Johnston, Esq. Law Offices of R. Bruce Johnston 8040 Northeast Day Road West #6E Bainbridge Island, Washington 98110 Tel: (206) 842-1542 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ace Property and Casualty Trade Debt $40,000 Insurance Co. c/o Rain and Hail LLC P.O. Box 10496 Des Moines, IA 50396 Northwest Farm Credit Trade Debt $84,914 Services Chapman Lampson Insurance P.O. Box 751 Prosser, WA 99350 Hart & Winfree Trade Debt $15,000 c/o Stephen Winfree P.O. Box 210 Sunnyside, WA 98944 Valley Pipe Trade Debt $9,191 John Deere Credit Trade Debt $7,010 Central Pre-Mix Conc. Co. Trade Debt $5,922 YCCS National Collection Trade Debt $4,280 Cascade Wind Machines $1,999 TJ's Refigeration $1,394 Market Place $745 TM Market $141 Stemilt Growers Inc. Trade Debt Unknown Stemilt Management Inc. Trade Debt Unknown CLAYTON HOMES: Fitch Affirms & Withdraws BB+ Rating on Senior Debt ------------------------------------------------------------------ Fitch removes Clayton Homes from Ratings Watch Positive and affirms the company's indicative senior unsecured debt ratings of 'BB+' with a Stable Outlook, and simultaneously withdraws the ratings, as Fitch is no longer able to maintain an opinion on the financial strength of Clayton Homes as a separate entity due to Clayton Homes being acquired by and merged into Berkshire Hathaway. Fitch will no longer provide ratings or analytical coverage of this issuer. Clayton Homes -- http://www.clayton.net/-- and its subsidiaries make up a vertically integrated manufactured housing company with 32 manufacturing plants, 392 company-owned stores, more than 1,400 independent retailers, 83 manufactured housing communities and subdivisions, and financial services operations that provide mortgage services for more than 400,000 customers and insurance protection for 135,000 families. COMBUSTION ENG'G: Court Approves Modified Disclosure Statement -------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware approved the adequacy of the Modified Disclosure Statement explaining the Modified Plan of Reorganization filed by Combustion Engineering, Inc. Judge Fitzgerald put her stamp of approval on the Disclosure Statement on Aug. 19, 2005. Judge Fitzgerald determined that the Disclosure Statement contains adequate information -- the right amount of the right kind for creditors to make informed decisions when the Debtor asks them to vote to accept the Plan. With an approved Disclosure Statement in hand, the Debtors are now authorized to solicit acceptances of its Plan. As reported in the Troubled Company Reporter on June 29, 2005, under the Modified Plan, treatment of claims other than asbestos personal injury claims remain unchanged. Priority claims, secured claims, workers' compensation claims, general unsecured claims will be unimpaired. The Plan separates the tort claimants into two classes: a) Non-participants to the CE Settlement Trust will be subject to a channeling injunction. The injunction will require the tort claimants to assert their claims against the Asbestos PI Trust. The Trust will be funded with substantial assets including ABB's $232 million contribution. b) Participants in the CE Settlement Trust will also be subject to a channeling injunction. The participants will receive a release of any preference claims and fraudulent transfer claims from the Debtors. They will also be permitted to keep any distributions that have been or will be made from the CE Settlement Trust. The Asbestos PI Trust will act as a Qualified Settlement Fund as defined in the Treasury Regulations under Section 468B of the Internal Revenue Code. The Modified Plan also contemplates Lummus' filing of a chapter 11 case to liquidate its assets and create the Lummus Asbestos PI Channelling Injunction Trust. The Trust will contribute $204 million to the Asbestos PI Trust upon the sale of Lummus. Valuation & Plan Funding Under the Plan, CE's US$812,000,000 value is delivered to the Sec. 524(g) Trust for the benefit of present and future claimants. In addition: (1) ABB contributes: (a) 30,298,913 shares of its stock, initially valued at $50,000,000, but with a current market value exceeding $81,000,000; (b) a financial commitment to pay $250,000,000 to the Trust in pre-agreed installments from 2004 to 2009 (guaranteed by certain ABB affiliates); (c) up to $100,000,000 more from 2006 through 2011 if certain performance benchmarks are achieved; and (2) Asea Brown Boveri contributes: (a) an indemnification of all of CE's environmental liabilities, which has a value of around $100,000,000; (b) a release of its indemnification rights against CE for asbestos claims asserted against Asea Brown Boveri after June 30, 1999; (c) a note evidencing Asea Brown Boveri's agreement to contribute almost $38,000,000 on account of the asbestos claims attributable to: -- Basic, Incorporated (CE acquired this acoustical plaster manufacturer in 1979) and -- ABB Lummus Global, Inc. (CE acquired this manufacturer of feed water heaters that used asbestos-containing gaskets in transactions stretching from 1930 to 1970); (3) Lummus and Basic release and assign all of their interests in insurance covering asbestos personal injury claims, including certain CE-shared policies. A full-text copy of the Modified Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050822021626 All ballots must be returned by Sept. 19, 2005, to the Debtor's solicitation agent: Combustion Engineering Ballot Processing P.O. Box 5014 FDR Station New York, New York 10150-5014 (for ballots sent by U.S. Mail) -- Or -- Combustion Engineering Ballot Processing C/o Bankruptcy Services L.L.C. 757 Third Avenue, 3rd Floor New York, New York 10017 (for ballots sent by overnight mail or hand delivery) Objections to the Modified Plan, if any, must be filed and served by Sept. 22, 2005. About ABB ABB -- http://www.abb.com-- is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in more than 100 countries and employs about 146,000 people. As of Dec. 31, 2004, ABB listed $24,677,000,000 in total assets and $5,534,000,000 in total debts. S&P rates ABB's 3-3/4% $500 million note due on Sept. 30, 2009, at BB-, while Moody's assigns its Ba2 rating on the same note. Headquartered in Norwalk, Connecticut, Combustion Engineering, Inc., is the U.S. subsidiary of the ABB Group. ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in more than 100 countries and employs about 103,000 people. Combustion Engineering filed for chapter 11 protection on Feb. 17, 2003 (Bankr. D. Del. Case No. 03-10495). Curtis A. Hehn, Esq., at Pachulski Stang Ziehl Young & Jones and Jennifer Mo, Esq., at Kirkpatrick & Lockhart Nicholson Graham represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. COMDIAL CORP: Auctioning All Assets on August 25 ------------------------------------------------ Comdial Corporation and its debtor-affiliates will auction substantially all of their assets at 10:00 a.m. on Aug. 25, 2005. The auction will take place at the offices of Richards, Layton & Finger, P.A., in Delaware. The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware will convene a hearing to approve the sale to the highest and best bidder at 10:30 a.m. on Aug. 29, 2005. Objections to the sale, if any, must: (a) be in writing and must be submitted on or before Aug. 26, 2005; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the U.S. Bankruptcy Court for the District of Delaware; (c) be filed with the: Clerk of the Bankruptcy Court U.S. Bankruptcy Court for the District of Delaware 824 North Market Street, 3rd Floor Wilmington, DE 19801 Copies of those objections must be served, either by facsimile or e-mail, on: (a) the Debtors: Comdial Corporation 106 Cattleman Road Sarasota, FL 32432 Attn: Ken Clinebell Tel: (941) 554-5000 Fax: (941) 554-5012 e-mail: ken.clinebell@comdial.com (b) Counsel to the Debtors: Richards, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19899 Attn: John H. Knight, Esq. Tel: (302) 651-7700 Fax: (302) 651-7701 e-mail: knight@rlf.com (c) Financial Advisor to the Debtors: Traxi LLC 212 West 35th Street New York, NY 10001 Attn: Perry M. Madarino Tel: (212) 465-0770 Fax: (212) 465-1919 e-mail: pmandarino@traxillc.com (d) Counsel to the Committee: Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP 1065 Avenue of the Americas New York, NY 10018 Attn: Cliff A. Katz, Esq. Tel: (212) 593-3000 Fax: (212) 593-0353 e-mail: ckatz@platzerlaw.com -- and -- Jaspan, Schlesinger Hoffman, LLP 913 North Market Street, 12th Floor Wilmington, DE 19801 Attn: Frederick B. Rosner, Esq. Tel: (302) 351-8000 Fax: (302) 351-8010 e-mail: frosner@jshllp-de.com (e) Counsel to the Buyer: Greenberg Traurig, LLP 401 East Las Olas Boulevard, Suite 2000 Fort Lauderdale, FL 33301 Attn: Brian K. Gart, Esq. Tel: (954) 765-0500 Fax: (954) 765-1477 e-mail: gartb@gtlaw.com -- and -- Greenberg Traurig LLP The Brandywine Building 1000 West Street, Suite 1540 Wilmington, DE 19801 Attn: William E. Chipman, Jr. Tel: (302) 661-7000 Fax: (302) 661-7360 e-mail: chipmanw@gtlaw.com (f) the U.S. Trustee Office of the United States Trustee 844 King Street, Suite 2204 Lockbox 35 Wilmington, DE 19801 Attn: David Buchbinder, Esq. Tel: (302) 573-96491 Fax: (302) 573-6497 e-mail: david.l.buchbinder@usdoj.gov Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. CP SHIPS: Board Recommends TUI AG's $2.3 Billion Acquisition Bid ---------------------------------------------------------------- The CP Ships Limited Board of Directors has unanimously recommended that shareholders accept an offer from TUI AG to acquire CP Ships in an all-cash transaction for US $21.50 per share or about $2 billion on a fully diluted basis. Including the assumption of net debt of $0.3 billion at June 30, 2005, the transaction has a total value of $2.3 billion. The offer price represents a premium of about 28% over CP Ships average closing share price over the past three months. TUI, the parent of Hapag-Lloyd, plans to combine Hapag-Lloyd and CP Ships to create the world's fifth-largest container shipping company with a fleet of 139 ships (and a further 17 on order) for a capacity of approximately 400,000 teu on over 100 routes spanning the globe. Before the effects of consolidation, the combined shipping business would have had sales of approximately $7.0 billion and EBITDA of $731 million in 2004. "Having improved the performance of the business after a difficult 2004, the Board undertook a review of our business and its potential opportunities. This transaction represents immediate and attractive value for our shareholders and the Board has recommended it unanimously," commented CP Ships CEO Ray Miles. "The combination of Hapag-Lloyd and CP Ships will create a company with the strength and scale to compete effectively in an industry where consolidation is changing the landscape. Furthermore, the combined company will offer enhanced resources and opportunities for both CP Ships and Hapag-Lloyd's customers and employees," said Michael Behrendt, Hapag-Lloyd CEO. "This transaction will enhance growth opportunities over the longer term and will enhance value for TUI's shareholders through CP Ships' earnings potential and the realization of synergy potential in operations and ship networks," said Dr Michael Frenzel, TUI CEO. "Our enlarged shipping business will be well positioned to take advantage of the strong long term growth dynamics in the container shipping industry. This is both a compelling financial and strategic opportunity for us." TUI's offer to acquire CP Ships is subject to customary closing conditions including acceptance by shareholders representing two thirds of the outstanding CP Ships shares and the receipt of necessary regulatory approvals in Canada, the United States, Europe and certain other countries. TUI has secured necessary bank financing to fund the offer. The transaction is expected to close during the fourth quarter of this year. About TUI TUI AG is the European market leader in tourism and, through its wholly owned subsidiary, Hapag-Lloyd, is a leading player in the global market for container shipping. About CP Ships One of the world's leading container shipping companies, CP Ships provides international container transportation services in four key regional markets: TransAtlantic, Australasia, Latin America and Asia. Within these markets CP Ships operates 38 services in 22 trade lanes. At June 30, 2005, CP Ships' vessel fleet was 82 ships and its container fleet 441,000 teu. Volume in 2004 was 2.3 million teu. CP Ships also owns Montreal Gateway Terminals, which operates one of the largest marine container terminal facilities in Canada. CP Ships is listed on the Toronto and New York stock exchanges under the symbol TEU and also in the S&P/TSX 60 Index of top Canadian publicly listed companies. * * * As reported in the Troubled Company Reporter on Feb. 24, 2004, Standard & Poor's Ratings Services assigned its 'BB+' rating to container shipping company CP Ships Ltd.'s US$175 million convertible senior subordinated note issue. At the same time, the 'BBB-' long-term corporate credit and 'BB+' senior unsecured debt ratings on the company were affirmed. Proceeds from the notes will be used to reduce drawings under the company's credit lines. S&P said the outlook is stable. CREST G-STAR: Fitch Lifts Rating on $21MM Class C Notes to BBB -------------------------------------------------------------- Fitch Ratings upgrades four classes and affirms one class of notes issued by Crest G-Star 2001-2, Ltd. These rating actions are effective immediately: -- $244,078,737 class A floating-rate notes are affirmed at 'AAA'; -- $34,000,000 class B-1 fixed-rate notes are upgraded to 'A+' from 'A-'; -- $15,000,000 class B-2 floating-rate Notes are upgraded to 'A+' from 'A-'; -- $21,000,000 class C fixed-rate rotes are upgraded to 'BBB' from 'BB+'; -- $14,000,000 preferred shares are upgraded to 'BB+' from 'BB-'. Crest G-Star is a commercial real estate collateralized debt obligation that closed Dec. 18, 2001. Crest G-Star is managed by GMAC Institutional Advisors (rated 'CAM1' by Fitch), Crest G-Star is composed of 63% real estate investment trust debt and 37% commercial mortgage-backed securities. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Since the last review, on Aug. 31, 2004, the collateral quality has improved. 9.3% of the current portfolio has been upgraded since the last rating action. 5.1% of the portfolio has been downgraded. In addition, two bonds, representing 3.7% of the original collateral pool, were sold at or above par as credit risk securities, and one bond, representing 2.0% of the original pool, paid in full. The overcollateralization test for all classes has also improved since last review. The A OC test increased to 141.1% from 131.7% with a trigger of 120% and the B OC increased to 117.5% from 111.2% with a trigger of 105%. The class A notes received approximately $21.9 million in principal distributions representing approximately 8.2% of the original balance. Significant excess spread has led to approximately $11.9 million in total distributions to the preference shares, representing 85.2% of the rated balance. The rating of the class A notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B and class C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preferred shares addresses the likelihood that investors will receive their stated balance of principal by the legal final maturity date. As a result of increased credit enhancement through coverage levels and improvement in collateral credit quality, Fitch determined that an upgrade of the class B, class C and preferred shares above classes is warranted. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralized Debt Obligations' dated Sept. 13, 2004, available on Fitch's web site at http://www.fitchratings.com/ CREST G-STAR: Fitch Upgrades $15MM Class D Notes One Notch to B+ ---------------------------------------------------------------- Fitch Ratings upgrades four and affirms two classes of notes issued by CREST G-STAR 2001-1, Corp. These rating actions are the result of Fitch's review process and are effective immediately. Fitch has upgraded these classes: -- $60,000,000 class B-1 notes to 'A+' from 'A-'; -- $15,000,000 class B-2 notes to 'A+' from 'A-'; -- $20,000,000 class C notes to 'BB+' from 'BB'; -- $15,000,000 class D notes to 'B+' from 'B'; Fitch affirms these classes: -- $297,917,148 class A notes at 'AAA'; -- $30,377,165 limited partnership interest certificates rated 'B' (principal only). CREST G-STAR 2001-1 is a collateralized debt obligation managed by GMAC Institutional Advisors, LLC, which closed Sept. 6, 2001. CREST G-STAR 2001-1 is a static CDO composed of real estate investment trusts, commercial-mortgage backed securities, commercial mortgage loans, and a real estate CDO. Included in this review, Fitch discussed the current state of the portfolio, including loan level performance of the CMBS securities. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios. Since the last review, the collateral has continued to perform. The weighted average rating has stayed the same since origination at 'BBB-/BB+'. The class A, B, and C overcollateralization ratios are all currently passing at 147.96%, 118.20%, and 112.19%, respectively, as of the most recent trustee report dated June 30, 2005. Triggers for the class A, B, and C OC tests are set at 126.0%, 106.0%, and 104.0%, respectively. As of the most recent trustee report available, there are no defaulted or credit-risk assets. Assets currently rated 'BB+' or lower represent approximately 37.5% of the collateral securities as compared with 39.4% as of closing. Since closing, there have been four credit risk sales, equaling 6% of the collateral, and prepayments of four CMBS (5.1% of collateral) and four whole loans (1.8% of collateral). The rating of the class A notes addresses the likelihood that investors will receive full and timely payments of interest, as well as the stated balance of principal by the legal final maturity date, as per the governing documents. The ratings of the class B-1, B-2, C, and D notes address the likelihood that investors will receive ultimate and compensating interest payments, as well as the stated balance of principal by the legal final maturity date, as per the governing documents. The rating of the limited partnership interest certificates addresses the likelihood that investors will receive the ultimate stated balance of principal by the legal final maturity date. Fitch's current asset-backed securities collateral asset manager rating for GMAC Institutional Advisors LLC is 'CAM1'. Fitch will continue to monitor CREST G-STAR 2001-1 closely to ensure accurate ratings. For more information on GIA's collateral asset manager rating, see the report titled 'GMAC Institutional Advisors LLC,' dated March 15, 2004, available on the Fitch Ratings web site at http://www.fitchratings.com/ Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the original ratings assigned to the class A notes and the limited partnership interest certificates still reflect the current risk to noteholders; however, the current ratings assigned to the classes B-1, B-2, C, and D notes no longer reflect the current risk to noteholders, and have subsequently improved since closing. Fitch will continue to monitor and review these transactions for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralized Debt Obligations,' dated Sept. 13, 2004, also available at http://www.fitchratings.com/ DEBORAH DOUGLAS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Deborah Douglas aka Deborah S. Douglas 1304 Ridge Road Laurel Hollow, NY 11791 Bankruptcy Case No.: 05-85685 Chapter 11 Petition Date: August 19, 2005 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Stephen B. Kass, Esq. Law Offices of Stephen B. Kass 250 Hempstead Avenue, 2nd Floor Malverne, New York 11565 Tel: (516) 887-1800 Fax: (516) 887-8456 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 12 Known Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service Unknown Special Procedures Function 625 Fulton Street 10 Metrotech Center Brooklyn, NY 11201 United States Attorney Unknown Attn: Chief of Bankruptcy Litigation One Pierrepont Plaza, 14th Floor Brooklyn, NY 11201 U.S. Department of Justice Unknown Tax Department P.O. Box 55 Ben Franklin Station Washington, DC 20044 NYS Dept. of Taxation & Finance Unknown Queens District Office 80-02 Kew Gardens Road Kew Gardens, NY 11415 United States Attorney Unknown 100 Church Street New York, NY 10007 Chase Manhattan Bank USA Unknown P.O. Box 15909 Wilmington, DE 19886-5909 Citi Cards Unknown P.O. Box 8105 S. Hackensack, NJ 07606-81 Eastern Savings Bank, FSB Unknown c/oKriss & Feuerstein, LLP 360 Lexington Avenue New York, NY 10017 HSBC NV Unknown 95 Washington Street #4 North Buffalo, NY 14273 Internal Revenue Service Unknown Insolvency Section 625 Fulton Street 10 Metrotech Center Brooklyn, New York 11201 NYS Department Tax & Finance Unknown Tax Compliance Div. - Oos Un O.S. Unit Building 8, Room 7 Albany, NY 12227-0209 Tracy Ciocia Unknown c/o Palmieri & Castiglione, LLC 250 Mineola Boulevard Mineola, NY 11501 DIAMOND TRIUMPH: Recapitalization Cues S&P to Affirm B- Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit and 'B-' senior unsecured notes ratings on Diamond Triumph Auto Glass Inc., following Diamond Triumph's announcement of its planned recapitalization and tender offer for up to $22 million of its $72 million 9.25% senior notes. The company had $75 million of balance-sheet debt at June 30, 2005. The outlook is negative. "Diamond Triumph's credit profile will be enhanced if the recapitalization and debt reduction, funded mostly by new equity, is completed as contemplated," said Standard & Poor's credit analyst Nancy C. Messer. Furthermore, free cash flow should improve because of lower interest costs, allowing the company to accelerate debt reduction in future quarters. However, the ratings affirmation at the 'B-' level reflects many continuing credit risks. Diamond Triumph will remain aggressively leveraged, with lease-adjusted total debt to EBITDA of about 5.5x, even if the maximum $22 million of notes is tendered, compared to 7.8x for the 12 months ended June 30, 2005. EBITDA interest coverage, which was 1.5x at June 30 would improve to about 2x but remain weak. The company's capital structure will still require refinancing in the intermediate term, since the credit facility expires in March 2007 and the subordinated notes that remain outstanding (between $50 million and $58 million) mature in April 2008. Liquidity could be very tight immediately following the recapitalization, assuming that funding for the tender requires borrowing under the revolving credit facility and given that the fourth quarter is typically a cash-using quarter. Industry conditions remain challenging, with weak market demand and continuing pricing pressures. The eligible tendered senior notes will be purchased for cash, funded by borrowings under the revolving credit facility and $12.5 million in proceeds from the expected sale of common stock to Kenneth Levine, the company's chairman. The tender offer, structured as a modified Dutch auction, will expire on Sept. 15. Following the recapitalization, Diamond Triumph will be controlled by Levine and Green Equity Investors II LP, who will hold common equity shares of about 52% and 46%, respectively. The ratings on Diamond Triumph reflect the company's very aggressive debt leverage and exposure to the highly competitive North American automotive glass replacement and repair market. Despite its well-established position in this highly fragmented market, the company, being one of the largest providers of such services, has faced difficult industry conditions, including unfavorable pricing trends, for the past three years. Kingston, Pennsylvania-based Diamond Triumph owns and operates about: * 249 service centers, * 1,000 mobile installation vehicles, and * six distribution centers in 44 states. Management's current focus is to improve the financial performance of underperforming service centers and eliminate redundant facilities. DIGITAL LIGHTWAVE: Borrows $375,000 from Optel Capital ------------------------------------------------------ Digital Lightwave, Inc., borrowed $375,000 from Optel Capital, LLC, On August 12, 2005. Optel is controlled by the Company's largest stockholder and current Chairman of the Board, Dr. Bryan Zwan. The loan is evidenced by a secured promissory note, bears interest at 10.0% per annum, and is secured by a security interest in substantially all of the Company's assets. Principal and any accrued but unpaid interest under the secured promissory note is due and payable upon demand by Optel at any time after September 30, 2005. A full-text copy of the Secured Promissory Note is available for free at http://ResearchArchives.com/t/s?f1 Based in Clearwater, Florida, Digital Lightwave, Inc., provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. The Company designs, develops and markets a portfolio of portable and network-based products for installing, maintaining and monitoring fiber optic circuits and networks. Network operators and telecommunications service providers use fiber optics to provide increased network bandwidth to transmit voice and other non-voice traffic such as internet, data and multimedia video transmissions. The Company provides telecommunications service providers and equipment manufacturers with product capabilities to cost-effectively deploy and manage fiber optic networks. The Company's product lines include: Network Information Computers, Network Access Agents, Optical Test Systems, and Optical Wavelength Managers. The Company's wholly owned subsidiaries are Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd., and Digital Lightwave Latino Americana Ltda. As of June 30, 2005, Digital Lightwave's equity deficit widened to $42,616,000 from a $29,146,000 deficit at Dec. 31, 2004. DIRECT INSITE: Balance Sheet Upside-Down by $3 Million at June 30 ----------------------------------------------------------------- Direct Insite Corp. (OTC BB:DIRI.OB) disclosed its financial results for the three and six months ended June 30, 2005. Revenue from continuing operations for the three and six months ended June 30, 2005, increased 35.0% and 15.0% to $2,318,000 and $4,398,000, respectively, compared to revenue from continuing operations of $1,716,000 and $3,822,000 for the same periods in 2004. Recurring revenues from EIP&P services increased 48.2% and 32.0% to $1,439,000 and $2,589,000 for the three and six months ended June 30, 2005, respectively, compared to $971,000 and $1,961,000 for same periods in 2004, while recurring revenues from other non-EIP&P services decreased by $273,000 for the six months ended June 30, 2005, compared to 2004. Revenues from professional services increased 44.0% to $867,000 and 14.1% to $1,783,000 for the three and six months ended June 30, 2005, respectively, compared to $602,000 and $1,562,000 for the same periods in 2004. Direct Insite reduced its operating loss for the three and six month periods ended June 30, 2005, 62.1% and 14.6%, to $170,000 and $380,000, respectively, compared to losses of $449,000 and $445,000 for the three and six month periods ended June 30, 2004, respectively. Basic and diluted net loss per share from continuing operations for the three and six-month periods ended June 30, 2005, was $0.10 and $0.20, respectively, compared to basic and diluted net loss per share from continuing operations of $0.17 and $0.22 for the same periods in 2004. The net income per share from discontinued operations for the three and six month periods ended June 30, 2005, was $0.00 and $0.00, respectively, compared to a net income per share from discontinued operations of $0.01 and $0.06 for the same periods in 2004. Direct Insite CEO and Chairman of the Board James A. Cannavino said, "During the first half of 2005 the Company's recurring revenues from its Invoice-on-Line (IOL) family of EIP&P offerings that support accounts receivable organizations continued to show strong growth. Two additional corporations committed to become users of the IOL service with deployments in both North America and Europe. We now deliver our electronic invoice presentment and payment service in more than thirty countries around the world supporting eighteen local languages and currencies." The portfolio of the Company's offerings was significantly expanded in the first quarter with the deployment of the Invoices on Line for Accounts Receivable (IOL/AP) service offering IOL/AP accepts purchase orders from a Corporations supply chain anagement system, proof of delivery or acceptance data, and other such documentation and then provides the AP department with a workflow that insures proper delivery, quantity and price charged, and compliance with various contractual terms and conditions. IOL/AP also facilitates payment to the vendor and provides monitoring and reporting that assists in assuring SOX compliance. This new IOL/AP service "went live" during the quarter in support of a Global 1000 company . . . With IOL/AP supporting the accounts payable organization and Invoices on Line (IOL) supporting accounts receivables requirement the combination provides the enterprise with a single AR/AP solution. One of the key differentiators of the IOL family of offerings is the global coverage and thousands of existing corporate users already part of the IOL user community. Additionally, IOL offers a number of industry specific features such as those offered in the IOL Extended Edition, which adds "Pre-Bill Review" and "Field Delivery Team Approval" for the services industry. These two key attributes were further enhanced this quarter with the deployment of IOL eXtended Edition to Europe to support the fast growing services and outsourcing business areas Headquartered in Bohemia, New York, Direct Insite Corp. -- http://www.directinsite.com/-- employs a staff of 54. The Company's IOL solution is deployed in North and South America, Europe/Middle East/Africa and Asia/Pacific geographic areas. As of June 30, 2005, Direct Insite's equity deficit widened to $3,033,000 from a $2,537,000 deficit at Dec. 31, 2004. EMPIRE RESORTS: Shareholders Approve 2005 Equity Incentive Plan --------------------------------------------------------------- Empire Resorts, Inc.'s stockholders approved the adoption of the 2005 Equity Incentive Plan on August 17, 2005, during the company's annual meeting of stockholders. The Plan allows for the issuance of up to 3.5 million shares of the Company's common stock. The compensation committee of the board of directors administers the Incentive Plan. The types of awards that may be granted under the Plan include options (both incentive stock options and nonqualified stock options under Section 422 of the Internal Revenue Code of 1986, as amended) and restricted stock awards. A full-text copy of the Equity Incentive Plan is available for free at http://ResearchArchives.com/t/s?ee Empire Resorts, Inc., operate Monticello Raceway, a harness horse racing facility located in Monticello, New York, 90 miles Northwest of New York City. On June 30, 2004, the Company operating 1,744 video gaming machines on the property. The Company also has an agreement with the Cayuga Nation to develop and manage a Native American casino entitled the Cayuga Catskill Resort adjacent to the Raceway. As of June 30, 2005, Empire Resorts' equity deficit widened to $19,549,000 from a $14,992,000 equity deficit at Dec. 31, 2004. ENRON CORP: Gets Court Nod on Five Employee Settlement Agreements ----------------------------------------------------------------- A number of employees filed claims against Reorganized Enron Corporation and its debtor-affiliates seeking payment under various types of employee benefit or incentive plans, or seeking payment of other allegedly unpaid amounts, Sylvia Mayer Baker, Esq., at Weil Gotshal & Manges, in New York, relates. In many instances, the claims filed exceed the Debtors' analysis of the correct amount of those claims. The Debtors also determined that mutual setoffs should be applied to certain of the employee claims. For claims where there was no mutuality, the Reorganized Debtors entered into a negotiated settlement with the employee claimants. The Debtors worked diligently to consensually resolve many of the employee claims. Pursuant to Section 105(a) of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Reorganized Debtors sought and obtained the Court's approval of these settlements, which were filed under seal: A. Nine Late NQB Plan Claim Settlements The Reorganized Debtors, in consultation with a Steering Committee of a group of their former employees, developed a settlement proposal to resolve a substantial percentage of the claims arising under nonqualified benefit plans. Under the settlement mechanism, letters were sent to 627 Plan participants to whom a settlement offer was made. To the extent accepted, each settlement offer resulted in an allowed general unsecured claim against Enron Corp. About 522 of the 627 claimants accepted the settlement offers, resulting in resolution of 548 claims. After the deadline established by the Reorganized Debtors and the filing of a motion to approve settlements with the accepting participants, the Debtors received acceptances of the settlement letters from an additional nine claimants. The Debtors considered the late settlement letters and elected to accept the late settlement letters, which resolved an additional 12 claims. B. Two Stipulations Related to PGH Settlement As previously reported, the Court approved a settlement of benefit plan claims related to Portland General Holdings. Consistent with the terms of the PGH Settlement, claimants released some claims and consensually resolved other claims. In conjunction with the PGH Settlement, the Reorganized Debtors entered into stipulations with two claimants to clarify resolution of their claims arising under the NQB Plans. C. Tax-Related Settlements 1. An audit of calendar year 2001 by the Internal Revenue Service found that two employees asserting claims aggregating $197,901, either owe Enron for amounts that were paid to the IRS for employment taxes, or for federal income taxes for non-business expenses. The Reorganized Debtors' books and records however reveal that these claimants were owed amounts under employment-related agreements. After offsetting the amounts owed by the claimants to the Debtors against the amounts owed by the Debtors to the claimants, the parties entered into a settlement agreement wherein they agreed allow the two claims for $187,588. 