/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050909.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, September 9, 2005, Vol. 9, No. 214 Headlines ABITIBI-CONSOLIDATED: S&P Affirms BB Corporate Credit Rating ALERIS INTERNATIONAL: Buys ALSCO Holdings for $150 Million ALL COUNTY: Gets Court Nod to Employ John Titler as Bankr. Counsel ALLOY HARDFACING: Case Summary & 20 Largest Unsecured Creditors ALOHA AIRLINES: Wants Until October 28 to Decide on Leases AMERISOURCEBERGEN CORP: Moody's Rates $900M Unsec. Notes at Ba2 ARMSTRONG WORLD: Court Okays Pact Resolving Carlino's $34MM Claim ARVINMERITOR INC: Closing Shock Absorber Operation in Tennessee ASARCO LLC: U.S. Trustee Appoints 7-Member Creditors' Committee ASARCO LLC: Gets Court Nod to Employ Bracewell as Special Counsel ASARCO LLC: Court OKs Retention of Quarles to Tackle Labor Issues ASPECT SOFTWARE: Moody's Places B1 Rating on $475 Million Debts ATA AIR: Chicago Creditors' Move for Panel Appointment Draws Fire AXTEL SA: Moody's Upgrades Corporate Family Rating to B1 from B2 BGK SECURITY: Case Summary & Largest Unsecured Creditors BIO-ONE CORP.: Fred Zeidman Named Chief Restructuring Officer BOMBARDIER RECREATIONAL: Moody's Rates $50M Sr. Sec. Loan at Ba3 BRICE ROAD: Wants to Hire Bailey Cavalieri as Bankruptcy Counsel BRICE ROAD: Section 341(a) Meeting Scheduled for October 13 CAPITAL AUTOMOTIVE: Moody's Reviews Ba1 Preferred Stock Rating CARDTRONICS INC: June 30 Balance Sheet Upside-Down by $49.8 Mil. CATHOLIC CHURCH: Spokane Begins Appeal of Parish Property Decision CCH I LLC: Fitch Expects to Rate Sr. Secured Notes at CCC+ CHASE COMMERCIAL: Fitch Affirms Low-B Ratings on 5 Cert. Classes CHESAPEAKE ENERGY: Offering $250 Million of Preferred Stock CONCENTRA OPERATING: Moody's Rates Proposed $675-Mil Debts at B1 CONCERTO SOFTWARE: S&P Rates Planned $475M Sr. Sec. Facility at B COOK'S INC: Inventory & Equipment to be Auctioned on September 14 CREDIT SUISSE: Credit Enhancement Prompts Fitch's Rating Upgrades DEAN ZANETOS: Case Summary & 6 Largest Unsecured Creditors DELPHI: Detailed Talks with UAW & General Motors Start in October DELTA AIR: Skywest Completes $425M Purchase of Airline Subsidiary DELTA AIR: Cutting Cincinnati Operations by 26% & Selling 11 Jets DOBSON COMMUNICATIONS: Prices $300-Mil Private Debt Offerings DOBSON COMMS: S&P Junks Planned $150M Sr. Unsec. Convertible Notes DONALD L. MATTIA: Case Summary & 20 Largest Unsecured Creditors DRUGMAX INC: Receives Default Waiver from General Electric Capital E.SPIRE COMMS: Court Approves $1MM Administrative Claim Carve-Out ENER1 INC: Plans to Spin Off Three Subsidiaries to Stockholders ENRON CORP: Bankruptcy Court Okays American Express Settlement ENTRAVISION COMMS: Prices Tender Offer for 8.125% Sr. Sub. Notes ENTRAVISION COMMS: Moody's Rates Planned $650MM Facilities at Ba3 FALCON PRODUCTS: Can Sell 87.4% Stake in Czech Falcon Mimon Unit FALCON PRODUCTS: Court Approves $4MM Sale of S&J Unit's Assets FALCON PRODUCTS: Van Kafsouni Buys Belding Property for $350,000 FEDERAL-MOGUL: Defends Merits of Michigan Environmental Settlement FREDERICK MCNEARY: Says Plan Hinges on Prestwick's Ch. 11 Plan FRK PROPERTIES: Case Summary & Largest Unsecured Creditor HALLIBURTON CO: Moody's Reviews (P)Ba1 Preferred Stock Rating HONEY CREEK: Hires Robert & Grant P.C. as Bankruptcy Counsel HOVNANIAN ENT: Earns $116.1 Million of Net Income in 3rd Quarter JERNBERG INDUSTRIES: Completes 363 Sale to KPS Special for $60-Mil JOHN Q. HAMMONS: Tender Offer Yield in JQH Merger is 4.358% JOSEPH BONO: Case Summary & 13 Largest Unsecured Creditors KAISER ALUMINUM: Court Approves 2nd Amended Disclosure Statement KATAYONE ADELI: Case Summary & 20 Largest Unsecured Creditors KERR-MCGEE: Soliciting Consents to Amend Bond Indenture KNOLL INC: UBS & BofA Commit to Provide $450-Mil Credit Facility LAWRENCE BARGAIN: Case Summary & 3 Largest Unsecured Creditors MERIDIAN AUTOMOTIVE: Committee Sues Lenders to Invalidate Liens MERIDIAN AUTOMOTIVE: Wants Until Jan. 25 to Decide on Leases MERIDIAN AUTOMOTIVE: Wants Dec. 1 as Admin. Claims Bar Date MIDLAND REALTY: Fitch Lifts Rating on $7.7-Mil Certs. to BB+ MIRANT CORP: Inks Pact with Committees & Creditors on Plan Terms MIRANT CORP: Court Okays $600K Sale of Transformers to Equisales MIRANT CORP: Court Denies Wells Fargo's Request for Documents MOOG INC: Moody's Rates Planned $50 Million Sr. Sub. Notes at Ba3 MOOG INC: S&P Rates Proposed $50 Million Sr. Sub. Notes at B+ MQ ASSOCIATES: Bondholders Agree to Amend Senior Note Indentures MQ ASSOCIATES: Lenders Waive Reporting Requirement Until Dec. 31 NAKOMA LAND: Wants to Hire Gold Mountain as Real Estate Broker NORTEL NETWORKS: Board Declares Dividends on Preferred Shares NORTHWEST AIRLINES: Duluth May Cut Off Ties Due to AMFA Strike OREGON STEEL: Moody's Upgrades $305 Million Notes' Rating to Ba3 PACIFIC GAS: Can Direct Deutsche Bank to Release $743K from Escrow PACIFIC GAS: Wants Partial Judgment on Lexington's $8-Mil Claims PHOENIX INT'L: Case Summary & 17 Largest Unsecured Creditors PONDEROSA PINE: Employs Cuyler Burk as Insurance Counsel PONDEROSA PINE: Hires FTI Consulting as Financial Advisor PONDEROSA PINE: Employs Paul Hastings as Regulatory Counsel PNC MORTGAGE: Scheduled Paydown Prompts Fitch's Rating Upgrades PROTOCOL SERVICES: Taps Murray Devine as Valuation Experts PROTOCOL SERVICES: Wants to Continue Hiring Ordinary Course Profs. QUADRAMED: Names Keith Hagen President & Chief Executive Officer RELIANCE GROUP: Asks Court to Approve Lloyd's Settlement Agreement RESTAURANT CO: Moody's Rates $190 Million Sr. Unsec. Notes at B2 RHODES INC: Has Until December 31 to Make Lease-Related Decisions SEA STREET RESTAURANT: Voluntary Chapter 11 Case Summary SHORE POINT: Case Summary & 20 Largest Unsecured Creditors SOLUTIA INC: JPMorgan Defends Request for Document Production STANDARD AERO: Senior Vice President Lee Beaumont Resigns STEEL DYNAMICS: Replaces $230-Mil Facility with $350-Mil Facility SUMMIT ONE LLC: Voluntary Chapter 11 Case Summary SUNDANCE FRAMING: Voluntary Chapter 11 Case Summary TECHNICAL OLYMPIC: Prices 4-Mil Share Offering at $28 Per Share TERAFORCE TECHNOLOGY: Selling DNA Computing's Assets for $2.9M++ TERAFORCE TECHNOLOGY: Wants to Tap BKR Cornwell as Tax Accountants TERAFORCE TECHNOLOGY: Court Sets October 14 as Claims Bar Date TOWER AUTOMOTIVE: Products Unit Selling Ky. Assets for $1.15M TOWER AUTOMOTIVE: Wants Until Jan. 27 to File Chapter 11 Plan TOWER AUTOMOTIVE: Wants Until March 31 to Decide on Leases TRANS MAX: Case Summary & 20 Largest Unsecured Creditors TRW AUTOMOTIVE: Fitch Sees No Rating Change after Dalphi Purchase UAL CORP: Battle Brews Over Barclay's Multi-Million Claim UNITED HOSPITAL: Gets Court Nod to Reject Six Burdensome Leases US AIRWAYS: Asks Court to OK Sale/Leaseback Deal with RPK Capital USG CORP: Has Until December 31 to File Plan of Reorganization VARICK STRUCTURED: Moody's Chips $350 Million Notes' Rating to Ba2 VISIPHOR CORP: Settles OSI Systems Dispute for $400 Million W.R. GRACE: Wants Scope of Nelson Mullins' Services Expanded WILLIAMS SCOTSMAN: Moody's Rates $325M Sr. Unsec. Note at (P)B3 WILLIAMS SCOTSMAN: S&P Rates $325 Million Sr. Unsec. Notes at B WINN-DIXIE: Creditors Committee Wants Equity Committee Disbanded WINN-DIXIE: Wants Gordon to Sell Equipment on Sept. 20 Auction WINN-DIXIE: IRS Has Until November 22 to File Proofs of Claim * Abria Financial Group Names Brian Kralik Vice President Finance * Jerry Lombardo Joins Goldin Associates from FTI Consulting * BOOK REVIEW: The Big Board: A History of the New York Stock Market ********* ABITIBI-CONSOLIDATED: S&P Affirms BB Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB-' long-term corporate credit and senior unsecured debt ratings on Abitibi- Consolidated Inc. following the company's announcement of its proposed US$600 million divestiture of its 50% interest in Pan Asia Paper Co. Pte Ltd. The transaction is expected to close later this fall and proceeds will be used for debt reduction. The outlook is negative. "The divestiture is an important step for the company to maintain its rating. The divestiture will improve its balance sheet, as Abitibi currently consolidates about US$300 million of Pan Asia's debt on its balance sheet," said Standard & Poor's credit analyst Daniel Parker. Thus, total debt could be reduced by more than C$1 billion. There is a partial offset on the earnings side, however, as Pan Asia accounts for about 10% of Abitibi's consolidated EBITDA, and the asset had a strong position in a growing market. The affirmation also reflects the continuing cost pressure affecting Abitibi's North American operations, including energy, fiber, and the appreciation of the Canadian dollar. The ratings on Abitibi reflect its high debt levels, heavy exposure to cyclical commodity-oriented groundwood papers, and weak, but improving financial performance in the wake of several years of highly unfavorable industry conditions. These risks are partially offset by the company's leading market share position in newsprint and groundwood papers, and by its competitive cost position in North America. Abitibi's profitability and cash flow generation have been weak because of a stronger Canadian dollar and structural changes to North American newsprint demand. In response to declining demand, newsprint produers (led by Abitibi), have closed substantial capacity to improve industry-operating rates, which are currently at about 96%. Improving newsprint prices have been mitigated by the appreciation of the Canadian dollar. For every one U.S. cent appreciation of the Canadian dollar, EBITDA is negatively affected by about C$35 million (net of hedging). As all of Abitibi's debt is denominated in U.S. dollars, the negative cash flow effect is partially offset by a decline in the translated Canadian dollar debt level. The negative outlook reflects concerns about the relentless cost pressure. The strong Canadian dollar and continued high energy, fiber, and freight prices are negating much of the benefit of higher newsprint prices. In addition, North American newsprint demand continues to decline. For the ratings to improve, Abitibi must demonstrate improved margins and cash flow generation. If the company is unable to do so, the ratings could be lowered. ALERIS INTERNATIONAL: Buys ALSCO Holdings for $150 Million ---------------------------------------------------------- Aleris International, Inc. (NYSE: ARS), entered into a definitive agreement to purchase 100% of the issued and outstanding stock of ALSCO Holdings, Inc., the parent company of ALSCO Metals Corporation, for $150 million in cash. ALSCO Metals Corporation, headquartered in Raleigh, North Carolina, is one of North America's largest suppliers of aluminum building products. The business had revenues approaching $300 million and operating income of $23 million for the 12 months ended June 30, 2005. ALSCO has approximately 615 employees. "Today's announcement marks a significant strategic step for Aleris," said Steve Demetriou, Chairman and Chief Executive Officer of Aleris International, Inc. "We are focused on profitably growing our core rolling business through internal improvement initiatives and strategic acquisitions. This acquisition is an excellent strategic fit that will broaden our customer base and enhance our ability to meet the needs of our customers." Aleris expects the acquisition to result in annualized cost synergies of at least $12 million. "These synergies are anticipated to come from the consolidation of redundant manufacturing operations, optimizing our scrap handling and melting capabilities, and other cost-reduction opportunities," said Demetriou. "We anticipate capturing the cost synergies over the next 18 months." Aleris expects the acquisition to be immediately accretive to earnings and cash flow. The transaction will be funded with cash and borrowings under its revolving credit facility. Aleris currently operates three rolling mills, including a direct chill casting facility in Kentucky and continuous cast facilities in Ohio and California. Through this acquisition Aleris will add to its portfolio the ALSCO rolling mill located in Bellwood, Virginia. "The addition of this rolling mill facility will allow us to expand our spectrum of products and build upon our rolling, metal sourcing, melting and recycling competencies," said John Wasz, President, Aleris Rolled Products Segment. In addition to the Bellwood rolling facility, Aleris will acquire coating and fabrication facilities located in Roxboro, North Carolina, Ashville, Ohio and Beloit, Wisconsin. Closing of the sale is subject to regulatory approval and is expected early in the fourth quarter. Aleris International, Inc. -- http://www.aleris.com/-- is a global leader in aluminum recycling and the production of specification alloys and is a major North American manufacturer of common alloy sheet. The Company is also a leading manufacturer of value-added zinc products that include zinc oxide, zinc dust and zinc metal. Headquartered in Beachwood, Ohio, a suburb of Cleveland, Aleris operates 29 production facilities in the U.S., Brazil, Germany, Mexico and Wales, and employs approximately 3,400 employees. * * * Standard & Poor's Ratings Services currently rates the Company's 10-3/8% Senior Secured Notes at B. ALL COUNTY: Gets Court Nod to Employ John Titler as Bankr. Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Iowa approved All County Electrical Company's request to employ John M. Titler, Esq., as its bankruptcy counsel. Mr. Titler will: 1) provide legal advice as to the Debtor's powers and duties as the debtor-in-possession; 2) prepare all petitions, motions, complaints, answers, orders, reports, schedules, plans, disclosure statements and other legal papers as may be necessary and appropriate; 3) institute, defend and maintain suits and other legal proceedings for and on behalf of the Debtor for the purpose of collecting and protecting its assets and for the enforcement of Debtor's rights, generally, to the extent required; and 4) perform all other legal services for the Debtor as may be necessary or appropriate herein. Mr. Titler will be paid from the Debtor's assets at a rate of $175 per hour plus allowable out of pocket expenses. Mr. Titler assures the Court that he doesn't represent any interest adverse to the Debtor or its estate. Headquartered in Waterloo, Iowa, All County Electrical Company -- http://www.all-county-electrical.com/-- installs and repairs residential, commercial and industrial electrical, telephone, data, fire and burglar alarm systems. The Company filed for chapter 11 protection on June 8, 2005 (Bankr. N.D. Iowa Case No. 05-02707). John M. Titler, Esq., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $1 million to $10 million. ALLOY HARDFACING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Alloy Hardfacing and Engineering Company 20425 Johnson Memorial Drive Jordan, Minnesota 55352 Bankruptcy Case No.: 05-46034 Type of Business: The Debtor designs, manufactures and install custom-made equipment for ASME welding, blood processing, cooking, conveyance, engineering, feather processing, field service, heat transfer, mixers, pelletizing, sealing, separation, control systems, and waste water treatment. See http://www.alloy-inc.com/ Chapter 11 Petition Date: September 7, 2005 Court: District of Minnesota (Minneapolis) Judge: Robert J. Kressel Debtor's Counsel: Thomas J. Lallier, Esq. Foley & Mansfield, P.L.L.P. 250 Marquette, Suite 1200 Minneapolis, Minnesota 55401 Tel: (612) 338-8788 Fax: (612) 338-8690 Total Assets: $904,119 Total Debts: $1,697,061 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ William Aulik $600,000 c/o Johnson West 1400 Pioneer Building Saint Paul, MN 55101 Baldwin Supply Company Trade debt $225,421 601 11th Avenue South Minneapolis, MN 55415 Mark S. Aulik Trade debt $102,284 Alloy Hardfacing & Engineering Jordan, MN 55352 Oxygen Service Co. Inc. Trade debt $53,097 1111 Pierce Butler Route Saint Paul, MN 55104 American Express Company Trade debt $28,356 P.O. Box 0001 Chicago, IL 60679-0001 GW Transportation Service Trade debt $15,796 710 Johnson Drive Delano, MN 55328 Total Logistics Corporation Trade debt $15,285 6860 Shingle Creek Parkway Suite 206 Minneapolis, MN 55430 TS/UMT Trade debt $13,706 8259 Melrose Drive Overland Park, KS 66214 Minnesota Valley AG Coop Trade debt $11,713 27252 Helena Boulevard P.O. Box 93 New Prague, MN 56071 Ferguson Enterprises, Inc. Trade debt $9,281 2350 West County Road C #150 Saint Paul, MN 55113 Platinum Plus for Business Trade debt $8,845 P.O. Box 15469 Wilmington, DE 19886-5469 Circle Gear Trade debt $8,015 1501 South 55th Court Cicero, IL 60804 Davenport Dryer LLC $7,725 P.O. Box 6635 Rock Island, IL 61204 Darling International Trade debt $7,000 P.O. BOX 179 Alton, IA 51003 William Aulik 1997 Tahoe $6,897 c/o Johnson West 1400 Pioneer Bldg. Saint Paul, MN 55101 Bosch Rexroth Pneumatics Trade debt $6,785 5150 Prairie Stone Parkway Schaumburg, IL 60192 Building Fastners Trade debt $6,661 2827 Anthony Lane South Minneapolis, MN 55418 Sunsource Technologies Trade debt $6,208 10286 West 70th Street Eden Prairie, MN 55344 Industrial Kiln & Dryer Trade debt $6,012 12700 Shelbyville Road Louisville, KY 40243 Chicago Tube & Iron Trade debt $5,734 2940 Eagandale Boulevard Saint Paul, MN 55121 ALOHA AIRLINES: Wants Until October 28 to Decide on Leases ---------------------------------------------------------- Aloha Airgroup, Inc., and Aloha Airlines, Inc., ask the U.S. Bankruptcy Court for the District of Hawaii to extend the period within which they can elect to assume, assume and assign or reject unexpired leases of non-residential real property until October 28, 2005. The Debtors tell the Court that the leased premises are being utilized in their operations. They don't want to make a premature rejection or assumption of a lease which may prove to be important or cumbersome to the estates. The Debtors assure the Court that they are current in all their postpetition rent obligations. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERISOURCEBERGEN CORP: Moody's Rates $900M Unsec. Notes at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned Ba2 ratings to AmerisourceBergen Corporation's (ABC's) new $500 million and $400 million offerings of senior unsecured notes. Proceeds from these transactions are expected to be used to refinance two existing senior note offerings. The company recently announced board authorization of approximately $400 million in share repurchases, which will raise total repurchase availability to $750 million. Following these announcements, Moody's affirmed ABC's existing long-term and speculative grade liquidity ratings. The rating outlook remains stable. The notes are being sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issue has been designed to permit resale under Rule 144A. ABC's Ba2 ratings are supported by: 1) solid operating cash flow relative to debt; 2) the likelihood that excess cash generated from lower working capital requirements will be used for shareholder initiatives; and 3) uncertainty associated with changes in PharMerica reimbursement. Since mid-December 2004, ABC has lowered guidance two times, due to lack of drug price increases and ongoing reductions in buy opportunities. Despite the fact that ABC had liquidated about $485 million of excess inventory during fiscal 2004, it appears that stricter enforcement of lower inventory levels as outlined under inventory management agreements has resulted in even fewer buy opportunities and lower profitability. Further reduction of inventory is resulting in approximately $1 billion in additional one-time cash flow benefits. The Ba2 ratings also reflect ABC's high reliance (85% of net earnings) on drug distribution -- a sector that continues to undergo transition due largely to a changing business model. Fee for service contract negotiations appear to be occurring, but the lack of clear incentives on the part of manufacturers to move to fee-for-service arrangements appears to be providing challenges during the transition. In addition, lack of transparency in negotiated contracts make an assessment of the impact difficult. In the meantime, Moody's believes that players in this sector have limited control over key factors affecting their margins in drug distribution. Further, Moody's believes that the ratings reflect a relatively aggressive posture toward shareholder initiatives. The company recently indicated its intention to accelerate share buybacks under its existing program. As of June 30, 2005, ABC has repurchased almost $800 million in shares during fiscal 2005. The rating agency expects ABC to continue using excess cash generated during the last quarter of fiscal 2005 for share buybacks. Under the prior senior note indenture, the company was limited in its ability to make restricted payments in the form of dividends or share repurchases. Moody's expects that the new senior notes will be governed by an indenture with greater flexibility. Recent regulations governing the Medicare Modernization Act of 2003 result in uncertainty for PharMerica, ABC's institutional pharmacy division, comprising about 15% of the company's net earnings. The new regulations appear to recognize the value added by institutional pharmacies, and Moody's believes that eliminating the need to negotiate with individual state Medicaid programs could be beneficial to this sector. However, the new regulations introduce the addition of risk-taking Prescription Drug Plans, which are likely to be health benefits companies. Under current legislation, the rating agency expects that rebates, which are currently negotiated between manufacturers and institutional pharmacies, will be moved to the PDP level. One uncertainty relates to how much leverage and, therefore, how much rebate will be retained by the institutional pharmacies. The stable outlook assumes that despite declining margins and net income, ABC should have enough flexibility in its cash position to continue buying back shares as well as to make a moderate-sized acquisition without significantly leveraging its balance sheet. Fewer buy opportunities should result not only in one-time liquidation benefits, but also less volatile working capital swings. A key factor limiting upside potential is the likelihood that ABC, along with the rest of the drug distribution sector, will be in a transition period over the near term. Prior to a ratings upgrade, ABC must demonstrate its ability to reverse profitability trends as the company weathers transitions in both its drug distribution and institutional pharmacy businesses. If profits and cash flow return to stronger levels and shareholder initiatives are not likely to result in significant increases in debt, so that operating cash flow and free cash flow to adjusted debt metrics are sustainable in the 20% and 15% range, respectively, the ratings or outlook may be raised. If ABC experiences further declines in cash flow or raise debt levels, so that operating and free cash flow to adjusted debt metrics fall below the 15% and 10% range, respectively, the ratings or outlook could be lowered. ABC's SGL-1 speculative grade liquidity rating reflects our expectation that over the next twelve months, ABC will not likely need external sources of liquidity due to the significant one-time boost in operating cash flow. Ratings assigned: AmerisourceBergen Corporation: * Ba2 $500 million new senior unsecured notes due 2015 * Ba2 $400 million senior unsecured notes due 2012. Ratings affirmed: * Ba2 corporate family rating (formerly senior implied rating) * SGL-1 speculative grade liquidity rating Ratings expected to be withdrawn (upon tender): AmerisourceBergen Corporation: * Ba2 $500 million 8 1/8% senior unsecured notes due 2008 * Ba2 $300 million 7 1/4% senior notes due 2012. AmerisourceBergen Corporation, headquartered in Valley Forge, Pennsylvania, is one of the nation's leading wholesale distributors of pharmaceutical products and related services. ARMSTRONG WORLD: Court Okays Pact Resolving Carlino's $34MM Claim ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved a stipulation inked among Armstrong World Industries, Inc., Carlino Arcadia Associates L.P., as successor to Carlino Development Group, Inc., and Wagman Construction, Inc., resolving the parties dispute regarding Carlino's $34,254,844 claim. Pursuant to the Stipulation, Carlino will be granted an allowed prepetition general unsecured claim for $388,024 and an allowed administrative expense claim for $242,934. AWI will remit to Carlino one-half of the Administrative Expense Claim. AWI will pay to Carlino the remainder of that claim on the effective date of any confirmed plan of reorganization in AWI's Chapter 11 case. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARVINMERITOR INC: Closing Shock Absorber Operation in Tennessee --------------------------------------------------------------- ArvinMeritor, Inc. (NYSE: ARM) plans to close its Light Vehicle Systems shock absorber assembly operation in Pulaski, Tenn., U.S. The company will transfer a portion of the production to its Detroit, Mich., U.S., and Toronto, Ont., Canada facilities, with remaining business being phased out by July 2006. The company met with employees today to discuss the transfer and closure plans, which will affect all 268 employees. "As announced in our second-quarter earnings release, ArvinMeritor identified the need to rationalize 11 sites, to further focus its businesses on serving customer needs and improve its return on invested capital," said Sidney Del Gaudio, vice president and general manager of LVS Undercarriage Systems. "Pulaski was one of the 11 sites chosen because its overall costs exceeded the short- and long-term returns required to sustain the business and remain competitive." ArvinMeritor's Light Vehicle Systems (LVS) business group posted $4.8 billion in sales during fiscal year 2004, and employs 17,000 people at 75 facilities in 23 countries. LVS -- a market leader in the product categories it serves -- supplies integrated systems and modules to the world's leading passenger car and light truck OEMs. With advanced technology and systems design expertise in apertures, undercarriage, wheel and emissions control, LVS combines high-quality components into cost-effective, performance- based solutions for virtually every car and light truck on the road today. ArvinMeritor, Inc. -- http://www.arvinmeritor.com/-- is a premier $8 billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. Headquartered in Troy, Mich., ArvinMeritor employs approximately 31,000 people at more than 120 manufacturing facilities in 25 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. * * * As reported in the Troubled Company Reporter on Sept. 6, 2005, Fitch Ratings has affirmed the senior unsecured 'BB+' rating and Stable Outlook of ArvinMeritor, Inc. The company has announced an exchange tender offer for up to $300 million in face amount of its $499 million 6.8% notes due 2009 and its $150 million 7-1/8% notes also due 2009. Fitch has assigned an indicative rating of 'BB+' and a Stable Outlook to the new issue. The new debt would mature in 2015 and has not yet been priced. On Sept. 4, 2005, Standard & Poor's Ratings Services assigned its 'BB' rating to ArvinMeritor Inc.'s proposed $300 million senior unsecured notes due September 15, 2015. At the same time, S&P affirmed all other long-term ratings on the company and related entities. Total consolidated debt at June 30, 2005, stood at about $1.5 billion. As reported in the Troubled Company Reporter on Sept. 2, 2005, Moody's Investors Service assigned a Ba2 rating to approximately $300 million of new unsecured notes maturing in 2015 which ArvinMeritor, Inc. intends to issue under an exchange offer to existing holders of two debt obligations. The exchange offer will be for up to $300 million par value split, based on amounts tendered, between the 7.125% senior unsecured notes maturing in March 2009 ($150 million total) and the 6.80% senior unsecured notes maturing in February 2009 (total $499 million). The Ba2 rating is level with the current Corporate Family and Senior Unsecured ratings. ASARCO LLC: U.S. Trustee Appoints 7-Member Creditors' Committee --------------------------------------------------------------- Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code, Richard W. Simmons, the United States Trustee for Region 7, appoints seven creditors to the Official Unsecured Creditors' Committee in ASARCO LLC's case: (1) Deutsche Bank Trust Company 60 Wall Street, 60-2715 New York, NY 10005 Attention: Mr. Stanley Burg Phone: (212) 250-5280 (2) Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Mr. Steve Cimalore Phone: (302) 636-6058 (3) Road Machinery, LLC 716 S. Seventh Street Phoenix, Arizona 85034 Attention: Mr. Chuck Paugh Phone: (602) 252-7121 (4) Hecla Mining Company 6500 Mineral Drive, Suite 200 Coeur d'Alene, Idaho 3815 Attention: Mr. Mike White Phone: (208) 769-4110 (5) Pension Benefit Guaranty Corporation 1200 K Street, N.W. Washington D.C. 20005-4026 Attention: Mr. Roger Reiersen Phone: (202) 326-4070 x 3704 (6) United Steelworkers Five Gateway Center Pittsburgh, Pennsylvania 15222 Attention: David R. Jury Phone: (412) 562-2545 (7) The Doe Run Resources Corporation 1801 Park 270 Drive, Suite 300 St. Louis, Missouri 63146 Attention: Mr. Lou Marucheau Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Gets Court Nod to Employ Bracewell as Special Counsel ----------------------------------------------------------------- ASARCO LLC sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of Texas to employ Bracewell & Giuliani LLP as special litigation counsel pursuant to Section 327(e) of the Bankruptcy Code, nunc pro tunc to Aug. 9, 2005. As reported in the Troubled Company Reporter on Aug. 31, 2005, Bracewell represented the company as environmental counsel, advising ASARCO on many issues, including environmental litigation. ASARCO will compensate Bracewell for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates: Professionals Hourly Rate ------------- ----------- Attorneys $400 - $200 paraprofessionals $75 ASARCO will also reimburse the firm for actual and necessary out-of-pocket expenses. Mr. Groten discloses that, within the 90-day period preceding the commencement of ASARCO's bankruptcy case, Bracewell received payment from ASARCO of $293,997 for professional services rendered and expenses incurred before the Petition Date. In addition, although Bracewell has a general unsecured claim against ASARCO for about $163,598 for prepetition services rendered for which the firm did not receive payment, it does not have or represent any interest adverse to the Debtor or its estate on the matters for which it is being retained as special counsel. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Court OKs Retention of Quarles to Tackle Labor Issues ----------------------------------------------------------------- ASARCO LLC sought and obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ Quarles & Brady Streich Lang as special litigation counsel for labor and employment issues, nunc pro tunc to Aug. 9, 2005. As previously reported in the Troubled Company Reporter on Aug. 31, 2005, Q&B represented the company in collective bargaining and in related labor matters and has provided advice and counsel to ASARCO on labor relations matters, including representing ASARCO at the Copper Group and Ray bargaining tables for contracts to replace those that expired June 30, 2004, and June 30, 2005. In addition, Q&B has defended ASARCO in numerous cases before the National Labor Relations Board filed in 2005 by the labor unions representing ASARCO's Arizona and Texas employees. The Debtor proposes to compensate Q&B for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates. The Debtor will also reimburse the firm for actual and necessary out-of-pocket expenses. Q&B's hourly rates for L&E lawyers at its Phoenix office range from $185 to $395. Q&B's current customary hourly rates for paraprofessionals range from $130 to $160. The professionals at Q&B who will primarily represent the Debtor and their hourly rates are: Professional Position Hourly Rate ------------ -------- ----------- Jon E. Pettibone Partner $365 Lisa Duran Partner $290 Dawn Valdivia Associate $200 The fee arrangement with ASARCO provides for a $45 discount to Mr. Pettibone's fee. The fee arrangement also provides for a $30,000 advance to be replenished monthly. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASPECT SOFTWARE: Moody's Places B1 Rating on $475 Million Debts --------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Aspect Software Inc., a provider of contact center software products, applications and services. The ratings assigned are Corporate Family rating of B2 and B1 for the proposed secured revolver and first lien term loan facility. There is also a second lien term facility which Moody's was not asked to rate. Proceeds of the term loan and an unrated secured lien facility will be used to finance the $788 million acquisition of Aspect Communications Corporation by Concerto Software Inc. with the new company to be named Aspect Software Inc. These first time ratings have been assigned: * Corporate Family Rating - B2 * $ 50 million revolving credit facility due 2010 - B1 * $ 425 million senior secured term loan due 2010 - B1 The ratings outlook is Stable. The ratings reflect: 1) relatively mature nature of the call center software business; 2) ongoing competition with larger, better financed competitors, despite the company's increased scale and potential and possible leadership positions in key products; 3) possible integration risks as Heritage Concerto making its biggest acquisition thus far over the past 18 months; and 4) high leverage resulting from the combination with the potential for additional leverage from possible leveraged dividends of the company's venture investors. The ratings also consider: 1) the combined entity will become one of the largest contact center software providers with product strengths in each of the key contact center categories; 2) diversified client base of over 5,000 installed customers across a wide range of industry sectors; 3) good revenue and cashflow visibility with reasonable software maintenance contract renewal rates; and 4) reasonable credit protection measures with free cashflow representing over 10% of combined debt amount. The contact center industry is relatively mature, with growth rates generally expected to track overall economic growth rates. New offshoring volume often times takes away existing domestic volume and thus does not necessarily contribute to the overall growth of the sector. Organic revenue growth of the merged company is expected to be measured, net of market share gains. Both Heritage Concerto and Aspect provide software products and services to the contact center industry. The combined company will become one of the largest software service providers in the sector. Market share figures in key products are expected to be 30%. Aspect on a combined basis along with Avaya will be the two largest competitors in the contact software sector. However, both Avaya and another competitor Nortel are bigger in size though neither is a "pure play" in the contact center software business. The combined company is also expected to become a more integrated service provider, combining inbound (automatic call distribution/ACD) strength of Heritage Aspect's business, outbound (predictive dialer/PD) strength of Heritage Concerto's business, and workforce management software. The benefits of one stop shopping are yet to be proven, but could potentially enhance the merged company's ability to maintain market share. The current transaction represents the fifth acquisition for Heritage Concerto over the past 18 months and it is by far the largest. Successful integration is an important factor in future rating considerations. The combined company will have a diversified customer base, with over 5,000 customers. Top 10 and 20 customers represent about 22% and 30% of total revenue, respectively. The customer base is also diversified across vertical markets and Heritage Aspect and Concerto also serve some of the largest outsourcing contact centers in India. Although there is some customer overlap, revenue cannibalization is not expected to be significant due partly to different product strengths of heritage Concerto and Aspect. The combined company benefits from good revenue visibility due to the recurring nature of its maintenance contracts, typical of a software provider. Renewal rates are in the high 80% range, which is still reasonable. Pro-forma leverage is about 3.7 x EBITDA, assuming management projected cost synergy can be achieved. The amount of synergy assumed here appears to be consistent with transaction of this kind. Interest coverage is satisfactory at 3.2x. One element of potential risk is a possible leveraging event as a result of the eventual exit of the company's venture investors. Golden Gate Capital and Oak Investment combined own more than 75% of the company. The B1 ratings on the first lien revolver and term loan facility are notched above that of the Corporate Family rating. This is a reflection of the first priority of the first lien piece in the pro forma capital structure and the credit support provided by $250 million second lien tranche, unrated by Moody's and the fresh $200 million equity contribution from the sponsors. While the company's balance sheet is comprised largely of intangible assets of goodwill and IP, enterprise value should provide adequate protection and cushion for the first lien holders. Moody's was not asked to rate the second lien piece which is expected to be taken up by a club of private lenders. Moody's also notes that the cash flow of the U.S. guarantors represent over 80% of consolidated cash flow, and that IPs largely reside in the U.S. entities. The ratings could be positively influenced if the company can successfully integrate its operations; de-leverage and enhance credit metrics. Conversely, the ratings could be negatively impacted if leverage and coverage ratios, currently modest for its rating category, were to worsen as a result of poor operating results and/or a further leveraging event. Concerto Software Inc. is headquartered in Westford, Massachusetts with operations across the Americas, Europe and Asia Pacific. Concerto provides products and services that enable business processes including customer service, collections, and sales and telemarketing for in-house and outsourced contact centers. Aspect Communications Corp. is headquartered in San Jose, California, with offices in countries around the world. The company develops, markets, licenses and supports an end-to-end, integrated suite of contact center software applications that support: * customer communications, * customer and contact center information; and * workforce productivity. LTM revenue for the combined company is $636 million. ATA AIR: Chicago Creditors' Move for Panel Appointment Draws Fire ----------------------------------------------------------------- As reported in the Troubled Company Reporter on August 29, 2005, the Ad Hoc Committee of unsecured creditors, which holds $800,000 in claims against Chicago Express Airlines, Inc., asked the U.S. Bankruptcy Court for the Southern District of Indiana to direct the U.S. Trustee to appoint an official committee of unsecured creditors in Chicago Express' chapter 11 case. The Chicago Express creditors allege that they have been denied adequate representation in the ATA Airlines, Inc. and its debtor-affiliates' jointly administered bankruptcy cases. Aaron L. Hammer, Esq., Esq., at Freeborn & Peters LLP, in Chicago, Illinois, tells the U.S. Bankruptcy Court for the Southern District of Indiana that neither the non-Chicago Express Debtors nor the present Creditors Committee have taken any action to avoid the $481 million in guarantee obligations which Chicago Express was required to provide to certain bondholders on account of the non-Chicago Express Debtors' various prepetition financing transactions, although Chicago Express did not benefit from the Guarantees. Mr. Hammer points out that, unsurprisingly, the Creditors Committee -- which has two ATA bondholder members that hold the Chicago Express Guarantee claims -- has not clamored for avoidance of the fraudulent Guarantees. In addition, the non-Chicago Express Debtors siphoned significant value from Chicago Express in the period immediately prior to the Petition Date, which resulted in the $15.6 million net intercompany receivable due from ATA Airlines, Inc., to Chicago Express. Objections (1) Creditors Committee The Official Committee of Unsecured Creditors opposes the request of the Ad Hoc Committee for the appointment of an official creditors committee of Chicago Express Airlines, Inc., now known as C8 Airlines, Inc. C.R. Bowles, Jr., Esq., at Greenebaum, Doll & McDonald, PLLC, in Louisville, Kentucky, asserts that the interests of all of the Debtors' creditors are being adequately represented. He says that the Creditors Committee has taken a very active role in the Debtors' Chapter 11 cases and has performed its fiduciary duties. Mr. Bowles points out that the Ad Hoc Committee, in its accusation against the Creditors Committee's inaction with respect to the Prepetition Guarantees and the Intercompany Receivable, ignores the findings of Kenneth Malek, the Examiner appointed by the U.S. Trustee, that: (a) the costs and time required to resolve the complex issue of the validity of the guarantees by Chicago Express are "inconsistent with the value and time sensitivities of the [estate of Chicago Express]"; and (b) Chicago Express has a valid prepetition receivable from ATA Airlines of approximately $17 million, that Chicago Express owes ATA Holdings Corp. a prepetition amount of approximately $1.9 million, and that Chicago Express owes ATA Airlines a postpetition amount of approximately $2.4 million. Mr. Bowles adds that, based on a straight forward application of the absolute priority rule, the Chicago Express creditors may not receive any distribution from the Chicago Express Estate as there may not be sufficient funds in that Estate to pay its third party administrative creditors. Even if the prepetition guarantees and the intercompany receivables are invalidated, this would not produce a recovery for the Chicago Express creditors unless the Estate has sufficient funds to pay the administrative claims in full, Mr. Bowles avers. Moreover, the Creditors Committee would be violating its fiduciary duties to the Chicago Express creditors if it acted as the Ad Hoc Committee is suggesting and pursued the litigation at this time, further dissipating the remaining assets of the Chicago Express Estate. According to Mr. Bowles, contrary to the Ad Hoc Committee's claims, the Creditors Committee's composition clearly shows that the bondholders do not dominate the Creditors Committee. The Committee is composed of two trade creditors -- Flying Food Group, LLC and Airport Terminal Services -- and two unions -- ALPA and the Association of Flight Attendants -- in addition to three entities that represent the interests of the Debtors' bondholders -- John Hancock Funds and Loeb Partners plus Wells Fargo Bank, N.A. as indenture trustee. There are other avenues for the Chicago Express creditors to participate in the Debtors' restructuring, Mr. Bowles notes. Section 1109 of the Bankruptcy Code allows creditors, including the Ad Hoc Committee to be heard on any issue. In addition, in the event of a filing of a plan of liquidation for Chicago Express, the Chicago Express creditors will be able to object to its terms and may vote for or against the plan. Accordingly, the Creditors Committee asks the Court to deny the Motion. (2) Debtors The Debtors echo the sentiments of the Creditors Committee and object to the request for the creation of an official creditors committee for Chicago Express. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, asserts that the Motion is untimely, unfounded and unsupported by facts. Ms. Hall tells the Court that there may be no recovery to unsecured creditors of Chicago Express, notwithstanding the presence or avoidance of certain prepetition guarantees. She points out that Chicago Express' estate is slightly more than $1 million based on the sale of its assets. Its remaining assets are an engine, certain avoidance actions, and two postpetition receivables related to services to Indiana cities and that is in negotiations. According to Ms. Hall, ATA Airlines' postpetition receivable has continued to grow as ATA has continued to fund the postpetition administrative expenses of Chicago Express, to attempt to maximize the return to its creditors. Ms. Hall argues that the Chicago Express creditors will not be well served by expending what proceeds there are to pay professionals of another committee. She warns that the costs may guarantee administrative insolvency of the Chicago Express estate. Moreover, the issues being raised in the Motion have been raised and asserted numerous times in pleadings filed by NatTel, LLC, including an appeal of the Court's order authorizing the sale of Chicago Express assets, which appeal was later withdrawn. It is not clear from the Motion whether NatTel is a member of the "ad hoc" committee identified, but the issues raised are the same. The time and energy expended in attending to these issues over and over again wastes resources of all the estates, including that of Chicago Express. In addition, the Debtors believe that the request made in the Motion was earlier made of the U.S. Trustee, who declined to appoint an additional committee for Chicago Express, though he did offer to add a trade creditor of Chicago Express to the Creditors Committee. This offer was declined, says Ms. Hall. Pursuant to Section 1102(a) of the Bankruptcy Code, the appointment of an additional committee is completely discretionary and depends on the facts of each case. Ms. Hall reminds the Court that nothing raised in the Motion requires the appointment of an additional committee, and the attendant expense, complexity, and waste of resources that the appointment would entail. 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. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) AXTEL SA: Moody's Upgrades Corporate Family Rating to B1 from B2 ---------------------------------------------------------------- Moody's Investors Service has upgraded Axtel, S.A. de C.V.'s corporate family rating to B1 from B2 to reflect Axtel's improved credit metrics as a result of solid sales and EBITDA growth. The same change to B1 from B2 was made to the senior unsecured rating for the Mexican corporate. The outlook on the ratings is stable. This issue was affected by Moody's upgrade: -- US$250 million of 11% Senior Unsecured Notes due 2013 Axtel's ratings upgrade is supported by its strong and consistent increase in sales over the past two years, as well as 2004 growth in EBITDA, which Moody's expects will be, by FYE 2005, equivalent to over 4 times cash interest expenses. Growth in EBITDA has also strengthened the company's financial position, as total debt dropped from 2.9 times EBITDA in 2003 to 1.6 times at FYE 2004. The consistent earnings growth reflects Axtel's successful strategy of: 1) assuring its access to high-profile subscribers such as business customers and large residential developments; and 2) choosing the right technology (wireless local loop) to compete against incumbent Telmex. This strategy, coupled with sharp operating expense management, has generated the means for funding the expansion of the company's network; the consequent increase in telephone lines (530,000 as of June 2005) has more than offset expected reductions in the average revenue per user. The ratings also benefited from Axtel's consistent market share gains, from 9% in 2003 to the current 10.9% in the business customers segment; this represents 38.9% of the company's total lines and approximately 69% of revenues as of June 2005. The company also has a sound maturity profile, as no significant debt matures before 2013, and strong sponsorship from large shareholders. Axtel has also reduced its foreign exchange exposure, as it has entered into cross currency swaps to hedge interest payments on the $250MM senior notes up to 2008. The company's ratings are restrained, however, by low free cash flow generation, declining prices in traditional telephone services and by the uncertainties around any possible acquisition of a related or non-related business, which could impact the company's leverage and profitability. Despite the recent sales growth performance, it is unlikely that the company will be able to post similar rates of sales increase in the years to come, due to competition from the dominant telephone carrier and the effects of wireless substitution, which have been forcing a reduction in tariffs. However, Moody's expects that the company's strategy of targeting business customers, as well as new residential developments, will generate double digit sales growth for the coming years. The rating outlook is stable as per Moody's belief that Axtel's sales, EBITDA and cash generation will increase mostly as a consequence of the development of the Mexican fixed line market coupled with market share gains in existing or new cities. Moody's rating also recognizes that the company is expanding its network to support revenue growth in a cost-effective manner. Moody's also regards Axtel as well positioned, from a cash and technology perspective, to participate in the market for fixed line telecommunication services, which will eventually offer bandwidth for video at home and home networking, besides the current Internet access. Factors that could contribute to upward pressure on the B1 rating would be if the company posts free cash flow in amounts that reduce its leverage exposure, as demonstrated by FCF to total debt higher than 10% and if it increases interest coverage, as per EBITDA over 6.5 times interest expense. Should credit metrics be impacted by an acquisition that increases leverage, should projected subscriber base growth slow sharply, or should average revenue per user drop more than the expected annual decline of 10%, the rating agency would place pressure on the rating. Axtel, with headquarters in the city of Monterrey, Mexico, is a competitive local telephone company providing bundled products including voice, data and Internet services. BGK SECURITY: Case Summary & Largest Unsecured Creditors -------------------------------------------------------- Debtor: BGK Security Services, Inc. 7810 South Claremont Avenue Chicago, Illinois 60620 Bankruptcy Case No.: 05-36263 Type of Business: The Debtor is a security agency. Chapter 11 Petition Date: September 8, 2005 Court: Northern District of Illinois (Chicago) Judge: Jack B. Schmetterer Debtor's Counsel: Richard N. Golding, Esq. Weinberg Richmond LLP 333 West Wacker Drive Chicago, Illinois 60606 Tel: (312) 845-2512 Fax: (312) 807-3903 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million A full-text copy of the Debtor's 8-page List of Unsecured Creditors is available for free at: http://bankrupt.com/misc/BGKSecurityListofUnsecuredClaims.pdf BIO-ONE CORP.: Fred Zeidman Named Chief Restructuring Officer ------------------------------------------------------------- Bio-One Corp. (Pink Sheets:BICO) has named Fred Zeidman as its Chief Restructuring Officer of the Company. Mr. Zeidman's most recent successes include acting as Chairman of Seitel, Inc. and overseeing the restructuring of Seitel, Inc. in Chapter 11, and the recovery of nearly a quarter of a billion dollars in damages for the shareholders of AremisSoft. "Mr. Zeidman's skills are exactly what the shareholders of Bio-One need. We are fortunate to have his services for the Company in this critical period," stated John Ruddy, Director of Bio-One Corporation. Mr. Zeidman added, "Bio-One has a significant, multi-million dollar investment in Interactive Nutrition International, Inc. The Company intends to vigorously protect the interests of its shareholders and creditors in INII." About Fred S. Zeidman Mr. Zeidman was appointed Chairman of the United States Holocaust Memorial Council by President George W. Bush in March 2002. The Council, which includes 55 Presidential-appointed members and ten members from the U.S. Congress, is the governing board of the United States Holocaust Memorial Museum. A prominent Houston-based business and civic leader, Mr. Zeidman is Chairman of the Board of Seitel, Inc. and Chairman of the Board of Corporate Strategies, Inc. In 2004 he joined Greenberg Traurig as Senior Managing Director of Governmental Affairs. Mr. Zeidman also currently serves as a director of Prosperity Bank in Houston. Mr. Zeidman holds a Bachelor's degree from Washington University in St. Louis, and a Master's in Business Administration from New York University. Mr. Zeidman's Prior Posts Seitel is a leading provider of seismic data and related geophysical expertise to the petroleum industry. Their products and services are used by oil and gas companies to assist in the exploration for and development and management of oil and gas reserves. AremisSoft Corporation was a publicly traded company involved in software manufacturing that was the victim of a massive fraud at the hands of its former executive, which caused over $500 million in shareholder losses. As Trustee appointed by the United States District Court of the District of New Jersey, Mr. Zeidman has been charged with investigating and recovery damages on behalf of the former shareholders. To date the trustees have recovered in excess of $240 million. Bio-One Default Bio-One is currently in default under the Secured Convertible Debenture for its failure to make the required payments and for its failure to properly perfect Cornell Capital's security interest in accordance with in the Secured Convertible Debenture and the Security Agreement. Pursuant to this default, Cornell Capital Partners, LP, may foreclose on all of the assets of Bio- One, including, but not limited to, all of Bio-One's ownership interests in all of its subsidiaries. Therefore, as a result of a foreclosure, Bio-One would no longer have an ownership if any of its subsidiaries and could be forced to curtail or cease its business operations. About Bio-One Headquartered in Winter Park, Florida, Bio-One Corporation manufactures nutritional supplements that it markets to healthcare providers. Bio-One's latest balance sheet, dated Sept. 30, 2004, shows $52 million in assets and $40 million in liabilities. Grant Thornton cautions that these financial statements are unreliable. BOMBARDIER RECREATIONAL: Moody's Rates $50M Sr. Sec. Loan at Ba3 ---------------------------------------------------------------- Moody's Investors Service upgraded Bombardier Recreational Products' (BRP) senior secured revolving credit facility to Ba3 from B1 and assigned a Ba3 rating to BRP's US $50 million senior secured term loan. At the same time, Moody's affirmed both BRP's B1 corporate family rating and its B3 subordinated notes rating, in addition to withdrawing the rating on the US $275 million senior secured term loan, which was repaid with the proceeds from the new term loan and cash on hand. The ratings outlook is stable. The ratings upgrade of the senior secured revolving credit facility to Ba3 reflects the improved expected loss prospects of the debt in light of the reduction in the term loan outstanding and its priority position in the capital structure and the strong asset collateralization, namely inventory, accounts receivable and fixed assets and BRP's strong brand value. The overall ratings of BRP reflect its strong cash flow, which, together with the $40 million of proceeds from the sale of its utility business, has enabled BRP to repay close to US $230 million of funded debt since the beginning of 2004. In addition, the ratings of BRP reflect the company's strong brand names and market positions in: * snowmobiles, * personal watercraft, * sport boats, and * marine engines. BRP's ratings are also supported by management's emphasis on cost controls and the company's generally conservative financial profile. The ratings further reflect the company's vulnerability to: * increased energy costs; * economic cycles; * foreign exchange fluctuations; * seasonal spending patterns; * the discretionary nature of the demand for its products; and * the risks associated with BRP's revised ATV strategy of selling to the sports, recreational-utility and youth enthusiasts. Management's restructuring actions to rationalize capacity, consolidate distribution centers and reduce manufacturing costs are credit positives, yet the increase in oil prices and the potential cascading effect on consumer spending for recreational products is a risk. Moody's believes the company's liquidity profile with modest cash balances ($35 million at April 30, 2005), minimal amortizing debt, an undrawn $250 million revolver, annual operating cash flow of around $100 million, suspension of the defined benefit pension plan and access to bank and capital markets, should provide BRP with adequate liquidity to meet the significant seasonal working capital needs of its business. The stable outlook is predicated on Moody's expectation that BRP will continue to repay debt with excess cash flow and that BRP will maintain its leading market positions and maintain or increase sales and profits through new product introductions, manufacturing optimization efforts, and low-cost sourcing arrangements. The stable outlook also reflects Moody's belief that BRP's improving credit metrics with adjusted EBIT margins (adjusted EBIT/revenue) for the LTM ended April 2005 of 5.5% (up from 2.6% in January 2004) and leverage (adjusted debt/adjusted EBITDA) of 2.6x (down from 6.5x in January 2004) will substantially be maintained even if demand for its products moderates. In accordance with Moody's Global Standard Adjustments, these analytical adjustments were made to BRP's reported numbers: * capitalize operating leases; * expense unrecorded stock compensation (and adjust cash flow for the income tax benefit); * add back the uncollected portion of securitized receivables; and * record an obligation for BRP's potential contingent liability for floor plan financing. A ratings upgrade could be considered if the company's margins improve closer to high single or low double digit and retained cash flow to adjusted debt is maintained at or above its current level of about 20%. However, an upgrade would also be contingent upon the assumption that BRP can maintain its improved credit profile within the normal cyclical and seasonal patterns of the industry and potential decrease in consumer spending. Given the continuing improvements in leverage, Moody's does not anticipate downward rating pressure outside of event risk associated with acquisitions or a severe pull back in demand in the marine industry. However, an increase in leverage to around 4x and a retreat in EBIT margins to the low single digits combined with a change in its strategy or a severe downturn in consumer spending could cause Moody's to revise the ratings down. The Ba3 rating on BRP's term loan reflects its priority in the capital structure as supported by subsidiary guarantees and collateral pledges. BRP is the borrower under the term loan, which is guaranteed by all U.S. and Canadian subsidiaries. The term loan is secured by substantially all of the assets of the borrowers and guarantors. Because of these benefits, along with strong asset coverage and brand value, the rating of the term loan is notched one level above the B1 corporate family rating. In connection with the new term loan, the company amended the secured credit facility (credit facility includes the revolver and term loan). The amended facility reduced the pricing of the revolver, eliminated the excess cash flow sweep of the term loan and removed the fixed charge covenant; the amended credit facility still contains customary limitations and financial covenants governing maximum total leverage, minimum interest coverage, and maximum capital expenditures. The term loan amortizes 1% per year with a bullet payment due on maturity. Rating upgraded: * Senior secured revolver to Ba3 from B1; Rating assigned: * US $50 million senior secured term loan at Ba3; Ratings affirmed: * US $200 million subordinated notes at B3; * Corporate family rating at B1. With corporate headquarters in Valcourt, Quebec, Bombardier Recreational Products Inc. is a leading designer, manufacturer, and distributor of motorized recreational products worldwide. Net sales for the twelve-month period ended April 2005 were approximately C$2.4 billion. BRICE ROAD: Wants to Hire Bailey Cavalieri as Bankruptcy Counsel ---------------------------------------------------------------- Brice Road Developments, L.L.C., asks the U.S. Bankruptcy Court for the Southern District of Ohio for permission to employ Bailey Cavalieri LLC as its general bankruptcy counsel. Bailey Cavalieri will: a) advise the Debtor of its rights, powers, and duties as a debtor and debtor-in-possession in continuing to operate and manage its business and property; b) prepare on behalf of the Debtor all necessary and appropriate applications, motions, draft orders, other pleadings, notices, schedules, and other documents, and review all financial and other reports to be filed in its chapter 11 case; c) advise the Debtor concerning responses to, applications, motions, other pleadings, notices, and other papers that may be filed and served in its chapter 11 case and assist in the negotiation and documentation of financing agreements, cash collateral orders and related transactions; e) review the nature and validity of any liens asserted against the Debtor's property and advise it concerning the enforceability those liens; f) advise the Debtor concerning actions that it might take to collect and recover property for the benefit of its estate and assist in connection with any potential property dispositions; g) counsel the Debtor in connection with the formulation, negotiation, and promulgation of a plan of reorganization and its related documents; h) advise the Debtor concerning executory contract and unexpired lease assumptions, assignments, and rejections and lease restructurings and assist in reviewing, estimating and resolving claims asserted against the Debtor's estates; i) commence and conduct any and all litigation necessary to assert rights held by the Debtor, protect assets of the Debtor's chapter 11 estate and further the goal of completing the Debtor's successful reorganization; and j) perform all other necessary legal services to the Debtor in connection with its chapter 11 case. Yvette A. Cox, Esq., a Member of Bailey Cavalieri, is one of the lead attorneys for the Debtor. Ms. Cox disclosed that her Firm received a $10,000 retainer. Ms. Cox charges $325 per hour for her services. Ms. Cox reports Bailey Cavalieri's professionals bill: Designation Hourly Rate ----------- ----------- Members $260 - $445 Associates & Counsel $175 - $270 Paralegals $140 - $145 Professional Designation Hourly Rate ------------ ----------- ----------- Timothy A. Riedel Counsel $270 Matthew T. Schaeffer Associate $230 Timothy B. McGranor Associate $220 Adam J. Biehl Associate $210 Craig R. Hartpence Paralegal Assistant $145 Beth A. Dannaher Paralegal Assistant $140 Bailey Cavalieri assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Dublin, Ohio, Brice Road Developments, L.L.C., owns Kensington Commons, a 264-unit apartment complex located outside of Columbus, Ohio. The Company filed for chapter 11 protection on Sept. 2, 2005 (Bankr. S.D. Ohio Case No. 05-66007). When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. BRICE ROAD: Section 341(a) Meeting Scheduled for October 13 ----------------------------------------------------------- The U.S. Trustee for Region 9 will convene a meeting of Brice Road Developments, L.L.C.'s creditors at 10:00 a.m., on Oct. 13, 2005, at the Office of the US Trustee, 170 North High Street, Suite 204 Columbus, Ohio 43215. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Dublin, Ohio, Brice Road Developments, L.L.C., owns Kensington Commons, a 264-unit apartment complex located outside of Columbus, Ohio. The Company filed for chapter 11 protection on Sept. 2, 2005 (Bankr. S.D. Ohio Case No. 05-66007). Yvette A Cox, Esq., at Bailey Cavalieri LLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. CAPITAL AUTOMOTIVE: Moody's Reviews Ba1 Preferred Stock Rating -------------------------------------------------------------- Moody's Investors Service placed its ratings of Capital Automotive REIT on review for possible downgrade. This review was prompted by CARS' announcement that it has agreed to be acquired for cash by clients advised by DRA Advisors LLC. The total transaction value is approximately $3.4 billion, including the assumption of CARS indebtedness and preferred shares. CARS' Series A and Series B Cumulative Redeemable Preferred Shares will remain outstanding after the close of the acquisition as preferred shares of CARS. The closing of the transaction, which is expected to occur in late 2005 or early 2006, is subject to the approval of the REIT's common shareholders and other customary closing conditions. Holders of common limited partnership interests in Capital Automotive L.P., the REIT's operating partnership, will be given the choice of either receiving cash, or continuing their interest in the operating partnership indirectly through a membership interest in an affiliate of DRA. Moody's remarked that although the precise capital structure of CARS subsequent to this transaction is not yet clear, it is likely that leverage, particularly secured leverage, will increase materially, while other credit metrics are likely to deteriorate. Thus, a rating downgrade could be more than one notch. In its review, Moody's will focus on CARS' pro forma capital structure -- specifically, overall leverage and the use of secured debt -- and strategic profile. Ratings under review for possible downgrade are: Capital Automotive REIT: * Senior unsecured debt rated Baa3 * preferred stock rated Ba1 Capital Automotive REIT [NasdaqNM: CARS], headquartered in McLean, Virginia, is a self-administered, self-managed real estate investment trust. The REIT's strategy is to acquire real property and improvements used by operators of multi-site, multi-franchised automotive dealerships and related businesses. As of June 30, 2005, the REIT had real estate investments primarily consisting of interests in 345 properties, representing 509 automotive franchises in 32 states. The properties are leased under long-term, triple-net leases with a weighted average initial lease term of approximately 15.1 years. Approximately 76% of the REIT's real estate portfolio is located in the top 50 metropolitan areas in the USA in terms of population, and 73% of the REIT's real estate portfolio is invested in properties leased to the "Top 100" dealer groups as published by "Automotive News." The REIT reported assets of $2.4 billion and shareholders equity of more than $1 billion at June 30, 2005. CARDTRONICS INC: June 30 Balance Sheet Upside-Down by $49.8 Mil. ---------------------------------------------------------------- Cardtronics, Inc., reported its financial results for the quarter ended June 30, 2005. For the second quarter of 2005, revenues totaled $69.2 million, representing a 99.4% increase over the $34.7 million in revenues recorded during the second quarter of 2004. Net income for the second quarter of 2005 totaled approximately $200,000, compared to approximately $800,000 million for the same period in 2004. The quarterly results for both periods include write-offs of deferred financing costs totaling $2.5 million in each period, resulting from the refinancing of the Company's bank credit facilities in May 2005 and June 2004. The year-over-year increase in revenues was primarily due to the Company's acquisition of the E*TRADE ATM portfolio in June 2004, and, to a lesser extent, additional acquisitions consummated during the first six months of 2005, including: * the BAS Communications, Inc. ATM portfolio in March 2005; * the Neo Concepts, Inc. ATM portfolio in April 2005; and * Bank Machine Limited in the United Kingdom in May 2005. The decrease in net income was primarily due to the additional interest, depreciation and amortization expense amounts associated with the aforementioned acquisitions. For the six months ended June 30, 2005, revenues totaled $127.5 million, representing an increase of 88.3% over the $67.7 million in revenues recorded during the first six months of 2004. Net income for the six months ended June 30, 2005, totaled $2.1 million, compared to $1.1 million for the same period in 2004. As was the case with the quarterly results outlined above, the year-over-year increase in revenues was due primarily to the E*TRADE ATM portfolio acquisition consummated in June 2004. The year-over-year increase in net income was largely due to the fact that the 2004 results included an additional $1.3 million, net of tax, in stock compensation charges when compared to the 2005 results. The 2005 results are not fully reflective of the operations of the acquired Neo Concepts, Inc. portfolio (which was in transition to the Company's operating platform during the second quarter) or of Bank Machine Limited, which has only been included in the Company's financial results for two months during the second quarter. "Cardtronics has achieved a tremendous amount of progress with respect to its growth initiatives during the first six months of 2005," remarked Jack Antonini, Chief Executive Officer of Cardtronics. "With the Bank Machine acquisition, our first outside of the United States, we have demonstrated our commitment to expanding our domestic ATM operating expertise to selected international markets. Additionally, we have continued to make great strides domestically with our bank-branding program, as evidenced by the recent agreement with JPMorgan Chase to brand our ATMs located in Duane Reade drugstores throughout the New York metropolitan area. Combined, we have laid a solid foundation for our future domestic and international growth initiatives." Headquartered in Houston, Texas, Cardtronics Inc. -- http://www.cardtronics.com/-- an owner/operator of ATMs with a nationwide U.S. network of more than 25,000 locations operating in every major market and in all 50 states as well as 1,000 locations throughout the United Kingdom. Major U.S. merchant-clients include A&P, Albertson's, Amerada Hess, Barnes & Noble College Bookstores, BP Amoco, Chevron, Costco, CVS/pharmacy, ExxonMobil, Duane Reade, Rite Aid, SSP/Circle K, Sunoco, Target and Walgreens. Cardtronics' unique ATM footprint enables it to offer ATM branding opportunities to financial institutions across the USA. Branded ATMs deployed at Cardtronics' major merchant-clients increase account access convenience for the depositors of these financial institutions as well as customer foot traffic for the merchant- clients. At June 30, 2005, Cardtronics Inc.'s balance sheet showed a $49,760,000 stockholders' deficit, compared to a $2,164,000 deficit at Dec. 31, 2004. CATHOLIC CHURCH: Spokane Begins Appeal of Parish Property Decision ------------------------------------------------------------------ The Diocese of Spokane and 22 members of the Association of Parishes in Washington filed separate notices advising Judge Williams that they will take an appeal to the U.S. District Court for the Eastern District of Washington from the Bankruptcy Court's order granting the Committee of Tort Litigant's request for partial summary judgment and finding that certain properties that the Diocese "held for another" actually constitute property of the Diocese's estate. The Diocese and the Association of Parishes and certain related schools and ministries will also take an appeal from the Bankruptcy Court's order denying the Association's request to dismiss the Litigants Committee's complaint for lack of standing and lack of jurisdiction. Saint Phillips Villa, Inc., filed a joinder to the Association's appeal. Saint Phillips holds a $2,064 claim against Spokane. Spokane will also ask the District Court to determine whether Judge Williams erred in her decision denying Spokane's cross- motion for summary judgment. The 22 members of the Association of Parishes are: 1. Assumption Church Spokane, 2. Cathedral of Our Lady of Lourdes Spokane, 3. Mary Queen of Heaven Church Spokane, 4. Our Lady of Fatima Parish Spokane, 5. Sacred Heart Church Spokane, 6. St. Aloysius Church Spokane, 7. St. Ann Church Medical Lake, 8. St. Anne Church Spokane, 9. St. Anthony Church Spokane, 10. St. Augustine Church Spokane, 11. St. Charles Church Spokane, 12. St. Francis Assisi Church Spokane, 13. St. Francis Xavier Church Spokane, 14. St. John Vianney Church Spokane Valley, 15. St. Joseph Church Colbert, 16. St. Joseph Church Otis Orchards, 17. St. Joseph Church Spokane, 18. St. Mary Church Spokane Valley, 19. St. Mary Presentation Church Deer Park, 20. St. Peter Church Spokane, 21. St. Rose of Lima Cheney, and 22. St. Thomas Moore Parish Spokane A complete list of the members of the Association of Parishes and the schools and ministries is available for free at: http://bankrupt.com/misc/assoc_parishes_schools_ministries.pdf The parishes, schools and ministries are represented by John D. Munding, Esq., at Crumb & Munding, P.S., in Spokane, and Ford Elsaesser, Esq., at Elsaesser Jarzabek Anderson Marks Elliott & McHugh, in Sandpoint, Idaho. Spokane & Parishes Want Order Stayed The Diocese of Spokane, the Association of Parishes and the related schools and ministries seek leave from the Bankruptcy Court to file appeals from Judge Williams' Orders. The 22 members of the Association of Parishes also ask the Bankruptcy Court to stay the Orders pending the appeals. Shaun M. Cross, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, explains that the Bankruptcy Court's Orders are of great significance to the Diocese and other defendants. Unless reversed by an appellate court, the Orders have the effect of creating a "law of the case" which would result in the Diocese being forced to submit a plan of reorganization that includes property in which it has no beneficial interest. That plan, Mr. Cross points out, would pit the Diocese against the true beneficial owners of the disputed property, the schools and parishes, in violation of the civil and canonical trust relationship between the Diocese, on the one hand, and the parishes and schools on the other. The Bankruptcy Court's decision will lead to the disruption of Diocese's reorganization process and subject all non-debtors in other bankruptcies to unrestricted litigation advanced by creditors committees acting as de facto trustees, says John D. Munding, Esq., at Crumb & Munding, P.S., in Spokane, Washington. According to Mr. Munding, the Bankruptcy Court's decision granting summary judgment substantially affects and implicates rights of the 22 Parishes, in property, by divesting them of their interests in property without considering evidence properly before the Bankruptcy Court. If not corrected now, Mr. Munding says Judge Williams' decision will prevent all the defendants in the case from defending their interests in property. "Before the Court was substantial evidence raising issues of material fact with respect to the existence of a trust relationship between the Diocese of Spokane and the non-debtor defendants. The Court did not rule the evidence was inadmissible or irrelevant, rather it refused to consider the evidence, relying instead on selected portions of the evidence to justify an opinion contrary to the facts demonstrated by the historical documents, statements and practices of the parties," Mr. Munding says. Under this judicial process, the Parishes have been denied their right to be heard in a meaningful way, Mr. Munding argues. Mr. Munding also points out that, by denying the Association of Parishes' Motion to Dismiss, the Bankruptcy Court has unilaterally upset the carefully drafted congressional legislation codified in the Bankruptcy Code. "The Order is of great significance to the 22 Parishes because, unless reversed by an appellate court, it means that a creditors committee, which has no case or controversy with the 22 Parishes, has standing to quiet title and extinguish the 22 Parishes' interest in real property." Mr. Munding maintains that the Bankruptcy Court's decision also fails to cite to any Ninth Circuit law that allows a creditors committee standing to file an adversary proceeding of this nature against non-debtors seeking declaratory relief under Section 541 of the Bankruptcy Code. No federal court, bankruptcy or appellate court has ever specifically addressed this issue or allowed this type of action. This lack of authority, Mr. Munding contends, leaves substantial ground for difference of opinion concerning the findings in the Order and emphasizes the need for a decision at the appellate level. A stay pending appeal is necessary, Mr. Munding asserts, to allow full appellate view of decisions that are of national importance and which are of significance in the adversary actions. The stay will avoid the parties' litigating further motions before a final appellate decision on these issues have been issued. None of the parties will suffer significant injury from the stay. 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. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) CCH I LLC: Fitch Expects to Rate Sr. Secured Notes at CCC+ ---------------------------------------------------------- Fitch expects to assign a 'CCC+' rating and an 'R3' recovery rating to the proposed issuance of senior secured notes offered by CCH I, LLC, as well as a 'CCC+' rating and an 'R3' recovery rating to the proposed offering of senior unsecured notes issued by CCH I Holdings, LLC. CCHI and CIH are wholly owned subsidiaries of Charter Communications Holdings, LLC. The notes are being offered as part of a debt exchange launched by Charter Holdings. Fitch will assign the ratings to the new CCHI and CIH notes upon the closing of the proposed debt exchange. Additionally, in the event the proposed debt exchange fails to close or that less than 100% of Charter Holdings noteholders tender for the exchange, Fitch expects to maintain the 'CCC+' senior unsecured debt rating and 'R3' recovery rating assigned to Charter Holdings. Lastly, Fitch has affirmed the 'CCC' issuer default rating and Stable Rating Outlook assigned to Charter Communications, Inc. This rating action reflects Fitch's belief that a bankruptcy filing by Charter, absent the proposed debt exchange, is not imminent. Such determination is a key consideration in characterizing a proposed debt exchange as a distressed debt exchange. Fitch believes that amounts available for borrowings under Charter's bank revolver, continued access to capital markets, and nominal amounts of scheduled maturities through 2006 will provide the company with sufficient liquidity and financial flexibility to continue to operate outside a bankruptcy filing. Fitch acknowledges that Charter's proposed debt exchange contains characteristics normally found in a distressed debt exchange, namely the exchange of bonds at a level lower than the par value of the original securities, and the lengthened maturity dates relative to the original debt securities. The exchange offer will utilize two intermediate holding companies within Charter's capital structure, both of which would be structurally senior to any remaining Charter Holdings noteholders. While Fitch recognizes the structural subordination within Charter's intermediate holding company structure, the lack of notching within these intermediate holding companies reflects the lack of material credit enhancement (in the form of an operating company guaranty), and Fitch's opinion that the recovery prospects of the various intermediate holding companies are substantially equivalent. From Fitch's perspective the proposed debt exchange does not materially change or enhance the recovery prospects of the various holding companies, including CCHI and CIH, relative to each other. Fitch acknowledges that the notes that will be issued by CCHI will be senior secured. However because the notes will be secured by the economic interests of a non-operating holding company (CCH II, LLC) and because of the restrictions on the security holders' ability to utilize the collateral to remedy a payment default, Fitch does not believe that the security interests provide meaningful credit enhancement to the holders of the CCHI secured debt, and that the recovery prospects of the CCHI noteholders are within the same recovery rating scale as the rest of Charter's intermediate holding companies. In general, Fitch believes that the proposed debt exchange is positive for Charter's overall credit profile. The debt exchange positions the company to extend maturities scheduled for 2009 and 2010 to 2015, and extend maturities scheduled for 2011 and 2012 to 2014 and 2015 respectively. The debt exchange will also modestly reduce outstanding debt and leverage. Pro forma leverage (on a latest 12-month basis) as of the end of second-quarter 2004 after giving effect to the $300 million issuance by CCO Holdings, LLC in August was 9.99 times (x). Assuming a 50% participation in the exchange, Fitch estimates pro forma leverage of 9.83x as of the end of second quarter 2004. Fitch points out that as a condition for the exchange to close, leverage at Charter Holdings adjusted for debt exchange must be below 8.75x, which will likely require in excess of $2 billion of the old Charter Holdings notes be tendered before the exchange can close. The proposed exchange offer will not in Fitch's opinion improve the company's near-term liquidity profile. Fitch expects that the exchange offer will have a neutral impact on the company's cash interest requirements. Overall, Charter's liquidity position is supported by the $870 million available under the company's secured credit facility, all of which is available for borrowing under the covenant structure. The company has nominal amounts of debt scheduled to mature during the remainder of 2005, and in 2006 scheduled maturities total $55 million. Scheduled maturities in 2007 total approximately $385 million. In light of Fitch's expectation of limited near-term EBITDA growth, Fitch does not expect any meaningful improvement of credit protection metrics. Overall, Fitch's current ratings for Charter reflect the company's highly levered balance sheet and the absence of any prospects to meaningfully delever its balance sheet over the near term. Additionally, the ratings incorporate Fitch's expectation that Charter will continue to generate negative free cash flow given the company's operating profile, elevated capital expenditures, and the increasing cash interest requirements on debt that has converted to, or is scheduled to convert to cash interest payment. CHASE COMMERCIAL: Fitch Affirms Low-B Ratings on 5 Cert. Classes ---------------------------------------------------------------- Fitch Ratings affirms Chase Commercial Mortgage Securities Corp., commercial mortgage pass-through certificates, series 1999-2: --$53.0 million class A-1 at 'AAA'; --$469.3 million class A-2, at 'AAA'; --Interest-only class X at 'AAA'; --$41.1 million class B at 'AA'; --$37.2 million class C at 'A'; --$11.7 million class D at 'A-'; --$27.4 million class E at 'BBB'; --$11.7 million class F at 'BBB-'; --$27.4 million class G at 'BB+'; --$7.8 million class H at 'BB'; --$6.8 million class I at 'BB-'; --$8.8 million class J at 'B+'; --$6.8 million class K at 'B'; --$5.9 million class L at 'B-'. The $17.1 million class M is not rated by Fitch. The rating affirmations reflect the transactions current stable performance and scheduled loan amortization. As of the August 2005 distribution date, the pool's aggregate collateral balance has been reduced approximately 6.2% to $732.2 million from $782.7 million at issuance. Interest shortfalls continue to affect the below investment grade classes J, K, L and M and are expected to continue for the next six months. Additionally, loan modifications on two specially serviced loans have resulted in deferred interest which is being accrued to class M. Five loans comprising 4.8% of the pool are currently in special servicing. The largest specially serviced loan (2.2%) is secured by a flex office/warehouse complex located in Englewood, CO and is currently 90 days delinquent. The loan was transferred to the special servicer in May 2005 due to a technical default. The borrower failed to lease up the vacant space in accordance with the Modification agreement. Borrower has found a buyer and lender has agreed to accept a discounted payoff and expected closing at the end of September 2005. The next largest loan in special servicing (1.0%) is a multifamily property located in Euless, TX and is currently real-estate owned. The Trust foreclosed in March 2005 and immediately took over property management. Management is working on leasing up the property before disposition. Losses are expected upon liquidation. CHESAPEAKE ENERGY: Offering $250 Million of Preferred Stock ----------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) intends to commence a public offering of $250 million of a new series of its cumulative convertible preferred stock with a liquidation preference of $100 per share. Chesapeake intends to use the net proceeds of the offering, together with the proceeds from a concurrent offering of common stock, to repay debt under its bank credit facility or for general corporate purposes. The offering will be made under the company's existing shelf registration statement. The company intends to grant underwriters a 30-day option to purchase a maximum of $37.5 million in additional shares of convertible preferred stock to cover any over-allotments in the offering. Lehman Brothers, Banc of America Securities LLC, Credit Suisse First Boston, Morgan Stanley and Wachovia Securities will be joint book-running managers for the offering. Copies of the preliminary prospectus and records relating to the offering may be obtained from the offices of Lehman Brothers Inc., c/o ADP Financial Services, Integrated Distribution Services, 1155 Long Island Avenue, Edgewood, NY 11717; Banc of America Securities LLC, Attn: Prospectus Department, 100 West 33rd Street, New York, NY 10001, 646-733-4166; Credit Suisse First Boston, One Madison Avenue, Level 1B, New York, NY 10010, 212-325-2580; Morgan Stanley, Prospectus Department, 1585 Broadway, LLB, New York, NY 10036; Wachovia Securities Capital Markets, LLC, Equity Capital Markets, 7 St. Paul Street, 1st Floor, Baltimore, MD 21202. Chesapeake Energy Corporation is the third largest independent producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast, Barnett Shale and Ark-La-Tex regions of the United States. * * * As reported in the Troubled Company Reporter Aug. 19, 2005, Moody's assigned a Ba3 rating to Chesapeake Energy's (CHK) new $600 million issue of 12 year 6.5% senior unsecured notes and to CHK's existing $600 million issue of 13 year 6.25% senior unsecured notes. Moody's affirmed CHK's Ba3 corporate family rating, existing Ba3 senior unsecured note ratings, and B3 preferred stock rating. Moody's said the outlook remains positive. The new note proceeds will be used to repay outstanding borrowings under the revolving bank credit facility (unrated), which was partially tapped to fund four recent transactions costing $410 million. CHK had approximately $455 million of bank debt outstanding as of June 2005. CONCENTRA OPERATING: Moody's Rates Proposed $675-Mil Debts at B1 ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Concentra Operating Corporation in conjunction with Concentra's proposed acquisitions of Beech Street Corporation and Occupational Health and Rehabilitation Inc. At the same time, Moody's assigned a rating of B1 to Concentra's proposed $150 million Revolving Credit Facility and a $525 million Term Loan B. The ratings outlook remains stable, although flexibility within the current rating category has been reduced. Ratings of Concentra Operating Corporation affirmed: * B1 corporate family rating * B1 senior secured revolving credit facility of $100 million due 2008 (to be withdrawn concurrent with the proposed transaction) * B1 senior secured term loan of $335 million due 2009 (to be withdrawn concurrent with the proposed transaction) * B3 senior subordinated notes of $180 million due 2010 * B3 senior subordinated notes of $150 million due 2012 Ratings of Concentra Operating Corporation assigned: * B1 senior secured revolving credit facility of $150 million due 2010 * B1 senior secured term loan of $525 million due 2011 These rating actions follow Concentra's announcement that it intends to acquire Beech Street Corporation, a leading Preferred Provider Organization, in a transaction valued at $165 million. For the twelve months ended June 30, 2005, Beech Street generated revenues of $70.4 million and EBITDA of $13.2 million, resulting in a purchase price of over two times trailing revenue and over 12 times trailing EBITDA. Concentra also announced that it intends to acquire Occupational Health and Rehabilitation, a regional operator of 34 centers primarily in the northeastern United States, for a purchase price of $48.6 million. For the twelve months ended June 30, 2005, OH&R generated revenues of $58.2 million and EBITDA of $4.3 million. Concurrently, Concentra has proposed to refinance its existing senior secured credit facility of $367.5 million. Moody's understands that Concentra plans to finance the proposed acquisitions and retirement of its credit facility through issuing $525 million in Senior Term Debt and utilizing $59.4 million of retained cash. The affirmation of Concentra's ratings also reflects Moody's belief that Concentra's improved operating results and free cash flow generation will continue, and will help to support the incremental debt associated with the proposed acquisitions. Concentra's Health Services business has generated mid-teens revenue growth over the past few quarters supported by mid to upper single digit same store revenue growth, an increase in ancillary services and on-site activity and the addition of new centers through development and acquisitions. Despite a decline in revenues, profitability at Concentra's Care Management services division has expanded significantly following a restructuring plan that resulted in reduced operating costs and the termination of unprofitable offices and accounts. Concentra has also benefited from tight control of working capital investments; in particularly, day's sales outstanding in receivables continue to drop. As a result, Moody's currently expects that Concentra will generate approximately $110 to $115 million in operating cash flow and $60 to $70 million in free cash flow over the next two years. Adjusting for capitalizing leases on the balance sheet, Moody's currently projects that the ratio of free cash flow to debt should be 5% to 6% over the next two years. Credit risk factors include Concentra's high customer concentration risk in the group health sub-segment of Network Services, and the loss of customer accounts due to in-sourcing trends and increased consolidation in the managed care industry. In particular, results in the Network Services Division in 2005 are being adversely affected by the loss of a major client. Recent results have also been negatively affected by increased competition and adverse regulatory and legislative changes. In addition, Moody's believes that Concentra's operating risk and financial risk profile has increased with: * the two proposed acquisitions based on the premium paid for these companies; * the increase in debt to finance the transaction; and * potential integration challenges. Moody's believes that there is more uncertainty and risk associated with the Beech Street relative to the OH&R acquisitions for several reasons. Revenue growth at Beech Street's existing operations has been sluggish for the past few years. The success of the transaction is highly dependent on offering Beech Street's PPO product to an entirely new segment, group health, and developing new products and approaches for the insurance industry. Notwithstanding the higher debt load related to the acquisitions, Moody's believes that there are several factors mitigating the company's greater financial and operational risk. The two acquisitions will enable Concentra to strengthen its internal operations at the health care centers and worker's compensation PPO, and lower overhead costs in these two areas. Further, margin improvement of Beech Street and OH&R is possible, through reducing costs and accelerating revenue growth by leveraging Concentra's existing base of customers. The rating outlook is stable, although Concentra's flexibility within the current rating category to withstand operating risks or to perform cash-financed acquisitions has been reduced. At 5-6% free cash flow to adjusted debt (pro forma for the acquisitions), these metrics are slim for the B1 rating, and any decline could lead to a downgrade. The rating is more susceptible now to any unexpected operating risks, such as a decline in the economy, which would negatively impact the Health Services division. In the past, Concentra has de-leveraged after acquisitions, and Moody's expectation that deleveraging will again occur supports the stable outlook. The reduction in outstanding debt combined with continued expansion in cash flow would improve its ratio of free cash flow to adjusted debt to the 7% to 9% area, which is in line with the middle to upper-end of its historic range for this credit metric Concentra's ratings and rating outlook could face downward pressure if a meaningful deterioration in operating trends at the Health Care Services Division or more protracted weakness in the Network Services Division occurs and results in a significant reduction in cash flow. Conversely, the ratings could be upgraded if the company curtails the magnitude and frequency of debt- financed acquisitions and expands the ratio of free cash flow to adjusted debt above 10% for a sustained period of time. The B1 ratings on Concentra's secured bank facilities reflect their preferred position in the capital structure, based on unconditional guarantees by Concentra and by each domestic subsidiary, and security consisting of a first priority perfected lien on substantially all tangible and intangible assets. In Moody's opinion, collateral coverage in a distress scenario would not likely be ample enough to support notching the secured bank rating above the B1 corporate family rating. Moody's notes that Concentra has a minimal amount of tangible assets as goodwill and other intangible assets account for over 50% of total assets; the company had recorded a $41.8 million charge in 2004 related to the loss on impairment of goodwill and other long-lived assets. Moody's further notes that total committed bank facilities account for approximately 60% of total pro-forma debt. Beech Street Corporation is a national Preferred Provider Organization that has contracts with approximately 400,000 physicians, 52,000 ancillary providers and 3,800 acute care hospitals. Occupational Health and Rehabilitation, a publicly traded company, operates 34 health care centers in the Northeast. Concentra Operating Corporation is the leading provider of fully- integrated services to the occupational, auto, and group healthcare markets. Its service offerings include: * employment-related injury and occupational healthcare, * case management, and * cost containment services. Revenues were approximately $1.1 billion for the twelve months ended June 30, 2005. CONCERTO SOFTWARE: S&P Rates Planned $475M Sr. Sec. Facility at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Westford, Massachusetts-based Concerto Software Inc. At the same time, Standard & Poor's assigned its 'B' rating, with a recovery rating of '2', to Concerto's proposed $475 million first-lien senior secured bank facility, which will consist of a $50 million revolving credit facility and $425 million term loan, both due 2010. The bank loan rating, which is the same as the corporate credit rating, along with the recovery rating, reflect S&P's expectation of substantial (80%-100%) recovery of principal by creditors in the event of a payment default or bankruptcy. Proceeds from the first-lien facilities, along with a $250 million second-lien facility, approximately $280 million cash on hand, and $200 million of equity, will be used to acquire Aspect Communications Corp. (B+/Stable/--) and refinance existing debt. Upon completion of the transaction, Concerto will be renamed Aspect Software, and Aspect Communications' corporate credit rating will be withdrawn. The outlook is stable. "Our rating on Concerto reflects significant integration risks arising from a string of acquisitions since 2003, the competitiveness of the contact center solutions market, the soft corporate spending environment, and the company's aggressive financial profile," said Standard & Poor's credit analyst Patrice Cochelin. These factors are partly offset by the two companies' relatively stable revenue bases, and leading positions in a niche market with relatively high barriers to entry. Concerto develops, installs, and maintains software-based solutions for contact centers. Aspect's strength in "inbound" software, notably automatic call distributors will complement Concerto's positions in "outbound" technologies of predictive dialing. Aspect also holds solid positions in workforce management software for call centers. Pro forma for the Aspect acquisition, Concerto had total lease-adjusted debt of about $735 million at June 30, 2005. COOK'S INC: Inventory & Equipment to be Auctioned on September 14 ----------------------------------------------------------------- Elrod Auction Company, Inc., will auction Cook's, Inc.'s floor tile and stone inventory, forklifts, pallet racks, trailers, says, telephones, computers, desks, chairs and other fixtures on September 14, 2005, at the company's facilities at 7620 Delta Circle in Austell, Georgia. Additional information is available from the auctioneer at http://elrodauction.net/or by contacting elrodauction@aol.com by e-mail. Cook's, Inc. (aka Cook's/Turkiz, Inc. and aka Cook's Wholesale Flooring) filed for chapter 11 protection on May 9, 2005 (Bankr. N.D. Ga. Case No. 05-68648). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the company. Cook's estimated assets and liabilities in the range of $1 million to $10 million in its chapter 11 petition. CREDIT SUISSE: Credit Enhancement Prompts Fitch's Rating Upgrades ----------------------------------------------------------------- Fitch Ratings has taken these actions on Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass- through certificates, series 2001-CP4: Fitch upgrades these classes: --$61.9 million class B to 'AAA' from 'AA'; --$45.7 million class C to 'AA+' from 'A'; --$22.1 million class D to 'AA-' from 'A-'; --$16.2 million class E to 'A' from 'BBB+'; --$16.2 million class F to 'A-' from 'BBB'; --$11.8 million class G to 'BBB+' from 'BBB-'; --$22.1 million class H to 'BBB-' from 'BB+'; --$19.1 million class J to 'BB+' from 'BB'. In addition, Fitch affirms the following classes: --$48.9 million class A-1 at 'AAA'; --$86.9 million class A-2 at 'AAA'; --$110.0 million class A-3 at 'AAA'; --$611.4 million class A-4 at 'AAA'; --Interest-only class A-X at 'AAA'; --Interest-only class A-CP at 'AAA'; --$10.3 million class K at 'BB-'; --$8.8 million class L at 'B+'; --$7.4 million class M at 'B'; --$5.9 million class N at 'B-'. Fitch does not rate the $20.1 million class O certificates. The upgrades reflect increased credit enhancement levels due to scheduled loan amortization and defeasance. As of the August 2005 distribution date, the pool's collateral balance has decreased 4.6% to $1.12 billion from $1.18 billion at issuance. Sixteen loans (20.3%), including the largest loan (10.42%) in the portfolio, have fully defeased. There are four loans (2.83%) currently with the special servicer. The largest specially serviced loan (1.4%) is secured by two apartment properties in Dallas, TX. This loan is crossed with the second largest specially serviced loan (0.74%) and is also collateralized by two apartment buildings in Dallas, TX. The special servicer is currently assessing its options with respect to the disposition of both loans. Based on current appraisal values, resolution of these properties will result in losses that may substantially erode the balance of the O class. Fitch continues to maintain an investment grade credit assessment on the Parfinco East and West Annex loan (4.6%). Fitch reviewed operating statement analysis reports and other performance information provided by the master servicer. The Fitch stressed debt service coverage ratio as of year-end 2004 was 2.01 times (x) compared to 1.40x at issuance and 1.64x at YE 2003. The Fitch stressed DSCR is calculated by taking the average of the Fitch constant DSCR, to reflect balloon risk, and the Fitch term DSCR, to reflect term risk. The occupancy as of YE 2004 was 100% compared to 92% at issuance and 99% at YE 2003. DEAN ZANETOS: Case Summary & 6 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Dean J. Zanetos 3170 Hollyridge Drive Los Angeles, California 90068 Bankruptcy Case No.: 05-30325 Chapter 11 Petition Date: September 7, 2005 Court: Central District of California (Los Angeles) Judge: Theodor Albert Debtor's Counsel: Jayne T. Kaplan, Esq. 1112 Fair Oaks Avenue South Pasadena, California 91030 Tel: (626) 799-1122 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Douglas Richardson Attorneys' fees $120,000 146 South Main Street Orangeburg, CA 92868 Wayne Hagendorf Judgment for $113,000 c/o D. Scott Abernethy attorneys' fees 442 Rumsey Place Placentia, CA 92870 Loyola Marymount University Student loan $66,726 Educational Services 2505 South Finley Road Lombard, IL 60148 ML Credit Card Services Credit card purchase $48,701 P.O. Box 15289 Wilmington, DE 19886-5724 Loyola Marymount University Student loan $32,229 2505 South Finley Road Lombard, IL 60148 Wells Fargo Mastercard Credit card purchase $15,000 P.O. Box 54349 Los Angeles, CA 90054 DELPHI: Detailed Talks with UAW & General Motors Start in October ----------------------------------------------------------------- Ted Evanoff at Indystar reports that Delphi Corp.'s CEO Robert Miller told the company's employees in Kokomo, Indiana, during his plant visit on Wednesday, that detailed concession negotiations with General Motors Corp. and the United Auto Workers union will start in October. GM and the UAW have had conceptual discussions to bail-out ailing Delphi. Delphi's Kokomo plant houses its electronics division and employs 5,500 people, the Indystar relates. As previously reported, Delphi Chairman Steve Miller -- Federal- Mogul's former non-executive chairman and a turnaround pro who came to Delphi from Bethlehem Steel -- demanded wage cuts of at least $5 an hour, other benefit reductions and work rule changes from the UAW. Those concession total around $2.5 billion in savings for the Company. The Company also asked for the freedom to close plants and to divest or shut down money-losing business units, in the shortest time possible. Delphi is a 1999 spin-off from General Motors. While General Motors and Delphi are separate entities, GM retains indemnification obligations for some employee obligations. Analysts said in reports that should Delphi file for bankruptcy, GM will be paying up to $9 billion in costs. Delphi Corp. -- http://www.delphi.com/-- is the world's largest automotive component supplier with annual revenues topping $25 billion. Delphi is a world leader in mobile electronics and transportation components and systems technology. Multi-national Delphi conducts its business operations through various subsidiaries and has headquarters in Troy, Michigan, USA, Paris, Tokyo and Sao Paulo, Brazil. Delphi's two business sectors -- Dynamics, Propulsion, Thermal & Interior Sector and Electrical, Electronics & Safety Sector -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 186,500 employees and operates 171 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices and 34 technical centers in 41 countries. At June 30, 2005, Delphi Corporation's balance sheet showed a $4.56 billion stockholders' deficit, compared to a $3.54 billion deficit at Dec. 31, 2004. Delphi is rated by the three major rating agencies: Senior Senior Preferred Secured Unsecured Stock Rating Agency Rating Rating Rating ------------- -------- --------- --------- Standard & Poor's B- CCC- CC Moody's B3 Ca C Fitch Ratings B CCC CCC- As a result of recent downgrades, Delphi's facility fee and borrowing costs under its credit facilities increased. DELTA AIR: Skywest Completes $425M Purchase of Airline Subsidiary ----------------------------------------------------------------- SkyWest, Inc. (Nasdaq: SKYW) completed the purchase of Atlantic Southeast Airlines, Inc., Delta Air Lines, Inc.'s wholly owned regional airline subsidiary, for a purchase price of $425 million. As a result of the transaction, ASA is now a wholly owned subsidiary of SkyWest. Together with SkyWest Airlines, Inc., SkyWest's existing wholly owned subsidiary, the two carriers will create the largest regional airline carrier network in the domestic United States. The purchase transaction also resulted in the amendment and extension of existing Delta Connection operating agreements under which SkyWest Airlines and ASA obtained the rights to continue flying as Delta Connection carriers through 2020. "The acquisition of ASA enhances our strategic position and accomplishes several key corporate objectives," said Bradford R. Rich, SkyWest Executive Vice President, Chief Financial Officer and Treasurer. "We are pleased that the deal has been consummated, but remain focused on the importance of serving our customers and providing a productive work environment for our employees," he continued. SkyWest paid $350 million in cash at closing, consisting of $330 million of the purchase price and $20 million relating to certain aircraft financing deposits Delta had previously paid. An additional $125 million representing $95 million of the purchase price and $30 million relating to the return of certain aircraft financing deposits is payable to Delta, pursuant to the terms of an escrow agreement, upon the earlier of the assumption by Delta of the ASA and SkyWest Airlines Delta Connection Agreements should Delta file for reorganization under Chapter 11, or four years after closing of the transaction. SkyWest would be entitled to retain the escrow deposit if Delta files for reorganization under Chapter 11 and rejects its Delta Connection agreement with ASA or SkyWest Airlines prior to the fourth anniversary of the closing of this transaction. Separate Operations For the foreseeable future, SkyWest intends to operate SkyWest Airlines and ASA as wholly owned subsidiaries, with separate labor groups and FAA operating certificates. For the first year following the closing of the transaction, Delta has agreed to continue to provide to ASA certain transitional administrative and information technology services. SkyWest expects those functions will be transitioned to SkyWest personnel over the course of the coming year. As part of its planned transition, SkyWest intends to launch an intense "best practices" initiative to identify and capitalize on the strengths of each of SkyWest Airlines and ASA and to realize potential efficiencies. Customers SkyWest does not currently intend to make any significant changes to the operating schedules or aircraft deployment of either SkyWest Airlines or ASA. Customers of both carriers can continue to expect to receive the superior high-quality service to which they have become accustomed. Combined, SkyWest Airlines and ASA will have primary hubs in Atlanta, Cincinnati, Chicago, Los Angeles, San Francisco, Salt Lake City, Denver, Portland, and Seattle/Tacoma. ASA and SWA Delta Connection Agreements The new Delta Connection agreements provide for each of SkyWest Airlines and ASA to continue flying as Delta Connection Carriers for terms of 15 years. These agreements will continue to be capacity purchase arrangements with both carriers being compensated in a manner substantially similar to their prior agreements. Based in Atlanta, Atlantic Southeast Airlines, Inc. -- http://www.flyasa.com/-- is a leading member of the Delta Connection program, operating more than 900 flights each day to 126 airports in 38 states, the District of Columbia, Canada, Mexico and the Caribbean. The airline operates a fleet of 151 aircraft and employs nearly 6,000 aviation professionals across its route system. Founded in 1979, ASA has operated as a Delta Connection carrier since 1984. Delta acquired a 20 percent ownership stake in ASA in 1984, and purchased the remaining stake in 1999. Headquartered in St. George, Utah, SkyWest, Inc. -- http://www.skywest.com/-- is the parent company of SkyWest Airlines, which operates as an independently owned partner carrier to Delta and United Airlines. SkyWest has been a Delta Connection carrier since 1987. SkyWest currently serves 59 Delta Connection locations with approximately 480 daily departures, primarily from Delta's hub in Salt Lake City, Utah. SkyWest's Delta Connection fleet currently consists of 56 50-seat Canadair Regional Jets and 13 30- seat Embraer EMB- 120 turboprops. Delta Air Lines -- http://delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 490 destinations in 85 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. DELTA AIR: Cutting Cincinnati Operations by 26% & Selling 11 Jets ----------------------------------------------------------------- Delta Air Lines disclosed in a regulatory filing that it's cutting operations in Cincinnati by 26%, reducing its workforce by 1,000, adding some international flights, and selling 11 old jets. The airline company says the changes will accelerate the pace of its transformation through its winter schedule that realign service at domestic hubs to be more efficient, shift capacity from domestic routes to meet growing international demand, and reduce fleet complexity by accelerating plans to retire inefficient aircraft. "Today, we are announcing the latest in a series of integrated improvements to further strengthen our network by continuing to right-size our hubs, increase international flying and simplify our fleet - all key components of our transformation plan," said Jim Whitehurst, Chief Operating Officer. "Together with earlier, major initiatives such as de-hubbing Dallas/Fort Worth, introducing SimpliFares(TM) and expanding point-to-point flying, these changes complement the service customers have come to expect from the world's second-largest airline in terms of passengers carried, while stepping up the pace of our customer-focused transformation." Realigning Domestic Hubs Effective Dec. 1, Delta will right-size operations at its second-largest hub at Cincinnati-Northern Kentucky International Airport to better match service to local passenger demand and optimize the balance of local and connecting traffic. With the changes, Delta will reduce mainline and Delta Connection carrier capacity by 26%, while boosting the percentage of local traffic from 36% to nearly 50% - well in line with other Delta and competitor hubs. Additionally, Delta will replace service in nine markets currently served non-stop from Cincinnati by Delta Connection carriers ASA and Comair with connecting service through the Atlanta hub. "In keeping with our customer-focused commitment, these scheduling improvements will have virtually no effect on the services the traveling public has come to expect from us as the No. 1 airline in the Cincinnati market. By consolidating flights into fewer flight banks and reducing flights in off-peak hours, we will increase customer choice during preferred travel times." Whitehurst said. "Importantly, as an international gateway, the Cincinnati area also will retain the international service its customers enjoy to eight non-stop destinations in Canada, Mexico, Europe and the Caribbean, and its status as one of the country's top 10 airline hubs." Additionally, from the Atlanta and Salt Lake City hubs, Delta is expanding service to regional business destinations with new non- stop flights to 20 destinations, including between Salt Lake City and Columbus, Ohio, and between Atlanta and Bloomington and Moline, Ill. And for leisure customers, Delta will add more flights to Hawaii with the first non-stop service between Atlanta and Maui, complementing existing non-stop flights to Honolulu and planned one-stop service to Kona via Salt Lake City (effective Dec. 1). The new Atlanta-Maui route begins Dec. 16 and brings to 11 the number of daily Delta round-trip departures between the U.S. mainland and Hawaii. Increasing Service to International Destinations With the fall and winter schedule, customers throughout Delta's global network will enjoy new or expanded service to 41 international destinations. New destinations served from Atlanta will include: Destination Service Date ----------- ------------ Managua, Nicaragua Dec. 15, 2005 Puerto Vallarta, Mexico Dec. 15, 2005 Antigua Dec. 18, 2005 San Pedro Sula, Honduras March 1, 2006 Roatan, Honduras March 4, 2006 Dusseldorf, Germany April 3, 2006 On Dec. 1, Delta also will increase by two the number of daily flights between Atlanta and Cancun, Mexico, and expand to daily existing weekend-only service between Cincinnati and Montego Bay, Jamaica. Service to Latin America markets is subject to appropriate government operating approvals. Delta's upcoming international expansion adds to the 21 new international routes introduced or announced since Jan. 1, 2005, including New York (JFK) to Chennai, India (via Paris); New York (JFK) to Berlin, Germany; Atlanta to Moscow; New York (JFK) and Atlanta to Santo Domingo, Dominican Republic; Atlanta to Barbados; and Salt Lake City to Puerto Vallarta, Mexico. These schedule enhancements maintain Delta's position as the leading U.S. carrier across the Atlantic and the No. 3 carrier to Latin America and the Caribbean. Increasing Efficiencies through Fleet Simplification Part of Delta's ongoing transformation calls for the simplification of its fleet by up to four types in approximately four years to reduce fleet complexity, increase fuel efficiency and reduce capacity on routes where Delta offers more seats than necessary to meet customer demand. Beginning this month, Delta will accelerate the removal from service of its Boeing 767-200 aircraft type - the least efficient wide-body aircraft in its fleet. These aircraft are scheduled to be removed from service by Dec. 1 2005, with the majority to be sold to ABX Air, Inc., through a transaction announced separately today. Delta Air Lines -- http://delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 490 destinations in 85 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. DOBSON COMMUNICATIONS: Prices $300-Mil Private Debt Offerings ------------------------------------------------------------- Dobson Communications Corporation (Nasdaq:DCEL) priced its private offerings of $150 million principal amount of Senior Floating Rate Notes due 2012 and $150 million principal amount of Senior Convertible Debentures due 2025. In addition, the Company may issue up to an additional $30 million principal amount of Senior Convertible Debentures upon exercise of an option granted to the initial purchasers. The Senior Floating Rate Notes will bear interest at a rate equal to three-month LIBOR plus 4.25% and mature in 2012. The Company will have the right to redeem the Senior Floating Rate Notes any time on or after October 15, 2007, initially at a redemption price equal to 102% of the principal amount being redeemed, plus accrued interest. The Senior Convertible Debentures will bear interest at a rate of 1.5% per annum and mature in 2025. If certain conditions are satisfied, the Senior Convertible Debentures will be convertible into shares of the Company's Class A common stock at an initial conversion rate of 97.0685 per $1,000 principal amount of Senior Convertible Debentures (equivalent to an initial conversion price of approximately $10.30 per share), which represents a premium of 27.5% to the last reported sale price of the Class A common stock on the Nasdaq Stock Market on September 7, 2005 of $8.08 per share. The Senior Convertible Debentures will be convertible if, among other things: (1) there is a change in control of the Company or other fundamental change, including the dissolution of the Company or the delisting of the Company's Class A common stock; (2) the closing price of the Class A common stock for 20 trading days in any quarter is more than 125% of the then- current conversion price of the Senior Convertible Debentures; or (3) during any five-trading-day period the trading price of the Senior Convertible Debentures is less than 98% of the closing price of the Class A common stock during such five-day period multiplied by the then-current conversion rate of the Senior Convertible Debentures. Upon conversion, the Company has the right to deliver cash, shares of Class A common stock or a combination of cash and shares of Class A common stock. The conversion rate is subject to adjustment under certain circumstances. The Company will have the right to redeem the Senior Convertible Debentures at any time on or after October 1, 2010 at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest. In addition, holders of the Senior Convertible Debentures will have the right to require the Company to repurchase all or part of the Senior Convertible Debentures on October 1, 2010, October 1, 2015 and October 1, 2020 or if there is a change of control or other fundamental change, in each case at a repurchase price equal to 100% of the principal amount being redeemed, plus accrued interest. The Company intends to use the net proceeds from the offerings, along with cash on hand, to redeem the entire $299 million outstanding aggregate principal amount of its 10.875% Senior Notes due 2010, including accrued interest and the applicable redemption premium. The offerings of the Senior Floating Rate Notes and Senior Convertible Debentures are not conditioned on each other and are expected to close on September 13, 2005, subject to customary closing conditions. The Senior Floating Rate Notes will be offered only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S, and the Senior Convertible Debentures will be offered only to qualified institutional buyers under Rule 144A. The notes and debentures (including any shares of common stock issuable upon conversion thereof) have not been registered under the Securities Act of 1933 or under any state securities laws and, unless so registered, may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. 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. DOBSON COMMS: S&P Junks Planned $150M Sr. Unsec. Convertible Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'CCC' rating to Oklahoma City, Oklahoma-based Dobson Communications Corp.'s proposed offering of $150 million senior unsecured convertible notes due in 2025, and $150 million of senior unsecured floating rate notes maturing in 2012. These issues are being sold under Rule 144A with registrations rights. Proceeds from the two issues will be used to redeem approximately $299 million of the company's 10.875% senior notes. S&P's 'B-' corporate credit rating on Dobson Communications Corp. also is affirmed; the outlook is negative. Pro forma for the proposed debt refinancing and a preferred stock exchange completed in August, total debt and preferred stock will be approximately $2.9 billion when adjusted for operating leases. Dobson, a rural and suburban wireless provider, has approximately 1.6 million subscribers located in 16 states. "The ratings on Dobson reflect elevated financial risk from the company's high debt leverage and negative discretionary cash flow, subscriber losses caused by increased churn over the last year, uncertainty regarding the impact of the new roaming agreement with Cingular Wireless LLC, and increased competition from large, well capitalized competitors," said Standard & Poor's credit analyst Susan Madison. These risks are tempered by healthy wireless industry growth, opportunities for increased data revenue, adequate liquidity and geographic diversity. Although the company has made progress in reducing post-paid customer losses, its subscriber base declined by approximately 18,000 subscribers over the past year. Post-paid churn increased approximately 50 basis points to 2.3% in the second quarter of 2005 compared with the prior year, because of network transition issues and the impact of wireless number portability. In response, the company heavily has invested in its network, adding additional global system for mobile communications cell sites to improve network performance and reliability, and has increased advertising and marketing expenditures. Higher gross additions in the second quarter of 2005 compared with one year ago and strengthening average revenue per user suggest the company is stabilizing its business, but it is unclear that new initiatives will yield sustainable operating improvements. DONALD L. MATTIA: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Donald L. Mattia Inc dba Chapel Homes P.O. Box 99 Deale, Maryland 20751 Bankruptcy Case No.: 05-30106 Chapter 11 Petition Date: September 7, 2005 Court: District of Maryland (Baltimore) Judge: Duncan W. Keir Debtor's Counsel: Marc L. Jordan, Esq. 7370 Grace Drive, Suite 101 Columbia, Maryland 21044-2470 Tel: (443) 535-0040 Fax: (443) 535-0940 Total Assets: $11,115 Total Debts: $3,591,162 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $137,614 Insolvency Unit 31 Hopkins Plaza Baltimore, MD 21201 Nora Martin Loans $131,043 131 Bangor Lane Milton, DE 19968 JEM Lumber & Building Miscellaneous $123,797 Supply Inc. goods and services P.O. Box 160 Bridgeville, DE 19933 Steve Canady Loan $110,000 Beverly Cashdollar Loan $95,077 Sherwin Williams Miscellaneous $95,000 goods and services REICO Distributors Miscellaneous $86,988 goods and services RealProp Investors LLC Promissory note $72,448 Rodrigo & Patricia Chacon Loan $62,000 RealProp Investors LLC Loan $60,500 Bernard McCaffrey Loan $59,500 Irving Stedman and Loan $50,000 Bruce Savage Michael & Christina Ferris Loan $50,000 Robert & Priscilla Pierce Loan $50,000 Eric James Electric Miscellaneous $47,705 goods and services Nicholas Spalaris Loan $47,115 Chesapeake Engineered Wood Miscellaneous $47,036 goods and services Lloyd Saunders Roofing Corp. Miscellaneous $39,630 goods and services Barbara Marshall Loan $36,000 Catts Plumbing Repair Inc. Miscellaneous $31,582 goods and services DRUGMAX INC: Receives Default Waiver from General Electric Capital ------------------------------------------------------------------ DrugMax, Inc. received from General Electric Capital Corporation an executed letter of agreement on Aug. 31, 2005, amending the Company's credit agreement with GECC. Pursuant to the amendment, GECC: (a) waived its right to collect default interest for all periods prior to the date of the Amendment, but otherwise reserved all of its rights and remedies resulting from DrugMax's default under the Credit Facility; (b) increased the applicable interest margins under the Credit Facility by an average of 1.0% per annum; and (c) imposed an additional 1% per annum "PIK" interest, which began to accrue as of August 2005. The Amendment further provides that the PIK interest is due and payable upon the termination of the Credit Facility, but will be waived if the facility is terminated or otherwise repaid prior to October 31, 2005. The Company's Second Amended and Restated Credit Agreement with GECC requires monthly compliance with certain restrictive covenants. DrugMax has been in violation of certain of these covenants since January 1, 2005 and is currently in default under the Credit Facility. DrugMax is currently exploring alternative financing (both equity and debt) and, although there can be no assurances, expects to refinance the Credit Facility with a major lender other than the current lender during the third quarter of 2005. Senior Credit Facility On Dec. 9, 2004, the Company entered into a Second Amended and Restated Credit Agreement with General Electric Capital Corporation, which increased the facility from $31 million to $65 million. The $65 million of maximum availability was reduced by $5.5 million of permanent availability, until the March 2005 Amendment, which increased the permanent availability reduction to $7.5 million. The Senior Credit Facility will mature on Dec. 9, 2007. The Senior Credit Facility includes a prepayment penalty of: (1) $1,300,000 if paid in full before December 9, 2005, (2) $975,000 if paid in full after December 9, 2005 but before December 9, 2006, and (3) $650,000 if paid after December 9, 2006. The Senior Credit Facility is secured by substantially all assets of the Company. As of April 2, 2005, $48 million was outstanding under the Senior Credit Facility and $1 million was available for additional borrowings. DrugMax, Inc., is a specialty pharmacy and drug distribution provider formed by the merger on November 12, 2004 of DrugMax, Inc. and Familymeds Group, Inc. The Company works closely with doctors, patients, managed care providers, medical centers and employers to improve patient outcomes while delivering low cost and effective healthcare solutions. It is focused on building an integrated specialty drug distribution platform through its drug distribution operations and its specialty pharmacy operations. As of April 2, 2005, DrugMax operated two drug distribution facilities, under the Valley Drug Company and Valley Drug South names, and 77 specialty pharmacies in 13 states under the Arrow Pharmacy & Nutrition Center and Familymeds Pharmacy brand names. Its platform is designed to provide services for the treatment of acute and complex health diseases including chronic medical conditions such as cancer, diabetes and pain management. Going Concern Doubt In its Form 10-K filing, Deloitte & Touche LLP, the Company's independent registered certified public accounting firm, issued an unqualified audit report with an explanatory paragraph raising doubt about the Company's ability to continue as a going concern. E.SPIRE COMMS: Court Approves $1MM Administrative Claim Carve-Out ----------------------------------------------------------------- The Honorable Walter Shapero of the U.S. Bankruptcy Court for the District of Delaware approved the settlement and compromise agreement between Gary F. Seitz, Esq., chapter 11 Trustee for e.Spire Communications, Inc., and its debtor-affiliates, and a group of bank lenders. The agreement carves out a portion of the Bank Group's collateral for distribution to holders of administrative claims in the Debtors' cases. The Bank Group, a syndicate of lenders composed of Foothill Income Trust, LP, Ableco, The CIT Group/Business Credit, Inc., and George F. Schmitt, committed to provide up to $85 million in DIP financing to the Debtors. The Bank Group's postpetition loan is secured by a first priority lien on all of the Debtors' assets. When the Debtors sold substantially all of their assets to Xspedius Management Co. LLC, on April 17, 2002, they no longer had any money to pay any postpetition obligations. To facilitate the sale and allow the Trustee to wind-down the Debtors' operations, the Bank Group agreed to fund administrative expenses incurred after April 19, 2002. Administrative expenses from the petition date until April 18, 2002, estimated at $14 million, are unfunded and must be paid out of assets not subject to secured creditors' liens. Since there are no assets left for liquidation to pay the unfunded administrative claims, the Trustee negotiated an exit strategy with the Bank Group -- as embodied in a settlement and compromise agreement. A carve-out of not less than $250,000 and not more than $1 million will cover administrative claim payments from the petition date through April 18, 2002. The Trustee tells the Court that the administrative creditors will receive nothing without the Bank Group carve-out. The Trustee estimates that holders of administrative claims incurred prior to April 19 will be paid something less than 7% of their claims. The Court set Sept. 15, 2005, as the administrative claims bar date. A copy of the settlement and compromise agreement is available for a fee at http://ResearchArchives.com/t/s?16a 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. ENER1 INC: Plans to Spin Off Three Subsidiaries to Stockholders --------------------------------------------------------------- Ener1, Inc.'s (OTCBB:ENEI) board of directors has authorized a plan to spin-off the common stock of its three primary alternative energy subsidiaries to the Ener1 stockholders. The Ener1 board believes that each of EnerDel, NanoEner and EnerFuel has made significant progress in developing their technologies and business strategies such that each of these companies could successfully achieve its business plan as a stand-alone company. The Company's board has instructed senior management to implement the proposed plan to spin-off Ener1's interest in each of EnerDel, NanoEner and EnerFuel. Any spin-off of these Ener1 subsidiaries will be subject to the receipt of applicable regulatory and third party approvals and adequate financing, which Ener1 may seek in the public or private equity or debt markets. If the Company is able to satisfy these conditions, it anticipates that the board would declare a dividend to distribute the stock of its three operating subsidiaries within the next six months. As a result of this distribution by Ener1 to its shareholders, EnerDel, NanoEner and EnerFuel would each become a public reporting company under federal securities laws. In this regard, the Company will adjust the capitalizations and the number of outstanding shares of each spun off company so that each will have the ability to more easily qualify for listing at appropriate exchanges. CEO Kevin Fitzgerald said, "Our three operations - EnerDel, NanoEner and EnerFuel - are alike in that they all concentrate on renewable power sources and related technologies. But they need to go in different directions now. They need to have access to capital and to be able to find strategic partners who can maximize the potential of their technologies. We believe the best way to accomplish this is to spin off the three 'pure plays' to the existing shareholders, subject to ensuring that each company is adequately capitalized. We believe all three companies will have excellent management teams, comprised in part by Ener1 executives, who will stand them in good stead." EnerDel Inc., Ener1's lithium battery business, has a new team of lithium specialists who are developing an advanced, high-rate battery primarily for the hybrid electric vehicle (HEV) market. EnerDel is working with EnerStruct, a joint venture formed by Ener1 and ITOCHU Corporation, to consolidate its lithium battery production facilities in Ft. Lauderdale and implement a new, automated manufacturing process developed by EnerStruct. EnerDel believes this new mobile, module type process will make its battery production operations more cost-competitive, as well as locate them closer to HEV manufacturers and other potential EnerDel customers with US production operations. NanoEner Inc. has developed a proprietary technology for the production of nanostructured thin-film coatings for use in battery electrodes. NanoEner plans to expand its unique platform technology into other markets for nanomaterials, including thin- film photovoltaic solar cells, fuel cell components, super capacitors and thin-film sensors. NanoEner has built and is operating four prototype machines that produce samples of battery electrodes that demonstrate the capabilities of NanoEner's technologies. EnerFuel Inc. is positioned to address the needs of the fuel cell market in the near future. It has developed unique test fixtures and components that it is marketing to other fuel cell manufacturers. EnerFuel has won an innovative partnership with the State of Florida to develop a direct methanol fuel cell to power a rest area along a Florida highway and act as a test bed and demonstration platform for EnerFuel's renewable energy technologies. EnerFuel's long-term plans also include developing its proton exchange membrane fuel cell control system to provide high reliability, long lifetime and safety of fuel cell-based power sources. "We are confident that these subsidiaries are ready to become independent companies," said Mr. Fitzgerald. "We believe that the shareholders of Ener1 would benefit through ownership of stock in three companies each pursuing different market opportunities in the alternative energy industry." In addition to receiving shares in the three companies, Ener1 shareholders would retain ownership of their Ener1 common stock, which would seek new investments in technology following the proposed spin-off. Mr. Fitzgerald commented further "Our first priority is to secure sufficient financing for the proposed transaction, and we intend to act expeditiously to accomplish this. We believe that the technologies and intellectual property of EnerDel, NanoEner and EnerFuel make them compelling investment opportunities." Ener1, Inc. (EBB: ENEI) -- http://www.ener1.com/-- is an energy technology company. The company's interests include: * 80.5% of EnerDel -- http://www.enerdel.com/-- a lithium battery company in which Delphi Corp. owns 19.5%; * 49% of Enerstruct, a Japanese lithium battery technology company in which Ener1's strategic investor ITOCHU owns 51%; wholly owned subsidiary EnerFuel, a fuel cell testing and component company -- http://www.enerfuel.com/; and * wholly owned subsidiary NanoEner -- http://www.nanoener.com/ -- which develops nanotechnology-based materials and manufacturing processes for batteries and other applications. At June 30, 2005, the Company's balance sheet shows $17,690,000 in total assets and a $13,733,000 stockholders deficit. ENRON CORP: Bankruptcy Court Okays American Express Settlement -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement between Enron Corp. and American Express Bank Ltd. The salient terms of the settlement are: (1) AMEX and ECPC will file in the Canadian Litigation an order providing that the Clerk of the Canadian Court will immediately pay CN$3,655,000 from the Registry Funds to AMEX. AMEX and ECPC will then pay the balance of the Registry Funds, including all interest, to ECPC. Thereafter, the Canadian Litigation will be wholly dismissed with prejudice, with each party to bear its own costs; (2) AMEX and Enron will execute and file a stipulation and order in the Adversary Proceeding dismissing the Original AMEX Claim, the Settlement Order, and the Amended AMEX Claim with prejudice, and will execute and file a notice of withdrawal of the Original Amex Claim. AMEX and ECC will execute and file in the Enron Chapter 11 Case a stipulation, which will: (i) vacate the Settlement Order in its entirety with respect to the Amended AMEX Claim; (ii) bifurcate the Amended AMEX Claim into two separate claims, the first of which will consist of the ECPC Standby L/C Claim, and second of which will consist of the ENA Standby L/C Claim; (iii) allow and assign the ECPC Standby L/C Claim to ECC; and (iv) provide that AMEX will remain the holder of the ENA Standby L/C Claim, which claim will be allowed. (3) The Parties will release each other from all claims and obligations in connection with the disputes. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 156; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENTRAVISION COMMS: Prices Tender Offer for 8.125% Sr. Sub. Notes ---------------------------------------------------------------- Entravision Communications Corporation (NYSE: EVC) has determined the tender offer yield for the tender offer for any and all of its $225,000,000 aggregate principal amount of 8.125% Senior Subordinated Notes due 2009 and related consent solicitation. The tender offer yield for Notes tendered and accepted will be 4.189%, which was determined as of 2:00 p.m., New York City time, on Sept. 7, 2005, by reference to a fixed spread of 0.50% over the yield to maturity based on the bid side price of the 1.50% U.S. Treasury Note due March 31, 2006. The right to withdraw tenders of Notes expired at 5:00 p.m., New York City time, on Aug. 22, 2005. As previously announced on August 22, 2005, Entravision received tenders and consents from holders of 100% of its Notes prior to the Consent Time. Assuming a settlement date of Sept. 26, 2005, consideration for such notes will be $1,057.92 per $1,000 principal amount of Notes, which includes a consent payment of $20.00 per $1,000 principal amount of Notes. Payments in consideration for tendered Notes will be made promptly after the expiration of the tender offer and consent solicitation, which is scheduled to occur on or around Sept. 21, 2005, unless the tender offer and consent solicitation is extended or earlier terminated. The tender offer and consent solicitation are being made upon the terms, and subject to the conditions, set forth in the Offer to Purchase and Consent Solicitation Statement and related Consent and Letter of Transmittal, each dated Aug. 9, 2005. The obligation of Entravision to accept for purchase and pay for the Notes in the tender offer is conditioned on, among other things, the completion by Entravision of a new financing arrangement. Entravision has retained Goldman, Sachs & Co. and Citigroup Global Markets Inc. to serve as the joint dealer managers and solicitation agents for the tender offer and the consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to Goldman, Sachs & Co. at (800) 828-3182 or (212) 357-7867, or Citigroup Global Markets Inc. at (800) 558-3745 or (212) 723-6106. Requests for documents in connection with the tender offer and the consent solicitation may be directed to Bondholder Communications Group, the information and tender agent, at (212) 809-2663. Entravision Communications Corporation is a diversified Spanish- language media company utilizing a combination of television, radio and outdoor operations to reach approximately 75% of Hispanic consumers across the United States, as well as the border markets of Mexico. Entravision is the largest affiliate group of both the top-ranked Univision television network and Univision's TeleFutura network, with television stations in 20 of the nation's top 50 Hispanic markets in the United States. Entravision owns and operates one of the nation's largest groups of primarily Spanish-language radio stations, consisting of 54 owned and operated radio stations in 21 U.S. markets. Entravision's outdoor advertising operations consist of approximately 11,100 advertising faces located primarily in Los Angeles and New York. Entravision shares of Class A Common Stock are traded on The New York Stock Exchange under the symbol: EVC. * * * As reported in the Troubled Company Reporter on Sept. 8, 2005, Standard & Poor's Ratings Services assigned its 'B+' rating and a recovery rating of '3' to Entravision Communications Corp.'s proposed $650 million senior secured credit facility. "The ratings indicate expectations for a meaningful (50%-80%) recovery of principal in the event of a payment default," said Standard & Poor's credit analyst Alyse Michaelson Kelly. Borrowings under the proposed credit agreement will be used to refinance Entravision's existing bank borrowings and subordinated notes. ENTRAVISION COMMS: Moody's Rates Planned $650MM Facilities at Ba3 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Entravision Communications Corporation's proposed senior secured bank credit facilities totaling $650 million ($150 million revolving credit facility, $500 million term loan). In addition, Moody's upgraded the corporate family rating to Ba3 from B1. The proceeds from the new facilities will be used to: * refinance outstandings under the existing senior secured credit facilities; * tender for the company's 8.125% senior subordinated notes due 2009; and * fund general corporate purposes. The ratings assignment and upgrade continue to reflect: * the company's strong operating performance; * the robust growth prospects of Spanish-language media; * Moody's belief that the company's aggressive acquisition strategy has slowed given the lack of opportunities deemed attractive by management; and * the likelihood of further deleveraging due to continued organic growth in cash flow. Moody's took these rating actions: 1) assigned a Ba3 rating to $150 million senior secured revolving credit facility due 2012; 2) assigned a Ba3 rating to $500 million senior secured term loan due 2013; and 3) upgraded the corporate family rating to Ba3 from B1. Moody's withdrew the B1 ratings on the company's existing senior secured credit facilities. Additionally, Moody's will withdraw the B3 rating on the $225 million of 8.125% senior subordinated notes due 2009 upon completion of the redemption. The rating outlook is stable. The ratings are supported by: * Entravision's continued organic cash flow growth and the subsequent improvements in its financial profile; * the substantial underlying asset value of the company's station portfolio; and I * its experienced management team. The company's television stations operate in the 12 densest and fastest growing Hispanic markets in the country. Notably, Entravision is the largest affiliate of Univision and TeleFutura, which is the dominant Spanish-language television programmer in the U.S which garners an 80% Spanish-language broadcast television prime time household share. Further, the company's radio stations reach over 50% of Hispanics, the fastest growing demographic in the United States. The fundamentally favorable economic and demographic trends within the Spanish-language market and the increase in advertising that targets this base continue to provide Entravision with growth. In addition, the company enjoys the benefits of the geographic diversity of its station portfolio. The ratings remain constrained by the company's still high financial leverage, the broader risks associated with the company's business strategy, which entails the reformatting of all stations upon acquisition and the high proportion of developing stations in the company's portfolio. Additionally, Moody's recognizes Entravision's dependence on Univision and corresponding lack of television network diversification. The stable outlook incorporates the prospects for meaningful cash flow growth through further operating improvements at developmental stage stations. It is our expectation that the company will continue to pursue small acquisitions to bolster existing station clusters and maintain leverage of about 5.0 times going forward. If the company reverts to its former aggressive debt-financed acquisition strategy, negative ratings momentum could occur. Moody's would expect material cash flow growth before any additional positive rating momentum would be considered. As of June 30, 2005, Entravision's leverage is high with Total Debt/EBITDA of 6.0 times pro forma for the refinancing, and cash flow coverage is thin with EBITDA/Interest of 2.5 times. The Ba3 rating for the bank credit facilities reflects the senior- most position of this class of debt. The facilities are secured by all of the stock and assets of the borrower and its subsidiaries and benefit from subsidiary guarantees. The proportion of bank debt in the capital structure warrants setting the bank loan rating on par with the corporate family rating. While the refinancing eliminates the cushion provided by the senior subordinated notes to the lenders of the bank credit facilities, Moody's believes this is offset by the strengthening credit profile of the company. Entravision Communications Corporation is a diversified Spanish- language media company with: * television, * radio, * outdoor, and * publishing operations. Entravision is the largest affiliate of the Univision television network with 47 stations in 23 markets. FALCON PRODUCTS: Can Sell 87.4% Stake in Czech Falcon Mimon Unit ---------------------------------------------------------------- As previously reported, Falcon Products, Inc., asked the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, for permission to sell its 87.4% interest in Falcon Mimon, a.s. Czech Republic. Falcon is comprised of nine domestic debtor corporations and five active foreign subsidiaries in China, Hong Kong, Mexico, the Czech Republic and Denmark. Falcon wholly owns all foreign affiliates except for Mimon. These foreign subsidiaries manufacture furniture for their local customers and also have exported unassembled furniture to the Debtors' factories located in the United States. Mimon's unaudited balance sheet as of June 2005 shows total assets of $9.4 million and $3.3 million in total debts. The company's assets include: -- $3.5 million of inventory; -- a $100,000, third-party receivables; and -- property, plant and equipment valued at $5.6 million. Mimon's liabilities include: -- $1.4 million of trade payables and accrued expenses; and -- a $1.9 million loan from the Ceskoslovenska Obchodni Banka, a.s. The bank loan, due in March 2006, is secured by a lien on all of Mimon's assets except for its equipment. Falcon provided an unsecured guarantee to the Czech bank. The Debtors have stopped purchasing goods from Mimon as part of their cost-cutting initiatives contemplated in their Plan of Reorganization. After Falcon made known its intention to cease purchasing chair frames from Mimon, the Bank threatened to seize the company's assets. Falcon wired $166,000 to Mimon in June 2005. The Czech bank seized those funds, creating a liquidity crisis at the factory. The Bank made it clear that an orderly wind-down of Mimon is out of the question. Either the Debtors find an acceptable buyer for the factory or the Bank will seize all of its assets. BEKY a.s., a Slovak company supplying wood to Mimon, expressed interest in buying the factory. The Bank advised it would support a transaction with BEKY. Subsequently, the parties were able to negotiate a term sheet acceptable to the Bank. The salient terms of the Term Sheet are: a) Falcon will transfer its 87.4% interest in Mimon to BEKY for a nominal $1.00 amount. b) BEKY will guarantee the CSOB Bank Loan and CSOB will release Falcon from its Bank Debt guarantee. c) BEKY will assume the net amount due to Mimon from Falcon. This amount totals approximately $623,000 and consists of the following components: $1,516,000 prepetition payable due to Mimon net of the $1,160,000 prepetition receivable due to Falcon, plus the $276,000 postpetition payable due to Mimon from Falcon. d) Falcon will purchase $332,000 of goods from Mimon at a 20% discount. The purchase price will be funded 50% upon shipment and 50% upon receipt of goods, which will be placed in an escrow account. e) BEKY will provide a CZK 15 million (approximately $623,000) working capital loan to Mimon to assist Mimon through the transition. Falcon stressed that unless a sale transaction is completed quickly, the Czech Bank will force Mimon into bankruptcy and liquidate its assets. That course of action would leave nothing for Falcon. The Honorable Barry S. Schermer approved the Debtor's request in its entirety. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FALCON PRODUCTS: Court Approves $4MM Sale of S&J Unit's Assets -------------------------------------------------------------- The Honorable Barry S. Schermer of the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, approved the sale of Sellers & Josephson, Inc.'s assets to Horizon Motors, Inc., for $4 million, subject to higher and better offers. S&J is one of Falcon Products, Inc.'s debtor-affiliates. The Court also approved a $200,000 break-up fee for Horizon in the event that it's not the successful bidder at an auction on Sept. 28. Competing bids, if any, must be submitted by Sept. 21 at 2:00 p.m. Initial bid increment will be $250,000 and subsequent increments will be at $100,000. The proposed sale is in accordance with the Debtors' business consolidation contemplated in its Plan of Reorganization. The Debtors' Plan is dependent on the success of the consolidation plan which include among others, the sale of subsidiaries to reduce administrative overhead, eliminate redundancies and inefficiencies throughout the organization. Falcon's plan intends to focus the company's efforts and resources on the commercial furniture business. S&J is a wall-covering manufacturer. As such, the Debtors deem it best to divest themselves of this subsidiary. Under the sale agreement, S&J will: a) assign its lease of the property located at 50 Armor Avenue in Carlstadt, New Jersey to Horizon; b) assign to Horizon its Vehicle Lease Service Agreement with Penske Truck Leasing Company; and c) agree with Horizon regarding the termination of the lease for the property located at 86 Route 4 East in Englewood, New Jersey. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FALCON PRODUCTS: Van Kafsouni Buys Belding Property for $350,000 ---------------------------------------------------------------- Falcon Products, Inc., and its debtor-affiliates sought and obtained the Honorable Barry S. Schermer's permission to sell its 87,255 square foot facility located in Belding, Michigan, to Van Kafsouni for $350,000. The Debtors expect the sale to close by September 15, 2005. The Debtors are also authorized 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. 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. Hunt Hoppough says it owed Falcon $28,999.98 as of July 20, 2005. Hunt Hoppough has neither assumed nor rejected the Falcon Lease Agreement. Falcon will pay $32,545 of real property tax owed to Ionia County and the City of Belding. The Debtors will payRealvesco 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: Defends Merits of Michigan Environmental Settlement ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on July 29, 2005, Federal-Mogul Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court to approve a settlement agreement resolving proofs of claim filed by the State of Michigan asserting millions of dollars of liability on account of environmental remediation and clean-up costs. As reported in the Troubled Company Reporter on August 25, 2005, the settlement agreement drew fire from: 1. The State of Michigan, Department of Treasury; 2. Sweet Haven Realty, L.L.C.; 3. Travelers Indemnity Company and certain affiliates and Travelers Casualty and Surety Company, formerly known as The Aetna Casualty and Surety Company; 4. Certain Underwriters at Lloyd's, London, and Certain London Market Insurance Companies; and 5. Kurdziel Industries, Inc., Sparta Property Holding Company LLC, and Sparta Foundry, Inc. The Debtors have resolved the Objections of the Michigan Treasury Department and Sparta by amending the proposed order previously submitted to the Court. The amended Proposed Order provides that the Settlement does not address the tax-related claims of the Treasury Department and that nothing in the order approving the Settlement releases or waives the tax claims. In addition, nothing in the Settlement or the order approving the Settlement releases or waives the claims filed by Sparta. Nothing in the Settlement Agreement or the Motion limits, affects, modifies or impairs in any way all of Travelers' rights or obligations under the Travelers Policies or the rights or obligations of Certain Underwriters at Lloyd's, London, and London Market Insurers under any policies they may have issued that are applicable to the sites covered by the Settlement Agreement. The Debtors have been unable to resolve the Objections submitted by Certain Underwriters at Lloyd's, London, and London Market Insurers and Sweet Haven. However, the Debtors believe that the additional language in the amended Proposed Order properly addresses Travelers' Objection. A full-text copy of the amended Proposed Order to the Michigan Settlement Motion is available for free at: http://bankrupt.com/misc/MISettlementProposedOrder.pdf (1) London Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, contends that the modifications to the Proposed Order resolving Travelers' Objection adequately address London's concerns. Thus, London's Objection should be overruled. However, London has proposed to incorporate certain language that it finds necessary "for the avoidance of any doubt as to the preservation of [London's] rights." "[The] language is overbroad, unnecessary, and entirely beyond the scope of the order and the relief requested," Ms. McFarland argues. London appears to misperceive the effect of the Settlement Agreement and the provisions that allegedly relate to insurance, Ms. McFarland notes. "The Motion and the Settlement Agreement provide that with respect to the three Liquidated Sites only, insurance proceeds recovered by the Debtors relating to those sites will be retained 50% by the Debtors and the other 50% paid to the State of Michigan, with the State's allocable share to be reduced in certain specified instances." Ms. McFarland points out that neither the Settlement Agreement nor the Motion: -- attempts to obligate any insurer to pay any amounts with respect to the three Liquidated Sites; and -- says anything at all about insurance that may be applicable to the additional environmental sites covered by the Settlement Agreement. Thus, Ms. McFarland contends that it strains credibility for London to argue that somehow the Court's approval of the Settlement Agreement might prejudice its rights in later coverage litigation. London's arguments are also diminished by the fact that it is unclear from the Objection what insurance policies they believe they have at issue, Ms. McFarland adds. The only Debtors against which the State of Michigan is granted Allowed Unsecured Claims under the Settlement Agreement are (i) Federal-Mogul Ignition Company and (ii) Federal-Mogul Piston Rings, Inc., who are the Debtors responsible for the Liquidated Sites. London appears to have reviewed insurance policies applicable to Federal-Mogul Products, Inc., which are the subject of certain coverage litigation pending before Judge Rodriguez, Ms. McFarland says. "While Federal-Mogul Products, Inc., is a U.S. Debtor and a party to the Settlement Agreement, no claims are allowed against it under the Settlement Agreement." W. Roger Strelow, an associate general counsel at Federal-Mogul Corporation, attests that the Settlement Agreement is in the Debtors' best interests because it: (a) reduces $3.2 million in allegedly secured claims relating to the Liquidated Sites to less than $2.3 million in unsecured claims; (b) effects the withdrawal of an administrative expense claim asserted by Michigan; (c) provides that future environmental claims relating to sites other than the Liquidated Sites will be paid a dividend equal to that paid to unsecured claims against the U.S. Debtors under the Plan of Reorganization; (d) spares the Debtors and their estates substantial costs in litigating Michigan's environmental claims against the Debtors; and (e) eliminates any objections to the Plan of Reorganization that Michigan might assert. If London elects to litigate the reasonableness of the Settlement Agreement, London must be bound by the Bankruptcy Court's determinations resolving its Objection, Ms. McFarland maintains. (2) Sweet Haven The Settlement Agreement solely addresses and resolves Michigan's claims against the Debtors, Ms. McFarland points out. Neither the Motion nor the Settlement Agreement purports to address or resolve the Sweet Haven Claim. What Michigan intends to do with any dividend it receives on account of its Allowed Unsecured Claims under the Settlement Agreement is outside the scope of the issues before the Court, Ms. McFarland emphasizes. "The matter before the Court is only whether or not the Debtors should be authorized to enter into and implement the Settlement Agreement, which says nothing about Sweet Haven's rights -- if any -- to obtain any funds from the Debtors relating to the Lambertville Site." Therefore, the Debtors ask the Court to overrule Sweet Haven's Objection. 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 Oct. 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. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000) FREDERICK MCNEARY: Says Plan Hinges on Prestwick's Ch. 11 Plan -------------------------------------------------------------- Frederick J. McNeary, Sr., asks the U.S. Bankruptcy Court for the Northern District of New York to extend his exclusive period to file a chapter 11 plan and solicit of acceptances of that Plan to 30 days and 90 days after confirmation of a Plan of Reorganization in Prestwick Chase, Inc.'s, chapter 11 case. Mr. McNeary is a shareholder of Prestwick Chase, Inc., which filed for chapter 11 protection six weeks before Mr. McNeary sought protection from his creditors. Mr. McNeary tells the Bankruptcy Court that he can't propose a Plan of Reorganization until he is able to review Prestwick's Plan because he's personally guaranteed some of Prestwick's obligations. Mr. McNeary states that Prestwick still has not filed a Plan of Reorganization. The Debtor assures the Bankruptcy Court that no creditor is prejudiced by the requested extension. Headquartered in Saratoga Springs, New York, Frederick J. McNeary, Sr., is a real estate developer and broker. He is also a shareholder of bankrupt Prestwick Chase, Inc., which filed for chapter 11 protection on March 11, 2005 (Bankr. N.D.N.Y. Case No. 05-11456). Mr. McNeary filed for chapter 11 protection on April 29, 2005 (Bankr. N.D.N.Y. Case No. 05-13007). Howard M. Daffner, Esq., at Segel, Goldman, Mazzotta & Siegel, P.C., represents the Debtor. When Mr. McNeary filed for protection from his creditors, he estimated less than $50,000 in assets and listed $10 million to $50 million in debts. FRK PROPERTIES: Case Summary & Largest Unsecured Creditor --------------------------------------------------------- Debtor: FRK Properties, LLC fka Robertville Manor Properties, LLC 60 Massell Drive Cartersville, Georgia 30121 Bankruptcy Case No.: 05-43313 Type of Business: The Debtor operates a hospice care facility. Chapter 11 Petition Date: September 7, 2005 Court: Northern District of Georgia (Rome) Judge: Paul W. Bonapfel Debtor's Counsel: R. Scott Cunningham, Esq. R. Scott Cunningham, PC P.O. Box 2529 Dalton, Georgia 30722-2529 Tel: (706) 226-3642 Total Assets: $2,015,600 Total Debts: $1,346,592 Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Bartow Co. Tax Commissioner $9,200 135 West Cherokee Avenue #217A Cartersville, GA 30121 HALLIBURTON CO: Moody's Reviews (P)Ba1 Preferred Stock Rating ------------------------------------------------------------- Moody's Investors Service placed Halliburton Company's Baa2 senior unsecured ratings under review for possible upgrade based on: * significant improvement in the company's earnings and cash flow over the past four fiscal quarters; and * management's demonstrated commitment to repay debt with free cash flow since the funding of the company's asbestos settlement in January of this year. Halliburton's adjusted consolidated operating profit of about $1.1 billion during the first half of 2005 was substantially above the $186 million the company had reported during the same period in 2004. The improvement was driven by: * strong oilfield services industry fundamentals; * a lower cost structure, greater capital efficiency; and * a turnaround in the operating performance of its Kellogg Brown & Root subsidiary. At June 30, 2005, Halliburton had a sizable unrestricted cash balance of about $1.6 billion, despite the asbestos settlement in the first quarter (of which the cash portion was approximately $2.3 billion) and a subsequent reduction in total balance-sheet debt of over $400 million. In its review, Moody's will examine: * Halliburton's ability to generate through-the-cycle financial performance that is more in line with those of its more highly rated oilfield services industry peers; * the likelihood that Halliburton will achieve its financial leverage targets by the end of 2005; * management's strategies for deployment of excess cash flow once those leverage targets are achieved; and * the credit implications of the company's numerous legal contingencies. Moody's will also assess the status of KBR's contracts in Iraq and the sustainability of KBR's positive earnings trend. Management has announced that Halliburton may spin off or sell KBR under certain conditions. While the likelihood and timing of such a transaction are unclear at this time, Moody's will consider the potential implications for Halliburton's ratings of a separation from KBR. Ratings under review: Halliburton Company: * senior unsecured debentures, notes, and medium-term notes rated Baa2 * shelf registration for senior unsecured debt rated (P)Baa2 * shelf registration for subordinated debt rated (P)Baa3 * shelf registration for preferred stock rated (P)Ba1 The company's Prime-2 rating for commercial paper and extendible commercial notes is not under review. Headquartered in Houston, Texas, Halliburton Company is one of the world's largest diversified energy services, engineering, maintenance, and construction companies. HONEY CREEK: Hires Robert & Grant P.C. as Bankruptcy Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Texas in Dallas gave Honey Creek Kiwi, LLC, interim approval to retain Robert & Grant P.C. as counsel in its chapter 11 case. The Debtor tells the Bankruptcy Court that Robert & Grant's knowledge and experience of the industry in which it operates will contribute to the efficient administration of its estate and minimize expenses. In this engagement, Robert & Grant will: a) advise the Debtor of its powers and duties as debtor-in- possession in the continued management of its affairs; b) provide assistance advice and representation concerning the confirmation of any proposed plan of reorganization or liquidation and solicitation of any acceptances or responding to rejections of such plan; c) provide assistance, advice and representation concerning the possible sale or liquidation of the Debtor's assets; d) provide assistance, advice and representation concerning any further investigation of the assets, liabilities and financial condition of the Debtor that may be required under local, state or federal law; e) represent the Debtor at hearing or matters pertaining to their affair as debtor-in-possession; f) prosecute and defend pending litigation matters and such other matters that might arise during the chapter 11 case; g) provide counseling and representation with respect to assumption or rejection of executory contracts and leases, sale of assets and other bankruptcy-related matters arising from the case; h) in conjunction with other counsel, render advice with respect to general corporate and litigation issues relating to these cases, including, but not limited to securities corporate finance, tax and commercial matters; and i) perform other legal services as may be necessary and appropriate for the efficient and economical administration of the Debtor's chapter 11 case. The hourly rates for Robert & Grant's professionals designated to represent the Debtor are: Professional Hourly Rate ------------ ----------- Richard, G. Grant, Esq. $300 Keith R. Pearson, Esq. $175 The Debtor tells the Bankruptcy Court that the Firm received a $75,000 retainer. Approximately $10,000 of the retainer has been applied to prepetition invoices, leaving a $65,000 balance. To the best of the Debtor's knowledge, the Firm does not hold any interest adverse to its estate and is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC, filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). When the Debtor filed for protection from its creditors, it reported $10 million to $50 million in estimated assets and debts. HOVNANIAN ENT: Earns $116.1 Million of Net Income in 3rd Quarter ---------------------------------------------------------------- Hovnanian Enterprises, Inc. (NYSE: HOV) reported net income of $116.1 million, on $1.3 billion in total revenues for the quarter ended July 31, 2005. Net income in the third quarter of fiscal 2004 was $86.7 million on total revenues of $1.1 billion. Consolidated deliveries for the third quarter of 2005 were 3,967 homes with an aggregate sales value of $1.3 billion, compared with consolidated deliveries of 3,738 homes in the same period last year with an aggregate sales value of $1.0 billion, a 23% sales value increase. Homebuilding gross margins, after interest expense included in cost of sales, increased 140 basis points to 25.6%, compared with 24.2% on a comparable basis in last year's third quarter. Stockholders' equity grew 55% to $1.6 billion at July 31, 2005 from $1.1 billion at the end of the fiscal 2004 third quarter. For the nine-month period ended July 31, 2005, total revenues reached $3.6 billion, up 30% compared to $2.8 billion for the year earlier period. Net income for the first nine months of fiscal 2005 increased 41% to $303.7 million, compared to $214.9 million, in the same period a year ago. Compared to the first nine months of 2004, the dollar value of net contracts during the same period in fiscal 2005 increased by 26% and the number of home deliveries rose by 19%, including contracts and deliveries from unconsolidated joint ventures. "Our outstanding performance during the fiscal 2005 third quarter was driven by excellent gross margins and through the successful execution of our strategy to provide the right product mix throughout each of our markets," said Ara K. Hovnanian, President and Chief Executive Officer of the Company. "As indicated by the 35% increase in the dollar value of our net contracts, we continue to experience strong demand for our well-designed homes in the vast majority of our communities. We also have been able to grow our number of communities at a healthy pace, particularly when our joint ventures are included. We have been increasing our use of joint ventures with financial and strategic partners to mitigate risk in certain larger developments and as a means to issue equity at a project level to reduce leverage without diluting our common shareholders. We believe that this strategy will further enhance our growth and returns. Additionally, we are excited about the geographic diversification and growth opportunities created by our recently announced acquisitions of First Home Builders in Ft. Myers, Florida and Oster Homes in Cleveland, Ohio," Mr. Hovnanian continued. "Although we continued to see some pricing power in many of our heavily regulated markets, the pace of sales price increases has moderated during the third quarter. Recent reports of job growth across the U.S. remain strong, and job creation historically has a positive correlation with the health of the housing industry," said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. "Our quarter-end backlog of more than 11,300 homes combined with the backlog of our two most recent acquisitions provides us with approximately 15,500 homes in contract backlog. Given this backlog of sales contracts, we have an excellent basis for our projected deliveries, revenues and earnings for the next six to eight months. As a result, we are increasingly confident in our EPS projection for fiscal 2005 of greater than $7.00 per fully diluted common share. We are projecting that we will grow earnings per share in 2006 between 15% and 20%, to between $8.05 and $8.40 per fully diluted common share, even after paying a full year of preferred dividends, and amortizing over $100 million of pre-tax costs, or approximately $0.93 after-tax earnings per fully diluted share, related to company acquisition premiums. We remain committed to a conservative accounting approach which amortizes and expenses 100% of any purchase premiums related to company acquisitions. "During the third quarter we increased the committed amount of our unsecured revolving credit facility to $1.2 billion and issued $140 million in a perpetual preferred stock offering. Since the end of the third quarter we have raised an additional $300 million through a senior notes offering. After taking into account this additional debt and capital, as well as our recent acquisitions, we are projecting to end fiscal 2005 below our target net debt- to-capital ratio of 50%. Our successful capital markets activities leave us well-positioned to grow organically through traditional land acquisition, as well as through further company acquisitions," Mr. Sorsby concluded. "With 93% of our earnings growth during the third quarter coming from organic operations, we continue to deliver steady growth from our existing operations. In addition, we have added to the strength of our product offerings and the penetration of our markets with the additions of Oster Homes and First Home Builders of Florida. We believe that the addition of these two well- respected homebuilding operations will further our successful strategy of being a dominant homebuilder in each of our regional markets," Mr. Hovnanian said. "During fiscal 2005 we are achieving strong growth in both revenues and earnings as well as high returns on our invested capital, keeping us in the top tier of companies in the Fortune 500 in terms of these performance metrics. As we go forward into 2006 and beyond, we expect that we will continue to grow both our revenues and earnings at a rate well above the pace of the overall housing market," Mr. Hovnanian concluded. Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Illinois, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Goodman Homes, Matzel & Mumford, Diamond Homes, Westminster Homes, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Great Western Homes, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes and First Home Builders of Florida. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes. * * * As reported in the Troubled Company Reporter on Aug. 4, 2005, Fitch Ratings has assigned a 'BB+' rating to Hovnanian Enterprises, Inc.'s (NYSE:HOV) $300 million 6.25% senior unsecured notes due Jan. 15, 2016. The Rating Outlook is Stable. The $300 million issue will be ranked on a pari passu basis with all other senior unsecured debt, including Hovnanian's revolving and letter of credit facility. Proceeds from the new debt issues will be used for general corporate purposes. JERNBERG INDUSTRIES: Completes 363 Sale to KPS Special for $60-Mil ------------------------------------------------------------------ KPS Special Situations Fund II completed the acquisition of substantially all of the assets of Jernberg Industries, Inc., Iron Mountain Industries, LLC and related entities. KPS acquired the assets through a newly formed company, Hephaestus Holdings, Inc., for $1.25 million in cash and the assumption of certain of the Debtors' liabilities. The Debtors believe that the aggregate value of the Offer exceeds $60 million. The transaction was accomplished pursuant to a 363 sale of assets under Chapter 11 of the U.S. Bankruptcy Code. HHI is now one of North America's leading manufacturers of highly engineered forged parts for various power-train and wheel-end applications in the automotive industry. Products manufactured by HHI include wheel hubs, transmission turbine hubs, and axle ring and pinion gears. With over 800 employees, HHI operates four manufacturing facilities located in Chicago, Illinois. KPS has retained Mr. George Thanopoulos, an executive with over twenty years of automotive experience, to lead HHI as its new Chief Executive Officer. KPS invested $23 million of equity capital into HHI to fund the Company's turnaround plan and working capital. In addition, KPS provided HHI with $8 million of Interim Financing to fund the purchase of certain new manufacturing equipment. To complete the transaction in a very limited time period, KPS successfully negotiated over thirty unique agreements with the Company's customers, vendors, lenders and lessors; including three collective bargaining agreements with the United Steelworkers of America and a new $37 million senior lending facility with LaSalle Bank, N.A. "Our objective is to build the premier supplier of automotive forgings in North America," George Thanopoulos, Chief Executive Officer of HHI, said. "We thank the Company's customers, vendors and employees for their support through a difficult period. Our new Company looks forward to providing our customers with world class products and superior customer service. KPS has provided HHI with the resources for success and long term growth. I am very confident that by leveraging the skill, creativity and talent of our workforce, HHI will achieve its full potential." Michael Psaros, a Managing Principal of KPS said, "We look forward to working with George Thanopoulos and the employees of HHI to create one of the world's leading automotive forging companies. We intend to aggressively build HHI through both organic growth and acquisitions. Acquiring and turning around Jernberg's business is an important first step in this process. The long term commitments made by the Company's valued customers made all of this possible. We thank the United Steelworkers of America for its support in connection with this complex transaction and LaSalle Bank and Conway MacKenzie & Dunleavy for their contribution to the process." KPS Special Situations Funds -- http://www.kpsfund.com/-- are a family of private equity funds with over $600 million of committed capital focused on constructive investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand- alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS invests its capital concurrently with a turnaround plan predicated on cost reduction, capital investment, and capital availability. Typically, the KPS turnaround plan is accompanied by a financial restructuring of the company's liabilities. Headquartered in Chicago, Illinois, Jernberg Industries, Inc., -- http://www.jernberg.com/-- is a press forging company that manufactures formed and machined products. The Company and its debtor-affiliates filed for chapter 11 protection on June 29, 2005 (Bankr. N.D. Ill. Case No. 05-25909). Jerry L. Switzer, Jr., Esq., at Jenner & Block LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of $50 million to $100 million. CM&D Management Services, LLC's A. Jeffery Zappone serves as the Debtors' Chief Restructuring Officer. CM&D Joseph M. Geraghty sits as Cash and Restructuring Manager and Joshua J. Siano, Gerald B. Saltarelli and J. David Mathews serve as Cash and Restructuring Support personnel. JOHN Q. HAMMONS: Tender Offer Yield in JQH Merger is 4.358% ----------------------------------------------------------- JQH Finance, LLC, has determined the tender offer yield for its tender offer for all of the outstanding $499 million principal amount of Series B 8-7/8% First Mortgage Notes due 2012 issued by John Q. Hammons Hotels, L.P., and John Q. Hammons Hotels Finance Corporation III, affiliates of John Q. Hammons Hotels, Inc., in connection with the pending merger between its affiliate and John Q. Hammons Hotels, Inc. (Amex: JQH). In connection with the tender offer, JQH Finance, LLC, is also soliciting consents from the holders of the notes to approve certain proposed amendments to the indenture under which the notes were issued. The tender offer yield for the notes tendered and purchased will be 4.358%, which was determined as of 2:00 p.m., New York City time, on Sept. 7, 2005, by reference to a fixed spread of 0.50% over the yield to maturity based on the bid side price of the 3.125% U.S. Treasury Note due May 15, 2007. Assuming a settlement date of September 27, 2005, consideration for each $1,000 principal amount of notes validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time, tomorrow, Sept. 9, 2005, unless extended will be $1,111.74, which includes a consent payment of $30. The remaining pricing terms, and other details regarding the tender offer and consent solicitation, are set forth in detail in the Offer to Purchase and Consent Solicitation Statement dated Aug. 26, 2005, and related documents. Holders who validly tender notes after the Consent Time but prior to 10:00 a.m., New York City time, on Sept. 26, 2005, unless extended, will be eligible to receive the tender offer consideration, which is equal to the Total Consideration less the consent payment. Payment for all notes purchased will be made promptly after the Expiration Time. Tendered notes may be withdrawn and related consents may be revoked at any time prior to the execution by the Issuers and Wachovia Bank, National Association, as trustee for holders of the Notes, of a supplemental indenture implementing the proposed amendments to the indenture. Goldman, Sachs & Co. has been appointed as dealer manager and solicitation agent for the tender offer and consent solicitation. Global Bondholder Services Corporation has been appointed the information agent and depositary for the tender offer and consent solicitation. The Offer Materials may be obtained by contacting Global Bondholder Services Corporation, 65 Broadway - Suite 74, New York, New York 10006, Attention: Corporate Actions (telephone: 866-873-6300). Information concerning the terms and conditions of the tender offer and consent solicitation may be obtained by contacting Goldman, Sachs & Co., Credit Liability Management Group, 85 Broad Street, 29th Floor, New York, New York, 10004 (telephone: 800-828-3182). John Q. Hammons Hotels, Inc. -- http://www.jqh.com/-- is a leading independent owner and manager of affordable upscale, full service hotels located primarily in key secondary markets. The Company owns 46 hotels located in 20 states, containing 11,370 guest rooms or suites, and manages 14 additional hotels located in seven states containing 3,158 guest rooms or suites. The majority of these 60 hotels operate under the Embassy Suites, Holiday Inn and Marriott trade names. Most of the hotels are located near a state capitol, university, convention center, corporate headquarters, office park or other stable demand generator. * * * As reported in the Troubled Company Reporter on May 27, 2005, Standard & Poor's Ratings Services ratings on John Q. Hammons Hotels L.P. (JQH LP), including the 'B' corporate credit rating, remain on CreditWatch with developing implications, where they were placed on Oct. 18, 2004. This follows the announcement by JQH Inc. that a special committee approved a transaction between principal stockholder John Q. Hammons and an investor group. The purchase price for JQH Inc.'s Class A common shares was reiterated at $24 a share. JQH Inc. has not yet publicly disclosed all details of the transaction, such as the participants in the investor group and what the final capital structure will be. JQH LP is a partnership whose sole general partner is JQH Inc., a publicly traded company, which exercised control over all partnership decisions. Mr. John Q. Hammons, the majority shareholder of JQH Inc. holds about 77% of the voting shares. In resolving the CreditWatch listing, Standard & Poor's will monitor developments associated with the ongoing transaction, including whether the $499 million in outstanding 8.875% first mortgage notes due 2012, which were jointly issued by JQH LP and John Q. Hammons Hotels Finance Corporation III, will remain outstanding. The CreditWatch listing will be resolved when details of the transaction are fully determined. JOSEPH BONO: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------- Debtors: Joseph L. Bono and Barbara A. Bono 2406 Marquardt McHenry, Illinois 60050 Bankruptcy Case No.: 05-74690 Chapter 11 Petition Date: September 8, 2005 Court: Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtors' Counsel: Bradley T. Koch, Esq. Holmstrom & Kennedy P.C. P.O. Box 589 Rockford, Illinois 61105 Tel: (815) 962-7071 Fax: (815) 962-7181 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chase BankOne Credit Card Debt $17,622 P.O. Box 15298 Wilmington, DE 19850-5298 Bank of America Credit Card Debt $9,630 P.O. Box 650260 Dallas, TX 75265-0260 American Express Credit Card Debt $9,023 P.O. Box 360002 Ft. Lauderdale, FL 33336-0002 Advanta Bank Corporation Credit Card Debt $8,985 P.O. Box 30715 Salt Lake City, UT 84130-0715 Chase BankOne Credit Card Debt $7,144 P.O. Box 15298 Wilmington, DE 19850-5298 GM Card Credit Card Debt $6,056 P. O. Box 80082 Salinas, CA 83912 Chase BankOne Credit Card Debt $4,587 P.O. Box 15298 Wilmington, DE 19850-5298 US Bank Credit Card Debt $4,511 P.O. Box 790408 St. Louis, MO 63179-0408 Best Buy Credit Card Debt $4,193 P.O. Box 17298 Wilmington, DE 19850-5521 CitiBank Credit Card Debt $3,573 Aadvantage Business Card P.O. Box 8309 The Lakes, NV 88901-6309 Best Buy Credit Card Debt $3,020 P.O. Box 17298 Wilmingtonm, DE 19850-5521 Citi Card Credit Card Debt $1,660 P.O. Box 688907 Des Moines, IA 63179-0408 Capital One Credit Card Debt $1,341 P.O. Box 790217 St. Louis, MO 63179 KAISER ALUMINUM: Court Approves 2nd Amended Disclosure Statement ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved Kaiser Aluminum Corporation and its debtor-affiliates' Disclosure Statement that relates to their Second Amended Plan of Reorganization. The Court has scheduled a confirmation hearing with respect to the Plan for Jan. 9, 2006, and Jan. 10, 2006. Assuming plan confirmation at that time, the company could emerge from Chapter 11 by the end of January or early February 2006. "Today's ruling completes the first of three final milestones to the company's successful completion of its reorganization," said Jack Hockema, president and chief executive officer, Kaiser Aluminum. "We anticipate that the remaining two -- voting by the creditors and confirmation by the bankruptcy and district courts - - will be completed according to the court's schedule within the next four months. As a result, we now have a definitive, court- approved schedule to emerge early next year as a globally competitive company with a strong balance sheet, best-in-class operations, and the ability to grow in our key transportation and industrial markets." Mr. Hockema continued, "I credit today's achievement to the outstanding support of our employees, customers, suppliers, and other stakeholders who share our commitment of driving Kaiser Aluminum to its full potential in terms of customer service, quality, product development, and financial performance." The company expects to commence a 60-day solicitation of acceptances of the Plan by creditors by Sept. 15, 2005. Because the Plan reflects previously disclosed agreements reached with the company's major creditor constituents, the company is optimistic that it will receive the necessary acceptances for plan confirmation. However, no assurance can be given that the plan will ultimately receive the necessary acceptances by creditors, or be confirmed by the Bankruptcy Court or U.S. District Court, or that the transactions contemplated by the plan will ultimately be consummated. Their restructuring, the Debtors say, would resolve prepetition claims that are currently subject to compromise. Those claims include, among others, retiree medical, pension, asbestos, and other tort, bond, and note claims. The plan would also result in the cancellation of the equity interests of current stockholders and the distribution of equity in the emerging company to creditors or creditor representatives. The majority of the new equity would be distributed to two voluntary employee benefit associations that were created in 2004 to provide medical benefits or funds to defray the cost of medical benefits for salaried and hourly retirees. Retiree medical plans existing at that time were cancelled. All personal injury claims relating to both prepetition and future claims for asbestos, silica and coal tar pitch volatiles, and existing claims regarding noise-induced hearing loss, would be permanently resolved by the formation of certain trusts funded primarily by the company's rights to proceeds from certain of its insurance policies and the establishment of channeling injunctions that would permanently channel these liabilities away from the company and into the trusts. Pursuant to the Remaining Debtors' Disclosure Statement relating to their Second Amended Plan, Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells Judge Fitzgerald that once the PI Insurance Assets and the $13,000,000 are received by a trust established under a Funding Vehicle Trust Agreement -- to be entered by KACC and the individuals serving from time to time as the Asbestos and Silica PI Trustees -- it will reserve a cash amount for the payment of its disbursements and expenses in connection with all actions to pursue PI Insurance Assets and those incurred by the Remaining Debtors in certain actions to be paid by the Funding Vehicle Trust. The remainder of the Funding Vehicle Trust's Assets will be allocated among the PI Trusts. The PI Insurance Assets consist of: (a) rights to receive proceeds from certain Included PI Trust Insurance Policies in respect of Channeled Personal Injury Claims; and (b) cash paid or to be paid pursuant to settlement agreements with any PI Insurance Company entered into before the Effective Date in respect of Included PI Trust Insurance Policies and allocable to payment of Channeled PI Claims, including certain Settlement Escrow Funds. In addition, the Asbestos PI Trust will also be entitled to receive 94% of the common stock of Reorganized Kaiser Trading and 70.5% of the Kaiser Finance Corporation's $1,106,000,000 prepetition claim. Ultimate Value of PI Insurance Assets is Uncertain Mr. DeFranceschi relates that while the Remaining Debtors believe that substantial recoveries are probable as a result of the insurance coverage litigation, certain insurers continue under a variety of theories to dispute that their policies require them to pay. The Insurers assert that they will not be obligated to pay on claims approved for payment by the PI Trusts. Mr. DeFranceschi says that the amount of insurance coverage that will ultimately be available is uncertain and will depend on resolution of the coverage litigation as to various issues and settlements with insurers. As of June 29, 2005, there was approximately $14,000,000 in previously approved settlement payments that were in escrow and will be paid to the Funding Vehicle Trust. Moreover, a motion is currently pending before the Court for approval of a settlement that would involve a $1.37 million payment by certain underwriters at Lloyd's of London. Mr. DeFranceschi ascertains it is possible that there will be additional settlements approved before the Plan's confirmation and that settlements may occur after the Confirmation. Mr. DeFranceschi continues that there is also a possibility that one or more of the PI Insurance Companies may become insolvent in the future, which may adversely affect the amount that any insurance company is expected to contribute to the PI Trusts. "Because there is uncertainty as to the total value of Channeled Personal Injury Claims and the PI Insurance Assets that will be available to pay them, the amount that would ultimately be recovered and paid to any individual claimant on a Channeled PI Claim is uncertain and speculative," Mr. DeFranceschi notes. Channeled PI Claims and Trust Expenses The Funding Vehicle Trust will assume all liability and responsibility for the Trust Expenses. It will also advocate in all actions brought against any reorganize debtor involving Channeled PI Claims that are and have been channeled to the applicable PI Trust. Each Reorganized Debtors will be entitled to indemnification from the Funding Vehicle Trust for any out-of- pocket and attorneys' fees and expenses. Insurance-Related Obligations Mr. DeFranceschi states that the Funding Vehicle Trust's pursuit of PI Insurance Assets as to Channeled PI Claims and Trust Expenses or of any PI Trust will be undertaken by the Funding Vehicle Trust in a manner so as not to cause the Reorganized Debtors or other Kaiser companies, including Trochus Insurance Company, to become obligated, whether: * directly to the PI Insurance Company, as to which claim is made by the Funding Vehicle Trust; or * indirectly through claims made by a PI Insurance Company to pay any amounts in the form of self-insured retentions, premiums, deductibles, retrospective premium adjustments, reinsurance, security or collateral arrangements or other charges, costs, fees or expenses. To effectuate its obligation to defend any Insurance-Related Claim, the Funding Vehicle Trust, at the Funding Vehicle Trustees' option, will either: (a) pay any Insurance-Related Claim adjudicated or determined by binding arbitration on behalf of the Reorganized Debtor or other Kaiser Company; or (b) reduce the amount that any PI Insurance Company is adjudicated or determined by binding arbitration. Effect of Plan on Certain Indentures On the Effective Date, the 9-7/8% and the 10-7/8% Senior Note Indentures will be deemed cancelled and discharged with respect to all obligations owed to and by any debtor, as well as the Indenture Trustees' obligations under those Indentures and the holders of Senior Note Claims. The Indenture Trustees' rights, including their rights as paying agent and registrar, will remain in effect after the Petition Date. Environmental Laws' Payments and Obligations Reorganized Kaiser Aluminum Corporation will guarantee in respect of properties, facilities or sites owned by a Reorganized Debtor as of the Effective Date: -- the payment by each Reorganized Debtor of any amounts that may ultimately be required to be paid by it in respect of claims under certain environmental laws of governmental units; and -- the performance by each Reorganized Debtor of any obligations that it may ultimately be required to perform by any governmental unit under Environmental Laws. Mr. DeFranceschi explains that Environmental Laws constitute all laws relating to pollution or protection of human health or the environment, including laws relating to: * releases or threatened releases of hazardous materials, wastes or substances, pollutants, contaminants, radiological materials or oils; or * manufacture, processing, distribution, use, treatment, storage, release, disposal, transport or handling of hazardous materials, including those laws on natural resource damages, decontamination, decommissioning and voluntary remediation programs. Governmental units enforcing Environmental Laws will have the right to enforce Reorganized KAC's guarantees under the Plan provisions. A black-lined copy of the Remaining Debtors' Second Amended Joint Plan of Reorganization is available for free at: http://bankrupt.com/misc/Blacklined_Second_Amended_Plan.pdf A black-lined copy of the Remaining Debtors' Second Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/Blacklined_Second_Amended_Disclosure_Statement.pdf 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. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) KATAYONE ADELI: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Katayone Adeli 9950 Durant Drive No. 48 Beverly Hills, California 90212 Bankruptcy Case No.: 05-30583 Chapter 11 Petition Date: September 8, 2005 Court: Central District of California (Los Angeles) Judge: Thomas B. Donovan Debtor's Counsel: Paul M. Brent, Esq. Steinberg, Nutter & Brent, Law Corporation 501 Colorado Avenue, Suite 300 Santa Monica, California 90401 Tel: (310) 451-9714 Total Assets: $629,800 Total Debts: $2,112,570 Debtor's 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CIT $727,358 c/o R. Sachs c/o A. Golub 42 East 64th Street New York, NY 10021 Richard B. Sachs $727,358 c/o A. Golub 42 East 64th Street New York, NY 10021 Ballon Stoll Bader and Nadler PC $45,000 1450 Broadway New York, NY 10018-2268 New York Sales Tax Authority $30,000 United Mileage Plus Visa $19,163 Union Bank of California $11,321 American Express $3,369 KERR-MCGEE: Soliciting Consents to Amend Bond Indenture ------------------------------------------------------- Kerr-McGee Corp. (NYSE: KMG) commenced a consent solicitation to amend the indenture governing four outstanding Kerr-McGee debt securities: * 5.875% Notes due 2006 * 6.875% Notes due 2011 * 7.875% Notes due 2031 * 6.950% Notes due 2024 The purpose of the proposed amendment to the indenture is to provide for the release of Kerr-McGee's chemical business subsidiary, Kerr-McGee Chemical Worldwide LLC (Newco Chemical Worldwide), as a guarantor of the notes upon an initial public offering of securities, spinoff or splitoff of Newco Chemical Worldwide or its newly formed parent. As previously announced, Kerr-McGee has decided to separate its chemical business and expects to use the proceeds from the separation to reduce debt. Under the existing terms of the indenture, Newco Chemical Worldwide would be released as a guarantor of the notes in the event of a sale of the entity in its entirety, and neither noteholder consent nor an amendment would be necessary to consummate such a sale. However, Kerr-McGee may choose to separate Newco Chemical Worldwide through a transaction not involving a sale, such as an IPO, a spinoff or a splitoff. Kerr- McGee believes it is important to the separation of the chemical business, irrespective of the form of the transaction, that Newco Chemical Worldwide does not have the contingent liability as a guarantor of the notes, which are a direct obligation of Kerr- McGee. For this reason, Kerr-McGee is soliciting consent to ensure release of Newco Chemical Worldwide as guarantor of the notes even if the transaction by which the separation occurs is not a sale. The proposed amendment to the indenture requires the written consent of the holders of at least a majority in aggregate outstanding principal amount of all series of notes voting together as a single class. As of Sept. 7, 2005, notes with an aggregate principal balance of $2,131,930,000 are outstanding under the issues subject to the consent solicitation. Upon adoption of the proposed amendment, an initial consent fee (execution fee) of $2.50 for each $1,000 principal amount of notes will be paid to each holder who validly delivers, and does not revoke, a consent prior to the expiration of the consent solicitation. If the proposed amendment becomes operative and Newco Chemical Worldwide is released from its guaranty of the notes as a result of an IPO, spinoff or splitoff, Kerr-McGee will pay an additional consent fee (release fee) to each consenting holder for each $1,000 principal amount of notes as outlined below. Total Security Amount Execution Release Consent Description CUSIP Outstanding Fee Fee Fee ----------- ----- ----------- --------- -------- ----- -- 5.875% due 492386 AR8 $306,930,000 $2.50 $1.25 $3.75 9/15/06 6.875% due 492386 AS6 $675,000,000 $2.50 $3.75 $6.25 9/15/11 7.875% due 492386 AT4 $500,000,000 $2.50 $10.00 $12.50 9/15/31 6.950% due 492386 AU1 $650,000,000 $2.50 $10.00 $12.50 7/01/24 If the amendment to the indenture is executed, but Kerr-McGee proceeds with the sale of the chemical business or otherwise does not proceed with an IPO, spinoff or splitoff of Newco Chemical Worldwide, the release fee will not be paid. The consent solicitation will expire at 5 p.m. EDT on Wednesday, Sept. 21, 2005, unless extended by Kerr-McGee. Holders of the notes should refer to the company's Consent Solicitation Statement dated Sept. 8, 2005, and the related Letter of Consent for more information on the terms and conditions. Lehman Brothers is acting as the solicitation agent, and questions may be directed to Lehman at 212-528-7581 (collect) or 800-438- 3242 (toll free). Requests for documentation should be directed to Global Bondholder Services Corp. at 212-430-3774 (banks and brokers) or 866-470-4500 (toll free). Kerr-McGee -- http://www.kerr-mcgee.com/-- is an Oklahoma City- based energy and inorganic chemical company with worldwide operations and assets of more than $15 billion. * * * As reported in the Troubled Company Reporter on July 21, 2005, Standard & Poor's Ratings Services affirmed its 'BB+' long-term corporate credit rating on oil and gas exploration and production company Kerr-McGee Corp. and removed the rating from CreditWatch with negative implications. The rating was originally placed on CreditWatch March 4, 2005. Standard & Poor's also affirmed its 'B' short-term corporate credit rating on the company. The short-term rating was not on CreditWatch. S&P says the outlook is negative. As reported in the Troubled Company Reporter on Apr. 18, 2005, Fitch Ratings has downgraded and removed from Rating Watch Negative the ratings of Kerr-McGee: -- Senior unsecured debt to 'B' from 'BBB'; -- Commercial paper to 'B' from 'F2'. Fitch has also assigned a 'BB' senior secured rating to Kerr McGee. Fitch says the Rating Outlook is Stable. As reported in the Troubled Company Reporter on Apr. 18, 2005, Moody's Investors Service lowered the long-term and short-term debt ratings of Kerr-McGee Corporation to below investment grade. Moody's assigned a Ba3 Senior Implied and lowered KMG's Senior Unsecured notes to Ba3 from Baa3. Moody's expects that KMG's existing notes will be secured equally and ratably with new secured term loans that the company has arranged. The company's short-term ratings were lowered to Not Prime from Prime-3. This action concludes the review begun March 4 that had reflected "material event risk" resulting from a more activist shareholder base. Moody's says the outlook is stable. KNOLL INC: UBS & BofA Commit to Provide $450-Mil Credit Facility ---------------------------------------------------------------- Knoll, Inc. (NYSE: KNL) entered into a fully underwritten commitment letter with: * UBS Loan Finance LLC, * UBS Securities LLC, * Bank of America N.A., and * Banc of America Securities LLC, which provides for a $450 million credit facility, a portion of which would be used to repay the indebtedness under Knoll's existing credit facilities. The closing of the refinancing is subject to the satisfaction of various conditions. Under the new credit facilities, among other things, (i) the new term loan would mature in seven years; (ii) the new revolving credit agreement would expire in five years; (iii) interest rates would be lower as compared to the existing Knoll credit facilities; (iv) financial covenants would be reset; and (v) although the new credit facilities continue to impose restrictions on Knoll's ability to pay dividends, Knoll would be permitted to pay dividends in greater amounts than under its existing credit facilities. Dividend Policy Subject to the closing of the refinancing, its Board of Directors currently intends to declare and pay quarterly dividends of $0.10 per share on its common stock -- double its current quarterly dividend. Andrew B. Cogan, Chief Executive Officer, stated, "Our strong financial performance has put us in position to enter into a new and improved credit facility which will reduce our borrowing costs and increase the cash we return to shareholders in the form of increased quarterly dividends." This proposed change in dividend policy will not affect Knoll's previously announced $0.05 per share cash dividend for the third quarter of 2005, which is payable September 30, 2005 to stockholders of record on September 15, 2005. Knoll designs, manufactures and distributes a comprehensive portfolio of branded office furniture products, textiles and accessories. * * * As reported in the Troubled Company Reporter on Aug. 20, 2004, Standard & Poor's Ratings Services lowered its corporate credit and bank loan ratings on office furniture manufacturer Knoll Inc. to 'BB-' from 'BB', following Knoll's proposal of a debt refinancing and a shareholder dividend. At the same time, a 'BB-' senior secured bank loan rating and a recovery rating of '4' were assigned to the proposed $500 million bank facility that is part of the refinancing. The 'BB-' bank loan rating is the same as Knoll's corporate credit rating; this and the '4' recovery rating indicate that lenders can expect marginal (25%-50%) recovery of principal in the event of a default. S&P said the outlook is stable. As reported in the Troubled Company Reporter on Aug. 20, 2004, Moody's Investors Service downgraded Knoll, Inc.'s senior implied rating to Ba3 and senior unsecured issuer rating to B1 and rated the company's new senior secured bank facilities Ba3 following the company's announcement of a leveraged recapitalization. The outlook remains stable. The downgrade reflects Knoll's increased leverage and reduced interest coverage following the company's decision to pay a dividend to shareholders in the context of uncertainty as to the extent of the recovery in the commercial furniture business. Ratings assigned: * $75 million revolving credit facility due 2009, Ba3; and * $425 million senior secured term loan due 2011, Ba3. Ratings downgraded: * Senior implied rating, Ba2 to Ba3; and LAWRENCE BARGAIN: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Lawrence Bargain Center, Inc. 7800 Record Street Indianapolis, Indiana 46226 Bankruptcy Case No.: 05-18137 Type of Business: The Debtor operates an apparel store. Chapter 11 Petition Date: September 8, 2005 Court: Southern District of Indiana (Indianapolis) Debtor's Counsel: Edward B. Hopper, II, Esq. Stewart & Irwin PC 251 East Ohio Street, Suite 1100 Indianapolis, Indiana 46204 Tel: (317) 639-5454 Total Assets: $3,196,240 Total Debts: $1,295,417 Debtor's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Marion County Auditor Notice of tax sale $54,958 841 City County Building 200 East Washington Street Indianapolis, IN 46204 Pollard Electric, Inc. Mechanic lien on $22,325 267 East Washington Street real property P.O. Box 723 Mooresville, IN 46158 Lawrence Utilities, LLC Utility services $18,133 c/o Angela Pease Krahulik, Esq. One American Square, Box 82001 Indianapolis, IN 46204 MERIDIAN AUTOMOTIVE: Committee Sues Lenders to Invalidate Liens --------------------------------------------------------------- The Official Committee of Unsecured Creditors, on Meridian Automotive Systems, Inc., and its debtor-affiliates' behalf, wants to avoid certain liens and claims of: * Credit Suisse First Boston, both as agent and individually, * Goldman Sachs Credit Partners L.P., as agent & individually, * ABN AMRO Bank NV, * ABN Amro, * Anchorage Capital Master Offs, * Anchorage Capital, * Bank of America NA, * Bank of America NT & SA, * Bank of America, * Barclays Bank PLC, * Bear Stearns Asset Management, * Bear Stearns Investment Produc., * Black Diamond Capital Management LLC, * Black Diamond CLO 2000-1 Ltd, * Breakwater Fund Management, LLC, * Breakwater Master Fund Ltd., * Carlyle Loan Opportunity FD, * Carlyle, * Caspian Capital, * Cerberus Partners (Madeleine), * Cerberus Partners LP, * Citibank International, * Citigroup Financial Products, * Citigroup Partners LP, * Comac Acquisition, * Credit Suisse International, * Credit Suisse, * CSFB International (Trading), * Davidson Kempner Partners, * Deutsche Bank Trust Co America, * Deutsche Bank, * DK Acquisition Partners L.P., * Fernwood Associates LLC, * Fernwood Foundation Fund LLC * Fernwood Restructurings Ltd, * Goldman Sachs Asset Management, * Goldman Sachs Credit PTS LP, * Grand Central Sil Series, * GSC Partners, * GSC Recovery II LP, * GSC Recovery IIA LP, * Intermarket Management Corp., * JME Management LLC, * JME Offshore Opportunity FD, * JME Offshore Opportunity II, * JP Morgan Chase Bank, * JP Morgan Chase, * Lehman Brothers Inc. * Lehman Commercial Paper, Inc., * Longhorn CDO (Cayman) Ltd, * Mariner Atlantic, * Merrill Lynch Asset Management, * Morgan Stanley Broker/Dealer, * Morgan Stanley Senior Funding, * Oppenheimer & Co. (New York), * Oppenheimer Senior FL Rate, * Quadrangle Group LLC, * Quadrangle Master Funding Ltd, * Quantum Partners LDC, * Satellite Asset Management LP, * Satellite Senior Income Fund, * SilverPoint Capital, * Sol Loan Funding LLC, * Soros Partners, * Stanfield Capital Partners, * Stanfield Modena CLO Ltd, * Stanfield Quattro, * Stanfield RMF/ Transatlanticcdo, * Stonehill Capital Management, * Stonehill Institutional Partners, * Stonehill Investment, * TRS Callistro LLC, * TRS Stark LLC, * TRS SVCO LLC, * ULT CBNA Loan Funding LLC, * Wachovia Bank NA, * Wachovia Bank of NC, * Watershed Cap Inst Partners LP, * Watershed Capital Partners (Offshore), * Watershed Capital Partners LP, * Windward Capital, L.P., * XER Cap PR AC Xerion PRT I LLC, * Xerion Capital Partners, * Xerion Partners II Master Fund, and * XL RE Ltd, and * some unidentified lenders. The First Lien Credit Agreement On April 28, 2004, Meridian Automotive Systems, Inc., entered into a First Lien Credit Agreement with: * Credit Suisse First Boston, as First Lien Administrative Agent and First Lien Collateral Agent; * Goldman Sachs Credit Partners L.P., as Syndication Agent; and * certain additional lenders party thereto from time to time. Gregory A. Taylor, Esq., at Ashby & Geddes, P.A., in Wilmington, Delaware, relates that pursuant to the First Lien Credit Agreement, the First Lien Lenders made available to MASI a $75 million revolving credit facility and a Tranche B Term Loan in the principal amount of $235 million. MASI and all of its affiliates that are guarantors under the First Lien Credit Facility; and CSFB, as First Lien Collateral Agent, also entered into a First Lien Guarantee And Collateral Agreement dated April 28, 2004. Under the First Lien Collateral Agreement, the First Lien Guarantors granted a security interest to CSFB for the ratable benefit of the First Lien Lenders in substantially all assets of the First Lien Guarantors, including all Investment Property as defined in the First Lien Collateral Agreement. Pursuant to a U.C.C. Financing Statement filed with the Delaware Department of State on Apr. 28, 2004, CSFB asserted a lien on all assets of Meridian Automotive Systems Composites Operations, Inc. On Oct. 18, 2004, CSFB filed a U.C.C. Termination Statement with the Delaware Department of State, terminating and releasing CSFB's lien with respect to all assets of Meridian Composites. Pursuant to a U.C.C. Financing Statement filed with the Delaware Department of State on April 21, 2005, CSFB asserted a lien on all of Meridian Composites' assets. The Second Lien Credit Agreement On Apr. 28, 2004, MASI also entered into a Second Lien Credit Agreement with: * CSFB, as Second Lien Administrative Agent and Second Lien Collateral Agent; * Goldman Sachs, as Syndication Agent; and * 20 lenders party thereto from time to time. Pursuant to the Second Lien Credit Agreement, the Second Lien Lenders made available to MASI a Tranche C Term Loan in the aggregate principal amount of $175 million. MASI and all of its affiliates that are guarantors under the Second Lien Credit Facility and CSFB, as Second Lien Collateral Agent, also entered into a Second Lien Guarantee And Collateral Agreement dated as of Apr. 28, 2004. Under the Second Lien Collateral Agreement, the Second Lien Guarantors granted a security interest to CSFB for the ratable benefit of the Second Lien Lenders in substantially all assets of the Second Lien Guarantors, including all Investment Property. Mr. Taylor tells the Court that Section 5.8 of the First Lien Collateral Agreement and Second Lien Collateral Agreement limits the Lien Lenders' security interest in the stock of any Foreign Subsidiary to 65% of that stock to the extent necessary to avoid adverse tax consequence to any Grantor. Avoidance Action Pursuant to the DIP Order, the Official Committee is authorized and has standing to file and prosecute an adversary proceeding avoiding the First and Second Lien lenders' claims. (A) Avoidance as a Preferential Transfer the First Lien Lenders' Asserted Lien on All Assets of Meridian Composites Mr. Taylor asserts that the Preferential Composites Financing Statement purported to perfect a security interest in all assets of Composites in favor of CSFB for the ratable benefit of the First Lien Lenders. Mr. Taylor tells the Court that the Preferential Composites Transfer: (i) occurred within the 90 days prior to the Petition Date; (ii) constitutes a transfer of an interest in one or more of the Debtors' property; (iii) was for the benefit of the First Lien Lenders, each of whom was a creditor of one or more of the Debtors prior to and at the time the Preferential Composites Transfer was made; (iv) was on account of one or more antecedent debts owed by the Debtors to the First Lien Lenders before the Preferential Composites Transfer was made; (v) was made while the Debtors, including Meridian Composites, were insolvent; (vi) will enable the First Lien Lenders to receive more than they would have if: -- the Debtors' Chapter 11 cases were cases under Chapter 7 of the Bankruptcy Code; -- the Preferential Composites Transfer had not been made; and -- the First Lien Lenders received payment of their debts under the provisions of the Bankruptcy Code. Thus, the Committee is entitled to a Court judgment avoiding, recovering, and preserving for the benefit of the Debtors' estates the Preferential Composites Transfer or its value, Mr. Taylor contends. (B) Declaration of the Extent of the Guarantees Given by the Debtors for the First and Second Lien Lenders' Benefit Pursuant to the First Lien and Second Lien Collateral Agreements, each Guarantor's guarantee of MASI's obligations under the First Lien Facility and the Second Lien Facility is limited to the amount, which can be guaranteed by the Guarantor under applicable federal and state laws relating to the insolvency of debtors. Thus, Mr. Taylor asserts that any claims by the First Lien Lenders or the Second Lien Lenders against each of the Guarantors under the two Lien Collateral Agreements can be no greater than the equity value of each Guarantor as of the Petition Date. (C) Declaration and Avoidance of the First Lien Lenders' and Second Lien Lenders' Security Interests in the Stock of MASI's Foreign Subsidiaries Mr. Taylor relates that upon information and belief, each Grantor under the First Lien Collateral Agreement and Second Lien Credit Agreement will suffer adverse tax consequences if the First Lien Lenders and Second Lien Lenders hold a security interest in excess of 65% of the Pledged Stock of the Foreign Subsidiaries. (D) Declaration and Avoidance of First Lien Lenders' and Second Lien Lenders' Security Interests in Certain Assets of the Debtors Mr. Taylor relates that the First Lien Lenders and Second Lien Lenders assert that they hold a valid, perfected and enforceable security interest in: (1) certain assets of the Debtors which are located outside of the United States, including certain patents and patent applications registered or pending in various foreign countries; (2) certain vehicles owned by the Debtors; (3) the capital stock of Meridian Automotive Systems - DO Brasil LTDA; (4) three real properties owned by the Debtors: * 5214 Kraft Ave., Grand Rapids, Michigan; * 5292 Kraft Ave., Grand Rapids, Michigan; and * Grand River Ave., Fowlerville, Michigan; (5) the capital stock of Meridian Automotive Systems, S. de R.L. de C.V, MASM Employee Leasing Company, S. De R.L. de C.V., and MASM Employee Leasing Company Muzquiz Operations, S. De R.L. de C.V; and (6) the assets owned by Meridian Automotive Systems - Mexico Operations, LLC. Mr. Taylor argues that the First Lien Lenders and Second Lien Lenders have not taken the necessary steps to perfect any security interests they may have been granted in the Debtors' assets. Therefore, the First Lien Lenders and Second Lien Lenders do not hold valid, perfected and enforceable security interests in the Debtors' assets. (E) Declaration that the Lien Collateral Agreements are Void for Lack of Consideration with Respect to Meridian Automotive Systems - Mexico Operations, LLC Mr. Taylor contends that when MAS-Mexico executed the First Lien Collateral Agreement and Second Lien Collateral Agreement in June 2004, MAS-Mexico received no consideration from the First Lien Lenders and Second Lien Lenders. Thus, MAS-Mexico's pledge of its capital stock and guarantee of MASI's obligations under the First Lien Facility and Second Lien Facility is voidable for lack of consideration, Mr. Taylor asserts. The Committee asks the U.S. Bankruptcy Court for the District of Delaware to enter a judgment declaring: (1) void any security interest of the First Lien Lenders in the Centralia Facility; (2) that any interest of the First Lien Lenders and Second Lien Lenders in the stock of the Guarantors is limited to the equity value of the Guarantors as of the Petition Date, and the equity value of each of the Guarantors; (3) any security interest of the First Lien Lenders and Second Lien Lenders in the Pledged Stock of the Foreign Subsidiaries is limited to 65%, or the lesser amount as is appropriate, of the total capital stock of the Foreign Subsidiaries; (4) that the First Lien Lenders and Second Lien Lenders have no security interest in the Debtors' Foreign Assets; (5) that the First Lien Lenders and Second Lien Lenders have no security interest in the Debtors' Vehicles; (6) that the First Lien Lenders and Second Lien Lenders have no security interest in the capital stock of MAS-Brazil; (7) that the First Lien Lenders and Second Lien Lenders have no lien in the Debtors' Michigan Real Property; (8) the First Lien Collateral Agreement and Second Lien Collateral Agreement void for lack of consideration with respect to MAS-Mexico: -- avoiding any security interest asserted by the First Lien Lenders and Second Lien Lenders in the capital stock of MAS-Mexico; and -- disallowing all claims of the First Lien Lenders and Second Lien Lenders against MAS-Mexico; and (9) that the Second Lien Lenders have no security interest in MAS-Mexico's assets. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Wants Until Jan. 25 to Decide on Leases ------------------------------------------------------------ Meridian Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend the deadline within which they must assume, assume and assign or reject unexpired non-residential real property leases, through and including Jan. 25, 2006, without prejudice to their right to seek further extensions for cause. As previously reported, the Debtors are party to at least 12 major facility lease agreements, which include leases for office space locations and key production and warehousing centers. Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that during the first 60 days of the Debtors' Chapter 11 cases, the Debtors have concentrated on securing permanent financing as well as stabilizing their business operations and managing a smooth transition to operating under bankruptcy protection. As a result, the time elapsed since the Petition Date has not proved sufficient for the Debtors to determine whether to assume or reject their Real Property Leases. The Debtors are proceeding with the goal of timely formulating a confirmable plan of reorganization, and the progress made in their cases warrants the requested further extension of the Lease Decision Period, Mr. Kosmowski asserts. "If the Debtors are forced to prematurely assume the Real Property Leases, the consequences might include the Debtors being required to pay cure obligations under the Real Property Leases, and the elevation of lessor claims to administrative expense status prior to confirmation of a plan of reorganization." Pending their decision to assume or reject the Real Property Leases, the Debtors assure the Court that they will perform all of their undisputed obligations arising as of the Petition Date in a timely fashion, including payment of postpetition rent due. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Wants Dec. 1 as Admin. Claims Bar Date ----------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to establish Dec. 1, 2005, as the last day for filing written proofs of claim on account of prepetition claims. Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that the proposed Bar Date Order provides that each person or entity asserting a claim against one or more of the Debtors is required to file a separate and original proof of claim in the bankruptcy case of each Debtor against whom the claim is asserted. Each proof of claim must substantially comply with Official Bankruptcy Form 10. Proofs of Claim will be deemed timely filed only if actually received by The Trumbull Group, LLC, the Debtors' claims and noticing agent, on or before the Bar Date. The persons or entities that are not required to file a proof of claim on or before the Bar Date include: a. Any person or entity that has already properly filed a proof of claim against one or more of the Debtors with either Trumbull or the Clerk of the Court for the United States Bankruptcy Court for the District of Delaware; b. Any person or entity: (i) whose claim is listed in the Debtors' schedules of assets and liabilities, list of equity holders, and statement of financial affairs, or any related amendments; (ii) whose claim is not described as "disputed," "contingent," or "unliquidated;" and (iii) who does not dispute the amount or classification of its claim as set forth in the Schedules; c. Professionals retained by the Debtors or the Official Committee of Unsecured Creditors pursuant to various Court orders who assert administrative claims for fees and expenses subject to the Court's approval pursuant to Sections 330, 331 and 503(b) of the Bankruptcy Code; d. Any person or entity that asserts an administrative expense claim against the Debtors pursuant to Section 503(b); e. The Debtors' current officers and directors who assert claims for indemnification or contribution arising as a result of their services to the Debtors; f. Any Debtor asserting a claim against another Debtor; g. Any direct or indirect non-debtor subsidiary of a Debtor asserting a claim against a Debtor; and h. Any person or entity whose claim against the Debtors has been allowed by a Court order entered on or before the Bar Date. The Debtors propose that any person or entity that asserts a claim against any Debtor arising from its rejection of an executory contract or unexpired lease: (1) Where the order authorizing the rejection is entered on or before September 30, 2005, that person or entity must file a Proof of Claim based on the rejection on or before the Bar Date; (2) Where the order authorizing the rejection is entered after September 30, 2005, that person or entity must file a Proof of Claim on or before the later of: (i) the Bar Date; (ii) 30 days from entry of a Court order approving the rejection; or (iii) a certain date as the Court may fix. Any person or entity that fails to timely file a Proof of Claim: (1) will be forever barred, estopped and enjoined from asserting a claim against the Debtors; (2) will not be treated as a creditor of the Debtors for the purposes of voting on any plan of reorganization in the Debtors' cases; and (3) will not receive or be entitled to receive any payment or distribution of property from the Debtors or their successors or assigns with respect to the Claim. Bar Date Notification Following the entry of a Court order fixing the Bar Date and no later than September 30, 2005, the Debtors will provide notice of the Bar Date to: -- the U.S. Trustee; -- the counsel to the Official Committee of Unsecured Creditors; -- the counsel to the administrative agent for the postpetition lenders; -- the counsel to the administrative agent for the prepetition lenders and the lenders under the first lien credit agreement; -- the counsel to administrative agent for the prepetition lenders and the lenders under the second lien credit agreement; -- U.S. Bank, National Association, as collateral agent for the subordinated noteholders and the subordinated noteholders under subordinated note agreement; -- all persons and entities who have requested notice pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure as of the date of the Bar Date Order; -- all persons or entities listed in the Schedules; -- all known parties to executory contracts or unexpired leases with the Debtors; -- all known holders of equity securities in the Debtors as of the Petition Date; -- all taxing authorities for the jurisdictions in which the Debtors maintained or conducted business up to one year prior to the Petition Date; -- all known holders of Prepetition Claims against the Debtors and their counsel; -- all parties that have filed notices of appearance in the Debtors' cases; -- all entities which are parties to any litigation in which the Debtors are a party; -- the District Director of the Internal Revenue Service for the District of Delaware; and -- the Securities and Exchange Commission. To provide creditors with sufficient information to file properly prepared and executed Proofs of Claim in a timely manner, the Debtors will publish the Bar Date Notice at least once approximately 30 days prior to the Bar Date in the national edition of The Wall Street Journal and in the national editions of The New York Times, The Detroit Free Press and USA Today. The Bar Date Notice and the Publication Notice will: (i) set forth the Bar Date; (ii) advise creditors under what circumstances they may file a Proof of Claim in respect of a Prepetition Claim; (iii) alert creditors to the consequences of failing to timely file a Proof of Claim; (iv) set forth the address to which Proofs of Claim must be sent for filing; and (v) notify creditors that (x) Proofs of Claim must be filed with original signatures, and (y) facsimile or e-mail flings of Proofs of Claim are not acceptable and are not valid for any purpose. A hearing on the Debtors' request will be set only if responses are received on or before Sept. 16, 2005. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). MIDLAND REALTY: Fitch Lifts Rating on $7.7-Mil Certs. to BB+ ------------------------------------------------------------ Fitch Ratings upgrades Midland Realty Acceptance Corp.'s commercial mortgage pass-through certificates, series 1996-C2: --$5.1 million class H to 'AAA' from 'AA'; --$12.8 million class J to 'BBB+' from 'BBB'; --$7.7 million class K to 'BB+' from 'BB'. In addition, Fitch affirms these classes: --Interest-only class A-EC 'AAA'; --$19.7 million class B 'AAA'; --$28.2 million class C 'AAA'; --$23 million class D 'AAA'; --$7.7 million class E 'AAA'; --$15.4 million class F 'AAA'; --$12.8 million class G 'AAA'. Fitch does not rate the $10.8 million class L-1 or the interest- only class L-2 certificates. The class A-1 and class A-2 certificates have paid in full. The rating upgrades are due to the increase in subordination levels resulting from loan payoffs and amortization. As of the August 2005 distribution date, the pool has paid down 72% to $143.2 million from $512.1 million at issuance. In addition, the pool has paid down 6.4% since Fitch's upgrades in June 2005. Six loans (3.6%) are currently in special servicing, all of which are current. Five of the specially serviced loans (2.8%) are cross-collateralized and cross-defaulted and are secured by five former Frank's Nursery & Crafts stores located in Michigan, Minnesota, and New Jersey. Based on November 2004 appraised values, minimal losses, if any, are expected on these loans. The sixth specially serviced loan (0.8%) is secured by a multifamily property in Great Falls, MT. This loan was transferred to the special servicer, J.E. Robert Company, Inc., in August 2005 due to imminent default. JER is currently evaluating workout options and loss expectations are uncertain at the present time. MIRANT CORP: Inks Pact with Committees & Creditors on Plan Terms ---------------------------------------------------------------- Mirant Corporation (Pink Sheets: MIRKQ) reached an agreement with a number of the key constituencies in its Chapter 11 case regarding the terms upon which it will emerge from bankruptcy protection. The deal sets forth the modifications that Mirant will make to its currently pending Plan of Reorganization filed in March 2005, and the terms on which the constituencies will support and recommend the amended Plan's confirmation. Parties to the accord include: -- the Debtors; -- Mirant Creditors' Committee; -- Mirant Americas Generation, LLC Creditors' Committee; -- Mirant Equityholders' Committee; and -- Phoenix Partners, acting as an ad hoc representative of the holders of the Mirant Trust I subordinated trust preferred securities. An ad hoc committee comprised of Mirant bondholders also announced their support for the arrangement. "This agreement marks a major step forward in the company's reorganization effort and is the product of a recent round of intense negotiations between the company and its statutory committees," said M. Michele Burns, Mirant's chief restructuring officer and chief financial officer. "The deal now permits Mirant's constituencies to put their differences behind them and work together to bring the business out of Chapter 11 quickly and on terms that will clearly maximize the recovery of all stakeholders." "Although much remains to be done and there are a number of important matters that still need to be addressed, such as outstanding litigation, we are pleased that the momentum around the company's exit from Chapter 11 is finally starting to build," said Burns. Importantly, the Mirant Plan Term Sheet sets forth the financial terms on which the value of the Mirant enterprise will be shared among the company's stakeholders. The Term Sheet affirms that all MAG debt obligations will be satisfied in full and that MAG's $1.7 billion of long-term debt will be reinstated. The accord clarifies the company's current intention to satisfy MAG's approximately $1.5 billion of short-term debt and other obligations with common stock in the reorganized parent company for 10 percent of the amount owed with the balance to be paid in cash. Although the company plans to raise the cash through a proposed $1.35 billion capital markets financing at its exit from Chapter 11, it still reserves the right to issue new notes directly to the creditors for this portion of their claims. The Term Sheet also specifies the methodology for calculating the amount of interest that accrued on all MAG debt during the pendency of the Chapter 11 case and provides details regarding various credit support mechanisms to be provided under the POR by the reorganized parent company for the benefit of MAG. Under the Plan, as it is to be amended, approximately $6.5 billion of unsecured debt and obligations at the parent level will be exchanged for 96.25 percent of the remaining common stock (exclusive of the above-noted MAG shares and shares reserved for employee programs under the Plan). This includes an agreed-upon participation by Mirant's subordinated trust preferred securities, which will receive 3.5 percent of the common stock (excluding the MAG and employee shares) and warrants entitling the holders to purchase 5 percent of the new common stock issued under the POR, exclusive of employee shares. The remaining common stock (3.75 percent excluding the MAG and employee shares) will go to the company's current shareholders. The shareholders will also receive warrants to purchase an additional 10 percent of the common stock of the company. The Term Sheet also specifies that recoveries on the company's avoidance actions (including the action against Mirant's former parent, Southern Company) will trigger payments to be shared by Mirant's former creditors and shareholders on a 50/50 basis. New Officers As part of the terms of the agreement, and upon the approval by the Bankruptcy Court of the Amended Disclosure Statement, Mr. Edward Muller, the former CEO of Southern California Edison's merchant energy subsidiary, Edison Mission, will be elected to the board of directors of Mirant and named chairman. Mirant will also request that the Court approve an employment agreement with Mr. Muller as chief executive officer. He will replace Mr. A.W. Dahlberg, who has served as chairman of Mirant's board of directors since 2000, and Ms. Marce Fuller, who has served as Mirant's president and chief executive officer since 1999. The agreement also provides that a new board of directors will be formed consisting of Mr. Muller, Mr. A.D. Correll (a current board member), six independent members selected jointly by the company and the Mirant Creditors' Committee, and one independent member to be chosen through a joint selection process with the Mirant Equity Committee. As a result of the agreement, Mirant and the committees asked United States Bankruptcy Judge D. Michael Lynn, who has presided over the case since its filing in July, 2003, to stop work related to the ongoing valuation dispute in the case and schedule a hearing to approve the company's soon-to-be amended disclosure statement for Sept. 28, 2005. "In granting the parties' request, the Judge praised the parties for their efforts in developing the terms of a consensual plan and indicated his willingness to drive a schedule that would make it possible for the company to exit Chapter 11 by year-end," said Thomas E. Lauria of White & Case, LLP, Mirant's lead counsel in its bankruptcy case. 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 CORP: Court Okays $600K Sale of Transformers to Equisales ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas authorized the private sale by Mirant Americas, Inc., and Mirant Wyandotte, LLC, of two power transformers including related equipment and documentation to Equisales Associates, Inc., pursuant to a Purchase and Sale Agreement, dated as of July 15, 2005. The important terms of the Agreement are: 1. Equisales will initially pay $120,000 of the Purchase Price, with the remaining $480,000 to be paid at the Closing Date. If the Court does not approve the Sale, the Deposit will be returned to Equisales; 2. The sale will close three days after Court approves the Purchase Agreement; 3. The Debtors will deliver the Transformers' title to Equisales at Closing, on an "as is" and "where is" basis; 4. Equisales will bear all taxes associated with the Sale; and 5. If Equisales does not remove the Transformers on the Closing Date, the Debtors will provide storage space for up to 60 days after the Effective Date at no cost to Equisales. The Debtors are free to remove the Transformers from the Site at the expiration of the 60-day period at Equisales' expense. 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. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Denies Wells Fargo's Request for Documents ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas denied the request of Wells Fargo Bank, National Association to compel Mirant Corporation and its debtor-affiliates to produce certain documents in connection with its objection to the Disclosure Statement. Wells Fargo also wanted the Court to compel the Debtors to provide a proper privilege log. Wells Fargo is the Successor Trustee under an Indenture dated May 1, 2001, between Mirant Americas Generation, LLC, and Bankers Trust Company. Tracy L. Treger, Esq., at Gardner Carton & Douglas LLP, Chicago, Illinois, noted that the Debtors' plan of reorganization contemplates, among others, the reinstatement of the Long Term Notes so that when MAGi emerges from bankruptcy, it will remain obligated under those Notes until 2031. "The Trustee's primary concern with the Plan and Disclosure Statement is that they contemplate transactions affecting the Holders of the Notes without providing adequate information to determine precisely how their rights and claims will be affected, and whether and to what extent the transactions in the Plan may create defaults under the Indenture [and] cure existing Indenture defaults." In particular, Ms. Treger said, Wells Fargo sought more thorough disclosures with respect to, among others: -- the formation of New MAG Holdco and the disposition of MAGi's stock in its existing subsidiaries in connection therewith; -- New MAG Holdco's incurrence of new debt and the granting of liens on its assets; -- the basis for separate classification and treatment of the Long Term Notes and Short Term Notes and the related basis, if any, for concluding that the treatment is feasible and will lead to full repayment; and -- the impact of the release of intercompany claims. Concluding that the Plan and the Disclosure Statement were deficient in many of these respects, Wells Fargo provided the Debtors with both informal and formal objections, and propounded the Discovery, Ms. Treger pointed out. "The Debtors failed to adequately respond to the majority of the Trustee's Discovery." The Trustee has made numerous attempts to solicit the Debtors' cooperation in obtaining the Discovery, yet, to date, the Debtors have refused to comply, Ms. Treger told the Court. "[I]t appears that the Debtors are withholding information that the Trustee needs to evaluate the Plan and the Disclosure Statement, and are unwilling to avoid needless duplication of efforts by responding to Discovery that relates to both issues of confirmation and adequacy of the Disclosure Statement." 