/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050919.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 19, 2005, Vol. 9, No. 222 Headlines A. Q. GROUPS: Case Summary & 5 Largest Unsecured Creditors ACCIDENT & INJURY: Judge Hale Approves Disclosure Statement ADVANSTAR COMMS: Liquidity Concerns Prompt S&P to Junk Sub. Debt ALLIANCE LEASING: To Sell Remaining Assets Under Liquidating Plan ALLIED HOLDINGS: Torbits Want to Collect $720K 8th Cir. Judgment AMAZON.COM: S&P Raises Credit Rating to BB- Due to Good Cash Flow ANCHOR GLASS: Court Approves $125 Million DIP Financing ANCHOR GLASS: Taps Acclaris as Claims and Balloting Agent ANCHOR GLASS: Wants to Continue Hiring Ordinary Course Profs. ARGO-TECH CORP: Sale of Parent Company Spurs S&P to Review Ratings ASARCO LLC: Gets Court Nod to Pay Costs Related to DIP Financing ASARCO LLC: Wants Anderson Kill to Litigate Insurance Matters ASARCO LLC: Union Blames Management for Bargaining Collapse ATA AIRLINES: Pilot Union Leaders to Conduct Strike Vote for Pact AURA SYSTEMS: Gets Court OK to Borrow $1.2MM More from AGP Lender AURA SYSTEMS: Realty Unit Wants Court Nod on $8.75M Alliance Sale BRUCE FERRINI: Case Summary & 20 Largest Unsecured Creditors BUCKEYE TECHNOLOGIES: Lowers Third Quarter Earnings Expectations BULL RUN: Restates Three Quarterly Reports to Correct Errors CALPINE CORP: Forms CalBear Energy Venture with Bear Stearns CAPACHE TRANSPORTATION: Voluntary Chapter 11 Case Summary CATHOLIC CHURCH: Court Rejects Tucson's Call for Protective Order CHC INDUSTRIES: Has Until Sept. 24 to File Objections to Claims CHC INDUSTRIES: Ispat Fails in Bid to Appoint Examiner CHEMRITE INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors CITIGROUP MORTGAGE: Fitch Rates $20.04 Million Pvt. Certs. at BB COLLINS & AIKMAN: Customers Extend Filing Deadline to Sept. 22 CREDIT SUISSE: S&P Junks Series 2002-10 Mortgage Securities Class D.E.W. STEEL: Case Summary & 20 Largest Unsecured Creditors DANA CORP: S&P Pares Ratings to BB+ Due to Earnings Guidance Cut DANA CORP.: Earnings Outlook Reduction Cues Fitch to Cut Ratings DELPHI CORP: Credit Protection Cost Multiplies 10x in Past 6 Mos. DELTA AIR: Gets Court Nod to Use Lenders' Cash Collateral DELTA AIR: Judge Beatty Okays $1.7 Billion Interim DIP Use DELTA AIR: S&P Assigns Default Rating After Bankruptcy Filing DESARROLLADORA HOMEX: S&P Puts BB- Rating on $200 Million Notes DIALOG GROUP: Completes AdValiant Merger Transaction DLJ MORTGAGE: S&P Junks Class B-3OC Mortgage Certificates ELECTRONIC DATA: Moody's Revises Rating Outlook to Stable ENVIRONMENTAL TRUST: Disclosure Hearing Continued to Sept. 22 EXIDE TECHNOLOGIES: Pays $15 Mil. Interest on 10-1/2% Sr. Notes F2M LLC: Case Summary & 20 Largest Unsecured Creditors FEEDCOM ENTERPRISES: Case Summary & Largest Unsecured Creditor FIDELITY NATIONAL: S&P May Up Low-B Ratings After Certegy Merger FIDELITY NATIONAL: Fitch Affirms BB- Rating on Sr. Debt Facility FOSS MANUFACTURING: Case Summary & 20 Largest Unsecured Creditors FREEDOM MEDICAL: Confirmation Hearing Scheduled for October 12 GEO GROUP: Completes $175 Million Financing for CSC Acquisition HCC INDUSTRIES: AMETEK Acquisition Spurs S&P to Review Junk Rating HINES HORTICULTURE: Nurseries Unit Selling Property for $47.8-Mil IMMUCOR INC: Finds Material Weakness in Internal Control INTERPUBLIC: Fitch Keeps B+ Rated Debt Facility on Negative Watch JILLIAN'S ENT: Administrative Claims Bar Date Set on November 15 JO-ANN STORES: CFO B.P. Carney & EVP & Secretary V.G. Sachs Resign KAISER ALUMINUM: U.S. Trustee Balks at Russell's Proposed Services KERZNER INT'L: S&P Rates Planned $400 Million Senior Notes at B KERZNER INT'L: Moody's Rates $400 Million Senior Sub. Notes at B2 KOPPERS INC: S&P Revises Outlook on Low-B Ratings to Stable LAND O'LAKES: Moody's Reviewing Low-B Ratings for Possible Upgrade MAULDIN-DORFMEIER: Cowles & Thompson Approved as Special Counsel MCI INC: NY U.S. Attorney Ends Probe on Worldcom Accounting Issues MERISTAR HOSPITALITY: Refinances $300 Million CMBS Portfolio Loan MIDWESTERN TELECOMMUNICATIONS: Case Summary & 20 Largest Creditors MITSUBISHI MOTORS: Moody's Reviews Ba2 Rating on 2002-1 Certs. MOVIE GALLERY: Likely Low Performance Cues Moody's to Cut Ratings NEW WEATHERVANE: Judge Walsh Formally Dismisses Bankruptcy Cases NORMAN TIGLEY: Voluntary Chapter 11 Case Summary NORTHWEST AIRLINES: 400 Pilots Stand to Lose Jobs NORTHWEST AIRLINES: Ch. 11 Filing Cues S&P to Put Default Rating NORTHWEST AIRLINES: Fitch Downgrades Issuer Default Rating to D OFFICE PORTFOLIO: Fitch Affirms BB+ Rating on $17.1MM Certificates ONESOURCE TECHNOLOGIES: Receives Notice of Default from Comerica ONESOURCE TECHNOLOGIES: To Restate First Quarter 2005 Financials OPTINREALBIG.COM: Court Extends Exclusive Periods Until October 21 P R HOSPITALITY: Case Summary & 18 Largest Unsecured Creditors PACIFIC ENERGY: Moody's Puts Ba2 Rating on $150MM Sr. Unsec. Notes PROMETRIX CORPORATION: Case Summary & 20 Largest Unsec. Creditors RITE AID: Amends Senior Secured Facility to $1.75 Billion RURAL/METRO: Equity Deficit Narrows to $111 Million at June 30 RUSSELL-STANLEY: Wants to Assign Leases to RSH Acquisition S-TRAN HOLDINGS: Removal Period Stretched to November 9 S-TRAN HOLDINGS: Wants to Sell Remaining Assets in Mississippi SANDY BAY: Case Summary & 29 Largest Unsecured Creditors SEMCO ENERGY: Enters into $120 Million Revolving Credit Facility SEMCO ENERGY: Moody's Revises Outlook on Ba2 Ratings to Stable SHOPKO STORES: Extends Tender Offer for 9-1/4% Notes to Sept. 29 ST. MARYS CEMENT: Moody's Confirms B1 Ratings After Review TASER INTERNATIONAL: Names Grant Thornton LLP as New Auditor TELESYSTEM INT'L: Shares to Halt Trading at TXS on Sept. 27 TEREX CORP: Lenders Waive Reporting Requirement to Oct. 15 TOWNHOMES AT HILLTOP: Case Summary & 8 Largest Creditors TRUDY DEVELOPMENT: Case Summary & 2 Largest Unsecured Creditors US AIRWAYS: Court Confirms Chapter 11 Plan of Reorganization VARELA ENTERPRISES: Confirmation Hearing Moved to October 14 WAPAKONETA MACHINE: Case Summary & 20 Largest Unsecured Creditors WESTERN WATER: Wants Excl. Plan Filing Period Stretched to Dec. 20 WINN-DIXIE: Court Approves Rejection of Four Grocery Store Leases WINN-DIXIE: Court Approves Settlement Agreement With Heritage WINN-DIXIE: Florida Tax Collectors Has Until Nov. 7 to File Claim XEROX CORP: Moody's Takes Positive Outlook on Low-B Ratings XYBERNAUT CORP: Creditors Panel Taps Blank Rome as Lead Counsel XYBERNAUT CORP: U.S. Trustee Picks 5-Member Equity Holders Panel XYBERNAUT CORPORATION: Meets With Newly Formed Equity Committee YUKOS OIL: Cuts Net Loss By 94.5% in Second Quarter of 2005 * Proskauer Rose Names Christopher Wells as Partner in N.Y. Office * BOND PRICING: For the week of Sept. 12 - Sept. 16, 2005 ********* A. Q. GROUPS: Case Summary & 5 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: A. Q. Groups, Inc. 1501 Robin Hood Road Richmond, Virginia 23220 Bankruptcy Case No.: 05-38202 Chapter 11 Petition Date: September 14, 2005 Court: Eastern District of Virginia (Richmond) Judge: Chief Judge Douglas O. Tice Jr. Debtor's Counsel: Michael J. Champlin, Esq. Bowen, Champlin, Carr Foreman & Rockech 1919 Huguenot Road, Suite 300 Richmond, Virginia 23235-4321 Tel: (804) 379-1900 Fax: (804) 379-5407 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Adil Khan Open Account $100,000 8151 Lake Rillhurst Road Culpeper, VA 22701 The Vohra Group Lease & sale dispute $100,000 1500 Sherwood Road Richmond, VA 23220 City of Richmond Real Estate Real Estate Taxes $30,000 900 East Broad Street Richmond, VA 23219 Uzma Khan Loan to Corporation $25,000 8151 Lake Rillhurst Road Culpeper, VA 22701 City of Richmond Real Estate Unknown City Hall 900 East Broad Street Richmond, VA 23219 ACCIDENT & INJURY: Judge Hale Approves Disclosure Statement ----------------------------------------------------------- The Honorable Harlin DeWayne Hale of the U.S. Bankruptcy Court for the Northern District of Texas approved the Third Amended Disclosure Statement explaining the Third Amended Plan of Reorganization filed by Accident & Injury Pain Centers Inc. last month. Judge Hale determined that the disclosure statement contained adequate information -- the right amount of the right kind for hypothetical investors to make informed decisions when asked to vote for the Plan. Objections to the Plan, if any, must be submitted by October 5, 2005. The Court will convene a hearing on October 12 at 1:30 p.m. to discuss the merits of the Plan. The Plan proposes to retain the Debtors' pre-petition ownership and management structure. The Plan also provides for the pre- confirmation merger of Accident & Injury with the other debtor- affiliates. A Creditors Distribution Trust, created pursuant to the Plan, will be responsible for the distribution of funds to holders of Allowed Unsecured Non Priority Claims. The Trust will hold all equity interests in the Debtors until all allowed claims have been paid in full. Thereafter, the equity interests will be disbursed to Bob Smith and allowed subordinated claims of insiders will be paid. Treatment of Claims The Plan will separately treat the claims filed against Accident & Injury Pain Centers, Inc., its affiliated limited liability companies, and Accident & Injury's principals Robert Smith and Stephen Arthur Smith. The allowed secured claim of Comerica against Accident & Injury, consisting of approximately $1.7 million in account receivables and $135,499 in equipment obligations, will be paid, with interest at the original rate, in equal monthly installments over a three- year period. North Texas' Equipment Obligation to Comerica ($314,783 of which is on account of the North Texas MRI equipment notes and $95,000 pertaining to the North Texas MRI term notes), will be paid in equal monthly installments, with interest at the original rate, over the period from the Effective Date of the Plan through January 2007. White Rock's Term Obligation to Comerica, totaling $105,000 as of September 30, 2005, will be paid in equal monthly installments, with interest at the original rate, from the effective date of the Plan through January 2007. The allowed secured claim of Northeast Bancshares, Inc., against White Rock, consisting of equipment obligation totaling $284,170, will be paid, with interest at the original rate, in equal amortizing monthly installments over a five-period. The allowed secured claims of Northeast Bancshares against Rehab 2112, totaling $23,407, will be paid in equal amortizing monthly installments over a five-year period, with interest at the original rate. The first installment is due on the Initial Plan Distribution Date. Receivable Finance will apply the certificates of deposit and money market accounts securing Northeast Bancshares' claims to satisfy these claims. Any excess funds after the application of the collateral will be transferred to the Creditors Distribution Trust. The Allowed Secured Claim of Colonial Savings against Bob Smith will be paid in full over a 327-month period with interest at 5.75%. Steve Smith will continue making payments in accordance with the terms of the Countrywide Home Loans note and Countrywide Home will retain its lien until its allowed secured claim is fully paid. Accrued interest on Wells Fargo Home Mortgage's allowed secured claim against Steve Smith will be paid on the Initial Plan Distribution date. The balance will be paid in monthly installments for the first 24 months following the Initial Plan Distribution date. On the 25th month following the Initial Plan Distribution date, any balance will be amortized over a 30-year period and will be paid in equal monthly installments at the original interest rate. The allowed secured claim of Town North Bank, N.A., against Steve Smith will be paid on the same terms as the Wells Fargo Home Mortgage claim. Allstate and Encompass' asserted secured garnishment claim against the Debtors is subject to Comerica's setoff right and the class will therefore receive nothing under the Plan. Holders of allowed unsecured claims electing to reduce their claims to $5,000 will receive that reduced amount in full in four equal quarterly installments with the first payment beginning on the Initial Plan Distribution Date. Holders of allowed general unsecured claims will be paid in full with interest at the rate of 2.89% per annum over a 60-month period beginning on the Initial Plan Distribution Date. Each of the Debtors will make these minimum monthly payments to the Creditors Distribution Trust to meet the payment requirement for this class: Debtor Minimum Monthly Contribution ------ ----------------------------- Accident & Injury $201,735 Rehab 2112 12,584 North Texas 12,125 Lone Star 11,890 White Rock 17,385 Steve Smith 2,000 Bob Smith 3,000 Holders of equity interests receive nothing under the Plan. Reorganized A&I will issue 100% of its common stock to Bob Smith. Plan Funding Payments to allowed Claims against the Debtors under the Plan will be paid from: a) any income generated by property of a Debtor; b) proceeds from sales of property of a Debtor c) recoveries from Causes of Action retained by a Debtor; d) cash flow, after payment of normal and ordinary costs of operation, of a Debtor; and e) from the Plan Funding Reserve. A schedule of the Debtors' assets as of the Plan Filing is available for free at: http://bankrupt.com/misc/Accident_Assets.pdf Continuance of Allstate Civil Action The judgment and related verdict on the civil action styled Allstate Insurance Company, et al. v. Receivable Finance Company, L.L.C., et al. (Civil Action No. 01-CV-2247-N) is on appeal in the Fifth Circuit Court of Appeals. The Debtors seek reversal of the judgment. The Debtors' liability in this action, if any, will not be discharged under the Plan. Headquartered in Dallas, Texas, Accident & Injury Pain Centers, Inc. -- http://www.accinj.com/-- operates clinics that treat patients with highly advanced therapy equipment and techniques. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. N.D. Tex. Case No. 05-31688). Glenn A. Portman, Esq., at Bennett, Weston & LaJone, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported estimated assets and debts of $10 million to $50 million. ADVANSTAR COMMS: Liquidity Concerns Prompt S&P to Junk Sub. Debt ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and subordinated debt ratings on Advanstar Communications Inc. to 'B-' from 'B', and 'CCC' from 'CCC+', respectively, based on increased concern over the company's ability to service the pending rise in its consolidated cash interest payments. At the same time, Standard & Poor's affirmed its 'B+' first-lien senior secured bank loan rating, and raised its second-lien senior secured debt rating to 'B' from 'B-'. Also, Standard & Poor's assigned a recovery rating of '1' to the company's $60 million first-lien revolving credit facility and its $303 million in remaining second-lien notes, indicating a high expectation for full recovery of principal in a default scenario. The recovery ratings on these issues are based on improved recovery expectations as a result of the company's recent permanent reductions in its first- and second-lien loan balances with asset sale proceeds. All ratings other than the recovery ratings remain on CreditWatch with negative implications, where they were placed on July 7, 2005, following Advanstar's announcement that it is exploring strategic alternatives, including the potential sale of the company. As of June 30, 2005, the New York, N.Y.-based business-to-business media firm, which is analyzed on a consolidated basis with its parent company, Advanstar Inc., had about $614 million in consolidated debt. "The lowering of Advanstar's corporate credit rating reflects Standard & Poor's heightened concern about the adequacy of the company's cash flow to meet its consolidated interest costs," said Standard & Poor's credit analyst Steve Wilkinson. Also, while the operating company currently has decent near-term liquidity, its ability to fund the pending onset of its semiannual $12.8 million cash interest payments could be restricted over time unless EBITDA improves from the company's growth initiatives and recent restructuring actions. The operating company's cushion of compliance with its fixed-charge covenant will shrink as it makes restricted payments to its parent company to cover the parent's interest expense. Consequently, the operating company's ability to make such payments could be restricted in late 2006 or early 2007 unless EBITDA increases. Advanstar's ratings remain on CreditWatch pending a review of the potential sale of the company. "The Watch listing reflects concern that Advanstar's already high debt leverage and weak discretionary cash flow potential could be perpetuated or worsened if a purchase of the company is financed predominantly with debt or debt-like preferred stock," said Mr. Wilkinson. Advanstar is unlikely to be taken off CreditWatch before the company determines and completes its plan. In the event of a sale of the company, when terms become clearer, we will evaluate the capital structure, competitive positioning, strategic focus, and cash flow potential of the company or surviving entity. However, a further downgrade is possible if Advanstar's operating performance does not improve, its liquidity tightens, its leverage increases, or its ability to fund the holding company's interest payments worsens. ALLIANCE LEASING: To Sell Remaining Assets Under Liquidating Plan ----------------------------------------------------------------- Alliance Leasing Corporation delivered its Disclosure Statement summarizing the provisions of its Plan of Reorganization to the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville on Aug. 30, 2005. The Plan contemplates the liquidation of all of the Debtor's assets for distribution to its creditors. All causes of action and other assets of the estate will be transferred to a Liquidation Trust on the effective date of the Plan. Michael E. Collins, Esq., the chapter 11 Trustee, will serve as Plan Trustee. Debtor's Business Model Prior to their bankruptcy filing, the Debtor provided vehicle leasing and brokerage services to credit union members throughout the Southeast United States. Credit unions would finance the purchase of vehicles for its members and ownership of these vehicles would then be titled to the Debtor. The Debtor, in turn, would lease these vehicles to the union members. At the end of the lease term, the Debtor would sell the used vehicles and pay the credit unions the residual value provided for in the leases. The Debtor's profit was generated by the difference between the total lease price to the credit union member and the purchase price from vehicle dealers. The competitive climate of the leasing industry forced the debtor to offer lower monthly lease payments by increasing the residual value of the leases. Higher residual values meant higher payments to the credit unions and lower profits for the Debtor. Sagging profits eventually led to the Debtor's bankruptcy filing in Feb. 2005. Remarketing Agent Pursuant to the Plan, a Remarketing Agent will be retained to market approximately 1,250 vehicles that need to be liquidated as they come off the leases. Mr. Collins tells the Bankruptcy Court that the Remarketing Agent's network and liquidation system would result in over $800,000 of additional recoveries to creditors. The Debtor has a residual obligation associated with the remaining lease portfolio of $16,670,932. Mr. Collins says that that the vehicles are expected to sell at 25% below their estimated residual value -- resulting in expected aggregate losses of over $4 million. Treatment of Claims Holders of residual claims on the leased vehicles will retain their liens and will receive the proceeds from the liquidation of the collateral subject to that lien. Holders of alleged trust fund claims will receive pro rata payments to the extent funds are available after Administrative Claims, Priority Tax Claims, and other priority claims are paid in full. As of the petition date, the Debtor owes 119 costumers under this class approximately $2.2 million for undelivered vehicles. Claimants under this class have asserted that the funds held by the estate are held in trust for their benefit and are not property of the estate. Since the cost of litigating the issue with each of the customers would severely diminish the funds available in the estate, the Plan separately classifies the alleged trust fund claims and provides a mechanism for creditors who assert such claims to obtain treatment in such class. General unsecured claimholders who are not insiders will receive pro rata payments to the extent funds are available after Administrative Claims, Priority Tax Claims, other priority claims, and trust claims are paid in full. Insiders will receive pro rata payments after the non-insider General unsecured claimholders receive full payment of their claims. Equity interest holders will receive pro rata payment after all other claims are paid in full. Headquartered in Franklin, Tennessee, Alliance Leasing Corporation, filed for chapter 11 protection on Feb. 28, 2005 (Bankr. M.D. Tenn. Case No. 05-02397). Steven L. Lefkovitz, Esq., at Law Offices Lefkovitz & Lefkovitz represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $24,190,072 and total debts of $29,147,788. ALLIED HOLDINGS: Torbits Want to Collect $720K 8th Cir. Judgment ---------------------------------------------------------------- Prior to Allied Holdings, Inc., and its debtor-affiliates' bankruptcy filing, Ronald and Susan Torbit filed a civil action against Debtor GACS Incorporated in the City of St. Louis Circuit Court. GACS is a subsidiary of Allied Automotive Group, Inc., which in turn is a subsidiary of Allied Holdings, Inc. The Torbits asserted product liability claims and sought damages relating to personal injuries suffered by Mr. Torbit. The Torbit Case was removed to the United States District Court for the Eastern District of Missouri. On November 19, 2002, a judgment based on a jury verdict awarded $693,000 to Mr. Torbit and $27,000 to Ms. Torbit. GACS appealed the Judgment to the U.S. Court of Appeals for the Eighth Circuit. Pending the appeal and as a condition of the stay of the Judgment, an $850,000 supersedeas bond was provided by Traveler's Casualty Insurance Company, as surety, with GACS, as the principal. On July 28, 2005, the Court of Appeals denied GACS' appeal and affirmed the Judgment. Rufus T. Dorsey, IV, Esq., at Parker, Hudson, Rainer & Dobbs, LLP, in Atlanta, Georgia, explains that the affirmation of the Judgment substantially completes the appellate process with the exception of a petition for panel rehearing, a petition for rehearing en banc or a petition for certiorari to the United States Supreme Court, to the extent GACS believes that any valid grounds exist for that action and elects to do so. Mr. Dorsey relates that after the Petition Date, any further proceedings on the appeal have been suspended. Accordingly, the Torbits ask Judge Drake to: (a) allow the appellate process to be completed; (b) declare the automatic stay inapplicable to either the supersedeas bond or any of their action to execute and apply the amounts to the Judgment; and (c) in the alternative, permit them to take action with regard to the supersedeas bond. Mr. Dorsey notes that Rule 62(d) of the Federal Rules of Civil Procedure permits an appellant to stay execution of a judgment by posting a bond. The judgment creditor is protected by the supersedeas bond during the pendency of the appeal. When the appellate process is concluded, the judgment creditor is authorized to take action directly against the bond and the surety. The bond is the surety's independent obligation, and the surety submits to the jurisdiction of the trial court. This type of surety bond does not constitute property of the estate. Mr. Dorsey asserts that continuing the appellate process satisfies the three-prong test because "great prejudice" to GACS or the bankruptcy estate will not result from completion of the Appellate Process because the issues are narrow and have been previously briefed by GACS' counsel. The prospect ultimately satisfying the Judgment with the bond also does not pose a hardship for GACS because the issue is between third parties. Moreover, Mr. Dorsey maintains that continuing the stay will impose a hardship on the Torbits, which hardship considerably outweighs any hardship to GACS. There is also an overwhelming likelihood of the Torbits' success on the merits. "If [GACS] wishes to make any further challenge to the claims, lifting the stay is the only logical alternative," Mr. Dorsey argues. Given the stage of the appeal, GACS does not intend to ask the Bankruptcy Court to supplant the Eighth Circuit Court of Appeals and the jury to reevaluate any of the issues relating to the claims. "The approach would be a waste of judicial resources and unthinkable under the circumstances," Mr. Dorsey adds. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMAZON.COM: S&P Raises Credit Rating to BB- Due to Good Cash Flow ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Internet retailer Amazon.com, including raising its corporate credit rating to 'BB-' from 'B+'. At the same time, Standard & Poor's affirmed its 'B-1' short-term rating on the company. The outlook is stable. Total debt outstanding was $1.5 billion as of June 30, 2005. "The upgrade reflects Amazon's greater cash flow generation capabilities and strengthened cash flow protection measures," said Standard & Poor's credit analyst Diane Shand. "These improvements are attributable to the company's strong sales, lean cost structure, and debt reduction." Cash flow protection measures have strengthened, primarily because of Amazon's repayment of $150 million of debt in 2004 and EUR200 million of its outstanding 6.875% convertible subordinated notes in 2005. The ratings on Amazon reflect the risks of rapid growth and the company's participation in the intensely competitive retail industry. These risks are tempered by the company's solid market position in online retailing. Amazon has been successful at creating a strong brand, which is critical to the long-term success of any retailer selling goods through the Internet. The company's focus on convenience, service, selection, and content, and its low price strategy have enabled it to increase revenues at about a 30% compound annual rate over the past three years. Amazon currently generates almost $7.7 billion in annual sales. The company has also typically done a good job leveraging sales against fixed costs; its free cash flow has grown dramatically. Standard & Poor's Ratings Services expects sales growth to slow from its current pace because Amazon is up against tough comparisons and competition has increased. Also, competition for online sales began to escalate in 2004 as other online retailers gained traction, and traditional store retailers have increased their presence in the channel. Still, sales growth should be in the double-digit percentage area because consumers have responded favorably to the company's everyday low pricing strategy. Amazon is also expected to further enhance its product offerings and merchandising strategy. Margins are expected to remain under pressure because Amazon is lowering prices to drive demand and stay competitive, investing in technology and content, and adding lower margin products. ANCHOR GLASS: Court Approves $125 Million DIP Financing ------------------------------------------------------- Anchor Glass Container Corporation (Pink Sheets:AGCCQ) received final approval from the U.S. Bankruptcy Court for the Middle District of Florida for the issuance of $125 million of debtor-in- possession Senior Secured Term Notes provided by certain holders of its pre-petition Senior Secured Notes and agented by Wells Fargo Bank. The proceeds from these notes will be used to repay the existing pre- and post-petition credit facilities, with the balance to be used for working capital. "This financing gives us the ability to fund our business plan, which includes making the capital improvements required to continue providing our customers with top quality and innovative products," said Mark Burgess, Anchor Glass' chief executive officer. "We are pleased with this financing as it reinforces our pre-petition Senior Secured Noteholders' commitment to Anchor Glass' employees, suppliers and customers." Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. ANCHOR GLASS: Taps Acclaris as Claims and Balloting Agent --------------------------------------------------------- Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida for permission to employ Acclaris, LLC, as its noticing, claims and balloting agent. The Debtor tells the Bankruptcy Court that engaging Acclaris as Noticing, Claims and Balloting Agent will enable them to expedite the distribution of notices, the processing of claims, and the tabulation of ballots and assist in relieving the Clerk's Office of the administrative burden. The Debtor believes Acclaris is well qualified to provide the Debtor with experienced services as Noticing Claims and Balloting Agent. Acclaris has provided the Debtor with the same services in its April 2002 bankruptcy case and, therefore, is familiar with its operations, the Court and the bankruptcy process, Robert A. Soriano, Esq., at Carlton Fields PA, in Tampa, Florida, says. As official Noticing Claims and Balloting Agent, Acclaris will: (a) notify all potential claimants, as established by the Debtor's records, of the case and provide them with an appropriate proof of claim; (b) docket all claims received by the Clerk's Office and by Agent, maintain the official claims register on behalf of the Clerk of the Court and provide to the Clerk an exact duplicate thereof on a monthly basis; (c) upon completion of the docketing process for all claims received to date by the Clerk's Office, turn over to the Clerk a copy of the claims register for the Clerk's review; (d) specify in the claims register for each claim docketed: * the claim number assigned, * the date received, * the name and address of the claimant or agent, * the amount and classification of the claim asserted by each claimant; and * the applicable Debtor. (e) maintain the mailing list of all entities that have filed proofs of claim, proofs of interest, or notices of appearance, which list will be available upon request of any party-in-interest or the Clerk; (f) prepare and serve required notices, motions and orders, and documents in these cases, including: * notice of the claims bar date; * notice of objections to claims; * notice of any hearings on a Disclosure Statement and confirmation of a plan; * other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the chapter 11 case; * motions prepared by Debtor; * plans of reorganization, disclosure statements, and ballots; and * orders entered by the Court for which the Debtor is responsible for service. (g) implement necessary security measures to ensure the completeness and integrity of the claims registers; (h) maintain copies of all proofs of claim and proofs of interest; (i) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list will be available upon request of a party-in-interest or the Clerk's Office; (j) other services as may be requested by the Clerk's Office or the Debtor in connection with processing claims and providing notice to known creditors; and (k) collect, process and tabulate ballots cast in the Debtor's case. The Debtor also proposes that: -- any claims register maintained by Acclaris will be open to the public for examination without charge during regular business hours; -- Acclaris will record all transfers of claims pursuant to Rule 3001 of the Federal Rules of Bankruptcy Procedure and provide notices of transfer as required by that rule; and -- Acclaris will timely serve out any motion, order or notice, but in no event later than three days after receipt of the motion, order or notice, or within a time the Court authorizes. The Debtor seeks the Court's permission to pay Acclaris a $10,000 retainer, which will be applied to invoices. The Debtor intends to pay the Agent's invoices every two weeks pursuant to a fee services agreement. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts.(Anchor Glass Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Wants to Continue Hiring Ordinary Course Profs. ------------------------------------------------------------- Anchor Glass Container Corp. asks permission from the U.S. Bankruptcy Court for the Middle District of Florida to employ professionals, which it utilizes in ordinary course, without the submission of separate employment applications, affidavits, and the issuance of separate retention orders for each individual professional. Anchor Glass currently seeks to employ 60 Ordinary Course Professionals. A list of the 60 Professionals is available for free at http://researcharchives.com/t/s?18e These Ordinary Course Professionals render a wide range of legal, accounting, tax, real estate, and other services for the Debtor that impact the Debtor's day-to-day operations, Robert A. Soriano, Esq., at Carlton Fields PA, in Tampa, Florida, relates. The Debtor believes that the employment of the Professionals is essential to avoid disruption of its normal business operations. With the additional cost associated in the preparation of employment applications for the Ordinary Course Professionals who will receive relatively small fees, the Debtor finds it impractical and inefficient to submit individual applications and proposed retention orders for each Ordinary Course Professional. The procedure will save the estate the substantial expenses associated with applying separately for the employment of each professional, Mr. Soriano maintains. Furthermore, the procedure will avoid the incurrence of additional fees pertaining to preparing and prosecuting interim fee applications. The procedure will also relieve the Court and the U.S. Trustee of the burden of reviewing numerous fee applications involving relatively small amounts of fees and expenses. Anchor Glass proposes to pay each professional 100% of the fees and disbursements incurred upon the submission and approval by the Debtor of an appropriate invoice. The Debtor will pay up to the lesser of: * $50,000 per month per Ordinary Course Professional; or * $500,000 per month, in the aggregate, for all Ordinary Course Professionals. If a professional seeks more than $50,000 in a single month or $500,000 in the aggregate, that professional will be required to file a fee application for the full amount of their fees in accordance with Sections 330 and 331. The Debtor proposes that within 30 days of the entry of an order granting the Motion or the engagement of the professional by the Debtor, each professional will serve and file with the Court: * an affidavit certifying the professionals' interest or disinterestedness to the Debtor or its estate; and * a completed retention questionnaire. The Debtor reserves the right to supplement the list of Ordinary Course Professionals from time to time as necessary. In that event, the Debtor will file an Ordinary Course Professional Notice and serve the notice on parties-in-interest. If no objection to any the additional Professional is filed with the Court and served on the Debtor within 20 days after the service of the Ordinary Course Professional Notice, retention of the Professionals would be deemed approved by the Court without the need for a hearing or further order. Although certain of the Ordinary Course Professionals may hold unsecured claims for prepetition services rendered, the Debtor does not believe that any of the Professionals have an interest adverse to the Debtor, its creditors or other parties-in-interest on the matters for which they would be employed. Thus, all of the Professionals proposed to be retained meet the special counsel retention requirement under Section 327(e) of the Bankruptcy Code. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts.(Anchor Glass Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARGO-TECH CORP: Sale of Parent Company Spurs S&P to Review Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings, including the 'B+' corporate credit rating, on Argo-Tech Corp. on CreditWatch with negative implications. The CreditWatch placement follows the announcement in Argo-Tech's most recent 10-Q that its parent, AT Holdings Corp. (unrated), is being sold to a group of private equity firms for $173 million. "The CreditWatch reflects the possibility of higher debt levels to finance the acquisition, which could result in an increase in Argo-Tech's already high leverage," said Standard & Poor's credit analyst Christopher DeNicolo. The details on how the purchase will be financed were not disclosed. Pending customary regulatory, shareholder, and debt-holder approvals, the acquisition is expected to close by the end of fiscal 2005 (ending Oct. 29, 2005). Standard & Poor's will meet with the company to determine the impact of the transaction on credit quality. Argo-Tech is the world's largest supplier of main engine fuel pumps, which are used in approximately two-thirds of large commercial aircraft in service. The Cleveland, Ohio-based firm also has leading positions in commercial and military airframe fuel pumps and valves, aerial refueling components installed on U.S. military aircraft, and components for ground fueling systems for major commercial airports. In addition, the company provides cryogenic pumps and other components to the liquefied natural gas industry. ASARCO LLC: Gets Court Nod to Pay Costs Related to DIP Financing ---------------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas gave authority to ASARCO LLC and its debtor-affiliates to pay the out-of-pocket costs and expenses incurred by third-party lenders in connection with potential DIP financing agreements in an amount not to exceed $350,000. As reported in the Troubled Company Reporter on Sept. 5, 2005, ASARCO estimates that, for a DIP facility in the range of $75 million to $150 million, out-of-pocket expenses will range from $275,000 to $350,000. ASARCO has already received expense reimbursement requests from its potential DIP lenders. 