2. The Debtors employed numerous expatriates who were assigned to work in various international locations around the world. To ensure that (i) expatriate employees paid the same amount of income taxes while on foreign assignment that they would have paid had they remained in their home country, and (ii) any assignment related premiums and allowances received by the expatriates were on a gross basis, the Debtors maintained an Income Tax Equalization program. The Reorganized Debtors determined that eight expatriates asserting $323,280 in aggregate claims owe outstanding amounts to the Debtors in accordance with the TEQ Program. The Debtors also determined that the expatriate claimants are owed amounts under employment-related agreements. After offsetting the amounts owed by the claimants to the Debtors against the amounts owed by the Debtors to the claimants, the parties agreed to the resolve the remaining amounts due the expatriates pursuant to a settlement agreement. Under the settlement, the expatriate claimants will have $201,454 in aggregate allowed amount for their claims. D. Eleven Other Employee Claim Settlements The Reorganized Debtors negotiated settlement agreements with 11 claimants to globally resolve their claims aggregating $1,304,598. The claims, among others, assert: -- unpaid amounts under severance or separation agreements, -- unpaid amounts under bonus or other incentive plans, -- unpaid benefits under NQB Plans, -- reimbursable expenses, -- unpaid vacation, or -- unpaid sales commission. The 11 Settlement Agreements result in withdrawal or disallowance and expungement of many of the claims. Some of the claims will be allowed after (i) reduction, (ii) reclassification or (iii) correction of the Debtor against which the claims were filed. The claimants' allowed claims will total $118,586. E. Florida Gas Settlement Florida Gas Transmission filed Claim No. 22855 for $6,843,932, asserting reimbursement of payments it made to certain employees under the Houston Natural Gas Corporation Deferred Income Program. Florida Gas is jointly liable with the Debtors under the HNG Program and remains current on its obligations to make payments under this program. The Reorganized Debtors and Florida Gas reviewed employee claims arising under the HNG Program and agreed on methods for estimating unsecured claims to be paid by Florida Gas in the future. To resolve and liquidate Florida Gas' unsecured claim against Enron Management Inc. for reimbursement of the claims it has paid and will continue to pay under the HNG Program, the Debtors and Florida Gas executed a settlement agreement. Under the Florida Gas Settlement, Claim No. 22855 will be allowed against Enron at the reduced amount of $3,434,036. The Settlement further provides that the allowed claim will be the sole claim against the Debtors arising under the HNG Program. Any other claims under the program will be released. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 156; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Inks Pact Resolving Liberty Mutual's Claim for $2.8MM ----------------------------------------------------------------- Before the Petition Date, Liberty Mutual Surety, formerly known as Liberty Bond Services, a division of Liberty Mutual Insurance Company, issued surety bonds on behalf of Enron Corporation and its debtor-affiliates for the benefit of various obligees. Enron Corp. entered into a General Indemnity Agreement with the Surety related to the Surety Bonds. On December 3, 1999, and as part of its issuance of the Surety Bonds, the Surety issued a payment bond in the amount of $2,500,000, on behalf of Enron Federal Solutions, Inc., in connection with a contract between EFS and the United States of America to provide utility repairs and maintenance services for the United States Army installation at Fort Hamilton, New York. Pursuant to the EFS Bond, the Surety guaranteed the payment of subcontractors EFS hired in connection with the Fort Hamilton Contract, and from and after the Petition Date, EFS defaulted on its obligations to pay two subcontractors. On February 21, 2002, the Court granted Liberty relief from the automatic stay to perform its obligations under the EFS Bond and to enforce its subrogation rights. In 2002, the Surety made payments in the aggregate amount of $1,364,147 to the Subcontractors to satisfy, in full, EFS' unpaid obligations in connection with the Fort Hamilton Contract. The Surety filed claims in connection with the Fort Hamilton Bond Payments: -- Claim No. 13998, filed against EFS, which has been amended and superseded by Claim No. 25254, and -- Claim No. 25252, filed against Enron. The Reorganized Debtors objected to the Claims. To resolve the Claims without the expense of litigation, the parties agree that: (i) Claim No. 25254 will be allowed Class 29 general unsecured claim against EFS for $1,364,147; (ii) Claim No. 25252 will be allowed as Class 185 against Enron for $1,504,567; (iii) Claim No. 13998 will be disallowed and expunged; (iv) in the event that the Surety successfully recovers any Recovered Amount in its Government Recovery Action, the Allowed Claims will be reduced by the amount of the Recovered Amount less the Surety's reasonable costs and attorneys' fees in obtaining the Recovery; (v) the Surety will reimburse the Debtors' estates to the extent that it receives, or has previous received, any distributions on account of the difference between the Allowed Claims and the Reduced Allowed Claims; and (vi) to the extent not specifically allowed in the Stipulation, the Surety's Claims are disallowed. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 155; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Societe Generale Energie Holds $900,000 Allowed Claim ----------------------------------------------------------------- Societe Generale Energie SA filed Claim No. 1081 against Enron Corp. for $4,498,582. On Dec. 18, 2003, the U.S. Bankruptcy Court for the Southern District of New York granted the 17th Omnibus Claims Objection, disallowing and expunging the Claim. The parties agree to resolve the Objection on these terms: 1. The Omnibus Objection Order will be vacated as to the Claim; 2. The Claim will be allowed as a Class 4 General Unsecured Claim against Enron in the amount of $900,000; 3. All scheduled liabilities related to SGE in respect of the Claim will be disallowed in their entirety in favor of the Allowed Claim; and 4. The parties release each other from any claims with the exception of any claims that SGE may have with regard to Enron Capital & Trade Resources Limited, in administration in the United Kingdom since November 29, 2001. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 156; Bankruptcy Creditors' Service, Inc., 15/945-7000) ERIC CAMPMAN: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------- Debtors: Eric Pierce & Ivonne NMN Campman 524 Tyler Court Cottontown, Tennessee 37048 Bankruptcy Case No.: 05-09911 Chapter 11 Petition Date: August 19, 2005 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtors' Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church Street, Suite 410 Nashville, Tennessee 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $747,300 Total Debts: $1,378,859 Debtors' 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ SBA Building and 5 acres $138,888 50 Vantage Way #201 located at 3135 Nashville, TN 37228 Pleasant Grove Road, White House, TN Value of senior lien: $965,000 TN Dept Revenue $3,000 c/o TN Atty. Gen. Office 525 5th Avenue No. 2nd Floor Nashville, TN 37243 State of CA Franchise Board $1,600 P.O. Box 942857 Sacramento, CA 94257 FALCON PRODUCTS: Selling 87.4% Stake in Czech Falcon Mimon Unit --------------------------------------------------------------- Falcon Products, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, to sell its 87.4% interest in Falcon Mimon, a.s. Czech Republic. Falcon is comprised of nine domestic debtor corporations and five active foreign subsidiaries in China, Hong Kong, Mexico, the Czech Republic and Denmark. Falcon wholly owns all foreign affiliates except for Mimon. These foreign subsidiaries manufacture furniture for their local customers and also have exported unassembled furniture to the Debtors' factories located in the United States. Mimon's unaudited balance sheet as of June 2005 shows total assets of $9.4 million and $3.3 million in total debts. The company's assets include: -- $3.5 million of inventory; -- a $100,000, third-party receivables; and -- property, plant and equipment valued at $5.6 million. Mimon's liabilities include: -- $1.4 million of trade payables and accrued expenses; and -- a $1.9 million loan from the Ceskoslovenska Obchodni Banka, a.s. The bank loan, due in March 2006, is secured by a lien on all of Mimon's assets except for its equipment. Falcon provided an unsecured guarantee to the Czech bank. The Debtors have stopped purchasing goods from Mimon as part of their cost-cutting initiatives contemplated in their Plan of Reorganization. After Falcon made known its intention to cease purchasing chair frames from Mimon, the Bank threatened to seize the company's assets. Falcon wired $166,000 to Mimon in June 2005. The Czech bank seized those funds, creating a liquidity crisis at the factory. The Bank made it clear that an orderly wind-down of Mimon is out of the question. Either the Debtors find an acceptable buyer for the factory or the Bank will seize all of its assets. BEKY a.s., a Slovak company supplying wood to Mimon, expressed interest in buying the factory. The Bank advised it would support a transaction with BEKY. Subsequently, the parties were able to negotiate a term sheet acceptable to the Bank. The salient terms of the Term Sheet are: a) Falcon will transfer its 87.4% interest in Mimon to BEKY for a nominal $1.00 amount. b) BEKY will guarantee the CSOB Bank Loan and CSOB will release Falcon from its Bank Debt guarantee. c) BEKY will assume the net amount due to Mimon from Falcon. This amount totals approximately $623,000 and consists of the following components: $1,516,000 prepetition payable due to Mimon net of the $1,160,000 prepetition receivable due to Falcon, plus the $276,000 postpetition payable due to Mimon from Falcon. d) Falcon will purchase $332,000 of goods from Mimon at a 20% discount. The purchase price will be funded 50% upon shipment and 50% upon receipt of goods, which will be placed in an escrow account. e) BEKY will provide a CZK 15 million (approximately $623,000) working capital loan to Mimon to assist Mimon through the transition. Falcon stresses that unless a sale transaction is completed quickly, the Czech Bank will force Mimon into bankruptcy and liquidate its assets. That course of action would leave nothing for Falcon. 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: Has $4MM Offer for Sellers & Josephson's Assets ---------------------------------------------------------------- Sellers & Josephson, Inc., one of Falcon Products, Inc.'s debtor- affiliates, asks the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, for authority to sell all of its assets to Horizon Motors, Inc., for $4 million, subject to higher and better offers. The move is in accordance with the Debtors' business consolidation contemplated in its Plan of Reorganization. The Debtors' Plan is dependent on the success of the consolidation plan which include among others, the sale of subsidiaries to reduce administrative overhead, eliminate redundancies and inefficiencies throughout the organization. Falcon's plan intends to focus the company's efforts and resources on the commercial furniture business. S&J is a wall-covering manufacturer. As such, the Debtors deem it best to divest themselves of this subsidiary. Under the sale agreement, S&J will: a) assign its lease of the property located at 50 Armor Avenue in Carlstadt, New Jersey to Horizon; b) assign to Horizon its Vehicle Lease Service Agreement with Penske Truck Leasing Company; and c) agree with Horizon regarding the termination of the lease for the property located at 86 Route 4 East in Englewood, New Jersey. The Court will convene a hearing on August 24, 2005, to consider approval of the sale to Horizon and a hearing on September 28 to consider approval of the sale procedures and to set a date for a public auction. 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. FLEMING COS: Trust Wants Court to Reduce Core-Mark Stock Reserve ---------------------------------------------------------------- The Post Confirmation Trust created pursuant to the confirmed plan of reorganization of Fleming Companies, Inc., and its subsidiaries asked the United States Bankruptcy Court for the District of Delaware for permission to allow it to make a reduction in the reserve of Core-Mark stock to be maintained pursuant to the Plan and Confirmation Order on account of disputed claims. Core-Mark is the reorganized company that emerged from Chapter 11 on Aug. 23, 2004. The Plan directs all of Core-Mark's common stock (except for the shares reserved for Core-Mark's management and for certain warrants issued under the Plan) to be distributed to the holders of allowed general unsecured claims. The Plan also requires that an appropriate reserve be established for general unsecured claims that are not yet allowed or in dispute. Based on an order of the Bankruptcy Court from January 2005, the Trust currently maintains a Disputed Reserve that is based on an estimate of the maximum aggregate general unsecured claims to be ultimately allowed of $3.29 billion. All of the distributions of Core-Mark stock made to-date were made on the basis of these numbers. However, due to the Trust's diligent pursuit of reconciling the general unsecured claims, it is now in the position to seek further reduction of the Disputed Reserve. While the aggregate amount of the general unsecured claims that will be ultimately allowed in these cases is unknown at this time, the Trust currently conservatively estimates that the maximum amount of the ultimately allowed general unsecured claims will be no more than $2.58 billion. The general unsecured claims allowed to-date total $1.78 billion. Accordingly, the Trust has asked the Court for authority to reduce the Disputed Reserve. As set forth in the Court pleadings, this number is conservative. The Trust currently believes the allowed aggregate amount of general unsecured claims entitled to stock distribution will be lower, but due to the fact that the claims review and reconciliation process is not yet complete, the final aggregate amount of general unsecured claims cannot be accurately predicted at this time. Additional stock will be distributed to the holders of allowed claims through subsequent periodic distributions. In the court pleadings, the Trust has included calculations which indicate how the $2.58 billion estimate was derived, as well as why it believes that estimate to be conservative. A new distribution will be made to claimants that previously received Core-Mark stock and will be based on the $2.58 billion estimate, increasing their allocation to 69% of the aggregate distributable stock, while 31% of the aggregate distributable stock will be retained in the reserve. In the coming week the Trust anticipates filing its First Status Report which will provide an update on operations of the trust since the Effective Date. This report will provide more insight on the anticipated recoveries from the trust, including the potential for cash distributions to the holders of allowed general unsecured claims. The RCT has recently filed its first status report and indicated that "the RCT should have the ability to satisfy all reclamation claims" and "may ultimately turn over a surplus to the Post Confirmation Trust". Based on this report, it appears unlikely that the RCT will require distributions from the PCT or funding under the Core-Mark guarantees. The PCT is optimistic that, upon completion of its efforts, it will have sufficient cash available to allow cash distributions to general unsecured creditors that will meet or exceed the $33 million that was projected in the Disclosure Statement. The Court will convene a hearing on the Company's request on Sept. 27, 2005, at 10:30 a.m. The PCT has set up a hotline to answer the questions of parties in interest: the hotline number is 972-535-7149. Core-Mark is one of the largest broad-line, full-service wholesale distributor of packaged consumer products to the convenience retail industry in North America. Founded in 1888, the Core-Mark provides distribution and logistics services as well as marketing programs to over 18,000 retail locations in 37 states and five Canadian provinces through 23 distribution centers. Core-Mark services traditional convenience retailers, grocers, mass merchandisers, drug, liquor and specialty stores, and other stores that carry consumer packaged goods. For more information, visit http://www.core-mark.com/ Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- was the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Judge Walrath confirmed Fleming's Third Amended Plan on July 26, 2004, under which Core-Mark Holding Company, Inc., emerged as a rehabilitated company owned by Fleming's unsecured creditors on August 23, 2004. Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. FLEXTRONICS INT'L: Fitch Affirms Senior Subordinated Debt at BB+ ---------------------------------------------------------------- Fitch Ratings has affirmed Flextronics International, Ltd.'s 'BB+' senior subordinated debt and assigned a 'BBB-' rating for the company's senior unsecured bank credit facility. The Rating Outlook is Stable. Fitch's action affects approximately $1.6 billion of debt. The ratings and Outlook reflect Flextronics' relatively consistent operating performance over the last several years, which has been driven by greater exposure to more stable consumer electronics end-markets; industry-leading cash conversion cycle, which has contributed to annual free cash flow; and one of the industry's best-positioned low-cost manufacturing footprints. Also considered is the company's organic revenue growth, which has partially mitigated meaningful customer share erosion in Flextronics' wireless handset segment. The ratings incorporate longer term industry growth trends supported by increased penetration of the manufacturing and design outsourcing model and expectations that tier 1 electronics manufacturing services providers will continue to benefit from original equipment manufacturers consolidating their EMS suppliers. Ratings concerns center on integration risks related to the acquisition of Nortel Networks' manufacturing facilities, Flextronics' acquisitive history and more aggressive operating strategy, and increased operating leverage associated with the company's vertical model, which has contributed meaningfully to recent operating margin expansion but increases Flextronics sensitivity to demand. The ratings also reflect the EMS industry's thin operating margins and ongoing competition from original design manufacturers. Flextronics' operating results have exhibited comparatively lower volatility than the majority of its peers, due to the more stable unit growth exhibited by consumer electronics in comparison to IT markets. Furthermore, the company has gradually diversified its revenue base by expanding revenues in nontraditional end-markets (12% of revenues versus 9% for fiscal 2004), as well as its communications infrastructure through its Nortel transaction. At the same time, Fitch believes that Flextronics' low-cost manufacturing footprint has mitigated some pricing pressures. Fitch estimates that the company's earlier and more aggressive restructuring activities following the IT downturn have resulted in Flextronics having among the highest percentages of low-cost capacity in the industry. Despite revenue diversification, Fitch believes the Nortel transaction, which could result in $2 billion of annual revenues, and the integration of related facilities, will affect Flextronics' operating performance negatively in the short term due to manufacturing and supply chain inefficiencies and the lower inventory turns associated with communications equipment. However, the current ratings incorporate Fitch's expectation that Flextronics will expand operating margins from this transaction to company wide levels in the intermediate term along with restoring CCC days to industry-leading levels. Fitch expects Flextronics to fund the five remaining installment payments to Nortel, totaling approximately $500 million, from a combination of: cash, an expected $550 million of net proceeds from pending asset divestitures, or borrowings under the company's revolving credit facility. If borrowings are used, then Fitch expects the company will rapidly reduce these amounts with subsequent free cash flow, as it has historically done following debt-financed acquisitions. Given the size and complexity of the Nortel transaction and Flextronics' pending purchase of the minority interest of its software unit for approximately $137 million, the ratings incorporate Fitch's expectation that Flextronics will curtail significant acquisition activity in the near term. Total debt was approximately $1.8 billion as of June 30, 2005, and consisted primarily of: $500 million 1% convertible subordinated notes due 2010; approximately $400 million 6 1/2% senior subordinated notes due 2013; approximately $507 million 6 1/4% senior subordinated notes due 2014; and $200 million zero-coupon convertible junior subordinated notes due 2008. While total adjusted debt (adjusted for proceeds from accounts receivable sales [A/R] and rental expense) has declined over the past year, primarily as a result of Flextronics' redemption of approximately $175 million 9 3/4% senior subordinated notes due 2010, Fitch believes there is less opportunity for further debt reduction through the intermediate term due to the longer term maturity profile of the remaining debt. Consequently, Fitch expects adjusted leverage to erode slightly for fiscal 2006, from 3.0 times (x) for the latest 12 months ended June 30, 2005 (3.4x for the preceding year), due to profitability pressure from Nortel. Longer term, Fitch would expect Flextronics to reduce debt and/or grow operating EBITDA in order to maintain total adjusted leverage at approximately 3.5x. Liquidity as of June 30, 2005 was sufficient to meet near-term debt maturities and was supported by approximately $830 million of cash and cash equivalents and an undrawn $1.35 billion senior unsecured revolving credit facility expiring 2010. Additional sources of liquidity include a $250 million A/R program, expiring March 2006, of which approximately $98 million was outstanding as of June 30, 2005, and annual free cash flow in each of the past four fiscal years (after adjusting for A/R proceeds). Flextronics' CCC continues to lead the tier 1 EMS industry, but increased to a Fitch-estimated 28 days, adjusting for A/R sales, for the LTM ended June 30, 2005, from a record low 23 days at the end of fiscal 2004. Fitch believes CCC days could increase further as the company integrates Nortel, potentially resulting in modest cash usage for fiscal 2006. FOOTSTAR INC: Has Until Nov. 10 to Solicit Acceptances of Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended Footstar, Inc., and its debtor-affiliates' exclusive right to solicit acceptances of their proposed Joint Plan of Reorganization until Nov. 10, 2005. The Court approved the adequacy of the Debtors' Disclosure Statement on an interim basis on Dec. 13, 2004. The Debtors' Plan is dependent on the assumption of a Master Agreement with Kmart Corporation. On July 2, 2005, Footstar and Kmart entered into a Settlement Agreement that resolves all litigation between them. Pursuant to the agreement, Kmart consents to Footstar's assumption of the Master Agreement subject to some modifications. The Settlement also allows the Debtors to continue their footwear business in Kmart stores, reorganize expeditiously, pay creditors in full, plus interest, and provide a significant return to Footstar's equity holders. With a settlement in hand, the Debtors believe they now can proceed expeditiously toward soliciting votes for the Plan and proceed with the confirmation process. In addition, they will incorporate the terms of the Settlement Agreement in an amended Disclosure Statement and ask for a final approval of that document. Headquartered in West Nyack, New York, Footstar Inc., retails family and athletic footwear. As of August 28, 2004, the Company operated 2,373 Meldisco licensed footwear departments nationwide in Kmart, Rite Aid and Federated Department Stores. The Company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal-Mart and Shoe Zone stores. The Company and its debtor-affiliates filed for chapter 11 protection on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil Gotshal & Manges represents the Debtors in their restructuring efforts. When the Debtor filed for chapter 11 protection, it listed $762,500,000 in total assets and $302,200,000 in total debts. FREESCALE SEMICONDUCTOR: Fitch Holds Sr. Unsec. Debt Rating at BB+ ------------------------------------------------------------------ Fitch Ratings has revised its Rating Outlook on Freescale Semiconductor, Inc. to Positive from Stable. The company's senior unsecured debt is affirmed at 'BB+'. Fitch's action affects $1.25 billion of debt securities. The Positive Rating Outlook reflects Freescale's consistent operating momentum since the spin-off from Motorola, Inc., in July 2004, Fitch's greater comfort with the company's financial and operating strategies, and the company's strengthening relationship with Motorola as reflected by its recent design win for low-end 3G phones through 2008, which Fitch believes provides some assurance of the strength of Freescale's wireless products portfolio. The rating reflects Freescale's strong credit protection measures; solid liquidity position; conservative capital structure; diversified end market and product portfolios; and strong positions within the stable transportation and standard products segment, as well as GSM and 3G baseband markets. However, rating concerns center on Freescale's significant ongoing investments in research and development required to build the intellectual property portfolio, particularly as the company tries to shift its mix to higher value added platform products; ongoing capital spending requirements; significant customer concentration to Motorola, Inc., which typically represents 25%-30% of total sales; the ongoing challenges the company faces in gaining new wireless customers, particularly given its lack of current generation CDMA products. The ratings also incorporate the cyclical demand patterns and volatile cash flows associated with the semiconductor industry. Within the context of modest sales growth and mixed semiconductor demand environment, Freescale has demonstrated gross margin expansion, resulting from ongoing restructuring activities that focused on meaningfully reducing manufacturing capacity and headcount. Motorola's market share gains in wireless handsets have also contributed meaningfully to margin expansion over this time frame. At the same time, the company's manufacturing outsourcing strategy has enabled Freescale to hold capital expenditures to below 10% of sales, which is slightly below the industry average, and contributed to more than $550 million of free cash flow generation. Fitch believes that Freescale's continued operational stability within the context of the cyclical semiconductor market, including ongoing free cash flow, and maintenance of financial discipline and strong liquidity position could lead to further positive rating action. The rating considers the potential for modest share repurchases or acquisitions but that these actions are expected to be offset by free cash flow and/or debt reduction. In addition to Freescale's lower fixed cost structure resulting from the aforementioned restructuring activity, Freescale's well- diversified end market and product portfolios are expected to mitigate some operational volatility going forward. Freescale's leading positions with the tier-1 automotive suppliers in the more consistent transportation business (approximately 45% of sales), driven by longer design cycles, increasing electronics content in automobiles, and relatively stable worldwide unit growth, should continue to add stability to the portfolio. The wireless and mobile solutions segment (26% of sales), which has suffered significant historical losses, has achieved minimal profitability the past three quarters and, given the strength of Motorola's current product portfolio and Freescale's recent design win for low-end 3G phones through 2008, Fitch believes the wireless and mobile solutions segment will continue to be profitable over the near term and demonstrate more stability than in the past. The company also has a networking and computing segment, representing the remainder of sales, which typically has higher operating margins but also has experienced more volatile sales. Although Freescale's 'asset light' strategy, which involves outsourcing some manufacturing to foundries and partnering to share the risks of R&D projects, has been successful over the past year, Fitch believes that ongoing investments in R&D and capital expenditures will continue to be significant as these fixed costs currently represent approximately 25%-30% of sales. As the company continues to build its brand and intellectual property portfolio, Fitch expects R&D expense, which has increased over the past year, to remain relatively fixed in absolute dollars. In addition, while the company outsources a greater percentage of the manufacturing of wireless semiconductors, which require more technologically advanced equipment in order to be price competitive, Fitch believes Freescale would be challenged to reduce maintenance capital spending, due to the company's leading manufacturing position for the transportation segment. Given these ongoing fixed investments, as well as expectations for subdued demand over the near term and limited potential debt reduction, Fitch believes credit protection measures will be essentially flat but remain strong. For the latest 12 months interest coverage (Operating EBITDA-to-interest incurred) was more than 15 times(x) and total leverage (total debt-to-Operating EBITDA) 1.1x. As of July 1, 2005, Freescale's liquidity was strong and supported by approximately $2.6 billion of cash and cash equivalents and more than $1 billion of free cash flow over the last 2-1/2 years. Given expectations for subdued demand growth over the near-term, Fitch expects free cash flow could exceed $500 million for fiscal year 2005. Total debt at July 1, 2005 was approximately $1.3 billion and consisted of: i) $400 million of floating-rate (LIBOR plus 275 basis points) senior notes due 2009 (callable in 2006), ii) $350 million of 6.875% senior notes due 2011 (callable in 2008), and iii) $500 million of 7.128% senior notes due 2014 (callable in 2009). About Freescale Semiconductor Freescale Semiconductor, Inc. (NYSE:FSL) (NYSE:FSL.B) -- http:// www.freescale.com/ -- is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Freescale became a publicly traded company in July 2004 after more than 50 years as part of Motorola, Inc. The company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations in more than 30 countries. Freescale, a member of the S&P 500(R), is one of the world's largest semiconductor companies with 2004 sales of US$5.7 billion. G-FORCE CDO: Fitch Lifts Rating on Two Low-B Rated Cert. Classes ---------------------------------------------------------------- Fitch Ratings upgrades 11 and affirms two classes of notes issued by G-Force CDO 2003-1. These rating actions are effective immediately: --$146,458,304 class A-1 notes affirm at 'AAA'; --$20,000,000 class A-2 notes affirm at 'AAA'; --$28,750,000 class BFL notes upgrade to 'AA+' from 'AA'; --$30,000,000 class BFX notes upgrade to 'AA+' from 'AA'; --$12,000,000 class CFL notes upgrade to 'A+' from 'A'; --$34,155,000 class CFX notes upgrade to 'A+' from 'A'; --$13,800,000 class D notes upgrade to 'A' from 'A-'; --$26,200,000 class E notes upgrade to 'A-' from 'BBB+'; --$21,550,000 class F notes upgrade to 'BBB+' from 'BBB'; --$26,000,000 class G notes upgrade to 'BBB+' from 'BBB'; --$30,000,000 class H notes upgrade to 'BBB' from 'BBB-'; --$40,000,000 class J notes upgrade to 'BB+' from 'BB'; --$50,000,000 class K notes upgrade to 'B+' from 'B'. Force CDO 2003-1 is a collateralized debt obligation whose collateral was selected by G Funds Asset Management, LLC and closed on Dec. 18, 2003. G-Force CDO 2003-1 is composed of 100% commercial mortgage-backed securities assets, including approximately 25.4% CMBS B-notes. The collateral credit quality has improved. Since closing, 12.8% of the collateral has been upgraded, with 8.3% of the collateral being upgraded since the last rating action in December 2004. There have been no downgrades to date, and the overcollateralization ratio has remained stable since the close of the transaction. There has been limited deleveraging of the transaction's capital structure. The A-1 note holders have received principal distributions of approximately $16.3 million, representing approximately 10% of initial A-1 balance. The ratings on the class A-1, class A-2, class BFL, and class BFX notes address the timely payment of interest and ultimate repayment of principal. The ratings on the class CFL, class CFX, class D, class E, class F, class G, class H, class J, and class K notes address the ultimate payment of interest and ultimate repayment of principal. Due to the increased credit enhancement levels and the positive rating migration within the collateral pool, Fitch affirms the A-1 and A-2 classes, and upgrades all other classes. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralized Debt Obligations,' dated Sept. 13, 2004, available on Fitch's web site at http://www.fitchratings.com/ GLASS GROUP: Court Okays Auction & Bid Procedures for Asset Sale ---------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware approved uniform bidding and auction procedures related to the sale of substantially all of The Glass Group, Inc.'s assets. The Debtor asked for approval of the bid and auction procedures on an emergency basis in view of its relative lack of liquidity and the impending maturity, on Aug. 31, 2005, of a debtor-in- possession facility extended by CapitalSource Finance, LLC. As previously reported in the Troubled Company Reporter, the Court authorized the Debtor to obtain up to $40 million in post-petition financing under a revolving credit and security agreement with CapitalSource and certain other DIP Lenders. The Debtor's assets up for auction include: 1) Millville, New Jersey Facilities - The Millville facilities include executive offices, a glass manufacturing plant, a mold manufacturing plant and a warehouse and distribution center. The 58-acre glass manufacturing plant is equipped with multiple melting furnaces for glass production and can produce up to 195 tons of glass per day. The 40,000 square feet mold manufacturing plant designs and supplies the Debtor's manufacturing plants with molds for production of its glass products. The warehouse and distribution center, occupying approximately 500,000 square feet in two buildings, stores and coordinates the Debtor's products to its costumers. 2) Park Hills, Missouri Facility - The Flat River facility houses a glass manufacturing plant occupying approximately 375,000 square feet situated on 44 acres. The facility is equipped with melting furnaces for glass production and can produce up to 215 tons of glass per day. 3) Mays Landing, New Jersey Facility - The leased Mays Landing facility is comprised of a decorating and coating plant, which occupies approximately 175,000 square feet on approximately 28 acres. 4) Williamstown, New Jersey Facility - Williamstown facility is comprised of a decorating plant, which occupies approximately 65,000 square feet on approximately 30 acres. The facility is equipped with new spray guns, pressure sensitive labeling machines, high speed round screen printers, a high speed round screening machine and Lehr burners and controls. The facility' capabilities include: Research and Development, sampling, acid frosting, assembly, ceramic screening, Type II S02 treatment, precious metals screening and PVC plastic coating. 5) Beijing Joint Venture Facility - The Beijing Wheaton Glass Company in China has a layout similar to the Flat River facility. It is equipped with multiple melting furnaces and six production lines. The facility's capabilities include glass manufacturing and decorating. SSG Capital Advisors, LP, the Debtor's investment banker, has conducted an extensive marketing process for the assets. The Debtor reports that SSG Capital has sent initial marketing materials to approximately 69 parties, coordinated confidentiality agreements with and sent offering memoranda to 29 potential buyers, facilitated due diligence and arranged actual site visits for 12 potential buyers. To date, no asset purchase agreement or stalking-horse bid has been executed with any of these interested parties. The Debtors intend to re-canvass all potentially interested bidders for the assets in order to maximize interest on the proposed sale. The competitive bidding and auction for the Debtor's assets is scheduled at 9:00 a.m. on Aug. 29, 2005, at the offices of Morris Nichols Arsht & Tunnell in Wilmington, Delaware. Initial bids must be submitted to Morris Nichols no later than 5:00 p.m. on Aug. 25, 2005. Objections to the proposed sale, if any, must be filed with the Clerk of the Bankruptcy Court by 4:00 p.m. on Aug. 25, 2005. Objections must also be served on: a) Debtor's Counsel Morris, Nichols, Arsht & Tunnell Attention: Derek C. Abbot, Esq. 1201 North Market Street P.O. Box 1347 Wilmington Delaware 19899-1347 b) Counsel for CapitalSource Finance, LLC. Katten Muchin Rosenman LLP Attention: Kenneth J. Ottaviano, Esq. 525 W. Monroe Street, Suite 1900 Chicago Illinois 60661-3693 -- and -- Connolly Bove Lodge & Hutz LLP Attention: Jeffrey C. Wisler, Esq. The Nemours Building 1007 N. Orange Street, Suite 878 Wilmington, Delaware 19801 c) Counsel for The Official Committee of Unsecured Creditors Cozen O'Connor Attention: Mark E. Felger, Esq. 1201 N. Market Street, Suite 1400 Wilmington Delaware 19801 d) Office of the U.S. Trustee Attention: Margaret L. Harrison, Esq. J. Caleb Boggs Federal Building 844 King Street, Lockbox 2313 Wilmington, Delaware 19801 Only those objections complying with the general objection procedures will be considered by the Court during the hearing approving the sale at 1:30 p.m. on Aug. 30, 2005. A copy of the bid and auction procedures is available for a fee at http://www.researcharchives.com/bin/download?id=050822022043 Break-Up Fee Judge Walsh further allowed the Debtor to provide a break-up fee for any pre-qualified stalking-horse bidder selected by the Debtor. The break-up fee will be capped at a maximum amount of 3% of the cash portion of the stalking-horse bidder's qualified bid. The break-up fee will be treated as a priority administrative expense and is payable out of the proceeds of the sale at closing. Headquartered in Millville, New Jersey, The Glass Group, Inc. -- http://www.theglassgroup.com/-- manufactures molded glass container and specialty products with plants in New Jersey and Missouri. Its products include cosmetic bottles, pharmaceutical vials, specialty jars, and coated containers. The Company filed for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Del. Case No. 05-10532). Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. HAPPY KIDS: Committee Hires Olshan Grundman as Substitute Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Happy Kids Inc. and its debtor affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to hire Olshan Grundman Frome Rosenzweig & Wolosky LLP as substitute counsel, nunc pro tunc to July 18, 2005. Olshan Grundman replaces Traub Bonacquist & Fox LLP, the Committees' previous counsel. The committee asked for the replacement after Michael S. Fox, Esq., and Adam H. Friedman, Esq., the attorneys representing the Committee from Traub Bonacquist, joined Olshan Grundman. Olshan Grundman will render the same services to the Committee as previously approved by the Court in the Traub Bonacquist retention order. Specifically, Olshan Grundman will: a) provide the Committee with legal advice with respect to its rights, duties and powers in the Debtors' chapter 11 cases; b) consult with the Debtors, their counsel, other professionals retained in the Debtors' chapter 11 cases and the U.S. Trustee concerning the administration of the Debtors' 11 cases and their impact on their estates; c) assist and advise the Committee in analyzing the claims of creditors and in negotiating with those creditors; d) assist and advise in the Committee's investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses, and any other matters relevant to the chapter 11 cases or to the formulation of a plan of reorganization or liquidation, including considering the appointment of a trustee or examiner; e) assist and advise the Committee in its analysis and negotiations with the Debtors and any third parties, in the formulation of any plan of reorganization or liquidation, and with respect to the Committee's communications with the general creditor body regarding significant matters in the Debtors' bankruptcy cases; f) prepare pleadings, motions, applications, objections and other papers as may be necessary in furtherance of the Committee's interests and objectives, and represent the Committee at all hearings and other proceedings; g) analyze and advise the Committee of the meaning and importance of all pleadings and other documents filed with the Court; and h) perform all other legal services as may be required and deemed to be in the interest of the Committee in accordance with the provisions of the Bankruptcy Code. Olshan Grundman professionals' current standard hourly rates are: Designation Hourly Rates ---------- ------------ Partners $360 - $530 Associates & Counsel $215 - $360 Paraprofessionals $130 - $190 Mr. Fox tells the Court that his Firm does not hold any interest adverse to the Debtors and their estates and is therefore a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in New York, New York, Happy Kids Inc. and its affiliates are leading designers and marketers of licensed, branded and private label garments in the children's apparel industry. The Debtors' current portfolio of licenses includes Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $54,719,000 and total debts of $82,108,000. HAPPY KIDS: Hires Berenson as Auditor and Tax Services Provider --------------------------------------------------------------- The Honorable Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York gave Happy Kids Inc. and its debtor-affiliates permission to employ Berenson LLP as their auditor, accountant and tax services provider, nunc pro tunc to January 3, 2005. The Debtors choose Berenson as their auditing, accounting and tax services provider based on the Firm's extensive experience in advising companies involved in large and complex chapter 11 cases. In this engagement, Berenson will: a) audit and report on the Debtors' annual financial statements for the year ending Dec. 31, 2004. b) advise and assist in various federal, foreign, state and local tax matters as requested by the Debtors; c) provide other similar services and assistance as may be requested by the Debtors. Berenson bills its clients based on these regular hourly rates: Designation Hourly Rate ----------- ----------- Partner $300 - $425 Senior Manager $ Supervisor $190 - $285 Senior Staff $80 - $165 Stanley Joseph, an Audit Partner at Berenson and the lead professional in this engagement, reports that his Firm's fees in this engagement will not exceed $75,000 for the Audit of the Debtor's 2004 Financial Statements and $15,000 for Corporate Tax Returns as of Dec. 31, 2004. Mr. Joseph assures the Court that Berenson does not hold any interest adverse to the Debtors and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Joseph has extensive experience numerous industries where his clients include manufacturers, distributors and importers of apparel and textiles, furniture, toys, building supplies, electronic components, and consumer electronics. He spends considerable time consulting and advising turnaround companies and has vast experience in the structuring and placing of financing for clients. He is a member of the American Institute of Certified Public Accountants and New York State Society of CPAs. He has served on committees such as Cooperation with Commercial Credit Grantors, Cooperation with Bankers, and Apparel Manufacturing and Textile Accounting. He holds a B. A. in economics from Queens College and an M.B.A. in public accounting from St. John's University. Headquartered in New York, New York, Happy Kids Inc. and its affiliates are leading designers and marketers of licensed, branded and private label garments in the children's apparel industry. The Debtors' current portfolio of licenses includes Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $54,719,000 and total debts of $82,108,000. HAYES LEMMERZ: G. Haymaker Disposes of 2,424 Shares of Stock ------------------------------------------------------------ In Form 4 report filed with the Securities and Exchange Commission, George T. Haymaker, a director of Hayes Lemmerz International, Inc., disclosed that he disposed of 2,424 shares of the Company's restricted stock units on July 28, 2005. Mr. Haymaker previously received the Restricted Stock Units pursuant to the Hayes Lemmerz International, Inc. Long Term Incentive Plan. He beneficially owns 17,273 shares following the transaction. 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). INTELSAT LTD: Plans to Buy New Skies for $1.3 Billion ----------------------------------------------------- Intelsat Ltd. is offering to acquire New Skies Satellites Holdings Ltd. for $1.3 billion. Blackstone Group acquired New Skies for $1 billion last year. The Intelsat/New Skies merger would own 33 orbiting spacecraft, including five relatively young New Skies satellites designed to serve emerging international markets for video, Internet and data. About New Skies New Skies Satellites Holdings Ltd. operates five geosynchronous communications satellites around the globe. The company -- created in 1998 through the partial privatization of Intelsat. About Intelsat Intelsat, Ltd. offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high-quality connections, global reach and reliability. As reported in the Troubled Company Reporter on Mar. 7, 2005, Fitch Ratings has maintained the ratings of Intelsat: Intelsat, Ltd. -- senior unsecured notes at 'CCC+'. Intelsat (Bermuda), Ltd. (formerly Zeus Special Sub Ltd.) -- Senior unsecured discount notes at 'B-'. Intelsat Subsidiary Holding Company Ltd. (formerly Intelsat (Bermuda), Ltd. -- Senior unsecured notes at 'B'; -- Senior secured credit facilities at 'BB-'. INTERSTATE BAKERIES: Court Lifts Stay to Permit Set-Off with IRS ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri lifted the automatic stay to permit the Internal Revenue Service to set off certain of its prepetition tax refunds against certain prepetition taxes owed by Interstate Bakeries Corporation and its debtor-affiliates. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that, per the 10-year carryback, the Debtors are owed a $6,138,651 credit balance for the fiscal year ending May 1994 that is to be applied to these fiscal years or periods: 1. Fiscal year ending May 2001 -- Carryback recapture due to reclassification of NOL and Specified Liability Loss balance due $45,855; 2. Fiscal year ending May 2002 -- Carryback recapture due to reclassification of NOL and Specified Liability Loss balance due $3,071,569; and 3. Fiscal Year ending May 2003 -- Carryback recapture due to reclassification of NOL and Specified Liability Loss balance due $3,021,227. The credit balance and the balance due for all years are a result of the loss carryback from the May 2004 fiscal tax year. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, 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 $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: GE Commercial Wants Lease Obligations Paid --------------------------------------------------------------- On April 9, 2001, GE Commercial Finance Business Property Corporation, as successor-in-interest to General Electric Capital Business Asset Funding Corporation, and Interstate Brands Corporation entered into a Master Lease Purchase Agreement, whereby GE Commercial leases to Interstate Brands certain tangible personal property under equipment schedules executed from time to time between the parties. Pursuant to the Master Lease Agreement, GE Commercial and Interstate Brands entered into two schedules, which: -- describe the equipment; -- establish the lease terms; -- set rental payments for the equipment; and -- establish the rights and obligations of Interstate Brands upon termination of the lease term. The Schedules are: (1) Schedule 001 Pursuant to Lease Purchase Addendum No. 1 dated April 9, 2001, and Lease Purchase Closing Schedule No. 001 dated June 29, 2001, Interstate Brands leased Intermec 6220 handheld Computers and Intermec 6820 Printers from GE Commercial. Schedule 001 requires Brands to pay $194,758, as monthly rent in advance. (2) Schedule 002 Pursuant to Lease Purchase Addendum No. 2 dated August 6, 2002, and Lease Purchase Closing Schedule No. 002 dated August 12, 2002, Interstate Brands leased Intermec computers, servers and related equipment from GE Commercial. Schedule 002 requires Interstate Brands to pay GE Commercial a $51,920 monthly rent in advance. The Schedules remained in effect as of the Petition Date. John W. McClelland, Esq., at Armstrong Teasdale, LLP, Kansas City, Missouri relates that Interstate Bakeries Corporation and Interstate Brands West Corporation unconditionally guaranteed the full and prompt payment and performance of Interstate Brands under the Master Lease Agreement. Thus, Mr. McClelland asserts that the Master Lease Agreement is a "true lease," not a disguised financing agreement that creates a "security interest" in the GE Equipment as those terms are defined and described in the Uniform Commercial Code in effect in Washington. After the Petition Date, Interstate Brands continued to make rental payments to GE Commercial pursuant to the Master Lease Agreement and Schedule 001. However, Mr. McClelland tells the Court that Interstate Brands failed to pay: -- each of the three monthly installments of rent due on the first day of March, April and May of 2005, pursuant to Schedule 001, aggregating $584,273; and -- the nine installments of rent due on the first day of each month from September 2004 through May 2005, pursuant to Schedule 002, aggregating $467,276. "[Interstate] Brands has had the use of the Schedule 002 Equipment for nine months and the Schedule 001 Equipment for three months without making rental payments to compensate GE for the use of the Equipment," Mr. McClelland contends. "Meanwhile, the Equipment is decreasing in value as a result of the passage of time and the presumed usage in the ordinary course of [the Debtors'] business." Therefore, GE Commercial asks the Court to: (a) compel Interstate Brands to immediately perform all obligations under the Master Lease Agreement, including the payment of rent; (2) compel Interstate Brands to immediately accept or reject the Master Lease Agreement and if accepted, to require the Debtor to cure all related defaults; or (3) in the alternative, lift the automatic stay to compel the Debtors to turnover the Equipment to GE Commercial. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, 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 $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Two Local Unions Ratify Long-Term Labor Pacts ------------------------------------------------------------------ Interstate Bakeries Corporation (OTC: IBCIQ) reached an agreement with two of its local unions affiliated with the International Brotherhood of Teamsters modifying and extending the existing collective bargaining agreements that govern their employment with IBC through July 31, 2010. Members of the local unions have ratified these agreements. The Company said it has been working with Richard Volpe, IBT International VP and Director of the Bakery Conference of the U.S. and Canada. Members of Bakery Drivers Union Local 550 and Bakery Drivers and Salesmen Local 701 (collectively approximately 500 employees) are employed in the New York City metropolitan area. "Negotiation and ratification of these extensions are important steps in our restructuring efforts," said Tony Alvarez II, chief executive of IBC and co-founder and co-chief executive of Alvarez & Marsal, the global corporate advisory and turnaround management services firm. "This is just the beginning of a very long process. With approximately 500 contracts subject to negotiation, there is significant uncertainty ahead," he continued, adding that a long- term, stable relationship with its union work force along the lines of those reached with Locals 550 and 701 is a key component of IBC's restructuring efforts. Mr. Alvarez said that IBC is presently attempting to negotiate long-term extensions with the remaining IBT local bargaining units within the Northeast Profit Center. Should the efforts to extend collective bargaining agreements in the Northeast PC be successful, the Company would attempt to roll out similar concepts to the remaining PC's across the country. Because of the negotiations with the IBT, certain aspects of IBC's previously announced plans to consolidate PC operations will likely be deferred, both with respect to the consolidations that have been announced and those PCs currently under review. Moreover, the Company expects that successful negotiations with its unions may result in fewer terminations of non-production employees than previously announced. Given the large number of collective bargaining agreements to which the Company is a party, and notwithstanding the negotiations noted above, there can be no assurances that satisfactory agreements will be reached with other union collective bargaining units. There can be no assurance that previously announced consolidation plans will remain unaltered or that further consolidation plans will be consistent with the consolidations that have been announced previously or already implemented. It is unlikely, however, that any agreements with local bargaining units will change the Company's decisions with respect to previously announced bakery and production line closings. It is anticipated that each extended collective bargaining agreement will require approval by the bankruptcy court in IBC's pending chapter 11 proceedings. Accordingly, the Company filed a Motion for an Order Authorizing Debtors to Enter into Long-Term Extensions of Collective Bargaining Agreements. Due to the sheer number of collective bargaining agreements covering its union employees, the Company has proposed a streamlined approval process, much like procedures previously approved by the Bankruptcy Court, whereby notice of the terms of the proposed long-term extensions is given to the principal constituents in its chapter 11 cases and these parties will have the right to object thereto. If this Motion is approved, the Company would not anticipate publicly updating the status of negotiations or the finalization of additional individual extension agreements. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, 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 $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. JABIL CIRCUIT: S&P Raises Sr. Unsecured Rating to BBB- from BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior unsecured ratings on St. Petersburg, Florida-based Jabil Circuit Inc. to 'BBB-' from 'BB+'. The outlook is stable. The electronics manufacturing services provider had about $589 million in total debt outstanding, including operating leases and securitizations, at May 2005. "The upgrade is based on Jabil's sustained, stable operating performance and expectations for continued moderate financial policies," said Standard & Poor's Lucy Patricola. Despite highly competitive industry conditions, Jabil has continued to expand its revenue base by about 20% for the 12 months ended May 31, 2005, while sustaining EBITDA margins and generating free cash flow. The company's growth strategies are expected to remain primarily organic, supplemented with modest acquisitions. Revenues for the May quarter improved 19.2% over the year ago period, a pace of growth that has been sustained for the past two years, driven by successful new program wins in its core consumer market and its smaller but growing instrumentation and medical markets. Jabil continues to expand its customer base as the outsourcing trend of electronics manufacturing expands. JACK GARDNER: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Jack William Gardner 307 Barrington Park Drive Greer, South Carolina 29650-3642 Bankruptcy Case No.: 05-09376 Chapter 11 Petition Date: August 19, 2005 Court: District of South Carolina (Spartanburg) Judge: Wm. Thurmond Bishop Debtor's Counsel: Robert H. Cooper, Esq. The Cooper Law Firm 3523 Pelham Road, Suite B Greenville, South Carolina 29615 Tel: (864) 271-9911 Fax: (864) 232-5236 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Collins Entertainment Corp. $1,900,000 c/o Russell Ghent, Esq. 300 East McBee Avenue, Suite 500 Greenville, SC 29601 BB & T $582,118 Bankruptcy Sect/100-70-01-51 P.O. Box 1847 Wilson, NC 27894-1847 BB & T Personally guaranteed $157,600 Bankruptcy Sect/100-70-01-51 business line of P.O. Box 1847 credit Wilson, NC 27894-1847 Irwin Home Equity $99,710 12677 Alcosta Boulevard, Suite 500 San Ramon, CA 94583 Bankcard Services Unsecured Credit Card $30,618 P.O. Box 15026 Wilmington, DE 19850-5026 Wells Fargo Mortgage House $19,472 5024 Parkway Plaza Boulevard Charlotte, NC 28217 Bankcard Services Unsecured Credit Card $19,167 P.O. Box 15026 Wilmington, DE 19850-5026 Citicard Unsecured Credit Card $12,763 P.O. Box 8117 South Hackensack, NJ 07606-8116 Bank of America Unsecured Loan $8,669 P.O. Box 105737 Atlanta, GA 303485737 Bank of America Unsecured Loan $4,995 P.O. Box 105737 Atlanta, GA 303485737 Bank of America Unsecured Credit Card $25 P.O. Box 5270 Carol Stream, IL 60197-5270 J. CREW GROUP: S&P Places B- Corporate Credit Rating on Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on J. Crew Group Inc., including its 'B-' corporate credit rating, on CreditWatch with positive implications. The ratings on J. Crew Corp. and J. Crew Intermediate LLC were also placed on CreditWatch with positive implications. J. Crew had total debt (including preferred stock that is mandatorily redeemable in 2009) of about $577 million as of April 30, 2005. The CreditWatch listing follows J. Crew's S-1 filing with the SEC for an IPO of its common stock of up to $200 million. "The transaction, if successfully completed as described in the S- 1 filing, would result in a meaningful improvement in the company's capital structure and enhance its financial flexibility," said Standard & Poor's credit analyst Ana Lai. The proceeds from the IPO, along with the sale of about $73.5 million of its common stock to Texas Pacific Group (its majority shareholder) and borrowings under a new term loan, will be used to redeem outstanding cumulative preferred stock and some of its outstanding debt. Standard & Poor's will resolve the CreditWatch listing following the completion of the IPO and a meeting with management to evaluate the company's business strategies and financial policies. JILL KELLY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Jill Kelly Productions, Inc. 11151 Vanowen Street North Hollywood, California 91605 Bankruptcy Case No.: 05-15389 Type of Business: The Debtor is an adult entertainment company specializing in the production, development and distribution of high-quality films, pictures, and other related adult oriented content on a world-wide basis. See http://www.jillkellyproductions.com/ Chapter 11 Petition Date: August 8, 2005 Court: Central District of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: Todd B. Becker, Esq. 3750 East Anaheim Street, #100 Long Beach, California 90804 Tel: (562) 495-1500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service $400,000 [Address not provided] Ronald Stone $300,000 [Address not provided] BLU c/o Coastline Films Sales agent $280,000 7345 Topanga Canyon Blvd. Canoga Park, CA 91303 Klehr, Harrison, Harvey, $258,168 Branzburg & Ell 5554 Reseda Boulevard Suite 201 Tarzana, CA 91365 AVN Publications Inc. $215,542 IVI $131,187 American Express $128,284 Bowne $101,953 Collateral Damage $100,000 c/o Coastline Films Employment Development Dept. $100,000 Vanowen Investment Company $100,000 London & Co., LLP $51,630 Nasty Pixx $50,000 Premium Financing $46,965 Selvin & Weiner Law Offices $45,315 Home Entertainment Events/AVN $42,000 Great Western Litho, Inc. $39,767 Sherb & Co., LLP $36,000 Bill Baxter $32,058 Babylon $30,000 KAISER ALUMINUM: 6 Insurers Say Disclosure Statement Is Worthless ----------------------------------------------------------------- "With respect to the mass tort-related aspects of [the Debtors'] bankruptcy case, the Disclosure Statement is essentially meaningless and, as such, lacks good faith," Thomas G. Whalen Jr., Esq., at Stevens & Lee, P.C., in Wilmington, Delaware, tells Judge Fitzgerald. The Remaining Debtors' Disclosure Statement fails to provide "adequate information" as required by Section 1125 of the Bankruptcy Code and describes an unconfirmable Plan of Reorganization. Mr. Whalen believes that in mass tort bankruptcy cases, "the devil is in the details." However, in the Remaining Debtors' Disclosure Statement, there are no details. The proposed Chapter 11 Plan is missing every crucial document that will provide the substantive details of how the various personal injury claims will be resolved and paid. Mr. Whalen notes that the missing documents include: * the Funding Vehicle Trust Agreement, * the PI Trust Funding Agreement, * the Asbestos PI Trust Agreement, * the Asbestos Distribution Procedures, * the CTPV PI Trust Agreement, * the CTPV Distribution Procedures, * the Silica PI Trust Agreement, * the Silica Distribution Procedures, * the NIHLPI Trust Agreement, and * the NIHL Distribution Procedures. Mr. Whalen recounts that six insurers issued certain insurance policies that may provide coverage for Personal Injury Claims that have been, or that may be, asserted against the Debtors: * ACE Property & Casualty Company, * Central National Insurance Company of Omaha, * Century Indemnity Company, * Industrial Indemnity Company, * Industrial Underwriters Insurance Company, and * Pacific Employers Insurance Company. The Insurers are also parties to certain other agreements relating to the Policies. They hold certain contingent and unliquidated claims arising from the Debtors' continuing contractual obligations under the Insurance Agreements. In addition, the Insurers also have certain rights including the rights to receive monetary and non-monetary performance, and assert defenses, set- offs and recoupments. The Disclosure Statement acknowledges certain Tort Claims asserted against the Debtors for which insurance coverage may be sought under the Insurance Agreements. However, Mr. Whalen informs Judge Fitzgerald that the Disclosure Statement fails to provide adequate information on the material risks that any available insurance coverage may be vitiated by the Debtors' past actions and the Plan's violations of the Insurers' contractual rights and the Debtors' ongoing contractual obligations pursuant to the Insurance Agreements. Mr. Whalen also asserts that rather than provide the meaningful disclosure, the Disclosure Statement is a transparent effort to avoid requesting an eleventh extension of exclusivity. Mr. Whalen explains that the implication of the Debtors' showing up empty-handed is that exclusivity should finally be terminated, and that any other party-in-interest with a constructive proposal to deal with the various Personal Injury Claims should be free to propose it in the framework of the treatment of the non-mass tort commercial creditors. The Debtors "simply do not yet have a workable plan to deal with their mass tort liabilities," Mr. Whalen says. Rather than to simply admit their lack of meaningful progress in resolving the mass tort aspect of their reorganization case, the Debtors have chosen a less forthright path in an effort to avoid the consequences of their failure. Mr. Whalen contends that the September 1, 2005, Disclosure Statement Hearing "portends to be a grand, and expensive, waste of everyone's time." Moreover, Mr. Whalen avers that it is "painfully obvious" that filing the Disclosure Statement without the crucial documents related to the Trusts under the Plan is a "naked stall tactic." As a result, relevant parties lack crucial information concerning the exclusive means for the resolution of personal injury claims. Accordingly, the Debtors cannot realistically go forward until the missing documents are provided. Also, considering that payment of certain Personal Injury Claims under the Plan depends on the availability of insurance proceeds, Mr. Whalen maintains that the Disclosure Statement fails to provide basic and meaningful information about the mechanics and the risks for doing so. In addition, the Insurers note that the Disclosure Statement also: -- misstates that the Plan is "insurance neutral;" -- fails to reveal irreconcilable conflicts of interest inherent in the structures of the various Trusts; -- fails to disclose that the Silica Personal Injury Claims may have been generated as a result of wholesale fraud; and -- fails to adequately provide the Plan's proposed treatment of the Insurers' claims, as monetary creditors. In this regard, the Insurers ask the Court to deny approval of the Disclosure Statement. 