/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050824.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 24, 2005, Vol. 9, No. 200 Headlines ADAHI INC: Judge Zive Confirms First Amended Chapter 11 Plan ADELPHIA COMMS: Says Sale Process Must Guide Lease Decisions ALLIED HOLDINGS: Hires Hays Fin'l as Administrative Consultants ALLIED HOLDINGS: Wants to Reject Timberland Office Park Lease ALLMERICA FINANCIAL: S&P Places B Preferred Stock Rating on Watch ANCHOR GLASS: Glenshaw Glass Wants to Recover Molds ANCHOR GLASS: Judge Paskay Amends DIP Financing Orders ANCHOR GLASS: Wants Court to Compel OCI Chemical to Honor Contract APCO LIQUIDATING: Creditors Must File Proofs of Claim by Nov. 11 APCO LIQUIDATING: Wants Delaware Claims as Noticing & Claims Agent ATA AIRLINES: Court Grants John Hancock Admin. Expense Claim BBI ENTERPRISES: Committee Balks at Bid Protocol & Bid Increment BDR CORP: Judge Williams Confirms Second Amended Plan BIG 5 SPORTING: Names Barry Emerson As Chief Financial Officer BIRCH TELECOM: Gets Interim Okay to Obtain up to $2 Mil. DIP Loans BIRCH TELECOM: Look for Bankruptcy Schedules On Oct. 11 BISYS GROUP: CEO Says Financial Results In Line with Expectations BISYS GROUP: Bruce Dalziel to Succeed Jim Fox as CFO BRAUER SUPPLY: Case Summary & 20 Largest Unsecured Creditors BRILIANT DIGITAL: Balance Sheet Upside Down by $3 Mil. at June 30 BRILIANT DIGITAL: Braces for Unfavorable Suit Ruling in 3rd Qtr. BRILIANT DIGITAL: May File for Bankruptcy as Notes Mature in Sept. CATHOLIC CHURCH: D.F.T. Wants Stay Lifted to Sue Portland Diocese CATHOLIC CHURCH: Spokane Wants Future Claims Rep.'s Appeal Denied CEDU EDUCATION: Keen Realty Brings In $17 Mil. in Bankruptcy Sale CELERO TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors CHENIERE ENERGY: S&P Lowers Corporate Credit Rating to B from B+ CHENIERE LNG: S&P Rates Proposed $600 Million Bank Facility at BB COLLINS & AIKMAN: InSite Westland Wants to Collect Lease Payments COLUSA MUSHROOM: Case Summary & 20 Largest Unsecured Creditors CSAM HIGH: Fitch Puts $9MM Junk-Rated Notes on Rating Watch Neg. DATATEC SYSTEMS: Files Plan & Disclosure Statement in Delaware DOBSON COMMS: Declares In-Kind Dividends on Series F Stocks DOCTORS HOSPITAL: Wants Lease Decision Period Stretched to Nov. 4 DOCTORS HOSPITAL: Wants Exclusive Period Stretched to Nov. 4. DORAL FINANCIAL: Mgt. Changes Cue Fitch to Hold Low-B Ratings EMERSON RADIO: Chairman Geoffrey Jurick to Sell Shares to Grande EMMIS COMMS: Selling Three TV Stations to Journal for $235 Million EMMIS COMMS: Selling Five TV Stations to LIN TV for $260 Million EMMIS COMMS: Selling West Virginia TV Station to Gray for $186MM E.SPIRE COMMS: Court Sets Admin. Claims Bar Date for September 16 FALCON PRODUCTS: Wants to Sell Belding Property for $350,000 FEDERAL-MOGUL: Has Until Dec. 1 to Make Lease-Related Decisions FEMONE INC: Posts $762,794 Net Loss in Second Quarter 2005 GRAY TELEVISION: S&P Affirms B+ Long-Term Corporate Credit Rating GREEN THUMB: Case Summary & 16 Largest Unsecured Creditors HAYES LEMMERZ: Citadel Limited Discloses 5.6% Equity Stake HEARTLAND PARTNERS: Earns $613,000 of Net Income in Second Quarter HOLLINGER: Asking Court to Approve Appointment of Rattee to Board HUSMANN-PEREZ: Judge Paskay Declines to Revive Chapter 11 Case HUSMANN-PEREZ: MJ Squared Wants Chapter 22 Petitions Dismissed ICG COMMS: Wants Until Dec. 1 to Object to Proofs of Claim INTERPLAY ENTERTAINMENT: Debts Exceed Assets by $16.95M at June 30 INTERPLAY ENT: May File for Bankruptcy Due to Liquidity Woes KAISER ALUMINUM: Insurers Prepare to Battle with Asbestos Trust KEY ENERGY: Names J. Marshall Dodson as Chief Accounting Officer KMART CORP: SEC Charges Chuck Conway & John McDonald with Fraud KMART CORP: Files Status Report on Remaining Avoidance Actions KMART CORP: Settles Dispute Over Winder Corners' Claim for $590K KNOWLES ELECTRONICS: S&P Puts B- Corporate Credit Rating on Watch MAIN ELECTRIC: Case Summary & 9 Largest Unsecured Creditors MAYTAG CORP: Signs $2.7 Billion Merger Agreement with Whirlpool MBIA INC: SEC Issues Wells Notice in Reinsurance Investigation MIRANT CORP: Disclosure Statement Hearing Continued to Sept. 21 MIRANT CORP: May Incorporate Reorganized Debtors Under Cayman Law MIRANT: May Shut Down Units Absent Short-Term Air Quality Plans NEWAVE INC: Stockholders' Deficit Climbs to $1.1 Mil. at June 30 NEXSTAR BROADCASTING: S&P Lowers Corporate Credit Rating to B NORTHSHORE ASSET: Creditors Must File Proofs of Claim by Sept. 9 NORTHWEST AIRLINES: Names N. Pieper & J. Friedel to Exec. Posts NORTHWEST AIRLINES: S&P Places Junk Ratings on Negative Watch NVF COMPANY: Files Schedules of Assets and Liabilities NVF COMPANY: Parsons Paper Files Schedules of Assets and Debts NVF CO: U.S. Trustee Picks 5-Member Creditors Committee OSE INC: Stockholders' Deficit Narrows to $47.42 Million at July 3 PANAVISION INC: S&P Downgrades Sub. Debt Rating to CC from CCC- PREMCOR: Election Deadline for Pending Valero Merger Is on Monday PREMCOR REFINING: 99% of Noteholders Tender 7-3/4% Sr. Sub. Notes PURADYN FILTER: SEC Approves AMEX Delisting Q COMM: Look for Second Quarter Financials on August 26 RADIANT ENERGY: Gets CDN$2.33 Million in Private Equity Placement RELIANCE GROUP: Creditors' Committee Files Liquidating Ch. 11 Plan REUNION INDUSTRIES: Reports $26.32M Equity Deficit at June 30 ROBERT HOUGH: Voluntary Chapter 11 Case Summary RODGERS GMC: Case Summary & 20 Largest Unsecured Creditors RUSSELL-STANLEY: Combined Plan & Disclosure Hearing Set on Oct. 3 SENETEK PLC: June 30 Balance Sheet Upside-Down by $1.98 Million SOUTHAVEN POWER: Wants Until Jan. 16, 2006 to File Chapter 11 Plan STONERIDGE INC: Joseph Mallak Resigns as Chief Financial Officer S-TRAN HOLDINGS: Paying $8.7 Million to LaSalle Business Credit TOWER AUTOMOTIVE: Can Remove Civil Actions Until October 31 TOWER AUTOMOTIVE: Secures Waiver Letter from JPMorgan Chase UNITED RENTALS: Soliciting Consents from Securities Holders UNIVERSAL COMMS: Reports $2.12MM Stockholders' Deficit at June 30 VALERO ENERGY: Election Deadline for Premcor Merger Set for Monday WINN-DIXIE: Can Reject Nine Unexpired Leases WINN-DIXIE: Wants to Reform Insurance Policy with XL Insurance WODO LLC: Files Disclosure Statement in Washington YUKOS OIL: Concludes Talks With Lithuania Over Mazeikiu Stakes * Brad Richter Joins Fried Frank as Trusts & Estates Partner ********* ADAHI INC: Judge Zive Confirms First Amended Chapter 11 Plan ------------------------------------------------------------ The Honorable Gregg W. Zive of the U.S. Bankruptcy Court for the District of Nevada confirmed the First Amended Plan of Reorganization filed by Adahi Inc. on April 19, 2005. Judge Zive determined that the Plan met the 13 standards for confirmation stated in Section 1129(a) of the Bankruptcy Code. About the Plan The Plan intends to pay creditors using: * net revenue from leasing Adahi's commercial real property; and * net proceeds from a cash-out refinancing of Adahi's Incline Village Real Property. General Unsecured Creditors, holding claims totaling $2,815,000, are promised full payment of their claims plus 6% interest on the Effective Date. Unimpaired classes include: * Administrative claims, * priority tax claims, and * claims held by the Sacramento City Employee Retirement System, and and will be paid in full on the Effective Date. Gregory and Sara Skinner, Brandon Skinner and Henry Skinner, will retain their equity interests in Adahi. First Bank & Trust's $3,480,000, claim will be paid in full with interest at a non-default rate to be determined by the Court. Mechanic lienholders, owed $165,403, will be paid in full on the Effective Date or the closing of the cash-out refinance of the Debtor's Incline Village Real Property. Headquartered in Incline Village, Nevada, Adahi Inc. filed for chapter 11 protection on September 13, 2004 (Bankr. D. Nev. Case No. 04-52718). Stephen R. Harris, Esq., Chris D. Nichols, Esq., and Gloria M. Petroni, Esq., at Belding, Harris & Petroni, Ltd., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $50 million in debts and assets. ADELPHIA COMMS: Says Sale Process Must Guide Lease Decisions ------------------------------------------------------------ Adelphia Communications Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend their time to assume and reject all unexpired nonresidential real property leases through and including the date upon which the Court enters an order confirming their Plan of Reorganization. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, tells Judge Gerber that in the coming months, the ACOM Debtors will continue to work with Time Warner, Inc., and Comcast Corp. to analyze the Buyers' needs for the various premises governed by the Unexpired Leases. The completion of the analysis, however, requires additional time to enable Time Warner and Comcast to review the Unexpired Leases and determine which of those will be needed after the sale is completed. Under the asset purchase agreements the ACOM Debtors entered into with Time Warner and Comcast, the deadline for the Buyers to decide on the leases is 50 days before the Confirmation Hearing. The Debtors believe the extension is appropriate to enable the Buyers to decide on the leases and, thus, enable the Debtors to assume or reject the leases accordingly. Ms. Chapman assures the Court that lessors under the Unexpired Leases will not be prejudiced by the extension. The Debtors are substantially current on their postpetition rent obligations under the Unexpired Leases and they intend to continue performing timely all of their obligations under the Leases as required by Section 365(d)(3) of the Bankruptcy Code. The lessors may also ask the Court to fix an earlier date by which the Debtors must decide on an Unexpired Lease. 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. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Hires Hays Fin'l as Administrative Consultants --------------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Georgia, on an interim basis, to employ Hays Financial Consulting, LLC, as their administrative compliance consultants. The Debtors determined, in the exercise of their business judgment, that the size of their operations and the complexity of their financial difficulties required them to employ experienced administrative consultants to render advisory services in connection with bankruptcy administration and potential restructuring strategies. The Debtors believe that due to the limited size of their financial management staff, employing advisors will allow management to focus its attention on successfully reorganizing their business and financial affairs. The Debtors have selected Hays after reviewing the qualifications and experience of the firm's personnel. According to the Debtors, Hays has considerable expertise in assisting restructuring companies both inside and outside of Chapter 11 cases. The Debtors expect Hays to advise and assist them: (a) with regard to the preparation and filing of any and all monthly operating reports; (b) in connection with the investigation, analysis, and compilation of data relating to financial and accounting matters or issues in connection with any proceeding in their Chapter 11 cases, and to prepare reports, summaries, documents and exhibits as may be required; (c) in connection with compliance with SOP 90-7 or other financial reporting requirements; (d) in connection with internal controls to segregate and avoid paying prepetition liabilities; (e) in connection with cash collateral motions and compliance; and (f) by interacting with other parties-in-interest. S. Gregory Hays, Managing Director of Hays Financial Consulting, LLC, tells the Court that Hays is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code, in that, except as otherwise disclosed, the firm, its members and associates: (a) are not creditors, equity holders, or insiders of the Debtors; (b) are not and were not investment bankers for any outstanding security of the Debtors; (c) have not been, within three years before the Petition Date, (i) investment bankers for a security of the Debtors, or (ii) an attorney for an investment banker in connection with the offer, sale, or issuance of a security of the Debtors; (d) are not and were not, within two years before the Petition Date, a director, officer, or employee of the Debtors or an investment banker; and (e) have not represented any party in connection with matters relating to the Debtors. Mr. Hays discloses that the Debtors paid Hays a $40,000 retainer, a portion of which has been applied to prepetition invoices. The balance is to be maintained during the Debtors' Chapter 11 cases and applied in accordance with future Court orders. The current standard hourly rates of certain senior professionals resident in Hays' office range from $50 to $250. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Wants to Reject Timberland Office Park Lease ------------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia for authority to reject a non-residential real property lease dated February 14, 1991, for 12,427 square feet of general office space located at 1450 West Long Lake Road, Troy, Michigan, by and between Timberland Four Limited Partnership, as lessor, and Complete Auto Transit, Inc., as lessee. Complete Auto later assigned its rights under the lease to Allied Automotive Group, Inc. The Debtors want the rejection to be effective as of the Petition Date. The Debtors have determined that the Timberland Lease is not necessary for their ongoing business operations and will not contribute to the orderly and efficient reorganization of their business and financial affairs. "The Timberland Lease constitutes a burden upon the Debtors' estates and will needlessly increase administrative costs if not rejected immediately," Ezra H. Cohen, Esq., at Troutman Sanders LLP, in Atlanta, Georgia tells the Court. Mr. Cohen relates that a debtor-in-possession's right to reject executory contracts and unexpired leases is a fundamental component of the bankruptcy process as it provides a debtor with a mechanism to eliminate financial burdens to the estate. The decision to reject an executory contract or unexpired lease is primarily administrative and should be given great deference by a court subject only to review under the "business judgment" rule, Mr. Cohen notes. The Debtors assert that the Timberland Lease provides no economic benefit to their estates to offset their recurring costs. The Debtors further assert that their estates will be benefited by eliminating immediately any unnecessary administrative rent accrual and other obligations associated with the Lease. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLMERICA FINANCIAL: S&P Places B Preferred Stock Rating on Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' counterparty credit, 'BB' senior unsecured debt, and 'B' preferred stock ratings on Allmerica Financial Corp. (NYSE:AFC) and its 'BB' counterparty credit and financial strength ratings on First Allmerica Financial Life Insurance Co. (FAFLIC) on CreditWatch with positive implications. Standard & Poor's also said that it placed its 'BB' counterparty credit and financial strength ratings on Allmerica Financial Life Insurance & Annuity Co. (AFLIAC) on CreditWatch negative. In addition, Standard & Poor's affirmed its 'BBB+' counterparty credit and financial strength ratings on Hanover Insurance Co. (Hanover), Citizens Insurance Co. of America (MI) (Citizens), and their rated property/casualty affiliates. The outlook on Hanover, Citizens, and their affiliates remains stable. The CreditWatch placements follow AFC's announcement that it has agreed to sell AFLIAC to the Goldman Sachs Group Inc. The transaction is expected to close on or about Nov. 30, 2005. "We view the transaction as beneficial to AFC and anticipate raising the ratings by one notch following the close of the transaction," noted Standard & Poor's credit analyst John Iten. The sale of AFLIAC will complete AFC's exit from the variable annuity and variable universal life businesses. The guaranteed minimum death benefit feature of these products produced very substantial losses in 2002 following a substantial decline in the equity markets and triggered AFC's decision to place its entire life and annuity business in runoff. The company has instituted a dynamic hedging program to mitigate the GMDB risk associated with this business. However, the sale of this business benefits AFC by removing this exposure completely from its books and allowing management to concentrate on its core property/casualty operations. Standard & Poor's also views the transaction as positive for FAFLIC and anticipates raising the ratings by two notches following the close of the transaction. The liabilities that AFC is retaining in FAFLIC consist predominantly of a well-seasoned book of low volatility whole life and group annuity business. FAFLIC's capital adequacy is expected to remain strong for the rating. Standard & Poor's decision to place the ratings on AFLIAC on CreditWatch negative means the ratings could be affirmed or lowered. AFLIAC will no longer own FAFLIC, which houses the more stable portions of Allmerica's runoff life business. In addition, AFLIAC will no longer be part of an established insurance group that has a demonstrated record of supporting its capital needs. Also of some concern are the execution risks inherent in such a transaction, including obtaining all necessary regulatory approvals. These are mitigated to some degree by Goldman Sachs's ownership of AFLIAC, as Goldman Sachs has substantially greater ability to provide financial support in case of need. Finally, AFLIAC could benefit from the hedging expertise of Goldman Sachs, but insurance is not a core activity for its new owner, raising the issue of how committed Goldman Sachs is to this business. "In determining the ratings outcome, we will consider the degree and type of support provided by ALIAC's new owner and the prospects for the run-off business," said Standard & Poor's credit analyst Ovadiah N. Jacob. "If the rating is lowered, we do not anticipate that it would fall by more than one notch." ANCHOR GLASS: Glenshaw Glass Wants to Recover Molds --------------------------------------------------- Ronald B. Roteman, Esq., at Campbell & Levine, LLC, in Pittsburgh, Pennsylvania, informs Judge Paskay that on June 13, 2005, GGC LLC, formerly known as Glenshaw Glass Company, filed a complaint against Anchor Glass Container Corporation before the U.S. Bankruptcy Court for the Western District of Pennsylvania for the turnover of property. The Complaint sought to compel Anchor Glass to return some molds to GGC. GGC is a debtor in a Chapter 11 case pending before the Western District of Pennsylvania Bankruptcy Court. Judge M. Bruce McCullough presides over the case. Despite the one-week allowance for response, Anchor Glass failed to answer the Complaint. Anchor Glass also failed to respond to the requests for admissions. On July 11, 2005, GGC sought a court order compelling Anchor to immediate cease any further use of the GGC molds. Because of Anchor Glass' failure to answer the complaint, GGC filed a Motion for Default Judgment. On August 4, 2005, Judge McCullough entered an Order granting GGC default judgment, directing Anchor to immediately cease any and all current use of the molds and deliver those molds to GGC. Judge McCullough also entered a separate order granting GGC injunctive relief. By this motion, GGC asks Judge Paskay to lift the automatic stay to cause the enforcement of Judge McCullough's order. Mr. Roteman argues that, pursuant to Sections 362(d)(1) and (2) of the Bankruptcy Code, the Florida Court must modify the automatic stay for: 1. the molds do not belong to Anchor Glass and are therefore not property of Anchor Glass' estate; and 2. Anchor Glass has no equity in the molds, inasmuch as the molds do not belong to Anchor Glass, and, accordingly, the molds are not necessary to any effective reorganization. As Anchor Glass has admitted by its failure to respond to the requests for admissions, Anchor Glass believes that it is entitled to retain the GGC Molds solely on the basis that GGC owes it money on a debt. Mr. Roteman says this is clearly inappropriate use of the defense of set-off. Akin to the concept of comity, Mr. Roteman advises the Court to take judicial notice of the entry and finality of Judge McCullough's orders, and should give full effect and dignity to those orders, and direct Anchor to immediately cease any further use of the Molds and to immediately return the Molds to GGC or allow GGC the opportunity to immediately repossess the Molds. GGC also seeks the Court's authority to pursue an order of contempt from Judge McCullough and against any and all appropriate parties, in the event Anchor continues to fail to cooperate. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Judge Paskay Amends DIP Financing Orders ------------------------------------------------------ The Honorable Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida issued amended orders authorizing Anchor Glass Container Corporation to obtain additional postpetition financing on an interim basis for a period through and including August 30, 2005, from Wells Fargo Bank, National Association, in its capacity as agent for certain noteholders of senior secured notes issued by Anchor. Revolving Loan DIP Facility Fee In consideration for granting the Noteholders Adequate Protection, Anchor Glass, Wells Fargo, the Note Purchasers and Wachovia Capital Finance Corporation, as agent for the DIP Lenders, have agreed to modify the DIP Facility Fee provisions in the Wachovia Facility: * In the event the obligations due Wachovia and the DIP Lenders is indefeasibly paid in full on or before September 15, 2005, the DIP Facility Fee will be reduced to $575,000 in the aggregate; * In the event the obligations due Wachovia and the DIP Lenders is indefeasibly paid in full during the period September 16 through 30, 2005, the DIP Facility Fee will be reduced to $862,500 in the aggregate; and * In the event the obligations due Wachovia and the DIP Lenders is not indefeasibly paid in full on or before September 30, 2005, the full DIP Facility Fee in the amount of $1,150,000 will be due and payable to Wachovia and the DIP Lenders. Priority of Replacement Liens To the extent the Noteholders have been granted replacement liens in the Collateral as defined in the Wachovia DIP Order pursuant to the terms of the Amended Interim Order, the Term Sheet or the other Financing Agreements, the replacement liens will be: (a) junior, subordinate and subject to the postpetition liens and security interests granted in favor of Wachovia and the DIP Lenders in accordance with the terms of the Wachovia DIP Order and the prepetition liens and security interests granted in favor of Madeleine LLC, as Junior Lender Agent, and the Junior Lenders under the Loan and Security Agreement, dated February 14, 2005; and (b) have no enforcement right or remedy of any kind, nature or description, including, without limitation, the right to object to the sale, disposition or other treatment of any of the Collateral until all Obligations due Wachovia and the DIP Lenders will have been indefeasibly paid in full and released in accordance with the terms of the Wachovia DIP Order, and all obligations due Junior Lender Agent and Junior Lenders will have been indefeasibly paid in full. Retention of CRO The Debtor is required to retain a chief restructuring officer in accordance with the terms of the Term Sheet on or before September 15, 2005. The Debtor, Wells Fargo and the Note Purchasers agree that: -- the retention of a CRO will be reasonably acceptable to Wachovia; and -- the CRO will be obligated to provide information and access to Wachovia and the DIP Lenders. Judge Paskay will convene a hearing on August 30, 2005, at 1:30 p.m. to consider final approval of the Debtor's request for additional financing. Objections are due August 29. Wells Fargo is represented in the Debtor's case by Mark Somerstein, Esq., at Kelley Drye & Warren LLP, in New York. The Note Purchasers are represented by Ira S. Dizengoff, Esq., and David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York. A full-text copy of Judge Paskay's First Amended Interim Order dated August 17, 2005, is available at no charge at: http://bankrupt.com/misc/1st-Priming_Order.pdf A full-text copy of Judge Paskay's Second Amended Interim Order dated August 19, 2005, is available at no charge at: http://bankrupt.com/misc/2nd-Priming_Order.pdf Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Wants Court to Compel OCI Chemical to Honor Contract ------------------------------------------------------------------ Robert A. Soriano, Esq., at Carlton Fields PA, in Tampa, Florida, informs the Court that Anchor Glass Container Corporation and OCI Chemical Corporation entered into an OCI Sales Agreement #145 dated June 7, 2004. In the Agreement, OCI agreed to supply not less than 240,000 tons of bulk density soda ash each year to Anchor Glass, for a three-year term. OCI supplies approximately 65% of Anchor Glass' annual requirements of soda ash, and is substantially the sole supply to six of Anchor Glass' eight manufacturing plants. The six plants are located at Elmira, New York; Jacksonville, Florida; Winchester, Indiana; Warner-Robins, Georgia; Salem, New Jersey; and Lawrenceburg, Indiana. Mr. Soriano further informs the Court that under the terms of the Agreement, OCI ships soda ash by railcar from its facilities in Green River, Wyoming, to Anchor's plants, numerous times each week. Each shipment by railcar takes approximately 10 to 12 days. Payment at the rate of $79.20 per ton is due 30 days after each shipment is placed with the carrier. On August 9, 2005, in an attempt to collect a prepetition claim in violation of Section 362 of the Bankruptcy Code, OCI sent Anchor a letter notifying Anchor that Anchor failed to make payments due under the Agreement. OCI asserts a balance due in excess of $1,800,000 as of the Petition Date. The letter also purported to notify Anchor that pursuant to paragraph 3 of the Terms and Conditions to the Agreement, OCI declined further performance under the Agreement. In response to the letter, Anchor notified OCI that as debtor-in- possession, Anchor had the right to assume or reject the Agreement under Section 365(d)(2), at any time prior to confirmation. Anchor further explained that in the interim, OCI was obligated to continue to perform under the Agreement notwithstanding any prepetition defaults. On August 9, 2005, OCI stopped all new shipments of soda ash from leaving its facility in Wyoming, and stopped all railcars that had been in transit to, but had not yet reached any of Anchor's plants prior to the Petition Date. Since that time, OCI has released its hold on the in transit railcars, and Anchor expects to receive delivery of approximately 45 additional railcars of soda ash. In addition, OCI has demanded that, as a condition to resuming new shipments of soda ash, Anchor must agree to the substantially higher amount OCI asserts as its unpaid prepetition claim due from Anchor, rather than the amount indicated by Anchor's records. OCI also demanded that Anchor must agree to pay a price of $105 per ton, rather than the $79.20 per ton established under the terms of the Agreement, until Anchor has paid OCI's asserted prepetition claim in full. OCI's actions constitute a willful violation of the automatic stay, Mr. Soriano tells Judge Paskay. OCI's actions also constitute a breach of its obligations under the Agreement, as affected by Section 365, which implicitly obligates a non-debtor party to an executory contract to continue performing its obligations, until Anchor exercises its right to assume or reject the terms of the Agreement. Accordingly, Anchor asks the Court for: (a) a Temporary Retraining Order against OCI, requiring OCI to (i) resume immediately the shipment of soda ash to Anchor, at the price per ton set by the terms of the Agreement, and (ii) make shipments by truck as well as railcar, to avoid any interruption in the steady supply of soda ash to Anchor's plants, until a regular supply is restored; (b) a Preliminary Injunction requiring OCI to continue shipping soda ash to Anchor under the terms of the Agreement until a final hearing on the merits; (c) a Permanent Injunction requiring OCI to continue shipping soda ash to Anchor under the terms of the Agreement until Anchor assumes or rejects the Agreement; and (d) any relief as may be appropriate, including judgment for all damages sustained by Anchor as a result of OCI's refusal to perform under the terms of the Agreement, and OCI's violation of the automatic stay, including the incremental expense of truck shipments. Mr. Soriano contends that Anchor is highly likely to succeed in establishing that OCI has wrongfully refused to perform its obligations under the Agreement in violation of Sections 362 and 365. Anchor has a clear legal right to a temporary restraining order and preliminary injunction and has a substantial likelihood of success on the merits. Mr. Soriano reminds the Court that the Bankruptcy Code provides a debtor with the right to assume or reject an executory contract, like the OCI Agreement, and permits a debtor reasonable time after the filing of a bankruptcy petition to decide whether to assume or reject a contract. OCI has interrupted the supply of a critical ingredient to Anchor's products, for the transparent purpose of forcing Anchor to commit to pay OCI's prepetition claim. Mr. Soriano points out that Anchor can find no other source to replace the soda ash on a timely basis. Yet, Anchor is entitled to a reasonable time before deciding whether to assume or reject the Agreement with OCI. Hence, Anchor is entitled to immediate injunctive relief to preserve the status quo, pending its decision on assumption or rejection of the Agreement. Mr. Soriano also explains that soda ash is an essential ingredient to the manufacture of glass. OCI is one of a handful of producers of soda ash in the United States. Beginning in 2004, OCI has supplied approximately 240,000 tons of soda ash to six of Anchor's plants annually. OCI is essentially the sole supplier of soda ash to those six Anchor plants. If one or more of Anchor's plants runs out of soda ash, Anchor may have to shut the plant, causing enormous expense. In addition to the enormous cost of shutting down and reopening plants once a supply of soda ash is restored, it will also take substantial time to shut down and then resume production after shut down. This interruption may jeopardize Anchor's supply to its principal customers. Although Anchor has substantial inventory on hand for shipment under many of its major contracts, the available inventory may not be sufficient to avoid disruption in the steady supply of products to Anchor's largest customers, if Anchor's supply of soda ash is not restored on a timely basis. OCI can be protected from further losses from the postpetition sale of its products to Anchor, Mr. Soriano assures the Court. Suitable payment arrangements can be made, he says. If Anchor is forced to shut down any of its plants, Anchor will suffer substantial losses, and its very reorganization put at risk in the first days of the bankruptcy case. Consequently, greater injury will be inflicted upon Anchor by the denial of a temporary restraining order and preliminary injunction than would be inflicted upon OCI, Mr. Soriano continues. A temporary restraining order and preliminary injunction would also serve the public interest. Anchor employs approximately 2,800 people, and supplies bottles and glass containers essential to its customers' businesses. Interrupting the operation of any of Anchor's plants would not only cause substantial losses to Anchor and its estate, it would also jeopardize the jobs of Anchor's employees, and the smooth and efficient operation of its customers' businesses. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) APCO LIQUIDATING: Creditors Must File Proofs of Claim by Nov. 11 ---------------------------------------------------------------- Apco Liquidating Trust and APCO Missing Stockholder Trust ask the U.S. Bankruptcy Court for the District of Delaware to set 5:00 p.m. on Nov. 11, 2005, as the deadline for all creditors owed money on account of claims arising prior to Aug. 19, 2005, to file proofs of claim. All governmental units are required to submit proofs of claim on or before 5:00 p.m. on Feb. 15, 2006. Creditors must file written proofs of claim on or before the November 11 Claims Bar Date and those forms must be sent either by mail or courier to: Delaware Claims Agency, LLC P.O. Box 515 Wilmington, DE 19899 Proofs of claim submitted by facsimile or e-mail will not be accepted. 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). Gregory P. Williams, Esq., 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 Delaware Claims as Noticing & Claims Agent ------------------------------------------------------------------ Apco Liquidating Trust and APCO Missing Stockholder Trust ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Delaware Claims Agency, LLC, as their claims and noticing agent. DCA specializes in providing bankruptcy administrative services related to the orderly administration of pending bankruptcy proceedings. DCA is expected to: (a) establish an address to which all proofs of claim should be directed for filing: Delaware Claims Agency, LLC P.O. Box 515 Wilmington, DE 19899 (b) relieve the Clerk of the Bankruptcy Court of its responsibility for all noticing required under any applicable Federal Rule of Bankruptcy Procedure relating to the institution of a claims bar date and the processing of claims; (c) satisfy the Court, at any time upon request, that DCA has the capability to notice, docket and maintain proofs of claims efficiently and effectively; (d) furnish a notice of bar date approved by the Court for the filing of a proof of claim and a form for filing a proof of claim to each party notified of the filing; (e) furnish service to creditors of any required notices, including notice of the meeting of creditors and notice of the time fixed for filing proofs of claim; (f) file with the Clerk's Office a certificate of service, as soon as practicable after each service, which includes a copy of the notice served, a list of persons to whom it was mailed and the date those notice was mailed; (g) receive, docket, maintain, photocopy, and transmit all proofs of claim filed; (h) maintain the original proofs of claim in correct claim number order in an environmentally secure area, and protect the integrity of these original documents from theft and alteration; (i) be open to the public for examination of the original proofs of claim without charge during regular business hours; (j) make all original documents available to the Clerk's Office on an expedited, immediate basis; (k) maintain a proof of claim docket in sequential order, which specifies: (1) the claim number, (2) the date the proof of claim was received, (3) the name and address of the claimant and the agent, if any, that filed the proof of claim, (4) the amount of the claim, and (5) the classification of the claim; (l) transmit to the Clerk's Office a copy of the Claims Register on a monthly basis, unless requested in writing by the Clerk's Office on a more or less frequent basis; (m) maintain an up-to-date mailing list for all entities that have filed a proof of claim, which will be available upon request of a party-in-interest or the Clerk's Office, provided that a party-in-interest other than the Clerk's Office may be required to pay a reasonable charge for those list; (n) record all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of the transfer; (o) comply with applicable state, municipal and local laws and rules, orders, regulations and requirements of federal government departments and bureaus; and (p) promptly comply with further conditions and requirements as the Clerk's Office may prescribe. Also, the Debtors want to retain DCA to assist the Debtors in fulfilling their claims-related obligations, including: (a) assisting the Debtors with the process of objecting to proofs of claims, including providing notice of objections and tracking allowances and disallowances of claims based on Court orders, (b) providing all services necessary with respect to the preparation, mailing and tabulation of ballots with respect to the Debtors' plan of liquidation, (c) providing the requisite notices throughout the Debtors' chapter 11 cases, and (d) providing other administrative services that may be requested by the Debtors. Joseph L. King, the Vice President of Delaware Claims Agency, LLC, discloses that the Firm received a $5,000 retainer. The current hourly rates of professionals who will work in the engagement are: Designation Hourly Rate ----------- ----------- Senior Consultants $130 Technical Consultants $115 Associate Consultants $100 Processors & Coordinators $50 The Debtors believe that Delaware Claims Agency, LLC, 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). Gregory P. Williams, Esq., 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: Court Grants John Hancock Admin. Expense Claim ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on April 28, 2005, the United States Bankruptcy Court for the Southern District of Indiana approved ATA Airlines, Inc. and its debtor-affiliates' request to reject a Boeing 727-290 Lease entered into between ATA Airlines, Inc., and John Hancock Leasing Corporation. George E.B. Maguire, Esq., at Debevoise & Plimpton LLP, in New York, tells Judge Lorch that as of April 11, 2005, the Debtors have not yet consummated the rejection. The Debtors failed to comply with the "installation" regulations of the Federal Aviation Administration. Pursuant to Section 365(d)(10) of the Bankruptcy Code, Mr. Maguire informs the Court that the Debtors incurred administrative expense obligations under the Lease, commencing on December 24, 2004, or 60 days after the Petition Date. These obligations include basic rent, accruing at a $83,590 rate per month. In light of the concerns presented, John Hancock asked the Court to: (a) declare that the Rejection Effective Date has not occurred; (b) compel the Debtors to comply with all of their obligations under the Rejection Order, including the installation of the Engines in accordance with the Current Manuals; (c) direct the Debtors to satisfy timely their obligations under the Lease accruing as of December 24, 2004; and (d) compel the Debtors to continue their insurance, maintenance and storage obligations through the occurrence of the Rejection Effective Date and for the next 20 days thereafter. * * * The Court holds that the surrender of the Current Manuals and the reinstallation of the Leased Engines were neither conditions precedent to the rejection of the Lease becoming effective. Judge Lorch explains that the Rejection Effective Date occurred on the date the Debtors surrendered and returned the Rejected Aircraft Equipment. The actual date of surrender and return of the Rejected Aircraft Equipment, however, will be determined after the parties have been afforded an opportunity to conduct discovery and present evidence. The Court grants John Hancock Leasing Corporation an administrative expense claim against the Debtors under Section 365(d)(10) of the Bankruptcy Code for the Debtors' unperformed Lease obligations first arising from or after December 24, 2004, through the Rejection Effective Date. The amount of any administrative expense claim, however, will be determined after the parties have been afforded an opportunity to conduct discovery and present evidence. The Rejection Order imposes postpetition obligations on the Debtors to: (a) at their own expense, reinstall the Leased Engines, before the Rejection Effective Date, in the Leased Aircraft in which they were originally installed; and (b) surrender and return the Rejected Aircraft Equipment. To the extent the Debtors failed to comply with the postpetition obligations imposed by the Rejection Order, John Hancock will be entitled to an administrative expense claim. Judge Lorch clarifies that the Order does not determine by implication any issues beyond its express terms. Certain issues, including, but not limited to, the extent of the postpetition obligations imposed on the Debtors by the Rejection Order and whether the Debtors have complied with their post-petition obligations, will be determined after the parties have been afforded an opportunity to conduct discovery and present evidence. The Order also does not determine the amount of, or allow, any administrative expense claim of John Hancock arising from the postpetition obligations imposed on the Debtors by the Rejection Order. The amount and allowance of John Hancock's administrative expense claims, if any, arising from any noncompliance by the Debtors with their postpetition obligations will be determined after the parties have been afforded an opportunity to conduct discovery and present evidence. The Order is without prejudice to: (a) John Hancock's right to assert additional claims against the Debtors relating to the rejection of the Lease; (b) John Hancock's right to pursue claims asserted in the Motion that are not determined by the Order, including without limitation administrative expense claims for: (i) alleged postpetition property damage inflicted by the Debtors upon the Leased Engines or the Leased Aircraft; and (ii) the Debtors' "fair use," if any, of the Leased Aircraft and Leased Engines under Section 503(b)(1)(A) during the first 59 days following the Petition Date; and (c) the Debtors' right to contest any additional claims or assertions. The Order is without prejudice to the Debtors' right to seek to avoid the Lease or any renewal, modification or extension thereof under applicable provisions of the Bankruptcy Code, or to John Hancock's right to contest any attempts at avoidance. 