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. Encycle/Texas, Inc. (Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Case No. 05-21346) also filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants Anderson Kill to Litigate Insurance Matters ------------------------------------------------------------- Anderson Kill & Olick, L.L.P. is a global law firm with six offices in the United States, employing around 130 lawyers. James R. Prince, Esq., at Baker Botts LLP, in Dallas, Texas, informs the Honorable Judge Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas that Anderson Kill has had unparalleled success in obtaining insurance coverage for policyholders in connection with environmental and toxic tort liability, products liability, professional liability and disability, and many other types of insurance. The firm's Insurance Recovery Group has been heralded by the New York Times as "a leader in representing big corporations and individuals against insurance companies." In March 2004, Anderson Kill was employed by ASARCO, LLC, to represent the company on insurance-related matters, including a coverage action pending in Nueces County, Texas, which was set for trial in January 2005. Mr. Prince relates that Anderson Kill has performed substantial work for ASARCO in connection with that coverage dispute, including: -- identifying and retaining expert witnesses and responding to discovery requests; -- successfully opposing a motion filed by Fireman's Fund Insurance Company for a declaration as to choice of law; -- successfully negotiating a voluntary stay of the coverage action so that the parties can pursue resolution of the dispute in the context of a Section 524(g) proceeding; -- persuading Fireman's Fund Insurance to withdraw voluntarily a motion to compel production of settlement agreements between ASARCO and other insurance companies; -- assisting ASARCO in connection with settlement negotiations with defendant Certain London Market Companies; -- producing substantial amounts of information to Fireman's Fund Insurance in preparation for the initiation of settlement discussions; -- identifying and contacting unrepresented and inactive London Market Company defendants to initiate settlement discussions; -- representing ASARCO on a contingency basis in connection with insolvent London Market defendants; and -- successfully recovering insurance proceeds for ASARCO from various London Market defendants. In light of the substantial work Anderson Kill has performed relating to ASARCO's businesses, and the impossibility of ASARCO obtaining alternative counsel at this late juncture, ASARCO asks for Judge Schmidt's permission to employ Anderson Kill as its special insurance counsel, nunc pro tunc to the Petition Date. Within the 90-day period preceding the commencement of ASARCO's Chapter 11 case, Anderson Kill received a $199,769 payment from ASARCO for professional services rendered and expenses incurred before the Petition Date. Mr. Prince notes that since March 2004, Anderson Kill has held a $100,000 retainer. Unless otherwise ordered by the Court, Anderson Kill will continue to maintain the retainer and will bill ASARCO for its fees and expenses in accordance with the Bankruptcy Code, and will file applications for compensation and reimbursement as may be appropriate. The firm's professionals that will primarily provide services to ASARCO and their hourly rates are: Rhonda D. Orin $390 Robert M. Horkovich 675 William Passannante 525 Daniel M. Healy 250 James Zeas 220 Izak Feldgreber 210 Harris Gershman 190 Brenda Bonazelli 125 In addition, Anderson Kill has a contingency arrangement with ASARCO with regard to the firm's efforts to recover insurance proceeds on ASARCO's behalf from London Market Companies. Pursuant to that arrangement, Anderson Kill will also receive 5% of the insurance proceeds that it recovers in addition to any expenses incurred. Rhonda D. Orin, Esq., a partner at Anderson Kill, attests that the firm does not hold nor represent any interest adverse to ASARCO or its estate on the matters for which Anderson Kill is being retained as special counsel, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. 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. Encycle/Texas, Inc. (Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Case No. 05-21346) also filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Union Blames Management for Bargaining Collapse ----------------------------------------------------------- The United Steelworkers accused ASARCO officials of shamelessly misrepresenting the circumstances around the collapse of negotiations earlier this week and undermining the Union's good faith effort to negotiate fair agreements for workers at the company's mining, refining and smelting operations. "These lavishly compensated executives at ASARCO and its parent, Grupo Mexico, are simply trying to deflect attention from their own failings that led to the current financial problems," said USW District 12 Director Terry Bonds, "and their mean-spirited insistence on hiring scab replacement workers has further alienated our members and set back the effort to put Asarco's house in order through the bankruptcy process." ASARCO managers have claimed that the USW is somehow responsible for the lack of progress in contract talks. Mr. Bonds reiterated the Union's willingness to bargain and challenged ASARCO's statement that contract language requiring a potential buyer to recognize the Unions that represent ASARCO employees would inhibit a sale. "The USW is ready and willing to sit down and negotiate a fair and equitable agreement with ASARCO at any time," Bonds said, "but what does the company hope to accomplish by negotiating a contract that would be worthless if one or more of the facilities are sold?" "Instead of discussing the issue further, ASARCO took the ultimate step in disrespecting its workforce and brought in scabs." The USW has filed charges with Region 28 of the National Labor Relations Board and blames Grupo Mexico for deliberately and illegally instigating the current strike at ASARCO's operations in Arizona and Texas. "We believe that cooperating with management is the only way to save our mines, our plants and our jobs," Mr. Bonds said. "As the current labor dispute drags on, however, I have become less confident that ASARCO and Grupo share this goal." 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. Encycle/Texas, Inc. (Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Case No. 05-21346) also filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. ATA AIRLINES: Pilot Union Leaders to Conduct Strike Vote for Pact ----------------------------------------------------------------- As reported in the Troubled Company Reporter on August 30, 2005, the Air Line Pilots Association, International, objects to ATA Airlines, Inc.'s request to reject its 2002 collective bargaining agreement with the Air Line Pilots under Section 1113 of the Bankruptcy Code. Frederick W. Dennerline III, Esq., at Fillenwarth, Dennerline, Groth & Towe, in Indianapolis, Indiana, asserts that ATA attempts to minimize the tremendous sacrifices already made by the ALPA crewmembers. Not unmindful of the Debtors' financial conditions, ALPA has thrice agreed to modify the CBA to generate about $70 million in savings to ATA. Strike Vote Authorized The Air Line Pilots Association, International, said that its president, Capt. Duane Woerth, has authorized pilot union leaders at ATA Airlines to conduct a strike vote if they cannot reach an acceptable agreement with the airline in the U.S. Bankruptcy Court for the Southern District of Indiana. The Court is expected to rule very soon on ATA's motion to reject ALPA's collective bargaining agreement and impose more than $37 million in additional pay and benefit concessions. "Our members have already provided almost $70 million in relief to ATA since 2004, and these new demands would reduce our pay by more than 40 percent from our 2005 rates," Capt. Jim Anderson, chairman of the ALPA's ATA Master Executive Council, explained in a press release. "We are already severely underpaid, and we will not hesitate to hold a strike vote if ATA insists on financing its bankruptcy by slashing compensation for its pilots and flight engineers." The Union clarifies that the authorization to conduct a strike vote does not mean that a strike or other legal job action is imminent, rather, it authorizes the ATA union leadership to ask its members if they want to go on strike. A date for a vote has not been set. 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. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) AURA SYSTEMS: Gets Court OK to Borrow $1.2MM More from AGP Lender ----------------------------------------------------------------- The United States Bankruptcy Court for the Central District of California, Los Angeles Division, authorizes Aura Systems, Inc., to borrow up to an additional $1.2 million of financing from AGP Lender LLC. The Loan is secured by all of the assets of the Company (excluding avoidance causes of action), and is junior in priority to all liens in favor of the Koyah Entities (and all other pre-bankruptcy secured creditors) that were perfected at the time of the Company's bankruptcy filing and are not avoidable, and all liens in favor of the Company's initial lender during the bankruptcy on account of such lender's postpetition loan. The Loan is due and payable on June 30, 2006. The Loan bears interest at a rate of 17.5% per annum. In addition, a loan fee and a finder's fee were earned by the Lender in connection with the Loan. The Loan may not be prepaid, in whole or in part, without the Lender's prior written consent. The Lender has the option at its sole discretion to convert all or any portion of the Loan, and all accrued but unpaid interest into common stock of the Company at any time during the term of the Loan. A full-text copy of the DIP Loan Agreement is available for free at http://ResearchArchives.com/t/s?188 A full-text copy of the Security Agreement is available for free at http://ResearchArchives.com/t/s?189 Headquartered in El Segundo, California, Aura Systems, Inc. -- http://www.aurasystems.com/-- develops and sells AuraGen(R) mobile induction power systems to the industrial, commercial and defense mobile power generation markets. The Company filed for chapter 11 protection on June 24, 2005 (Bankr. C.D. Calif. Case No. 05-24550). Ron Bender, Esq., at Levene Neale Bender Rankin & Brill LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported $18,036,502 in assets and $28,919,987 in debts. AURA SYSTEMS: Realty Unit Wants Court Nod on $8.75M Alliance Sale ----------------------------------------------------------------- Aura Realty Inc., a Delaware corporation which is 50.1% owned by Aura Systems, Inc., asks the United States Bankruptcy Court for the Central District of California, Los Angeles Division, to approve a Purchase Agreement and Escrow Instructions it signed with Alliance Commercial Partners and Aura Systems with respect to certain real property owned by Realty and leased to Systems. The Purchase Agreement provides for a purchase price of $8,750,000, which includes the assumption of an existing loan of approximately $4,950,000. If the sale occurs, the Company would relinquish rights to lease all of the space that it currently occupies and would instead lease only the approximately 27,000 square foot building located at 2330 Utah Avenue, Los Angeles, California. The lease would be for a term of two years at a base rent of $17,550 per month on a triple net basis and a security deposit of $17,550. Under the lease, the Buyer would agree to perform certain leasehold improvements up to a maximum amount of $100,000. A full-text copy of the Purchase Agreement is available for free at http://ResearchArchives.com/t/s?18a Headquartered in El Segundo, California, Aura Systems, Inc. -- http://www.aurasystems.com/-- develops and sells AuraGen(R) mobile induction power systems to the industrial, commercial and defense mobile power generation markets. The Company filed for chapter 11 protection on June 24, 2005 (Bankr. C.D. Calif. Case No. 05-24550). Ron Bender, Esq., at Levene Neale Bender Rankin & Brill LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported $18,036,502 in assets and $28,919,987 in debts. BRUCE FERRINI: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Bruce P. Ferrini 1080 Top of the Hill Drive Akron, Ohio 44333 Bankruptcy Case No.: 05-56047 Type of Business: The Debtor is a manuscript dealer. Chapter 11 Petition Date: September 15, 2005 Court: Northern District of Ohio (Akron) Judge: Marilyn Shea-Stonum Debtor's Counsel: Morris H. Laatsch, Esq. Baker, Hardesty & Kaffen 520 South Main Street, #500 Akron, Ohio 44311 Tel: (330)762-7477 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 ------ --------------- ------------ First Merit 1080 Top of the $2,100,000 III Cascade Plaza, 3rd Floor Hill Drive, Akron Bankruptcy Ohio 44333 Akron, OH 44308 Value of Senior Lien: $1,050,000 Guenther Hill and Clavroix Breach of contract $1,013,332 Allen E. Molnar, Esq. 550 Broad Street #810 Newark, NJ 07102-4582 First Merit 1080 Top of the $600,000 III Cascade Plaza, 3rd Floor Hill Drive, Akron Bankruptcy Ohio 44333 Akron, OH 44308 Value of Senior Lien: $3,413,000 Michael Sharpe 1080 Top of the $263,000 1026 South Rafael Avenue Hill Drive, Akron Pasadena, CA 91105 Ohio 44333 Value of Senior Lien: $3,150,000 J.P. Industrial Personal loan $125,000 State Route 30 Lisbon, OH 44432 Bank One National Parcel 2: 7374 $100,000 Payment Services Valleyview Drive, Bankruptcy Department Hudson, Ohio P.O. Box 182223 Value of Senior Lien: Columbus, OH 43218-2223 $406,000 Ron Towne, Esq. Legal services $88,686 Guy, Lammert & Towne 2210 First National Tower Akron, OH 44308 Brockman, Coats, Gedelian & Co. Accounting services $76,270 1735 Merriman Road Akron, OH 44313-9007 Weltman, Weinberg & Reis LPA Lillie & Holderman $57,727 323 West Lakeside Avenue vs Bruce P. Ferrini Suite #200 Cleveland, OH 44113-1099 Summit County Treasurer Taxes $42,000 175 South Main Street P.O. Box 80598 Akron, OH 44308 Thomarios Rent $30,000 Saturn Apollo Capital Group, LLC One Canal Square Plaza Akron, OH 44308 Chase Credit Card Credit card $19,822 P.O. Box 15298 purchases Wilmington, DE 19886-1194 Kaufman & Kaufman Legal services $15,888 Eric R. Kaufman, Esq. 820 Fifth Avenue New York, NY 10020 First Merit Credit card $12,885 III Cascade Plaza, 3rd Floor purchases Bankruptcy Akron, OH 44308 Nissan Infiniti LT 2003 Nissan Murano $10,604 P.O. Box 660366 Dallas, TX 75266-0366 Deficiency balance: Joseph Scafidi, Inc. Tailors and $10,366 925 Euclid Avenue Shirtmakers Cleveland, OH 44115 Kahn, Dees, Donovan & Kahn, LLP Legal services $10,145 501 Main Street P.O. Box 3646 Evansville, IN 47735-3646 Summit County Treasurer Taxes $10,000 175 South Main Street P.O. Box 80598 Akron, OH 44308 National City Bank Credit card $8,993 Private Client purchases One NCC Parkway, KA 162B Kalamazoo, MI 49009-8002 State of Ohio Taxes $8,970 Income Tax Division P.O. Box 2618 Columbus, OH 43266-0018 BUCKEYE TECHNOLOGIES: Lowers Third Quarter Earnings Expectations ---------------------------------------------------------------- For the quarter ending September 30, 2005, Buckeye Technologies Inc. (NYSE:BKI) expects to earn 5 to 7 cents per share, excluding restructuring and early debt extinguishment costs. While none of the Company's operations suffered serious damage from Hurricane Katrina, the disruptions caused by the hurricane Katrina and the impact of high material and energy costs are expected to result in Buckeye's earnings falling below the 14 cents per share, excluding restructuring costs, earned in the July-September quarter of the previous year. Analysts expected earnings for the current quarter, excluding restructuring and early debt extinguishment costs, to be within the range of 9 to 13 cents per share. The Company expects that sales for the quarter ending September 30, 2005, will be at or above the level achieved in the year ago quarter. Buckeye Chairman, David B. Ferraro, commented, "Although the high costs we are experiencing and the disruptions caused by Hurricane Katrina are disappointing, we do not anticipate that they will have a long-term negative effect on our business. We will be repricing many annual contracts at the beginning of the calendar year and have confidence that we will reestablish margin growth during calendar year 2006." Buckeye Technologies, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany, Canada, and Brazil. Its products are sold worldwide to makers of consumer and industrial goods. * * * As reported in the Troubled Company Reporter on Feb 2, 2005, Moody's Investors Service assigns a B1 rating to Buckeye Technologies Inc.'s (Buckeye) $85 million increase of its senior secured term loan B, affirms all other ratings, and changes outlook to stable from negative. Moody's also affirmed these ratings: * Senior implied rated B2 * Senior unsecured issuer rating rated Caa1 * US$150 million, guaranteed senior secured term loan B, due October 15, 2008, rated B1 * US$70 million, guaranteed senior secured revolver, due September 15, 2008, rated B1 * US$200 million, 8.5%, guaranteed senior unsecured notes, due 2013, rated B3 * US$100 million, 9.25% senior subordinated notes, due 2008, rated Caa1 * US$150 million, 8.0% senior subordinated notes, due 2010, rated Caa1 As reported in the Troubled Company Reporter on Feb. 1, 2005, Standard & Poor's Ratings Services assigned its 'BB-' secured bank loan rating to specialty pulp producer Buckeye Technologies Inc.'s proposed $85 million term loan B add-on, based on preliminary terms and conditions. All other ratings were affirmed. S&P says the outlook is stable. BULL RUN: Restates Three Quarterly Reports to Correct Errors ------------------------------------------------------------ Frederick J. Erickson, Bull Run Corporation's Vice President for Finance, Chief Financial Officer, Treasurer and Assistant Secretary informs the Securities and Exchange Commission in an 8-K filing that the Audit Committee of the Company's Board of Directors determined that the Company's unaudited interim financial statements for each of the quarterly periods ended November 30, 2004, February 28, 2005 and May 31, 2005, were restated to correct errors related to the Company's accounting for dividends on redeemable preferred stock and to report such preferred stock as a current liability on the balance sheet. The Company had incorrectly recorded dividends accruing on the Company's redeemable preferred stock as a reduction of stockholders' equity rather than interest expense in the statement of operations. As a result, interest expense, loss from continuing operations and net loss were understated and preferred dividends were overstated for the current fiscal year. In addition, the redeemable preferred stock had been reported as a noncurrent liability, which, as a result, understated total current liabilities. The accounting errors had no effect on previously reported operating income, earnings (loss) available to common stockholders or earnings (loss) per share amounts. Only the interim fiscal periods subsequent to August 31, 2004, the date as of which the Company's preferred stock was reclassified from stockholders' equity to liabilities, require restatement. Accordingly, the Audit Committee of the Company's Board of Directors determined that the unaudited interim financial statements contained in the Company's Form 10-Q for each of the periods ended November 30, 2004, February 28, 2005 and May 31, 2005 should no longer be relied upon. The Company filed, an amended Form 10-Q for each of the quarterly periods ended November 30, 2004, February 28, 2005 and May 31, 2005, which will include restated financial statements for the respective periods. The Audit Committee of the Company's Board of Directors has discussed these matters with PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm. Material Weakness in Internal Controls As a result of the restatement, the Company determined that a control deficiency existed with respect to the Company's internal controls over its financial reporting related to accounting for preferred stock. Accordingly, the Company has concluded that its disclosure controls and procedures were not effective and this control deficiency constituted a material weakness in the Company's internal control over financial reporting as of November 30, 2004 and through May 31, 2005. A material weakness is a control deficiency or combination of control deficiencies that results in a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The Company is in the process of determining the remedial steps necessary to eliminate the material weakness that resulted in the restatement and intends to engage the services of consultants, as necessary, to assist in the review of certain complex accounting matters. Restated Financials Full-text copies of the amended quarterly reports are available for free at: For the Quarter Ending URL ---------------------- --- May 31, 2005 http://ResearchArchives.com/t/s?185 February 28, 2005 http://ResearchArchives.com/t/s?186 November 30, 2004 http://researcharchives.com/t/s?187 Based in Atlanta, Georgia, Bull Run Corporation is a sports and affinity marketing and management company through its sole operating business, Host Communications, Inc., acquired in December 1999. Host's "Collegiate Marketing and Production Services" business segment provides sports marketing and production services to a number of collegiate conferences and universities, and on behalf of the National Collegiate Athletic Association. Host's "Association Management Services" business segment provides various associations with services such as member communication, recruitment and retention, conference planning, Internet web site management, marketing and administration. As of May 31, 2005, Bull Run's equity deficit narrowed to $55,386,000 from a $56,551,000 deficit at August 31, 2004. CALPINE CORP: Forms CalBear Energy Venture with Bear Stearns ------------------------------------------------------------ The Bear Stearns Companies Inc. [NYSE: BSC] and Calpine Corporation [NYSE: CPN] have agreed to form a new energy marketing and trading venture to develop a significant customer business focused on physical natural gas and power trading and related structured transactions. CalBear Energy LP, a wholly owned Bear Stearns subsidiary, will benefit from the financial resources, risk management expertise and client reach of Bear Stearns, complimented by the market knowledge, technology, trading ability, deal flow and customers of Calpine. These strengths will provide a solid foundation to establish the new venture's market position in the growing merchant energy trading business. It is anticipated that CalBear trading operations will begin in the fourth quarter of 2005, following the requisite regulatory approvals. Commenting on the transaction, Warren Spector, President and Co- Chief Operating Officer of Bear Stearns, said, "We are very excited about the formation of CalBear and working with Calpine in this venture. This transaction provides us with a unique opportunity to quickly become a leading provider of liquidity, execution and clearing services in the physical energy market without compromising our disciplined approach to risk and capital allocation. Many of our hedge fund, institutional investor, public finance and private equity clients are active users of energy price risk management services. Acquiring the expertise necessary to properly serve their needs has been a strategic priority for the firm. Calpine was our choice in this venture because of their professionalism and commitment to providing the best service to their clients." Peter Cartwright, Calpine Chairman, President and Chief Executive Officer, said, "We are very pleased about the creation of CalBear and teaming up with Bear Stearns as we will build upon the strengths of both of our organizations. This energy trading venture will enable us to create more value for our shareholders and to provide additional opportunities for our customers and employees. As we looked to set up the ideal energy trading organization, we felt strongly that venturing with the right financial institution was essential for us to maximize returns from Calpine's investments. Bear Stearns is the right institution." In connection with this transaction, Calpine has formed a wholly owned subsidiary, Calpine Merchant Services Company, Inc., that will include the employees and information infrastructure of the highly regarded Calpine subsidiary, Calpine Energy Services, L.P. CalBear has entered into an agreement with CMSC that provides for CMSC to be its exclusive agent to execute power and natural gas trades with CalBear clients that have entered into master trading agreements guaranteed by Bear Stearns. CMSC will also provide scheduling and back office services to CalBear from its offices in Houston. CMSC will be compensated for its services through a service fee equal to 50 percent of the profits of CalBear. The transaction also includes a $350 million credit intermediation agreement between CalBear and CES. Under the terms of this arrangement, CalBear will enter into approved transactions to sell power and acquire natural gas up to 61 days in advance with clients that have entered into master trading agreements guaranteed by Bear Stearns. The economics of these transactions will be passed on to CES through offsetting trades. CalBear's counterparty exposure to CES will be mitigated through the use of margin requirements and a master netting agreement covering all CES transactions with CalBear. It is anticipated that this credit intermediation agreement will provide CES with additional flexibility and the opportunity to expand the operating margins of Calpine's generating assets. In addition, the agreement is expected to increase Calpine's working capital position through the return of cash currently posted as collateral. In addition, CMSC, acting as agent for CES, will provide all of the asset management services required by Calpine's power generation fleet. Calpine will retain all of the economics of these assets. About Bear Stearns Founded in 1923, Bear, Stearns & Co. Inc. -- http://www.bearstearns.com/-- is a leading investment banking and securities trading and U.S. registered brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. [NYSE:BSC]. With approximately $49.4 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, securities research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., Bear Stearns offers financing, securities lending, clearing and technology solutions to hedge funds, broker-dealers and investment advisors. BSSC is a member of the NYSE, NASD and SIPC. Headquartered in New York City, the company has approximately 11,000 employees worldwide. About Calpine Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in the Troubled Company Reporter on June 23, 2005, Standard & Poor's Ratings Services assigned its 'CCC' rating to Calpine Corp.'s (B-/Negative/--) planned $650 million contingent convertible notes due 2015. The proceeds from that convertible debt issue will be used to redeem in full its High Tides III preferred securities. The company will use the remaining net proceeds to repurchase a portion of the outstanding principal amount of its 8.5% senior unsecured notes due 2011. S&P said its rating outlook is negative on Calpine's $18 billion of total debt outstanding. As reported in the Troubled Company Reporter on May 16, 2005, Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). CAPACHE TRANSPORTATION: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Capache Transportation, LLC dba Capache Transportation, Inc. P.O. Box 3518 Knoxville, Tennessee 37927-3518 Bankruptcy Case No.: 05-35081 Type of Business: The Debtor is a trucking company. Chapter 11 Petition Date: September 15, 2005 Court: Eastern District of Tennessee (Knoxville) Judge: Richard Stair Jr. Debtor's Counsel: Robert L. Vogel, Esq. P. O. Box 31464 Knoxville, Tennessee 37930 Tel: (865) 357-1949 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. CATHOLIC CHURCH: Court Rejects Tucson's Call for Protective Order ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter on August 22, 2005, the Archdiocese of Portland in Oregon asked the U.S. Bankruptcy Court for the District of Oregon for a protective order establishing the timing and sequence of discovery in the main Chapter 11 case and in each adversary proceeding and contested matter. Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, reminds the Court that Portland's Chapter 11 case is one of the most complex Chapter 11 cases ever filed in the Oregon District. The Case directly or indirectly affects nearly 400,000 people. Moreover, the case is comprised of at least four separate, but interrelated and all highly litigious and contested components. More Parties Object (1) The Tort Claimants Committee On behalf of the Tort Claimants Committee, Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, points out that determination of the property of the estate is crucial to the confirmation process. Accordingly, discovery, particularly with respect to the "property litigation," must continue. Discovery on the Property Litigation has not been burdensome, Mr. Kennedy explains. The Tort Committee has been sensitive to Portland's concerns and has sought discovery to the extent possible from third persons and from public records. Portland's role in the property litigation would also diminish significantly because most of the issues relate to the interests, if any, of the other defendants. (2) 26 Tort Claimants SNB, JC, REC, DET, DM, FM, HS, LD, JCM, MJ, MM, John Smith, RM, John Doe 1, SL, AGY, CDT, CWR, DFT, GM, SEM, BLC, DJC, ATM, HCM, and HTD argue that Portland acts as if it has no part in the "slow pace of the bankruptcy, and no part in the 'multiple battles' and 'multiple fronts' it is fighting." The Tort Claimants contend that Portland must be required to: -- provide all discovery ordered by the U.S. Bankruptcy Court for the District of Oregon last year; -- strictly follow the ordinary rules and procedures of the Bankruptcy Court; -- promptly propose a feasible plan of reorganization; and -- pay its child abuse victims. (3) David A. Foraker David A. Foraker, the Future Claimants Representative, points out that no good cause exists for granting the Archdiocese's extraordinary request. "The Motion is designed to give [Portland] a strategic advantage over its creditors in negotiating a plan," Mr. Foraker says. Granting the Archdiocese's request will also likely impede progress in advancing the case towards confirmation of a plan. Portland should be directed to provide discovery in accordance with the normal rules governing discovery matters, Mr. Foraker suggests. Furthermore, Portland should be directed promptly to arrange for its records relating to sexual abuse claims to be included in a central electronic data bank available for review by Hamilton, Rabinovitz & Alschuler, Inc., the insurers, the Future Claimants Representative, and other parties, subject to an appropriate protective order. (4) Insurers To the extent the Archdiocese seeks to preclude discovery related to contested matters in the Chapter 11 case, General Insurance Company, Safeco Insurance Company of America, Interstate Fire and Casualty Company, and Ace Property and Casualty Company maintain that Portland's request must be denied because: (a) the Archdiocese has not made a specific or sufficient showing that any of the insurers' discovery request imposes or will impose an "undue burden or expense" on the Archdiocese; and (b) the Court cannot use its equitable powers to grant relief which contradicts express provisions of the Federal Rules of Civil Procedure. * * * Judge Perris denies Portland's request with leave to renew specific requests for protective orders. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHC INDUSTRIES: Has Until Sept. 24 to File Objections to Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida in Tampa gave CHC Industries, Inc., an extension, through and including Sept. 24, 2005, to file objections to claims. The Debtor tells the Bankruptcy Court that it continues to review other claims and may still file additional objections with respect to those claims, if necessary. The Debtor explains that the extension will allow it and the Creditors Committee to verify that objections to all disputed and contested claims have been filed. The Debtor assures the Bankruptcy Court that the extension will not prejudice its creditors and will not delay the payment to holders of allowed claims. Headquartered in Palm Harbor, Florida, and formerly known as Cleaners Hanger Company, CHC Industries, Inc., manufactures and distributes steel wire coat hangers. The Company filed for chapter 11 protection on October 6, 2003 (Bankr. M.D. Fla. Case No. 03-20775). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, PA, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $25,000,000 in total assets and $20,000,000 in total debts. CHC INDUSTRIES: Ispat Fails in Bid to Appoint Examiner ------------------------------------------------------ The Hon. Paul M. Glenn of the U.S. Bankruptcy Court for the Middle District of Florida in Tampa denied Ispat North America, Inc.'s request to appoint an examiner to investigate the claims it filed in CHC Industries, Inc.'s chapter 11 case. Ispat asked for the appointment of an examiner because of the Debtor's alleged persistent pattern of bad faith in dealing with its claim. Ispat's Claim Prior to the Debtor's bankruptcy filing, Ispat initiated a lawsuit in the Pinellas County Circuit Court seeking to recover over $7 million in damages resulting from the Debtor's failure to pay for goods delivered by Ispat. The Debtor acknowledged approximately $7 million in unsecured debt to Ispat in the schedules it filed in connection with its chapter 11 petition. The Debtor, however, indicated that its debt to Ispat was liquidated, undisputed, and not contingent. Ispat argued that it holds a valid claim against the Debtor's estate and subsequently filed an $8.9 million claim. Adversary Proceeding In an effort to expedite the resolution of the Debtor's bankruptcy case, Ispat asked the Court in Dec. 2004 to allow pre-petition distributions to certain unsecured creditors. On orders from the Bankruptcy Court, the Debtor filed a schedule of proposed preliminary distributions to these creditors. The Debtor, however, disputed Ispat's claim and subsequently raised its own counterclaims. In an adversary proceeding launched against Ispat, the Debtor alleged breach of contract, conversion, promissory estoppel, tortious interference with contract, and tortious interference with an advantageous business relationship. Ispat's counsel, Andrew W. Lennox, Esq., at Battaglia, Ross, Dicus & Wein, PA, alleges that the Debtor's actions are attempts to hinder an orderly liquidation and preserve cash for shareholders, to the detriment of valid creditors. Mr. Lennox tells the Bankruptcy Court that the appointment of an examiner to conduct a limited investigation may resolve significant issues relating to Ispat's claim and will permit an earlier distribution to creditors. He adds that the cost to conduct such an investigation is outweighed by potential savings form legal fees the Debtor currently spends in pursuing the adversary proceeding. Debtor Disagrees The Debtor opposed Ispat's request for an examiner as it would not advance the case, would only serve to unnecessarily increase the costs of litigation and could even jeopardize the final resolution of the Ispat claim by delaying the trial scheduled in December. In its response, the Debtor maintained that its decisions to investigate, object and continue to litigate claims and causes of action is an exercise of its duties to preserve the value of its estate. The Debtor's counsel, Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, PA, says that Ispat's move is an attempt to circumvent the Debtor's exercise of its obligation to all parties in interest, including equity holders, to fully and thoroughly review all claims and contest claims which are disputed. Mr. Stichter adds that the request to appoint an examiner is a dilatory tactic designed to in part to divert the its attention away from the trial in December. The Debtor asserts that its claims against Ispat have substantial merit and continues to believe that Ispat's actions damaged its business. Headquartered in Palm Harbor, Florida, and formerly known as Cleaners Hanger Company, CHC Industries, Inc., manufactures and distributes steel wire coat hangers. The Company filed for chapter 11 protection on October 6, 2003 (Bankr. M.D. Fla. Case No. 03-20775). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, PA, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $25,000,000 in total assets and $20,000,000 in total debts. CHEMRITE INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: ChemRite Industries, LLC 19725 West Edgewood Drive P.O. Box 317 Lannon, Wisconsin 53046 Bankruptcy Case No.: 05-36040 Type of Business: The Debtor is a private labeler, formulator, blender, tube and bottle filler. ChemRite specializes in liquids, creams and pastes and offers a full range of existing formulas in categories such as Personal Care, Topical Health Care, Household Cleaning, Auto Appearance, Institutional, Industrial, Laundry & Fabric Care. See http://www.chemriteindustries.com/ Chapter 11 Petition Date: September 16, 2005 Court: Eastern District of Wisconsin (Milwaukee) Judge: Margaret D. McGarity Debtor's Counsel: Christian C. Onsager, Esq. Onsager & Staelin, LLC 1873 South Bellaire Street, Suite 1401 Denver, Colorado 80222 Tel: (303) 512-1123 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Brownstein Hyatt & Farber $137,320 410 Seventeenth Street, 22nd Floor Denver, CO 80224 Illinois Bottle Mfg Co. $86,566 701 East Devon Avenue Elk Grove, IL 60007 Univar USA Inc. $66,831 1707 South 101st Street Milwaukee, WI 53214 Hydrite Chemical Co. $62,517 Rieke Corporation $57,600 Plastic Container Corp. $50,231 Continental PKG Solutions $49,094 Arrow Carton Company $48,789 KDV Label Co. Inc. $37,601 Chemcentral/Milwaukee $35,219 Brenntag Great Lakes, LLC $34,051 Hein & Associates LLP $22,450 Business Controls, Inc. $19,310 A.I. Credit Corp. $19,255 Kaufman Container $16,375 Archway Sales $15,592 Total Water Treat.Systems $15,392 Crompton (Witco) $14,221 Bobolink Storage LLC $14,030 Kolb & Co. S.C. $13,112 CITIGROUP MORTGAGE: Fitch Rates $20.04 Million Pvt. Certs. at BB ---------------------------------------------------------------- Fitch has rated the Citigroup Mortgage Loan Trust Inc. asset- backed pass-through certificates, series 2005-HE3, which closed on Sept. 13, 2005: --$1.14 billion, classes A-1 and A-2A through A-2D 'AAA'; --$55.67 million class M-1 'AA+'; --$51.96 million class M-2 'AA'; --$34.89 million class M-3 'AA'; --$25.24 million class M-4 'AA-'; --$24.50 million class M-5 'A+'; --$22.27 million class M-6 'A'; --$22.27 million class M-7 'A-'; --$17.82 million class M-8 'BBB+'; --$14.10 million class M-9 'BBB'; --$14.10 million class M-10 'BBB-'; --$12.62 million privately offered class M-11 'BB+'; --$20.04 million privately offered class M-12 'BB'. The 'AAA' rating on the senior certificates reflects the 23.00% total credit enhancement provided by the 3.75% class M-1, the 3.50% class M-2, the 2.35% class M-3, the 1.70% class M-4, the 1.65% class M-5, the 1.50% class M-6, the 1.50% class M-7, the 1.20% class M-8, the 0.95% class M-9, the 0.95% class M-10, the 0.85% privately offered class M-11, the 1.35% privately offered class M-12, the 0.35% privately offered, nonrated class M-13, and the 1.40% initial and target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the primary servicing capabilities of Countrywide Home Loans Servicing LP, JPMorgan Chase Bank, and HomEq Servicing Corporation. U.S. Bank, N.A. will act as trustee. Two collateral groups support the certificates. The group I mortgage loans consist of fixed-rate and adjustable-rate mortgage loans with principal balances that conform to Freddie Mac loan limits and has a cut-off date pool balance of $494,768,852. Approximately 16.18% of the mortgage loans are fixed-rate mortgage loans and 83.82% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 7.215%. The weighted average remaining term to maturity is 338 months. The average principal balance of the loans is approximately $168,174. Approximately 9.85% of the group I mortgage loans are second liens. The weighted average combined loan-to-value ratio is 82.53%. The properties are primarily located in California (39.30%), Florida (7.91%), and New York (6.21%). The group II mortgage pool consists of fixed-rate and adjustable- rate mortgage loans that may or may not conform to Freddie Mac loan limits and has a cut-off date pool balance of $989,782,946. Approximately 19.62% of the mortgage loans are fixed-rate mortgage loans, and 80.38% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 7.179%. The weighted average WAM is 340 months. The average principal balance of the loans is approximately $196,776. Approximately 8.53% of the group II mortgage loans are second liens. The weighted average CLTV is 80.83%. The properties are primarily located in California (49.53%), New York (5.64%), and Florida (5.10%). The group I mortgage loans originators were WMC Mortgage Corp. (82.97%), First Horizon Home Loan Corporation Inc. (6.09%), MortgageIT, Inc. (4.70%), Accredited Home Lenders, Inc. (3.89%), and Impac Funding Corporation (2.35%). The group II mortgage loans originators were WMC Mortgage Corp. (77.24%), MortgageIT, Inc. (8.62%), First Horizon Home Loan Corporation Inc. (5.21%), Accredited Home Lenders Inc. (5.19%), and Impac Funding Corporation (3.74%). For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. COLLINS & AIKMAN: Customers Extend Filing Deadline to Sept. 22 -------------------------------------------------------------- Collins & Aikman Corporation (CKCRQ.PK) has reached an agreement with its major customers to extend the deadline to complete contract renegotiations until no later than September 22, 2005. This extension delays the Company's filing of motions with the US Bankruptcy Court to reject certain customer contracts by up to one week while the negotiations continue. A court hearing has been scheduled for September 30, 2005 to review those motions, if necessary. Commenting on the negotiations, John R. Boken, Collins & Aikman's Chief Restructuring Officer, said "Because we have made significant progress with our principal customers in our contract negotiations, we felt that a short extension was appropriate to allow us sufficient time to finalize consensual agreements with them." Mr. Boken added, "We look forward to continued constructive communications with our customers as we work toward creating a viable and sustainable business model for Collins & Aikman and its stakeholders." Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. CREDIT SUISSE: S&P Junks Series 2002-10 Mortgage Securities Class ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class I-B from loan group I of Credit Suisse First Boston Mortgage Securities Corp.'s series 2002-10 to 'CCC' from 'B'. At the same time, ratings are affirmed on the remaining classes from the same loan group. The lowered rating on class I-B reflects a decrease in credit support due to adverse collateral pool performance. Originally rated 'BBB', the class is supported by excess interest and overcollateralization (o/c) from loan group I. As of August 2005, recent net losses had eroded o/c for loan group I to $34,102, or 0.13%, compared with the target of 0.50%. As the deal amortizes, the monthly excess interest available to cover losses has steadily declined, and it will not be sufficient to cover any sizeable future losses incurred by the loan group. As of the August 2005 distribution date, cumulative realized losses to date for loan group I totaled $1.19 million, $218,124 of which was incurred during the most recent six months. Total delinquencies were 13.54%, and serious delinquencies (90-plus- days, foreclosure, and real estate owned) were 9.77%. While the mortgage pool has paid down to approximately 12.16% of its original balance, periodic losses, along with the limited amounts of monthly excess interest generated by the deal, have contributed to the erosion of credit support. Given this trend, collateral performance is likely to continue to result in losses that will outpace excess interest. Therefore, Standard & Poor's will continue to monitor the transaction closely. The affirmed ratings on the remaining four classes in loan group 1 reflect adequate actual and projected credit support provided by subordination and, to a lesser extent, excess interest and o/c. The collateral consists of fixed-rate Alt-A mortgage loans secured by one- to four-family residential properties. Rating Lowered Credit Suisse First Boston Mortgage Securities Corp. Mortgage Pass-Through Certs Series 2002-10, Loan Group I Rating Class To From ----- -- ---- I-B CCC B Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Mortgage Pass-Through Certs Series 2002-10, Loan Group I Class Rating ----- ------ I-A-5, I-PP AAA I-M-1 AA I-M-2 A D.E.W. STEEL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: D.E.W. Steel Contractors, Inc. 244 Old Hershberger Road Hollsopple, Pennsylvania 15935 Bankruptcy Case No.: 05-72057 Type of Business: The Debtor is a steel erection contractor. Chapter 11 Petition Date: September 14, 2005 Court: Western District of Pennsylvania (Johnstown) Judge: Bernard Markovitz Debtor's Counsel: Mark A. Gregg, Esq. Highland Commons, 2nd Floor 351 Budfield Street Johnstown, Pennsylvania 15904-3213 Tel: (814) 266-3636 Fax: (814) 262-0466 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Stewart-Amos Steel, Inc. Fabrication $381,000 P.O. Box 4259 4400 Paxton Street Harrisburg, PA 17111 Dwight Yoder, Jr. Personal Loan $115,000 Linda Rogers 396 Beatrice Avenue Johnstown, PA 15906 Eastern Highreach Supplier $90,204 152 Mathers Road #210 Ambler, PA 19002 United States Treasury Taxes $42,146 11601 Roosevelt Boulevard Drop Point N803 Philadelphia, PA 19154 AmQuip Crane Rental $39,851 1950 Bri Hen Ti Road Rochester, NY 14623 DRM Associates, Inc. Subcontractor $37,710 4334 Hanover Pike Manchester, MD 21102 PAUC Fund Unemployment $33,988 200 Lincoln Street Johnstown, PA 15901 Harmon & Davies, PC Attorney $31,703 2306 Columbia Avenue Lancaster, PA 17603 Best Line Leasing Rental Equipment $24,881 140 Hawbaker Industrial Drive State College, PA 16803 Thomas B. Berkebile Unpaid fridge $23,821 2001 Jackson Avenue benefits Windber, PA 15963 New Age Fastening Systems, Inc. Subcontractor $19,724 P.O. Box 5658 Woodbury, NJ 08096 PA Department of Revenue Taxes $18,909 345 Main Street Johnstown, PA 15901 Eric L. Rager Unpaid fringe $18,733 529 Govier Lane benefits Johnstown, PA 15905 Alrco Gas and Welding Supply Supplies $18,678 312 Baumer Street Johnstown, PA 15902 Justin D. Shaffer Unpaid fringe $18,639 2405 Franklin Street benefits Johnstown, PA 15905 Lockwood Brothers Equipment Rental $18,148 P.O. Box 564 Hampton, VA 23669 Ryan J. Cahill Unpaid fringe $18,137 2356 Columbia Street benefits Chest Springs, PA 16624 United Rentals Equipment Rental $17,945 (North America) Inc. 45 Center Street Batavia, NY 14020 William D. Cunningham Unpaid fringe $16,324 153 Linden Avenue benefits Northern Cambria, PA 15714 Bradley J. Wagner unpaid fringe $16,616 155 Seneca Street benefits Nanty Glo, PA 15943 DANA CORP: S&P Pares Ratings to BB+ Due to Earnings Guidance Cut ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Dana Corp. to a speculative- grade 'BB+' from 'BBB-', and placed the ratings on CreditWatch with negative implications. Total outstanding debt at June 30, 2005, was about $2.2 billion. This excludes debt at Dana Credit Corp. (BB/Negative/B), which is undergoing an orderly liquidation. This includes debt for Dana Credit Corp. (B/Negative/B), which is undergoing an orderly liquidation by the equity method. The downgrade and CreditWatch listing on Toledo, Ohio-based Dana follow the company's announcement that it is cutting its full-year 2005 earnings guidance by more than 50%. The company is also assessing whether it must write-down U.S. deferred tax assets as a result of the change in the earnings outlook for its U.S. operations. In addition, Dana may have to seek amendments to its unsecured bank credit facility, as it may no longer be able to remain in compliance with certain bank covenants. "The dramatic drop-off in earnings guidance and lowered expectations for Dana's commercial vehicle business are much more significant than we expected," said Standard & Poor's credit analyst Daniel R. DiSenso. "Dana's operating performance in the first half of 2005 was hurt by large unrecovered steel price increases and by lower production levels for light-vehicles in North America, which led to a 10% decline in earnings from continuing operations, excluding unusual items. Standard & Poor's had previously expected Dana's earnings to strengthen in the second half of 2005 given some improvement in light vehicle production schedules and some retrenchment of high steel prices. Because credit measures were already subpart for an investment- grade rating, it was especially critical for Dana to meet these performance expectations." Costly manufacturing inefficiencies are occurring within the company's commercial vehicle business, and this will require investments and time to fix. As a result of these inefficiencies, Dana is not benefiting from the currently robust heavy-duty truck market, whose performance will likely peak in 2006. Moreover, the possibility that the company will write down U.S. deferred tax assets calls into question the ability of the company's U.S. operations to become profitable in the near-to-intermediate term. Standard & Poor's will review with management its plans to reduce costs and improve efficiencies. The risk of a further downgrade is likely limited to one notch. DANA CORP.: Earnings Outlook Reduction Cues Fitch to Cut Ratings ---------------------------------------------------------------- Fitch Ratings has downgraded the senior unsecured debt and senior unsecured bank facility of Dana Corp. one notch to 'BB+' and placed the ratings on Rating Watch Negative. These actions follow the announcement that the company has reduced its full-year 2005 earnings outlook, in part, as a result of manufacturing inefficiencies at its Commercial Vehicle unit and continued raw material cost pressures. The company also stated that it is assessing its deferred tax asset for possible write-down, opening discussions with its banks regarding its ability to comply with certain covenants of the five-year facility. In a separate issue, a restatement of second quarter 2005 financial statements to reflect an after-tax net income reduction of $10 million to $15 million is likely, and as a result, an internal review and a review by its independent auditors are underway. Other rating concerns include the quality of Dana's internal controls and uncertainty about potential waivers, amendments, or modifications to the bank agreements, especially bank requirements for security. Further rating downgrades are possible and would depend on the nature of any additional disclosures by Dana, the timely filing of quarterly SEC documents, improved visibility into the company's fundamental operating performance and cash flow, and the resolution of any accounting control issues that may have ultimately led to the need for a restatement. Offsetting the concerns about reduced operational performance and the uncertainty regarding the five-year revolver is Dana's booked new light vehicle business, which when launched should further diversify its customer base and geographic sales mix, as well as Dana's liquidity at the end of the second quarter that included $651 million in balance sheet cash (with Dana Credit Corp. on an equity basis) and availability of $635 million in other lines of credit. Fitch had anticipated that the commercial vehicle portion of Dana's business would have bolstered 2005 operating results due to the significant increase in 2005 Class 8 heavy truck volume. For the full-year 2004, the Heavy Vehicle Technologies and Systems Group, of which the CV unit is a part, had net profit (after allocation of corporate expense and net interest expense) of only $48 million while the Automotive Systems Group (ASG) had net income of $106 million. Fitch had originally expected that increased operating leverage from industry volume would contribute to better profitability at the CV unit and serve to offset the impact of lower anticipated volumes in the Light Vehicle unit where domestic customers have experienced slackening demand and declining market share. Given the $106 million reduction in the average 2005 net income guidance, it now appears that CV manufacturing inefficiencies have off-set Dana's benefits from Class 8 industry volume. DELPHI CORP: Credit Protection Cost Multiplies 10x in Past 6 Mos. ----------------------------------------------------------------- The cost of a credit default swap to insure $10 million of Delphi Corp. senior debt for a one-year period multiplied from $300,000 six months ago to just over $3,000,000 last week. "The possibility of a Delphi Corp. bankruptcy-law filing remains more likely than not," John Kollar at HSBC Securities wrote in a research report last week, adding that "it is impossible to know with any reasonable degree of certainty where negotiations stand." Glen Taksler, a credit derivatives strategist at Banc of America Securities in New York, tells Karen Brettell at Reuters that in the event of a default by the auto parts maker, Delphi will test settlement protocols in the credit derivatives market on a large scale. Mr. Taksler says that Delphi has a huge volume of outstanding protection in the single-name market, in addition to being included in derivatives indexes and a lot of structured credit trades. 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. 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. Standard & Poor's, Moody's, and Fitch have put their junk ratings on Delphi's debt securities. DELTA AIR: Gets Court Nod to Use Lenders' Cash Collateral --------------------------------------------------------- Delta Air Lines, Inc., as borrower and certain of its subsidiaries as guarantors entered into a Credit Agreement dated as of Nov. 30, 2004, with: -- General Electric Capital Corporation, as Revolving Facility Administrative Agent, Term Loan Administrative Agent and Collateral Agent, -- GE Capital Markets Group, Inc., as Lead Arranger and Book Runner, -- Merrill Lynch Capital, as Syndication Agent, -- Congress Financial Corporation, as Documentation Agent, and -- a consortium of lenders. As of the Petition Date, Delta and American Express Travel Related Services Company, Inc., are parties a number of credit card agreements. In November 2004, Amex, Delta and Delta Loyalty Management Services, LLC, entered into Advance Payment Supplements to some of the credit card agreements, whereby Amex paid $500 million to Delta as an advance payment for the purchase of SkyMiles, for Amex's future use, with respect to Delta SkyMiles Credit Cards and with respect to Amex's Membership Rewards Program. Delta, DLMS and certain other Debtors granted to Amex liens, offset rights, recoupment rights, rights of reserve and security interests in certain of their assets as security for their obligations to Amex under the Pre-Petition SkyMiles Loan Documents and the Pre-Petition Amex Card Agreements. The obligations under the Pre-Petition GECC Credit Agreement, the Pre-Petition SkyMiles Loan Documents and the Pre-Petition Amex Card Agreements are secured by security interests in and liens on all of the Collateral. The Pre-Petition Collateral is comprised of the SkyMiles Collateral and the Credit Facility Collateral. The SkyMiles Collateral is comprised, excluding certain specified assets, of: (a) substantially all of the assets of DLMSI related to certain credit card agreements, and (b) all right, title and interest of Delta in the credit card agreements. The Credit Facility Collateral is comprised of substantially all of the Debtors' assets other than (i) the SkyMiles Collateral, (ii) assets that were encumbered as of November 30, 2004, and (iii) other specified excluded assets. Pursuant to an Intercreditor Agreement by and between Amex and GECC, dated as of November 30, 2004, Amex has senior and prior lien priority in the SkyMiles Collateral, and the Pre-Petition Agent, on behalf of the Pre-Petition Lenders, has junior and subordinate lien priority in the SkyMiles Collateral. Also, pursuant to the Intercreditor Agreement, the Pre-Petition Agent, on behalf of the Pre-Petition Lenders, has senior and prior lien priority in the Credit Facility Collateral, and Amex has junior and subordinate lien priority in the Credit Facility Collateral. Substantially all cash generated by the Debtors' businesses as of the Petition Date constitutes Cash Collateral. Amex has consented to the Debtors' use of its Cash Collateral. The Debtors seek to use Cash Collateral to make essential payments including employee salaries, payroll, taxes, the purchase of fuel and other essential goods, and other general corporate and working capital purposes in the ordinary course of their businesses that become due and payable during the period commencing immediately after the Petition Date. * * * Judge Beatty authorizes the Debtors to use the cash collateral and all other collateral of the Pre-Petition Secured Parties solely in the ordinary course of business in order to maintain and finance their ongoing operations in the ordinary course of their business. Judge Beatty grants the Pre-Petition Secured Lenders, as adequate protection for any diminution in the value of their interest in Debtors' property, including the cash collateral, a replacement lien on the Debtors' unencumbered assets, which will be deemed perfected. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.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 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Judge Beatty Okays $1.7 Billion Interim DIP Use ---------------------------------------------------------- Without access to fresh financing, Delta Air Lines says it won't have enough cash to continue operating under chapter 11 protection. "As one of the world's largest passenger airlines, any interruption in the Debtors' ability to provide service to their customers could have a devastating impact upon the Debtors. The uncertainty concerning the Debtors' financial condition could also greatly reduce their ability to procure goods and services from vendors critical to the successful operation of their business," John Fouhey, Esq., at Davis Polk & Wardwell, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York. Prior to the Petition Date, the Debtors surveyed various sources of postpetition financing from both new and existing lenders. The Debtors retained The Blackstone Group, L.P., as financial advisor in connection with their restructuring. To help the Debtors procure debtor-in-possession financing, Blackstone solicited the interest of 17 potential lenders. Proposals were received and reviewed. The Debtors, with Blackstone's assistance, decided that the proposals submitted by General Electric Capital Corporation and American Express Travel Related Services Company, Inc., offered the most favorable terms. "Moreover, none of the other proposals reviewed by the Debtors and Blackstone offered the Debtors the same level of liquidity and closing conditions as favorable as those obtained under the proposal made by GECC and Amex. They were not even close," Mr. Fouhey relates. Under the proposed GECC DIP Facility, a total of $1.7 billion of postpetition liquidity will be made available to the Debtors. Specifically, the GECC DIP Facility is comprised of: (i) a senior secured first-out term loan of up to $600 million, (ii) a $600 million senior secured second-out term loan, and (iii) a $500 million senior secured superpriority debtor-in- possession last-out term loan provided by Morgan Stanley Senior Funding, Inc. Of the proceeds of the GECC DIP Facility, Mr. Fouhey says, approximately $980 million will be used to repay in full both Amex's Advance Payments of $500 million and the $480 million owing under the Pre-Petition GECC Credit Agreement. Amex will then simultaneously re-lend $350 million as the Amex DIP Loan to the Debtors upon entry of an order assuming the Pre- Petition Amex Card Agreements, to be repaid in accordance with the Advance Payment Supplements, all as amended by a Modification Agreement. "Combined, the GECC DIP Facility and the Amex DIP Loan will provide the Debtors with new liquidity of $1.070 billion that will provide additional working capital and liquidity to the Debtors," Mr. Fouhey notes. The GECC DIP Facility is to be secured by a superpriority lien granted pursuant to Section 364 over substantially all of the Debtors' assets (excluding certain assets and properties) and a junior and subordinated lien on the SkyMiles Collateral. The Amex DIP Loan and the other obligations of the Debtors to Amex will be secured by a superpriority lien granted pursuant to Section 364 over the SkyMiles Collateral. In addition, the Debtors' obligations under the Amex DIP Loan and the Pre-Petition Amex Card Agreements will be secured by junior and subordinated liens over the Post-Petition Collateral. Amex has consented to the liens securing the Debtors obligations being further subordinated to the liens securing the Debtors additional borrowings under the GECC DIP Facility. According to Mr. Fouhey, Amex's agreement to consent to the subordination of its junior and subordinate interests is contingent upon, among other things, the Court's interim and final approval of an adequate protection package comprised of, inter alia, the Debtors' unconditional assumption of the Pre- Petition Amex Card Agreements. GECC Loan The significant provisions of the Post-Petition GECC Loan Documents are: Borrower: Delta Air Lines, Inc. Guarantors: All wholly owned domestic subsidiaries of Delta Air Lines, except for Delta's special purpose insurance subsidiaries and Guardant, Inc. Credit Parties: The Borrower and the Guarantors Administrative Agent: General Electric Capital Corporation Sole Lead Arranger & Sole Book Runner for Term Loan A and Term Loan B: GE Capital Markets, Inc. Joint Lead Arrangers & Joint Book Runners for Term Loan C: GECM and Morgan Stanley Senior Funding, Inc. Issuing Bank: GECC and another financial institution reasonably acceptable to GECC Lenders: GECC, Morgan Stanley, and other lenders selected by the Arrangers Commitment: The Post-Petition GECC Loan Documents provide for a total Commitment of $1.7 billion, comprised of: Term Loan A: $600 million, a portion of which, not to exceed $200 million, will be available for the issuance of letters of credit by the Issuing Bank Term Loan B: $600 million Term Loan C: $500 million Term: Term Loans A, B, and C will be payable on the earliest of: -- the date that is the 30-month anniversary of the Closing Date, -- the date of termination of the commitments or acceleration of any outstanding extensions of credit, and -- the effective date of a plan of reorganization in the Debtors' Chapter 11 Cases. Use of Proceeds: Loans under the Facilities will be used (i) to refinance the obligations under the Pre- Petition Loan Documents and the Advance Payments, and (ii) for working capital and other general corporate purposes. Borrowing Base: Term Loan A will be subject to a borrowing base comprised of: (i) Up to 80% of eligible accounts receivable (excluding unbilled accounts receivable); (ii) Up to 50% of eligible unbilled accounts receivable; (iii) The lesser of up to 50% of refundable tickets to be used within 30 days from issuance and $30 million; (iv) The lesser of up to 50% of the Fair Market Value of certain eligible real estate and $100 million; (v) The lesser of up to 50% of the Net Orderly Liquidation Value of certain eligible aircraft and $250 million; (vi) The lesser of up to 30% of the NOLV of the Comair CRJ-100ERs aircraft and $13.5 million; (vii) The lesser of up to 40% of the half life NOLV of the Comair CF34-3A1 engines and the CF34-3B1 engines and $13.5 million; (viii) The lesser of up to 65% of the half life NOLV of the Comair CF34-8C1 engines and $5.1 million; (ix) The lesser of up to 25% of the NOLV of eligible spare parts and $7 million; (x) The lesser of up to 25% of the NOLV of eligible ground service equipment and $25 million; (xi) The lesser of up to 25% of the NOLV of eligible tooling and $25 million; (xii) The lesser of up to 50% of the NOLV of eligible flight simulators and $25 million; plus (xiii) The amount of cash deposited in the Cash Collateral Account minus 100% of the aggregate face amount of all outstanding Letters of Credit issued under the GECC DIP Facility; (xiv) provided, that the availability from the sum of (i), (ii), and (iii) above will not exceed $400 million. The Administrative Agent reserves the right, in its reasonable judgment, to impose certain reserves against the Term Loan A Borrowing Base. Priority and Liens: All amounts owing by the Debtors will, at all times, constitute superpriority administrative expense claims pursuant to Section 364(c)(1) of the Bankruptcy Code, having priority over all administrative expenses, subject only to the Carve-Out. The obligations will be secured by: (i) first priority liens on substantially all unencumbered assets of the Borrowers and the Guarantors, subject to the Carve-Out and certain specified exceptions; (ii) a second priority lien on the SkyMiles Collateral; and (iii) junior liens on all property of the Borrower and the Guarantors that is subject to valid and perfected liens, subject to certain limited exceptions. Carve-Out: $35,000,000 Interest Rate: A floating rate equal to either (i) a 1, 2, 3, or 6-month reserve-adjusted LIBOR plus the Applicable LIBOR Margin, or (ii) the Index Rate (higher of Prime or 50 basis points over the Federal Funds Rate) plus the Applicable Index Margin. Term Loan A: ------------ Applicable Term Loan A Index Margin 4.25% Applicable Term Loan A LIBOR Margin 5.00% Term Loan B: ------------ Applicable Term Loan B Index Margin 6.25% Applicable Term Loan B LIBOR Margin 7.00% Term Loan C: ------------ Applicable Term Loan C Index Margin 8.25% Applicable Term Loan C LIBOR Margin 9.00% Default Rates: During the existence of any payment event of default, (1) interest on the Loans will be increased 2.00% above the rate otherwise applicable and (2) other obligations will bear interest at the rate then applicable to the Term Loan C bearing interest at the Index Rate. Fees and Expenses: Borrower will pay certain fees and out-of- pocket charges assessed by the Issuing Bank. Events of Default: Events of default, include: (i) non-payment of amounts when due; (ii) misrepresentation; (iii) breach of covenants; (iv) change of control, (v) certain ERISA-related events; (vi) unenforceability of loan documents; (vii) false statements; (viii) loss of slots, gates or routes; (ix) non-performance; (x) appointment of a trustee or examiner; (xi) dismissal of any Chapter 11 Case; (xii) a party obtaining liens on assets; (xiii) granting of a more senior lien; (xiv) conversion to Chapter 7 liquidation; (xv) sale of all of Delta's assets; (xvi) suspension of Debtors' operations; (xvii) nonconsensual modification; (xviii) reversal or stay of DIP Orders; (xix) non-entry of the Final Order; and (xx) cessation of liens granted. Financial Covenants: (a) Maximum Net Capital Expenditures. Net Capital Fiscal Quarter Expenditures -------------- ------------ October-December 2005 $145,000,000 January-March 2006 131,000,000 April-June 2006 138,000,000 July-September 2006 108,000,000 October-December 2006 121,000,000 January-March 2007 152,000,000 April-June 2007 132,000,000 July-September 2007 108,000,000 October-December 2007 106,000,000 January-March 2008 106,000,000 (b) Minimum EBITDAR. Fiscal Month EBITDAR ------------ ------- October 2005 $571,000,000 November 2005 628,000,000 December 2005 644,000,000 January 2006 672,000,000 February 2006 681,000,000 March 2006 704,000,000 April 2006 745,000,000 May 2006 779,000,000 June 2006 830,000,000 July 2006 907,000,000 August 2006 1,015,000,000 September 2006 1,104,000,000 October 2006 1,210,000,000 November 2006 1,290,000,000 December 2006 1,372,000,000 January 2007 1,560,000,000 February 2007 1,625,000,000 March 2007 1,691,000,000 April 2007 1,731,000,000 May 2007 1,769,000,000 June 2007 1,806,000,000 July 2007 1,843,000,000 August 2007 1,875,000,000 September 2007 1,903,000,000 October 2007 1,935,000,000 November 2007 1,963,000,000 December 2007 1,988,000,000 January 2008 2,000,000,000 February 2008 2,000,000,000 March 2008 2,000,000,000 (c) Aggregate Cash On Hand. -- at all times from the Closing Date through May 31, 2006, $750,000,000; -- at all times from June 1, 2006, through November 30, 2006, $1,000,000,000; -- at all times from December 1, 2006, through February 28, 2007, $750,000,000; and -- at all times thereafter until the Termination Date, $1,000,000,000. A full-text copy of the 180-page GECC Loan Agreement is available for free at http://bankrupt.com/misc/deltageccfinancing.pdf Amex Loan The significant provisions of the Post-Petition Amex Loan Documents are: Borrower: Delta Air Lines, Inc. Guarantors: All wholly owned domestic subsidiaries of the Borrower, except for Delta's special purpose insurance subsidiaries and Guardant, Inc. Term: The entire principal amount will be payable in 17 equal installments beginning July 2006 and ending November 2007. Use of Proceeds: The proceeds will be used for working capital and other general corporate purposes. Priority and Liens: All amounts owing by Delta under the Amex DIP Loan will be secured by: (i) first priority liens on the SkyMiles Collateral; (ii) a second priority lien on the Post-Petition Collateral; and (iii) third priority liens on all property of the Borrower and the Guarantors that is subject to valid and perfected liens. Adequate Protection: Amex is granted a joint and several postpetition claim against the Debtors' estates, which will have priority in payment over any other obligations by the Debtors, and over any and all administrative expenses or charges against property arising in the Chapter 11 cases. The Amex Claim will be subject to the Carve-Out and any super- priority claims granted by the Court with respect to the GECC DIP Facility and/or as adequate protection of the GECC DIP Facility. Amex's Consent to Priming Liens: Amex has consented and agreed to the priming of its liens in the Pre-Petition Collateral. Advance Payment Discount Fee: The Borrower will pay to Amex an Advance Payment Discount Fee, which is the equivalent of interest on the loan, at a floating rate equal to, absent a default, a 1, 2, 3, or 6- month reserve-adjusted LIBOR plus 10.25% (1.25% above the margin of the Term Loan C under the GECC DIP Facility), payable monthly in arrears. During the existence of any Event of Default, the Advance Payment Discount Fee will be increased 2.00% above the rate otherwise applicable. Carve-Out: $35,000,000 Events of Default: Events of default include: (i) non-payment of amounts when due; (ii) misrepresentation; (iii) breach of covenants; (iv) ERISA events; (v) unenforceability of loan documents; (vi) false statements; (vii) minimum slot, gate & route utilization; (viii) non-performance; (ix) appointment of a trustee or examiner; (x) dismissal of any Chapter 11 Case; (xi) a party obtains liens on the assets; (xii) granting of a more senior claim; (xiii) conversion to Chapter 7 liquidation; (xiv) sale of all of Delta's assets; (xv) suspension of Delta's operations; (xvi) nonconsensual modification; (xvii) reversal or stay of DIP Orders; (xviii) non-entry of the Final Order; and (xix) cessation of liens granted. Interim Approval Obtained Pursuant to Bankruptcy Rules 4001(b) and (c), the Debtors asked the Court to conduct an expedited preliminary hearing on their request and authorize them to enter into the DIP Facilities and borrow up to $1.4 billion under the GECC DIP Facility on an interim basis and to re-borrow $350 million from Amex, until entry of a final order in order to: (a) maintain and finance their ongoing operations, (b) pay their prepetition obligations to GECC and Amex pursuant to the Pre-Petition GECC Credit Agreement and Advance Payment Supplements in full, in the amounts of $480 million and $500 million, respectively, and (c) avoid immediate and irreparable harm and prejudice to their estates and all parties-in-interest. These interim borrowings will provide the Debtors with $770 million of critical incremental liquidity until a final hearing can be held next month. Mr. Fouhey points out that the availability of interim loans under the GECC DIP Facility will provide necessary assurance to vendors, employees, and customers of the Debtors' ability to meet their near-term obligations. The terms and conditions of the DIP Facilities, Mr. Fouhey asserts, are fair and reasonable, and were negotiated extensively by well-represented parties in good faith and at arm's length. At a hearing this morning in Manhattan, Judge Beatty granted Delta's interim borrowing request. Judge Beatty will convene a final hearing next month to consider entry of a final DIP Financing Order and consider any objections that might be raised by any official committees appointed by the United States Trustee later this month. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.