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) KMART CORP: Conway Acquitted of Fraud & Mismanagement Charges ------------------------------------------------------------- The Wall Street Journal reports that a three-member arbitration panel acquitted Charles C. Conaway, former chairman and chief executive of Kmart Corporation, of fraud, mismanagement, and corporate looting that resulted to $1.7 billion in losses before the company filed for bankruptcy in 2002. The Kmart Creditors Trust sued Mr. Conway and former executives Mark Schwartz, David Rots, David Montoya, John McDonald and Anthony D'Onofrio for over $400 million in damages in the Circuit Court for Oakland County, Michigan. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Creditors Committee Supports Kmart Master Agreement --------------------------------------------------------------- As previously reported, Kmart Corporation and Footstar, Inc., entered into a settlement agreement that resolves the ongoing litigation and the disputes in connection with the assumption, interpretation and amendment of the Master Agreement, dated June 9, 1995. Creditors Committee Supports Agreement The Official Committee of Unsecured Creditors of Footstar, Inc., believes that the Settlement between Footstar and Kmart Corporation should be approved because: (a) The Settlement provides Footstar with certainty on issues that, if not resolved favorably, could have a devastating impact on Footstar and its businesses; (b) The Settlement repairs Footstar's contentious relationship with Kmart; and (c) Absent the Settlement, Footstar would continue to be involved in "bet the company" litigation, costing the estates hundreds of thousands of dollars in litigation expenses. Equity Committee Reserves Right to Object David M. Feldman, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, representing the Official Committee of Equity Holders of Footstar, Inc., recounts that after Footstar exits from bankruptcy, it will be the equity holders and Footstar's newly- elected board of directors who will be left to navigate the terms of the proposed revised agreement. Thus, it is critical that the Equity Committee's concerns be addressed. Mr. Feldman notes that the most recent draft received by the Equity Committee still contains several provisions, which are both inconsistent with the term sheet and inappropriate, given the new structure of the Footstar/Kmart business relationship. Given the undisputed importance of the Master Agreement and its terms, the Equity Committee must have a full and fair opportunity to review the final version of the proposed agreement prior to a hearing on the efficacy and reasonableness of the proposed Settlement. Mr. Feldman says that Kmart's litigation history should have taught the parties that every word is critical to the proper interpretation of an agreement. As the U.S. Bankruptcy Court for the Northern District of Illinois may recall, the Equity Committee highlighted during the last status conference with the Court in July 2005 its need to review the final form of Amended and Restated Master Agreement well in advance of the hearing. Because it has not yet been provided with a proposed final agreement, and because issues in the current drafts remain outstanding and subject to negotiation, the Equity Committee reserves all of its rights, including but not limited to the right to seek discovery on, request an adjournment of the hearing on, and object to the final form of the Agreement on any grounds. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) KNOLL INC: Board Approves Stock Repurchase Program -------------------------------------------------- Knoll, Inc.'s Board of Directors approved a stock repurchase program authorizing the Company to purchase shares of its common stock in the open market from the cash proceeds received by the Company upon the exercise by holders of options to purchase shares of the Company's common stock. The Company has retained Banc of America Securities LLC to effect the purchases and has authorized Banc of America to commence repurchases on August 19, 2005. Knoll designs, manufactures and distributes a comprehensive portfolio of branded office furniture products, textiles and accessories. * * * As reported in the Troubled Company Reporter on Aug. 20, 2004, Standard & Poor's Ratings Services lowered its corporate credit and bank loan ratings on office furniture manufacturer Knoll Inc. to 'BB-' from 'BB', following Knoll's proposal of a debt refinancing and a shareholder dividend. At the same time, a 'BB-' senior secured bank loan rating and a recovery rating of '4' were assigned to the proposed $500 million bank facility that is part of the refinancing. The 'BB-' bank loan rating is the same as Knoll's corporate credit rating; this and the '4' recovery rating indicate that lenders can expect marginal (25%-50%) recovery of principal in the event of a default. S&P said the outlook is stable. As reported in the Troubled Company Reporter on Aug. 20, 2004, Moody's Investors Service downgraded Knoll, Inc.'s senior implied rating to Ba3 and senior unsecured issuer rating to B1 and rated the company's new senior secured bank facilities Ba3 following the company's announcement of a leveraged recapitalization. The outlook remains stable. The downgrade reflects Knoll's increased leverage and reduced interest coverage following the company's decision to pay a dividend to shareholders in the context of uncertainty as to the extent of the recovery in the commercial furniture business. Ratings assigned: * $75 million revolving credit facility due 2009, Ba3; and * $425 million senior secured term loan due 2011, Ba3. Ratings downgraded: * Senior implied rating, Ba2 to Ba3; and * Senior unsecured issuer rating, Ba3 to B1. L&D PETROLEUM: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: L&D Petroleum, Inc. dba Hwy 41 Gas Station 12005 Evanshire Court Tampa, Florida 33626 Bankruptcy Case No.: 05-16513 Type of Business: The Debtor operates a gas station. Chapter 11 Petition Date: August 19, 2005 Court: Middle District of Florida (Tampa) Debtor's Counsel: Buddy D. Ford, Esq. 115 North MacDill Avenue Tampa, Florida 33609 Tel: (813) 877-4669 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Washington Mutual Gas station w/ $900,000 f/k/a Bank United pumps and carwash 6341 E. Campus Cir. Dr. Value of security: Irving, TX 75063 $1,000,000 Senior lien: $900,000 Bank of America Loan $57,279 NC1-001-07-06 101 North Tyron Charlotte, NC 28255 Sonia Sarfani Loan $57,000 2658 N. McMullen Booth Rd. Apartment 325 Clearwater, FL 33761 Fla. Enterprises/ Deposit $50,000 Samlley Ent. Doug Belden, Tax Collector Real property $30,000 taxes 2003, 2004 & 2005 H.T. Hackney Co. Purchases $11,000 Citibusiness Card Credit card $5,000 Environmental Protection Citation $3,000 Com. Preferred Capital Purchases $2,850 Bank of America Credit card $1,956 ICX Corporation Purchases $10 MAC-GRAY CORP: S&P Rates $150 Million Sr. Unsec. Notes at BB- ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to Mac-Gray Corp.'s $150 million senior unsecured notes due 2015. This represents a $25 million increase in the amount of previously rated unsecured note issue. The increase in the size of the note offering reduced amounts outstanding under the company's (unrated) revolving credit facility. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on laundry equipment services provider Mac-Gray Corp. The existing 'B+' senior unsecured debt rating was withdrawn. The outlook remains stable. Pro forma for the transaction, Cambridge, Massachusetts-based Mac-Gray will have about $170 million of debt outstanding. "The senior unsecured rating is one notch below the corporate credit rating, reflecting its junior position within the company's capital structure, but is one notch higher than the previously rated unsecured note issue because the amount of priority obligations was reduced," said Standard & Poor's credit analyst Jean C. Stout. MAGRUDER COLOR: Court Okays Financing Pact with Cananwill Inc. -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave Magruder Color Company and its debtor-affiliates permission to obtain post-petition financing from Cananwill, Inc., under a Commercial Insurance Premium Finance and Security Agreement. The Debtors will use the proceeds of the loan to pay for $75,312 of annual insurance premiums due to Travelers Indemnity Co., RSUI Indemnity Co., Greenwhich XL Environment and American Casualty Insurance. The Debtors will pay the insurance premiums due to those three Firms in two monthly installments of $37,656. A copy of the Commercial Insurance Premium Finance and Security Agreement is available for free at: http://bankrupt.com/misc/MagruderInsurance_DocB.pdf The Court orders that: 1) in the event that the Debtors default in the timely payment of monies due to Cananwill under the terms of the Premium Financing Agreement, the automatic stay provisions of 11 U.S.C. Section 362 will be automatically lifted and Cananwill may cancel the Insurance Policies financed under the Agreement after giving 15 days written notice to the Debtors; 2) in the event of a default, Cananwill may apply any unearned or return premiums of other amounts due to the Debtors upon cancellation of the Insurance Policies to any amount owed by the Debtors to Cananwill, without further application or order of the Court. Any excess funds received by Cananwill will be remitted to the Debtors and are subject to the liens and security interests of the Debtors' secured lenders pursuant to the Court's final DIP Financing Order dated June 30, 2005; 3) in the event of a cancellation of the Insurance Policies and the unearned or return premiums received by Cananwill are insufficient to pay the total amount owed by the Debtors, any remaining amount owed to Cananwill, including reasonable attorney's fees, will be allowed and given priority as an administrative expense under 11 U.S.C Section 503 in any distribution of assets of the estate; 4) the reversal or modification on appeal of the Court's order will not affect the validity of the debt, priority or lien granted to Cananwill as provided by Section 364(e) of the Bankruptcy Code; and 5) a) the liens and security interest granted to Cananwill in all sums payable as described in the Premium Financing Agreement will be limited to all unearned or returned premiums, and b) nothing in the Court's order will limit or impair in any way the liens, rights, claims and priorities of Wachovia Bank, N.A., in the Collateral granted to Wachovia pursuant to the Court's Final Financing Order dated June 30, 2005, and applicable law, which liens, rights, claims and priorities Cananwill acknowledges are prior and senior, except the first priority lien of Cananwill on unearned or return premiums. Headquartered in Elizabeth, New Jersey, Magruder Color Company -- http://www.magruder.com/-- and its affiliates manufacture basic pigment and also supply quality products to the ink, paint, and plastics industries. The Company and its debtor-affiliates filed for chapter 11 protection on June 2, 2005 (Bankr. D.N.J. Case No. 05-28342). Bruce D. Buechler, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. When the Debtors filed protection from their creditors, they estimated assets and debts of $10 million to $50 million. MAGRUDER COLOR: Ravin Greenberg Approved as Committee's Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave The Official Committee of Unsecured Creditors of Magruder Color Company and its debtor-affiliates permission to employ Ravin Greenberg PC as its counsel. The Committee hired Ravin Greenberg as its counsel because of its substantial experience in the representation of official and unofficial creditors' committees and equity committees in a variety of corporate chapter 11 bankruptcy matters and other insolvency matters. Ravin Greenberg will: a) assist the Committee in researching, preparing and drafting pleadings and other legal documents required in the Debtors' chapter 11 cases; b) assist the Committee in all Court hearing preparations and represent the Committee in all necessary Court appearances and hearings; and c) assist and advise the Committee with respect to all matters related to the Debtors' chapter 11 proceedings. Howard S. Greenberg, Esq., a Managing Partner of Ravin Greenberg, is the lead attorney for the Committee. Mr. Greenberg charges $540 per hour for his services. Mr. Greenberg reports Ravin Greenberg's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Nathan Ravin Partner $450 Stephen B. Ravin Partner $420 Bruce J. Wisotsky Partner $400 Larry Lesnik Partner $390 Morris S. Bauer Partner $380 Brian L. Baker Associate $290 Sheryll S. Tahiri Associate $255 Chad B. Friedman Associate $225 Ravin Greenberg assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Elizabeth, New Jersey, Magruder Color Company -- http://www.magruder.com/-- and its affiliates manufacture basic pigment and also supply quality products to the ink, paint, and plastics industries. The Company and its debtor-affiliates filed for chapter 11 protection on June 2, 2005 (Bankr. D.N.J. Case No. 05-28342). Bruce D. Buechler, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. When the Debtors filed protection from their creditors, they estimated assets and debts of $10 million to $50 million. MAYTAG: Inks $1.7B Merger Deal with Whirlpool as Triton Backs Out ----------------------------------------------------------------- Maytag Corporation inked a $1.7 billion merger deal with Whirpool Corp. after Triton Acquisition Holding, the acquisition vehicle formed by the Ripplewood Holdings-led investor group, said it will not raise its $14 per share bid, The Wall Street Journal reports. As reported in the Troubled Company Reporter on Aug. 16, 2005, Maytag's Board of Directors has withdrawn its recommendation of the pending merger deal with Triton. Maytag said that its Board has determined that in light of the $21 per share Whirlpool Corporation binding, irrevocable proposal, which was announced on Aug. 10, 2005, it would be inconsistent with the Maytag Board's exercise of its fiduciary duty for the Board to fail to withdraw its recommendation of the Triton $14 per share deal. Maytag paid Triton a $40 million fee, to be reimbursed by Whirlpool. Maytag shareholders will receive $10.50 in cash for each share of stock, with the balance coming in the form of Whirlpool stock. The merger of the nations No. 1 and No. 3 appliance makers is expected to draw close regulatory scrutiny. Maytag's share price steadily climbed since from $14.50 per share when Ripplewood first made its offer. Maytag's share price reached $19 per share level within the month. About Whirlpool Whirlpool Corporation -- http://www.whirlpoolcorp.com/-- is the world's leading manufacturer and marketer of major home appliances, with annual sales of over $13 billion, 68,000 employees, and nearly 50 manufacturing and technology research centers around the globe. The company markets Whirlpool, KitchenAid, Brastemp, Bauknecht, Consul and other major brand names to consumers in more than 170 countries. About Maytag Maytag Corporation is a leading producer of home and commercial appliances. Its products are sold to customers throughout North America and in international markets. The corporation's principal brands include Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie- Narco(R) and Jade(R). At July 2, 2005, Maytag Corp.'s balance sheet showed a $77.4 million of stockholders' deficit, compared to a $75 million deficit at Jan. 1, 2005. * * * As reported in the Troubled Company Reporter on July 21, 2005, Fitch Ratings placed Maytag Corporation's approximately $969 million of 'BB' rated senior unsecured notes on Rating Watch Evolving. This action followed the July 17, 2005 announcement that Whirpool Corporation has made a proposal to acquire Maytag for $2.3 billion in cash and stock and reflects the potential for either an upgrade or downgrade given the various competing offers for Maytag and the credit profile that could result. Whirlpool Corporation has made a proposal to acquire Maytag for $17 per share plus the assumption of $969 million of Maytag's debt for a total transaction valued at $2.3 billion. This bid follows two other bids: Initially, on May 19, 2005, Maytag entered into a definitive agreement to be acquired by a private investor group led by Ripplewood Holdings LLC for $14 per share cash. Subsequently, on June 21, 2005, Maytag announced that it had received a preliminary non-binding proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P., and Haier America Trading, L.L.C. to acquire all outstanding shares of Maytag for $16 per share cash. As reported in the Troubled Company Reporter on July 20, 2005, Standard & Poor's Ratings Services placed its 'BBB+' long-term and 'A-2' short-term corporate credit and other ratings on home appliance manufacturer Whirlpool Corp. on CreditWatch with negative implications. At the same time, Standard & Poor's revised its CreditWatch status of home and commercial appliance manufacturer Maytag Corp. to developing from CreditWatch negative. As reported in the Troubled Company Reporter on Apr. 29, 2005, Moody's Investors Service downgraded Maytag Corporation's senior unsecured ratings to Ba2 from Baa3 and the short-term rating to Not Prime from Prime-3. At the same time the Ba2 senior unsecured note rating was placed on review for possible further downgrade. Moody's also assigned a new senior implied rating of Ba2. Moody's says the outlook for the ratings remains negative. MEDIACOM BROADBAND: Fitch Places B Rating on $200MM Senior Notes ---------------------------------------------------------------- Fitch Ratings has assigned a 'B' rating to Mediacom Broadband LLC's $200.0 million issuance of 8.5% senior notes due 2015 in a private transaction. Additionally, Fitch has assigned an 'R5' recovery rating to the notes. Mediacom Broadband LLC is a wholly owned subsidiary of Mediacom Communications Corporation. Fitch has assigned MCCC an issuer default rating of 'B+'. Proceeds from the offering are expected to be utilized to repay outstanding borrowings under the company's revolving credit facility. Fitch maintains the Negative Rating Outlook assigned to the ratings of MCCC, Mediacom Broadband LLC, and Mediacom LLC. Fitch believes that MCCC's credit and operating profile is weak within its rating category. Overall, the ratings for MCCC reflect the company's high leverage, competitive operating environment, operating performance that lags its industry peer group, and the execution risks and capital requirements surrounding the launch of Voice over Internet Protocol, and the completion of the roll-out of advance digital services. Fitch's ratings also incorporate the company's upgraded cable plant, as well as the strong clustering of the company's subscribers. Fitch's ratings are supported by the expected revenue and revenue-generating unit diversification through the deepening penetration of digital cable and high-speed data services, as well as the introduction of Voice over Internet Protocol telephony service. On a consolidated basis, MCCC's leverage (debt to LTM EBITDA) was approximately 7.5 times (x) as of the end of the second quarter. When considering the new issuance at Mediacom Broadband, the leverage metric remains unchanged. MCCC's leverage has been trending upward as basic subscriber losses and operating cost increases have pressured EBITDA and margins. Fitch does not expect material improvement of the company's credit protection metrics during the remainder of 2005. The basic subscriber losses, which for the LTM period ended June 30, 2005 totaled approximately 45,000, are primarily attributable to competition from direct broadcast satellite providers and the roll-out of local-into-local service. Fitch expects that competitive pressures will persist; however, the impact of new market launches of local-into-local service is largely behind MCCC as approximately 92% of MCCC's subscribers are covered by local- into-local service. Fitch does believe that the company's strategy of focusing on advanced digital services, the repositioning of the digital tier, is having a positive effect on subscriber metrics. Demonstrating this effect, basic subscriber losses during the second quarter of 2005 were 64% less than the basic subscribers losses reported during the second quarter of 2004. Fitch believes that the introduction of Voice over Internet Protocol telephony service could potentially further stabilize MCCC's subscriber base. Additionally, the company added approximately 59,000 digital tier subscribers during the first half of 2005 and lower downgrades to analog service, which compares favorably with the 10,000 digital subscribers lost during the first half of 2004. Fitch notes that these strategies address the higher end of MCCC's subscriber segment. Approximately 69% of MCCC's subscriber base is analog subscribers among the highest in the industry. From Fitch's perspective, these analog subscribers represent the highest risk to be lost to competition. Steps take to convert these subscribers to the digital tier or pricing promotions offered to retain these subscribers will further pressure the company's EBITDA margin and hamper video service revenue growth. Declines in EBITDA coupled with increased capital expenditures have led to a free cash flow (determined from cash from operations less capital expenditures and dividends) deficit of approximately $5.9 million for the first half of 2005 versus positive free cash flow of approximately $31 million during the first half of 2004. Increased capital expenditures are attributable to the continued acceptance of advanced digital services as spending on customer premise equipment during the first half of 2005 has increased over 100% relative to the first half of 2004. During the first half of 2005, CPE capital spending accounts for approximately 56% of total capital expenditures, a substantial increase relative to the 37% of capital expenditures allocated to CPE during the first half of 2004. Fitch points out that the increase in success-based capital spending is positive for MCCC's credit profile and would expect incremental revenue and cash flow growth over the medium term provided that the company control subscriber churn. Fitch had expected the company to generate a modest amount of free cash flow during 2005; however, with higher-than-expected capital expenditures coupled with ongoing EBITDA margin pressure, Fitch expects the company to be break-even on a free cash flow basis during 2005. From Fitch's perspective, MCCC's liquidity position is strong and is supported by the available borrowing capacity on the bank facilities at Mediacom LLC and Mediacom Broadband LLC. Pro forma for the new issuance at Mediacom Broadband LLC, MCCC had a total of $841.7 million of borrowing capacity as of the end of the second quarter of 2005. Required bank term amortization is approximately $20.25 million during the remainder of 2005 and $48.0 million in 2006. No public debt is scheduled to mature before 2006 when the convertible senior notes become due. The Negative Rating Outlook reflects the growing business risks and the adverse impact on basic subscriber growth, video revenue growth, and EBITDA metrics attributable to the ongoing competition from direct broadcast satellite providers. From Fitch's perspective, the DBS competition has had a more pronounced effect on MCCC's operating metrics relative to MCCC's peer group. Additionally, the Outlook incorporates Fitch's expectation that the company's operating profile will continue to lag the industry peer group and that free cash flow generation during 2005 will be limited. Factors that could stabilize the Rating Outlook include the continued stabilization of basic subscriber losses, increases in incremental digital penetration, and the return of EBITDA and revenue growth rates to industry norms. Fitch would view negatively a worsening of subscriber metrics, the continued negative trend in leverage, and widening free cash flow deficits. MEHMET ADIGUZELLI: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Mehmet Adiguzelli 12 Verdona Road Newton, New Jersey 07860 Bankruptcy Case No.: 05-36868 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Turgay Adiguzelli 05-36869 Type of Business: The Debtors have interests in Halal Meat Market, Inc., Halal Packing, Inc., M&T Adiguzelli Partnership, and U.S. Lambskins & Hides, Inc. Chapter 11 Petition Date: August 22, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Stephen B. McNally, Esq. McNally & Busche, L.L.C. 40 Park Place Newton, New Jersey 07860 Tel: (973) 300-4260 Total Assets Total Debts ------------ ----------- Mehmet Adiguzelli $2,918,350 $2,985,673 Turgay Adiguzelli $2,775,150 $3,161,678 Consolidated List of Debtors' 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Estate of Ayas Adiguzelli $2,743,531 c/o Herold & Haines, PA 25 Independence Boulevard Warren, NJ 07059-6747 Attn: Halime Adiguzelli 56 Mudtown Road Wantage, NJ 07461 Suly Cosay $86,000 1 Hanover Square New York, NY Kenan Ozbay $40,000 403 Morganville Court Morganville, NJ 07751 MINA'S FUEL: Case Summary & 40 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Mina's Fuel Oil, Co., Inc. 129-01 Metropolitan Avenue Kew Gardens, New York 11415 Bankruptcy Case No.: 05-23510 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Big City Petroleum Transport Co., Inc. 05-23515 Type of Business: The Debtors sell oil. Chapter 11 Petition Date: August 22, 2005 Court: Eastern District of New York (Brooklyn) Debtors' Counsel: Richard J. McCord, Esq. Certilman Balin Adler & Hyman 90 Merrick Avenue East Meadow, New York 11554 Tel: (516) 296-7801 Fax: (516) 296-7111 Total Assets Total Debts ------------ ----------- Mina's Fuel Oil, Co., Inc. $910,688 $1,610,740 Big City Petroleum $179,164 $800,748 Transport Co., Inc. Mina's Fuel Oil, Co., Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $61,555 P.O. Box 9019 Holtsville, NY 11742-9019 Marks Paneth & Shrow $54,375 88 Froelich Farm Boulevard Woodbury, NY 11797 Conoco Phillips Co. $49,740 P.O. Box 75201 Charlotte, NC 28275 New York State Taxes $43,883 Department of Tax & Finance Tax Compliance Division Queens DO 80-02 Kew Gardens Road Kew Gardens, NY 11415 Internal Revenue Service Taxes $29,138 P.O. Box 9019 Holtsville, NY 11742-9019 GMAC Payment Processing Center $25,416 P.O. Box 830070 Baltimore, MD 21283-0070 Rini Tank & Trunk Service, Inc. $22,000 327 Nassau Avenue Brooklyn, NY 11222 MBNA America $18,596 P.O. Box 15137 Wilmington, DE 19886-5137 Bayside Fuel Oil Depot Corp. $16,782 1776 Shore Parkway Brooklyn, NY 11214 Crosstown Fuel $13,448 277 Chesterton Avenue Staten Island, NY 10306 The B& G Group $11,214 55 West Ames Court Plainview, NY 11803 AF Liberty, Inc. $9,504 195 Lauman Lane Hicksville, NY 11801 Reserve Account $9,006 P.O. Box 958256 St. Louis, MO 63195 Empire Blue Cross Blue Shield Insurance $8,885 3 Huntington Quadrangle Melville, NY 11747 Nextel Communications Telephone $5,586 P.O. Box 17990 Denver, CO 80217 Ford Credit $5,054 P.O. Box 220564 Pittsburgh, PA 15257 Petrodata $3,767 Automated Wireless Lake Hopatcong, NJ 08749 Jamaica Plumbing & Heating, Inc. $3,102 144-20 Liberty Avenue Jamaica, NY 11435 Gent Uniform Rental Corp. $3,048 5680 Merrick Road Massapequa, NY 11758 New York State Taxes $3,004 Department of Tax & Finance Tax Compliance Divison - Queens DO 80-02 Kew Gardens Road Kew Gardens, NY 11415 Big City Petroleum Transport Co., Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $53,378 P.O. Box 9019 Holtsville, NY 11742-9019 HSBC Bank USA N.A. Value of Collateral: $97,824 c/o Sankel, Skurman & $127,840 McCartin, LLP 750 Third Avenue New York, NY 10017 Key Equipment Finance Auto Loan $41,214 Payment Processing Houston, TX 12212 Internal Revenue Service Taxes $32,406 P.O. Box 9019 Holtsville, NY 11742-9019 Gallco Leasing Auto Loan $21,230 55 Leonardville Road Belford, NJ 07718 MBNA America $18,596 P.O. Box 15137 Wilmington, DE 19886-5137 Key Equipment Finance Auto Loan $18,210 Payment Processing Houston, TX 12212 AF Liberty, Inc. $12,962 195 Lauman Lane Hicksville, NY 11801 New York Oil Heating Associates $10,000 Suite 