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) BBI ENTERPRISES: Committee Balks at Bid Protocol & Bid Increment ---------------------------------------------------------------- Private equity firm Wynnchurch Capital Partners L.P. proposes to buy substantially all of BBi Enterprises L.P.'s assets for $20 million. Accordingly, BBi asks the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, to approve the proposed sale to Wynnchurch subject to better and higher offers. BBi also asks the Court to approve uniform bidding procedures and a $600,000 break-up fee for Wynnchurch. The Debtor's Official Committee of Unsecured Creditors tells the Court that the Bank of Montreal -- BBi's primary secured creditor -- refused to provide the company with additional financing to effectuate a sale of its assets. Without additional funding from the Bank, BBi will have to conduct an auction in an artificially constrained time-frame, killing the opportunity for competitive bidding. In addition, the Committee believes that the $1 million bid increment appears to be unnecessarily large and may chill other bidders. Furthermore, the Committee thinks that the Aug. 31 deadline for interested buyers to submit competing bids is too soon. An interested buyer will require a significant amount of due diligence, including plant visits, customer negotiations, union talks and financial analysis -- all of which the Committee stresses can't be done in so short a time. BBi proposes to hold a Court-approved auction on Sept. 2 and a sale hearing on Sept. 12. Headquartered in Bloomfield Hills, Michigan, BBi Enterprises, L.P., designs, manufactures and supplies thermal and acoustic components to the North American OEM Automotive industry. The Company filed for chapter 11 protection on March 4, 2005 (Bankr. E.D. Mich. Case No. 05-46580). Joseph M. Fischer, Esq., Robert A. Weisberg, Esq., and Lawrence A. Lichtman, Esq., at Carson Fischer, P.L.C., represent the Debtor. When BBi filed for protection from its creditors, it listed $10 million to $50 million in assets and debts. BDR CORP: Judge Williams Confirms Second Amended Plan ----------------------------------------------------- The Honorable Patricia C. Williams of the U.S. Bankruptcy Code for the Eastern District of Washington confirmed the Second Amended Plan of Reorganization proposed by BDR Corporation in May. Judge Williams determined that the Plan satisfies the 13 provisions for confirmation stated in Section 1129(a) of the Bankruptcy Code. About the Plan The Plan contemplates the sale of substantially all of BDR's real estate and certain Dellen Wood Products equipment to Pristina Pine. Pursuant to the Plan, Administrative and Priority Tax Claims will be paid in full on the confirmation date. Bank of America asserts a $2.6 million claim against BDR. The Bank holds a mortgage on BDR's Building I-6 located on East Flora Road, which serves as the Debtor's headquarters. The Debtor will fully pay the Bank's claim on the confirmation date. General Electric Capital Corporation is owed about $1,609,796 on account of equipment lease obligations. The Debtor will pay GE $1.4 million upon the closing of the "Woodeye" equipment sale to Pristina Pine. The rest of GE's claim will not be paid. The estates of: Claim ----- Ellen Lentes $1,623,481 William E. Lentes 521,863 Richard B. Lentes 314,800 Randal S. Lentes 312,400 will be given replacement real estate after claims held by of the Bank of America, GECC and general unsecured creditors are paid in full. General unsecured creditors Inland Empire Fire Protection and Ellsworth Wright will be paid in full. Equity interest holders and insider claims will be paid in full after these four claims are satisfied: Claim Holder Claim Amount ------------ ------------ Dellen Wood Products $59,449 William E. Lentes 62,010 Randal S. Lentes 39,926 Richard B. Lentes 39,961 Headquartered in Veradale, Washington, BDR Corporation, filed for chapter 11 protection on May 5, 2004 (Bankr. E.D. Wash. Case No. 04-03639). John F. Bury, Esq., at Murphy, Bantz & Bury, P.S., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $6,919,609 in assets and $6,925,123 in debts. BIG 5 SPORTING: Names Barry Emerson As Chief Financial Officer -------------------------------------------------------------- Big 5 Sporting Goods Corporation (Nasdaq: BGFVE) hired Barry D. Emerson to be the Company's new Senior Vice President, Chief Financial Officer and Treasurer. He is expected to begin employment with the Company in early September. Mr. Emerson has over 20 years of accounting and financial management experience, including Chief Financial Officer positions with U.S. Auto Parts Network, a leading Internet direct marketer of automotive replacement parts and accessories, and Elite Information Group, a premier software developer which traded on the Nasdaq National Market before being acquired. Mr. Emerson was also employed by Wyle Electronics for 15 years, where he served as Vice President and Corporate Controller. Wyle Electronics, an electronics distribution company with $1.7 billion in revenue, traded on the New York Stock Exchange before being acquired. Mr. Emerson began his career as an auditor with Arthur Andersen LLP. Mr. Emerson is a Certified Public Accountant and has an MBA degree in finance from UCLA and an undergraduate degree in accounting from California State University, Long Beach. "We are pleased to announce the hiring of Barry Emerson. When we began our search for a new Chief Financial Officer, we wanted someone who would strengthen our finance and accounting department by bringing an extensive background in GAAP and SEC financial reporting," stated Steven G. Miller, the Company's Chairman, President and Chief Executive Officer. "Mr. Emerson possesses these skills as well as the ability to ensure that our company will have the proper internal controls in place to support our long-term growth and expansion plans." "I am very excited to be joining one of the nation's leading sporting goods retailers," Mr. Emerson added. "I look forward to working with Big 5's executive team and accounting department." As previously announced, Charles P. Kirk, the Company's former Chief Financial Officer and Treasurer, will remain a Senior Vice President and a member of the Company's senior management team. Audit Review Work on the review and associated audit of the Company's Annual Report on Form 10-K for fiscal 2004 has been substantially completed. The Company expects that the review and audit will be completed and the Form 10-K will be filed shortly. The Company also expects that the review of its Quarterly Reports on Form 10-Q for the first quarter and second quarter of fiscal 2005 will be completed, and that those reports will be filed, soon after the Form 10-K is filed. Mr. Emerson will become the Company's Senior Vice President, Chief Financial Officer and Treasurer upon the Company's filing of its Annual Report on Form 10-K for fiscal 2004 and Quarterly Reports on Form 10-Q for the first quarter and second quarter of fiscal 2005. Pending those filings, Mr. Emerson will serve as a Senior Vice President with the Company. Financial Restatements As the Company disclosed on July 29, 2005, additional corrections to its prior financial statements will be required as part of the restatement. The expected cumulative net impact on the Company's net income of all additional corrections that the Company is aware of at this time, as well as the adjustments relating to the previously announced lease accounting changes and sales return reserve, for fiscal years 2002 through 2004 remains less than 3% of aggregate net income as preliminarily reported on Feb. 9, 2005, for such fiscal year periods, which reflected the preliminary adjustments to address the previously announced error in an account within accounts payable. As also stated in the July 29, 2005 announcement, these matters will reduce net income for prior periods, which the Company anticipates will be reflected in a balance sheet adjustment for fiscal 2002. Big 5 Sporting Goods Corporation (Nasdaq: BGFVE) is a leading sporting goods retailer in the United States, operating 312 stores in 10 states under the "Big 5 Sporting Goods" name. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5's product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding and in-line skating. BIRCH TELECOM: Gets Interim Okay to Obtain up to $2 Mil. DIP Loans ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave Birch Telecom, Inc., and its debtor-affiliates permission, on an interim basis to: a) obtain post-petition financing from Bank of America, N.A., acting as Administrative Agent for itself and as DIP Agent for the DIP Lenders pursuant to the DIP Credit Agreement entered into between the Debtors, Bank of America and the DIP Lenders; b) authorize the Debtors to execute and enter into the post- petition DIP Documents and perform other acts required in connection with the DIP Documents; and c) grant super-priority claims to the DIP Agent and the DIP Lenders on all of the Debtors pre-petition and post-petition property, subject to the Carve-Out. DIP Financing & Use of DIP Loans The Court authorizes the Debtors to enter into the DIP Documents and obtain DIP Financing of up to $2 million, plus fees, interests and other expenses, from Bank of America and the DIP Lenders pursuant to the DIP Documents. The Debtors will use the proceeds of the DIP Loans for the orderly continuation of their businesses, to maintain business relationships with their vendors, suppliers and customers, meet payroll expenses and satisfy other working capital and operational needs. The Debtors' interim use of the DIP Financing will be in compliance with the terms of the Court's Interim Order, the DIP Documents and the DIP Credit Agreement entered into between the Debtors, Bank of America and the DIP Lenders. A 12-page summary of the terms of the DIP Credit Agreement is available for free at: http://bankrupt.com/misc/BirchTelecomSummaryOfTermsDIPAgreement.pdf Adequate Protection & Carve-Out To adequately protect their interests, Bank of America and the DIP Lenders are granted a valid, binding, continuing, enforceable, fully-perfected first priority senior security interests and liens on all of the Debtors' pre-petition and post-petition properties. The liens, security interests and superpriority claims granted to Bank of America and the DIP Lenders pursuant to the DIP Documents, the Credit Agreement and the Court's Interim Financing Order are subject to a Carve-Out for: 1) the payment of all allowed professional fees and disbursements incurred by professionals retained by the Debtors and any statutory creditors' committee appointed in their chapter 11 cases in an amount not to exceed $1 million; and 2) all required fees to be paid to the Clerk of the Bankruptcy Court and the Office of the U.S. Trustee pursuant to 28 U.S.C. Section 1930(a). The Court will convene a final financing hearing at 3:00 p.m., on Sept. 14, 2005, to consider the Debtors' request to approve the DIP Financing arrangement on a final basis. Headquartered in Kansas City, Missouri, Birch Telecom, Inc. and its subsidiaries -- http://www.birch.com/-- owns and operates an integrated voice and data network, and offers a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long-distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. Birch Telecom and 28 affiliates filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del. Case Nos. 05-12237 through 05-12265). Marion M. Quirk, Esq., and Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. BIRCH TELECOM: Look for Bankruptcy Schedules On Oct. 11 ------------------------------------------------------- Birch Telecom, Inc., and its debtor-affiliates and its debtor- affiliates ask the U.S. Bankruptcy Court for the District of Delaware for more time to file their: -- Schedules of Assets and Liabilities, -- Statements of Financial Affairs, -- Schedules of Current Income and Expenditures, -- Statements of Executory Contracts and Unexpired Leases, and -- Lists of Equity Security Holders. The Debtors want until Oct. 11 to file those documents. The Debtors give the Court two reasons that militate in favor of the extension: a) their businesses are large and complex, encompassing operations throughout the United States and their chapter 11 cases involves more than 20,000 creditors and other parties- in-interest that will likely be included in their Schedules and Statements; and b) they and their professionals must gather and review an extensive number of documents to accurately prepare, complete and file the Schedules and Statements. The Court will convene a hearing at 4:00 p.m., on Sept. 14, 2005, to consider the Debtors' request. Headquartered in Kansas City, Missouri, Birch Telecom, Inc. and its subsidiaries -- http://www.birch.com/-- owns and operates an integrated voice and data network, and offers a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long-distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. Birch Telecom and 28 affiliates filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del. Case Nos. 05-12237 through 05-12265). Marion M. Quirk, Esq., and Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts BISYS GROUP: CEO Says Financial Results In Line with Expectations ----------------------------------------------------------------- The BISYS Group, Inc., provided a business update for its fiscal fourth quarter. "In light of the pending restatement of our financial results which we announced on July 25th, we are not providing detailed financial results at this time," Russell Fradin, BISYS President and CEO, said. "We can report, however, that excluding the potential impact of the pending restatement, BISYS' financial results were generally in line with our expectations and consistent with our stated objectives for the final quarter of the fiscal year." "Our Investment Services and Insurance Services groups each continued to generate internal revenue growth and to expand their operating margin compared to the quarter a year ago. Our Information Services group performed well and consistent with our expectations. Information Services internal revenue was mildly negative compared to the quarter a year ago, as we completed the anniversary of a client loss which occurred in fiscal year 2004. We also continue to generate solid cash flow in each of our businesses. "While we remain generally pleased with the operating results of our three business groups, our corporate expenses have continued to run at an elevated level, due principally to expenses associated with the ongoing SEC investigation in our fund services business and the additional SEC and internal investigations related to our accounting. While we anticipate an elevated level of expenditure to continue in the near term, we do expect these expenses to decrease from the level we experienced in our fiscal fourth quarter." As reported in the Troubled Company Reporter on Aug. 3, 2005, the Company negotiated an amendment to its credit agreement with its lenders on July 28, 2005. Under the terms of the amended agreement: -- the cure period for the default under its credit facility is extended through Sept. 13, 2005; -- the date required for BISYS to refinance $300 million of outstanding 4% convertible subordinated notes due March 2006 is extended from Sept. 9, 2005, to Dec. 14, 2005; and -- the minimum consolidated net worth that BISYS is required to maintain under the financial covenants contained in the Credit Facility is lowered to $685 million. The default under its credit facility occurred due to the Company's failure to timely file its Form 10-Q for the fiscal quarter ended March 31, 2005, and to deliver the related compliance certificate for that quarter. During the extended cure period, BISYS has agreed that it will not request additional credit extensions under the Credit Facility. The company believes that its operating cash flows and cash on hand will be sufficient to support its near term working capital and other cash requirements and that additional credit under the Credit Facility will not be necessary through the extension date. Financial Restatements As reported in the Troubled Company Reporter on July 27, 2005, BISYS concluded that its previously issued financial statements for the years ended June 30, 2002, 2003, and 2004 and the interim financial statements for the quarters ended Sept. 30 and Dec. 31, 2004 and 2003, need to restated. The Company will not be in a position to file the Form 10-Q for the quarter ended March 31, 2005, the Company said, until the restatement and related investigation into the facts and circumstances surrounding certain funds services arrangements being conducted by the company's Audit Committee are completed. THE BISYS GROUP, INC., is the Borrower under a $400,000,000 CREDIT AGREEMENT dated as of March 31, 2004. The Lending Syndicate at the time that loan facility was put in place was comprised of: * THE BANK OF NEW YORK, individually, as Issuing Bank, as Swingline Lender and as Administrative Agent * FLEET NATIONAL BANK, individually and as Documentation Agent * JPMORGAN CHASE BANK, individually and as Documentation Agent * SUNTRUST BANK, individually and as Documentation Agent * WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as Documentation Agent * KEYBANK NATIONAL ASSOCIATION * PNC BANK, NATIONAL ASSOCIATION * THE BANK OF NOVA SCOTIA * SCOTIABANC INC. * US BANK, N.A. * ALLIED IRISH BANKS, PLC * FIFTH THIRD BANK (CENTRAL OHIO) * UFJ BANK LIMITED * SUMITOMO MITSUI BANKING CORPORATION and * WELLS FARGO BANK, NATIONAL ASSOCIATION Lawyers at Bryan Cave LLP represent the Lenders. The BISYS Group, Inc. (NYSE: BSG) -- http://www.bisys.com/-- provides outsourcing solutions that enable investment firms, insurance companies, and banks to more efficiently serve their customers, grow their businesses, and respond to evolving regulatory requirements. Its Investment Services group provides administration and distribution services for mutual funds, hedge funds, private equity funds, retirement plans and other investment products. Through its Insurance Services group, BISYS is the nation's largest independent wholesale distributor of life insurance and a leading independent wholesale distributor of commercial property/casualty insurance, long-term care, disability, and annuity products. BISYS' Information Services group provides industry-leading information processing, imaging, and back-office services to banks, insurance companies and corporate clients. Headquartered in New York, BISYS generates more than $1 billion in annual revenues worldwide. BISYS GROUP: Bruce Dalziel to Succeed Jim Fox as CFO ---------------------------------------------------- The BISYS Group, Inc., disclosed the resignation of Jim Fox as Executive Vice President and Chief Financial Officer in a regulatory filing with the Securities and Exchange Commission. Bruce Dalziel will succeed Mr. Fox in these positions. Mr. Fox has agreed to remain with the Company during a period of transition. Mr. Dalziel brings over 20 years of financial experience to BISYS, most recently serving as Chief Financial Officer of DoubleClick, Inc. Previously, he served for over fourteen years in various financial and operating roles at Prudential Insurance Company of America, including Chief Financial Officer for Prudential's International Insurance division, and Corporate Vice President of Planning and Analysis. "We welcome Bruce to BISYS, and look forward to his contributions," Russell Fradin, BISYS President and CEO, said. "In addition, we thank Jim for his valuable contributions over the last two years and for his continued assistance during this transition period. We wish him well in his future endeavors." * * * As reported in the Troubled Company Reporter on Aug. 3, 2005, the Company negotiated an amendment to its credit agreement with its lenders on July 28, 2005. Under the terms of the amended agreement: -- the cure period for the default under its credit facility is extended through Sept. 13, 2005; -- the date required for BISYS to refinance $300 million of outstanding 4% convertible subordinated notes due March 2006 is extended from Sept. 9, 2005, to Dec. 14, 2005; and -- the minimum consolidated net worth that BISYS is required to maintain under the financial covenants contained in the Credit Facility is lowered to $685 million. The default under its credit facility occurred due to the Company's failure to timely file its Form 10-Q for the fiscal quarter ended March 31, 2005, and to deliver the related compliance certificate for that quarter. During the extended cure period, BISYS has agreed that it will not request additional credit extensions under the Credit Facility. The company believes that its operating cash flows and cash on hand will be sufficient to support its near term working capital and other cash requirements and that additional credit under the Credit Facility will not be necessary through the extension date. Financial Restatements As reported in the Troubled Company Reporter on July 27, 2005, BISYS concluded that its previously issued financial statements for the years ended June 30, 2002, 2003, and 2004 and the interim financial statements for the quarters ended Sept. 30 and Dec. 31, 2004 and 2003, need to restated. The Company will not be in a position to file the Form 10-Q for the quarter ended March 31, 2005, the Company said, until the restatement and related investigation into the facts and circumstances surrounding certain funds services arrangements being conducted by the company's Audit Committee are completed. THE BISYS GROUP, INC., is the Borrower under a $400,000,000 CREDIT AGREEMENT dated as of March 31, 2004. The Lending Syndicate at the time that loan facility was put in place was comprised of: * THE BANK OF NEW YORK, individually, as Issuing Bank, as Swingline Lender and as Administrative Agent * FLEET NATIONAL BANK, individually and as Documentation Agent * JPMORGAN CHASE BANK, individually and as Documentation Agent * SUNTRUST BANK, individually and as Documentation Agent * WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as Documentation Agent * KEYBANK NATIONAL ASSOCIATION * PNC BANK, NATIONAL ASSOCIATION * THE BANK OF NOVA SCOTIA * SCOTIABANC INC. * US BANK, N.A. * ALLIED IRISH BANKS, PLC * FIFTH THIRD BANK (CENTRAL OHIO) * UFJ BANK LIMITED * SUMITOMO MITSUI BANKING CORPORATION and * WELLS FARGO BANK, NATIONAL ASSOCIATION Lawyers at Bryan Cave LLP represent the Lenders. The BISYS Group, Inc. (NYSE: BSG) -- http://www.bisys.com/-- provides outsourcing solutions that enable investment firms, insurance companies, and banks to more efficiently serve their customers, grow their businesses, and respond to evolving regulatory requirements. Its Investment Services group provides administration and distribution services for mutual funds, hedge funds, private equity funds, retirement plans and other investment products. Through its Insurance Services group, BISYS is the nation's largest independent wholesale distributor of life insurance and a leading independent wholesale distributor of commercial property/casualty insurance, long-term care, disability, and annuity products. BISYS' Information Services group provides industry-leading information processing, imaging, and back-office services to banks, insurance companies and corporate clients. Headquartered in New York, BISYS generates more than $1 billion in annual revenues worldwide. BRAUER SUPPLY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Brauer Supply Company 4260 Forest Park Boulevard Saint Louis, Missouri 63108 Bankruptcy Case No.: 05-51754 Type of Business: The Debtor provides quality products and services at competitive prices to the construction industry, and commercial and industrial businesses in the St. Louis area, out-state Missouri, and southern Illinois. Brauer Supply is a source of HVAC equipment and accessories, thermal Insulation, Air Filtration products, and specialty Fasteners for firms of all sizes. See http://www.brauersupply.com/ Chapter 11 Petition Date: August 22, 2005 Court: Eastern District of Missouri (St. Louis) Judge: Kathy A. Surratt-States Debtor's Counsel: Peter D. Kerth, Esq. Gallop, Johnson & Neuman, L.C. 101 South Hanley, Suite 1600 Saint Louis, Missouri 63105 Tel: (314) 615-6000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Knauf Fiber Glass $109,674 #1 Knauf Drive Shelbyville, IN 46176-0120 Heating & Cooling Produces $87,572 325 Commerce Drive P.O. Box 683 Mt. Vernon, OH 43050 General Filters, Inc. $26,333 43800 Grand River Avenue Novi, MI 48375 Group Health Plan $23,977 Dynatemp International, Inc. $23,904 Milcor Limited Partnership $13,739 Selkirk L.L.C. $10,540 Unifrax Corporation $10,526 Gripnail Corp. $7,320 Glasfloss Ind., Inc. $5,908 Ramco $5,582 Auburn Manufacturing, Inc. $5,530 Pop Fasteners $5,434 Roxul, Inc. $4,659 Malco Products, Inc. $4,654 Tomcraft Company $4,055 Avdel Cherry Textron, Inc. $3,954 Willie Washer Mfg. $3,873 White-Rodgers, Inc. $3,721 TACC International Corp. $3,624 BRILIANT DIGITAL: Balance Sheet Upside Down by $3 Mil. at June 30 ----------------------------------------------------------------- Brilliant Digital Entertainment, Inc., reported its results of operations for the quarterly period ending June 30, 2005. Revenues Revenues decreased 32% from $4,722,000 for the six months ended June 30, 2004, to $3,233,000, for the six months ended June 30, 2005. Marketing services revenue decreased to $2,314,000, for the six months ended June 30, 2005 primarily as a result of a decrease in revenue from the Company's agreement with Focus Interactive, Inc., Licensing and other services revenues decreased to $761,000 for the six months ended June 30, 2005 from $1,065,000 for the six months ended June 30, 2004, due to a decrease in payment processing revenues as a result of our discontinuation of processing Kazaa Plus transactions that occurred in early February 2005. Digital content revenue decreased from $229,000, for the six months ended June 30, 2004, to $158,000 for the six months ended June 30, 2005, primarily as a result of a decrease in software sales through the Altnet Network. Cost of Revenues Cost of revenues decreased from $589,000, for the six months ended June 30, 2004, to $ 257,000 for the six months ended June 30, 2005. This net decrease of $332,000 is primarily related to a substantial decrease in the costs associated with the operation of our payment gateway services of $313,000 as a result of our discontinuation of processing for Kazaa Plus. Sales and Marketing Sales and marketing expenses decreased by 43% from $664,000 for the six months ended June 30, 2004, to $381,000 for the six months ended June 30, 2005. The net decrease of $283,000 in 2005 is due primarily to a reduction in marketing and promotion costs of $193,000 spent to support the Company marketing efforts for the Altnet network, and a reduction in commissions of $90,000. General and Administrative General and administrative expenses primarily include salaries and benefits of management and administrative personnel, rent, insurance costs, professional fees and non-cash warrant expense. General and administrative expenses decreased $1,595,000, or 48%, from $3,331,000 for the six months ended June 30, 2004 to $1,736,000 for the six months ended June 30, 2005. This decrease is primarily attributable to payroll related cost savings of $566,000 and decreases in legal costs of $740,000. Research and Development Research and development expenses include salaries and benefits of personnel conducting research and development relating to our Internet web site, payment gateway and related information database, and the development of the Altnet Peer Points Manager software application. These costs decreased from $231,000 for the six months ended June 30, 2004, to $197,000 for the six months ended June 30, 2005, as most of the development costs incurred for the development of our Peer Points program and our payment gateway have been incurred. Depreciation Depreciation expense relates to depreciation of fixed assets such as computer equipment and cabling, furniture and fixtures and leasehold improvements. These fixed assets are depreciated over their estimated useful lives (up to five years) using the straight-line method. Depreciation expense was $22,000 for the six months ended June 30, 2004, as compared to $13,000 for the six months ended June 30, 2005, as many of the depreciable assets have been fully depreciated. Loss on Impairment of Big Seven and Altnet At the time the Company acquired the remaining shares of Altnet from Joltid and purchased the shares of Big Seven, the Company determined that both Big Seven and Altnet were impaired and its recorded an impairment charge for the full value of the purchases, totaling $750,000. Other Income and Expense Other income and expense primarily includes interest expense. Other income and expense decreased from net expense of $2,437,000 for the six months ended June 30, 2004 to a net expense of $2,019,000 for the six months ended June 30, 2005. During the six months ended June 30, 2005, interest expense included interest accrued on outstanding convertible promissory notes and an additional $1,832,000 of amortized debt issuance costs associated with the agreement to further extend the maturity date of the indebtedness. Liquidity and Capital Resources As of June 30, 2005, the Company's cash and cash equivalents totaled approximately $1,976,000. This is an increase of $1,673,000 as compared to December 31, 2004. As of June 30, 2005, the Company had a working capital deficit of $4,777,000 (excluding non-cash prepaid expense of $828,000 related to the issuance of warrants). Included in this working capital deficit are accounts payable, accrued expenses and accrued expenses to related parties of $730,000 which are over 90 days past due, and $3,849,000 of secured indebtedness. The Company's cash and cash equivalents at June 30, 2005, included $1,360,000 of an advance against future payments due us from Focus Interactive, Inc., under our Strategic Alliance and Distribution Agreement, dated April 14, 2003, as amended in April 2005. Since June 2003, payments to the Company by Focus under its agreement have funded a substantial portion of its working capital. The Company anticipates receiving only small cash payments from Focus until approximately December 2005, when the Company expects the remaining portion of the advance to be fully earned. The Company currently satisfies its working capital requirements primarily through cash flows generated from operations and sales of equity securities. The Company is seeking additional funding. There can be no assurance that with any additional financing, higher cash flows will be generated by operations. Cash Flows During the six months ended June 30, 2005, the Company had a net increase in cash of $1,673,000. The net increase in cash from operating activities during the six months ended June 30, 2005, was primarily the result of the net loss of $2,138,000, a decrease of $120,000 in guaranteed minimum payments, and a $1,041,000 decrease in accrued expenses. These amounts were offset primarily by $1,652,000 in non-cash interest expense, $349,000 in non-cash warrant amortization, $1,417,000 in accounts receivable, an increase of $772,000 in deferred revenue and an impairment loss of $750,000. A full-text copy of Brilliant Digital's Quarterly Report is available for free at http://ResearchArchives.com/t/s?f3 Brilliant Digital Entertainment, Inc., is a company which, through its Altnet, Inc., subsidiary, operates a peer-to-peer-based content distribution network that allows us to securely and efficiently distribute a content owner's music, video, software and other digital files to computer users via the Internet. As of June 30, 2005, Brilliant Digital's balance sheet reflected a $3,383,000, stockholders' deficit. BRILIANT DIGITAL: Braces for Unfavorable Suit Ruling in 3rd Qtr. ---------------------------------------------------------------- Brilliant Digital Entertainment, Inc., is foreseeing material adverse effects on its ability to continue as going concern once a judgment in a copyright infringement suit is rendered against the Company. The Company, its affiliates, and Kevin Bermeister and Anthony Rose, the Company's Chief Executive Officer and Chief Technology Officer, were joined as defendants in the suit by Universal Music Australia Pty. Ltd. and other record labels against Sharman Networks and other defendants, alleging infringement of the copyright in sound recordings controlled by Universal Music. The suit was filed in March 2004, in the Federal Court of Australia, New South Wales District Registry. The plaintiffs alleged that due to the Company's business dealings with Sharman, it is integrally involved in the operation of the Kazaa Media Desktop and is therefore liable for the alleged copyright infringement occasioned by its development and distribution. The Company is still unable to have these charges dismissed, entailing the use of much needed cash. If the legal expenses and other costs of defense are not covered for by the Company's insurance policies or reimbursed by third parties pursuant to indemnification agreements, the cash required to pay for these costs and expenses would not be available for other purposes. A decision in this matter is expected during the third quarter of this year. Brilliant Digital Entertainment, Inc., is a company which, through its Altnet, Inc., subsidiary, operates a peer-to-peer-based content distribution network that allows us to securely and efficiently distribute a content owner's music, video, software and other digital files to computer users via the Internet. As of June 30, 2005, Brilliant Digital's balance sheet reflected a $3,383,000, stockholders' deficit. BRILIANT DIGITAL: May File for Bankruptcy as Notes Mature in Sept. ------------------------------------------------------------------ Brilliant Digital Entertainment, Inc., says it might file for bankruptcy if it cannot pay $3,849,000 to its secured debt holders when the payable becomes due on September 26, 2005. The notes matured on June 30, 2005, but the senior secured noteholders extended the maturity date, at the Company's request, in exchange for this schedule of payments: (1) $50,000 per month, plus (2) 50% of any quarterly EBITDA in excess of $600,000, plus (3) 50% of any increased revenue received from existing sources of revenue or from new sources of revenue. The Company does not believe it will be able to raise the needed cash by September. At June 30, 2004, the Company had $1,673,000 cash. In case the company cannot pay the noteholders by Sept. 26, they will be entitled to exercise all of their rights and remedies, including foreclosure on all of the Company's assets. The Company is once again in talks with its noteholders for additional concessions. Its previous financings have been significantly dilutive to its stockholders and if additional funds are raised through the issuance of equity securities, its stockholders may experience significant additional dilution. Brilliant Digital Entertainment, Inc., is a company which, through its Altnet, Inc., subsidiary, operates a peer-to-peer-based content distribution network that allows us to securely and efficiently distribute a content owner's music, video, software and other digital files to computer users via the Internet. As of June 30, 2005, Brilliant Digital's balance sheet reflected a $3,383,000, stockholders' deficit. CATHOLIC CHURCH: D.F.T. Wants Stay Lifted to Sue Portland Diocese ----------------------------------------------------------------- D.F.T. filed Claim No. 204 in the Archdiocese of Portland in Oregon's Chapter 11 case, seeking $500,000 for economic damages and $5,000,000 for non-economic damages for sexual abuse suffered when he was a minor. D.F.T. has not filed any lawsuit in any jurisdiction against any person on account of the abuse. D.F.T.'s counsel, Kelly W.G. Clark, Esq., in Portland, Oregon, relates that the abuse took place at the Sacred Heart Parish in Medford, Oregon. Sacred Heart Parish is a member of the Committee of Parishes. At the time of the abuse, the offending priest, Father J. William McLeod, was the pastor of the Parish. Portland and the Parishes Committee have asserted that someone other than the Archdiocese is the equitable owner of, the operator of, and the controller of Sacred Heart Parish. The Archdiocese and the Parishes have been adamant, consistent and repetitive in their position. D.F.T. believes that the contentions of both Portland and the Parishes Committee are completely without merit. However, D.F.T. needs to protect himself in case the U.S. Bankruptcy Court for the District of Oregon rules in Portland's favor. Accordingly, D.F.T. asks the Court to lift the automatic stay to commence litigation against Sacred Heart Parish or any other person or entity that asserts or may assert interest in or control over the assets or operation of the Parish. Mr. Clark points out that the request will not place any burden on Portland since the Archdiocese maintains that it does not have any property interest in Sacred Heart Parish. Portland Objects "It is unclear what D.F.T. hopes to accomplish by seeking [relief from the automatic stay]," Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, informs the Court. Mr. Stilley argues that Sacred Heart Parish and third parties like parishioners, donors, or beneficiaries are not liable to D.F.T. simply because they may claim some interest in parish assets or property. The question of property ownership is not relevant to liability but only to collection activities if and when D.F.T. obtains a judgment of liability against these persons. Assuming D.F.T. seeks relief to assert a legally recognized theory of liability, Mr. Stilley contends that D.F.T. should be required to specifically identify who he wants to sue, on what theory, and the scope of relief he requests. Without this information, the Archdiocese of Portland in Oregon cannot address the issues presented by D.F.T.'s request, like whether indemnification or contribution rights might exist in favor of any new defendant. If so, Mr. Stilley continues, the claim would essentially be against the Archdiocese as the real party defendant and "unusual circumstances" would exist justifying denial of relief from stay or an injunction under Section 105 of the Bankruptcy Code. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Wants Future Claims Rep.'s Appeal Denied ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter on June 3, 2005, the Spokane Diocese asked Judge Williams to set the bar date for filing non-governmental proofs of claim at 90 days after the Court approves the request or at another date that the Court determines to be appropriate under the circumstances. * * * The U.S. Bankruptcy Court for the Eastern District of Washington continues the hearing on the Diocese of Spokane's request to September 2, 2005, at 9:00 a.m., in open court. Judge Williams orders Gayle Bush, the Future Claims Representative, to file and serve a legal memorandum of authorities regarding summary judgment, or issue preclusion. The Court will rule on the issue without further oral argument by the parties. FCR Files Memo Pursuant to the Court's directive, Mr. Bush filed a memorandum in support of his contention that an evidentiary hearing is not required on the Claims Bar Date issue. Mr. Bush argues that: (a) Spokane offered no support for its contention that an evidentiary hearing is necessary; (b) Spokane had over two months to file declarations supportive of its position on the bar date but did not do so; (c) Spokane did not provide the FCR and other parties with information about the testimony it plans to present if a hearing is granted; (d) Judge Elizabeth Perris in the Archdiocese of Portland in Oregon's Chapter 11 case pending before the U.S. Bankruptcy Court for the District of Oregon found no need for live testimony in Portland's bankruptcy under near identical circumstances; (e) all the pleadings and evidence indicates that an evidentiary hearing is not necessary; and (f) the FCR knows of no other case in which an evidentiary hearing was held on the issue of a claims bar date. Mr. Bush says Spokane has not replied to his request for evidentiary hearing. Spokane sought the appointment of a Future Claims Representative in the Chapter 11 case because it is necessary for the Diocese to be able to confirm a plan of reorganization that deals with current claims, and any claims that might legitimately arise in the future. Therefore, it is necessary that all constituencies who assert claims against the Diocese arising out of sexual abuse allegedly committed by the Diocese's associates have the opportunity to be heard in the reorganization case. In Portland's Chapter 11 case, Judge Perris addressed the appointment of a Representative to protect the interests of certain victims of child sex abuse. In a legal memorandum, Judge Perris held that the most appropriate procedure for dealing with causal link claimants was through a Future Claims Representative, who was appointed to file claims on behalf of future claimants. Mr. Bush believes this is the most appropriate procedure in Spokane's case, but the Diocese has not offered any evidence as to why this procedure should not be adopted. Judge Perris further noted in Portland's case that the possibility of a long latency period before which injury becomes manifest is an important factual similarity between a sexual abuse case and the asbestos cases. The fact that a claimant may know of some level of abuse does not translate into knowledge by that claimant of entitlement to recourse against the Diocese. Mr. Bush argues that barring a claimant who holds a valid claim but who does not know of an entitlement to recourse because that claimant does not know of an injury, is patently unfair. Mr. Bush asserts that the simplest way to assure fair treatment for all is to follow other bankruptcy courts and to authorize a claim to be filed by the FCR on behalf of all causal link victims who have not yet made the connection between an act of abuse and a resulting injury. The Tort Claimants' Committee supports the FCR's request to restrict testimony at the hearing to declarations. George E. Frasier, Esq., at Riddell Williams, P.S., argues that an evidentiary hearing would be very expensive, would delay setting a bar date, and would not bind any Causal Link Claimant who does not file an individual proof of claim. Insurers Respond General Insurance Company of America and ACE Property & Casualty Insurance Company, as successor-in-interest with regard to policies issued by Aetna Insurance Company, assert that despite the Court's direct order for the Future Claims Representative to provide grounds for summary judgment and brief the issue of "issue preclusion," Mr. Bush and the Tort Committee have provided absolutely no authority to support their improper request to give preclusive effect to the Portland Archdiocese decision. "The issue directly before this Court concerns whether parties who hold claims and know of the conduct involved -- the Causal Link Claimants -- should be excused from the normal claims process applicable to all other claim holders," Nancy L. Isserlis, Esq., at Winston & Cashatt, in Spokane, Washington, tells Judge Williams. Mr. Bush and the Tort Committee have submitted evidence to support their assertion that the Causal Link Claimants should be excused from the claims process, but seek to foreclose any competing evidence or cross-examination. "That is not right and violates fundamental notions of due process," Ms. Isserlis contends. Ms. Isserlis informs the Court that the Insurers, as potential payors with a direct pecuniary and contractual interest in the claims process, are parties-in-interest under Section 1109 of the Bankruptcy Code. CNA Parties Support Insurers Pacific Insurance Company, Columbia Casualty Company, American Casualty Company of Reading, Pennsylvania, Continental Insurance Company and The Glens Falls Insurance Company want to emphasize the critical importance of a correct decision as to whether an unidentified, unquantified and largely undeterminable group of persons, who know they were sexually abused, will be permitted to remain outside the process for the resolution of the sexual abuse claims. Charles R. Ekberg, Esq., at Lane Powell PC, in Seattle, Washington, notes that exempting the so-called "causal link" claimants from the Bar Date will have a material adverse effect on settlement of insurance issues. "[H]ow can the future 'potential' liability be assessed and provided for in a settlement that seeks finality as one of its major objectives?" Mr. Ekberg asks. The CNA Parties urge the Court to decide the Bar Date and related issues on a fully developed evidentiary record. Spokane Wants FCR's Request Denied The Diocese of Spokane asks Judge Williams to deny Mr. Bush's request to restrict testimony. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller LLP, in Spokane, Washington, argues that the FCR's position is inconsistent with the Federal Rules of Bankruptcy Procedure and the Federal Rules of Civil Procedure. In his memo filed with the Court, Mr. Bush failed to: (a) explain why the Diocese should be prohibited from cross- examining witnesses who present testimony to the Court in opposition to the Diocese's case; (b) explain why Spokane should be prohibited from presenting live testimony from its expert witness; and (c) address whether the doctrines of res judicata or issue preclusion would bar the Diocese from cross-examining witnesses or presenting live testimony. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) CEDU EDUCATION: Keen Realty Brings In $17 Mil. in Bankruptcy Sale ----------------------------------------------------------------- Keen Realty LLC completed a real estate sale on behalf of George Miller, the Chapter 7 Trustee overseeing the liquidation of CEDU Education Inc. and its debtor-affiliates. Mr. Miller retained Keen Realty, LLC to market the company's four campuses: -- Running Springs, California; -- Bonners Ferry, Idaho; -- Naples, Idaho; and -- Sutton, Vermont. With the help of the Trustee's counsel John Carroll, Esq., the August 10 auction of the properties was successful, creating $17.5 million of value for the creditors. The successful bids at the auction were approved by the U.S. Bankruptcy Court in Delaware on Aug. 12. "We are pleased with the value commanded for these unique opportunities and that the purchasers plan to continue to use the properties in an educational capacity," said Matthew Bordwin, Executive Vice President at Keen Realty, who also ran the successful auction. Universal Health Services purchased the Idaho and Vermont properties. The Bonners Ferry and Naples, Idaho campuses, which consist of 82 buildings totaling 203,912+/- square feet on 447+/- acres, sold for $10,000,000. The Sutton, Vermont campus, consisting of 19 buildings totaling 57,880+/- square feet on 300+/- acres, sold for $3,350,000. The closings are scheduled for the end of August. Chabad purchased the Running Springs, California campus, consisting of 18 buildings totaling 56,165+/- square feet on 69.9+/- acres, for $4,300,000. This sale closed. For over 23 years, Keen Consultants has had extensive experience solving complex problems and evaluating and selling real estate, leases and businesses. Keen Consultants, a leader in identifying strategic investors and partners for businesses, has consulted with thousands of clients nationwide, evaluated and disposed of over 1.9 billion square feet of properties and repositioned more than 18,600 properties across the country. Recent clients include: Spiegel/Eddie Bauer, Arthur Andersen, Service Merchandise, Warnaco, Cable & Wireless, Fleming, Pillowtex, Parmalat, FOL Liquidation Trust (former Fruit of the Loom facilities) and financial institutions like JP Morgan Chase and CIBC. Headquartered in Sandpoint, Idaho, CEDU Education Inc. -- http://www.cedu.com/-- operates schools offering programs for troubled teenagers. The Debtor, along with its affiliates filed for chapter 7 petitions on March 25, 2005 (Bankr. D. Del. Case Nos. 05-10841 through 05-10865). Daniel B. Butz, Esq., at Morris, Nichols, Arsht & Tunnell represents the Debtors. When the Debtor filed for protection from its creditors, it estimated $10 million in assets and $50 million in debts. CELERO TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Celero Technologies, Inc. fka Sim Training Holdings, Inc. fka Strategic Management Group, Inc. 1500 Market Street East Tower, 12th Floor, Suite 67 Philadelphia, Pennsylvania 19102 Bankruptcy Case No.: 05-31273 Chapter 11 Petition Date: August 22, 2005 Court: Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Amy E. Vulpio, Esq. Robert A. Kargen, Esq. White and Williams LLP 1800 One Liberty Place Philadelphia, PA 19103 Tel: (215) 864-6250 Estimated Assets: $500,000 to $1 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Behrman Capital III, L.P. Value of security: $17,300,000 126 E. 56th Street, $8,100,000 27th Floor New York, NY 10022 SMG Real Estate Co. Philadelphia rent $332,217 3624 Market Street, 3rd Floor Philadelphia, PA 19104 MCI-Digex $68,740 P.O. Box 371322 Pittsburgh, PA 15250-7322 Xerox Corp. Copier rental $65,045 Goodwin Proctor LLP Legal services $56,349 PricewaterhouseCoopers Audit fees/ $43,962 returned fees R.R. Donnelly & Sons Co. Customer overpayment $29,625 Morgan Lewis & Bockius LLP Legal services $22,910 Siemens Financial Service Telephone equipment $15,931 Compuware Corporation Software $14,160 Sprint Data Telephone $13,782 Paetec Communication, Inc. Local telecom service $9,381 Wyeth Customer overpayment $9,052 ABM Janitorial Services Cleaning service $8,799 ASI Consulting Trade debt $8,717 University of Oklahoma Customer overpayment $8,027 Akin Gump Strauss Hauer & Legal services $7,661 Feld Hugo A. Keesing Consulting fees $6,000 Littler Mendelson PA Legal services $4,814 GE Corporate Europe Customer overpayment $4,000 CHENIERE ENERGY: S&P Lowers Corporate Credit Rating to B from B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit rating on Cheniere Energy Inc. to 'B' from 'B+'. The lowered rating reflects the implementation of a ring-fencing structure around Cheniere LNG Holdings LLC (CLH), a newly formed, indirectly owned 100% subsidiary of Cheniere that will own Cheniere's 100% general and limited partnership interests in the Sabine Pass liquefied natural gas (LNG) terminal and its 30% limited partnership interest in the Freeport LNG terminal. The outlook is stable. "These assets currently provide essentially all of Cheniere's contracted cash flows," said Standard & Poor's credit analyst Swami Venkataraman. "Two other LNG projects are still in the process of being permitted and may or may not be built." The ring-fence was implemented to enable the raising of up to $600 million in a term loan B bank facility at CLH. The bank loan agreement contains covenants require 100% of all currently contracted cash flows from the Sabine Pass project and 50% of all additional cash flows, if any, to be swept to repay the loan. Additional cash flows could come from the currently uncontracted capacity at Sabine Pass or distributions from Freeport. The other 50% of additional cash flows will go into a collateral account that is pledged to the lenders at CLH and will only be available for investments into CLH's subsidiaries. These cash flow restrictions, along with the ring-fencing of CLH, will result in no cash distributions to Cheniere. After CLH is established, Cheniere will be a project developer with two LNG development projects at Corpus Christi and Creole Trail in Texas. The 'B+' CCR assigned to Cheniere in April 2005 reflected full availability of cash flows from Sabine after a 1.25x debt service coverage distribution test under the terms of the project's debt facility. With receipt of part of the proceeds from the financing at CLH and proceeds from a recent $325 million convertible note issue, Cheniere will have more than $600 million in cash to support its terminal development business. CHENIERE LNG: S&P Rates Proposed $600 Million Bank Facility at BB ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to the proposed $600 million term loan B bank facility at Cheniere LNG Holdings LLC (CLH), an indirectly owned 100% subsidiary of Cheniere Energy Inc. (B/Stable/--), the Houston-based liquefied natural gas (LNG) project developer. The rating reflects: * construction risk in the building of the LNG terminals; * cash flow available for debt service at CLH that is subordinated to debt service at Sabine Pass; and * refinancing risk. The outlook is stable. Standard & Poor's also assigned its '3' recovery rating to the bank loan, indicating meaningful (50%-80%) recovery of principal in the event of a default. Offsetting strengths include: * expectations of strong and stable cash flows at Sabine Pass once it is operating; * a fixed-price engineering, procurement, and construction contract at Sabine Pass with an experienced builder (Bechtel) that minimizes construction risks; and * strong ring-fencing protections that insulate the credit quality of CLH from the rest of the Cheniere organization. "Construction risk is the most important risk, particularly given the stringent limitations on additional debt imposed by the bank loan agreement," said Standard & Poor's credit analyst Swami Venkataraman. "Significant cost overruns could necessitate an equity infusion from Cheniere, a much lower rated entity. The risk of cost-overruns is somewhat mitigated by the fixed-price EPC contract with Bechtel, and comfortable allowances for contingencies that have been built into the project costs." The proceeds from the bank loan will be distributed to Cheniere Energy to support future LNG terminal development activities and to fund a reserve to cover debt service payments during the four- year period before distributions are expected to begin from the Sabine Pass LNG terminal. CLH's only assets are its ownership of Cheniere's 100% general and limited partnership interests in the 2.6 billion cubic feet (bcf) per day Sabine Pass LNG terminal and 30% limited partnership interest in the 1.5 bcf/day Freeport LNG terminal. COLLINS & AIKMAN: InSite Westland Wants to Collect Lease Payments ----------------------------------------------------------------- InSite Westland, LLC, formerly known as Westland Newburgh Limited Partnership, asks the U.S. Bankruptcy Court for the Eastern District of Michigan to compel Collins & Aikman Corporation and its debtor-affiliates to: a. immediately pay all accrued postpetition rents and operating expenses; and b. pay and otherwise perform timely going forward all obligations coming due under the Lease until it is assumed or rejected. InSite Westland leased industrial and warehouse space to the Debtors. David J. Cannon, Esq., at Michael Best & Friedrich LLP, in Milwaukee, Wisconsin, tells the Court that $7,698 in operating expenses and other charges were accrued and unpaid under the Lease as of the Petition Date. Moreover, the Debtors permitted certain claims or liens to be filed against the Westland premises, purportedly securing not less than $68,757. For June 2005, additional base rent and operational expenses amounting $109,671 have accrued and became due under the Lease. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLUSA MUSHROOM: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Colusa Mushroom, Inc. P.O. Box 750381 Petaluma, California 94975 Bankruptcy Case No.: 05-12180 Type of Business: The Debtor operates a mushroom farm. Chapter 11 Petition Date: August 22, 2005 Court: Northern District of California (Santa Rosa) Debtor's Counsel: Michael C. Fallon, Esq. Law Offices of Michael C. Fallon 100 East Street #219 Santa Rosa, California 95404 Tel: (707) 546-6770 Estimated Assets: $50,000 to $100,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Petaluma Mushroom Farm Unsecured loan $1,670,000 782 Thompson Lane Petaluma, CA 94952 Lorenzo Zunino Unsecured loan $830,000 4521 Creekmont Court Santa Rosa, CA 95404 Colusa Industrial Properties Environmentally $653,334 Inc. related 50 Sunrise Boulevard Colusa, CA 95932 Muna Cerini Unsecured loan $500,000 782 Thompson Lane Petaluma, CA 94952 Sundet's Big Bale LLC Product $422,807 P.O. Box 810 Arbuckle, CA 95912 Robert and Carol Becchetti Unsecured loan $300,000 3077 Porter Creek Road Santa Rosa, CA 95404 Richard Schultze Unsecured loan $265,000 575 College Avenue #105 Santa Rosa, CA 95404 David Cerini Unsecured loan $234,000 Mabel A. Perlite Living Unsecured loan $200,000 Trust Leo Lavio Unsecured loan $120,000 Richard and Janet Questoni Unsecured loan $120,000 Don Frati Unsecured loan $100,000 Richard Carney Unsecured loan $100,000 Modern Building Inc. Construction $81,078 PG&E $76,664 Stohlman Enterprises Inc. Electrical $66,020 Colusa County Tax Collector $64,906 Charles and Mary Hall Unsecured loan $50,000 Robert Hall LLC Unsecured loan $50,000 Steve Clay Olmsted Jr. Unsecured loan $50,000 CSAM HIGH: Fitch Puts $9MM Junk-Rated Notes on Rating Watch Neg. ---------------------------------------------------------------- Fitch Ratings places four classes of notes issued by CSAM High Yield Focus CBO, Ltd., on Rating Watch. These actions are the result of Fitch's review process and are effective immediately: -- $55,361,162 class A-1 senior secured notes 'B-'; Rating Watch Positive; -- $9,000,000 class A-2 senior secured notes 'CCC-'; Rating Watch Negative; -- $35,000,000 class B-1 senior secured fixed-rate notes 'CC'; Rating Watch Negative; -- $25,000,000 class B-2 senior secured floating-rate notes 'CC'; Rating Watch Negative. The above actions on the classes A-1, B-1, and B-2 notes are a result of the recent default of Allied Holdings Inc. CSAM CBO holds a $4 million dollar exposure to this obligor. This additional default will likely cause the total cumulative defaults in CSAM CBO to exceed the maximum threshold of 40% (the Interest Default Test, or IDT), on the next trustee report. (As of the July 5, 2005 trustee report, cumulative default level was 39.62%.) If the IDT is triggered, the payment waterfall changes so that only the class A-1 notes will receive all cash proceeds available to pay interest and principal until the A-1 notes are fully redeemed or the coverage tests are brought into compliance. Subsequently, all cash proceeds are applied sequentially in a similar manner. The rating of the classes A-1 and A-2 notes addresses the likelihood that investors will receive timely and compensating interest payments, as well as the stated balance of principal by the final payment date. The rating of the classes B-1 and B-2 notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as well as the stated balance of principal by the final payment date. 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/ DATATEC SYSTEMS: Files Plan & Disclosure Statement in Delaware -------------------------------------------------------------- Datatec Systems, Inc., and Datatec Industries, Inc., delivered a Disclosure Statement explaining their First Amended Joint Plan of Liquidation to the U.S. Bankruptcy Court for the District of Delaware. The Plan provides for the establishment of the Datatec Trust into which the Debtor's remaining assets will be transferred on the effective date of the Plan. The Recovery Group, Inc., will implement the provisions of the Datatec Trust and the Plan as Trustee. Plan Funding Payments due under the Plan will be funded from the Debtors' cash, from proceeds of the liquidation of their assets and from the proceeds of the settlement with Eagle Acquisition Partners, Inc. As previously reported in the Troubled Company Reporter, the Bankruptcy Court approved the sale of substantially all of the Debtors' assets to Eagle Acquisition Partners, Inc., for $8 million. The sale included the Debtors' agreement to assume and assign appropriate executory contracts and leases to Eagle Acquisition. Following the sale, Eagle Acquisition assigned its rights over the assets to Technology. The Eagle Settlement resolves the objections raised by The Official Committee of Unsecured Creditors against the asset sale. All claims of Eagle Acquisition and Technology have been waived as part of this settlement agreement. Pursuant to the settlement agreement, Technology advanced the initial sum of $250,000 to fund the wind-down of the Debtors' bankruptcy cases. In addition, Technology agrees to make four annual fixed payments to the Datatec Trust based on this schedule: Payment Date Amount ------------ ------ December 31, 2005 $500,000 December 31, 2006 300,000 December 31, 2007 400,000 December 31, 2008 450,000 Other sums due to the Datatec Trust under the settlement agreement include: a) annual contingent payments, commencing on March 31, 2006 and ending on March 31, 2009, equal to 20% of Technology's excess cash flow; and b) a 20% share on the cash recoveries, less legal costs, from a lawsuit filed by the Debtors against Home Depot. The Debtors assigned their contingent claims on the lawsuit pursuant to the asset sale. Total payments made under the settlement agreement shall not exceed the agreed $3.5 million payment cap. Treatment of Claims Administrative Claims will be paid in full, without interest, on the later of ten days after the effective date of the Plan or within sixty days after the claim becomes an allowed claim. Professional Fees will be paid in cash, in the amount awarded by the Bankruptcy Court, upon the entry of a final order awarding fees and expenses, to the extent of any available cash. Priority Tax claims shall be paid in full, in cash, without interest, on the later of 60 days after the effective date of the Plan or after the claim becomes an allowed claim. The Debtors' interest holders will get nothing under the Plan. Unsecured Claims are the only impaired class and will vote to accept or reject the Plan. Based on the Debtors' schedules, Unsecured Claims total approximately $7.3 million. The Debtors say funds will not be sufficient to pay the unsecured claims in full. The unsecured claim holders will receive a pro-rata share of the Estate Cash after all administrative and priority claims are paid. In addition, holders of unsecured claims are eligible to receive a pro-rated share of the Eagle settlement, after distributions are made to allowed priority claimants, if they elect to sign an optional release provided for in the settlement agreement. By signing the optional release and electing to receive a share of the settlement amount, the unsecured claimants agree that: a) all released causes of action against Eagle Acquisition and Technology are fully settled and released under the Plan; b) any and all creditors or interest holders are permanently enjoined from pursuing causes of action against Eagle and Technology; b) each claimant affirmatively making the release, shall be deemed to have released any and all of the Released Causes of Action against Eagle and Technology; and c) the release shall be binding on all transferees of Eagle and Technology. Plan Confirmation The Honorable Peter J. Walsh will convene a hearing to discuss confirmation of the Debtors' Plan at 9:30 a.m. on October 21, 2005, in Wilmington, Delaware. Objections to plan confirmation must be filed by 4:00 p.m. on October 10, 2005 with: The Clerk of Court 824 Market Street, 3rd Floor Wilmington, Delaware 19801 and copies of the objection must be served on: Debtor's Counsel: Lowenstein Sandler, PC Attention: Bruce Buechler, Esq. 65 Livingston Avenue Roseland, New Jersey 07068 -- and -- Richards Layton & Finger, PA Attention: John H. Knight, Esq. One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 Counsel for The Official Committee of Unsecured Creditors: Blank Rome LLP Attention: Bonnie G. Fatell, Esq. Chase Manhattan Centre 1201 North Market Street, Suite 800 Wilmington Delaware 19801 Office of the U.S. Trustee: Attention: Richard Schepacarter, Esq. 844 King Street, Suite 2313 Wilmington, Delaware 19801 Ballots voting for or against the Plan must be submitted by 5:00 p.m. on Oct. 10, 2005, to: Traxi LLC Attention: Chad Shandler 212 West 35th Street, 4th Floor New York, New York 10001 Facsimile of electronically transmitted ballots will not be accepted. Headquartered in Alpharetta, Georgia, Datatec Systems, Inc. -- http://www.datatec.com/-- specializes in the rapid, large-scale market absorption of networking technologies. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 14, 2004 (Bankr. D. Del. Case No. 04-13536). John Henry Knight, Esq., at Richards, Layton & Finger, P.A. and Bruce Buechler, Esq., at Lowenstein Sandler PC represent the Debtors' restructuring. When the Company filed for protection from its creditors, it listed total assets of $26,400,000 and total debts of $47,700,000. DOBSON COMMS: Declares In-Kind Dividends on Series F Stocks ----------------------------------------------------------- Dobson Communications Corporation (Nasdaq:DCEL) declared in-kind dividends on its outstanding Series F Convertible Preferred Stock for the dividends due October 15, 2004, April 15, 2005 and October 15, 2005. The CUSIP numbers for the Series F Convertible Preferred Stock are 256 069 402, 256 069 709, 256 069 600 and U 254 01 206. The dividends due on October 15, 2004 and April 15, 2005 will be payable on September 12, 2005 to holders of record at the close of business on September 1, 2005. Holders of Series F Convertible Preferred Stock will receive 0.0700 additional shares of Series F Convertible Preferred Stock for each share held at the close of business on the September 1, 2005 record date. In addition, holders will receive $0.5736 in cash for each share held at the close of business on the record date as an interest payment on these dividends. These dividends cover the period April 15, 2004 to April 14, 2005. The dividend due on October 15, 2005 will be payable on October 15, 2005 to holders of record at the close of business on September 30, 2005. Holders of shares of Series F Convertible Preferred Stock will receive 0.0350 additional shares of Series F Convertible Preferred Stock for each share held at the close of business on the September 30, 2005 record date. This dividend covers the period April 15, 2005 to October 14, 2005. The dividends have an annual rate of 7% of the $178.571 per share liquidation preference value of the preferred stock. Headquartered in Oklahoma City, Dobson Communications -- http://www.dobson.net/-- provides wireless phone services to rural markets in the United States. The Company owns wireless operations in 16 states. * * * Moody's Investors Service and Standard & Poor's assigned junk ratings to Dobson Communications': -- 8-7/8% senior notes due 2013; and -- 10-7/8% senior notes due 2010. DOCTORS HOSPITAL: Wants Lease Decision Period Stretched to Nov. 4 ----------------------------------------------------------------- Doctors Hospital 1997, LP, asks the U.S. Bankruptcy Court for the Southern District of Texas in Houston to extend, until Nov. 4, 2005, the time within which it can assume, assume and assign or reject unexpired nonresidential real property leases. The Debtor's current period to decide on four remaining nonresidential real property leases ends on Sept. 5, 2005. The Debtor tells the Court that the deadline for assuming or rejecting its nonresidential real property leases must be extended so it can evaluate the leases in relation to the results of the Joint Commission on Accreditation of Healthcare Organizations' resurvey. The resurvey, conducted on August 17-19, 2005, gives the Debtor an opportunity to become fully accredited again. The Debtor further presented four factors that weigh in favor of the proposed extension: a) one of the leases is integral to its operations since it pertains to the real property on which one of its two hospital facilities is located; b) an extension will allow an informed and meaningful decision that is consistent with a proposed plan of reorganization; b) time constraints particular to its chapter 11 proceedings have impaired its ability to give the leases the attention necessary to determine whether assumption or rejection is proper; c) it believes the respective lessors' interests are protected because there is a reasonable likelihood of a successful reorganization; and d) the lessors are not severely prejudiced because it is only seeking an additional 60-day extension. The Court will consider the proposed extension at a hearing scheduled at 3:30 p.m. on Aug. 31, 2005, in Houston, Texas. A list of the Debtors remaining unexpired nonresidential real property leases is available for free at: http://bankrupt.com/misc/DoctorsHospital_Leases.pdf Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. DOCTORS HOSPITAL: Wants Exclusive Period Stretched to Nov. 4. ------------------------------------------------------------- Doctors Hospital 1997, LP, asks the U.S. Bankruptcy Court for the Southern District of Texas in Houston for another extension of the period within which it has the exclusive right to file a plan of reorganization and disclosure statement. The Debtor wants its exclusive plan filing period extended to Nov. 4, 2005. The Debtor also asks the Court to extend, until Jan. 2, 2006, its exclusive period to solicit acceptances of that plan. The Debtor tells the Court that it cannot file a plan of reorganization by the current Sept. 5, 2005 deadline because it needs time after the Joint Commission of Accreditation of Healthcare Organizations resurvey to discuss the terms of a confirmable plan with GE HFS Holdings, Inc., and the Official Committee of Unsecured Creditors. Joshua W. Wolfshohl, Esq., at Porter & Hedges, LLP, explains that the JCAHO accreditation is an important component in the Debtor's reorganization. Non-accreditation could result in the termination of at least one insurance provider agreement and trigger a full certification survey by the Centers for Medicare and Medicaid Services. Failure to maintain certification with CMS would have a dramatic impact on the Debtor's business, as approximately 80% of its patient revenue is derived from Medicare and Medicaid, Mr. Wolfshohl says. The three-day JCAHO resurvey began on Aug. 17, 2005. The Debtor adds that the extension will give it more time to negotiate potential equity investments from several third parties. The Debtor intends to include the terms of this equity infusion in the plan of reorganization. Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. DORAL FINANCIAL: Mgt. Changes Cue Fitch to Hold Low-B Ratings ------------------------------------------------------------- Fitch Ratings has affirmed the ratings for Doral Financial Corporation and its subsidiaries, and maintained the Rating Watch Negative. Doral's senior obligations are currently rated 'BB+', and the short-term rating is 'B' by Fitch. The rating action is in response to Doral's announcement that its executive management team has undergone significant change. Through a combination of resignations and terminations made public last Friday, Doral has replaced its chief executive officer, chief financial officer, and treasurer, as well as its director emeritus. The changes in management were implemented in response to the findings of a report by Latham & Watkins LLP. Latham & Watkins was hired in early 2005 as an independent counsel for Doral's outside directors as part of the corrective action process to resolve the issues raised by the need of Doral to restate its financial statements. The most important factor in Fitch's decision to affirm the company's ratings at this time is the comfort that the named replacements for the three management positions have the ability and knowledge to lead Doral through the restatement process and beyond. The new treasurer and chief financial officer have been actively involved in the restatement process and the implementation of enhancements to Doral's risk management process. Fitch has had ongoing dialogue with these individuals as part of its own assessment of the progress made in the restatement process. Furthermore, Fitch believes that the departures of the former management team members were not necessitated by new findings that have not already been made public. Fitch expects that the timing, scope, and magnitude of the financial restatement process remain unchanged. The changes in executive management, while not a surprise, do present near-term issues that could influence Doral's creditworthiness. The new management team must work to ensure staff members are not overly distracted by the abrupt departure of long-term members of Doral's management team. Uncertainty at the staff level could translate to loss of focus on some of the important work being conducted as part of the restatement as well as confusion among Doral's current and prospective customers that seek clarification from employees on the future direction of the company. Fitch still anticipates resolving its Rating Watch status within 45 days. It is expected that the financial restatement process will be near completion within this time frame. Unexpected delays in the restatement process, expansion of the scope of transactions being reviewed, or an increase in the size of the expected restatement relative to previous indications, would be the most likely factors that would place additional pressure on the ratings. Fitch will also be seeking information on business flow at Doral in near-term to assess the influence of the management changes on Doral's financial profile. Fitch has affirmed these ratings and they remain on Rating Watch Negative: Doral Financial Corporation -- Long-term issuer and senior unsecured at 'BB+'; -- Short-term issuer and short-term notes at 'B'; -- Individual at 'C/D'; -- Preferred stock at 'BB-'. Doral Bank -- Long-term deposit obligations at 'BBB'; -- Long-term issuer at 'BBB-'; -- Short-term deposit obligations at 'F3'; -- Short-term issuer at 'F3' -- Individual at 'C'. These ratings are affirmed by Fitch: Doral Financial Corporation -- Support at '5'. Doral Bank -- Support at '5'. EMERSON RADIO: Chairman Geoffrey Jurick to Sell Shares to Grande ---------------------------------------------------------------- Emerson Radio Corp.'s (AMEX:MSN) chairman and chief executive officer, Geoffrey P. Jurick, has entered into an agreement to sell 10,000,000 of his Emerson shares to a subsidiary of The Grande Holdings Limited, a Hong Kong-based group of companies engaged in a number of businesses including the manufacture, sale, and distribution of audio, video and other consumer electronics and digital products. The purchase price is $5.20 per share payable in a combination of cash and a convertible debenture of Grande. The shares to be sold represent approximately 37 percent of Emerson's outstanding shares. In advising the company of his decision to enter into this agreement, Mr. Jurick stated, "This agreement marks the successful creation of a far reaching strategic alliance between two companies combining substantial resources in manufacturing, brand marketing and global distribution of a wide range of consumer electronic products. I am delighted to have taken steps to diversify my personal assets while at the same time finding an ideal strategic partner for Emerson. Grande's strong presence in the Far East, its manufacturing expertise, particularly for plasma and LCD television sets and its commitment to building a first- class worldwide electronics distribution network for branded products should substantially enhance Emerson's business." Mr. Jurick continued, "While I intend to remain actively involved for the foreseeable future as a board member and in an advisory capacity, I contemplate retiring as chairman and chief executive officer upon the appointment of my successor by the board, which I anticipate will occur within approximately the next 60 days. I have enjoyed greatly my 13 years as chief executive officer, but hope now to be able to spend more time on family matters." Closing of the transaction is expected to take place within 30 days and is subject to the satisfaction of a number of conditions. Bank Waiver Emerson intends to seek a waiver from its domestic lending banks of a provision in its loan agreement providing that the sale of these shares would constitute an event of default. There are presently $3.5 million of borrowings outstanding under Emerson's $35 million line of credit. The company expects to increase its borrowings in the upcoming weeks to meet seasonal needs. Headquartered in Parsippany, N.J., Emerson Radio Corp. (AMEX:MSN) -- http://www.emersonradio.com/-- designs, markets and licenses, throughout the world, full lines of televisions and other video products, microwaves, clocks, radios, audio and home theater products. EMMIS COMMS: Selling Three TV Stations to Journal for $235 Million ------------------------------------------------------------------ Emmis Communications Corporation (NASDAQ: EMMS) and Journal Communications (NYSE: JRN) signed an agreement wherein Journal will acquire these television stations from Emmis: * WFTX-TV (Ch. 4, Fox affiliate) in Fort Myers, Fla.; * KMTV-TV (Ch. 3, CBS affiliate) in Omaha, Neb.; and * KGUN-TV (Ch. 9, ABC affiliate) in Tucson, Ariz. The sale price for the three stations is $235 million. The Blackstone Group served as a financial adviser to Emmis and Wiley Rein & Fielding LLP as its legal counsel. Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., Lehman Brothers and Merrill Lynch also assisted the Company with respect to its television business. The closing is subject to customary conditions, including approval from the Federal Communications Commission and other regulatory agencies. Emmis expects to close the transaction before the end of the year. About Journal Headquartered in Milwaukee, Wisconsin, Journal Communications, Inc. -- http://www.journalcommunications.com/-- is diversified media and communications company with operations in publishing, radio and television broadcasting, telecommunications and printing services. It publishes the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and more than 90 community newspapers and shoppers in eight states. It owns and operates 38 radio stations and seven television stations in 11 states and operates an additional television station under a local marketing agreement. Through its telecommunications segment, it owns and operates a regional fiber optic network in the upper Midwest, provide integrated data communications solutions for small and mid-size businesses and offer network transmission solutions for other service providers. It also provides a wide range of commercial printing services -- including printing for publications, professional journals and documentation material -- as well as electronic publishing, kit assembly and fulfillment. In addition, it operates a direct marketing services business. About Emmis Emmis Communications -- http://www.emmis.com/-- is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 23 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Austin, Indianapolis and Terre Haute, Indiana. Emmis has recently announced its intent to seek strategic alternatives for its 16 television stations, which will result in the sale of all or a portion of its television assets. In addition, Emmis owns a radio network, international radio stations, regional and specialty magazines and ancillary businesses in broadcast sales and book publishing. * * * As reported in the Troubled Company Reporter on May 26, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to Emmis Communications Corp.'s proposed $300 million senior unsecured floating-rate notes due 2012. The rating was also placed on CreditWatch with negative implications. Proceeds from the proposed transaction are expected to be used to fund share repurchases. As reported in the Troubled Company Reporter on May 25, 2005, Moody's Investors Service assigned B3 ratings to Emmis Communications Corporation's proposed $300 million senior unsecured floating rate note issuance, and placed the rating on review for possible downgrade. The proceeds of the transaction and capacity under the existing revolving credit facility will be used to finance the company's recently announced dutch auction tender offer to repurchase up to 20 million or 39% of the company's outstanding common stock (approximately $400 million in aggregate). Moody's also affirmed the company's SGL-3 liquidity rating. EMMIS COMMS: Selling Five TV Stations to LIN TV for $260 Million ---------------------------------------------------------------- Emmis Communications Corporation (NASDAQ: EMMS) and LIN TV Corp (NYSE:TVL) signed an agreement wherein LIN will acquire these television stations from Emmis: * WALA-TV (Ch. 10, Fox affiliate); * WBPG-TV (Ch. 55, WB affiliate) in Mobile, Ala./Pensacola, Fla.; * WTHI-TV (Ch. 10, CBS affiliate) in Terre Haute, Ind.; * WLUK-TV (Ch. 11, Fox affiliate) in Green Bay, Wis.; and * KRQE-TV (Ch. 13, CBS affiliate) in Albuquerque, New Mexico; plus * regional satellite stations. The sale price for the five stations is $260 million. The Blackstone Group served as a financial adviser to Emmis and Wiley Rein & Fielding LLP as its legal counsel. Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., Lehman Brothers and Merrill Lynch also assisted the Company with respect to its television business. The closing is subject to customary conditions, including approval from the Federal Communications Commission and other regulatory agencies. Emmis expects to close the transaction before the end of the year. About LIN TV LIN TV -- http://www.lintv.com/-- owns and operated 25 television stations in 14 mid-sized markets in the U.S. and Puerto Rico. LIN TV owns approximately 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California through a joint venture with NBC, and is a 50% non-voting investor in Banks Broadcasting, Inc., which owns KWCV-TV in Wichita, Kansas and KNIN-TV in Boise, Idaho. LIN TV also is a one-third owner of WAND-TV, the ABC affiliate in Decatur, Illinois, which it manages pursuant to a management services agreement. About Emmis Emmis Communications -- http://www.emmis.com/-- is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 23 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Austin, Indianapolis and Terre Haute, Indiana. Emmis has recently announced its intent to seek strategic alternatives for its 16 television stations, which will result in the sale of all or a portion of its television assets. In addition, Emmis owns a radio network, international radio stations, regional and specialty magazines and ancillary businesses in broadcast sales and book publishing. * * * As reported in the Troubled Company Reporter on May 26, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to Emmis Communications Corp.'s proposed $300 million senior unsecured floating-rate notes due 2012. The rating was also placed on CreditWatch with negative implications. Proceeds from the proposed transaction are expected to be used to fund share repurchases. As reported in the Troubled Company Reporter on May 25, 2005, Moody's Investors Service assigned B3 ratings to Emmis Communications Corporation's proposed $300 million senior unsecured floating rate note issuance, and placed the rating on review for possible downgrade. The proceeds of the transaction and capacity under the existing revolving credit facility will be used to finance the company's recently announced dutch auction tender offer to repurchase up to 20 million or 39% of the company's outstanding common stock (approximately $400 million in aggregate). Moody's also affirmed the company's SGL-3 liquidity rating. EMMIS COMMS: Selling West Virginia TV Station to Gray for $186MM ---------------------------------------------------------------- Emmis Communications Corporation (NASDAQ: EMMS) and Gray Television (NYSE: GTN; GTN.A) signed an agreement wherein Gray will purchase WSAZ-TV (Ch. 3, NBC affiliate) in Huntington/ Charleston, West Virginia, for $186 million. The Blackstone Group served as a financial adviser to Emmis and Wiley Rein & Fielding LLP as its legal counsel. Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., Lehman Brothers and Merrill Lynch also assisted the Company with respect to its television business. The closing is subject to customary conditions, including approval from the Federal Communications Commission and other regulatory agencies. Emmis expects to close the transaction before the end of the year. About Gray Television Gray Television, Inc. -- http://www.gray.tv/-- is a communications company headquartered in Atlanta, Georgia, and prior to the closing of this transaction, owns 31 television stations serving 27 television markets. The stations include 16 CBS affiliates, eight NBC affiliates and seven ABC affiliates. Gray Television, Inc., has 23 stations ranked #1 in local news audience and 22 stations ranked #1 in overall audience within their respective markets based on the average results of the 2004 Nielsen ratings reports. The TV station group reaches approximately 5.5% of total U.S. TV households. Gray also owns five daily newspapers, four in Georgia and one in Indiana. About Emmis Emmis Communications -- http://www.emmis.com/-- is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 23 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Austin, Indianapolis and Terre Haute, Indiana. Emmis has recently announced its intent to seek strategic alternatives for its 16 television stations, which will result in the sale of all or a portion of its television assets. In addition, Emmis owns a radio network, international radio stations, regional and specialty magazines and ancillary businesses in broadcast sales and book publishing. * * * As reported in the Troubled Company Reporter on May 26, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to Emmis Communications Corp.'s proposed $300 million senior unsecured floating-rate notes due 2012. The rating was also placed on CreditWatch with negative implications. Proceeds from the proposed transaction are expected to be used to fund share repurchases. As reported in the Troubled Company Reporter on May 25, 2005, Moody's Investors Service assigned B3 ratings to Emmis Communications Corporation's proposed $300 million senior unsecured floating rate note issuance, and placed the rating on review for possible downgrade. The proceeds of the transaction and capacity under the existing revolving credit facility will be used to finance the company's recently announced dutch auction tender offer to repurchase up to 20 million or 39% of the company's outstanding common stock (approximately $400 million in aggregate). Moody's also affirmed the company's SGL-3 liquidity rating. E.SPIRE COMMS: Court Sets Admin. Claims Bar Date for September 16 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has established Sept. 16, 2005, as the deadline for creditors to assert administrative claims pursuant to Section 503 of the U.S. Bankruptcy Code against e.Spire Communications, Inc., and its debtor-affiliates that arose between March 22, 2001, and Aug. 1, 2005. All requests for payment of chapter 11 administrative claims must be timely filed with the Bankruptcy Court and served on the Chapter 11 Trustee's counsel: John Daniel McLaughlin, Jr., Esq. Young Conaway Stargatt & Taylor, LLP 1000 West Street, 17th Floor P.O. Box 391 Wilmington, Delaware 19899 Tel. No. 302-571-6634 Headquartered in Columbia, Maryland, e.Spire Communications is a facilities-based integrated communications provider, offering traditional local and long distance internet access throughout the United States. The Company and its debtor-affiliates filed for chapter 11 protection on March 22, 2001 (Bankr. Del. Case No. 01-00974). Chad Joseph Toms, Esq., and Domenic E. Pacitti, Esq., at Saul Ewing LLP, and James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represent the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $911.2 million in total assets and $1.4 billion in total debts. Gary F. Seitz, Esq., is the Court-appointed Chapter 11 Trustee in the Debtors' bankruptcy proceedings. Daniel K. Astin, Esq., and Anthony M. Saccullo, Esq., at The Bayard Firm; Erin Edwards, Esq., at Young Conaway Stargatt & Taylor LLP; and Deirdre M. Richards, Esq., at Obermayer Rebmann Maxwell & Hippel LLP, represent Mr. Seitz. FALCON PRODUCTS: Wants to Sell Belding Property for $350,000 ------------------------------------------------------------ Falcon Products, Inc. and its debtor-affiliates ask the Court for permission to sell its 87,255 square foot facility located in Belding, Michigan, to Van Kafsouni for $350,000. The Debtors request that the sale must close on or before September 15, 2005. The Debtors further ask the Court to assume and assign the property leased by Hunt Hoppough Custom Crafted Structures, Inc. Hunt Hoppough leased 40,000 square feet of the Belding Property from July 1, 2004 through December 31, 2004, with two six month renewal options. The Hunt Hoppough Lease is presently in its second renewal term. Currently, Hunt Hoppough is the only tenant of the Belding Property, and the balance of the property remains vacant. On July 20, 2005, Hunt Hoppough filed a chapter 11 petition (Bankr. W.D. Mich. Case No. 05-10043, reported in the Troubled Company Reporter on July 22, 2005). Falcon is included on Hunt Hoppough's "List Of 20 Largest Creditors." According to the list, Hunt Hoppough owes Falcon $28,999.98 as of July 20, 2005. Hunt Hoppough has neither assumed nor rejected the Hunt Hoppough Lease. The Debtors propose to pay $32,545 for the real property tax owed to Ionia County and the City of Belding. Furthermore, the Debtors ask the Court for approval to pay NAI/Realvesco Properties, Inc., their real estate broker, a commission of 7% of the gross sale price of the Belding Property. Realvesco has agreed to share that 7% commission with Mr. Kafsouni's broker, Don Oppenhuizen of G.W. DeHaan Real Estate. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FEDERAL-MOGUL: Has Until Dec. 1 to Make Lease-Related Decisions --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the time within which Federal-Mogul Corporation and its debtor- affiliates may elect to assume, assume and assign, or reject non-residential real property leases through and including December 1, 2005, pursuant to Section 365(d)(4) of the Bankruptcy Code. The extension will give the Debtors more time to implement their long-term business plan and reorganize successfully while preserving lessors' rights under the Bankruptcy Code. The Debtors assured the Court it will continue to perform all of their obligations in a timely fashion, including payment of postpetition rent due. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEMONE INC: Posts $762,794 Net Loss in Second Quarter 2005 ---------------------------------------------------------- FemOne, Inc. (OTC Bulletin Board: FEMO), a publicly held Nevada corporation, reported consolidated sales for the second quarter of 2005. FemOne reported consolidated net sales of $1,867,076 for the three months ended June 30, 2005, an increase of approximately 600%, from $262,540 for the three months ended June 30, 2004. Consolidated net sales for the six months ended June 30, 2005 increased to $3,619,705 from $482,032 for the same period in 2004. The increase in sales in the 2005 periods of approximately 650% is primarily attributed to the continued growth of FemOne's technology division, BIOPRO Technology. Gross profits for the three months ended June 30, 2005 increased to $1,456,228 from $186,617 during the three months ended June 30, 2004. The increase in gross profits of approximately 680% is directly attributable to the overall increase in net sales in 2005 and increases in gross margins is primarily due to increased profits from Direct Sales of approximately 640% attributed to the growth in our BIOPRO Technology division in the U.S., Australia and New Zealand. Also contributing to the increase in gross profits during the 2005 period are gross profits from Direct Response Television Shopping of approximately $222,240 from our subsidiary SRA Marketing. Gross profits for the six months ended June 30, 2005 increased to $2,762,549 from $349,805 over the same period in 2004. Consolidated net loss for the three months ended June 30, 2005, was $762,794, compared to a consolidated net loss of $511,305 for the three months ended June 30, 2004. Consolidated net loss attributable to stockholders for the six months ended June 30, 2005 was $2,051,041, compared to a consolidated net loss of $1,099,182 for the same period in 2004. The increase in net loss in 2005 over 2004 was directly attributable to an increase in expenses associated with the Company's expanded operations and efforts to continue its business growth. Included in the net loss for the three and six month periods ended June 30, 2005 are expenses of approximately $450,000 and $1,220,000, respectively, representing non-cash amortization expense related to the Company's convertible debt financing. Operating expenses for the three months ended June 30, 2005 were $1,732,128, compared to $680,060 for the same period in 2004. Operating expenses for the six months ended June 30, 2005 were $3,576,020, compared to $1,419,396 for the same period in 2004. Operating expenses as a percentage of sales for the three and six months ended June 30, 2005 decreased to 93% and 99%, respectively, compared to 259% and 294%, respectively, in the 2004 periods. The significant decrease of operating expenses as a percentage of sales has been predominantly a result of the 650% increase in sales. The increase in operating expenses in the 2005 periods was the result of increases in commission expenses incurred on the increased sales, as well as increases in promotion and marketing expenses, and our expanded operations in Australia and New Zealand. Included in the Company's consolidated results for the three and six months ended June 30, 2005 are revenues and expenses from its two controlled subsidiaries, BIOPRO Australasia Pty, Ltd, which operates the Company's direct sales effort in Australia and New Zealand, and SRA Marketing, Inc., which is responsible for all sales made over the Direct Response Shopping network. Each of these subsidiaries began their operations in the fourth quarter of 2004. Revenues during the three and six months ended June 20, 2005, from BIOPRO Australasia Pty, Ltd., represented 25% and 26%, respectively, of the Company's consolidated revenues for those periods. Revenues from SRA Marketing during the three and six months ended June 30, 2005, represent 7% and 11%, respectively, of the Company's consolidated revenues for those periods. "We continue to see the rewards of our marketing efforts with our significant revenue growth over prior periods," Ray W. Grimm, Jr., the Company's chief executive officer, said. "We will continue to focus our efforts on building our sales momentum, expanding our market presence, and achieving profitability." On June 30, 2005 the Company closed a round of financing where it raised gross proceeds of $1,500,000 through the sale of 8% convertible notes and warrants. "We plan to use this funding to grow and expand our international business and fund our continued operations," the Company said in its quarterly report. "Although, at this time, we do not anticipate the need to raise additional funds during 2005, we may need to raise additional funds in early 2006 to adequate working capital for FemOne to continue to operate and pursue our expansion and marketing plans. "If we are unable to raise funds through contemplated sales of our equity securities in private transactions exempt from registration under applicable federal and state securities laws, we could be forced to cease operations." Going Concern Doubt Peterson & Co., LLP, expressed substantial doubt about FemOne's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The auditing firm points to the Company's recurring losses from operations since inception and its dependence on raising additional capital. FemOne, Inc. (OTC Bulletin Board: FEMO) -- http://www.femone.com/ -- based in Carlsbad, California is sales and marketing company with distribution in the United States, Canada, Australia and New Zealand. GRAY TELEVISION: S&P Affirms B+ Long-Term Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Gray Television Inc. to stable from positive. At the same time, Standard & Poor's affirmed its existing ratings on the company, including its 'B+' long-term corporate credit rating. At June 30, 2005, the Atlanta, Georgia-based broadcaster had total debt, including preferred stock, of $674.5 million. "The outlook revision reflects our expectation that Gray's pending $186 million acquisition of a CBS affiliate in Charleston, West Virginia, and the spin-off of its small publishing and paging operations will increase leverage and preclude the potential for a rating upgrade in the near term," said Standard & Poor's credit analyst Steve Wilkinson. Standard & Poor's had stated that maintaining leverage at less than 6x was a key input for an upgrade to 'BB-'. If the West Virginia acquisition is completely funded with debt, leverage would increase to the mid-6x area on a trailing 12-month basis. Leverage should also increase further in the second half of 2005 as a result of the off-year in the election cycle. Pro forma for the spin-off and a fully debt-financed purchase, leverage could temporarily increase to the mid-7x area at year-end. The stable outlook reflects S&P's expectation that the potential spike in Gray's leverage to the mid-7x area will be temporary and that leverage will decline to less than 6x in 2006, and be lower at the end of 2007 than at the end of 2005. The outlook could be revised to negative: * if additional sizable debt-financed acquisitions or other actions further increase leverage; * if the company does not maintain an appropriate margin of compliance with its bank financial covenants; or * if the anticipated EBITDA and leverage improvements in 2006 do not materialize. The potential for the outlook to be revised back to positive, which is unlikely in the near term, would require the company to demonstrate that it will be able to reduce and sustain leverage of less than 6x in future nonelection years. The ratings on Gray continue to reflect: * its relatively high debt leverage; * the slow growth and somewhat cyclical nature of TV advertising; and * the potential for additional cash acquisitions, share repurchases, dividends, or other actions that may limit improvement of Gray's credit measures. These risks are only partially offset by: * the strong market position of the company's major-network-affiliated TV stations; * its geographic and network cash flow diversity; and * the good margin and free cash flow potential of TV broadcasting. GREEN THUMB: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Green Thumb of Indiana, L.L.C. 9999 Baseline Road Avilla, Indiana 46710 Bankruptcy Case No.: 05-14171 Type of Business: The Debtor sells lawn and garden equipment. Chapter 11 Petition Date: August 22, 2005 Court: Northern District of Indiana (Fort Wayne) Debtor's Counsel: Daniel J. Skekloff, Esq. Skekloff, Adelsperger & Kleven, LLP 927 South Harrison Street Fort Wayne, Indiana 46802 Tel: (260) 407-7000 Fax: (260) 407-7137 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ United Industries Corp. $1,581,772 2150 Scheutz Road Saint Louis, MO 63146 Conrad Fafard Inc. $54,546 P.O. Box 790 Agawam, MA 01001 Sun Gro Horticulture Dist. $34,916 15831 Northeast 8th Street Suite 100 Bellevue, WA 98008 PVP Industries Inc. $19,845 Sam Pitulla $12,000 Noble County Welding $2,248 Stone-Street Quarries Inc. $1,702 Edward Ryan Rent $975 Complete Drives Inc. $836 MacDonald Machinery Co. $616 Vitran Express $433 Avilla True Value Hardware $377 Business Service Co. of $287 America Hanson Aggregates $166 Tri-County Water Conditioning $69 Mittler Supply Inc. $36 HAYES LEMMERZ: Citadel Limited Discloses 5.6% Equity Stake ---------------------------------------------------------- In a Schedule 13G filed with the Securities and Exchange Commission, Matthew B. Hinerfeld, managing director and deputy general counsel of Citadel Limited Partnership, discloses that 2,144,734 shares of Hayes Lemmerz International, Inc.'s Common Stock may be deemed beneficially owned by: 1. Citadel Limited Partnership, 2. Citadel Investment Group, L.L.C., 3. Kenneth Griffin, 4. Citadel Wellington LLC, 5. Citadel Kensington Global Strategies Fund Ltd., 6. Citadel Equity Fund Ltd., and 7. Wingate Capital Ltd. The 2,144,734 shares represents 5.6% of Hayes Lemmerz's total outstanding common stock as of July 24, 2005. 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). HEARTLAND PARTNERS: Earns $613,000 of Net Income in Second Quarter ------------------------------------------------------------------ Heartland Partners, L.P. (Amex: HTL) reported unaudited results for the fiscal quarter and six months ended June 30, 2005. The Company reported net income for the quarter ended June 30, 2005 of $613,000 with property sales of $170,000 and a gain on sale of buildings and improvements of $430,000. The net income will be allocated entirely to the Class B Limited Partner in accordance with the terms of the Company's partnership agreement. In comparison, operations for the quarter ended June 30, 2004 resulted in property sales of $749,000 and a net loss of $1,357,000. After allocations to the Class B Limited Partner and General Partner pursuant to the terms of the Company's partnership agreement, there was a net loss of $0.42 per Class A Unit for the second quarter of 2004. For the six months ended June 30, 2005, the Company reported a net loss of $474,000 with property sales of $4,373,000 and a gain on sale of buildings and improvements of $430,000. For the six months ended June 30, 2004, the Company had a net loss of $420,000 with property sales of $3,864,000. Several factors contributed to the increase in operating results for the second quarter of 2005 compared to the second quarter of 2004. During the quarter ended June 30, 2005, there was a reduction of the environmental reserve related to several sites and recovery of environmental expenses from US Borax in connection with the Company's Lite Yard property in Minneapolis, Minnesota. During the quarter ended June 30, 2004, the Company increased the environmental reserve for off-site costs related to its Lite Yard property. Also reflected in the results for the second quarter of 2005 is a favorable settlement of a billing dispute with a vendor and reductions in the Company's expenses from staff reductions and a lower volume of transactions. For the first six months of 2005 compared to the first six months of 2004, the reductions in the environmental reserve and various expenses were offset by the high cost of sales recognized in connection with the sale of Kinzie Station II in 2005. Sales in the first half of 2004 had higher gross profit as a result. Lawrence Adelson, CEO of the Company's operating partnership commented, "During the past quarter, Heartland Partners made significant progress towards unwinding its relationship with Heartland Technology, Inc. This will allow Heartland Partners to move into the next phase of its wind up without any claim that Heartland Technology is entitled to share in any future distributions by virtue of its ownership of the Class B Interest in Heartland Partners." "The Company substantially completed a major environmental clean up at the Lite Yard site in Minneapolis, Minnesota, resolved a billing dispute with one of its consultants for that project on favorable terms, and on August 8, 2005, closed on the sale of the property to a local developer. The sale does not relieve the Company of its obligation to complete the remediation. The sales of the two remaining parcels of land in the Kinzie Station development in Chicago, Illinois are moving to closing, albeit slowly, at $2.85 million each. These are expected to close this year." Mr. Adelson continued, "There has been no significant progress towards resolving our lawsuit for additional compensation for 143 acres taken by eminent domain by the Redevelopment Authority of the City of Milwaukee or Edwin Jacobson's litigation with the company for additional compensation from his employment agreement. If not settled, these matters are likely to be tried in the first half of 2006. "Two potentially large environmental matters are ongoing. The United States Environmental Protection Agency is conducting testing and clean up of arsenic in residential yards near the Lite Yard in Minneapolis, Minnesota. USEPA has notified the Company and US Borax as it considers them responsible for the costs. At Miles City, Montana, the Montana Department of Environmental Quality has ordered an investigation of environmental conditions at the Miles City Yard. Trinity, the property's current owner, has sued the Company. The state court in Miles City, Montana has ordered the Company to escrow $2.5 million against possible liability while the investigation is being conducted and the responsibilities of Trinity and the Company are sorted out. The amount of the Company's liability for these matters is not yet clear." Mr. Adelson added, "We expect to develop a program for the next phase of wind up over the next few months. Options being studied include dissolution under state law and liquidation under federal law. The Company could also go private as an interim step, which would require approval of unitholders." "The objective of all of our activities is to generate cash and resolve liabilities so that we can make cash distributions. The wide range of possible outcomes for the RACM litigation, the Jacobson litigation, the Lite Yard off-site liabilities and the Miles City Yard coupled with the fact that $2.5 million of the Company's cash is restricted in connection with the Miles City Yard case make it unlikely that there will be a cash distribution in 2005," Mr. Adelson concluded. Heartland Partners, L.P. is a Chicago-based real estate limited partnership with properties primarily in the upper Midwest and northern United States. CMC Heartland is a subsidiary of Heartland Partners, L.P. and is the successor to the Milwaukee Road Railroad, founded in 1847. * * * Going Concern Doubt PricewaterhouseCoopers LLP audited Heartland Partners, L.P.'s financial statements for the year ending December 31, 2004. At the conclusion of that engagement, PwC said a number of uncertainties raise substantial doubt about Heartland's ability to continue as a going concern. PwC points to the company's recurring operating losses and management's intention to sell the Company's remaining assets and dissolve. HOLLINGER: Asking Court to Approve Appointment of Rattee to Board ----------------------------------------------------------------- Hollinger Inc. will ask the Ontario Superior Court of Justice tomorrow to approve the appointment of David Drinkwater and David Rattee to the Hollinger Board of Directors. Messrs. Rattee and Drinkwater will join the recently appointed board comprised of Randy Benson (the Chief Restructuring Officer), Stanley Beck, Newton Glassman and Joseph Wright. On the same day, Hollinger will also bring a motion before the Court seeking an Order extending the time for calling the Annual General Meeting of Hollinger shareholders to December 30, 2005. Hollinger's principal asset is its approximately 66.8% voting and 17.4% equity interest in Hollinger International, which is a newspaper publisher, the assets of which include the Chicago Sun- Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments. Hollinger also owns a portfolio of revenue-producing and other commercial real estate in Canada, including its head office building located at 10 Toronto Street, Toronto, Ontario. * * * Litigation Risks Hollinger, Inc., faces various court cases and investigations: (1) a consolidated class action complaint filed in Chicago, Illinois; (2) a class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on September 7, 2004; (3) a US$425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) a lawsuit seeking enforcement of a November 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction; (5) a lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) a US$5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor; (7) an action commenced by the United States Securities and Exchange Commission on November 15, 2004, seeking injunctive, monetary and other equitable relief; and (8) investigation by the enforcement division of the OSC. Court-Ordered Inspection On Sept. 3, 2004, Mr. Justice Colin Campbell of the Ontario Superior Court of Justice ordered the appointment of an Inspector of the affairs of Hollinger pursuant to section 229 of the CBCA upon the application of Catalyst Fund General Partner I Inc. The Order broadly requires an investigation into the affairs of Hollinger and, specifically, into related party transaction and non-competition payments for the period January 1, 1997, to the present. It is estimated that the Inspector's future costs will average $1,000,000 per month. The remaining duration of the Inspection is uncertain though it is presently anticipated to continue for at least an additional 4 months. Litigation Costs Hollinger has incurred legal expense in the defense of various actions brought against it and others in both the United States and Canada. Hollinger has in turn advanced a claim against its directors' and officers' liability insurers asserting that, under the terms and conditions of the policy of insurance, these insurers are required to indemnify Hollinger in respect of this legal expense incurred in connection with some of the actions brought against Hollinger. The claims made total approximately $3,700,000. However, the actual amount of recovery is not determinable at the present time. Default As reported in the Troubled Company Reporter on Apr. 25, 2005, Hollinger is in default under the terms of the indentures governing Hollinger's US$78 million principal amount of 11.875% Senior Secured Notes due 2011 and US$15 million 11.875% Second Priority Secured Notes due 2011 due to Ontario Superior Court of Justice's appointment of RSM Richter Inc. as receiver of all of The Ravelston Corporation Limited's and Ravelston Management Inc.'s assets (except for certain shares held directly or indirectly by them, including shares of Hollinger Inc. and RMI). HUSMANN-PEREZ: Judge Paskay Declines to Revive Chapter 11 Case -------------------------------------------------------------- As reported in the Troubled Company Reporter on Aug. 12 2005, Husmann-Perez Family Ltd. Partnership, by and through its counsel, Frederick T. Lowe, Esq., at Florida Law Group, L.L.C., asked the Court to rehear and reconsider its order dismissing its chapter 11 case. The Honorable Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida denied the Motion for Rehearing or Reconsideration filed by Husmann-Perez Family Ltd. Partnership. Judge Paskay entered the order denying the Motion on August 15, 2005. Judge Paskay says that after considering the motion and the record in the Debtor's chapter 11 proceeding there's no merit in the request for reconsideration and the request to breathe life back into the chapter 11 case is denied. The Court dismissed the Debtor's chapter 11 case on July 29, 2005, with prejudice, after an emergency hearing on motions to dismiss filed by secured creditor MJ Squared and the U.S. Trustee. Mr. Lowe says that in contrast to the allegations mentioned by the U.S. Trustee and MJ Squared in their separate requests, the truth is that the Debtor's insurance coverage is still in force, its electric bills have been paid and the monthly operating reports have been filed with the Court. The Debtor argues that it allayed and debunked all of these charges at the emergency hearing. The Debtor is mystified why the Court chose to dismiss its chapter 11 case. Headquartered in Dallas, Texas, Husmann-Perez Family Ltd. Partnership owns a skating facility located in Ellenton, Florida. The Company filed for chapter 11 protection on March 29, 2005 (Bankr. M.D. Fla. Case No. 05-05774). Frederick T. Lowe, Esq., at Florida Law Group, L.L.C., represents the Debtor. When the Company filed for chapter 11 protection, it listed $10 million to $50 million in assets and $1 million to $10 million in debts. The case was dismissed on July 29, 2005. The Debtor filed a Motion for reconsideration. An order denying the motion was entered on August 15, 2005. The Debtor and its debtor-afiliate, J.P. Igloo Inc., filed new chapter 11 petitions on August 22, 2005 (Bankr. M.D. Fla. Case Nos. 05- 16614 and 05-16615). The two cases were filed pro se. HUSMANN-PEREZ: MJ Squared Wants Chapter 22 Petitions Dismissed -------------------------------------------------------------- MJ Squared LLC asks the U.S. Bankruptcy Court for the Middle District of Florida to dismiss a second chapter 11 petition filed by Husmann-Perez Family Ltd. Partnership and a chapter 11 petition filed by its debtor-affiliate tenant J.P. Igloo, Inc. MJ Squared tells the court that it is owed approximately $5.5 million by the Debtor and its debtor-affiliate, J.P. Igloo, Inc. MJ Squared holds mortgages on an ice skating rink owned by the Debtor and leased by J.P. Igloo. MJ Squared reminds the Court that during the first Chapter 11 case, it was granted relief from the automatic stay to conclude it pending state court foreclosure action. MJ Squared and the Office of the United States Trustee filed motions to dismiss or convert the first Chapter 11 case. On July 29, 2005, the Court dismissed the case "with prejudice" and said that it will consider "appropriate award of sanctions if the Debtor attempts to file another bankruptcy case." The Debtor subsequently filed a Motion for reconsideration and Judge Paskay denied that Motion. MJ Squared discloses that after the dismissal of the first bankruptcy case, a hearing on its motion for summary judgment in the state court foreclosure action was scheduled on August 22, 2005. In order to further slow the wheels of justice, MJ Squared says, the Debtor filed fresh Chapter 11 cases on the morning of August 22, 2005. The new Chapter 11 filing was filed pro se. MJ Squared tells the Court that because of the new Chapter 11 filing, the state court declined to go forward with the summary judgment hearing. MJ Squared says that the case was filed in bad faith for the sole purpose of frustrating MJ Squared' efforts to obtain summary judgment in the pending state court foreclosure action. The filing of the second petition has delayed MJ Squared's foreclosure action without justification and has required them to incur additional fees and costs. MJ Squared asks the Court to dismiss the new Chapter 11 case as a bad faith filing and as a violation of the Court's dismissal order. MJ Squared also asks the Court to enter an award of sanctions against the Debtor and Greg Richard, the individual that filed the Chapter 11 petition. JP Igloo Chapter 22 Filing In a separate motion, MJ Squared also asks the Court to dismiss the new Chapter 11 case by J.P. Igloo and enter an award of sanctions for the same reasons given in the Husmann-Perez motion. Headquartered in Dallas, Texas, Husmann-Perez Family Ltd. Partnership owns a skating facility located in Ellenton, Florida. The Company filed for chapter 11 protection on March 29, 2005 (Bankr. M.D. Fla. Case No. 05-05774). Frederick T. Lowe, Esq., at Florida Law Group, L.L.C., represented the Debtor in that proceeding. When the Company filed for chapter 11 protection, it listed $10 million to $50 million in assets and $1 million to $10 million in debts. The case was dismissed on July 29, 2005. The Debtor filed a Motion for reconsideration. An order denying the motion was entered on August 15, 2005. The Debtor and its debtor-affiliate, J.P. Igloo Inc., filed new chapter 11 petitions on August 22, 2005 (Bankr. M.D. Fla. Case Nos. 05-16614 and 05-16615). The two new cases were filed pro se. ICG COMMS: Wants Until Dec. 1 to Object to Proofs of Claim ---------------------------------------------------------- ICG Communications, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend the deadline by which they can object to proofs of claims filed against their estates. The Court confirmed the Debtors' Second Amended Joint Plan of Reorganization on Oct. 9, 2002, and the Plan took effect on Oct. 10, 2002. On Aug. 3, 2004, the Creditor Trust was formed pursuant to the Creditor Trust Agreement for the benefit of all Allowed Class H-4 Claims holders and Allowed Class S-4 Claims holders. On Oct. 18, 2004, pursuant to a Merger Agreement dated July 19, 2004, MCCC ICG Holdings LLC, MCCC Merger Corp., and ICG Communications merged to form ICG Communications, Inc. Pursuant to Section 9.1 of the Amended Plan, the Reorganized Debtors are responsible for administering, disputing, objecting to, compromising or resolving and making distributions on account of claims filed against the Debtors. The Reorganized Debtors explain that approximately 3,000 claims have been filed in their chapter 11 cases. To date, the Reorganized Debtors have resolved all but 36 disputed claims, which have neither been allowed as filed, withdrawn, nor objected to. The disputed claims are held by eight claimholders. The Reorganized Debtors give the Court three reasons in support of the extension: a) the requested extension will give them more opportunity to file additional objections and to continue to resolve disputed claims for which settlement negotiations are ongoing between them and the claims holders; b) once the disputed claims are resolved during the duration of the requested extension, the Creditor Trust can make a final distribution of the consideration that it received from the Merger Agreement to the holders of newly Allowed and previously Allowed Claims in Classes H-4 and S-4; and c) the requested extension is not a delaying tactic on their part to prejudice the creditors but a valid request to avoid the inadvertent allowance of objectionable claims that could detriment all other creditors. ICG Communications, Inc. -- http://www.icgcomm.com/-- is a business communications company that specializes in converged voice and data services. ICG has a national footprint and extensive metropolitan fiber serving 24 markets. ICG products and services include voice and Internet Protocol (IP) solutions including VoicePipeT, voice services, dedicated Internet access (DIA) and private line transport services. ICG provides corporate customers and other carriers with flexible and reliable solutions. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 14, 2000 (Bankr. D. Del. Case Nos. 00-04238 through 00-04263). David S. Kurtz, Esq., and Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom L.L.P., represents the Debtors. As of Sept. 30, 2000, the Debtors had total assets of $2,789,927,050 and total debts of $2,809,795,436. The Court confirmed the Debtors' Second Amended Joint Plan of Reorganization on Oct. 9, 2002, and the Plan took effect on Oct. 10, 2002. INTERPLAY ENTERTAINMENT: Debts Exceed Assets by $16.95M at June 30 ------------------------------------------------------------------ Interplay Entertainment Corp. disclosed its operational results for the quarter ended June 30, 2005, to the Securities and Exchange Commission. Net revenues for the three months ended June 30, 2005, were $.5 million, a decrease of 85% compared to the same period in 2004. This decrease resulted from a 97% decrease in North America net revenues, a 95% decrease in OEM, royalties and licensing revenues and a 75% decrease in international net revenues. Net revenues for the six months ended June 30, 2005, were $1.3 million, a decrease of 89% compared to the same period in 2004. This decrease resulted from a 93% decrease in North America net revenues and a 92% decrease in OEM, Royalty and licensing revenues and an 88% decrease in International net revenues. North America net revenues for the three months ended June 30, 2005, were $.01 million, a decrease of 97% compared to the same period in 2004. The decrease in North America net revenues in 2005 was mainly due to delivering no product gold master and catalog sales eroding with time, resulting in a decrease in North America sales of $.32 million. North America net revenues for the six months ended June 30, 2005, were $.05 million a decrease of 93% compared to the same period in 2004. The decrease in North America net revenues in 2005 was mainly due to delivering no product gold masters in 2005 and catalog sales eroding with time, resulting in a decrease in North America sales of $.64 million. International net revenues for the three months ended June 30, 2005, were $0.4 million, a 75% decrease compared to the same period in 2004. The decrease in International net revenues for the three months ended June 30, 2005 was mainly due to releasing two new titles in the 2004 period as compared to zero in the 2005 period. Overall, the Company had a $1.2 million decrease in net revenue compared to the 2004 period. International net revenues for the six months ended June 30, 2005, were $1.1 million, an 88% decrease compared to the same period in 2004. The decrease in International net revenues for the six months ended June 30, 2005, was mainly due to releasing BALDUR'S GATE: DARK ALLIANCE II and FALLOUT: BROTHERHOOD OF STEEL in Europe during the first six months of 2004 compared to no new title in 2005. OEM, royalty and licensing net revenues for the three months ended June 30, 2005, were $0.05 million, a decrease of 95% compared to the same period in 2004. OEM, royalty and licensing net revenues for the six months ended June 30, 2005, were $0.1 million, a decrease of 92% compared to the same period in 2004. PC net revenues for the three months ended June 30, 2005, were $0.14 million, a decrease of 54% compared to the same period in 2004. The decrease in PC net revenues in 2005 was primarily due to lower back catalog sales. Video game console net revenues were $0.27 million, a decrease of 83% for the three months ended June 30, 2005, compared to the same period in 2004, mainly due to lower back catalog sales PC net revenues for the six months ended June 30, 2005, were $0.34 million, a decrease of 32% compared to the same period in 2004. The decrease in PC net revenues in the six months ended June 30, 2005, was primarily due to lower back catalog sales. Video Game console net revenues were $.8 million, a decrease of 91% for the six months ended June 30, 2005, compared to the same period in 2004. Cost of Goods Sold and Gross Profit Margin Cost of goods sold related to PC and video game console net revenues represents the manufacturing and related costs of interactive entertainment software products, including costs of media, manuals, duplication, packaging materials, assembly, freight and royalties paid to developers, licensors and hardware manufacturers. For sales of titles under the new 2002 distribution arrangement with Vivendi, our cost of goods consists of royalties paid to developers. Cost of goods sold related to royalty-based net revenues primarily represents third party licensing fees and royalties paid by the Company. Typically, cost of goods sold as a percentage of net revenues for video game console products is higher than cost of goods sold as a percentage of net revenues for PC based products due to the relatively higher manufacturing and royalty costs associated with video game console and affiliate label products. The Company also included in the cost of goods sold the amortization of prepaid royalty and license fees paid to third party software developers. The Company's expense prepaid royalties over a period of six months commencing with the initial shipment of the title at a rate based upon the number of units shipped. The Company evaluates the likelihood of future realization of prepaid royalties and license fees quarterly, on a product-by-product basis, and charge the cost of goods sold for any amounts that the Company deems unlikely to realize through future product sales. The Company's cost of goods sold decreased 22 points to 0.096 million in the three months ended June 30, 2005, compared to the same period in 2004. The decrease was due to lower shipments. The Company's cost of goods sold decreased 35 points to $0.267 million in the six months ended June 30, 2005, compared to the same period in 2004. The Company's gross margin increased to 79% for the three months ended June 30, 2005, from 57% in the comparable period in 2004. The Company's gross margin increased to 79% for the six months ended June 30, 2005 period from 44% in the comparable 2004 period. Marketing and Sales Marketing and sales expenses primarily consist of advertising and retail marketing support, sales commissions, marketing and sales personnel, customer support services and other related operating expenses. Marketing and sales expenses for the three months ended June 30, 2005, were $.4 million, an 89% decrease as compared to the 2004 period. Marketing and sales expenses for the six months ended June 30, 2005, were $0.139 million a 90% decreased as compared to the same period during 2004. The decrease for the three months and six months ended June 30, 2005 as compared to the same period in 2004 is due primarily to no new title being released in 2005. General and Administrative General and administrative expenses primarily consist of administrative personnel expenses, facilities costs, professional fees, bad debt expenses and other related operating expenses. General and administrative expenses for the three months ended June 30, 2005, were $.606 million, a 48% decrease as compared to the same period in 2004. The decrease is mainly due to decreases in personnel costs and general expenses. General and administrative expenses for the six months ended June 30, 2005, were $1.3 million a 46% decrease as compared to the same period in 2004. The decrease is mainly due to decreases in personnel costs and general expenses as a result of a reduction in administrative personnel during 2005. Product Development Product development expenses for the three months ended June 30, 2005, were $.07 million, a 95% decrease as compared to the same period in 2004. This decrease is due to a virtual suspension in product development personnel costs and general expenses during the quarter. Product development expenses for the six months ended June 30, 2005, were $.15 million, a 96% decrease as compared to the same period in 2004. The decrease is mainly due to a $3.3 million decrease in personnel costs and general expenses as a result of a reduction in product development personnel during 2005. Other Income/Expenses, Net Other income consists primarily of a settlement and a release of accrued royalty obligations in the amount of $0.92 million, recovery of bad debt in the amount of $0.05 million, foreign currency exchange transactions gains and losses interest expense on debt. Other income for the three months ended was $0.97 million as compared to expenses of $0.676 million expenses in the same period in 2004. The change is attributable to a settlement in 2005 compared to the write down of the Avalon accounts receivable in 2004. A full-text copy of Interplay Entertainment's Quarterly Report is available for free at http://ResearchArchives.com/t/s?f6 Interplay Entertainment Corp. develops and publishes interactive entertainment software for both core gamers and the mass market. As of June 30, 2005, Interplay Entertainment's balance sheet reflected a $16,953,000 stockholders' deficit compared to a $17,362,000 deficit at Dec. 31, 2004. INTERPLAY ENT: May File for Bankruptcy Due to Liquidity Woes ------------------------------------------------------------ Interplay Entertainment Corp. is considering the liquidation of its assets or the filing of a bankruptcy petition if it cannot receive additional financing to pay off its current liabilities. As of June 30, 2005, the Company's balance sheet shows a $17 million working capital deficit, with a $30,000 cash balance. The Company currently has no cash reserves and is unable to pay current liabilities. The Company has operated without a credit facility since October 2001. The Company continues to face difficulties in paying its vendors, and employees, and has pending lawsuits against it as a result of its continuing cash flow difficulties. The Company expects these difficulties to continue during 2005. Unpaid Rent On April 16, 2004, Arden Realty, the Company's landlord, filed an unlawful detainer action against the Company, alleging unpaid rent of approximately $432,000. The Company was unable to pay its rent, and vacated the office space during the month of June 2004. On June 3, 2004, the Landlord obtained a judgment of approximately $588,000 exclusive of interest. The Company also owed an additional $148,000 on a prior settlement with the Landlord. The Company negotiated a forbearance agreement whereby Arden has agreed to accept payments commencing in January 2005 in the amount of $60,000 per month until the full amount is paid. The Company is currently in default of this agreement. Delinquent Payroll Taxes & Penalties The Company received notice from the Internal Revenue Service that it owes $117,000 in payroll tax penalties for late payment of payroll taxes in the 3rd and 4th quarters of 2003 and the 1st and 2nd quarters of 2004. The amount has been accrued at Dec. 31, 2004. An additional notice was received for the tax year ending 2003 regarding the reconciliation of 2003 payroll tax returns and a potential increase in taxes of $45,479. The Company has received notice from the California Employment Development Department that it owes payroll taxes and penalties of around $101,000. The Company has received notice from the State Board of Equalization that it owes approximately $64,000 in State Use Tax. The Company also received notice from the Orange County Treasurer that it owes approximately $28,000 in property taxes. Such amounts have been accrued at June 30, 2005. Employee Obligations The Company is unable to meet certain 2004 payroll obligations to its employees. As a result, several employees filed claims with the State of California Labor Board. The Labor Board has fined the Company approximately $10,000 for failure to meet its payroll obligations and set trial dates for August 2005. Since the Company is having difficulty meeting its payroll obligations on a timely basis to its employees, a large number of its employees stopped reporting to work in late May and early June 2004. The Company was subsequently evicted from its building at 16815 Von Karman Avenue in Irvine, California in mid June 2004. The Company had a core group of approximately 5 employees on payroll on June 30, 2005. All employees have not been paid for the period August through December 31, 2004. Since The Company has been unable to pay the employees, it has continuing liability to them. Workers' Comp Problems The Company's property, general liability, auto, fiduciary liability, workers compensation, directors and officers, and employment practices liability insurance policies, have been cancelled. The Company obtained a new workers' compensation insurance policy. The Labor Board fined us approximately $79,000 for not having worker's compensation coverage for a period of time. The Company's health insurance was also cancelled but was subsequently reinstated. The Company is appealing the Labor Board fines. Interplay Entertainment Corp. develops and publishes interactive entertainment software for both core gamers and the mass market. As of June 30, 2005, Interplay Entertainment's balance sheet reflected a $16,953,000 stockholders' deficit compared to a $17,362,000 deficit at Dec. 31, 2004. KAISER ALUMINUM: Insurers Prepare to Battle with Asbestos Trust --------------------------------------------------------------- According to Kaiser Aluminum Corporation and its debtor- affiliates, one of the significant events that led to the filing of their bankruptcy cases was the existence of more than 100,000 asbestos-related lawsuits filed against them, as well as a significant number of non-asbestos tort claims including the "Channeled Personal Injury Claims," as defined in the Remaining Debtors' Plan of Reorganization. Karl Hill, Esq., at Sietz, Van Ogtrop & Green P.A., in Wilmington, Delaware, relates that for more than five years, Kaiser Aluminum & Chemical Corporation and certain insurers have been involved in a lawsuit pending in a California state court. The Lawsuit pertains to over $1,000,000,000 in aggregate insurance coverage available for asbestos and other pending claims against KACC. The Insurers include: * Affiliated FM Insurance Company; * AIU Insurance Company; * Allstate Insurance Company; * Associated International Insurance Company; * Columbia Casualty Insurance Company; * Continental Insurance Company; * Employers Mutual Casualty Company; * Evanston Insurance Company; * Federal Insurance Company; * First State Insurance Company; * Granite State Insurance Company; * Harbor Insurance Company; * Hartford Accident and Indemnity Company; * Hudson Insurance Company; * Insurance Company of the State of Pennsylvania; * Landmark Insurance Company; * Lexington Insurance Company; * National Union Fire Insurance Company of Pittsburgh, Pennsylvania; * New England Reinsurance Corporation; * New Hampshire Insurance Company; * Nutmeg Insurance Company; and * Transcontinental Insurance Company. Mr. Hill recounts that one of the Plan's main components is the Debtors' proposal to create five trusts governed by at least nine different agreements, under which: (a) the Channeled Personal Injury Claims will be channeled to one of the Trusts; and (b) certain assets of the Debtors known as the "PI Trust Assets" will be transferred to the Trusts, which will manage and distribute those assets to pay the Channeled Personal Injury Claims. Under the Plan, the Trusts will: -- assume all of the Channeled Personal Injury Claims; -- preserve, hold, manage and maximize the Trusts' assets for use in satisfying the Channeled Personal Injury Claims and Trust expenses; -- direct the processing, liquidation and payment of the Channeled Personal Injury Claims in accordance with certain Distribution Procedures; and -- otherwise comply in all respects with the requirements of a trust under Section 524(g)(2)(B) of the Bankruptcy Code Code with respect to the Asbestos Personal Injury Claims only. However, Mr. Hill notes that none of the Trust Documents that are fundamental to the Plan have been filed with the U.S. Bankruptcy Court for the District of Delaware or distributed to parties-in- interest. Mr. Hill reminds Judge Fitzgerald that the Remaining Debtors proposed to fix the deadline for the objection to their Plan Confirmation on October 21, 2005, and the confirmation hearing on November 15, 2005. Under these circumstances, it is premature to set litigation deadlines -- especially when they relate to undisclosed key documents, Mr. Hill says. Mr. Hill points out that those circumstances are unfair on the part of the Insurers since it is their policies that the Plan purports to assign to the Trusts to fund the payment of the Channeled Personal Injury Claims. There may be a need to take discovery, however, without having seen the Trust Documents, Allstate Insurance and the other Insurers cannot know the extent of discovery needed, Mr. Hill notes. Furthermore, Mr. Hill argues that the Plan includes a misleadingly titled "Insurance Neutrality" provision that is in no sense "neutral" because, among other things, it expressly asks the Court to rule against Allstate Insurance and the other Insurers on a critical state-law coverage issue -- the Insurance Assignment Finding. The Insurers believe that the Insurance Assignment sought by the Plan, absent a consent, violates the terms of their policies and applicable law, and, therefore, they intend to oppose that assignment. Accordingly, Allstate Insurance and the other Insurers ask Judge Fitzgerald to deny the Remaining Debtors' proposed schedules, or in the alternative, continue to a date after which the Trust Documents have been filed with the Court and that the parties-in- interest have been given at least 25 days to review the documents. 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) KEY ENERGY: Names J. Marshall Dodson as Chief Accounting Officer ---------------------------------------------------------------- Key Energy Services, Inc. (OTC Pink Sheets: KEGS) welcomes J. Marshall Dodson as the Company's Vice President and Chief Accounting Officer. Mr. Dodson reports to Bill Austin, Chief Financial Officer. Mr. Dodson brings thirteen years of experience, having served most recently as Managing Director and Controller, Dynegy Generation for Dynegy Inc. Prior to joining Dynegy, Mr. Dodson spent approximately ten years with Arthur Andersen LLP in Houston, Texas. Mr. Dodson is a Certified Public Accountant and is a graduate of the University of Texas at Austin. Mr. Dodson will be based in Houston, Texas. Financial Restatements As previously reported, Key Energy Services, Inc. received a notice of default from the holders of its 6-3/8% senior notes and 8-3/8% senior notes on June 7, 2005. The action came after the Company failed to file its Annual Report on Form 10-K for the year ended Dec. 31, 2003, by the May 31, 2005 deadline. Under the terms of the notice, the Company had until Aug. 6, 2005, to cure the default by filing its 2003 Annual Report. As a result of the Company's failure to file its Form 10-K, the noteholders have the right to accelerate the notes at any time. As of Aug. 17, 2005, Key Energy said it has not received any notice of acceleration from the noteholders or the trustee. On July 29, 2005, the Company entered into a new credit facility which provides the Company with the ability to repay the senior notes, if necessary. Key Energy Services, Inc. is the world's largest rig-based well service company. The Company provides oilfield services including well servicing, contract drilling, pressure pumping, fishing and rental tools and other oilfield services. The Company has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina. * * * As reported in the Troubled Company Reporter on July 11, 2005, Standard & Poor's Ratings Services revised the CreditWatch implications on its 'B-' corporate credit rating on Key Energy Services Inc. to developing from negative. Houston, Texas-based Key has about $450 million of total debt outstanding as of June 8, 2005. As reported in the Troubled Company Reporter on June 17, 2005, Moody's Investors Service continues to leave Key Energy Services' ratings on review for downgrade pending the filing of its 2003, 2004 and 2005 financial statements. Though receiving a notice of default on June 7, 2005, from the trustees on behalf of both the 6.375% and the 8.375% noteholders, Moody's is currently not taking any ratings action as the company has procured a commitment for a new financing package from Lehman Brothers which, combined with the company's cash balances, appears sufficient to refinance essentially all of Key's existing debt. The notice of default stems from the company not meeting its recent waiver from the bondholders and bank lenders to file its 2003 Form 10-K by May 31, 2005. Under the terms of the indenture, the company now has 60 days to cure the default (by August 5, 2005, at which time the trustee or 25% of each class of noteholders will have the right to accelerate each series of notes. However, the company announced on June 1, 2005 that it had received a commitment from Lehman Brothers to provide $550 million in loan facilities in the event it elects to refinance its existing bank debt and/or senior notes. The facilities are comprised of a $400 million term loan, a $65 million revolving credit facility, and an $85 million Letter of Credit facility. The commitment expires December 31, 2005 and is subject to pre- funding conditions such as meeting a trailing twelve month EBITDA test of $175 million and that no new material developments transpire that have not been already disclosed. These facilities, together with the more than $100 million of cash on hand, gives the company the capacity to refinance all of the existing debt. In the meantime, the cash is more than sufficient to cover ongoing operating needs and coupon payments. These ratings for Key remain under review for downgrade: 1) B1 -- Key's senior implied rating 2) B2 -- Key's senior unsecured issuer rating 3) B1 -- $150 million 6.375% Sen. Unsec. notes due 2013 4) B1 -- $175 million 8.375% Sen. Unsec. notes due 2008 5) B1 -- $100 million add-on to 8.375% Sen. Unsec notes, due 2008. KMART CORP: SEC Charges Chuck Conway & John McDonald with Fraud --------------------------------------------------------------- The Securities and Exchange Commission filed charges yesterday against two former top Kmart executives for misleading investors about Kmart's financial condition in the months preceding the company's bankruptcy. According to the Commission's complaint, former Chief Executive Officer Charles C. Conaway and former Chief Financial Officer John T. McDonald are responsible for materially false and misleading disclosure about the company's liquidity and related matters in the Management's Discussion and Analysis (MD&A) section of Kmart's Form 10-Q for the third quarter and nine months ended October 31, 2001, and in an earnings conference call with analysts and investors. Linda Chatman Thomsen, Director of the Division of Enforcement, said, "The SEC has repeatedly emphasized the important role MD&A disclosure is intended to play in giving shareholders the ability to examine a corporation 'through the eyes of management.' Kmart senior management deprived its shareholders of that opportunity." Peter H. Bresnan, an Associate Director in the Division of Enforcement, stated, "Investors are entitled to both accurate financial data and an accurate description of the story behind the numbers. Kmart's senior management failed to honestly inform investors that Kmart faced a liquidity crisis in the third quarter of 2001, how the company's own ill-advised action had caused the problem and what steps management took to respond to it." The Commission alleges that, in the MD&A section, Messrs. Conaway and McDonald failed to disclose the reasons for a massive inventory overbuy in the summer of 2001 and the impact it had on the company's liquidity. For example, the MD&A disclosure attributed increases in inventory to "seasonal inventory fluctuations and actions taken to improve our overall in-stock position." The Commission alleges that this disclosure was materially misleading because, in reality, a significant portion of the inventory buildup was caused by a Kmart officer's reckless and unilateral purchase of $850 million of excess inventory. According to the complaint, the defendants dealt with Kmart's liquidity problems by slowing down payments owed vendors, thereby withholding $570 million from them by the end of the third quarter. According to the complaint, Messrs. Conaway and McDonald lied about why vendors were not being paid on time and misrepresented the impact that Kmart's liquidity problems had on the company's relationship with its vendors, many of whom stopped shipping product to Kmart during the fall of 2001. Kmart filed for bankruptcy on Jan. 22, 2002. The Commission's complaint, which was filed in the United States District Court for the Eastern District of Michigan, charges Conaway and McDonald with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and aiding and abetting violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 13a-13, and 12b-20 thereunder by Kmart, and seeks as relief permanent injunctions, disgorgement with prejudgment interest, civil penalties and officer and director bars. The proceeding is captioned Securities and Exchange Commission v. Charles C. Conaway and John T. McDonald, Jr. (Dist. E.D. Mich. Case No. 05 Civ. 40263) (P. Gadola, J.). A full-text copy of the complaint is available at no charge at: http://www.sec.gov/litigation/complaints/comp19344.pdf The Commission acknowledged the assistance of the United States Attorney's Office for the Eastern District of Michigan and the Federal Bureau of Investigation. The SEC says its Kmart-related investigation is continuing. KMART CORP: Files Status Report on Remaining Avoidance Actions -------------------------------------------------------------- Pursuant to the U.S. Bankruptcy Court for the Northern District of Illinois' Case Management Order, dated May 6, 2004, Kmart Corporation identified nine defendants who filed requests to dismiss the adversary complaints, which have general applicability to all or many other defendants. Six of the Nine Defendants' cases have been dismissed: Defendant Case No. Status --------- -------- ------ Chicago Sun-Times 04-02038 Dismissed Washington Post Company 04-00121 Dismissed Great Lakes Media 04-00118 Dismissed Consumer Communications Services, Inc. 04-02055 Dismissed Quad Graphics 04-00086 Pending Ogden Newspaper Group 04-00158 Pending Marigold Foods, LLC 04-01898 Pending Dean Foods Company 04-00082 Dismissed Vertis, Inc. 04-00099 Dismissed William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, in Chicago, Illinois, relates that other defendants to avoidance actions filed or otherwise joined in one or more of the Nine Defendants' dismissal motions. The dismissal of the cases against any of the Nine Defendants does not affect any other defendants that joined the Dismissal Motions. Mr. Barrett explains that, under the Case Management Order, the filing of a joinder to a dismissal motion in the critical vendor adversary proceedings is deemed the same as filing an independent motion to dismiss. A copy of the pending cases is available for free at: http://bankrupt.com/misc/Kmart_remaining_crit_vendors.pdf 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: Settles Dispute Over Winder Corners' Claim for $590K ---------------------------------------------------------------- Winder Corners Associates, L.P., and Kmart Corporation inform the U.S. Bankruptcy Court for the Northern District of Illinois that they have resolved their dispute in relation to the lease of Store No. 7595 located in Winder, Georgia. Pursuant to a stipulation approved by Judge Sonderby, Winder Corners will have an allowed Class 5 lease rejection claim for $579,921, which will be satisfied in accordance with the Plan. Winder Corners will also have an allowed administrative expense claim for $10,937, which will be paid in good funds. In addition, Winder Corners is forever barred from asserting, collecting, or seeking to collect any other claims or amounts with respect to the Lease. 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) KNOWLES ELECTRONICS: S&P Puts B- Corporate Credit Rating on Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings for Itasca, Illinois-based Knowles Electronics Holdings Inc., including its 'B-' corporate credit rating, on CreditWatch with positive implications. Standard & Poor's ratings on Dover Corp., including its 'A+' corporate credit rating, concurrently were downgraded to A/Stable/A-1 from A+/Stable/A-1. These actions follow the announcement that Dover will purchase Knowles Electronics for $750 million. "The CreditWatch positive listing reflects Dover's stronger credit quality," said Standard & Poor's credit analyst Ben Bubeck. "We will monitor progress of the acquisition, and will determine the appropriate ratings actions, based upon the degree of explicit or implicit support Dover provides to Knowles outstanding debt obligations," he continued. In the event that Knowles' existing debt is refinanced, the ratings on Knowles will be withdrawn. As of June 2005, Knowles had approximately $322 million of funded debt, in addition to approximately $328 million of mandatorily redeemable preferred stock. MAIN ELECTRIC: Case Summary & 9 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Main Electric Supply & Contracting, Inc. 65 Tener Street Luzerne, Pennsylvania 18709 Bankruptcy Case No.: 05-54401 Type of Business: The Debtor is an electrical contractor. Chapter 11 Petition Date: August 22, 2005 Court: Middle District of Pennsylvania (Wilkes-Barre) Debtor's Counsel: David J. Harris, Esq. 15 Public Square, Suite 310 Wilkes-Barre, Pennsylvania 18701 Tel: (570) 823-9400 Fax: (570) 820-9600 Estimated Assets: $126,600 Estimated Debts: $496,800 Debtor's 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Luzerne National Bank Busines and truck loan $158,000 Attn: George McCollough Value of security: 118 Main Street $12,000 Luzerne, PA 18709 Internal Revenue Service Federal Employment $150,000 Special Procedures Branch Taxes P.O. Box 12051 Philadelphia, PA 19105 Local 163 Retirement Funds $80,000 IBEW 1269 san Souci Parkway Wilkes-Barre, PA 18706 Gray Bar Material supplied $38,000 PA Department of Revenue State employment taxes $20,000 Don Wilkinson Local income taxes $18,000 PA Department of Labor & State employment taxes $10,000 Industry Kato Light Generator $8,000 Capital One business credit card $2,800 MAYTAG CORP: Signs $2.7 Billion Merger Agreement with Whirlpool --------------------------------------------------------------- Whirlpool Corporation (NYSE: WHR) and Maytag Corporation (NYSE: MYG) signed a definitive merger agreement in which Whirlpool will acquire all outstanding shares of Maytag in a cash and stock merger valued at $21 per share. One half of the per-share consideration will be paid in cash and the balance in a fraction of a share of Whirlpool common stock. The Board of Directors of Maytag has approved the merger agreement with Whirlpool and intends to recommend to Maytag's shareholders that they adopt the agreement. Prior to signing the Whirlpool merger agreement, Maytag paid a $40 million termination fee to Triton Acquisition Holding and, thereafter, terminated the agreement with Triton. In accordance with Whirlpool's August 10, 2005, offer, as extended on August 12, 2005, Whirlpool has reimbursed the $40 million to Maytag today. In addition, Maytag said that the special meeting of stockholders scheduled for Friday, September 9, 2005, has been cancelled as a result of the termination of the Triton merger agreement. The aggregate transaction value, including assumption of approximately $977 million of debt, is approximately $2.7 billion. The transaction is subject to customary conditions, including, among other things, regulatory approvals and Maytag shareholder approval. The transaction will be taxable to Maytag shareholders. Maytag shareholders will receive, for each share held, $10.50 in cash and between 0.1144 and 0.1398 of a share of Whirlpool stock. The amount of Whirlpool stock to be issued in exchange for each Maytag share will depend upon the volume-weighted average trading price of Whirlpool's stock during a 20 trading-day period ending shortly before the merger. Maytag shareholders will receive 0.1144 of a share of Whirlpool stock if the average Whirlpool stock price is $91.79 or greater and 0.1398 if it is $75.10 or less; between the two prices, the exchange ratio will vary proportionately. Howard Clark, Maytag board member since 1986 and lead director, said, "After careful consideration in conjunction with our financial and legal advisors and an independent committee of Maytag's board consisting of all non-management directors, we re- evaluated the transaction with Triton and concluded that the Whirlpool agreement is superior and is in the best interest of our shareholders." Jeff Fettig, Whirlpool chairman, president and CEO, said, "The combination of Whirlpool and Maytag will create very substantial benefits for consumers, trade customers and our shareholders. This transaction will enable us to achieve significant efficiencies and better asset utilization. It will also allow us to offer a wider range of products to a much broader consumer base." "Overall, this transaction will translate into better products, quality and service, as well as efficiencies, which will enhance our ability to succeed in the increasingly competitive global home-appliance industry," added Mr. Fettig. "We remain highly confident that we will receive regulatory clearance for this transaction in a timely manner." Ralph Hake, Maytag chairman and CEO, said, "This combination brings together two leading organizations with strong traditions in quality and customer satisfaction. Together, Whirlpool and Maytag will bring substantial benefits to consumers around the world, as well as to shareholders and customers." Whirlpool has sufficient resources to finance the acquisition and has received strong support from the banking sector. The company currently has a $1.2 billion, five-year committed credit facility, scheduled to mature in 2009. There have been no borrowings under this agreement. The acquisition and upcoming debt maturities of the combined company are expected to be financed through current bank agreements and with new committed bank facilities. In addition to reimbursing the $40 million termination fee paid by Maytag to Triton, Whirlpool has agreed to pay up to $15 million to assist Maytag in retaining key employees. Whirlpool also has agreed to pay Maytag a "reverse break-up fee" of $120 million under certain circumstances in the unlikely event of failure to obtain regulatory clearance. Maytag's shareholders are expected to vote on the transaction before the end of the year. Whirlpool expects the transaction to close as early as the first quarter of 2006, following approval from Maytag shareholders and regulatory clearance. Lazard serves as financial advisor; Wachtell, Lipton, Rosen & Katz serves as legal advisor; and Cleary Gottlieb Steen & Hamilton serves as special legal counsel to Maytag. Greenhill & Company, Weil Gotshal & Manges LLP, Howrey LLP, and The Boston Consulting Group serve as advisors to 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. Maytag Corporation is a $4.7 billion home and commercial appliance company focused in North America and in targeted international markets. The corporation's primary brands are Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R). * * * As reported in the Troubled Company Reporter on Aug. 18, 2005, Moody's Investors Service placed the ratings of Whirlpool Corp. and its subsidiaries under review for possible downgrade and revised its rating review of Maytag Corporation to direction uncertain from review for possible downgrade. On August 12, 2005, Maytag announced that it has endorsed Whirlpool's $2.7 billion bid for 100% control of Maytag. While the terms of Whirlpool's offer have not been finalized, Moody's expects that the bid will be financed with $1.7 billion split equally between equity and debt plus the assumption of approximately $1 billion of Maytag's debt. The reviews will focus on: * the final structure of the financing package; * the integration and restructuring plan for Maytag; and * the projected operating and financial performances and cost saving synergies for the combined entity. The reviews will also incorporate the historically strong brand names of both Whirlpool and Maytag and assess how Whirlpool will leverage the diverse brands, while maintaining key customer relationships. MBIA INC: SEC Issues Wells Notice in Reinsurance Investigation -------------------------------------------------------------- MBIA Inc. (NYSE:MBI) received a "Wells Notice" from the staff of the U.S. Securities and Exchange Commission. The Wells Notice indicates that the Staff is considering recommending that the SEC bring a civil injunctive action against the Company alleging violations of federal securities laws "arising from MBIA's action to retroactively reinsure losses it incurred from the AHERF bonds MBIA had guaranteed, including, but not limited to, its entering into excess of loss agreements and quota share agreements with three separate counterparties." The Company is engaged in discussions with the Staff concerning the possible resolution of these charges. The Company is also engaged in preliminary discussions with the staffs of the New York Attorney General's Office and the New York State Insurance Department regarding the possible resolution of potential civil charges that the New York Attorney General's Office might bring in connection with the AHERF reinsurance transactions. As previously disclosed, MBIA has been cooperating, and is continuing to cooperate fully with the investigations by the SEC, New York State Attorney General's office and the U.S. Attorney's Office for the Southern District of New York. The investigations are, however, ongoing, and the Company is continuing to provide information. The Company is unable to predict the outcome of the investigations or whether its current efforts to resolve them on a fair and appropriate basis will be successful. On November 18, 2004, MBIA received subpoenas from the Securities and Exchange Commission and the New York Attorney General's Office requesting information with respect to non-traditional or loss mitigation insurance products developed, offered or sold by MBIA to third parties from January 1, 1998 to the present. On March 8, 2005, MBIA announced that it had decided to restate its financial statements for 1998 through 2003 to correct the accounting treatment for two reinsurance agreements that MBIA entered into in 1998 with Zurich Reinsurance North America, which later was re-named Converium Re upon its divesture by Zurich Financial Services in 2001. The restated transactions overstated net income by $54 million during the period 1998 through 2003 by failing to record a loss related to MBIA's insurance of bonds issued by the Allegheny Health, Education and Research Foundation. On March 9, 2005, MBIA announced that the U.S. Attorney's Office for the Southern District of New York was conducting its own investigation into losses suffered by MBIA as a result of its insurance of the Allegheny bonds. On March 30, 2005, the SEC and NYAG supplemented the November 2004 subpoenas with requests for documents related to MBIA's accounting treatment of advisory fees, its methodology for determining loss reserves and case reserves, instances of purchase of credit default protection in itself, and documents relating to Channel Reinsurance Ltd. ("Channel Re"), a reinsurance company launched in 2004 by MBIA, PartnerRe Ltd., RenaissanceRe Holdings Ltd., and Koch Financial Corporation. On April 8, 2005, PartnerRe Ltd. and RenaissanceRe Holdings Ltd. announced that they had received subpoenas from the SEC and NYAG seeking information relating to Channel Re. MBIA Inc. -- http://www.mbia.com/-- through its subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's innovative and cost-effective products and services meet the credit enhancement, financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary, MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. * * * As reported in the Troubled Company Reporter on Apr. 13, 2005, the law firm of Milberg Weiss Bershad & Schulman LLP filed a class action lawsuit on behalf of all persons who purchased or otherwise acquired the securities of MBIA Inc. between August 5, 2003 and March 30, 2005, inclusive, seeking to pursue remedies under the Securities Exchange Act of 1934. A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss's website at http://www.milbergweiss.com/ MIRANT CORP: Disclosure Statement Hearing Continued to Sept. 21 --------------------------------------------------------------- The hearing to consider the approval of Mirant Corporation and its debtor-affiliates' Amended Disclosure Statement is continued to September 21, 2005, at 10:30 a.m. However, all parties who intend to participate in the Disclosure Statement Hearing must appear at a pre-hearing status conference scheduled at 9:00 a.m. on September 14. As reported in the Troubled Company Reporter on April 1, 2005, the Debtors delivered their First Amended Joint Plan of Reorganization and First Amended Disclosure Statement explaining that Plan to the U.S. Bankruptcy Court for the Northern District of Texas on March 25, 2005. Mirant says that its plan as originally filed on January 19, 2005, was the product of extensive, but incomplete, negotiations with the Corp Committee, the MAGI Committee. Although not supported by either committee, Mirant believes that Plan reflected the basic construct around which the parties had negotiated to that point and otherwise represented, in the Debtors' view, a reasonable and appropriate compromise that permitted the value of the Debtors' business to be maximized and provided a fair allocation between the Debtors' estates. Negotiations regarding the terms under which the Debtors would emerge from chapter 11 protection continued since January. Mirant believes that the Amended Plan reflects the current status of discussions with various parties, and reflects an agreement in principal with the Corp Committee. Given the current state of negotiations, Mirant believes there is a reasonable prospect of obtaining the support of the MAGI Committee before the Disclosure Statement begins. Mirant makes it clear that the Amended Plan does not reflect material input from the Official Committee of Equity Security Holders because there isn't sufficient value to flow to that constituency. The Equity Committee continues to argue that holders of Equity Interests in Mirant are entitled to a recovery because the enterprise value of the Debtors' business exceeds the amount necessary to provide a full recovery to creditors. The Debtors say they're ready to proceed with the hearing on April 11, 2005, at which time they'll ask the Court to determine enterprise value. If creditors accept and the Court confirms the Amended Plan: * The Debtors' business will continue to be operated in substantially its current form, subject to: (1) certain internal structural changes that the Debtors believe will improve operational efficiency, facilitate and optimize the ability to meet financing requirements and accommodate the enterprise's debt structure as contemplated at emergence; and (2) potentially organizing the new parent entity for the Debtors' ongoing business operations in the jurisdiction outside the United States; * The estates of Mirant Corp., Mirant Americas Energy Marketing, LP, Mirant Americas, Inc., and the other debtor- subsidiaries -- excluding Mirant Americas Generation, LLC, and its debtor-subsidiaries -- will be substantially consolidated for purposes of determining treatment of and making distributions in respect of claims against and equity interests in Consolidated Mirant Debtors; * MAG's estates will be substantially consolidated for purposes of determining treatment of and making distributions in respect of Claims against and Equity Interests in Consolidated MAG; * The holders of unsecured claims against Consolidated Mirant Debtors will receive a pro rata share of 100% of the shares of New Mirant common stock, except for: (1) certain shares to be issued to the holders of certain MAG Claims; and (2) the shares reserved for issuance pursuant to the New Mirant Employee Stock Programs, which will provide for an eligible pool of awards to be granted to New Mirant's eligible employees and directors in the form of stock options; * The unsecured claims against Consolidated MAG will be paid in full through: (1) the issuance to general unsecured creditors and holders of MAG's revolving credit facility and MAG's senior notes maturing in 2006 and 2008 of: (i) new debt securities of a newly formed intermediate holding company under MAG -- "New MAG Holdco" -- or, at the option of the Debtors, cash proceeds from third-party financing transactions, equal to 90% of the full amount owed to those creditors; and (ii) common stock in the Debtors' new corporate parent that is equal to 10% of the amount owed; and (2) the reinstatement of MAG's senior notes maturing in 2011, 2021 and 2031; * The intercompany claims between and among Consolidated Debtors and Consolidated MAG will be resolved as part of a global settlement under the Amended Plan whereby Intercompany Claims will not receive a distribution under the Plan; * The consolidated business will have approximately $4.33 billion of debt -- as compared to approximately $8.63 billion of debt at the commencement of the Debtors' Chapter 11 cases -- comprised of: (1) $1.14 billion of debt obligations associated with non- debtor international subsidiaries of Mirant; (2) $169 million of miscellaneous domestic indebtedness including, in particular, the $109 million of the certain "West Georgia Plan Secured Notes", issued by West Georgia Generating Company, LLC; (3) $1.7 billion of reinstated debt at MAG; and (4) $1.32 billion of new debt issued by New MAG Holdco in partial satisfaction of certain existing MAG debt, which amount does not include the obligations under numerous agreements between Mirant Mid-Atlantic, LLC and various special purpose entities -- "Owner Lessors" -- which relate to two power stations, the Morgantown Station and the Dickerson Station; * To help ensure the feasibility of the Amended Plan with respect to Consolidated MAG, Mirant Corp. will contribute value to MAG, including the trading and marketing business -- subject to an obligation to return a portion of the imbedded cash collateral in the trading and marketing business to Mirant; provided that, under certain circumstances, the Debtors may elect to satisfy this obligation by transferring $250 million to Mirant Americas from New MAG Holdco -- the Mirant Peaker, Mirant Potomac and Zeeland generating facilities and commitments to make prospective capital contributions of $150 million for refinancing and, under certain circumstances, up to $265 million for sulfur dioxide capital expenditures; * MAG's prospective working capital requirements will be met with the proceeds of a new senior secured credit facility of $750 million; * Substantially all of the Debtors' contingent liabilities associated with the California energy crisis and certain related matters will be resolved pursuant to a global settlement in accordance with the Amended Plan; * The disputes regarding the Debtors' ad valorem real property taxes for the Bowline and Lovett facilities will be settled and resolved on terms that permit the feasible operation of these assets, or the Debtors that own the assets will remain in Chapter 11 until those matters are resolved by settlement or through litigation; * Substantially all of Mirant Corp.'s assets will be transferred to New Mirant, which will serve as the corporate parent of the Debtors' business enterprise on and after the Plan effective date and which will have no successor liability for any unassumed obligations of Mirant Corp.; similarly, the trading and marketing business of the "Trading Debtors" will be transferred to Mirant Energy Trading LLC, which shall have no successor liability for any unassumed obligations of the Trading Debtors; * The outstanding Mirant common stock will be cancelled and the holders thereof will receive any surplus value after creditors are paid in full, plus the right to receive a pro rata share of warrants issued by New Mirant if they vote to accept the Plan. A full-text copy of the amended Disclosure Statement is available at no charge at http://ResearchArchives.com/t/s?50 A full-text copy of the amended Plan of Reorganization is available at no charge at http://ResearchArchives.com/t/s?51 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. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: May Incorporate Reorganized Debtors Under Cayman Law ----------------------------------------------------------------- Mirant Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for authority to employ Appleby Spurling Hunter as their special counsel. Appleby will advise the Debtors regarding the possibility of incorporation of the reorganized Debtors under Cayman law and perform the necessary legal services to accomplish the incorporation. Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, informs the Court that Appleby's Cayman office has 90 staff members, 30 of which are attorneys. The firm excels in offering advice on a variety of issues related to Cayman law, Mr. Peck says. Moreover, he continues, the firm provides specialized offshore legal and business services, including incorporation of companies under Cayman law, and has previously worked with the Debtors as ordinary course counsel. Thus, the Debtors believe that Appleby is uniquely qualified to assist them with respect to the proposed services. Mr. Peck points out that "the proposed services will require Appleby to work at a level that merits its retention as special counsel rather than as an ordinary course professional." The Debtors will pay Appleby based on its customary hourly rates. To the best of the Debtors' knowledge, Appleby does not have any interest adverse to the Debtors or their estates on the matters for which it is being retained. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT: May Shut Down Units Absent Short-Term Air Quality Plans --------------------------------------------------------------- Mirant Corp. (Pink Sheets: MIRKQ) has taken rapid action to address concerns raised by a just-completed environmental computer modeling study of air quality in the vicinity of Mirant's Potomac River generating station. Mirant said that, as its initial response to the study findings, it has already reduced output of all five units at the plant to their lowest feasible levels. Mirant said it expects to meet soon with the Virginia Department of Environmental Quality to discuss both short and long-term plans to resolve the newly identified local air quality issues. If no acceptable short-term solutions can be found, Mirant will shut down all five units at the power plant no later than midnight Wednesday, Aug. 24, until a solution can be identified and implemented. Even taking the new study findings into consideration, the Potomac River generating station remains in compliance with all its operating permits, which set overall limits on the quantity of emissions from the plant, the company said. The coal-fired power plant, which began operation in 1949, produces 482 megawatts of electricity for Washington D.C. and surrounding communities. It is located in Alexandria, Va. The plant has been identified as a critical component for the reliability of the electric grid in the Washington, D.C. area. "As soon as we received results of an environmental computer modeling analysis that showed emissions from the Potomac River generating station could be significantly contributing to localized, modeled exceedances of National Ambient Air Quality Standards (NAAQS), we acted quickly," said Curt Morgan, executive vice president and chief operating officer, Mirant. "However, it's important to understand the nature of the study that has just been completed. The computer model was designed to analyze local air quality levels using a 'worst case' set of assumptions, including the operation of all five units at maximum permitted output with maximum emissions, combined with unfavorable wind conditions. These combined circumstances do not typically occur all at once, so the model works with hypothetical conditions that are not usually seen during normal plant operation," Mr. Morgan said. "Nevertheless, we take these findings extremely seriously, as demonstrated by our actions." "The decision to curtail and possibly halt power production at the plant involves many complex issues, including important electric system reliability considerations in the Nation's Capital and throughout the Mid-Atlantic region. We are working closely with all affected parties. However, the overriding factor in our decision has been, and will continue to be, protection of public health," said Lisa D. Johnson, president, Mirant's Northeast and Mid-Atlantic business unit. The plant has been designated by PJM Interconnection, the entity responsible for the reliability of the transmission system from the Mid-Atlantic states as far west as Chicago, as a facility critical to electric system reliability in the Washington, D.C. area. PJM's designation means that removing the Potomac River generating station could result in a strain on the transmission system and potential electrical outages if other key generation and transmission facilities become unavailable during high demand periods. Because of the advance notice required to be given to the regional electric grid operator and the complex and lengthy physical process to shut down large coal-fired steam boilers, Mirant will continue to operate the plant at a reduced level for a few days. The company also noted that it will maintain the plant in a state of operational readiness during the period of reduced operations or temporary shutdown of all units. The new findings arose in a study completed Aug. 19, 2005. It was commissioned under an agreement between Mirant and the Virginia Department of Environmental Quality (DEQ). The computer modeling of five air pollutants from the plant showed that for three types of emissions -- PM10 (particulate matter with an aerodynamic diameter of 10 micrometers or smaller), NO2 (nitrogen dioxide), and SO2 (sulfur dioxide) -- the plant's emissions have the potential to contribute to localized, modeled exceedances of NAAQS under some conditions. The potential localized air quality concerns impact an area within a half-mile radius of the plant. The newly identified air quality impacts are the result of a phenomenon known as "downwash." According to the U.S. Environmental Protection Agency, downwash is defined as "impacts associated with building wake effects. These effects cause the pollutant plume to fall to ground-level quicker." At the Potomac River plant, the unique combination of relatively short emissions stacks at the power plant (165 feet) and the presence of nearby tall buildings -- built well after the power plant was completed -- produce conditions that the newly completed computer model identified as being capable of causing downwash under some wind conditions. Computer modeling of possible downwash effects had never previously been required or conducted at the Potomac River plant. "Although the exact time frame for the return to full service of the Potomac River power plant cannot currently be determined, we are confident that we can identify solutions, and hopeful we can gain the cooperation of all parties to implement them," Ms. Johnson said. Mirant said it does not expect to return the plant to full service until appropriate solutions are implemented. However, Mirant may be required to operate the plant to meet mandatory system stability obligations, or if there is a legal obligation to operate the plant at higher output levels than would otherwise be in effect. Mirant also said it will need to operate plant units occasionally to test technological modifications to the plant. 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. NEWAVE INC: Stockholders' Deficit Climbs to $1.1 Mil. at June 30 ---------------------------------------------------------------- NeWave, Inc. (OTC Bulletin Board: NWWV) posted record gross revenue of $2,673,365 for the quarter ended June 30, 2005 vs. $1,862,476 for the quarter ended June 30, 2004. The Company's complete financial results can be viewed in its Form 10-QSB filing for the period ended June 30, 2005. NeWave CEO Michael Hill stated, "Once again we are able to report substantial gains in our top line growth for yet another quarter. During this past quarter we began formulating and implementing various new pricing and fulfillment strategies for new 'onlinesupplier.com' memberships." NeWave CFO Paul Daniel commented, "Having generated the revenue growth and market share gained in our first two years, as with any successful high growth company, we are moving into a new phase and have now implemented a strategy to increase our operating efficiency. Over the next several quarters, our focus is to continue to improve our membership retention, implement prudent measures for cost containment and strive towards operating profitability. With the launch of our first television broadcast infomercial scheduled for this fall, we believe we will be in a position to produce even greater qualitative financial results, which should assist us with our transition to a new plateau." NeWave Inc. (OTCBB: NWWV) -- http://www.newave-inc.com/-- is a leading online auction and e-commerce solutions provider which utilizes the internet to maximize profits and savings for it's customers through its three subsidiaries; OnlineSupplier.com, AuctionLiquidator and Online Discount Warehouse. Going Concern Doubt As reported in the Troubled Company Reporter on June 15, 2005, Jaspers Hall & Johnson expressed substantial doubt about NeWave Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm says that the company must generate sufficient cash flow to meet its obligations and sustain its operation. At June 30, 2005, NeWave Inc.'s balance sheet showed a $1,134,996 stockholders' deficit, compared to $224,074 of positive equity at Dec. 31, 2004. NEXSTAR BROADCASTING: S&P Lowers Corporate Credit Rating to B ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Nexstar Broadcasting Group Inc., including lowering its long-term corporate credit rating to 'B' from 'B+', because of the company's weaker-than-expected operating performance and high leverage. The outlook is stable. Total debt, including debt obligations of Mission Broadcasting that are guaranteed by Irving, Texas-based Nexstar, totaled approximately $648 million at June 30, 2005. "The downgrade recognizes that softer-than-expected advertising demand gives us greater concern that the company will not achieve the near-term leverage reduction that we had used in our previous rating assumptions," said Standard & Poor's credit analyst Alyse Michaelson Kelly. The shortfall in ad demand recently prompted Nexstar to lower its full-year 2005 revenue guidance. The rating on Nexstar reflects: * its high leverage from aggressive debt-financed acquisitions; * advertising's vulnerability to economic downturns; and * TV broadcasting's mature revenue growth prospects. These factors are only partially offset by: * Nexstar's cash flow diversity from major-network-affiliated TV stations in midsize markets; * broadcasting's good margin and discretionary cash flow potential; and * relatively resilient station asset values. Debt-financed acquisitions, softer-than-expected core ad revenues, and the company's failure to close an asset sale in early 2004 and use proceeds for debt reduction have resulted in persisting high leverage. Debt to EBITDA was 7.8x at June 30, 2005, up from the 7.1x reported level at year-end 2004. This ratio is expected to be even higher at year-end 2005, given the company's operating outlook for the remainder of 2005. Nexstar owns and operates approximately 46 TV stations, reaching 7.4% of U.S. TV households. Auto advertising, the largest ad category for TV broadcasters, will be a key determinant of performance in 2005, a nonelection year. Revenue comparisons are difficult this year because of the absence of sizable political advertising in nonelection years. The company's NBC- and CBS-affiliated stations contribute a majority of total broadcast cash flow. No market contributes more than 15% of Nexstar's total broadcast cash flow, mitigating the impact of regional economic volatility on advertising demand. NORTHSHORE ASSET: Creditors Must File Proofs of Claim by Sept. 9 ---------------------------------------------------------------- The U.S. District Court for the Southern District of New York set Sept. 9, 2005, at 5:00 p.m., as the deadline for each person or entity to file a proof of claim or proof of equity interest against Northshore Asset Management LLC and its debtor-affiliates on account of claims or equity interests arising prior to February 16, 2005. Creditors must deliver their claim forms by mail or courier to: Northshore Asset Management LLC, et. al. c/o Charles Rutledge JPMorgan Chase 4 New York Plaza, 17th Floor New York, New York 10004 A copy of each claim form must be furnished to the Receiver at: Kaye Scholer LLP Attention: Arthur Steinberg, Esq. Keith R. Murphy, Esq. 425 Park Avenue New York, New York 10022 Proof of Claim and Proof of Equity Security Interest forms are available at http://www.Northshoreupdate.com/or by contacting JPMorgan Chase, the Recordation Agent, at (904)807-3023. Headquartered in Chicago, Illinois, Northshore Asset Management LLC provides investment management services to private equity and hedge funds and sophisticated investors. On Feb. 15, 2005, Northshore, NSCT LLC and Saldutti Capital Management, LP, filed for chapter 11 protection (Bankr. N.D. Ill. Case Nos. 05-04950, 05-04958 and 05-04959). On February 16, 2005, the U.S. District Court for the Southern District of New York appointed Arthur Steinberg as receiver. On March 29, 2005, the Honorable Judge Pamela S. Hollis in Chicago ordered the transfer of the Debtors' chapter 11 cases to the U.S. Bankruptcy Court for the Southern District of New York (Bankr. Case Nos. 05-12797 through 05-12799). Jon C. Vigano, Esq., Patricia J. Fokuo, Esq., at Schiff Hardin LLP represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts ranging from $10 million to $50 million. NORTHWEST AIRLINES: Names N. Pieper & J. Friedel to Exec. Posts --------------------------------------------------------------- Northwest Airlines (Nasdaq: NWAC) disclosed two leadership appointments in its international and alliance organizations, naming Nathaniel Pieper to the position of vice president- alliances and Jim Friedel, president of NWA Cargo, to the additional role of senior vice president-Pacific, effective immediately. In his new role, Mr. Pieper will be responsible for Northwest's global alliance strategy and partnerships, including the airline's highly successful joint venture with KLM Royal Dutch Airlines and Northwest's membership in the SkyTeam alliance. Mr. Pieper replaces Gary Fishman, who has retired from Northwest. "Nat has held a number of key positions with Northwest in financial and business planning," said Phil Haan, executive vice president of international, alliances and information technology and chairman of NWA Cargo. "Nat's leadership skills and wide range of experience at Northwest will help us continue to develop our strategic global alliances to better serve our customers." Mr. Pieper joined Northwest in 1997. Since 2003, he has served as managing director of financial planning and analysis, with responsibilities for labor analysis, long-range financial planning and fleet planning, including Northwest's recent Boeing 787 order. Previously, he held positions in and had responsibility for capital planning and strategic planning. Mr. Pieper earned an MBA from Northwestern University's Kellogg School of Management in finance, strategy and transportation management and a BA in history from Duke University. Thanking Mr. Fishman for his 12 years of service with Northwest, Mr. Haan said, "During his career at Northwest Airlines, Gary Fishman made important contributions to the company's success in the areas of facilitating our entry into SkyTeam, providing our customers with a faster and more efficient airport experience and providing financial leadership of our technical operations division. We wish him well in his new endeavors." Jim Friedel Named SVP-Pacific Jim Friedel will take on the newly-created role of senior vice president- Pacific in addition to retaining his responsibilities as president of NWA Cargo. Mr. Friedel will have profit and loss (P&L) responsibility for Northwest's Asia/Pacific operations. "Jim's vast cargo experience in the Asia/Pacific region will be a strong asset as he leads our efforts to leverage the combination of Northwest's major passenger and cargo presence in this key region," said Mr. Haan. "The Asia/Pacific region continues to be the most rapidly developing part of the global economy," said Mr. Friedel. "I look forward to working with the passenger and cargo teams to ensure that Northwest continues to be a strong and nimble competitor." A 14-year veteran of Northwest, Mr. Friedel is president of NWA Cargo, one of the largest players in the trans-Pacific air freight market. Before joining NWA Cargo in 1996, Friedel had responsibility for the operation of Northwest's passenger reservations offices in the U.S. He also served as director of analysis in corporate finance. Before joining Northwest in 1991, Mr. Friedel was an associate with Mercer Management Consulting, where he worked with logistics clients such as railroads, distribution centers, overnight express couriers, and truckers. He holds an economics degree from Princeton University and is a native of New York. NWA Cargo -- http://www.cargo.nwa.com/-- the cargo subsidiary of Northwest Airlines, is the largest cargo carrier among U.S. combination passenger and cargo airlines. NWA Cargo's fleet of 14 dedicated Boeing 747 freighter aircraft fly from key cities throughout the United States and Asia and connect at the carrier's cargo hub in Anchorage, Alaska, facilitating the quick transfer of cargo between large cities on both sides of the Pacific. NWA Cargo also transports freight aboard the passenger fleet of Northwest Airlines to more than 250 cities worldwide. Northwest Airlines is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. NORTHWEST AIRLINES: S&P Places Junk Ratings on Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Northwest Airlines Corp. (CCC+/Watch Neg/C) and its Northwest Airlines Inc. (CCC+/Watch Neg/--) subsidiary on CreditWatch with negative implications, following the collapse of mechanics' contract negotiations on August 19, a strike by that labor group, and the airline's implementation of its strike contingency plan. Ratings on insured debt issues and the recovery rating on Northwest Airlines Inc.'s bank loan are not placed on CreditWatch. "Northwest has been able to continue flying, but still needs to reach concessionary contracts with not only its mechanics, but also other unions, before the October 17 bankruptcy law change," said Standard & Poor's credit analyst Philip Baggaley. "Prospects for pension legislation that allows airlines to stretch out repayment of funding deficits ($3.8 billion for Northwest) will likely also figure in management's decision whether to file for bankruptcy in October," the credit analyst continued. Northwest has thus far maintained flight operations successfully, using temporary replacement mechanics and outsourcing, implementing an extensive contingency plan arranged months in advance. The company had earlier this year incurred added expense arranging the backup maintenance capacity, but is now saving money using the lower-paid mechanics. Other employees are not honoring the mechanics' picket lines (which would be illegal), and continue to report for work. Still, the airline needs to reach resolutions on concessionary contracts with each of its major unions as quickly as possible. Negotiations with pilots (who agreed to partial concessions in November 2004), flight attendants, and machinists have not progressed very far, as those groups appear to be waiting for a resolution of the airline's showdown with mechanics. Management's overall $1.1 billion labor savings target was set early in 2005, but fuel costs have increased substantially since then, raising the risk that the amount may prove insufficient. Following negotiated labor concessions at other "legacy carriers," Northwest now has the highest labor costs of its peer group. Northwest has so far obtained only $300 million (from pilots and management) of the labor concessions it seeks. Proposed concessions would lower labor costs by about 20% and total operating expenses by about 6%, bringing the operating costs to an average level among its peer legacy carriers (though still much higher than those of the low-cost carriers). Northwest is believed to still have fairly healthy liquidity (unrestricted cash was $2.1 billion at June 30, 2005), but very high fuel prices are eroding that financial cushion. Northwest, like other U.S. airlines, has been able to raise fares over the past half year, but these increases have not nearly kept pace with the added expense of costlier fuel. Debt maturities for the second half of 2005 total $200 million, and required pension funding and capital expenditures are manageable or covered by pre-arranged financing. However, debt and pension obligations in 2006 and beyond are substantial. NVF COMPANY: Files Schedules of Assets and Liabilities ------------------------------------------------------ NVF Company delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the District of Delaware, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property Unknown B. Personal Property $312,435 C. Property Claimed as Exempt D. Creditors Holding $4,333,383 Secured Claims E. Creditors Holding Unsecured Priority Claims $5,119,302 F. Creditors Holding Unsecured Nonpriority Claims $2,524,586 --------- ----------- Total $312,435 $11,977,271 Headquartered in Yorklyn, Del., 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: Parsons Paper Files Schedules of Assets and Debts -------------------------------------------------------------- Parsons Paper Company, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the District of Delaware, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $1,856,597 C. Property Claimed as Exempt D. Creditors Holding Unknown Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Nonpriority Claims $420,641 ---------- -------- Total $1,856,597 $420,641 Headquartered in Yorklyn, Del., 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 CO: U.S. Trustee Picks 5-Member Creditors Committee ------------------------------------------------------- The United States Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors in NVF Company's chapter 11 case: 1. Liberty Mutual Insurance Company Attn: Cynthia R. Koehler 175 Berkeley Street Boston, Massachusetts 02117 Tel: (617) 654-4455 Fax: (617) 574-5794 2. L.B. Corporation Attn: Thomas R. Garrity P.O. Box 388 95 Marble Street Lee, Massachusetts 01238 Tel: (413) 243-1072 Fax: (413) 243-3655 3. UGI Energy Services, Inc. Attn: Frank Markle 1100 Berkshire Boulevard, Suite 305 Wyomissing, Pennsylvania 19610 Tel: (610) 337-1000 Fax: (610) 992-3258 4. Unlimited Restoration Specialties Attn: Jonathan R. McBride and Michael J. Alivernini 379 Cherry Street Pottstown, Pennsylvania 19464 Tel: (610) 327-3505 Fax: (610) 324-0132 5. Cotswold Industries, Inc Attn: James M. McKinnon 10 East 40th Street, Suite 3410 New York, New York 10016-0301 Tel: (212) 689-3432 Fax: (212) 545-0603 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Yorklyn, Del., 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. OSE INC: Stockholders' Deficit Narrows to $47.42 Million at July 3 ------------------------------------------------------------------ OSE, Inc., reported its operational results for the quarter ended July 3, 2005, in Form 10-Q filing to the Securities and Exchange Commission. Revenues The Company earns revenue through a distribution agreement with OSE, Ltd., pursuant to which revenues derived from fees received on the sales of OSE's and OSE Philippines' semiconductor assembly and test services to customers headquartered in North America are recognized on a net commission basis. Total revenues decreased 37% and 37% from $1,207,000 and $2,230,000 for the three and six-month periods ended June 27, 2004, to $760,000 and $1,405,000 for the three and six-month periods ended July 3, 2005. Revenue decreased as a result of price erosion from increasing competition. Selling, General and Administrative Selling, general and administrative expense consists primarily of costs associated with sales, customer service, finance, administration and management personnel, as well as advertising, public relations, legal and accounting costs. Selling, general and administrative expenses were $1,338,000 and $2,162,000 for the three and six-month periods ended June 27, 2004, compared with $607,000 and 1,359,000 for the three and six-month periods ended July 3, 2005, respectively. The decrease in selling, general and administrative expenses in 2005 was mainly due to decreases in payroll expenses and rent income from the sublease of a portion of the Company's headquarters. As a percentage of revenues, selling, general and administrative expense decreased from 111% and 97% for the three and six-month periods ended June 27, 2004 to 80% and 97% for the three and six-month periods ended July 3, 2005. The decrease in percentage was mainly caused by lower spending in 2005 but partially offset by lower revenue in 2005. Interest and Other Income Interest income is primarily comprised of interest earnings from investments in cash equivalents. Interest and other income increased from $8,000 and $8,000 for the three and six-month periods ended June 27, 2004, to $20,000 and $39,000 for the three and six-month periods ended July 3, 2005. The increase in the three and six month period was mainly due to an $18,000 insurance premium refund from previous year's policy. Interest Expense Interest expense consists of interest payable on inter-company loans payable to OSE. Interest expense decreased from $217,000 and $434,000 for the three and six month periods ended June 27, 2004 to $196,000 and $389,000 for the three and six-month periods ended July 3, 2005, respectively. The decrease was due to lower interest rate in 2005 charged by OSE on the inter-company loans. Liquidity and Capital Resources During the six month period ended July 3, 2005, the Company's net cash used in operations was $183,000. Net cash used in operations was comprised primarily of a net loss of $304,000, increased by $186,000 of non-cash charges for depreciation and amortization, reduced by a non-cash $69,000 gain on sale of facility, and an $67,000 net decrease in working capital items. The net decrease in working capital items primarily reflected a $132,000 decrease in accounts receivable, a $108,000 increase in prepaid and other current assets, a $150,000 increase in accounts payable and accounts payable to related party, and a $107,000 increase in accrued liabilities. During the six-month period ended July 3, 2005, the Company's net cash used in discontinued operations was $35,000. The Company had no cash provided by or used in investing and financing activities for the six-month periods ended July 3, 2005. At July 3, 2005, the Company had cash and cash equivalents of $350,000. The increase of $342,000 in cash used in operating activities from 2004 to 2005 was mainly due to: (1) a $188,000 difference in accrued liabilities (accrued liabilities increased by $81,000 during the six-month period in 2004 compared with a $107,000 decrease during the same period in 2005); (2) a $508,000 difference in bad debt expense (bad debt expense of $500,000 was included in the net loss from operation in the six month period in 2004 compared with $8,000 bad debt expense reversal from the same in 2005); and (3) a $568,000 difference in accounts payable and accounts payable to related party (accounts payable and accounts payable to related party increased by $718,000 during the six month period in 2004 compared with a $150,000 increase during the same period in 2005). These were offset by: (1) a $668,000 decrease in accounts receivable in the six month period from 2004 to 2005; (2) a $56,000 decrease in net loss from continuing operations due to lower interest expense in the six month period from 2004 to 2005; and (3) a $211,000 difference in cash used in discontinued operations (cash used in discontinued operation in operating activities was $245,000 during the six-month period in 2004 compared with $34,000 during the same period in 2005). In 2003, the Company converted $26.1 million of its payable to OSE to two one-year loans. $17.5 million of principal bears interest at 3.5% and $8.6 million of principal bears interest at 3%. The $17.5 million loan was originally due on June 26, 2004 and has been extended to December 25, 2005 with reduced interest at 3%. The $8.6 million was due on June 29, 2004 and has been extended to June 28, 2006. The Company does not believe that it will have the ability to settle the loans on the due dates either through its operations or through financing from banks or other third parties. If OSE does not renew the loans when they are due, the Company will not be able to continue its operations. Without any debt facilities with a bank, the Company will require continued financial support from OSE to fulfill operating cash requirements. If OSE does not provide the Company with required cash, the Company may not be able to continue its operations. Currently, OSE is providing the Company with needed operating cash. A full-text copy of OSE's Quarterly Report is available for free at http://ResearchArchives.com/t/s?f4 OSE, Inc., serves as the exclusive North American distributor for OSE, a public Taiwanese company and the Company's principal stockholder. OSEI also serves as the exclusive North American distributor for the affiliated company OSE Philippines. OSEI derives its revenues exclusively from fees received on the sales of OSE's and OSEP's semiconductor assembly and test services to customers headquartered in North America. As of July 3, 2005, OSEI's balance sheet reflects a $46,503,000 stockholders' deficit compared to a $47,422,000 deficit at Dec. 31, 2004. PANAVISION INC: S&P Downgrades Sub. Debt Rating to CC from CCC- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Panavision Inc. to 'CCC' from 'CCC+', and its subordinated debt rating on the company to 'CC' from 'CCC-'. These actions resulted from the company's failure to refinance its substantial 2005 debt maturities by the end of the second quarter, which Standard & Poor's had indicated was a key input to maintaining the rating. The outlook is negative. As of June 30, 2005, the Woodland Hills, California-based designer and manufacturer of high-quality camera systems had $322 million in debt. "The ratings on Panavision reflect high risk of a near-term default as a result of its substantial debt maturities in 2005, large discretionary cash flow deficits, dependence on related parties for liquidity, and high debt leverage," said Standard & Poor's credit analyst Steve Wilkinson. "These risks significantly overshadow the company's good position in its core business of renting cameras to the film and film-based TV industries." Panavision's revenue and EBITDA remain weak compared with historical levels, despite some improvement in the second quarter of 2005 linked to recent acquisitions and favorable foreign exchange. The company continues to generate substantial discretionary cash flow deficits as a result of its poor operating cash flow and elevated capital spending levels. Panavision has been dependent on support from its parent company, Mafco Holdings Inc., and related entities to meet its financial obligations and negotiate bank facility amendments over the past few years. Additional support from related entities is likely necessary for Panavision to avoid a default. The probability of such support is uncertain, notwithstanding a nonbinding support letter from the holding company that owns the majority of Panavision's common stock. PREMCOR: Election Deadline for Pending Valero Merger Is on Monday ----------------------------------------------------------------- Premcor Inc. (NYSE: PCO) established an election deadline for Premcor stockholders to elect the right to receive either: (1) 0.99 Valero shares, plus cash in lieu of any fractional shares; or (2) $72.76 in cash (Premcor stockholders may also elect cash for some of their Premcor shares and Valero shares for others), until Monday, Aug. 29, 2005 at 5:00 p.m. Eastern Standard Time, pursuant to the Agreement and Plan of Merger with the Valero Energy Corporation (NYSE: VLO). Elections are subject to proration as described in the proxy statement/prospectus. Because the exchange ratio is fixed, the value of the stock consideration will vary with the trading price of Valero shares and may be different from the value of the cash consideration. To make a valid election, a stockholder must, at or before this time, deliver to Computershare Trust Company of New York, the Exchange Agent for the merger, a properly completed Form of Election and Letter of Transmittal (previously sent to Premcor shareholders), together with Premcor stock certificates, or confirmation of a book-entry transfer into the Exchange Agent's account at the Depository Trust Company, as to those Premcor shares for which they wish to make an election (or instead properly follow the notice of guaranteed delivery procedure described in Instruction 15 to the Form of Election and Letter of Transmittal). Premcor stockholders may obtain additional copies of the Form of Election and Letter of Transmittal by contacting The Altman Group, Inc. at 800-591-8254. Valero Energy Corporation -- http://www.valero.com/-- is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenue of approximately $55 billion. The company owns and operates 15 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. Premcor Inc. -- http://www.premcor.com/-- is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products in the United States. The company owns and operates refineries in Port Arthur, Texas, Lima, Ohio, Memphis, Tennessee and Delaware City, Delaware with a combined crude oil throughput capacity of approximately 790,000 barrels per day. * * * As reported in the Troubled Company Reporter on Apr. 27, 2005, Moody's Investors Service placed Valero Energy Corporation's ratings under review for possible downgrade in response to Valero's announcement that it plans to acquire Premcor Inc. for approximately $8 billion, including the assumption of about $1.8 billion of debt. Premcor's ratings remain on review for possible upgrade, continuing a review initiated on February 23, 2005. The equity portion of the purchase will be funded with 50% cash and 50% Valero stock. Valero expects to fund the cash portion with a combination of cash on hand and debt. The transaction is subject to the approval of Premcor's shareholders and customary regulatory reviews and is expected to close by December 31, 2005. Ratings under review for possible downgrade are Valero Energy Corporation's Baa3 rated senior unsecured notes, debentures, medium-term notes, and bank debt, its Ba1 rated subordinated debentures, its shelf registration for senior unsecured debt/subordinated debt/preferred stock rated (P)Baa3/(P)Ba1/(P)Ba2, and its Ba2 rated mandatory convertible preferred stock. Ratings under review for possible upgrade are Premcor Inc.'s Ba3 senior implied and B1 non-guaranteed senior unsecured issuer ratings, Premcor Refining Group's (PRG) Ba2 senior secured rating of a $1 billion bank facility, PRG's Ba3 rated senior unsecured notes, PRG's B2 rated senior subordinated notes, and Port Arthur Finance Corporation's Ba3 rated senior secured notes. At the same time, Standard & Poor's Ratings Services lowered its corporate credit rating on Valero Energy Corp. to 'BBB-' from 'BBB' and placed the rating on CreditWatch with negative implications on the company's announcement that it will acquire Premcor Inc. in an $8.7 billion transaction. In addition, Standard & Poor's placed its 'BB-' corporate credit rating on Premcor on CreditWatch with positive implications. At the close of the transaction, the ratings on Premcor are expected to be equalized with the ratings on Valero, reflecting the guaranty by Valero of Premcor's debt. PREMCOR REFINING: 99% of Noteholders Tender 7-3/4% Sr. Sub. Notes ----------------------------------------------------------------- The Premcor Refining Group Inc., a wholly owned subsidiary of Premcor Inc. (NYSE: PCO), received tenders and consents from the holders of $173,235,000 of its outstanding 7-3/4% Senior Subordinated Notes due 2012 as of 5:00 p.m. Eastern Time on Aug. 19, 2005. The tenders and consents represent approximately 99% of the total principal amount of the Notes outstanding. Notes tendered prior to the Consent Payment Deadline may no longer be withdrawn and consents delivered prior to the Consent Payment Deadline may no longer be revoked. This participation level satisfies the condition of its tender offer and consent solicitation that it receive valid consents to the proposed amendments to the indenture under which the Notes were issued from registered holders of not less than a majority of the aggregate outstanding principal amount of the Notes. The terms and conditions of the Offer are more fully set forth in the PRG's Offer to Purchase and Consent Solicitation Statement, dated Aug. 8, 2005 and related Letter of Transmittal and Consent. Holders who validly tendered Notes and delivered consents at or prior to the Consent Payment Deadline, and did not validly withdraw such Notes and whose Notes are acquired pursuant to the Offer will be paid a purchase price of $1,096.73 per $1,000 principal amount of Notes, which was calculated as described in Annex A to the Statement. Holders who validly tender Notes after the Consent Payment Deadline and at or prior to the Expiration Date will receive $1,051.73 per $1,000 principal amount of Notes, which is equal to the Total Purchase Price, minus a consent payment of $45 per $1,000 principal amount. Holders that have validly tendered and delivered their consents and have not validly withdrawn such Notes and related consents and whose Notes are accepted for purchase will receive accrued and unpaid interest from the last interest payment date to, but not including, the Settlement Date. The Offer will expire at 12:00 (midnight), Eastern Time, on Sept. 2, 2005, unless extended or earlier terminated. The Settlement Date is expected to be the first business day following the Expiration Date. PRG is making the Offer in connection with a proposed merger between Valero Energy Corporation and Premcor Inc. If the Merger is completed, PRG will become an indirect, wholly owned subsidiary of Valero. The tender offer and consent solicitation are conditioned upon, among other things, completion of the Merger. There is no guarantee that the Merger will be completed. Completion of the Merger is subject to customary conditions, including approval of the Premcor stockholders and the expiration or termination of the Hart-Scott-Rodino waiting period, however, the Merger is not dependent upon consummation of the Offer. PRG has engaged Barclays Capital Inc. as Dealer Manager for the tender offer and consent solicitation. Persons with questions regarding the tender offer or the consent solicitation are directed to Barclays Capital, toll-free at 866-307-8991 or collect at 212-412-4072 (attention: Liability Management). Georgeson Shareholder c/o Computershare Trust Company of New York is acting as Depositary. Requests for documents should be directed to Georgeson Shareholder Communications, Inc., the