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 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: S&P Assigns Default Rating After Bankruptcy Filing ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its 'CC' corporate credit rating and ratings on unsecured debt and airport revenue bonds of Delta Air Lines Inc. to 'D' and removed the ratings from CreditWatch, following the company's bankruptcy filing Sept. 14, 2005. Ratings on equipment trust certificates and enhanced equipment trust certificates were not lowered and remain on CreditWatch with negative implications. Ratings on 'AAA' rated insured debt, which are not on CreditWatch, were also not affected. "Delta's bankruptcy filing, which was widely expected, was caused by a combination of high fuel costs, pricing pressure in the domestic market, and a heavy debt and pension burden," said Standard & Poor's credit analyst Philip Baggaley. "The surge in fuel prices that followed Hurricane Katrina and the need to post a large amount of cash collateral to the bank that processes Delta's credit card transactions removed any remaining hope of escaping Chapter 11," the credit analyst continued. Delta has arranged a $1.7 billion debtor-in-possession credit facility that replaces $980 million of existing secured facilities provided by GE Commercial Finance (a unit of General Electric Credit Corp.) and American Express Travel-Related Services Co. Inc. $1.4 billion will be available to Delta on an interim basis pending bankruptcy court approval of the facility. In addition, Delta has an agreement in principle with American Express on a new $350 million secured facility. These arrangements should bolster Delta's unrestricted cash, which is believed to have declined significantly from the $1.7 billion last reported at June 30, 2005. Delta is expected to continue negotiations with its pilots' union to obtain further concessions, and would be able to impose concessions on noncontract employees. The airline will likely turn back to lessors and creditors some aircraft that it planned to retire over time and reduce its flying in the domestic market. Delta will also likely move to terminate its pension plans later in the reorganization process. Although the company faces a need to substantially reduce its costs, debt burden, and losses, it should be able to reorganize, rather than liquidating. DESARROLLADORA HOMEX: S&P Puts BB- Rating on $200 Million Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Desarrolladora Homex S.A. de C.V. At the same time, Standard & Poor's assigned its 'BB-' rating to Homex's $200 million notes due 2015. The outlook is stable. Proceeds of the proposed bond will be used to repay indebtedness of about $165 million and the remainder for working capital purposes. "The ratings assigned to Homex and its proposed issue are constrained by the company's aggressive growth plans, our expectation that the aforementioned plans could demand additional indebtedness, and high working capital requirements that have not allowed free operating cash flow generation up to now," said Standard & Poor's credit analyst Raul Marquez. "Homex's ratings also reflect the concentration of mortgage origination in the public housing agencies and increased competition, which are inherent risk factors to the Mexican homebuilding industry." Positive factors supporting the rating include Homex's position as one of the leading homebuilders in Mexico, an improved geographical diversification, a manageable maturity schedule following the refinancing, and the favorable trend in Homex's financial performance over the past couple of years. The rating assigned to the proposed notes also considers the guarantee of its restricted subsidiaries avoiding structural subordination between parent-subsidiary creditors. Furthermore, with the payment of all guaranteed debt the company is eliminating subordination between unsecured and secured debt. However future issuance of secured debt could lead to structural subordination. Homex is a vertically integrated homebuilder focused on the affordable and middle-income housing segments. Headquartered in Culiacan, Sinaloa, Homex is one of the largest homebuilders in Mexico, with operations in 25 cities in 17 states across the country. During 2004, Homex sold 21,053 houses and reported revenues of US$476 million. The stable outlook on Homex reflects Standard & Poor's expectations that the company should report satisfactory financial ratios, which would generate free operating cash flow in the medium term; that a prudent operating and financial strategy will be sustained (especially if a slowdown in the collections occurs); and that Homex will continue to maintain an adequate liquidity position. A positive rating action is not foreseen in the medium term. A weakening in the company's liquidity and its key financial ratios, or an increase in management's tolerance for risk, could lead to a negative rating action. DIALOG GROUP: Completes AdValiant Merger Transaction ---------------------------------------------------- Dialog Group, Inc., and its wholly owned subsidiary, AdValiant Acquisition Corp entered into an Agreement for Merger with: * AdValiant, Inc., an Ontario corporation, * AdValiant USA, Inc., a Delaware corporation, and * AdValiant shareholders: -- Empire Media, Inc., a Delaware corporation, -- Matt Wise, a Canadian citizen -- Jivan Manhas, a Canadian citizen on June 30, 2005. The acquisition was accomplished by a statutory merger between Dialog Group's subsidiary, AdValiant Acquisition Corp., and a newly formed United States holding company, AdValiant USA, Inc. Prior to the merger, AdValiant USA had subscribed for all of the Class A multiple voting shares of AdValiant and AdValiant had reorganized its capital by changing all of its outstanding common shares into Exchangeable Shares each of which entitled the holder to exchange their Exchangeable Shares of AdValiant for shares of AdValiant USA. Also prior to the merger, AdValiant USA issued, for the benefit of holders of AdValiant Exchangeable Shares, Class A Common Stock of AdValiant USA. As a result of the merger, the AdValiant Exchangeable Shares are now exchangeable for a total of 336,685,584 shares of Dialog Group common stock. In addition, Dialog Group issued 400 shares of its new class F preferred special voting stock to the holders of the AdValiant USA class A Common. Each of these shares has voting power equal to 841,714 shares of Dialog Group common stock. Certificates for Exchangeable Shares exchangeable for 242,514,188 shares of Dialog Group common stock and 300 shares of the Class F Special Voting Stock will be held in escrow pending their distribution pursuant to the merger agreement. After the closing, Bordes, Wise, and Manhas will be employed by AdValiant for $90,000 per year. Promptly after the consummation of the transaction, Peter Bordes, the controlling shareholder of Empire Media, Inc., will join Dialog Group's Board of Directors. About AdValiant AdValiant Inc. is a provider of affiliate marketing and lead generation services based on the cost-per-action and cost-per- lead model. With their in-house, proprietary tracking technology, AdValiant provides a suite of advertising and marketing tools for both advertisers and publishers. AdValiant offers advertisers fast direct marketing results and return on investment. For publishers, AdValiant offers top performing campaigns that maximize inventory earnings. About Dialog Group Dialog Group, Inc. (DLGG) is a publicly traded corporation, headquartered at 257 Park Avenue South, 12 Floor New York, New York 10010, with offices in Valencia, California; Sunrise, Florida; and Houston, Texas. The company's two divisions, Data Dialog and Healthcare Dialog, provide a combination of traditional advertising (print, broadcast) and marketing services (broadcast, new media, and internet-based promotional venues); as well as a broad spectrum of proprietary and exclusive databases for healthcare, pharmaceutical, consumer and business-to-business market clients. The company owns and/or has exclusive licensing rights to 75 Web sites, 9 databases, and 5 products. The Company has incurred substantial losses resulting in an accumulated deficit of $9,284,787 as of June 30, 2005. The Company's Management said this has raised substantial doubt as to the ability of the Company to continue as a going concern. Auditors at Berenfeld, Spritzer, Shechter & Sheer expressed similar doubts after auditing the Company's 2004 financials. DLJ MORTGAGE: S&P Junks Class B-3OC Mortgage Certificates --------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes A-3, B-1, B-2, B-3TB, and B-3OC of DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates from series 1997-CF2. At the same time, the ratings on classes A-1B and A-2 from the same transaction are affirmed. The raised and affirmed ratings reflect seasoning, payoffs, and credit support levels that adequately support the ratings under various stress scenarios. As of August 2005, the trust collateral consisted of 89 commercial mortgages with an outstanding balance of $406.0 million, down 38.66% from $661.9 million at issuance. Losses suffered to date total $12.6 million, or 1.91% of the pool. There are no loans with collateral exposure to Hurricane Katrina. The master servicer, ORIX Capital Markets LLC, reported partial or full-year 2004 net cash flow (NCF) debt service coverage ratios (DSCRs) for 89.5% of the pool. The largest exposure in the pool, the Stone Container Corp. (B+/Watch Neg/--) loans, for $35.7 million (8.80%), do not have to report financials. These 19 cross- collateralized loans are fully recourse. Three loans totaling $24.6 million (6.07%) have been fully defeased. Excluding the Stone Container loans and the defeased loans, Standard & Poor's calculated the current weighted average DSCR for the pool to be 1.30x, down from 1.33x at issuance. The current weighted average DSCR for the top 10 loans secured by real estate, which make up 45.2% of pool, declined to 1.22x from 1.35x for the same loans at issuance. The second-largest exposure, the Samoth lodging portfolio, is excluded from this calculation because it is specially serviced. At present, there are six loans with a current combined balance of $42.2 million (10.4%) that are with the special servicer, CRIIMI MAE Services L.P. (CRIIMI MAE). Five are REO and one is current but in foreclosure. -- The largest exposure with the special servicer is the Samoth lodging portfolio, for a combined balance of $31.6 million (7.78%) and a total exposure of $39.8 million. These loans are REO and consist of four hotels located in Kissimmee, Fla., near Disney World. CRIIMI MAE is in the process of selling the four properties. Based on recent appraisals, losses are expected. -- Abington Manor had a current balance of $8.4 million (2.1%) and a total exposure of $10.2 million. It was liquidated Aug. 25, 2005 for approximately $5.3 million, resulting in a loss. The current servicer's watchlist includes 20 loans totaling $81.5 million (20.1%). The largest loan on the watchlist, Park at Lakeside ($18.0 million; 4.43%), is the fourth-largest exposure in the pool. It is secured by a 775-unit multifamily complex in Houston, Texas, and appears on the watchlist due to a 0.46x DSCR as of year-end 2004. Occupancy levels at the property remain low at 72.5% (as of March 31, 2005) compared to 70.3% year-end 2004 and 71.8% year-end 2003. Most loans appear on the watchlist due to low DSCRs and were stressed accordingly. Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit levels adequately support the current rating actions. Ratings Raised DLJ Mortgage Acceptance Corp. Commercial Mortgage Pass-Thru Certs Series 1997-CF2 Rating Class To From Credit Enhancement (%) ----- -- ---- ---------------------- A-3 AAA AA+ 27.85 B-1 AA BBB 18.89 B-2 A- BBB- 15.63 B-3TB BBB BB 12.96 B-3OC B- CCC 6.67 Ratings Affirmed DLJ Mortgage Acceptance Corp. Commercial Mortgage Pass-Thru Certs Series 1997-CF2 Class Rating Credit Enhancement (%) ----- ------ ---------------------- A-1B AAA 47.43 A-2 AAA 39.28 ELECTRONIC DATA: Moody's Revises Rating Outlook to Stable --------------------------------------------------------- Moody's Investors Service has affirmed the Ba1 debt rating for Electronic Data Systems Corporation and has revised the company's rating outlook to stable from negative. Moody's has also affirmed the company's SGL-1 rating, indicating strong short-term liquidity. The stable rating outlook revision reflects EDS' (1) reduction of cash outflows associated with large commercial and governmental problem contracts, including Navy Marine Corp Intranet; (2) growth in organic revenue and new business contract signings following the company's lower level of signings in fiscal years 2003 and 2004; (3) improvement of pre severance charge and stock compensation expense operating margins to in excess of 3%; and (4) containment of capital expenditures to less than 10% of revenues with a concurrent reduction of CFT off balance sheet capital financing program usage. The company's rating outlook could be revised to positive and subsequently restored to investment grade if, in addition to a continuation of the factors listed: (1) operating margins, including any restructuring charges, track towards 6% or more over the intermediate term; (2) Moody's gains further confidence in the performance stability of EDS' contracts, including NMCI, GM, and large developmental stage contracts with prospective milestones; (3) performance of the NMCI contract shows continued improvement; and (4) a resolution of the company's SEC investigation and shareholder lawsuits is likely to occur without a significant liquidity impact. Conversely, the rating outlook could be revised to negative and the rating could be lowered if, in addition to a diminution of the rating stabilization factors listed: (1) operating margins including any restructuring charges track towards 2% or less on an annual basis; (2) NMCI free cash flow materially declines and prospects for its cash flow become increasingly uncertain; (3) organic revenues and new business contract signings decline in excess of 5% on an annual basis; or (4) gross capital expenditures exceed 10% of revenues. EDS' SGL-1 liquidity rating reflects its ample cash balances, expectations of improving free cash flow, and undrawn revolving credit facilities. At June 30, 2005, EDS' cash, cash equivalents, and marketable securities balance stood at a solid $2.7 billion. Electronic Data Systems Corporation, with headquarters in Plano, Texas, is a leading provider of information technology services worldwide. ENVIRONMENTAL TRUST: Disclosure Hearing Continued to Sept. 22 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California will continue discussing the adequacy of information contained in the Amended Disclosure Statement explaining The Environmental Trust, Inc.'s Liquidating Plan of Reorganization on September 22, 2005. The Court commenced the disclosure hearing on September 7. As previously reported, the Debtor's Plan provides for its liquidation by selling some assets for distribution to creditors. Most of the Debtor's assets are not saleable due to their environmentally sensitive habitat or condition. These assets, comprised of 90 parcels of protected habitat, will be offered to claimants (subject to environmental protections) together with a pro rata share of an Endowment Fund. If the claimants reject the non-saleable assets, they will be turned over to the State of California. The entities which will get first priority to acquire the habitats are direct permitees or developers. Funds A & B will be established for distribution to creditors. Fund A will hold 75% of cash proceeds while Fund B will hold the remaining 25% of cash proceeds. Pursuant to the terms of the Plan, * administrative claims; * priority tax claims; * secured tax claims; * priority wage claims and * secured claims will be paid in full. Endowment-related claim holders will be given interests on the Debtor's properties and pro rata shares of an endowment fund. For any deficiency, claimants will be given pro rata shares of Fund B. General Unsecured creditors owed $550,225 will be paid pro rata from Fund A. Headquartered in San Diego, Calif., The Environmental Trust, Inc., filed for chapter 11 protection on Mar. 23, 2005 (Bankr. S.D. Calif. Case No. 05-02321). Michael D. Breslauer, Esq., at Solomon Ward Seidenwurm & Smith, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed $1 million to $10 million in assets and $10 million to $50 million in debts. EXIDE TECHNOLOGIES: Pays $15 Mil. Interest on 10-1/2% Sr. Notes --------------------------------------------------------------- Exide Technologies (NASDAQ: XIDE) made the required interest payment of approximately $15 million on its $290 million of 10-1/2% senior secured notes. The notes, which were offered earlier this year and successfully closed on March 18, will mature in 2013. Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded post-employment benefit liabilities of $380 million. F2M LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: F2M, L.L.C. P.O. Box 700 Ellensburg, Washington 98926 Bankruptcy Case No.: 05-07365 Chapter 11 Petition Date: September 15, 2005 Court: Eastern District of Washington (Spokane/Yakima) Judge: John A. Rossmeissl Debtor's Counsel: Donald D. Hackney, Esq. Hackney & Carroll 120 North Wall Street, Suite 500 Spokane, Washington 99201 Tel: (509) 624-8200 Fax: (509) 623-1491 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Fulleton Pacific Corporation $127,300 P.O. Box 518 Ellensburg, WA 98926 DeVere & Sons Distributing Inc. $91,804 P.O. Box 336 Cle Elum, WA 98922 Hackney & Carroll $54,981 120 North Wall #500 Spokane, WA 99201 Capitol Equipment $27,895 Gregg R. Smith $19,820 Marsh Advantage America $13,212 Spokane Industries, Inc. $13,169 Modern Machinery $9,865 Columbia Asphalt & Gravel Inc. $9,080 Les Schwab $6,828 Rockwall Inc. $5,999 Forsgren Associates Inc. $4,176 Office Depot $3,976 Fasental Industrial Supplies $2,834 United Rentals-Ellensburg $2,203 Woodpecker $1,633 Koncrete Industries, Inc. $1,431 Larson & Perkins PLLC $1,370 Liberty & Rocky Mountain Pipe $1,165 Accurate Survey Supply Inc. $973 FEEDCOM ENTERPRISES: Case Summary & Largest Unsecured Creditor -------------------------------------------------------------- Debtor: Feedcom Enterprises, Inc. 827 Tjossem Road Ellensburg, Washington 98926 Bankruptcy Case No.: 05-07366 Type of Business: The Debtor exports livestock-feed hay. Chapter 11 Petition Date: September 15, 2005 Court: Eastern District of Washington (Spokane/Yakima) Judge: John A. Rossmeissl Debtor's Counsel: James P. Hurley, Esq. Hurley, Lara & Hehir 411 North Second Street Yakima, Washington 98901 Tel: (509) 248-4282 Fax: (509) 575-5661 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Orix Credit Alliance $240,645 600 Town Park Lane Kennesaw, GA 30144 FIDELITY NATIONAL: S&P May Up Low-B Ratings After Certegy Merger ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB' corporate credit and senior unsecured ratings for Alpharetta, Ga.-based Certegy Inc. on CreditWatch with negative implications. At the same time, the 'BB' corporate credit and senior secured ratings of Jacksonville, Fla.-based Fidelity National Information Services Inc. are placed on CreditWatch with positive implications. The CreditWatch listings follow the announced merger agreement in which FIS, a majority owned subsidiary of Fidelity National Financial Inc. (BBB-/Watch Pos/--), and Certegy will combine operations to form a single publicly traded entity. Under the terms of the merger agreement, FIS and Certegy will be combined in a tax-free, stock-for-stock merger under which each share of FIS common stock will be exchanged for 0.6396 shares of Certegy common stock. After the issuance of Certegy stock to FIS shareholders, current Certegy shareholders will own approximately 32.5% and FIS shareholders will own approximately 67.5% of the combined entity, with FNF directly owning approximately 50.3%. Additionally, Certegy will pay a $3.75 per share special cash dividend to its shareholders prior to the closing of the transaction. The name of the combined company will become Fidelity National Information Services, Inc., and the transaction is subject to stockholder and regulatory approvals. After a preliminary analysis, Standard & Poor's corporate credit rating for the new company most likely will be at or just below investment grade. The combined company is expected to have an investment grade business risk profile, because of a stable recurring revenue base, good cash-flow generation, and the opportunity to realize both product and cost synergies over time. Pro forma revenues are about $4 billion with EBITDA of over $900 million. However, leverage will be between that of FIS and Certegy, with pro forma immediate total debt to EBITDA at over 3x. Standard & Poor's will meet with management to review the capital structure of the new entity, integration plans, future financial policy, and growth strategy. FIDELITY NATIONAL: Fitch Affirms BB- Rating on Sr. Debt Facility ---------------------------------------------------------------- Fitch affirmed the 'BB-' rating on the senior secured credit facility of Fidelity National Information Services after the announcement of the proposed merger between FIS and Certegy, Inc. In addition, Fitch affirmed the 'A-' insurer financial strength ratings of the title insurance underwriting subsidiaries of Fidelity National Financial, Inc., and the 'BBB-' long-term issuer rating of FNF. All ratings have a Stable Rating Outlook. CEY is a provider of card issuer services to financial institutions, principally community banks and credit unions. CEY appears to share a common customer base with FIS, who provides technology solutions, processing services, and information services to the financial services and real estate industries. FIS would be the surviving entity from the proposed merger through a stock-for-stock merger, where CEY shareholders would receive a share of FIS stock for every 0.6396 shares of CEY. The combined FIS/CEY entity would produce an estimated $4 billion in annual revenue. The long-term nature of the servicing contracts produces a very stable revenue stream, comparing favorably to the more cyclical revenue produced on the title insurance side. After the proposed merger, FIS' share of consolidated annual FNF revenue would be approximately 35%, up from 28% during the first half of 2005. Financial leverage at FIS would decline to an estimated 55% after the merger compared with the current 81%, and consequently, consolidated debt-to-total capital at FNF would fall below 40%. Balanced against the improvement in financial leverage are integration risks that are present in any merger, as well as considerable goodwill and other intangible assets that continue to create negative tangible equity at FIS. The title insurance business will be relatively unaffected by the proposed merger, other than the overall reduction in leverage at the consolidated enterprise. Fitch expects further discussions with FIS' management team regarding detailed business plans for the combined FIS/CEY entity. Future favorable rating actions on the FIS debt might occur following successful integration and seasoning of the proposed merger. Fidelity National Title Insurance Co. Ticor Title Insurance Co. of FL Alamo Title Insurance Co. of TX Nations Title Insurance of NY Chicago Title Insurance Co. Chicago Title Insurance Co. of OR Security Union Title Insurance Co. Ticor Title Insurance Co. National Title Insurance Co. of NY -- Insurer financial strength affirmed at 'A-'/Stable Outlook. Fidelity National Financial Inc. -- Long-term issuer affirmed at 'BBB-'/Stable Outlook. Fidelity National Information Services, Inc. -- Senior Secured Credit Facility affirmed at 'BB-'/Stable Outlook. FOSS MANUFACTURING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Foss Manufacturing Company, Inc. 380 Lafayette Road P.O. Box 5000 Hampton, New Hampshire 03843-5000 Bankruptcy Case No.: 05-13724 Type of Business: The Debtor is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. See http://www.fossmfg.com/ Chapter 11 Petition Date: September 16, 2005 Court: District of New Hampshire (Manchester) Debtor's Counsel: Jennifer Rood, Esq. Bernstein, Shur, Sawyer & Nelson, P.A. 670 North Commercial Street, Suite 108 P.O. Box 1120 Manchester, New Hampshire 03105-1120 Tel: (603) 623-8700 Fax: (603) 623-7775 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CGLIC-Bloomfield EASC $1,866,781 5082 Collection Center Drive Chicago, IL 60693-0050 Cigna Healthcare $1,642,355 5082 Collection Center Drive Chicago, IL 60693-0050 PolyQuest $1,315,184 P.O. Box 890291 Charlotte, NC 28289-0291 W.P. Carey $800,000 50 Rockefeller Plaza New York, NY 10020 Wachovia $788,392 Eastman Chemical Company P.O. Box 8500-55157 Philadelphia, PA 19178-5157 Eastman Chemical $788,392 Wachovia, Eastman Chemical Co. P.O. Box 8500-55157 Philadelphia, PA 19178-5157 A. Schulman $450,885 P.O. Box 74052-S Cleveland, OH 44194 Sprague Energy $353,081 P.O. Box 414380 Boston, MA 02241-4380 DuPont Teijin $351,791 P.O. Box 198150 Atlanta, GA 30384 Goldmark $317,087 P.O. Box 8600 Lewiston, MA 04243 Drake $253,510 P.O. Box 890886 Charlotte, NC 28289-0886 Invista S.A.R.L. $223,115 P.O. Box 406876 Atlanta, GA 30384-6876 Pacific $183,750 24 Industrial Way P.O. Box 697 Wilmington, MA 01887 National Employment $166,794 P.O. Box 845510 Boston, MA 02284-5510 Irving Oil $157,204 P.O. Box 401 Bangor, ME 04402-0401 DFDS $142,718 440 McClellan Highway, Suite 104 East Boston, MA 02128 Noveon $139,883 P.O. Box 73605-N Cleveland, OH 44193-0941 Devon Resin $119,712 P.O. Box 207 Dowington, PA 19355 Town of Hampton $116,679 Tax Collector's Office 136 Winnacunnet Road Hampton, NH 03842 Overnite $111,640 P.O. Box 79755 Baltimore, MD 21279-0755 FREEDOM MEDICAL: Confirmation Hearing Scheduled for October 12 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania will convene a hearing on October 12, 2005, to discuss the merits of Freedom Medical Inc.'s Plan of Reorganization. The Court approved the Debtor's Disclosure Statement explaining its Plan on September 12. Objections to the Plan, if any, must be submitted by 5:00 p.m. of October 7. The Plan enables the Debtor to successfully emerge from bankruptcy, preserve its business, maintain jobs and allow creditors to realize the highest recoveries. Under the Plan, administrative claims, priority claims, secured tax claims, Canon Financial, Marlin and other priority claims will be paid in full. Greenwich Capital Financial Products, Inc., owed $21,433,585, will be paid equal monthly principal installments of $120,000 until Dec. 31, 2007. Payment to the lender could be less if the Debtor makes a prepayment in accordance with a schedule of Discounted Payoff Amounts. The Discounted Payoff Amounts range from $16.5 million (of payment is received on or before Oct. 31, 2005) to $19 million (if payment is received on or before June 30, 2007). Greenwich is expected to recover 78% to 99% of its claim. Med One Capital, Inc.'s $60,008 claim will be paid in full. However, the Debtor won't make payments to the claimant's lawyer. Maquet asserts a disputed $380,000 claim. According to the Debtor's schedules, Maquet is owed $33,095 which, pursuant to the Plan, will be paid in full. As for the Debtor's action against RBC Dain Rauscher, the plan outlines two options. If Freedom's successful in the RBC litigation, RBC's $76,525 claim will be setoff against the judgment in favor of the Debtor. If the judgment is in favor of RBC, then its claim will be allowed as an allowed general unsecured claim. General unsecured creditors, owed between $729,387 to $2,066,701 in the aggregate, will recover 12.1% to 34.3% of their claims. The recovery amount will depend on: a) successful prosecution of objections to proofs of claim; and b) whether Frank Gwynn and Dominic Greco, the Debtor's respective President and CEO, will agree to waive their unsecured claims. Convenience claim holders will be paid not more than $250. Equity interest holders will retain their shares in exchange for a $50,000 aggregate cash contribution. Headquartered in Exton, Pennsylvania, Freedom Medical, Inc., -- http://www.freedommedical.com/-- sells electronic medical equipment and related services to hospitals, alternate site healthcare providers, and EMS transport organizations. The Company filed for chapter 11 protection on December 29, 2004 (Bankr. E.D. Pa. Case No. 04-37092). Barry D. Kleban, Esq., at Adelman Lavin Gold and Levin represents the Debtor. When Freedom Medical filed for protection from its creditors, it listed estimated assets and debts of more than $50 million. GEO GROUP: Completes $175 Million Financing for CSC Acquisition --------------------------------------------------------------- The GEO Group, Inc. (NYSE: GGI) completed the amendment to its senior secured credit facility, consisting of: * a $75 million, 6-year term-loan bearing interest at LIBOR plus 2.00%, and * a $100 million, 5-year revolving credit facility bearing interest at LIBOR plus 2.00%. GEO plans to use the borrowings under the Senior Credit Facility to fund general corporate purposes and to finance GEO's proposed acquisition of Correctional Services Corporation for approximately $62 million plus deal-related costs. The acquisition of CSC is expected to close in the beginning of the fourth quarter of 2005 subject to certain closing conditions contained in the merger agreement. BNP Paribas underwrote the Senior Credit Facility. The GEO Group, Inc. is a world leader in the delivery of correctional and detention management, health and mental health, and other diversified services to federal, state, and local government agencies around the globe. GEO offers a turnkey approach that includes design, construction, financing, and operations. GEO represents government clients in the United States, Australia, South Africa, and Canada managing 42 facilities with a total design capacity of approximately 38,500 beds. * * * AS reported in the Troubled Company Reporter on July 22, 2005, Moody's Investors Service affirmed The GEO Group, Inc.'s Ba3 Corporate Family Rating (previously called the Senior Implied Rating), Ba3 Senior Secured Credit Facility, and B1 Senior Unsecured Notes. According to Moody's, this rating affirmation reflects GEO Group's plan to acquire Correctional Services Corporation, another corrections company, using cash and debt. The transaction will further consolidate the private corrections industry, a plus for GEO Group. Moreover, while GEO Group's credit profile will be modestly weakened by the leveraged purchase of CSC, the greater sector leadership provided by the transaction, and some operating cost savings, are counterbalances, and over the intermediate term Moody's expects GEO Group to reduce its leverage. The rating outlook remains stable. HCC INDUSTRIES: AMETEK Acquisition Spurs S&P to Review Junk Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services placed the ratings on HCC Industries, Inc., including its 'CCC+' corporate credit rating, on CreditWatch with positive implications following the announcement by AMETEK Inc. (BBB/Stable/--) that it has agreed to acquire the company. HCC designs and manufactures highly engineered hermetic connectors, terminals, headers, and microelectronic packages for sophisticated electronic applications in the aerospace, defense, industrial and petrochemical markets. Rosemead, Calif.-based HCC has annual sales of approximately $100 million. AMETEK will purchase the company from an investor group led by Windward Capital Partners and HCC management for approximately $162 million in cash (including HCC's debt). Although this will be a new platform for AMETEK's Electromechanical Group, the business provides synergistic opportunities with AMETEK's markets and distribution channels, particularly in aerospace and defense, and technology-sharing opportunities with AMETEK's specialty metals division. "Standard & Poor's expects to withdraw its ratings on HCC when the transaction closes, which is expected by the fourth quarter of 2005," said Standard & Poor's credit analyst John R. Sico. At that time, the subordinated debt will be repaid. HINES HORTICULTURE: Nurseries Unit Selling Property for $47.8-Mil ----------------------------------------------------------------- Hines Nurseries, Inc., a subsidiary of Hines Horticulture, Inc., negotiated and entered into the Real Property Purchase and Sale Agreement and Escrow Instructions with Quantum Ventures, LLC, to sell approximately 121.92 acres of unimproved property located at 17455 SW 157th Avenue, Miami-Dade County, Florida. The Company currently operates a plant nursery on the Property. The Buyer, headquartered in Coral Gables, Florida, is a residential real estate developer and homebuilder in South Florida. Subject to closing conditions, the closing date is expected to be on or before October 19, 2005, subject to extension by the Buyer for up to two weeks. The closing of the purchase and sale of the Property is subject to conditions, including certain conditions which are outside the control of the Company. The Agreement provides that the purchase price of the Property is approximately $47.8 million, payable in cash, on the closing date. In addition to the Purchase Price, the Agreement provides that the Buyer will pay to the Company a deferred purchase price payment in the event the Property is subdivided or otherwise entitled for the development of more than four residences per acre. The Buyer has agreed to pay the Company $40,000 for every residential lot created within the Property in excess of four lots per acre. The Buyer is under no commitment to seek residential lots in excess of four per acre, and it is very possible that the Buyer will not receive zoning for the excess lots or pay any deferred purchase price. It is expected that the maximum possible density per acre would be five residential lots. The deferred purchase price payment will be due and payable upon recordation of final plats consummating the residential subdivision of the Property. The Agreement requires the Buyer to pay an initial earnest money deposit, which will be credited towards the Purchase Price at closing but will be refundable if the Buyer, in its discretion, is not satisfied with certain due diligence and feasibility reviews of the Property; provided, however, $200,000 of the deposit will be disbursed to the Company upon receipt and will be non- refundable except in limited circumstances. The due diligence period will run from the date of execution of the Agreement to October 12, 2005, but may be extended by the Buyer for an additional two-week period. Commencing on the closing date, pursuant to the Agreement the Company will enter into a two-year lease agreement with the Buyer to lease the Property while transitioning operations to other locations. Pursuant to the Agreement, the Company will lease the entire Property for a one-year period, with a thirty-day extension right, and will then vacate approximately 32.71 acres. The Company will lease the remaining 89.21 acres for an additional one-year period, with extension rights for an additional ninety days, and will then vacate the remaining acreage. The Company will pay the Buyer rent of approximately $500 per outstanding acre, annually, during the lease term. Hines Horticulture operates commercial nurseries in North America, producing one of the broadest assortments of container grown plants in the industry. Hines Horticulture sells nursery products primarily to the retail segment, which includes premium independent garden centers, as well as leading home centers and mass merchandisers, such as Home Depot, Lowe's and Wal-Mart. As reported in the Troubled Company Reporter on April 6, 2005, Standard & Poor's Ratings Services revised its outlook on Irvine, California-based Hines Horticulture Inc. to negative from stable, and affirmed the company's 'B+' corporate credit rating. IMMUCOR INC: Finds Material Weakness in Internal Control -------------------------------------------------------- Immucor Inc. reported that on Sept. 15, 2005, it has substantially completed its assessment of the Company's internal control over financial reporting. The Company's management has identified the following control deficiencies in the Company's internal control over financial reporting: (1) Revenue Recognition and Billing Processes Management has concluded that as of May 31, 2005, material weaknesses existed related to ineffective controls over the Company's revenue recognition and billing processes resulting from: * the lack of controls over the review of all arrangement documentation in order to properly record revenue, * the lack of controls over ensuring that all arrangement terms and conditions are known for proper revenue recognition evaluation, and * the lack of personnel with sufficient skills and experience to properly record revenue from multi element arrangements. (2) Financial Statement Close Process Management has also concluded that as of May 31, 2005, material weaknesses existed related to the Company's financial statement close process resulting from: * the lack of adequate processes, controls, review and approval procedures to ensure that financial statements and disclosures generated for external purposes are prepared in accordance with U.S. generally accepted accounting principles, * the lack of personnel with sufficient skills and experience to properly analyze certain technical accounting issues in accordance with U.S. generally accepted accounting principles, and * the lack of adequate policies and procedures in certain international locations with respect to preparing journal entries and reconciling certain significant accounts. The Company's management concluded that the control deficiencies constitute "material weaknesses" as defined by the Public Company Accounting Oversight Board's Accounting Standard No. 2. As a result of these control deficiencies: * management recorded material adjustments to the Company's financial statements during the fiscal year ended May 31, 2005, and * management will be unable to conclude that the Company's internal control over financial reporting was effective as of May 31, 2005. The Company said that Ernst & Young LLP, its independent registered public accounting firm, will issue an adverse opinion with respect to the Company's internal control over financial reporting in the Company's Form 10-K for the fiscal year ended May 31, 2005. The Company believes that the control deficiencies identified could result in a material misstatement to the Company's annual or interim financial statements that would not be prevented or detected. The Company's management, with the oversight of the Audit Committee of the Board of Directors, has begun the process of remediating these control deficiencies as expeditiously as possible. The Company says that the deficiencies are the only material weaknesses identified to date in connection with the Company's fiscal year-end assessment of its internal control over financial reporting, and management does not currently expect to identify any additional material weaknesses as of May 31, 2005. Immucor Inc. -- http://www.immucor.com-- develops, makes, and sells reagents and automated systems that are used by blood banks, hospitals, and clinical laboratories in North America and Europe. Immucor's products identify human blood properties for blood typing; they also detect foreign antibodies. It also distributes other companies' products used for monitoring transfusion-therapy patients, transplant typing, and paternity testing. Immucor markets directly and through distribution agreements and has consolidated its distribution operations to become more competitive. * * * As reported in the Troubled Company Reporter on Sept. 19, 2001, Immucor had covenant waiver-related conversations with its senior lender after reporting consecutive quarterly losses. Immucor's financial statements for the past year show that the company is profitable, liquid, solvent, and adequately capitalized. INTERPUBLIC: Fitch Keeps B+ Rated Debt Facility on Negative Watch ----------------------------------------------------------------- Fitch reports that The Interpublic Group of Companies senior unsecured and multi-currency bank credit facility ratings of 'B+' remain on Rating Watch Negative. The company announced that it is on track to meet the Sept. 30th timeline it established earlier in the year for filing its 2004 Form 10-K and 2005 1st and 2nd Quarter Form 10-Qs. However, the company also indicated that previously issued financial statements and unaudited interim financial information previously issued should no longer be relied upon. In addition, the company will restate earnings from 2000- 2004 specifically related to accounting for revenue, acquisitions, and lease expenses. Fitch expects the review and resolution of the Rating Watch status will be concluded following the satisfactory filing of the company's Form 10-K for 2004 and Form 10-Qs for 2005 and review of these statements. Also, Fitch will meet with management in the near term to evaluate the company's financial status, long-term business outlook, and progress the company