1202 New York, NY 10122 New York State $9,899 Department of Tax & Finance Tax Compliance Divison Queens DO 80-02 Kew Gardens Road Kew Gardens, NY 11415 Sid Harvey $8,747 600 Chestnut Street Garden City, NY 11530 Gallco Leasing Auto Loan $8,734 55 Leonardville Road Belford, NJ 07718 Gallco Leasing Auto Loan $6,930 55 Leonardville Road Belford, NJ 07718 American Express $4,618 P.O. Box 2855 New York, NY 10116 H.E.A.T. $4,240 35 East 21st Street New York, NY 10010 USA Heating Co, Inc. $2,944 1065 Front Street Uniondale, NY 11553 Jamaica Plumbing & Heating, Inc. $2,705 144-20 Liberty Avenue Jamaica, NY 11435 Herman Gerdes $2,411 1725 North Strong Avenue Copaigue, NY 11935 Gent Uniform Rental Corp. $2,307 5680 Merrick Road Massapequa, NY 11758 Blask Telephone Enterprises $1,929 71-34 Austin Street Forest Hills, NY 11375 MIRANT CORP: Battles PEPCO on Multi-Million Claims -------------------------------------------------- Potomac Electric Power Company asks the U.S. Bankruptcy Court for the Northern District of Texas for summary judgment on the joint and several liability of: 1. Mirant Americas Energy Marketing, LP; 2. Mirant Mid-Atlantic, LLC; 3. Mirant Potomac River, LLC; 4. Mirant Peaker, LLC; 5. Mirant Chalk Point, LLC; 6. Mirant D.C. O&M, LLC; 7. Mirant Piney Point, LLC; 8. Mirant MD Ash Management, LLC; and 9. Mirant Mid-Atlantic Services, LLC, for certain of Mirant Corporation's obligations under an Asset Purchase and Sale Agreement, specifically for that portion of PEPCO's goods and services claims arising out of the back-to-back obligations under the APSA. PEPCO asserts that pursuant to a related Assignment and Assumption Agreement dated December 19, 2000, the Mirant Entities assumed and agreed to discharge when due all "Assumed Obligations," as defined in the APSA. Jo E. Hartwick, Esq., at Stutzman Bromberg Esserman & Plifka, P.C., in Dallas, Texas, asserts that the AAA provides for the Mirant Entities to assume liability for all of Mirant Corp.'s Assumed Obligations under the APSA. The Assumed Obligations undertaken by Mirant in the APSA and assumed by the Mirant Entities in the AAA include the back-to-back obligations. Ms. Hartwick notes that the Debtors attempt to argue that by executing and entering into the AAA, the Mirant Entities did not agree to be jointly and severally liable for the Assumed Obligations, but rather only agreed to assume liability for the specific obligations that they had previously assumed from Mirant pursuant to the AAA. That argument has no merit, Ms. Hartwick points out. "It is well-settled that, in the District of Columbia, the law of which governs the AAA, when two or more parties to a contract make a promise to the same promisee, each of those parties is jointly and severally liable for the entire performance of the obligation of that promise unless a contrary intention is manifested." In the case of the Debtors and PEPCO, Ms. Hartwick contends that the clear and unambiguous language of the AAA, which evidences the parties' intent to the agreement, establishes that each Mirant Entity agreed to assume and discharge the Assumed Obligations under the APSA. Thus, each Mirant Entity is jointly and severally liable for the back-to-back obligations, which are Assumed Obligations under the APSA. Debtors Also Seek Summary Judgment The Debtors seek summary judgment from the Court with respect to their objections to PEPCO's Claim Nos. 190, 191, 6474-6484 and 6496, and Claim Nos. 8228-8237. According to Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, the PEPCO Claim Nos. 6474-6481 seek the same recovery against each of the other Mirant Parties based on the three separate alleged liabilities: 1. Goods and Services Liability for $25,554,175; 2. TPA Liability for $105,000,000; and 3. Indemnity Liability for $688,272. Claim Nos. 8228-8237 essentially seek the same recovery against each of the other Mirant Parties, except for Claim No. 8234 asserted against Mirant Corp. Mr. Phelan believes that PEPCO's claims should be disallowed: a. based on an unsustainable claim for joint and several liability; b. because they were untimely filed and do not meet the requirements of excusable neglect; and c. because PEPCO's claims seek payment of contingent unliquidated damages on alleged indemnity obligations under Section 502(e) of the Bankruptcy Code. Joint & Several Liability Issue PEPCO asserts that the AAA created the sole basis for the Debtors' joint and several liability. Mr. Phelan disagrees. Under the plain meaning of the AAA, the other Mirant Parties agreed to assume only the obligations of PEPCO as Seller, those that constitute "Assumed Obligations," Mr. Phelan explains. "The AAA itself does not define the term 'Assumed Obligations'. The term's meaning, however, is found in the APSA." According to Mr. Phelan, the AAA merely provides that to the extent there is assignment of an Assumed Obligation to an "Other Mirant Party", that "Other Mirant Party" is to be liable for it. So, at most, an "Other Mirant Party" could be severally liable for Assumed Obligations assigned to it, but not jointly and severally liable on all Assumed Obligations. Mr. Phelan notes that David L. Davis, the executive who executed the AAA on behalf of the "Other Mirant Parties" attests that the parties never once discussed joint and several liability for the "Other Mirant Parties" pursuant to the AAA, or any other document. "Moreover, had [the] joint and several liability been requested by PEPCO, it would have been refused." Mr. Phelan argues that PEPCO's attempts to rely on Section 16- 2101 of the D.C. Code Ann. to establish joint and several liability is incorrect. "Section 16-2101 addresses only the procedure PEPCO may use to recover for liability, not whether the Other Mirant Parties agreed to assume the liabilities under the Claims." Additionally, Mr. Phelan continues, PEPCO's assertion of joint and several liability is undercut by the actual structure and purpose of the APSA and Transaction Documents. "It is uncontested that Mirant Corp. was the sole Mirant entity that signed the APSA. It is also uncontested that once the assets were purchased, particular assets were transferred from Mirant Corp. to the other Mirant entities including [Mirant Americas Energy Marketing, LP], and the Other Mirant Parties. It is also without contest that to the extent an Other Mirant Party was to receive a particular asset, it would become liable for it." "PEPCO's attempt to create joint and several liability is undercut by the absence of any document that would create joint and several liability, [like] a guarantee," Mr. Phelan emphasizes. The "Other Mirant Parties" cannot be jointly and severally liable for the TPA-related liabilities because the definition of Assumed Obligation under the APSA does not include any liability pursuant to the TPAs and the TPA Settlement, Mr. Phelan points out. Mr. Phelan contends that PEPCO's contingent indemnity claims should be similarly dismissed. Objections to PEPCO's Request for Summary Judgment (a) MAGi Committee and the Ad Hoc Bondholders Committee The MIRMA Entities are not parties to the BTB Agreement nor were these entities parties to the APSA, the Official Committee of Unsecured Creditors of Mirant Americas Generation, LLC, asserts. "[The] MIRMA Entities never assumed the PPA liability because this liability could not be transferred to any of the Debtors, much less the MIRMA Entities," the MAGi Committee contends. "Instead, the MIRMA Entities participated in the [PEPCO] transaction as recipients of assets transferred to them by Mirant. Although the MIRMA Entities are parties to an assignment and assumption agreement -- a short and limited document in which [PEPCO's] remaining liability (post-APSA execution) is assumed by them -- this liability does not encompass the BTB Agreement." The BTB Agreement does not even represent a liability of PEPCO, Thomas Rice, Esq., at Cox Smith Matthews Incorporated, in San Antonio, Texas, points out. "[I]nstead, it grants to [PEPCO] the right to seek payment of liabilities relating to the PPA from Mirant and MAEM. In short, the 'joint and several liability' arguments of [PEPCO] are not supported by the documents, and have no merit." Mr. Rice adds that the APSA and related documents clearly show that the MIRMA Entities have no liability under the TPAs, the TPA Settlement or the Indemnity Agreement, and that the PEPCO Claims filed against the MIRMA Entities should be disallowed. The Ad Hoc Committee of Bondholders of Mirant Americas Generating, LLC, supports the MAGi Committee's arguments. (b) Debtors The Debtors ask the Court to deny PEPCO's motion for summary judgment and disallow PEPCO's claims in respect of the "BTB Obligations" against any estate other than Mirant Corp. and MAEM. J. Christopher Shore, Esq., at White & Case LLP, in Miami, Florida, notes that any losses from Mirant Corp.'s failure to pay sums owing under the Back-to-Back Agreement are neither "liabilities and obligations of PEPCO," nor "Assumed Obligations," under even the most rudimentary and liberal of contract interpretations. Mr. Shore adds that the amount of the BTB Obligations against Mirant Corp. and MAEM cannot be disputed, and consequently, summary adjudication on the amount of the obligations is also appropriate. "PEPCO has simply been unable to establish with any degree of certainty the claims which purportedly comprise the BTB Obligations." According to the Debtors' books and records, the BTB Obligations cannot exceed $21,071,686. Mr. Shore also clarifies that the MIRMA estates are not liable for the BTB Obligations as a matter of law. "The unambiguous terms of the one contract upon which PEPCO relies to establish liability, the AAA, makes clear that neither the MIRMA estates nor any of the Other Mirant Parties have any obligation to indemnify PEPCO for non-payment of Back-to-Back Agreement invoices. The AAA, by its express terms, requires indemnification only for 'liabilities and obligations of [PEPCO] constituting the 'Assumed Obligations.'" PEPCO's Reply to Objections The reason for the AAA is simple, Ms. Hartwick says. "Mirant, as a single entity, agreed to buy Pepco's generating assets. Thus, Pepco could look to Mirant and the pool of assets it was buying to satisfy the APSA obligations. During the preparation of the APSA documents, however, Mirant decided that it wanted to create special purpose entities that would own individual generating assets. Pepco agreed to [the] change on the understanding that the various entities would be jointly and severally liable for all APSA obligations. As a result, the AAA was executed by the Mirant Entities to preserve Pepco's ability to look into to the pool of assets being sold under the APSA to satisfy the APSA obligations. Thus, the fundamental reason for the AAA was to create joint and several liability among the Mirant Entities for the Assumed Obligations in the APSA." Ms. Hartwick points out that the parties to the APSA intended to assign the PPAs. "When the counterparties to the PPAs refused to consent to the assignment of the PPAs, Mirant became obligated under the BTB to perform [PEPCO's] liabilities and obligations under the PPAs. [PEPCO's] inability to assign the PPAs to Mirant did not prohibit or prevent Mirant from assuming all of [PEPCO's] liabilities and obligations under the PPAs. Thus, the BTB obligations, i.e., [PEPCO's] liabilities and obligations under the PPAs, are Assumed Obligations." Contrary to the arguments of the MAGi Creditors, the Assumed Obligations and the Mirant Entities' joint and several liability under the AAA include the TPAs, Ms. Hartwick insists. "In fact, the Assumed Obligations under the APSA include many post-closing obligations of [the] Debtors that were not pre-existing obligations of [PEPCO]." For these reasons, PEPCO asks the Court to grant its request for summary judgment. 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) MURRAY INC: Has Until November 8 to Remove Civil Actions -------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Tennessee, Nashville Division, extended the time within which Murray Inc. can remove all civil actions pursuant to Section 1452 of the Judiciary Procedures Code and Rule 9027 of the Federal Rule of Bankruptcy Procedure. The Debtor is focused on obtaining confirmation of its plan of reorganization. A confirmation hearing is scheduled to convene on Sept. 22, 2005. The Court approved the Debtor's Disclosure Statement on Aug. 4, 2005. Murray said the extension would afford it the opportunity to make fully informed decisions concerning removal of each prepetition lawsuit or other action from a remote court for the Middle of District of Tennessee, and will ensure that the Debtor does not forfeit its rights under Section 1452. The Debtor assured the Court that no adversarial party will be prejudiced by the extension. All actions are currently stayed. Further, in the event the Debtor requests removal of any particular action, the other party to the proceeding can seek remand pursuant to Section 1452(b). Headquartered in Brentwood, Tennessee, Murray, Inc. -- http://www.murray.com/-- manufactures lawn tractors, mowers, snowthrowers, chipper shredders, and karts. The Company filed for chapter 11 protection on Nov. 8, 2004 (Bankr. M.D. Tenn. Case No. 04-13611). Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. NEWS CORP: Chinese Unit Under Investigation by Beijing Authorities ------------------------------------------------------------------ News Corp.'s Chinese unit, Beijing Rejian Hulian Advertisement Co., also known as Beijing Hotkey Internet, is being investigated by authorities in Beijing, for broadcasting foreign programming without state permission, The Wall Street Journal reports. The Industrial and Commercial Bureau's investigation started in June. The Company might face sanctions. The Company's Chairman Rupert Murdoch offended the Chinese authorities in 1993 by saying that that satellite television would undermine totalitarian regimes. China has since prohibited individuals from owning Star TV's satellite dishes. The Company tried mending the relationship by dropping British Broadcasting Corp.'s World Service Television news from Star's broadcasts into China. BBC's news displeased Chinese officials, according to reports. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. * * * As reported in the Troubled Company Reporter on Jan. 27, 2005, Moody's Investors Service confirmed News Corporation's Baa3 senior unsecured ratings and the rating outlook was changed to positive. NORTHWESTERN CORP: Harbert, et al., May Sell 24% Stake to Montana ----------------------------------------------------------------- Harbert Distressed Investment Master Fund, Ltd., HMC Distressed Investment Offshore Manager, L.L.C., HMC Investors, L.L.C., Philip Falcone, Raymond J. Harbert, and Michael D. Luce may sell their 24.1% stake in Northwestern Corporation Montana Public Power, Inc., in its bid to buy all Northwestern's outstanding shares of stock. They are evaluating their options on how to dispose of their stake, depending on these factors: * price comparison, * timing and terms of the Montana Public Power offer to the other alternatives available including, without limitation: -- private sales, -- secondary market transactions, or -- fully underwritten public offerings for all or a portion of the holdings. The Selling Shareholders have engaged Lehman Brothers, Inc., as their financial advisor and Milbank, Tweed, Hadley & McCloy LLP as their legal advisor to advise them on, among other things, the timing and structural issues in the offer and the price in the offer relative to the stand alone value of Northwestern or the price that might be obtained through sales by other means. As reported in the Troubled Company Reporter on July 11, 2005, NorthWestern's Board of Directors has voted unanimously to reject Montana Public Power's unsolicited proposal as "not in the best interest of NorthWestern, its stockholders or the customers it serves." As reported in the Troubled Company Reporter on July 5, 2005, Montana Public Power offered to buy the Company for $1.17 billion plus the assumption of $825 million of Northwestern's debts and other financial obligations. The deal will be funded through a debt financing provided by Citigroup Global Markets Inc. A full-text copy of the Supplemented Prospectus is available for free at http://ResearchArchives.com/t/s?f2 Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/ -- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. The Court entered a written order confirming the Debtors' Second Amended and Restated Plan of Reorganization, which took effect on Nov. 1, 2004. * * * As reported in the Troubled Company Reporter on July 5, 2005, Standard & Poor's Ratings Services placed its 'BB' corporate credit rating on NorthWestern Corp. on CreditWatch with negative implications pending clarity on Montana Public Power Inc.'s June 30, 2005, offer to buy NorthWestern for $1.18 billion plus the assumption of $825 million in debt. Montana Public Power is a newly formed single-purpose entity organized to purchase NorthWestern and is ultimately composed of the Montana cities of Bozeman, Great Falls, Helena, Missoula, and Butte. "The CreditWatch listing reflects Standard & Poor's lack of information about Montana Public Power and the financing and legal structure of its bid for NorthWestern," said Standard & Poor's credit analyst Gerrit Jepsen. NRG ENERGY: Stock Repurchase Prompts Moody's to Affirm Ratings -------------------------------------------------------------- Moody's Investors Service has affirmed all of the debt ratings of NRG Energy, Inc., (NRG: B1 Corporate Family Rating (formerly known as Senior Implied Rating) following the Company's announcement to utilize cash on hand to repurchase $250 million of NRG's common stock and to use the proceeds of a $250 million privately placed convertible preferred offering to repurchase a portion of NRG's 8.0% $1.35 Billion in second lien secured notes. The rating outlook is stable. The rating affirmation reflects the continuation of strong cash flow being generated from the Company's well-placed merchant power fleet as NRG's cash from operations is expected to comfortably cover all capital needs during 2005. While unrestricted cash on hand is expected to decline by about $250 million following the completion of both transactions to around $570 million, unrestricted cash on hand is expected to grow to around $750 million during the remainder of 2005, due in large part, to the accumulation of operating cash flow from NRG's electric business. Factoring in the approximate $325 million of availability expected under its working capital facilities, NRG's total liquidity is anticipated to be in excess of $1.1 billion at year- end 2005. The rating affirmation considers the increase in consolidated leverage that will occur at NRG as adjusted consolidated leverage, which includes the $797 million of non-recourse project debt and treats NRG's preferred securities as 75% debt, is expected to be around 60%. NRG's consolidated leverage is expected to trend downward due to the repayment terms under the Company's secured term loan as well as the scheduled amortization under various project finance transactions. Additionally, collateral protection for second lien note holders should improve from the issuance of the preferred securities, as the amount of second lien debt is expected to decline by around 17% after the transaction is completed. Moody's expects NRG's funds from operations for 2005 and for the next several years to remain at or above 10% of total consolidated debt under most reasonable scenarios. Moody's also notes that while NRG's cash flow can be impacted by volatility in energy prices, the majority of its merchant energy cash flows are sourced from the Company's coal fired assets located in the New York Power Pool and in the Pennsylvania New Jersey Maryland Interconnect. These assets largely burn lower cost Western coal and the margins from these coal assets are expected to be substantially hedged for 2005 and 2006. Moreover, NRG's higher heat rate, less efficient natural gas and oil plants tend to be somewhat protected from the more efficient natural gas entrants in the near-term, as a number of these plants serve transmission constrained load pockets and are expected to continue to receive capacity payments for availability and regional reliability for the next several years. The stable rating outlook reflects Moody's expectation that NRG's cash flow generation will be relatively stable, representing at least 10% of total consolidated debt, and that leverage will decline over the next several years. Given its fairly conservative capital structure, an expected downward trend in leverage, and the its ability to generate fairly predictable cash flows, NRG's rating is well positioned in this rating category relative to other independent power producers. The rating could be upgraded if NRG continues to execute on its business plan over a sustainable timeframe including financing any growth opportunities in a reasonably conservative fashion. While the near-term prospects for a downgrade appear limited, the rating could be downgraded should growth opportunities be financed with substantial leverage or if sustainable cash flow to total debt declines to around 7 to 8% caused by NRG incurring higher debt, or operating cash flow declining due to higher than anticipated operating expenses or lower than anticipated spark spreads. Ratings affirmed include: -- Secured Term Loan due 2011 and secured Revolving Credit due 2007 rated Ba3; -- Corporate Family Rating at B1; -- 8.0% second lien secured notes due 2013 at B1; -- Preferred Stock at B3; -- Speculative Grade Liquidity (SGL) Rating of SGL-1 NVF COMPANY: Hires Richards Layton as Bankruptcy Counsel -------------------------------------------------------- NVF Company, and its debtor-affiliate, sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware for permission to employ Richards, Layton & Finger, P.A., as their bankruptcy counsel, nunc pro tunc to June 20, 2005. Richards Layton will: (a) advise Debtors of their rights, powers and duties as debtors and debtors-in-possession; (b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objection to claims filed against the Debtors' estates; (c) prepare on behalf of the Debtors all necessary motions, application, answers, orders, reports and papers in connection with the administration of the Debtors' estates; and (d) perform all other necessary legal services in connection with the Bankruptcy cases. Rebecca L. Booth, Esq., at Richards Layton, discloses that the Firms' professionals bill: Professional Hourly Rate ------------ ----------- Mark D. Collins, Esq. $485 Rebecca L. Booth, Esq. $290 Jason M. Madron, Esq. $220 Alfonse J. Lugano $145 Heidi L. Parker $140 Evergreen Retainer The Debtors tell the Court that prior to the petition date, Richards Layton was paid a total retainer of $275,000 in connection with and in contemplation of the Debtors' chapter 11 filings. The Debtors also disclosed that the retainer was not paid directly by the Company, rather by Victor Posner, the Debtors' senior secured lender and 100% equity holder. The Debtors ask the Court that the retainer paid to Richards Layton for prepetition services and disbursements be treated as an evergreen retainer to be held by the Firm as security throughout the bankruptcy proceedings until the fees are awarded by final order and payable to Richards Layton. To the best of the Debtors' knowledge, Richards Layton is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Yorklyn, Delaware, NVF Company -- http://www.nvf.com/-- manufactures thermoset composites (glass, Kevlar), vulcanized fiber, custom containers, circuitry materials, custom fabrication, and welding products. The Company along with its wholly owned subsidiary, Parsons Paper Company, Inc., filed for chapter 11 protection on June 20, 2005 (Bankr. D. Del. Case Nos. 05-11727 and 05-11728). Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets between $10 million to $50 million and estimated debts of more than $100 million. NVF COMPANY: Taps Morris Anderson as Financial Advisors ------------------------------------------------------- NVF Company, and its debtor-affiliate, sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware for permission to employ and retain Morris Anderson & Associates, Ltd., as their financial advisors. Morris Anderson will: a) act as the primary contact for all suitors interested in acquiring the Debtors' assets; b) analyze and make recommendations to the Debtors with respect to any such offers from suitors; c) provide other operational and financial advisory services deemed appropriate by the Debtors to maximize value; d) provide financial analysis related to proposed asset sales, including assistance in negotiations and attendance at hearings and testimony as necessary; e) review all financial information prepared by the Debtors, including but not limited to financial statements as of Petition Date, showing in detail all assets and liabilities; f) monitor the Debtors' activities regarding cash expenditures, receivables collection, asset sales and projected cash requirement; g) provide financial analysis of and prepare any business plans, cash flows, asset sales or plans of reorganization and accompanying disclosure statements; h) provide assistance in communications with the Court and Office of the United States Trustee, including preparation analysis and reports as may be requested or required by parties-in-interest; i) attend meetings and communicate with any statutory committee appointed in theses cases, secured creditors, their attorneys and consultant, federal and state authorities, as necessary; j) review the Debtors' periodic operating and cash flow statement, provide expert testimony regarding work performed as may be requested; k) review the Debtors' books and records for various transactions, including related party transactions, potential preferences, fraudulent conveyances and other potential prepetition investigations; l) review and analyze proposed transactions for which the Debtors seek Court approval; and m) provide other financial advisory and consulting services as may be requested by the Debtors or their counsel to facilitate these chapter 11 cases. Robert F. Troisio, managing director at Morris Anderson, discloses that the Firms' professionals bill: Professional Hourly Rate ------------ ----------- Robert F. Troiso $300 Raymond Prztula $225 David Paddy $250 Designation Hourly Rate ----------- ----------- Analysts $175 - $225 Clerical Staff $45 Evergreen Retainer The Debtors tell the Court that prior to the petition date, Morris Anderson was paid a total retainer of $35,000 in connection with and in contemplation of the Debtors' chapter 11 filings. The Debtors also disclosed that the retainer was not paid directly by the Company, rather by Victor Posner, the Debtors' senior secured lender and 100% equity holder. The Debtors ask the Court that the retainer paid to Morris Anderson for prepetition services and disbursements be treated as an evergreen retainer to be held by the Firm as security throughout the bankruptcy proceedings until the fees are awarded by final order and payable to Morris Anderson. Mr. Troiso assures the Court that the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Yorklyn, Delaware, NVF Company -- http://www.nvf.com/-- manufactures thermoset composites (glass, Kevlar), vulcanized fiber, custom containers, circuitry materials, custom fabrication, and welding products. The Company along with its wholly owned subsidiary, Parsons Paper Company, Inc., filed for chapter 11 protection on June 20, 2005 (Bankr. D. Del. Case Nos. 05-11727 and 05-11728). Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets between $10 million to $50 million and estimated debts of more than $100 million. OPTICAL DATACOM: Trustee & Bank Group Wants Claim Disputes Settled ------------------------------------------------------------------ Frederick B. Rosner, Esq., the Chapter 11 Trustee for Optical DataCom, LLC's estate, asks the U.S. Bankruptcy Court for the District of Delaware to approve a settlement agreement with the U.S. Bank National Association, First Bank, GE Corporate Financial Services, Inc., IBM Credit LLC and Wachovia Bank National Association. The agreement, dated July 27, 2005, seeks to resolve disputes between the Debtor and the lenders. The parties agree to resolve all disputes to avoid incurring additional expenses for litigation. Under the settlement agreement: 1) the Bank Group will release the Trustee and the Debtor's estate from the obligation under a court-approved agreement to remit to the Bank Group the amount of $250,000; 2) the proceeds of any recovery based on the contract claims of the Debtor's estate against large defendants will not be required to be paid to the Bank Group on account of their lien but will instead be distributed on a pro-rate basis for payment of allowed unsecured claims in the case, including, but not limited to the allowed claims of the Bank Group and U.S. Bank; 3) subject to a common interest agreement, the Bank Group agrees to the following: i) share certain expert work product relating to a forensic accounting report by Boston & Associates, P.C. ii) consent to the Trustee's use of members of Morris-Anderson as potential expert witnesses and consultants with regard to legal actions against persons other than the Bank Group iii) make available to the Trustee for a period of time and subject to certain conditions documents relating to due deligence on the loan made by the Bank Group to the Debtor and representations made to the Bank Group as to asset values in connection with the making of the loan iv) make available to the Trustee an individual at each Bank Group member organization that has knowledge regarding documents produced, to the extent such a person currently exists within the member organization; 4) the Trustee and the Debtor's estate are releasing the Bank Group Releases from any and all claims and the adversary proceeding shall be dismissed with prejudice; 5) the Bank Group is releasing the Trustee and the Trustee's counsel for any claims arising out of their service to date as Trustee and Trustee's counsel in the Debtor's case; 6) The Bank Group will hold an allowed unsecured claim in the Debtor's case in the amount of $35,000,000 less the aggregate amount of all payments, if any, they may receive after the date of the settlement agreement on account of the proceeds' receipt of any remaining collateral; 7) U.S. Bank will hold an allowed unsecured claim in the Debtor's case in the amount of $10,918,611.12; and 8) the expense of the forensic accounting report shall constitute an administrative expense under section 503(b)(3)(d) in favor of the documentation agent for the Bank Group and will be paid solely out of the first proceeds of any litigation recoveries from any of the large defendants. If the Court approves the settlement agreement, it will result in additional funds being available to the estate. Optical Datacomm, LLC, now known as OODC LLC, supplies network integration services solutions and design and manufactures custom connectionized fiber optic, copper and coaxial cable assemblies to telecommunication companies worldwide. The Company filed for chapter 11 protection on November 17, 2001. H. Jeffrey Schwartz, Esq. at Benesch, Friedlander, Coplan & Aronoff, LLP and Joel A. Waite, Esq. at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. In its petition, the Company listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. O'SULLIVAN IND: GE Capital Waives Default Under $40 Mil. Revolver ----------------------------------------------------------------- In exchange for a $50,000 Amendment Fee and a promise to deliver a preliminary comprehensive restructuring plan by Sept. 2, 2005, O'Sullivan Industries, Inc., reached an agreement with General Electric Capital Corporation to amend its $40 million revolving line of credit agreement. "This is another positive milestone in our continuing financial restructuring process," said Bob Parker, President and Chief Executive Officer of O'Sullivan. "The amendment provides us continued access to working capital funds under the credit agreement." Pursuant to the amendment, GECC has agreed to continue to make available funding within terms of the borrowing base and other conditions and not to enforce any event of default in connection with O'Sullivan's failure to pay interest on the 10.63% senior secured notes due 2008 within the applicable grace period, consistent with the terms and conditions of the amendment. As previously announced, O'Sullivan recently entered into a forbearance agreement with the controlling holders of such senior secured notes. O'Sullivan also needs to host a conference call with GECC no later than September 12, 2005, to talk about the preliminary plan and inform GECC about the any preliminary feedback it receives from the holders of the Senior Notes regarding the Preliminary Plan. Not later than October 3, 2005, O'Sullivan must deliver a final plan to GECC that has either been agreed upon by the holders of the Senior Notes or can restructure the balance sheet without the Noteholders' consent. O'Sullivan Industries Holdings, Inc. (OTC Bulletin Board: OSULP) -- whose March 31, 2004 balance sheet shows a shareholders' deficit of $154 million -- is a leading manufacturer of ready-to- assemble furniture. * * * As reported in the Troubled Company Reporter on July 20, 2005, Moody's Investors Service downgraded O'Sullivan Industries' Senior Secured Notes to Ca from Caa1 following O'Sullivan's announcement on July 15, 2005, that it will utilize the-30 day grace period for its $5.3 million interest payment on the secured notes. At the same time Moody's downgraded O'Sullivan's corporate family rating (previously known as the senior implied rating) to Caa3 from Caa1 and downgraded the company's senior subordinated notes rating to C from Ca and affirmed the senior discount notes rating at C. Moody's said the outlook is negative. OTIS SPUNKMEYER: Moody's Rates Proposed $170 Million Loan at B1 --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Otis Spunkmeyer, Inc.'s proposed new $170 million senior secured term loan and affirmed the company's existing senior secured credit facility ratings at B1 and its corporate family rating at B1. Proceeds from the new $170 million term loan will be used to refinance Otis' existing $150 million term loan ($132.3 million outstanding) and for general corporate purposes, including possible acquisitions. The outlook remains stable. Moody's assigned these ratings: 1) Proposed $170.0 million senior secured term loan, maturing 2012 -- B1 Moody's affirmed these ratings: 1) $22.5 million senior secured revolving credit, maturing 2008 -- B1 2) $150 million senior secured term loan, maturing 2011 --B1 3) Long term corporate family rating -- B1 Upon closing of the proposed new $170 million term loan, Moody's will withdraw the ratings of the existing $150 million bank facilities. Otis's ratings are supported by its dominant position in the foodservice frozen cookie dough category, where it enjoys a leading and growing market share, backed by an established distribution network and longstanding relationships with key foodservice providers. In the more fragmented foodservice muffin market, the company recently has improved its market position, currently maintaining a #2 share behind much larger Sara Lee. Frozen cookie dough and foodservice muffin volume demand has increased steadily over the past 20 years although industry volume growth has moderated in recent years due to recent shifts in dietary trends away from carbohydrates. Since 2000, Otis has generated compound annual sales growth of about 9% by investing in experienced sales and marketing staff, and by focusing on top 20 customers and key product segments. Otis' ratings are limited by: * its narrow product line (roughly 70% cookies, 25% muffins and 5% other); * modest revenue base ($305 million in net sales in FY04); * high leverage (greater than 4 times debt/EBITDA); and * a weak balance sheet (negative tangible net worth) primarily due to the accounting effect of Code Hennessy & Simmons' purchase of the company in 2002. The company has high operation leverage, reflecting its 100% leased manufacturing and distribution facilities. Given the company's consistent growth over the years, operating leverage has contributed to margin improvement as fixed costs are spread across a growing volume base. Gross margin percentage has improved by approximately 200 basis points since 2000. Otis operates two manufacturing plants in eastern US (Pennsylvania and South Carolina) and one facility in California near the company's headquarters in San Leandro. As the company continues to expand its business with larger, more demanding customers such as Wal- Mart and Subway, Otis likely will benefit from additional production capacity that is centrally located. The replacement cost of a new production facility is approximately $6 million. At closing, the proposed new term loan would provide an additional $38 million of cash on hand, which the company may use for general corporate purposes, including acquisitions. Moody's believes that the risk of an aggressive acquisition is mitigated by the relatively small transaction size that could be consummated with such funds, reasonably tight covenants, and evidence that management has approached acquisitions prudently in the past. Last year, the company elected not to complete a contemplated $10MM acquisition following its due diligence process, and ultimately returned funds committed to the transaction back to the banks. The proposed term loan contains a feature that would allow the company to expand the loan by up to $50 million subject to lender approval. The company presumably could use this incremental amount to refinance its $44.7 million high coupon subordinated notes that are callable next year. Although such a transaction would have no impact on debt levels, it would result in a material improvement in total coverage and cash flow and remove all the junior debt from the company's capitalization. The stable ratings outlook reflects Moody's expectation of consistent sales and cash flow generation. Moody's expects free cash flow after capital spending to enable a modest pace of debt reduction, assuming no aggressive acquisitions or unusually large working capital increases. The ratings could be pressured if negative sales trends develop with key customers such as Subway, operating margins become compressed by increased competitive pressures, or debt/EBITDA increases above 5.0 times. Ratings upside over the near term is limited given the company's current leverage, narrow product focus and modest revenue base. However upside pressure would build if debt/EBITDA is maintained below 4.0 times and the company continues to grow and diversify its business at a measured pace. The proposed new $170 million senior secured term loan and the existing $22.5 million revolving credit will be guaranteed by Otis' subsidiaries and will have first priority liens on all tangible and intangible assets and capital stock of Otis and its subsidiaries. The $22.5 million revolver matures in 2008. The maturity of the $170 million term loan will be the earlier of 7 years after the closing date, or 6 months prior to the maturity of the $44.7 million subordinated notes, currently December 2011. Thus, while the stated maturity date of the term loan will be in 2012, if the existing subordinated notes remain outstanding, the term loan will mature on June 30, 2011. Otis Spunkmeyer is a leading frozen sweet baked goods producer. The company distributes over 200 million pounds of frozen cookie dough and muffins to over 120,000 customers across North America. The company is privately held and has headquarters in San Leandro, California. Its fiscal 2004 net revenues were approximately $305 million. OWENS-ILLINOIS: Names Albert Stroucken to Board of Directors ------------------------------------------------------------ Owens-Illinois, Inc., (NYSE: OI) appointed Albert P.L. Stroucken to serve on the Company's Board of Directors, effective Aug. 19. Mr. Stroucken will serve on the Compensation Committee and Nominating/Corporate Governance Committee. He has been appointed to fill the vacancy created by the early retirement from the Board of James H. Greene, Jr. Mr. Stroucken's term will expire May 2007. Since 1999, Mr. Stroucken has served as a Chairman of the Board of H.B. Fuller Company, and as president and CEO since 1998. H.B. Fuller Company manufactures adhesives, sealants, coatings, paints and other specialty chemical products. Prior to joining H.B. Fuller, he was general manager of the Inorganics division of Bayer AG, after serving as executive vice president and president of the Industrial Chemicals division of the Bayer Corporation from 1992 through 1997. He joined Bayer AG in Leverkusen, Germany, in 1969. Mr. Stroucken is a member of the Board of Directors of Baxter International, Inc., a medical devices, pharmaceuticals and biotechnology company. He also serves on the Board of Directors for the H.B. Fuller Company Foundation and the Twin Cities United Way. "Al is a great addition to the O-I Board," said Steve McCracken, O-I chairman and chief executive officer. "He brings a strong international perspective, as well as significant global operational leadership experience." Owens-Illinois -- http://www.o-i.com/-- is the largest manufacturer of glass containers in the world, with leading positions in Europe, North America, Asia Pacific and Latin America. O-I is also a leading manufacturer of healthcare packaging and specialty closure systems. * * * As reported in the Troubled Company Reporter on March 2, 2005, Fitch Ratings has affirmed the ratings for Owens-Illinois (NYSE: OI) and revised the Rating Outlook to Positive from Stable. Current ratings are: -- Senior Secured Credit Facilities 'B+'; -- Senior Secured Notes 'B'; -- Senior Unsecured Notes 'CCC+'; -- Convertible Preferred Stock 'CCC'. At the same time, Fitch assigned a 'CCC' rating to OI's senior subordinated notes. OI assumed BSN's senior subordinated debentures, 10.25% due 2009 and 9.25% due 2009, at the time of the BSN acquisition. During the fourth quarter of 2004, OI's wholly owned subsidiary Owens-Brockway issued 6.75% senior unsecured notes due 2014 to refinance a large portion of BSN's subordinated notes and to repurchase a substantial portion of OI's 7.15% notes due 2005. The ratings affect approximately $5.8 billion of debt and preferred securities. PC LANDING: Wants Scope of Pachulski Stang's Services Expanded -------------------------------------------------------------- PC Landing Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to expand the scope of Pachulski Stang Ziehl Young Jones & Weintraub, P.C.'s services to enable them to retain experts in connection with confirmation issues that may arise in the chapter 11 cases. As previously reported in the Troubled Company Reporter on July 19, 2005, the Honorable Peter J. Walsh approved the Debtors' Disclosure Statement explaining the Debtors' First Amended Joint Plan of Reorganization. Tyco Telecommunications (US) Inc. raised objections to the Disclosure Statement that it ultimately agreed to continue to confirmation. The Debtors anticipate that other parties-in- interest may object to confirmation for various reasons. As a result, the Debtors may require the assistance of experts to address the confirmation issues that may be raised by an objecting party. The Debtors explain that allowing the Firm to retain the experts instead of them will preserve any work product created by experts in the event that the Debtors determine not to use experts in any contested confirmation proceeding. The Debtors further ask to allow Pachulski Stang to include the fees and expenses of any experts as expenses in the Firm's fee applications and not to require them or the experts to produce any time to detail in connection with the experts' services except to the Court and the office of the U.S. Trustee to protect the integrity of the Firm's work product. Headquartered in Dallas, Texas, PC Landing Corporation and its debtor-affiliates, own and operate one of only two major trans- Pacific fiber optic cable systems with available capacity linking Japan and the United States. The Debtor filed for chapter 11 protection on July 19, 2002 (Bankr. Del. Case No. 02-12086). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets of over $10 million and estimated debts of more than $100 million. PHARMACEUTICAL FORMULATIONS: Bid Protocol for Asset Sale Approved ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware approved the bidding procedures in Pharmaceutical Formulations' proposed sale of its assets to Leiner Health Products L.L.C. The Court also approved an expense reimbursement (of up to $375,000) and a $500,000 break-up fee for Leiner. Leiner Health offers the buy the Debtor's assets for $23 million. Pursuant to the bidding procedures order, any objections to the sale must be filed by September 13, 2005. Any competing bids must be submitted by September 14, 2005. If there are competing bids, an auction will be held on September 19, 2005. The court hearing to approve any sale is scheduled for September 20, 2005. A full-text copy of the Asset Purchase Agreement is available for free at http://ResearchArchives.com/t/s?ef Headquartered in Edison, New Jersey, Pharmaceutical Formulations -- http://www.pfiotc.com/-- is a publicly traded private label manufacturer and distributor of nonprescription over-the- counter solid dose generic pharmaceutical products in the United States. The Company filed for chapter 11 protection on July 11, 2005 (Bankr. Del. Case No. 05-11910). Matthew Barry Lunn, Esq., and Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtor in its chapter 11 proceeding. As of Apr. 30, 2005, the Debtor reported $40,860,000 in total assets and $44,195,000 in total debts. PHILLIPS RESTAURANT: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Phillips Restaurant Corporation 2817 Regal Road Plano, Texas 75075 Bankruptcy Case No.: 05-44430 Type of Business: The Debtor offers restaurant management and consultancy services. Chapter 11 Petition Date: August 19, 2005 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Michael B. Suffness, Esq. Michael B. Suffness P.C. 5201 West Park Boulevard, Suite 100 Plano, Texas 75093 Tel: (972) 985-1331 Fax: (972) 985-1315 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service $600,000 P.O. Box 21126 Philadelphia, PA 19114 S & A Restaurant Corp. Security Agreement $271,781 P.O. Box 974183 Value of security: Dallas, TX 75397 $10,000 USRP-CNL $89,149 12440 Inwood Road, #300 Dallas, TX 75244 State Treasurer $62,768 Protea Real Estate $50,440 USRP Funding 2001-A, L.P. $30,937 Sysco Food Service of Dallas $19,402 Kovak and Co. $19,000 Caddo SH Sales & Use Tax $13,399 Commission Kenneth Wall & Assoc., Inc. $12,000 Ruffino Meats & Food Service $11,173 Santa Maria Produce $9,610 Sysco Food Service of Austin $8,021 Sysco-Watson $6,716 North LA Security Service, Inc. $5,946 WF/Plaza Parkway Ltd. $5,691 Texas Linen Company, Ltd. $5,282 Angelica Textile Service $4,889 B.B. Taylor Wholesale $4,386 Distributor TXU Energy $4,376 PILLOWTEX: Committee Seeks to Recover Transfers from 120 Creditors ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Pillowtex Corporation filed complaints seeking to avoid certain preferential and fraudulent transfers made by the Debtors and to recover the value of the Transfers from 120 creditors. Bonnie Glantz Fatell, Esq., at Blank Rome LLP, in Wilmington, Delaware, tells the Court that Pillowtex made the Transfers to, or for the benefit of, the Defendants on or within 90 days before the Petition Date. On June 6, 2005, through a letter, the Creditors Committee requested the Creditors to return the Transfers. However, Ms. Fatell says, the Creditors have not complied. The Creditors Committee explains that the Transfers were made for or on account of antecedent debts owed to the Creditors and were made while Pillowtex was insolvent. The Transfers enabled the Creditors to receive more than they would receive if: (a) Pillowtex's cases were under Chapter 7 of the Bankruptcy Code; (b) the Transfers had not been made; and (c) they received payment on account of the debt paid by the Transfers to the extent provided by the provisions of the Bankruptcy Code. Accordingly, Ms. Fatell asserts, the Transfers constitute preferential transfers, which should be avoided and recovered from the Creditors pursuant to Sections 547 and 550 of the Bankruptcy Code. In the event that a creditor asserts that one or more of the Transfers were made on behalf of a Debtor other than the one that was owed the corresponding antecedent debt, the Creditors Committee asserts that: (1) The Transfers constitute transfers of an interest of Pillowtex in property; (2) Pillowtex received less than a reasonably equivalent value in exchange for the Transfers; and (3) Pillowtex: (i) was insolvent on the date that the Transfers were made, or became insolvent as a result of the Transfers; (ii) was engaged or was about to engage in a business or a transaction for which any property remaining with Pillowtex was an unreasonably small capital, or (iii) intended to incur, or believed that it would incur, debts that would be beyond its ability to pay as the debts matured. Accordingly, the Transfers also constitute fraudulent transfers, which should be avoided pursuant to Section 548 of the Bankruptcy Code and are recoverable under Section 550. For these reasons, the Creditors Committee asks the Court to: (a) authorize avoidance of the Transfers; (b) enter judgment in its favor in an amount equivalent to the Transfers plus interest at the legal rate from the date of the Transfers, together with all costs of the Actions; and (c) disallow any and all of the Creditors' claims against the Debtors until the Transfers are repaid to the Debtors pursuant Section 502(d) of the Bankruptcy Code. Cases Reassigned to Judge Lindsey Judge Walsh assigns the preference adversary proceedings commenced by the Committee to Judge Paul B. Lindsey. A list of the cases is available for free at: http://bankrupt.com/misc/pillowtex_reassigned_advproc_list.pdf Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) RCN CORP: Has Until Sept. 16 to Answer ERISA Class Action Suit -------------------------------------------------------------- On May 16, 2005, participants in the RCN Savings and Stock Ownership Plan filed a consolidated class action complaint before the United States District Court for the District of New Jersey, naming RCN Corporation and certain of its current and former directors, officers, employee administrators and managers, as well as Merrill Lynch Trust Company, FSB, as defendants. The Class Action Complaint alleges violations of the Employee Retirement Income Security Act of 1974. The plaintiffs assert that the defendants breached their fiduciary duties to the participants by failing to "prudently and loyally" manage the Plan's investment in RCN securities by: -- continuing to offer RCN common stock as a plan investment option for participant contributions; -- utilizing RCN securities for employer contributions to the Plan; and -- maintaining the Plan's pre-existing heavy investment in RCN securities when the stock was no longer a prudent investment for the Plan, running directly counter to the express primary purpose of the Plan which was to help provide for participants' retirement. Defendants charged with the selection and monitoring of other Plan fiduciaries failed to (i) provide certain fiduciaries with material information regarding the imprudence of investing Plan assets in RCN securities, and (ii) remove certain fiduciaries whose performance was deficient and cause damage to the Plan and its participants. Certain defendants also failed to communicate complete and accurate information to the Plan participants regarding the Plan's investment in RCN securities sufficient enough to advise participants of the true risks of investing their retirement savings in RCN stock. The plaintiffs are Stephanie Thomas, Harold Hill, Debra K. Craig, Arnold Prashad, Scott Grassi and Robert M. Maguire. The plaintiffs seek recovery of unspecified money damages for the benefit of a purported class of participants and beneficiaries of the Plan from January 12, 1999, to December 21, 2004, as a result of the defendants' breaches. The other defendants include: 1. The Compensation Committee of the Board of Directors of RCN Corporation; 2. David C. McCourt, former RCN chairman and CEO; 3. Bruce C. Godfrey, RCN Board member; 4. Michael J. Mahoney, former RCN President, Chief Operating Officer and Board member; 5. Michael A. Adams, former RCN Chief Strategy Officer and Board member; 6. Timothy J. Stoklosa, RCN CFO until May 2002 and Executive Vice President from May 2002 to February 2004, and former member of the Compensation Committee; 7. Eugene Roth, Esq., chairman of the Compensation Committee until 2003; 8. Alfred Fasola, former member of the Board and the Compensation Committee; 9. Michael B. Yanney, former member of the Board and the Compensation Committee; 10. Theodore H. Schell, former chairman of the Compensation Committee; 11. Michael E. Katzenstein, Esq., member of the Board and the Compensation Committee; 12. Daniel Tseung, member of the Board and the Compensation Committee; and 13. The RCN 401(k) Administrative Committee. The Complaint is pending before Judge Stanley R. Chesler and logged under Master File No. 04-CV-5068 (SRC). No motion for class certification has been filed by the plaintiffs. Pursuant to a Bankruptcy Court order in April 2005, the plaintiffs may enforce any judgment obtained against RCN solely against any applicable insurance companies and only up to limits of any applicable insurance coverage, to the extent coverage is available. The plaintiffs are represented by: * Trujillo Rodriguez & Richards, LLP, in Haddonfield, New Jersey; * Kantrowitz, Goldhamer & Graifman, Esqs., in Montvale, New Jersey; * Sarraf Gentile, LLP, in New York; and * Proskauer Rose LLP, in Newark, New Jersey. Defendants Given More Time to Respond The U.S. District Court for the District of New Jersey approves a stipulation among the adversary parties extending the defendants time to respond to the complaint until Sept. 16, 2005. RCN Corporation and the other Defendants need additional time to respond because certain individual defendants have recently retained separate counsel. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect on December 21, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, 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 $1,486,782,000 in assets and $1,820,323,000 in liabilities. The Debtor consummated its plan of reorganization and formally emerged from Chapter 11 protection. The plan, confirmed on Dec. 8, 2004, by Judge Robert Drain of the Bankruptcy Court in New York, converted approximately $1.2 billion in unsecured obligations into 100% of RCN's new equity, and eliminated approximately $1.8 billion in preferred share obligations. (RCN Corp. Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) RELIANCE GROUP: Still Unable to File Financial Reports with SEC --------------------------------------------------------------- Paul W. Zeller, President and CEO of Reliance Group Holdings, Inc., informs the Securities and Exchange Commission in a Form 12b-25 filing on Aug. 8, 2005, that RGH has been unable to complete the work necessary to issue audited financial statements for fiscal year 2000 or any subsequent fiscal year. Unless this work is completed and an audit opinion is issued, it will not be possible to prepare a Form 10-Q for the fiscal quarter ended June 30, 2005. Mr. Zeller notes that RGH has still not filed these SEC-required reports over the last 12 months: -- Form 10-Q for the fiscal quarter ended: * June 30, 2004; * September 30, 2004; and * March 31, 2005; and -- Form 10-K for the fiscal year ended December 31, 2004. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAMSHER FLIGHT: Voluntary Chapter 11 Case Summary ------------------------------------------------- Lead Debtor: Samsher Flight Management, Inc. 22 Waugh Drive Houston, Texas 77007 Bankruptcy Case No.: 05-42963 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Advanced Rehabilitation & Pain Management, Inc. 05-42958 Orthopedic Pain Management, PA 05-42962 Type of Business: The Debtors' affiliate, Mohamed Shaffin Ali, filed for chapter 11 protection on August 15, 2005, and the case is pending before Hon. Wesley W. Steen (Bankr. S.D. Tex. Case No. 05-42695). Chapter 11 Petition Date: August 19, 2005 Court: Southern District of Texas (Houston) Debtors' Counsel: Dean W. Ferguson, Esq. Adams & Reese LLP 1221 McKinney, Suite 4400 Houston, Texas 77010 Tel: (713) 308-0385 Fax: (713) 652-5152 Estimated Assets Estimated Debts ---------------- --------------- Samsher Flight Management, $0 to $50,000 $1 Million to Inc. $10 Million Advanced Rehabilitation & $0 to $50,000 $0 to $50,000 Pain Management, Inc. Orthopedic Pain Management, $0 to $50,000 $0 to $50,000 PA Lists of the Debtors' Largest Unsecured Creditors were not available at press time. SPIEGEL INC: RATKL Demands $1.3 Mil. Administrative Claim Payment ----------------------------------------------------------------- On Dec. 31, 2004, Ronald A. Katz Technology Licensing, L.P., filed an administrative expense claim against Spiegel, Inc., and its debtor-affiliates on account of infringement of certain of RAKTL's intellectual property. RATKL is the portfolio holder of over 50 U.S. patents, 17 pending applications, and several foreign equivalents, totaling around 3,000 issued and pending claims. These patents represent pioneering work in the field of computer telephony. Michael S. Kogan, Esq., at Ervin, Cohen & Jessup LLP, in Beverly Hills, California, alleges that the Debtors have provided services for their business operations that infringe on various RATKL Patents. Since 2000, RATKL has given the Debtors infringement notice through various correspondences. Mr. Kogan tells Judge Lifland that since the Petition Date, the Debtors have continued to infringe on the RATKL Patents and accrue royalties owed to RATKL through June 21, 2005. The Debtors have also proceeded to utilize the technologies protected by the RAKTL Patents in their everyday business operations without RATKL's permission, and that use constitutes an "actual and necessary expense of the Debtors' bankruptcy estates." Based on the calculation of the Administrative Claim, RATKL attests that the amount of damages from the Postpetition Infringement is $1,312,684. Mr. Kogan asserts that the royalties due from the Debtors' to RATKL for infringement on the RATKL Patents should be divided into prepetition claims and postpetition administrative expenses based on the timing of the Debtors' infringing use of the RATKL Patents. The royalties due from the Postpetition Infringement began to accrue on the day after the Petition Date and can be accorded first priority status separate from any claim made by RATKL for royalties stemming from the Debtors' prepetition infringement. Despite the infringement notice of the RATKL Patents, Mr. Kogan notes that the Debtors never secured a license and never paid any royalties to continue use of the Protected Technology. Accordingly, RATKL asks the Court to compel the Debtors to immediately pay $1,312,684, for administrative expenses incurred by the Postpetition Infringement. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. The Court confirmed the Debtors' Modified First Amended Joint Plan of Reorganization on May 23, 2005. Impaired creditors overwhelmingly voted to accept the Plan. (Spiegel Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) SR TELECOM: 99.3% of Noteholders Swap 8.15% Notes for 10% Bonds --------------------------------------------------------------- SR Telecom Inc. (TSX: SRX; Nasdaq: SRXA) reported the expiration of its offer to exchange its outstanding CDN$71 million 8.15% debentures due August 31, 2005, and accrued interest of approximately CDN$4.8 million into new 10% Secured Convertible Debentures due October 15, 2011. The offer expired at 5:00 p.m., Eastern Time, on August 18, 2005. The exchange offer occurred as part of the Corporation's recapitalization plan, announced in May 2005. At that time, SR Telecom closed an operating credit facility of USD$39.6 million with certain holders of its 8.15% Debentures, including certain funds and accounts managed by DDJ Capital Management, LLC. In addition, Inter-American Development Bank and Export Development Canada agreed to restructure the terms of the loans to SR Telecom's Chilean subsidiary, Comunicacion rurales y telefonia, and postpone maturity for three years from the date of the implementation of the restructuring. Pursuant to the exchange offer, CDN$70.5 million in principal amount of the 8.15% Debentures were tendered, representing approximately 99.3% of the outstanding 8.15% Debentures. In exchange, the Corporation will issue CDN$75.3 million of 10% Secured Convertible Debentures to those holders of 8.15% Debentures who tendered at the closing on account of principal and interest. Funds and accounts managed by DDJ Capital Management, LLC will hold approximately 33% of the outstanding 10% Secured Convertible Debentures upon consummation of the exchange offer. In addition, under the exchange offer, SR Telecom received the required consents to amend the terms of the 8.15% Debentures to, among other things extend the maturity thereof to coincide with the maturity date of the 10% Secured Convertible Debentures and remove certain covenants. Holders of 8.15% Debentures who did not tender under the exchange offer will continue to hold such debentures. Interest on the 10% Secured Convertible Debentures is payable in cash or in kind by the issuance of additional 10% Secured Convertible Debentures, at the option of SR Telecom. The 10% Secured Convertible Debentures will be convertible into common shares at a rate of approximately 4,606 common shares per CDN$1,000 in principal amount of 10% Secured Convertible Debentures representing a conversion price at closing of approximately $0.217 per common share such that the outstanding principal amount of all 10% Secured Convertible Debentures are convertible into 95.2% of the fully diluted common shares of the Corporation upon closing of the exchange offer. On the earlier of the business day following the record date for a rights offering being contemplated by the Corporation and Nov. 30, 2005, CDN$10 million in principal amount of the 10% Secured Convertible Debentures will be converted into approximately 46,060,892 common shares of the Corporation, and immediately after the issuance, those holders of 10% Secured Convertible Debentures that were converted will hold approximately 72% of the common shares of the Corporation on an undiluted basis. The exchange offer was launched on July 21, 2005, and was subject to terms and conditions set forth in a private offering memorandum and consent solicitation statement sent to holders of 8.15% debentures. About DDJ Capital DDJ Capital Management, LLC is a boutique investment manager specializing in private equity and debt financings, as well as high yield and special situations investing. Founded in 1996, the Wellesley, Massachusetts based investment firm currently manages approximately $3 billion on behalf of 78 institutional clients. About SR Telecom SR TELECOM (TSX: SRX, Nasdaq: SRXA) designs, manufactures and deploys versatile, Broadband Fixed Wireless Access solutions. For over two decades, carriers have used SR Telecom's products to provide field-proven data and carrier-class voice services to end- users in both urban and remote areas around the globe. SR Telecom's products have helped to connect millions of people throughout the world. * * * As reported in the Troubled Company Reporter on May 18, 2005, Deloitte & Touche LLP raised substantial doubt about SR Telecom Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended December 31, 2004. Factors that prompted the going concern opinion include: -- the Company's losses for the current and prior years, -- negative cash flows, -- significant deficiency in working capital, -- reduced availability of supplier credit, -- breach of a number of its long-term debt covenants