Information Agent for the tender offer and consent solicitation, toll-free at 866- 391-7007 or collect at 212-440-9800. Valero Energy Corporation -- http://www.valero.com/-- is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenue of approximately $55 billion. Valero owns and operates 14 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,700 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. Premcor Inc. -- http://www.premcor.com/-- is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products in the United States. Premcor currently owns and operates four refineries in Port Arthur, Texas; Lima, Ohio; Memphis, Tennessee; and Delaware City, Delaware, with a total throughput capacity of approximately 800,000 barrels per day. * * * As reported in the Troubled Company Reporter on Apr. 1, 2005, Fitch Ratings has revised the Rating Outlook on Premcor Refining Group -- PRG -- and Port Arthur Finance Corp. -- PAFC -- to Positive from Stable. The Outlook revision reflects the improvements in the operating base and capital structure of Premcor Inc. (Premcor, NYSE: PCO) since the company's initial public offering in 2002 as well as management's proven commitment to conservatively finance the company's growth strategy and improve the credit profile. PRG is a wholly-owned subsidiary of Premcor. PAFC and the Port Arthur Coker Company L.P. (PACC) are wholly owned subsidiaries of PRG. Fitch rates the debt of PRG and PAFC: PRG -- $1 billion secured credit facility 'BB+'; -- Senior unsecured notes 'BB'; -- Senior subordinated notes 'B+'. PAFC -- Senior secured notes 'BB+'. PURADYN FILTER: SEC Approves AMEX Delisting ------------------------------------------- puraDYN Filter Technologies Incorporated (Pink Sheets:PFTI) said that the Securities and Exchange Commission has notified puraDYN that application to voluntarily withdraw the Company's common stock from trading and registration on the American Stock Exchange has been granted, effective at the opening of business on August 18, 2005. The Company had previously submitted to the Exchange notice of its intent on June 24th to voluntarily delist the Company's stock, a move to which the Exchange consented. puraDYN earlier stated it was making efforts to facilitate the trading of its shares on the OTC Bulletin Board to ensure as seamless a transition as possible for its stockholders. A third party application for trading the Company's stock is currently under review by OTC BB staff. It is the Company's understanding that there do exist market makers for the Company's shares, which will be trading under the symbol PFTI in the Pink Sheets during this transition. puraDYN designs, manufactures and markets the puraDYN(R) Bypass Oil Filtration System, the most effective filtration product on the market today. It continuously cleans lubricating oil and maintains oil viscosity to safely and significantly extend oil change intervals and engine life. Effective for internal combustion engines, transmissions and hydraulic applications, the Company's patented and proprietary system is a cost-effective and energy-conscious solution targeting an annual $13 billion potential industry. The Company has established aftermarket programs with several of the transportation industry leaders such as Volvo Trucks NA, Mack Trucks, PACCAR; a strategic alliance with Honeywell Consumer Products Group, producers of FRAM(R) filtration products; and continues to market to major commercial fleets. puraDYN(R) equipment has been certified as a 'Pollution Prevention Technology' by the California Environmental Protection Agency and was selected as the manufacturer used by the US Department of Energy in a three-year evaluation to research and analyze performance, benefits and cost analysis of bypass oil filtration technology. At Mar. 31, 2005, puraDYN Filter Technologies, Inc.'s balance sheet showed a $3,943,382 stockholders' deficit, compared to a $3,127,358 deficit at Dec. 31, 2004. Q COMM: Look for Second Quarter Financials on August 26 ------------------------------------------------------- Q Comm International, Inc. (Amex: QMM; QMM.WS) said that it would delay the filing of its Form 10-Q for the quarter ended June 30, 2005. The Company recently successfully amended its Form 10-KSB for the fiscal year 2004 and its Form 10-Q for the first quarter of 2005. As a result of that effort, the Company requires more time to complete the filing of its second quarter Form 10-Q. The Company plans to file its Form 10-Q for the second quarter by Friday, August 26, 2005. Q Comm is rescheduling its investor conference call from August 23, 2005 to August 30, 2005 at 5:00 p.m., Eastern Time. Listeners may access the conference call by dialing 1-800-811-0667 or 1-913- 981-4901, or by accessing the webcast at http://www.qcomm.com/ Preliminary Results Revenues for the second quarter were $13.3 million, an increase of $10.3 million, compared to $3.0 million in revenues as restated for the second quarter of 2004. Higher transaction volume due to increased terminal activations drove revenue performance for the quarter. Margins, after accounting for cost of goods sold, commissions, fees paid to brokers and retailers, depreciation and amortization, and $1.5 million in impairment of terminals and PIN inventory write-downs during the second quarter of 2005, decreased to 9.5% in the second quarter of 2005, compared to 1.1% for the comparable period in 2004. Margins, after accounting for cost of goods sold, commissions, fees paid to brokers and retailers, but before depreciation and amortization, and before the $1.5 million in impairment of terminals and PIN inventory write-downs during the second quarter of 2005, decreased to 5.1% in the second quarter of 2005, compared to 12.4% for the comparable period in 2004, reflecting a shift toward lower margin wireless products. Total expenses during the second quarter were $16.6 million compared to $3.8 million during the second quarter of 2004. Expenses increased significantly as the Company chose to account for asset impairment, legal settlement and bad debt expenses during the second quarter while concurrently investing in personnel, legal and accounting expenses related to the SEC review. More specifically, second quarter expenses include: -- $1,266,000 in terminal-related asset impairment expenses; -- $250,000 of inventory write-down expense; -- $225,000 of settlement costs related to the Dial-thru litigation; -- $100,000 in bad debt expense; and -- $100,000 related to second quarter professional fees that will not continue in the remainder of the year. The Company's net loss in the second quarter of 2005 increased to $3.3 million, compared to a loss of $883,000 in the second quarter of 2004. "Our second quarter 2005 results reflect the new management team's efforts to completely account for past financial issues and performance, while we continue to position the company to take full advantage of the rapidly expanding prepaid market and focus on profitability. We have made important investments in the business this year and chose to take a conservative approach to accounting decisions in anticipation of continued revenue growth and bottom line improvement," stated Mike Keough, President and Chief Executive Officer of Q Comm International. Balance Sheet As of June 30, 2005, the Company had cash of $1.5 million, working capital of $2.7 million, and stockholders' equity of $7.7 million. "Demand for prepaid products at the point of sale has never been stronger, and our increasing retailer network drove revenue growth north of 300% this quarter. Now we are ideally positioned to capitalize on numerous opportunities in the prepaid market as we move forward in 2005, including with the addition of several new products in the money transfer, gift and loyalty and bill pay arenas," continued Mr. Keough. Business Highlights During the first six months of 2005, Q Comm: -- Added 25 new retail chains throughout the U.S., including chains with the potential to add 6-150 store locations each. This compares with the addition of 1 new retail chain with over 6 stores to the Q Comm network throughout the entire year 2004. -- Increased net activated terminals to 3,342 from 2,721 in the first quarter of 2005. -- Secured over 230 new Q xpress locations at small-to-medium size retailers in the U.S. Q Comm International is a prepaid transaction processor that electronically distributes prepaid products from service providers to the point of sale. Q Comm offers proprietary prepaid transaction processing platforms, support of various point-of-sale (POS) terminals, product management, merchandising, customer support and engineering. Q Comm systems replace traditional hard cards (also known as scratch cards or voucher) that are costly to distribute, and provide more comprehensive reporting and inventory management among other benefits. Q Comm's solutions are currently used by wireless carriers or mobile operators, telecom distributors, and various retailers to sell a wide range of prepaid products and services including prepaid wireless or prepaid mobile, prepaid phone cards, prepaid dial tone and prepaid bank cards, such as prepaid MasterCard. * * * Material Weakness As reported in the Troubled Company Reporter on June 27, 2005, Q Comm International, Inc., a provider of prepaid transaction processing and electronic point-of-sale (POS) distribution solutions, will restate the financial information presented in the Company's 2004 Annual Report on Form 10-KSB and first quarter 2005 Form 10-Q. As such, the Company's financial information in the 2004 Form 10-KSB and the first quarter 2005 Form 10-Q should no longer be relied upon. Under Public Company Accounting Oversight Board Auditing Standard No. 2, the restatement of the Company's financial statements is a strong indicator that a material weakness in internal control over financial reporting exists. The Company's management is reviewing its disclosure and internal controls over financial reporting to remediate the situation. RADIANT ENERGY: Gets CDN$2.33 Million in Private Equity Placement ----------------------------------------------------------------- Radiant Energy Corporation reported the completion of a non-brokered private placement for 15,537,133 common shares at $0.15 per common share for gross proceeds of C$2,326,440. The Company also completed a Share for Debt private placement, issuing 8,343,451 common shares to retire C$1,714,858 of debt. Under the non-brokered private placement, the Company issued 35,000 common shares with respect to a finder's fee to National Bank Financial. Insiders of the Company subscribed for 64.4% of the common shares issued under the non-brokered private placement. "This private placement is key for us to advance the construction of our deicing systems in Oslo and at JFK," said Colin Digout, President of Radiant Energy Corp. "The retirement and conversion of debt is an important contribution to strengthening our balance sheet as we prepare for expansion opportunities." Use of proceeds includes C$1,400,000 applied to the deicing projects underway at John F. Kennedy Airport in New York and at Gardermoen Airport in Oslo, Norway. The Company also allocated C$520,000 to repay a short-term credit facility. The remaining proceeds of the private placement were allocated to working capital needs. Shares for Debt The Company completed, subject to acceptance by the TSX Venture Exchange, a Shares-for-Debt private placement to convert outstanding Convertible Debentures and accrued interest and for the settlement of amounts due to the management of Radiant Aviation Services Europe AS (RAS Europe). The Company will issue 8,343,451 common shares to retire debts of C$1,754,858. Settlement of Series A, B, and C Debentures The Company reached agreement with certain holders of the Series A, B and C Convertible Debentures. Principal on the Series A Debentures are currently convertible at 580 common shares per US$1,000 debenture (approximately C$2.05 per common share). To encourage conversion of the Series A Debentures the Company has increased the conversion rate to 3,634 common shares (approx.C$0.33 per common share) provided the holder agreed to convert the Series A debentures owned and the holder agreed to forgive all accrued interest due to the holder. As at May 15, 2005, the total principal outstanding was US$1,152,000 and accrued interest was US$299,150. Settlement agreements were entered to issue 2,260,166 common shares to retire Series A debentures with a face value of US$622,000 (54%) and accrued interest equal to US$170,791. Insiders and those who may become insiders to the Company will receive 1,562,492 common shares to retire US$553,128 of debt. On May 15, 2005, the Company owed C$44,422 for principal and C$14,978 for accrued interest on the Series B Convertible Debentures. The existing conversion rate of the principal to common shares is C$0.10. The Company signed settlement agreements for the outstanding accumulated interest through the issuance of 6.667 common shares (C$0.15 per common share) for every C$1.00 of accrued interest conditional on conversion of all the debentures held by each Debenture Holder. All Series B Debentures will be converted and the total number of common shares to be issued with respect to the Series B Debentures and accrued interest will be 544,074 common shares to retire C$59,400 of debt. On May 15, 2005, the company owed C$230,000 principal and C$24,398 for accrued interest on the Series C Convertible Debentures. The existing conversion rate of principal to common shares is C$0.10. The Company has agreed to settle, the outstanding accumulated interest through the issuance of 6.667 common shares (approximately C$0.15 per common share) for every C$1.00 of accrued interest conditional on conversion of all the debentures held by each Debenture Holder. Agreements were signed to settle all Series C Debentures. The total number of common shares to be issued with respect to the Series C Debentures and accrued interest will be 2,462,652 common shares to retire C$254,398 of debt. Insiders and those who may become insiders to the Company will receive 1,815,412 common shares to retire C$187,312 of debt. Settlement of Accrued Interest on the 9% Secured Convertible Term Loans On May 16, 2005, the company owed US$750,000 for principal and US$235,519 for accrued interest on the 9% Secured Convertible Term Loans with two insiders and a shareholder who will become an insider of the Company. The principal is convertible at 7.5 common shares for every USD $1.00 (Approx. C$0.16). The Company entered settlement agreements to convert all the outstanding accumulated interest through the issuance of 8.3333 common shares (approximately C$0.15 per common share) for every USD $1.00 of accrued interest outstanding on May 15, 2005. The three secured lenders also agreed to reduce the annual interest rate on the loans from 9% to 0%. The total number of common shares to be issued with respect to the accrued interest will be 1,962,642 common shares to retire USD$235,519 of debt. Settlement of Accrued Interest on the Short-term Credit Facility On May 16, 2005, the company owed C$545,000 principal and C$39,588 of accrued interest on a Short-term Credit Facility with one insider and a shareholder will become an insider of the Company. The principal was repaid from the proceeds on the private placement. The Company entered settlement agreements to convert all the outstanding accumulated interest through the issuance of 6.667 common shares (approx. C$0.15 per common share) for every USD $1.00 of accrued interest outstanding on May 15, 2005. The total number of common shares to be issued with respect to the accrued interest will be 263,917 common shares to retire C$39,588 of debt. Settlement of Amounts Due by Radiant Aviation Services Europe AS Radiant Aviation Services Europe AS, a fully owned subsidiary of the Company, had accrued commissions, consulting fees and other amounts due to two consultants engaged by the company to provide management and financial services to RAS Europe. The acting Managing Director, who is an insider of the Company, will be issued 750,000 common shares for all amounts due of C$112,500. An additional 100,000 was issued to settle C$15,000 owed to a consultant providing financial advice to the Company. After completing these transactions, the Company will have 57,431,358 common shares issued and outstanding and 67,394,858 common shares on a fully diluted basis. Completion of the private placements are subject to acceptance by the TSX Venture Exchange and all the common shares issued will be subject to a four-month hold period under Canadian securities laws. Radiant Energy Corporation, through its wholly owned subsidiary Radiant Aviation Services developed and sells the world's only infrared alternative to traditional glycol-based aircraft deicing. Its fully patented InfraTek(R) systems are approved for use by the FAA. Prior to the introduction of InfraTek, spraying with glycol was the only feasible method to satisfy FAA safety guidelines for ensuring that aircraft are properly deiced prior to take-off. Common shares of Radiant trade on the TSX Venture Exchange (symbol RDT). As of April 30, 2005, Radiant Energy's balance sheet reflected a CDN10,284,261, equity deficit. RELIANCE GROUP: Creditors' Committee Files Liquidating Ch. 11 Plan ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Reliance Group Holdings, Inc.'s chapter 11 proceedings filed a Plan of Reorganization for RGH and an accompanying Disclosure Statement explaining the Plan in the U.S. Bankruptcy Court for the Southern District of New York on Aug. 18, 2005. The Creditors' Committee represents the Debtor's general unsecured creditors, which hold an estimated $600 million in claims. These claims principally include: -- the claims of creditors holdings notes issued under certain senior and subordinated bond indentures; -- the claims of the Pension Benefit Guaranty Corporation; and -- the claims of certain of the Debtor's directors, officers, and employees. About the Plan The Plan is the result of extensive negotiations among the Debtor, the Creditors' Committee, the Bank Committee, the PBGC, and the Liquidator. The Plan is a plan of liquidation for RGH, which will be principally implemented through a Liquidating Trust. The Plan distributes the Debtor's remaining assets to its general unsecured creditors through the Liquidating Trust, which will receive all of the Debtor's assets. The assets to be distributed include cash, certain tax-related assets, and a portion of the recoveries from certain lawsuits. The Committee said that these distributions, spread over all of the claims, provide less than full recovery to general unsecured creditors. Treatment of Claims Class 3 creditors representing senior bondholders, subordinated bondholders and general unsecured creditors, will: -- receive a full satisfaction of their allowed claim in exchange for any and all contractual subordination rights and a right to its pro rata share of non-certified beneficial interests in the Liquidating Trust; and -- be deemed to have assigned its D&O Litigation Claims and Creditor Litigation Claims, if any, to the Debtor and/or the Liquidating Trust, provided that the holder is not an opt- out claimant. Under the Plan, the holder of the Liquidator Claim will receive a full satisfaction of its allowed claim in exchange for an extinguishment of this claim or any other claims against the Debtor, the payments or other distributions provided under the Tax Sharing Agreement and the PA Settlement Agreement. The Liquidator Claim will be deemed allowed in the aggregate amount of $288 million and will not be subject to defense, setoff or counterclaim. Subordinated creditors holding all securities litigation claims will not receive anything under the Plan, while equity interests will be cancelled on the effective date. Appointment of Trustee On the effective date, James A. Goodman will be appointed Trustee of the Liquidating Trust and will govern the Trust, subject to the provisions regarding the Trustee's possible removal. Mr. Goodman served as a U.S. Bankruptcy Judge for the District of Maine from 1981 until 2001 and served as the Chief Bankruptcy Judge of the same Court from 1990 until 1997. Mr. Goodman also serves as a member of the Bankruptcy Appellate Panel for the First Circuit since 1996. The Liquidating Trust The Liquidating Trust will make annual distributions of its net income plus all net proceeds from the sale of assets, necessary to maintain the value of its assets or to meet claims and contingent liabilities and to evaluate litigation claims. Distributions to holders of allowed senior bondholder claims and subordinated bondholder claims will be made to the respective Indenture Trustee. Trust Funding The Creditors' Committee developed a $5 million budget with respect to the funding of the Liquidating Trust's operating expenses including indemnification and other appropriate reserves. The proposed budget reflects discussions with Mr. Goodman and the Creditors' Committee's good faith estimation regarding the amount of funding that will be required by the Liquidating Trust. However, although the Creditors' Committee believes the proposed budget is reasonable and should be adequate, there is no guarantee that the Liquidating Trust will have sufficient funds to cover all of its operating expenses. The dissolution of the Debtor will not affect the current ownership or management of Reorganized Reliance Financial Services Corp. or Reliance Insurance Co. As reported in the Troubled Company Reporter on Aug. 17, 2005, the Creditors Committee asked the Bankruptcy Court to schedule a hearing on Sept. 21, 2005, to consider the adequacy of the Disclosure Statement related to a Plan of Reorganization for RGH. A full-text copy of the Creditors' Committee's Liquidating Plan of Reorganization is available for a fee at http://ResearchArchives.com/t/s?f7 A full-text copy of the Disclosure Statement accompanying the Plan is available for a fee at http://ResearchArchives.com/t/s?f8 A full-text copy of the Liquidating Trust Agreement is available for a fee at http://researcharchives.com/t/s?fb 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. REUNION INDUSTRIES: Reports $26.32M Equity Deficit at June 30 ------------------------------------------------------------- Reunion Industries, Inc., disclosed to the Securities and Exchange Commission its operation results for quarter ending June 30, 2005. The Company's net sales, gross margins and EBITDA percentages for the three months ended 2005 and 2004 are: Net Sales Gross Margin EBITDA -------------------- -------------- -------------- 2005 2004 2005 2004 2005 2004 --------- --------- ------ ------ ------ ------ Pressure vessels $ 6,803 $ 5,872 35.6% 20.5% 29.3% 17.3% Cylinders 5,397 4,402 19.0% 16.7% 10.1% 4.3% Grating 1,963 2,582 22.9% 26.3% 13.8% 12.6% Plastics 5,297 4,682 18.0% 18.6% 12.9% 13.7% --------- --------- ------ ------ ------ ------ Totals $ 19,460 $ 17,538 24.9% 19.4% 17.9% 12.4% ========= ========= ====== ====== ====== ====== Net sales for the second quarter of 2005 were up 11.0% from the second quarter of 2004. The increase reflects sales increases at all of the domestic operations, which offset reduced sales of grating at our Chinese joint venture. The increase in domestic sales is primarily the result of improving orders in 2005 over 2004 at all divisions which produced a 50% increase in the April 1, 2005, combined backlogs over April 1, 2004. The increased April 1, 2005, backlog in the pressure vessel segment not only reflects improving orders, but also a residual effect from a January 2005 accident negatively impacted operations in that first quarter. The decrease in grating sales reflects the impact of additional competition from local Chinese businesses, which situation is expected to continue throughout the year. Gross margin as a percentage of sales in the second quarter of 2005 compared to the same quarter in 2004 increased to 24.9% from 19.4%. This increase reflects gross margin increases in the pressure vessel and cylinders segments, which offset decreases in the grating and plastics segments. Pressure vessel gross margin as a percentage of sales increased to 35.6% in 2005 from 20.5% in 2004 due primarily to two factors. One was the receipt in the second quarter of a business interruption insurance advance payment of approximately $600,000 related to the plant accident noted in the Company's first quarter filing. The second factor is the 16% increase in pressure vessel sales in 2005 over 2004, which generated improved efficiencies of operation. The increase in cylinder gross profit margin reflects the benefits in operations as a result of a 22% increase in cylinder sales in 2005 over 2004. The decrease in gross margin in the grating segment reflects the negative impact from reduced sales. The decrease in the gross margin in the plastics segment is primarily due to a more favorable product mix in 2004, higher plant inefficiencies in 2005 related to new molds and higher material costs that have yet to be passed on to customers. Selling, General and Administrative Selling, general and administrative expenses for the second quarter of 2005 were $2.4 million, an increase of $163,000 from the expenses for the second quarter of 2004. This increase reflects the net of $262,000 in additional divisional expense offset partially by a reduction of $99,000 in corporate expense. Of the divisional increase, $190,000 was in the pressure vessel segment and related primarily to an increase in sales commissions due to an increase in foreign sales. The majority of the other increase was in the cylinder segment and reflects additional professional fees for legal and employment related issues. The decrease in corporate expenses reflects reductions in both staff and operating expenses. As a percentage of sales, SGA expenses decreased to 12.2% for the second quarter of 2005 compared to 12.6% for the second quarter of 2004 as overall expenses increased slower than the overall increase in sales. Gain on Debt Extinguishments There were no gains on debt extinguishments in the second quarter of 2005. There were $470,000 of those gains in the second quarter of 2004. Of this amount, $262,000 was related to the SFSC Settlement and $208,000 was related to the 13% Senior Note second Consent Solicitation. Other Income, Net Other income, net for the second quarter of 2005 was $4,000, compared to other income, net of $204,000 for the second quarter of 2004. There were no significant offsetting items of other income and expense in the 2005 period. Significant items in the 2004 period included other income of $331,000, relating to an adjustment of the Louisiana environmental reserve, and other expense of $171,000, related to the costs to complete the consolidation of the cylinder operations into one facility in Libertyville, Ill. There were no other individually significant items in the second quarter of 2004. Minority Interests Minority interests for the second quarter in 2005 and 2004 was $71,000 and $113,000, respectively. These amounts represent the income during the quarter allocated to the minority ownerships of the Company's consolidated foreign grating joint venture. Minority interests are calculated based on the percentage of minority ownership. From a balance sheet perspective, minority interest was reduced by the minority ownership of the 2005 declared dividend. Interest Expense Interest expense for the second quarter of 2005 was $2.145 million compared to $1.975 million for the second quarter of 2004. The significant interest increases were $108,000 for interest accrued on the Senior Note interest that the Company was not able to make in January of 2005, $100,000 for a higher level of amortization of deferred financing costs and estimated warrant value and $62,000 for interest expensed in connection with the May 2004 supplemental loan to the Wachovia credit facility. Offsetting a portion of these increases was a $108,000 decrease in interest expense as a result of the SFSC Settlement as referred to above in the caption "Gain on Debt Extinguishments". The remaining net increase in expense is due to an increase in interest rates in the 2005 period over the 2004 period. A full text copy of Reunion Industries' Quarterly Report is available for free at http://ResearchArchives.com/t/s?f5 Reunion Industries, Inc., owns and operates industrial manufacturing operations that design and manufacture engineered, high-quality products for specific customer requirements, such as large-diameter seamless pressure vessels, hydraulic and pneumatic cylinders, grating and precision plastic components. As of June 30, 2005, Reunion Industries reports liabilities amounting to $78,975,000, assets amounting to $52,910,000, and stockholders' deficit at $26,327,000 ROBERT HOUGH: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Robert B. Hough 93 Crescent Beach Road Glen Cove, New York 11542-1323 Bankruptcy Case No.: 05-85740 Chapter 11 Petition Date: August 22, 2005 Court: Eastern District of New York (Central Islip) Judge: Melanie L. Cyganowski Debtor's Counsel: Heath S. Berger, Esq. Steinberg, Fineo, Berger & Fischoff, PC 40 Crossways Park Drive Woodbury, New York 11797 Tel: (516) 747-1136 Fax: (516) 747-0382 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor does not have unsecured creditors who are not insiders. RODGERS GMC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Rodgers GMC, Inc. 4701 Clinton Highway Knoxville, Tennessee 37912 Bankruptcy Case No.: 05-34551 Type of Business: The Debtor sells new cars; used cars, trucks and SUVs; auto parts; and accessories. See http://www.rodgerscars.com/ Chapter 11 Petition Date: August 22, 2005 Court: Eastern District of Tennessee (Knoxville) Debtor's Counsel: Michael H. Fitzpatrick, Esq. Jenkins & Jenkins Attorneys, PLLC 2121 First Tennessee Plaza 800 South Gay Street Knoxville, Tennessee 37929 Tel: (865) 524-1873 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 ------ --------------- ------------ TN Dept. of Revenue Sales tax $180,000 TN Atty. Gen. Off. Bkcy. Unit 426 5th Avenue, 2nd Floor Nashville, TN 372430489 TN Motor Vehicle Commission Penalty Due/Rodgers $95,000 TN Atty. Gen. Off. Suzuki Bkcy. Unit 426 5th Ave, 2nd Floor Nashville, TN 372430489 Quality Auto Sales Agreed buy-out purchase $80,000 3820 North Broadway payments due Knoxville, TN 37917 Internal Revenue Service 941/940 Payroll Tax $32,000 Lonon, LLC $30,000 Baker, Donelson, Bearman, $22,000 Caldwell & Berkowitz Chestnut Street Garage $7,850 American Express Credit card purchases $5,972 Reynolds & Reynolds Computer software $5,000 Bacon & Company, Inc. $4,507 Reyna Capital Corporation Computer hardware $4,000 Central Auto Parts $3,211 American Tire Distributors $1,803 Kelso Oil Company $1,719 ChoiceData $1,386 Ken Smith Auto Parts $1,302 Customer Funding.com $1,250 US Bancorp $1,058 City Diesel $975 Fatcat Customs $955 RUSSELL-STANLEY: Combined Plan & Disclosure Hearing Set on Oct. 3 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a combined hearing on Oct. 3, 2005, to consider confirmation of Russell-Stanley Holdings, Inc.'s reorganization plan and approval of the Disclosure Statement and Solicitation Procedures. The Debtor filed a prepackaged chapter 11 plan in order to effectuate an asset purchase agreement with an affiliate of Mauser-Werke GmbH & Co. KG and One Equity Partners. Pursuant to that agreement, Russell-Stanley and certain of its subsidiaries will sell substantially all of their assets to Mauser. Prior to the filings, Russell-Stanley obtained 100% acceptance of the Plan from voting creditors. This unanimous support is expected to minimize the duration of the Chapter 11 cases. Under the proposed plan, Russell-Stanley's existing subordinated debt and equity will be cancelled, and bondholders will receive their pro rata share of the sale proceeds that remain after secured claims, unsecured claims other than bond claims, and Chapter 11 expenses have been paid or reserved. The proposed plan of reorganization contemplates the payment in full of any allowed pre-petition vendor claims that remain unpaid upon consummation of the Plan. Moreover, as part of the transaction, Mauser has agreed, upon the closing, to assume and pay valid and accrued trade payables that are not otherwise paid when due as a result of the filing and that are reflected on the Company's books. Creditors have until Sept. 23, 2005, to file their written proofs of claim. A full-text copy of the Debtor's prepackaged chapter 11 plan is available at no charge at http://ResearchArchives.com/t/s?f9 A full-text copy of the Disclosure Statement explaining the Plan is available at no charge at http://ResearchArchives.com/t/s?fa First-Day Motions Also, the Court approved the Debtor's "first-day" motions that will enable Russell-Stanley's operations to proceed smoothly and without interruption throughout its pre-packaged reorganization cases. The Court approved the motions related to the Company's ability to: -- pay employee salaries, wages and benefits in the ordinary course; -- utilize existing cash management systems -- continue its customer programs -- pay trade creditors in the ordinary course -- use the cash collateral of their lenders to fund operations during the restructuring, and -- prohibit utilities from discontinuing service and permitting payment of such utilities in the ordinary course. "The court's approval of our first-day motions will ensure that Russell-Stanley can conduct business as usual and remain focused on serving our customers as we go through this process," said Ron Litchkowski, President and CEO of Russell-Stanley. Russell-Stanley expects to emerge from Chapter 11 and close the transaction with Mauser within the next few months subject to customary closing conditions contained in the Purchase Agreement, including receipt of all necessary bankruptcy court and other approvals. Mauser-Werke GmbH Co. KG -- http://www.mauser-werke.com/-- is a global leader in industrial packaging, with its headquarters in Bruehl, Germany. Headquartered in Bridgewater, New Jersey, Russell-Stanley Holdings, Inc. -- http://www.russell-stanley.com/-- is North America's largest plastic drum manufacturer, second largest steel drum manufacturer, and a leading industrial container supply chain management company. The Company and its affiliates filed for chapter 11 protection on Aug. 19, 2005 (Bankr. D. Del. Case No. 05-12339). Mark S. Chehi, Esq., and Sarah E. Pierce, Esq., Kayalyn A. Marafioti, Esq., Frederick D. Morris, Esq., and Bennett S. Silverberg, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. SENETEK PLC: June 30 Balance Sheet Upside-Down by $1.98 Million --------------------------------------------------------------- Senetek PLC (OTC Bulletin Board: SNTKY) reported a loss for the quarter ended June 30, 2005 of $88,000 compared to a loss for the quarter ended June 30, 2004 of $312,000. Revenues for the quarter ended June 30, 2005 totaled $1,477,000, comparable to the $1,442,000 reported for the second quarter of 2004. Increased revenue from Valeant Pharmaceuticals International and various European licensees, were partially offset by reduced royalty revenue from The Body Shop and from monoclonal antibodies. Net loss for the six months ended June 30, 2005 totaled $672,000 compared to net income of $320,000 for the comparable period in 2004. Revenues for the six months ended June 30, 2005 totaled $2,716,000 compared to $4,687,000 for the first six months of 2004. The decrease in 2005 revenues was primarily the result of the $1.5 million received as part of the March 2004 OMP legal settlement. Operating expenses for the quarter and six months ended June 30, 2005 totaled $1.2 million and $2.7 million compared to $1.3 million and $3.5 million for the three and six months ended June 30, 2004. The reduction in operating expenses for the six months ended June 30, 2005 compared to 2004 resulted primarily from a $700,000 decrease in legal fees related to the OMP lawsuit settled in March 2004. Operating expenses for the six months ended June 30, 2005 included approximately $115,000 of severance payments related to the departure of a senior executive in connection with Senetek's long term goal of operating expense reduction. The Company's bottom line benefited from reduced interest expense in the quarter and six months ended June 30, 2005 compared to 2004 of $59,000 and $116,000, resulting from $1.6 million of principal debt payments made in August 2004. Senetek's income from discontinued operations was $89,000 and $75,000 in the six months ended June 30, 2005 and 2004. The Company is scheduled to collect an additional $325,000 over the next two years under the terms of the sale of its discontinued operations. The Company's current ratio as of June 30, 2005 is strong at 2.72 compared to 2.54 at December 31, 2004. As of June 30, 2005 the Company's liquid position, represented by cash, cash equivalents and short term investments totaled $3.34 million, a decrease of $1,183,000 from December 31, 2004, primarily caused by the net loss for the six months ended June 30, 2005 of $672,000 and reduction in the Company's accounts payable and accrued expenses of $644,000. Senetek expects its cash flow to improve beginning in 2006 as a result of the recently signed amendment to the Valeant license agreement under which the Company will receive minimum annual royalty payments of $6 million in contract year 2006, $7 million in contract year 2007, and $8 million in contract years 2008 through 2010, subject to a royalty credit to Valeant of $250,000 per quarter in consideration of previous payments. Frank J. Massino, Chief Executive Officer, commenting on the financial performance, said, "Our liquidity and cash position remain strong and our loss for the quarter ended June 30, 2005 has narrowed as we continue to focus our efforts on skincare licensing and enhancing our portfolio of proprietary compounds. The recent signing of the amended license agreement with Valeant that expands their rights for Kinetin and provides exclusive rights for Zeatin, should provide Senetek with an outstanding revenue base and improved financial strength for future years. This should allow us the necessary working capital to continue our research in our primary core business, skincare and dermatological therapeutics, with the goal of bringing new proprietary compounds to market". Mr. Massino said the Company will conduct its quarterly conference call in the near future at which time it will address the Company's financial performance as well as the strategic direction for the future. Senetek PLC -- http://www.senetekplc.com/-- is a life sciences- driven product development and licensing company focused on the high growth market for dermatological and skin care products primarily addressing photodamage and age-related skin conditions. Senetek's patented compound Kinetin is a naturally occurring cytokinin that has proven effective in improving the appearance of aging skin with virtually none of the side effects associated with acid-based active ingredients. Senetek has licensed Kinetin to leading global and regional dermatological and skin care marketers including Valeant Pharmaceuticals, The Body Shop and Revlon. Senetek's researchers at the University of Aarhus, Denmark, also are collaborating with the Institute of Experimental Botany, Prague, and with the Department of Dermatology, University of California at Irvine, to identify and evaluate additional new biologically active compounds for this high growth field. At June 30, 2005, Senetek PLC's balance sheet showed a $1,985,000 stockholders' deficit, compared to a $1,361,000 deficit at Dec. 31, 2004. SOUTHAVEN POWER: Wants Until Jan. 16, 2006 to File Chapter 11 Plan ------------------------------------------------------------------ Southaven Power, LLC, asks the U.S. Bankruptcy Court for the Western District of North Carolina, Charlotte Division, for an extension of its exclusive periods to file and solicit acceptances of a chapter 11 plan. The Debtor wants until Jan. 16, 2006, to file a plan and until March 15 to solicit acceptances of that plan. The Debtor explains that the estate's most important asset is ongoing litigation against PG&E Energy Trading-Power, L.P., nka NEGT Energy Trading - Power, L.P. In the suit, NEGT Energy asserts an $8 million breach of contract claim against the Debtor. In turn, the Debtor asserts a $500 million rejection damage claim against NEGT. The litigation is subject to an arbitration proceeding scheduled for October 17 to October 28, 2005. The Debtor says that a final resolution of the suit is key to determining distributions to creditors and to the ultimate formulation of any plan of reorganization. Headquartered in Charlotte, North Carolina, Southaven Power, LLC, operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The Company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, and Mark A. Broude, Esq., at Latham & Watkins LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. STONERIDGE INC: Joseph Mallak Resigns as Chief Financial Officer ---------------------------------------------------------------- Stoneridge, Inc. (NYSE: SRI) reported that Joseph M. Mallak has resigned as the Company's vice president and chief financial officer, effective immediately. "We thank Joe for his contributions to Stoneridge and we wish him well in his future endeavors," said Gerald V. Pisani, president and chief executive officer. "He has provided support and guidance for our restructuring initiatives over the past year which will strengthen our future position." The Company has retained an executive search firm to find a successor. In the interim, Mallak's responsibilities will be assumed by the Company's financial team, under Pisani's supervision. Mallak's resignation is not related to any financial or accounting issues. "We believe that our current finance team has the knowledge and experience to effectively perform the necessary duties during this transition," Pisani said. "Our guidance for 2005 remains unchanged." Earnings Outlook Based on the current industry outlook, Stoneridge reaffirms its expectations for third-quarter 2005 net income to be between negative $0.05 and positive $0.05 per diluted share, compared with $0.17 per diluted share for last year's third quarter. The Company's full-year 2005 outlook of $0.40 to $0.50 per diluted share also remains unchanged. Headquartered in Warren, Ohio, Stoneridge, Inc. -- http://www.stoneridge.com/-- is a leading independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems principally for the automotive, medium- and heavy-duty truck, agricultural and off-highway vehicle markets. Net sales in 2004 were approximately $682 million. * * * As reported in the Troubled Company Reporter on May 3, 2005, Standard & Poor's Ratings Services revised its outlook on Stoneridge Inc. to stable from positive, following the company's announcement that 2005 earnings will fall well short of previous guidance. Because of the lower earnings target, it is unlikely the company will achieve and sustain credit statistics sufficiently improved to support a ratings upgrade in the next year or two. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit, 'BB' senior secured debt, and 'B+' senior unsecured debt ratings on Stoneridge. S-TRAN HOLDINGS: Paying $8.7 Million to LaSalle Business Credit --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave S-Tran Holdings, Inc., and its debtor-affiliates authority to pay LaSalle Business Credit LLC, the $8,780,000 net proceeds from the sale of their personal property. The Debtors owe LaSalle approximately $9 million under a senior secured credit facility. The debt is secured by a lien on substantially all of S-Tran Holdings' properties. 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. TOWER AUTOMOTIVE: Can Remove Civil Actions Until October 31 ----------------------------------------------------------- As previously reported, Tower Automotive Inc. and its debtor- affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend the period within which they may file notices of removal with respect to civil actions pending on the Petition Date, to and including the later to occur of: (x) December 31, 2005, or (y) 30 days after the entry of a Court order terminating the automatic stay with respect to the particular action that is sought to be removed. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that since April 20, 2005, the Debtors' management personnel and professionals have been actively involved in supervising and implementing several key steps in the Debtors' reorganization, including, but not limited to: (a) amending the Debtors' schedules of assets and liabilities and statements of financial affairs; (b) identifying and terminating unprofitable business ventures; (c) continuing the process of reconciling reclamation claims; (d) stabilizing the Debtors' cash management system; (e) maintaining the Debtors' sensitive supply chain with their customers and vendors; (f) negotiating amendments and waivers with the Debtors' secured lenders; (g) marketing and selling certain non-core assets; (h) preparing and filing the Debtors' monthly operating reports; (i) reviewing various revenue enhancing alternatives; (j) developing a business plan; and (k) negotiating and settling claim and set-off issues among the Debtors' vendors and customers. * * * Judge Gropper extended the period within which the Debtors may file notices of removal with respect to civil actions pending on the Petition Date, to and including the earlier to occur of October 31, 2005, or 30 days after the entry of a Court order terminating the automatic stay with respect to the particular action that is sought to be removed. Bankruptcy Court records don't indicate the reason for the 60-day contraction from Tower's original request. 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: Secures Waiver Letter from JPMorgan Chase ----------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates sought and obtained the Court's authority to enter into a waiver letter with respect to the DIP Credit Agreement syndicated by JPMorgan Chase Bank, N.A. The Debtors also obtained permission to pay a waiver fee to the Consenting DIP Lenders. The Debtors' Motion and the Waiver Letter have been filed under seal. As previously reported, the DIP Agreement provides for a $725 million commitment of DIP financing comprised of (i) a revolving credit and letter of credit facility in an aggregate principal amount not to exceed $300 million and (ii) a term loan in the aggregate principal amount of $425 million. The proceeds of the term loan have been used to refinance the Debtors' prepetition obligation amounting to $425 million under the credit agreement existing at the time of the bankruptcy filing. The proceeds of the revolving credit loans will be used to fund the ongoing cash requirements of the Debtors during the Chapter 11 proceedings. The DIP Agreement matures on February 2, 2007; however, the Debtors are obligated to repay all borrowings made pursuant to the DIP Agreement upon substantial consummation of a plan of reorganization of the Debtors that is confirmed pursuant to an order of the Bankruptcy Court. Pursuant to the Fourth Amendment to Revolving Credit, Term Loan and Guaranty Agreement dated April 29, 2005, the lending syndicate consists of: * JPMorgan Chase Bank, N.A., individually and as agent; * CypressTree Investment Management Company, Inc.; * CSAM Funding IV; * CSAM SLF; * Madison Park Funding I; * Four Corners Capital Management LLC; * Olympic CLO I; * KKR Financial CLO 2005-1, Ltd.; * Malibu CBNA Loan Funding LLC; * Wilmington Trust Company, as trustee; * Credit Suisse First Boston International; * Dunes Funding LLC; * Pinehurst Trading, Inc.; * Waterville Funding LLC; * Satellite Senior Income Fund II, LLC; * Wells Fargo Foothill, LLC; * Cypresstree CLAIF Funding LLC; * Jupiter Loan Funding LLC; * Red Fox Funding LLC; * Winged Foot Funding Trust; * MJX Asset Management, LLC; * The CIT Group/Business Credit; * Boston Management and Research, as investment advisor; * Eaton Vance Management, as investment advisor; * Harbour Town Funding LLC; * L. A. Funding LLC.; * Natexi's Banques Populaires; * UBS AG, Stamford Branch; * Avenue CLO Fund, Ltd.; * Canadian Imperial Bank of Commerce; * Canyon Capital Advisors LLC * McDonnell Investment Management, LLC, as manager; * Merrill Lynch Capital; * Morgan Stanley Senior Funding, Inc.; * Sankaty Advisors, LLC as collateral manager; * Highland Capital Management, L.P, as Collateral Manager; * Nationwide Life Insurance Company; * Nationwide Mutual Insurance Company; * Oppenheimer Senior Floating Rate Fund; * General Electric Capital Corporation; * Wachovia Capital Finance (Central); * Carlyle High Yield Partners, L.P.; * Carlyle High Yield Partners IV, Ltd.; * Carlyle Loan Opportunity Fund; * Carlyle High Yield Partners VI, Ltd.; and * Carlyle Loan Investment, Ltd. 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) UNITED RENTALS: Soliciting Consents from Securities Holders ----------------------------------------------------------- United Rentals, Inc. (NYSE: URI) is soliciting consents for amendments to the indentures governing its bonds and QUIPs securities, which would allow the company additional time to make certain SEC filings. As previously announced, the company has delayed filing its Form 10-K for 2004 and Form 10-Qs for subsequent 2005 quarters. The consents are being solicited from the holders of these securities: -- 6-1/2% Senior Notes due 2012; -- 7-3/4% Senior Subordinated Notes due 2013; -- 7% Senior Subordinated Notes due 2014; -- 1-7/8% Convertible Senior Subordinated Notes due 2023 -- 6-1/2% Convertible Quarterly Income Preferred Securities (QUIPs); The indentures for the securities require the company to timely file required annual and other periodic reports with the SEC. The proposed amendments would, among other things, allow the company up until March 31, 2006 to regain compliance with this requirement and waive any violation of this requirement that has previously occurred. The company is offering a consent fee of $2.50 for each $1,000 in principal amount of notes and $0.125 for each $50 of liquidation preference of QUIPs as to which the holder provides a consent. In addition, if the company does not file its 2004 Form 10-K by December 31, 2005, the company will pay an additional $2.50 for each $1,000 in principal amount of notes and $0.125 for each $50 of liquidation preference of QUIPs. Approval of the proposed amendments and related waiver with respect to each series of securities requires the consent of holders of the majority of principal amount or liquidation preference, as applicable, of the outstanding securities of such series. The consent solicitations will expire at 5:00 p.m., New York City time, on September 7, 2005, unless extended. Holders may tender their consents to the Information Agent at any time before the expiration date. However, after consents are received from the requisite majority of holders of any series of securities, the company will execute a supplemental indenture and thereafter the consents related to that series may not be revoked unless the company fails to pay the required consent fee. The company has retained Credit Suisse First Boston to serve as Solicitation Agent for the solicitation, and MacKenzie Partners to serve as the Information Agent. Copies of the consent solicitation statements, consent form and related documents may be obtained at no charge by contacting the Information Agent by telephone at (800) 322-2885 (toll free) or (212) 929-5500 (call collect), or in writing at 105 Madison Avenue, New York, New York 10016. Questions regarding the solicitation may be directed to: Credit Suisse First Boston, Eleven Madison Avenue, New York, New York, 10010, U.S. Toll Free: (800) 820-1653, Call Collect: (212) 325-7596, Attn: Liability Management Group. United Rentals, Inc. -- http://www.unitedrentals.com/-- is the largest equipment rental company in the world, with an integrated network of more than 730 rental locations in 48 states, 10 Canadian provinces and Mexico. The company's 13,200 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 600 different types of equipment with a total original cost of $3.9 billion. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index(R) and is headquartered in Greenwich, Connecticut. * * * As reported in the Troubled Company Reporter on July 18, 2005, Moody's Investors Service lowered the long-term ratings of United Rental (North America) Inc. and its related entities: * Corporate Family Rating (previously called Senior Implied) to B1 from Ba3; * Senior Unsecured to B2 from B1; Senior Subordinate to B3 from B2; and * Quarterly Income Preferred Securities to Caa1 from B3. The rating action is prompted by the continuing challenges facing the company in resolving the pending SEC investigation and certain accounting irregularities. These challenges are accentuated by today's announcement regarding the employment status of the company's President and Chief Financial Officer. URI's board determined that refusal by the President and CFO to answer questions at this time by the special committee of the board constitutes a failure to perform his duties, and would constitute grounds for termination if not cured within the thirty-day cure period provided by his employment agreement. The special committee of the board is reviewing matters relating to the previously disclosed SEC inquiry of the company. UNIVERSAL COMMS: Reports $2.12MM Stockholders' Deficit at June 30 ----------------------------------------------------------------- Universal Communication Systems, Inc., disclosed the results of its operations to the Securities and Exchange Commission in its report for the quarter ending June 30, 2005. Comparative Results Revenues for the three months ended June 30, 2005, compared to the same period ended June 30, 2004, decreased $175,582, from $220,529 in 2004 to $44,947 in 2005. These sales were entirely from our Millennium operations, and the decrease resulted from timing of contract completions. Revenues for the nine months ended June 30, 2005, compared to the nine months ended June 30, 2004, increased $446,235 from $449,856 to $896,091. The increase resulted from Millennium's contract completions and sales in Airwater equipment. Cost of sales totaled $63,667 for the three months ending June 30, 2005, and $250,051 for the three months ending June 30, 2004. For the nine months ended June 30, 2005, and 2004, cost of sales totaled $856,134 and $275,221, respectively. Although cost of sales were higher comparatively in 2005 versus 2004, this resulted from freight and production costs of the air water systems, whose sales and manufacturing was relatively new during those periods. Operating expenses for the three months and nine months ended June 30, 2005, amounted to $885,884 and $2,720,922, respectively, compared to $779,140 and $2,264,284 for the three months and nine months ended June 30, 2004. For both periods, these expenses were primarily sales and marketing costs, consultants and professional fees. Interest expense decreased $15,720 from $45,342 for the three months ended June 30, 2004, to $29,622 for the three months ended June 30, 2005. For the nine months ended June 30, 2005, and 2004, interest expense increased $12,915 from $275,417 to $288,332, respectively. The decrease resulted from the conversion by the bondholders of a portion of their debt to common stock during the period and the increase resulted from a settlement on past due interest penalties with one of the bond holders. Net losses for the three months ended June 30, 2005 were $(911,152), as compared with $(821,596) for the three months ended June 30, 2004. Net losses for the nine months ended June 30, 2005 were $(2,992,713), as compared with $(2,531,012) for the nine months ended June 30, 2004. The increases in net losses are primarily attributable to increased marketing and consulting activities with respect to the air water product lines. Liquidity and Capital Resources On June 30, 2005, the Company's cash position was $59,832 compared to $453,134 at September 30, 2004. Cash used in operating activities for the nine-month period ending June 30, 2005, compared to the nine months ending June 30, 2004 were $(1,951,458) and $(1,345,054) respectively. The primary use of these funds resulted from operating losses and increase in inventories. Cash provided by financing activities for the nine month periods ending June 30, 2005 and 2004 were $1,571,226 and $1,603,923 respectively. For both periods, these amounts were derived from the sale of common and preferred stock and, in 2005, the sale of convertible notes. While sales are being developed, current operating cash is being provided by loans and the sale of preferred and common stock. The company has had a working capital deficit for an extensive period of time. If management is unable to continue raising funds through stock sales and loans, the Company may not be able to continue as a viable concern. Other than the small line of credit held by Millennium, the Company does not have a bank line of credit and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms, if at all. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. The Company's Chairman and President, Michael Zwebner, both personally and through his related foreign financial companies and contacts, has continued to provide cash funding for our and our subsidiary's working capital needs, pursuant to his non-binding commitment previously reported. Universal Communication Systems, Inc., prior to 2003, was engaged in activities related to advanced wireless communications, including the acquisition of radio-frequency spectrum internationally. Currently, the Company's activities related to the advanced wireless communications are conducted only by our investment in Digital Way, S.A., a Peruvian communication company and former wholly owned subsidiary. As of June 30, 2005, Universal Communication's equity deficit narrowed to $2,118,402 from a $2,757,191 deficit at Sept. 30, 2004. VALERO ENERGY: Election Deadline for Premcor Merger Set for Monday ------------------------------------------------------------------ Pursuant to the Agreement and Plan of Merger with Premcor Inc. (NYSE:PCO), Premcor disclosed that an election deadline for Premcor stockholders to elect the right to receive either: (1) 0.99 Valero shares, plus cash in lieu of any fractional shares; or (2) $72.76 in cash (Premcor stockholders may also elect cash for some of their Premcor shares and Valero shares for others), has been established for Monday, Aug. 29, 2005 at 5:00 p.m. Eastern Standard Time. Elections are subject to proration as described in the proxy statement/prospectus. Because the exchange ratio is fixed, the value of the stock consideration will vary with the trading price of Valero shares and may be different from the value of the cash consideration. To make a valid election, a stockholder must, at or before this time, deliver to Computershare Trust Company of New York, the Exchange Agent for the merger, a properly completed Form of Election and Letter of Transmittal (previously sent to Premcor shareholders), together with Premcor stock certificates, or confirmation of a book-entry transfer into the Exchange Agent's account at the Depository Trust Company, as to those Premcor shares for which they wish to make an election (or instead properly follow the notice of guaranteed delivery procedure described in Instruction 15 to the Form of Election and Letter of Transmittal). Premcor stockholders may obtain additional copies of the Form of Election and Letter of Transmittal by contacting The Altman Group, Inc. at 800-591-8254. Premcor Inc. -- http://www.premcor.com/-- is one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products in the United States. The company owns and operates refineries in Port Arthur, Texas, Lima, Ohio, Memphis, Tennessee and Delaware City, Delaware with a combined crude oil throughput capacity of approximately 790,000 barrels per day. Valero Energy Corporation -- http://www.valero.com/-- is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenue of approximately $55 billion. The company owns and operates 15 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. * * * As reported in the Troubled Company Reporter on Apr. 27, 2005, Moody's Investors Service placed Valero Energy Corporation's ratings under review for possible downgrade in response to Valero's announcement that it plans to acquire Premcor Inc. for approximately $8 billion, including the assumption of about $1.8 billion of debt. Premcor's ratings remain on review for possible upgrade, continuing a review initiated on February 23, 2005. The equity portion of the purchase will be funded with 50% cash and 50% Valero stock. Valero expects to fund the cash portion with a combination of cash on hand and debt. The transaction is subject to the approval of Premcor's shareholders and customary regulatory reviews and is expected to close by December 31, 2005. Ratings under review for possible downgrade are Valero Energy Corporation's Baa3 rated senior unsecured notes, debentures, medium-term notes, and bank debt, its Ba1 rated subordinated debentures, its shelf registration for senior unsecured debt/subordinated debt/preferred stock rated (P)Baa3/(P)Ba1/(P)Ba2, and its Ba2 rated mandatory convertible preferred stock. Ratings under review for possible upgrade are Premcor Inc.'s Ba3 senior implied and B1 non-guaranteed senior unsecured issuer ratings, Premcor Refining Group's (PRG) Ba2 senior secured rating of a $1 billion bank facility, PRG's Ba3 rated senior unsecured notes, PRG's B2 rated senior subordinated notes, and Port Arthur Finance Corporation's Ba3 rated senior secured notes. At the same time, Standard & Poor's Ratings Services lowered its corporate credit rating on Valero Energy Corp. to 'BBB-' from 'BBB' and placed the rating on CreditWatch with negative implications on the company's announcement that it will acquire Premcor Inc. in an $8.7 billion transaction. In addition, Standard & Poor's placed its 'BB-' corporate credit rating on Premcor on CreditWatch with positive implications. At the close of the transaction, the ratings on Premcor are expected to be equalized with the ratings on Valero, reflecting the guaranty by Valero of Premcor's debt. WINN-DIXIE: Can Reject Nine Unexpired Leases -------------------------------------------- As part of their restructuring plans, Winn-Dixie Stores, Inc., and its debtor-affiliates sought to sell, sublet, negotiate buyouts with landlords, or otherwise reduce or eliminate their liability under many leases. The Debtors were unable to sell four leases: Store No. Leased Property Location Landlord --------- ------------------------ -------- 992 3334 Halifax Road WBFV, INC. South Boston, VA 24592 1233 3230 Augusta Road Woodberry Plaza West Columbia, SC 29169 E&A, LLC 2047 Mebane Oaks Rd/Peartree Rd BHBS, Inc. Mebane, NC 27302 1676 1148 South 4th Street John H.O. La Gatta Louisville, KY 40203 D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, tells the U.S. Bankruptcy Court for the Middle District of Florida that the Debtors no longer need the Leases because they provide no continuing benefit to their estates. The Debtors have concluded that the Leases constitute a burden on them and are not necessary for an effective reorganization. Mr. Baker relates that rejecting the Leases will save the Debtors' estates costs incurred with respect to administrative expenses, including rent, taxes, insurance premiums, and other charges under the Leases. To the extent any personal property remains in the premises subject to the Leases, it is of little or no value to the Debtors' estates, Mr. Baker says. Accordingly, the Debtors ask the Court to deem any interest in those personal properties abandoned pursuant to Section 554(a) of the Bankruptcy Code. To the extent that any of the Landlords intend to claim rejection damages as a result of the proposed rejections, the Debtors ask the Court to set the deadline to file rejection damage claims at 30 days after the date of entry of the order approving the rejection. Accordingly, the Debtors seek the Court's authority to reject the Leases effective as of the earlier of: (a) the date on which the Debtors provide notice of termination to the landlords under the leases and tender possession of the premises to each Landlord; and (b) the date of entry of an order approving the rejection. The Debtors also sought and obtained authority from the Court to reject these nine grocery store leases: Store No. Leased Property Location Landlord ----- ------------------------ -------- 1612 5252 Bardstown Road Louisville, KY Ralph & Sarah Dyan 1621 5364 Dixie Highway Louisville, KY Bradley Real Estate 1645 2809 W. Broadway Louisville, KY Ainstar Realty Corporation 1686 3430 Taylor Blvd. Louisville, KY Taylon LLC 2712 931 Monroe Drive Atlanta, GA Ackerman Midtown Association Ltd. 2712 931 Monroe Drive Atlanta, GA John Lagatta 0901 3024 Sunset Ave Rocky Mount, SC Carolina Dev't Company 0969 6601 Lake Harbor Rd. Midlothian, VA JNB Company of Virginia LLC 0977 3300 Broadrock Blvd Richmond, VA Horton Properties Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Reform Insurance Policy with XL Insurance -------------------------------------------------------------- Winn-Dixie Stores, Inc., seeks indemnification for the substantial property damage it sustained as a result of a series of devastating hurricanes that swept through the Southeastern United States during August and September 2004. Scott E. Morris, Esq., at Holt Ney Zatcoff & Wasserman, LLP, in Atlanta, Georgia, relates that in 2004, Winn-Dixie operated 1,334 stores along with 22 distribution centers and 20 processing and manufacturing facilities and a truck delivery fleet. Winn- Dixie's operations spanned 14 states, as well as the Bahamas. Property Insurance As a major retail food chain, Winn-Dixie required adequate commercial property insurance to guard against a variety of perils that could harm and disrupt its business. Because many of Winn-Dixie's properties and operations were located in states with Atlantic Ocean coastlines -- Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia -- procuring adequate property insurance against hurricane losses was of the utmost importance, Mr. Morris says. According to Mr. Morris, Winn-Dixie instructed its insurance broker, Marsh USA Inc. to procure through its Atlanta, Georgia, office, as part of a comprehensive, multiple-layer property insurance program, commercial excess property insurance from XL. Winn-Dixie required coverage for hurricane losses that would allow for the annual aggregation of losses for purposes of exhausting the underlying coverages and triggering coverage from XL, because a policy allowing only for exhaustion on a "per occurrence" basis would result in an unacceptable gap in Winn- Dixie's necessary excess coverage. On Winn-Dixie's behalf, Marsh submitted to XL an application for the required excess property insurance, including all required underwriting information regarding Winn-Dixie's operations and claims loss history. March provided XL with a copy of its manuscript form that contains an "Excess Clause" in Section 4(b), which dictates that the key factor in determining whether windstorm losses can be aggregated to trigger excess coverage. Mr. Morris relates that on April 23, 2004, before the binding of coverage, Gary Fox of XL notified Marsh that Marsh's proposed "wording is acceptable to XL considering [its] excess participation . . . The flood/EQ and wind limits are fine." XL Policy On April 27, 2004, XL bound coverage. Mr. Morris relates that in return for a substantial premium, XL issued Policy No. US00006536PR04A to Winn-Dixie on June 25, 2004, effective for the policy period of April 30, 2004, to April 30, 2005. The Policy is comprised collectively of an XL policy form attached to, and expressly following, Marsh's commercial excess property insurance form. Mr. Morris notes that the Policy's insuring agreement states, "[t]his Excess Commercial Insurance Property Policy is for direct physical loss or direct physical damage to first-party property and [the] directly resulting effect on income and expense as provided for in the Followed Policy." Thus, Mr. Morris asserts, the Policy covers property damage caused by hurricanes. Mr. Morris explains that under the Policy, XL must indemnify Winn-Dixie for a 30% share of the $50 million layer in excess of a $50 million annual aggregate retention for "windstorm" losses, including the damage and resulting business interruptions caused by the Hurricanes. For purposes of triggering coverage, the Policy requires aggregation of windstorm losses for the layers below the excess layer occupied by the Policy, Mr. Morris says. Section 4 of the XL Form, styled "Followed Policy," establishes that "[t]his policy is based on the policy form submitted by Marsh USA Inc., dated April 6, 2004, and on file with the Company." In turn, Mr. Morris continues, the incorporated Followed Form provides that, for purposes of exhausting the limits of the underlying policies, Winn-Dixie is entitled to aggregate its annual losses for the peril of windstorm. Thus, Mr. Morris contends, the Policy obliges XL to respond once any underlying aggregate limit has been reached for a covered windstorm loss. Mr. Morris notes that every other insurer participating in Winn- Dixie's commercial property insurance program agreed that Winn- Dixie is entitled to aggregate its underlying annual windstorm losses. "XL bound coverage with full knowledge of that feature of Winn-Dixie's property insurance program, and know Winn-Dixie would not accept from XL materially different coverage than that provided by its other excess insurers." 2004 Hurricanes Just three and a half months after the inception of the Policy, Winn-Dixie suffered through a hurricane season that Marsh described as "the worst in history." Beginning in August of 2004, the Southeastern United States was ravaged by a series of violent hurricanes, including: Landfall Date Location ------------- -------- Hurricane Charley August 13, 2004 Florida Hurricane Frances September 4, 2004 Florida Hurricane Ivan September 16, 2004 Alabama Hurricane Jeanne September 17, 2004 Florida "Winn-Dixie sustained extensive property damage and other losses in each of the Hurricanes. Winn-Dixie's aggregated losses for the 2004 hurricane season amounts to at least $85 million," Mr. Morris says. Coverage Dispute With XL Mr. Morris relates that Winn-Dixie promptly notified and tendered its Hurricane losses to the appropriate primary and excess insurers, including XL. "Winn-Dixie has fully complied with all applicable conditions of the Policy, and thus is entitled to indemnification according to its terms. In particular, because all of the underlying insurers are solvent and all have agreed to pay their respective policy limits . . . XL's duty to indemnify has attached," Mr. Morris says. Winn-Dixie tells the U.S. District Court for the Northern District of Georgia, Atlanta Division, that notwithstanding that its losses are squarely covered by the Policy and that when properly aggregated those losses far exceed the $50 million threshold necessary to trigger the Policy, XL has unlawfully refused to indemnify Winn-Dixie. "XL incorrectly contends the Policy does not allow the aggregation of annual windstorm losses for purposes of exhausting underlying limits." Declaratory Relief Mr. Morris notes that the dispute presents an actual controversy of a justifiable nature that the District Court is authorized to decide pursuant to Sections 2201 and 2202 of the Judiciary Code. Accordingly, Winn-Dixie asks the District Court to enter a judgment in its favor and against XL, and grant it a declaration that XL will be liable for its 30% share of the losses Winn-Dixie has suffered in excess of the $50 million annual aggregate underlying retention for named windstorm losses as a result of the Hurricanes. Breach of Contract Because XL has refused to perform its contractual obligation to indemnify Winn-Dixie, Mr. Morris asserts, XL is in breach of contract. "Winn-Dixie has been damaged by XL's breach, in that Winn-Dixie has been denied the benefits of the insurance coverage for which it contracted and for which XL collected a substantial premium. Additionally, Winn-Dixie has been forced to incur the substantial burden, expense and disruption of bringing and pursuing this action," Mr. Morris says. Thus, Winn-Dixie asks the District Court for an award of the actual and consequential damages that it has sustained as a result of XL's contractual breach and other actionable conduct, in an amount to be proven at trial. Reformation of Contract Mr. Morris notes that the Policy failed to conform to Winn- Dixie's and XL's agreement at the time of contracting that XL's obligation to respond as an excess insurer would be triggered upon Winn-Dixie's incurring more than $50 million in windstorm losses to be calculated on an annual aggregate basis. "Because this mistake was the result of a scrivener's error, the Policy should be reformed to conform to Winn-Dixie's and XL's actual contemporaneous intent at the time the Policy was procured," Mr. Morris says. In the alternative to its Declaratory Relief and Breach of Contract claims, Winn-Dixie asks the District Court for a judgment that the Policy be reformed to reflect Winn-Dixie's and XL's actual, contemporaneous agreement at the time of procurement that the Policy would allow the aggregation of annual windstorm losses for purposes of exhausting underlying limits. Winn-Dixie also asks for a declaration under the Policy, as reformed, that XL will be liable for its 30% share of the losses Winn-Dixie has suffered in excess of the $50 million annual aggregate underlying retention for named windstorm losses as a result of the Hurricanes. For all counts, Winn-Dixie seeks an award of the costs it incurred in connection with bringing and pursuing the action. 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). WODO LLC: Files Disclosure Statement in Washington -------------------------------------------------- Wodo, LLC, delivered a Disclosure Statement explaining its Plan of Reorganization to the U.S. Bankruptcy Court for the Western District of Washington. Terms of the Plan Under the Plan, holders of Administrative Convenience Claims will receive cash payments equal to the full amount of their Allowed Claims, not to exceed $10,000. Holders of Allowed Administrative Convenience Claims will be paid 50% of their claims from non- Debtor sources ten days after the Effective Date and the remaining 50% of their Allowed Claims will be paid thirty days after the Effective Date. Holders of Secured Property Tax Claims will retain all the liens securing their claims. Interest shall accrue on the claims from the Petition Date at the non-default rates in accordance with applicable non-bankruptcy law. Upon transfer of any of the Real Property, the Claims secured by such property will be paid in full. Holders of Allowed General Unsecured Claims will be paid from non- Debtor sources 50% of their Allowed Claims 30 days following the Effective Date and 50% of their Claims sixty 60 days following the Effective Date. Any liens against the Real Property not otherwise treated under the Plan will remain against the Real Properties and holders of those liens will retain all of their rights. Unit Holders will retain their interests in the Debtor. WULA Secured Claims The Debtor discloses that the WULA Secured Claim arises from documents executed by the Company in favor of WULA including: * July 20, 2001 Loan Agreement, * Promissory Note, * Deed of Trust, * Security Agreement, and * Assignment of Lease and Rents and Fixture filing recorded on July 25, 2001 against the following properties: -- Block 11, -- Block 12, -- Block 14(A and B), -- Block 18, and -- Block 19(A and B) The Allowed WULA Secured Claim consists of the principal balance of the WULA loan, plus a 13% interest at the non-default rate provided in the WULA Loan Documents. The Allowed WULA Secured Claim will not include: * any attorneys' fees or other charges; * the default 23% interest rate set forth in the WULA Loan Documents, and * the $1,000,000 purported "bonus." The Allowed WULA Secured Claim will accrue interest from the Effective Date at the 13% non-default rate provided in the Loan Documents until satisfied. The Debtor proposes a compromise of controversies regarding portions of WULA's secured claims which includes: * WULA's claim to attorneys' fees, * WULA's claim to default interest under its loan documents, * WULA's claim to a $1,000,000 "bonus," and * claims the Debtor and its affiliates may have against WULA resulting from their failure to carry out prior commitments relating to this and other transactions. If the Plan is confirmed as proposed, the Debtor will waive any lender liability claims. If the Plan is not confirmed as proposed, the Debtor will retain the right to prosecute its lender liability claims, as well as its objections to portions of WULA's claim. Legacy Plaza Claims Legacy Plaza, LLC holds contingent Claims under three agreements: (a) May 25, 2001 Indemnification Agreement under which the Debtor indemnified Legacy for certain tax payments. Legacy Plaza will retain its rights under the Indemnification Agreement and associated Letter of Credit. (b) May 25, 2001 Parking Lease of Blocks 17, 18 and 19A; 10- year term; terminable upon construction of parking on Block 19C and Block 16. The Debtor tells the Court that it sent Legacy a letter regarding release of Block 17 from the obligations under the Parking Lease. In the event Legacy does not comply, the Debtor will institute an adversary proceeding to require the release. In addition, other disputes between the Debtor and Legacy respecting certain aspects of the Parking Lease will be resolved either through negotiation or through appropriate proceedings before the Bankruptcy Court. (c) May 2001, Option to Purchase Block 19C. The Debtor may reject this contract and request an evidentiary hearing to estimate Legacy's claim which the Debtor asserts has no value. If the rejection claim is determined to have value, it will become a General Unsecured Claim. Guaranty Bank Secured Claims Guaranty Bank has two Letters of Credit in favor Legacy Plaza, LLC against the Debtor for: a) tax rate increases through May 25, 2013 and b) surface parking improvements. Guaranty Bank will retain its liens in the two accounts and all of its rights and remedies. Skagit State Bank Liens On or prior to the Effective Date, Skagit State Bank's claims and liens against the Debtor's assets will be satisfied in full from non-Debtor assets through a refinancing of Skagit State Bank's loans to the Debtor's affiliates. In the event the refinancing does not occur as of the Effective Date, Skagit State Bank 's underlying claim will remain adequately secured by its primary collateral consisting of hardwood mills which are not property of the estate, and Skagit State Bank 's liens against the Debtor's assets, specifically Block 19C and Block 16, will be released. Headquartered in Bellingham, Washington, Wodo, LLC, fka Trillium Commons, LLC, is a real estate company. The Company filed for chapter 11 protection on January 18, 2005 (Bankr. W.D. Wash. Case No. 05-10556). Gayle E. Bush, Esq., at Bush Strout & Kornfeld represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $90,380,942 and total debts of $21,451,210. YUKOS OIL: Concludes Talks With Lithuania Over Mazeikiu Stakes -------------------------------------------------------------- The Lithuanian government ended talks with Yukos Oil Company over a disputed 10% key stake in the Mazeikiu Nafta refinery, according to MosNews. Yukos and Lithuania agreed that they had the right to buy an extra 10% of share from each other, Bloomberg New reports. Lithuania holds 40.66% stake in Mazeikiu, 13.04% less than Yukos' 53.7 % share in the refinery. 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) * Brad Richter Joins Fried Frank as Trusts & Estates Partner ------------------------------------------------------------ Fried, Frank, Harris, Shriver & Jacobson LLP disclosed that Brad J. Richter, Esq., has joined the firm as a partner in the Trusts and Estates Department, resident in New York. Mr. Richter's practice focuses on all aspects of private client representation, including sophisticated tax and estate planning, complex structuring work, administration of large estates and trusts, succession and business planning, tax-efficient transfers of wealth, and formation and operation of charitable foundations. He represents high net worth individuals, corporate executives, principals in private equity deals, investors in early stages of a business enterprise, the fiduciaries of estates and trusts, charitable organizations, and others. "Brad is an excellent addition both to our New York office and the Trusts and Estates Department. I am delighted to welcome him to the firm," said Valerie Ford Jacob, Fried Frank's Chairperson. "With the addition of Brad to our practice we will now be able to broaden our scope of client service and capitalize on new business opportunities," said Ann B. Lesk, head of Fried Frank's Trusts and Estates Department. Mr. Richter joins Fried Frank from Kramer Levin Naftalis & Frankel LLP, where he served as Special Counsel in the Individual Clients Group. He received his JD, cum laude, from New York University School of Law, where he was a member of the Law Review. He graduated magna cum laude from Amherst College. Mr. Richter is admitted to the bar in New York and Massachusetts. Fried, Frank, Harris, Shriver & Jacobson LLP -- http://www.friedfrank.com/-- is a leading international law firm with more than 500 attorneys in offices in New York, Washington, D.C., London, Paris and Frankfurt. Fried Frank lawyers represent clients in corporate transactions, including mergers and acquisitions and private equity, securities offerings and financings, international transactions, asset management and corporate governance; litigation, including general commercial litigation, securities and shareholder litigation, white-collar criminal defense and internal investigations, intellectual property litigation, qui tam and RICO defense matters, takeover and proxy fight litigation, environmental matters and domestic and international arbitration and alternative dispute resolution; antitrust counseling and litigation; bankruptcy and restructuring; real estate; securities regulation, compliance and enforcement; government contracts compliance and litigation; benefits and compensation; intellectual property and technology; tax; financial institutions; and trusts and estates. ********* 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. 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