has made to rectify material weaknesses in its internal controls to limit the probability of future financial reporting and accounting control issues. Fitch lowered IPG's ratings to 'B+' from BB+' and placed the ratings on Rating Watch Negative on March 11, 2005. These actions reflected the increased levels of negative event risk at IPG, concerns about the reliability of the company's financial reporting, the ability of IPG's auditors to provide an 'unqualified' opinion about the company's financial reports. In addition, the rating actions reflected IPG's earnings and cash flow outlook, given the company's weak organic growth trends, and significant pressures on operating margins. Fitch also continues to be concerned that turnaround efforts initiated by new management in 2003 have not stabilized the company's operating performance, which has been weak relative to historical levels and competitors. IPG has experienced high- profile account losses recently at key agencies and Fitch believes IPG continues to incur significant costs and management time to remediate the problems causing the material weaknesses. Previous misstatements of IPG's earnings resulting from weaknesses in accounting controls were the subject of shareholder lawsuits, which have required significant litigation and settlement costs, and resulted in an investigation by the Securities and Exchange Commission. Liquidity continues to be supported by cash on hand at June 30, 2005 of approximately $1.4 billion (net of $225 million which is now required to be held in domestic accounts with the lenders in order for the company to access the facilities) and is further supported by $700 million credit facilities, consisting of a $450 million, three-year facility expiring May 2007, and a $250 million, 364-day facility scheduled to mature Sept. 30, 2005. On June 27, 2005, IPG announced it had received additional amended financial covenants for minimum interest coverage, maximum debt/EBITDA leverage, and minimum EBITDA. Total debt stands at approximately $2.3 billion. The next significant maturity is in 2008. JILLIAN'S ENT: Administrative Claims Bar Date Set on November 15 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Kentucky set Nov. 15, 2005, at 4:00 p.m., as the deadline for all creditors owed money on account of administrative claims specified in Sections 503(b), 365 and 1114(e)(2) of the U.S. Bankruptcy Code arising through and including May 23, 2004, against Jillian's Entertainment Holdings, Inc., and its debtor-affiliates to file proofs of claim. Administrative claimants must file written proofs of claim on or before the Nov. 15 Administrative Claims Special Bar Date and those forms must be sent either by first class mail, overnight delivery or personal service to: Jillian's Entertainment Holdings, Inc. c/o Kurtzman Carson Consultants, LLC 1219 Culver Boulevard, Suite I Los Angeles, CA 90066 The Administrative Claims Bar Date will terminate any open-ended liability of the estates to holders of administrative claims and will place the Plan Administrator in a position to calculate and implement distributions to administrative and other unsecured creditors pursuant to the provisions of the Bankruptcy Code in the orderly wind down of the Estates. Headquartered in Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC and James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $100 million. Judge David T. Stosberg confirmed the Debtors' Amended Joint Liquidating Plan on Dec. 12, 2004. JO-ANN STORES: CFO B.P. Carney & EVP & Secretary V.G. Sachs Resign ------------------------------------------------------------------ Jo-Ann Stores, Inc. (NYSE: JAS) reported that Brian P. Carney, executive vice president and chief financial officer, and Valerie Gentile Sachs, executive vice president, general counsel and secretary, have resigned from the company both effective at the end of the month. Mr. Alan Rosskamm, chairman and chief executive officer stated, "While we deeply regret Brian and Valerie's independent decisions to leave, we thank them for their contributions to Jo-Ann's growth and wish them success in their new endeavors. However, we are fortunate to have a strong and experienced financial team in place, and we are confident that we will be able to accomplish a seamless transition. "During the transition period our finance team will be led by Jim Kerr and Don Tomoff. Jim has been leading our effort to build a proactive financial organization that is fully integrated in company-wide day-to-day operations. Additionally, Don will continue to be responsible for investor relations, financial reporting and the company's treasury and tax operations." James C. Kerr, vice president and controller, 43, joined the company in February 1998 and has 21 years of financial and accounting management experience, the majority of which has been with publicly held retail companies. Donald R. Tomoff, vice president, finance and treasurer, 46, joined Jo-Ann in February 1999 and has 24 years of progressive experience in corporate accounting and finance. Mr. Rosskamm added, "While we conduct a national search for a replacement for the general counsel position, the responsibilities of that position will be handled by our outside corporate law firm, as they were prior to Valerie joining our company as our first general counsel in 2003." Mr. Carney, 45, is leaving to become executive vice president and chief financial officer for Greenville, South Carolina-based Bi- Lo, LLC, a supermarket chain with annual revenues of approximately $4 billion, which was recently acquired in a leveraged buy-out transaction with Ahold, USA. Ms. Sachs, 50, is joining the senior management team of the Cleveland, Ohio-based OM Group, Inc., a leading international producer and marketer of metal-based specialty chemicals and related materials, as vice president, general counsel and corporate secretary. Jo-Ann Stores, Inc. -- http://www.joann.com-- the leading national fabric and craft retailer with locations in 47 states, operates 712 Jo-Ann Fabrics and Crafts traditional stores and 135 Jo-Ann superstores. * * * As reported in the Troubled Company Reporter on July 18, 2005, Standard & Poor's Ratings Service raised its ratings on Hudson, Ohio-based specialty retailer Jo-Ann Stores Inc. The corporate credit rating was raised to 'BB-' from 'B+' and the subordinated debt rating was raised to 'B' from 'B-'. The ratings were removed from CreditWatch, where they were placed with positive implications on March 14, 2005. S&P says the outlook is stable. KAISER ALUMINUM: U.S. Trustee Balks at Russell's Proposed Services ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on September 13, 2005, Kaiser Aluminum Corporation and its debtor- affiliates sought the U.S. Bankruptcy Court for the District of Delaware's authority to employ Russell Reynolds as search consultant, nunc pro tunc as of August 1, 2005. The Remaining Debtors ascertain that it is time to begin the search process for directors for Reorganized Kaiser Aluminum Corporation, the ultimate parent entity following various restructuring transactions to be completed in connection with the Remaining Debtors' emergence from Chapter 11. Reorganized KAC's initial board of directors will consist of 10 members: (a) one will be Reorganized KAC's Chief Executive Officer; (b) four will be designated by the United Steelworkers; and (c) the remaining five will be selected by a search committee comprised of: * two persons designated by the Debtors; * two persons designated by a statutory committee of unsecured creditors; and * one person designated jointly by Martin J. Murphy, as legal representative for future asbestos claimants; Anne M. Ferazzi, as legal representative for future silica and coal tar pitch volatiles claimants; and a statutory committee of asbestos claimants. The Search Committee interviewed three executive search firms. On August 1, 2005, the Search Committee selected Russell Reynolds Associates to conduct the search for five independent director candidates to join Reorganized KAC's Board. U.S. Trustee Objects Kelly Beaudin Stapleton, the United States Trustee for Region 3, objects to the proposal that Russell Reynolds Associates be exempted from the filing of fee applications and the necessity to obtain further Court approval for its compensation or reimbursement of expenses. This request is contrary to relevant law, the U.S. Trustee argues. The U.S. Trustee asserts that the U.S. Court of Appeals for the Third Circuit in In re Engel, 124 F.3d 567, 571-72 (3d Cir. 1997), has made it quite clear that fee applications are a requirement in bankruptcy and must be carefully reviewed under Section 330 of the Bankruptcy Code. The U.S. Trustee further contends that the Application fails to provide the specific services Russell Reynolds will be providing or the justification for its fee. Moreover, the U.S. Trustee notes that there will be expenses that the Debtors will reimburse, which are completely unknown at this time. The U.S. Trustee tells the Court that the correct procedure is not to approve the compensation up-front without any oversight, but to allow the Court and parties-in-interest the ability to assess the services performed at the end of the engagement to determine if the fees are justifiable and expenses are reasonable. The U.S. Trustee leaves Russell Reynolds to its burden, and reserves any and all of her rights to, inter alia, conduct discovery and to modify her objection in whatever actions are deemed necessary and appropriate. 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. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) KERZNER INT'L: S&P Rates Planned $400 Million Senior Notes at B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Kerzner International Ltd.'s proposed $400 million senior subordinated notes due 2015. Proceeds from these notes, along with cash on hand, will be used to refinance its existing $400 million senior subordinated notes due 2011 and to fund fees and expenses associated with this transaction. At the same time, Standard & Poor's affirmed its ratings, including its 'BB-' corporate credit rating, on the hotels and a casino owner and operator. The outlook on Kerzner remains stable. The Nassau, Bahamas-based company had about $820 million of debt outstanding as of June 30, 2005, which includes debt associated with the Palmilla and Reethi Rah joint ventures. "Although leverage is expected to rise by late 2006 as the company funds its outlined spending initiatives, we believe the Phase III expansion of its Paradise Island resort will be successful and that incremental cash flow from this project will lead leverage to decline in 2007 and trend towards a level more consistent with current ratings. However, given ongoing growth initiatives, there is limited room for credit measures to weaken further within the stable outlook," said Standard & Poor's credit analyst Peggy Hwan. KERZNER INT'L: Moody's Rates $400 Million Senior Sub. Notes at B2 ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Kerzner International Limited's proposed $400 million guaranteed senior subordinated notes due 2015, and affirmed the company's Ba3 Corporate Family Rating and stable rating outlook. The notes are offered pursuant to Rule 144A of the Securities Act of 1933. Proceeds of the note offering will be used, together with cash on hand, to repurchase all of Kerzner's 8-7/8% guaranteed senior subordinated notes tendered for pursuant to a tender offer launched on August 12, 2005. The B2 rating on the 8 7/8% notes will be withdrawn once the notes are redeemed. The B2 rating on the proposed notes considers that they will have a formal guaranty from Kerzner's operating subsidiaries. The company will have the ability to raise additional debt as long as it meets a 2.0 times fixed charge debt incurrence test, and the indenture includes a $900 million senior secured credit facility carve-out that will not be subject to the fixed charge debt incurrence test. The affirmation of the ratings considers the high quality of the company's assets and significant amount of customer loyalty attached to the Atlantis brand name and the stability of cash flows generated by the Mohegun Sun (Ba1/stable) relinquishment payments and other management contracts. Key credit concerns include the reliance on the single upscale destination resort property for a significant portion of the company's cash flow, which makes it highly vulnerable to uncertain travel and economic trends. The stable rating outlook reflects adequate liquidity to supported planned development activity, a manageable debt maturity profile (including no significant maturities in 2006 when leverage is expected to peak), as well as Moody's expectation that the company will not aggressively repurchase it stock. In August 2005, Kerzner's Board of Directors has approved a share repurchase program authorizing the repurchase of up to two million ordinary shares. Ratings upside is limited by Kerzner's significant expansion activities which will likely result in peak leverage (debt/EBITDA) during construction of over 5.0x in 2006. Currently gross debt to EBITDA is around 3.6x and the company had $375 million cash on hand at June 30, 2005. The company recently commenced development of a major expansion at Atlantis that includes a 600-room all- suite luxury hotel and a significant enhancement of water-based attractions. Certain elements of this expansion have already opened with the remaining elements expected to open by early 2007. The company is also developing other projects as part of joint venture arrangements, including Atlantis, The Palm, Dubai, and is expected to pursue other new development opportunities around the world, which increases overall business risk. Ratings could face downward pressure if the company were to execute material share repurchases and/or leverage increases significantly beyond current expectations. New rating assigned: * $400 million guaranteed senior subordinated notes at B2. Kerzner International Limited is a developer and operator of destination resorts, casinos and luxury hotels. The company's flagship brand is Atlantis, which includes Atlantis, Paradise Island, a 2,317-room, ocean-themed destination resort located on Paradise Island, The Bahamas. KOPPERS INC: S&P Revises Outlook on Low-B Ratings to Stable ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Koppers Inc. to stable from negative, citing continued improvements in operating conditions over the last year and the company's announcement that it has filed with the SEC to undertake an IPO for up to $125 million. The outlook on KI Holdings Inc., the parent of Pittsburgh, Pa.- based Koppers, was also revised to stable from negative. All ratings, including the 'B+' corporate credit ratings, are affirmed. As of June 30, 2005, Koppers had about $488 million of debt outstanding. "The outlook revision reflects improving business conditions and the expected enhancement to credit quality if the IPO is consummated and if a significant portion of the proceeds is applied to the permanent reduction of debt," said Standard & Poor's credit analyst Paul Kurias. Based on information in the company's S-1 filing with the SEC, Koppers is expected to use a significant portion of the proceeds for debt reduction. As a result, the company's credit protection measures should meaningfully improve, offsetting some of the negative impact to the financial profile caused by large dividend payments to existing shareholders over the past two years. The ratings on Koppers reflect: * a weak business position, attributable to a relatively narrow scope of operations and concentration of sales by customer base and end market; and * an aggressive financial policy, including elevated leverage measures following two debt-financed dividend payments to the company's shareholders. These factors are only partially offset by the company's leading market shares, high percentage of long-term contracts, and good geographic diversity. Existing shareholders are expected to sell shares through a secondary offering, but will maintain a significant stake in the publicly traded entity. If completed successfully, Standard & Poor's expects the IPO to have a positive influence on financial policy by reducing the probability of the company returning value to shareholders in the form of large dividend payments. Koppers, with about $970 million in sales, operates two divisions: carbon materials and chemicals (58% of 2004 sales), and railroad and utility products (42% of sales). LAND O'LAKES: Moody's Reviewing Low-B Ratings for Possible Upgrade ------------------------------------------------------------------ Moody's Investors Service placed under review for possible upgrade Land O'Lakes, Inc.'s B1 rated senior secured bank facility, its B2 rated second lien notes, its B3 rated senior unsecured notes, and its B2 corporate family rating. Moody's also placed under review for possible upgrade the capital securities of Land O'Lakes Capital Trust I. Land O'Lakes' speculative grade liquidity rating was upgraded to SGL-2 from SGL-3. The review is prompted by the reduction in Land O'Lakes' leverage with proceeds of asset sales, the resultant increase in financial flexibility, the successful divestiture over the past year of several non-core businesses, and the stabilization of operating performance. Land O'Lakes recently sold its equity interest in CF Industries, a manufacturer of fertilizer, for $315 million, and has earmarked proceeds for debt reduction. Additionally, during the past six months, the cooperative fully repaid its Term B bank loan ($118 million) and reduced capital leases by over $80 million. During the review, Moody's will evaluate: (1) the cooperative's strategy to further improve its operating performance; (2) management's plan to continue to reduce leverage and strengthen its capital structure; (3) the likelihood that Land O'Lakes can sustain a credit profile stronger than that incorporated in its current ratings. The upgrade of Land O'Lakes liquidity rating to SGL-2 reflects Moody's expectation that cash flow generation over the next twelve months will be at levels that are likely to cover capital spending, member payments, and required debt amortization, though the company may need to access external funds on an interim basis during the twelve months to cover seasonal working capital needs. The upgrade also takes into account Land O' Lakes' improved cushion for compliance with its financial covenants following the complete pay-down of its Term B bank loan earlier this year. Land O'Lakes has adequate unused availability under its committed revolver and receivables securitization facilities, which have been extended to January 2007. The SGL rating could improve further if Land O'Lakes is successful in increasing cash flow generation materially from current levels, or if it is able to further strengthen its excess cash balances and maintain additional unused availability under its committed credit facilities and receivables securitization facilities in the year ahead. The SGL rating could be pressured if profitability weakens, leading to tight covenant cushions and increased reliance on the revolver. Ratings upgraded are: -- Land O'Lakes, Inc. * Short Term Liquidity rating to SGL-2 from SGL-3 Ratings placed under review for possible upgrade are: -- Land O'Lakes, Inc. * $200MM Senior secured revolving credit facility at B1 * $175MM 9.0% senior secured 2nd lien notes at B2 * $350MM 8.75% senior unsecured notes at B3 * Corporate family rating at B2 -- Land O'Lakes Capital Trust I * $191MM 7.45% capital securities at Caa1 Land O'Lakes, based in Arden Hills, Minnesota, is an agricultural cooperative focusing on branded dairy food, feed, and agricultural crop inputs. MAULDIN-DORFMEIER: Cowles & Thompson Approved as Special Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of California approved Mauldin-Dorfmeier Construction, Inc.'s request to employ Cowles & Thompson as its special counsel, nunc pro tunc to Feb. 28, 2005. The Debtor needs Cowles & Thomson to represent it in a legal dispute involving bankrupt company CEI Roofing, Inc., and its affiliates. The dispute resulted from the construction of the California State University at Stanislaus and the Delano Prison. Mauldin filed proofs of claims in CEI's bankruptcy case (Bankr. N.D. Texas Case No. 04-35113). CEI objected to Mauldin's claims. Documents filed with the Bankruptcy Court in California don't specify the claim amount against CEI Roofing. Lang, Richert & Patch represents Mauldin in CEI's cases, assisted by Cowles & Thompson as local counsel in Dallas, Texas. William L. Siegel, Esq., a member at Cowles & Thompson, disclosed that the Firm will be paid a $2,000 retainer. Mr. Siegel will be the attorney principally handling the matter and he bills $325 per hour. The Court also allowed Mauldin to pay: -- $2,444 postpetition expenses, -- any amount up to $3,500 in fees and expenses without further order from the Court, and -- fees and expenses exceeding $3,500 after a Court order is issued. Founded in 1978 in Dallas, Texas, Cowles & Thompson -- http://www.cowlesthompson.com/-- has grown to more than 60 lawyers, evolving into a multitude of practice groups that reach clients across the country. The Debtor believes that William L. Siegel, Esq., and Cowles & Thompson is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Fresno, Calif., Mauldin-Dorfmeier Construction, Inc., provides construction services. The Company is owned 50% each by Patrick Mauldin and Alan Dorfmeier, who are president and vice president, respectively. The Company filed for chapter 11 protection on Feb. 29, 2005 (Bankr. E.D. Calif. Case No. 05-11402). Riley C. Walter, Esq., at Walter Law Group, represents the Debtors in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. MCI INC: NY U.S. Attorney Ends Probe on Worldcom Accounting Issues ------------------------------------------------------------------ The U.S. government has agreed not to file charges against MCI, Inc., for the $11 billion accounting fraud that led to WorldCom, Inc.'s bankruptcy case, Bloomberg News reports. MCI's cooperation in the investigation of the fraud case and its agreement to pay $750 million in restitution to the Securities and Exchange Commission prompted the government's decision not to prosecute, Christopher Mumma of Bloomberg News states. "The public interest has been sufficiently vindicated by the successful prosecution of the principal individual wrongdoers - Bernard Ebbers and Scott Sullivan," David Kelly, the U.S. Attorney for the Southern District of New York, said in a prepared statement. Mr. Ebbers, former WorldCom chief executive officer, has been sentenced to 25 years in prison. Mr. Sullivan, former WorldCom chief financial officer, was sentenced to 5 years in prison. MCI's Statement MCI, Inc. (NASDAQ: MCIP) reported an agreement with the office of the U.S. Attorney for the Southern District of New York under which the U.S. Attorney has concluded his investigation into past accounting issues without seeking to prosecute the company. The following statement can be attributed to Stasia Kelly, MCI executive vice president and general counsel: "The U.S. Attorney's decision to conclude this investigation allows us to close another chapter in the successful turnaround of our company." Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. MERISTAR HOSPITALITY: Refinances $300 Million CMBS Portfolio Loan ----------------------------------------------------------------- MeriStar Hospitality Corporation (NYSE: MHX) completed the previously announced refinancing of its 19-property, $300 million CMBS loan. The refinancing lowers the company's rate of borrowing by more than 300 basis points, provides greater flexibility for property dispositions and substitutions, releases approximately $45 million of cash currently held in escrow and frees up future property cash flow for general use. "This transaction is another important step, which, when combined with the strength of our properties' performance, will continue our efforts to provide value to our shareholders by strengthening our balance sheet and improving our overall credit statistics," said Donald D. Olinger, chief financial officer. "Significantly, it reduces our expected annualized interest expense by more than $9 million." The refinancing included a defeasance of the existing loan and borrowings under two new facilities, using 18 properties that were included in the original collateral package. The new borrowings consist of: * a $312 million, 17-property CMBS loan at a rate of LIBOR plus 135 basis points, or 309 basis points below the effective rate of the original loan; and a $15 million term loan covering one property with a borrowing rate of LIBOR plus 350 basis points. The new CMBS facility will have an initial maturity of October 9, 2007 plus three one-year extensions at the company's option. The term loan facility will initially mature on April 9, 2006 with an option to extend the maturity for an additional six months. Mr. Olinger said that the transaction also provides the company with significantly greater flexibility and control over the 18 hotels in the loan collateral pool, noting that, "We now have the flexibility to sell assets included in the collateral group that do not fit with our long-term strategy, generating proceeds to further reduce our debt while at the same time reducing our future capital requirements." In the third quarter, the company expects to record a $45.9 million loss on early extinguishment of debt related to the defeasance cost and an $8.7 million charge related to the termination of the interest rate swap on the original CMBS loan. In addition, the company also expects to record a non-cash impairment charge of approximately $36 million related to four assets in the collateral package that the company expects to sell, but which could not be sold under the original CMBS structure. Despite the one-time debt related charges, the company expects the transaction to be net present value positive. Expands Bank Facility The CMBS refinancing is one of a number of financial transactions completed by the company in 2005. In addition to the CMBS refinancing, the company expanded its bank facility to $150 million while lowering the borrowing rate on the facility by 100 basis points. Since the end of the first quarter the company has bought back more than $37 million of its senior unsecured notes and redeemed the remaining $32.7 million of 8-3/4% senior subordinated notes at par on August 15, 2005. The company also recently announced its intention to expand its asset disposition activity for the year in response to strong market conditions for dispositions and expressed interest. "Pending the sale of additional hotels, we plan to call between $175 million and $200 million of our 10.5% senior notes when they become callable on December 15th of this year, significantly reducing our most costly piece of debt," Mr. Olinger said. "We are continuing to see the positive financial results of our overall corporate strategy. We expect our weighted average interest rate to decrease by nearly 70 basis points to 7.8% and our interest coverage ratio to improve from 1.4 to between 1.7 and 1.8 by year-end 2005. Our next material maturity is not until 2008. The performance of our properties combined with our capital markets activities are strengthening our balance sheet and improving our overall credit statistics. Shareholder value has been increased by all of these achievements." The new CMBS financing and expanded bank facility were placed through Lehman Brothers. Headquartered in Arlington, Virginia, MeriStar Hospitality Corporation -- http://www.meristar.com/-- owns 71 principally upscale, full-service hotels in major markets and resort locations with 19,889 rooms in 22 states and the District of Columbia. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Ritz-Carlton, Westin, Doubletree and Radisson. * * * Standard & Poor's Ratings Services rates the Company's 9.50% Convertible Subordinated Notes due 2010 at CCC. MIDWESTERN TELECOMMUNICATIONS: Case Summary & 20 Largest Creditors ------------------------------------------------------------------ Debtor: Midwestern Telecommunications, Inc. dba MTI 65 East 16th Street, Suite 300 Chicago Heights, Illinois 60411 Bankruptcy Case No.: 05-37811 Type of Business: The Debtor is the largest local exchange company in the Midwest and has provided local telephone service for over six years. The Debtor previously filed for chapter 11 protection on April 15, 2003 (Bankr. N.D. Ill. Case No. 03-16626). See http://www.midwestern.net/ Chapter 11 Petition Date: September 16, 2005 Court: Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtor's Counsel: Robert R. Benjamin. Esq. Benjamin, Bernman & Brom, LLC 175 West Jackson Boulevard, Suite 1600 Chicago, Illinois 60604 Tel: (312) 540-7000 Fax: (312) 540-0578 Total Assets: $54,730 Total Debts: $1,368,617 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ IRS Balance due under $397,883 Department of Revenue 2003 Confirmed Plan 230 South Dearborn Stop 5013 B 16626 Chicago, IL 60604 Ameritech Illinois CABS $230,081 P.O. Box 1838 Saginaw, MI 48605-1838 SBC Balance due under $224,572 722 North Broadway, 11th Floor 2003 Confirmed Plan Milwaukee, WI 53202 B 16626 C & H Holdings Two 2005 Loans $130,000 1526 Otto, Suite 300 Chicago Heights, IL 60411 Ikechuku Chinwah 2005 loan $50,000 11800 Shade Cove Court Orland Park, IL 60467 Jerry Holt 2005 Loan $50,000 10645 Valley Court Orland Park, IL 60462 C & H Holdings II, LLC Past due rent $45,406 1526 Otto, Suite 300 Chicago Heights, IL 60411 Ameritech Indiana CABS $36,493 P.O Box 1838 Saginaw, MI 48605-1838 SBC $30,661 PO Box 1838 Saginaw, MI 48605-1838 Ameritech Michigan CABS $28,354 P.O. Box 1838 Saginaw, MI 48605-1838 TMC Communications long distance $25,948 P.O. Box 512670 services Los Angeles, CA 90051-0670 Qinteraction Outsourcing of $16,983 c/o John C. Wiiliams & Assoc. customer services 1612 Northeast Expressway Atlanta, GA 30329 Ameritech OHIO CABS $15,806 P.O. Box 1838 Saginaw, MI 48605-1838 Ameritech WIS CABS $7,584 P.O. Box 1838 Saginaw, MI 48605-1838 SBC $5,897 P.O. Box 1838 Saginaw, MI 48605-1838 SBC Payment Center $4,424 Sacramento, CA 95887-0001 SBC Payment Center $3,917 Sacramento, CA 95887-0001 CIT Communications Expanets Balance due under $3,033 680 CIT Drive 2003 Confirmed Plan Livingston, NJ 07039 B 16626 Clear Channel Balance due under $875 4000 Morgan Street 2003 Confirmed Plan Chicago, IL 60609 B 16626 Foley & Lardener Balance due under $699 330 North Wabash, Suite 3300 2003 Confirmed Plan Chicago, IL 60601 B 16626 MITSUBISHI MOTORS: Moody's Reviews Ba2 Rating on 2002-1 Certs. -------------------------------------------------------------- Moody's Investors Service has placed under review for possible upgrade seven securities from five auto loan backed securitizations originated by Mitsubishi Motors Credit of America (MMCA). This rating action reflects a strengthening in the credit profile of the securities, based upon the actual performance of the transactions and the build up of credit enhancement relative to expected future losses in the underlying receivables pools. The build up of credit enhancement as a percent of the current outstanding principal balance of the pools has been the result of different factors such as the inclusion of nondeclining enhancements as well as the initial trapping of excess spread within transactions. Moody's notes that unlike other auto securitizations, MMCA transactions include balloon payment loans. Moody's will take this risk into account when reviewing these deals. Complete rating action is as follows: Review for Possible Upgrade: * MMCA Auto Owner Trust 2001-3, Class B, current rating Baa3 * MMCA Auto Owner Trust 2002-1, Class B, current rating Ba2 * MMCA Auto Owner Trust 2002-3, Class B, current rating A2 * MMCA Auto Owner Trust 2002-3, Class C, current rating Baa3 * MMCA Auto Owner Trust 2002-4, Class B, current rating A1 * MMCA Auto Owner Trust 2002-4, Class C, current rating Baa2 * MMCA Auto Owner Trust 2002-5, Class C, current rating A2 MOVIE GALLERY: Likely Low Performance Cues Moody's to Cut Ratings ----------------------------------------------------------------- Moody's Investors Services downgraded the long term debt ratings of Movie Gallery, Inc., and speculative grade liquidity rating over concerns that the industry trends demonstrated during the second quarter as well as the impact of Hurricane Katrina to its south eastern stores will constrain the company's operating performance over the next twelve to eighteen months. The outlook is negative. These ratings are downgraded: * Corporate Family to B2 from B1; * $870 Million of Senior Secured Credit Facilities to B2 from B1; * $325 Million of Guaranteed Senior Notes to B3 from B2; * Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The B2 rating reflects Moody's expectation that operating performance will decline versus Moody's original expectations due to a poor release schedule from the movie studios and poor box office performance which directly correlates to the home video industry performance. In addition, approximately 328 stores or 7% of the company's stores are located in Mississippi, Alabama, and Louisiana. As a direct result of hurricane Katrina, approximately -- 21 stores were severely damaged. Numerous stores are expected to operate under restricted hours of operation for a period of time potentially placing further downward pressure on the company's operating performance. This lower level of operating performance will likely result in weaker leverage and coverage metrics as well as lower free cash flow generation. The rating also reflects the significant amount of uncertainty around other industry dynamics including the trends of "purchase" vs. "renting", the impact of video-on-demand, and on-line renting. The rating also encompasses the expected strategic fit of Hollywood Entertainment with Movie Gallery with only 13% crossover in the current store base as well as the possible execution risks associated with any large acquisition. In addition, the rating is supported by Movie Gallery's number two market share behind Blockbuster in what remains a highly fragmented market as well as Movie Gallery's focus on rural and secondary markets which provides a level of insulation from some of the previously mentioned competitive and industry threats, as well as the Hollywood Entertainment's strong real estate locations. In addition, the rating encompasses a modest level of synergies from the elimination of duplicative back office functions as well as migrating over time the Hollywood Entertainment cost structure towards Movie Gallery's lower cost operating structure. The rating also reflects Moody's expectation that the Movie Gallery management team will maintain its historically prudent financial policies. The negative outlook reflects Moody's expectation that industry trends could continue to place downward pressure on operating performance. Ratings could be downgraded further should the company's liquidity deteriorate, if the integration and expense leveraging of Hollywood Entertainment does not proceed to Moody's expectations, and/or Free Cash Flow/Debt falls below 4%. The outlook could stabilize should box office revenues and the home rental industry show signs of stabilization. Ratings could move upward should operating performance improve resulting in Free Cash Flow/Debt rising above 8% and total coverage increasing to above 1.5x. The downgrade to an SGL-3 (adequate liquidity) from an SGL-2 (good liquidity) represents Moody's expectation that free cash flow will be negatively impacted by the expected weaker operating performance; however, the company's internally generated cash flow and cash on hand will be sufficient to fund its working capital, capital expenditures, dividends, scheduled debt amortizations, and any excess cash flow sweeps over the next four quarters. The company currently has in place a $75 million revolving credit facility, which at the end of the second quarter had $26.6 million outstanding. Moody's had originally anticipated that borrowings under this revolver would be repaid by fiscal year end but now anticipates that there is a strong likelihood that an amount will continue to be drawn, therefore reducing available liquidity. In addition, given Moody's expectations that operating performance will be constrained going forward, it is likely that the expected cushion under Movie Gallery's financial covenants will be reduced and thus placing the company at risk for a covenant violation. The senior secured credit facilities consist of a $75MM 5 year revolving credit facility due 2010, a $95MM 5 Year Term Loan A due 2010, and a $700MM 6 Year Term Loan B due 2011. These credit facilities are secured by all tangible and intangible assets and guaranteed by all domestic subsidiaries. The senior secured credit facilities are rated at the same level as the corporate family rating due to the lack of tangible asset coverage and their size and scale relative to the total capital structure. The senior unsecured guaranteed notes are notched down by one from the corporate family rating due to its effective subordination to the credit facilities in that they are unsecured but still benefit from upstream subsidiary guarantees. Movie Gallery, headquartered in Dothan, Alabama is a leading provider of in-home movie and game entertainment in the United States. It operates approximately 4,800 stores in the U.S. and Canada under the banners of Movie Gallery, Hollywood Entertainment, Game Crazy, and VHQ. Proforma revenues for fiscal year 2004 were approximately $2,571.8 Million. NEW WEATHERVANE: Judge Walsh Formally Dismisses Bankruptcy Cases ---------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware formally dismissed the chapter 11 cases filed by New Weathervane Retail Corporation and its debtor-affiliate, New Weathervane Real Estate Corp., pursuant to Section 1112(b) of the Bankruptcy Code. Judge Walsh dismissed the Debtors' bankruptcy cases on Sept. 2, 2005. The Debtors and the Official Committee of Unsecured Creditors filed a joint motion with the Court on Aug. 4, 2005, to dismiss the Debtors' chapter 11 cases and for authority to distribute funds to creditors. Based on the Debtors and the Creditors' Committee's request, Judge Walsh concluded that: 1) the Debtors are unable to effectuate a plan of reorganization because they have liquidated all of their assets, they have completed their GOB sales, all of their inventory have been sold and they no longer have any retail stores; and 2) the dismissal of the Debtors' chapter 11 cases is in the best interests of the creditors and other parties-in- interest and the Debtors and the Creditors Committee have met the burden of proof that the Debtors' chapter 11 cases should be dismissed pursuant to Section 1112(b) of the Bankruptcy Code. Judge Walsh orders that: 1) the Debtors and the Committee are authorized to distribute the funds remaining in the Debtors' Bank Account to pay estimated administrative claims and expenses totaling approximately $47,355; 2) the Committee's counsel, Kronish Lieb Weiner & Hellman LLP is authorized to distribute the proceeds of the $675,000 Carveout Fund to outstanding professionals fees and expenses totaling approximately $224,247.69; and 3) Kronish Lieb is also authorized to distribute the proceeds of the Carveout Fund and other funding sources to the holders of unsecured claims totaling approximately $12,941,442.66, with an approximate distribution amount of 3.6% per one dollar. There will be no distribution for claims of less than $25. A copy of the 13-page list of unsecured creditors and the amount of their claims is available for free at: http://researcharchives.com/t/s?18f Objections to the amount of distributions on the list must be filed by Sept. 30, 2005, and served on: Kronish Lieb Weiner & Hellman LLP Attn: Gregory Plotko, Esq. 1114 Avenue of the Americas New York, New York 10036 Fax: 212-479-6275 Headquartered in New Britain, Connecticut, New Weathervane Retail Corporation -- http://www.wvane.com/-- was a women's specialty retailer. New Weathervane filed for chapter 11 protection on June 3, 2004 (Bankr. Del. Case No. 04-11649). William R. Firth, III, Esq., at Pepper Hamilton LLP, represents the Debtors. When the Debtors filed for chapter 11 protection, they listed $28,710,000 in total assets and $24,576,000 in total debts. The Court formally dismissed the Debtors' chapter 11 cases on Sept. 2, 2005. NORMAN TIGLEY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Norman and Nina J. Tigley 8318 East 1200th Road Martinsville, Illinois 62442 Bankruptcy Case No.: 05-61147 Chapter 11 Petition Date: September 17, 2005 Court: Southern District of Illinois (Effingham) Debtors' Counsel: Douglas A. Antonik, Esq. P.O Box 594 411 Main Mount Vernon, Illinois 62864 Tel: (618) 244-5739 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million The Debtors' did not file a list of their 20 Largest Unsecured Creditors. NORTHWEST AIRLINES: 400 Pilots Stand to Lose Jobs ------------------------------------------------- The Air Line Pilots Association told its Northwest Airlines Corp.'s members that about 400 of them will be losing their jobs in the next eight months as part of the carrier's restructuring under chapter 11 of the Bankruptcy Code, reports Thom Weidlich at Bloomberg News. The first 70 pilots will be idled beginning November 1. In a hearing late last week, the Honorable Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York authorized Northwest to pay its pilots all they were owed before the bankruptcy filing. Judge Gropper also allowed the airline to maintain its 190 bank accounts, its credit card processing and to pay its vendors and suppliers, Bloomberg reports. Judge Gropper further allowed Northwest to continue normal operations until October 6. The airline is also given a four- month extension to file its schedules and statements, Bloomberg News reports. Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft LLP, told Judge Gropper during the hearing that the full payment to its pilots is important to reduce turnover. Mr. Zirinsky adds the Company hopes to reorganize quickly, effectively and efficiently, Bloomberg reports. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NORTHWEST AIRLINES: Ch. 11 Filing Cues S&P to Put Default Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its 'CCC-' corporate credit ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary to 'D', and removed the ratings from CreditWatch. Also lowered to 'D' and removed from CreditWatch were ratings on unsecured debt, bank debt, and airport revenue bonds of Northwest Airlines Inc. Ratings on enhanced equipment trust certificates were not lowered, and remain on CreditWatch with negative implications. Ratings on 'AAA' rated insured bonds, which were not on CreditWatch, were likewise unaffected. The '1' recovery rating on Northwest's bank credit facility was not changed. "Northwest's hopes of negotiating concessionary labor contracts with its unions were overtaken by the surge in fuel prices, which deepened the airline's losses and cash outflow," said Standard & Poor's credit analyst Philip Baggaley. "The airline's unrestricted cash, $2.14 billion at June 30, had fallen to $1.5 billion by the time it filed for bankruptcy," the credit analyst continued. Northwest did not arrange debtor-in-possession financing, though it may seek to do that later while in Chapter 11. Such a facility would presumably refinance the existing $975 million bank credit facility, which is secured mostly by Northwest's valuable Pacific route rights. During the first 60 days of the Chapter 11 proceedings, Northwest will not need to make payments on its aircraft-backed obligations, but thereafter must cure past due amounts and agree to perform going forward, or risk having the planes repossessed by creditors. Northwest should be able to reorganize successfully, though it will likely shrink its fleet and its domestic operations, as bankrupt United Air Lines Inc. has done. The company would also be expected to negotiate or, if necessary, ask the bankruptcy court to impose, concessionary labor contracts, and to eventually seek to terminate its defined benefit pension plans. Northwest's revenue generation and its management of costs under its control (those other than labor and fuel) have been fairly good, so it has fewer problems to fix than does Delta Air Lines Inc., which likewise filed for bankruptcy Sept. 14, 2005. NORTHWEST AIRLINES: Fitch Downgrades Issuer Default Rating to D --------------------------------------------------------------- Fitch Ratings has downgraded the issuer default rating of Northwest Airlines to 'D' from 'CCC' following the company's announcement on Wednesday that it has filed for Chapter 11 bankruptcy court protection. Fitch has also downgraded the issue rating on Northwest's senior unsecured debt to 'C' from 'CC'. The recovery rating on the senior unsecured debt is 'R6', reflecting the very weak recovery prospects for unsecured creditors in a bankruptcy reorganization. The senior unsecured rating applies to approximately $1.5 billion in debt obligations. Northwest's Chapter 11 filing follows the carrier's lack of success in obtaining comprehensive labor cost concessions from its work force. As all other legacy carriers have made significant progress in reducing their labor costs, either in or out of court- supervised restructurings, Northwest has been saddled with the highest labor costs in the U.S. airline industry. In late 2004, the company's pilots agreed to $265 million in annual wage and benefit reductions, which, combined with non-union wage and benefit reductions of $35 million, amounted to $300 million in annual labor cost savings. However, Northwest has made little progress in achieving cost cuts from its unionized flight attendants and ground employees. On Aug. 20, the mechanics, represented by the Aircraft Mechanics Fraternal Association, went on strike, rather than agree to concessions. Subsequent discussions with AMFA have not resulted in a new contract. As market conditions have continued to deteriorate, Northwest has raised its targeted level of labor costs savings twice, from $950 million to $1.1 billion, then most recently to $1.4 billion. Although the carrier will achieve some additional cost savings as it begins to replace some of the striking AMFA workers with permanent employees, the company is still far from its labor cost savings goal. The section 1113 provisions of the bankruptcy code will potentially give Northwest a powerful tool to meet its labor cost reduction targets. In addition to its high labor costs, the weak revenue environment and high fuel costs plaguing the entire airline industry have increased pressure on Northwest's liquidity. In the first half of 2005, the airline's unrestricted cash balance fell from $2.5 billion to $2.1 billion. With heavy debt, pension, and lease obligations looming on the near-term horizon, Northwest's liquidity position would have deteriorated rapidly over the next several months. By entering Chapter 11 protection at this time, Northwest has avoided several near-term cash obligations, including a $65 million pension contribution, which would have further eroded its unrestricted cash position. Northwest enters Chapter 11 protection without a debtor-in- possession loan, although one could potentially be arranged later during the bankruptcy process. Based on the high percentage of secured debt in Northwest's capital structure, which will receive priority in the settlement of claims, Fitch estimates that recoveries to holders of the airline's unsecured debt obligations will be in the single-digit percentage range. This would be consistent with unsecured debt recoveries in other recent airline bankruptcies (e.g. US Airways' first bankruptcy and United Airlines' plan of reorganization filed with the court this month). This low level of recovery equates to a recovery rating of 'R6' and an issue rating of 'C'. Northwest's in-court restructuring efforts will likely focus on wage and work rule concessions, a potential termination of existing defined benefit pension plans, and a rationalization of its domestic route network to maximize unit revenue in the face of significant low-cost carrier competition. Northwest will likely seek other opportunities to renegotiate aircraft-backed debt and lease obligations to reduce secured claims in a post-Chapter 11 scenario. The 'C' rating on Northwest's defaulted unsecured debt obligations follows from Fitch's revised recovery rating methodology guidelines. The 'C' rating represents the lowest possible issue rating for a defaulted security with below-average or poor recovery prospects. For more information on Fitch's airline recovery ratings methodology, see the 'Airline Industry Recovery Ratings Guidelines,' available on the Fitch web site at http://www.fitchratings.com/in the 'Recovery Ratings' section. OFFICE PORTFOLIO: Fitch Affirms BB+ Rating on $17.1MM Certificates ------------------------------------------------------------------ Fitch Ratings affirms Office Portfolio Trust commercial mortgage pass-through certificates, series 2001-HRPT: --$23.2 million class A-1 at 'AAA'; --$28.0 million class A-2 at 'AAA'; --$91.0 million class A-2FL at 'AAA'; --Interest only class IO at 'AAA'; --$11.6 million class B-FL at 'AA+'; --$15.6 million class C-FL at 'AA'; --$11.0 million class D at 'A+'; --$10.0 million class E at 'A'; --$11.1 million class E-FL at 'A'; --$17.7 million class F at 'BBB'; --$10.8 million class G at 'BBB-'; --$17.1 million class H at 'BB+'. Although Fitch remains concerned with the two Austin, TX properties, affirmations are warranted due to the improved overall occupancy of the portfolio. The portfolio's adjusted net cash flow based on the servicer- provided year-end 2004 financials has declined 13.9% since issuance, but is essentially flat since YE 2003. Overall portfolio occupancy as of August 2005 has improved to 90.2% compared to 82.1% as of June 2004, but is lower than the occupancy of 97.4% at issuance. The Fitch stressed debt service coverage ratio as of YE 2004 was 1.24 times (x) which is flat compared to YE 2003, but lower than the 1.41x at issuance. The Fitch DSCR is based on a stress constant of 9.66% and the current balance of the loan with credit give for future amortization. The certificates are secured by six cross-collateralized and cross-defaulted mortgage loans on six office properties containing approximately 2.2 million square feet and located in four metropolitan markets. The loans amortize on a 30-year amortization schedule with a maturity date in January 2011. As of August 2005, the unpaid principal balance has amortized 4.9%. While occupancy levels at the two Austin, TX properties (26.4%) have improved since Fitch's last review, average occupancy for these two properties remains only 71.7% as of August 2005 with rental rates on newly signed leases that are lower than that at issuance. Fitch adjusted net cash flow at the other four properties in the portfolio, however, has improved since issuance, increasing 11.4% as of YE 2004 over issuance. The average occupancy for the four properties is 98.2%. The four properties are located in strong sub-markets within major metropolitan areas. The properties are located in the East End submarket of Washington, DC (two properties, 21.3% allocated loan balance), Market Street West submarket of Philadelphia (one property, 24.3%), and West Los Angeles of Los Angeles (one property, 28.0%). The portfolio benefits from the experienced sponsorship and management through HRPT Properties, rated 'BBB' by Fitch, and REIT Management and Research, Inc., a wholly owned subsidiary of HRPT Properties. ONESOURCE TECHNOLOGIES: Receives Notice of Default from Comerica ---------------------------------------------------------------- One Source Technologies Inc. reported that on Sept. 12, 2005, it received notice from Comerica Bank that certain events of default had occurred and continue to exist under the credit agreement, dated Nov. 9, 2004, between the company and the bank, which established a revolving line of credit in the amount of $1,500,000 and a term loan in the amount of $1,750,000. The company currently has $1,300,000 outstanding under the revolving line of credit and $1,402,920 outstanding under the term loan. The bank stated that, effective Sept. 12, 2005, and until such time as the company's noncompliance with the specified covenants is cured, it would charge the company the default interest rate pursuant to the agreement at the increased rate of 5% per year in excess of the agreed upon interest rate under the agreement, and that it has reserved all of its rights and remedies under the agreement. The company is currently working with the bank to restructure the loan. The current financial status of the company, after fully reflecting the adjustments discussed above has created the default condition with respect to the company's borrowings under the agreement. The bank, at its discretion, may demand immediate repayment of a portion or all of its outstanding loans until this default condition is cured. The company is currently in active negotiation with third parties. The transactions that are being discussed would, if consummated, include a potentially significant equity investment in OneSource Technologies Inc. and a potential change in control. No assurances can be given that we and the third parties with whom we are negotiating will successfully conclude any transaction nor that the company can arrange any additional or alternative financing to satisfy its current or longer-term operating requirements. Without access to additional funding, in the short term, the ability of the company to continue operations is severely impaired. OneSource Technologies, Inc. serves as a technology infrastructure maintenance and supplies distribution company. It offers related and complementary lines of technology industry services and products. The company provides equipment sales, integration, and maintenance services; and value added equipment supply sales. Its products include ribbons, toner, and original equipment manufactured and remanufactured toner cartridges for copiers, faxes, and laser printers. OneSource develops Flat-Rate Blanket Maintenance System, which provides customers with a single source for all general office, computer and peripheral, and industry- specific equipment technology maintenance, installation, and supply products. The company's customers include large regional enterprises and divisions of national companies in the banking and retail industries. OneSource Technologies is headquartered in Scottsdale, Arizona. ONESOURCE TECHNOLOGIES: To Restate First Quarter 2005 Financials ---------------------------------------------------------------- OneSource Technologies Inc. (OTCBB: OSRC) intends to restate its financial statements as of March 31, 2005, and for the three months then ended, to correct processing and recording errors related to sales contract billings and sales tax accruals. The result of that correction is to reduce the revenue recorded for the three months ended March 31, 2005, by $90,493. The restated Form 10-QSB for the quarter ended March 31, 2005, will also reflect an increase in other expenses of $62,500. These two adjustments result in a reduction of previously reported net income for the first quarter by $152,993. The resulting adjusted net loss for the period will be restated as $91,702. In addition, it has been determined that in the March 31, 2005 Form 10-QSB, as filed, inventory and deferred revenue accounts were erroneously understated equally by approximately $682,500. This misstatement, by itself, had no effect on the amount previously reported as net income for the quarter, since the cost of goods sold is calculated independently from the inventory and deferred revenue account balances. As a result of these corrections the Form 10-QSB for the period ended March 31, 2005, will be amended and filed as soon as possible. Second Quarter Financials Update The company also intends to take certain charges in the three- month period ended June 30, 2005, to reflect adjustments to the carrying value of inventory and goodwill associated with its 2004 acquisition of First Financial Computer Services Inc. These asset value adjustments will include a write-down of inventory book value by $3 million, and a write-off of goodwill balances of $1,521,828. During the quarter ended June 30, 2005, the company conducted an analysis of inventory acquired in the FFCS acquisition. That analysis included consideration of existing and probable customer contracts and the projected utilization of inventory to service this customer base. As a result, the company determined that the carrying value of the FFCS inventory was impaired and a write-down to the estimated realizable value was appropriate. Additionally, the company conducted an analysis of the goodwill arising in the FFCS acquisition. Due to lower than anticipated cash flows from the FFCS business, the company has determined that the carrying value of the goodwill is impaired at June 30, 2005. Additionally, in the quarter ended June 30, 2005, the company anticipates recording charges of approximately $1.1 million in order to increase inventory and accounts receivable reserves to levels judged to be required at that date. Management is completing a rigorous examination of the carrying value of all material account balances and is also analyzing its accounting processes. It is expected that this examination will be completed by Sept. 30, 2005. The cumulative impact of these various adjustments will result in a shareholder deficit of more than $5 million as of June 30, 2005. OneSource Technologies, Inc. serves as a technology infrastructure maintenance and supplies distribution company. It offers related and complementary lines of technology industry services and products. The company provides equipment sales, integration, and maintenance services; and value added equipment supply sales. Its products include ribbons, toner, and original equipment manufactured and remanufactured toner cartridges for copiers, faxes, and laser printers. OneSource develops Flat-Rate Blanket Maintenance System, which provides customers with a single source for all general office, computer and peripheral, and industry- specific equipment technology maintenance, installation, and supply products. The company's customers include large regional enterprises and divisions of national companies in the banking and retail industries. OneSource Technologies is headquartered in Scottsdale, Arizona. OPTINREALBIG.COM: Court Extends Exclusive Periods Until October 21 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Colorado approved OptinRealBig.com, LLC, and its owner, Scott Allen Richter's request for more time to file a chapter 11 plan and solicit acceptances of that plan. The Court gave the Debtors until Oct. 21, 2005, to file a plan, and until Dec. 20, 2005, to solicit acceptances of that plan. The Debtors will use the extension period to conclude proceedings with respect to their motion to dismiss their chapter 11 case as previously reported in the Troubled company Reporter on August 18, 2005. Headquartered in Westminster, Colorado, OptinRealBig.com, LLC, is an e-mail marketing company. The Company filed for chapter 11 protection on March 25, 2005 (Bankr. D. Colo. Case No. 05-16304). John C. Smiley, Esq., at Lindquist & Vennum P., LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $50 million to $100 million. P R HOSPITALITY: Case Summary & 18 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: P R Hospitality Group, LLC dba Kingsport Inn 700 Lynn Garden Drive Kingsport, Tennessee 37660 Bankruptcy Case No.: 05-53477 Type of Business: The Debtor operates an inn. Chapter 11 Petition Date: September 14, 2005 Court: Eastern District of Tennessee (Greeneville) Judge: Marcia Phillips Parsons Debtor's Counsel: Fred M. Leonard, Esq. 27 Sixth Street Bristol, Tennessee 37620 Tel: (423) 968-3151 Total Assets: $1,552,700 Total Debts: $1,898,089 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jayant Mehta $150,000 2367 Middlefield Avenue Freemont, CA 94539 Howard Johnson Value of Security: $135,000 International, Inc. $1,300,000 c/o Christopher Nanos Pitney, Hardin, Kipp & Szuch LLP 200 Campus Drive Florham Park, NJ 07960-1945 Nayant Savani $163,656 Broadway Center 2nd Floor Dr. Ambedkar Road Dadar (E) Mumbai 400 014 Dr. Ashok Mehta $50,000 1903 Roundtree Drive Johnson City, TN 37604 Appalachian Power $5,227 City of Kingsport (Water) $4,761 Telcove $4,168 Impex International $3,924 Tri-City Radiology $2,474 Heritage Insurance Group $1,648 Kelson $1,281 Atmos Energy $1,114 Receivable Management Service $1,035 Charter Communication $283 Allied Waste Service $187 Burns Systems Inc. $52 Service Plus Termite & $45 Pest Control East TN Nextwork $21 PACIFIC ENERGY: Moody's Puts Ba2 Rating on $150MM Sr. Unsec. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating for Pacific Energy Partners, L.P.'s (PPX) pending $150 million senior unsecured notes offering, affirmed its existing Ba2 senior unsecured note ratings, affirmed privately-held LB Pacific, LP's (LBP) B1 senior secured bank ratings, and affirmed the LBP/PPX consolidated credit group's Ba2 Corporate Family Rating, assigned at the LBP level. Moody's also withdrew its Ba1 rating on subsidiary Pacific Energy Group's former $200 million bank revolver which will be replaced by an unrated $700 million bank facility in connection with PPX's pending closing of terminal and pipeline acquisition. The rating outlook is stable. Today's actions conform to rating actions set forth in our August 5, 2006 press release associated with PPX's pending acquisition and related funding. Moody's rating affirmations then were contingent on at least 60% common equity funding for that acquisition, a condition that has been met. PPX is a public master limited partnership (MLP). LBP owns Pacific Energy GP, LLC (PEGP), which owns PPX's 2% managing general partner interest, providing LBP with effective strategic and operating control over PPX. LBP also owns a 29.9% limited partner interest in PPX, down from 34.6% after PPX's equity offering last week, in the form of subordinated (22.4%) and common units (7.5%). Together with at least $274 million of new private and public equity, up to another $21 million of equity under the underwriters' over-allotment option if exercised or bank debt if that option is not exercised, the new note proceeds will fund PPX's $455 million acquisition of three regional business units (midstream refined product terminals, storage, and pipeline assets, plus crude oil storage assets) from Valero, L.P. The acquisition would add two major refining regions to PPX's service area, doubling its number of refining centers served and providing important diversification of regional and specific refinery risk. It would also diversify PPX into the refined product midstream business, with two of the three asset packages located in distinctly growing markets, and, for the first time, place PPX in the East Coast market for domestic refined products and greater Atlantic Basin market for imported refined product and imported crude oil. In contrast to declining U.S. crude oil production, refined product volume grows with North American economic and demographic growth, in turn driving rising imported crude oil volumes. The acquisition adds 9.1 million barrels of storage capacity to PPX's system. Through adequately equity-funded acquisitions, PPX now operates at increasingly greater scale and diversification, particularly reducing the proportional impact of secular decline in California oil production and California pipeline throughput. PPX's ratings are supported by: (1) regionally diversified operations; strategic exposure to secularly rising imported crude oil volumes at Pacific Terminals, the Canadian and Rocky Mountain pipelines, and the East Coast; (2) crude oil pipelines in California strategic to central and offshore California crude oil producers and feeding crude oil to Los Angeles refiners. Moody's expects rising imported crude oil throughput for Pacific Terminals and PPX's cluster of Rocky Mountain and Canadian pipeline interests. PPX to date has been able to mitigate the cash flow impact of falling California pipeline volume with increased pipeline tariffs. PPX's regional diversification also mitigates its exposure to the risk of reduced pipeline volumes due to individual refinery downtimes. The company has thus far used adequate equity funding, consequently restraining the amount of senior secured debt to levels not warranting a notching of the senior unsecured notes for effective subordination. PPX's ratings are restrained by: (1) a still modest though growing business scale; (2) constant distributions of free cash flow to MLP unit holders, after interest expense and maintenance capital spending; (3) resulting reduced internal cash flow reinvestment to fuel organic credit accretion and reliance on new units offerings and debt funding for most of PPX's growth effort; (4) ongoing acquisition risk, in an extremely competitive expensive midstream market, to achieve growth expectations; (5) intense competition for Canadian, U.S., and waterborne imported crude oil throughput volumes; (6) declining California crude oil throughput; (7) full PPX leverage relative to its ratings and scale and full combined PPX and LBP leverage; and (8) a remaining degree uncertainty of the impact on PPX's strategy due to the change in PEGP ownership from Anschutz Corporation to Lehman Brothers Merchant Banking and First Reserve. PPX's trailing 12 month EBITDA for June 2005 was about $92 million. Pro-forma for the Valero acquisitions, Moody's expects pro-forma 2005 EBITDA to be in the $115 to $125 million range. Pro-forma 2005 EBITDA/Interest and EBIT/Interest coverage appears to be in the range of 4.0x to 4.5x and 3.0x to 3.2x, respectively. Pro-forma June 30, 2005 Debt/Capital is in the range of 45%, pro-forma Debt/Pro-forma EBITDA is in the range of 3.5x to 4.25x, and Debt/Pro-forma Gross Cash flow is in the 4.5x to 5.0x range. The ratings are also supported by: (1) the fact that PPX has only a small exposure to crude oil gathering, marketing, and trading; (2) the durable demand for PPS's California pipeline throughput; (3) the relatively predictable rate of California throughput decline and PPS's ability to partially offset the cash flow impact of that decline by raising tariffs; the strong credit ratings of its shippers; and (4) the relatively durable (though regionally far more competitive) throughput of PPX's Rocky Mountain and Canadian systems. Offshore California oil production declines 7% to 8% per year while onshore San Joaquin Valley production declines roughly 3% per year, restraining cash flow. However, three partial mitigants that impact include: (1) pricing power to raise tariffs on remaining California throughput; (2) added diversification from the Valero assets; (3) rising import throughput and utilization of the Pacific Terminal segment; and (4) PPX's rising Rocky Mountain system throughput. PPX faces highly competitive conditions in pursuing declining Rocky Mountain conventional crude oil production volumes and rising Canadian synthetic crude oil production. While Moody's anticipates progressively rising southbound Canadian synthetic crude oil throughput over the intermediate term, the eventual size of that market will evolve from a number of forces beyond PPX's control. Ultimate growth in that volume will evolve from the interplay between: (1) the pace of oil sands development; (2) producer efforts to create more widely attractive varieties of synthetic crude oil blends; (3) the degree of investment by Rocky Mountain refineries to run higher proportions of synthetic crude oil; (4) similarly, growth in Midwest refiners' demand for synthetic crude oil, taking volumes down competing pipelines; and (5) the degree to which up to three new potential Canadian pipelines create substantial markets on the U.S. West and Gulf Coasts for syncrude, increasing the competition for Canadian syncrude. Moody's notes PPX's inability (prior to its late 2005 completion of a key pumping station) to materially grow its volumes of imported Canadian syncrude; still modest size relative to the scale of potential acquisitions; and expected large funding needs beginning in the 2006 time frame if PPX proceeds with its potentially important Port of Los Angeles Pier 400 deepwater port terminal project. LBP is 70% owned by private equity funds managed by Lehman Brothers Merchant Banking Fund and 30% by First Reserve, a private equity fund focused on energy sector investing. PPX's key subsidiaries are Pacific Energy Group (PEG), Pacific Pipeline Systems (PPS) and Pacific Terminals (PT) which own and operate crude oil pipelines and storage terminals in the California, Rocky Mountain Pipeline System which owns and operates crude oil pipelines in the Rocky Mountains, and smaller PEG Canada, L.P. (PEGC), operating in western Canada. While the PPX notes are guaranteed on a senior unsecured basis by PPX's direct domestic subsidiaries holding the equity of indirect operating subsidiaries, they are not guaranteed by the indirect Canadian subsidiaries. Furthermore, regulatory restrictions limit the ability of certain of PPX's indirect domestic subsidiaries, which hold its key West Coast regulated pipeline and storage assets, to guarantee the parent notes. On August 5, 2005, Moody's recalibrated PPX's Corporate Family Rating (formerly named the Senior Implied Rating) by expanding PPX's consolidated corporate credit to include its controlling general partner, LBP. LBP holds $175 million of senior secured bank debt, rated B1. As such, Moody's expects combined LBP/PPX debt leverage on PPX's EBITDA to start at roughly 5.8x, or 8.2x after deducting PPX's maintenance capital spending and interest from EBITDA, and in the range of 10x after further deducting LBP's from the PPX EBITDA stream. With a stable outlook, Moody's took these actions today: * Assigned a Ba2 rating to PPX's pending $150 million senior unsecured note offering. * Affirmed the LBP/PPX group's Ba2 Corporate Family Rating, assigned at the LBP level. * Affirmed PPX's existing Ba2 senior unsecured note ratings. * Affirmed LBP's B1 senior secured Term Loan B rating. * Withdrew Pacific Energy Group's Ba1 bank debt rating. Pacific Energy Partners, L.P. and Pacific Energy Group LLC are headquartered in Long Beach, California. LB Pacific is headquartered in New York, New York. PROMETRIX CORPORATION: Case Summary & 20 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Prometrix Corporation 1085 Telegraph Street Reno, Nevada 89502 Bankruptcy Case No.: 05-53017 Type of Business: The Debtor fabricates precision sheet metal and system assembly and offers supplier-managed inventory, turnkey assembly, custom engineering, a complete stamping, liquid painting and powder coating facilities. See http://www.prometrixcorp.com/ Chapter 11 Petition Date: September 16, 2005 Court: District of Nevada (Reno) Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, Nevada 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 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 ------ --------------- ------------ Data Display Systems Goods/Services $289,657 14001 Townsend Road Philadelphia, PA 19154 Camp Chef Goods/Services $282,924 675 North 600 West P.O. Box 4057 Logan, UT 84321 Home Depot Goods/Services $115,389 P.O. Box 6031 The Lakes, NV 88901-6031 Sun Automation Inc. Goods/Services $97,485 3135 N. Delaware Street, Suite 3 Chandler, AZ 85225 Agile Software Corporation Goods/Services $90,000 13425 Collections Center Drive Chicago, IL 60693 Conway Western Express Goods/Services $70,000 Sierra Pacific Goods/Services $50,824 Engineering & Products Bar Code Supply Co., Inc. Goods/Services $41,538 Emka, Inc. Goods/Services $30,000 LaSalle Bristol Goods/Services $29,613 Valley Industrial Supply Goods/Services $26,681 LG Electronics USA, Inc. Goods/Services $24,750 The Cable Connection, Inc. Goods/Services $22,038 Xantrex Technology, Inc. Goods/Services $20,549 Amerasia Enterprises, Inc. Goods/Services $20,000 dba Megabrite Polymer Plastics Goods/Services $17,385 National Manufacturing Sales Goods/Services $17,326 Company GO Engineer, Inc. Goods/Services $17,200 Faultless Caster Goods/Services $16,802 Zodi Outback Gear Goods/Services $15,632 RITE AID: Amends Senior Secured Facility to $1.75 Billion --------------------------------------------------------- Rite Aid Corporation (NYSE, PSE:RAD) reached agreement with its lead banks, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., to amend its existing senior secured credit facility totaling $1.4 billion by increasing the total facility to $1.75 billion. The $1.75 billion senior secured revolving credit facility, priced initially at LIBOR plus 150 basis points, will replace an existing $950 million revolving credit facility, currently priced at LIBOR plus 175 basis points, and an existing $450 million senior secured term loan, priced at LIBOR plus 175 basis points. The amendment will also reduce the commitment fee from 37.5 basis points to 25 basis points. A portion of the amended revolver will be used to pay off the existing $450 million term loan at closing and to pay related fees and expenses. The amended revolving credit facility is expected to mature in September 2010 compared to the current credit facility which matures in September 2009. The closing of the amendment is subject to successful syndication and satisfaction of customary closing conditions, including documentation. The company expects to complete the amendment no later than early October. If the amendment closes as planned, the company said it expects to save approximately $1.6 million in interest expense annually. "Although we have no intention of significantly increasing debt, a larger revolver-only facility gives us more flexibility to execute our business plan and lowers interest expense," said Mary Sammons, Rite Aid president and CEO. Based on current trends and taking into consideration expected insurance reimbursement for losses and damages resulting from Hurricane Katrina, Rite Aid confirmed its fiscal 2006 guidance for sales, net income, adjusted EBITDA and capital expenditures and lowered its guidance for earnings per share, due to the premium paid to redeem the company's Series F preferred stock on August 23, 2005. The company said it expects sales to be between $17.1 billion and $17.4 billion, with same store sales improving 0.5% to 2.0% over fiscal 2005. Net income for fiscal 2006 is expected to be between $31 million and $62 million. Adjusted EBITDA is expected to be between $675 million and $725 million. Capital expenditures are expected to be between $350 million and $400 million. Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of $16.8 billion and approximately 3,350 stores in 28 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Sept 1, 2005, Moody's Investors Service lowered the Speculative Grade Liquidity Rating of Rite Aid Corporation to SGL-3 from SGL-2, affirmed all long-term debt ratings (Corporate Family Rating of B2), and revised the rating outlook to negative from stable. The downgrade of the Speculative Grade Liquidity Rating reflects Moody's expectation that mediocre operating cash flow and planned capital investment increases over the next twelve months will require the company to rely on external financing sources to cover the cash flow deficit. While liquidity over the next twelve months is adequate, revision of the outlook to negative on Rite Aid's long-term debt ratings reflects Moody's concern that operating results have stabilized at a level insufficient to fully fund fixed charges such as debt service, cash preferred stock dividends, and capital investment, as well as the company's weak operating performance relative to higher rated peers. This rating is lowered: -- Speculative Grade Liquidity Rating to SGL-3 from SGL-2. Ratings affirmed are: -- $860 million 2nd-lien senior secured notes (comprised of 3 separate issues) at B2; -- $1.28 billion of senior notes (comprised of 8 separate issues) at Caa1; -- $250 million of 4.75% convertible notes (2006) at Caa1; and -- Corporate Family Rating (previously called the Senior Implied Rating) at B2. RURAL/METRO: Equity Deficit Narrows to $111 Million at June 30 -------------------------------------------------------------- Rural/Metro Corporation (Nasdaq/SC: RURL), reported preliminary, unaudited financial results for its fourth quarter and fiscal year ended June 30, 2005. The company has issued preliminary financial results as it completes its evaluation of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and expects to file its Form 10-K and final results with the Securities and Exchange Commission on September 28, 2005. The company expects final results will be consistent with this disclosed preliminary, unaudited results. For the fourth quarter ended June 30, 2005, net revenue increased 10.1% to $137.4 million, compared to $124.8 million in the fourth quarter of the prior year. For the fiscal year ended June 30, 2005, net revenue increased 7.6% to $531.1 million, compared to $493.8 million for fiscal 2004. Revenue growth for the quarter and fiscal year primarily reflects a growing demand for medical transportation and subscription fire protection services, as well as increasing rates in both the medical transportation and fire protection businesses. Fourth quarter net income for 2005 was $73.4 million or $2.95 per diluted share (including $71.5 million or $2.87 per diluted share relating to the deferred tax adjustment described below) compared to net income of $1.3 million, or $0.06 per diluted share in the prior year fourth quarter. For the fiscal year ended June 30, 2005, the company reported net income of $77.9 million or $3.23 per diluted share (including $71.5 million or $2.96 per diluted share relating to the deferred tax adjustment) compared to net income of $6.2 million, or $0.28 per diluted share, in fiscal 2004. Fourth quarter and full year net income for 2005 includes a $71.5 million deferred income tax benefit resulting from the reversal of valuation allowances associated with the company's deferred tax assets, primarily those relating to the company's net operating loss carryfowards, as realization of such benefit is currently considered likely. In addition to the deferred tax adjustment, fiscal year 2005 net income includes an $8.2 million loss on early debt extinguishment reported in the third quarter of 2005. Jack Brucker, President and Chief Executive Officer, said, "Our continued strong financial performance reflects the targeted growth we have generated during the year to meet the steadily increasing demand for our services combined with operating improvements and cost-management initiatives that we have achieved. Mr. Brucker continued, "We remain focused on continued market growth through the addition of select, new 911 contracts and the retention of contracts in locations where we have a well-established and growing operational base; advancing the technologies to ensure high-quality, reliable services and to protect the safety of our work force. Additionally, we continue to implement programs to enhance cash-flow performance, which is a foundation of our deleveraging strategy." Rural/Metro Corporation -- http://www.ruralmetro.com/-- provides emergency and non-emergency medical transportation, fire protection, and other safety services in 23 states and approximately 365 communities throughout the United States. As of June 30, 2005, Rural/Metro's equity deficit narrowed to $111,165,000 from a $192,226,000 deficit at June 30, 2004. RUSSELL-STANLEY: Wants to Assign Leases to RSH Acquisition ---------------------------------------------------------- Russell-Stanley Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District to Delaware to approve their assumption and assignment of certain executory contracts and unexpired leases in connection with the proposed sale of substantially all of their assets to RSH Acquisition Corp. German industrial packaging group Mauser-Werke GmbH & Co. KG and private equity firm One Equity Partners LLC formed RSH Acquisition in order to acquire the Debtors' business in a $96.4 million cash deal. As reported in the Troubled Company Reporter, the Debtors filed a pre-packaged chapter 11 petition as a condition to the Mauser- Werke sale. The Debtors say operational concerns did not trigger their bankruptcy filing and maintains that their underlying business is sound. The Debtors' counsel, David R. Hurt, Esq., at Skadden, Arps, Slate, Meagher, & Flom LLP, tells the Bankruptcy Court that these contracts are integral to the Debtors' business and, as such, must be assigned to RSH Acquisition. Pursuant to the terms of the asset sale, the Debtors agree to make all payments necessary to cure defaults under the assumed contracts. The Debtors propose that any objection to the cure amounts set in the assumption schedule shall not constitute an objection to the assumption and assignment of the related contract or lease. To efficiently resolve objections, the Debtors ask the Bankruptcy Court for authority to negotiate and settle cure amount objections without further orders from the Bankruptcy Court. If a consensual resolution of the cure amount objections cannot be reached, the Debtors propose to: a) pay in full the undisputed portion of the cure amount; and b) segregate the disputed portion of the cure amount pending the resolution of the objection by the Bankruptcy Court or a mutual agreement between the Debtors and the objecting party. The Hon. Mary F. Walrath will convene a hearing at 10:30 a.m. on Sept. 23, 2005 to review any objections to the proposed assumption and assignment of the contracts and leases. A list of the unexpired contracts and lease is available for free at http://bankrupt.com/misc/RussellStanley_Contracts.pdf Headquartered in Bridgewater, New Jersey, Russell-Stanley Holdings, Inc. -- http://www.russell-stanley.com/-- is North America's largest plastic drum manufacturer, second largest steel drum manufacturer, and a leading industrial container supply chain management company. The Company and its affiliates filed for chapter 11 protection on Aug. 19, 2005 (Bankr. D. Del. Case No. 05-12339). Mark S. Chehi, Esq., and Sarah E. Pierce, Esq., Kayalyn A. Marafioti, Esq., Frederick D. Morris, Esq., and Bennett S. Silverberg, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. As of Aug. 24, 2005, the Debtors estimated total assets of $293,388,432 and total debts of $669,100,295. S-TRAN HOLDINGS: Removal Period Stretched to November 9 ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended S-Tran Holdings, Inc., and its debtor-affiliates period within which they can remove civil actions through and including November 9, 2005. As previously reported, the Debtors have devoted substantial amounts of time completing the shutdown of their operations, selling their assets, conducting the auction pursuant to the sale order, preparing and filing their schedules and statements and other bankruptcy matters. The Debtors believe that the extension of the removal period will afford them the opportunity necessary to make fully informed decisions concerning the removal of each action and will assure that they do not forfeit valuable rights under 28 U.S.C. Sec. 1452. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05- 11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. S-TRAN HOLDINGS: Wants to Sell Remaining Assets in Mississippi -------------------------------------------------------------- S-Tran Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to sell their remaining personal property to the highest bidder at the Tunica, Mississippi auction, by private sale or other public auction. On June 9, 2005, the Bankruptcy Court entered the Sale Order for the Debtors' assets. On May 5, 2005, the Debtors shut down their freight delivery business operations. However, the Debtors still have approximately 7 tractors, 90 trailers and other motor vehicle equipment remaining. Because of the shut down, the Debtors tell the Bankruptcy Court that the remaining property is of no value to them except to the extent the assets can be liquidated, and converted to cash for distribution to creditors. The Debtor adds that the parties asserting lien claims against the properties will consent to the proposed sale free and clear of all liens, provided they will be paid on their valid lien claims in full, or can be required to accept a money satisfaction of such interest. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. SANDY BAY: Case Summary & 29 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: Sandy Bay LLC 45 Marion Street Brookline, Massachusetts 02446 Bankruptcy Case No.: 05-18628 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Needham Street Properties LLC 05-18629 Marion Properties Group LLC 05-18630 Chateau Estates Limited Partnership 05-18631 Jamar Anthony LLC 05-46520 Chapter 11 Petition Date: September 18, 2005 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Debtors' Counsel: Stephen E. Shamban, Esq. Stephen E. Shamban Law Offices, P.C. 222 Forbes Road, Suite 208 P.O. Box 850973 Braintree, Massachusetts 02185-0973 Tel: (781) 849-1136 Estimated Assets Estimated Debts ---------------- --------------- Sandy Bay LLC $1 Million to $1 Million to $10 Million $10 Million Needham Street $1 Million to $10 Million Properties LLC $10 Million $50 Million Marion Properties $1 Million to $1 Million to Group LLC $10 Million $10 Million Chateau Estates $1 Million to $1 Million to Limited Partnership $10 Million $10 Million Jamar Anthony LLC $1 Million to $1 Million to $10 Million $10 Million A. Sandy Bay LLC's 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Paragon Properties $200,000 45 Marion Street Brookline, MA 02446 Marvin Glick $175,000 45 Marion Street Brookline, MA 02446 PC Inc. $75,000 45 Marion Street Brookline, MA 02446 Mass Electric $15,000 P.O. Box 1000 Woburn, MA 01807 Waste Management $2,000 4 Technology Drive Westborough, MA 01581 B. Needham Street Properties LLC's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Back Bay Condominium Coop. $150,000 45 Marion Street Brookline, MA 02446 PC Inc. $125,000 45 Marion Street Brookline, MA 02446 NStar Electric $15,000 P.O. Box 4508 Woburn, MA 01888 Waste Management $1,500 4 Technology Drive Westborough, MA 01581 C. Marion Properties Group LLC's 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Marvin Glick $400,000 45 Marion Street Brookline, MA 02446 PC Inc. $40,000 45 Marion Street Brookline, MA 02446 Keyspan $5,000 P.O. Box 4300 Woburn, MA 01888 NStar $1,000 P.O. Box 4508 Woburn, MA 01888 Waste Management $1,000 4 Technology Drive Westborough, MA 01581 D. Chateau Estates Limited Partnership's 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Marvin Glick $2,200,000 45 Marion Street Brookline, MA 02446 Marion Realty Co. $1,000,000 45 Marion Street Brookline, MA 02446 PC Inc. $50,000 45 Marion Street Brookline, MA 02446 Sovereign Bank $50,000 P.O. Box 12707 Reading, PA 19612 Bay State Glass $15,000 P.O. Box 830014 Baltimore, MD 21283 Taunton Lighting Co. $5,000 55 Weir Street Taunton, MA 02780 Waste Management Inc. $2,000 4 Technology Drive Westborough, MA 01581 E. Jamar Anthony LLC's 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Marvin Glick $900,000 45 Marion Street Brookline, MA 02446 Marvin Glick $200,000 45 Marion Street Brookline, MA 02446 Paragon Properties $150,000 45 Marion Street Brookline, MA 02446 Sandy Bay LLC $100,000 45 Marion Street Brookline, MA 02446 Marvin Glick $75,000 45 Marion Street Brookline, MA 02446 PC Inc. $25,000 45 Marion Street Brookline, MA 02446 Mass Electric $15,000 P.O. Box 1000 Woburn, MA 01807 Waste Management $2,000 4 Technology Drive Westborough, MA 01581 SEMCO ENERGY: Enters into $120 Million Revolving Credit Facility ----------------------------------------------------------------- Semco Energy, Inc. (NYSE: SEN) entered into a $120 million unsecured revolving credit facility with LaSalle Bank, formerly known as Standard Federal Bank, as administrative agent and a syndicate of lenders. The Agreement replaces the Company's existing $100.8 million credit facility, which was due to expire on September 23, 2005. The Agreement has a maturity date of September 15, 2008. Borrowings under the Agreement may be used to refinance existing debt, to provide for the working capital requirements and general corporate purposes of the Company and its subsidiaries and to finance acquisitions permitted under the Agreement. The Agreement contains certain loan covenants, including, among others, financial covenants requiring a maximum total leverage ratio, a minimum interest coverage ratio and a minimum net worth test. "Entering into this credit facility is another important milestone in the improvement of the Company's financial condition. The new facility should provide adequate liquidity for the Company for the foreseeable future," said George A. Schreiber, Jr., SEMCO ENERGY, Inc. President and Chief Executive Officer. Schreiber continued: "I am pleased with the length and terms of the new credit facility. In my view, this new credit facility reflects our accomplishments over the past year and is another confirmation that we are on the right course." Semco Energy, Inc. distributes natural gas to more than 404,000 customers combined in Michigan, as Semco Energy Gas Company, and in Alaska, as ENSTAR Natural Gas Company. It also owns and operates businesses involved in propane distribution, intrastate pipelines and natural gas storage in various regions of the United States. * * * Standard & Poor's Rating Services rates the Company's 6.49% Senior Notes due 2009 at BB-. SEMCO ENERGY: Moody's Revises Outlook on Ba2 Ratings to Stable -------------------------------------------------------------- Moody's Investors Service affirmed SEMCO Energy, Inc.'s ratings on its debt obligations at Ba2 senior unsecured and changed the rating outlook to stable from negative. This rating action follows SEMCO's successfully clearing the hurdles cited in our negative outlook, including the issuance of common stock and the renewal of its credit facility. The company issued $30 million of common stock as planned last month and yesterday applied the full amount of those proceeds toward redeeming trust preferreds that we considered as debt. Today, the company closed on its new expanded credit facility that addressed our concerns about renewal risk. The equity issuance and debt reduction neutralize the incremental leveraging, which occurred with the preferred stock refinancing last March that precipitated our negative outlook. They also restore SEMCO's near-term financial outlook to levels in line with our expectations for its current ratings. We also acknowledge SEMCO's common stock issuance as an indication of the management's commitment to improve its credit quality. The stabilization of the outlook also recognizes the satisfactory conclusion of its Michigan rate case, another hurdle we had cited in our negative outlook. In addition, since we instituted the negative outlook, there have been proceedings in its other two jurisdictions that will mitigate regulatory risk over the next few years. In Alaska, SEMCO was ordered to file a rate case by 6/08 rather than imminently. In its Battle Creek rate settlement, SEMCO has a three-year stay-out provision, which expires in 4/08. In Michigan, SEMCO has no future base rate filing requirement. Rating Outlook The stable rating is based on Moody's understanding of SEMCO's commitment to improve credit quality, to eschew diversification from its core regulated gas businesses, and to finance any growth investments so as not to disrupt further stabilization of its financial position. SEMCO's ratings and outlook factor in the following range of expected credit metrics: adjusted leverage (adjusting debt to include operating leases and preferred stock and adjusting capitalization for goodwill) in the low 90% range, retained cash flow/adjusted debt in the 8% range, and FFO/fixed charges at about 2x. The likelihood of the company's achieving these metrics is supported by the low business risk of its gas distribution business, its exit from underperforming non-core businesses, and the above-mentioned financings that reduce its prospective fixed charges. Moody's expects that SEMCO will have the ability to generate modest free cash flow, which will be available to chip away at its debt. Moody's will monitor the company's compliance with its financial covenants, as there is limited cushion in the near term. What Could Change The Rating -- Up An upgrade is unlikely in the foreseeable future. Credit metrics that would cause us to consider an upgrade to Ba1 include: a sustained return to profitability and more substantial earnings, more headroom under its financial covenants, retained cash flow/debt in the 9-10% range, FFO/fixed charges at around 3x, and adjusted leverage in the 70% range. Given SEMCO's substantial debt load, it will take many years of debt reduction before the company achieves meaningful credit accretion from purely organic means. These financial constraints raise the possibility of event risk longer term that also causes us to restrain our ratings. What Could Change The Rating - Down A downgrade is possible if SEMCO falls outside the expectations underlying our stable outlook. SEMCO Energy, Inc., is a natural gas distribution company, headquartered in Port Huron, Michigan. SHOPKO STORES: Extends Tender Offer for 9-1/4% Notes to Sept. 29 ---------------------------------------------------------------- ShopKo Stores, Inc. (NYSE: SKO) extended its offer to purchase any and all of its outstanding $100 million principal amount of 9-1/4% Senior Notes due 2022 in connection with the previously announced definitive merger agreement, as amended, that provides for the acquisition of ShopKo by Badger Retail Holding, Inc. and Badger Acquisition Corp., which are affiliates of Minneapolis-based private equity firm Goldner Hawn Johnson & Morrison Incorporated. The Offer, scheduled to expire on Thursday, September 15, 2005 at 9:30 a.m., New York City time, will now expire at 5:00 p.m., New York City time, on Thursday, September 29, 2005, unless further extended or earlier terminated by ShopKo. All other terms, provisions and conditions of the Offer will remain in full force and effect. The terms of the Offer and Solicitation are described in the Offer to Purchase and Consent Solicitation Statement dated June 30, 2005, as amended by a Supplement dated August 10, 2005. ShopKo announced on August 15, 2005 that it had received the requisite consents to amend the indenture governing the Notes. ShopKo executed the supplemental indenture on August 16, 2005, eliminating substantially all of the restrictive covenants and certain events of default in the indenture governing the Notes. Copies of the Offer to Purchase and Consent Solicitation Statement may be obtained from Global Bondholder Services Corporation, the information agent for the Offer, at (866) 736-2200 (US toll free) or (212) 430-3774 (collect). ShopKo said it has been informed by the information agent that, as of 9:30 a.m., New York City time, on September 15, 2005, approximately $93.7 million in aggregate principal amount of Notes had been tendered in the Offer. This amount represents approximately 93.7% of the outstanding principal amount of the Notes. Banc of America Securities LLC and Morgan Stanley & Co. Incorporated are acting as the dealer managers for the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, the lead dealer manager, at (212) 847-5834 or (888) 292-0070. ShopKo Stores, Inc. -- http://www.shopko.com/-- is a retailer of quality goods and services headquartered in Green Bay, Wisconsin, with stores located throughout the Midwest, Mountain and Pacific Northwest regions. Retail formats include 140 ShopKo stores, providing quality name-brand merchandise, great values, pharmacy and optical services in mid-sized to larger cities; 223 Pamida stores, 116 of which contain pharmacies, bringing value and convenience close to home in small, rural communities; and three ShopKo Express Rx stores, a new and convenient neighborhood drugstore concept. With more than $3 billion in annual sales, ShopKo Stores, Inc., is listed on the New York Stock Exchange under the symbol SKO. * * * As reported in the Troubled Company Reporter on April 18, 2005, Moody's Investors Service placed the long-term debt ratings of ShopKo Stores, Inc., on review for possible downgrade following the company's announcement that it had signed a definitive merger agreement to be acquired by an affiliate of Goldner Hawn Johnson & Morrison. The downgrade reflects the anticipated significant increase in leverage as a result of the proposed transaction. The transaction is valued at slightly more than $1 billion and is expected to be funded predominantly from debt with only $30 million of the purchase price to be funded by equity. The company has received a commitment from Bank of America to provide $700 million in real estate financing and additional commitments from Bank of America and Back Bay Capital Funding LLC to provide $415 million in senior debt financing. The proceeds from these financings along with the $30 million of equity will be used to pay the merger consideration, refinance the borrowings under the existing revolving credit facility, fund the amounts due under the expected tender offer for the $100 million senior unsecured notes due 2022, plus all fees and expenses. In addition, the financing will be used to cover all future working capital needs. If substantially all of the senior notes are tendered the rating on those notes will be withdrawn. The review will focus on the debt protection measures of ShopKo post acquisition as well as the company's business strategy going forward. These ratings are placed on review for possible downgrade: * Senior implied of B1; * Issuer rating of B2; and * Senior unsecured notes due 2022 of B2. ST. MARYS CEMENT: Moody's Confirms B1 Ratings After Review ---------------------------------------------------------- Moody's Investors Service has confirmed St. Marys Cement's B1 senior secured and corporate family ratings. The rating outlook is stable. This concludes the review for possible downgrade, initiated on April 11, following the company's announcement that it had entered into a $54 million annual operating lease with an affiliate company to manage and operate the Great Lakes region cement assets of Cemex S.A. de C.V. purchased by St. Marys' Brazilian parent, Votorantim, for $389 million. The review for possible downgrade was also prompted by the company's weaker operating performance for the twelve-month period ending March 31, 2005 that was going to result in a covenant breach that was avoided by a capital contribution of $10 million from Votorantim, which was used to help pre-pay approximately $16 million in debt. The ratings confirmation reflects Moody's belief that, despite the effective increase in financial leverage, St. Marys will start generating consistent free cash flow due to stable demand and increasing prices for cement already witnessed in the 2nd quarter 2005. In addition, the company has increased capital spending on their cement plants over the last couple of years and will continue to invest in capital projects that will increase capacity and support additional revenue growth. The stable outlook presumes the company will maintain debt-to- EBITDA at, or below, 3.5x, free cash flow-to-debt of at least 8%, EBITDA margins of at least 20%, and EBIT interest coverage of at least 2.0x. Moody's adjusts all of these ratios by capitalizing the $54 million operating lease expense for the 2 newly acquired cement plants. The rating could come under pressure should the company not maintain these ratio levels due to weak operating performance or incremental capital spending that does not generate corresponding revenue growth and/or operating margin expansion. The current rating and outlook could change over the next 12 to 18 months given that Votorantim will endeavor to reorganize all of its North American assets, which include St. Marys; St. Barbara, the financing vehicle that owns and leases the 2 cement plants acquired from Cemex to St. Marys; and a joint venture in cement and ready mix operations in Florida. Moody's does not believe it is likely that St. Marys creditors will be impacted negatively by such a move, rather it is more likely the company's credit profile will be enhanced or the credit facilities will be refinanced. Moody's also notes the continued operating and credit support Votorantim has provided to St. Marys. Since acquiring St. Marys in 2001, Votorantim has invested an additional $20 million in order to avoid a couple of impending covenant breaches and $51 million earlier this year to acquire the working capital and some other assets associated with the Cemex transaction. In addition, Votorantim's public note indentures have cross-default and cross-acceleration provisions to any wholly owned subsidiary liabilities greater than $50 million, which applies to the credit facility debt of St. Marys. Moody's believes the risk of cross- default and cross-acceleration provides significant incentive for the parent to continue to support St. Marys. The rating also reflects St. Marys position as one of the largest cement producers in the Great Lakes region and the maturity of that cement market. In addition, while the company still remains exposed to cyclical demand due to its concentration in a region that is dependent on a manufacturing sector, particularly North American automotive, that is under competitive pressure, Moody's notes that the company has increased its end market diversity by expanding its geographic presence with the addition of the former Cemex plants. St. Marys Cement, Inc., headquartered in Toronto, Ontario, is a major supplier of cement, ready mix, and aggregates in the Great Lakes region, with $380 million of revenue in 2004. The Votorantim group, headquartered in Sao Paulo, Brazil with 2004 revenue of $6.3 billion, is one of the largest private industrial conglomerates in Latin America, with large scale production in cement, pulp and paper, and metals and mining industries. The group is also actively engaged in the production of chemicals, frozen concentrated orange juice, energy, financial services and venture capital investments. TASER INTERNATIONAL: Names Grant Thornton LLP as New Auditor ------------------------------------------------------------ TASER International, Inc. (Nasdaq: TASR) appointed Grant Thornton LLP to serve as the Company's independent registered public accounting firm going forward. Grant Thornton, LLP will replace Deloitte & Touche, LLP. "We believe that Grant Thornton's focus on middle market leaders will more closely align with TASER International's service needs," said Dan Behrendt, Chief Financial Officer of TASER International. "We look forward to working with Grant Thornton as we continue to focus on improving our business," continued Mr. Behrendt. "There were no disagreements with Deloitte & Touche, LLP, the Company's previous independent registered public accounting firm, and I would like to personally thank Deloitte & Touche for their years of service to TASER International," concluded Mr. Behrendt. TASER International, Inc. -- http://www.taser.com/-- provides advanced non-lethal devices for use in the law enforcement, military, private security and personal defense markets. TASER devices use proprietary technology to safely incapacitate dangerous, combative or high-risk subjects who pose a risk to law enforcement officers, innocent citizens or themselves. TASER technology saves lives every day, and the use of TASER devices dramatically reduces injury rates for police officers and suspects and reduces litigation costs. * * * Material Weakness In the Company's Form 10-KSB/A filed on May 23, 2005, the Company concluded that errors that led to the restatement of its financial statements for the year ended December 31, 2004 resulted from an inadequate control over the accounting for its stock option programs. The Company's independent registered public accounting firm communicated that, under standards established by the Public Company Accounting Oversight Board, this control deficiency constituted a "material weakness" in the Company's internal control over financial reporting. TELESYSTEM INT'L: Shares to Halt Trading at TXS on Sept. 27 ----------------------------------------------------------- Telesystem International Wireless Inc. (TSX:TIW)(NASDAQ:TIWI) confirms that September 27th, 2005 will be the last day of trading of its common shares on the Toronto Stock Exchange and that its common shares will begin trading on the TSX Venture Exchange at the opening of the markets on September 28th, 2005 under the ticker "TIW". The Company expects its common shares to be delisted from the NASDAQ on or about September 27th, 2005. TIW also confirms that its 7.00% Equity Subordinated Debentures will be delisted from the TSX at the closing of the market on September 27th, 2005. There can be no assurance as to whether there will be adequate liquidity for the shares of TIW in the future or whether the Company will maintain the listing of its shares on the TSX Venture Exchange or any other public exchange until further cash distributions on its shares are made. In addition, there can be no assurance as to when the Company's common shares will be cancelled under its plan of arrangement. If the Company's common shares are cancelled before a target return of CDN$19.9614 per share, together with investment income thereon, has been distributed, shareholders at the time of the cancellation will continue to have the right to receive future distributions, if any. In all events the cumulative future distributions will not exceed the difference between the target return of CDN$19.9614 per share and investment income thereon, minus amounts previously distributed to shareholders. TIW operates under a court supervised Plan of Arrangement to complete the transaction with Vodafone announced on March 15, 2005, proceed with its liquidation, including the implementation of a claims process and the distribution of net cash to shareholders, cancel its common shares and proceed with its final distribution and be dissolved. TEREX CORP: Lenders Waive Reporting Requirement to Oct. 15 ---------------------------------------------------------- Terex Corporation (NYSE: TEX) obtained a waiver from its senior bank lending group that allows the Company until October 15, 2005 to provide its lenders with its financial information for the year ended December 31, 2004, as well as for the quarters ended March 31, 2005 and June 30, 2005. Management anticipates having all applicable financial information completed and provided to the senior bank lending group prior to that time. The Company continues to work diligently to complete the filing of the Company's financial statements for the year ended December 31, 2004 and prior periods with the Securities and Exchange Commission. The Company is in the final stages of internal and external review of its financial statements for 2004 and prior periods, and will file the appropriate documents in the next several business days. The Company's Quarterly Reports on Form 10-Q for the first and second quarters of 2005 will be filed as soon as practicable thereafter. Terex Corporation -- http://www.terex.com/-- is a diversified global manufacturer with 2004 net sales of approximately $5 billion. Terex operates in five business segments: Terex Construction, Terex Cranes, Terex Aerial Work Platforms, Terex Materials Processing & Mining, and Terex Roadbuilding, Utility Products and Other. Terex manufactures a broad range of equipment for use in various industries, including the construction, infrastructure, quarrying, recycling, surface mining, shipping, transportation, refining, utility and maintenance industries. Terex offers a complete line of financial products and services to assist in the acquisition of Terex equipment through Terex Financial Services. * * * As reported in the Troubled Company Reporter on Sept. 13, 2005, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, Terex was required to evaluate the effectiveness of its internal control over financial reporting as of December 31, 2004. Based on this current evaluation, it was determined that "material weaknesses" existed, which resulted in ineffective internal control over financial reporting. As announced on January 13, 2005, Terex had determined that a "material weakness" existed in Terex's internal control over financial reporting as it relates to the recording of certain intercompany transactions. On September 8, 2005, the management of Terex and the Audit Committee of Terex's Board of Directors concluded that material weaknesses also showed that: a) the Company did not maintain effective controls, including monitoring, over the financial reporting process as a result of an insufficient complement of personnel with requisite U.S. GAAP knowledge, experience and training, and b) the Company did not maintain sufficient supporting documentation for certain income tax account balances, including periodic reconciliations, which contributed to the failure to timely file. TOWNHOMES AT HILLTOP: Case Summary & 8 Largest Creditors -------------------------------------------------------- Debtor: Townhomes at Hilltop, LLC 75 Manhattan Drive, Suite 203 Boulder, Colorado 80303 Bankruptcy Case No.: 05-34612 Chapter 11 Petition Date: September 16, 2005 Court: District of Colorado (Denver) Judge: A. Bruce Campbell Debtor's Counsel: Lee M. Kutner, Esq. Kutner Miller, P.C. 303 East 17th Avenue, Suite 500 Denver, Colorado 80203 Tel: (303) 832-2400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Fisher, Sweetbaum & Levin $30,000 1125 - 17th Street, Suite 2100 Denver, CO 80202 AMI Fireplace Company $2,650 14200 East 33rd Place Aurora, CO 80011 Kleinfelder, Inc. $2,200 747 Sheridan Boulevard, Suite 9B Denver, CO 80214 Olson Studio $1,372 Ark Technologies, Inc. $1,000 Jeffrey S. Lehman $500 Standard Fence Company $250 Ruger Law Firm, LLC $250 TRUDY DEVELOPMENT: Case Summary & 2 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Trudy Development LLC 501 Madison Avenue New York, New York 10022 Bankruptcy Case No.: 05-18135 Type of Business: Real Estate Chapter 11 Petition Date: September 16, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Robert R. Leinwand, Esq. Robinson Brog Leinwand Greene Genovese & Gluck P.C. 1345 Avenue of the Americas, 31st Floor New York, New York 10105 Tel: (212) 586-4050 Total Assets: $83,402,206 Total Debts: $3,175,000 Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Robert Guerrin $1,875,000 33 Brook Street Garden City, NY 11530 Bryan Cave 1290 Avenue of the Americas $1,500,000 New York, NY 10104 US AIRWAYS: Court Confirms Chapter 11 Plan of Reorganization ------------------------------------------------------------ US Airways is now in the final stages of completing its transformation into the nation's first full-service, low-cost airline with Friday's judicial confirmation of its Chapter 11 Plan of Reorganization. Judge Stephen S. Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia confirmed the plan at a hearing on Friday, clearing the way for the US Airways-America West Airlines merger transaction to formally close by the end of September. The merger will create the nation's fifth-largest airline, and provide consumers with new domestic and international travel choices and an extensive route network throughout the U.S., Canada, the Caribbean, Latin America, and Europe. Judge Mitchell ruled that all necessary requirements have been met for US Airways to implement its Plan. Every class of creditor for all five debtors: -- US Airways Group, Inc., -- US Airways, Inc., -- PSA Airlines, Inc., -- Piedmont Airlines, Inc., and -- Material Services Company, Inc. in the Chapter 11 cases that was entitled to vote on the Plan, voted in favor by at least 90 percent in dollar amount and 80 percent in the number of votes cast. Under the terms of the merger agreement, the transaction can close on the 11th day following entry of the court's final order confirming the plan. US Airways then will emerge from Chapter 11 and complete its merger with America West as soon as Sept. 27, 2005. "This is a great day for both US Airways and America West," said US Airways President and Chief Executive Officer Bruce R. Lakefield. "For our customers, we are about to become the kind of airline that they have been asking for -- a global carrier offering full-service amenities and simplified fares. For our employees, this merger will provide more stability and a chance to be a part of a vibrant new company. "Through our restructuring, we have reduced our debt, improved our liquidity and strengthened our balance sheet," Mr. Lakefield said. "With the financial position of other carriers deteriorating, we are pleased that we will have a very strong cash position, a robust business plan, a low cost structure, and a strong network that offers our customers an attractive product and more choices." Key elements of the plan include: * Total equity and liquidity agreements to provide the merged airline with unrestricted cash of approximately $1.7 billion, and a total cash position of approximately $2.5 billion, including approximately $800 million of restricted cash. * Investment agreements that total $565 million in new equity and a public stock offering that is expected to raise $150 million. Support from business partners and suppliers that will provide in excess of $700 million in cash, and asset sales and sale-leaseback agreements that are expected to gross $300 million pending consummation of certain of the transactions. * Agreement between US Airways and the Pension Benefit Guaranty Corp., resolving nearly $2.7 billion in claims. The agreement provides for US Airways to pay the PBGC $13.5 million in cash, in addition to giving the PBGC a $10 million note and 70 percent of the common stock, which will be allocated to unsecured creditors. * The creation of a company with more than $10 billion in annual revenues and savings of over $600 million annually through synergies associated with the merger. * Reinstatement and extension of the Air Transportation Stabilization Board loans with amortization through 2010. Mr. Lakefield said that the company's full attention now will be on the completion of the merger, the implementation of consistent customer service offerings, the building of a unified corporate culture, and the transfer of headquarters functions to Tempe, Arizona. America West Chairman, President, and Chief Executive Officer Doug Parker will assume those same responsibilities at the merged company, with Mr. Lakefield serving as non-executive vice chairman of the board of directors. "Doug Parker and the management team he has assembled are enthusiastically working to make sure that the new US Airways is an airline that offers customer value, and one which our combined work force is proud to represent. I want to express my heartfelt thanks to our employees, customers, and business partners for their support of the company throughout this restructuring. Doug is committed to building upon that deep level of support and loyalty," Mr. Lakefield said. Mr. Lakefield also expressed his appreciation to the ATSB for its support in working through a number of issues related to the America West and US Airways federal loan guarantees. The merger of US Airways and America West will create the first full- service, low-cost nationwide airline with amenities that include international scope, a broad frequent flyer program, airport clubs, assigned seating and First Class cabin service. The airlines have already introduced the new US Airways aircraft livery design, and over the coming weeks, will be announcing more specific customer service enhancements and policies as the airlines implement the merger. America West -- http://www.americawest.com/-- operates more than 900 flights daily to 95 destinations in the U.S., Canada, Mexico and Costa Rica. The airline's 13,500 employees are proud to offer a range of services including more destinations than any other low-cost carrier, first-class cabins, assigned seating, airport clubs and an award-winning frequent flyer program. 