and undertakings, and -- lack of operating credit facilities. Deloitte said the realization of assets and the discharge of liabilities in the ordinary course of business are subject to significant uncertainty. The Company's $71 million debentures became due and payable on April 22, 2005. Currently the Corporation is involved in activities aimed at refinancing these debentures in whole or in part or extending their maturity date. If these negotiations are unsuccessful, the Corporation would need to look at alternative methods to re-capitalize its balance sheet. SR Telecom is also attempting to raise additional working capital to operate the business. Management's on-going plans with respect to the significant uncertainties Deloitte identified are: 1) continuing discussions with its lenders in respect of its non-compliance with its debt covenants, repayment terms, waivers and/or modifications thereto; 2) seeking of additional financing; 3) continuing the restructuring of the operations to reduce expenses, and; 4) securing new sales orders. The Company's continuation as a going concern is dependent upon, among other things: -- the continuing support of the Company's lenders (including the deferral of scheduled principal repayments), -- attaining a satisfactory sales level; -- the support of its customers; -- continued sales to the Corporation's customers; -- a return to profitable operations; and -- the ability to generate sufficient cash from operations, financing arrangements and new capital to meet its obligations as they become due. These matters are dependent on a number of items outside of the Corporation's control and there is substantial uncertainty about the Corporation's ability to successfully conclude on the matters. Should it be unsuccessful in these efforts, the Company said it may be obliged to seek protection from its creditors. As reported in the Troubled Company Reporter on Jan. 24, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on wireless communications equipment provider, SR Telecom, Inc., to 'CC' from 'CCC'. At the same time, the senior unsecured debt rating on the company's C$71 million debentures due April 22, 2005, was lowered to 'CC' from 'CCC'. In addition, the ratings were placed on CreditWatch with negative implications. A 'CC' rating indicates that the company's obligations are currently highly vulnerable to nonpayment. The ratings actions and CreditWatch placement follow the Montreal, Quebec-based company's announcement concerning its refinancing efforts as well as revised financial guidance. STANDARD AERO: Extends Sr. Sub. Debt Exchange Offer Until Friday ---------------------------------------------------------------- Standard Aero Holdings, Inc., has extended the expiration date of its offer to exchange up to $200 million in aggregate principal amount of its registered 8-1/4% senior subordinated notes due 2014 for its outstanding unregistered 8-1/4% senior subordinated notes due 2014. The exchange offer is now scheduled to expire at 5:00 p.m. on Friday, Aug. 26, 2005. As of the close of business on Aug. 19, 2005, $200 million in aggregate principal amount of Standard Aero Holdings, Inc.'s outstanding unregistered 8-1/4% senior subordinated notes due 2014 had been tendered to the exchange agent by the holders thereof. The exchange agent for the exchange offer is Wells Fargo Bank, National Association, Corporate Trust Operations, MAC N9303-121, P.O. Box 1517, Minneapolis, Minnesota. For information, call (800) 344-5128. Standard Aero Holdings Inc., -- http://www.dunlopstandard.com/-- is a leading supplier of services to the global aerospace, defense and energy industries. The Company has over 2,500 employees in six different countries, with its main operations located in the United States, Canada and the Netherlands. * * * As reported in the Troubled Company Reporter on Aug. 19, 2005, the Company says it will restate and reclassify its audited consolidated financial statements for the period from Aug. 25, 2004, to Dec. 31, 2004, and as of Dec. 31, 2004, and for the interim unaudited financial information for the first quarter of 2005 to reflect the non-cash effect of changes in the recorded amount of the Company's foreign deferred tax liabilities. Material Weakness in Internal Control The Company's management believes that the restatement may indicate a material weakness in the Company's internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The Company is committed to maintaining effective internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. In order to improve the process and to enhance the Company's internal control over financial reporting, the Company's management has hired the former Senior Manager for U.S. and Cross-Border Tax from a major public accounting firm to act as the Company's director of tax accounting beginning Aug. 15, 2005. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives due to its inherent limitations because internal control involves human diligence and compliance and is subject to lapses in judgment and breakdowns from human failures. Nonetheless, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. S-TRAN HOLDINGS: Lease-Decision Period Stretched to Sept. 12 ------------------------------------------------------------ As previously reported, S-Tran Holdings, Inc., and its debtor- affiliates asked the U.S. Bankruptcy Court for the District of Delaware to extend the period within which it can elect to assume, assume and assign, or reject unexpired nonresidential real property leases to September 12, 2005. The Debtors want to extend its lease decision period on these leases: Site Address Use Lessor Address ------------ --- -------------- 728 Jefferson Avenue General Office Dartmoor Realty Cookville, Tennessee 38501 PO Box 2709 Cookville, Tennessee 38502 120 E. Main St. Salvage Store William A. Algood, Tennessee 38506 & James W. Benson 909 Hillside Drive Cookville, Tennessee 38501 The Debtors explained that they need these locations to continue the orderly wind-down of their operations and sell damaged cargo rejected by recipients. * * * The Court granted the Debtors' request for an extension of their period to decide what to do with the two leases. 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. SUNCOM WIRELESS: Terminates $113 Million Purchase of Urban Comm --------------------------------------------------------------- Triton PCS Inc., nka SunCom Wireless Holdings, Inc., reported that its primary operating subsidiary SunCom Wireless, Inc., (NYSE: TPC), exercised its termination right to cancel the planned purchase of Urban Comm - North Carolina, Inc., for $113 Million. The agreement, which was announced on October 28, 2004, called for SunCom to purchase all of the outstanding stock of Urban, whose assets include FCC wireless licenses in 20 Basic Trading Areas in North Carolina, South Carolina and Virginia. Based in Berwyn, Pennsylvania, SunCom Wireless fka Triton PCS, Inc., is licensed to provide digital wireless communications services in an area covering 14.3 million people in the Southeastern United States and 4.0 million people in Puerto Rico and the U.S. Virgin Islands. * * * As reported in the Troubled Company Reporter on Mar. 22, 2005, Standard & Poor's Ratings Services lowered its ratings on Triton PCS Inc. The corporate credit rating was lowered to 'CCC+' from 'B-'. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 9, 2004, Moody's Investors Service downgraded the existing ratings of Triton PCS, Inc., as described below, completing the review for possible downgrade initiated in July. Moody's also assigned a B2 rating to the proposed $250 million senior secured term loan. The outlook for these ratings is negative. The affected ratings are: * Senior implied rating downgraded to Caa1 from B2 * Issuer rating downgraded to Caa1 from B2 * $250 million senior secured term loan assigned B2 * $725 million 8.5% Senior Notes due 2013 downgraded to Caa1 from B2 * $350 million 9.375% Senior Subordinated Notes due 2011 downgraded to Ca from B3 * $400 million 8.75% Senior Subordinated Notes due 2011 downgraded to Ca from B3 TFS ELECTRONIC: Files for Chapter 11 Protection in Arizona ---------------------------------------------------------- TFS Electronic Manufacturing Services, Inc., a subsidiary of Three-Five Systems, Inc., filed a chapter 11 petition in the U.S. Bankruptcy Court for the District of Arizona, on Aug. 19, 2005. The Company filed the petition in order to implement an asset purchase agreement for the sale of its electronic manufacturing services operations in Redmond, Washington, to Catalyst Manufacturing Services, Inc. Three-Five will continue to fund the operations of TFS Electronic through the closing date of the proposed sale through a debtor-in- possession financing. The electronic manufacturing services assets of TFS Electronic includes substantially all of the its manufacturing operations in Redmond, Washington. Three-Five estimates the total value of the transaction will be approximately $6.6 million, subject to adjustments relating to accounts receivable and inventory valuations. The value of the transaction is made up of $3.6 million in cash to be paid to TFS Electronic, at closing and the assumption of certain liabilities by Catalyst. The agreement is subject to customary closing conditions as well as approval by the bankruptcy court in the bankruptcy proceeding. The parties anticipate that the transaction will close within the next 45-60 days. Catalyst Manufacturing Services is a privately owned company founded to provide full contract electronic manufacturing services to OEMs from product development through distribution and after market support. Catalyst serves a broad global customer base in the medical, computer, industrial networking, telecommunication, transportation and securities industries. Three-Five Systems, Inc. -- http://www.tfsc.com/-- provides specialized electronics manufacturing services to original equipment manufacturers. TFS offers a broad range of engineering and manufacturing capabilities. Headquartered in Redmond, Washington, TFS Electronic Manufacturing Services, Inc., is an electronics manufacturing services facility that specializes in New Product Introduction services, prototype Development and low to medium-volume manufacturing. The Company filed for chapter 11 protection on August 19, 2005 (Bankr. D. Ariz. Case No. 05-15403). John R. Clemency, Esq., at Greenberg Traurig LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protections from its creditors, it listed estimated assets between $1 Million to $10 Million and estimated debts between $10 Million to $50 Million. TFS ELECTRONIC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: TFS Electronic Manufacturing Services, Inc., f/k/a Electronic Manufacturing Corp. f/k/a Electronic Turnkey Manufacturing Corp. f/k/a ETMA Corp. f/k/a TFS - Redmond f/k/a TFS Electronic Manufacturing Services 9461 Willows Road Northeast Redmond, Washington 98052 Bankruptcy Case No.: 05-15403 Type of Business: The Debtor is an electronics manufacturing services facility that specializes in New Product Introduction services, prototype development and low to medium-volume manufacturing. The Company is a subsidiary of Three-Five Systems. See http://www.tfsc.com/ Chapter 11 Petition Date: August 19, 2005 Court: District of Arizona (Phoenix) Debtor's Counsel: John R. Clemency, Esq. Greenberg Traurig LLP 2375 East Camelback Road, Suite 700 Phoenix, Arizona 85016 Tel: (602) 445-8575 Fax: 602-445-8100 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Three-Five Systems, Inc. $12,344,608 1600 North Desert Drive Tempe, AZ 85281 Arrow Electronics $1,194,138 7459 South Lima Street, Building 3 Englewood, CO 80112 TFS EMS SDN BHD $1,168,545 Plot 574, Lorong Perusahaan 4 Zon Perindustrian Bebas Prai Prai Malaysia Penang 13600 Avnet Electronics $288,936 8214 154th Avenue Northeast Redmond, WA 98052 Topsearch Printed Circuits Mac $204,406 TTM Technologies $162,334 Memec United $108,967 National Industrial Concepts $81,488 Polymer Technology $77,342 TTI, Inc. $69,114 Future Electronics $68,549 Adaptix $67,592 Force Electronics $66,866 Smith & Associates $56,260 Leadway Int'l Develop $53,028 Digi-Key $42,056 Globtek, Inc. $38,314 All American Semiconductor $38,202 Memec United (Unique Tech) $37,114 Neilsen MFG, Inc. $32,171 TOWER AUTOMOTIVE: Can't File Quarterly Report On Time ----------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Christopher T. Hatto, Chief Accounting Officer of Tower Automotive, Inc., reports that Tower has not had an opportunity to gather all of the information required in the Form 10-Q. As a result, Tower was unable to timely file its report for the quarter ended June 30, 2005, which report was due on August 9, 2005, without unreasonable effort and expense. According to Mr. Hatto, the necessary work associated with Tower's Form 10-Q will not be completed within the extended time frame permitted under Rule 12b-25 of the General Rules and Regulations under the Securities Exchange Act of 1934 because the independent auditor review pertaining to the Report had not been completed pending the appointment of Tower's independent auditors. Tower intends to seek the approval of the Bankruptcy Court in September 2005 with regard to the appointment of the independent auditors. Mr. Hatto says that Tower intends to file its Form 10-Q for the quarter ended March 31, 2005, and its Form 10-Q for the quarter ended June 30, 2005, as soon as all information necessary to complete the reports is available. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: General Foods Balks at Corydon Leases Rejection ----------------------------------------------------------------- As previously reported, Tower Automotive Inc. and its debtor- affiliates asked the U.S. Bankruptcy Court for the Southern District of New York for authority to reject 11 property leases related to their Corydon, Indiana facility effective as of the Rejection Date applicable to each contract: Lessor Description of Contract Rejection Date ------ ----------------------- -------------- LaSalle National Schedule 1: 06/30/2005 Leasing Corp. Powdercoat equipment Schedule 2: 07/15/2005 e-coat equipment Schedule 3: 06/17/2005 U-152 assembly equipment Levee Lift, Inc. Fork Lifts: 06/30/2005 Numerous contracts for 9 separate pieces of equipment Cardinal Carryor, Fork lifts and other 06/30/2005 Inc. material handling equipment: 30 pieces Harrison Building lease: 10/01/2005 Properties Corydon manufacturing site Fleet Capital Schedule A: 07/15/2005 hydroform presses Schedule B: 07/15/2005 Continental washers GE Capital & Dodge Ram frame line "A" 07/15/2005 General Foods and "B" Credit Investors CRA, Inc. Tow-tractor equipment 08/15/2005 lease Wells Fargo Bank Building lease and 07/15/2005 Northwest, NA sublease agreement for "Building 36" Corporate 44 Warehouse lease 08/31/2005 Business Park Summit Realty Group Fidelity Federal Two forklift leases 08/31/2005 Savings Bank Tower Ventures, Building lease 07/31/2005 LLC General Foods Objects General Foods Credit Investors No. 2 Corporation, a wholly owned subsidiary of Philip Morris Capital Corporation, objects to the Debtors' request to the extent that it fails to provide appropriate protections for General Foods' rights under: (a) an Equipment Lease among: (i) Tower Automotive Products Company, Inc., as lessee; (ii) Wells Fargo Bank Northwest, N.A., as Owner Trustee under a Trust Agreement dated as of September 25, 2001, between General Foods and Wells Fargo, as lessor; and (iii) General Foods, as Owner Participant under the GFCI Trust, pursuant to which Wells Fargo leases to Tower Automotive Products its 50% undivided ownership interest in two assembly lines of equipment at the Debtors' manufacturing facility at 3533 North 27th Street, Building #36, in Milwaukee, Wisconsin; (2) a Building Lease Agreement between Tower Automotive Products, as lessor, and Wells Fargo, as lessee, pursuant to which Tower Automotive Products conveyed to Wells Fargo an undivided 50% leasehold interest in the Building #36 manufacturing facility; and (3) a Building Sublease Agreement between Wells Fargo, as sublessor, and Tower Automotive Products, as sublessee, pursuant to which Wells Fargo subleased the leasehold interest in the Building #36 premises back to Tower Automotive Products. Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, in New York, informs the Court that General Foods, through Wells Fargo, has elected to retain its rights under the Building Lease, including, without limitation, the rights of use, possession, quiet enjoyment, subletting, and assignment. The initial term of the Building Lease expires on September 26, 2013. "Pursuant to [Bankruptcy] Code Section 365(h)(1)(B), [General Foods] was prepared to obtain and pay for utility service for Building #36 from a third-party provider," Ms. Klestadt relates. "However, [General Foods] has been informed by representatives of the Debtors that electricity and heat, and possibly other utility services, are supplied to the Building #36 premises by plants that are owned and operated by the Debtors and that such utility services are not available to Building #36 from any other source, including from public utilities." Ms. Klestadt recounts that a Court-approved stipulation with the Debtors dated July 8, 2005, entitles General Foods to certain protections under the GCFI Leases: 1. From and after July 8, 2005, through August 10, 2005, the Debtors are required to: (i) restrict access to Building #36 to: -- General Foods; -- General Electric Capital Corporation; -- those of the Debtors' employees, experts, or professionals who may reasonably need to access Building #36 from time to time; and (ii) affirmatively permit the Authorized Entities to have access to the Building #36 premises; 2. From and after July 8, 2005, through August 10, 2005, the Debtors are required to: (i) provide General Foods and GE Capital with reasonable prior notice of any removal of tooling or other property owned by the Debtors, DaimlerChrysler Corporation, or other third parties now used in connection with the Assembly Lines or installed on the Assembly Lines; and (ii) afford General Foods and GE Capital rights of access and observation during any removal; and 3. From and after July 8, 2005, through August 10, 2005, the Debtors are required not to dismantle, move, sell, or otherwise dispose of any of the Assembly Lines without the prior written consent of General Foods and GE Capital. Thus, to minimize the risk to the value, utility, and remaining useful life of the Assembly Lines, minimize administrative and unsecured claims against the Debtors arising from the rejection of the GFCI Leases, and necessarily protect General Foods' rights under Sections 365 of the Bankruptcy Code, General Foods asks the Court to include these provisions in any order approving the Debtors' request: (a) The Rejection Order will provide that the Stipulation Protections will remain in effect through the end of the period during which General Foods is entitled to exercise its rights under Section 365(h)(1)(A)(ii); (b) The Debtors will be required to immediately turnover to General Foods all maintenance records, software, manuals, and similar documentation, related to the Assembly Lines and to Building #36, to the extent reasonably necessary to effectuate Well Fargo's and General Foods' rights under Section 365; (c) So long as the Debtors are operating the Building #36 manufacturing facility during the Section 365(h) Period, they will be required to continue providing utility service to the facility; (d) The Debtors will not be allowed to circumvent the provisions of the GFCI Leases and of Section 365(h)(1) by having housed significant portions of the leased equipment in Annex 1 -- a structure that is not part of the premises subject to the Building Lease and Building Sublease, contrary to the representations contained in those instruments; and (e) The bar date for filing claims arising from the rejection of the GCFI Leases be extended through a date that is no earlier than 120 days after the July 15, 2005, rejection date. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) TXU CORP: Energy & Delivery Units Ink $1 Billion Credit Agreement ----------------------------------------------------------------- TXU Energy Company LLC and TXU Electric Delivery Company, TXU Corporation affiliates, entered into a $1 billion Revolving Credit Agreement with Citibank, N.A., JPMorgan Chase Bank, N.A., Calyon New York Branch, Deutsche Bank AG New York Branch, Wachovia Bank, National Association and other lenders, on August 12, 2005 The Credit Agreement provides for a $1 billion three-year revolving credit facility, which may be used for working capital and other general corporate purposes, including letters of credit and the making of advances to affiliates. The lenders and their commitments are: Lender Commitment ------ ---------- Citibank, N.A. $135,000,000 Bank of America, N.A. 85,000,000 JPMorgan Chase Bank, N.A 85,000,000 Calyon New York Branch 85,000,000 Deutsche Bank AG New York Branch 85,000,000 Lehman Brothers Bank, FSB 85,000,000 Merrill Lynch Bank USA 85,000,000 UBS Loan Finance LLC 85,000,000 Wachovia Bank, National Association 85,000,000 Credit Suisse, Cayman Islands Branch 70,000,000 Barclays Bank PLC 70,000,000 William Street Commitment Corporation 35,000,000 Mellon Bank, N.A. 10,000,000 Total borrowings and letters of credit under the Credit Agreement may not exceed $1 billion, of which no more than $800 million may be outstanding to Delivery. The facility will expire on August 12, 2008, at which time all outstanding amounts under the facility will be due and payable and outstanding letters of credit will expire. Under the terms of the Credit Agreement, Energy Holdings has agreed to pay the lenders a facility fee on a quarterly basis. The facility fee rate is dependent on the lower credit rating of either Energy Holdings or Delivery and ranges from a rate per annum equal to 0.1% to 0.2% of total commitments under the Credit Agreement. Based on Energy Holdings' and Delivery's current credit ratings, the facility fee rate would be 0.175% per annum. In addition, each of Energy Holdings and Delivery has agreed to pay a fronting fee and a letter of credit fee with respect to letters of credit issued for its account. The fronting fee is equal to 0.125% of the stated amount of each letter of credit. The letter of credit fee is based on the face amount of the letter of credit calculated at a rate per annum equal to 0.275% to 0.800% depending on the applicable borrower's credit ratings. Based on Energy Holdings' and Delivery's current credit ratings, the letter of credit fee would be 0.575% per annum. Covenants The Credit Agreement provides that the ratio of consolidated earnings available for fixed charges to consolidated fixed charges as of the end of each quarter of each fiscal year for Energy Holdings and Delivery be no less than 2.00 to 1.00 and 1.75 to 1.00, respectively. In addition, ratios of consolidated senior debt to consolidated total capitalization as of the end of each quarter of each fiscal year of Energy Holdings and Delivery should not be greater than 0.60 to 1.00 and 0.65 to 1.00, respectively. Each of Energy Holdings and Delivery makes the covenants independently, and a breach by one does not constitute a breach by the other. In Case of Default In the event of a default by Energy Holdings or Delivery under the Credit Agreement, including cross-defaults of Energy Holdings or Delivery relating to indebtedness in a principal amount in excess of $50 million of such borrower or its subsidiaries, the lenders may terminate the commitments made under the Credit Agreement with respect to the defaulting borrower, declare the amount with respect to the defaulting borrower outstanding, including all accrued interest and unpaid fees, payable immediately, and enforce any and all rights and interests created and existing under the Credit Agreement with respect to such defaulting borrower, including all rights of set-off and all other rights available at law. A full-text copy of the Credit Agreement is available for free at http://ResearchArchives.com/t/s?f0 TXU Corp., a Dallas-based energy company, manages a portfolio of competitive and regulated energy businesses in North America, primarily in Texas. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. The company is also one of the largest purchasers of wind- generated electricity in Texas and North America. TXU Corp.'s regulated electric distribution and transmission business, TXU Electric Delivery, complements the competitive operations, using asset management skills developed over more than one hundred years, to provide reliable electricity delivery to consumers. TXU Electric Delivery operates the largest distribution and transmission system in Texas, providing power to more than 2.9 million electric delivery points over more than 99,000 miles of distribution and 14,000 miles of transmission lines. Visit http://www.txucorp.com/for more information about TXU Corp. * * * As reported in the Troubled Company Reporter on Feb. 1, 2005, TXU Corp. securities rated by Fitch Ratings remain unchanged following the announcement that TXU reached a comprehensive settlement agreement resolving potential claims relating to TXU Europe. The ratings are: -- Senior unsecured 'BBB-'; -- Preferred stock 'BB+'; -- Commercial paper 'F3'. Under the terms of the settlement, TXU will make a $220 million one-time payment to creditors. A charge of $220 million ($143 million after tax) will be taken for the fourth quarter of 2004, and TXU expects a portion of the payment to be recovered from insurance proceeds. In Fitch's view, this loss will not materially affect TXU's credit profile or liquidity. Additionally, the possibility of this event was incorporated in current ratings. UAL CORP: Trade-Debt.Net Buys 7 Claims Totaling $33,413 ------------------------------------------------------- Trade-Debt.Net of West Babylon, New York, is the recipient of seven claims with a face value of $33,413 from these claimants: Claimant Amount -------- ------ Aquamatic Sprinkler $3,360 Capitol Concessions 2,653 Detroit Transmission 2,367 Luckysurf.com 18,722 Terminix Commercial 3,356 Wyndham Garden Hotel 1,806 Wyndham Garden Hotel 1,149 -------- Total $33,413 Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Mitsui & BofA Securities Buys $18.5 Million Claim ----------------------------------------------------------- Oc757-2-24763 LLC of Fort Worth, Texas, transferred Claim No. 43553 for $18,508,262 to Mitsui & Co. (USA), Inc., and Banc of America Securities, LLC. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Republic Airlines Buys Planes & Slots for $100 Million ------------------------------------------------------------------ US Airways has accepted Republic Airways' offer to buy its fleet of Embraer ERJ 170s and slot rights at New York LaGuardia Airport and Ronald Reagan Washington National Airport for $100,000,000, Regional Airport News reports. According to RAN, US Airways will continue to use the 113 slots in Washington and 24 slots in New York under a rental agreement with Republic. US Airways has the right to repurchase the slots. US Airways' Embraer 170s are operated by its MidAtlantic Airways unit. Republic will purchase 10 of the planes and assume the leases on another 18 planes. MidAtlantic will continue to operate the planes until the Federal Aviation Administration certifies Republic Airlines, a new unit of Republic Airways, to operate the planes. This transaction will not be completed until Summer 2006. Republic will assume seven ERJ 145s from the US Airways Express fleet. Both US Airways and Republic Airways continue to talk about adding more Embraer 170s to the transaction, as well as the prospect of adding Embraer 190s in the future, RAN says. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) WATERFORD GAMING: S&P Affirms B+ Issuer Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Waterford Gaming LLC to positive from stable. At the same time, Standard & Poor's affirmed its 'B+' issuer credit rating and other ratings on the company. "The outlook revision reflects the company's improved credit measures and the expectation that this trend will continue over the intermediate term as the issuer's outstanding bond issue continues to amortize," said Standard & Poor's credit analyst Peggy Hwan. The ratings on Waterford Gaming reflect the stable revenue stream from the operations of the successful Mohegan Sun Casino, operated by the Connecticut-based Mohegan Tribal Gaming Authority. Offsetting this factor is Waterford Gaming's high debt level and reliance on a single property for its cash flow. WESTERN OIL: Reports Second Quarter Financial & Operation Results ----------------------------------------------------------------- Western Oil Sands Inc. reports its second quarter 2005 results and provides an operational update for the athabasca oil sands project. During the second quarter of 2005, Western generated record results including: * net revenue of $148.2 million, * EBITDAX of $84.1 million, * cash flow from operations of $68.0 million, and * net earnings of $28.7 million. By comparison, in the second quarter of 2004, western generated net revenue of $93.3 million, EBITDAX of $35.5 million, cash flow from operations of $19.4 million and a net loss of $9.2 million. Relative to the second quarter of 2004, financial results during the second quarter of 2005 were positively impacted by a 15 per cent increase in production, a 39 per cent increase in West Texas Intermediate prices and a decrease in volumes subject to hedge contracts partially offset by wider light to heavy crude oil price differentials. In the second quarter of 2005, a $7.2 million unrealized foreign exchange loss ($6.0 million net of tax) was included in net earnings, compared to a foreign exchange loss of $13.5 million ($11.3 million net of tax) for the second quarter of 2004. Excluding the impact of Western's hedging activities, EBITDAX was $104.9 million, net earnings were $41.6 million, and cash flow from operations was $88.8 million in the second quarter of 2005 compared to $62.7 million, $7.5 million and $46.6 million, respectively, in the second quarter of 2004. Highlights * During the second quarter of 2005, the Project achieved record production averaging approximately 163,800 barrels per day (32,760 barrels per day net to Western), an increase of 15 per cent compared to 142,000 barrels per day (28,400 barrels per day net to Western) in the second quarter of 2004. The Project achieved another significant milestone during the second quarter of 2005, attaining cumulative production of 100 million barrels in just over two years of full operations. One-time operational issues experienced in the first quarter of 2005 were systematically addressed, setting the stage for robust production in the second quarter whereby the Project experienced reliable production performance for three consecutive months. Production in the second quarter of 2005 represents a 24 per cent increase over the first quarter of 2005. As a result of sustained high production levels, operating costs for the quarter decreased to $19.38 per processed barrel. * As announced on June 27, 2005, the Joint Venture partners agreed to settle the loss of profits insurance claim relating to the January 6, 2003, fire. The AOSP Joint Venture reached a settlement in the amount of $220 million. Western's pro rata share is $44 million. Similar to the claim proceeds relating to the physical damage stemming from the fire, certain insurers in the loss of profits claims are withholding payment to Western as these same insurers provided coverage on Western's construction and delay policy which is currently in arbitration proceedings. Western will initially receive $19.4 million from this settlement and we are attempting to finalize a contingent settlement for the balance of $24.6 million. The settlement amount is recorded as a reduction to capital assets in our second quarter balance sheet and, as such, did not impact earnings. * Western's previously announced three-for-one stock split was approved by shareholders at our Annual and Special Meeting held on May 11, 2005. Western's Class A Common Shares began trading on a post-split basis on May 30, 2005, bringing our outstanding Common Shares to approximately 160 million. * Albian Sands Energy, operator of the Muskeg River Mine, reported two significant safety milestones. On July 1, 2005, Albian achieved one year without a lost time incident and July 5, 2005, marked four million man hours without a lost time incident. As we move forward with our expansion, the AOSP remains committed to the highest standards in health, safety and the environment and building on our achievements to date. AOSP Expansion Update Western, together with its partners, continues to make significant progress in advancing the continuous construction expansion initiative. The Owners have adopted a management system, which requires rigorous adherence to a staged protocol for completing project milestones, with the next major milestone being the ordering of long lead time equipment and the completion of the first expansion development plan. This management tool will be critical to the success of the expansions as the Owners assess the capital costs of the expansions in the face of major increases in the cost of materials and services for the industry. Concurrent with this process, the Owners are securing Engineering Procurement and Construction Management contractors for the construction of both upstream and downstream facilities. The Project also continues to move forward with the de-bottlenecking program with the objective of increasing production to the 180,000 to 200,000 barrel per day range by 2007 to 2008. The Project's environmental permit for the first expansion is before the Energy Utilities Board and was filed on April 29, 2005; the Owners anticipate final approval in mid-2006. The Project has held its first public hearing in this regard and the regulatory agencies are evaluating the application in the normal course of business. The Project is also preparing the environmental application for the full development of the AOSP's leases with approval anticipated in mid-2008, coincident with a final investment decision on the second and third expansions. The Project is on track for this larger application. Beyond the AOSP In addition to our primary objective of developing and growing the sizeable resource base that we have available to us through the AOSP, Western is critically examining new strategic business opportunities. As part of our long-term strategy, Western's plan includes expanding the scope of our interests, domestically or internationally, by taking our core competencies and skills and applying them to new ventures. As an entrepreneurial, growth- oriented company, our goal is to continue to identify opportunities to enhance shareholder value. Western is a Canadian oil sands corporation, which holds a 20 percent undivided interest in the Athabasca Oil Sands Project together with Shell Canada Limited (60 per cent) and Chevron Canada Limited (20 per cent). * * * As reported in the Troubled Company Reporter on Apr. 10, 2002, Standard & Poor's Ratings Services affirmed Calgary, Alta.