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) MOOG INC: Moody's Rates Planned $50 Million Sr. Sub. Notes at Ba3 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Moog, Inc.'s proposed $50 million senior subordinated notes, due 2015, to be issued as an add-on to the company's existing $150 million notes, originally issued in January 2005. The company has a Ba2 Corporate Family Rating (previously called Senior Implied) with a stable ratings outlook. The purpose of the new notes offering is primarily to repay approximately $50 million of senior secured revolving credit outstanding, which had been drawn to fund the July 2005 acquisition of certain businesses from the Kaydon Corporation for $72 million. This acquisition was closely followed by the purchase of FCS Control Systems for $46 million, funded primarily by the company's cash balances. The rating outlook is stable. The ratings continue to reflect: * Moog's relatively modest debt levels, despite the increase in leverage that has ensued from debt financing of recent acquisitions; * its strong revenue growth across a number of military and commercial platforms; and * the expectation of continued strong cash flow generation to support its indebtedness. These strengths are balanced against the concentration of the company's revenue base among large aerospace OEM's and the U.S. DoD, as well as the liabilities associated with Moog's under- funded pension plan. The stable rating outlook anticipates that favorable business trends in the defense market and continued recovery of commercial aerospace demand will support the company's credit metrics and that the company will maintain its strong liquidity profile. Ratings or their outlook could be subject to downward revision if the company were to undertake a large, leveraged acquisition, such that free cash flow were to fall below 10% of debt, or if leverage (debt/EBITDA, as measured using standard adjustments per Moody's Ratings methodology report dated March 2005) were to remain above 3.5 times EBITDA for a prolonged period. Conversely, ratings could be revised upward if the company were to reduce debt while consistently generating substantial cash flow, such that debt/EBITDA were to fall below 3.0 times while free cash flow were to exceed 25% of total debt over a sustained period. Although Moog has increased debt by 25% as a result of funding recent acquisitions, the company's debt levels remain modest relative to the its earnings capacity. Pro forma the acquisitions and proposed refinancing transactions, as of June 2005, Moog has $360 million of balance sheet debt, representing about 41% of total capital. Pro forma debt/EBITDA will remain manageable at about 3.5 times, assuming only minimal contributions from the acquired businesses in FY (ending September) 2005. However, Moody's views this amount of leverage to be somewhat high for this ratings category, having increased from about 3.0 times as of LTM June 2005. Pro forma interest coverage will remain strong at about 4.5 times EBIT/interest for the same period. Pro forma free cash flow will be similarly robust at approximately 17% of total debt. Moody's also notes the positive incremental effect that the notes offering has on the debt structure, moving about $50 million of debt from senior secured facilities due 2008 to subordinated notes due 2015, marginally improving liquidity while extending average debt maturity. Moog's recent business trends have facilitated steady revenue growth and strong free cash flow generation. Since FY 2002, Moog's revenue has grown by over 40%, from $719 million as of FY 2002 to over $1 billion as of LTM June 2005. Much of this growth is attributable to the September 2003 acquisition of the Poly- Scientific division of Litton Systems from Northrup Grumman for $152 million, which provided about $130 million of revenue in FY 2004. EBITDA has similarly increased, from about $105 million to $140 million for the LTM June 2005 period on stable margins of about 14%. However, Moody's notes that the company's revenue base is still relatively concentrated in the military sector (46% of FY 2004 sales), leaving the company particularly exposed to changes in budget priorities related to key military aircraft and space platforms on which Moog is a supplier. Despite rapid growth, including recent acquisitions, Moog has been able to maintain moderate levels of outstanding indebtedness, with about $360 million of debt pro forma the proposed refinancing. This demonstrates the company's recent strong operating performance, which essentially allowed the company to complete approximately $275 million of acquisitions since FY 2002 while only increasing debt by about $45 million. However, the rating agency remains cautious that the company could pursue further acquisitions as part of its growth initiative. Moody's notes the significant unused availability that will exist under the company's revolving credit facility; Moog will have the ability to draw the majority of the $190 million remaining under its revolving credit facility without violating any covenants upon close of the refinancing transactions. While the existing ratings could accommodate a smaller-sized strategically beneficial acquisition, a heavily debt financed transaction in excess of $100 million could place downward pressure on the rating. The ratings also continue to consider Moog's under-funded defined benefit pension plans and the likelihood that pension funding could cause a modest draw on cash in the near term. As of September 2004, the company reported a combined (U.S. and non-U.S. plans) under-funded status of about $115 million on year-end projected benefits of about $361 million. The company has contributed about $4 million to the plans in the year through June 2005, and plans additional contributions in the near term to improve the plans' funding status. The Ba3 rating assigned to the proposed add-on senior subordinated notes, one notch below the Corporate Family Rating and the same as the existing senior subordinated notes, reflects its junior status in claim behind all current and potential future senior secured or unsecured debt commitments. The new notes are not guaranteed by any of Moog's subsidiaries. Furthermore, since all of the company's U.S. assets are pledged to the $356 million senior secured credit facilities, these notes lack the substantial collateral coverage that the senior bank debt enjoys. Notching on the subordinated notes may widen further from the Corporate Family Rating if the company were to undertake a material level of secured or unsecured debt financing senior to these notes. These ratings have been assigned: * $50 million senior subordinated notes due 2015, rated Ba3. These ratings have been affirmed: * $150 million senior subordinated notes due 2015 of Ba3 * Corporate Family Rating of Ba2 Moog, Inc., headquartered in East Aurora, New York, is a leading designer and manufacturer of high performance precision motion control products and systems for aerospace and industrial markets. The company operates within four segments: * Aircraft Controls (43% of nine months ending June 2005 revenues), * Space Controls (12%), * Industrial Controls (31%), and * Components (14%). Moog had LTM 2005 revenues of about $1 billion. MOOG INC: S&P Rates Proposed $50 Million Sr. Sub. Notes at B+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Moog Inc.'s proposed $50 million 6.25% senior subordinated notes due 2015. The notes will be issued via SEC rule 144A with registration rights and will be an add-on to the company's existing $150 million 6.25% subordinated notes issue. The proceeds will be used to repay revolver drawings, so leverage will not change. At the same time, Standard & Poor's affirmed its ratings, including the 'BB' corporate credit rating, on the aerospace supplier. The outlook is stable. "The ratings reflect Moog's participation in the cyclical and competitive commercial aerospace and industrial markets, the likelihood of debt-financed acquisitions, and the associated integration risk," said Standard & Poor's credit analyst Christopher DeNicolo. "Ratings benefit somewhat from leading positions in niche markets and generally above average for the rating financial measures," the analyst continued. East Aurora, New York-based Moog is a leading provider of highly engineered motion control systems for critical applications, including aircraft flight controls and industrial processes. Moog's largest segment, aircraft controls (43% of revenues for the nine months ended June 25, 2005, 51% of segment profits), has benefited recently from the recovery in the commercial aerospace market, following a few years of weakness. Military aircraft sales have been largely flat, with reductions in the F-35 Joint Strike Fighter (JSF) and V-22 Osprey tiltrotor business being offset by growth on other programs. Margins in this segment have declined somewhat due to contract loss reserves on two aircraft development programs. Key future aircraft programs for Moog now in development include: * Boeing Co.'s new 787 jetliner, * the A400M military transport in Europe, and * the JSF. Industrial sales (30%, 23%) have been higher in all major product lines due to strengthening in the industrial economy, especially in China. The components group (15%, 17%) has benefited from higher sales to the medical markets. Sales in the space and defense controls segment (12%, 9%) have shown solid growth so far in 2005 reflecting stronger demand for products used on military satellites. Improvements in the commercial aircraft, space, and industrial markets are likely to offset lower sales related to military aircraft, in the near term. Overall, credit protection measures are expected to be appropriate for current ratings, including the impact of possible additional small to mid-sized debt financed acquisitions. Standard & Poor's raised its ratings on Moog earlier this year, and is unlikely to revise the outlook in the near term absent a significant, unexpected change in the company's business or financial risk profile. MQ ASSOCIATES: Bondholders Agree to Amend Senior Note Indentures ---------------------------------------------------------------- MQ Associates, Inc., and MedQuest, Inc., consummated the consent solicitations and effected certain amendments to: (i) the outstanding 12-1/4% Senior Discount Notes due 2012 of MQ Associates and the related indenture dated as of Aug. 24, 2004; and (ii) the outstanding 11-7/8% Senior Subordinated Notes due 2012 of MedQuest and the related indenture dated as of Aug. 15, 2002. As contemplated by the terms of the consent solicitations, the Company received $20 million in cash as consideration for the sale to an affiliate of J.P. Morgan Partners, LLC, of MQ Associates': * 20 million shares of preferred stock, and * warrants to purchase three million shares of common stock. The Company previously announced on Aug. 15, 2005, that MQ Associates, MedQuest (in the case of the 11-7/8% Notes), the subsidiary guarantors of MedQuest (in the case of the 11-7/8% Notes), and the trustees for each indenture executed and delivered the supplemental indentures as a result of receiving the consent of the holders of: (i) a majority of the aggregate principal amount at maturity of the 12-1/4% Notes and (ii) a majority of the aggregate principal amount of the 11-7/8% Notes. As a result of consummating the consent solicitations, the supplemental indentures with respect to the respective indentures governing the 12-1/4% Notes and the 11-7/8% Notes have become effective. The Company has received and accepted for payment consents received from holders of approximately $135.8 million in aggregate principal amount at maturity of the 12-1/4% Notes, and $179.2 million in aggregate principal amount of the 11-7/8% Notes. In consideration for the noteholders' consents, MQ Associates and MedQuest, as applicable, will pay to each record holder who validly consented, a consent fee in cash equal to: (i) $1.75 for each $1,000 principal amount at maturity of the 12-1/4% Notes, and (ii) $2.50 for each $1,000 principal amount of 11% Notes. In addition, the Company will pay to each record holder of Notes as of the close of business, New York City time, on each of Oct. 1, 2005, and Jan. 1, 2006 (and quarterly thereafter, if applicable), a cash interest amount which will accrue from July 1, 2005 to (but not including) the earlier of: (i) the date that the Company has filed with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended Dec. 31, 2004, and all other past due periodic reports required to be filed; and (ii) if the Restatement Date has not occurred by Dec. 31, 2005, the date that the Company receives a notice of default under the indenture governing either series of Notes from the applicable trustee or the holders of 25% of such series of Notes. The Additional Interest Payment will accrue at a rate of 1.00% per annum on the accreted value of the 12-1/4% Notes (as of the end of the most recently completed fiscal quarter) and the principal amount of the 11-7/8% Notes, and will be paid quarterly in arrears on: (i) Oct. 15, 2005 (for the quarter ended Sept. 30, 2005) to the registered holders of Notes as of the close of business on Oct. 1, 2005; (ii) Jan. 15, 2006 (for the quarter ended Dec. 31, 2005) to the registered holders of Notes as of the close of business on Jan. 1, 2006 and, if applicable; (iii) on the 15th day of the month following the end of each subsequent calendar quarter to the registered holders of Notes as of the close of business on the first day immediately following the end of such quarter. MQ Associates is a holding company and has no material assets or operations other than its ownership of 100% of the outstanding capital stock of MedQuest, Inc. MedQuest is a leading operator of independent, fixed-site, outpatient diagnostic imaging centers in the United States. These centers provide high quality diagnostic imaging services using a variety of technologies, including magnetic resonance imaging, computed tomography, nuclear medicine, general radiology, ultrasound and mammography. As of June 30, 2005, MedQuest operated a network of ninety-six centers in thirteen states located primarily throughout the southeastern and southwestern United States. * * * The Company's 12-1/4% senior discount notes due 2012 carry Moody's Investors Service's and Standard & Poor's junk ratings. As reported in the Troubled Company Reporter on March 18, 2005, Standard & Poor's Ratings Services it lowered the corporate credit ratings on MedQuest Inc., and its parent, MQ Associates Inc. to 'B' from 'B+'. All the ratings remain on CreditWatch with negative implications, where they were placed Feb. 16, 2005. MQ ASSOCIATES: Lenders Waive Reporting Requirement Until Dec. 31 ---------------------------------------------------------------- MQ Associates, Inc., and MedQuest, Inc., entered into a Fourth Waiver and Third Amendment to their senior credit facility with a consortium of lenders led by Wachovia Bank, National Association, as Administrative Agent, Chase Lincoln First Commercial Corporation, as Syndication Agent, and General Electric Capital Corporation and Wachovia Bank, National Association, as Co-Documentation Agents. The amendment provides for: (i) the suspension until Dec. 31, 2005, of the Company's obligations to comply with the financial reporting and related delivery covenants in the senior credit facility; and (ii) the waiver of defaults and/or events of default in connection with the Company's failure to comply with the financial covenants and the Company's failure to deliver its financial statements. The Waiver and Amendment imposes certain increased pricing and additional information requirements until the financial statements are delivered and the SEC reports have been filed. In addition, the Waiver and Amendment makes certain other changes to the senior credit facility, including: -- modifying the levels of the financial covenants in the senior credit facility, and certain of the definitions used in calculating those covenants; -- adding a requirement that the Company's total leverage ratio and senior leverage ratio be below certain levels for the Company to be permitted to incur incremental term loan borrowings or to apply certain prepayments, including asset sale proceeds and excess cash flow amounts, to revolving loans rather than term loans, under the senior credit facility and imposing additional information covenants. MQ Associates is a holding company and has no material assets or operations other than its ownership of 100% of the outstanding capital stock of MedQuest, Inc. MedQuest is a leading operator of independent, fixed-site, outpatient diagnostic imaging centers in the United States. These centers provide high quality diagnostic imaging services using a variety of technologies, including magnetic resonance imaging, computed tomography, nuclear medicine, general radiology, ultrasound and mammography. As of June 30, 2005, MedQuest operated a network of ninety-six centers in thirteen states located primarily throughout the southeastern and southwestern United States. * * * The Company's 12-1/4% senior discount notes due 2012 carry Moody's Investors Service's and Standard & Poor's junk ratings. As reported in the Troubled Company Reporter on March 18, 2005, Standard & Poor's Ratings Services it lowered the corporate credit ratings on MedQuest Inc., and its parent, MQ Associates Inc. to 'B' from 'B+'. All the ratings remain on CreditWatch with negative implications, where they were placed Feb. 16, 2005. NAKOMA LAND: Wants to Hire Gold Mountain as Real Estate Broker -------------------------------------------------------------- Gold Mountain Ranch, LLC and Sierra Highlands, Inc., through its counsel, Alan R. Smith, Esq., ask the U.S. Bankruptcy Court for the District of Nevada for permission to employ Gold Mountain Real Estate, LLC, as their real estate broker. The Debtors want to hire Margaret Garner to market and sell some of their real properties located within the boundaries of the Gold Mountain subdivision, including Gold Mountain Ranch Lot 213 and all associated residential lots and villas held by Sierra Highlands designated as lots 286 through 309, lot 395, all located within the villa area and villa fractional timeshare sales. Margaret Garner is the owner of Gold Mountain Real Estate, 50% equity owner of Gold Mountain Ranch, corporate secretary and 50% shareholder of Sierra Highlands On August 9, 2005, the Court approved the sale of Lot 213. Gold Mountain Ranch has agreed to pay the broker a $14,000 commission of the property's selling price of $140,000. 100% of the amount will in turn be paid to the buyer's agent, William Kokorelis. As a result, the Debtor Gold Mountain Ranch also asks the Court to allow payments to Mr. Kokorelis an amount of $14,000 for his services rendered. As to the villa and factional ownership timeshare sales, the sales agent will receive 100% of the $6,990 earned commission, with no direct commission being retained by Gold Mountain Real Estate. Although Margaret Garner discloses that her brokerage firm is an unsecured creditor of Dragon Golf, Inc. and Sierra Highlands in the total amount of $24,377, yet she assures the Court that she does not hold or represent an interest adverse to the Debtors' estates. Headquartered in Reno, Nevada, Nakoma Land, Inc., and its debtor- affiliates filed for chapter 11 protection on May 19, 2005 (Bankr. D. Nev. Case No. 05-51556). Alan R. Smith, Esq., at Law Offices of Alan R. Smith represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed total assets of $18,000,000 and total debts of $15,252,580. NORTEL NETWORKS: Board Declares Dividends on Preferred Shares ------------------------------------------------------------- Nortel Networks Limited's board of directors declared a dividend on each of the outstanding Cumulative Redeemable Class A Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding Non-cumulative Redeemable Class A Preferred Shares Series 7 (TSX:NTL.PR.G). The dividend amount for each series is calculated in accordance with the terms and conditions applicable to each respective series, as set out in the Company's articles. The annual dividend rate for each series floats in relation to changes in the average of the prime rate of Royal Bank of Canada and The Toronto-Dominion Bank during the preceding month and is adjusted upwards or downwards on a monthly basis by an adjustment factor which is based on the weighted average daily trading price of each of the series for the preceding month, respectively. The maximum monthly adjustment for changes in the weighted average daily trading price of each of the series will be plus or minus 4.0% of Prime. The annual floating dividend rate applicable for a month will in no event be less than 50% of Prime or greater than Prime. The dividend on each series is payable on November 14, 2005, to shareholders of record of such series at the close of business on October 31, 2005. Nortel Networks -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on July 8, 2005, Moody's Investors Service confirmed the ratings of Nortel Networks Corporation (holding company) and Nortel Networks Limited (principal operating subsidiary and debt guarantor). The ratings confirmation concludes a ratings review for possible downgrade under effect since April 28, 2004. Moody's also assigned a new Speculative Grade Liquidity rating of SGL-3 to Nortel, reflecting adequate liquidity to fund debt maturities and other cash outflows over the next 12 months. The ratings outlook is negative. The ratings confirmed include: Nortel Networks Corporation: -- Senior Secured rating at B3 (guaranteed by Nortel Networks Limited) Nortel Networks Limited: -- Corporate Family Rating (formerly known as the Senior Implied rating) at B3 -- Senior Secured rating at B3 -- Issuer rating (senior unsecured) at Caa1 -- Preferred Stock rating at Caa3 Nortel Networks Capital Corporation: -- Senior Secured rating at B3 (guaranteed by Nortel Networks Limited). This new rating was assigned: -- Speculative Grade Liquidity rating of SGL-3. As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation was based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. NORTHWEST AIRLINES: Duluth May Cut Off Ties Due to AMFA Strike -------------------------------------------------------------- Peter Passi, writing for the News Tribune, reports that the City of Duluth in Minnesota is considering whether or not to cut off its ties with Northwest Airlines. The airline company has its maintenance base in Duluth. Mr. Passi relates that at the onset of the Aircraft Mechanics Fraternal Association workers' strike on August 19, Northwest Airlines has closed the Duluth facility. Even though Northwest no longer employs mechanics in Duluth, the City is on the hook to pay a $19 million state bond that helped fund maintenance base construction. Northwest pays the City $580,000 a year in lieu of paying property taxes, per tax-increment financing agreement; "One of the keys with the Northwest project for us was to bring jobs to Duluth," Mark Winson, Duluth's chief administrative officer told Mr. Passi, "Clearly, having Northwest paying rent on an empty facility doesn't meet our objectives." Northwest Airlines Corp. is the world's fifth largest airline with hubs in Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,600 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. At June 30, 2005, Northwest Airlines' balance sheet showed a $3,752,000,000 stockholders' deficit, compared to a $3,087,000,000 deficit at Dec. 31, 2004. OREGON STEEL: Moody's Upgrades $305 Million Notes' Rating to Ba3 ---------------------------------------------------------------- Moody's Investors Service upgraded its ratings for Oregon Steel Mills, Inc., raising the company's corporate family rating to Ba3 from B1. The upgrade considers the continuation of strong financial performance and favorable steel market conditions, as well as beneficial new investments the company is making to bolster its asset and product base. Oregon Steel's rating outlook remains stable. These ratings were raised: * $305 million of 10% guaranteed first mortgage notes due 2009 -- to Ba3 from B1; and * corporate family rating (previously called senior implied) -- to Ba3 from B1. Overall, Oregon Steel is doing very well in the current steel market environment. For the 12 months ended June 30, 2005, EBITDA/interest was almost 8x and debt to EBITDA was around 1.2x. Cash and short-term investments were nearly $110 million at June 30. Some of the cash is earmarked for several projects the company has underway, all of which are to be completed by the first quarter of 2006. While recognizing that there is a certain amount of completion risk associated with these projects, Moody's believes that the projects will be successfully completed and will strengthen Oregon Steel's business platform. As discussed more fully in our January 2005 upgrade of Oregon Steel, Moody's believes the company's cash flow is, and will continue to be, less variable than in the past due to strategic changes the company has adopted since 2003, when new President and CEO James Declusin joined Oregon Steel. Two changes are particularly worth noting as they have reduced volatility and done so without any apparent lowering of profitability. First, the company closed the melt shop at the Portland mill and now utilizes internationally purchased slabs for this mill. The correlation between slab and finished goods prices should help maintain more stable margins over the long term. Second, the lessened emphasis on large diameter pipe has reduced the influence of this notoriously volatile business on Oregon Steel's results. Product mix is now better balanced, with plate and coil being the mainstay products for the Portland mill. Oregon Steel is the only US plate producer in the western US and it enjoys a favorable geographic market niche. Moody's credit concerns for Oregon Steel include: * the risk embedded in the construction and completion of three in-process investments; * lower-than-expected volume sales of plate and coil and rod and bar products; and * the company's limited external liquidity. The three major investments Oregon Steel has underway include: * the installation of a new electric arc furnace at Rocky Mountain Steel Mills; * construction of a spiral weld pipe making facility at the Portland mill; and * upgrades to the Camrose large diameter pipe mill. These projects are expected to be completed in 4Q05, 1Q06, and mid-October 2005, respectively. Moody's believes the risk associated with these projects is modest as they all involve proven technology. The capital cost of these projects and related improvements is approximately $70 million, some of which has already been spent. Oregon Steel's cash balance could fund the remaining expenditures. The benefits derived from these projects include: * lower operating costs; * the capability to produce larger diameter; * thicker walled and higher grades of large diameter pipe; and * environmental compliance. A surprising negative development through the first half of 2005 was the lower sales of plate and coil (from Portland) and rod and bar (from RMSM). Actual 1H05 tonnage for these products was materially lower than sales in the first half of 2004, and lower than the company's original 2005 estimates had indicated. The company attributes the declines to customers managing inventory for these products. In part, the reduced volumes have been in reaction to the price increases that these products have experienced. The combined impact of the sales decline and a need to build semi-finished inventory in advance of the planned melt shop outage at RMSM has been a significant increase in inventory, approximately $100 million since December 31, 2004. Much of the semi-finished inventory represents slabs and billets that were purchased at prices higher than prevailing prices. This raises the potential for margin compression in the second half of the year. Finally, as noted, Oregon Steel's external sources of liquidity are minimal. The company established a new credit facility in March 2005 that provides for a maximum borrowing of $35 million for the sole purpose of issuing letters of credit. The facility matures March 29, 2006. While recognizing that the company has a large cash balance and should be cash flow positive in the second half of the year, Moody's would prefer the company had a secondary source of liquidity. This is the second time Oregon Steel has been upgraded this year. A further upgrade to its ratings is not likely in the near future. An upgrade would require a material reduction of debt or an extended period of solid results that withstand an economic slowdown or challenging steel market conditions, as well as increased external liquidity. Oregon Steel Mills, Inc. operates two steel minimills with finishing facilities, a pipe mill, and a structural tube facility, all located in the western U.S. and Canada. For the twelve months ended June 30, 2005, it sold 1.54 million tons of steel products. It has its headquarters in Portland, Oregon. PACIFIC GAS: Can Direct Deutsche Bank to Release $743K from Escrow ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California authorized Pacific Gas & Electric Company to direct Deutsche Bank Trust Company Americas to release $743,006 from the Class 5 Disputed Claims Escrow, plus interest, based on Nuevo Energy's withdrawal of its Gas Claim. Pursuant to its Plan of Reorganization, Pacific Gas is required to establish one or more escrow accounts to set aside funds to make distributions on Disputed Claims to the extent the Claims become Allowed Claims. Gary M. Kaplan, Esq., at Howard Rice Nemerovski Canady Falk & Rabkin, in San Francisco, California, relates that on March 5, 2004, the Court directed Pacific Gas to set aside $743,006 in a separate escrow account for Nuevo Energy Company's Class 5 claim. The Nuevo Class 5 Claim was based on alleged damages incurred because of purported lost gas production resulting from Pacific Gas' discontinuance of certain service. Pacific Gas objected to Nuevo's Gas Claim. Nuevo Energy later withdrew the Gas Claim to resolve Pacific Gas' Objection. Mr. Kaplan told the Court that under an Escrow and Disbursement Agreement between Pacific Gas and Deutsche Bank Trust Company Americas, as escrow and disbursing agent, Deutsche Bank is required to make payments from the Class 5 Escrow Fund to a Class 5 claimant whose claim becomes an Allowed Claim. Deutsche Bank is also required to release funds to Pacific Gas for any difference between the escrowed amount with respect to the claim and the allowed amount of the claim. To the extent any Disputed Class 5 Claim is resolved pursuant to a settlement or is disallowed by the Court, Pacific Gas may direct Deutsche Bank to release the escrowed amount of that claim to Pacific Gas. "The withdrawal of a Class 5 Claim should be treated consistently with an order disallowing, or a settlement resolving, a Class 5 Claim," Mr. Kaplan contended. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. Pacific Gas and Electric emerged from chapter 11 protection on April 12, 2004, paying all creditors 100 cents-on- the-dollar plus post-petition interest. (Pacific Gas Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC GAS: Wants Partial Judgment on Lexington's $8-Mil Claims ---------------------------------------------------------------- Gary M. Kaplan, Esq., at Howard Rice Nemerovski Canady Falk & Rabkin, in San Francisco, California, relates that Claim No. 3648 was filed in a contingent, unliquidated amount and included a number of specified components, by: * Lexington Insurance Company, * National Union Fire Insurance Company of Pittsburgh, Pa., * American Home Assurance Company, * American International Specialty Lines Insurance Company, * AIU Insurance Company, * Starr Excess Liability Insurance Company, Ltd., and * other entities related to American International Group, Inc. Pacific Gas and Electric Company objected to the Initial Claim on various grounds, including the Claimants' failure to establish the validity of the Claim or provide adequate supporting documentation. Subsequently, the Claimants filed Amended Claim No. 13511, withdrawing all components of the Initial Claim and solely asserting amounts allegedly owed by Pacific Gas with respect to a certain Core Market Pool Performance Bond issued by American Home Assurance Company on August 14, 2000, for California Power Exchange Corporation's benefit. The CalPX Bond secured the performance of a number of CalPX market participants, including Pacific Gas and Southern California Edison, including legal expenses incurred by Claimants and legal expenses incurred by CalPX. While asserted in a contingent, unliquidated amount, the Amended Claim sought to recover $8,151,110 from Pacific Gas, comprised of: -- $7.5 million paid by AHAC to CalPX pursuant to an August 12, 2003 Settlement Agreement between them; -- $300,000 paid by AHAC to CalPX pursuant to the Settlement Agreement in reimbursement of CalPX's legal expenses in connection with litigation with respect to the CalPX Bond; and -- $351,110 incurred by AHAC in connection with litigation with respect to the CalPX Bond. Mr. Kaplan tells the Court that the Amended Claim contained no breakdown or supporting documentation with respect to the Claim for CalPX Legal Expenses. The Claimants supplemented the Amended Claim with Claim No. 13519 in March 2005, and further supplemented the Supplement Claim with Claim No. 13520 in June 2005. The Supplement Claims increased the amount of the Legal Expense Claim to $395,541. The Supplements still contained no breakdown or supporting documentation with respect to the Claim for Legal Expenses. On June 24, 2005, at Pacific Gas' request, the Claimants produced discovery responses, documents and billing records. However, Mr. Kaplan contends that neither the Claim nor the Billing Records substantiate the Claimants' potential entitlement to recover from Pacific Gas on their Claim for CalPX Legal Expenses. The Billing Records primarily relate to Southern California Edison rather than Pacific Gas. Mr. Kaplan argues that the portion of the Claim seeking recovery for legal expenses must be disallowed in its entirety because the Claimants' failed to establish validity or to provide adequate supporting documentation. Accordingly, Pacific Gas asks the Court to grant it partial summary judgment and disallow the Claim for CalPX Legal Expenses. Pacific Gas reserves all rights to address the other components of the Amended Claim by summary judgment motion or otherwise. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. Pacific Gas and Electric emerged from chapter 11 protection on April 12, 2004, paying all creditors 100 cents-on- the-dollar plus post-petition interest. (Pacific Gas Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) PHOENIX INT'L: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Phoenix International Motorsports, LLC 5640 North 7th Street Phoenix, Arizona 85014-2504 Bankruptcy Case No.: 05-17060 Type of Business: The Debtor is a motorcycle dealer. See http://www.phxmotorsports.com/ Chapter 11 Petition Date: September 8, 2005 Court: District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Michael W. Carmel, Esq. Michael W. Carmel, Ltd. 80 East Columbus Avenue Phoenix, Arizona 85012-4965 Tel: (602) 264-4965 Fax: (602) 277-0144 Total Assets: Not Provided Estimated Debts: $100,000 to $500,000 Debtor's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Peyton A. Cramer Survivors Trust $112,000 c/o Tiffany & Bosco (C. Kaup) 2525 East camelback Road, 3rd Floor Phoenix, AZ 85016-4237 Kawasaki Motors Finance Corporation $10,474 9950 Jeronimo Road Irvine, CA 92618 Parts Unlimited $4,132 P.O. Box 5222 Janesville, WI 53547 Iron Horse $3,449 Kawasaki Parts Account $2,501 GE Commercial Distribution $2,166 GE Commercial Distribution $1,657 Tucker Rocky $1,454 GE Commercial Distribution $692 Motor Cycle Stuff $661 Ducati North America $502 Lockhart Phillips $470 Wurth California $349 Interstate Batteries $103 Malaguti USA $38 Triumph Motorcycles - Parts $23 North Valley Honda $8 PONDEROSA PINE: Employs Cuyler Burk as Insurance Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave Ponderosa Pine Energy, LLC, and its debtor-affiliates permission to employ Cuyler Burk, LLP, as their special insurance counsel, nunc pro tunc to May 4, 2005. As previously reported in the Troubled Company Reporter on Aug. 17, 2005, Cuyler Burk will advise the Debtors on insurance matters. Cuyler Burk will also provide counsel in prosecuting claims under first party policies of insurance for losses to power generating equipment, including claims arising out of turbine blades. Stephen Cuyler, Esq., a partner at Cuyler Burk, discloses the current hourly rates of professionals who will work in the engagement: Designation Hourly Rate ----------- ----------- Senior Partners $350 Partners $325 Of Counsel $300 Senior Associate $190 Associate $175 Paralegals $90 Stephen Cuyler assures the Court that his firm does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D. N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PONDEROSA PINE: Hires FTI Consulting as Financial Advisor --------------------------------------------------------- Ponderosa Pine Energy, LLC, and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the District of New Jersey to employ FTI Consulting, Inc., as their financial advisor, nunc pro tunc to April 13, 2005. As previously reported in the Troubled Company Reporter on June 16, 2005, Elliot Fuhr, a member of FTI Consulting, disclosed that FTI Consulting's professionals' bill: Designation Hourly Rate ----------- ----------- Senior Managing Director $560 - $625 Managing Director $520 - $560 Director $415 - $495 Consultant $310 - $385 Associate $205 - $280 FTI Consulting will not be able to provide services that are potentially adverse to Enron Corporation. Should the need arise, the Debtors believe that they will be able to obtain the services of other financial advisors as to specific matters concerning Enron. Elliot Fuhr assures the Court that FTI Consulting does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D.N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PONDEROSA PINE: Employs Paul Hastings as Regulatory Counsel ----------------------------------------------------------- Ponderosa Pine Energy Partners, Ltd., and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the District of New Jersey to employ Paul, Hastings, Janofsky & Walker LLP as their special litigation and regulatory counsel, nunc pro tunc as of June 1, 2005. The Debtors own an electric cogeneration plant located in Cleburne, Texas. The Cogeneration Plant produces electric energy and distilled water -- a form of useful thermal energy. The Debtors are party to a Power Purchase Agreement dated Nov. 1, 1993, with Brazos Electric Power Cooperative, Inc., Under the PPA, Brazos is obligated to purchase substantially all of the electric energy produced by the Cogeneration Plant for a period of 23 years. The PPA, the primary asset of Ponderosa, is the source of substantially all of Ponderosa's revenues. The Debtors want Paul Hastings to continue providing legal services including: (a) the arbitration before the American Arbitration Association known as Commercial Arbitration No. 71 198 00323 01, Brazos Electric Power Cooperative, Inc., as Claimant v. Tenaska IV Texas Partners, Ltd., as Respondent. Paul Hastings will: -- be the lead counsel on all matters related to the AAA Arbitration, including, any appeals, motions, pleadings and responses, negotiations or appearance on the Debtors' behalf in the bankruptcy case, state court or federal court related; -- assist the Debtors in disclosing the nature, scope and facts surrounding the Arbitration; and -- provide legal advice and recommendations on the impact and status of the Arbitration in the disclosure statement or other pleadings filed with the Bankruptcy Court. (b) the administrative proceedings before the Federal Energy Regulatory Commission. Paul Hastings will: -- provide legal advice on specific regulatory issues affecting the Debtors; and -- assist the Debtors in disclosing the nature, scope and facts surrounding the prepetition regulatory issues in the disclosure statement or other pleadings filed with the Bankruptcy Court. (c) the Debtors' prepetition corporate structure and corporate knowledge. Paul Hastings will assist the Debtors and act as a general resource for corporate issues if the Debtors or Lowenstein Sandler PC, their bankruptcy counsel, specifically ask their services in those areas. Paul Hastings will work closely with Lowenstein and the Debtors' other legal professionals to ensure that there will be no duplication of services. John D. Hawkins, Esq. a member at Paul, Hastings, Janofsky & Walker LLP, discloses that the Firm received $72,102.87 for services rendered and expenses within 90 days of bankruptcy filing. As of Debtors' bankruptcy petition date, Paul Hastings has $2,018,463 outstanding claims against the Debtors. The hourly rates of professionals to be engaged are: Designation Hourly Rate ----------- ----------- Partners $395 - $710 Counsel $355 - $620 Associates $200 - $475 Paralegals/Clerks $55 - $215 The Debtors believe that Paul, Hastings, Janofsky & Walker LLP do not represent or hold any interest adverse to them under Section 327(e) and modified by Section 1107(b) and 328 of the U.S. Bankruptcy Code. With more than 950 lawyers in 17 offices around the globe, Paul, Hastings, Janofsky & Walker LLP -- http://www.paulhastings.com/ -- represents clients in corporate, employment, litigation, real estate and tax matters. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D.N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PNC MORTGAGE: Scheduled Paydown Prompts Fitch's Rating Upgrades --------------------------------------------------------------- Fitch Ratings has taken these actions on PNC Mortgage Acceptance Corp. commercial mortgage pass-through certificates, series 1999- CM1: Fitch upgrades these classes: --$34.2 million class A-3 to 'AAA' from 'AA-; --$13.3 million class A-4 to 'AA' from 'A+'; --$24.7 million class B-1 to 'A' from 'BBB+'; --$9.5 million class B-2 to 'BBB+' from 'BBB'. --$10.5 million class B-6 to 'BB-' from 'B+'; --$5.7 million class B-8 to 'B' from 'B-'. In addition, Fitch affirms these classes: --$30.7 million class A-1A at 'AAA'; --$433.7 million class A-1B at 'AAA'; --Interest-only class S at 'AAA'; --$39.9 million class A-2 at 'AAA'. Fitch does not rate classes B-3, B-4, B-5, B-7, C, and D certificates. The rating upgrades reflect the increased credit enhancement levels due to scheduled amortization, paydown and defeasance. As of the August 2005 distribution date, the pool's aggregate collateral balance has been reduced by approximately 12.8%, to $663 million from $760.4 million at issuance. Eight loans (10.8%) have defeased, including the third largest loan. Currently, four loans (1%) are in special servicing. The largest specially serviced loan is secured by an office building in Fort Lauderdale, FL and is currently 90+ days delinquent. The special servicer has indicated that a refinancing of the loan is in process. No loss is expected upon resolution of this loan. The second specially serviced loan is collateralized by a 64-unit apartment complex in Covington, GA. This loan transferred to the special servicer in August 2005 for 60+ days delinquency. The special servicer is in the process of negotiating a workout; no loss is anticipated on the property. PROTOCOL SERVICES: Taps Murray Devine as Valuation Experts ---------------------------------------------------------- Protocol Services, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of California for permission to employ Murray, Devine & Co. Inc., as their valuation experts. Murray Devine will: 1) provide business enterprise valuation of the Debtors in connection with their corporate restructuring chapter 11 protection; 2) render expert witness services and consulting in connection with their chapter 11 cases and assist in establishing the Debtors' going concern value as a guide in formulating a plan of reorganization; and 3) provide all other business valuation and consulting services to the Debtors that are necessary in their chapter 11 cases. Francis X. Devine, an Executive Vice-President of Murray Devine, disclosed that his Firm received a $50,000 one-time Valuation Fee. Mr. Devine reports Murray Devine's professionals bill: Designation Hourly Rate ----------- ----------- Principals $375 Sr. Vice-Presidents $325 Vice-Presidents $275 Analysts $175 Mr. Devine assures the Court that Murray Devine does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, 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. PROTOCOL SERVICES: Wants to Continue Hiring Ordinary Course Profs. ------------------------------------------------------------------ Protocol Services, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of California for permission to continue to employ, retain and pay professionals they turn to in the ordinary course of their businesses without bringing formal employment applications to the Court. In the ordinary course of their businesses, the Debtors employ various professionals, including accountants and attorneys, to render services relating to numerous issues in connection with their business operations. The Debtors explain that it would be unduly burdensome on their part to require each Ordinary Course Professional to submit formal individual employment and compensation applications to the Court. Additionally, some of the Ordinary Course Professionals are unfamiliar with the fee application process in a chapter 11 case and they might be less inclined to work with the Debtors if they were forced to adhere to those requirements. The Debtors assure the Court that: 1) no Ordinary Course Professional will be paid in excess of $15,000 per month and the aggregate income for all the Professionals will not exceed $50,000 over any consecutive three-month period; 2) if an Ordinary Course Professional income exceeds $15,000 per month, that Professional will be required to submit a formal employment and compensation application to the Court; and 3) no Ordinary Course Professional will be involved in the administration of the Debtors' chapter 11 case. Although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, the Debtors do not believe that any of them have an interest adverse to the Debtors, their creditors and other parties in interest. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, 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. QUADRAMED: Names Keith Hagen President & Chief Executive Officer ---------------------------------------------------------------- QuadraMed(R) Corporation (AMEX:QD) appointed Keith B. Hagen to the post of President and Chief Executive Officer, effective Oct. 17, 2005. Mr. Hagen will also become a member of the QuadraMed Board of Directors. Lawrence P. English, who has led the Company as CEO since 2000, will continue as Executive Chairman until December 31, 2005 and will continue to serve as a Director thereafter. On Jan. 1, 2006, Robert L. Pevenstein, currently the Lead Independent Director, will become Non-Executive Chairman of the Board. In a letter to employees announcing the transition, Mr. English, who reached his 65th birthday in July, said, "Keith Hagen is exactly the kind of leader the Company needs for the future. I personally recruited him and recommended him to the Board. He is a growth oriented executive with a strong background in healthcare technology. Although you can be assured I will remain a very active member of the Board of Directors, I also believe it is appropriate for me, after a reasonable transition period, to relinquish the Chairman title. Bob Pevenstein is well qualified to assume that post, and he meets all of the requirements of an independent director." "What a perfect time for me to join QuadraMed," said Mr. Hagen. "Larry English has succeeded in resolving the financial issues that were holding the company back. The Affinity product continues to be ranked number one in the KLAS survey and the Quantim medical records products are leading the industry in innovation. The combination of a company with both solid business fundamentals and top ranked products is hard to beat. Having spent 21 years in healthcare technology, I have a strong appreciation for the complexities faced by our hospital customers. As CEO, I will be focused on proving our commitment to our customers, and to our products," he added. Mr. Hagen, 42, began his career as a programmer and rapidly rose to the post of Chief Technology Officer at Compucare, a company acquired by QuadraMed in 1999. In 2000, he joined Sunquest Information Systems (NASDAQ:SUNQ), where he served as a member of the executive team that sold Sunquest to Misys PLC in 2001. From 2001 to 2003, he served as Senior Vice President, Product Development and Chief Technology Officer for Misys Healthcare Systems. Since February 2003, he has served as President of M. Transaction Services, Inc. in Austin, Texas, a Misys Company. In a separate letter to employees, Lead Independent Director Mr. Pevenstein explained that the plan to separate the Board Chairmanship from the CEO position is consistent with good corporate governance. He went on to praise Mr. English for his leadership of the Company through a very difficult period. He noted that English had saved QuadraMed from almost certain bankruptcy in 2003, restructured the balance sheet twice, retired all of the Company's long-term debt, and restored the Company to its first profitable quarter in years. QuadraMed Corp. -- http://www.quadramed.com/-- is dedicated to improving healthcare delivery by providing innovative healthcare information technology and services. From clinical and patient information management to revenue cycle and health information management, QuadraMed delivers real-world solutions that help healthcare professionals deliver outstanding patient care with optimum efficiency. Behind our products and services is a staff of almost 700 professionals whose experience and dedication to service has earned QuadraMed the trust and loyalty of customers at approximately 2,000 healthcare provider facilities. * * * Material Weaknesses In connection with its evaluation of the effectiveness of the Company's internal controls over financial reporting as of Dec. 31, 2004, the Company's management discovered two control deficiencies in the Company's revenue cycle related to the Company's conversion of its financial records to its principal financial software, PeopleSoft: (i) The review and supervision of the data entry and contract activation process in connection with the conversion of data for the PeopleSoft modules was inadequate to detect errors in these areas prior to contract activation. (ii) Not all of our legacy contracts were converted completely into the new PeopleSoft module, requiring the continued need for manual review, impairing management's ability to effectively review, monitor, and investigate movements in customer account balances, and limiting the Company's ability to create meaningful deferred revenue roll-forward analysis on a timely basis. As of June 30, 2005, these control deficiencies have not been remediated. The Company believes that, both individually and in the aggregate, these control deficiencies continued to constitute material weaknesses in its internal controls over financial reporting as of June 30, 2005. These weaknesses resulted in more than a remote likelihood that a material misstatement could occur in the Company's annual or interim financial statements and not be prevented or detected. In fact, these material weaknesses resulted in errors, which were not detected on a timely basis at Dec. 31, 2004, and June 30, 2005. None of these errors, however, resulted in any material adjustments to the Company's financial statements. BDO Seidman, LLP, previously noted a matter involving internal control that they considered to be a material weakness after it audited the Company's financial statements for 2003. "The Company continues to invest significant effort and resources to eliminate these deficiencies in internal controls, and will continue to do so throughout 2005," Mr. English, disclosed in its Form 10-Q filing for the period ended June 30, 2005. "We will not, however, be in a position to change our current assessment of internal controls until we perform a comprehensive assessment of such controls as part of our 2005 Sarbanes-Oxley Section 404 procedures later this year and into early 2006." RELIANCE GROUP: Asks Court to Approve Lloyd's Settlement Agreement ------------------------------------------------------------------ Prior to being placed in liquidation, Reliance Insurance Company issued a Business Owners Policy to a limited partnership to construct a 12-unit condominium in San Diego, California, known as Pershing Park Villas. The Policy was effective from June 1, 1985, through June 1, 1986. In the early 1990s, the Pershing Park Villas Homeowners' Association filed an action against the Limited Partnership asserting construction defect claims. The Limited Partnership tendered the defense of the action to RIC. RIC defended the action for two years but withdrew in January 1994 because the claimed damage did not occur during the policy period. A $300,000 default judgment was taken against the members of the defendant Limited Partnership, all of whom filed for bankruptcy between August 1994 and July 1995. On July 20, 1995, the Limited Partnership filed a bad faith action against RIC. Early in 1998, the jury awarded $27,000,000 in damages against RIC. A trial court later reduced this amount to $5,250,000, plus interest and attorneys' fees. RIC subsequently reached a settlement with the Limited Partnership for $5,700,000. RIC was covered for the Pershing Park Settlement under a blended insurance policy, bearing Policy No. QA9500554, issued by Certain Underwriters at Lloyd's, London. RIC sought coverage for its losses pursuant to the Policy. Brian E. Goldberg, Esq., at Orrick, Herrington & Sutcliffe, in New York City, recounts that RIC and the Lloyd's Underwriters disagreed on the nature of RIC's losses under the Pershing Park Settlement and the scope of coverage provided by the Policy. However, RIC and the Lloyd's Underwriters agreed that a substantial portion of the losses was covered by the Policy. Zurich Reinsurance (London) Limited subscribed to 15% of the Policy and is responsible for 15% of the coverage. In January 2001, RIC and the Underwriters reached a settlement agreement whereby the Underwriters agreed to pay RIC 85% of the amount covered by the Policy, or $1,640,000. The Commonwealth Court approved the Agreement on January 31, 2005. However, since the Settlement Agreement does not become effective until approved by the both Commonwealth Court and the U.S. Bankruptcy Court for the Southern District of New York, the Official Committee of Unsecured Creditors and M. Diane Koken, Insurance Commissioner of the Commonwealth of Pennsylvania as Liquidator of RIC, jointly ask Judge Gonzalez to approve the Settlement Agreement. Any settlement with Zurich Reinsurance (London) Limited will be part of a separate motion, Mr. Goldberg explains. Court Must Approve Settlement Agreement The Settlement Agreement will result in a favorable outcome for the RGH estate and its creditors, Mr. Goldberg tells Judge Gonzalez. Pursuant to a separate agreement between RIC and Reliance Group Holdings, 12.5% of the $1,640,000, or $205,000 of the Policy proceeds will be paid to RGH. The $205,000 does not constitute "New Cash" as per the PA Settlement. Furthermore, the Underwriters Policy and the Settlement Agreement are separate from the insurance policies issued by the Lloyd's Underwriters that are subject to the PA Settlement, Mr. Goldberg explains. Therefore, the Settlement Agreement will result in the realization of additional proceeds for RGH and RIC estates. The Liquidator has also determined that the settlement is fair and reasonable and appropriate under the circumstances, Mr. Goldberg adds. Although the parties still dispute whether $340,000 in additional Policy proceeds are due to the RIC estate in connection with the Pershing Park Settlement, the parties have reserved their rights and will negotiate to resolve their differences, Mr. Goldberg assures the Court. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESTAURANT CO: Moody's Rates $190 Million Sr. Unsec. Notes at B2 ---------------------------------------------------------------- Moody's Investors Service rated at B1 and B2, respectively, the proposed revolving credit facility and senior unsecured notes of The Restaurant Company. Moody's also assigned a Speculative Grade Liquidity Rating of SGL-2. The Restaurant Company operates the "Perkins" chain of family dining restaurants. Net proceeds from the new debt plus equity from the new owner Castle Harlan will finance the leveraged buyout of the company. The fundamental ratings consider: * the company's high financial leverage and limited free cash flow; * the high competition among family dining restaurant chains; and * the uncertain success of more ambitious store development plans. However, supporting the ratings are the stability of sales and restaurant margins and the established position of Perkins as a multi-regional family dining restaurant operator. The rating outlook is stable. These ratings are assigned (subject to review of final documentation): -- $ 25 million secured revolving credit facility at B1; -- $190 million senior unsecured notes (2013) at B2; -- Corporate Family Rating (previously called the Senior Implied Rating) at B2; and -- Speculative Grade Liquidity Rating at SGL-2. The ratings reflect: * the high financial leverage (especially when adjusted for operating lease obligations) and low fixed charge coverage; * the uncertain results from a more ambitious store development program; and * the limited liquidity resources beyond operating cash flow. The high degree of competition in the mature family dining category and the vulnerability to price variations for commodities such as dairy and chicken also are significant business risks facing the company. However, the ratings recognize: * the strong average unit volume and solid store level margin of Perkins among family dining restaurants; * Moody's expectation that the company will fund its capital investment program from internally generated cash flow; and * the established position of Perkins in several regions. The medium-term flexibility of capital investment, the potential for increased outside sales at the Foxtail bakery subsidiary, and the stability of high-margin royalty payments from franchisees also positively impact Moody's perception of the company. Moody's belief that operating cash flow will exceed Perkins's obligations over the next twelve months and our expectation that the company will comfortably maintain compliance with its quantitative bank loan covenants support the good liquidity rating of SGL-2. Moody's anticipates that incremental utilization of the $25 million revolving credit commitment (beyond $6 million to cover Letters of Credit) will be minimal. The use of all assets to collateralize debts and Moody's opinion that asset orderly liquidation value falls well below the current debt balance limit the liquidity rating. Moody's expects that the company will generate at least $35 million of EBITDA over the next twelve months, while cash outflows are expected to include about $20 million for interest payments and $12 million for capital expenditures. The stable rating outlook reflects Moody's expectations that the company's financial profile will improve as it: 1) increases revenue mostly from new store openings; and 2) reduces leverage through growing cash flow. A decline of stable performance levels at the new and/or existing stores, financial difficulties at a significant proportion of franchisees, or failure to maintain a comfortable liquidity cushion would place downward pressure on the ratings. Over the longer term, ratings could move upward as the company achieves good returns on investment with the planned new store development program and makes meaningful progress at improving debt protection measures (such as lease adjusted debt falling below 5 times and fixed charge coverage approaching 2 times). The B1 rating on the proposed bank loan (to be comprised of a $25 million Revolving Credit Facility) considers: * the collateral provided by all tangible and intangible assets of the Borrowers and subsidiaries; * the pledge of all capital stock of the Borrowers and their subsidiaries; and * the guarantees of all subsidiaries. The most important asset is the royalty stream from more than 330 franchisee contracts. Moody's notes that goodwill will comprise about two-thirds of the post-transaction balance sheet. The small size of the secured bank loan rating supports the rating relative to the Corporate Family Rating, but the off-balance sheet burden of substantial operating lease obligations limits the differential to one notch. After about $6 million for letter of credit support, $19 million of the Revolving Credit Facility commitment will be available for immediate liquidity. The B2 rating on the senior notes recognizes that this debt is guaranteed by the company's operating subsidiaries. The notes are effectively subordinated to the bank loan and rank equally with $7 million of trade accounts payable. In a hypothetical default scenario with the revolving credit facility fully utilized, Moody's expects that most recovery for this unsecured debt class would result from residual enterprise value. Pro-forma for this financing transaction, lease adjusted debt equals 6 times EBITDAR and fixed charge coverage is near 1 time. Average unit volume of about $2.0 million and restaurant EBITDAR margin of around 16% have remained steady for many years. The new owner intends to invest most excess cash flow in new store development with the purpose of growing enterprise value, in contrast to the recent history of paying down debt. Moody's expects that lease adjusted leverage will fall towards 5 times and fixed charge coverage will approach 1.5 times within the next few years as the new stores yield incremental benefits. The Restaurant Company, headquartered in Memphis, Tennessee, operates 152 and franchises 331 Perkins Family Restaurants. The company also produces bakery items goods for internal use and external sale through its Foxtail subsidiary. Revenue for the twelve months ending July 10, 2005 was $348 million. RHODES INC: Has Until December 31 to Make Lease-Related Decisions ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia extended, until Dec. 31, 2005, the period within which Rhodes, Inc., and its debtor-affiliates can elect to assume, assume and assign, or reject certain of their unexpired nonresidential real property leases. The Debtors reminded the Court that it entered an order on Aug. 16, 2005, authorizing them to conduct Going Out of Business store closing sales for their remaining retail store locations. The Debtors explained that they are tenants to at least 14 unexpired nonresidential real property leases that they have not previously assumed or rejected. Those leases remain in effect and have not expired or been terminated according to their respective terms. The Debtors' 14 remaining unexpired leases are located in the states of Indiana, Illinois, Kentucky and Missouri, collectively called the Midwest Leases. The extension is therefore necessary to permit the Debtors to fulfill their obligations under the Midwest Going Out of Business Order and dispose of the Midwest Leases. Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and midwestern states (after disposing 14 stores). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in assets and $10 million to $50 million in debts. SEA STREET RESTAURANT: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Sea Street Restaurant Group, Inc. dba The Fox and Hound 123 Sea Street Quincy, Massachusetts 02169 Bankruptcy Case No.: 05-18110 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: September 7, 2005 Court: District of Massachusetts (Boston) Judge: Robert Somma Debtor's Counsel: Leonard Ullian, Esq. The Law offices of Ullian & Associates 220 Forbes Road, Suite 106 Braintree, Massachusetts 02184 Tel: (781) 848-5980 Total Assets: Not Provided Total Debts: Not Provided The Debtor did not file a list of its 20 Largest Unsecured Creditors. SHORE POINT: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Shore Point Management Company dba Ocean Pointe Inn 2101 South Atlantic Avenue Daytona Beach, Florida 32118 Bankruptcy Case No.: 05-10137 Type of Business: The Debtor operates an inn. See http://www.oceanpointeinn.com/ Chapter 11 Petition Date: September 7, 2005 Court: Middle District of Florida (Orlando) Judge: Karen S. Jennemann Debtor's Counsel: Norman L. Hull, Esq. Norman Linder Hull PA 746 North Magnolia Avenue Orlando, Florida 32803 Tel: (407) 422-1235 Fax: (407) 423-2842 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 ------ --------------- ------------ Chris Spann Money loan $236,000 8628 Center Street Holland, NY 14080 Curt L. Niederpruem Money loan $180,146 3255 South Atlantic Avenue Daytona Beach Store, FL 32118 GE Capital CPLC Loaned furniture $90,000 P.O. Box 230102 and air conditioning Portland, OR 97281 Shalish Patel Money loan $71,000 Heritage Hotel Money loan $59,187 Donald Pfeifer Money loan $55,000 Arthur and Vicky Arent Money loan $50,000 Internal Revenue Service Sales tax $30,000 Bank One Credit card $25,000 Pitney Workd Credit card $18,000 Mary Ellen G. Koberg, Esq. Legal service $15,700 State of Florida Department Sales tax $12,000 Of Revenue Advanta Credit card $10,000 American Express Credit card $8,500 Carrier Corp. Air conditioning $7,785 Southern Paint & Supply Co. Paint $7,000 Colorado Communications Telephone service $5,735 GE Capital Lease $4,502 Rick's Electrical Electrical $3,911 Builders Square Maintenance supplier $3,500 SOLUTIA INC: JPMorgan Defends Request for Document Production ------------------------------------------------------------- JPMorgan Chase Bank defended its request to the U.S. Bankruptcy Court for the Southern District of New York to compel Solutia Inc. and its debtor-affiliates to produce all the documents it requested in connection with its adversary proceeding against Solutia and to label and organize the documents responsive to the discovery demands JPMorgan Chase contends that Solutia failed to establish any privilege by competent evidence. It is fundamental law that Solutia bears the burden of proof and persuasion to justify its claims of privilege and work product, Eric A. Schaffer, Esq., at Reed Smith LLP, in New York, argues. Similarly deficient, Mr. Schaffer continues, is Solutia's attempt to justify its attorney-client privilege for documents created by and sent to its investment banker without an affidavit of any individual with first hand knowledge of the contents and motivation behind each document. Mr. Schaffer notes that Solutia's skeletal "draft privilege log" offers no support either. Acknowledging that Rothschild, Inc., cannot fall within the privilege unless it is considered the functional equivalent of a Solutia employee, Solutia can only "assert a conclusory and wildly exaggerated statement that 'Rothschild served the function of internal financial crisis manager for Solutia.'" This statement, Mr. Schaffer insists, is devoid of any factual support and fails to support a claim of privilege. Furthermore, Solutia has provided no competent evidentiary support for the contention that the documents produced to date have been produced in the "ordinary course," Mr. Schaffer adds. The burden is on Solutia to demonstrate compliance with the Federal Rules. Mr. Schaffer disagrees with Solutia's assertion that the parties did not "meet and confer." Mr. Schaffer relates that JPMorgan has been meeting and conferring with Solutia for over a year to resolve Solutia's improper assertion of privilege with regard to the Disputed Documents and to compel Solutia to produce documents in response to the specific document requests. JPMorgan also met with Solutia's prior counsel, Gibson, Dunn & Crutcher LLP, several times before the appointment of Kirkland & Ellis LLP, Mr. Schaffer says. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) STANDARD AERO: Senior Vice President Lee Beaumont Resigns --------------------------------------------------------- Lee Beaumont left Standard Aero Holdings Inc. effective August 12, 2005 to pursue other interests. Lee, a Senior Vice President with Standard Aero, has most recently worked on special projects reporting directly to the Chief Executive Officer, Dave Shaw. Standard Aero extends its best wishes to Lee in his future career activities. The Divisional restructuring of Standard Aero took place in December 2004, at which time Paul Soubry Jr. assumed responsibility of Standard Aero's global Maintenance, Repair and Overhaul operations, including Maryville, Tenn., San Antonio, Tex., Winnipeg, Canada, and Tillburg, Holland. The creation of the larger MRO Division brings together both the Commercial and Government operations of Standard Aero, allowing for better co- ordination of services for Standard Aero MRO customers around the world. In addition, Standard Aero created the Enterprise Services Division focused on providing business transformation and logistics readiness services to military and commercial clients. The Enterprise Services Division is led by Ed Richmond, Senior Vice President of Strategy and Business Development. In May 2005, the Enterprise Services Division as part of Team Battelle, won a major transformation contract to redesign the United States Air Force's Oklahoma City Air Logistics Center's MRO operations including aircraft, engines, and commodities. Standard Aero Holdings Inc. -- http://www.dunlopstandard.com/-- is a leading supplier of services to the global aerospace, defense and energy industries. The Company has over 2,500 employees in six different countries, with its main operations located in the United States, Canada and the Netherlands. On Aug. 15, 2005, the Company disclosed that it would restate and reclassify its audited consolidated financial statements for the period from August 25, 2004, to December 31, 2004, and as of December 31, 2004, and for the interim unaudited financial information for the first quarter of 2005 to reflect the non-cash effect of changes in the recorded amount of the Company's foreign deferred tax liabilities. Material Weakness in Internal Control As reported in the Troubled Company Reporter on Aug. 19, 2005, the Company's management believes that the restatement may indicate a material weakness in the Company's internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. In order to improve the process and to enhance the Company's internal control over financial reporting, the Company's management has hired the former Senior Manager for U.S. and Cross-Border Tax from a major public accounting firm to act as the Company's director of tax accounting beginning Aug. 15, 2005. STEEL DYNAMICS: Replaces $230-Mil Facility with $350-Mil Facility ----------------------------------------------------------------- Steel Dynamics, Inc. (Nasdaq: STLD), replaced its existing $230 million senior secured revolving credit facility with a new 5-year $350 million senior secured revolving credit facility. With completion of the refinancing, the Company increased its liquidity from approximately $200 million to $335 million, with the opportunity to increase the new facility by an additional $100 million during the next five years. The new facility is secured by substantially all of the Company's accounts receivable and inventories. The proceeds from the revolver will be available to fund working capital and other general corporate purposes. Steel Dynamics Inc. -- http://www.steeldynamics.com/-- produces a broad array of high-quality flat-rolled, structural and bar steels at its three Indiana steel mini-mills and steel-processing operations. * * * Standard & Poor's Ratings Services placed its BB rating on the Company's 9-1/2% Senior Notes due 2009 on February 4, 2005. SUMMIT ONE LLC: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Summit One LLC 318 West Elm Rogers, Arkansas 72758 Bankruptcy Case No.: 05-76618 Chapter 11 Petition Date: September 7, 2005 Court: Western District of Arkansas (Fayetteville) Debtor's Counsel: Stanley V. Bond, Esq. P.O. Box 1893 Fayetteville, Arkansas 72701-1893 Tel: (479) 444-0255 Fax: (479) 444-7141 Total Assets: Not Provided Total Debts: Not Provided The Debtor did not file a list of its 20 Largest Unsecured Creditors. SUNDANCE FRAMING: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Sundance Framing, Inc. 3049 East McKellips Road, Suite 8 Mesa, Arizona 85213 Bankruptcy Case No.: 05-17008 Type of Business: The Debtor is a framing subcontractor. Chapter 11 Petition Date: September 8, 2005 Court: District of Arizona (Phoenix) Judge: Chief Judge Redfield T. Baum Sr. Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 North 16th Street, #103 Phoenix, Arizona 8502 Tel: (602) 861-0777 Fax: (602) 870-0296 Total Assets: Not Provided Total Debts: Not Provided The Debtor did not file a list of its 20 Largest Unsecured Creditors. TECHNICAL OLYMPIC: Prices 4-Mil Share Offering at $28 Per Share --------------------------------------------------------------- Technical Olympic USA, Inc. (NYSE:TOA) priced an offering of 4,000,000 shares of common stock at $28.00 per share. Of the total number of shares: * 2,920,000 shares are being offered by the Company; and * 1,080,000 shares are being offered by Technical Olympic S.A., the Company's majority stockholder. In addition, the Company and the selling stockholder have granted the underwriters an option to purchase up to an additional 600,000 shares of common stock. The proceeds to the Company of the offering will be used to repay amounts outstanding under the Company's revolving credit facility. UBS Investment Bank and Citigroup are acting as joint book-running managers of the offering. Copies of the prospectus relating to the offering may be obtained, when available, from: UBS Investment Bank at 299 Park Avenue, New York, NY 10171 or Citigroup Global Markets Inc., 140 58th Street, Brooklyn, NY 11220. Technical Olympic USA, Inc. -- http://www.tousa.com/-- is a leading homebuilder in the United States, operating in 16 metropolitan markets located in four major geographic regions: Florida, the Mid-Atlantic, Texas and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home ("empty-nesters"). It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title, Inc. * * * As reported in the Troubled Company Reporter on July 12, 2005, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Technical Olympic USA Inc. and removed it from CreditWatch, where it was placed with negative implications on June 10, 2005. The outlook is returned to stable. Concurrently, the 'B+' rating on the approximately $300 million of existing senior unsecured notes and the 'B-' rating on the approximately $510 million of existing senior subordinated notes also are affirmed and removed from CreditWatch negative. TERAFORCE TECHNOLOGY: Selling DNA Computing's Assets for $2.9M++ ---------------------------------------------------------------- Teraforce Technology Corporation and its debtor-affiliate, DNA Computing Solutions, Inc., ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to sell substantially all of DNA Computing's assets free and clear of liens, claims, interest, and encumbrance. The Debtors decided to sell the assets of DNA Computing to maximize recovery for their creditors. The said assets are composed generally of: (a) intellectual property and technology, including patents, marks, copyrights, etc.; (b) inventory; (c) equipment; (d) rights under the Assumed Contracts; (e) rights under non-disclosure, non-compete, confidentiality or non-solicitation agreements, and Debtors' rights under warranties and other documents from third-party sellers or providers of services; (f) documents and permits; and (g) all rights, claims, and causes of action against third parties relating to any of the assets. GE Fanuc -- Stalking Horse The Debtors tell the Court that it entered into an Asset Purchase Agreement on Aug. 1, 2005, with GE Fanuc Embedded Systems Inc. Under the agreement, GE Fanuc will purchase the assets for the price of $2,895,000, subject to the indemnity escrow of $300,000. The Debtors disclose that in order to ensure that the assets are sold for the highest and best purchase price, with the agreement of GE Fanuc, they have decided to request the court to sell the assets: (1) at an auction; or (2) pursuant to the agreement with GE Fanuc should the auction fail to yield a better or higher offer. The Debtors tell the Court that to induce GE Fanuc's participation in the auction and prevent termination of the agreement, they have filed a separate Auction Procedures Motion with the Court. The Auction Procedures Motion contains, among others, bid protections for GE Fanuc including a break-up fee, expenses reimbursement and minimum overbid. Headquartered in Richardson, Texas, Teraforce Technology Corporation -- http://teraforcetechnology.com/-- markets the products and services of its affiliate, DNA Computing Solutions, Inc. DNA Computing -- http://www.dnacomputingsolutions.com/-- designs, produces and sells board-level products that deliver high performance computing capabilities for embedded applications in the military/aerospace, industrial, and commercial market sectors. Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the Debtors in their restructuring efforts. The Company and its affiliate filed for chapter 11 protection on Aug. 3, 2005 (Bankr. N.D. Tex. Case Nos. 05-38756 & 05-38757). When the Debtors filed for protection from their creditors, they listed assets totaling $4,338,000 and debts totaling $14,269,000. TERAFORCE TECHNOLOGY: Wants to Tap BKR Cornwell as Tax Accountants ------------------------------------------------------------------ Teraforce Technology Corporation and its debtor-affiliate ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ BKR Cornwell Jackson as their tax accountants. BKR Cornwell will prepare and file the Debtors' corporate tax returns for tax year 2004. The Debtors tell the Court that BKR Cornwell will be paid $8,950 for its services. The Debtor discloses that $4,500 will be paid as a retainer prior to the commencement of services and $4,450 would be payable after the completion of the tax services. To the best of the Debtors' knowledge, the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Richardson, Texas, Teraforce Technology Corporation -- http://teraforcetechnology.com/-- markets the products and services of its affiliate, DNA Computing Solutions, Inc. DNA Computing -- http://www.dnacomputingsolutions.com/-- designs, produces and sells board-level products that deliver high performance computing capabilities for embedded applications in the military/aerospace, industrial, and commercial market sectors. Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the Debtors in their restructuring efforts. The Company and its affiliate filed for chapter 11 protection on Aug. 3, 2005 (Bankr. N.D. Tex. Case Nos. 05-38756 & 05-38757). When the Debtors filed for protection from their creditors, they listed assets totaling $4,338,000 and debts totaling $14,269,000. TERAFORCE TECHNOLOGY: Court Sets October 14 as Claims Bar Date -------------------------------------------------------------- The Hon. Barbara J. Houser of the U.S. Bankruptcy Court for the Northern District of Texas set Oct. 21, 2005, as the deadline for all creditors owed money by Teraforce Technology Corporation and DNA Computing Solutions, Inc., on account of claims arising prior to Aug. 3, 2005, to file proofs of claims. Shorten Bar Date On Aug. 24, 2005, the Debtors asked the court to shorten the bar date from Dec. 6, 2005, to Oct. 14, 2005. The Debtors disclosed that with the sale of substantially all of DNA Computing Solutions, Inc.'s assets, they hope to file a proposed plan and disclosure statement by early Oct. 2005, and assuming no unanticipated problems, have the plan confirmed by mid-Dec. 2005. The Debtors tell the court that prior to any confirmation, they need to know the identity and amounts of all claims against their estates. The Debtors further tell the court that retaining the Dec. 6, 2005, bar date would likely delay any plan confirmation until Feb. 2006. The Debtor believes that shortening the bar date is to everyone's best interest. The sooner a plan is confirmed: (1) there would be less administrative expenses incurred; (2) the less in quarterly fees to the U.S. Trustee are incurred; and (3) the sooner that a return to creditors is obtained. Headquartered in Richardson, Texas, Teraforce Technology Corporation -- http://teraforcetechnology.com/-- markets the products and services of its affiliate, DNA Computing Solutions, Inc. DNA Computing -- http://www.dnacomputingsolutions.com/-- designs, produces and sells board-level products that deliver high performance computing capabilities for embedded applications in the military/aerospace, industrial, and commercial market sectors. Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the Debtors in their restructuring efforts. The Company and its affiliate filed for chapter 11 protection on Aug. 3, 2005 (Bankr. N.D. Tex. Case Nos. 05-38756 & 05-38757). When the Debtors filed for protection from their creditors, they listed assets totaling $4,338,000 and debts totaling $14,269,000. TOWER AUTOMOTIVE: Products Unit Selling Ky. Assets for $1.15M ------------------------------------------------------------- Tower Automotive Products Company, Inc., asks Judge Gropper to approve its asset purchase agreement with Gary Force and Tim Kannaly for the sale of real property and related de minimis equipment in Bowling Green, Kentucky, free and clear of liens, claims and encumbrances. Under the Purchase Agreement, Tower Products will sell the Bowling Green Facility to Messrs. Force and Kannaly for $1,150,000 in cash. A five-page copy of the Purchase Agreement is available for free at: http://bankrupt.com/misc/bowlingreenagreement.pdf Bowling Green Facility The Bowling Green Facility is a 45,850-square foot manufacturing and warehouse facility on 10 acres of land in an industrial park in Bowling Green. It was originally built by A.O. Smith Corporation in 1990 to manufacture composite spring components for Ford trucks. The facility was closed in 1991 and reopened in 1996 to produce specialized components for Toyota and Honda. Tower Products acquired the Bowling Green Facility in 1997, in connection with its acquisition of A.O. Smith's automotive products division. From April of 1997 through June of 2005, Tower Products continued to utilize the Facility for the production of specialized components for Toyota and Honda. In early 2005, in connection with the Debtors' overall restructuring strategy to reduce fixed costs by reducing and consolidating the number of operating locations, Tower Products determined that the work being performed at the Bowling Green Facility could be better accommodated in existing floor space at Tower Products' other manufacturing plants. As of June 30, 2005, Tower Products ceased all operations at the Bowling Green Facility. The estimated monthly cost associated with holding the inactive Facility is $5,000. Marketing Campaign In anticipation of shutting down the Bowling Green Facility, Tower Products hired Neal Turner Realty, a commercial real estate firm, to assist in locating potential purchasers for the Facility. The initial asking price for the Facility was $1,495,000. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that Neal Turner has initiated a marketing campaign for the Bowling Green Facility, which was conducted on all levels -- nationally, regionally, state-wide and locally. Specifically, Neal Turner has taken these marketing initiatives: (a) The Bowling Green Facility was added to two commercial and industrial real estate listing services; (b) Aerial and internal photographs, building plans and recorded documentation were gathered and used to create a comprehensive piece to be distributed to potential buyers; (c) The Commonwealth of Kentucky's Economic Cabinet was contacted related to the availability of the Bowling Green Facility. A representative of the cabinet toured the Facility in early June, and the Facility was then added to the available building inventory file, and the cabinet's Web site; (d) Local and regional chambers of commerce were notified regarding the availability of the Facility. A complete marketing package was delivered and meetings were scheduled to discuss specifics on the Facility and potential prospective buyers with interest; (e) Over 300 marketing pieces were distributed to known investors, users and industrial real estate brokers throughout the Southeast; (f) Broadcast email was sent to members of the Society of Industrial and Office Realtors regarding the availability of the Facility; and (g) Two 4' x 8' double-sided real estate signs were used -- one on the Facility itself, and the other one at the entrance to the industrial park where the Facility is located. The entrance to the industrial park has an approximate 25,000 daily vehicle traffic count. As a result of Neal Turner's extensive marketing campaign, three prospective purchasers extended letters of intent to buy the Property. The $1,150,000 offer from Messrs. Force and Kannaly represents the highest and best bid for the Bowling Green Facility. Upon closing, Tower Products will pay Neal Turner a one-time fee equal to 7% of the Purchase Price in consideration of its postpetition services in connection with the marketing of the Bowling Green Facility. Matsco Objects Matsco, a division of Greater Bay Bank, N.A., objects to the Debtors' request to the extent that it seeks to sell certain equipment acquired and owned by Matsco after assuming a master lease agreement between Varilease Technology Group, Inc., and Tower Automotive Products Company, dated October 20, 2000. Varilease previously assigned the Master Lease to Epic Funding Corporation who, thereafter, assigned it to Matsco. Thus, Matsco is deemed to own all equipment under the Master Lease. Amish R. Doshi, Esq., at Pitney Hardin LLP, in New York, asserts that the Debtors merely have a leasehold interest and are only lessees under the Master Lease. Therefore, the Debtors cannot sell the Equipment, but rather must comply with the applicable provision of the Bankruptcy Code, including but not limited to Section 365. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Wants Until Jan. 27 to File Chapter 11 Plan ------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend their exclusive period to: (1) file a plan of reorganization through January 27, 2006; and (2) solicit and obtain acceptances of that plan through March 29, 2006. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Gropper that the Debtors are progressing in their good faith attempts to formulate a viable reorganization plan. The Debtors require an extension of their Exclusive Periods to give them additional time to formulate a reorganization plan for the benefit of their Chapter 11 estates. Mr. Sathy relates that since the Petition Date, the Debtors have engaged in extensive discussions and meetings with many of their North American and European customers and suppliers to ensure the continued integrity of the Debtors' supply chain and to garner the support and cooperation of these constituencies that are so vital to the success of the Debtors' restructuring efforts. In particular, the Debtors have negotiated several claim settlements and setoff stipulations with their vendors and customers, as well as obtained valuable trade term concessions and agreements on both the customer and vendor level, including the approval of the global settlement with General Motors Corporation. As a result, the Debtors, Mr. Sathy continues, have successfully secured or reconfirmed numerous awards for new business and are in the process of launching a substantial amount of previously awarded business. Among other things, this new business launch included negotiating terms with the Debtors' customers and vendors, and preparing for the potential purchase of a new manufacturing facility to serve the Debtors' customers' specific needs. Mr. Sathy also reports that the Debtors, with the help of their professional advisors, have spent significant energy and resources engaging in a comprehensive evaluation and restructuring of their entire business model to rationalize, evaluate and enhance the efficiencies of their businesses. "This restructuring process is critical to the development of a plan because the Debtors believe that a tremendous amount of efficiency can be gained by evaluating the Debtors' plants, consolidating manufacturing operations, and centralizing the Debtors' purchasing and financial systems." Mr. Sathy informs the Court that the Debtors have already closed or downsized several of their manufacturing facilities. The work previously performed at these facilities has been transferred to the Debtors' other existing locations where it can be performed as or more efficiently without the added costs associated with maintaining the former facilities. Moreover, the Debtors have already identified prospective purchasers with whom they have negotiated agreements for the potential sale of two of the Debtors' former facilities. The Debtors have also been engaged in an on-going evaluation of their executory contracts and unexpired leases. As a result, the Debtors have identified contracts and leases that are beneficial to their estates. In the case of two particular contracts, the Debtors have sought and obtained authority to assume the agreements. So far, the Debtors have rejected 15 unfavorable contracts and real property leases in their cases. Since the expiration of the general claims bar date and governmental unit bar date, the Debtors and their advisors have also worked diligently to analyze and reconcile claims in connection with developing a plan of reorganization. As part of this process, the Debtors conducted a preliminary analysis as to the validity of the claims in preparation for filing omnibus claims objections in the coming months. Furthermore, the Debtors have also engaged in formal and informal dialogues with the Official Committee of Unsecured Creditors to explore restructuring alternatives and mechanisms, including the sale or consolidation of certain business segments of the Debtors' business that would maximize the value of their estates and assist them with the development of an effective reorganization plan. The Debtors are engaged in an ongoing and extensive due diligence effort with the Committee on a variety of issues related to the Debtors' intercompany transactions and the development of the Debtors' restructuring plan. Mr. Sathy assures the Court that the Debtors are making the required postpetition payments and effectively managing their businesses and properties. The Debtors are not seeking the extension to delay administration of their cases or to pressure creditors to accept an unsatisfactory reorganization plan. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Wants Until March 31 to Decide on Leases ---------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates ask Judge Gropper to extend their deadline to assume or reject unexpired non-residential real property leases through and including March 31, 2006. The Debtors are party to over 20 major facility lease agreements, including leases for office space locations and key production centers. Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York, reports that the Debtors have already made significant progress in evaluating the Unexpired Leases. To date, the Debtors have already rejected nine Unexpired Leases. While the Debtors have made substantial progress, the Debtors, according to Mr. Cantor, are still in the process of developing their business plan, and have not yet finished their analysis of the remaining Unexpired Leases. "[A] full and accurate analysis of each Unexpired Lease is critical to maximizing the value of the Debtors' estates for the benefit all parties in interest," Mr. Cantor concludes. The Debtors reserve their rights to evaluate whether any of the contracts referred to as the Unexpired Leases are secured financing arrangements. Nothing in the request constitutes an admission that any contracts are properly categorized as lease arrangements. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) TRANS MAX: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Trans Max Technologies, Inc. c/o McDonald Carano Wilson LLP 2300 West Sahara Avenue, Suite 1000 Las Vegas, Nevada 89102 Bankruptcy Case No.: 05-19263 Type of Business: The Debtor designs and manufactures electronic ignition systems for street vehicles, race cars, boats, scientific and industrial applications, space and aviation applications, and clean burning fuel applications. Chapter 11 Petition Date: September 8, 2005 Court: District of Nevada (Las Vegas) Debtor's Counsel: John J. Laxague, Esq. McDonald Carano Wilson LLP 2300 West Sahara Avenue, Suite 1000 Las Vegas, Nevada 89102 Tel: (702) 873-4100 Fax: (702) 873-9966 Financial Condition as of June 30, 2005: Total Assets: $1,819,578 Total Debts: $2,406,003 Estimated Debt as of filing date: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Richard Powers, Wedel, Jr., and Lawsuit $21,246,483 Cohen P.O. Box 5 179 Montauk Highway Remsenburg, NY 11960 R. E. Fyn $1,500,000 115 5th Street Northwest Linden, Alberta, Canada Jamie Spangler $100,000 168 Saint James Place Buffalo, NY 14222 Gary Fitgerald Wages $98,808 205 Blue Point Road Selden, NY 11784 Peter Mergenthaler $60,000 Kamal Mahajan $40,000 Sam Higgins $39,000 Lonnie Lendarduzzi and $30,000 Linda Decker Paul Cervino Wages $23,077 Raymond Wedel, Jr. Wages $23,077 Allen Cohen Wages $20,770 Ham, Langston & Brezina, LLP $19,732 PGE $19,000 Beth Knap Wages $10,385 David M. Love, Esq. $18,607 Gerald J. Bentivegna Wages $14,423 Randy Knap Wages $10,384 Scott Grader Wages $10,039 Michael Cardamone Wages $9,231 Scott Restmeyer Wages $8,885 TRW AUTOMOTIVE: Fitch Sees No Rating Change after Dalphi Purchase ----------------------------------------------------------------- Fitch currently rates TRW Automotive: -- Senior secured debt 'BB+'; -- Senior unsecured debt 'BB-'; -- Subordinated debt 'B+'; -- Outlook Stable. Despite the turbulent North American industry environment since the beginning of 2005, the company has been cash flow positive, benefiting from its focus on technologies that meet customer needs for safety and fuel economy, as well as a significantly diverse customer base and geographic sales mix. TRW today announced a definitive agreement to acquire 68.4% of Dalphi Metal Espana SA plus assumption of Euro-denominated debt for a total of US$240 million. The company intends to use current liquidity to finance the acquisition of Dalphimetal. Fitch believes that post-acquisition debt balances and credit metrics would be within the current rating category and that the acquisition only defers further expected debt reduction from free cash flow. In addition to debt reduction, Fitch will continue to monitor TRW for progress in the integration of Dalphimetal as well as other fundamentals, including the impact of industry production volume and new business wins resulting from OEM customer's focus on safety and fuel economy as well as raw material cost pressures. At the end of the second quarter, TRW had a cash balance of $519 million. Liquidity also consisted of approximately $1.2 billion in undrawn facilities, including a secured revolver and accounts receivable securitization programs. Free cash flow debt service coverage and FCF-to-total adjusted debt were 2.5 times (x) and 16.4%, respectively. Even though the North American auto industry has been challenging in 2005, for the trailing 12 months, TRW has been free cash flow positive and has reduced debt, both in excess of $500 million. Dalphimetal manufactures airbags and steering wheels, which increases TRW's global presence in passive safety systems. It also provides TRW with greater customer and geographic diversity, further reducing the company's reliance on the domestic Big Three automakers. There is very little in the way of facility overlap due to Dalphimetal's customer base. As a result, Fitch believes that minimal restructuring actions are required for TRW to achieve acquisition synergies. UAL CORP: Battle Brews Over Barclay's Multi-Million Claim --------------------------------------------------------- As previously reported, UAL Corporation and its debtor-affiliates financed two Boeing 737-322 Aircraft with Tail Nos. N323UA and N324UA, through Leveraged Leases. In both prepetition transactions, the Debtors leased the Aircraft from Wilmington Trust Company, as Owner Trustee. The Owner Trustee issued Loan Certificates pursuant to Trust Indentures and Mortgages. The Owner Trustee received an equity contribution by the Owner Participants, AT&T Credit Holdings, Inc., for Tail No. N323UA, and Cimmred Leasing Company for Tail No. N324UA. State Street Bank & Trust was Indenture Trustee for both Indentures. Barclays Bank PLC holds the Loan Certificates. On July 15, 2003, the Debtors entered into Term Sheets with Barclays, which contemplated converting the Leases into operating leases, Michael P. Richman, Esq., at Mayer, Brown, Rowe & Maw, in New York City, relates. The Term Sheets expressly reserved Barclays' rights to administrative rent: "In the event that definitive lease documents evidencing the transactions contemplated by this Term Sheet are not entered into, the Lessor (or the Financiers as applicable) reserves the right to assert an administrative claim based upon the lease rate set forth in the Existing lease documents (without regard to the terms hereof)." On September 23, 2003, the Term Sheet was approved and the Debtors were authorized to execute the operative definitive documentation. However, the definitive documentation was never completed, Mr. Richman says. The Term Sheet Termination Dates were extended many times, finally terminating on November 30, 2004. Had the definitive documentation been completed, the Debtors would have paid Barclays an administrative claim for postpetition use and possession of the Aircraft at the new monthly lease rate. The Debtors would have continued to pay this rate going forward, including pro ration for partial month's use of the Aircraft. On January 4, 2005, the Debtors and Barclays entered into a Letter Agreement whereby the Debtors agreed to return the Aircraft. On January 24, the Court authorized the Debtors to reject the Leases. Barclays assigned the Loan Certificates to a subsidiary, which then directed the Indenture Trustees to foreclose the liens on the estates of the Owner Trustees. Mr. Richman tells the Court that the Debtors used the Aircraft and engines for over two years without making any payments. Barclays wants compensation for rent due under each Lease for use of each Aircraft until the effective date of rejection. Under the Lease for N323UA, the Debtors owe postpetition rent of $6,216,993 for: December 9, 2002 $190,367 February 10, 2003 2,534,389 August 10, 2003 488,631 February 10, 2004 2,606,178 August 10, 2004 397,4282 Under the Lease for N324UA, the Debtors owe postpetition rent of $6,219,469 for: December 9, 2002 $311,834 February 10, 2003 2,390,292 August 10, 2003 573,126 February 10, 2004 2,551,172 August 10, 2004 393,045 In addition to a total rent of $12,436,462, Barclays wants $1,689,088 for attorneys' fees and expenses. Mr. Richman asserted that the Court should allow an administrative expense claim in favor of Barclays for $14,125,550. Objections (1) Creditors' Committee The Official Committee of Unsecured Creditors disagrees with the characterization of events provided by Barclays Bank PLC. Fruman Jacobson, Esq., at Sonnenschein, Nath & Rosenthal, in Chicago, Illinois, says the Boeing 737-322s bearing Tail Nos. N323UA and N324UA were part of the Debtors' fleet at the commencement of the Chapter 11 cases. Barclays entered into an agreement for the Debtors to pay $65,000 per month to retain each Barclays Aircraft, starting on the Petition Date. On February 6, 2003, the Debtors executed Section 1110(b) Stipulations, pursuant to which the Debtors were not obligated to make payments for use of the Barclays Aircraft, but were required to maintain their condition and insurance. These Section 1110(b) Stipulations were repeatedly extended through November 30, 2004. The Debtors and Barclays negotiated and consummated Term Sheets for the Barclays Aircraft, under which the $65,000 monthly payments per aircraft were applied retroactively to the Petition Date. The Court authorized the Debtors to enter into and perform under the Term Sheets. However, Barclays changed its mind and attempted to improve its terms under the Term Sheets. The Debtors resisted Barclays' efforts to renegotiate the Court-approved arrangement. The parties negotiated, but before the matter could be resolved, Barclays identified an alternative purchaser for the Barclays Aircraft and refused to engage in further extensions of the Section 1110(b) Stipulations, requiring the Debtors to return the Barclays Aircraft. According to Mr. Jacobson, Barclays omitted inconvenient facts from its account, although they are crucial to the outcome of the matter. Barclays agreed to a rental amount for use of the Barclays Aircraft that was in full satisfaction of all administrative expense claims. The Term Sheets indicated the obligations of each party for the Barclays Aircraft going forward. The offer was accepted by Barclays' execution of the Term Sheets. The Debtors agreed to pay the rental rate and not abandon the Barclays Aircraft or reject the lease. Barclays seeks over $14,000,000 for the Debtors' use of the Barclays Aircraft from the Petition Date through the Rejection Date at the full lease rate, plus attorneys' fees. Pursuant to the agreement between the parties, Mr. Jacobson asserts that Barclays administrative claim should be limited to the renegotiated rate of the Term Sheet, while Barclays' claim for attorneys' fees should be denied. (2) Debtors Section 365(d)(10) of the Bankruptcy Code protects counterparties who must watch their equipment utilized, while a debtor, protected by the automatic stay, deliberates whether to assume or reject a lease. Barclays does not fit the profile of the involuntary creditor that Section 365(d)(10) was designed for, argues James H.M. Sprayregen, Esq., at Kirkland & Ellis. On the 60th day of the Debtors' bankruptcy, Barclays could have repossessed the Barclays Aircraft, but chose not to. Instead, Barclays agreed -- on eight separate occasions -- to extend Section 1110's 60-day stay, allowing the Debtors to retain the Barclays Aircraft for approximately two years after the Petition Date. The Term Sheets committed the Debtors to pay Barclays market rates for use of the Barclays Aircraft. Thus, it was worthwhile for Barclays to allow the Debtors to retain the aircraft. The Debtors tried to close these transactions on multiple occasions, but Barclays dragged its feet, trying to extract concessions outside the original terms. The Debtors could have enforced the Terms Sheets, but tried to accommodate Barclays' concerns, Mr. Sprayregen notes. Barclays eventually took the Barclays Aircraft and went elsewhere. Now, Barclays returns to the Debtors seeking funds that were never agreed to. Barclays should not be allowed to extract more money from the Debtors, after an agreed-upon, Court- approved Term Sheet was on the table for months. The Court should refuse to award Barclays this windfall, Mr. Sprayregen says. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED HOSPITAL: Gets Court Nod to Reject Six Burdensome Leases --------------------------------------------------------------- New York United Hospital Medical Center and U.H. Housing Corp. sought and obtained authority from the Honorable Adlai S. Hardin, Jr. of the U.S. Bankruptcy Court for the Southern District of New York to reject six leases of medical and non-medical equipment and vehicles. The Leases pertaining to the Equipment are office and medical equipment that were used in connection with the UHMC's operations as a hospital. The Debtors no longer have any use for the Equipment and the ancillary items subject to the Leases in connection with their liquidation efforts. By rejecting the Leases, the Debtors will avoid incurring unnecessary administrative expenses and related charges that provide no tangible benefit to the Debtors' estate or to their creditors. A full-text copy of the New York United Hospital Medical Center and and U.H. Housing Corp.'s List of Rejected Leases is available for free at: http://bankrupt.com/misc/UnitedHospitalListofRejectedLeases.pdf Headquartered in Port Chester, New York, New York United Hospital Medical Center is a 224-bed, community healthcare provider and a member of the New York-Presbyterian Healthcare System, serving several Westchester communities, including Port Chester, Rye, Mamaroneck, Rye Brook, Purchase, Harrison and Larchmont. The Company filed for chapter 11 protection on December 17, 2004 (Bankr. S.D.N.Y. Case No. 04-23889). Lawrence M. Handelsman, Esq., at Stroock & Stroock & Lavan LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $39,000,000 and total debts of $78,000,000. US AIRWAYS: Asks Court to OK Sale/Leaseback Deal with RPK Capital ----------------------------------------------------------------- US Airways, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Virginia to: (a) authorize the sale and leaseback of nine Airbus 319-112 Aircraft with RPK Capital V, L.L.C.; (b) upon exercise of a put option, authorize the implementation of a sale/leaseback of five Airbus A320-214 Aircraft with RPK; and (c) authorize the payment of liquidated damages and reimbursement of certain expenses. The nine Airbus 319-112 Aircraft are each equipped with two CFM56-5B engines. The 319-112 Aircraft bear Tail Nos. N762US, N763US, N764US, N765US, N766US, N767US, N768US, N769US and N770US. The five Airbus A320-214 Aircraft are each equipped with two CFM56-5B4/P engines. The A320-214 Aircraft bear Tail Nos. N107US, N108UW, N109UW, N110UW and N111US. Sale/Leaseback Transaction Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explains that to procure the liquidity to emerge from bankruptcy, the Debtors have been analyzing various aircraft fleet transactions. After concluding that sale/leaseback transactions provided the greatest value, the Debtors and their advisors marketed the 14 Aircraft to several potential transaction partners. Due to the nature of the assets and the complexity of sale/leaseback transactions, the universe of potential transaction partners was finite and well known. In June 2005, the Debtors' advisors contacted 89 potential transaction partners, including operating leasing companies, private equity firms, hedge funds, banks and aircraft financiers. The Debtors received 24 indications of interest and provided each respondent with a detailed equipment information package that included specifications, records and maintenance data for the 319-112 Aircraft and the A320-214 Aircraft. By July, seven of the 24 parties confirmed continuing interest in a sale/leaseback transaction. The Debtors asked the parties to submit bids for the Aircraft. After receipt of the bids, the Debtors began negotiations, which culminated in four offers. The Debtors provided the four finalists with the proposed terms of a sale/leaseback and invited comments. The Debtors told the bidders that net liquidity proceeds, cost of financing, net present value, return conditions, lack of security deposits or holdbacks were integral criteria in their decision. After reviewing the bids and consulting with their advisors, the Debtors selected the bid from RPK as offering the best combination of net proceeds for the Aircraft, lease terms and conditions. The Debtors will sell the Aircraft to RPK under these negotiated terms and conditions: Aircraft: Nine 2000 model Airbus 319-112 passenger aircraft, each with two installed CFM56-5B engines with maintenance records and documents. Seller/Lessee: USAI Buyer/Lessor: RPK Capital Purchase Price: $229,500,000, payable as: (1) $250,000 Deposit refundable until execution of the Aircraft Participation Agreements, or after September 15, 2005, if the Transaction does not close; (2) $11,225,000 non-refundable and payable upon execution of the Aircraft Participation Agreements; and (3) $218,025,000 payable when the Transaction closes, equal to $24,225,000 per Aircraft. Delivery Condition: The Aircraft will be delivered in "As Is, Where Is" condition. Documentation and Legal Costs: USAI and RPK will pay their own legal costs. Leases/Renewal Option: USAI will leaseback each of the Aircraft from RPK for a 10-year term. The Lease will provide for three one-year renewal options at fair market rental rates. Subleasing: If there are no events of default, USAI may enter into a sublease with a sublessee that is either: (a) a U.S. certified air carrier; or (b) a certificated air carrier domiciled and located in an acceptable country. Limitation on Claims: If USAI fails to consummate a Plan of Reorganization and emerge from bankruptcy, RPK's claims will be limited to: (a) an administrative expense claim for unpaid rent through the rejection date or termination of the Lease, with credit for rent paid in advance; (b) an administrative expense claim for the cost of getting the Aircraft into compliance with return conditions; and (c) an unsecured prepetition claim for all other claims related to the Lease, including rejection or termination. Expense Reimbursement: If USAI consummates a transaction with another party, the Debtors will reimburse RPK for its out of pocket expenses, not to exceed $150,000. Liquidated Damages: If USAI consummates a transaction with another party, the Debtors will reimburse RPK $363,375 or 1.5% of the Purchase Price for each Aircraft. Put Option: USAI may exercise the Put Option on two weeks' notice, if it elects to sell and leaseback the five Airbus A320-214 Aircraft with RPK. Under the Put Option, RPK will pay USAI for the Airbus A320-214 Aircraft in two installments: (1) $1,450,000 per Aircraft, equal to a total of $7,250,000, payable upon execution of the sale and leaseback documents; and (2) $27,550,000 payable upon closing of the sale/leaseback transaction for each Aircraft, equal to a total of $137,750,000. The Debtors intend to consummate a sale/leaseback transaction for the five A320-214 Aircraft with B.C.I. Aircraft Leasing, Inc. However, if the Transaction with BCI is not executed, the Debtors may exercise the Put Option to effectuate a separate sale/leaseback transaction with RPK. Mr. Leitch notes that: * The nine 319-112 Aircraft are subject to liens arising from the US Airways Series 2000-3 Enhanced Equipment Trust Certificates financing; * The five A320-214 Aircraft are subject to liens arising from the US Airways Series 1999-1 Enhanced Equipment Trust Certificates financing; and * All 14 Aircraft are subject to liens of the ATSB Lenders under the ATSB Loan and the subordinate liens of Eastshore Aviation, LLC under the Junior Secured DIP Credit Facility Agreement. Mr. Leitch tells the Court that the Transaction will result in significant benefits to the Debtors' estates. It is anticipated that the sale proceeds received at closing from the sale of each of the 319-112 Aircraft will be used first to pay in full the equipment notes issued in connection with the Aircraft under the 2000-3 EETC Financing, without payment of any make-whole or other premium or prepayment penalty. After that, the sale proceeds will be delivered to Bank of America, as collateral agent under the ATSB Loan, to be applied and disbursed as agreed to be the Debtors and the lenders under the ATSB Loan. Thus, not only will the Transaction permit the Debtors to realize cash proceeds from the Aircraft, it will also allow the Debtors to maintain continued use of the equipment in their business operations, Mr. Leitch says. Similarly, in the event that the Debtors exercise the Put Option, the Put Transaction will yield substantial benefits to the Debtors' estates, as the Debtors will realize $145 million in value from the sale of the A320-214 Aircraft. Upon consummation of the Transaction, the sale proceeds will be used first to pay in full the equipment notes issued in connection with the A320- 214 Aircraft under the 1999-1 EETC Financing, without payment of any make-whole or other premium or prepayment penalty. The sale proceeds will then be delivered to Bank of America, to be applied and disbursed as agreed to by the Debtors and the ATSB lenders. Term Sheets Are Confidential According to Mr. Leitch, the Term Sheets governing the Transactions contain confidential information. The Debtors do not want this information to be made public. As a result, the Term Sheet will be filed in redacted form. Only certain identified parties will be provided with the non-redacted versions of the Term Sheet, subject to signed confidentiality agreements acceptable to the Debtors and RPK. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Has Until December 31 to File Plan of Reorganization -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the period within which USG Corporation and its debtor-affiliates have the exclusive right to file a chapter 11 plan until December 31, 2005, and to solicit acceptances to that plan until March 1, 2006. The Court's order ended the battle over the Debtors' exclusive periods. Dean M. Trafelet, the Official Representative for Future Asbestos Personal Injury Claimants and the Official Committee of Asbestos Personal Injury Claimants wanted the exclusive periods terminated to allow them to file their own chapter 11 plan. The Official Committee of Unsecured Creditors defended the Debtors' request for the extension. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARICK STRUCTURED: Moody's Chips $350 Million Notes' Rating to Ba2 ------------------------------------------------------------------ Moody's Investors Service reduced from Ba1 on watch for possible downgrade to Ba2 the $50,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2035 and the $300,000,000 Class A-2 First Priority Senior Secured Floating Rate Notes Due 2035 issued by Varick Structured Asset Fund, Ltd. The notes will be removed from the watchlist. According to Moody's, the current rating action reflects a continued deterioration in the overall credit quality of the collateral pool. Rating Action: Downgrade Class Description: U.S. $50,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2035 Prior Rating: Ba1 on watch for possible downgrade Current Rating: Ba2 Class Description: U.S. $300,000,000 Class A-2 First Priority Senior Secured Floating Rate Notes Due 2035 Prior Rating: Ba1 on watch for possible downgrade Current Rating: Ba2 VISIPHOR CORP: Settles OSI Systems Dispute for $400 Million ----------------------------------------------------------- Visiphor Corporation fka Imagis Technologies Inc. (OTCBB: VISRF; TSX-V: VIS; DE: IGYA) has reached a settlement in a long-standing dispute with OSI Systems of Hawthorne, California. The terms of the settlement include a series of payments from Visiphor to OSI totaling $400,000. The first payment of $100,000 has been made and the remaining two payments of $125,000 and $175,000 will be made on October 31, 2005, and December 31, 2005. The settlement is more than the previously recorded liability amount by $150,000. Management felt that absorbing this cost now was far better than the incurring the significant costs and risks associated with arbitrating the matter. Roy Trivett Visiphor's President and CEO commented, "I am extremely pleased to have this matter amicably retired. The pending drain on management time and the financial resources of the company were major considerations in reaching this settlement. A large part of the negative impact had already been recorded in our books and the overall positive effect is very good for Visiphor shareholders." Based in Vancouver, British Columbia, Visiphor Corporation specializes in developing and marketing software products that enable integrated access to applications and databases. The company also develops solutions that automate law enforcement procedures and evidence handling. These solutions often incorporate Visiphor's proprietary facial recognition algorithms and tools. Using industry standard "Web Services", Visiphor delivers a secure and economical approach to true, real-time application interoperability. The corresponding product suite is referred to as the Briyante Integration Environment (BIE). * * * KPMG LLP, the Company's independent registered public accounting firm, in its audit report on the Company's December 31, 2004 financial statements, said that the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern. For the six-months ended June 30, 2005, the Company had incurred a loss from operations of $3,016,481 and a deficiency in operating cash flow of $1,788,221. In addition, the Company has incurred significant operating losses and net utilization of cash in operations in all prior periods. At June 30, 2005, the Company has a working capital deficiency of $54,290. W.R. GRACE: Wants Scope of Nelson Mullins' Services Expanded ------------------------------------------------------------ As previously reported, in July 2001, the U.S. Bankruptcy Court for the District of Delaware authorized W.R. Grace & Co. and its debtor-affiliates to employ Nelson Mullins Riley & Scarborough, L.L.P., for the purpose of continuing the firm's engagement to represent, defend, and advise them as to certain environmental litigation-related issues. Nelson Mullins has represented the Debtors in this capacity throughout their Chapter 11 cases. In August 2004, Nelson Mullins' scope of employment was extended so as to include the firm's representation of the Debtors in certain real estate transactions. The Debtors now seek the Court's authority to further broaden the scope of Nelson Mullins' employment as special counsel to include a newly commenced environmental matter. Specifically, the Debtors want the firm to represent them in connection with a suit filed against them in the Court of Common Pleas, in Aiken County, South Carolina, on July 1, 2005. Due to the necessity of filing an answer to the complaint by August 27, 2005, the Debtors want to employ Nelson Mullins, nunc pro tunc to July 28, 2005, on the litigation matter. The Debtors selected Nelson Mullins to represent them in the New Litigation Matter because of the firm's long-standing relationship with them and because of its expertise in a variety of areas. George B. Cauthen, Esq., a member of the firm, attests that Nelson Mullins does not have any connection with the Debtors and any party-in-interest. The firm also does not hold or represent an interest adverse to the estates in the matters with respect to which it is employed. Nelson Mullins will be paid in accordance with the current rate charged for the services of its professionals. The firm will also be reimbursed for necessary out-of-pocket expenses. The professionals primarily expected to represent the Debtors and their hourly rates are: Professional Hourly Rate ------------ ----------- Bernard F. Hawkins, Jr., Esq. $290 Newman Jackson Smith, Esq. $290 Rose-Marie T. Carlisle, Esq. $260 James Holmes, Jr., Esq. $260 George B. Cauthen, Esq. $320 Betsy Johnson Burn, Esq. $220 Linda Barr, Esq. $240 Cory Manning, Esq. $250 Jim Lehman, Esq. $380 Anne Price (paralegal) $105 Laurie Jennings (paralegal) $125 Victoria Blackiston (paralegal) $135 Karla Lucas (project assistant) $75 Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAMS SCOTSMAN: Moody's Rates $325M Sr. Unsec. Note at (P)B3 --------------------------------------------------------------- Moody's Investors Service assigned a (P)B3 rating to Williams Scotsman's new $325 million senior unsecured note offering. The outlook is stable. The senior unsecured offering is expected to be used in conjunction with the proceeds from the company's initial public offering to retire the company's outstanding notes due in 2007 and 2008. Moody's also affirmed Williams Scotsman's B2 corporate family rating (formerly a "senior implied" rating). The rating considers Williams Scotsman's intrinsic credit strengths which are benefiting from an improving operating environment. The company has gained a leading market share in the modular space industry over the past few years. Additionally, the company has a diverse customer base throughout the US and Canada which limits its exposure to a regional economic downturn. If continued, a shift in the company's portfolio to more stable products should also reduce revenue and earnings volatility. For example, the company's gain in the modular classroom segment, which typically provides longer lease durations, though at lower margins, is positive. The experience of upper management is also viewed as a credit positive. Credit weaknesses include high leverage multiples and pretax interest coverage levels that have historically been below peers. However, the large interest expense burden should be mitigated to a degree by the current recapitalization. Consolidated debt to EBITDA levels have been high and although improvement is expected due to the equity issuance, continuing leverage will remain above average for its rating category. The substantial debt on the firm's balance sheet and the corresponding interest expense has been a primary cause of net losses for the company, and thus a core credit weakness. The B3 rating on the unsecured notes reflects their position in the company's capital structure. The one notch decrease from the corporate family rating is due to the subordination of the unsecured notes to the larger senior secured bank credit facility. The one notch differential is based on the projected loss severity in the current business environment with improved pricing and utilization rates greater than 80%. If utilization falls to below historical lows, Moody's would reconsider its loss severity analysis on the notes, and this could lead to a greater notching from the Corporate Family Rating. Williams Scotsman, Inc. is headquartered in Baltimore, Maryland, and is a provider of modular space solutions predominantly in North America. This rating was assigned: * Senior Unsecured Notes due 2015 at (P) B3 These ratings were affirmed: * Corporate Family at B2 * Senior Secured Revolving Credit Facility at B2 * Senior Secured Notes due 2008B2 This rating will be withdrawn once the related notes are retired: * $550 million Senior Unsecured Notes due 2007 currently rated B3 WILLIAMS SCOTSMAN: S&P Rates $325 Million Sr. Unsec. Notes at B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Williams Scotsman Inc.'s $325 million of senior unsecured notes due 2015. All other ratings on Williams Scotsman, including the 'B' corporate credit rating, remain on CreditWatch with positive implications, where they were placed on May 2, 2005. The CreditWatch listing followed an S-1 filing for an IPO. Proceeds of the IPO, expected to amount to approximately $250 million, in conjunction with those from the new notes, will be used to redeem $550 million of 9 7/8% notes and $150 million of 10% notes. Sale of the new notes is contingent on completion of the IPO and the acceptance of a majority in aggregate principal amount of each of the 9 7/8% and 10% notes in their current tender offers. If the IPO and associated debt transactions are successful, the corporate credit rating would be raised to 'BB-' from 'B', and the 'B' rating on the new unsecured notes due 2015 would be affirmed. "Ratings on Williams Scotsman reflect its weak, but improved, financial profile, pro forma for its proposed recapitalization," said Standard & Poor's credit analyst Betsy Snyder. Ratings also incorporate the Baltimore, Maryland-based company's strong market position in the leasing of mobile office units, a business that has tended to be somewhat recession-resistant. The proposed IPO will improve privately held Williams Scotsman's financial profile somewhat, reducing debt to capital to under 80% from 98% at December 31, 2004, and debt to EBITDA to the mid-5x area from 6.5x (as a leasing company, Williams Scotsman can operate at higher leverage than a typical like-rated industrial company). The recapitalization also includes the $650 million restated and amended credit facility the company completed on June 28, 2005, and $325 million of senior unsecured notes the company intends to issue in conjunction with the IPO. However, the company's financial flexibility is still constrained by a high percentage of secured assets (approximately 46%) and will continue to be weaker than that of its major competitor, GE Capital Modular Space, owned by 'AAA' rated General Electric Capital Corp. Williams Scotsman operates primarily as one of two major national participants in the estimated $3 billion U.S. market for leasing and sale of modular space. Williams Scotsman's and GE's market shares are each approximately 25%, with the remainder of the market highly fragmented. The company's fleet is comprised of 97,000 units-77,000 mobile offices and 20,000 storage units. The company operates out of 76 branches in 39 states, with an additional eight branches in Canada and one in Mexico. It has approximately 25,000 customers in 450 industries; primarily construction, education, and commercial and industrial users. The leasing of mobile office units has tended to be somewhat recession-resistant, as it offers customers more flexibility and lower costs compared with building permanent facilities for certain purposes. WINN-DIXIE: Creditors Committee Wants Equity Committee Disbanded ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Aug. 22, 2005, Felicia S. Turner, the United States Trustee for Region 21, appoints five parties willing to serve on the Official Committee of Equity Security Holders in Winn-Dixie Stores, Inc., and its debtor-affiliates' chapter 11 cases. Creditors' Committee Objects The Official Committee of Unsecured Creditors wants the U.S. Bankruptcy Court for the Middle District of Florida to direct the U.S. Trustee to disband the Equity Committee. Patrick P. Patangan, Esq., at Akerman Senterfitt, in Jacksonville, Florida, discloses that the Disbandment Motion is based on and cites extensively financial and commercial information relating to the Debtors' businesses and reorganization strategy that may be deemed confidential. The Debtors have asked the Creditors Committee to file the Disbandment Motion under seal to protect the Confidential Information. Section 107(b) of the Bankruptcy Code provides bankruptcy courts with the power to issue orders that will protect entities from potential harm that may result from the disclosure of confidential information. Accordingly, the Creditors Committee seeks the Court's permission to file the Disbandment Motion under seal. The Creditors Committee further asks the Court to rule that the Disbandment Motion will remain under seal and confidential and will not be made available to anyone other than: (1) the Court; and (2) on the condition that they agree to maintain the confidentiality of the Confidential Information: (A) the Debtors and their professionals; (B) the Creditors Committee and its professionals; (C) the U.S. Trustee and its counsel; (D) the Debtors' postpetition secured lenders and their counsel; and (E) the Equity Committee and its proposed professionals. "The Confidential Information consists of non-public financial and commercial information relating to the Debtors' businesses and reorganization strategy, including: discussion of the Debtors' business strategy with respect to their new footprint, confidential business plan material, and valuations of the Debtors' assets and businesses," Mr. Patangan relates. "Such information is precisely the kind of information entitled to protection under Section 107(b). Disclosure of the Confidential Information could provide competitors with a competitive advantage over the Debtors and may impair the Debtors' reorganization efforts." Responses Should also be Filed Under Seal The Debtors and other parties-in-interest intend to file responses opposing the Disbandment Motion. Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, relates that these Responses will, of necessity, contain material confidential financial and commercial information relating to the Debtors' businesses and reorganization strategy. This Confidential Information, if selectively disclosed in hearings on the Responses, would result in the recipient having received insider information material to publicly traded securities, Ms. Jackson explains. The Debtors support the Creditors Committee's request to file its Disbandment Motion under seal but believe that further measures applicable to all of the Responses and associated proceedings are required to protect the Confidential Information. Accordingly, the Debtors ask the Court to direct the parties-in- interest to file their Responses under seal. The Responses should remain under seal and confidential and should not be made available to anyone other than: (1) the Court; and (2) on the condition that they maintain the confidentiality of the Confidential Information: (A) the Debtors and their professionals; (B) the Creditors Committee and its professionals; (C) the U.S. Trustee and its counsel; (D) the Debtors' postpetition secured lenders and their counsel; and (E) the Equity Committee and its proposed professionals. The Debtors assert that the Court should also order that access to any hearing to consider the Responses is limited to the Limited Recipients. Retirees Respond The Ad Hoc Committee of Winn-Dixie, Inc., Retirees wants access to the Disbandment Motion and responsive pleadings. The Retirees Committee also wants to participate in the hearings. Jerrett M. McConnell, Esq., at Friedline & McConnell, P.A., in Jacksonville, Florida, relates that the Retirees Committee intends to file its own Motion Seeking Disbandment of the Equity Committee. The interests of justice would best be served by giving the Retirees Committee access to the same information as those who might oppose that motion, namely the Debtors, the Equity Committee and the U.S. Trustee, Mr. McConnell says. According to Mr. McConnell, the Retirees Committee understands the Debtors' concern about revealing confidential information relating to the Debtors' "new footprint strategy, business plan, and valuations of Debtors' assets and businesses." Mr. McConnell assures the Court that the Retirees Committee would abide by any condition to participation in the proceedings. "The Retirees Committee has a vested interest in seeing the Debtors successfully reorganize and emerge from bankruptcy and, therefore, would not reveal any information that might jeopardize that success," Mr. Connell says. * * * The Court allows the Creditors Committee to file the Disbandment Motion under seal. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants Gordon to Sell Equipment on Sept. 20 Auction -------------------------------------------------------------- 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 Winn-Dixie Stores, Inc., and its debtor-affiliates operate a facility in Fitzgerald, Georgia, that produces their "Chek" brand of carbonated sodas and their "Arizona Tea" line, as well as a line of condiments like peanut butter, mayonnaise, syrup, ketchup and jelly, which the Debtors sell in their stores. The Debtors also operate a facility in Jacksonville, Florida, that produces -- through Astor Products, Inc. -- a line of spices and coffee products the Debtors sell in their stores. The Astor Facility is physically connected to the Debtors' headquarters. The Debtors lease the Fitzgerald Facility from ZSF/WD Fitzgerald, LLC. The Debtors lease the Astor Facility from ZSF/WD Jacksonville, LLC. Mr. Baker relates that the Debtors have decided to sell their leasehold interests in the Fitzgerald Facility as well as their beverage production operations. The Debtors have also decided to cease production of their condiment line at the Fitzgerald Facility and their spice and coffee line at the Astor Facility because they are able to purchase these products from third parties for less than what it costs them to produce the products. Because the Debtors have decided to cease production of their condiment, spice and coffee lines, Mr. Baker explains that the Debtors no longer need the furniture, fixtures and equipment used in production. Mr. Baker tells Judge Funk that the Debtors need to sell the Equipment promptly so that any purchaser of the beverage operations and leasehold interests may begin their own operations. According to Mr. Baker, the Debtors may sell the Equipment either through a liquidator, who will conduct liquidation and auction sales at one or both of the Facilities, or directly to a strategic purchaser who will buy all of the Equipment at one or both of the Facilities and remove the Equipment promptly. The Debtors have entered into stalking horse agreements with a liquidating agent -- a joint venture group consisting of The Gordon Company, Inc., NREL, Inc., Bradford Industrial Group, LLC, Vision Equipment and Auction Company, Inc., and Rabin Worldwide, Inc. By this motion, the Debtors seek the Court's authority to sell the Equipment either through the Gordon Group or another liquidating agent or directly to a strategic purchaser who will buy all of the Equipment at one or both of the Facilities. In either event, the Debtors want to sell the Equipment free and clear of liens, claims and interests pursuant to Section 363 of the Bankruptcy Code, and exempt from stamp or similar tax pursuant to Section 1146(c) of the Bankruptcy Code. Auction The Debtors will conduct an auction on Sept. 20, 2005, in Jacksonville, Florida, at the offices of Smith Hulsey & Busey. At the conclusion of the Auction and after consulting with the Official Committee of Unsecured Creditors and the DIP Lender, the Debtors and their financial advisors will choose the highest or best bid for each or both Facilities. If the Successful Bid for either or both Facilities is that of the Gordon Group or another liquidating agent, the Debtors will ask the Court to approve the Agency Agreements. In the event a strategic purchaser submits the Successful Bid for either or both Facilities, the Debtors will seek authority to sell the Equipment directly to the purchaser. According to Mr. Baker, the Debtors have agreed to pay the Gordon Group a termination fee of: -- $15,000, in the event the firm is not the successful bidder at the Auction for the Equipment at the Astor Facility; and -- $25,000, in the event the Gordon Group is not the successful bidder at the Auction for the Equipment at the Fitzgerald Facility. Agency Agreement Mr. Baker points out that the Agency Agreements relating to the Fitzgerald Facility and Astor Facility are substantially similar except for their monetary terms: A. Payments to the Debtors and Agent -- Fitzgerald Facility The Agent guarantees and pays up front $900,000 to Winn-Dixie Stores, Inc., for the Equipment at the Fitzgerald Facility. The Proceeds generated by the sale of the Fitzgerald Equipment will be paid as follows: (1) the Proceeds up to and including $900,000 will be paid to the Agent; (2) the next $50,000 of Proceeds will be paid to Winn-Dixie; (3) the next $50,000 of Proceeds will be shared 75% by Winn- Dixie and 25% by the Agent; (4) the next $50,000 of Proceeds will be shared 65% to Winn- Dixie and 35% to the Agent; (5) the next $50,000 of Proceeds will be shared 55% to Winn- Dixie and 45% to the Agent; and (6) all Proceeds in excess of $1,100,000 will be shared 50% by Winn-Dixie and 50% by the Agent. B. Payments to Debtors and Agent -- Astor Facility The Agent guarantees and pays up front $575,000 to Winn-Dixie for the Equipment at the Astor Facility. The Proceeds generated by sales of the Astor Equipment will be paid as follows: (1) the Proceeds up to and including $575,000 will be paid to the Agent; (2) the next $50,000 of Proceeds will be paid to Winn-Dixie; (3) the next $50,000 of Proceeds will be shared 75% by Winn- Dixie and 25% by the Agent; (4) the next $50,000 of Proceeds will be shared 65% to Winn- Dixie and 35% to the Agent; (5) the next $50,000 of Proceeds shall be shared 55% to Winn- Dixie and 45% to the Agent; and (6) all Proceeds in excess of $775,000 will be shared 50% by Winn-Dixie and 50% by the Agent. C. Buyer's Premium The Agent will retain the entire amount of any premium added to the successful bid received from purchasers of Equipment in an amount not to exceed 10% of that successful bid and which will be paid by the purchasers of the Equipment. This buyer's premium is not included in determining Proceeds to be distributed to Winn-Dixie. D. Final Reconciliation Within 30 days after the Sale Termination Date, the Agent and Winn-Dixie will jointly prepare a final reconciliation including, without limitation, a summary of Proceeds, Additional Return and any other accountings required. Within five days of completion of the Final Reconciliation, any undisputed and unpaid Additional Return will be paid by the Agent to Winn-Dixie. E. Expenses of the Sale All Expenses will be borne by the Agent. All Company Expenses will be borne by Winn-Dixie. In the event a strategic purchaser submits the Successful Bid, the Debtors will execute a bill of sale. Mr. Baker reports that the Debtors will sell the Equipment without complying with any applicable state and local statutes, rules or ordinances governing liquidation or "going-out-of- business" sales, including laws governing (i) bulk sales, (ii) advertising, (iii) licensing requirements and procedures, (iv) waiting periods or time limits, and (v) inventory increases. However, Mr. Baker assures the Court that the Debtors and their agents will comply with all state and local public health and safety laws, as well as tax, labor, employment, environmental laws, to the extent applicable. The Debtors will also liquidate the Equipment without complying with any provisions of a lease, contract or other agreement of the Debtors that would otherwise prevent or impair the Debtors' conduct of the sales, including any "going dark provisions." 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: IRS Has Until November 22 to File Proofs of Claim ------------------------------------------------------------- At the Internal Revenue Service's request, Judge Funk gave the IRS until Nov. 22, 2005, to file proofs of claim in Winn-Dixie Stores, Inc., and its debtor-affiliates' Chapter 11 cases for taxable years ending in June 2003 and June 2004. The IRS will have until the date that is six months on which the Debtors file their 2005 federal income tax return to file a proof of claim in the Debtors' Chapter 11 cases for the taxable year ending June 2005. According to Deborah M. Morris, Esq., the Debtors have filed their consolidated federal corporate income tax returns for their fiscal years ending June 2003 and June 2004. They have not yet filed their federal income tax return for their fiscal year ending June 2005, Ms. Morris says. The IRS began an examination of the Debtors' 2003 return and 2004 return in March 2005, shortly after the completion of examination of the Debtors' consolidated federal corporate income tax returns for their fiscal years ending June 2000, June 2001, and June 2002. The examinations of those earlier periods resulted in substantial proposed adjustments to the Debtors' tax returns. In the absence of the Debtors' bankruptcy cases, the estimated time for completion of the audit for the Debtors' 2003 and 2004 returns would be August 2006. The Internal Revenue Service has expedited the examination process. The IRS needs to obtain further documentation substantiating, supporting, and explaining tax return items that it may wish to inquire about before it can issue a final report determining what taxes, if any, it believes to be due, Ms. Morris says. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Abria Financial Group Names Brian Kralik Vice President Finance ----------------------------------------------------------------- Henry Kneis, Founder, Chief Executive Officer and Chief Investment Officer and Dominic Staniscia, Chief Financial Officer and Head of Operational Due Diligence of Abria Alternative Investments of Toronto, Canada, reported that Brian Kralik, CA, CFA has joined Abria as Vice President, Finance. Brian Kralik has 10 years of experience in accounting, finance and operational roles. Prior to joining Abria, Mr. Kralik spent nearly five years working at the Ontario Teachers' Pension Plan Board, and was most recently responsible for managing the Investment Finance Operations of OTPPB's $12 billion Private Capital, Infrastructure, Timber and Alternative Investments portfolios. Early in his career with OTPPB, Mr. Kralik was responsible for the accounting, valuation and settlement of tens of billions of dollars of notional value in interest rate and equity derivatives. Mr. Kralik spent the first five years of his career with KPMG in Toronto providing audit services to Canadian financial institutions. "Mr. Kralik's experience in managing the day-to-day operations of a large portfolio of various private and alternative investments at one of the world's leading institutional investors will be a great benefit to Abria and our investors," stated Mr. Kneis. As VP Finance, Brian will focus on managing Abria's finance and investment operations and assisting in the operational due diligence of existing and prospective fund managers. "Mr. Kralik's extensive operational due diligence of hedge funds and funds of hedge funds further strengthens our firm's edge in this practice," stated Mr. Staniscia who joined Abria over a year ago. "Operational due diligence and ongoing monitoring are integral components of Abria's investment and risk management process. The due diligence conducted by Abria's experienced investment and operations teams on emerging and established alternative investment managers are of the quality and standard investors have come to demand of the world's leading investment managers." The addition of Mr. Kralik fits well within Abria's plans of becoming a globally recognized manager of alternative investments. Abria is in the process of completing the manager selection, due diligence and structuring of three innovative alternative products -- a leveraged version of its existing market neutral fund of hedge funds, a diversified energy focused fund of hedge funds and a specialty finance investment fund. Founded in 1999, Abria currently manages in excess of $300 million, providing investors with multi-manager, alternative investment funds and structured products that aim to preserve wealth and deliver superior risk-adjusted, stable, tax-efficient returns. Abria's flagship fund, the Abria Diversified Arbitrage Trust, is the inaugural winner of the 2004 Canadian Investments Award for the Best Fund of Hedge Funds and is ranked the number one risk-adjusted alternative strategy fund in Canada. Abria is a founding member of the Canadian chapter of the Alternative Investment Management Association (AIMA) and is actively involved in a number of educational initiatives in Canada. * Jerry Lombardo Joins Goldin Associates from FTI Consulting ------------------------------------------------------------ Jerry Lombardo is joining Goldin Associates, LLC, as a managing director in its turnaround consulting and restructuring advisory group, effective immediately. Mr. Lombardo comes to Goldin from FTI Consulting, where he was a managing director in its corporate restructuring practice. Mr. Lombardo has advised clients in diverse industries, including automotive, rental car, telecommunications, food service, retail, manufacturing, apparel & textile and consumer products. His publicly-disclosed advisory clients include Boston Market, Swifty Serve Convenience Stores, Twin County Grocers, Montgomery Ward, Pentech International, Danskin, Avaya Communications, RSL Communications and Aviation Sales Company. In addition, Mr. Lombardo has played a key role in numerous private or out-of-court restructuring assignments, including a $2 billion rental car company, a $14 billion automotive parts manufacturer and a multi- billion dollar global consumer goods conglomerate. "Jerry has an outstanding reputation among top U.S. restructuring advisors," Harrison J. Goldin, senior managing director of Goldin Associates, said. "His addition to the Goldin team strengthens our already extensive experience across a wide array of industries." Mr. Lombardo is a career restructuring and turnaround advisor with extensive experience advising debtors, creditors and investors in formal bankruptcy proceedings and out-of-court restructurings. He has also provided strategic and business direction to healthy companies looking to divest non-core operations. Mr. Lombardo's areas of expertise include: development and implementation of business and turnaround plans; identification, marketing and sales of non-core businesses; development and implementation of cost rationalization programs; development and analysis of cash flow projections; development and implementation of cash management programs; and valuations of troubled and underperforming businesses. Before joining FTI Consulting, Mr. Lombardo was a project manager with Zolfo Cooper, LLC, another restructuring advisory firm. He began his career at Deloitte & Touche, where he provided advisory, accounting and auditing services to a wide variety of clients in the manufacturing and retail sectors. He is a Certified Public Accountant, a Certified Turnaround Professional and a Certified Insolvency & Restructuring Advisor. Mr. Lombardo graduated from Pace University with a bachelor degree in accounting. Goldin Associates, L.L.C., is a financial advisory and turnaround consulting firm specializing in underperforming businesses and distressed situations, including financial and operational restructurings and bankruptcies. Goldin has consistently been designated among the top restructuring firms by industry publications and has played major roles in such distressed situations as Anchor Glass, Enron North America, MCI/WorldCom, Northshore Asset Management, Northwestern Corp., PSINet Consulting Solutions, RAB Holdings, Sizzler Restaurants, Tom's Foods and Vlasic Foods International, among many others. * BOOK REVIEW: The Big Board: A History of the New York Stock Market ------------------------------------------------------------- Author: Robert Sobel Publisher: Beard Books Paperback: 412 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1893122662/internetbankrupt First published in 1965, The Big Board was the first history of the New York stock market. It's a story of people: their foibles and strengths, earnestness and avarice, triumphs and crash-and- burns. It's full of entertaining anecdotes, cocktail-party trivia, and tales of love and hate between companies and investors. Early investments in North America consisted almost exclusively of land. The few securities holders lived in cities, where informal markets grew, with most trading carried out in the street and in coffeehouses. Banking, insurance, and manufacturing activity increased only after the Revolution. In 1792, 24 prominent New York businessmen, for whom stock- and bond-trading was only a side business, met under a buttonwood tree on Wall Street and agreed to trade securities on a common commission basis. Five securities were traded: three government bonds and two bank stocks. Trading was carried out at the Tontine Coffee-House in a call market, with the president reading out a list of stocks as brokers traded each in turn. The first half of the 19th century was heady for security trading in New York. In 1817, the Tontine gave way to the New York Stock and Exchange Board, with a more organized and regulated system. Canal mania, which peaked in the late 1820s, attracted European funds to New York and volume soared to 100 shares a day. Soon, the railroads competed with canals for funding. In the frenzy, reckless investors bought shares in "sheer fabrications of imaginative and dishonest men," leading an economist of the day to lament that "every monied corporation is prima facia injurious to the national wealth, and ought to be looked upon by those who have no money with jealousy and suspicion." Colorful figures of Wall Street included Jay Gould and Jim Fisk, who in 1869 precipitated one of the worst panics in American financial history by trying to corner the gold market. Almost lynched, the two were hauled into court, where Fisk whined, "A fellow can't have a little innocent fun without everybody raising a halloo and going wild." Then there was Jay Cooke, who invented the national bond drive and, practically unaided, financed the Union effort in the Civil War. In 1873, however, faulty judgement on railroad investments led to the failure of Cooke & Co. and a panic on Wall Street. The NYSE closed for ten days. A journalist wrote: "An hour before its doors were closed, the Bank of England was not more trusted." Despite J. P. Morgan's virtual single-handed role in stemming the Knickerbocker Trust panic of 1907, on his death in 1913, someone wrote "We verily believe that J. Pierpont Morgan has done more harm in the world than any man who ever lived in it." In the 1950s, Charles Merrill was instrumental in changing this attitude toward Wall Streeters. His firm, Merrill Lynch, derisively known in some quarters as "We, the People" and "The Thundering Herd," brought Wall Street to small investors, traditionally not worth the effort for brokers. The Big Board closes with this story. Asked by a much younger man what he thought stocks would do next, J.P. Morgan "never hesitated for a moment. He transfixed the neophyte with his sharp glance and replied 'They will fluctuate, young man, they will fluctuate.' And so they will." Robert Sobel died in 1999 at the age of 68. A professor at Hofstra University for 43 years, he was a prolific historian of American business, writing or editing more than 50 books. ********* 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 Pinili, Jr., and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***