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. VARELA ENTERPRISES: Confirmation Hearing Moved to October 14 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona will convene a hearing on Oct. 14, 2005, to discuss the merits of Varela Enterprises Inc.'s Amended Plan of Reorganization filed in June 22. The Court originally set Sept. 9, 2005 as the confirmation hearing but rescheduled it at the Debtor's request. Varela wants more time to review objections to confirmation of its Plan. Also, the Debtor's counsel, Robert M. Cook, Esq., told the Court that the Sept. 9 hearing will conflict with his other schedules. About the Plan The Plan proposes to pay all creditors in full from the Debtor's contract with Grupo Constructor Industrial e Inmobiliario, S.A., and an on-going bid for a government project in Mexico. The Debtor further expects to receive payment for more than $81,000 in account receivables from completed construction work. The Plan will also be funded from the proceeds of a lawsuit to be filed against the Debtor's former landlord for breach of contract and damages. The Debtor says it defaulted on existing commitments and consequently filed for bankruptcy protection after its landlord locked it out of its leased building and shut down operations. Treatment of Claims Allowed priority deposit claims of up to $2,225, of individuals for the purchase, lease, or rental of property or service will be paid in full, without interest, within three months from the effective date of the Plan. GMAC's claims, secured by a 2003 Cadillac Escalade and a 2002 Cadillac Escalade, will be paid according to the lease contract. GMAC will retain its security interest in the vehicles. All general unsecured residential construction and vendor claims against the Debtor will be paid in full within three years from the effective date of the Plan. J. P. Sandoval, M.P. Sandoval, and Henry Varela 11's unsecured claims against the Debtor, totaling $967,695, will be paid in full after all other unsecured claims have been satisfied. Headquartered in Moorpark, California, Varela Enterprises Inc., a subcontractor for Varela Manufacturing Company, LLC, holds a license to use the patented "E systems" construction process for producing prefabricated buildings. The Debtor filed for Chapter 11 protection on May 21, 2004 (Bankr. D. Ariz. Case No. 04-00725). Robert M. Cook, Esq. at the Law Offices of Robert M. Cook, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported between $10 million to $50 million and debts between $1 million to $10 million. WAPAKONETA MACHINE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Wapakoneta Machine Company 300 North Street P.O. Box 429 Wapakoneta, Ohio 45895 Bankruptcy Case No.: 05-39734 Type of Business: The Debtor operates one of the largest industrial knife sharpening facilities in the Midwest. The Debtor also offers milling, turning, and machining services. See http://www.wapakonetamachine.com/ Chapter 11 Petition Date: September 14, 2005 Court: Northern District of Ohio (Toledo) Judge: Mary Ann Whipple Debtor's Counsel: H. Buswell Roberts, Esq. 1000 Jackson Street Toledo, Ohio 43624 Tel: (419) 241-9000 Total Assets: $4,004,300 Total Debts: $3,784,583 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ PBGC Unfunded Pension $2,349,388 1200 K Street Northwest Washington, DC 20005-4026 Timken Latrobe Steel Business Expense $212,673 District 594 P.O. Box 360336 Cedar Hill Place, Suite 17 Pittsburgh, PA 15251-6336 Century Sun Metal Treating Business Expense $76,127 2411 West Aero Park Court Traverse City, MI 49686 AM Castle & Company Business Expense $66,410 Castle Metals Walters Metals Corporation Business Expense $65,606 Diamond Metals Business Expense $41,860 Anderson-Shumaker Company Business Expense $31,369 Crucible Service Centers Business Expense $23,165 Alcon Tool Company Business Expense $22,765 D.B. Engineering Pvt. Ltd. Business Expense $21,106 Paragon Service & Supply Business Expense $16,706 Eagle Rubber Products Business Expense $15,355 Detroit Flame Hardening Business Expense $15,170 Peter Wolters of America Business Expense $14,332 Hi-Tech Wire Inc. Business Expense $13,186 Letoureau Inc. Business Expense $11,409 Peerless Laser Processors Business Expense $6,155 Supply Connection Business Expense $5,296 Jowit & Rodgers Company Business Expense $4,671 FPI Industries Business Expense $4,364 WESTERN WATER: Wants Excl. Plan Filing Period Stretched to Dec. 20 ------------------------------------------------------------------ Western Water Company asks the U.S. Bankruptcy Court for the Northern District of California to extend, through and including Dec. 20, 2005, the time within which it alone can file a chapter 11 plan. The Debtor also asks the Court for more time to solicit acceptances of that plan from its creditors, through and including Feb. 20, 2006. The Debtor explains that it is in the best interest of its estate and creditors to wait until the sale transaction for the Cherry Creek Project and its other assets is approved and completed before it files a chapter 11 plan. The Cherry Creek assets, consisting of real property and water rights in the Cherry Creek basin, Colorado, is the Debtor's most valuable asset. The assets are recorded at approximately $12.5 million in the Debtor's books but the Debtor says it is worth substantially more than its book value. The Debtor has already obtained authorization to retain real estate brokers to market the Cherry Creek Project and it has a pending request with the Court to approve the sale of substantially all of its assets, including the Cherry Creek assets. The hearing to approve that sale request is tentatively scheduled on Oct. 24, 2005. The sale of the Cherry Creek assets, together with the Debtor's other remaining assets, will provide the needed funding to pay creditors under its proposed plan. The Court will convene a hearing today, Monday, Sept. 19, 2005, at 2:00 p.m., to consider the Debtor's request. Headquartered in Point Richmond, California, Western Water Company manages, develops, sells and leases water and water rights in the western United States. The Company filed for chapter 11 protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839). Adam A. Lewis, Esq., at the Law Offices of Morrison and Foerster , represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $10 Million and $50 Million. WINN-DIXIE: Court Approves Rejection of Four Grocery Store Leases ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave Winn-Dixie Stores, Inc., and its debtor-affiliates authority to sell, sublet, negotiate buyouts with landlords, or otherwise reduce or eliminate their liability under many leases as part of their restructuring plans. The Court also approved the rejection of these four leases: Store No. Leased Property Location Landlord --------- ------------------------ -------- 992 3334 Halifax Road WBFV, INC. South Boston, VA 24592 1233 3230 Augusta Road Woodberry Plaza West Columbia, SC 29169 E&A, LLC 2047 Mebane Oaks Rd/Peartree Rd BHBS, Inc. Mebane, NC 27302 1676 1148 South 4th Street John H.O. La Gatta Louisville, KY 40203 As reported in the Troubled Company Reporter on Aug. 24, 2005, the Debtors no longer need the Leases because they provide no continuing benefit to their estates. The Debtors have concluded that the Leases constitute a burden on them and are not necessary for an effective reorganization. By rejecting the Leases, the Debtors will save costs incurred with respect to administrative expenses, including rent, taxes, insurance premiums, and other charges under the Leases. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Court Approves Settlement Agreement With Heritage ------------------------------------------------------------- As previously reported in the Troubled Company Reporter on July 1, 2005, Winn-Dixie Stores, Inc., and its debtor-affiliates executed a contract for the purchase of goods from Heritage Mint, Ltd., on June 3, 2004. Heritage began shipping goods on Feb. 15, 2005. The Contract contains recoupment and reconciliation provisions that allow Heritage to credit the Debtors' account upon their return of goods in "original factory seals unopened master cartons." Heritage asks the U.S. Bankruptcy Court for the Middle District of Florida to compel the Debtors to assume or reject the Contract. Heritage believes that the nature of its interests with respect to the deliveries, the returns and the Contract make immediate assumption or rejection necessary. If the Contract is rejected, the Debtors' estate and postpetition lenders may have claims to the goods to the extent of the valued of the postpetition deliveries, and thus, Heritage cannot receive the returns without Court approval. If the Contract is assumed, Heritage is obligated to accept the returns and enforce its recoupment rights. Debtors Object As reported in the Troubled Company Reporter on Aug. 5, 2005, the Debtors ask the Court to deny Heritage Mint, Ltd.'s Motion because, among other things, Heritage has not established a compelling reason why the time for the Debtors to decide whether to assume or reject the Contract should be shortened. Stipulation The Debtors ask the Court to approve its settlement with Heritage Mint, Ltd., pursuant to which: a. Heritage will accept the return of goods it delivered totaling $217,474. Thereafter, the Debtors will not return additional goods. b. The parties will deem unpaid invoice number 1-263861 for $29,873 to represent a postpetition delivery, and will deem the return of goods up to $29,873 to entitle Heritage to credit the Debtors unpaid balance in the same amount. c. After subtracting the goods returned under the unpaid invoice from the total returns, the parties will attribute 70% of the remaining goods returned to be postpetition deliveries and will attribute the other 30% of goods returned to be prepetition deliveries, and will deem those goods as having been reclaimed by Heritage. d. The parties agree to lift the automatic stay to permit Heritage to perform the accounting functions and crediting of returns. e. After allocating the returns, Heritage will deliver repayment for the returned goods in an amount arrived at by this formula: Total returns: $217,474 Less: total value of unpaid invoice ($29,873) Less: $53,280 (30% of $187,601) --------------------------------------- Total payment: $131,321 (70% of $187,601) f. Heritage will pay the Debtors $131,321 by the later of Aug. 12, 2005, or within two days after the Court approves the Stipulation. Court's Ruling The Court approves the settlement entered into by the Debtors and Heritage Mint, Ltd., which include, among other things, the return of goods to Heritage totaling $217,414. 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: Florida Tax Collectors Has Until Nov. 7 to File Claim ----------------------------------------------------------------- As reported in the Troubled Company Reporter on Apr. 29, 2005, Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to establish August 1, 2005, at 5:00 p.m. Eastern Time as the last day and time to file proofs of claim. Also, the Debtors ask the Court to confirm that August 22, 2005, at 5:00 p.m. Eastern Time, is the last day and time by which proofs of claim may be filed by a governmental unit. Webber Commercial Properties, LLC, and LESCO MEDISEARCH, ask the Bankruptcy Court to extend the August 1 general bar date for filing proofs of claim with respect to their claims. Both parties had sent their proofs of claim on August 1 and expected them to be received only a few days after the Bar Date. Given the short period involved, Webber and LESCO assert that their requests are reasonable. Genoveva Cervantes, who has a claim against the Debtors due to personal injury, asserts that she did not receive notice of the Bar Date. Accordingly, she requests extension of the Bar Date to file her claim. Furthermore, Tax collectors of 47 counties in Florida also seek an extension of the August 22, 2005, claims bar date with respect to governmental units. The Florida Tax Collectors explain that due to Florida statutory requirements and procedures, the Debtors' 2005 ad valorem taxes are undetermined at this time. They cannot provide tax bills until November 1, 2005. Accordingly, the Florida Tax Collectors ask the Court to extend the Governmental Bar Date to November 7, 2005. Court's Ruling Judge Funk sets Nov. 7, 2005, as the last day for the Florida Tax Collectors to file claims for 2005 ad valorem real property and tangible personal property taxes. The Florida Tax Collectors' claims filed before Aug. 22, 2005, are deemed withdrawn without prejudice. Claims for the actual 2005 ad valorem taxes filed by November 7 will be treated as original, rather than amended claims. 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). XEROX CORP: Moody's Takes Positive Outlook on Low-B Ratings ----------------------------------------------------------- Moody's Investors Service revised the rating outlook of Xerox Corporation and supported subsidiaries to positive from stable. The action is prompted by Xerox's significant debt and leverage reduction over the last year, stable operating profit and free cash flow generation, and the prospects for further strengthening of its credit metrics and overall financial flexibility. As reported in the Troubled Company Reporter on Aug. 12, 2004, Moody's raised the senior implied rating of Xerox and its financially supported subsidiaries to Ba1 from Ba3. Ratings raised include: Xerox Corporation: * Senior implied to Ba1 from Ba3; * Senior unsecured to Ba2 from B1; * Senior unsecured shelf registration (P) Ba2 and (P) B1; * Subordinated to Ba3 from B3; * Subordinated shelf registration to (P) Ba3 from (P) B3; * Preferred to B1 from Caa1 * Preferred shelf registration to (P) B1 from (P) Caa1 Xerox Credit Corporation: * Senior unsecured to Ba2 from B1 (support agreement from Xerox Corporation); * Xerox Capital (Europe) PLC; * Senior unsecured to Ba2 from B1 (guaranteed by Xerox Corporation); The positive rating outlook reflects Moody's expectation for: 1. modest low single digit revenue growth over the intermediate term driven by continued improvement in equipment revenue which should help to position follow on post sale revenues, specifically; a) continued improvement in equipment revenue (29% of total revenues). Equipment revenue has been modestly positive recently (4% growth in Q2) and we believe that the late June launch of an array of new products is likely to stimulate continued single digit equipment sales growth in the near to mid term although competitive pressures will remain intense; b) sustained momentum for post sale and finance revenue (71% of total revenues), which increased for the first time in several quarters during Q2, aided by the reduced impact of legacy light lens activity ($149 million or 4% of Q2 total revenue); continued growth in color page volumes; and improvement in the overall low single digit decline of monochrome pages. Excluding the declining legacy light lens business, post sale and financing revenue has increased between 1% and 5% for each of the last ten quarters, which we expect should continue over the intermediate term; 2. gross margins of approximately 40%, which have recently been slightly pressured by strong growth in lower end product (Segment 1 and 2) and tempered demand from higher margin higher end product (Segment 3 to 5) including a modest early take up of its Nuvera production line; 3. operating profit margins in the 9% range, which will in part depend on continued operating expense controls or reduction derived from its recently announced $200 million after tax restructuring plan; 4. stability in cash flow from operations, which, with modest and predictable capital expenditures of approximately $250 million annually, drives free cash flow generation that has averaged $1.6 billion annually since 2002; 5. continued, albeit more modest, reduction in overall debt. Since June 2004, consolidated debt has declined by $3.1 billion through the repayment of scheduled maturities and the conversion to equity of $1 billion of trust preferred securities. With zero public debt maturities in 2006 and only $272 million and $50 million due in 2007 and 2008, respectively, further debt reduction will be driven by continued reduction of debt that is currently secured by finance receivables; 6. continued reduction of secured debt related to its finance receivable portfolio, which has declined by $780 million year to date, with further declines expected in the second half of 2005; 7. further improvement in interest coverage and non finance leverage as a result of debt reduction, equity buildup, and stable free cash flow. Rating could be upgraded if the company: 1. achieves sustainable improvement in revenue, although this is expected to be low single digits; 2. sustains consolidated operating margins in the 9% range; 3. achieves adjusted EBIT interest coverage of 5 times on an LTM basis (currently 2.9 times) excluding finance operations; 4. continues to generate consistent free cash flow; 5. maintains its strong liquidity profile; 6. continues to reduce the level of secured debt and obtains an unsecured bank facility with terms and conditions consistent with an investment grade profile, which will further improve financial flexibility. Conversely, downward ratings pressure could develop if: 1. financial performance deteriorates due to any combination of poor execution, sustained weak product acceptance or demand, unexpectedly intense and sustained competitive pressures; or deterioration in its finance operations due to a weakening of asset quality; 2. the company incurs leverage to effect any combination of share buybacks or dividends; 3. undertakes significant debt financed acquisitions. Liquidity remains solid, with cash balances of $2.1 billion at June 2005 and full access to its $700 million secured revolving credit facility, for which covenant room is expected to remain ample. Combined with our expectations of stable to improving annual free cash flow ($1.7 billion for the latest twelve months ended June 2005), Xerox is well positioned to meet: (1) aggregate public debt maturities of approximately $665 million through 2008, including a $300 million secured bank term loan due September 2008, as well as (2) potential calls on liquidity related to outstanding shareholder litigation. Xerox Corporation, headquartered in Stamford, Connecticut, develops, manufactures and markets document processing systems and related supplies and provides consulting and outsourcing document management services. XYBERNAUT CORP: Creditors Panel Taps Blank Rome as Lead Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Xybernaut Corporation and its debtor-affiliate ask the U.S. Bankruptcy Court for the Eastern District of Virginia for permission to employ Blank Rome LLP as its lead counsel. Blank Rome will: 1) assist the Committee in the administration of the Debtors' chapter 11 cases and the exercise of oversight with respect to the Debtors' affairs, including all issues arising from or impacting the Debtors or the Committee in connection with the Debtors' chapter 11 cases; 2) prepare on behalf of the Committee of all necessary applications, motions, orders, reports and other legal papers and appear in Bankruptcy Court and at statutory meetings of creditors to represent the interests of the Committee; 3) negotiate, formulate, draft and confirm any plan of reorganization and matters related to that plan; 4) assist and advise the Committee in the exercise of oversight with respect to any transfer, pledge, conveyance, sale or other liquidation of the Debtors' assets; 5) investigate as the Committee may desire concerning the assets, liabilities, financial condition and operating issues concerning the Debtors that may be relevant to their chapter 11 cases; 6) communicate with the Committee's constituents, the Debtors, the Equity Committee and others as is necessary in the Debtors' chapter 11 cases in furtherance of the Committee's responsibilities; and 7) render all other necessary legal services that are in the interests of those represented by the Committee's duties or as maybe ordered by the Court. Michael Z. Brownstein, Esq., a Partner of Blank Rome, is one of the lead attorneys for the Committee. Mr. Brownstein charges $595 per hour for his services. Mr. Brownstein reports Blank Rome's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- B. Michael B. Rauh Sr. Counsel $515 Michael B. Schaedle Partner $380 James A. Timko Associate $230 Designation Hourly Rate ----------- ----------- Partners & Counsel $300 - $675 Associates $195 - $410 Paralegals $105 - $250 Blank Rome assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. XYBERNAUT CORP: U.S. Trustee Picks 5-Member Equity Holders Panel ---------------------------------------------------------------- The United States Trustee for Region 4 appointed five creditors to serve on the Official Committee of Equity Security Holders in Xybernaut Corporation and its debtor-affiliate's chapter 11 cases: 1. The Niemi Group Attn: Peter Niemi 1775 York Avenue, #28G New York, New York 10128 Phone: 917-282-8060 2. John Buckner 1130 Crater Hill Dr. Nashville, Tennessee 37215 Phone: 615-726-8380 3. Mr. John D. Wydur POB 215 Seaford, Virginia 23696 Phone: 715-898-4411 4. Alfred B. Glover P.O. Box 784 West Jefferson, North Carolina 28694 Phone: 828-264-6111 5. Donald B. Hall, Lt. Col, USAF (Ret.) 2236 Silverthorn Dr. Rockford, Illinois 61107 Phone: 815-226-8547 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. XYBERNAUT CORPORATION: Meets With Newly Formed Equity Committee --------------------------------------------------------------- Xybernaut Corporation (Pink Sheet: XYBR.PK) said its management met this week with and outlined several options to the newly formed Equity Committee in the Chapter 11 bankruptcy proceeding in the United States Bankruptcy Court for the Eastern District of Virginia. The options generally involve plans for the reorganization of the Company and the orderly marketing of its intellectual properties and other assets. It is the overarching objective of both the Company and the Equity Committee to provide as much value as possible to the Company's shareholders. Together, the Company and the Equity Committee intend to chart a course in furtherance of their shared goals. There can be no assurance, however, that any of these options or the Company's restructuring efforts will be successful. Peter Niemi, the Chairman of the Equity Committee, said: "We are very pleased with the steps the Company's management is taking to preserve our options as the process moves forward." Said Perry L. Nolen, President and CEO of the Company: "We very much look forward to working closely with the Equity Committee to seek to maximize value for our shareholders." Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. YUKOS OIL: Cuts Net Loss By 94.5% in Second Quarter of 2005 ----------------------------------------------------------- Yukos Oil Company's RUB4.2 billion net loss for the first half of 2005 is 94.5% less than that of the same period in 2004 based on Russian accounting standards, Interfax reports, citing the company's second quarterly financial report. Yukos' net loss was RUB77 billion in the first half of 2004. Yukos reported revenues totaling RUB1.3 billion for the first half year of 2005, exhibiting a decline of 61% as compared to the same period in 2004. Gross profit also fell 78& to RUB555.89 million. Yukos cut down production by 20% in the second quarter of 2005 as compared to the first quarter, Interfax cited the company's financial report. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Proskauer Rose Names Christopher Wells as Partner in N.Y. Office ------------------------------------------------------------------ Proskauer Rose LLP, an international law firm with over 650 lawyers in the U.S. and Europe, announced that Christopher M. Wells, one of the country's top hedge fund attorneys, has been named a partner in the firm's New York office. Mr. Wells was previously a partner at Coudert Brothers LLP, where he headed the firm's Global Investment Funds Practice. Mr. Wells, who specializes in the organization and representation of on- and off-shore hedge funds and their managers, will also bring three associate attorneys in the hedge fund practice from Coudert. With an extensive background representing a variety of hedge fund entities and significant experience in trading, compliance and management issues related to hedge fund transactions, Mr. Wells and his team are an important addition to Proskauer's Corporate Department. "Attracting a seasoned attorney with the expertise and reputation that Chris possesses is a tremendous opportunity for us," said Proskauer Chairman Allen I. Fagin. "There are numerous synergies inherent in the combination of a thriving hedge fund group with our private equity and overall corporate practice. With a wealth of experience to his credit, he is an outstanding addition to our team." Proskauer's representation of private equity, buyout, and venture capital funds and its robust transactional practice have been driving forces behind the growth of its Corporate Department. The addition of Mr. Wells is yet another boon to that growth, following the expansion in the last year of the firm's private equity practice and the addition of several attorneys specializing in mezzanine financing, second lien financing and other sophisticated transactional work. Before joining Coudert as an associate, Mr. Wells received his J.D. from the University of Michigan. Mr. Wells has written and spoken extensively on the topics of hedge funds, private equity funds and investment management and was recognized in the 2005- 2006 edition of Best Lawyers in America. Proskauer Rose -- http://www.proskauer.com/-- founded in 1875, is one of the nation's largest law firms, providing a wide variety of legal services to clients throughout the United States and around the world from offices in New York, Los Angeles, Washington, D.C., Boston, Boca Raton, Newark, New Orleans and Paris. The firm has wide experience in all areas of practice important to businesses, including corporate finance, mergers and acquisitions, general commercial litigation, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, bankruptcy and reorganizations and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, hospitality, information technology, insurance, internet, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. * BOND PRICING: For the week of Sept. 12 - Sept. 16, 2005 --------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 4 Adelphia Comm. 6.000% 02/15/06 4 AHI-DFLT 07/05 8.625% 10/01/07 55 Air 2 US 10.127% 10/01/20 18 Allegiance Tel. 11.750% 02/15/08 25 Allegiance Tel. 12.875% 05/15/08 29 Amer Comm LLC 11.250% 01/01/08 24 Amer West Air 7.840% 07/02/10 71 Amer. Plumbing 11.625% 10/15/08 16 Amer. Restaurant 11.500% 11/01/06 66 American Airline 7.379% 05/23/16 72 American Airline 8.390% 01/02/17 72 American Airline 10.680% 03/04/13 65 Ameritruck Distr 12.250% 11/15/05 1 AMR Corp. 9.000% 08/01/12 75 AMR Corp. 9.000% 09/15/16 64 AMR Corp. 9.750% 08/15/21 66 AMR Corp. 9.800% 10/01/21 63 AMR Corp. 9.820% 10/25/11 73 AMR Corp. 9.880% 06/15/20 58 AMR Corp. 10.000% 04/15/21 54 AMR Corp. 10.125% 06/01/21 63 AMR Corp. 10.200% 03/15/20 69 AMR Corp. 10.550% 03/12/21 63 AMR Corp. 10.150% 05/15/20 20 Amtran Inc. 9.625% 12/15/05 16 Anchor Glass 11.000% 02/15/13 68 Antigenics 5.250% 02/01/25 60 Anvil Knitwear 10.875% 03/15/07 54 Apple South Inc. 9.750% 06/01/06 3 Asarco Inc. 7.875% 04/15/13 57 Asarco Inc. 8.500% 05/01/25 57 ATA Holdings 12.125% 06/15/10 20 ATA Holdings 13.000% 02/01/09 18 Atlantic Coast 6.000% 02/15/34 7 Atlas Air Inc. 9.702% 01/02/08 58 Autocam Corp. 10.875% 06/15/14 70 Bank New England 8.750% 04/01/99 9 Big V Supermarkets 11.000% 02/15/04 0 Budget Group Inc. 9.125% 04/01/06 0 Burlington North 3.200% 01/01/45 60 Calpine Corp. 4.000% 12/26/03 65 Calpine Corp. 4.750% 11/15/23 70 Calpine Corp. 7.750% 04/15/09 63 Calpine Corp. 7.875% 04/01/08 73 Calpine Corp. 8.500% 02/15/11 65 Calpine Corp. 8.625% 08/15/10 66 Calpine Corp. 8.750% 07/15/13 74 Cell Therapeutic 5.750% 06/15/08 63 Cell Therapeutic 5.750% 06/15/08 74 Cellstar Corp. 12.000% 01/15/07 72 CHS Electronics 9.875% 04/15/05 0 Classic Cable 9.375 08/01/09 0 Collins & Aikman 10.750% 12/31/11 39 Comcast Corp. 2.000% 10/15/29 42 Comprehens Care 7.500% 04/15/10 23 Conseco Inc. 9.000% 10/15/06 0 Contl Airlines 8.312% 04/02/11 74 Constar Intl 11.000% 12/01/12 71 Cons Container 10.125% 07/15/09 71 Covad Communication 3.000% 03/15/24 68 Cray Inc. 3.000% 12/01/24 56 Cray Research 6.125% 02/01/11 34 Curative Health 10.750% 05/01/11 74 Delco Remy Intl 9.375% 04/15/12 65 Delco Remy Intl 11.000% 05/01/09 75 Delta Air Lines 2.875% 02/18/24 14 Delta Air Lines 7.299% 09/18/06 20 Delta Air Lines 7.700% 12/15/05 16 Delta Air Lines 7.711% 09/18/11 60 Delta Air Lines 7.779% 11/18/05 42 Delta Air Lines 7.779% 01/02/12 44 Delta Air Lines 7.900% 12/15/09 16 Delta Air Lines 7.920% 11/18/10 60 Delta Air Lines 8.000% 06/03/23 16 Delta Air Lines 8.270% 09/23/07 50 Delta Air Lines 8.300% 12/15/29 17 Delta Air Lines 8.540% 01/02/07 29 Delta Air Lines 8.540% 01/02/07 23 Delta Air Lines 8.540% 01/02/07 26 Delta Air Lines 8.540% 01/02/07 24 Delta Air Lines 8.540% 01/02/07 32 Delta Air Lines 9.000% 05/15/16 17 Delta Air Lines 9.200% 09/23/14 30 Delta Air Lines 9.250% 03/15/22 15 Delta Air Lines 9.320% 01/02/09 50 Delta Air Lines 9.750% 05/15/21 15 Delta Air Lines 9.875% 04/30/08 26 Delta Air Lines 10.000% 08/15/08 17 Delta Air Lines 10.000% 05/17/09 25 Delta Air Lines 10.000% 06/01/09 46 Delta Air Lines 10.000% 06/01/10 37 Delta Air Lines 10.000% 06/01/10 16 Delta Air Lines 10.000% 06/01/11 43 Delta Air Lines 10.000% 12/05/14 17 Delta Air Lines 10.060% 01/02/16 49 Delta Air Lines 10.080% 06/16/07 44 Delta Air Lines 10.125% 06/16/09 50 Delta Air Lines 10.125% 05/15/10 15 Delta Air Lines 10.125% 06/16/10 44 Delta Air Lines 10.140% 08/26/12 46 Delta Air Lines 10.375% 02/01/11 15 Delta Air Lines 10.375% 12/15/22 16 Delta Air Lines 10.430% 01/02/11 50 Delta Air Lines 10.430% 01/02/11 20 Delta Air Lines 10.500% 04/30/16 41 Delta Air Lines 10.790% 03/26/14 17 Delphi Auto Syst 6.197% 11/15/33 50 Delphi Auto Syst 7.125% 05/01/29 67 Delphi Corp 6.500% 08/15/13 71 Delphi Trust II 6.197% 11/15/33 50 Edison Brothers 11.000% 09/26/07 0 Eagle-Picher Inc. 9.750% 09/01/13 74 Emergent Group 10.750% 09/15/04 0 Empire Gas Corp. 9.000% 12/31/07 0 Epix Medical Inc. 3.000% 06/15/24 69 Exodus Comm. Inc. 5.250% 02/15/08 0 Fedders North AM 9.875% 02/01/14 72 Federal-Mogul Co. 7.375% 01/15/06 28 Federal-Mogul Co. 7.500% 01/15/09 29 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.800% 04/15/07 26 Federated Group 7.500% 04/15/10 1 Finova Group 7.500% 11/15/09 41 Foamex L.P. 9.875% 06/15/07 10 Foamex L.P. 13.500% 08/15/05 13 Ford Motor Co. 7.700% 05/15/97 75 Fruit of the Loom 8.875% 04/15/06 0 Gateway Inc. 1.500% 12/31/09 72 Gateway Inc. 2.000% 12/31/11 67 GMAC 5.900% 02/15/19 73 GMAC 6.000% 02/15/19 73 GMAC 6.000% 02/15/19 74 GMAC 6.000% 02/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 74 GMAC 6.000% 04/15/19 73 GMAC 6.000% 09/15/19 71 GMAC 6.000% 09/15/19 72 GMAC 6.050% 08/15/19 73 GMAC 6.050% 08/15/19 70 GMAC 6.050% 10/15/19 69 GMAC 6.100% 09/15/19 70 GMAC 6.125% 10/15/19 73 GMAC 6.150% 08/15/19 70 GMAC 6.200% 04/15/19 72 GMAC 6.250% 12/15/18 74 GMAC 6.250% 01/15/19 73 GMAC 6.250% 04/15/19 72 GMAC 6.250% 05/15/19 74 GMAC 6.250% 07/15/19 72 GMAC 6.300% 08/15/19 73 GMAC 6.300% 08/15/19 73 GMAC 6.350% 04/15/19 74 GMAC 6.350% 07/15/19 73 GMAC 6.350% 07/15/19 73 GMAC 6.400% 12/15/18 74 GMAC 6.500% 06/15/18 74 GMAC 6.500% 11/15/18 73 GMAC 6.500% 12/15/18 70 GMAC 6.500% 05/15/19 74 GMAC 6.300% 08/15/19 73 GMAC 6.350% 04/15/19 74 GMAC 6.350% 07/15/19 73 GMAC 6.350% 07/15/19 73 GMAC 6.400% 12/15/18 74 GMAC 6.500% 06/15/18 74 GMAC 6.500% 11/15/18 73 GMAC 6.500% 12/15/18 70 GMAC 6.500% 05/15/19 74 GMAC 6.550% 12/15/19 71 GMAC 6.600% 05/15/18 73 GMAC 6.600% 06/15/19 73 GMAC 6.650% 10/15/18 73 GMAC 6.750% 05/15/19 75 GMAC 6.750% 06/15/19 72 GMAC 7.000% 06/15/22 74 GMAC 7.000% 11/15/24 75 GMAC 7.250% 03/15/25 74 Graftech Int'l 1.625% 01/15/24 74 Graftech Int'l 1.625% 01/15/24 74 Gulf States STL 13.500% 04/15/03 0 HNG Internorth 9.625 03/15/06 37 Huntsman Packag 13.000% 06/01/10 64 Impsat Fiber 6.000% 03/15/11 75 Inland Fiber 9.625% 11/15/07 48 Intermet Corp. 9.750% 06/15/09 34 Iridium LLC/CAP 10.875% 07/15/05 22 Iridium LLC/CAP 11.250% 07/15/05 23 Iridium LLC/CAP 13.000% 07/15/05 21 Iridium LLC/CAP 14.000% 07/15/05 23 Jacobson's 6.750% 12/15/11 3 Kaiser Aluminum & Chem. 12.750% 02/01/03 7 Kmart Corp. 6.000% 01/01/08 25 Kmart Corp. 8.990% 07/05/10 72 Kmart Funding 8.800% 07/01/10 50 Kmart Funding 9.440% 07/01/18 68 Kulicke & Soffa 0.500% 11/30/08 74 Lehman Bros Hldg 0.750% 06/21/10 52 Level 3 Comm. Inc. 2.875% 07/15/10 55 Level 3 Comm. Inc. 5.250% 12/15/11 70 Level 3 Comm. Inc. 6.000% 09/15/09 55 Level 3 Comm. Inc. 6.000% 03/15/10 50 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 62 Macsaver Financl 7.875% 08/01/03 2 Mississippi Chem 7.250% 11/15/17 4 Muzak LLC 9.875% 03/15/09 54 MSX Intl. Inc. 11.375% 01/15/08 74 Natl Steel Corp. 8.375% 08/01/06 2 North Atl Trading 9.250% 03/01/12 75 Northern Pacific RY 3.000% 01/01/47 59 Northern Pacific RY 3.000% 01/01/47 59 Northwest Airlines 7.068% 01/02/16 55 Northwest Airlines 7.360% 02/01/20 55 Northwest Airlines 7.626% 04/01/10 46 Northwest Airlines 7.670% 01/02/15 71 Northwest Airlines 7.691% 04/01/17 74 Northwest Airlines 7.875% 03/15/08 22 Northwest Airlines 8.070% 01/02/15 29 Northwest Airlines 8.130% 02/01/14 47 Northwest Airlines 8.304% 09/01/10 70 Northwest Airlines 8.700% 03/15/07 23 Northwest Airlines 8.875% 06/01/06 22 Northwest Airlines 9.179% 04/01/10 42 Northwest Airlines 9.875% 03/15/07 23 Northwest Airlines 10.000% 02/01/09 22 Northwest Airlines 10.500% 04/01/09 24 Northwest Stl & Wir 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 74 NWA Trust 10.230% 12/21/12 57 NWA Trust 11.300% 12/21/12 45 Oakwood Homes 7.875% 03/01/04 28 Oakwood Homes 8.125% 03/01/09 20 O'Sullivan Ind. 10.630% 10/01/08 70 O'Sullivan Ind. 13.375% 10/15/09 7 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 9.125% 04/15/17 0 Pegasus Satellite 12.375% 08/01/06 26 Pegasus Satellite 12.500% 08/01/07 30 Pen Holdings Inc. 9.875% 06/15/08 62 Pinnacle Airline 3.250% 02/15/25 72 Pixelworks Inc. 1.750% 05/15/24 71 Pliant Corp. 13.000% 06/01/10 64 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Portola Packagin 8.250% 02/01/12 73 Primedex Health 11.500% 06/30/08 50 Primedex Health 11.500% 06/30/08 45 Primus Telecom 3.750% 09/15/10 36 Primus Telecom 5.750% 02/15/07 55 Primus Telecom 8.000% 01/15/14 56 Primus Telecom 12.750% 10/15/09 55 Radnor Holdings 11.000% 03/15/10 64 RDM Sports Group 8.000% 08/15/03 0 Read-Rite Corp. 6.500% 09/01/04 44 Realco Inc. 9.500% 12/15/07 45 Reliance Group Holdings 9.000% 11/15/00 25 Reliance Group Holdings 9.750% 11/15/03 2 Salton Inc. 12.250% 04/15/08 56 Solectron Corp. 0.500% 02/15/34 68 Specialty Paperb. 9.375% 10/15/06 74 Sun World Int'l. 11.250% 04/15/04 11 Tekni-Plex Inc. 12.750% 06/15/10 67 Teligent Inc. 11.500% 12/01/07 0 Tom's Foods Inc. 10.500% 11/01/04 68 Tower Automotive 5.750% 05/15/24 32 Trans Mfg Oper 11.250% 05/01/09 58 TransTexas Gas 15.000% 03/15/05 1 Tropical SportsW 11.000% 06/15/08 5 United Air Lines 6.831% 09/01/08 64 United Air Lines 7.270% 01/30/13 43 United Air Lines 7.371% 09/01/06 25 United Air Lines 7.762% 10/01/05 52 United Air Lines 7.811% 10/01/09 74 United Air Lines 8.030% 07/01/11 62 United Air Lines 9.000% 12/15/03 12 United Air Lines 9.020% 04/19/12 42 United Air Lines 9.125% 01/15/12 13 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.300% 03/22/08 27 United Air Lines 9.560% 10/19/18 42 United Air Lines 9.750% 08/15/21 13 United Air Lines 10.250% 07/15/21 13 United Air Lines 10.670% 05/01/04 13 United Air Lines 11.210% 05/01/14 12 Univ. Health Services 0.426% 06/23/20 59 US Air Inc. 10.250% 01/15/07 4 US Air Inc. 10.250% 01/15/07 5 US Air Inc. 10.300% 07/15/08 8 US Air Inc. 10.610% 06/27/07 5 US Airways Pass- 6.820% 01/30/14 60 Venture Hldgs 11.000% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 59 Werner Holdings 10.000% 11/15/07 68 Westpoint Steven 7.875% 06/16/08 0 Wheeling-Pitt St 5.000% 08/01/11 75 Wheeling-Pitt St 6.000% 08/01/10 70 Windsor Woodmont 13.000% 03/15/05 1 Winn-Dixie Store 8.875% 04/01/08 65 Winstar Comm 14.000% 10/15/05 1 WMG Holdings 9.500% 12/15/14 71 World Access Inc. 4.500% 10/01/02 12 World Access Inc. 13.250% 01/15/08 6 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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