- based Western Oil Sands Inc.'s 'BB+' corporate credit rating. WHEREHOUSE ENT: Wants Claims Objection Deadline Moved to Sept. 30 ------------------------------------------------------------------ Wherehouse Entertainment, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, until Sept. 30, 2005, the period within which they can object to: -- administrative expense claims, -- priority tax claims, -- other priority claims, -- secured trade claims, and -- other secured claims. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, P.A., the Debtors' counsel, tells the Court that an extension is necessary to give the Debtors sufficient time to complete the evaluation of all outstanding claims. The Debtors report that they have filed eight omnibus claims objections seeking to reduce and allow or expunge some administrative, secured and priority claims. The Debtors have also filed various stipulations settling some significant administrative, secured and priority claims. Ms. Newmarch explains that the Debtors have only one employee remaining to continue the winding-up of their estates. The Debtors, however, assure the Court that they can complete the claims objection process in the near future. Headquartered in Torrance, California, Wherehouse Entertainment, Inc., sells prerecorded music, videocassettes, DVDs, video games, personal electronics, blank audio cassettes and videocassettes, and accessories. The Company and its debtor-affiliates filed for chapter 11 protection on January 20, 2003, (Bankr. Del. Case No. 03-10224). Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $227,957,000 in total assets and $222,530,000 in total debts. WINN-DIXIE: Wants Pride Capital Group as FF&E Liquidating Agent --------------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Middle District of Florida to employ The Pride Capital Group, LLC, doing business as Great American Group, as liquidating agent pursuant to an Agency Agreement. The Debtors also ask the Court to: a. approve the Agency Agreement; and b. authorize them to sell furniture, fixtures and equipment as well as designated rolling stock and excess equipment located at the Debtors' distribution centers, free and clear of liens. Agency Agreement The Agency Agreement provides the Debtors with the opportunity to dispose of the Assets and to maximize the proceeds for their estates. The material terms of the Agency Agreement include: A. Agent's Fee. The Agent will be entitled to this fee structure: (a) if Net Proceeds are less than $3,675,000, there will be no fee; (b) if Net Proceeds are equal to or greater than $3,675,000 up to $4,325,000, the Agent will receive a fee that is 25% of the amount by which Net Proceeds exceed $3,675,000; (c) if Net Proceeds are greater than $4,325,000 up to $4,775,000, the Agent will receive a fee that is 35% of the amount by which Net Proceeds exceed $4,325,000, plus the fee set forth in (b); (d) if Net Proceeds are greater than $4,775,000 up to $5,225,000, the Agent will receive a fee that is 50% of the amount by which Net Proceeds exceed $4,775,000, plus the fee set forth in (b) and (c); and (e) if Net Proceeds are greater than $5,225,000, the Agent will receive a fee that is 60% of the amount by which Net Proceeds exceed $5,225,000, plus the fee set forth in (b), (c) and (d). B. Control of Proceeds. All cash proceeds from the sale will be deposited into the Debtors' depository bank accounts. C. Final Reconciliation. By November 12, 2005, the Agent and the Debtors will jointly prepare a final reconciliation including a summary of Proceeds, taxes, expenses, and any other accountings required. Within five days of completion of the Final Reconciliation, (i) any undisputed and unpaid expenses will be paid by the Debtors and (ii) any portion of the Agent's fee for which there is no disputed amount will be paid by the Debtors to the Agent. D. Expenses of the Sale. All expenses of the sale will be borne by the Debtors consistent with an expense budget to be agreed to between the Agent and the Debtors and attached to the Agency Agreement. The Agent will pay expenses of the sale that exceed the Expense Budget. In the event the Agent fails to timely vacate any of the Distribution Centers, the Agent must reimburse the Debtors for any expense or claims incurred. E. Assets. The Assets substantially include all furniture, fixtures and equipment and specifically identified rolling stock located at the Closing Distribution Centers and excess equipment located at the Operating Distribution Centers. F. Additional Assets. The Assets also include: (1) additional equipment not located in the Distribution Centers on the Sale Commencement Date but which the Debtors and the Agent mutually agree to include in the Sale on terms and conditions acceptable to the Debtors and the Agent in accordance with the terms of the Agreement; and (2) to the extent the Company provides written notice to the Agent on or prior to September 22, 2005, any and all furniture, fixtures and equipment located at the Debtors' Montgomery Pizza facility located in Montgomery, Alabama or the Debtors' Highpoint Dairy located in Highpoint, North Carolina, subject to the Debtors and the Agent reaching an agreement on any appropriate and necessary modifications to the Expense Budget related to those additional Assets. G. Vacating the Distribution Centers. The sales under the Agency Agreement will commence immediately after entry of Court order approving the Agreement and continue until the Sale Termination Date. The Agent will provide the Debtors with advance written notice of its intention to vacate any Distribution Center. The Agent will be responsible for the removal of any unsold Assets by the Sale Termination Date. On the Sale Termination Date, the Agent must vacate and leave the Closing Distribution Centers in "broom clean" condition. Furthermore, the Debtors ask the Court to permit the Agent to conduct the sales without obtaining permits which may otherwise be required by federal, state or local laws, other than health and safety and without interference by the affected landlords of the Distribution Centers. 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 Lease Decision Period Extended to Dec. 19 ----------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates are lessees under more than 900 unexpired leases. Since filing for chapter 11 protection, the Debtors have sold or are in the process of selling leases for about 120 stores and have rejected leases for 180 stores. The Debtors are analyzing the remaining Unexpired Leases to determine which will be critical to their reorganization. In considering their options with respect to the remaining Unexpired Leases, the Debtors are evaluating a variety of factors to determine whether it is appropriate to assume, assume and assign or reject particular Unexpired Leases. The Debtors ask the U.S. Bankruptcy Court for the Middle District of Florida to further extend the period within which they must assume or reject the Unexpired Leases, through and including Dec. 19, 2005. Given the large number of Unexpired Leases that still exist, the Debtors want an extension to fully and adequately determine whether to assume or reject the remaining Unexpired Leases. Otherwise, the Debtors may be compelled, prematurely, to assume substantial, long-term liabilities under the Unexpired Leases or forfeit benefits associated with some Unexpired Leases to the detriment of the Debtors' ability to operate and preserve the going-concern value of their business for the benefit of all creditors and other parties-in-interest. Deciding whether and when to assume, assign or reject the Unexpired Leases requires the Debtors to determine whether particular leased premises are necessary to their future business plan. Although the Debtors have made significant progress in assessing the Unexpired Leases, they have not determined which of the remaining leased premises will be necessary to their business plan or which should be assumed or rejected to maximize the value of the Debtors' estates. Given the size of Winn-Dixie's case, the number of Unexpired Leases, and the need for the Debtors to focus on their primary objective of stabilizing their business, more time is needed to adequately assess whether to assume or reject each of the Unexpired Leases. 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 Claims Resolution Procedures Established ---------------------------------------------------------- Approximately 3,800 claimants commenced or threatened to commence litigation against Winn-Dixie Stores, Inc., and their debtor- affiliates, their employees or others whom the Debtors are contractually obligated to indemnify, before the grocer filed for chapter 11 protection. These Litigation Claims, which exceed $44 million, run the gamut in terms of asserted liability, many seek relatively small amounts. James H. Post, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, relates that all actions by the Claimants to collect or recover on the Litigation Claims were stayed at the Petition Date. The Litigation Claims are contingent, disputed and unliquidated. In many cases, the Debtors deny liability or dispute the amounts on these claims. In this regard, the Debtors ask the U.S. Bankruptcy Court for the Middle District of Florida to establish procedures for liquidating and settling Litigation Claims through direct negotiation or alternative dispute resolution. The Claims Resolution Procedure is intended to promote cost effective and timely liquidation and settlement of the Litigation Claims. According to Mr. Post, the legal fees and expenses of litigating thousands of Litigation Claims in multiple forums would be substantial for the Debtors and their estates. Likewise, the expense of litigation may prohibit many Claimants from fully litigating their claims, particularly in light of the uncertainty of the percentage recovery that will ultimately be available on allowed unsecured claims in the Debtors' Chapter 11 cases. Claims Resolution Procedures The proposed Claims Resolution Procedures is designed to facilitate efficient and inexpensive liquidation of the Litigation Claims. The principal features of the proposed Claims Resolution Procedure include: * Questionnaires. The Debtors will issue Questionnaires to Claimants by September 30. Claimants should return the Questionnaire by November 1, 2005. * Response and Reply. The Debtors must tender a Response Statement to a Claimant's Questionnaire by December 15, 2005, and Claimant must Reply to the Response by January 15, 2006. * Mediation, Arbitration, and Adjudication. For claims over $50,000, parties could agree to a mediation. The mediation will commence on September 15, 2005, and conclude by November 30, 2005. If mediation does not resolve the claim, Claimant may request arbitration. If the matter is not resolved by arbitration, the claim will be adjudicated. * For claims below $50,000, if the matter is not settled by January 15, 2006, the claim will be adjudicated. A full-text copy of the Claims Resolution Procedures is available for free at: http://bankrupt.com/misc/wd-claims_resolution_procedure.pdf Mr. Post explains that the underlying rationale for the Claims Resolution Procedures is the practical consideration that most litigation is settled prior to trial, but only after each side has had an opportunity to analyze the merits of the case. By requiring Claimants to comply with the Claims Resolution Procedure, each Claimant will be required to analyze, present and document its Litigation Claims in an informal, inexpensive way that should result in a large percentage of that Litigation Claims being resolved without the need of further litigation. In addition, settlement consideration changes in bankruptcy because the ultimate potential recovery for plaintiffs, and the ultimate cost to the Debtors, can be significantly lower than outside of bankruptcy. Mr. Post assures the Court that the Claims Resolution Procedure will treat Claimants fairly. The Claims Resolution Procedures is a non-judicial procedure for liquidating Litigation Claims more quickly than full trial litigation in state, federal or Bankruptcy Court. The parties will have sufficient opportunity to reach consensual settlements through direct negotiation or alternative dispute resolution. During the suspension of litigation there is limited delay but Claimant's substantive rights are not abridged in any way, Mr. Post says. Furthermore, there is no requirement that a Claimant settle its Litigation Claim pursuant to the Claims Resolution Procedures. Rather, the Debtors propose only that a Claimant be required to comply in good faith, with the Claims Resolution Procedures before being entitled to seek to lift the stay. Settlement Authority The Debtors also seek the Court's authority to settle Litigation Claims in accordance with the Claims Resolution Procedures. All settlements between $50,000 and $250,000 will be subject to Court approval. For any settlement equal to or greater than $250,000, the Debtors will provide notice to the Committee before filing a motion seeking approval of that settlement. The Debtors may settle claims amounting to $50,000 or less without prior notice or Court approval. For Litigation Claims settled for $5,001 or more, the Claimant will receive an allowed general unsecured non-priority claim against the Debtors in the Settlement Amount. All settlements will be paid in accordance with a confirmed reorganization plan. Moreover, for Litigation Claims that are settled for $5,000 or less, the Claim will receive, in the Debtors' sole discretion, either: a. an allowed general unsecured claim against the Debtors in the settled amount; or b. a payment in cash equal to the settled amount, up to an aggregate cap of $5,000,000. Automatic Stay To implement the Claims Resolution Procedures, the automatic stay must remain in effect against commencement or continuation of all Litigation Claims asserted against the Debtors. Once the Claimant has exhausted the Claims Resolution Procedure and no settlement has been reached with respect to its Litigation Claim, the Claimant is entitled to file a motion seeking to lift the automatic stay. However, the Debtors request that any Claimant that fails or refuses to comply with the Claims Resolution Procedures be denied, without prejudice, relief from the automatic stay until the Claimant complies with the Claims Resolution Procedure. Third Party Indemnity Prior to the Petition Date, the Debtors were parties to general liability insurance policies that may cover portions of the Litigation Claims in excess of $2 million. However, the Debtors are self-insured for the initial $2 million per occurrence. The Debtors do not believe that the Claims Resolution Procedures is inconsistent with the terms of any of the Insurance Policies. The Debtors may also be entitled in some instances, under agreements or applicable non-bankruptcy law, to be indemnified by other third parties. To the extent that the Debtors are or may be entitled to indemnity for a particular Litigation Claim from a Third Party Indemnitor, the Debtors propose to invite the Third Party Indemnitor to participate in the liquidation of that claim. 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: Moody's Junks $150 Million Senior Secured Notes ------------------------------------------------------------ Moody's Investors Service downgraded its ratings for Wise Metals Group LLC in view of the company's: * weak profits, * negative cash flow, * very limited liquidity, and * the increased burden posed by its $271 million of debt, which is about $100 million higher than when the company was first rated in April 2004. While the company may be able to pull cash out of working capital over the next several quarters, any improvement is likely to be modest and does not, in Moody's opinion, offset the increased risk associated with Wise's high leverage and limited liquidity. Wise ended the June 2005 quarter with about $3 million of availability under its $125 million revolving credit facility, which leaves the company weakly positioned to withstand any adverse financial or operating setbacks, although availability has improved to $12 million as of August 12. These ratings were lowered: * $150 million of 10.25% senior secured notes due 2012, to Caa1 from B2, * corporate family rating, to Caa1 from B2. Moody's affirmed its SGL-4 speculative grade liquidity rating, indicating weak liquidity, and maintained its negative rating outlook for the company. While market fundamentals for Wise's can stock and common alloy aluminum products have been solid over the last year, higher costs -- for aluminum, transportation, energy, and other operating materials -- have limited its ability to take advantage of higher shipments and improved plant utilization. As a result, conversion margin per pound has not materially improved, averaging less than 5 cents/pound over the 12 months ended June 30, 2005, and Adjusted EBITDA for the same period was $31 million. In addition, higher aluminum costs, as well as increased shipments, have required an approximate $89 million investment in working capital since March 2004 and interest expense has been higher than expected. Therefore, Wise's free cash flow (cash from operating activities minus capex) was negative in each of the last five quarters and has totaled negative $94 million over this period. This has pushed revolver borrowings up to $119 million (and $3 million in letters of credit) and total debt up to $271 million, as of June 30, 2005, whereas pro forma debt was $176 million when Moody's first rated Wise in April 2004. Given Wise's earnings potential and business model, this is a significant debt burden. The negative rating outlook remains in place to reflect the challenges Wise faces in expanding its conversion margin such that cash flow will be assured of not only covering its ongoing interest, capex and working capital requirements, but will also allow for a meaningful reduction in debt. Wise is also trying to move away from providing price caps on the metal transfer price offered to can sheet customers, but these discussions may not be successful. Regarding working capital, inventory reductions could be difficult to realize if recent aluminum price increases hold up. In addition, Wise's strategic move to increase sales of common alloy products will probably require higher inventories of these products. Wise could be downgraded further if: * its cash flow does not increase in the second half of 2005; * debt remains high; and * liquidity does not improve or credit facility covenants are in danger of being violated. Factors that could restore Wise's stable outlook include: * sustained improvement in conversion margins and cash flow; * net liquidity above $50 million; and * total debt below $225 million, all other things equal. Moody's ratings reflect: * Wise's dependence on a narrow but expanding range of product capabilities; * concentration of sales among few customers; and * lack of pricing power in a mature market dominated by two much larger and financially stronger competitors, Alcoa and Novelis. Market share concentration and intense competition among packaging companies and their customers, the beverage companies, as well as competition from other packaging materials such as plastics and glass, have limited the operating margins earned by producers of can stock and this is expected to continue. The ratings are buoyed by: * the technological capabilities of Wise's Listerhill facility; * the progress Wise has made in expanding its can stock customer base and common alloy sales; and * the current high level of industry capacity utilization. Wise Metals Group LLC produces aluminum can stock and packaging products from a casting and rolling facility in Muscle Shoals, Alabama. The company has its headquarters in Baltimore, Maryland. WYNDHAM INTERNATIONAL: S&P Withdraws B Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit and senior secured ratings on hotel lessor, manager, and franchiser Wyndham International Inc. These ratings had been placed on CreditWatch with developing implications on June 14, 2005. The rating withdrawal follows the acquisition of Wyndham by the Blackstone Group. Stockholders of the Dallas, Texas-based company approved the acquisition on August 11. XEROX CORP: Core Debt Reduction Cues Fitch's Ratings Upgrade ------------------------------------------------------------ Fitch Ratings has upgraded Xerox Corp. and its subsidiaries' senior unsecured debt to 'BB+' from 'BB', trust preferred securities to 'BB-' from 'B+' and affirmed the senior secured bank credit facility at 'BBB-'. The Rating Outlook remains Positive. Approximately $5.8 billion of securities are affected by Fitch's action. Fitch's rating actions and positive outlook reflect Xerox's improved credit protection measures, adequate liquidity profile, consistent operating and financial performance, significant reduction in core debt, and progress in reducing both the proportion and total dollar value of secured debt in the capital structure. Xerox continues to execute its operating strategy, and despite challenging prospects for revenue growth in the near term, Fitch expects operating performance will remain stable. Consistent financial and operational performance and strong free cash flow, along with continued core and secured debt reduction, could result in further positive rating actions. Fitch's rating concerns center on strong competition, Xerox's inability to achieve consistent revenue growth, and lagging but improving performance in Xerox's Developing Markets Operations segment, specifically Brazil. In addition, Fitch remains concerned about the recent gross margin deterioration in the second quarter ended June 30, 2005 as a result of product mix shifts in the office and production segments. Fitch anticipates tepid revenue growth for the remainder of 2005 with margin pressures associated with the company's various end markets, particularly the office and low-end printer segments. Credit protection measures for the latest 12 months ending June 30, 2005, continue to improve, especially Xerox's core debt metrics. Xerox's leverage, measured by total debt to total operating EBITDA, is estimated to be approximately 4.3 times (x) compared to 5.1x and 5.4x for year-end 2004 and 2003, respectively. Similarly, Fitch estimates Xerox's core leverage (defined as non-financing debt divided by non-financing operating EBITDA) at June 30, 2005 declined to approximately 1.6x compared to 2.3x for fiscal 2004 and 2.7x for fiscal 2003. In addition, the company's overall interest coverage (including the financing segment) was 3.2x, while Fitch estimates core interest coverage (defined as core operating EBITDA divided by core interest expense) was approximately 4.8x for the latest 12 months ended June 30, 2005, compared to 4.1x and 3.0x for fiscal 2004 and 2003. Fitch expects overall and core credit protection measures to gradually improve as a result of core debt reduction from free cash flow along with relatively flat operational EBITDA. The company's liquidity at June 30, 2005 consisted of more than $2.1 billion of cash and short-term investments, consistent annual free cash flow above $1.5 billion the last three years, and an undrawn $700 million bank facility revolver expiring September 2008. The bank facility is available, without sub-limit, to Xerox and certain foreign borrowers of Xerox, including Xerox Canada Capital Limited, Xerox Capital (Europe) plc, and other qualified foreign subsidiaries. Fitch believes that Xerox has more than sufficient liquidity and financial flexibility to meet upcoming debt maturities and absorb a reasonable adverse monetary outcome from any currently outstanding litigation. To support business growth, Xerox also has access to a secured eight-year $5 billion credit facility provided by General Electric Vendor Financial Services expiring in October 2010. This facility is used for secured loans backed by U.S. finance receivables arising from the sale of Xerox's products. At June 30, 2005, nearly $3 billion was available under this facility. In addition, in June 2004 Xerox arranged a three-year $400 million revolving credit facility secured by U.S. trade receivables with General Electric Capital Corp.; as of June 30, 2005, approximately $172 million was drawn from this facility. Additionally, Xerox has various multi-year committed secured funding facilities totaling approximately $1.8 billion, of which approximately $400 million was available at June 30, 2005. Xerox will continue to access the aforementioned financing facilities in the near term, but Fitch expects the company to gradually reduce its reliance on these vendor financing programs by internally funding a higher proportion of customer financing receivables. As of June 30, 2005, total debt was $8.9 billion, excluding the $889 million of mandatorily convertible preferred stock converting July 2006. Total debt consists of $3.9 billion of senior unsecured debt, $736 million of liabilities to subsidiary trusts issuing preferred securities (mandatorily redeemable in 2027), and $4.2 billion of secured debt, consisting primarily of a $300 million bank term loan due 2008, $3.7 billion secured by financing receivables, and $172 million secured by trade receivables. Debt secured by finance receivables accounted for 41.1% of total debt and Fitch believes this percentage will gradually decline as the company reduces the proportion of secured debt in the capital structure. Xerox's finance receivables totaled $7.9 billion at June 30, 2005. Debt maturities for the second half of 2005 are estimated to be $884 million, of which only $178 million is unsecured debt and the remaining amount is debt secured by finance receivables. Fitch believes free cash flow along with a strong cash balance will enable the company to manage debt maturities and other obligations. Additional cash outlays are expected to continue in 2005 for the company's pension plans as well as cash charges for previously announced restructuring actions, primarily for severance payments. In addition to Xerox Corp., the ratings affected are: Xerox Credit Corp. and Xerox Capital (Europe) plc's rated senior debt, and Xerox Corp.'s $1 billion senior secured bank credit facility ($700 million revolver and $300 million term loan), which is also available to Xerox Canada Capital Limited and Xerox Capital (Europe) plc. YUKOS OIL: Moscow Ct. Allows Yugansk to Raise Claim to $7.87 Bil. ----------------------------------------------------------------- The Moscow Arbitration Court authorized Yuganskneftegas increase its $5.68 billion claim against Yukos Oil Company to $7.87 billion, according to RIA Novosti. Yuganskneftegas filed the claim for alleged financial losses it suffered because Yukos allegedly sold oil below market value from 1999 to 2003. The Court further authorized Yuganskneftegas to conduct an expert analysis of oil market prices from 1999 to 2003. The Court adjourned the hearing on the case today. 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 $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (43) 106 (5) Alliance Imaging AIQ (52) 621 43 Amazon.com Inc. AMZN (64) 2,601 782 AMR Corp. AMR (615) 29,494 (2,230) Atherogenics Inc. AGIX (76) 235 213 Biomarin Pharmac BMRN (110) 167 (4) Blount International BLT (220) 446 126 CableVision System CVC (2,430) 10,111 (1,607) CCC Information CCCG (107) 96 20 Centennial Comm CYCL (480) 1,447 59 Choice Hotels CHH (185) 283 (36) Cincinnati Bell CBB (625) 1,891 (18) Clorox Co. CLX (346) 3,756 (158) Compass Minerals CMP (81) 667 129 Crown Media HL-A CRWN (34) 1,289 (130) Delphi Corp. DPH (4,392) 16,511 256 Deluxe Corp DLX (124) 1,508 (276) Denny's Corporation DENN (260) 494 (73) Domino's Pizza DPZ (574) 420 (21) Echostar Comm-A DISH (972) 7,281 269 Emeritus Corp. ESC (123) 720 (43) Foster Wheeler FWLT (490) 2,012 (175) Guilford Pharm GLFD (20) 136 60 Graftech International GTI (34) 1,006 264 I2 Technologies ITWO (153) 386 124 ICOS Corp ICOS (57) 243 160 IMAX Corp IMAX (38) 241 27 Intermune Inc. ITMN (7) 219 133 Investools Inc. IED (22) 56 (47) Isis Pharm. ISIS (124) 147 46 Kulicke & Soffa KLIC (44) 365 182 Lodgenet Entertainment LNET (72) 275 15 Maxxam Inc. MXM (681) 1,024 103 Maytag Corp. MYG (77) 3,019 398 McDermott Int'l MDR (140) 1,489 123 McMoran Exploration MMR (39) 377 135 Nexstar Broadc - A NXST (51) 684 27 Northwest Airline NWAC (3,563) 14,352 (1,392) NPS Pharm Inc. NPSP (98) 310 215 ON Semiconductor ONNN (346) 1,132 270 Owens Corning OWENQ (8,225) 7,766 1,391 Primedia Inc. PRM (771) 1,506 16 Quality Distrib. QLTY (26) 380 18 Qwest Communication Q (2,663) 24,070 1,248 Revlon Inc. - A REV (1,102) 925 70 Riviera Holdings RIV (27) 216 5 Rural/Metro Corp. RURL (184) 221 18 SBA Comm. Corp. A SBAC (50) 857 19 Sepracor Inc. SEPR (201) 1,175 717 St. John Knits Inc. SJKI (52) 213 80 Tivo Inc. TIVO (1) 151 48 US Unwired Inc. UNWR (76) 414 56 Vector Group Ltd. VGR (33) 527 173 Verifone Holding PAY (120) 267 30 Vertrue Inc. VTRU (50) 451 (81) Weight Watchers WTW (36) 938 (266) Worldspace Inc.-A WRSP (1,698) 592 47 WR Grace & Co. GRA (605) 3,423 811 ********* 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 ***